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As Filed with the Securities and Exchange Commission on August 30, 1999
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS UNDER SECTION
12(b) OR 12(g) OF THE SECURITIES EXCHANGE
ACT OF 1934
Global Network, Inc.
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(Name of Small Business Issuer in Its Charter)
Nevada 88-0367123
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(State of Incorporation) (IRS Employer Identification No.)
575 Madison Ave., 10th Floor, New York, New York 10022
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(Address of Principal Executive Offices) (Zip Code)
(212) 605-0431
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(Issuer's Telephone Number)
Securities to be registered under Section 12(b) of the Act: None
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Securities to be registered under Section 12(g) of the Act: Common Stock
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(Title of Class)
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Global Network, Inc.
Form 10-SB
PART I
NOTE REGARDING FORWARD LOOKING STATEMENTS
Some of the statements in this Registration Statement are
forward-looking statements within the meaning of the federal securities laws.
Generally forward-looking statements can be identified by the use of terms like
"believe," "may," "will," "expect," "anticipate," "plan," "hope" and similar
words, although this is not a complete list and some forward-looking statements
may be expressed differently. Discussions relating to our plan of operation, the
Year 2000 problem, our business strategy, our competition, and the future of the
Internet, among others, contain such statements. Actual results may differ
materially from those contained in our forward-looking statements for a variety
of reasons including those expressly set forth under "Risk Factors" or as
otherwise detailed from time to time in our filings with the SEC.
ITEM 1 - DESCRIPTION OF BUSINESS
Throughout this Registration Statement, when we refer to "GNI," "Global
Network" or "the Company," or when we speak of ourselves generally, we are
referring collectively to Global Network, Inc. and its subsidiary unless the
context indicates otherwise or as otherwise noted.
THE COMPANY
Global Network, Inc. was incorporated in the State of New York on April
20, 1999. On August 5, 1999 GNI was acquired by Bargain Brokers, Inc., which
subsequently changed its name to Global Network, Inc. Bargain Brokers was
incorporated in Nevada in August 1996 to act as a wholesale liquidator of
closeouts, factory overruns, seconds and insurance salvage goods. Bargain
Brokers did not break out of the development stage, however, and was an inactive
business when it acquired Global Network, Inc. The original Global Network, Inc.
(the New York corporation) is now a wholly owned subsidiary of the new Global
Network, Inc. (the Nevada corporation).
Our address is 575 Madison Avenue, New York, New York 10022. Our
telephone number is (212) 605- 0431. Our Internet address is
http://www.dgonn.com.
OUR BUSINESS
Our goal is to develop an advertising network of online local newspaper
web sites for the purpose of purchasing unused page views on these sites and
reselling to national advertisers.
Newspaper advertising has traditionally been limited primarily to local
advertisers. National advertisers have focused on national publications and
network television because of perceived limitations relating to the local nature
of the newspaper market. Increasingly, however, local newspapers are offering
content on the Internet, which we feel creates a significant potential market
for national advertisers.
We intend to capitalize on this market potential by purchasing unused
page views from these newspaper web sites, packaging them and reselling them to
national advertisers. In doing so, we offer these advertisers an opportunity to
advertise online in multiple markets through one source - GNI, and we offer
newspapers, who are often ill-equipped to present their value to national
advertisers, exposure to and significantly increased ad revenues from, national
advertisers. Furthermore, by serving as a single source provider of online
newspaper advertising, we
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expect to be able to gather and use information on newspaper web site user
demographics, reading habits and advertising effectiveness.
We employ three full time employees, each of whom have specific
responsibilities based primarily on their respective industry experience and
executive contacts therein (details of such experience are provided in Part I,
Item 5). Those responsibilities include:
- James Mason, our President and CEO, will target top level
executives at national advertisers, advertising agencies, and
executives in the newspaper industry;
- John Grant, one of our Executive Vice Presidents, will target
contacts in the financial services and insurance industries;
and
- Arnold Behrman, one of our Executive Vice Presidents, will
target contacts in the advertising agency business.
We believe that we are one of the first businesses to offer network
marketing of online newspaper web sites and we feel that this early entry gives
us an opportunity to establish our name as a leading brand name in the industry
and develop a large, loyal customer base.
We have entered into an oral agreement with IMEX Exchange Inc, a
designer and developer of web sites, to assist us in further developing our web
site and creating proprietary software for the design, distribution, and
measurement of interactive advertising.
OUR BUSINESS & MARKETING STRATEGIES
We plan to establish and grow our business by implementing the
following key strategies:
Focus on Newspaper Web Sites
We believe that there is a large potential market for national
advertising on newspaper web sites and our primary focus will be the pursuit and
development of this market. By focusing on this as our core business, we believe
that we can offer the highest quality services to our customers.
Market Online Newspaper Advertising to National Advertisers
Our marketing will be targeted at national advertisers who have
traditionally focused on national magazines and network television. We intend to
craft sales proposals to demonstrate to these advertisers the power of local
newspaper advertising as a potentially formidable competitor to magazines and
television. Specific industries which we intend to target include automobiles,
entertainment, financial, insurance, pharmaceuticals, politics and packaged
goods, among others.
Efficient Advertising and Promotion
Because the advertising space we intend to offer is contained on local
newspaper web sites which are promoted by the newspapers themselves, we feel
that we have an advantage over Internet marketing companies who are often
required to commit a significant percentage of their revenues to efforts to
attract traffic to their web sites.
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Direct Marketing Techniques
We intend to implement a direct marketing program by using available
lists of key marketing executives' email addresses. We intend to pursue
arrangements with list providers to obtain these addresses and are also
beginning negotiations with facilitators who can process our direct marketing
mailings in mass format.
Capitalize on an Experienced Management Team
We intend to capitalize on our management team's' industry contacts and
relationships to attract major national advertisers. Rather than relying on
inexperienced salesmen, we have made it senior management's responsibility to
pursue the 20 leading interactive ad agencies and the 50 leading interactive
advertisers.
Maximize Customer Satisfaction and Renewals
We believe that we can maximize customer satisfaction and renewals by
demonstrating the effectiveness of advertising through GNI. To do so, we intend
to invest in and develop systems and software to track and measure this
effectiveness.
Pursue Strategic Relationships with Select Interactive and National
Advertising Agencies
We are in negotiations with an interactive advertising agency to assist
us in purchasing page views from various newspaper companies. We are also
seeking to develop relationships with various national advertising agencies such
as Interpublic, Saatchi & Saatchi, J. Walter Thompson, Carat, Young & Rubicam,
Ogilvy & Mather, etc., with a view to obtaining access to their individual
client base of national advertisers.
INDUSTRY OVERVIEW AND COMPETITION
There are several other Internet marketing companies competing for
Internet advertising dollars, some of which are well established, well funded
and well managed. To date, however, it appears that these companies have not
focused on our primary target - selling page views on online newspaper sites to
national advertisers. While we are certain that these Internet marketing
companies as well as traditional marketing and advertising firms will eventually
look to take advantage of this market, we feel that our early entry into this
market offers an initial competitive advantage. See "Risk Factors," below, for
additional discussion of our competition.
RISK FACTORS
An investment in GNI is highly speculative and involves a high degree
of risk. In this section of the Registration Statement we highlight certain
specific risk factors, each of which could adversely affect our business,
operating results and financial condition. These risk factors are not a complete
list of all risks factors that may affect the Company or the value of its stock.
Our Limited Operating History Makes it Difficult to Evaluate Our Business
GNI was formed in April 1999 and its operations as of the date of this
Registration Statement have been limited to developing our business model,
creating our web site and pursuing certain potential strategic relationships.
Accordingly, there is a limited operating history upon which to base an
evaluation of our business. Our prospects must be considered in light of the
risks, expenses and difficulties frequently encountered by early stage companies
like us in new and rapidly evolving markets such as online (or e) commerce. To
address these risks we must:
- improve and maintain our web site;
- obtain a customer base;
- establish strategic relationships with interactive and
national advertising agencies;
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- implement and successfully execute our business and marketing
strategy;
- increase awareness of the GNI brand;
- respond effectively to competitive developments;
- develop software to obtain information regarding newspaper web
site use and advertising effectiveness;
- manage growth; and
- attract, retain and motivate qualified personnel.
We may not be able to successfully accomplish all of these objectives,
and if we fail to do so, our business, financial condition and operating results
will be harmed. See "Plan of Operation" later in this Registration Statement for
more information on our limited operating history.
We are not profitable and we cannot guarantee that we will be profitable in the
future
We have not generated any revenues to date, we are not profitable and
we cannot guarantee that we will be profitable in the future. See "Plan of
Operation."
We are in an intensely competitive business with low barriers to entry
Internet marketing and advertising is a relatively new business, but it
is already intensely competitive. An increasing number of dedicated Internet
marketing companies are competing for online advertising dollars, and we face
competition from traditional marketing and advertising firms as well. We expect
competition from both sources to intensify and increase in the future.
Many of our current and potential competitors have greater name
recognition, financial, technical or marketing resources, and more extensive
customer bases than we do, all of which could be leveraged to gain market share
to our detriment.
The barriers to entry into our business are relatively low - i.e., it
is not particularly difficult for new competitors to enter the market. Our
current and future competitors may develop or offer services that have
significant price, market, creative or other advantages over the services we
plan to provide. If they do so and we are unable to respond satisfactorily, our
business and financial condition will likely be adversely effected.
Our growth and success depends on continued growth and commercial acceptance of
the Internet
The Internet has grown rapidly in the past few years, but we cannot
guarantee you that people, businesses and/or advertisers will continue to accept
and use the Internet. Our projections take into account, and our success depends
on, continued rapid growth and widespread acceptance of the Internet as a source
of information and vehicle for commerce. If the Internet does not continue to
grow generally, if it loses or does not continue to gain acceptance as a
commercial medium, or if the technology behind the Internet cannot adequately
support continued growth, our business will suffer or fail.
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We may not be able to attract enough customers
We have not yet obtained a customer base, but we must do so to become
successful. We have discussed our strategy to do so above, but we cannot assure
you that our strategy will be successful. The measures we implement may be
ineffective at attracting and generating advertisers, our competitors may be
more successful than we are in attracting advertisers, or the number of
advertisers willing to pay for online marketing may not increase or may
decrease, any of which would be to our detriment. If we cannot develop our
customer base, we will have little, if any, financial success.
We may not be successful at building brand awareness or building strategic
relationships
As detailed in our business strategy above, our success is based in
part on our ability to develop brand awareness by implementing our growth
strategy and capitalizing on our early entry in the market. The GNI name and our
web site currently have little or no recognition, however, and our ability to
grow our business is limited if we cannot increase that recognition. We cannot
guarantee that we will be successful in doing so.
Our business strategy also contemplates successful strategic
relationships with select national and interactive advertising firms. We have
begun negotiations in furtherance of this goal, but we cannot guarantee that we
will be successful in finalizing such relationships.
We may not be able to successfully manage our growth
Our business strategy requires us to rapidly grow our business. We may
not be able to do so, but if we do, that growth will put a strain on our
financial, managerial, technical and operational resources. Growth on this scale
will demand that we rapidly and successfully expand our staff and operations and
will require a high level of managerial skill. We have little experience in
managing this sort of expansion. If we fail to successfully do so, our business,
financial condition and results will be harmed.
We may experience difficulties in developing our web site or our proprietary
software
As detailed above, we intend to further develop our web site and create
proprietary software for the design, distribution, and measurement of
interactive advertising. We cannot guarantee that we will have success in
further developing our web site, nor that any such developments will be well
received by our customers, and we cannot guarantee that we will be successful in
designing new software, nor that such software will function as intended. Our
business will be adversely affected if we experience difficulties in developing
our web site or our proprietary software.
We may not be able to adequately protect our intellectual property rights
We currently have little or no formal protection of our intellectual
property rights. To protect our rights to our intellectual property, we will
rely on a combination of trademark and copyright law, trade secret protection,
confidentiality agreements and other contractual arrangements with our
employees, affiliates, clients, strategic partners and others. The protective
steps we have taken and will take may be inadequate to deter misappropriation of
our proprietary information. We may be unable to detect the unauthorized use of,
or take appropriate steps to enforce, our intellectual property rights. Failure
to adequately protect our intellectual property could adversely affect our
ability to compete effectively. Further, defending our intellectual property
rights could result in the expenditure of significant financial and managerial
resources, which could materially adversely affect our business, results of
operations and financial condition.
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We depend on key people in management and operations
Our success will be largely dependent on our ability to retain our
existing executive officers and to attract and retain additional qualified
managers, officers and other key personnel in the future. We cannot guarantee
that we will be able to do so. We have not entered into written or formal
employment agreements with any of these people, nor do we have key person life
insurance policies on any of our key personnel. If we lose the services of any
of our key personnel or are unable to attract, hire, train and retain qualified
officers, managers and operating, marketing and financial personnel, our
business, financial condition and results could be harmed.
We May Incur a Significant Compensation Expense Upon the Release of Certain
Escrowed Shares of Common Stock
An aggregate of 12,000,000 shares of our common stock held by certain
shareholders are currently held in escrow. These "Earnout Shares" will be
released to these shareholders if we meet certain future income targets and
forfeited if we do not. (See the description of the Earnout Shares contained in
"Description of Securities -Escrowed Shares" for further explanation). Generally
accepted accounting principles require, in effect, that if the condition
triggering release of the Earnout Shares is satisfied or if we otherwise agree
to remove the risk of forfeiture, we will be required to record a compensation
expense in the amount of the fair market value of the shares at that time for
financial reporting purposes.
Therefore, if we satisfy the conditions to release of the Earnout
Shares - i.e. if we have a net income before taxes of more than $1,000,000 for
any four consecutive quarters before August 2002 - or if we otherwise agree to
remove the risk of forfeiture of the Earnout Shares, we will be required to take
a one-time charge to earnings for that fiscal year in the amount of the fair
market value of the Earnout Shares. This charge to earnings could be substantial
and could have the effect of substantially increasing our loss or eliminating
our net income, if any, during that year. See "Description of Securities,"
"Security Ownership of Certain Beneficial Owners and Management" and note 6 to
the consolidated financial statements attached hereto.
System slowdowns or failures could hurt our business
In order for our business to be successful, we must provide
consistently fast and reliable access to our web site. Unfortunately, slowdowns,
breakdowns or failures in our computer and communication systems, or of the
Internet generally, many of which are beyond our control, could jeopardize
access to our site at any time. In addition, heavy traffic on our site or on the
Internet generally could severely slow access to, and the performance of, our
site. Repeated system slowdowns will likely impair our ability to service and
maintain our existing customers and attract new customers. Failures of or damage
to our computer or communications systems could render us unable to effectively
operate our business for extended periods of time.
We may not be able to adequately protect ourselves against security risks
All Internet businesses are subject to electronic and computer security
risks. We have taken steps to protect ourselves from unauthorized access to our
systems and use of our site, but we cannot guarantee that these measures will be
effective. If our security measures are ineffective, unauthorized parties could
alter, misappropriate, or otherwise disrupt our service or information. If such
unauthorized parties were able to access certain of our, or our customers',
proprietary information, we would face significant unexpected costs and a risk
of material loss, either of which could adversely affect our business.
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Our business could be adversely affected by the Year 2000 problems of other
parties
We believe that we are Year 2000 compliant (see the "Year 2000
Readiness Disclosure" set forth elsewhere in this Registration Statement).
Nevertheless, we cannot guarantee that our customers, potential customers,
advertisers, vendors and others on whom we depend to successfully operate our
business are Year 2000 compliant. If any of these parties, including a
significant number of our customers, suffer disruptions or difficulties as a
result of the Year 2000 problem, our business could be adversely affected in the
short or long term.
Government regulation and legal uncertainties relating to the web could increase
our costs of transmitting data and increase our legal and regulatory
expenditures and could decrease our reader base
Existing domestic and international laws or regulations specifically
regulate communications or commerce on the web. Further, laws and regulations
that address issues such as user privacy, pricing, online content regulation,
taxation and the characteristics and quality of online products and services are
under consideration by federal, state, local and foreign governments and
agencies. Several telecommunications companies have petitioned the Federal
Communications Commission to regulate Internet service providers and online
services providers in a manner similar to the regulation of long distance
telephone carriers and to impose access fees on such companies. This regulation,
if imposed, could increase the cost of transmitting data over the web. Moreover,
it may take years to determine the extent to which existing laws relating to
issues such as intellectual property ownership and infringement, libel,
obscenity and personal privacy are applicable to the web. The Federal Trade
Commission and governmental agencies in certain states have been investigating
certain Internet companies regarding their use of personal information. We could
incur additional expenses if any new regulations regarding the use of personal
information are introduced or if these agencies chose to investigate our privacy
practices. Any new laws or regulations relating to the web, or certain
application or interpretation of existing laws could decrease the demand of our
web site or otherwise materially adversely affect our business.
A large percentage of our stock is owned by relatively few people, including
officers and directors
As of the date of this Registration Statement, our officers and
directors beneficially owned or controlled a total of 24,266,317 shares of our
common stock, or approximately 76% of our outstanding common stock. (See
"Security Ownership of Certain Beneficial Ownership and Management" and
"Description of Securities" later in this Registration Statement.) If you
purchase shares of our common stock, you may be subject to certain risks due to
the concentrated ownership of our common stock. For example, these stockholders
could, if they were to act together, affect the outcome of other stockholder
votes which could, among other things, affect elections of directors, delay or
prevent a change in control or other transaction that might be beneficial to you
as a stockholder.
A large number of our shares are eligible for future sale
We had 31,724,934 shares of Common Stock outstanding on August 15,
1999. Of these, approximately 4,000,000 are freely tradeable and approximately
27,734,934 shares are "restricted securities" under Rule 144 of the Securities
Act of 1933. An additional 200,000 shares have been sold but remain unissued as
of the date of this Registration Statement and an additional 300,000 shares
underlying outstanding warrants will be restricted securities if and when they
are issued. Restricted securities may be sold only if they are registered under
the Securities Act or if an exemption from the registration requirements of the
Securities Act is available. Rule 144 provides certain terms under which
stockholders may sell restricted stock.
Generally, under Rule 144, each person having held restricted
securities for one year may, every three months, sell in ordinary brokerage
transactions up to the greater of one percent (1%) of our then outstanding
Common Stock or the average weekly volume of trading of our shares during the
preceding four calendar weeks. A person who has not been an affiliate of the
Company for at least three months immediately preceding the sale and
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who has beneficially owned shares of the common stock for the currently required
period of two years may sell his or her restricted shares without regard to any
of the limitations described above.
Approximately 27,934,934 of the restricted securities described above
may be eligible for resale under Rule 144 on or after August 2000. 300,000
shares underlying outstanding warrants will be eligible for resale from time to
time following their issuance and expiration of the holding period described
above.
Sales, or even the mere prospect of sales, of restricted stock by our
current or future stockholders under Rule 144 or otherwise, may have a
depressive effect on the price of our stock.
The market for our stock is limited
Our stock is traded on the Nasdaq OTC Bulletin Board under the symbol
"GNNU," but as of the date of this Registration Statement there has only very
limited and sporadic trading activity. We cannot guarantee that a consistently
active trading market for our stock will develop at any time in the future,
especially while we remain on the Bulletin Board.
Our stock - and technology and Internet stocks generally - may to be volatile
The market for our stock is likely to continue to be highly volatile
and subject to wide price fluctuations. These price variations are the result of
many factors, most of which are beyond our control. Furthermore, Internet and
technology related stocks generally have been subject to wide fluctuations in
price and volume that often appear to be unrelated to the operating success of
these companies. Such volatility can present risks for investors. Moreover, such
volatility often leads to securities litigation and, although we are not aware
of any pending or threatened suit or basis therefor, such suits are costly and
we could be adversely affected if such a suit were brought against us.
No dividends
We have never paid any cash or other dividends on our common stock and
we expect to use foreseeable future earnings, if any, to grow the business or
for other corporate purposes. We do not expect to pay cash or any other
dividends on our Common Stock in the foreseeable future.
INFORMATION AVAILABLE TO STOCKHOLDERS
Shortly after this Registration Statement becomes effective, we will be
required to file annual, quarterly and special reports, proxy statements and
other information with the SEC. You can read and copy any of this information at
the SEC's public reference rooms in Washington, D.C., New York, and Chicago.
Please call the SEC at (800) SEC-0330 if you would like further information on
the public information rooms. This information is also available from the SEC's
web site at http://www.sec.gov.
In the future we intend to distribute annual reports containing audited
financial statements and other information to our stockholders after the end of
each fiscal year. We do not intend to regularly distribute quarterly reports to
our stockholders, but we will gladly send them to you upon your written request
to our Corporate Secretary.
ITEM 2 - PLAN OF OPERATION
The following discussion should be read in conjunction with the
consolidated financial statements and the notes to those statements that appear
in Part III of this Registration Statement. The following discussion contains
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forward-looking statements that reflect our plans, estimates and beliefs. Our
actual results could differ materially from those discussed in the
forward-looking statements. Factors that could cause or contribute to such
differences include, but are not limited to, those discussed below and elsewhere
in this Registration Statement, particularly in "Risk Factors."
PLAN OF OPERATIONS
The Company intends to derive its revenues from the sale of interactive
advertising on the web. Secondary revenues are expected to be generated through
the development of proprietary software designed for the direction, creation,
and measurement of Internet ads on the network GNI is expanding.
The Company plans to have its suppliers and distribution channels in
place during the quarter ending December 31, 1999 and to be able to accept
interactive advertising on or before that date. The Company has made initial
contact with, and will continue to make contacts with, major interactive clients
and their advertising agencies through a series of mailings, presentations, and
web site demonstrations. The Company's strategy is to solicit the major
potential advertisers, including but not limited to the following industries:
automobile, entertainment, package goods, financial services, political, and
technology.
The Company intends to out-source research, marketing, computer
programming, and the graphic design functions to expert individuals with whom
management has prior experience and in whom management has an acceptable level
of confidence. Through outsourcing, management believes it can achieve maximum
results while keeping overhead expenses at a minimum.
The Company had no revenues during the period from April 26, 1999
(inception) through August 15, 1999. Selling, general and administrative
expenses of $26,176 for the period April 26, 1999 (inception) through August 15,
1999 consist primarily of promotional expenditures relating to the initial
solicitation of customers and other incidental start up costs.
LIQUIDITY AND CAPITAL RESOURCES
The Company raised $200,000 through the sale of 100,000 shares of the
Company's common stock and warrants to purchase 400,000 shares of common stock
at a price of $2 per share through February 5, 2000. On August 10,1999 100,000
warrants were exercised, raising an additional $200,000. Although the holder of
the remaining warrants is under no obligation to exercise the warrants and,
accordingly, there is no guarantee that such warrants will be exercised, it is
management's belief that the warrant holder will exercise an additional 150,000
warrants in each of September 1999 and October 1999, which will generate an
additional $600,000.
At August 15, 1999 the Company had working capital of $338,824,
including cash of $297,000. The Company's principal cash requirements are for
the continual development of the Company and solicitation of new customers.
The Company anticipates that its working capital, together with the
proceeds from the anticipated exercise of warrants and its projected cash flows
from results of operations will be sufficient to satisfy the Company's cash
requirements for at least twelve months. In the event the Company's plans change
(due to unanticipated expenses or difficulties or otherwise), or if the working
capital and projected cash flow otherwise prove insufficient to fund operations,
the Company could be required to seek additional financing sooner than currently
anticipated. However, there can be no assurance that additional financing will
be available to the Company when needed, on commercially reasonable terms, or at
all. The Company's inability to obtain such additional financing could have a
material adverse effect on the Company's long term liquidity.
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YEAR 2000 READINESS DISCLOSURE
The Company is in the process of implementing and executing a Year 2000
assessment with the objective of having all of its business systems including
those used by outsourcing outfits functioning properly with respect to the Year
2000 issue before January 1, 2000.
The Company has not yet developed a contingency plan to address
situations that may result if it is unable to achieve Year 2000 compliance. The
cost of developing implementing such a plan, if necessary could be material.
ITEM 3 - DESCRIPTION OF PROPERTY
Our principal office, which is located at 575 Madison Avenue, New York,
NY 10022, houses all of our employees and the majority of our operations
including investor relations, management, sales, marketing and accounting. We
lease our office space on a month to month basis and we pay rent of
approximately $1,000 per month.
ITEM 4 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to
beneficial ownership of the Common Stock as of August 15, 1999 by (i) each
person known by the Company to be the beneficial owner of more than five percent
of the Common Stock, (ii) each executive officer and director of the Company,
and (iii) all executive officers and directors of the Company as a group.
<TABLE>
<CAPTION>
Name and Address of Beneficial Owner Number of Shares Beneficially Owned Percentage of Class(1)
- ------------------------------------ ----------------------------------- ----------------------
<S> <C> <C>
James C. Mason (President, CEO and Director)
575 Madison Avenue
New York, New York 10022 12,341,155(2) 38.7%
Arnold R. Behrman
(Executive Vice President and Director)
575 Madison Avenue
New York, New York 10022 5,130,593(3) 16.1%
John F. Grant (Executive Vice President
and Director)
575 Madison Avenue
New York, New York 10022 6,794,569(4) 21.3%
Donald S. Radcliffe
239 Long Hill Road
Little Falls, NJ 07424 2,079,970(5) 6.5%
All executive officers and directors as a 24,266,317(6) 76%
group (3 persons)
</TABLE>
(1) Based on 31,732,934 shares outstanding as of August 15, 1999. See "Part
I, Item 8 - Description of Securities" for further information about
the Company's outstanding Common Stock.
