U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
Registration Statement on Form 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL
BUSINESS ISSUERS
GRG, INC.
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(Name of Small Business Issuer as specified in its charter)
NEVADA 65-0831618
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(State or other jurisdiction of (I.R.S. incorporation or
organization) Employer I.D. No.)
100 2nd Avenue North Suite 200
St. Petersburg, Florida 33701
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(Address of Principal Executive Office)
Issuer's Telephone Number, including Area Code: (727) 550-2442
Securities registered pursuant to Section 12(b) of the Exchange Act:
None
Securities registered pursuant to Section 12(g) of the Exchange Act:
$0.001 Par Value Common Voting Stock
------------------------------------
Title of Class
DOCUMENTS INCORPORATED BY REFERENCE: None.
Item 1. Description of Business.
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Business Development.
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Organization, Charter Amendments and General History.
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Organization.
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GRG, Inc., a Nevada corporation ("GRG"), was organized on March 19,
1992, under the name "Karat Productions, Inc." We were organized for the purpose
of conducting any lawful business, including, but not limited to, the
manufacture, sale and distribution of diamonds and colored gemstones.
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At inception, we were authorized to issue 100,000,000 shares of
non-assessable common voting stock, par value one mill ($0.001) per share.
Charter Amendments.
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The following amendments to the Articles of Incorporation have been
effected since we were organized:
* Reduction of par value from $0.001 per share to $0.0005 per shares,
effective August 9, 1993.
* Increased par value back to $0.001 per share; effected a three for one
forward split of the outstanding common stock; and changed the name of GRG to
"Ghiglieri Corporation," effective June 5, 1997.
* Changed the name of GRG to "GRG, Inc.," effective March 3, 1998.
Copies of the initial Articles of Incorporation, these amendments and
the Bylaws are attached hereto and incorporated herein by reference. See Part
III, Item 1.
General History.
----------------
We ceased our original business operations, which proved unsuccessful,
and were dormant until 1998, when it entered into a series of transactions to
acquire interests in the telephone, real estate and sports marketing industries.
In March 1998, we acquired the international telecommunications asset s
of International Tele-Data, Inc., a New York Corporation (" ITD") for 5,224,000
shares of our common stock. The agreement, referred to as the partial
liquidation agreement, provided that only the crucial assets of ITD were
acquired, along with means of settling any ITD liabilities and claims which
could potentially affect GRG after the transaction. Those assets identified as
crucial were employees, and intangibles including contracts identified in the
partial liquidation agreement, leads, customer base, and office equipment and
database of ITD used in the international telecommunications business. Certain
other assets of ITD were not included in the transaction since they were not
pertinent to the international telecommunications business targeted by GRG. All
shares issued in the transaction were subject to a two-year proxy granting
voting rights of the shares under the control of ITD's principals to the
executive committee of the GRG board of directors. The accounting of this
transaction is at predecessor cost since ITD is a major shareholder post
formation.
In March 1998, we acquired certain assets of Catalyst Communications,
Inc., a Utah Corporation (" Catalyst") for 3,150,000 shares of our common stock.
The agreement provided that GRG acquire employees, crucial suppliers, leads,
customer base, and office equipment and database of Catalyst used in business of
marketing Internet scratch off sweepstakes promotions. Certain other assets of
Catalyst were not included in the transaction since they were not pertinent to
the Internet and telecommunications business targeted by GRG. The accounting of
this transaction is at predecessor cost since control parties of Catalyst were
also control parties of GRG at the time of the transaction.
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This Registration Statement is being filed on a voluntary basis to
maintain GRG's quotations on the OTC Bulletin Board of the National Association
of Securities Dealers, Inc. (the "NASD"). See the heading "Effects of Existing
or Probable Governmental Regulations," Item I.
NASD OTC Bulletin Board Quotations.
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GRG's common stock is quoted on the OTC Bulletin Board of the National
Association of Securities Dealers, Inc. (the "NASD") under the symbol "GRGI,"
For information concerning these stock quotations during the past two years, see
the caption "Market Price of and Dividends on the Company's Common Equity and
Other Stockholder Matters," Part II, Item 1. The quotations presented do not
represent actual transactions or broker/dealer markups, markdowns or
commissions.
Further, effective January 4, 1999, the NASD adopted rules and
regulations requiring that prior to any issuer having its securities quoted on
the OTC Bulletin Board of the NASD that such issuer must be a "reporting issuer"
which is required to file reports under Section 13 or 15(d) of the Securities
and Exchange Act of the 1934, as amended (the "1934 Act"). The Company is not
currently a "reporting issuer," and this Registration Statement is being filed
to bring GRG into compliance with these quotations provisions. Under the
"phase-in" schedule of the NASD, GRG had until December 1, 1999, within which to
become a "reporting issuer," and to satisfy all comments of the Securities and
Exchange Commission respecting this Registration Statement. This Registration
Statement will not become effective for 60 days from the date of its filing, and
it is unlikely that GRG will timely satisfy these quotation requirements of the
NASD. Therefore, OTC Bulletin Board quotations of GRG's common stock will cease
on December 1, 1999, and the Company's common stock would thereafter be quoted
in the "Pink Sheets" of the National Quotations Bureau, LLC ("NQB"). This result
would further impede the development of an "established trading market" in the
common stock of GRG because the "Pink Sheets" market is not as accepted by most
brokers/dealers in securities as the OTC Bulletin Board, and a broker/dealer
must subscribe to the NQB's service. GRG will, as soon as practicable following
the satisfaction of all necessary requirements of the NASD, file for quotations
on the OTC Bulletin Board; however, no assurance can be given that the NASD will
allow the quotations of GRG's common stock to be reinstated.
Business.
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Risk Factors.
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Our principal business is International Long Distance communication
services. We have entered into a termination agreement with Qwest Communications
for termination of US destined traffic of international origin. We use leading
edge, bandwidth compression technology known as Asynchronous Transfer Mode (ATM)
that permits high speed, large volume, transmission services. We are also in the
business of marketing Internet scratch-off sweepstakes to companies wishing to
use such sweepstakes as promotions to increase traffic on their web sites.
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The "Global Resource Network", currently being installed, consists of a
US presence from international gateways (Siemens Digital Central Offices) in New
York, Miami and Los Angeles, along with ATM facilities in Mexico City, Monterey
and Guadalajara, Mexico. The US and Mexico switches will feature the use of ATM
equipment provided by and monitored by General DataComm, Inc. (GDC). The
switches will be leased from Siemen's under a 60-month capital lease on which
the Company has made a $60,000 down payment but has not entered into a final
lease configuration. Likewise, with respect to the GDC equipment, we have made
an $87,000 down payment but have not finalized a 36-month lease for. Such
switches and equipment has a fair market value of approximately $2.9 million. We
expect to complete this leg of our network by December 1999 and expand into the
network into additional Latin America and Caribbean countries we have obtained
termination agreements with.
Limited Operating History.
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We have had limited operations since our inception in 1992. We are still
in developmental stage. None of our operations have proved successful, and there
is no assurance that we can profitably market our present products and services.
Operating Results.
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We had no revenues and substantial losses for the years ended December 31,
1998 and 1997, and limited revenues and additional losses for the nine months
ended September 30, 1999.
Year or Period Gross Net
Ended Revenue Loss
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December 31, 1997 -0- $ (21,983)
December 31, 1998 -0- $(5,857,756)
September 30, 1999 $49,304 $(1,202,043)
No assurance can be given that we will not continue to incur losses on or that
its business operations will prove to be profitable. See the financial
statements of GRG, which accompany this Registration Statement.
Additional Capital Requirements.
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GRG has limited capital. Our primary revenues are derived from the
purchase and sale of long distance telecommunications services to limited
markets and are presently dependent upon the services provided by a small number
of employees. GRG does not have sufficient capital to increase its sales force
or to expand its operations; accordingly, without additional capital, growth
will be limited.
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Economic Considerations.
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Any substantial downturn in economic conditions or any significant price
decreases related to the telecommunications industry could significantly depress
discretionary consumer spending and have a material adverse effect on GRG's
business operations. Everyone is aware of the daily price war between principal
competitors in the telecommunications industry. Inflation may also affect the
future availability of favorable financing rates for GRG or its customers, and
deflation may also affect revenues derived from these operations to the extent
that GRG's costs of providing these services increases from the time that the
telecommunications services are sold and the time when the services are
provided.
Reliance on Existing Management.
--------------------------------
GRG's operations are primarily dependent upon the experience and expertise
of Kenneth W. Craig, CEO, and Jeffrey M. Good, its President. The loss of Mr.
Craig or Mr. Good may have a material adverse effect on GRG's present and
contemplated business operations. GRG's success is also dependant upon its
ability to attract and retain qualified management, administrative and sales
personnel to support its anticipated future growth, of which there can be no
assurance. GRG does not carry key man insurance upon the lives of any of its
directors or executive officers.
Lack of Dividends.
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GRG has not paid does not expect to pay any cash dividends with respect to
its common stock in the foreseeable future. It presently has limited revenues
and capital. Without substantial increases in revenues and capital, it would be
impossible to pay cash dividends.
No Market for Common Stock.
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There is currently no "established trading market" for GRG's shares of
common stock, and there can be no assurance that such a market will ever develop
or be maintained. Any market price for shares of common stock of GRG is likely
to be very volatile, and numerous factors beyond the control of GRG may have a
significant adverse effect. In addition, the stock markets generally have
experienced, and continue to experience, extreme price and volume fluctuations
which have affected the market price of many small capital companies and which
have often been unrelated to the operating performance of these companies. These
broad market fluctuations, as well as general economic and political conditions,
may also adversely affect the market price of GRG's common stock. Further, there
is no correlation between the present limited market price of GRG's common stock
and its revenues, book value, assets or other established criteria of value. The
present limited quotations of GRG's common stock should not be considered
indicative of the actual value of GRG or its common stock. See Part II, Item 1.
Shares Eligible for Future Sales.
--------------------------------
Sales of "restricted securities" under Rule 144 may also have an adverse
effect on any market that may develop in GRG's common stock. Of the 19,219,427
outstanding shares of GRG's common stock, 13,961,661 are designated as
"restricted securities," and 4,186,332 have satisfied the one year "holding
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period" requirements of Rule 144; the filing and effectiveness of this
Registration Statement, along with the continued filing of all required reports
with the Securities and Exchange Commission by GRG, will make Rule 144 available
to the holders of these "restricted securities." See Part II, Item 4, for
information respecting the commencement of the holding periods of "restricted
securities" of GRG offered and sold during the past three years.
Conflicts of Interest.
----------------------
GRG's directors and officers may become directors, executive officers,
controlling stockholders and/or partners of other entities engaged in a variety
of endeavors. Thus, there exist potential conflicts of interest including, among
other things, time, effort and corporate opportunity, involved in participation
with other potential business opportunities.
Risks Associated with Execution of Growth Strategy.
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A principal component of GRG's growth strategy is to deploy and facilitate
an international gateway network of long distance telecommunication services in
the United States and selected international countries. GRG's ability to execute
its growth strategy depends on a number of factors including, (i) the
availability of purchase opportunities; (ii) GRG's ability to acquire these
services and related opportunities on economically feasible terms; (iii) its
ability to obtain the capital necessary to finance the acquisition of required
facilities and to pay any necessary sales, marketing and operational
expenditures; (iv) to market and sell services; and (v) to manage potentially
rapidly growing operations effectively and in a manner which will result in
significant customer satisfaction. There can be no assurance that GRG will be
successful in any of these respects.
Competition; Low Barriers to Entry.
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GRG expects competition to persist, intensify and increase in the
telecommunications industry in the future. Present competition includes every
telecommunications company and Internet Service Provider ("ISP"), that includes
AT&T, GTE, MCI/WorldCom, Sprint, QWEST Communications, Inc. ("QWEST") and all of
the Bell companies; and AOL and other Internet service providers. Almost all of
GRG's current and potential competitors have longer operating histories, larger
installed customer bases, longer relationships with clients and significantly
greater financial, technical, marketing and public relation resources than GRG
and could decide at any time to increase their resource commitments to GRG's
target market. As a strategic response to changes in the competitive
environment, GRG may from time to time make certain pricing, service technology
or marketing decisions or business or technology acquisitions that could have a
material adverse effect on its business, financial condition, results of
operations and prospects, and similar actions by competitors could materially
adversely affect GRG's present and proposed business operations, results of
operations, financial condition and prospects.
In addition, GRG's ability to generate clients will depend to a
significant degree on the uniqueness and quality of its products and services
and its reputation among its clients and potential clients, compared with the
quality of similar services provided by, and the reputations of, GRG's
competitors. To the extent GRG loses clients to its competitors because of
dissatisfaction with its services, or its reputation is adversely affected for
any other reason, GRG's business, results of operations, financial condition and
prospects could be materially adversely affected.
There are relatively low barriers to entry into GRG's targeted
business. Anyone can attempt to purchase and sell the telecommunication services
which GRG purchases and markets. Accordingly, GRG is likely to face additional
competition from new entrants into the market in the future. There can be no
assurance that existing or future competitors will not develop or offer services
that provide significant performance, price, creative or other advantages over
those offered by GRG, which could have a material adverse effect on its
business, financial condition, results of operations and prospects.
Rapid Price Changes.
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There is intense price competition among the major competitors in the
telecommunications industry. This continued decrease in the price of these
services may make it economically unfeasible for GRG to continue its present and
proposed telecommunications purchases and sales. Further, the continued use and
expansion of the Internet as a telecommunications service provider can have a
similar effect.
Risks of "Penny Stock."
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GRG's common stock may be deemed to be "penny stock" as that term is
defined in Rule 3a51-1 of the Securities and Exchange Commission. Penny stocks
are stocks (i) with a price of less than $5.00 per share; (ii) that are not
traded on a "recognized" national exchange; (iii) whose prices are not quoted on
the NASDAQ automated quotation system (NASDAQ-listed stocks must still meet
requirement (i) above); or (iv) in issuers with net tangible assets less than
$2,000,000 (if the issuer has been in continuous operation for at least three
years) or $5,000,000 (if in continuous operation for less than three years), or
with average revenues of less than $6,000,000 for the last three years.
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There has been no "established public market" for GRG's common stock
during the last five years. At such time as GRG completes a merger or
acquisition transaction, if at all, it may attempt to qualify for quotation on
either NASDAQ or a national securities exchange. However, at least initially,
any trading in its common stock will most likely be conducted in the
over-the-counter market in the "pink sheets" or the OTC Bulletin Board of the
NASD.
Section 15(g) of the Securities Exchange Act of 1934, as amended, and Rule
15g-2 of the Securities and Exchange Commission require broker/dealers dealing
in penny stocks to provide potential investors with a document disclosing the
risks of penny stocks and to obtain a manually signed and dated written receipt
of the document before effecting any transaction in a penny stock for the
investor's account. Potential investors in the GRG's common stock are urged to
obtain and read such disclosure carefully before purchasing any shares that are
deemed to be a "penny stock."
Moreover, Rule 15g-9 of the Securities and Exchange Commission requires
broker/dealers in penny stocks to approve the account of any investor for
transactions in such stocks before selling any penny stock to that investor.
This procedure requires the broker/dealer to (i) obtain from the investor
information concerning his or her financial situation, investment experience and
investment objectives; (ii) reasonably determine, based on that information,
that transactions in penny stocks are suitable for the investor and that the
investor has sufficient knowledge and experience as to be reasonably capable of
evaluating the risks of penny stock transactions; (iii) provide the investor
with a written statement setting forth the basis on which the broker/dealer made
the determination in (ii) above; and (iv) receive a signed and dated copy of
such statement from the investor, confirming that it accurately reflects the
investor's financial situation, investment experience and investment objectives.
Compliance with these requirements may make it more difficult for investors in
GRG's common stock to resell their shares to third parties or to otherwise
dispose of them.
Year 2000.
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We believe all of GRG's computer systems and applications are Y2K
compliant. GRG can give no assurance that third parties with whom it intends to
do business will ensure Year 2000 compliance in a timely manner or that, if they
do not, their computer systems will not have an adverse effect on GRG. However,
GRG does not believe that Year 2000 compliance issues of such third parties will
result in a material adverse effect on its financial condition or results of
operations.
Principal Products and Services.
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GRG currently maintains two lines of businesses, which it operates:
International Telecommunications operations and Teleprizes.
International Telecommunications.
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We believe that as technology advances, a comprehensive range of both
consumer and business communications and information services will be provided
over networks utilizing Asynchronous Transfer Mode ("ATM") technology, which is
a method of bandwidth compression that may allow one line to carry the
equivalent of six lines. With a large enough traffic base, the cost of acquiring
ATM equipment may become more cost effective. These services will include
traditional voice, video, data and facsimile transmission, as well as virtual
private networks. We believe this shift to ATM has begun, and over time should
accelerate, for the following reasons:
o Flexibility. ATM technology is based on an open protocol (a
nonproprietary, published standard) that allows for market driven
development of new-uses and applications for ATM networks. In
international markets, this is based upon proprietary protocols for a
"Public Switched Network" ("PSTN"), which are governed and maintained
by international standard bodies that are generally controlled by
government affiliated entities.
o Improving Technologies. GRG believes that ATM's open protocol will
allow technological advances that will lead to achieving seamless
interconnection with the PSTN in International Markets. A seamless
interconnection will allow customers to use GRG's ATM-based services,
including voice and facsimile, without modifying existing telephone and
facsimile equipment or existing dialing procedures; there will be no
need to dial access codes or follow other present similar procedures.
o Standardized Interface. Web browsers (developed for the Internet and
usable with many ATM networks) can provide a standardized interface to
data and applications on an ATM network and thus make it easier for end
users to access and use these resources.
We are developing technology to allow seamless interconnection of the
network it is presently building, to be known as the "Global Resource Network,"
with the PSTN.
We intend to provide a comprehensive range of telecommunication services
over the Global Resource Network, including private line, virtual private
networks, video, data, voice and facsimile transmission services.
The Internet.
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We have also developed an enhanced serviced division, which will focus its
attention on Internet services and applications. Under the trademark
"TeleprizesTM," We have marketing rights (through a joint marketing agreement
with RealTIME Media, Inc.) to an internationally patent pending, "scratch and
win" sweepstakes, which has already been accepted for Internet implementation.
Recent Public Announcements.
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GRG has agreements that provide for the exchange of telecommunications
traffic with foreign carriers. GRG has strategic agreements to terminate traffic
into Mexico, Latin and South America. The Company has entered into a Strategic
Alliance with Value Added Services (VAS), a Mexican company, with expertise in
regulatory affairs pertaining to telecommunications in Latin America. VAS is
obtaining all the necessary certifications and licenses to provide service
throughout Mexico. One node of our ATM switching platform, supporting the
"Global Resources Network" (GRN), has been located in VAS facilities in Mexico
City with additional nodes into the Monterrey and Guadalajara marketplaces.
These points of presence ("POPs") are strategic for access to fiber capacity
throughout the country of Mexico.
The company has signed a master agreement with a licensed long distance
carrier in Mexico to terminate traffic in the US and internationally. This
agreement allows for GRG to utilize 800 origination services for all of Mexico
and internationally. Traffic will be delivered to GRG at its point of presence
in San Antonio for distribution on the GRN. The Company is negotiating
additional foreign partners for Latin and South America that have licenses in
their home markets which may be wholly or partially government-owned (often
referred to as Post Telephone and Telegraphs or "PTTs") and non-dominant
carriers that may have been recently established as a result of the deregulation
of foreign telecommunications markets ("Competitive Carriers").
Distribution Methods of the Products or Services.
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Marketing.
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International Telecommunications.
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International Market. In 1998, the global trend toward more liberalized
telecommunications markets accelerated in an unprecedented fashion. The World
Trade Organization ("WTO") Agreement, struck in 1997, took effect in February
1998. Sixty-nine countries, representing 95% of the world's US $600 billion
domestic and international telecommunications revenues, signed the Agreement,
with most committing to improved access by foreign companies to these
international telecommunications markets.