(2) Includes 5,340,000 Earnout Shares and 4,331,155 Penalty Shares. See
"Part I, Item 8 - Description of Securities" for further explanation.
Mr. Mason has the right to vote the Earnout Shares and the Penalty
Shares, but does not have the right to sell or otherwise transfer them
unless and until they are released from escrow.
(3) Includes 2,220,000 Earnout Shares and 1,800,593 Penalty Shares. See
"Part I, Item 8 - Description of Securities" for further explanation.
Mr. Behrman has the right to vote the Earnout Shares and the Penalty
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Shares, but does not have the right to sell or otherwise transfer them
unless and until they are released from escrow.
(4) Includes 2,940,000 Earnout Shares and 2,384,569 Penalty Shares. See
"Part I, Item 8 - Description of Securities" for further explanation.
Mr. Grant has the right to vote the Earnout Shares and the Penalty
Shares, but does not have the right to sell or otherwise transfer them
unless and until they are released from escrow.
(5) Includes 900,000 Earnout Shares and 729,970 Penalty Shares. See "Part
I, Item 8 - Description of Securities" for further explanation. Mr.
Radcliffe has the right to vote the Earnout Shares and the Penalty
Shares, but does not have the right to sell or otherwise transfer them
unless and until they are released from escrow.
(6) Includes 10,500,000 Earnout Shares and 8,516,317 Penalty Shares. See
"Part I, Item 8 - Description of Securities" for further explanation.
The listed officers and directors have the right to vote the Earnout
Shares and the Penalty Shares, but do not have the right to sell or
otherwise transfer them unless and until they are released from escrow.
ITEM 5 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Following is certain information about our executive officers and
directors. We have not entered into employment agreements with any of our
executive officers.
James C. Mason, President, CEO and Director
Mr. Mason, age 55, has over 30 years of senior management experience in
both large corporation and entrepreneurial enterprises. Mr. Mason began his
career with McGraw-Hill in 1967 and rose through the ranks until 1974 when he
joined Business Week magazine as a sales executive. In 1980-82, Mr. Mason opened
a consultancy business and worked in the development of small magazines. In
1983, Mr. Mason rejoined Business Week as Worldwide Director of Marketing
overseeing all sales and marketing. In 1985, Mr. Mason joined the partnership
which was purchasing U.S. News and World Report. He remained at U.S. News and
World Report as Associate Publisher and a Partner until 1987 when he joined The
New York Daily News as Executive Vice President, Sales & Marketing. In 1991, Mr.
Mason ran several entrepreneurial companies and consulted to numerous investment
banking and publishing institutions. Mr. Mason incorporated the Company in 1999.
John F. Grant, Executive Vice President and Director
Mr. Grant, age 62, began his career in publishing in 1966 when he
joined National Geographic as International Director, a position which he held
until 1980. During his tenure, Mr. Grant launched two international operations.
In 1980, Mr. Grant joined Knapp Communications as Publisher for GEO, a startup
magazine. In 1985, Mr. Grant started his own real estate firm, Jacpa Equities,
which he ran from 1985-1988. In 1988, Mr. Grant returned to publishing as Sales
Manager for Scientific American magazine until 1990 when he became Vice
President of Harper's magazine. His last venture prior to joining GNI was with
Mutual Funds magazine, which he co-founded in 1994.
Arnold R. Behrman, Executive Vice President and Director
Mr. Behrman, age 57, has spent 35 years in executive positions with
major advertising agencies and publishing organizations. Starting in media in
1964, Mr. Behrman joined Compton Advertising, now a subsidiary of Saatchi &
Saatchi. Mr. Behrman rose through the ranks until achieving total responsibility
for all print media decisions at Compton. Mr. Behrman became a specialist in
package goods and personally directed all print advertising for Proctor &
Gamble, and directed print strategies over all ten of their agencies. Mr.
Behrman left to join the Newspaper Association of America as Vice President. Mr.
Behrman's responsibilities included the coordination of all the member
newspapers. In 1998, Mr. Behrman started his own consulting firm where he
remained until April 1999 when he joined Global Network as Executive Vice
President.
11
<PAGE> 13
ITEM 6 - EXECUTIVE COMPENSATION
GNI did not pay any compensation until August, 1999. Beginning in
August 1999, the Company is paying James C. Mason, President and CEO, a salary
of $200,000 per year; John F. Grant, Executive Vice President, a salary of
$175,000 per year; and Arnold R. Behrman, Executive Vice President, a salary of
$170,000 per year.
The members of the Company's board are reimbursed for actual expense
incurred in attending board meetings. There are no other arrangements for
compensation to directors.
ITEM 7 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Except as set forth below, the Company is not aware of any transaction
during the last two years, or proposed transactions, to which the Company was or
is to be a party, in which any director, executive officer, 5% security holder,
or member of the immediate family of any of the previously named persons had or
is to have a direct or indirect material interest.
The Company has entered into an oral consulting agreement with Donald
Radcliffe, a greater than 5% shareholder. The terms of the agreement provide
that Mr. Radcliffe will provide consulting services with respect to financing
and general startup and operating matters. As of the date of this Registration
Statement, Mr. Radcliffe had received payment from the Company of $15,000 and
he may receive up to an additional $60,000.
The Company has entered into an oral agreement with IMEX Exchange Inc.,
a designer and developer of web sites, to assist us in further developing our
web site and creating proprietary software for the design, distribution, and
measurement of interactive advertising. Dennis Stillwell, the President and CEO
of IMEX Exchange Inc. holds 1,386,647 shares of the Company's common stock,
600,000 of which are "Earnout Shares" and 486,647 of which are "Penalty Shares,"
both as described under "Description of Securities" below.
Donald Radcliffe, who holds more than 5% of the Company's common
stock, owns a minority interest in the lessor of the Company's office space.
ITEM 8 - DESCRIPTION OF SECURITIES
Common Stock
The Company's Articles of Incorporation authorize the issuance of
50,000,000 shares of Common Stock, $.001 par value. As of August 15, 1999,
31,732,934 shares were outstanding and an additional 200,000 shares of Common
Stock had been sold but not issued. The Company expects to issue such shares
shortly.
Holders of shares of Common Stock are entitled to one vote for each
share on all matters to be voted on by the stockholders and are not entitled to
cumulate their votes in the election of directors. Holders of shares of Common
Stock are entitled to share ratably in dividends, if any, as may be declared
from time to time by the Board of Directors in its discretion, from funds
legally available therefor. In the event of a liquidation, dissolution or
winding up of the Company, the holders of shares of Common Stock are entitled to
share pro rata all assets remaining after payment in full of all liabilities.
Holders of Common Stock have no preemptive or other subscription rights, and
there are no conversion rights or redemption or sinking fund provisions with
respect to such shares.
Escrowed Common Stock
As of August 15, 1999, an aggregate of 21,732,934 of the outstanding
shares of Common Stock were subject to an Escrow Agreement (collectively, the
"Escrowed Shares"). The escrow term runs until August 5, 2002 (the "Escrow
Term"). 12,000,000 of the Escrowed Shares are designated "Earnout Shares," which
are to be released to the shareholders listed in the table below upon the
Company's having a net income before taxes of not less than
12
<PAGE> 14
$1,000,000 during any four consecutive quarters during the Escrow Term.
9,732,934 of the Escrowed Shares are designated "Penalty Shares," which are to
be released to the shareholders listed in the table below as follows:
- 25% of the Penalty Shares are to be released if Warrants (as
described below) having an aggregate exercise price of
$200,000 are not exercised on or before 30 days from August 5,
1999;
- an additional 37.5% of the Penalty shares are to be released
if Warrants having an aggregate exercise price of an
additional $300,000 are not exercised on or before 60 days
from August 5, 1999; and
- an additional 37.5% of the Penalty shares are to be released
if Warrants having an aggregate exercise price of an
additional $300,000 are not exercised on or before 90 days
from August 5, 1999.
If any percentage of the Penalty Shares are released to the
shareholders listed below, the same percentage of the Earnout Shares shall be
simultaneously released to such shareholders.
Earnout Shares and Penalty Shares that are not released to the
shareholders listed below shall be returned to the Company for cancellation. As
of August 15, 1999, Warrants having an aggregate exercise price of $200,000 had
been exercised. Accordingly, 25%, or 2,433,233, of the Penalty Shares are
subject to cancellation by the Company. Although it had not done so as of August
15, 1999, the Company intends to cancel such shares promptly.
Shareholders holding Escrowed Shares have the right to vote such shares
but do not have the right to sell or otherwise dispose of the Escrowed Shares.
The Escrowed Shares have been issued in the name of, and, subject to
the terms of the Escrow Agreement, shall be released to the following
shareholders
<TABLE>
<CAPTION>
Stockholder Earnout Shares Penalty Shares
---------------- -------------- --------------
<S> <C> <C>
James C. Mason 5,340,000 4,331,155
John F. Grant 2,940,000 2,384,569
Arnold R. Behrman 2,220,000 1,800,593
Donald Radcliffe 900,000 729,970
Dennis Stillwell 600,000 486,647
</TABLE>
The foregoing description of the Escrowed Shares is qualified in its
entirety by reference to the Escrow Agreement that is attached as an Exhibit to
this Registration Statement.
Preferred Stock
The Company's Articles of Incorporation authorize the issuance of up to
5,000,000 shares of Preferred Stock, $.001 par value. The Preferred Stock may be
issued in one or more series, with terms and preferences to be determined by the
Company's Board of Directors. No shares of Preferred Stock have been issued as
of August 15, 1999.
13
<PAGE> 15
Warrants
As of August 15, 1999, there were warrants outstanding to purchase, at
any time prior to February 5, 2000, 300,000 shares of Common Stock at $2.00 per
share.
Registrar and Transfer Agent
The Registrar and Transfer Agent for the Company's Common Stock is
Silver State Registrar, PO Box 17985, Salt Lake City, Utah, 84117, 702/734-1223.
14
<PAGE> 16
PART II
ITEM 1 - MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
OTHER SHAREHOLDER MATTERS
The Company's Common Stock trades in the over-the-counter market on the
OTC Bulletin Board. The Company began trading under the symbol "GNNU" on August
15. Prior to that date, the stock was traded under the symbol "BRGB" with only
limited and sporadic trading.
The following table shows all listed trading in the Company's Common
Stock from August 15, 1999 through August 25, 1999. Such prices are inter-dealer
quotations without retail mark-ups, mark-downs or commissions, and may not
represent actual transactions.
<TABLE>
<CAPTION>
Volume Ask Bid
-------- -------- --------
<S> <C> <C> <C>
August 19, 1999 1,000 $ 5.50 $ 5.50
August 20, 1999 47,000 $ 6.00 $ 5.00
August 23, 1999 427,000 $ 6.75 $ 6.00
August 24, 1999 309,700 $ 7.00 $ 6.81
August 25, 1999 82,800 $ 7.18 $ 6.75
</TABLE>
As of August 15, 1999, there were approximately 50 stockholders of
record of the Company's Common Stock.
The Company has never paid any cash dividends on its Common Stock and
anticipates that, for the foreseeable future, no cash dividends will be paid on
its Common Stock. Payment of future cash dividends will be determined by the
Company's Board of Directors based upon conditions then existing, including the
Company's financial condition, capital requirements, cash flow, profitability,
business outlook and other factors. In addition, the Company's future credit
arrangements may restrict the payment of dividends.
ITEM 2 - LEGAL PROCEEDINGS
There are no currently pending law suits or similar administrative
proceedings to which the Company is a party and, to the best of our knowledge,
there is presently no basis for any such suit or proceeding.
ITEM 3 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Prior to August 1999, the Company's (then known as Bargain Brokers,
Inc.) financial statements were audited by David E. Coffey, CPA. In August 1999,
following the acquisition of GNI, the Company engaged J.H. Cohn LLP as its
independent public accountants. The Company did not consult with any other
accounting firm regarding the application of accounting principles to a
specified transaction, either contemplated or proposed, or the type of opinion
that might be rendered regarding the Company's financial statements, nor did the
Company consult with J.H. Cohn LLP with respect to any accounting disagreement
or any reportable event, at any time prior to the appointment of such firm.
Reports issued by Mr. Coffey on the financial statements of Bargain
Brokers, Inc. (which are not included herein) did not contain any adverse
opinion or disclaimer of opinion and were not qualified as to audit scope or
accounting principles, nor were there any
15
<PAGE> 17
material disagreements with the former accountant on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure.
At the Company's request, Mr. Coffey has furnished the Company with a
letter addressed to the Securities and Exchange Commission stating that he
agrees with the foregoing statements. This letter is attached as an Exhibit to
this Registration Statement.
ITEM 4 - RECENT SALES OF UNREGISTERED SECURITIES
The Company has made the following sales of unregistered securities
within the last three years:
In October 1997 the Company (then known as Bargain Brokers, Inc.) sold
2,000,000 shares of its common stock for aggregate consideration of $20,000. The
sale of such securities was exempt from registration under the Securities Act of
1933 pursuant to Rule 504 of Regulation D promulgated thereunder.
In August 1999 the Company (then known as Bargain Brokers, Inc.) issued
27,732,934 shares of its common stock to the stockholders of Global Network,
Inc. in exchange for all of the outstanding shares of Global Network, Inc. The
issuance of such securities was exempt from registration under the Securities
Act of 1933 pursuant to Section 4(2) thereof and/or Regulation D promulgated
thereunder.
In August 1999 the Company (then known as Bargain Brokers, Inc.) sold
to one investor (i) 100,000 shares of its common stock and (ii) warrants to
purchase an additional 400,000 shares of its common stock at a price of $2.00
per share. As of the date of this Registration Statement, warrants with respect
to 100,000 of these shares had been exercised for cash consideration of
$200,000. The sale of such securities was exempt from registration under the
Securities Act of 1933 pursuant to Regulation S promulgated thereunder.
ITEM 5 - INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our Articles of Incorporation provide that we shall indemnify our
officers, directors, employees and agents against expenses (including judgments,
fines and amounts paid for settlement) incurred in connection with actions or
proceedings brought against them by reason of their serving or having served as
officers, directors or in other capacities. We do not, however, indemnify them
in actions in which it is determined that they have not acted in good faith or
have acted unlawfully or not in the best interest of the Company. In the case of
an action brought by or in the right of the Company, we shall indemnify them
only to the extent of expenses actually and reasonably incurred by them in
connection with the defense or settlement of these actions and we shall not
indemnify them in connection with any matter as to which they have been found to
be liable to the Company, unless the deciding court determines that,
notwithstanding such liability, that person is fairly entitled to indemnity in
light of all the relevant circumstances.
We do not currently maintain director's and officer's liability
insurance.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors and officers of the Company pursuant to the
foregoing provisions, or otherwise, the Company has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable.
16
<PAGE> 18
GLOBAL NETWORK, INC. AND SUBSIDIARY
(A Development Stage Company)
I N D E X
---------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 18
CONSOLIDATED BALANCE SHEET
AUGUST 15, 1999 19
CONSOLIDATED STATEMENT OF OPERATIONS
PERIOD FROM APRIL 26, 1999 (DATE OF INCEPTION) THROUGH
AUGUST 15, 1999 20
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
PERIOD FROM APRIL 26, 1999 (DATE OF INCEPTION) THROUGH
AUGUST 15, 1999 21
CONSOLIDATED STATEMENT OF CASH FLOWS
PERIOD FROM APRIL 26, 1999 (DATE OF INCEPTION) THROUGH
AUGUST 15, 1999 22
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 23/28
</TABLE>
* * *
17
<PAGE> 19
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------
To the Board of Directors
Global Network, Inc.
We have audited the accompanying consolidated balance sheet of GLOBAL NETWORK,
INC. AND SUBSIDIARY (a development stage company) as of August 15, 1999, and the
related consolidated statements of operations, stockholders' equity and cash
flows for the period from April 26, 1999 (date of inception) through August 15,
1999. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Global Network, Inc.
and Subsidiary as of August 15, 1999, and their results of operations and cash
flows for the period from April 26, 1999 (date of inception) through August 15,
1999, in conformity with generally accepted accounting principles.
J.H. COHN LLP
Roseland, New Jersey
August 25, 1999
18
<PAGE> 20
GLOBAL NETWORK, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET
AUGUST 15, 1999
<TABLE>
<CAPTION>
ASSETS
------
<S> <C>
Current assets:
Cash $ 297,000
Prepaid expenses 3,503
Advances to officers 75,000
---------
Total $ 375,503
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities - accounts payable $ 36,679
---------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.001 par value; 5,000,000 shares authorized;
none issued --
Common stock, $.001 par value; 50,000,000 shares authorized;
29,499,700 shares issued and outstanding 31,933
Additional paid-in capital 333,067
Deficit accumulated in the development stage (26,176)
---------
Total stockholders' equity 338,824
---------
Total $ 375,503
=========
</TABLE>
See Notes to Consolidated Financial Statements.
19
<PAGE> 21
GLOBAL NETWORK, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENT OF OPERATIONS
PERIOD FROM APRIL 26, 1999 (DATE OF INCEPTION)
THROUGH AUGUST 15, 1999
<TABLE>
<CAPTION>
<S> <C>
General and administrative expenses $ 26,176
----------
Net loss $ (26,176)
==========
Basic net loss per common share $ --
==========
Basic weighted average common shares outstanding 6,373,874
==========
</TABLE>
See Notes to Consolidated Financial Statements.
20
<PAGE> 22
GLOBAL NETWORK, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
PERIOD FROM APRIL 26, 1999 (DATE OF INCEPTION)
THROUGH AUGUST 15, 1999
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Stock Additional in the
------------------- Subscription Paid-in Development
Shares Amount Receivable Capital Stage Total
------ ------ ---------- ------- ----------- -----
<S> <C> <C> <C> <C> <C> <C>
Initial issuance of shares on April 26, 1999
(as retroactively adjusted to reflect shares
effectively issued prior to reverse
acquisition on August 5, 1999) 27,732,934 $ 100 $ (100)
Effects of reverse acquisition 4,000,000 31,633 100 $(66,733) $(35,000)
Sale of units of shares of
common stock and
warrants through private
placement 100,000 100 199,900 200,000
Exercise of warrants 100,000 100 199,900 200,000
Cancellation of shares held
in escrow as a result of exercise of
warrants (2,433,234) (2,433) 2,433
Net loss $(26,176) (26,176)
------------ ------- --------- --------- -------- --------
Balance, August 15, 1999 29,499,700 $29,500 $ -- $ 335,500 $(26,176) $338,824
============ ======= ========= ========= ======== ========
</TABLE>
See Notes to Consolidated Financial Statements.
21
<PAGE> 23
GLOBAL NETWORK, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CASH FLOWS
PERIOD FROM APRIL 26, 1999 (DATE OF INCEPTION)
THROUGH AUGUST 15, 1999
<TABLE>
<CAPTION>
<S> <C>
Operating activities:
Net loss $ (26,176)
Adjustments to reconcile net loss to net cash used in
operating activities:
Changes in operating assets and liabilities:
Prepaid expenses (3,503)
Advances to officers (75,000)
Accounts payable 36,679
---------
Net cash used in operating activities (68,000)
---------
Financing activities:
Proceeds from sale of units of common stock and warrants 200,000
Proceeds from exercise of warrants 200,000
Payments of costs in connection with reverse acquisition (35,000)
---------
Net cash provided by financing activities 365,000
---------
Increase in cash and cash, end of period $ 297,000
=========
</TABLE>
See Notes to Consolidated Financial Statements.
22
<PAGE> 24
GLOBAL NETWORK, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Organization and business:
Global Network, Inc. ("Global Nevada") was originally incorporated in
August 1996 in Nevada as Bargain Brokers, Inc. to develop operations as
a liquidator of closeouts, factory overruns, seconds and insurance
salvage goods. However, Global Nevada never generated any significant
revenues or expenses in connection with such operations, and it was an
inactive "shell company" whose common shares were publicly traded at
the time of the exchange of shares described below.
Global Network, Inc. ("Global New York") was originally incorporated on
April 26, 1999 in New York to develop an advertising network of online
local newspaper web sites for the purpose of purchasing unused page
views on these sites and reselling them to national advertisers. During
the period from its inception on April 26, 1999 through August 15,
1999, Global New York did not generate any revenues and, accordingly,
it was in the development stage as of August 15, 1999.
As of August 5, 1999, Global Nevada had, effectively, 4,000,000 shares
of common stock outstanding, with a par value of $.001 per share. As of
that date, Global Nevada issued 27,732,934 shares of common stock,
including 21,732,934 shares subject to cancellation that were placed in
escrow (see Note 6), to acquire all of the 27,732,934 shares of common
stock, which had no par value, of Global New York that were,
effectively, then outstanding (the "Exchange"). As a result of the
Exchange, Global New York became a wholly-owned subsidiary of Global
Nevada, and Global Nevada had 31,732,934 shares of common stock
outstanding, of which 27,732,934 shares, or 87.4%, were owned by the
former stockholders of Global New York and 4,000,000 shares, or 12.6%,
were owned by the former stockholders of Global Nevada. However, since
the former stockholders of Global New York became the owners of a
majority of the outstanding common shares of Global Nevada after the
Exchange and Global Nevada had no significant operating activities or
assets and liabilities prior to the Exchange, the Exchange was treated
effective as of August 5, 1999 as a "purchase business combination" and
a "reverse acquisition" for accounting purposes in which Global Nevada
was the legal acquirer and Global New York was the accounting acquirer;
the assets and liabilities of Global New York were recorded at their
historical carrying values as of August 5, 1999; and the historical
financial statements prior to August 5, 1999 are those of Global New
York. Common stock and additional paid-in capital were adjusted as of
August 5, 1999 to reflect the $.001 per share par value of the Global
Nevada shares. All references to the number of shares of common stock
of Global New York as of dates or for periods prior to the Exchange
have been restated to reflect the ratio of the number of common shares
of Global Nevada effectively exchanged for common shares of Global New
York.
The "Company" as used herein refers to Global New York prior to August
5, 1999 and Global Nevada together with Global New York subsequent to
that date. The Company's year-end will be December 31st.
23
<PAGE> 25
GLOBAL NETWORK, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 2 - Summary of accounting policies:
Use of estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
Principles of consolidation:
The accompanying consolidated financial statements include the accounts
of Global Nevada from its acquisition on August 5, 1999 and Global New
York, its wholly-owned subsidiary, from its inception on April 26,
1999. All significant intercompany accounts and transactions have been
eliminated in consolidation.
Income taxes:
Prior to the Exchange on August 5, 1999, Global New York, with the
consent of its stockholders, had elected to be treated as an "S"
Corporation under the Internal Revenue Code. Accordingly, prior to that
date, the Company's losses were allocated to Global New York's
stockholders for inclusion in their personal income tax returns and the
Company was not required to record any provision or credit for income
taxes.
The Company accounts for income taxes pursuant to the asset and
liability method which requires deferred income tax assets and
liabilities to be computed annually for temporary differences between
the financial statement and tax bases of assets and liabilities that
will result in taxable or deductible amounts in the future based on
enacted tax laws and rates applicable to the periods in which the
differences are expected to affect taxable income. Valuation allowances
are established when necessary to reduce deferred tax assets to the
amount expected to be realized. The income tax provision or credit is
the tax payable or refundable for the period plus or minus the change
during the period in the deferred tax assets and liabilities.
Net earnings (loss) per common share:
The Company presents "basic" earnings (loss) per common share and, if
applicable, it will present "diluted" earnings per common share
pursuant to the provisions of Statement of Financial Accounting
Standards No. 128, Earnings per Share. Generally, basic earnings (loss)
per common share is calculated by dividing net income or loss by the
weighted average number of common shares outstanding during each
period. The calculation of diluted earnings per common share is similar
to that of basic earnings per common share, except that the denominator
is increased to include the number of additional common shares that
would have been outstanding if all potentially dilutive common shares,
such as those issuable upon the exercise of warrants, were issued
during the period.
24
<PAGE> 26
GLOBAL NETWORK, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 2 - Summary of accounting policies (concluded):
Net earnings (loss) per common share (concluded):
The weighted average number of common shares of 6,373,874 used in the
computation of basic net loss per common share for the period from
April 26, 1999 (date of inception) through August 15, 1999: (i)
includes the effects of the issuance of the 4,000,000 shares of common
stock to the owners of Global Nevada as a result of the Exchange and
the reverse acquisition by Global New York for the period subsequent to
August 5, 1999, the date of the Exchange and (ii) excludes the effects
of the 19,299,700 shares of common stock owned by the founders of
Global New York that were subject to cancellation and held in escrow as
of August 15, 1999 since there is uncertainty as to whether the
conditions for the release of the shares from escrow will be met. Those
conditions are based on the Company's future earnings and issuances of
shares upon the exercise of warrants (see Note 6).
If the conditions for the release of the shares held in escrow are met
in subsequent periods, the Company will restate earnings (loss) per
common share previously reported based on a weighted average number of
common shares that includes any shares that became noncancellable.
Since the Company had a loss for the period from April 26, 1999 (date
of inception) through August 15, 1999, the assumed effect of the
exercise of warrants outstanding at August 15, 1999 would have been
anti-dilutive and, therefore, a diluted per share amount has not been
presented in the accompanying consolidated statement of operations.
Note 3 - Advances to officers:
Advances to officers of $75,000 as of August 15, 1999 were noninterest
bearing and due on demand.
Note 4 - Rent expense:
The Company leases its office space on a month-to-month basis. Total
rent expense for the period from April 26, 1999 (date of inception)
through August 15, 1999 approximated $1,200. One of the stockholders of
the Company owns a minority interest in the lessor.
25
<PAGE> 27
GLOBAL NETWORK, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 5 - Income taxes:
Prior to the Exchange on August 5, 1999, Global New York had elected to
be treated as an "S" Corporation under the applicable sections of the
Code. The "S" Corporation election terminated as a result of the
Exchange.
The Company had net operating loss carryforwards of approximately
$26,000 available to reduce future Federal taxable income as of August
15, 1999. There were no other material temporary differences as of that
date. If not used, net operating loss carryforwards as of August 15,
1999 will expire in 2019.
Deferred tax assets of approximately $9,000 attributable to the
potential benefits from the net operating loss carryforwards as of
August 15, 1999 were offset by an equivalent valuation allowance due to
the uncertainties related to the extent and timing of the Company's
future taxable income and, accordingly, the Company did not recognize a
credit for income taxes for the period from April 26, 1999 through
August 15, 1999.
Note 6 - Stockholders' equity:
Preferred stock authorized:
The Company's Articles of Incorporation authorize the issuance of up to
5,000,000 shares of preferred stock, $.001 par value. The preferred
stock may be issued in one or more series, with terms and preferences
to be determined by the Company's Board of Directors. No shares of
preferred stock had been issued as of August 15, 1999.
Issuances of common stock and warrants:
The Company's Articles of Incorporation also authorize the issuance of
50,000,000 shares of common stock, $.001 par value.
On April 26, 1999, a total of 27,732,934 shares of common stock were
issued, effectively, to the founders of Global New York for nominal
consideration.
On August 5, 1999: (i) 4,000,000 shares of common stock were issued,
effectively, to the owners of Global Nevada as a result of the Exchange
and the reverse acquisition by Global New York, (ii) 21,732,934 shares
of common stock owned by the founders of Global New York became subject
to cancellation and were placed in escrow as further explained below
and (iii) the Company sold 100,000 shares of common stock and warrants
("Warrants") to purchase 400,000 shares of common stock, exercisable at
$2.00 per share through February 5, 2000, pursuant to a private
offering of units for which it received total consideration of
$200,000.
26
<PAGE> 28
GLOBAL NETWORK, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 6 - Stockholders' equity (continued):
Issuances of common stock and warrants (concluded):
On August 10, 1999, the Company received $200,000 upon the exercise of
Warrants for the purchase of 100,000 shares of common stock. As a
result of the exercise of those Warrants, a total of 2,433,234 shares
of common stock held in escrow were cancelled.
As a result of the transactions described above, as of August 15, 1999,
the Company had 29,499,700 shares of common stock outstanding,
including 19,299,700 shares held in escrow, and Warrants outstanding
for the purchase of 300,000 shares of common stock.
Shares of common stock subject to cancellation held in escrow:
In connection with the Exchange on August 5, 1999, a total of
21,732,934 shares of common stock owned by the founders of Global New
York became subject to cancellation and were placed in escrow pursuant
to an agreement that expires on August 5, 2002. A total of 12,000,000
and 9,732,934 of the shares placed in escrow were designated as
"Earnout Shares" and "Penalty Shares," respectively.
The 12,000,000 Earnout Shares will be released to the stockholders if
the Company has income before income taxes of not less than $1,000,000
during any four consecutive quarters prior to the expiration of the
escrow agreement or, as explained below, upon the release of Penalty
Shares.
As explained above, on August 10, 1999, Warrants for the purchase of
100,000 shares with an aggregate exercise price of $200,000 were
exercised and, accordingly, 2,433,234 of the Penalty Shares became
subject to cancellation by the Company. As of August 15, 1999, the
7,299,700 Penalty Shares remaining in escrow were scheduled to be
released to the stockholders as follows:
o 3,649,850 shares will be released if Warrants with an aggregate
exercise price of $300,000 are not exercised on or before October 4,
1999; and
o 3,649,850 shares will be released if Warrants with an aggregate
exercise price of $300,000 are not exercised on or before November 3,
1999.
If any of the Penalty Shares are required to be released to the
stockholders, an equal percentage of Earnout Shares will also be
released to such stockholders.
Earnout Shares and Penalty Shares that are not released to the
stockholders shall be returned to the Company for cancellation. If the
conditions for the release of all of the Earnout Shares and the
remaining Penalty Shares are not met and such shares are cancelled,
the stockholders holding those shares would own approximately 57% of
the Company.
27
<PAGE> 29
GLOBAL NETWORK, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 6 - Stockholders' equity (concluded):
Shares of common stock subject to cancellation held in escrow
(concluded):
Stockholders that own shares held in escrow have the right to vote, but
do not have the right to sell or otherwise dispose of, such shares.
At such time as any of the Earnout Shares become noncancellable and are
required to be released to the stockholders, the Company will also be
required to: (i) recognize a noncash charge to operations equal to the
approximate aggregate fair market value of such shares at that time and
(ii) restate earnings (loss) per common share based on a weighted
average number of common shares that includes the shares that became
noncancellable.
Note 7 - Commitments:
The Company has entered into an oral consulting agreement with one of
its stockholders whereby the stockholder will provide financial and
other consulting services to the Company in exchange for payments of up
to approximately $75,000 for such services.
The Company has also entered into an oral agreement with a company that
is a designer and developer of web sites for assistance in the further
development of its web site and the creation of proprietary software
for the design, distribution and measurement of interactive
advertising. One of the stockholders of the Company is the president
and chief executive officer of the web site designer and developer.
* * *
28
<PAGE> 30
PART III
ITEM 1 - INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibits
- --------
<S> <C>
3.1 Articles of Incorporation of Global Network, Inc., as amended
3.2 Bylaws of Global Network, Inc.
10.1 Agreement and Plan of Reorganization dated as of August 5, 1999 by
and among Bargain Brokers, Inc., a Nevada corporation, Global
Network, Inc., a New York Corporation, and the shareholders of
Global Network, Inc.
10.2 Escrow Agreement dated as of August 5, 1999 by and among James C.
Mason, as the representative of the former stockholders of Global
Network, Inc., Charles R. Powell, as the representative of certain
of the former controlling stockholders of Bargain Brokers, Inc.,
and Sidney D. Bluming, P.C., as escrow agent
10.3 Common Stock Purchase Warrants to purchase up to 400,000 shares of
Bargain Brokers, Inc. (now known as Global Network, Inc.) Common
Stock at a price of up to $800,000
16.1 Letter Regarding Change in Certifying Accountant
21.1 List of Subsidiaries
27 Financial Data Schedule
</TABLE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized.
GLOBAL NETWORK INC.
--------------------------------
(Registrant)
Date: August 30, 1999 By: /s/ JAMES C. MASON
--------------------- --------------------------------
(Signature)
Its: President and CEO
-------------------------------
29
<PAGE> 1
EXHIBIT 3.1
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
AUG 23 1996
AUG 23 1996
NO: C17957-96
---------------------
/s/ DEAN HELLER
- ------------------------------
DEAN HELLER, SECRETARY OF STATE
ARTICLES OF INCORPORATION
OF
BARGAIN BROKERS, INC.
KNOW ALL MEN BY THESE PRESENTS:
That we, the undersigned, have this day voluntarily associated
ourselves together for the purpose of forming a Corporation under and pursuant
to the laws of the State of Nevada, and we do hereby certify that:
ARTICLE I -- NAME: The exact name of this Corporation is:
Bargain Brokers, Inc.
ARTICLE II -- RESIDENT AGENT:
The Resident Agent of the Corporation is Max C. Tanner, Esq., The Law
Offices of Max C. Tanner, 2950 East Flamingo Road, Suite G, Las Vegas, Nevada
89121.
ARTICLE III -- DURATION: The Corporation shall have perpetual existence.
ARTICLE IV -- PURPOSES: The purpose, object and nature of the business for which
this Corporation is organized are:
(a) To engage in any lawful activity;
(b) To carry on such business as may be necessary, convenient, or
desirable to accomplish the above purposes, and to do all
other things incidental thereto which are not forbidden by law
or by these Articles of Incorporation.
ARTICLE V -- POWERS: The powers of the Corporation shall be those powers granted
by 78.060 and 78.070 of the Nevada Revised Statutes under which this corporation
is formed. In addition, the Corporation shall have the following specific
powers:
(a) To elect or appoint officers and agents of the Corporation and
to fix their compensation;
(b) To act as an agent for any individual, association,
partnership, corporation or other legal entity;
(c) To receive, acquire, hold, exercise rights arising out of the
ownership or possession thereof, sell, or otherwise dispose
of, shares or other interests in, or obligations
<PAGE> 2
of, individuals, associations, partnerships, corporations, or
governments;
(d) To receive, acquire, hold, pledge, transfer, or otherwise
dispose of shares of the corporation, but such shares may only
be purchased, directly or indirectly, out of earned surplus;
(e) To make gifts or contributions for the public welfare or for
charitable, scientific or educational purposes, and in time of
war, to make donations in aid of war activities.
ARTICLE VI -- CAPITAL STOCK:
Section 1. Authorized Shares. The total number of shares which this
Corporation is authorized to issue is 25,000,000 shares of Capital
Stock at $.001 par value per share.
(a) The total number of shares of Common Stock which this
Corporation is authorized to issue is 20,000,000 shares at
$.001 par value per share.
(b) The total number of shares of Preferred Stock which this
Corporation is authorized to issue is 5,000,000 shares at
$.001 par value per share, which Preferred Stock may contain
special preferences as determined by the Board of Directors of
the Corporation, including, but not limited to, the bearing of
interest and convertibility into shares of Common Stock of the
Corporation.
Section 2. Voting Rights of Shareholders. Each holder of the Common
Stock shall be entitled to one vote for each share of stock standing in
his name on the books of the Corporation.
Section 3. Consideration for Shares. The Common Stock shall be issued
for such consideration, as shall be fixed from time to time by the
Board of Directors. In the absence of fraud, the judgment of the
Directors as to the value of any property for shares shall be
conclusive. When shares are issued upon payment of the consideration
fixed by the Board of Directors, such shares shall be taken to be fully
paid stock and shall be non-assessable. The Articles shall not be
amended in this particular.
Section 4. Pre-emptive Rights. Except as may otherwise be provided by
the Board of Directors, no holder of any shares of the stock of the
Corporation, shall have any preemptive right to purchase, subscribe
for, or otherwise acquire any shares of stock of the Corporation of any
class now or hereafter authorized, or any securities exchangeable for
or convertible into such shares, or any warrants or other instruments
2
<PAGE> 3
evidencing rights or options to subscribe for, purchase, or otherwise
acquire such shares.
Section 5. Stock Rights and Options. The Corporation shall have the
power to create and issue rights, warrants, or options entitling the
holders thereof to purchase from the corporation any shares of its
capital stock of any class or classes, upon such terms and conditions
and at such times and prices as the Board of Directors may provide,
which terms and conditions shall be incorporated in an instrument or
instruments evidencing such rights. In the absence of fraud, the
judgment of the Directors as to the adequacy of consideration for the
issuance of such rights or options and the sufficiency thereof shall be
conclusive.
ARTICLE VII -- ASSESSMENT OF STOCK: The capital stock of this Corporation, after
the amount of the subscription price has been fully paid in, shall not be
assessable for any purpose, and no stock issued as fully paid up shall ever be
assessable or assessed. The holders of such stock shall not be individually
responsible for the debts, contracts, or liabilities of the Corporation and
shall not be liable for assessments to restore impairments in the capital of the
Corporation.
ARTICLE VIII -- DIRECTORS: For the management of the business, and for the
conduct of the affairs of the Corporation, and for the future definition,
limitation, and regulation of the powers of the Corporation and its directors
and shareholders, it is further provided:
Section 1. Size of Board. The members of the governing board of the
Corporation shall be styled directors. The number of directors of the
Corporation, their qualifications, terms of office, manner of election,
time and place of meeting, and powers and duties shall be such as are
prescribed by statute and in the by-laws of the Corporation. The name
and post office address of the directors constituting the first board
of directors, which shall be One (1) in number are:
NAME ADDRESS
Max C. Tanner 2950 East Flamingo Road Suite G
Las Vegas, NV 89121
Section 2. Powers of Board. In furtherance and not in limitation of the
powers conferred by the laws of the State of Nevada, the Board of
Directors is expressly authorized and empowered:
3
<PAGE> 4
(a) To make, alter, amend, and repeal the By-Laws subject to the
power of the shareholders to alter or repeal the By-Laws made
by the Board of Directors.
(b) Subject to the applicable provisions of the By-Laws then in
effect, to determine, from time to time, whether and to what
extent, and at what times and places, and under what
conditions and regulations, the accounts and books of the
Corporation, or any of them, shall be open to shareholder
inspection. No shareholder shall have any right to inspect any
of the accounts, books or documents of the Corporation, except
as permitted by law, unless and until authorized to do so by
resolution of the Board of Directors or of the Shareholders of
the Corporation;
(c) To issue stock of the Corporation for money, property,
services rendered, labor performed, cash advanced,
acquisitions for other corporations or for any other assets of
value in accordance with the action of the board of directors
without vote or consent of the shareholders and the judgment
of the board of directors as to value received and in return
therefore shall be conclusive and said stock, when issued,
shall be fully-paid and non-assessable.
(d) To authorize and issue, without shareholder consent,
obligations of the Corporation, secured and unsecured, under
such terms and conditions as the Board, in its sole
discretion, may determine, and to pledge or mortgage, as
security therefore, any real or personal property of the
Corporation, including after-acquired property;
(e) To determine whether any and, if so, what part, of the earned
surplus of the Corporation shall be paid in dividends to the
shareholders, and to direct and determine other use and
disposition of any such earned surplus;
(f) To fix, from time to time, the amount of the profits of the
Corporation to be reserved as working capital or for any other
lawful purpose;
(g) To establish bonus, profit-sharing, stock option, or other
types of incentive compensation plans for the employees,
including officers and directors, of the Corporation, and to
fix the amount of profits to be shared or distributed, and to
determine the persons to participate in any such plans and the
amount of their respective participations.
(h) To designate, by resolution or resolutions passed by a
4
<PAGE> 5
majority of the whole Board, one or more committees, each
consisting of two or more directors, which, to the extent
permitted by law and authorized by the resolution or the
By-Laws, shall have and may exercise the powers of the Board;
(i) To provide for the reasonable compensation of its own members
by By-Law, and to fix the terms and conditions upon which such
compensation will be paid;
(j) In addition to the powers and authority herein before, or by
statute, expressly conferred upon it, the Board of Directors
may exercise all such powers and do all such acts and things
as may be exercised or done by the corporation, subject,
nevertheless, to the provisions of the laws of the State of
Nevada, of these Articles of Incorporation, and of the By-Laws
of the Corporation.
Section 3. Interested Directors. No contract or transaction between
this Corporation and any of its directors, or between this Corporation
and any other corporation, firm, association, or other legal entity
shall be invalidated by reason of the fact that the director of the
Corporation has a direct or indirect interest, pecuniary or otherwise,
in such corporation, firm, association, or legal entity, or because the
interested director was present at the meeting of the Board of
Directors which acted upon or in reference to such contract or
transaction, or because he participated in such action, provided that:
(1) the interest of each such director shall have been disclosed to or
known by the Board and a disinterested majority of the Board shall have
nonetheless ratified and approved such contract or transaction (such
interested director or directors may be counted in determining whether
a quorum is present for the meeting at which such ratification or
approval is given); or (2) the conditions of N.R.S. 78.140 are met.
ARTICLE IX -- LIMITATION OF LIABILITY OF OFFICERS OR DIRECTORS: The personal
liability of a director or officer of the corporation to the corporation or the
Shareholders for damages for breach of fiduciary duty as a director or officer
shall be limited to acts or omissions which involve intentional misconduct,
fraud or a knowing violation of law.
ARTICLE X -- INDEMNIFICATION: Each director and each officer of the corporation
may be indemnified by the corporation as follows:
(a) The corporation may indemnify any person who was or is a
party, or is threatened to be made a party, to any threatened,
pending or completed action, suit or proceeding, whether
civil, criminal, administrative or
5
<PAGE> 6
investigative (other than an action by or in the right of the
corporation), by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is
or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement, actually and reasonably incurred
by him in connection with the action, suit or proceeding, if
he acted in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the
corporation and with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit or proceeding,
by judgment, order, settlement, conviction or upon a plea of
nolo contendere or its equivalent, does not of itself create a
presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed
to the best interests of the corporation, and that, with
respect to any criminal action or proceeding, he had
reasonable cause to believe that his conduct was unlawful.
(b) The corporation may indemnify any person who was or is a
party, or is threatened to be made a party, to any threatened,
pending or completed action or suit by or in the right of the
corporation, to procure a judgment in its favor by reason of
the fact that he is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request
of the corporation as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or
other enterprise against expenses including amounts paid in
settlement and attorneys' fees actually and reasonably
incurred by him in connection with the defense or settlement
of the action or suit, if he acted in good faith and in a
manner which he reasonably believed to be in or not opposed to
the best interests of the corporation. Indemnification may not
be made for any claim, issue or matter as to which such a
person has been adjudged by a court of competent jurisdiction,
after exhaustion of all appeals there from, to be liable to
the corporation or for amounts paid in settlement to the
corporation, unless and only to the extent that the court in
which the action or suit was brought or other court of
competent jurisdiction determines upon application that in
view of all the circumstances of the case the person is fairly
and reasonably entitled to indemnity for such expenses as the
court deems proper.
6
<PAGE> 7
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in
subsections (a) and (b) of this Article, or in defense of any
claim, issue or matter therein, he must be indemnified by the
corporation against expenses, including attorneys' fees,
actually and reasonably incurred by him in connection with the
defense.
(d) Any indemnification under subsections (a) and (b) unless
ordered by a court or advanced pursuant to subsection (e),
must be made by the corporation only as authorized in the
specific case upon a determination that indemnification of the
director, officer, employee or agent is proper in the
circumstances. The determination must be made:
(i) By the stockholders;
(ii) By the board of directors by majority vote of a
quorum consisting of directors who were not parties
to the act, suit or proceeding;
(iii) If a majority vote of a quorum consisting of
directors who were not parties to the act, suit or
proceeding so orders, by independent legal counsel in
a written opinion; or
(iv) If a quorum consisting of directors who were not
parties to the act, suit or proceeding cannot be
obtained by independent legal counsel in a written
opinion.
(e) Expenses of officers and directors incurred in defending a
civil or criminal action, suit or proceeding must be paid by
the corporation as they are incurred and in advance of the
final disposition of the action, suit or proceeding, upon
receipt of an undertaking by or on behalf of the director or
officer to repay the amount if it is ultimately determined by
a court of competent jurisdiction that he is not entitled to
be indemnified by the corporation. The provisions of this
subsection do not affect any rights to advancement of expenses
to which corporate personnel other than directors or officers
may be entitled under any contract or otherwise by law.
(f) The indemnification and advancement of expenses authorized in
or ordered by a court pursuant to this section:
(i) Does not exclude any other rights to which a person
seeking indemnification or advancement of
7
<PAGE> 8
expenses may be entitled under the certificate or articles of
incorporation or any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, for either an action in
his official capacity or an action in another capacity while
holding his office, except that indemnification, unless
ordered by a court pursuant to subsection (b) or for the
advancement of expenses made pursuant to subsection (e) may
not be made to or on behalf of any director or officer if a
final adjudication establishes that his acts or omissions
involved intentional misconduct, fraud or a knowing violation
of the law and was material to the cause of action.
(ii) Continues for a person who has ceased to be a
director, officer, employee or agent and inures to
the benefit of the heirs, executors and
administrators of such a person.
ARTICLE XI - PLACE OF MEETING; CORPORATE BOOKS: Subject to the laws of the State
of Nevada, the shareholders and the Directors shall have power to hold their
meetings, and the Directors shall have power to have an office or offices and to
maintain the books of the Corporation outside the State of Nevada, at such place
or places as may from time to time be designated in the By-Laws or by
appropriate resolution.
ARTICLE XII - AMENDMENT OF ARTICLES: The provisions of these Articles of
Incorporation may be amended, altered or repealed from time to time to the
extent and in the manner prescribed by the laws of the State of Nevada, and
additional provisions authorized by such laws as are then in force may be added.
All rights herein conferred on the directors, officers and shareholders are
granted subject to this reservation.
ARTICLE XIII - INCORPORATOR: The name and address of the sole incorporator
signing these Articles of Incorporation is as follows:
NAME POST OFFICE ADDRESS
1. Max C. Tanner 2950 East Flamingo Road, Suite G
Las Vegas, Nevada 89121
IN WITNESS WHEREOF, the undersigned incorporator has executed these
Articles of Incorporation this 19th day of August, 1996.
/S/ MAX C. TANNER
-------------------------------
Max C. Tanner
8
<PAGE> 9
ED #C17957-96
JUL 30 1999
FILED
IN THE OFFICE OF
/s/ DEAN HELLER
-------------------
DEAN HELLER, SECRETARY OF STATE
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
OF
BARGAIN BROKERS, INC.
Pursuant to NRS 78.385, 78.390, and 78.207 the undersigned President and
Secretary of Bargain Brokers, Inc. do hereby certify:
That the following Amendment to the Articles of Incorporation was
unanimously approved by the Sole Director of said Corporation by written consent
in lieu of a special meeting of the Sole Director dated July 27, 1999 and by a
majority of the outstanding shares entitled to vote.
Article 4 Section 1 is hereby amended to read as follows:
Section 1. Authorized Shares. The total number of shares which this
Corporation is authorized to issue is 55,000,000 shares of Capital Stock at
$.001 per value per share.
(a) The total number of shares of Common Stock which this Corporation is
authorized to issue is 50,000,000 shares at $.001 par value per
share.
(b) The total number of shares of Preferred Stock which this Corporation
is authorized to issue is 5,000,000 Shares at $.001 par value per
share, which Preferred Stock may contain special preferences as
determined by the Board of Directors of the Corporation, including
but not limited to, the bearing of interest and convertibility into
shares of Common Stock of the Corporation.
This Certificate of Amendment to the Articles of Incorporation may be
signed in two or more counterparts.
/s/ CHARLES POWELL
- ----------------------------------------
Charles Powell, President and Secretary
STATE OF NEVADA )
) ss.
COUNTY OF CLARK )
On the 27th day of July, 1999, personally appeared before me, a Notary Public,
Charles Powell, President and Secretary of Bargain Brokers, Inc. acknowledged
that he executed the above instrument.
[NOTARY SEAL] /s/ MAX C. TANNER
---------------------------
Notary Public
Page 3
<PAGE> 10
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
AUG 12 1999
NO: C17957-96
/s/ DEAN HELLER
- ---------------------
DEAN HELLER, SECRETARY OF STATE
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
BARGAIN BROKERS, INC.
DEAN HELLER, SECRETARY OF STATE
We, the undersigned President and Secretary of Bargain Brokers, Inc., a
Nevada corporation, do hereby certify:
That the Board of Directors of the Corporation has duly adopted
resolutions to amend the Articles of Incorporation of the Corporation as
follows:
1. Article 1 is hereby amended to read in full as follows:
"Article I - Name: The name of the Corporation is Global Network,
Inc."
That the foregoing amendment has been duly adopted and approved by the
written consent of the stockholders holding a majority of the Corporation's
outstanding stock entitled to vote thereon in accordance with the provisions of
Nevada Revised Statutes, Section 78.320.
/s/ JAMES C. MASON
--------------------------------------
James C. Mason, President
/s/ ARNOLD R. BEHRMAN
--------------------------------------
Arnold R. Behrman, Secretary
STATE OF NEW YORK )
:s.
COUNTY OF NEW YORK )
On August 11, 1999, personally appeared before me, a Notary Public,
James C. Mason, as President of Bargain Brokers, Inc., and Arnold R. Behrman, as
Secretary of Bargain Brokers, Inc., who acknowledged that they executed the
above instrument.
/s/ GLORIA A. RODRIGUEZ
-------------------------------------------
Notary Public
[NOTARY STAMP]
<PAGE> 1
EXHIBIT 3.2
BY-LAWS OF
GLOBAL NETWORK, INC.
ARTICLE I
SHAREHOLDERS
Section 1.01 Annual Meeting. The annual meeting of the shareholders
shall be held at such date and time as shall be designated by the board of
directors and stated in the notice of the meeting or in a duly-executed waiver
of notice thereof. If the corporation shall fail to provide notice of the annual
meeting of the shareholders as set forth above, the annual meeting of the
shareholders of the corporation shall be held during the month of November or
December of each year as determined by the Board of Directors, for the purpose
of electing directors of the corporation to serve during the ensuing year and
for the transaction of such other business as may properly come before the
meeting. If the election of the directors is not held on the day designated
herein for any annual meeting of the shareholders, or at any adjournment
thereof, the president shall cause the election to be held at a special meeting
of the shareholders as soon thereafter as is convenient.
Section 1.02 Special Meetings. Special meetings of the shareholders may
be called by the president or the Board of Directors and shall be called by the
president at the written request of the holders of not less than 51% of the
issued and outstanding shares of capital stock of the corporation.
All business lawfully to be transacted by the shareholders may be
transacted at any special meeting at any adjournment thereof. However, no
business shall be acted upon at a special meeting, except that referred to in
the notice calling the meeting, unless all of the outstanding capital stock of
the corporation is represented either in person or by proxy. Where all of the
capital stock is represented, any lawful business may be transacted and the
meeting shall be valid for all purposes.
<PAGE> 2
Section 1.03 Place of Meetings. Any meeting of the shareholders of the
corporation may be held at its principal office in the State of Nevada or such
other place in or out of the United States as the Board of Directors may
designate. A waiver of notice signed by the shareholders entitled to vote may
designate any place for the holding of such meeting.