The liberalization movement also enjoyed significant advances in the
Asia-Pacific and Latin America areas, expanding the mosaic of foreign competitor
opportunities in these regions. While many nations have yet to open their
international telecommunications markets to competition, 1998 was a banner year.
GRG's management believes that these developments will assure that GRG's
addressable global markets will continue to expand rapidly. In addition, the
Internet is in the process of becoming a global phenomenon, creating exceptional
opportunities to provide telecommunications connectivity in every region of the
world. GRG will focus its strategies on:
North America. Long the leader, it is the world's international
telecommunications hub. 25 billion outbound minutes, one-third of all global
international public switched traffic, originate from this region. Assuming we
raise the capital, GRG is positioned to compete in this region's market. While
the WTO Agreement will result in the further opening of the global
telecommunications market in the new millennium, GRG intends to maintain its
focus on Latin America and the Caribbean. In 2000, GRG will handle in excess of
300 million minutes of traffic. Growth in the Latin American international
market continues to be a strong source of GRG's telecommunications services.
GRG's management believes it has only scratched the surface of this market, and
will focus on originating U.S. telecommunications traffic to Latin America,
while also bringing this traffic from these countries into the U.S.
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Latin America and the Caribbean. This region's economic promise, combined
with recent efforts by several nations to allow competition into their
telecommunications industries, makes it a significant target market. The
examples of Chile and Mexico, the region's deregulation leaders, are stimulating
others to accelerate their efforts to open their telecommunications industries.
Colombia, El Salvador and Guatemala are the most recent countries to allow
competition in international voice services. Argentina, Bolivia, Brazil, Peru
and Venezuela have committed to allow competition for their international
services over the next few years, with others surely to follow their lead. This
region now generates some 5 billion minutes of outbound traffic annually, and
GRG has entered into an agreement with QWEST to terminate and originate
telecommunications traffic in the U.S. via Qwest's digital fiber network.
Additionally, GRG will have contractual relationships allowing extensive
origination and termination of traffic into Mexico on fiber. See Part III, Item
1.
GRG's sales plan is to utilize a direct sales force as well as alternative
distribution channels. Through the combination of a direct sales force and
alternative distribution channels, GRG believes that it will be able to more
rapidly access markets and increase revenue producing traffic on its network.
GRG intends to utilize its direct sales force to market its products and
services directly to large communications-intensive national and international
business accounts. These accounts would typically be connected directly to the
Global Resource Network using unswitched, dedicated facilities.
As part of its distribution strategy, GRG has identified several potential
distribution channels. These include agents, resellers and wholesalers. Agents
are independent organizations that would sell Global Resource's products and
services under the Global Resource brand name to end-users in exchange for
revenue based commissions. GRG intends to identify agents that generally would
be focused on specific market segments, such as Fortune 1000 multi-national
corporations. Sales through this alternative distribution channel would require
GRG to provide the same type of services that would be provided in the case of
sales through its own direct sales force, including order fulfillment, billing
and collections, customer care and direct sales management.
Wholesalers are independent companies that would purchase from GRG
unbundled network and service capabilities in large quantities in order to
market their own products and services under a brand name other than GRG's. GRG
believes that wholesalers would have minimal dependence on GRG's business
support systems in connection with the sale of services to their customers. An
unbundled network is the opposite of an ATM, where bundling is compressing
bandwidth, unbundled is comparable to real time; however, the rate of speed in
telecommunications technology today makes the distinction difficult to notice.
GRG anticipates that participants in its distribution channels will sell
services directly to multi-national businesses. GRG expects these businesses to
access the "Global Resource Network" by using local services that are provided
by Competitive Local Exchange Carriers ("CLECs") or Incumbent Local Exchange
Carriers ("ILECs") or by utilizing newly emerging alternatives, including
various Digital Subscriber Line ("DSL") modem technologies, cable modems and
wireless access technologies. CLECs were created by the Telecommunications Act
of 1996 (the "Telecommunications Act"), and are designed to bring competition to
the local telecommunication markets where monopolies have existed for a number
of years.
Distribution.
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We have selected carrier to carrier services as our focus; hence GRG will
offer it's network capacities to the 1st, 2nd and 3rd tier carriers with volumes
of traffic to host countries. For example, if we were to install our equipment
with a capacity of up to 10 million minutes per month, we would then contract
other like carriers, brokers and agents that have proven to be reliable in the
past, and negotiate the best rate per minute based upon the cost factors
utilized. We would provide the best quality available and act as a pipeline of
connectivity for the telecommunication services to the host country. In many
instances, we would be able to sell the total minutes capacity of the installed
equipment per host country to a single customer.
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If we build, operate and maintain a quality network, filling the pipeline
should not be difficult if priced competitively. We will deploy a fiber network
complete with switches in the international portals of Los Angeles, Miami and
New York. Fiber will allow GRG to provide world class service for Voice, Data
and Multi Media international facilities. Today, AT&T and MCI/WorldCom control
over 80% of the data traffic. This dominance will change in the coming decade
and management believes it will provide additional niche opportunities for GRG's
network.
Competitive Business Conditions.
--------------------------------
The communications and information services industries are highly
competitive. Many of GRG's existing and potential competitors have financial,
personnel, marketing and other resources significantly greater than those of
GRG, as well as other competitive advantages including customer bases.
GRG is subject to significant competition from other entities that engage
in the telecommunications industry. Many of the world's most widely recognized
telecommunications companies have begun to develop and sell overseas
telecommunications. In addition, other publicly-traded companies focused on the
overseas telecommunications industry currently or may in the future compete with
GRG. Many of these entities possess significantly greater financial, sales and
marketing, personnel and other resources than those of GRG and may be able to
grow at a more rapid rate or more profitably as a result. Management of GRG
believes that industry competition will be increased by recent and possibly
future consolidation in the telecommunications industry.
International Telecommunications. Many of our existing and potential
competitors in the communications and information services industries have
financial, personnel, marketing and other resources significantly greater than
ours, as well as other competitive advantages including existing customer bases.
Increased consolidation and strategic alliances in the industry resulting from
the Telecommunications Act, the opening of the U.S. market to foreign carriers
and technological advances could give rise to significant new competitors to
GRG.
In the special access and private line services market, GRG's primary
competitors will be ILECs and CLECs. Most of these competitors have a
significant base of customers for whom they are currently providing services.
Due to the high costs to a customer of switching, GRG may have a competitive
disadvantage relative to these competitors.
For virtual private network services and voice services, GRG will
compete primarily with international and regional network providers. There are
currently three principal facilities based long distance fiber optic networks
(AT&T, Sprint and MCI/WorldCom, as well as numerous ILEC and CLEC networks. GRG
is aware that others, including QWEST, IXC Communications, Inc. ("IXC") and The
Williams Companies, Inc. ("Williams"), are building additional networks that,
when constructed, could employ advanced technology similar to that of its Global
Resource Network and will offer significantly more capacity than is currently
available in the marketplace. The additional capacity that is expected to become
available in the next several years may cause significant decreases in the
prices for services.
The ability of GRG to compete effectively in this market will depend upon
its ability to maintain high quality services at prices equal to or below those
charged by its competitors.
In the long distance market, GRG's primary competitors will include AT&T,
Sprint and MCI/WorldCom, all of whom have extensive experience in the long
distance market. In addition, the Telecommunications Act will allow the regional
Bell operating companies ("RBOCs") and others to enter the long distance market.
GRG will not compete with ILECs and CLECs, many of whom have extensive
experience in the local market. GRG believes that ATM technology will prove to
be a viable technology for the transmission of voice, video, data and fax
services. The technology is in place that will enable GRG to provide voice
services at an acceptable level of quality at this time.
The communications and information services industries are subject to
rapid and significant changes in technology. For instance, recent technological
advances permit substantial increases in transmission capacity of both new and
existing fiber, and the introduction of new products or emergence of new
technologies may reduce the cost or increase the supply of certain services
similar to those, which GRG plans on providing. Accordingly, in the future GRG's
most significant competitors may be new entrants to the communications and
information services industries, which are not burdened by an installed base of
outmoded equipment.
The Internet. The exclusivity of Internet scratch-off games for Internet
malls and Fortune 1000 companies does grant GRG some relief from competition.
However, there is no assurance that the consumer will not choose sweepstakes
based telecommunications products or Internet based telecommunications products
as opposed to Internet sweepstakes based telecommunications products.
Patents, Trademarks, Licenses, Franchisees, Concessions, Royalty Payments or
Labor Contracts.
----------------------------
Long term Termination Agreements with International Host countries are in
place and/or under negotiation. Marketing rights to a patent pending "Scratch
and Win" Instant Win Sweepstakes software have been granted from Real Time
Media. GRG entered into an agreement with Action Performance, Inc. ("Action")
that provides GRG with an exclusive telecommunications banner-advertising rights
to Action's Internet web site.
Overseas Telecommunications.
----------------------------
Our proposed international telecommunications activities do not require,
and we do not intend to rely on, patents or trademarks.
The Internet.
-------------
12
<PAGE>
Although the Registrant's trade names are not subject to patent
protection, the Registrant treats these as proprietary and uses confidentiality
agreements as appropriate in an attempt to protect such trade names. The
Registrant has received a trademark for "Club Speed" from the United States
Patent and Trademark Office, which it uses on some of its products.
Need for Government Approval of Principal Products or Services.
---------------------------------------------------------------
GRG's communications service business will be subject to varying degrees
of Federal, state, local and international regulation. See the following
heading.
Effect of Existing or Probable Governmental Regulations on Business.
--------------------------------------------------------------------
International Telecommunications.
---------------------------------
Federal Regulation.
-------------------
The Federal Communications Commission (the "FCC") regulates interstate
and international telecommunications services. The FCC imposes extensive
regulations on common carriers such as ILECs that have some degree of market
power. The FCC imposes less regulation on common carriers without market power,
such as GRG. The FCC permits these non-dominant carriers to provide domestic
interstate services (including long distance and access services) without prior
authorization; but it requires carriers to receive an authorization to construct
and operate telecommunications facilities, and to provide or resell
telecommunications services between the United States and international points.
GRG has obtained FCC authorization to provide international services on a
facilities and resale basis. GRG will be required to file tariffs for its
interstate and international long distance services with the FCC before
commencing operations.
Under the Telecommunications Act, any entity, including cable television
companies, and electric and gas utilities, may enter any telecommunications
market, subject to reasonable state regulation of safety, quality and consumer
protection. Because implementation of the Telecommunications Act is subject to
numerous federal and state policy rule making proceedings and judicial review,
there is still uncertainty as to what impact it will have on GRG. The
Telecommunications Act is intended to increase competition. The
Telecommunications Act opens the local services market by requiring ILECs to
permit interconnection to their networks and establishing ILEC obligations with
respect to:
o Reciprocal Compensation. Requires all ILECs and CLECs to complete calls
originated by competing carriers under reciprocal arrangements at
prices based on a reasonable approximation of incremental cost or
through mutual exchange of traffic without explicit payment.
13
<PAGE>
o Resale. Requires all ILECs and CLECs to permit resale of their
telecommunications services without unreasonable restrictions or
conditions. In addition, ILECs are required to offer wholesale versions
of all retail services to other telecommunications carriers for resale
at discounted rates, based upon the costs avoided by the ILEC in the
wholesale offering.
o Interconnection. Requires all ILECs and CLECs to permit their
competitors to interconnect with their facilities and to permit
interconnection at any technically feasible point within their
networks, on nondiscriminatory terms, at prices based on cost (which
may include a reasonable profit). At the option of the carrier seeking
interconnection, collocation of the requesting carrier's equipment in
the ILECs' premises must be offered, except where the ILEC can
demonstrate space limitations or other technical impediments to
collocation.
o Unbundled Access. Requires all ILECs to provide nondiscriminatory
access to unbundled network elements (including network facilities,
equipment, features, functions, and capabilities) at any technically
feasible point within their networks, on nondiscriminatory terms, at
prices based on cost (which may include a reasonable profit).
o Number Portability. Requires all ILECs and CLECs to permit users of
telecommunications services to retain existing telephone numbers
without impairment of quality, reliability or convenience when
switching from one telecommunications carrier to another.
o Dialing Parity. Requires all ILECs and CLECs to provide "1+1" equal
access to competing providers of telephone exchange service and toll
service, and to provide nondiscriminatory access to telephone numbers,
operator services, directory assistance and directory listing, with no
unreasonable dialing delays.
o Access to Rights-of-Way. Requires all ILECs and CLECs to permit
competing carriers access to poles, ducts, conduits and rights-of-way
at regulated prices.
ILECs are required to negotiate in good faith with carriers requesting
any or all of the above arrangements. In the case of ATM, if the negotiating
carriers cannot reach agreement within a prescribed time, either carrier may
request binding arbitration of the disputed issues by the state regulatory
commission. Where an agreement has not been reached, ILECs remain subject to
interconnection obligations established by the FCC and state telecommunication
regulatory commissions.
14
<PAGE>
In August 1996, the FCC released a decision (the "Interconnection
Decision") establishing rules implementing the foregoing requirements and
providing guidelines for review of interconnection agreements by state public
utility commissions. On July 18, 1997, the United States Court of Appeals for
the Eighth Circuit (the "Eighth Circuit") vacated certain portions of the
Interconnection Decision, including provisions establishing a pricing
methodology and a procedure permitting new entrants to "pick and choose" among
various provisions of existing interconnection agreements between ILECs and
their competitors. On October 14, 1997, the Eighth Circuit issued a decision
vacating additional FCC rules that will likely have the effect of increasing the
cost of obtaining the use of combinations of an ILEC's unbundled network
elements. The Supreme Court has decided to review the Eighth Circuit's
decisions, and is expected to do so during its 1998-99 term, but GRG cannot
predict what the result of this review will be. The Eighth Circuit's decisions
create uncertainty about the rules governing pricing, terms and conditions of
interconnection agreements, and could make negotiating and enforcing such
agreements more difficult and protracted. There can be no assurance that GRG
will be able to obtain or enforce interconnection agreements on terms acceptable
to GRG.
The Telecommunications Act also codifies the ILECs' equal access and
nondiscrimination obligations and preempts inconsistent state regulation. The
Telecommunications Act contains special provisions that modify previous court
decrees that prevented RBOCs from providing long distance services and engaging
in telecommunications equipment manufacturing.
These provisions permit an RBOC to enter the long distance market in
its traditional service area if it satisfies several procedural and substantive
requirements, including obtaining FCC approval upon a showing that the RBOC has
entered into interconnection agreements (or, under some circumstances, has
offered to enter into such agreements) in those states in which it seeks long
distance relief, the interconnection agreements satisfy a 14-point "checklist"
of competitive requirements and the FCC is satisfied that the RBOC's entry into
long distance markets is in the public interest. To date, the FCC has denied
several petitions by RBOCs for such entry, and none have been granted. The
Telecommunications Act permitted the RBOCs to enter the out-of-region long
distance market upon its enactment.
ISPs are generally considered "enhanced service providers" and are
exempt from Federal and state regulations governing common carriers.
Accordingly, GRG's provision of Internet access services will be exempt from
tariffing, certification and rate regulation. Nevertheless, regulations
governing disclosure of confidential communications, copyright, excise tax and
other requirements may apply to GRG's provision of Internet access services. GRG
cannot predict the likelihood that state, federal or foreign governments will
not impose additional regulation on GRG's Internet business; nor can it predict
the impact that future regulation will have on GRG's operations.
In December 1996, the FCC initiated a Notice of Inquiry regarding
whether to impose regulations or surcharges upon providers of Internet access
and Information Service (the "Internet NOI").
The Internet NOI sought public comment upon whether to impose or
continue to forebear from regulation of Internet and other packet-switched
network service providers. The Internet NOI specifically identifies Internet
telephony as a subject for FCC consideration. On April 10, 1998, the FCC issued
a Report to Congress on its implementation of the universal service provisions
of the Telecommunications Act. In that Report, the FCC indicated that it would
reexamine its policy of not requiring an ISP to contribute to the universal
service mechanisms when the ISP provides its own transmission facilities and
engages in data transport over those facilities in order to provide an
information service.
Any such contribution would be related to the ISP's provision of
telecommunications itself. In the report, the FCC also indicated that it would
examine the question of whether certain forms of "phone-to-phone IP telephony"
are information services or telecommunications services. It noted that the FCC
did not have an adequate record on which to make any definitive pronouncements
on that issue at the time, but that the record the FCC had reviewed suggested
that certain forms of phone-to-phone IP telephony appear to have the same
functionality as non-IP telecommunications services and lack the characteristics
that would render them information services.
15
<PAGE>
If the FCC were to determine that certain services are subject to FCC
regulations as telecommunications services, the FCC noted it might find it
reasonable that the ISPs pay access charges and make universal service
contributions. GRG cannot predict the outcome of these proceedings or other FCC
proceedings that may effect GRG's operations or impose additional requirements,
or regulations or charges upon GRG's provision of Internet access services.
State Regulation.
-----------------
The Telecommunications Act is intended to increase competition in the
telecommunications industry, especially in the local exchange market. With
respect to local services, ILECs are required to allow interconnection to their
networks and to provide unbundled access to network facilities, as well as a
number of other pro-competitive measures. Because the implementation of the
Telecommunications Act is subject to numerous state rule-making proceedings on
these issues, it is currently difficult to predict how quickly full competition
for local services, including local dial tone, will be introduced. State
regulatory agencies will have jurisdiction when company facilities and services
are used to provide intrastate services. A portion of GRG's traffic may be
classified as intrastate and therefore subject to state regulation. GRG expects
that it will offer more intrastate services (including intrastate switched
services) as its business and product lines expand and state regulations are
modified to allow increased local services competition. To provide intrastate
services, GRG generally must obtain a certificate of public convenience and
necessity from the state regulatory agency and comply with state requirements
for telecommunications utilities, including state tariffing requirements.
The Internet.
-------------
Sweepstakes games are regulated by a combination of Federal and state
regulations for telecommunication and state regulations for sweepstakes.
Although rules tend to vary from state to state, sweepstakes rules typically
require posting of games rules and odds, articles of consideration for the
sweepstakes play and ability of individuals wishing to play the sweepstakes game
to do so for free, among others. Certain states and Federal legislators are
considering incorporating additional rules to sweepstakes games; however, GRG
cannot estimate the effect of any potential changes at this time.
Research and Development.
-------------------------
As part of GRG's entrance to the international telecommunications market,
it intends to enhance existing products and develop new products. GRG had no
costs associated with customer-sponsored research and development activities
during the years ended December 31, 1998 or 1997, or the nine months ended
September 30, 1999.
Number of Employees.
--------------------
International Telecommunications.
---------------------------------
GRG currently has a management team consisting of five executives. GRG
expects to hire 20 employees by the middle of 2000, and to have over 100
employees once the Global Resource Network has been fully deployed.
16
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operations.
- -------------------------------------------------------------------
Plan of Operations.
-------------------
GRG has been a development stage company from its inception through 1998.
Although the efforts of GRG failed in ventures in real estate, prepaid phone
cards and sports marketing, its future in telecommunications activities is
promising.
GRG will focus its initial expansion and development in Mexico, Central
and South America and the Caribbean due to the ever-growing demand for
termination of international traffic into these countries. Several countries in
these areas have either opened their doors to legal competition or are expected
to do so in 1999 or early 2000. In addition, numerous opportunities exist in
Asia, and many are currently under evaluation.
To meet its business plan, we expect to generate capital to meet our
operating needs from sales or issuance of equity securities, credit facilities
and other borrowings, or the issuance of debt securities. In addition, GRG may
sell or dispose of existing businesses or investments or lease network
facilities being developed.
GRG intends to capitalize on the significant growth opportunities it
believes are being created by the following major trends in the international
telecommunications services market:
o Global deregulation and privatization;
o Increased availability of digital undersea, fiber optic cable
and terrestrial satellite capacity;
o Cost reduction driven by technology and competition; and,
o Economic development and increased reliance on telephones and
access lines to service telephony and technology worldwide.
The foregoing contains "forward-looking" statements and information,
all of which is modified by reference to the caption "Risk Factors," Item 1.