Section 1.04 Notice of Meetings.
(a) The secretary shall sign and deliver to all shareholders
of record written or printed notice of any meeting at least ten (10)
days, but not more than sixty (60) days, before the date of such
meeting; which notice shall state the place, date and time of the
meeting, the general nature of the business to be transacted, and, in
the case of any meeting at which directors are to be elected, the names
of nominees, if any, to be presented for election.
(b) In the case of any meeting, any proper business may be
presented for action, except that the following items shall be valid
only if the general nature of the proposal is stated in the notice or
written waiver of notice:
(1) Action with respect to any contract or
transaction between the corporation and one or more of its
directors or another firm, association, or corporation in
which one or more of its directors has a material financial
interest;
(2) Adoption of amendments to the Articles of
Incorporation; or
(3) Action with respect to the merger, consolidation,
reorganization, partial or complete liquidation, or
dissolution of the corporation.
(c) The notice shall be personally delivered or mailed by
first class mail to each shareholder of record at the last known
address thereof, as the same appears on the books of the corporation,
and the giving of such notice shall be deemed delivered the date the
same is deposited in the United States mail, postage prepaid. If the
address of any shareholder does not appear upon the books of the
corporation, it will be sufficient to address any notice to such
shareholder at the
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<PAGE> 3
principal office of the corporation.
(d) The written certificate of the person calling any meeting,
duly sworn, setting forth the substance of the notice, the time and
place the notice was mailed or personally delivered to the several
shareholders, and the addresses to which the notice was mailed shall be
prima facie evidence of the manner and fact of giving such notice.
Section 1.05 Waiver of Notice. If all of the shareholders of the
corporation shall waive notice of a meeting, no notice shall be required, and,
whenever all of the shareholders shall meet in person or by proxy, such meeting
shall be valid for all purposes without call or notice, and at such meeting any
corporate action may be taken.
Section 1.06 Determination of Shareholders of Record.
(a) The Board of Directors may at any time fix a future date
as a record date for the determination of the shareholders entitled to
notice of any meeting or to vote or entitled to receive payment of any
dividend or other distribution or allotment of any rights or entitled
to exercise any rights in respect of any other lawful action. The
record date so fixed shall not be more than sixty (60) days prior to
the date of such meeting nor more than sixty (60) days prior to any
other action. When a record date is so fixed, only shareholders of
record on that date are entitled to notice of and to vote at the
meeting or to receive the dividend, distribution or allotment of
rights, or to exercise their rights, as the case may be,
notwithstanding any transfer of any shares on the books of the
corporation after the record date.
(b) If no record date is fixed by the Board of Directors, then
(1) the record date for determining shareholders entitled to notice of
or to vote at a meeting of shareholders shall be at the close of
business on the business day next preceding the day on which notice is
given or, if notice is waived, at the close of business on the day next
preceding the day on which the meeting is held; (2) the record
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date for determining shareholders entitled to give consent to corporate action
in writing without a meeting, when no prior action by the Board of Directors is
necessary, shall be the day on which written consent is given; and (3) the
record date for determining shareholders for any other purpose shall be at the
close of business on the day on which the Board of Directors adopts the
resolution relating thereto, or the sixtieth (60th) day prior to the date of
such other action, whichever is later.
Section 1.07 Quorum: Adjourned Meetings.
(a) At any meeting of the shareholders, a majority of the issued and
outstanding shares of the corporation represented in person or by proxy, shall
constitute a quorum.
(b) If less than a majority of the issued and outstanding shares are
represented, a majority of shares so represented may adjourn from time to time
at the meeting, until holders of the amount of stock required to constitute a
quorum shall be in attendance. At any such adjourned meeting at which a quorum
shall be present, any business may be transacted which might have been
transacted as originally called. When a shareholders' meeting is adjourned to
another time or place, notice need not be given of the adjourned meeting if the
time and place thereof are announced at the meeting at which the adjournment is
taken, unless the adjournment is for more than ten (10) days in which event
notice thereof shall be given.
Section 1.08 Voting
(a) Each shareholder of record, such shareholder's duly authorized
proxy or attorney-in-fact shall be entitled to one (1) vote for each share of
stock standing registered in such shareholder's name on the books of the
corporation on the record date.
(b) Except as otherwise provided herein, all votes with respect to
shares standing in the name of an individual on the record date (included
pledged shares) shall be cast only by
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that individual or such individual's duly authorized proxy or attorney-in-fact.
With respect to shares held by a representative of the estate of a deceased
shareholder, guardian, conservator, custodian or trustee, votes may be cast by
such holder upon proof of capacity, even though the shares do not stand in the
name of such holder. In the case of shares under the control of a receiver, the
receiver may cast votes carried by such shares even though the shares do not
stand in the name of the receiver provided that the order of the court of
competent jurisdiction which appoints the receiver contains the authority to
cast votes carried by such shares. If shares stand in the name of a minor, votes
may be cast only by the duly-appointed guardian of the estate of such minor if
such guardian has provided the corporation with written notice and proof of such
appointment.
(c) With respect to shares standing in the name of a corporation on the
record date, votes may be cast by such officer or agents as the by-laws of such
corporation prescribe or, in the absence of an applicable by-law provision, by
such person as may be appointed by resolution of the Board of Directors of such
corporation. In the event no person is so appointed, such votes of the
corporation may be cast by any person (including the officer making the
authorization) authorized to do so by the Chairman of the Board of Directors,
President or any Vice President of such corporation.
(d) Notwithstanding anything to the contrary herein contained, no votes
may be cast by shares owned by this corporation or its subsidiaries, if any. If
shares are held by this corporation or its subsidiaries, if any, in a fiduciary
capacity, no votes shall be cast with respect thereto on any matter except to
the extent that the beneficial owner thereof possesses and exercises either a
right to vote or to give the corporation holding the same binding instructions
on how to vote.
(e) With respect to shares standing in the name of two or more persons,
whether fiduciaries, members of a partnership, joint tenants, tenants in common,
husband and wife as community property, tenants by the entirety, voting
trustees, persons entitled to vote under a shareholder voting agreement or
otherwise and shares held by two or more persons
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(including proxy holders) having the same fiduciary relationship respect in the
same shares, votes may be cast in the following manner:
(1) If only one such person votes, the votes of such person
binds all.
(2) If more than one person casts votes, the act of the
majority so voting binds all.
(3) If more than one person casts votes, but the vote is
evenly split on a particular matter, the votes shall be deemed cast
proportionately as split.
(f) Any holder of shares entitled to vote on any matter may cast a
portion of the votes in favor of such matter and refrain from casting the
remaining votes or cast the same against the proposal, except in the case of
elections of directors. If such holder entitled to vote fails to specify the
number of affirmative votes, it will be conclusively presumed that the holder is
casting affirmative votes with respect to all shares held.
(g) If a quorum is present, the affirmative vote of holders of a
majority of the shares represented at the meeting and entitled to vote on any
matter shall be the act of the shareholders, unless a vote of greater number or
voting by classes is required by the laws of the State of Nevada, the Articles
of Incorporation and these By-Laws.
Section 1.09 Proxies. At any meeting of shareholders, any holder of
shares entitled to vote may authorize another person or persons to vote by proxy
with respect to the shares held by an instrument in writing and subscribed to by
the holder of such shares entitled to vote. No proxy shall be valid after the
expiration of six (6) months from the date of execution thereof, unless coupled
with an interest or unless otherwise specified in the proxy. In no event shall
the term of a proxy exceed seven (7) years from the date of its execution. Every
proxy shall continue in full force and effect until its expiration or
revocation. Revocation may be effected by filing an instrument revoking the same
or a duly-executed proxy bearing a later date with the
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secretary of the corporation.
Section 1.10 Order of Business. At the annual shareholders meeting, the
regular order of business shall be as follows:
(1) Determination of shareholders present and existence of
quorum;
(2) Reading and approval of the minutes of the previous
meeting or meetings;
(3) Reports of the Board of Directors, the president,
treasurer and secretary of the corporation, in the order named;
(4) Reports of committee;
(5) Election of directors;
(6) Unfinished business;
(7) New business;
(8) Adjournment.
Section 1.11 Absentees Consent to Meetings. Transactions of any meeting
of the shareholders are as valid as though had at a meeting duly-held after
regular call and notice if a quorum is present, either in person or by proxy,
and if, either before or after the meeting, each of the persons entitled to
vote, not present in person or by proxy (and those who, although present, either
object at the beginning of the meeting to the transaction of any business
because the meeting has not been lawfully called or convened or expressly object
at the meeting to the consideration of matters not included in the notice which
are legally required to be included therein), signs a written waiver of notice
and/or consent to the holding of the meeting or an approval of the minutes
thereof. All such waivers, consents, and approvals shall be filed with the
corporate records and made a part of the minutes of the meeting. Attendance of a
person at a meeting shall constitute a waiver of notice of such meeting, except
when the person objects at
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the beginning of the meeting to the transaction of any business because the
meeting is not lawfully called or convened and except that attendance at a
meeting is not a waiver of any right to object to the consideration of matters
not included in the notice if such objection is expressly made at the beginning.
Neither the business to be transacted at nor the purpose of any regular or
special meeting of shareholders need be specified in any written waiver of
notice, except as otherwise provided in Section 1.04(b) of these By-Laws.
Section 1.12 Action Without Meeting. Any action which may be taken by
the vote of the shareholders at a meeting may be taken without a meeting if
consented to by the holders of a majority of the shares entitled to vote or such
greater proportion as may be required by the laws of the State of Nevada, the
Articles of Incorporation, or these ByLaws. Whenever action is taken by written
consent, a meeting of shareholders needs not be called or noticed.
ARTICLE II
DIRECTORS
Section 2.01 Number, Tenure and Qualification. Except as otherwise
provided herein, the Board of Directors of the corporation shall consist of at
least one (1) but no more than nine (9) persons, who shall be elected at the
annual meeting of the shareholders of the corporation and who shall hold office
for one (1) year or until their successors are elected and qualify.
Section 2.02 Resignation. Any director may resign effective upon giving
written notice to the chairman of the Board of Directors, the president, or the
secretary of the corporation, unless the notice specifies a later time for
effectiveness of such resignation. If the Board of Directors accepts the
resignation of a director tendered to take effect at a future date, the Board or
the shareholders may elect a successor to take office when the resignation
becomes effective.
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Section 2.03 Reduction in Number. No reduction of the number of
directors shall have the effect of removing any director prior to the expiration
of his term of office.
Section 2.04 Removal.
(a) The Board of Directors or the shareholders of the
corporation, by a majority vote, may declare vacant the office of a
director who has been declared incompetent by an order of a court of
competent jurisdiction or convicted of a felony.
Section 2.05 Vacancies.
(a) A vacancy in the Board of Directors because of death,
resignation, removal, change in number of directors, or otherwise may
be filled by the shareholders at any regular or special meeting or any
adjourned meeting thereof or the remaining directors by the affirmative
vote of a majority thereof. A Board of Directors consisting of less
than the maximum number authorized in Section 2.01 of ARTICLE II
constitutes vacancies on the Board of Directors for purposes of this
paragraph and may be filled as set forth above including by the
election of a majority of the remaining directors. Each successor so
elected shall hold office until the next annual meeting of shareholders
or until a successor shall have been duly-elected and qualified.
(b) If, after the filling of any vacancy by the directors, the
directors then in office who have been elected by the shareholders
shall constitute less than a majority of the directors then in office,
any holder or holders of an aggregate of five percent (5%) or more of
the total number of shares entitled to vote may call a special meeting
of shareholders to be held to elect the entire Board of Directors. The
term of office of any director shall terminate upon such election of a
successor.
Section 2.06 Regular Meetings. Immediately following the adjournment
of, and at the same place as, the annual meeting of the shareholders, the Board
of Directors, including directors newly
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elected, shall hold its annual meeting without notice, other than this
provision, to elect officers of the corporation and to transact such further
business as may be necessary or appropriate. The Board of Directors may provide
by resolution the place, date and hour for holding additional regular meetings.
Section 2.07 Special Meetings. Special meetings of the Board of
Directors may be called by the chairman and shall be called by the chairman upon
the request of any two (2) directors or the president of the corporation.
Section 2.08 Place of Meetings. Any meeting of the directors of the
corporation may be held at its principal office in the State of Nevada, or at
such other place in or out of the United States as the Board of Directors may
designate. A waiver or notice signed by the directors may designate any place
for the holding of such meeting.
Section 2. 09 Notice of Meetings. Except as otherwise provided in
Section 2.06, the chairman shall deliver to all directors written or printed
notice of any special meeting, at least three (3) days before the date of such
meeting, by delivery of such notice personally or mailing such notice first
class mail, or by telegram. If mailed, the notice shall be deemed delivered two
(2) business days following the date the same is deposited in the United States
mail, postage prepaid. Any director may waive notice of any meeting, and the
attendance of a director at a meeting shall constitute a waiver of notice of
such meeting, unless such attendance is for the express purpose of objecting to
the transaction of business threat because the meeting is not properly called or
convened.
Section 2.10 Quorum: Adjourned Meetings.
(a) A majority of the Board of Directors in office shall
constitute a quorum.
(b) At any meeting of the Board of Directors where a quorum is
not present, a majority of those present may
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adjourn, from time to time, until a quorum is present, and no notice of
such adjournment shall be required. At any adjourned meeting where a
quorum is present, any business may be transacted which could have been
transacted at the meeting originally called.
Section 2.11 Action Without Meeting. Any action required or permitted
to be taken at any meeting of the Board of Directors or any committee thereof
may be taken without a meeting if a written consent thereto is signed by all of
the members of the Board of Directors or of such committee. Such written consent
or consents shall be filed with the minutes of the proceedings of the Board of
Directors or committee. Such action by written consent shall have the same force
and effect as the unanimous vote of the Board of Directors or committee.
Section 2.12 Telephonic Meetings. Meetings of the Board of Directors
may be held through the use of a conference telephone or similar communications
equipment so long as all members participating in such meeting can hear one
another at the time of such meeting. Participation in such a meeting constitutes
presence in person at such meeting.
Section 2.13 Board Decisions. The affirmative vote of a majority of the
directors present at a meeting at which a quorum is present shall be the act of
the Board of Directors.
Section 2.14 Powers and Duties.
(a) Except as otherwise provided in the Articles of
Incorporation or the laws of the State of Nevada, the Board of
Directors is invested with the complete and unrestrained authority to
manage the affairs of the corporation, and is authorized to exercise
for such purpose as the general agent of the corporation, its entire
corporate authority in such manner as it sees fit. The Board of
Directors may delegate any of its authority to manage, control or
conduct the current business of the corporation to any standing or
special committee or to any officer or agent and to appoint any persons
to be agents of the corporation with such powers, including the power
to sub-delegate, and upon such terms as
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may be deemed fit.
(b) The Board of Directors shall present to the shareholders
at annual meetings of the shareholders, and when called for by a
majority vote of the shareholders at a special meeting of the
shareholders, a full and clear statement of the condition of the
corporation, and shall, at request, furnish each of the shareholders
with a true copy thereof.
(c) The Board of Directors, in its discretion, may submit any
contract or act for approval or ratification at any annual meeting of
the shareholders or any special meeting properly called for the purpose
of considering any such contract or act, provided a quorum is present.
The contract or act shall be valid and binding upon the corporation and
upon all the shareholders thereof, if approved and ratified by the
affirmative vote of a majority of the shareholders at such meeting.
(d) In furtherance and not in limitation of the powers
conferred by the laws of the State of Nevada, the Board of Directors is
expressly authorized and empowered to issue stock of the Corporation
for money, property, services rendered, labor performed, cash advanced,
acquisitions for other corporations or for any other assets of value in
accordance with the action of the Board of Directors without vote or
consent of the shareholders and the judgment of the Board of Directors
as to the value received and in return therefore shall be conclusive
and said stock, when issued, shall be fully-paid and non-assessable.
Section 2.15 Compensation. The directors shall be allowed and paid all
necessary expenses incurred in attending any meetings of the Board.
Section 2.16 Board Officers.
(a) At its annual meeting, the Board of Directors shall elect, from
among its members, a chairman to preside at the meetings of the Board of
Directors. The Board of Directors may also elect such other board officers and
for such term as
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it may, from time to time, determine advisable.
(b) Any vacancy in any board office because of death,
resignation, removal or otherwise may be filled by the Board of
Directors for the unexpired portion of the term of such office.
Section 2.17 Order of Business. The order of business at any meeting of
the Board of Directors shall be as follows:
(1) Determination of members present and existence of quorum;
(2) Reading and approval of the minutes of any previous
meeting or meetings;
(3) Reports of officers and committeemen;
(4) Election of officers;
(5) Unfinished business;
(6) New business;
(7) Adjournment.
ARTICLE III
OFFICERS
Section 3.01 Election. The Board of Directors, at its first meeting
following the annual meeting of shareholders, shall elect a president, a
secretary and a treasurer to hold office for one (1) year next coming and until
their successors are elected and qualify. Any person may hold two or more
offices. The Board of Directors may, from time to time, by resolution, appoint
one or more vice presidents, assistant secretaries, assistant treasurers and
transfer agents of the corporation as it may deem advisable; prescribe their
duties; and fix their compensation.
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Section 3.02 Removal; Resignation. Any officer or agent elected or
appointed by the Board of Directors may be removed by it whenever, in its
judgment, the best interest of the corporation would be served thereby. Any
officer may resign at any time upon written notice to the corporation without
prejudice to the rights, if any, of the corporation under any contract to which
the resigning officer is a party.
Section 3.03 Vacancies. Any vacancy in any office because of death,
resignation, removal, or otherwise may be filled by the Board of Directors for
the unexpired portion of the term of such office.
Section 3.04 President. The president shall be the general manager and
executive officer of the corporation, subject to the supervision and control of
the Board of Directors, and shall direct the corporate affairs, with full power
to execute all resolutions and orders of the Board of Directors not especially
entrusted to some other officer of the corporation. The president shall preside
at all meetings of the shareholders and shall sign the certificates of stock
issued by the corporation, and shall perform such other duties as shall be
prescribed by the Board of Directors.
Unless otherwise ordered by the Board of Directors, the president shall
have full power and authority on behalf of the corporation to attend and to act
and to vote at any meetings of the shareholders of any corporation in which the
corporation may hold stock and, at any such meetings, shall possess and may
exercise any and all rights and powers incident to the ownership of such stock.
The Board of Directors, by resolution from time to time, may confer like powers
on any person or persons in place of the president to represent the corporation
for these purposes.
Section 3.05 vice President. The Board of Directors may elect one or
more vice presidents who shall be vested with all the powers and perform all the
duties of the president whenever the president is absent or unable to act,
including the signing of the certificates of stock issued by the corporation,
and the vice president shall perform such other duties as shall be prescribed by
the Board of Directors.
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Section 3.06 Secretary. The secretary shall keep the minutes of all
meetings of the shareholders and the Board of Directors in books provided for
that purpose. The secretary shall attend to the giving and service of all
notices of the corporation, may sign with the president in the name of the
corporation all contracts authorized by the Board of Directors or appropriate
committee, shall have the custody of the corporate seal, shall affix the
corporate seal to all certificates of stock duly issued by the corporation,
shall have charge of stock certificate books, transfer books and stock ledgers,
and such other books and papers as the Board of Directors or appropriate
committee may direct, and shall, in general perform all duties incident to the
office of the secretary. All corporate books kept by the secretary shall be open
for examination by any director at any reasonable time.
Section 3.07 Assistant Secretary. The Board of Directors may appoint an
assistant secretary who shall have such powers and perform such duties as may be
prescribed for him by the secretary of the corporation or by the Board of
Directors.
Section 3.08 Treasurer. The treasurer shall be the chief financial
officer of the corporation, subject to the supervision and control of the Board
of Directors, and shall have custody of all the funds and securities of the
corporation. When necessary or proper, the treasurer shall endorse on behalf of
the corporation for collection checks, notes and other obligations, and shall
deposit all monies to the credit of the corporation in such bank or banks or
other depository as the Board of Directors may designate, and shall sign all
receipts and vouchers for payments made by the corporation. Unless otherwise
specified by the Board of Directors, the treasurer shall sign with the president
all bills of exchange and promissory notes of the corporation, shall also have
the care and custody of the stocks, bonds, certificates, vouchers, evidence of
debts, securities and such other property belonging to the corporation as the
Board of Directors shall designate, and shall sign all papers required by law,
by these By-laws or by the Board of Directors to be signed by the treasurer. The
treasurer shall enter regularly in the books of the corporation, to be kept for
that purpose, full and accurate accounts of all monies received and paid on
account of the corporation and whenever required by the
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Board of Directors, the treasurer shall render a statement of any or all
accounts. The treasurer shall at all reasonable times exhibit the books of
account to any directors of the corporation and shall perform all acts incident
to the position of treasurer subject to the control of the Board of Directors.
The treasurer shall, if required by the Board of Directors, give a bond to the
corporation in such sum and with such security as shall be approved by the Board
of Directors for the faithful performance of all the duties of the treasurer and
for restoration to the corporation in the event of the treasurer's death,
resignation, retirement, or removal from office, of all books, records, papers,
vouchers, money and other property belonging to the corporation. The expense of
such bond shall be borne by the corporation.
Section 3.09 Assistant Treasurer. The Board of Directors may appoint an
assistant treasurer who shall have such powers and perform such duties as may be
prescribed by the treasurer of the corporation or by the Board of Directors, and
the Board of Directors may require the assistant treasurer to give a bond to the
corporation in such sum and with such security as it may approve, for the
faithful performance of the duties of assistant treasurer, and for the
restoration to the corporation, in the event of the assistant treasurer's death,
resignation, retirement or removal from office, of all books, records, papers,
vouchers, money and other property belonging to the corporation. The expense of
such bond shall be borne by the corporation.
ARTICLE IV
CAPITAL STOCK
Section 4.01 Issuance. Shares of capital stock of the corporation
shall be issued in such manner and at such times and upon such conditions as
shall be prescribed by the Board of Directors.
Section 4.02 Certificates. Ownership in the corporation shall be
evidenced by certificates for shares of stock in such form as shall be
prescribed by the Board of Directors, shall be under the seal of the corporation
and shall be signed by the president or
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the vice president and also by the secretary or an assistant secretary. Each
certificate shall contain the name of the record holder, the number,
designation, if any, class or series of shares represented, a statement of
summary of any applicable rights, preferences, privileges, or restrictions
thereon, and a statement that the shares are assessable, if applicable. All
certificates shall be consecutively numbered. The name and address of the
shareholder, the number of shares, and the date of issue shall be entered on the
stock transfer books of the corporation.
Section 4.03 Surrender: Lost or Destroyed Certificates. All
certificates surrendered to the corporation, except those representing shares of
treasury stock, shall be canceled and no new certificates shall be issued until
the former certificate for a like number of shares shall have been canceled,
except that in case of a lost, stolen, destroyed or mutilated certificate, a new
one may be issued therefor. However, any shareholder applying for the issuance
of a stock certificate in lieu of one alleged to have been lost, stolen,
destroyed or mutilated shall, prior to the issuance of a replacement, provide
the corporation with his, her or its affidavit of the facts surrounding the
loss, theft, destruction or mutilation and an indemnity bond in an amount and
upon such terms as the treasurer, or the Board of Directors, shall require. In
no case shall the bond be in amount less than twice the current market value of
the stock and it shall indemnify the corporation against any loss, damage, cost
or inconvenience arising as a consequence of the issuance of a replacement
certificate.
Section 4.04 Replacement Certificate. When the Articles of
Incorporation are amended in any way affecting the statements contained in the
certificates for outstanding shares of capital stock of the corporation or it
becomes desirable for any reason, including, without limitation, the merger or
consolidation of the corporation with another corporation or the reorganization
of the corporation, to cancel any outstanding certificate for shares and issue a
new certificate therefor conforming to the rights of the holder, the Board of
Directors may order any holders of outstanding certificates for shares to
surrender and exchange the same for new certificates within a reasonable time to
be fixed by the Board of Directors. The order may provide that a holder of any
certificate(s) ordered to be surrendered shall not be entitled to
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vote, receive dividends or exercise any other rights of shareholders until the
holder has complied with the order provided that such order operates to suspend
such rights only after notice and until compliance.
Section 4.05 Transfer of Shares. No transfer of stock shall be valid as
against the corporation except on surrender and cancellation by the certificate
therefor, accompanied by an assignment or transfer by the registered owner made
either in person or under assignment. Whenever any transfer shall be expressly
made for collateral security and not absolutely, the collateral nature of the
transfer shall be reflected in the entry of transfer on the books of the
corporation.
Section 4.06 Transfer Agent. The Board of Directors may appoint one or
more transfer agents and registrars of transfer and may require all certificates
for shares of stock to bear the signature of such transfer agent and such
registrar of transfer.
Section 4.07 Stock Transfer Books. The stock transfer books shall be
closed for a period of ten (10) days prior to all meetings of the shareholders
and shall be closed for the payment of dividends as provided in Article V hereof
and during such periods as, from time to time, may be fixed by the Board of
Directors, and, during such periods, no stock shall be transferable.
Section 4.08 Miscellaneous. The Board of Directors shall have the power
and authority to make such rules and regulations not inconsistent herewith as it
may deem expedient concerning the issue, transfer and registration of
certificates for shares of the capital stock of the corporation.