17
<PAGE>
Results of Operations
---------------------
Selected Financial Data
-----------------------
The following selected Consolidated Statement of Operations, Other
Financial Data and Balance Sheet Data as of and for the year ended December 31,
1998, have been derived from our Consolidated Financial Statements and the notes
related thereto, which were audited by Jones, Jensen and Company, Independent
Certified Public Accountants. Information for the three months and nine months
ended September 30, 1999 is unaudited. The Consolidated Financial Statements as
of December 31, 1998 and the report of Jones, Jensen and Company thereon, are
included elsewhere in this report. This information should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" our Consolidated Financial Statements, including the
notes thereto, and the other financial data included elsewhere in this report.
<TABLE>
<CAPTION>
Year Ended Three Months Ended Nine Months Ended
December 31, 1998 Sept. 30, 1999 Sept. 30, 1999
Consolidated Statements of Operations Data:
<S> <C> <C> <C>
Communication services revenue $ 0 $ 49,304 $ 49,304
Operating expenses:
Cost of communication services 0 76,869 76,869
Selling, general and administrative 4,746,129 446,64 1,139,559
Depreciation and amortization 1,134 21,813 32,771
Total operating expense 4,747,263 545,327 1,249,199
---------- ---------------- --------------
Operating loss (4,747,263) (496,023) (1,199,895)
---------- ---------------- --------------
Interest expense 0 (1,544) (1,544)
Other, net (1,110,493) 2,792 (604)
Net loss attributable
to common stockholders $(5,857,756) $(494,775) $(1,202,043)
=========== =============== =============
Loss per share attributable
to common stockholders $ (0.48) $ (0.03) $ (0.07)
=========== =============== =============
Other Financial Data:
Operating EBITDA (loss) $(4,746,129) $(474,210) $(1,167,124)
Net cash used in operating activities (2,210,942) (457,434) (1,178,884)
Net cash used in investing activities (263,424) (252,567) (253,037)
Net cash provided by (used in)
financing activities 2,574,426 672,646 1,405,894
Capital additions $ 13,424 $ 327,567 $ 328,037
Other Operating Data:
Billable minutes 0 0 2,185,176
Switches 0 0 0
Points of presence 0 0 0
Balance Sheet Data:
18
<PAGE>
Cash and cash equivalents and
marketable securities $100,060 $74,033 $74,033
Property and equipment, net 12,290 321,943 321,943
Total assets 333,394 581,632 581,632
Long-term debt, excluding
current installments 0 193,419 193,419
Stockholders' equity $309,353 322,785 322,785
</TABLE>
The following discussion should be read in conjunction with our
financial statements, the notes thereto, and the other financial data included
elsewhere in this report.
Overview
--------
Since GRG's restructuring in 1998, we have invested in developing our
ability to provide international communication services and expanding our market
presence. We have made investments in telecommunications infrastructure, back
office operations, an administrative facility and a direct sales organization.
Furthermore, we have acquired through partition and other means the rights to
use an extensive commercial telecommunications network in which we believe is
necessary to economically render the voice and data services we offer and intend
to offer. We have also expanded our ability to generate revenues in North
America during 1999. Currently, our revenues are derived from wholesale sales.
Each revenue source has a different impact on our results of operations. The
sale of capacity on the "Global Resources Network" will vary substantially from
period to period and will result in fluctuations in our operating results. For a
discussion of the effects of the "Global Resources Network" on communication
services revenue and other line items, see The "Global Resources Network".
In 1998, due to the inception of our telecommunications operations, we
did not report any telecommunications revenue or related cost of sales. The
discussion below is intended to introduce the reader to our approach and discuss
matters which will impact future operations. All operational costs relating to
Internet business are included in sales, general and administrative costs.
Communication Services Revenue
------------------------------
Our communication services revenue is currently based primarily on the
number of minutes of use billed ("billable minutes") and, to a lesser extent, on
the additional services and products provided through our network at a fixed
cost. We currently derive our communication services revenue principally from
international long distance telecommunications services.
Our industry has experienced, and expects to continue to experience,
declining revenue per minute in all markets, as a result of increased worldwide
competition within the telecommunications industry. We believe, however, that
the impact on our results of operations from price decreases will be at least
partially offset by (1) continuing decreases in our cost of providing
telecommunications services, particularly those decreases resulting from our
continued efforts to convert from leased to owned infrastructure and reduced
interconnection costs through the use of the "Global Resources Network" as it is
expanded, (2) the introduction of new products and services and (3) our ability
to enter into additional interconnection agreements. There can be no assurance,
however, that these results, including a decline in our cost of communication
services, can be achieved.
19
<PAGE>
Cost of Communication Services
------------------------------
Our cost of communication services can be classified into three general
categories: access costs, network costs and termination costs. Access costs
generally represent the costs associated with transporting the traffic from a
customer's premises to the closest access point on our network. Access costs
vary depending upon the distance from our network to the customer's premises and
from country to country. We currently expect that our effective per minute cost
will be reduced as deregulation continues and competition accelerates, certain
European Union directives requiring cost-oriented pricing (i.e., costs that an
effectively competitive market would yield) by incumbent telecommunications
operators are enforced and as we are able to obtain cost effective
interconnection agreements. However, we can provide no assurance regarding the
extent or timing of such cost decreases. In the event that such access costs do
not fall as fast as we can expect or not at all, our gross margins could be
adversely impacted.
Network costs represent the costs of transporting calls over our
network from its point of entry to its point of exit. Network costs generally
consist of leased line rental costs and costs associated with interconnection
with facilities of incumbent telecommunications operators. These costs will
decrease substantially as each node of the "Global Resources Network" is placed
into service and we secure infrastructure ownership on other routes, which will
enhance gross margins. However, there will be an associated increase in
depreciation and amortization expense (which is included in a different line
item). In order to succeed, we will need our per minute network costs to decline
substantially compared to our per minute revenue. See "Depreciation and
Amortization".
Termination costs currently represent the costs which we are required
to pay to other carriers from the point of exit from our network to the point of
destination. Termination costs are generally variable with traffic volume and
traffic mix. If a call is terminated in a city in which we have a switch or
point of presence, the call is usually transferred to the public switch
telephone network for local termination. If the call is to a location in which
we do not have a switch or point of presence, then the call must be transferred
to another carrier with which we are interconnected.
We utilize least cost routing designed to terminate traffic in the most
cost effective manner. We believe that local termination costs should decrease
as we (1) add additional switches and points of presence, (2) interconnect with
additional incumbent telecommunications operations and other infrastructure
providers, and (3) construct or purchase additional transmission facilities.
Local termination costs should also decrease as new telecommunications service
providers emerge and, in Western Europe, as European Union member states
implement and enforce regulations requiring incumbent telecommunications
operators to establish rates which are set at the forward- looking, long run
economic costs that would be incurred by an efficient provider using
state-of-the-art technology. We cannot provide any assurance regarding the
results referred to in the foregoing forward-looking statements, including the
extent or timing of cost decreases.
20
<PAGE>
Selling, General And Administrative Expenses
--------------------------------------------
Our selling, general and administrative expenses include commissions
paid to independent sales representatives and overhead costs associated with our
headquarters, back office and network operations centers and sales offices. Our
selling, general and administrative expenses have continued to increase since
our inception as we developed and expanded our business, although these expenses
have fallen as a percentage of communications revenue. We anticipate that these
expenses will continue to increase as our business is expanded in the future,
however, we cannot provide any assurance that this will be the case. We
anticipate that these expenses will continue to be incurred in advance of
anticipated related communication services revenue.
Depreciation And Amortization
-----------------------------
Depreciation and amortization expense includes charges relating to
depreciation of property and equipment, which consist principally of
telecommunications related equipment such as switches and points of presence,
indefeasible rights of use and minimum investment units, furniture and
equipment, leasehold improvements, and amortization of intangible assets and
costs associated with acquired employee bases and sales forces. We depreciate
our network over periods ranging from five (5) to seven (7) years and amortize
our intangible assets over periods ranging from three (3) to five (5) years. We
expect depreciation and amortization expense to increase as we further expand
our network, particularly as each node of the "Global Resources Network" is
placed into service, at least until significant portions of the "Global
Resources Network" are built and sold.
The "Global Resources Network"
------------------------------
Today, with regulatory changes throughout the world favoring innovation
and competition, telecommunications infrastructures are being upgraded,
resulting in faster digital communications rates than previously possible. And
now with electronic channels of commerce, like the Internet, have been
established, reliable public and private communication links are essential to
any organization's survival. To allow customers to capitalize on these changes,
GRG will offer xDSL solutions that are integrated with other multi-service
applications. This is a high capacity ATM switching platform engineered
specifically for use within the service provider network. Designed to nicer NEBS
requirements, with DC power, and carrier-oriented timing and synchronization
options, it is one of the leading platforms for delivering ATM services in some
of the world's most advanced and demanding public ATM networks. Enterprises can
use the "Global Resources Network" to consolidate multiple networks into a
single ATM overlay backbone. The "Global Resources Network" will yield bottom
line benefits in the form of resource consolidation and sharing of disparate
voice and data facilities, servers, and LANs. It delivers higher performance for
end user LAN applications, Internet, and intranet access. Support for new
multimedia applications including high-resolution image transfer,
videoconferencing, distance learning, and telemedicine is another distinct
advantage.
The "Global Resources Network" when completed is expected to have
significant effects on our results of operations. GRG's innovative architecture
provides a complete end-to-end multi-service network solution across a single
integrated backbone. This will enable GRG to deploy a variety of data, voice,
21
<PAGE>
video and multimedia information over one network infrastructure for all of it
customers. All of the elements of the "Global Resources Network" are managed
under a distributed, open network management framework to enable interconnection
with other systems. We will capitalize the costs associated with designing,
building, and placing each node of the "Global Resources Network" into service.
We will sell bandwidth on demand on the "Global Resources Network".
Revenue from bandwidth sales will qualify under generally accepted accounting
principles to be treated as sales and recognized under a line item to be titled
"Bandwidth Sales". Bandwidth Sales will be recognized as revenue when the
purchaser obtains the right to use the capacity. The related cost of bandwidth
will be reported in the same period. With respect to each sale of bandwidth, the
related cost of bandwidth sales will be equal to a proportionate amount of the
total capitalized cost of the related network. Revenue from operating leases of
private line circuits, which will be included in communication services revenue,
will be recognized on a straight-line basis over the life of the lease. The
portion of the total capitalized cost of the "Global Resources Network" used to
provide communication services will be included in property and equipment and
charged to depreciation and amortization over its useful life.
We expect to trade bandwidth on the "Global Resources Network" for
bandwidth on other systems. Depending upon structure, these trades of bandwidth
may have a material affect on our statement of operations. We will incur sales
and marketing related expenses that will not be capitalized and will affect our
results of operations, particularly while the "Global Resources Network" is
being designed, built and placed into service. In addition, we will continue to
incur additional operating and maintenance expenses as the remaining phases of
the "Global Resources Network" become operational. As a result of financing a
portion of the "Global Resources Network" with debt, we will capitalize a
portion of the interest incurred that relates to the construction of the "Global
Resources Network" until it is placed in service and will incur substantial
increases in interest expense thereafter.
The "Global Resources Network" will have a beneficial effect on our
costs of services as well as net income (loss). This will occur as we bring
traffic "on-net", to our own facilities, as opposed to facilities that we lease
from other carriers. A large portion of the expenses with facilities we own is
accounted for as depreciation and amortization, while leased capacity is
accounted for as a cost of services. As a result, we expect that our gross
margins and profit will be improved as we bring traffic "on-net". However, our
net income (loss) will not improve to the same extent. The effect of bringing
traffic "on-net" will be somewhat delayed, because our leased line agreements
require minimum notification to terminate our obligations.
Results Of Operations
---------------------
The following discussion of results of operations relates to the
Company on a historical basis. Because we are a development stage company, we
expect changes in our operations when or if we are no longer in the development
stage.
22
<PAGE>
Year ended December 31, 1998 Compared to December 31, 1997
----------------------------------------------------------
Communication Services Revenue And Related Cost Of Sales
-------------------------------------------------------------------
Because our facilities to sell long distance traffic were not completed
in 1998, we did not record any billable minutes or related communication
services revenues or costs.
Selling, General And Administrative Expenses
--------------------------------------------
Selling, general and administrative expenses increased to $4,746,129
for the year ended December 31, 1998 from $21,983 in for the year ended December
31, 1997. Much of these expenses are attributable to overhead costs associated
with our headquarters, back office and network operations as well as maintaining
sales offices. In 1998, salaries and commissions were $255,994, and advertising
and promotion expenses were $29,265. We expect to incur additional expenses as
we continue to invest in our sales and marketing infrastructure and actively
market our products and services. Approximately $2.75 million of these costs
were non-cash one-time restricted stock awards to board members and related
entities for expenses associated with establishing the company's operations. The
company has expended approximately $150,000 in Internet development costs.
Operating EBITDA Loss
---------------------
Operating EBITDA loss increased to $4.75 million for 1998 as a result
of the above mentioned items.
Depreciation And Amortization
-----------------------------
Depreciation and amortization expense, which will include depreciation
of our network, when completed, increased to approximately $1,134 in 1998 from
- -0- in 1997. The increase was due primarily to the depreciation of equipment
related to network expansion and office facility. Depreciation expense will
increase substantially as each ring of the "Global Resources Network" becomes
operational.
Interest
--------
The Company did not incur any interest income or expense and did not
capitalize any interest in 1998 or 1997.
Nine Months Ended September 30, 1999 Compared To Nine Months ended
September 30, 1998
- ------------------------------------------------------------------------------
- ---------------------------------------------------------------------------
Communications Service Revenue And Related Cost Of Sales
- --------------------------------------------------------------------------------
--------------------------------------------------------
For the nine months ending September 30, 1999, the Company realized minimal
revenues of $49,304 from its telecommunications services. The most significant
event was the landing of additional contracts which are anticipated to increase
23
<PAGE>
future revenues from Mexico. There was a cost of sales of $76,869 for the nine
months ended September 30, 1999. This amount was greater than the related
revenues due to one-time costs associated with bringing the traffic online.
- -------------------------------------------------------------------------------
Selling, General And Administrative Expenses
--------------------------------------------
- -------------------------------------------------------------------------------
Selling, general and administrative expenses decreased from $1,508,229
in the nine months ended September 30, 1998 to $1,139,559 for the nine months
ended September 30, 1999. Substantially all of this reduction was due to the
fact that there was a nonrecurring charge of $350,000 for acquisition services
in 1998. The company expended approximately $100,000 in Internet development
costs focusing entirely on customer relationship development.
Operating EBITDA Loss
---------------------
Operating EBITDA decreased from a loss of ($2.564,973) for the nine
months ended September 30, 1998 to a loss of ($1,167,728), again due to the
$350,000 charge for acquisition services incurred in 1998 and due to the write
off of $1,056,744 for rescinded transactions in 1998.
Interest
--------
The company incurred interest expense of $1,544 for the nine months
ended September 30, 1999 compared to zero for the same period in 1998. This
amount will increase in future years as the Company raises capital from debt
offerings or incurs interest expense with leased network equipment.
Depreciation And Amortization
-----------------------------
Depreciation and amortization rose from zero for the nine months ended September
30, 1998 to $32,771 for the nine months ended September 30, 1999. This was due
to the acquisition of equipment for the building of the "Global Resources
Network".
Three Months Ended September 30, 1999 Compared to Three Months Ended
September 30, 1998
- -----------------------------------------------------------------------------
Communications Service Revenue and Related Cost of Sales
--------------------------------------------------------
As discussed above, for the three months ended September 30, 1998, the
Company began to realize minimal revenues of $49,304 from its telecommunications
services. The most significant event was the landing of additional contracts
which are anticipated to increase future revenues from Mexico. There was a cost
of sales of $76,869 for the three months ended September 30, 1999. This amount
was greater than the related revenue due to one-time costs associated with
bringing the traffic online.
24
<PAGE>
Selling, General And Administrative Expenses
--------------------------------------------
Selling, general and administrative Expenses increased from $356,669
for the three months ended September 30, 1998 to $446,645 for the three months
ended September 30, 1999. This increase was due to increases in salaries and
payroll related expenses. The company made reductions in its staff shortly after
September 30, 1999 in a cost containment effort. The company's Internet
development costs were $25,000 which approximated the same amount as the three
month period in the prior year.
Operating EBITDA Loss
---------------------
Operating EBITDA increased from a loss of ($449,919) for the three
months ended September 30, 1998 to a loss of ($471,418). This was due to the
operating cost increase described above offset by relief from losses on
rescinded acquisitions which were incurred in 1998.
Liquidity And Capital Resources
-------------------------------
We have incurred losses from operating activities in each year since
our inception and expect to incur operating and net losses for at least one more
year until the Company's network becomes fully functional. Since inception, we
have utilized cash provided by financing activities to fund operating losses,
and capital expenditures. The sources of this cash have been primarily through
private and public equity and financing. Since inception, we have raised
approximately $4,000,000 of gross proceeds from the sale of our common stock. As
of December 31, 1998, and September 30, 1999, we had $100,060 and $74,033 in
cash, cash equivalents and other liquid investments, respectively.
We believe that the net proceeds from the 1998 and 1999 financing,
together with cash and marketable securities on hand and the sale of capacity on
the "Global Resources Network" will provide sufficient funds for us to expand
our business as planned and to fund operating losses for at least the next two
(2) months. However, the amount of our future capital requirements will depend
on a number of factors, including the success of our business, the start-up
dates of each ring of the "Global Resources Network", the dates at which we
further expand our network, the types of services we offer, staffing levels,
acquisitions and customer growth, as well as other factors that are not within
our control, including competitive conditions, government regulatory
developments and capital costs. In addition, we continually discuss and evaluate
potential acquisitions. In the event that (1) our plan or assumptions change or
prove to be inaccurate, (2) we consummate an acquisition, (3) we are unable to
convert from leased to owned infrastructure in accordance with our current plans
or (4) the cash and investments on hand, and the proceeds from the sale of
capacity on the "Global Resources Network" prove to be insufficient to fund our
growth in the manner and at the rate currently anticipated, we may be required
to delay or abandon some or all of our development and expansion plans or we may
be required to seek additional sources of financing earlier than currently
anticipated. In the event we are required to seek additional financing, there
can be no assurance that such financing will be available on acceptable terms or
at all. If we do not raise the required amounts, we will have to significantly
alter our plans. (see "Risk Factors")
25
<PAGE>
The Company faces a crucial test of its capital needs and requirements
in late 1999 as it searches for private capital (equity or debt) of $2,000,000
for equipment purchases, deposits and working capital to implement the new
business it has signed. In the event that the Company is unable to raise the
amounts needed, it will have to scale back its international telecommunications
sector and focus on acquisitions or developing less capital-intensive sectors of
the business such as Teleprizes(TM), which remains in the early stages although
showing bright promise.
Capital Expenditures - Commitments
-------------------------------
The development of our business has required substantial capital.
Capital additions for each period consist of capital expenditures, the net
increase in property and equipment purchases payable, assets acquired under
capital lease obligations and capitalized interest during the period. During
1998, capital additions were nominal, but are expected to greatly increase in
future years. We added $300,000 of equipment during the 3rd Quarter of 1999. The
company plans to expend approximately $450,000 for ATM equipment, $150,000 for
switch deposits and payments, and $300,000 for deposits on long distance lines
in the 4th Quarter of 1999.
Additional equipment needs for the network systems will be secured with long
term leases.
Foreign Currency
----------------
We have limited exposure to fluctuations in foreign currencies relative to
the U.S. dollar as a result of billing portions of our communication services
revenue and a substantial portion of our transmission costs, being denominated
in U.S. dollars. A substantial portion of our capital expenditures are, and will
continue to be, denominated in U.S. dollars.