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ARTICLE V
DIVIDENDS
Section 5.01 Dividends may be declared, subject to the provisions of
the laws of the State of Nevada and the Articles of Incorporation, by the Board
of Directors at any regular or special meeting and may be paid in cash,
property, shares of corporate stock, or any other medium. The Board of Directors
may fix in advance a record date, as provided in Section 1.06 of these By-laws,
prior to the dividend payment for the purpose of determining shareholders
entitled to receive payment of any dividend. The Board of Directors may close
the stock transfer books for such purpose for a period of not more than ten (10)
days prior to the payment date of such dividend.
ARTICLE VI
OFFICES; RECORDS; REPORTS; SEAL AND FINANCIAL MATTERS
Section 6.01 Principal Office. The principal office of the corporation
in the State of Nevada shall be the Law Offices of Max C. Tanner, 2950 East
Flamingo Road, Suite G, Las Vegas, Nevada 89121, and the corporation may have an
office in any other state or territory as the Board of Directors may designate.
Section 6.02 Records. The stock transfer books and a certified copy of
the By-laws, Articles of Incorporation, any amendments thereto, and the minutes
of the proceedings of the shareholders, the Board of Directors, and committees
of the Board of Directors shall be kept at the principal office of the
corporation for the inspection of all who have the right to see the same and for
the transfer of stock. All other books of the corporation shall be kept at such
places as may be prescribed by the Board of Directors.
Section 6.03 Financial Report on Request. Any shareholder or
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shareholders holding at least five percent (5%) of the outstanding shares of any
class of stock may make a written request for an income statement of the
corporation for the three (3) month, six (6) month, or nine (9) month period of
the current fiscal year ended more than thirty (30) days prior to the date of
the request and a balance sheet of the corporation as of the end of such period.
In addition, if no annual report for the last fiscal year has been sent to
shareholders, such shareholder or shareholders may make a request for a balance
sheet as of the end of such fiscal year and an income statement and statement of
changes in financial position for such fiscal year. The statement shall be
delivered or mailed to the person making the request within thirty (30) days
thereafter. A copy of the statements shall be kept on file in the principal
office of the corporation for twelve (12) months, and such copies shall be
exhibited at all reasonable times to any shareholder demanding an examination of
them or a copy shall be mailed to each shareholder. Upon request by any
shareholder, there shall be mailed to the shareholder a copy of the last annual,
semiannual or quarterly income statement which it has prepared and a balance
sheet as of the end of the period. The financial statements referred to in this
Section 6.03 shall be accompanied by the report thereon, if any, of any
independent accountants engaged by the corporation or the certificate of an
authorized officer of the corporation that such financial statements were
prepared without audit from the books and records of the corporation.
Section 6.04 Right of Inspection.
(a) The accounting books and records and minutes of
proceedings of the shareholders and the Board of Directors and
committees of the Board of Directors shall be open to inspection upon
the written demand of any shareholder or holder of a voting trust
certificate at any reasonable time during usual business hours for a
purpose reasonably related to such holder's interest as a shareholder
or as the holder of such voting trust certificate. This right of
inspection shall extend to the records of the subsidiaries, if any, of
the corporation. Such inspection may be made in person or by agent or
attorney, and the right of inspection includes the right to copy and
make extracts.
(b) Every director shall have the absolute right at any
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reasonable time to inspect and copy all books, records and documents of
every kind and to inspect the physical properties of the corporation
and/or its subsidiary corporations. Such inspection may be made in
person or by agent or attorney, and the right of inspection includes
the right to copy and make extracts.
Section 6.05 Corporate Seal. The Board of Directors may, by resolution,
authorize a seal, and the seal may be used by causing it, or a facsimile, to be
impressed or affixed or reproduced or otherwise. Except when otherwise
specifically provided herein, any officer of the corporation shall have the
authority to affix the seal to any document requiring it.
Section 6.06 Fiscal Year. The fiscal year-end of the corporation shall
be the calendar year or such other term as may be fixed by resolution of the
Board of Directors.
Section 6.07 Reserves. The Board of Directors may create, by
resolution, out of the earned surplus of the corporation such reserves as the
directors may, from time to time, in their discretion, think proper to provide
for contingencies, or to equalize dividends or to repair or maintain any
property of the corporation, or for such other purpose as the Board of Directors
may deem beneficial to the corporation, and the directors may modify or abolish
any such reserves in the manner in which they were created.
ARTICLE VII
INDEMNIFICATION
Section 7.01 Indemnification. The corporation shall, unless prohibited
by Nevada Law, indemnify any person (an "Indemnitee") who is or was involved in
any manner (including, without limitation, as a party or a witness) or is
threatened to be so involved in any threatened, pending or completed action suit
or
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proceeding, whether civil, criminal, administrative, arbitrative or
investigative, including without limitation, any action, suit or proceeding
brought by or in the right of the corporation to procure a judgment in its favor
(collectively, a "Proceeding") by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan or
other entity or enterprise, against all Expenses and Liabilities actually and
reasonably incurred by him in connection with such Proceeding. The right to
indemnification conferred in this Article shall be presumed to have been relied
upon by the directors, officers, employees and agents of the corporation and
shall be enforceable as a contract right and inure to the benefit of heirs,
executors and administrators of such individuals.
Section 7.02 Indemnification Contracts. The Board of Directors is
authorized on behalf of the corporation, to enter into, deliver and perform
agreements or other arrangements to provide any Indemnitee with specific rights
of indemnification in addition to the rights provided hereunder to the fullest
extent permitted by Nevada Law. Such agreements or arrangements may provide (i)
that the Expenses of officers and directors incurred in defending a civil or
criminal action, suit or proceeding, must be paid by the corporation as they are
incurred and in advance of the final disposition of any such action, suit or
proceeding provided that, if required by Nevada Law at the time of such advance,
the officer or director provides an undertaking to repay such amounts if it is
ultimately determined by a court of competent jurisdiction that such individual
is not entitled to be indemnified against such expenses, (iii) that the
Indemnitee shall be presumed to be entitled to indemnification under this
Article or such agreement or arrangement and the corporation shall have the
burden of proof to overcome that presumption, (iii) for procedures to be
followed by the corporation and the Indemnitee in making any determination of
entitlement to indemnification or for appeals therefrom and (iv) for insurance
or such other Financial Arrangements described in Paragraph 7.02 of this
Article, all as may be deemed appropriate by the Board of Directors at the time
of execution of such agreement or arrangement.
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Section 7.03 Insurance and Financial Arrangements. The corporation may,
unless prohibited by Nevada Law, purchase and maintain insurance or make other
financial arrangements ("Financial Arrangements") on behalf of any Indemnitee
for any liability asserted against him and liability and expenses incurred by
him in his capacity as a director, officer, employee or agent, or arising out of
his status as such, whether or not the corporation has the authority to
indemnify him against such liability and expenses. Such other Financial
Arrangements may include (i) the creation of a trust fund, (ii) the
establishment of a program of self-insurance, (iii) the securing of the
corporation's obligation of indemnification by granting a security interest or
other lien on any assets of the corporation, or (iv) the establishment of a
letter of credit, guaranty or surety.
Section 7.04 Definitions. For purposes of this Article:
Expenses. The word "Expenses" shall be broadly construed and,
without limitation, means (i) all direct and indirect costs incurred,
paid or accrued, (ii) all attorneys, fees, retainers, court costs,
transcripts, fees of experts, witness fees, travel expenses, food and
lodging expenses while traveling, duplicating costs, printing and
binding costs, telephone charges, postage, delivery service, freight or
other transportation fees and expenses, (iii) all other disbursements
and out-of-pocket expenses, (iv) amounts paid in settlement, to the
extent permitted by Nevada Law, and (v) reasonable compensation for
time spent by the Indemnitee for which he is otherwise not compensated
by the corporation or any third party, actually and reasonably incurred
in connection with either the appearance at or investigation, defense,
settlement or appeal of a Proceeding or establishing or enforcing a
right to indemnification under any agreement or arrangement, this
Article, the Nevada Law or otherwise; provided, however, that
"Expenses" shall not include any judgments or fines or excise taxes or
penalties imposed under the Employee Retirement Income Security Act of
1974, as amended ("ERISA") or other excise taxes or penalties.
Liabilities. "Liabilities" means liabilities of any type
whatsoever, including, but not limited to, judgments or fines, ERISA or
other excise taxes and penalties, and
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amounts paid in settlement.
Nevada Law. "Nevada Law" means Chapter 78 of the Nevada
Revised Statutes as amended and in effect from time to time or any
successor or other statutes of Nevada having similar import and effect.
This Article. "This Article" means Paragraphs 7.01 through
7.04 of these bylaws or any portion of them.
Power of Stockholders. Paragraphs 7.01 through 7.04, including
this Paragraph, of these Bylaws may be amended by the stockholders only
by vote of the holders of sixty-six and two-thirds percent (66 2/3%) of
the entire number of shares of each class, voting separately, of the
outstanding capital stock of the corporation (even though the right of
any class to vote is otherwise restricted or denied); provided,
however, no amendment or repeal of this Article shall adversely affect
any right of any Indemnitee existing at the time such amendment or
repeal becomes effective.
Power of Directors. Paragraphs 7.01 through 7.04 and this
Paragraph of these Bylaws may be amended or repealed by the Board of
Directors only by vote of eighty percent (80%) of the total number of
Directors and the holders of sixty-six and two-thirds percent (66 2/3)
of the entire number of shares of each class, voting separately, of the
outstanding capital stock of the corporation (even though the right of
any class to vote is otherwise restricted or denied); provided,
however, no amendment or repeal of this Article shall adversely affect
any right of any Indemnitee existing at the time such amendment or
repeal becomes effective.
ARTICLE VIII
BY-LAWS
Section 8.01 Amendment. Amendments and changes of these By-Laws may be
made at any regular or special meeting of the Board of Directors by a vote of
not less than all of the entire Board, or
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may be made by a vote of, or a consent in writing signed by the holders of a
majority of the issued and outstanding capital stock.
Section 8.02 Additional By-Laws. Additional by-laws not inconsistent
herewith may be adopted by the Board of Directors at any meeting of the Board of
Directors at which a quorum is present by an affirmative vote of a majority of
the directors present or by the unanimous consent of the Board of Directors in
accordance with Section 2.11 of these By-laws.
CERTIFICATION
I, the undersigned, being the duly elected secretary of the
Corporation, do hereby certify that the foregoing By-laws were adopted by the
Board of Directors on the 23rd day of August, 1996.
/s/ Max C. Tanner
-------------------------------------
Max C. Tanner, Secretary
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EXHIBIT 10.1
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") made and
entered into as of August 5, 1999, is by and among Bargain Brokers, Inc., a
Nevada corporation (hereinafter referred to as the "Company"), Global Network,
Inc., a New York corporation (hereinafter referred to as "Global"), and each of
the holders of shares of Common Stock of Global listed on Exhibit A attached
hereto (hereinafter collectively referred to as the "Global Stockholders").
RECITALS
WHEREAS, the Global Stockholders own a total of two hundred (200) shares
of Global Common Stock (the "Global Shares") which constitutes all of the issued
and outstanding shares of Common Stock of Global;
WHEREAS, the Company desires to acquire all of the Global Shares and
the Global Stockholders desire to exchange all of the Global Shares for shares
of Common Stock of the Company in a transaction intended to qualify under
Section 368 of the Internal Revenue Code of 1986, as amended (the "Code").
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and in reliance upon the representations and warranties
hereinafter set forth, the parties agree as follows:
1. EXCHANGE OF THE SHARES AND CONSIDERATION
1.1 Shares Being Exchanged. Subject to the terms and conditions of
this Agreement, at the closing provided for in Section 2 hereof (the "Closing"),
each of the Global Stockholders shall assign, transfer and deliver to the
Company the number of Global Shares set forth opposite each such Global
Stockholder's name on Exhibit A attached hereto, which constitutes all of the
Global Shares which each of them respectively own.
1.2 Consideration. Subject to the terms and conditions of this
Agreement and in consideration of the exchange, assignment, transfer and
delivery of the Global Shares to the Company, at the Closing, the Company shall
issue and deliver a total of twenty-seven million seven hundred thirty-two
thousand nine hundred thirty-four (27,732,934) shares of Common Stock of the
Company, of which six million (6,000,000) shares shall be designated as the
Company Shares and twenty-one million seven hundred thirty-two thousand nine
hundred thirty-four (21,732,934) shares shall be designated as the Escrowed
Shares. The Company Shares shall be delivered to the Global Stockholders at the
Closing and the Escrowed Shares shall be delivered to the Escrow Agent (as
defined in Section 1.3 below) at the Closing. Each Global Stockholder shall
receive, subject to the provisions of Section 1.3 below in connection with the
Escrowed Shares, in consideration for the Global Shares exchanged with the
Company, a pro rata portion of the Company Shares and the Escrowed Shares based
on the number of Global Shares held by each Global Stockholder.
1.3 Escrowed Shares. The Company shall deliver the Escrowed Shares
to the escrow agent (the "Escrow Agent") named in the Escrow Agreement attached
hereto as Exhibit B (the "Escrow Agreement") to be held in escrow on behalf of
the Global Stockholders until they are released and delivered to the Global
Stockholders or surrendered to the Company for cancellation in accordance with
the provisions of the Escrow Agreement. Twelve million (12,000,000) of the
Escrowed Shares are referred to as "Earnout Shares" and nine million seven
hundred thirty-two thousand nine hundred thirty-four (9,732,934) of the Escrowed
Shares are referred to as "Penalty Shares" in the Escrow Agreement. Each Global
Stockholder shall be entitled to receive a pro rata portion of any Earnout
Shares or Penalty Shares released from the escrow and delivered to the Global
Stockholders in accordance with the provisions of the Escrow Agreement based on
the number of Global Shares held by each Global Stockholder immediately prior to
the Closing.
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2. THE CLOSING
2.1 Time and Place. The closing of the transactions contemplated by
this Agreement shall be held not more than two (2) business days following the
later of (a) the date of receipt by the Company of Two Hundred Thousand Dollars
($200,000) U.S. cash from the sale of the Company's Common Stock pursuant to the
private offering described in Section 8.2 below, and (b) satisfaction of all
other conditions precedent to the obligations of the parties specified in this
Agreement, unless duly waived by the party entitled to satisfaction thereof. In
any event, if the Closing has not occurred on or before August 10, 1999, this
Agreement may be terminated as provided in Section 10.1 below, or on such other
date as the parties may agree upon in writing. The date on which the Closing is
to be held is referred to herein as the "Closing Date". The Closing shall be
held at the offices of Day & Campbell, LLP, 3070 Bristol Street, Suite 450,
Costa Mesa, CA 92626 at 10:00 a.m. on the Closing Date, or at such other time
and place as the parties may agree upon in writing.
2.2 Deliveries by the Global Stockholders. At the Closing, each
Global Stockholder shall deliver to the Company the following: (a) stock
certificates representing the number of Global Shares set forth opposite the
name of such Global Stockholder on Exhibit A hereto, duly endorsed or
accompanied by stock powers duly executed in blank and otherwise in form
acceptable for transfer on the books of Global, and (b) an investment letter in
the form attached hereto as Exhibit C executed by such Global Stockholder.
2.3 Deliveries by Global. At the Closing, Global shall deliver to
the Company the documents referred to in Section 7.2 hereof.
2.4 Deliveries by the Company. At the Closing, in addition to the
documents referred to in Section 7.3 hereof, the Company shall deliver to the
Global Stockholders the following: (a) a stock certificate issued in the name of
each Global Stockholder representing the number of Company Shares set forth
opposite the name of such Global Stockholder on Exhibit A attached hereto, and
(b) the Company's minute books, corporate seal and copies of all corporate and
financial books and records. In addition, the Company shall deliver stock
certificates representing the Escrowed Shares to the Escrow Agent in accordance
with the provisions of the Escrow Agreement.
3. INDIVIDUAL REPRESENTATIONS AND WARRANTIES BY THE GLOBAL STOCKHOLDERS
Each of the Global Stockholders, severally but not jointly,
represents and warrants to the Company as follows:
3.1 Title. Such Global Stockholder owns the number of Global Shares
set forth opposite such Global Stockholder's name on Exhibit A hereto, and shall
transfer to the Company at the Closing good and valid title to said number of
Global Shares, free and clear of all liens, claims, options, charges, pledges,
security interests, and encumbrances of every kind, character or description.
3.2 Valid and Binding Agreement. Such Global Stockholder has full
power and authority to execute and deliver this Agreement and consummate the
transactions contemplated hereby, and this Agreement is binding on him and
enforceable in accordance with its terms. The execution and delivery of this
Agreement and consummation of the transactions contemplated hereby do not
violate or conflict with or constitute a default under any contract, commitment,
agreement, understanding, arrangement or restriction of any kind to which such
Global Stockholder is a party or by which such Global Stockholder or such Global
Stockholder's property is bound, or to the knowledge of such Global Stockholder
any existing applicable law, rule, regulation, judgment, order or decree of any
government, governmental instrumentality or court, domestic or foreign, having
jurisdiction over such Global Stockholder or any of such Global Stockholder's
property. Such Global Stockholder is not and will not be required to give any
notice to or obtain any consent from any person in connection with the execution
and delivery of this Agreement or the consummation of the transactions
contemplated hereby.
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3.3 Investment Representations. Such Global Stockholder intends to
hold the Company Shares and any Escrowed Shares delivered pursuant to the Escrow
Agreement for investment and not with a view to the public distribution or
resale thereof, and such Global Stockholder shall confirm such intention to the
Company by delivering to the Company at the Closing an investment letter in the
form attached as Exhibit C hereto executed by such Global Stockholder. Such
Global Stockholder agrees that the Company may endorse on any stock certificate
for the Company Shares and the Escrowed Shares to be delivered pursuant to this
Agreement or the Escrow Agreement an appropriate legend referring to the
provisions of the investment letter attached as Exhibit C hereto, and that the
Company may instruct its transfer agent not to transfer any Company Shares or
Escrowed Shares unless advised by the Company that such provisions have been
complied with.
4. REPRESENTATIONS AND WARRANTIES OF GLOBAL AND THE GLOBAL STOCKHOLDERS
Global and Global Stockholders, jointly and severally, represent and
warrant to the Company as follows:
4.1 Authority. Global has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated herein. The execution and delivery of this Agreement and the
consummation of the transactions contemplated herein have been duly authorized
and approved by all necessary corporate action on the part of Global. This
Agreement has been duly executed and delivered by Global and constitutes the
valid and binding obligation of Global, enforceable in accordance with its
terms.
4.2 Organization.
(a) Global is a corporation duly organized, validly existing and
in good standing under the laws of the State of New York. Global has the
corporate power and authority to carry on its business as presently conducted
and to own or lease its properties and assets, possesses all licenses,
franchises, rights and privileges material to the conduct of its business, and
is qualified to conduct business as a foreign corporation and is in good
standing under the laws of every jurisdiction where the nature of the activities
conducted by it or the character of the properties owned, leased or operated by
it require such qualification, except where the failure to be so qualified could
not reasonably be expected to have, individually or in the aggregate, a material
adverse effect on the properties, results of operations, financial condition or
prospects of Global and/or its business.
(b) The copies of the Articles of Incorporation of Global and
all amendments thereto, as certified by the Secretary of State of New York, and
the Bylaws of Global and all amendments thereto, as certified by the Secretary
of Global, which have heretofore been delivered to the Company, are complete and
correct copies of the Articles of Incorporation and Bylaws of Global as amended
and in effect on the date hereof. All minutes of meetings and actions in writing
without a meeting of the Board of Directors and stockholders of Global are
contained in the minute book of Global heretofore delivered to the Company for
examination, and no minutes or actions in writing without a meeting have been
included in such minute book since such delivery to the Company that have not
also been delivered to the Company.
4.3 Capitalization.
(a) The authorized capital stock of Global consists of 200
shares of common stock, no par value, of which 200 shares are issued and
outstanding. All of the issued and outstanding shares of common stock of Global
were offered and sold in compliance with applicable state and federal securities
laws, are duly authorized, validly issued, fully paid and nonassessable, and are
not subject to preemptive rights created by statute, Global's Articles of
Incorporation or Bylaws or any agreement to which Global is a party or by which
it is bound.
(b) There are no options, warrants, calls, rights, commitments
or agreements of any character to which Global is a party or by which it is
bound obligating Global to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock of Global or obligating
Global to grant, extend or enter into any such option, warrant, call, right,
commitment or agreement.
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4.4 Equity Investments. Global does not own any equity interest,
directly or indirectly, in any corporation, partnership or other form of
business entity.
4.5 Financial Statements. Since its incorporation in May, 1999,
Global has not conducted any business operations or engaged in any activities
other than those relating to organizational matters and the preparation of its
Business Plan.
4.6 Absence of Liabilities. As of the date hereof and as of the
Closing Date, Global had and will have no debts, liabilities or obligations of
any nature, whether absolute, accrued, contingent or otherwise, and whether due
or to become due (including, without limitation, any liability for taxes and
interest, penalties and other charges payable with respect to any such liability
or obligation) that are not set forth on Schedule 4.6 attached hereto, and no
facts or circumstances exist which, with notice or the passage of time or both,
could reasonably be expected to result in any material claims against or
obligations or liabilities of Global.
4.7 Property and Assets. Global has good title to all of its
material properties and assets, including all properties and assets reflected in
the Balance Sheet, except those disposed of since the date thereof in the
ordinary course of business, and none of such properties or assets is subject to
any mortgage, pledge, lien, security interest, lease, charge or encumbrance
other than those the material terms of which are described in the Balance Sheet.
4.8 Taxes. Within the times and in the manner prescribed by law,
Global has filed all federal, state, and local tax returns and reports required
by law and has paid in full all taxes, including, without limitation, all net
income, gross receipts, sales, use, withholding, payroll, employment, social
security, unemployment, excise and property taxes, plus applicable penalties and
interest thereon (all such items are collectively referred to as "Taxes") due
to, or claimed to be due by, any governmental authority. The Balance Sheet fully
accrues all current and deferred Taxes.
4.9 Litigation. There is no action, suit, proceeding or
investigation pending, or, to the knowledge of Global, threatened by or against
Global, which questions the validity of this Agreement or the right of Global to
enter into it, or which might result, either individually or in the aggregate,
in any material adverse change in the assets, condition (financial or
otherwise), business or prospects of Global, nor is there any litigation
pending, or, to the knowledge of Global, any basis therefor or threat thereof,
against Global by reason of the past employment relationships of any of Global's
employees or their use, in connection with the business of Global, of any
information or techniques which might be alleged to be proprietary to their
former employers. Neither Global nor any of Global's assets is subject to any
order, writ, judgment, award, injunction or decree of any court, arbitrator,
federal, state or local government agency, regulatory body, or other
governmental authority (each a "Governmental Entity," and collectively
"Governmental Entities"). As used in this Agreement, "to the knowledge of
Global" shall mean the individual or collective knowledge of each of the Global
Stockholders. "Knowledge" when used in this context shall mean, as to the facts
or circumstances represented, actual knowledge, without any duty of inquiry, of
any one of the Global Stockholders.
4.10 Compliance. Global has, in all material respects, complied with
all laws, regulations and orders applicable to its present and proposed business
and has all permits and licenses required thereby. There is no term or provision
of any agreement or instrument to which Global is a party or by which it is
bound, or, to the knowledge of Global, any provision of any state or Federal
judgment, decree, order, statute, rule or regulation applicable to or binding
upon Global, which materially adversely affects or, so far as Global may now
foresee, in the future is reasonably likely to materially adversely affect, the
business, prospects, condition, affairs or operations of Global or any of its
properties or assets. To the best of the knowledge of Global, no employee of
Global is in violation of any term of any employment contract, proprietary
information disclosure agreement or any other contract or agreement relating to
the employment of such employee by Global.
4.11 Contracts. Schedule 4.11 lists all contracts, agreements,
instruments, licenses, commitments and other arrangements to which Global is a
party or otherwise relating to or affecting any of its assets, properties or
operations (the "Contracts"). Each Contract is valid, binding and enforceable
against the parties
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thereto in accordance with its terms and is in full force and effect on the date
hereto. Global has performed all material obligations required to be performed
by it under, and is not in material default or breach of, any Contract, and, to
the knowledge of Global, no event has occurred which, with due notice or lapse
of time or both, would constitute such a material default or breach.
4.12 Proprietary Rights. Schedule 4.12 attached hereto is a list of
all Proprietary Rights (either registered, applied for, or common law) owned by,
registered in the name of, licensed to, or otherwise used by Global that are
material to the business of Global. For purposes of this Agreement, "Proprietary
Rights" means all patents, patent applications, trademarks, service marks,
trademark and service mark applications, trade names, copyrights, Internet Web
sites, domain names and registrations or applications for registration thereof.
Global owns or possesses all of the Proprietary Rights and licenses or rights to
the foregoing necessary for the conduct of Global's business as conducted and as
proposed to be conducted. To Global's knowledge, the business as conducted and
as proposed to be conducted by Global will not cause Global to infringe or
violate any of the patents, trademarks, service marks, trade names, copyrights,
licenses, trade secrets, domain names or other proprietary rights of any other
person or entity. To Global's knowledge, no employee of Global is obligated
under any contract (including any license, covenant or commitment of any
nature), or subject to any judgement, decree or order of any court or
administrative agency, that would interfere with the use of such employee's best
efforts to promote the interests of Global or would conflict with Global's
business as conducted and as proposed to be conducted.
4.13 Insurance. Schedule 4.13 contains a complete list of all
policies of insurance to which Global is a party or is a beneficiary or named
insured. Global has in full force and effect, with all premiums due thereon
paid, the policies of insurance set forth therein. All the insurable properties
of Global are insured in amounts and coverages and against risks and losses
which are adequate and usually insured against by persons holding or operating
similar properties in similar businesses.