With the continued expansion of our network, a substantial portion of
the costs associated with the network, such as local access and termination
charges and a portion of the leased line costs, as well as a majority of local
selling expenses and possibly debt service, will be charged to us in the same
currency as revenues billed. These developments create a natural hedge against a
portion of our foreign exchange exposure. To date, much of the funding necessary
to establish the local direct sales organizations has been derived from
communication services revenue that was billed in local currencies.
Consequently, we believe that our financial position as of December 31, 1998 and
September 30, 1999 and our results of operations for the year ended December 31,
1998 and the three months and nine months ending September 30, 1999 were not
significantly impacted by fluctuations in the U.S. dollar in relation to foreign
currencies.
Year 2000
---------
The year 2000 problem is the result of computer programs,
microprocessors and embedded date reliant systems using two digits rather than
four to define the applicable year. If such programs are not corrected, such
26
<PAGE>
date sensitive computer programs, microprocessors and embedded systems may
recognize a date using "00" as the year 1900 rather than the year 2000. This
could result in a system failure or miscalculation causing disruptions in
operations.
In an effort to assess our year 2000 state of readiness, during 1998 we
performed a complete inventory assessment of all of our internal systems, which
we have divided into two categories, business essential, or mission critical,
and support systems, or non-mission critical. As part of our year 2000 program
and as part of our overall procurement plan, we have sought to ensure that fixed
assets acquired were year 2000 compliant. As part of this process, we have
inventoried, tested, and ensured year 2000 compliance of our mission critical
systems. The inventory and testing of these mission critical systems is
complete. The backbone of our communications network is primarily composed of
use of switches which are year 2000 compliant. Our message processing and
billing systems, which are used to record and process millions of call detail
records, and our transmission equipment, which our only other mission critical
systems, are also year 2000 compliant. The majority of our non-mission critical
systems are year 2000 compliant. We believe our mission critical and our
non-mission critical systems are all year 2000 compliant as of September 30,
1999.
We have initiated formal communications with the key carriers and other
vendors on which our operations and infrastructure are dependent to determine
the extent to which we are susceptible to a failure resulting from such third
parties' inability to remediate their own year 2000 problems. Accordingly,
during the procurement process, we have taken steps to ensure that our vendors,
carriers and products purchased are year 2000 compliant or are adequately
addressing the year 2000 issues. We can provide no assurance that the carriers
and other vendors on which our operations and infrastructure rely are or will be
year 2000 compliant in a timely manner. Interruptions in the services provided
to us by these third parties could result in disruptions in our services.
Depending upon the extent and duration of any such disruptions and the specific
services affected, such disruptions could have a material adverse affect on our
business, financial condition and results of operations. As a contingency
against any possible disruptions in services provided by vendors, we have sought
to diversify our vendor base. We believe that the diversity of our vendor base
is sufficient to mitigate year 2000 related disruptions in service to our
customers. In addition, we believe that the fact that we conduct business in,
and derive revenue from, multiple Western European countries helps to mitigate
the potential impact of year 2000 related disruptions. In addition, disruptions
in the economy generally resulting from year 2000 problems could also have a
material adverse affect on us. We could be subject to litigation resulting from
any disruption in our services. The amount of potential liability or lost
revenue which would result from these disruptions in service could have a
material adverse effect on our business, financial condition and results of
operations.
Inflation
---------
We do not believe that inflation has had a significant effect on our
operations to date.
27
<PAGE>
Market Risk Exposure
--------------------
We are subject to foreign currency exchange rate risk relating to
receipts from customers, payments to suppliers and interest payments on
outstanding Euro denominated securities. We do not consider the market risk
exposure relating to foreign currency exchange to be material. See "Liquidity
and Capital Resources - Foreign Currency".
We have financial instruments that are subject to interest rate risk,
principally short-term investments and debt obligations issued at a fixed rate.
Historically, we have not experienced material gains or losses due to interest
rate changes when selling short-term investments and typically hold these
securities until maturity. Based on our current holdings of short-term
investments, our exposure to interest rate risk is not material. Fixed rate debt
obligations issued by us are generally not callable until maturity.
Item 3. Description of Property.
---------------------------------
GRG's principal executive offices are 100 2nd Avenue North, Suite #200,
St. Petersburg, Florida. GRG's lease is for 2,986 square feet at $3,338 a month
and expires on August 31, 2001. The facility is used entirely for office and
administration. The Company anticipates leasing additional facilities in the
future for telecommunications equipment as the "Global Resources Network" is
built.
Item 4. Security Ownership of Certain Beneficial Owners and Management.
- ------------------------------------------------------------------------
Security Ownership of Certain Beneficial Owners.
------------------------------------------------
The following table sets forth the share holdings of those persons who own
more than five percent of GRG's common stock as of October 22, 1999, based upon
22,299,427 outstanding shares:
<TABLE>
<CAPTION>
Number of Shares Percentage
Name and Address Beneficially Owned of Class(1)
- ---------------- ------------------ -----------
<S> <C> <C>
Carl Smith
355 Interstate Blvd.
Sarasota, FL 34240 3,335,598 (1) 15.0%
Ken Craig
612 Downs Avenue 1,560,000(2) 6.9%
Temple Terrace, FL 33617
28
<PAGE>
Jeffrey M. Good
4490 38th Way South 1,560,000(2) 6.9%
St. Petersburg, FL 33711
Ranald Stewart
3424 Jean Circle
Tampa, FL 33629 3,639,512 16.3%
10,055,110 45.1%
(1) Includes 1,200,000 shares owned by SB Resources Group, Inc. (see
"Security Ownership of Directors and Officers" below), 1,633,935 shares
owned by ASFT, Inc. (see "Security Ownership of Directors and Officers"
below),45,020 shares owned by Carl Smith III (son), 50,000 shares owned
by Carl Smith III and Julie M. Smith, 50,800 shares owned by Franklin
S. Smith (son), 2,300 shares owned by Tina S. Cook (daughter), 25,000
shares owned by Linzy Cook (granddaughter), 301,876 shares owned by
Vikki Cook, and 26,667 shares owned by Tampa Bay Financial, Inc.
(2) Subject to vesting requirements based on 1 share released for every two
dollars of gross profit earned by the Company
</TABLE>
Security Ownership of Directors and Officers.
---------------------------------
The following table sets forth the share holdings of GRG's directors and
executive officers as of October 22, 1999. Information regarding the capacities
in which each person serves for GRG is contained in Part I, Item 5.
<PAGE>
Number of Shares Percentage of
Name and Address Beneficially Owned of Class
- ---------------- ------------------ -------------
O. Howard Davidsmeyer, Jr.
5159 Riverwood Avenue 328,800 1.5%
Sarasota, FL 34231
Carl L. Smith
355 Interstate Blvd. 3,335,598 15.0%
Sarasota, FL 34240
Christopher R. Beck
235 Sunrise Avenue 480,000 2.2%
Suite C-24
Palm Beach, FL 33629
Ranald Stewart, Jr.
3424 Jean Circle 3,639,512 16.3%
Tampa, Fl 33629
29
<PAGE>
Ken Craig
612 Downs Avenue 1,560,000 6.9%
Temple Terrace, FL 33617
Matthew A. Veal
1004 Marlin Lakes Circle 102,500 0.4%
#211
Sarasota, FL 34232
Jeffrey M. Good
4490 38th Way South 1,560,000 6.9%
St. Petersburg, FL 33711
Totals 10,966,410 49.2%
Changes in Control.
-------------------
There are no present arrangements or pledges of GRG's securities that may
result in a change in control of GRG.
Item 5. Directors, Executive Officers, Promoters and Control Persons.
- ---------------------------------------------------------------------
Identification of Directors and Executive Officers.
---------------------------------------------------
The following table sets forth the names of all current directors and
executive officers of GRG. These persons will serve until the next annual
meeting of the stockholders (held in June of each year) or until their
successors are elected or appointed and qualified, or their prior resignations
or terminations.
Date of Date of
Positions Election or Termination
Name Held Designation or Resignation
- ---- ---- ----------- --------------
O. Howard
Davidsmeyer, Jr. Chairman 3/98 *
Carl L. Smith Director 3/98 *
Christopher R. Beck Director 3/98 *
Ranald Stewart, Jr. Director 3/98 *
Matthew A. Veal CFO 1/99 *
Jeffrey M. Good President/COO 10/99 *
Ken Craig CEO 10/99 *
30
<PAGE>
* These persons presently serve in the capacities indicated.
Business Experience.
--------------------
O. Howard Davidsmeyer, Chairman of the Board of Directors. Mr. Davidsmeyer
is 76 years of age. Mr. Davidsmeyer has been the chairman of Diversified
Resources Group, Inc., formerly known as Data 1 Inc.) from 1994 to 1996 and
again from 1997 to the present. He also served as CEO from 1994 to 1995 and
again June 1999 to the present. He has also served as chairman of Catalyst
Communications, Inc. from 1994 to the present. Mr. Davidsmeyer's career extends
many years and includes a variety of business and civic accomplishments.
Carl L. Smith, Director. Mr. Smith is 56 years of age. Mr. Smith is an
entrepreneur in marketing, sales and business development. Mr. Smith has served
as the CEO of Catalyst Communications, Inc. from 1994 to the present and has
served on the board of directors of Diversified Resources Group, Inc. from 1994
to 1996 and from April 1999 to the present. Mr. Smith has also been chairman of
Tampa Bay Financial, Inc. from 1994 to the present.
Christopher R. Beck, Director. Mr. Beck is 46 years of age. Mr. Beck is a
successful businessman and master negotiator with experience in sales, marketing
and corporate management. He has served for the last five years as the president
of Phone USA, an independent telecommunications firm and also became president
of Cordless Power, Inc. a division of Diversified Resources Group, Inc. in 1999.
Ranald Stewart, Jr., Director. Mr. Stewart is 61 years of age. Mr. Stewart
is a business executive and entrepreneur involved in new company formation,
marketing, management and finance. Mr. Stewart has served as the Chairman/CEO of
International Tele-Data, Inc. from 1994 to the present. Mr. Stewart has also
served on the Boards of Valucar, Genlink, Bentely Pharmaceutical, and Belmac.
Mr. Stewart is a graduate of The University of Florida.
Matthew A. Veal, CFO. Mr. Veal is 40 years of age. Mr. Veal, a CPA, is
currently CFO for Catalyst and Tampa Bay Financial. From 1997 to 1998 he was
Chief Accounting Officer for Koasmas Group International. From 1995 to 1997 he
was CFO for Catalyst and from 1994 to 1995 he was CFO for ComCentral Corp. Mr.
Veal served on the Boards of Directors of ComCentral and Data 1. Mr. Veal is a
graduate of the University of Florida School of Accounting.
Jeffrey M. Good, President & COO. Mr. Good is 53 years of age. From 1994 to
1996, Mr. Good serves as Director of National Sales for Quintrel Corporation, a
software development company specializing in telecommunications applications. In
1996, Mr. Good became the Vice President of Systems Communications, Inc. from
1997 to 1998. Mr. Good, through Plum Creek Communications, Inc. a consulting
company he formed, served as a consultant specializing in mergers and
acquisitions for International Tele-Data, Inc. Mr. Good joined GRGI as Chief
Operating Officer in October 1998 and was promoted to President in October 1999.
Ken Craig, CEO. Mr. Craig is 45 years of age. Mr. Craig is an attorney
experienced in reorganization, compliance and management of Public Companies.
31
<PAGE>
Mr. Craig left the legal profession in the early 90's after founding two
telecommunication finance companies. He worked on the acquisition of Centel for
the benefit of the Williams Companies and became a division president of Wiltel,
the surviving entity. From 1996 to 1997 he was President and CEO of Renaissance
Golf Products, Inc. In 1998 - 1999 he was a consultant for Divot Golf ("PUTT"),
first reorganizing a subsidiary and then restructuring the parent at the request
of the Board of Directors. Mr. Craig joined GRGI in September, 1999. Mr. Craig
is a graduate of Stetson University and the University of Mississippi School of
Law, and is admitted to practice law in a variety of jurisdictions.
Family Relationships.
---------------------
There are no family relationships between any director or executive
officer.
Involvement in Certain Legal Proceedings.
-----------------------------------------
During the past five years, except as noted below, no present or former
director, executive officer or person nominated to become a director or an
executive officer of GRG:
o was a general partner or executive officer of any business against
which any bankruptcy petition was filed, either at the time of the
bankruptcy or two years prior to that time, except Mr. Veal, Mr. Smith
and Mr. Davidsmeyer having served as officers and directors of
Diversified Resources Group, Inc. and Catalyst Communications, Inc.,
which filed for bankruptcy in 1997 and 1998, respectively;
o was convicted in a criminal proceeding or named subject to a pending
criminal proceeding (excluding traffic violations and other minor
offenses);
o was subject to any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise
limiting his involvement in any type of business, securities or banking
activities; or
o was found by a court of competent jurisdiction (in a civil action), the
Commission or the Commodity Futures Trading Commission to have violated
a federal or state securities or commodities law, and the judgment has
not been reversed, suspended or vacated.
Executive Committee In December 1998, the Board of Directors
established executive committee (the "Executive Committee"), which is granted
such authority as may be determined from time to time by a majority of the Board
of Directors. The Executive Committee consists of Messrs. Davidsmeyer and
Stewart.
32
<PAGE>
Audit Committee Shortly after becoming a registrant, the Board of
Directors will establish an audit committee (the "Audit Committee"), which will
consist of two or more directors. The Audit Committee will be established to
make recommendations concerning the engagement of independent public
accountants, review with the independent public accountants the plans and
results of the audit engagement, approve professional services provided by the
independent public accountants, review the independence of the independent
public accountants, consider the range of audit and non-audit fees, and review
the adequacy of the Company's internal accounting controls.
Compensation Committee Shortly after completion of the Company's
registration, the Board of Directors will establish a compensation committee
(the "Compensation Committee"), which will consist of two or more non-employee
or independent directors to the extent required by Rule 16b-3 under the Exchange
Act and Section 162(m) of the Code, to determine compensation for the Company's
senior executive officers.
Nominating Committee Shortly after completion of the Company's
registration, the Board of Directors will establish a nominating committee (the
"Nominating Committee"), which will initially consist of Mssrs. Smith and Beck.
The function of the Nominating Committee will be to recommend to the full board
of Directors nominees for election as directors of the Company and the
composition of committees of the Board of Directors.
The Board of Directors of the Company initially will not have any other
committees.
Director Compensation
Except for these shares granted to directors for board services (see
"Certain Relationships and Related Transactions" and "Recent Sales of
Unregistered Securities"), the Company does not currently contemplate any
compensation to do its directors for 1999.
Item 6. Executive Compensation.
- --------------------------------
The following table sets forth the aggregate compensation paid by GRG
for services rendered during the periods indicated:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Secur-
ities All
Name and Year or Other Rest- Under- LTIP Other
Principal Period Salary Bonus Annual rictedlying Pay- Comp-
Position Ended ($) ($) Compen-Stock Optionsouts ensation
- -----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Vince 9/30/99 111,154 0 0 0 0 0 42,000(7)
33
<PAGE>
Murone, 12/31/98 0 0 0 0 0 0 0 0
President 12/31/97 0 0 0 0 0 0 0 0
Ken Craig, 9/30/99 0 0 11,570 0 0 0 0 0(9)
CEO 12/31/98 0 0 0 0 0 0 0 0
CEO 12/31/98 0 0 0 0 0 0
12/31/97 0 0 0 0 0 0 0 0
Matthew A. 9/30/99 0 0 5,000(1) 0 0 0 0
Veal, 12/31/98 0 0 0 0 0 0 0 0
CFO 12/30/97 0 0 0 0 0 0 0 0
Jeffrey M. 9/30/99 113,076 0 0 0 0 0 0(9)
Good, COO 12/31/98 0 0 8,077(2) 0 0 0 0
President 12/31/97 0 0 0 0 0 0 0
O. Howard 9/30/99 0 0 0 0 0 0 0 0
Davidsmeyer12/31/98 0 0 250,000(3) 0 0 0
Jr.Chairman12/31/97 0 0 0 0 0 0 0
Carl L. 9/30/99 0 0 0 1,650,000(6)0 0 0
Smith, 12/31/98 0 0 0 0 0 0 0 0
Director 12/31/97 0 0 0 0 0 0 0 0
Christopher 9/30/99 0 0 0 0 0 0 0 0
R. Beck, 12/31/98 0 0 70,385(4) 0 0 0 600,000(4)
Director 12/31/97 0 0 0 0 0 0 0 0
Ranald 9/30/99 0 0 0 0 0 0 0 0
Stewart, 12/31/98 0 0 0 250,000(5) 0 0 0
Director 12/31/97 0 0 0 0 0 0 0 0
Robert 9/30/99 80,769 (8) 0 0 0 0 0 0
Alexander, 12/31/98 105,000 0 0 0 0 0 0 0
[Former 12/31/97 0 0 0 0 0 0 0 0
President,
Former Vice
President]
</TABLE>
(1) Received $5,000 in fees.
(2) Received $8,077 in gross wages.
(3) Received 250,000 shares of "restricted securities" as
compensation for a Consulting Fee Agreement for Board services
dated March 20, 1998, valued at $0.99 per share.
(4) Received $70,385 in wages and 250,000 shares as compensation
for a Consulting Fee Agreement for board services dated March
20, 1998 and 350,000 shares issued for merger and acquisition
services which were valued at $1.00 per share.
(5) Received 250,000 shares "restricted securities" as
compensation for a Consulting Fee Agreement for board services
dated March 20, 1998, valued at $0.99 per share.
34
<PAGE>
(6) Received (through Vikki Cook, unmarried cohabitant) 250,000
shares for board services pursuant to a consulting contract
dated March 28, 1998, received 200,000 shares through ASFT,
Inc., a company owned by Vikki Cook for administrative
services in November 1998, and received 1,200,000 shares from
SB Resources Group, Inc., a company owned by Vikki Cook, for
telecommunication services in December 1998, valued at $0.99
per share.
(7) Terminated in Oct. 1999. This amount represents severance payments due Mr.
Murone.
(8) Terminated in Oct. 1999.
(9) Received 1,560,000 shares each under a performance stock
agreement on November 12, 1999, subject to earnout provisions
(see Item 4, "Recent Shares of Unregistered Securities").
Cash Compensation Awards.
-------------------------
No cash compensation, deferred compensation or long-term incentive plan
awards were issued or granted to GRG's management during the years ended
December 31, 1998 and 1997, or the period ended September 30, 1999, except as
set forth in the Summary Compensation Table. Further, no member of GRG's
management has been granted any option or stock appreciation rights;
accordingly, no tables relating to such items have been included within this
Item.
Stock Option or Benefit Plans.
------------------------------
GRG has adopted certain stock performance agreements with management dated
November 12, 1999. Jeffrey M. Good and Ken Craig have been granted performance
1,560,000 shares of common stock of GRG. The acquisition of these shares will be
deemed paid in full under the formula of one paid in full share for every $2.00
of gross profit produced by GRG, through November 1, 2001, and November 1, 2004,
respectively.
Compensation of Directors.
--------------------------
There are no standard arrangements pursuant to which GRG's directors are
compensated for any services provided as a director. No additional amounts are
payable to GRG's directors for committee participation or special assignments.
Employment Contracts and Termination of Employment and Change in Control
Arrangements.
-------------
Other than the Consulting Fee Agreements with SB Resources Group, Inc.,
dated March 16, 1998, Vikki C. Cook, Ranald Stewart, Jr., Christopher R. Beck,
O. Howard Davidsmeyer, Jr., all dated March 20, 1998, and Executive Employment
Agreements and Stock Performance agreements with Jeff Good and Ken Craig, there
are no employment contracts, compensatory plans or arrangements, including
35
<PAGE>
payments to be received from GRG, with respect to any director or executive
officer of GRG which would in any way result in payments to any such person
because of his or her resignation, retirement or other termination of employment
with GRG or its subsidiaries, any change in control of GRG, or a change in the
person's responsibilities following a change in control of GRG. Copies of the
agreements are attached hereto and incorporated herein by reference. See Part
III, Item 1.
Item 7. Certain Relationships and Related Transactions.