4.14 Employee Plans. Global is not a party to nor participates in
any profit sharing, deferred compensation, bonus, stock option, stock purchase,
pension, retainer, consulting, retirement, welfare or incentive plan or
agreement.
4.15 No Conflict. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby do not and will not
conflict with, or result in a breach of any term or provision of, or constitute
a default under or result in a violation of (i) the Articles of Incorporation or
Bylaws of Global, as amended, (ii) any agreement, contract, lease, license or
instrument to which Global is a party or by which Global or any of its
properties or assets are bound, or (iii) any judgment, decree, order, or writ by
which Global is bound or to which it or any of its properties or assets are
subject.
4.16 Consent. To Global's knowledge, no consent, approval, order or
authorization of, or registration, declaration or filing with, any court,
administrative agency or commission or other governmental authority or
instrumentality is required by or with respect to Global in connection with the
execution and delivery of this Agreement or the consummation by Global of the
transactions contemplated herein. No consent, waiver or approval of third
parties material to the business or operations of Global is required to be
obtained by Global in connection with the execution and delivery of this
Agreement and the performance of Global's obligations hereunder.
4.17 Brokers or Finders. Global has not dealt with any broker or
finder in connection with the transactions contemplated by this Agreement.
Global has not incurred, and shall not incur, directly or indirectly, any
liability for any brokerage or finders' fees or agents commissions or any
similar charges in connection with this Agreement or any transaction
contemplated herein.
4.18 Intercompany and Affiliate Transactions. There are no material
transactions, agreements or arrangements of any kind, direct or indirect,
between Global and any director, officer, employee, stockholder, relative or
affiliate of Global or the Global Stockholders.
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4.19 Indebtedness. Schedule 4.19 lists each person or entity that
owns any direct or indirect debt interest (other than accounts payable incurred
in the ordinary course of Global's business) in Global (including, without
limitation, any indebtedness for borrowed money, whether or not evidenced by a
note or other written instrument) and a description of each such debt interest.
4.20 Minutes Books and Stock Records. The minute books of Global
contain complete and accurate records of all meetings and other corporate
actions of its stockholders and its Board of Directors and committees thereof.
The stock ledger of Global is complete and reflects all issuances, transfers,
repurchases and cancellations of shares of capital stock of Global.
4.21 Accuracy of Information. None of the representations or
warranties or information provided and to be provided by Global or any Global
Stockholder to the Company pursuant to this Agreement (including without
limitation all information and financial data contained in the Global Business
Plan attached hereto as Schedule 4.21), or any schedules or exhibits hereto,
contains or will contain any untrue statement of a material fact or omits or
will omit to state any material fact necessary in order to make the statements
and facts contained herein or therein not false or misleading. To Global's
knowledge, there is no information or fact which has or would have a material
adverse effect on the financial condition, business or prospects of Global which
has not been disclosed to the Company.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Global and the Global
Stockholders as follows:
5.1 Authority. The Company has all requisite corporate power and
authority to enter into this Agreement and, subject to satisfaction of the
conditions set forth herein, to consummate the transactions contemplated herein.
The execution and delivery of this Agreement, the consummation of the
transactions contemplated herein, and the issuance of the Company Shares and the
Escrowed Shares in accordance with the terms hereof, have been duly authorized
by all necessary action on the part of the Company. This Agreement has been duly
executed and delivered by the Company and constitutes the valid and binding
obligation of the Company.
5.2 Organization.
(a) The Company is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Nevada. The
Company has the corporate power and authority to carry on its business as
presently conducted, and is qualified to do business in all jurisdictions where
the failure to be so qualified would have a material adverse effect on its
business or financial condition.
(b) The copies of the Articles of Incorporation of the
Company, and all amendments thereto, as certified by the Secretary of State of
Nevada, and the Bylaws of the Company and all amendments thereto, as certified
by the Secretary of the Company, which have heretofore been delivered to Global
and made available to the Global Stockholders for examination, are complete and
correct copies of the Articles of Incorporation and Bylaws of the Company as
amended and in effect on the date hereof. All minutes of meetings and actions in
writing without a meeting of the Board of Directors and stockholders of the
Company are contained in the minute book of the Company heretofore delivered to
Global and made available to the Global Stockholders for examination, and no
minutes or actions in writing without a meeting have been included in such
minute book since such delivery to Global that have not also been delivered to
Global.
5.3 Capitalization.
(a) The authorized capital stock of the Company consists of
50,000,000 shares of Common Stock, $.001 par value, of which 4,000,000 shares
are issued and outstanding on the date hereof and 5,000,000 shares of Preferred
Stock, $.001 par value, none of which are outstanding. The aforesaid number of
shares of Common Stock issued and outstanding on the date hereof does not
include the 100,000 additional shares to be issued by the Company on or prior to
the Closing pursuant to Section 6.2(a) below. All of the issued and
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outstanding shares of Common Stock of the Company are duly authorized, validly
issued, fully paid and non-assessable and, are not subject to preemptive rights
created by statute, the Company's Articles of Incorporation or Bylaws or any
agreement to which the Company is a party or by which it is bound. To the
Company's knowledge, all of the issued and outstanding shares of common stock of
the Company were offered and sold in compliance with applicable state and
federal securities laws, are duly authorized, validly issued, fully paid and
nonassessable, and are not subject to preemptive rights created by statute, the
Company's Articles of Incorporation or Bylaws or any agreement to which the
Company is a party or by which it is bound.
(b) Except as contemplated, permitted or required by this
Agreement, there are no options, warrants, calls, rights, commitments or
agreements of any character to which the Company is a party or by which it is
bound obligating the Company to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock of the Company or
obligating the Company to grant, extend or enter into any such option, warrant,
call, right, commitment or agreement.
5.4 Equity Investments. Company does not own any equity interest in
any corporation, partnership, or other form of business entity.
5.5 Financial Statements. Company has delivered to Global and made
available to the Global Stockholders for examination copies of its audited
balance sheet as of December 31, 1998 and the related statements of income and
cash flows for the period then ended (the "Company Financial Statements") a copy
of which is attached hereto as Schedule 5.5. The Company Financial Statements
have been prepared in conformity with generally accepted accounting principles
consistently applied, and present fairly the financial condition of the Company
and the results of operations as of the dates and for the periods indicated
therein.
5.6 Absence of Undisclosed Liabilities. As of the date of this
Agreement and as of the Closing Date, the Company had and will have no debts,
liabilities or obligations of any nature, whether absolute, accrued, contingent
or otherwise, and whether due or to become due (including, without limitation,
any liability for taxes and interest, penalties and other charges payable with
respect to any such debt, liability or obligation), that are not reflected or
reserved against in the balance sheet included in the Company Financial
Statements or set forth on Schedule 5.6 attached hereto, and no facts or
circumstances exist which, with notice or the passage of time or both, could
reasonably be expected to result in any material claims against or liabilities
of the Company.
5.7 Absence of Assets. The Company does not have and immediately
prior to the Closing will not have any material assets.
5.8 Taxes. Within the times and in the manner prescribed by law, the
Company has filed all federal, state, and local tax returns required by law and
has paid all taxes including, without limitation, all net income, gross
receipts, sales, use, withholding, payroll, employment, social security,
unemployment, excise and property taxes, plus applicable penalties and interest
thereon (all such items are collectively referred to as "Taxes") due to, or
claimed to be due by, any governmental authority, except as set forth on
Schedule 5.8. The balance sheet of the Company included in the Company Financial
Statements fully accrues all current and deferred Taxes. The Company is not a
party to any pending action or proceeding, nor, to the actual knowledge of the
Company, is any such action or proceeding threatened by any governmental
authority for the assessment or collection of Taxes. There are no liens for
Taxes except for liens for property taxes not yet delinquent.
5.9 Litigation. There is no action, suit, proceeding or
investigation pending or, to the knowledge of the Company, threatened by or
against the Company, involving, affecting or relating to the business, assets,
properties or operations of the Company or the transactions contemplated by this
Agreement, and the Company does not know or have reason to be aware of any basis
for the same. Neither the Company nor any of the Company's assets is subject to
any order, writ, judgment, award, injunction or decree of any Governmental
Entity.
5.10 Compliance With Applicable Law. The Company has, in all
material respects, complied with all laws, regulations and orders applicable to
its business and has all permits and licenses required thereby. There is no term
or provision of any agreement or instrument to which the Company is a party or
by which it is
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bound, or, to the knowledge of the Company, any provision of any state or
Federal judgment, decree, order, statute, rule or regulation applicable to or
binding upon the Company, which materially adversely affects or, so far as the
Company may now foresee, in the future is reasonably likely to materially
adversely affect, the business, prospects, condition, affairs or operations of
the Company or any of its properties or assets. To the best of the knowledge of
the Company, no employee of the Company is in violation of any term of any
employment contract, proprietary information disclosure agreement or any other
contract or agreement relating to the employment of such employee by the
Company.
5.11 Contracts. The Company is not a party to or bound by any
material contract, agreement, instrument, license, lease, commitment or
undertaking, except as set forth on Schedule 5.11 attached hereto.
5.12 No Conflict. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby do not and will not
conflict with, or result in a breach of any term or provision of, or constitute
a default under or result in a violation of (i) the Articles of Incorporation or
Bylaws of the Company as amended, (ii) any agreement, contract, lease, license
or instrument to which the Company is a party or by which the Company or any of
its properties or assets are bound or (iii) any judgment, decree, order, or writ
by which the Company is bound or to which it or any of its properties or assets
are subject.
5.13 Consent. No consent, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality is required by or
with respect to the Company in connection with the execution and delivery of
this Agreement or the consummation by the Company of the transactions
contemplated herein, except for (a) such filings as may be required under
federal and applicable state securities laws, and (b) such other consents,
approvals, orders, authorizations, registrations, declarations and filings which
if not obtained or made would not have a material adverse effect on the Company.
No consent, waiver or approval of third parties material to the business or
operations of the Company is required to be obtained by the Company in
connection with the execution and delivery of this Agreement and the performance
of the Company's obligations hereunder.
5.14 Brokers or Finders. The Company has not dealt with any broker
or finder in connection with the transactions contemplated by this Agreement,
except as set forth on Schedule 5.14 attached hereto. The Company has not
incurred, and shall not incur, directly or indirectly, any liability for any
brokerage or finders' fees or agents commissions or any similar charges in
connection with this Agreement or any transaction contemplated herein, except as
set forth on Schedule 5.14 attached hereto.
5.15 Intercompany and Affiliate Transactions. There are no material
transactions, agreements or arrangements of any kind, direct or indirect,
between the Company and any director, officer, employee, stockholder, or
affiliate of the Company, except as set forth on Schedule 5.15.
5.16 Indebtedness. Schedule 5.16 lists each person or entity that
owns any direct or indirect debt interest (other than accounts payable incurred
in the ordinary course of the Company's business) in the Company (including,
without limitation, any indebtedness for borrowed money, whether or not
evidenced by a note or other written instrument) and a description of each such
debt interest.
5.17 Minutes Books and Stock Records. The Company has made available
to Global true, complete and correct copies of the minute books of the Company,
containing all records required to be set forth of all proceedings, consents,
actions, and meetings of its stockholders and the Board of Directors.
5.18 Accuracy of Information. None of the representations or
warranties or information provided and to be provided by the Company to Global
in this Agreement, or any schedules or exhibits hereto, contains or will contain
any untrue statement of a material fact or omits or will omit to state any
material fact necessary in order to make the statements and facts contained
herein or therein not false or misleading. Copies of all documents heretofore or
hereafter delivered or made available to Global pursuant hereto were or will be
complete and accurate records of such documents.
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5.19 Shares to be Issued. The Company Shares to be issued to the
Global Stockholders, when issued in accordance with the terms of this Agreement,
will be duly authorized, validly issued, fully paid and non-assessable. The
Additional Shares and the Warrants, as such terms are defined in Sections 6.2(a)
and 6.2(b) hereof, respectively, issued by the Company to certain private
investors immediately prior to the Closing and the shares of Common Stock
issuable upon the exercise of such Warrants (the "Underlying Shares") have been
duly authorized. When the Underlying Shares have been duly delivered and paid
for pursuant to the terms of the Warrants, such shares will be validly issued,
fully paid and non-assessable. A sufficient number of authorized but unissued
shares of Common Stock will, as of the Closing, have been reserved for issuance
upon exercise of the Warrants.
6. CERTAIN UNDERSTANDINGS AND AGREEMENTS OF THE PARTIES
6.1 Access to Information.
(a) Global shall afford to the Company and shall cause its
independent accountants to afford to the Company, and its accountants, counsel
and other representatives, reasonable access during normal business hours during
the period prior to the Closing Date to all of Global's properties, books,
contracts, commitments and records and to the audit work papers and other
records of Global's independent accountants. During such period, Global shall
use reasonable efforts to furnish promptly to the Company all information
concerning the business, properties and personnel of Global as the Company may
reasonably request, provided that Global shall not be required to disclose any
information which it is legally required to keep confidential. The Company will
not use such information for purposes other than this Agreement and will
otherwise hold such information in confidence (and the Company will cause its
consultants and advisors also to hold such information in confidence) until such
time as such information otherwise becomes publicly available, and in the event
of termination of this Agreement for any reason the Company shall promptly
return, or cause to be returned, to Global all documents obtained from Global,
and any copies made of such documents, extracts and copies thereof.
(b) The Company shall afford to Global and shall cause its
independent accountants to afford to Global, and its accountants, counsel and
other representatives, reasonable access during normal business hours during the
period prior to the Closing Date to all of the Company's properties, books,
contracts, commitments and records and to the audit work papers and other
records of the Company's independent accountants. During such period, the
Company shall use reasonable efforts to furnish promptly to Global such
information concerning the Company as Global may reasonably request, provided
that the Company shall not be required to disclose any information which it is
legally required to keep confidential. Global will not use such information for
purposes other than this Agreement and will otherwise hold such information in
confidence (and Global will cause Global's consultants and advisors also to hold
such information in confidence) until such time as such information otherwise
becomes publicly available, and in the event of termination of this Agreement
for any reason Global shall promptly return, or cause to be returned, to the
Company all documents obtained from the Company, and any copies made of such
documents, extracts and copies thereof.
6.2 Additional Capital.
(a) The Company shall use commercially reasonable efforts to
raise additional capital in the amount of Two Hundred Thousand Dollars U.S.
($200,000 U.S.) on or prior to the Closing from the sale of 100,000 shares of
the Company's Common Stock (the "Additional Shares") sold in a private offering
to a limited group of investors in accordance with the terms set forth on
Schedule 6.2(a) hereto.
(b) The Company shall issue common stock purchase warrants in
the form attached hereto as Exhibit D (the "Warrants") to a limited group of
investors to purchase up to 400,000 shares of the Company's Common Stock at a
price of Two Dollars U.S. ($2.00 U.S.) per share or an aggregate purchase price
of up to Eight Hundred Thousand Dollars U.S. ($800,000) U.S.
6.3 Escrow Agent. The Company and Global shall mutually select and
appoint a person or entity to serve as escrow agent (the "Escrow Agent")
pursuant to and in accordance with the terms and conditions of the Escrow
Agreement.
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6.4 Securities Law Matters. The Company Shares and the Escrowed
Shares shall be issued and sold without registration or qualification under the
Securities Act of 1933, as amended, (the "Act") or any state securities or "Blue
Sky" laws, on the ground that the issuance and sale of the Company Shares and
the Escrowed Shares is exempt from registration and qualification under Rule 506
of Regulation D and Section 18 of the Act. Accordingly, the Company Shares and
the Escrowed Shares may not be resold by the holders thereof without
registration under the Act unless a further exemption from the registration
requirements of the Act is available for such resale. All certificates
representing the Company Shares and the Escrowed Shares shall bear the following
legend or a legend of similar import:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER
CERTAIN STATE SECURITIES LAWS. NO SALE OR TRANSFER OF THESE SHARES
MAY BE MADE IN THE ABSENCE OF (1) AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT OR (2) AN OPINION OF COUNSEL THAT
REGISTRATION UNDER THE ACT OR UNDER APPLICABLE STATE SECURITIES LAWS
IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED SALE OR TRANSFER."
7. CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligations. The respective
obligations of each party to consummate the transactions contemplated by this
Agreement shall be subject to the satisfaction on or prior to the Closing of the
following conditions unless waived by such party:
(a) Government Approvals. All authorizations, consents, orders
or approvals of, or declarations or filings with, or expiration of waiting
periods imposed by, any governmental authority necessary for the consummation of
the transactions contemplated by this Agreement shall have been filed, occurred
or been obtained.
(b) Third-Party Approvals. Any and all consents or approvals
required from third parties relating to contracts, licenses, leases and other
instruments, material to the respective businesses of the Company and Global,
shall have been obtained.
(c) Legal Action. No temporary restraining order, preliminary
injunction or permanent injunction or other order preventing the consummation of
the transactions contemplated by this Agreement shall have been issued by any
federal or state court and remain in effect, and no litigation seeking the
issuance of such an order or injunction, shall be pending which, in the good
faith judgment of the Company's Board of Directors, has a reasonable probability
of resulting in such order, injunction or damages. In the event any such order
or injunction shall have been issued, each party agrees to use its reasonable
efforts to have any such injunction lifted.
(d) Additional Capital. At or prior to the Closing, the Company
shall have received $200,000 U.S. from the sale of the Additional Shares in
accordance with the terms of Section 6.2(a) of this Agreement.
(e) Warrants. At or prior to the Closing, the Company shall have
issued Warrants to purchase up to 400,000 shares of the Company's Common Stock
at a price of Two Dollars U.S. ($2.00 U.S.) or an aggregate purchase price of up
to $800,000 U.S.
(f) Redemption of Company Stock. At or prior to the Closing, the
Company shall have (i) redeemed 7,000,000 shares of its Common Stock in
compliance with applicable provisions of the Nevada General Corporation Law, and
(ii) delivered to the Company's transfer agent stock certificates representing
7,000,000 shares of its Common Stock together with written instructions to
cancel all of such shares signed by a
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duly authorized officer and a copy of resolutions duly adopted by the Company's
Board of Directors authorizing the redemption and cancellation of such shares.
(g) Amendment to the Company's Articles of Incorporation. At or
prior to the Closing, the Company shall have amended its Articles of
Incorporation in compliance with applicable provisions of the Nevada General
Corporation Law to increase its authorized Common Shares to 50,000,000.
(h) Lock-Up Agreement. At or prior to the Closing, the Company's
stockholders shall have executed and delivered a Lock-Up Agreement in the form
attached hereto as Exhibit E with respect to 300,000 shares of the Company's
Common Stock outstanding immediately prior to the Closing.
7.2 Conditions to Obligations of the Company. The obligations of the
Company to consummate the transactions contemplated by this Agreement are
subject to the satisfaction on or prior to the Closing of the following
conditions, unless waived by the Company:
(a) Representations and Warranties of Global Stockholders. The
representations and warranties of the Global Stockholders set forth in this
Agreement shall be true and correct in all material respects as of the date of
this Agreement and as if made at and as of the Closing Date, except as otherwise
contemplated by this Agreement.
(b) Representations and Warranties of Global. The
representations and warranties of Global set forth in this Agreement shall be
true and correct in all material respects as of the date of this Agreement and
as if made at and as of the Closing Date, and the Company shall have received a
certificate to such effect signed by the chief executive officer of Global.
(c) Performance of Obligations of Global. Global shall have
performed in all material respects all obligations required to be performed by
it under this Agreement prior to the Closing Date, and the Company shall have
received a certificate to such effect signed by the chief executive officer of
Global.
(d) Additional Closing Documents. The Company shall have
received the following documents and instruments:
(1) Certified resolutions of the Board of Directors of
Global authorizing the execution and delivery of this Agreement and the
performance by Global of its obligations hereunder;
(2) A certificate of good standing of Global from the New
York Secretary of State dated as of the most recent practicable date;
(3) An Escrow Agreement in the form of Exhibit B attached to
this Agreement duly executed by Global and the Escrow Agent; and
(4) Such other documents and instruments as are required to
be delivered pursuant to the provisions of this Agreement or otherwise
reasonably requested by the Company.
(e) Due Diligence. Company shall be satisfied with the results
of its due diligence review of the business, operations, properties, assets,
financial condition and prospects of Global.
7.3 Conditions to Obligations of Global and the Global Stockholders.
The obligations of Global and the Global Stockholders to consummate the
transactions contemplated by this Agreement are subject to the satisfaction on
or prior to the Closing Date of the following conditions unless waived by Global
and the Global Stockholders:
D
(a) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement shall be true and correct
in all material respects as of the date of this
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Agreement and as if made at and as of the Closing Date, except as otherwise
contemplated by this Agreement, and Global shall have received a certificate to
such effect signed by the chief executive officer of the Company.
(b) Performance of Obligations of the Company. The Company shall
have performed in all material respects all obligations required to be performed
by it under this Agreement prior to the Closing Date, and Global shall have
received a certificate to such effect signed by the chief executive officer of
the Company.
(c) Resignations. Global shall have received written
resignations of the officers and directors of the Company as of the Closing Date
in form satisfactory to Global.
(d) Election of Directors and Officers. The Board of Directors
of the Company shall have elected persons nominated by the management of Global
to serve as directors and officers of the Company effective as of the Closing
Date.
(e) Additional Closing Documents. Global and the Global
Stockholders shall have received the following documents and instruments:
(1) Certified resolutions of the Company's Board of
Directors (a) authorizing the execution and delivery of this Agreement and the
performance by the Company of its obligations hereunder, and (b) electing the
persons designated by Global as officers and directors of the Company effective
as of the Closing Date;
(2) A certificate of good standing of the Company from the
Secretary of State of Nevada dated as of the most recent practicable date;
(3) A list of the Company's stockholders as of the most
recent practicable date certified by the Company's transfer agent;
(4) An Escrow Agreement in the form of Exhibit B attached to
this Agreement duly executed by the Company and the Escrow Agent; and
(5) Such other documents and instruments as are required to
be delivered pursuant to the provisions of this Agreement or otherwise
reasonably requested by Global.
(f) Due Diligence. Global and the Global Stockholders shall be
satisfied with the results of its due diligence review of the business,
operations, properties, assets, financial condition and prospects of the
Company.
8. SURVIVAL; INDEMNIFICATION
8.1 Survival. The representations and warranties made in this
Agreement or in any exhibit, schedule or certificate shall survive any
investigation made by any party hereto and the Closing of the transactions
contemplated hereby until the first anniversary of the Closing Date. As to any
matter or claim which is based upon fraud by the indemnifying party, the
representations and warranties set forth in this Agreement shall expire only
upon expiration of the applicable statute of limitations. No party will be
liable to another under any warranty or representation after the expiration of
such warranty or representation; provided however, if a claim or notice is given
under this Article 8 with respect to any representation or warranty prior to the
expiration date, such claim may be pursued to resolution notwithstanding
expiration of the representation or warranty under which the claim was brought.
Any investigations made by or on behalf of any of the parties prior to the date
hereof shall not affect any of the parties' obligations hereunder. Completion of
the transactions contemplated hereby shall not be deemed or construed to be a
waiver of any right or remedy of any of the parties.
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8.2 Indemnification by the Global Stockholders. The Global
Stockholders, and their successors and assigns shall jointly and severally
indemnify, defend, reimburse and hold harmless the Company and its successors
and assigns, and the officers, directors, employees and agents of any of them,
from and against any and all claims, losses, damages, liabilities, obligations,
assessments, penalties and interest, demands, actions and expenses, whether
direct or indirect, known or unknown, absolute or contingent (including, without
limitation, settlement costs and any legal, accounting and other expenses for
investigating or defending any actions or threatened actions ("Losses"),
reasonably incurred by any such indemnitee, arising out of or in connection with
any of the following:
(a) any untruth, inaccuracy or material omission of any
representation or warranty made by Global or the Global Stockholders in this
Agreement; and
(b) the breach of any covenant, agreement or obligation of
Global or the Global Stockholders contained in this Agreement.
8.3 Indemnification by the Company. The Company and its successors
and assigns shall indemnify, defend, reimburse and hold harmless the Global
Stockholders and their successors and assigns from and against any and all
Losses incurred by any such Global Stockholders arising out of or in connection
with any of the following:
(a) any untruth, inaccuracy or material omission of any
representation or warranty made by the Company in this Agreement; and
(b) the breach of any covenant, agreement or obligation of the
Company contained in this Agreement.
8.4 Indemnification Procedure.
(a) Whenever any claim shall arise for indemnification hereunder
(a "Claim"), the party entitled to indemnification (the "Indemnitee") shall
promptly give written notice to the party obligated to provide indemnity (the
"Indemnitor") with respect to the Claim after the receipt by the Indemnitee of
reliable information of the facts constituting the basis for the Claim; but the
failure to timely give such notice shall not relieve the Indemnitor from any
obligation under this Agreement, except to the extent, if any, that the
Indemnitor is materially prejudiced thereby.