- --------------------------------------------------------
The only transactions between members of management, nominees to become
directors or executive officers, 5% stockholders, or promoters or persons who
may be deemed to be parents of GRG are:
o During 1998, the Company issued 4 contracts to its directors for
250,000 shares each for board services (see item 4 "Recent Sales of
Unregistered Securities"). Also during 1998, United Funding Solutions,
Inc. a Company controlled by Chris Beck, and ASFT, Inc. and SB
Resources Group, Inc. a company controlled by Carl Smith awarded
contracts of 350,000 shares, 200,000 shares and 1,200,000 shares for
acquisition services, administrative and consulting services, and
telecommunications services, respectively. During March 1998, the
Company acquired certain assets from Catalyst Communications, Inc.
(Catalyst), a company controlled by Carl Smith, O. Howard Davidsmeyer,
Jr. and Matthew A. Veal, for 3,150,000 shares of common stock. (See
Item 4, "Recent Sales of Unregistered Securities")
o During 1998, Catalyst paid GRG's expenses of $267,305, all of which
were repaid. Catalyst and its affiliates also donated capital of
$1,625,000 to the Company. Chris Beck paid Company expenses of $44,406
to the Company and was repaid all but $3,000 as of December 31, 1998
which was paid in 1999.
o During 1999, ASFT, Inc. purchased 356,400 shares for $0.25 and
1,277,533 shares for $0.50 per share. Tampa Bay Financial, Inc., also
controlled by Carl Smith, also acquired 26,667 shares at $0.50 per
share.
Item 8. Description of Securities.
- -----------------------------------
Common Stock.
-------------
GRG has one class of securities authorized, consisting of 100,000,000
shares of $0.001 par value common voting stock. The holders of GRG's common
stock are entitled to one vote per share on each matter submitted to a vote at a
meeting of stockholders. The shares of common stock do not carry cumulative
voting rights in the election of directors.
36
<PAGE>
Stockholders of GRG have no pre-emptive rights to acquire additional
shares of common stock or other securities. The common stock is not subject to
redemption rights and carries no subscription or conversion rights. All shares
of the common stock now outstanding are fully paid and non-assessable.
No Outstanding Options, Warrants or Calls.
------------------------------------------
No Provisions Limiting Change of Control
---------------------------------------
There is no provision in GRG's Articles of Incorporation or Bylaws that
would delay, defer, or prevent a change in control of GRG.
Part II
Item 1. Market Price of and Dividends on GRG's Common Equity and
Other Stockholder Matters.
- --------------------------
Market Information.
-------------------
Quotations of GRG's common stock only commenced on the OTC Bulletin Board
of the National Association of Securities Dealers, Inc. (the "NASD") on April
15, 1998. There is no "established trading market" for the common stock of GRG,
and no assurance can be given that any current market for GRG's common stock
will develop or be maintained. For any market that develops for GRG's common
stock, the sale of "restricted securities" (common stock) pursuant to Rule 144
of the Securities and Exchange Commission by members of management and others
may have a substantial adverse impact on any such public market. Information
about the dates when current holders' Rule 144 holding period of "restricted
securities" commenced can be found under the caption "Recent Sales of
Unregistered Securities," Part II, Item 4. A minimum holding period of one year
is required for resale's under Rule 144, along with other pertinent provisions,
including publicly available information concerning GRG (this requirement will
be satisfied by the filing and effectiveness of this Registration Statement, the
passage of 90 days and the continued timely filing by GRG of all reports
required to be filed by it with the Securities and Exchange Commission;
limitations on the volume of "restricted securities" which can be sold in any 90
day period; the requirement of unsolicited broker's transactions; and the filing
of a Notice of Sale of Form 144.
Effective January 4, 1999, the NASD adopted rules and regulations
requiring that prior to any issuer having its securities quoted on the OTC
Bulletin Board of the NASD that such issuer must be a "reporting issuer" which
is required to file reports under Section 13 or 15(d) of the
37
<PAGE>
the 1934 Act. Under the "phase-in" schedule of the NASD, GRG has until December
1, 1999, within which to become a "reporting issuer," and to satisfy all
comments of the Securities and Exchange Commission respecting this Registration
Statement. This Registration Statement will not become effective for 60 days
from the date of its filing, and it is unlikely that GRG will timely satisfy
these quotation requirements of the NASD. Therefore, OTC Bulletin Board
quotations of GRG's common stock will cease on December 1, 1999, and the
Company's common stock would thereafter be quoted in the "Pink Sheets" of the
NQB.
The following quotations were provided by the National Quotation Bureau,
and do not represent actual transactions; these quotations do not reflect dealer
markups, markdowns or commissions.
STOCK QUOTATIONS*
CLOSING BID
Quarter ended: High Low
- -------------- ---- ---
June 30, 1998 $5.25 $0.625
September 30, 1998 $3.125 $0.3125
December 31, 1998 $1.09375 $0.5625
March 31, 1999 $2.25 $0.625
June 30, 1999 $1.96875 $0.9375
September 30, 1999 $1.3125 $0.78125
* The Company's stock did not trade before the second quarter of 1998.
Holders.
--------
The number of record holders of GRG's securities as of the date of this
Registration Statement is approximately 1,420.
Dividends.
----------
GRG has not declared any cash dividends with respect to its common stock,
and does not intend to declare dividends in the foreseeable future. The future
dividend policy of GRG cannot be ascertained with any certainty, and if and
until GRG completes any sales of its products, no such policy will be
formulated. There are no material restrictions limiting, or that are likely to
limit, GRG's ability to pay dividends on its securities.
Item 2. Legal Proceedings.
- ---------------------------
38
<PAGE>
Other than as indicated below, GRG is not a party to any pending legal
proceeding. No Federal, state or local governmental agency is presently
contemplating any proceeding against GRG. No director, executive officer or
persons who may be deemed to be an "affiliate" of GRG or owner of record or
beneficially of more than five percent of GRG's common stock is a party adverse
to GRG or has a material interest adverse to GRG in any proceeding, except in
the cases disclosed below:
(1) Global Resources Group, Inc. vs. E-Tel Corporation, Phil Martin and
Raymond Klingenburg, Case NO: CL 99-381 AF, Circuit Court of the 15th
Judicial Circuit, In and For Palm Beach County, Florida:
In this action, we have sued the Defendants, E-Tel, Phil Martin and
Raymond Klingenburg for a breach of an Agreement and Plan of Exchange,
unjust enrichment, money had and received, fraud in the inducement,
constructive fraud/breach of fiduciary duty, conversion and for
impression of a constructive trust. In turn, E-Tel and Phil Martin have
filed an Ame3nded Counterclaim alleging two causes of action for breach
of contract. This cause is not set for trial. We do not believe we will
make a significant recovery but hope to recover 10,000 shares of stock
issued t these individuals.
(2) Michael Williams vs. GRG, Inc. d/b/a/ Global Resources Group, Inc.,
Christopher Beck and Jeffrey M. Good, Case No: CL 99-2502 AG, Circuit
Court of the 15th Judicial Circuit, In and for Palm Beach County,
Florida:
In this action, the Plaintiff, Michael Williams has sued the defendants
for tortious interference with his contract of employment with E-Tel.
In his complaint, Williams alleges that he executed a written
employment agreement pursuant to which he was to be paid a base salary
of $80,000.00 per year during the two year term of the agreement, plus
other benefits including health insurance, bonus, stock option, company
car, reimbursement of expenses and an auto allowance. GRG, Inc. and the
other defendants have denied that they tortiously interfered with Mr.
Williams' employment agreement and have alleged various affirmative
defenses. This matter is currently set for trial on the Court's March
6, 2000 Trial Docket. We will vigorously defend this case and believe
our liability to be minimal, if any.
(3) Cooney, Ward, Lesher & Damon, P.A., vs. Global Resources Group, Inc.,
Joseph Simmons, etc. Case No: 98-10774-AF, Circuit Court of the 15th
Judicial Circuit in and for Palm Beach County, Florida.
This action, filed on December 3, 1998, in the Circuit Court of the
fifteenth Judicial Circuit, in and for Palm Beach County, Florida,
arises out of a stock ownership dispute. Cooney, Ward, Lesher & Damon,
P.A., acting as an escrow agent, is currently holding 400,000 shares of
stock of GRG, Inc. GRG, Inc., is involved in a claim against Joseph
Simmons, his wife, and their related entities ("the Simmons group")
regarding ownership of the stock. The nature of the action is an
39
<PAGE>
interpleader action filed by Cooney, Ward, et al., seeking to release
the stock to the Registry of the Court for a determination as to
ownership between GRG, Inc., and the Simmons Group. We have filed an
answer to the interpleader complaint and a claim against the Simmons
group alleging GRG, Inc.'s interest in the stock. The Simmons group,
has received and extension of time within which to respond to the
cross-claim and to file its own claim regarding ownership of the stock.
It is the intention of the Company to vigorously contest any claim by
the Simmons group to ownership of the stock. We believe the court will
find in our favor, but we have expensed the entire amount of shares as
a loss since our recovery may take a significant amount of time.
Item 3. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
- ---------------------
Anderson, Anderson and Strong, L.C., Certified Public Accountants, of
Salt Lake City, Utah, audited the financial statements of GRG for the calendar
years ended December 31, 1997, 1996 and 1995; these financial statements are
filed as a part of this Registration Statement.
Jones, Jensen & Company, LLC, Certified Public Accountants, of Salt
Lake City, Utah, were engaged by the Board of Directors of GRG to prepare the
audit of the financial statements of GRG for the year ended December 31, 1998;
and will prepare the audit of the financial statements for the year ending
December 31, 1999.
There were no disagreements between GRG and Andersen, Andersen and
Strong, L.L.C., whether resolved or not resolved, on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure, which, if not resolved, would have caused them to make reference to
the subject matter of the disagreement in connection with their reports.
The Report of Andersen, Andersen and Strong, L.L.C. did not contain any
adverse opinion or disclaimer of opinion, and with the exception of a "going
concern" qualification because of the lack of material operations of and
recurring losses from operations of GRG on the date of the Independent Auditor's
Report, were not qualified or modified as to uncertainty, audit scope or
accounting principles.
During GRG's three most recent calendar years, and since then, neither
Andersen, Andersen and Strong nor Jones, Jensen & Company has advised GRG that
any of the following exists or is applicable:
(1) That the internal controls necessary for GRG to develop reliable
financial statements do not exist, that information has come to
their attention that has lead them to no longer be able to rely
on management's representations or that has made them unwilling
to be associated with the financial statements prepared by
management;
(2) That GRG needs to expand significantly the scope of
its audit, or that information has come to their attention
that if further investigated may materially impact the
fairness or reliability of a previously issued audit report
or the underlying financial statements or any other
financial presentation, or cause them to be unwilling to
rely on management's representations or be associated with
GRG's financial statements for the foregoing reasons
or any other reason; or
40
<PAGE>
(3) That they have advised GRG that information has come to their
attention that they have concluded materially impacts the
fairness or reliability of either a previously issued audit
report or the underlying financial statements
for the foregoing reasons or any other reason.
During GRG's three most recent calendar years and since then, GRG has
not consulted Jones Jensen & Company regarding the application of accounting
principles to a specified transaction, either completed or proposed; or the type
of audit opinion that might be rendered on GRG's financial statements or any
other financial presentation whatsoever.
GRG has provided Andersen, Andersen & Strong with a copy of the disclosure
provided under this caption of this Registration Statement, and has advised them
to provide GRG with a letter addressed to the Securities and Exchange Commission
as to whether they agree or disagree with the disclosures made herein. A copy of
its response is attached hereto and is incorporated herein by this reference.
See Part III, Item 1.
Item 4. Recent Sales of Unregistered Securities.
- -------------------------------------------------
<TABLE>
<CAPTION>
Common Stock
------------
Name Date Number of Shares Aggregate
Acquired Consideration
<S> <C> <C> <C>
Alliance Marketing December 1997 1,000,000 (1)
International Tele-Data March 1998 5,224,310 (2)
Catalyst Communications March 1998 3,150,000 (3)
Vikki Cook December 1998 250,000 (4)
Ranald Stewart December 1998 250,000 (4)
Chris Beck December 1998 250,000 (4)
O.H. Davidsmeyer, Jr. December 1998 250,000 (4)
SB Resources Group, Inc. December 1998 1,200,000 (5)
ASFT, Inc. November 1998 200,000 (6)
Justine Blankenship November 1998 250,000 (7)
United Funding Solutions, March 1998 350,000 (8)
Inc.
41
<PAGE>
Franklin PB Enterprises February 1998 450,000 (9a)
E-Tel June 1998 10,000 (9b)
Pro Sports Group Corp. June 1998 25,000 (9c)
504 Regulation D Offering Fall 1998 663,956 (10)
504 Regulation D Offering Winter 98/99 448,647 (11)
Private Placement Spring/Summer 1999 3,247,514 (12)
Performance Shares Issuance November 12, 1999 1,560,000 (13)
to Ken Craig
Performance Shares Issuance November 12, 1999 1,560,000 (14)
to Jeff Good
</TABLE>
* Please refer to the below information for details on aggregate consideration
(1) In December 1997, the Company issued 1,000,000 shares for services to
Alliance Leasing, valued at $0.001 per share. Those shares were cancelled in
February 1999.
(2) In March 1998, the Company acquired the international telecommunications
assets from International Teledata, Inc. for 5,224,310 shares of common stock in
1998, in a transaction valued at the predecessor cost of $23,749 or $0.0045 per
share.
(3) In March 1998, the Company acquired Teleprizes(TM) for 3,150,000 shares of
common stock, with certain marketing rights associated with providing internet
scratch off sweepstakes promotions to internet web sites to induce traffic.
Teleprizes(TM) was acquired from Catalyst Communications, Inc., a corporation
controlled by Carl Smith, O. Howard Davidsmeyer, Jr. and Matthew A. Veal. The
acquisition was accounted for at predecessor cost of $95,934 or $0.03 per share.
That affiliate and related control parties also contributed $1,625,000 in cash
and payment of expenses to the Company.
(4) In December 1998, the Company issued 250,000 shares each under four (4)
contracts for board services to each of its directors (Carl Smith, O. Howard
Davidsmeyer, Jr., Chris Beck and Ranald Stewart, Jr.) for services in 1998.
Those issuances were valued at $0.991 per share, which approximates the market
value and offering price of the Company's shares during 1998.
(5) In December 1998, the Company issued 1,200,000 shares of stock to SB
Resources Group, Inc., a corporation controlled by Carl Smith, for
telecommunications services associated with the sale and marketing of the
Company's internet sweepstakes products. This contract was also valued at the
$1.00 market price of the Company's stock.
42
<PAGE>
(6) In November 1998, the Company issued 200,000 shares under an agreement for
administrative services from ASFT, Inc., a corporation controlled by Carl Smith,
which accrued during 1998. These shares were also valued at $1.00 per share.
Reimbursements
--------------
(7) In November 1998, The Company reimbursed Justine Blankenship, a shareholder,
for a $250,000 expenditure by issuing her 250,000 shares of common stock which
were valued at $1.00 per share.
Mergers and Acquisitions
------------------------
(8) In March 1998, the Company issued 350,000 shares to United Funding
Solutions, Inc., a company controlled by Chris Beck, for services in connection
with acquisition made by the Company. These shares were valued at $1.00 per
share.
Rescinded Acquisitions
----------------------
(9) The Company issued shares in connection with the rescinded acquisition of 3
entities, each of which is discussed below:
a. Franklin P.B. Enterprises- The Company entered into contracts in February
1998 to acquire companies with various real estate holdings owned by an
unrelated shareholder. The Company advanced $238,494 and issued 3,150,000 shares
of its common stock, of which 2,700,000 shares were canceled. The Company
accounted for the shares at $1.00 per share.
b. E-Tel - In June 1998, the Company entered into a contract to acquire the
common stock of E-Tel Corporation for 1,250,000 shares of common stock. E-Tel
was also in the international long distance phone business. The transaction was
canceled after the Company's determination that it would be unable to recover
its investment. The Company recovered and cancelled 1,240,000 shares of the
stock.
c. Pro Sports Group Corporation - In June 1998, the Company acquired Pro Sports
Group Corporation for 200,000 shares, valued at $1.00 per share, as a complement
to its marketing operations. When Pro Sports was found to have no value, the
Company terminated the acquisition recovered 175,000 shares and wrote-off the
remaining 25,000 shares at $1.00 per share. The Company accounted for the shares
at $1.00 per share.
Shares Issued in 504 Regulation D Offering at $1.00 per Share
-------------------------------------------------------------
(10) The Company sold 663,956 of its common shares for cash at various dates in
September and October 1998.
Shares Issued in 504 Regulation D Offering at $0.75 per Share
-------------------------------------------------------------
(11) The Company sold 376,627 of its common shares to investors in November 1998
for cash, and 72,020 shares to investors for cash in January 1999.
43
<PAGE>
(12) During 1999, ASFT, Inc., a related party, purchased for cash, 356,400
shares for $0.25 per share and 1,304,200 shares for $0.50 per share.
Non-affiliated investors also purchased 98,126 shares for $0.50 per share in the
spring of 1999 and 1,488,788 shares for $0.25 per share in the summer of 1999.
(13) Received 1,560,000 shares in a stock performance agreement dated November
12, 1999, subject to vesting based on 1 share released for every $2.00 gross
profit earned.
(14) Received 1,560,000 shares in a stock performance agreement dated November
12, 1999, subject to vesting based on 1 share released for every $2.00 gross
profit earned.
*per answers provided by management but not on shareholders list
All issued pursuant to Consulting Fee Agreements with each of these
persons or entities.
Each of these persons had access to all material information regarding GRG
prior to the offer or sale of these securities; ASFT, Inc. and SB Resources
Group, Inc. are beneficially owned by Vikki C. Cook who is believed to be an
"accredited investor"; and the other shares were issued to directors or
executive officers who had access to all material information respecting GRG.
The offers and sales of all of these securities are believed to have been exempt
from the registration requirements of Section 5 of the Securities Act of 1933,
as amended, pursuant to Section 4(2) thereof, and from similar applicable
states' securities laws, rules and regulations exempting the offer and sale of
these securities by available state exemptions from required registration.
Item 5. Indemnification of Directors and Officers.
- ---------------------------------------------------
Section 78.751(1) of the Nevada Revised Statutes ("NRS") authorizes a
Nevada corporation to indemnify any director, officer, employee, or corporate
agent "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 investigative, except an action by or in the right
of the corporation" due to his or her corporate role. Section 78.751(1) extends
this protection "against expenses, including attorneys' fees, judgments, fines
and amounts paid in settlement actually and reasonably incurred by him or her in
connection with the action, suit or proceeding if he or she acted in good faith
and in a manner which he or she 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 or her conduct was
unlawful."
Section 78.751(2) of the NRS also authorizes indemnification of the
reasonable defense or settlement expenses of a corporate director, officer,
employee or agent who is sued, or is threatened with a suit, by or in the right
of the corporation. The party must have been acting in good faith and with the
reasonable belief that his or her actions were not opposed to the corporation's
best interests. Unless the court rules that the party is reasonably entitled to
indemnification, the party seeking indemnification must not have been found
liable to the corporation.
44
<PAGE>
To the extent that a corporate director, officer, employee, or agent is
successful on the merits or otherwise in defending any action or proceeding
referred to in Section 78.751(1) or 78.751(2), Section 78.751(3) of the NRS
requires that he be indemnified "against expenses, including attorneys' fees,
actually and reasonably incurred by him or her in connection with the defense."
Section 78.751 (4) of the NRS limits indemnification under Sections 78.751
(1) and 78.751(2) to situations in which either (1) the stockholders, (2)the
majority of a disinterested quorum of directors, or (3) independent legal
counsel determine that indemnification is proper under the circumstances.
Pursuant to Section 78.751(5) of the NRS, the corporation may advance an
officer's or director's expenses incurred in defending any action or proceeding
upon receipt of an undertaking. Section 78.751(6)(a) provides that the rights to
indemnification and advancement of expenses shall not be deemed exclusive of any
other rights under any bylaw, agreement, stockholder vote or vote of
disinterested directors. Section 78.751(6)(b) extends the rights to
indemnification and advancement of expenses to former directors, officers,
employees and agents, as well as their heirs, executors, and administrators.
Regardless of whether a director, officer, employee or agent has the right
to indemnity, Section 78.752 allows the corporation to purchase and maintain
insurance on his behalf against liability resulting from his or her corporate
role.
Index to Financial Statements
Report of Independent Auditors
(a)
Jones Jensen & Company, LLC
Index to Financial Statements
Report of Independent Auditors
Financial Statements.
- ---------------------
Audited Financial Statements for the year ended December 31, 1998.
---------------------------------
Independent Auditors' Report.
Balance Sheet.
Statements of Operations.
Statements of Stockholders' Equity.
Statements of Cash Flows.
Notes to the Financial Statements.
Unaudited Financial Statements for the period ended September 30, 1999.
------------------------------------
Balance Sheet.
Statements of Operations.
Statement of Stockholders' Equity.
Statements of Cash Flows.
Notes to Financial Statements
45
<PAGE>
GRG, INC.
(dba GLOBAL RESOURCES GROUP, INC.)
(Formerly Ghiglieri Corporation)
(A Development Stage Company)
FINANCIAL STATEMENTS
December 31, 1998
46
<PAGE>
C O N T E N T S
<TABLE>
<S> <C>
Independent Auditors' Report............................................................................ 3
Balance Sheet........................................................................................... 4
Statements of Operations.................................................................................6
Statements of Stockholders' Equity...................................................................... 7
Statements of Cash Flows............................................................................... 10
Notes to the Financial Statements...................................................................... 12
</TABLE>
47
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
GRG, Inc.
(dba Global Resources Group, Inc.)
(Formerly Gighlieri Corporation)
(A Development Stage Company)
St. Petersburg, Florida
We have audited the accompanying balance sheet of GRG, Inc. (dba Global
Resources Group, Inc.) (formerly Ghiglieri Corporation) (a development stage
company) as of December 31, 1998 and the related statements of operations,
stockholders' equity and cash flows for the years ended December 31, 1998 and
1997. 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 audits.
We conducted our audits 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 audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of GRG, Inc. (dba Global Resources
Group, Inc.) (formerly Ghiglieri Corporation) (a development stage company) as
of December 31, 1998 and the results of its operations and its cash flows for
the years ended December 31, 1998 and 1997 in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 4 to the
financial statements, the Company's recurring losses from operations and net
accumulated deficit raise substantial doubt about its ability to continue as a
going concern. Management's plans concerning these matters are also described in
Note 4. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
Jones, Jensen & Company
Salt Lake City, Utah
November 10, 1999
48
<PAGE>
GRG, INC.
(dba Global Resources Group, Inc.)
(Formerly Ghiglieri Corporation)
(A Development Stage Company)
Balance Sheet
<TABLE>
<CAPTION>
ASSETS
December 31,
1998
CURRENT ASSETS -------------------
<S> <C>
Cash $ 100,060
Other current assets 110
------------------
Total Current Assets 100,170
------------------
FIXED ASSETS (Note 1)
Furniture and fixtures 13,424
Accumulated depreciation (1,134)
------------------
Net Fixed Assets 12,290
------------------
OTHER ASSETS
Settlement receivable, net of allowance (Note 2) 125,000
Investment in contracts (Notes 3, 6 and 7) 95,934
------------------
Total Other Assets 220,934
------------------
TOTAL ASSETS $ 333,394
==================
The accompanying notes are an integral part of these
financial statements.
</TABLE>
49
<PAGE>
GRG, INC.
(dba Global Resources Group, Inc.)
(Formerly Ghiglieri Corporation)
(A Development Stage Company)
Balance Sheet (Continued)
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
December 31,
1998
CURRENT LIABILITIES
<S> <C>
Accounts payable and accrued expenses $ 21,041
Note payable to officer (Note 6) 3,000
------------------
Total Current Liabilities 24,041
------------------
COMMITMENTS AND CONTINGENCIES (Note 2)
STOCKHOLDERS' EQUITY (Notes 3 and 6)
Common stock, $.001 par value, 100,000,000 shares authorized;
issued and outstanding 16,899,893 shares 16,900
Additional paid-in capital 6,198,540
Deficit accumulated during the development stage (5,906,087)
------------------
Total Stockholders' Equity 309,353
------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 333,394
==================
The accompanying notes are an integral part of these
financial statements.
</TABLE>
50
<PAGE>
GRG, INC.
(dba Global Resources Group, Inc.)
(Formerly Ghiglieri Corporation)
(A Development Stage Company)
Statements of Operations
<TABLE>
<CAPTION>
From
Inception of the
Development
Stage on
March 19,
For the Years Ended 1992 Through
December 31, December 31,
1998 1997 1998
(Unaudited)
--------------------- -------------
REVENUES
<S> <C> <C> <C>
Sales, net $ - $ - $ -
Cost of sales - - -
--------------- ----------- -------------
Gross Margin - - -
--------------- ----------- -------------
EXPENSES
General and administrative 4,746,129 21,983 4,794,460
Depreciation and amortization 1,134 - 1,134
--------------- ----------- -------------
Total Expenses 4,747,263 21,983 4,795,594
--------------- ----------- -------------
LOSS FROM OPERATIONS (4,747,263) (21,983) (4,795,594)
--------------- ----------- -------------
OTHER (EXPENSE)
Loss on disposition of property and equipment (23,749) - (23,749)
Writeoff of rescinded acquisitions (Note 3) (1,086,744) - (1,086,744)
--------------- ----------- -------------
Total Other (Expense) (1,110,493) - (1,110,493)
--------------- ----------- -------------
(LOSS) BEFORE INCOME TAXES (5,857,756) (21,983) (5,906,087)
INCOME TAX EXPENSE - - -
--------------- ----------- -------------
NET (LOSS) $ 5,857,756) $ (21,983) $ (5,906,087)
=============== =========== =============
BASIC (LOSS) PER SHARE $ (0.48) $ (0.01)
=============== ===========
WEIGHTED AVERAGE SHARES OUTSTANDING 12,269,191 3,461,538
=============== ===========
</TABLE>
The accompanying notes are an integral part of these
financial statements.
51
<PAGE>
GRG, INC.
(dba Global Resources Group, Inc.)
(Formerly Ghiglieri Corporation)
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit)
<TABLE>
<CAPTION>
Additional
Common Stock Paid-in Accumulated
Shares Amount Capital Deficit Total
<S> <C> <C> <C> <C> <C>
Balance at inception on
March 19, 1992, unaudited - $ - $ - $ - $ -
Issuance of common capital stock
for cash at $0.003 per share at
March 19, 1992 750,000 750 1,500 - 2,250
Capital contributions by
shareholder's through payment of
expenses - - 2,400 - 2,400
Net loss from inception on March 19,
1992 through December 31, 1993 - - - (9,504) (9,504)
------------ --------- ----------- ---------- -------------
Balance, December 31, 1993
(unaudited) 750,000 750 3,900 (9,504) (4,854)
Capital contributions by
shareholders' through payment of
expenses - - 16,040 - 16,040
Issuance of common capital stock
for cash at $0.008 per share -
net of offering costs 2,250,000 2,250 15,391 - 17,641
Net loss for the year ended
December 31, 1994 - - - (12,144) (12,144)
------------ --------- ----------- ---------- -------------
Balance, December 31, 1994
(unaudited) 3,000,000 3,000 35,331 (21,648) 16,683
Net loss for the year ended
December 31, 1995 - - - - -
------------ --------- ----------- ---------- -------------
Balance, December 31, 1995
(unaudited) 3,000,000 3,000 35,331 (21,648) 16,683
Net loss for the year ended
December 31, 1996 - - - (4,700) (4,700)
------------ --------- ----------- ---------- -------------
Balance, December 31, 1996 3,000,000 $ 3,000 $ 35,331 $ (26,348) $ 11,983
------------ --------- ----------- ---------- -------------
</TABLE>
The accompanying notes are an integral part of these
financial statements.
52
<PAGE>
GRG, INC.
(dba Global Resources Group, Inc.)
(Formerly Ghiglieri Corporation)
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit) (Continued)
<TABLE>
<CAPTION>
Additional
Common Stock Paid-in Accumulated
Shares Amount Capital Deficit Total
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1996 3,000,000 $ 3,000 $ 35,331 $ (26,348) $ 11,983
Issuance of common capital stock
for services at $0.01 per share 1,000,000 1,000 9,000 - 10,000
Net loss for the year ended
December 31, 1997 - - - (21,983) (21,983)
---------- -------------- -------------- --------------- -----------------
Balance, December 31, 1997 4,000,000 4,000 44,331 (48,331) -
Common stock issued for
acquisition of International
Teleservices Operating Division
at predecessor cost of $0.00
per share per share 5,224,310 5,224 18,525 - 23,749
Common stock issued for
acquisition of Teleprizes
Operating Division at predecessor
cost of $0.03 per share 3,150,000 3,150 92,784 - 95,934
Capital contribution by shareholders - - 1,625,000 - 1,625,000
Issuance of shares to directors
for services at $0.99 per share 1,000,000 1,000 990,000 - 991,000
Issuance of shares for
telecommunications services at
$1.00 per share 1,200,000 1,200 1,198,800 - 1,200,000
---------- -------------- -------------- --------------- -----------------
Balance Forward 14,574,310 $ 14,574 $ 3,969,440 $ (48,331) $ 3,935,683
---------- -------------- -------------- --------------- -----------------
</TABLE>
The accompanying notes are an integral part of these
financial statements.
53
<PAGE>
GRG, INC.
(dba Global Resources Group, Inc.)
(Formerly Ghiglieri Corporation)
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit)
(Continued)
<TABLE>
<CAPTION>
Additional
Common Stock Paid-in Accumulated
Shares Amount Capital Deficit Total
--------- ---------- ------------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
Balance Forward 14,574,310 $ 14,574 $ 3,969,440 $ (48,331) $ 3,935,683
Issuance of shares for
administrative services at
$1.00 per share 200,000 200 199,800 - 200,000
Issuance of shares to shareholder
as reimbursement for expenses
paid at $1.00 per share 250,000 250 249,750 - 250,000
Issuance of shares for merger
and acquisition services at $1.00
per share 350,000 350 349,650 - 350,000
Common stock issued in rescinded
acquisitions at $1.00 per share 485,000 485 484,515 - 485,000
Issuance of shares in Regulation D
Rule 504 offering at $1.00 per share 663,956 664 663,292 - 663,956
Issuance of shares in Regulation D
Rule 504 offering at $0.75 per share 376,627 377 282,093 - 282,470
Net loss for the year ended
December 31, 1998 - - - (5,857,756) (5,857,756)
---------- -------------- -------------- --------------- -----------------
Balance, December 31, 1998 16,899,893 $ 16,900 $ 6,198,540 $ (5,906,087) $ 309,353
========== ============== ============== =============== =================
</TABLE>
The accompanying notes are an integral part of these
financial statements.
54
<PAGE>
GRG, INC.
(dba Global Resources Group, Inc.)
(Formerly Ghiglieri Corporation)
(A Development Stage Company)
Statements of Cash Flows
<TABLE>
<CAPTION>
From
Inception of the
Development
Stage on
March 19,
For the Years Ended 1992 Through
December 31, December 31,
1998 1997 1998
(Unaudited)
---------------- ---------------- -----------------
<S> <C> <C> <C> >
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) $ (5,857,756) $ (21,983) $ (5,906,087)
Adjustments to reconcile net (loss) to net cash
used in operating activities:
Depreciation and amortization 1,134 - 1,134
Issuance of stock for services 2,991,000 - 2,991,000
Issuance of stock for expenses - 10,000 10,000
Stock issued in rescinded acquisitions 485,000 - 485,000
Allowance for doubtful accounts 125,000 - 125,000
Loss on disposition of property and equipment 23,749 - 23,749
Changes in asset and liabilities:
Decrease in inventory - 18,668 -
(Increase) in other assets (110) - (110)
Increase (decrease) in accounts payable 21,041 (6,685) 21,041
---------------- ---------------- -----------------
Net Cash (Used) in Operating Activities (2,210,942) - (2,249,273)
---------------- ---------------- -----------------
CASH FLOWS FROM INVESTING ACTIVITIES
Settlement recoverable from supplier (250,000) - (250,000)
Purchase of fixed assets (13,424) - (13,424)
---------------- ---------------- -----------------
Net Cash (Used) in Investing Activities (263,424) - (263,424)
---------------- ---------------- -----------------
CASH FLOWS FROM FINANCING ACTIVITIES
Expenses paid by shareholders - - 18,440
Cash contributed by promoters 1,625,000 - 1,625,000
Borrowings from related parties 311,711 - 311,711
Payments to related parties (308,711) - (308,711)
Issuance of common stock for cash 946,426 - 966,317
---------------- ---------------- -----------------
Net Cash Provided by Financing Activities $ 2,574,426 $ - $ 2,612,757
================ ================ =================
</TABLE>
The accompanying notes are an integral part of these
financial statements.
55
<PAGE>
GRG, INC.
(dba Global Resources Group, Inc.)
(Formerly Ghiglieri Corporation)
(A Development Stage Company)
Statements of Cash Flows (Continued)
<TABLE>
<CAPTION>
From
Inception of the
Development
Stage on
March 19,
For the Years Ended 1992 Through
December 31, December 31,
1998 1997 1998
(Unaudited)
---------------- ----------- -------------------
<S> <C> <C> <C>
NET INCREASE IN CASH $ 100,060 $ - $ 100,060
CASH AT BEGINNING OF YEAR - - -
---------------- ----------- -------------------
CASH AT END OF YEAR $ 100,060 $ - $ 100,060
================ =========== ===================
CASH PAID FOR:
Interest expense $ - $ - $ -
Income taxes $ - $ - $ -
NON CASH INVESTING AND FINANCING ACTIVITIES:
Common stock issued for ITD assets $ 23,749 $ - $ 23,749
Common stock issued for acquisition of Teleprizes Division $ 95,934 $ - $ 95,934
Common stock issued for services $ 2,991,000 $ - $ 2,991,000
Common stock issued in rescinded acquisitions $ 485,000 $ $ 485,000
</TABLE>
The accompanying notes are an integral part of these
financial statements.
56
<PAGE>
GRG, INC.
(dba Global Resources Group, Inc.)
(Formerly Ghiglieri Corporation)
(A Development Stage Company)
Notes to Financial Statements
December 31, 1998
NOTE 1 - ACCOUNTING POLICIES AND PROCEDURES
The Company was originally incorporated as Karat Productions, Inc.
under the laws of the State of Nevada on March 19, 1992. The
Company changed its name to Global Resources Group, Inc. in
February 1998. The Company has not paid dividends.
Dividends that may be paid in the future will depend on the
financial requirements of the Company and other relevant factors.
On June 5, 1997, the Company completed a forward stock split of
one share for three shares and changed the par value of its common
stock from $0.0005 to $0.001. This report has been prepared giving
effect to the stock split shares from inception.
During 1994, the Company completed a public offering of 2,250,000
(adjusted for) shares and received $15,391, net of the offering
expenses.
At the organization date, the Company had intended to pursue the
business of manufacturing jewelry and in that connection the
Company purchased an inventory of various types of jewelry to be
used in that activity. However, after the death of an officer of
the Company the planned activity was abandoned.
The Company has been in the development stage since inception per
SFAS No. 7.
The Company's planned principle operations are in the business of
building a Pan- American communications network with access to
international switching centers in various U.S. cities and points
of presence throughout Mexico and the Caribbean.
A summary of the significant policies consistently applied in the
preparation of the financial statements follows:
a. Accounting Method
The Company's financial statements are prepared using the accrual
method of accounting. The Company has adopted a calendar year end.
b. Basic (Loss) Per Share
The computation of basic (loss) per share of common stock is based
on the weighted average number of shares outstanding at the date
of the consolidated financial statements.
57
<PAGE>
GRG, INC.
(dba Global Resources Group, Inc.)
(Formerly Ghiglieri Corporation)
(A Development Stage Company)
Notes to Financial Statements
December 31, 1998 and 1997
NOTE 1 - ACCOUNTING POLICIES AND PROCEDURES (Continued)
c. Income Taxes
At December 31, 1998, the Company had a net operating loss
carryforward of approximately $5,900,000 that may be offset
against future taxable income through 2013. No tax benefit has
been reported in the financial statements, because the Company
believes there is a 50% or greater chance the carryforward will
expire unused. Accordingly, the potential tax benefits of the loss
carryforward are offset by a valuation allowance of the same
amount.
d. Cash Equivalents
The Company considers all highly liquid investments and deposits
with a maturity of three months or less when purchased to be cash
equivalents.
e. Revenue Recognition
The Company records communications services revenue as earned, at
the time services are provided. Network capacity sales, if any,
are recorded at the time the capacity is provided to the customer.
f. Depreciation
Furniture and fixtures are stated at cost. Depreciation of
property and equipment is computed using straight-line and
accelerated methods over the estimated useful lives of the related
assets, are as follows:
Furniture and fixtures 5 years
g. Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
h. Advertising
The Company follows the policy of charging the costs of
advertising to expense as incurred.
58
<PAGE>
GRG, INC.
(dba Global Resources Group, Inc.)
(Formerly Ghiglieri Corporation)
(A Development Stage Company)
Notes to Financial Statements
December 31, 1998
NOTE 1 - ACCOUNTING POLICIES AND PROCEDURES (Continued)
i. Intangible Assets
Acquired employee base and sales force in place represents the
intangible assets associated with the acquisition of independent
sales organizations and investment in contracts discussed in Note
3 are being amortized over five (5) years.
j. Impairment of Long-Lived Assets and Long-Lived Assets to be
Disposed of Long-lived assets and certain identifiable
intangibles are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. Recoverability of assets to be held
and used is measured by a comparison of the carrying amount of an
asset to future net cash flows expected to be generated by the
asset. If such assets are considered to be impaired, the
impairment to be recognized is measured by the amount by which
the carrying amount of the assets exceed the fair value of the
assets. Assets to be disposed of are reported at the lower of the
carrying amount or fair value less costs to sell.
k. Change in Accounting Principle
The Financial Accounting Standards Board has issued Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings Per
Share" and Statement of Financial Accounting Standards No. 129
"Disclosures of Information About an Entity's Capital Structure."
SFAS No. 128 provides a different method of calculating earnings
per share than was previously used in accordance with APB Opinion
No. 15, "Earning Per Share." SFAS No. 128 provides for the
calculation of "Basic" and "Dilutive" earnings per share. Basic
earnings per share includes no dilution and is computed by
dividing income available to common shareholders by the weighted
average number of common shares outstanding for the period.
Diluted earnings per share reflects the potential dilution of
securities that could share in the earnings of an entity, similar
to fully diluted earnings per share. SFAS No. 129 establishes
standards for disclosing information about an entity's capital
structure. SFAS No. 128 and SFAS No. 129 are effective for
financial statements issued for periods ending after December 15,
1997. In fiscal 1998, the Company adopted SFAS No. 128, which did
not have a material impact on the Company's financial statements.
The implementation of SFAS No. 129 did not have a material effect
on the Company's financial statements.
59
<PAGE>
GRG, INC.
(dba Global Resources Group, Inc.)
(Formerly Ghiglieri Corporation)
(A Development Stage Company)
Notes to Financial Statements
December 31, 1998
NOTE 1 - ACCOUNTING POLICIES AND PROCEDURES (Continued)
k. Change in Accounting Principle (Continued)
The Financial Accounting Standards Board has also issued SFAS No.