(b) Upon receipt of written notice from the Indemnitee of a
Claim, the Indemnitor shall provide counsel (such counsel subject to the
reasonable approval of the Indemnitee) to defend the Indemnitee against the
matter from which the Claim arose, at the Indemnitor's sole cost, risk and
expense. The Indemnitee shall cooperate in all reasonable respects, at the
Indemnitor's sole cost, risk and expense, with the Indemnitor in the
investigation, trial, defense and any appeal arising from the matter from which
the Claim arose; provided, however, that the Indemnitee may (but shall not be
obligated to) participate in any such investigation, trial, defense and any
appeal arising in connection with the Claim. If the Indemnitee's participation
in any such investigation, trial, defense and any appeal arising from such Claim
relates to a legal position or defense that varies materially from the legal
positions or defenses pursued by the Indemnitor, and if the Indemnitee
reasonably believes that the Indemnitee's interests will be adversely and
materially affected if such legal position or defense is not pursued, the
Indemnitor shall bear the expense of the Indemnitee's separate participation,
including all fees, costs and expenses of one separate counsel for the
Indemnitee (or multiple Indemnitees). If the Indemnitee elects to so
participate, the Indemnitor shall cooperate with the Indemnitee, and the
Indemnitor shall deliver to the Indemnitee or its counsel copies of all
pleadings and other information within the Indemnitor's knowledge or possession
reasonably requested by the Indemnitee or its counsel that is relevant to the
defense of such Claim and that will not prejudice the Indemnitor's position,
claims or defenses. The Indemnitee and its counsel shall maintain
confidentiality with respect to all such information consistent with the conduct
of a defense hereunder. The Indemnitor shall have the right to elect to settle
any claim for monetary damages only without the Indemnitee's consent, if the
settlement includes a complete release of the Indemnitee. If the settlement does
not include such a release, it will be subject to
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the consent of the Indemnitee, which will not be unreasonably withheld. The
Indemnitor may not admit any liability of the Indemnitee or waive any of the
Indemnitee's rights without the Indemnitee's prior written consent, which will
not be unreasonably withheld. If the subject of any Claim results in a judgment
or settlement, the Indemnitor shall promptly pay such judgment or settlement.
(c) If the Indemnitor fails to assume the defense of the subject
of any Claim in accordance with the terms of Section 8.4(b), if the Indemnitor
fails diligently to prosecute such defense, or if the Indemnitor has, in the
Indemnitee's good faith judgment, a conflict of interest, the Indemnitee may
defend against the subject of the Claim, at the Indemnitor's sole cost, risk and
expense, in such manner and on such terms as the Indemnitee deems appropriate,
including, without limitation, settling the subject of the Claim after giving
reasonable notice to the Indemnitor. If the Indemnitee defends the subject of a
Claim in accordance with this Section, the Indemnitor shall cooperate with the
Indemnitee and its counsel, at the Indemnitor's sole cost, risk and expense, in
all reasonable respects, and shall deliver to the Indemnitee or its counsel
copies of all pleadings and other information within the Indemnitor's knowledge
or possession reasonably requested by the Indemnitee or its counsel that are
relevant to the defense of the subject of any such Claim and that will not
prejudice the Indemnitor's position, claims or defense. The Indemnitee shall
maintain confidentiality with respect to all such information consistent with
the conduct of a defense hereunder.
(d) The obligation of the Indemnitor to indemnify the Indemnitee
against Losses arising under this Agreement shall be in addition to any other
obligations the Indemnitor might otherwise have and any other rights the
Indemnitee might otherwise have.
8.5 Payment. All payments owing under this Article 8 will be made
promptly as indemnifiable Losses are incurred. If the Indemnitee defends the
subject matter of any Claim in accordance with Section 8.4(c) or proceeds with
separate counsel in accordance with Section 8.4(b), the expenses (including
attorneys' fees) incurred by the Indemnitee shall be paid by the Indemnitor in
advance of the final disposition of such matter as incurred by the Indemnitee,
if the Indemnitee undertakes in writing to repay any such advances in the event
that it is ultimately determined that the Indemnitee is not entitled to
indemnification under the terms of this Agreement or applicable law.
9. PAYMENT OF EXPENSES
The Stockholders of the Company immediately prior to the Closing and
the Global Stockholders shall each pay their own fees and expenses incurred
incident to the preparation and carrying out of the transactions herein
contemplated (including legal and accounting fees).
10. TERMINATION
10.1 This Agreement may be terminated at any time prior to the
Closing Date:
(a) by mutual written consent of the Company, Global and the
Global Stockholders;
(b) by the Company if there has been a material breach of any
representation, warranty, covenant or agreement contained in this Agreement by
Global or the Global Stockholders;
(c) by Global and the Global Stockholders if there has been a
material breach of any representation, warranty, covenant or agreement contained
in this Agreement by the Company;
(d) by the Company if any condition to the Company's
obligation to consummate the transactions contemplated by this Agreement has not
been satisfied or waived by the Company;
(e) by Global and the Global Stockholders if any condition to
the obligations of Global and the Global Stockholders to consummate the
transactions contemplated by this Agreement has not been satisfied or waived by
Global and the Global Stockholders;
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(f) by Global and the Global Stockholders if the Company has
failed to receive $200,000 U.S. of capital from the sale of the Additional
Shares by August 10, 1999;
(g) by the Company or Global and the Global Stockholders, in
the event the Closing has not occurred on or prior to the close of business on
August 10, 1999 or such later date as the parties hereto may agree in writing
(unless such event has been caused by the breach of this Agreement by the party
seeking such termination).
10.2 Effect of Termination. Termination of this Agreement in
accordance with Section 10.1 may be effected by written notice from either the
Company or Global and the Global Stockholders, as appropriate, specifying the
reasons for termination and shall not subject the terminating party to any
liability for any valid termination.
11. MISCELLANEOUS
11.1 Tax Treatment. The transaction contemplated herein is intended
to qualify as a "tax-free" reorganization under the provisions of Section 368 of
the Internal Revenue Code. Global, the Global Stockholders and the Company
acknowledge, however, that they each have been advised to consult with their own
tax advisors in connection with this transaction; that no party hereto has made
any representation or warranty to the other with respect to the treatment of
such transaction or the effect thereof under applicable tax laws, regulations,
or interpretations; and that no attorney's opinion or private revenue ruling has
been obtained with respect to the effects thereof under the Internal Revenue
Code of 1986, as amended.
11.2 Further Assurances. From time to time, at the other party's
request and without further consideration, each of the parties will execute and
deliver to the others such documents and take such action as the other party may
reasonably request in order to consummate more effectively the transactions
contemplated hereby.
11.3 Payment of Fees and Expenses. If any legal action or any
arbitration or other proceeding is brought for the enforcement of this
Agreement, or because of an alleged dispute, breach, default, or
misrepresentation in connection with any of the provisions of this Agreement,
the successful or prevailing party or parties shall be entitled to recover
reasonable attorneys' fees and other costs incurred in that action or
proceeding, in addition to any other relief to which it or they may be entitled.
11.4 Parties in Interest. Except as otherwise expressly provided
herein, all the terms and provisions of this Agreement shall be binding upon,
shall inure to the benefit of and shall be enforceable by the respective heirs,
beneficiaries, personal and legal representatives, successors and assigns of the
parties hereto.
11.5 Entire Agreement; Amendments. This Agreement, including the
Schedules, Exhibits and other documents and writings referred to herein or
delivered pursuant hereto, which form a part hereof, contains the entire
understanding of the parties with respect to its subject matter. There are no
restrictions, agreements, promises, warranties, covenants or undertakings other
than those expressly set forth herein or therein. This Agreement supersedes all
prior agreements and understandings between the parties with respect to its
subject matter. This Agreement may be amended only by a written instrument duly
executed by the parties or their respective successors or assigns.
11.6 Headings, Etc. The section and paragraph headings contained
in this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement.
11.7 Pronouns. All pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine or neuter, singular or plural, as the
identity of the person, persons, entity or entities may require.
15
<PAGE> 16
11.8 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
11.9 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without reference
to conflicts of laws principles.
11.10 Notices. Any and all notices, demands or other communications
required or desired to be given hereunder by any party shall be in writing and
shall be validly given or made to another party if given by personal delivery,
telex, facsimile, telegram or if deposited in the United States mail, certified
or registered, postage prepaid, return receipt requested. If such notice, demand
or other communication is given by personal delivery, telex, facsimile or
telegram, service shall be conclusively deemed made at the time of receipt. If
such notice, demand or other communication is given by mail, such notice shall
be conclusively deemed given forty-eight (48) hours after the deposit thereof in
the United States mail addressed to the party to whom such notice, demand or
other communication is to be given as hereinafter set forth:
If to Global: Global Network, Inc.
575 Madison Ave., 10th Floor
New York, New York 10022
If to the Global Stockholders: At the addresses set forth below
their names on the signature page
of this Agreement or on
Exhibit A hereto
If to the Company: 3172 North Rainbow Blvd.
Suite 307
Las Vegas, NV 89108
11.11 Delivery by Facsimile Transmission. Delivery of an executed
counterpart of this Agreement or any exhibit attached hereto by telefacsimile
transmission shall be equally as effective as delivery of an executed hard copy
of the same. Any party delivering an executed counterpart of this Agreement or
any exhibit attached hereto by telefacsimile transmission shall also deliver an
executed hard copy of the same, but the failure by such party to deliver an
executed hard copy shall not affect the validity, enforceability and binding
effect of this Agreement or such exhibit.
12. APPOINTMENT OF AGENT
The Global Stockholders hereby irrevocably constitute and appoint
James C. Mason as their true and lawful attorney (the "Agent") with full right
and power in their names and stead to take any and all action by and on behalf
of them necessary or desirable to consummate the transactions contemplated by
this Agreement, including without limitation, the right and power to receive
certificates representing the Company Shares on behalf of each of the Global
Stockholders, to receive certificates representing the Escrowed Shares and
deliver them to the Escrow Agent on behalf of the Global Stockholders, to
deliver to the Company the certificates representing the Global Shares, to waive
performance of any of the obligations of the Company or waive compliance by the
Company with any of its covenants hereunder, to deliver the investment letters
of the Global Stockholders referred to in Section 3.3 hereof, and to amend or
terminate this Agreement as herein provided. Any such action taken by the Agent
on behalf of a Global Stockholder shall be binding upon such Global Stockholder.
The Company shall not have any responsibility to the Global Stockholders or any
of them for the distribution by the Agent of the certificates representing the
Company Shares to be delivered to the Global Stockholders or for the delivery to
the Escrow Agent of the certificates representing the Escrowed Shares, nor shall
the Company be liable in any manner whatsoever to the Global Stockholders or any
of them by or on account of any act or omission of the Agent.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the parties hereto as of the date first above written.
16
<PAGE> 17
Bargain Brokers, Inc.,
a Nevada corporation
By: /s/ Charles Powell
Its: President
Global Network, Inc.,
a New York corporation
By: James C. Mason
Its: President
[Signatures of Global Stockholders continued on next page]
17
<PAGE> 18
GLOBAL STOCKHOLDERS
SIGNATURE PAGE
/s/ James C. Mason
James C. Mason
/s/ John F. Grant
John F. Grant
/s/ Arnold R. Behrman
Arnold R. Behrman
/s/ Donald Radcliffe
Donald Radcliffe
/s/ Dennis Stillwell
Dennis Stillwell
18
<PAGE> 19
Exhibit A
to
Reorganization Agreement
<TABLE>
<CAPTION>
NUMBER OF COMPANY SHARES TO BE RECEIVED
NAME AND ADDRESS OF NUMBER OF GLOBAL -------------------------------------------------------------
GLOBAL STOCKHOLDER SHARES OWNED INITIAL SHARES EARNOUT SHARES PENALTY SHARES
- -------------------- ---------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
James C. Mason 49 1,470,000 2,940,000 2,980,711
John F. Grant 49 1,470,000 2,940,000 2,980,711
Arnold R. Behrman 37 1,110,000 2,220,000 2,250,741
James C. Mason 40 1,200,000 2,400,000 2,433,233
Donald Radcliffe 15 450,000 900,000 912,463
Dennis Stillwell 10 300,000 600,000 608,308
</TABLE>
19
<PAGE> 1
EXHIBIT 10.2
ESCROW AGREEMENT
THIS ESCROW AGREEMENT, made and entered into as of this 5th day
of August, 1999 (the "Agreement"), by and among JAMES C. MASON (the "Global
Representative"), as the representative of the former stockholders (the "Global
Stockholders") of GLOBAL NETWORK, INC., a New York corporation ("Global"),
CHARLES R. POWELL (the "Company Representative"), as the representative of
certain of the former controlling stockholders (the "Company Stockholders") of
BARGAIN BROKERS, INC., a Nevada corporation (the "Company"), and Sidney D.
Bluming, P.C., as escrow agent (the "Escrow Agent").
W I T N E S S E T H:
WHEREAS, the Company, Global and the Global Stockholders have
entered into that certain Agreement and Plan of Reorganization, dated as of
August 5, 1999 (the "Reorganization Agreement") attached hereto as Exhibit A,
pursuant to which the Global Stockholders are exchanging the shares (the "Global
Shares") of the common stock of Global owned by them for shares of common stock
(the "Company Shares") of the Company on the terms and subject to the conditions
set forth in the Reorganization Agreement; and
WHEREAS, in order to provide for certain additional Company
Shares to be issued to the Global Stockholders pursuant to the Reorganization
Agreement (the "Escrowed Shares"), the Company, Global and the Global
Stockholders have agreed that the Escrowed Shares specified in Section 3.1 of
this Agreement shall be delivered to the Escrow Agent to be deposited in the
Escrow Fund, as hereinafter defined, pending the completion of the conditions
contemplated under Section IV of this Agreement; and
WHEREAS, the Company, Global, the Global Stockholders and the
Escrow Agent desire to set forth the terms, conditions and provisions pursuant
to which the Escrow Fund will be held by the Escrow Agent and (i) disbursed to
the Global Stockholders and/or (ii) returned to the Company for cancellation.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereto agree as follows:
SECTION I DEFINITIONS
Except as otherwise provided herein, all capitalized terms
contained herein shall have the same meanings as provided in the Reorganization
Agreement, provided, however, that for purposes hereof, the term "Escrow Fund"
shall mean the Escrowed Shares deposited with the Escrow Agent on the date this
Agreement is executed as provided in the Reorganization Agreement, together with
all dividends thereon, if any, less releases (including returns to the Company)
from time to time made therefrom.
SECTION II TERM OF THE AGREEMENT
The term (the "Term") of this Agreement shall commence on the
date hereof and shall continue in effect for three years thereafter, unless
earlier terminated because all of the Escrowed Shares deposited pursuant to
Section 3.1 below have been released.
SECTION III ESTABLISHMENT OF THE ESCROW FUND
Section 3.1 Delivery of Escrow Fund. The Escrow Fund shall
initially consist of 21,732,934 shares of the Company's Common Stock (the
"Escrowed Shares"), which shall be comprised of 12,000,000 Earnout Shares and
9,732,934 Penalty Shares. Certificates representing the Escrowed Shares are to
be issued at the Closing pro rata in the names of the Global Stockholders and
shall be delivered, together with stock
1
<PAGE> 2
powers duly endorsed in blank, by the Global Representative to the Escrow Agent
upon the signing of this Agreement.
Section 3.2 Receipt of Escrow Fund. The Escrow Agent agrees,
after receipt of the Escrowed Shares as provided in Section 3.1 above, to hold
and dispose of the Escrow Fund in accordance with the terms, conditions and
provisions of this Agreement.
Section 3.3 Voting and Dividends. During the Term, the Global
Stockholders shall have the right to vote the Escrowed Shares, other than
Escrowed Shares returned to the Company for cancellation in accordance with
Section IV below, registered in their respective names. Dividends, if any, paid
on the Escrowed Shares during the Term will be added to the Escrow Fund and will
be released from the Escrow Fund at the same time, and in the same manner, as
the respective Escrowed Shares on which such dividends were paid.
SECTION IV DISPOSITION OF ESCROW FUND DURING TERM OF AGREEMENT
Section 4.1 Direction Letter. Should an event occur that requires
the release of Escrowed Shares from the Escrow Fund pursuant to Sections 4.2 and
4.3 below, the Global Representative and the Company Representative shall send
to the Escrow Agent a direction letter, in the form set forth in Exhibits C and
D, as applicable; provided, however, that a notice to return all of the Escrowed
Shares to the Company for cancellation need only be signed by the Global
Representative. The Escrow Agent shall release the Escrowed Shares as so
instructed pursuant to such direction letter or notice, without further notice
or consent by the other parties hereto. Notwithstanding any provisions of
Sections 4.2 and 4.3 below, the Escrow Agent is only obligated to release the
Escrowed Shares in accordance with a direction letter issued pursuant to this
Section 4.1 or pursuant to an award in arbitration as set forth in Section 6.2
below.
Section 4.2 Earnout Shares.
(a) Some or all of the Earnout Shares shall be released
(pro rata in accordance with the percentages set forth opposite each Global
Stockholder's name on Exhibit B hereto if not all Escrowed Shares are to be
released) to the Global Stockholders in the following circumstances:
(i) All of the Earnout Shares are to be released to
the Global Stockholders upon the Company having during any four consecutive
quarters during the Term aggregate net income before taxes of not less than
$1,000,000, as determined by generally accepted accounting principles and as
reported to the public in accordance with applicable periodic reporting rules
under the Securities Exchange Act of 1934.
(ii) If all or any percentage of the Penalty Shares
are released to the Global Stockholders under Section 4.3 of this Agreement, all
or the same percentage of the Earnout Shares shall simultaneously be released to
the Global Stockholders.
(b) Any Earnout Shares not released to the Global
Stockholders, or for which a notice has not been sent to the Escrow Agent
requesting release to the Global Stockholders as provided above in this Section
and in Section 4.1, as of the end of the Term shall be returned by the Escrow
Agent to the Company for cancellation.
Section 4.3 Penalty Shares.
(a) Some or all of the Penalty Shares shall be released
(pro rata in accordance with the percentages set forth opposite each Global
Stockholder's name on Exhibit B hereto if not all Escrowed Shares are to be
released) to the Global Stockholders in the following circumstances:
(i) 25% of the Penalty Shares (2,433,233 Penalty
Shares) are to be released to the Global Stockholders if Warrants having an
aggregate exercise price of at least $200,000 are not exercised, and the
aggregate exercise price thereof is not delivered to the Company, on or before
30 days following the Closing; an additional 37 1/2% of the Penalty Shares
(3,649,850 Penalty Shares) are to be released to the Global
2
<PAGE> 3
Stockholders if Warrants having an aggregate exercise price of at least an
additional $300,000 are not exercised, and the aggregate exercise price thereof
is not delivered to the Company, on or before 60 days following the Closing; and
the remaining 37 1/2% of the Penalty Shares (3,649,851 Penalty Shares) are to be
released to the Global Stockholders if Warrants having an aggregate exercise
price of at least an additional $300,000 are not exercised, and the aggregate
exercise price thereof is not delivered to the Company, on or before 90 days
following the Closing.
(ii) All of the Penalty Shares are to be released to
the Global Stockholders if a claim is asserted against the Company by
stockholders who purchased their securities from the Company pursuant to the
private offering of 100,000 shares for an aggregate purchase price of $200,000
described in Section 6.2(a) of the Reorganization Agreement and such claim is
related to (x) any action taken by or on behalf of the Company prior to the
Closing or (y) any action taken after the Closing by any person, other than an
officer or director of the Company, without written authorization by the
Company, in each case unless satisfactory indemnity reasonably acceptable to the
Global Stockholders is provided within 30 days after the Global Representative
notifies the Company Representative of such claim.
(b) Any Penalty Shares not released to the Global
Stockholders, or for which a notice has not been sent to the Escrow Agent
requesting release to the Global Stockholders as provided above in this Section
and in Section 4.1, prior to the end of the Term shall be returned by the Escrow
Agent to the Company for cancellation.
Section 4.4 Notice to the Escrow Agent. Notice to the Escrow
Agent shall be (i) joint written instructions of the Global Representative and
the Company Representative, directing the release of a number of the Escrowed
Shares from the Escrow Fund, in the form of Exhibits C and D attached hereto,
(ii) with respect to the return all of the Escrowed Shares to the Company for
cancellation, a notice signed by the Global Representative in the form of
Exhibit D attached hereto, or (iii) an award in arbitration, pursuant to Section
6.2 below, directing the release of Escrowed Shares from the Escrow Fund.
SECTION V THE ESCROW AGENT
Section 5.1 Responsibility and Liability of the Escrow Agent.
(a) As escrow agent hereunder, the Escrow Agent shall have
no duties or responsibilities, including, without limitation, any duty or
responsibility to determine whether any release is proper under any provision
hereof, except those duties and responsibilities expressly set forth herein.
Without limitation, the Escrow Agent shall have no obligation hereunder except
as to Escrowed Shares actually received by it. It is understood and agreed that
the duties of the Escrow Agent hereunder are purely ministerial in nature and
that it shall not be liable for any error of judgment, fact or law, or any act
done or omitted to be done, except for its own gross negligence or willful
misconduct. The determination of the Escrow Agent as to whether an event or
condition has occurred, been met or satisfied, or as to whether a provision of
the Reorganization Agreement or this Agreement has been complied with, or as to
whether sufficient evidence of the event, condition or compliance with the
provision has been furnished to the Escrow Agent, shall not subject such Escrow
Agent to any claim, liability or obligation whatsoever, even if it shall be
found that such determination was improper or incorrect, provided only that such
Escrow Agent shall not have been guilty of gross negligence or willful
misconduct in making such determination. The Escrow Agent may execute any papers
hereunder and perform any duties hereunder through employees, or attorneys, or
agents or servants.
(b) The Escrow Agent shall not be responsible for the
genuineness or validity of any document or item deposited with it or any notice
or instruction given to it hereunder, and the Escrow Agent shall be fully
protected in acting in accordance with any written instruction or instrument
given to it hereunder, and believed by it to have been signed by the proper
person or persons. The Escrow Agent may assume that any person purporting to
give any notice or instruction in accordance with the provisions of this
Agreement has been duly authorized to do so and may assume the authenticity of
any signature it receives.
(c) If at any time the Escrow Agent shall receive
conflicting notices, claims, demands or instructions with respect to the Escrow
Fund or any part thereof or if for any other reason it shall in
3
<PAGE> 4
good faith be unable to determine the party or parties entitled to receive the
Escrow Fund or any part thereof, or shall otherwise be uncertain as to its
duties or rights hereunder, the Escrow Agent may refuse to make any release and
retain the Escrow Fund or part thereof in its possession until either receiving
written instructions from both the Global Representative and the Company
Representative or as directed pursuant to an order as set forth in Section 6
below whereupon the Escrow Agent shall make disposition of the disputed Escrowed
Shares or take action in accordance with such written instructions or such
order.
(d) The Global Stockholders [and the Company
Representative] shall jointly and severally indemnify and hold harmless the
Escrow Agent from and against any claim, demand, deficiency, tax, loss or
liability and related costs or expenses in connection therewith, including,
without limitation, reasonable attorneys' fees and costs of investigation, and
any costs or expenses incurred in connection with any arbitration or judicial
proceedings, incurred for any reason other than the gross negligence or willful
misconduct of such Escrow Agent and arising out of or in connection with such
Escrow Agent's acceptance of, the exercise of its rights under, or the
performance of its duties and obligations under this Agreement. The terms of
this Section shall survive the termination of this Agreement and shall apply
with respect to claims arising out of or in connection with the Escrow Agent's
duties while acting as Escrow Agent and the resignation of the Escrow Agent.
(e) If the Global Representative and the Company
Representative shall be in disagreement about the interpretation of this
Agreement, or about the rights and obligations, or the propriety, of any action
contemplated by Escrow Agent hereunder, Escrow Agent may, in its sole
discretion, submit such disagreement to arbitration to resolve such
disagreement, as set forth in Section 6.2 below. Escrow Agent shall be
indemnified by the Global Stockholders for all costs, including reasonable
attorneys' fees, in connection with the foregoing submission and shall be fully
protected in suspending all or part of its activities under this Agreement until
a final judgment in the arbitration action is received.
Section 5.2 Compensation of the Escrow Agent. The Escrow Agent
shall receive fees for its services hereunder as set forth on Schedule A hereto
for which the Global Stockholders shall be jointly and severally liable. The
Escrow Agent shall have a first lien on the Escrow Fund with respect to the
indemnity afforded it hereunder.
Section 5.3 Completion of the Escrow Agent's Duties. The Escrow
Agent shall, upon release of the Escrow Fund, be released and discharged from
any liability or obligation with respect thereto.
Section 5.4 Removal or Resignation of Escrow Agent: Successor
Escrow Agent.
(a) The Global Representative and the Company
Representative, in their sole discretion, may remove the Escrow Agent, and
appoint a successor escrow agent, upon ten (10) days written notice to the
Escrow Agent.
(b) The Escrow Agent, in its sole discretion, may resign
as Escrow Agent upon ten (10) business days' notice to the Global Representative
and the Company Representative.
(c) If the Escrow Agent is removed or resigns, its only
duty shall be to hold and dispose of the Escrow Fund in accordance with the
provisions of this Agreement until a successor escrow agent shall be appointed
and written notice of the name and address of such successor escrow agent shall
be given to the Escrow Agent by the Global Representative and the Company
Representative, whereupon the Escrow Agent's only duty shall be to pay over to
the successor escrow agent the Escrow Fund, less any portion thereof previously
released in accordance with this Agreement.
(d) If the Escrow Agent delivers a notice of its intention
to resign and the Global Representative and the Company Representative are
unable to agree upon a successor escrow agent, a successor escrow agent shall be
determined by arbitration in accordance with the provisions of Section 6.2 of
this Agreement. The Escrow Agent shall remain the Escrow Agent hereunder until
it receives notice of the appointment of a successor escrow agent as a result of
such arbitration. It is understood and agreed that under no circumstances shall
the Escrow Agent be required to take any action with respect to the designation
or appointment of a successor
4
<PAGE> 5
escrow agent (including, without limitation, taking any action to initiate
arbitration proceedings for the appointment of such successor escrow agent).