130, "Reporting Comprehensive Income" and SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related
Information." SFAS No. 130 establishes standards for reporting and
display of comprehensive income, its components and accumulated
balances. Comprehensive income is defined to include all changes
in equity except those resulting from investments by owners and
distributions to owners. Among other disclosures, SFAS No. 130
requires that all items that are required to be recognized under
current accounting standards as components of comprehensive income
be reported in a financial statement that displays with the same
prominence as other financial statements. SFAS No. 131 supersedes
SFAS No. 14 "Financial Reporting for Segments of a Business
Enterprise." SFAS No. 131 establishes standards on the way that
public companies report financial information about operating
segments in annual financial statements and requires reporting of
selected information about operating segments in interim financial
statements issued to the public. It also establishes standards for
disclosure regarding products and services, geographic areas and
major customers. SFAS No. 131 defines operating segments as
components of a company about which separate financial information
is available that is evaluated regularly by the chief operating
decision maker in deciding how to allocate resources and in
assessing performance.
SFAS No. 130 and 131 are effective for financial statements for
periods beginning after December 15, 1997 and requires comparative
information for earlier years to be restated. Implementation of
SFAS No. 130 and 131 did not have a material effect on the
Company's financial statements.
In February 1998, the Financial Accounting Standards Board
("FASB") issued Statement of Financial Accounting Standard
("SFAS") No 132. "Employers' Disclosures about Pensions and other
Postretirement Benefits" which standardizes the disclosure
requirements for pensions and other Postretirement benefits and
requires additional information on changes in the benefit
obligations and fair values of plan assets that will facilitate
financial analysis. SFAS No. 132 is effective for years beginning
after December 15, 1997 and requires comparative information for
earlier years to be restated, unless such information is not
readily available. The adoption of this statement had no material
impact on the Company's financial statement.
In June 1998, the FASB issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities" which requires
companies to record derivatives as assets or liabilities, measured
at fair market value. Gains or losses resulting from changes in
the values of those derivatives would be accounted for depending
on the use of the derivative and whether it qualifies for hedge
accounting. The key criterion for hedge accounting is that the
hedging relationship must be highly effective in achieving
offsetting changes in fair value or cash flows. SFAS No. 133 is
effective for all fiscal quarters of fiscal years beginning after
June 15, 1999. Management believes the adoption of this statement
will have no material impact on the Company's financial
statements.
60
<PAGE>
GRG, INC.
(dba Global Resources Group, Inc.)
(Formerly Ghiglieri Corporation)
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1998
NOTE 2 - COMMITMENTS AND CONTINGENCIES
a. Leases
The Company leases 3,000 square feet for its operations in St.
Petersburg, Florida. Minimum future rentals for the next five
years are as follows:
1999 $ 38,818
2000 39,565
2001 40,311
2002 -
2003 -
Total $ 118,694
Rent expense for the years ended December 31, 1998 and 1997 was
$43,920 and $-0-, respectively.
b. Employment Contracts
Effective November 1, 1998, the Company has entered into a 3-year
employment agreement with its Chief Operating Officer, which
provides for a base salary of $140,000 per year plus benefits. The
agreement was modified during 1999 (see Note 7).
c. Litigation
From time to time, the Company is subject to litigation in the
normal course of business. The Company believes that any adverse
outcome from litigation would not have a material adverse effect
on its financial position or results of operations. The Company
has received a settlement from a supplier resulting from the
supplier's inability to provide telecommunication services during
1998. The Company has reserved $125,000 against that settlement.
NOTE 3 - EQUITY TRANSACTIONS
International Teledata Acquisition
The Company acquired the international telecommunications assets
from International Teledata, Inc. for 5,224,310 shares of common
stock in 1998, in a transaction valued at the predecessor cost of
$23,749 or $0.00 per share. Predecessor cost was used because it
approximated the value of the assets acquired.
61
<PAGE>
GRG, INC.
(dba Global Resources Group, Inc.)
(Formerly Ghiglieri Corporation)
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1998
NOTE 3 - EQUITY TRANSACTIONS (Continued)
Teleprizes
The Company acquired Teleprizes TM for 3,150,000 shares of common
stock, with certain marketing rights associated with providing
internet scratch off sweepstakes promotions to internet websites
to induce traffic. Teleprizes TM was acquired from an affiliated
company, Catalyst Communications, Inc, which is controlled by the
major shareholders of the Company. The acquisition was accounted
for at predecessor cost of $95,934 or $0.03 per share because the
shares were issued to related parties. That affiliate and related
control parties also contributed $1,625,000 in cash and payment of
expenses to the Company.
Board Services
The Company issued 250,000 shares each under four (4) contracts
for board services to each of its directors for services in 1998.
Those issuances were valued at $0.99 per share, which approximates
the market value and offering price of the Company's shares during
1998.
Telecommunications Services
The Company issued 1,200,000 shares of stock to a corporation
controlled by an affiliate, for telecommunications services
associated with the sale and marketing of the Company's internet
sweepstakes products. This contract was valued at the $1.00 market
price of the Company's stock.
Administrative Services
The Company issued 200,000 shares under an agreement for
administrative services which accrued during 1998. These shares
were valued at $1.00 per share.
Reimbursements
The Company reimbursed a shareholder for a $250,000 expenditure by
issuing her 250,000 shares of common stock which were valued at
$1.00 per share.
Merger and Acquisition Services
The Company issued 350,000 shares to a company affiliated with one
of its directors for services in connection with acquisition made
by the Company. These shares were valued at $1.00 per share.
62
<PAGE>
GRG, INC.
(dba Global Resources Group, Inc.)
(Formerly Ghiglieri Corporation)
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1998
NOTE 3 - EQUITY TRANSACTIONS (Continued)
Rescinded Acquisitions
The Company issued shares in connection with the rescinded
acquisition of 3 entities, each of which is discussed below:
a. Franklin P B Enterprises - The Company entered into
contracts to acquire companies with various real estate
holdings owned by a common shareholder. The Company
advanced cash of $238,494 and issued 3,150,000 shares of
its common stock, of which 2,700,000 shares were canceled.
The Company accounted for the shares at $1.00 per share.
The Company expensed all amounts associated with this
transaction based on its determination that it would be
unable to recover its investment and terminated its
agreement.
b. E-Tel - The Company entered into a contract to acquire the
common stock of E-Tel Corporation for 1,250,000 shares of
common stock. E-Tel was also in the international long
distance phone business. The transaction was canceled after
the Company's determination that it would be unable to
recover its investment. The Company recovered 1,240,000
shares of the stock but expensed the remaining 10,000
shares valued at $1.00 per share and cash advances of
$220,750.
c. Pro Sports Group Corporation - The Company acquired Pro
Sports Group Corporation for 200,000 shares, valued at
$1.00 per share, as a complement to its marketing
operations. When Pro Sports was found to have no value, the
Company terminated the acquisition recovered 175,000 shares
and wrote-off the remaining 25,000 shares at $1.00 per
share and cash advances of $142,500.
Shares Issued in 504 Regulation D Offering at $1.00 Per Share
The Company sold 663,956 of its common shares for cash to
investors.
Shares Issued in 504 Regulation D Offering at $0.75 Per Share
The Company sold 376,627 of its common shares to investors for
cash.
NOTE 4 - GOING CONCERN
The Company's consolidated financial statements are prepared using
generally accepted accounting principles applicable to a going
concern which contemplates the realization of assets and
liquidation of liabilities in the normal course of business. The
Company has incurred losses from its inception through December
1998.
63
<PAGE>
GRG, INC.
(dba Global Resources Group, Inc.)
(Formerly Ghiglieri Corporation)
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1998
NOTE 4 - GOING CONCERN (Continued)
The Company's plans for its future are as follows:
a. Selling business in its international telecommunications
area: The Company has subsequently entered into new
contracts in its international telecommunications sector
which it believes will generate gross margins sufficient to
bring the Company to profitability. The implementation of
these contracts will require that the Company raise
additional capital for equipment and deposits with long
distance carriers.
b. Further development of internal sweepstakes marketing area:
As discussed in Note 8, the Company has entered into a
joint marketing agreement with an Internet sweepstakes
provider. Development of this business is promising, but
will require capital for startup purposes. The Company is
also pursuing additional strategies including the opening
of a website to sell telecommunications products.
c. Cost containment: The Company recently reduced its work
force by approximately 30% in the marketing and
administrative areas. These reductions are not expected to
have any long-term impact on the Company.
d. Pursuit of mergers: From time to time, merger opportunities
with entities generating positive cash flow may arise.
Current management will vigorously pursue profitable
opportunities.
NOTE 5 - REGULATORY MATTERS
The Company is subject to regulation in countries in which it does
business. The Company believes that an adverse determination as to
the permissibility of the Company's services under the laws and
regulations of any such country may have a material adverse
short-term effect on its business, particularly in Mexico and the
Caribbean. There have been no adverse regulatory findings to date.
NOTE 6 - RELATED PARTY TRANSACTIONS
During 1998, the Company issued shares to related parties in the
following manner:
Services
During 1998, the Company issued 4 contracts to its directors for
250,000 shares each for board services. Also during 1998,
affiliated companies of directors were awarded contracts of
350,000 shares, 200,000 shares and 1,200,000 shares for
acquisition services, administrative and consulting services, and
telecommunications services, respectively. During March 1998, the
Company acquired certain assets from Catalyst Communications,
Inc. (Catalyst), a company controlled by its directors, for
3,150,000 shares of common stock. See Note 3 for additional
discussion of these transactions.
64
<PAGE>
GRG, INC.
(dba Global Resources Group, Inc.)
(Formerly Ghiglieri Corporation)
(A Development Stage Company)
Notes to Financial Statements
December 31, 1998
NOTE 6 - RELATED PARTY TRANSACTIONS (Continued)
Borrowings and Contributed Capital
During 1998, Catalyst paid Company expenses of $267,305 to the
Company all of which was repaid. Catalyst and its affiliates also
donated capital of $1,625,000 to the Company. An officer of the
Company paid Company expenses of $44,406 to the Company and was
repaid all but $3,000, which was subsequently paid back.
NOTE 7 - SUBSEQUENT EVENTS
Issuance of Employment Contracts
In October 1999, the Company reached a three-year agreement with
a new Chief Executive Officer. The agreement provides for a base
salary of $150,000, plus benefits and stock options. Final terms
of the stock options have not been determined.
Potential Dispute with Internet Supplier
In June 1999, the Company modified its existing agreements with
Real Time Media, Inc., to enter into a joint venture agreement to
market an Internet scratch-and-win sweepstakes product.
Subsequently, there arose a dispute between the Company and Real
Time Media, Inc. over certain elements of that agreement. The
Company believes that a resolution can be reached and has not
reserved against capitalized intangibles associated with this
relationship.
Carrier Contracts
In January 1999, the Company entered into contracts to purchase
transmission capacity from various domestic and foreign carriers,
particularly Qwest International, Inc. However, the Company is
currently renegotiating those contracts. The Company is not
involved in disputes with carriers arising in the ordinary course
of business other than as described below.
Related Party Transactions
During 1999, ASFT, Inc., a related party, purchased for cash,
356,400 shares for $0.25 per share and 1,304,200 shares for $0.50
per share.
65
<PAGE>
GRG, INC.
(dba Global Resources Group, Inc.)
(Formerly Ghiglieri Corporation)
(A Development Stage Company)
Notes to Financial Statements
December 31, 1998
NOTE 7 - SUBSEQUENT EVENTS (Continued)
Notes Payable
From January through October 1999, the Company borrowed $325,000
of 10% notes payable, due in monthly installments of $14,199
until fully paid. The notes were collateralized by certain long
distance contracts of the Company. The Company issued 325,000
warrants to noteholders which are exercisable when the Company's
stock price reaches $1.50 and expire on July 8, 2003.
66
<PAGE>
GRG, INC.
(dba GLOBAL RESOURCES GROUP, INC.)
(Formerly Ghiglieri Corporation)
(A Development Stage Company)
FINANCIAL STATEMENTS
September 30, 1999 and December 31, 1998
67
<PAGE>
GRG, INC.
(dba Global Resources Group, Inc.)
(Formerly Ghiglieri Corporation)
(A Development Stage Company)
Balance Sheets
ASSETS
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------------ --------------------
(Unaudited)
CURRENT ASSETS
<S> <C> <C>
Cash $ 74,033 $ 100,060
Refundable deposits 1,500 -
Supplies and inventory 50,000 -
Other 2,610 110
------------------ --------------------
Total Current Assets 128,143 100,170
------------------ --------------------
FIXED ASSETS (Note 1)
Telecommunications equipment 328,036 -
Furniture and fixtures 13,424 13,424
Accumulated depreciation (19,517) (1,134)
------------------ --------------------
Net Fixed Assets 321,943 12,290
------------------ --------------------
OTHER ASSETS
Settlement receivable, net of allowance of $125,000
and $125,000 at September 30, 1999 and
December 31, 1998, respectively 50,000 125,000
Investment in contracts, net of accumulated amortization
of $14,388 and $-0- at September 30, 1999 and
December 31, 1998, respectively 81,546 95,934
------------------ --------------------
Total Other Assets 131,546 220,934
------------------ --------------------
TOTAL ASSETS $ 581,632 $ 333,394
================== ====================
</TABLE>
The accompanying notes are an integral part of these
financial statements.
68
<PAGE>
GRG, INC.
(dba Global Resources Group, Inc.)
(Formerly Ghiglieri Corporation)
(A Development Stage Company)
Balance Sheets (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------------ -------------------
(Unaudited)
CURRENT LIABILITIES
<S> <C> <C>
Accounts payable and accrued expenses $ 45,428 $ 21,041
Customer security deposits 20,000 -
Note payable to officer - 3,000
------------------ -------------------
Total Current Liabilities 65,428 24,041
------------------ -------------------
LONG-TERM NOTE PAYABLE 193,419 -
------------------ -------------------
Total Liabilities 258,847 24,041
------------------ -------------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock, $0.001 par value, 100,000,000 shares authorized; 19,219,427 and
16,899,893 shares issued and outstanding,
at September 30, 1999 and December 31, 1998, respectively 19,219 16,900
Additional paid-in capital 7,411,696 6,198,540
Accumulated deficit (7,108,130) (5,906,087)
------------------ -------------------
Total Stockholders' Equity 322,785 309,353
------------------ -------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 581,632 $ 333,394
================== ===================
</TABLE>
The accompanying notes are an integral part of these
financial statements.
69
<PAGE>
GRG, INC.
(dba Global Resources Group, Inc.)
(Formerly Ghiglieri Corporation)
(A Development Stage Company)
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
From
Inception of the
Development
Stage on
For the For the March 19,
Nine Months Ended Three Months Ended 1992 Through
September 30, September 30, September 30,
1999 1998 1999 1998 1999
-------------- ------------- ---------------- ------------ ----------------
REVENUES
<S> <C> <C> <C> <C> <C>
Sales, net $ 49,304 $ - $ 49,304 $ - $ 49,304
Cost of sales 76,869 - 76,869 - 76,869
-------------- --------------- --------------- ------------- ----------------
Gross Margin (Deficit) (27,565) - (27,565) - (27,565)
-------------- --------------- --------------- ------------- ----------------
EXPENSES
General and administrative 1,139,559 1,508,229 446,645 356,669 5,957,768
Depreciation and amortization 32,771 - 21,813 - 33,905
-------------- ---------------- --------------- ------------- ----------------
Total Expenses 1,172,330 1,508,229 468,458 356,669 5,991,673
-------------- ---------------- --------------- ------------- ----------------
(LOSS) FROM OPERATIONS (1,199,895) (1,508,229) (496,023) (356,669) (6,019,238)
-------------- ---------------- --------------- ------------- ----------------
OTHER INCOME (EXPENSE)
Interest expense (1,544) - (1,544) - (1,544)
Interest income 1,992 - 1,333 - 1,992
Other income (expense) (2,596) - 1,459 - (2,596)
Write-off of rescinded acquisitions - (1,056,744) - (93,250) (1,086,744)
-------------- ---------------- --------------- ------------- ----------------
Total Other Income (Expense) (2,148) (1,056,744) 1,248 (93,250) (1,088,892)
-------------- ---------------- --------------- ------------- ----------------
(LOSS) BEFORE INCOME TAXES (1,202,043) (2,564,973) (494,775) (449,919) (7,108,130)
INCOME TAX EXPENSE - - - - -
-------------- ---------------- --------------- ------------- ----------------
NET (LOSS) $ (1,202,043) $ (2,564,973) $ (494,775) $ (449,919) $ (7,108,130)
============== ================ =============== ============= ================
BASIC INCOME (LOSS) PER SHARE $ (0.07) $ (0.23) $ (0.03) $ (0.03)
============== ================ =============== =============
WEIGHTED AVERAGE SHARES
OUTSTANDING 17,894,786 11,231,729 18,738,909 13,429,460
============== ================ =============== =============
</TABLE>
The accompanying notes are an integral part of these
financial statements.
70
<PAGE>
GRG, INC.
(dba Global Resources Group, Inc.)
(Formerly Ghiglieri Corporation)
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit)
<TABLE>
<CAPTION>
Additional
Common Stock Paid-in Accumulated
Shares Amount Capital Deficit Total
----------- -------------- ------------- ---------------- -------------------
<S> <C> <C> <C> <C> <C>
Balance at inception on
March 19, 1992 - $ - $ - $ - $ -
Issuance of common capital stock
for cash at $0.003 per share -
March 19, 1992 750,000 750 1,500 - 2,250
Capital contributions by
shareholder's - expenses - 1993 - - 2,400 - 2,400
Net loss from inception on
March 19, 1992 through
December 31, 1993 - - - (9,504) (9,504)
------------ -------------- --------------- ---------------- -------------------
Balance, December 31, 1993 750,000 750 3,900 (9,504) (4,854)
Capital contributions by
shareholders' - expenses - 1994 - - 16,040 - 16,040
Issuance of common capital stock
for cash at $0.008 per share -
net of offering costs - 1994 2,250,000 2,250 15,391 - 17,641
Net loss for the year ended
December 31, 1994 - - - (12,144) (12,144)
------------ -------------- --------------- ---------------- -------------------
Balance, December 31, 1994 3,000,000 3,000 35,331 (21,648) 16,683
Net loss for the year ended
December 31, 1995 - - - - -
------------ -------------- --------------- ---------------- -------------------
Balance, December 31, 1995 3,000,000 3,000 35,331 (21,648) 16,683
Net loss for the year ended
December 31, 1996 - - - (4,700) (4,700)
------------ -------------- --------------- ---------------- -------------------
Balance, December 31, 1996 3,000,000 $ 3,000 $ 35,331 $ (26,348) $ 11,983
------------ -------------- --------------- ---------------- -------------------
</TABLE>
The accompanying notes are an integral part of these
financial statements.
71
<PAGE>
GRG, INC.
(dba Global Resources Group, Inc.)
(Formerly Ghiglieri Corporation)
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit)
(Continued)
<TABLE>
<CAPTION>
Additional
Common Stock Paid-in Accumulated
Shares Amount Capital Deficit Total
----------- -------------- ------------- ----------------- ------------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1996 3,000,000 $ 3,000 $ 35,331 $ (26,348) $ 11,983
Issuance of common capital stock
for services at $0.01 per share -
1997 1,000,000 1,000 9,000 - 10,000
Net loss for the year ended
December 31, 1997 - - - (21,983) (21,983)
----------- -------------- ------------- ----------------- ------------------
Balance, December 31, 1997 4,000,000 4,000 44,331 (48,331) -
Common stock issued for acquisition
of International Teledata, Inc. and
International Teleservices Division
at predecessor cost of $0.00
per share 5,224,310 5,224 18,525 - 23,749
Common stock issued for acquisition
of Teleprizes Operating Division at
predecessor cost of $0.03 per share 3,150,000 3,150 92,784 - 95,934
Capital contribution by shareholders - - 1,625,000 - 1,625,000
Issuance of shares to Directors for
board services at $0.99 per share 1,000,000 1,000 990,000 - 991,000
Issuance of shares for
telecommunications services at
$1.00 per share 1,200,000 1,200 1,198,800 - 1,200,000
Issuance of shares for administrative
services at $1.00 per share 200,000 200 199,800 - 200,000
----------- -------------- ------------- ----------------- ------------------
Balance Forward 14,774,310 $ 14,774 $ 4,169,240 $ (48,331) $ 4,135,683
----------- -------------- ------------- ----------------- ------------------
</TABLE>
The accompanying notes are an integral part of these
financial statements.