(e) Any such successor escrow agent shall be required to
become a party to this Agreement, and shall thereupon be deemed to be the Escrow
Agent for all purposes hereunder.
SECTION VI MISCELLANEOUS
Section 6.1 Notices. All notices, requests, consents, and other
communications given or served hereunder shall be in writing and shall be duly
sent, given or made by hand, by telecopy, by post office express mail, or by
overnight delivery service (such as Federal Express and its competitors), and in
each case addressed.
in the case of the Global Representative, to him
at:
c/o Global Network Incorporated
575 Madison Avenue, 10th Floor
New York, New York 10022
with a copy to:
Coleman, Rhine & Goodwin LLP
750 Lexington Avenue, 26th Floor
New York, New York 10022
Attention: Bruce S. Coleman, Esq.
in the case of Company Representative, to him at:
Charles R. Powell
5900 Mira Costa
Las Vegas, NV 89108
If to Escrow Agent:
Sidney D. Bluming, P.C.
315 West 57th Street
Suite 501
New York, NY 10019
or to such other persons or to such other address as a party hereto may from
time to time specify to the others by notice given in accordance with this
Section. All such notices, requests, consents and other communications, if
mailed, shall be deemed given five (5) days after the mailing thereof, and if
otherwise sent, given or made, upon receipt thereof.
Section 6.2 Arbitration. The parties hereto agree that any
dispute or controversies arising under this Agreement shall be settled by final
and binding arbitration conducted in New York City in accordance with and
subject to the Commercial Arbitration Rules of the American Arbitration
Association in effect at such time by a panel of three (3) arbitrators selected
in accordance with those Rules. Judgment upon the award rendered in any such
arbitration may be entered in any court of competent jurisdiction, or
application may be made to such court for a judicial acceptance of the award and
an enforcement, as the law of such jurisdiction may require or allow.
5
<PAGE> 6
Section 6.3 Effect of Headings. The headings of sections of this
Agreement are to facilitate reference only, do not form a part of this
Agreement, and shall not in any way affect or be considered in the
interpretation hereof.
Section 6.4 Governing Law. This Agreement has been negotiated and
is to be performed in the State of New York and shall be governed by and
construed in accordance with the laws applicable to agreements made and to be
performed solely in the State of New York.
Section 6.5 Entire Agreement. This Agreement and the
Reorganization Agreement contain the entire agreement among the parties with
respect to the subject matter hereof. This Agreement may not be amended,
supplemented or discharged, and no provision hereof may be modified or waived,
except by an instrument in writing signed by all of the parties hereto. No
waiver of any provision hereof by any party shall be deemed a continuing waiver
of any matter by such party.
Section 6.6 Severability. In the event any one or more of the
provisions of this Agreement shall for any reason be held to be invalid, illegal
or unenforceable, the remaining provisions of the Agreement shall be unimpaired,
and the invalid, illegal or unenforceable provision shall be replaced by a
mutually acceptable provision, which being valid, legal and enforceable, comes
closest to the intention of the parties underlying the invalid, illegal or
unenforceable provision.
Section 6.7 Waiver. No waiver or modification of any of the terms
of this Agreement shall be valid unless in writing and designated as such. No
waiver of a breach of any provision hereof or a default hereunder shall be
deemed a waiver of such provision or of any subsequent breach or default of any
kind.
Section 6.8 Binding Effect. This Agreement shall be binding upon
and shall inure to the benefit of each of the parties hereto, and their
respective successors and assigns.
Section 6.9 Execution. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but such counterparts
together shall constitute one and the same instrument.
Section 6.10. Waiver of Conflicts. The Global Representative and
the Company Representative have been advised of the Escrow Agent's
representation of Global and the Global Stockholders and they expressly (i)
waive any conflicts that may be created thereby and (ii) consent to the Escrow
Agent's continued representation of Global and the Global Stockholders (and,
following the transactions contemplated by the Reorganization Agreement, the
Company) in any matter, including those relating to the subject matter of this
Escrow Agreement and to the transactions contemplated by the Reorganization
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the day and year first above written.
JAMES C. MASON
/s/ James C. Mason
-----------------------------
CHARLES R. POWELL
/s/ Charles R. Powell
-----------------------------
SIDNEY D. BLUMING, P.C.
6
<PAGE> 7
By:/s/ Sidney D. Bluming
--------------------------
Sidney D. Bluming
7
<PAGE> 8
EXHIBIT A
REORGANIZATION AGREEMENT
[See Exhibit 10.1 to Global Network, Inc. Form 10-SB]
A-1
<PAGE> 9
EXHIBIT B
GLOBAL STOCKHOLDERS' PERCENTAGE OWNERSHIP INTEREST
<TABLE>
<CAPTION>
Name of Global Stockholder Percentage Ownership Interest
- -------------------------- -----------------------------
<S> <C>
James C. Mason 24.5
John F. Grant 24.5
Arnold R. Behrman 18.5
James C. Mason 20.0
Donald Radcliffe 7.5
Dennis Stillwell 5.0
</TABLE>
B-1
<PAGE> 10
EXHIBIT C
FORM OF NOTICE TO ESCROW AGENT
_____________________,_____
Sidney D. Bluming, P.C.
315 West 57th Street, Suite 501
New York, NY 10019
Re: Release under the Escrow Agreement
Dear Mr. Bluming:
We hereby respectfully request that you release to the former
stockholders (the "Global Stockholders") of Global Networks, Inc. set forth on
Annex 1 to this notice, in the denominations set forth opposite each such name
on Annex 1, an aggregate of ________ shares of [Bargain Brokers, Inc.] (the
"Company") Common Stock, comprised of [_____ Earnout Shares and _____ Penalty
Shares], which you are holding pursuant to that certain Escrow Agreement (the
"Escrow Agreement"), dated as of August ____, 1999, by and among James C. Mason
(the "Global Representative"), as the representative of the Global Stockholders,
Charles R. Powell (the "Company Representative"), as the representative of
certain of the former controlling stockholders (the "Company Stockholders") of
the Company, and [insert], as escrow agent (the "Escrow Agent"). An event has
occurred which, pursuant to the Escrow Agreement, has given rise to the release
of these shares to the Global Stockholders.
Thank you for your cooperation in this matter.
Very truly yours,
JAMES C. MASON
-------------------------------------
CHARLES R. POWELL
-------------------------------------
C-1
<PAGE> 11
ANNEX 1
Name of Global Stockholder Number of Shares
C-2
<PAGE> 12
EXHIBIT D
FORM OF NOTICE TO ESCROW AGENT
_____________________,_____
Sidney D. Bluming, P.C.
315 West 57th Street, Suite 501
New York, NY 10019
Re: Release under the Escrow Agreement
Dear Mr. Bluming:
We hereby respectfully request that you return to Bargain
Brokers, Inc. (the "Company") the remaining shares of Common Stock of the
Company which you are holding pursuant to that certain Escrow Agreement (the
"Escrow Agreement"), dated as of August ____, 1999, by and among James C. Mason
(the "Global Representative"), as the representative of the former stockholders
(the "Global Stockholders") of GLOBAL NETWORKS, INC., a New York corporation
("Global"), Charles R. Powell (the "Company Representative"), as the
representative of certain of the former controlling stockholders (the "Company
Stockholders") of the Company, and [insert], as escrow agent (the "Escrow
Agent"). The term of the Escrow Agreement has expired. The remaining shares
should be returned to the Company for cancellation at the address set forth in
the Escrow Agreement.
Thank you for your cooperation in this matter.
Very truly yours,
JAMES C. MASON
----------------------------------
CHARLES R. POWELL
----------------------------------
D-1
<PAGE> 1
EXHIBIT 10.3
THE WARRANTS REPRESENTED HEREBY AND THE SHARES OF COMMON STOCK TO BE ISSUED UPON
ITS EXERCISE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE
ACCOUNT OR BENEFIT OF, U.S. PERSONS (AS SUCH TERM IS DEFINED IN RULE 902(K) OF
THE SECURITIES ACT), EXCEPT (A) TO THE COMPANY, (B) IN AN OFFSHORE TRANSACTION
MEETING THE REQUIREMENTS OF RULE 903 OR 904 OF THE SECURITIES ACT, (C) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, OR
(D) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT.
HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY BE MADE ONLY IN COMPLIANCE
WITH THE SECURITIES ACT.
BARGAIN BROKERS, INC.
Incorporated Under the Laws of the State of Nevada
No. 01 400,000 Common Stock
Purchase Warrants
CERTIFICATE FOR COMMON STOCK
PURCHASE WARRANTS
1. Warrant. This Warrant Certificate certifies that Miraflores Corp., or
registered assigns (the "Registered Holder"), is the registered owner of the
above indicated number of Warrants expiring on the Expiration Date, as
hereinafter defined. One (1) Warrant entitles the Registered Holder to purchase
one (1) share of the $.001 par value common stock (a "Share") of Bargain
Brokers, Inc., a Nevada corporation (the "Company"), from the Company at a
purchase price of Two Dollars ($2.00) (the "Exercise Price") at any time during
the Exercise Period, as hereinafter defined, upon surrender at the principal
office of the Company of this Warrant Certificate with the exercise form
appended hereto duly completed and executed and accompanied by payment of the
Exercise Price.
Upon due presentment for transfer or exchange of this Warrant
Certificate at the principal office of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued in exchange for this Warrant Certificate, subject to
the limitations provided herein, upon payment of any tax or governmental charge
imposed in connection with such transfer. Subject to the terms hereof, the
Company shall deliver Warrant Certificates in required whole number
denominations to Registered Holders in connection with any transfer or exchange
permitted hereunder.
2. Restrictive Legend. Each Warrant Certificate shall bear legends
substantially in the form of the legends that appear at the beginning of this
Warrant Certificate. Each certificate representing Shares issued upon exercise
of a Warrant, unless such Shares are then registered under the Securities Act of
1933, as amended (the "Securities Act") , shall bear a legend in substantially
the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE
SHARES ARE BEING ISSUED IN RELIANCE UPON THE PROVISIONS OF REGULATION S
PROMULGATED UNDER THE SECURITIES ACT.
1
<PAGE> 2
THE SHARES ARE RESTRICTED AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE
TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OF, U.S.
PERSONS (AS SUCH TERM IS DEFINED IN RULE 902(K) OF THE SECURITIES ACT),
EXCEPT (A) TO THE COMPANY, (B) IN AN OFFSHORE TRANSACTION MEETING THE
REQUIREMENTS OF RULE 903 OR 904 OF THE SECURITIES ACT, (C) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES
ACT, OR (D) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT. HEDGING TRANSACTIONS INVOLVING THE SHARES MAY BE MADE
ONLY IN COMPLIANCE WITH THE SECURITIES ACT."
3. Exercise. Subject to the terms hereof, the Warrants evidenced by this
Warrant Certificate may be exercised at the Exercise Price in whole or in part
at any time during the period (the "Exercise Period") commencing on the date
hereof and terminating at the close of business on _____________, 1999 (the
"Expiration Date").
The Warrants represented by this Warrant Certificate may not be
exercised by a U.S. person, as defined in Regulation S promulgated under the Act
("Regulation S"), or on behalf of or for the account of such a U.S. person,
unless registered under the Act or an exemption from such registration
requirements is available. The Warrants represented by this Warrant Certificate
may not be exercised within the United States (as defined in Regulation S), and
the Shares issuable upon such exercise shall be delivered outside the United
States, unless such securities are registered under the Act or an exemption from
such registration requirements is available. A holder purporting to exercise the
Warrants represented hereby shall certify in writing as to the foregoing as a
condition to the exercise of such Warrants.
A Warrant shall be deemed to have been exercised immediately prior to
the close of business on the date (the "Exercise Date") of the surrender to the
Company at its principal offices of this Warrant Certificate with the exercise
form attached hereto completed and executed by the Registered Holder and
accompanied by payment to the Company, in cash or by check (which shall be
accepted subject to collection), of an amount equal to the aggregate Exercise
Price, in lawful money of the United States of America.
The person entitled to receive the Shares issuable upon exercise of a
Warrant or Warrants ("Warrant Shares") shall be treated for all purposes as the
holder of such Warrant Shares as of the close of business on the Exercise Date.
The Company shall not be obligated to issue any fractional share interests in
Warrant Shares issuable or deliverable on the exercise of any Warrant or scrip
or cash with respect thereto, and such right to a fractional share shall be of
no value whatsoever. If more than one Warrant shall be exercised at one time by
the same Registered Holder, the number of full shares which shall be issuable on
exercise thereof shall be computed on the basis of the aggregate number of full
shares issuable on such exercise.
Promptly, and in any event within fifteen business days after the
Exercise Date, the Company shall cause to be issued and delivered to the person
or persons entitled to receive the same, a certificate or certificates for the
number of Warrant Shares deliverable on such exercise.
The Company may deem and treat the Registered Holder of the Warrants at
any time as the absolute owner thereof for all purposes, and the Company shall
not be affected by any notice to the contrary. The Warrants shall not entitle
the Registered Holder thereof to any of the rights of shareholders or to any
dividend declared on the Shares unless the Registered Holder shall have
exercised the Warrants and thereby purchased the Warrant Shares prior to the
record date for the determination of holders of Shares entitled to such dividend
or other right.
4. Reservation of Shares and Payment of Taxes. The Company covenants
that it will at all times reserve and have available from its authorized Common
Stock such number of Shares as shall then be issuable on the exercise of
outstanding Warrants. The Company covenants that all Warrant Shares which
2
<PAGE> 3
shall be so issuable shall be duly and validly issued, fully paid and
nonassessable, and free from all taxes, liens and charges with respect to the
issue thereof.
The Registered Holder shall pay all documentary, stamp or similar taxes
and other government charges that may be imposed with respect to the issuance,
transfer or delivery of any Warrant Shares on exercise of the Warrants. In the
event the Warrant Shares are to be delivered in a name other than the name of
the Registered Holder of the Warrant Certificate, no such delivery shall be made
unless the person requesting the same has paid the amount of any such taxes or
charges incident thereto.
5. Registration of Transfer. The Warrant Certificates may be transferred
in whole or in part, provided any such transfer complies with all applicable
Federal and state securities laws and, if requested by the Company, the
Registered Holder delivers to the Company an opinion of counsel to that effect,
in form and substance reasonably acceptable to the Company. Warrant Certificates
to be transferred shall be surrendered to the Company at its principal office.
The Company shall execute, issue and deliver in exchange therefor the Warrant
Certificate or Certificates which the Registered Holder making the transfer
shall be entitled to receive.
The Company shall keep transfer books at its principal office which
shall register Warrant Certificates and the transfer thereof. On due presentment
of any Warrant Certificate for registration of transfer at such office, the
Company shall execute, issue and deliver to the transferee or transferees a new
Warrant Certificate or Certificates representing an equal aggregate number of
Warrants. All Warrant Certificates presented for registration of transfer or
exercise shall be duly endorsed or be accompanied by a written instrument or
instruments of transfer in form satisfactory to the Company. The Company may
require payment of a sum sufficient to cover any tax or other government charge
that may be imposed in connection therewith.
All Warrant Certificates so surrendered, or surrendered for exercise, or
for exchange in case of mutilated Warrant Certificates, shall be promptly
canceled by the Company and thereafter retained by the Company until the
Expiration Date. Prior to due presentment for registration of transfer thereof,
the Company may treat the Registered Holder of any Warrant Certificate as the
absolute owner thereof (notwithstanding any notations of ownership or writing
thereon made by anyone other than the Company), and the Company shall not be
affected by any notice to the contrary.
6. Loss or Mutilation. On receipt by the Company of evidence
satisfactory as to the ownership of and the loss, theft, destruction or
mutilation of this Warrant Certificate, the Company shall execute and deliver,
in lieu thereof, a new Warrant Certificate representing an equal aggregate
number of Warrants. In the case of loss, theft or destruction of any Warrant
Certificate, the individual requesting issuance of a new Warrant Certificate
shall be required to indemnify the Company in a form and amount satisfactory to
the Company. In the event a Warrant Certificate is mutilated, such Certificate
shall be surrendered and canceled by the Company prior to delivery of a new
Warrant Certificate. Applicants for a new Warrant Certificate shall also comply
with such other regulations and pay such other reasonable charges as the Company
may prescribe.
7. Adjustment of Shares. The number and kind of securities issuable upon
exercise of a Warrant shall be subject to adjustment from time to time upon the
happening of certain events, as follows:
(a) Stock Splits, Stock Combinations and Certain Stock Dividends.
If the Company shall at any time subdivide or combine its outstanding
Shares, or declare a dividend in Shares or other securities of the
Company convertible into or exchangeable for Shares, the number and kind
of Shares purchasable upon exercise of the Warrant immediately prior
thereto shall be adjusted so that the Registered Holder shall be
entitled to receive the kind and number of Shares or other
3
<PAGE> 4
securities of the Company which it would have owned or would have been
entitled to receive immediately after the happening of any of the events
described above, had the Warrant been exercised immediately prior to the
happening of such event or any record date with respect thereto. Any
adjustment made pursuant to this Section 7(a) shall become effective
immediately after the effective date of such event.
Whenever the number of Shares issuable upon exercise of the
Warrant is adjusted as herein provided, the Exercise Price payable upon
exercise of the Warrant shall be adjusted by multiplying such Exercise
Price immediately prior to such adjustment by a fraction, the numerator
of which shall be the number of Shares purchasable upon the exercise of
the Warrant immediately prior to such adjustment, and the denominator of
which shall be the number of Shares so purchasable immediately
thereafter.
(b) Adjustment for Reorganization, Consolidation, Merger. In case
of any reorganization of the Company (or any other corporation the stock
or other securities of which are at the time receivable upon exercise of
a Warrant) or in case the Company (or any such other corporation) shall
merge into or with or consolidate with another corporation or convey all
or substantially all of its assets to another corporation or enter into
a business combination of any form as a result of which the Shares or
other securities receivable upon exercise of a Warrant are converted
into other stock or securities of the same or another corporation, then
and in each such case, the Registered Holder of a Warrant, upon exercise
of the purchase right at any time after the consummation of such
reorganization, consolidation, merger, conveyance or combination, shall
for the same Exercise Price be entitled to receive, in lieu of the
Shares or other securities to which such Registered Holder would have
been entitled had he exercised the purchase right immediately prior
thereto, such stock and securities which such Registered Holder would
have owned immediately after such event with respect to the Shares and
other securities for which a Warrant may have been exercised immediately
before such event had the Warrant been exercised immediately prior to
such event.
In each case of an adjustment in the Shares or other securities
receivable upon the exercise of a Warrant, the Company shall promptly notify the
Registered Holder of such adjustment. Such notice shall set forth the facts upon
which such adjustment is based.
8. Reduction in Exercise Price at Company's Option. The Company's Board
of Directors may, at its sole discretion, reduce the Exercise Price of the
Warrants in effect at any time either for the remaining life of the Warrants or
any shorter period of time determined by the Company's Board of Directors. The
Company shall promptly notify the Registered Holders of any such reduction in
the Exercise Price.
9. Notices. All notices, demands, elections, or requests (however
characterized or described) required or authorized hereunder shall be deemed
given sufficiently if in writing and sent by registered or certified mail,
return receipt requested and postage prepaid, or by facsimile or telegram to the
Company, at its principal executive office, and to the Registered Holder, at the
address of such holder as set forth on the books maintained by the Company.
10. General Provisions. This Warrant Certificate shall be construed and
enforced in accordance with, and governed by, the laws of the State of Nevada.
Except as otherwise expressly stated herein, time is of the essence in
performing hereunder. The headings of this Warrant Certificate are for
convenience in reference only and shall not limit or otherwise affect the
meaning hereof.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed as of the 5 day of August, 1999.
4
<PAGE> 5
Bargain Brokers, Inc.
By /s/ Charles R. Powell
Title President
5
<PAGE> 6
BARGAIN BROKERS, INC.
The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT -
TEN ENT - as tenants by the entireties Custodian
JR TEN - as joint tenants with right ---------------------
of survivorship and not as (Cust) (Minor)
tenants in common under Uniform Gifts
to Minors Act __________
(State)
Additional abbreviations may also be used though not in the above list.
FORM OF ASSIGNMENT
(To be Executed by the Registered Holder if He or It
Desires to Assign Warrants Evidenced by the
Within Warrant Certificate)
FOR VALUE RECEIVED _________________________________________ hereby
sells, assigns and transfers unto _____________________________________________
(___________) Warrants, evidenced by the within Warrant Certificate, and does
hereby irrevocably constitute and appoint ____________________ Attorney to
transfer the said Warrants evidenced by the within Warrant Certificates on the
books of the Company, with full power of substitution.
Dated:________________________ _______________________________________
Signature
Notice: The above signature must correspond with the name as written upon the
face of the Warrant Certificate in every particular, without alteration
or enlargement or any change whatsoever.
Signature Guaranteed:___________________________________________________________
SIGNATURE MUST BE GUARANTEED BY A COMMERCIAL BANK OR MEMBER FIRM OF ONE OF THE
FOLLOWING STOCK EXCHANGES: NEW YORK STOCK EXCHANGE, PACIFIC COAST STOCK
EXCHANGE, AMERICAN STOCK EXCHANGE, OR MIDWEST STOCK EXCHANGE.
<PAGE> 7
FORM OF ELECTION TO PURCHASE
(To be Executed by the Holder if He or It Desires to Exercise
Warrants Evidenced by the Warrant Certificate)
To Bargain Brokers, Inc.
The undersigned hereby irrevocably elects to exercise
_____________________________ (_____) Warrants evidenced by the within Warrant
Certificate for, and to purchase thereunder, _________________________________
(_________) full shares of Common Stock issuable upon exercise of said Warrants
and delivery of $__________ and any applicable taxes.
The undersigned hereby certifies that (i) the undersigned is not a U.S.
person (as defined in Regulation S promulgated under the Securities Act of 1933,
as amended), (ii) the undersigned is not exercising any Warrants on behalf of a
U.S. person, (iii) no U.S. person has any interest in the Warrants being
exercised or the securities to be issued upon their exercise, and (iv) that the
undersigned is exercising the Warrants outside the United States. [If this
certification cannot be given because the facts do not support it, it should be
stricken and the undersigned shall, if required by the issuer, provide a written
opinion of counsel, in form and substance acceptable to the issuer, to the
effect that the Warrants being exercised and the securities deliverable upon
exercise thereof have been registered under the Securities Act of 1933 or are
exempt from registration thereunder.]
Please register the certificates for such shares as follows:
Please insert taxpayer
identification or social
security number (if any)
- ---------------------------------- ---------------------------------
(Please print name)
- --------------------------------------------------------------------------------
(Please print address, which must be outside the United States)
- --------------------------------------------------------------------------------
If said number of Warrants shall not be all the Warrants evidenced by
the within Warrant Certificate, the undersigned requests that a new Warrant
Certificate evidencing the Warrants not so exercised be registered in the name
of the undersigned at the following address and delivered to that address:
- --------------------------------------------------------------------------------
(Please print address, which must be outside the United States)
- --------------------------------------------------------------------------------
<PAGE> 8
(SIGNATURES CONTINUED ON FOLLOWING PAGE)
Dated:____________________ Signature:___________________________________________
NOTICE: The above signature must correspond with the name as written upon
the face of the within Warrant Certificate in every particular,
without alteration or enlargement or any change whatsoever, or if
signed by any other person the Form of Assignment hereon must be
duly executed and if the certificate representing the shares or
any Warrant Certificate representing Warrants not exercised is to
be registered in a name other than that in which the within
Warrant Certificate is registered, the signature of the holder
hereof must be guaranteed.
Signature Guaranteed:___________________________________________________________
SIGNATURE MUST BE GUARANTEED BY A COMMERCIAL BANK OR MEMBER FIRM OF ONE OF THE
FOLLOWING STOCK EXCHANGES: NEW YORK STOCK EXCHANGE, PACIFIC COAST STOCK
EXCHANGE, AMERICAN STOCK EXCHANGE, OR MIDWEST STOCK EXCHANGE.
<PAGE> 1
EXHIBIT 16.1
LETTER ON CHANGE IN CERTIFYING ACCOUNTANT
David E. Coffey, CPA
3651 Lindell Road, Suite H
Las Vegas, Nevada 89103
- --------------------------------------------------------------------------------
August 24, 1999
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Gentlemen:
I am the former certified public accountant for Bargain Brokers, Inc.
(now known as Global Network, Inc. and hereinafter referred to as "the
Company"). I have reviewed and agree with the following statements made by the
Company in its Registration Statement on Form 10-SB with respect to its change
in accountants:
Reports issued by Mr. Coffey on the Company's financial statements did
not contain any adverse opinion or disclaimer of opinion and were not
qualified as to audit scope or accounting principles, nor were there any
material disagreements with Mr. Coffey on any matter of accounting
principles or practices, financial statement disclosure, or auditing
scope or procedure.
Very Truly Yours,
/s/ David E. Coffey, CPA
David E. Coffey, CPA
<PAGE> 1
EXHIBIT 21.1
LIST OF SUBSIDIARIES
Global Network, Inc., a New York corporation, is a wholly owned
subsidiary of Global Network, Inc.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> APR-26-1999
<PERIOD-END> AUG-15-1999
<CASH> 297,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 375,503
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 375,503
<CURRENT-LIABILITIES> 36,679
<BONDS> 0
0
0
<COMMON> 31,933
<OTHER-SE> 306,891
<TOTAL-LIABILITY-AND-EQUITY> 375,503
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> (26,176)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (26,176)
<INCOME-TAX> 0
<INCOME-CONTINUING> (26,176)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (26,176)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