72
<PAGE>
GRG, INC.
(dba Global Resources Group, Inc.)
(Formerly Ghiglieri Corporation)
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit
(Continued)
<TABLE>
<CAPTION>
Additional
Common Stock Paid-in Accumulated
Shares Amount Capital Deficit Total
------------ -------------- ------------- ------------------ ------------------
<S> <C> <C> <C> <C> <C>
Balance Forward 14,774,310 $ 14,774 $ 4,169,240 $ (48,331) $ 4,135,683
Issuance of shares to shareholder as
reimbursement for expenses 250,000 250 249,750 - 250,000
Issuance of shares for merger and
acquisition services at $1.00 per
share 350,000 350 349,650 - 350,000
Common stock issued in rescinded
acquisitions at $1.00 per share 485,000 485 484,515 - 485,000
Issuance of shares in Regulation D
Rule 504 offering at $1.00 per share 663,956 664 663,292 - 663,956
Issuance of shares in Regulation D
Rule 504 offering at $0.75 per share 376,627 377 282,093 - 282,470
Net loss for the year ended
December 31, 1998 - - - (5,857,756) (5,857,756)
------------ -------------- ------------- ------------------ ------------------
Balance, December 31, 1998 16,899,893 16,900 6,198,540 (5,906,087) 309,353
Issuance of shares in Regulation D
Rule 504 offering at $0.75 per share
(unaudited) 72,020 72 53,944 - 54,016
Return of shares by officers and
cancellation of shares (unaudited) (1,000,000) (1,000) - - (1,000)
Issuance of shares in Private
Placement at $0.50 per share
(unaudited) 1,402,326 1,402 699,760 - 701,162
Issuance of shares in Private
Placement at $0.25 per share
(unaudited) 1,845,188 1,845 459,452 - 461,297
Net loss for the nine months
ended September 30, 1999
(unaudited) - - - (1,202,043) (1,202,043)
------------ -------------- ------------- ------------------ ------------------
Balance, September 30, 1999
(unaudited) 19,219,427 $ 19,219 $ 7,411,696 $ (7,108,130) $ 322,785
============ ============== ============= ================== ==================
</TABLE>
The accompanying notes are an integral part of these
financial statements.
73
<PAGE>
GRG, INC.
(dba Global Resources Group, Inc.)
(Formerly Ghiglieri Corporation)
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
From
Inception of the
Development
Stage on
For the For the March 19,
Nine Months Ended Three Months Ended 1992 Through
September 30, September 30, September 30,
1999 1998 1999 1998 1999
-------------- ----------------- --------------- ------------- -----------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
<S> <C> <C> <C> <C> <C>
Net income (loss) $ (1,202,042) $ (2,564,973) $ (494,775) $ (449,919) $ (7,108,129)
Adjustments to reconcile net income
(loss) to net cash used in operating
activities:
Depreciation and amortization 32,771 - 21,813 - 33,905
Issuance of stock for services - - - - 2,991,000
Issuance of stock for expenses - - - - 10,000
Allowance for doubtful accounts - 125,000 - - 125,000
Loss on disposition of property, plant
and equipment - 23,749 - - 23,749
Stock issued in rescinded acquisitions - 465,350 - 24,559 485,000
Changes in assets and liabilities:
(Increase) decrease in supplies
inventory (50,000) - (50,000) - (50,000)
(Increase) decrease in prepaid
expenses and other current assets (4,000) - - - (4,110)
(Increase) decrease in other
receivables - (1,553) - (1,553) -
Increase (decrease) in customer
deposits 20,000 - 20,000 - 20,000
Increase (decrease) in accounts payable 24,386 24,673 45,428 17,944 45,428
Increase (decrease) in accrued expenses - 1,062 - 2,916 -
-------------- ----------------- --------------- ------------- -----------------
Net Cash (Used) by Operating Activities (1,178,885) (1,926,692) (457,534) (406,053) (3,428,157)
-------------- ----------------- --------------- ------------- -----------------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Settlement, recoverable from supplier 75,000 (250,000) 75,000 - (175,000)
Purchase of fixed assets (328,036) (4,200) (327,567) - (341,459)
-------------- ----------------- --------------- ------------- -----------------
Net Cash (Used) by Investing Activities $ (253,036) $ (254,200) $ (252,567) $ - $ (516,459)
-------------- ----------------- --------------- ------------- -----------------
</TABLE>
The accompanying notes are an integral part of these
financial statements.
74
<PAGE>
GRG, INC.
(dba Global Resources Group, Inc.)
(Formerly Ghiglieri Corporation)
(A Development Stage Company)
Statements of Cash Flows (Continued)
(Unaudited)
<TABLE>
<CAPTION>
From
Inception of the
Development
Stage on
For the For the March 19,
Nine Months Ended Three Months Ended 1992 Through
September 30, September 30, September 30,
1999 1998 1999 1998 1999
------------- ----------------- -------------- ------------- -----------------
CASH FLOWS FROM FINANCING
ACTIVITIES:
<S> <C> <C> <C> <C> <C>
Cash contributed by promoters $ - $ 1,625,000 $ - $ - $ 1,625,000
Issuance of stock for expenses paid - - - - 18,440
Loans from/to related parties - 65,188 - (68,397) -
Long-term debt 200,000 - 200,000 - 200,000
Principal payments on long-term debt (6,581) - (6,581) - (6,581)
Notes from/ to officers (3,000) 22,269 - 9,266 -
Issuance of common stock 1,215,475 449,950 479,227 440,741 2,181,790
-------------- ----------------- --------------- -------------- -----------------
Net Cash Provided by Financing
Activities 1,405,894 2,162,407 672,646 381,610 4,018,649
-------------- ----------------- --------------- -------------- -----------------
Net Increase (Decrease) in Cash (26,027) (18,485) (37,455) (24,443) 74,033
CASH AT BEGINNING OF PERIOD 100,060 - 111,488 5,958 -
-------------- ----------------- --------------- -------------- -----------------
CASH (OVERDRAFT) AT END OF
PERIOD $ 74,033 $ (18,485) $ 74,033 $ (18,485) $ 74,033
============== ================= =============== ============== ================
CASH PAID FOR:
Interest expense $ 1,544 $ - $ 1,544 $ - $ 1,544
Income taxes $ - $ - $ - $ - $ -
NON CASH FINANCING ACTIVITIES:
Common stock issued for ITD assets $ - $ 23,749 $ - $ - $ 23,749
Common stock issued for acquisition of
Teleprizes operating division $ - $ 95,934 $ - $ - $ 95,934
Common stock issued in rescinded
acquisition $ - $ 465,000 $ - $ - $ 485,000
Common stock issued for services $ - $ - $ - $ - $ 2,991,000
</TABLE>
The accompanying notes are an integral part of these
financial statements.
75
<PAGE>
GRG, INC.
(dba Global Resources Group, Inc.)
(Formerly Ghiglieri Corporation)
(A Development Stage Company)
Notes to Financial Statements
September 30, 1999 and December 31, 1998
NOTE 1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements have been
prepared by the Company without audit. In the opinion of
management, all adjustments (which include only normal recurring
adjustments) necessary to present fairly the financial position,
results of operations and cash flows at September 30, 1999 and for
all periods presented have been made.
Certain information and footnote disclosures normally included in
consolidated financial statements prepared in accordance with
general accepted accounting principles have been condensed or
omitted. It is suggested that these condensed consolidated
financial statements be read in conjunction with the financial
statements and notes thereto included in the Company's December
31, 1998 audited consolidated financial statements. The results of
operations for the periods ended September 30, 1999 are not
necessarily indicative of the operating results for the full year.
Part III
Item 1. Index to Exhibits.
- ---------------------------
(b) The following exhibits are filed as a part of this Registration
Statement:
Exhibit
Number Description*
- ------ ------------
3(i) Articles of Incorporation (including amendments).
3(ii) Bylaws.
Material Contracts
------------------
10(i)(a) Partial Liquidation Agreement between International Teledata,
Inc. and its shareholders and the Company dated March 20, 1998
76
<PAGE>
10(i)(b) Sale of Marketing Rights Agreement between the Company and
Catalyst Communications, Inc. dated March 19, 1998
10(i)(c) Joint Marketing Agreement between the Company and Real Time
Media Inc. dated June 22, 1999
10(i)(d) Carrier Service Agreement between the Company and Qwest
Communications Corporation dated January 19, 1999
10(i)(e) Promissory Note and Warrant between the Company and F.
Stanton Moyer dated August 5, 1999
10(i)(f) Promissory Note and Warrant between the Company and John
McWilliams dated August 15, 1999
10(i)(g) Master Agreement between the Company and Value Added Services,
Inc. dated October 11, 1999 -
WAIVER of confidential information to be requested
10(i)(h) Promissory Note and Warrant between the Company and F. Stanton
Moyer dated October 5, 1999
10(i)(i) Promissory Note and Warrant between the Company and F. Stanton
Moyer dated November 5, 1999
Management Contracts and Compensatory Plans/Arrangements
10(ii)(a) Employment Agreement between the Company and Jeffrey M. Good
dated November 1, 1998
10(ii)(b) Employment Agreement between the Company and Kenneth W. Craig
dated November 12, 1999
10(ii)(c) Performance Stock Agreement between the Company and Jeffrey M.
Good dated November 12, 1999
10(ii)(d) Performance Stock Agreement between the Company and Kenneth W.
Craig dated November 12, 1999
16 Change of Accountants - Letter from Anderson, Anderson & Strong,
dated November 5, 1999
21 Subsidiaries (none)
23 Consent of Independent Auditors
27 Financial data Schedules
* Summaries of all exhibits contained within this Registration
Statement are modified in their entirety by reference to these
Exhibits.
77
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the Registrant has caused this Registration Statement to be signed on its behalf
by the undersigned, hereunto duly authorized.
GRG, INC.
Date: /99 By:
------------------------
Kenneth W. Craig, CEO
Date: /99 By:
------------------------
Jeffery M. Good,
President/COO
Date: /99 By:
------------------------
Matthew A. Veal,
Principal Financial and Accounting
Officer
Date: /99 By:
--------------------------
O. Howard Davidsmeyer, Jr.
Chairman of the Board
Date: /99 By:
--------------------------
Carl L. Smith
Director
Date: /99 By:
--------------------------
Christopher R. Beck
Director
Date: /99 By:
--------------------------
Ranald Stewart, Jr.
Director
78
<PAGE>
EX-3.(I)
ARTICLES OF INCORPORATION
OF
GRG, INC.
WE THE UNDERSIGNED natural persons, being of the age of twenty-one
years or more, acting as incorporators of the corporation under the applicable
provisions of the laws of the State of Nevada, adopt the following Articles of
Incorporation for such corporation.
First: the name of the corporation shall be GRG, Inc.
Second: The period of duration of said corporation shall be perpetual.
Third: The purpose for which this corporation is formed and the powers
it shall have are:
(a) To conduct any lawful business, including, but not limited to
manufacture, production, creation, sale, distribution, both wholesale
and retail, of diamonds, colored gemstones of all sorts, kinds and
varieties, including all precious metals. To have and to exercise all
the powers conferred by the laws of the State of Nevada upon
corporations formed under the laws pursuant to and under which this
corporation is formed, as such laws are now in effect or may at any
time hereafter be amended.
(b) To carry on any business whatsoever, either as principal, agent, or
as a partnership, which this corporation may deem proper or convenient
in connection with any lawful purpose, or which may be calculated
directly or indirectly to promote the interest of this corporation or
to enhance the value of its property or business and to conduct its
business or businesses in the State of Nevada, and other States and in
the District of Columbia and in the territories and colonies of the
United States and foreign countries.
(c) To acquire, by purchase or otherwise, the goodwill, business,
property rights, franchises, and assets of every kind, of any person,
firm, association or corporation; and to acquire any property or
business as a going concern or otherwise and to pay for the same in
cash or in shares of stock or debentures or otherwise; to hold,
maintain, and operate, or in any manner dispose of, the whole part of
the goodwill, business, rights, or property so acquired; and to conduct
in any lawful manner the whole or any part of any business so acquired;
and to exercise all the powers necessary or convenient in and about the
management of such business.
(d) To apply for, acquire by application, take, purchase, or otherwise
acquire, own, hold, use, sell, assign, transfer, exchange, or deal with
79
<PAGE>
and dispose of patents, licenses, inventions, improvements, copyrights,
trademarks, and any benefit, right, privilege, prerogative, or power
conferred by, acquired under, or granted by any type of statute,
ordinance, order, license, power, authority, franchise, commission,
right or privilege which any Government or non-Government person or
association may be empowered to enact, make or grant.
The foregoing statement of purposes shall be construed as a
statement of both purposes as a statement of both purposes and powers
statements stated in each clause shall be in wise limited or restricted
by reference to or influence from the terms or provisions of any other
clause, but shall be regarded as independent purposes and powers. The
purposes and powers as above specified are to be interpreted in their
broadest intent with the basic intent of the incorprators being to
grant to this corporation the power to do any and all things which a
natural person could do in the furtherance of the operation of any and
all lawful business activities in which the corporation may from time
to time participate. Fourth: The aggregate number of shares which the
corporation shall have authority to issue is One Hundred Million Shares
(100,000,000) common, non-assessable voting stock of equal rights and
privileges, of $.001 (one tenth of one cent) par value for each share,
thus constituting total authorized capital of One Hundred Thousand
Dollars ($100,000.00).
Fifth: The corporation will not commence business until consideration
in the value of at least One Thousand Dollars ($1,000).
Sixth: The stockholders of the corporation shall have no preemptive
rights to acquire unissued shares of the corporation nor shall they
have any presumptive rights with respect to the reissuance or sale by
the corporation of its treasury stock or with respect to stock paid to
employees in the form of bonuses or wages.
Seventh: After payment by any subscribing shareholder of at least the
par value of stock for which he has subscribed, the capital stock of
the corporation shall not be subject to assessment to pay the debts of
the corporation.
Eighth: The registered office of the corporation shall be located as
determined by the Board of Directors. The name of the registered agent
shall be the Company's President.
Ninth: There shall be up to nine (9) directors constituting the Board
of Directors. The directors shall serve until the annual meeting or
until successors are otherwise elected and qualified.
Tenth: Each share of stock shall be entitled to one vote on each
matter submitted to vote at a meeting of shareholders. Times and places
of the meetings of shareholders shall be set by the bylaws of the
corporation.
Eleventh: It shall not be necessary for the Directors of the
corporation to own stock in the corporation. The board of directors may
designate a committee or committees consisting of any number of
directors, which committees, to the extent provided in the resolution
adopted by the board of directors or as provided by the bylaws of the
corporation, may exercise all authority so provided. The delegation of
power to such committees shall not operate to relieve the other
Directors or the Board of Directors of any responsibility impowered
upon them by law.
GRGL42.1
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<PAGE>
EX-3.(II)
BY-LAWS
OF
GRG, INC.
OFFICES
Section 1. The principal office of the Corporation shall be located as
determined by the Board of Directors. The corporation may have such other
offices, either within or without the state of Nevada as the Board of Directors
may designate or as the business of the Corporation may require from time to
time.
The registered office of the Corporation required by the Nevada Business
Corporation Act to be maintained in the State of Nevada may be, but need not be,
identical with the principal offices in the State of Nevada, and the address of
the registered office may be changed, from time to time, by the Board of
Directors.
ARTICLE II
STOCKHOLDERS
1 Section 1. Annual Meeting. The annual meeting of stockholders shall be held at
the principal office of the Corporation at such other places on the Third Friday
of June of each year or at such other times as the Board of Directors may, from
time to time, determine. If the day so designated falls upon a legal holiday
then the meeting shall be held upon the first day thereafter. The Secretary
shall serve personally or by mail a written notice thereof, not less than ten
(10) nor more than fifty (50) days previous to such meeting, addressed to each
stockholder at his address as it appears on the stock book; but at any meeting
at which all stockholders not present have waived notice in writing, the giving
of notice as above required may be dispensed with.
Section 2. Special Meetings. Special meeting of stockholders other than
those regulated by statute may be called at any time by a majority of the
Directors. Notice of such meeting stating the place, day and hour and the
purpose for which it is called, shall be served personally or by mail, not
less than ten (1-10) days before the date set for such meeting. If mailed, it
shall be directed to a stockholder at his address as it appears on the stock
book; but at any meeting at which all stockholders not present have waived
notice in writing, the giving of notice as above described may be dispensed
with. The Board of Directors shall also, in like manner, call a special
meeting of stockholders representing not less than ten percent (10%) of the
capital stock of the Corporation entitled to vote at the meeting. The
President may in his direction call a special meeting of stockholders upon ten
(10) days notice.
Section 3. Closing of Transfer Books or Fixing of Record Date. For the
purpose of determining stockholders entitled to receive notice of or to vote
at any meeting of stockholders or any adjournment thereof, or stockholders
entitled to receive payment of any dividend; or in order to make a
determination of stockholders for nay other proper purpose, the Board of
Directors of the corporation may provide that the stock transfer books shall
be closed for at least ten (10) days immediately preceding such meeting. In
lieu of closing the stock transfer books, the board of Directors may f ix in
advance a date as the record date for any such determination of stockholders,
such date in any case to be not more than thirty (30) days, and in case of a
meeting of stockholders, not less than ten (10) days prior to the date on
81
<PAGE>
which the particular action, requiring such determination of stockholders, is
to be taken. If the stock transfer books are not closed, and no record date is
fixed for the determination of stockholders entitled to receive notice of or
to vote at a meeting of stockholders, or stockholders entitled to receive
payment of a dividend, the date on which notice of the meeting is mailed or
the date on which the resolution of the Board of Directors declaring such
dividend is adopted, as the case may be, shall be the record date for such
determination as to stockholders. When a determination of stockholders
entitled to vote at any meeting of stockholders has been made as provided in
this section, such determination shall apply to any adjournment thereof.
Section 4. Voting. At all meetings of the stockholder of record having
the right to vote, subject to the provisions of Section 3, each stockholder of
the Corporation is entitled to one (1) vote for each share of stock having
voting power standing in the name of such stockholder on the books of the
Corporation. Votes may be cast in person or by written authorized proxy.
Section 5. Proxy. Each proxy must be executed in writing by the
stockholder of the Corporation or his duly authorized attorney. Such proxy shall
be filed with the Secretary of the Corporation before or at the time of the
meeting. No proxy shall be valid after the expiration of eleven (11) months from
the date of its execution unless it shall have specified therein its duration.
Every proxy shall be revocable at the discretion of the person executing
it or of his personal representatives or assigns.
Section 6. Voting of Shares by Certain Holders. Shares standing in the
name of another corporation may be voted by such officer, agent or proxy as the
by-laws of such corporation may prescribe, or, in the absence of such provision,
as the Board of Directors of such corporation may determine.
Shares held by an administrator, executor, guardian or conservator may
be voted by him either in person or by proxy without a transfer of such shares
into his name. Shares tending in the name of a trustee may be voted by him
either in person or by proxy, but no trustee shall be entitled to vote shares
held by him without a transfer of such shares into his name.
Shares standing in the name of a receiver may be bored by such receiver,
and shares held by or under the control of a receiver may be voted by such
receiver without the transfer thereof into his name if authority so to do be
contained in an appropriate order of the Court by which such receiver was
appointed.
A stockholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledge shall be entitled to vote the shares so transferred.
Shares of its own stock belonging to the Corporation or held by it in a
fiduciary capacity shall not be voted, directly or indirectly, at any meeting,
and shall not be counted in determining the total number of outstanding shares
at any given time.
Section 7. Election of Directors. At each election for Directors, every
stockholder entitled to vote at such election shall have the right to vote, in
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<PAGE>
person or by proxy, the number of shares owned by him.
Section 8. Ouorum. A majority of the outstanding shares of the
Corporation' entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of the stockholders. If a quorum shall not be
present or represented, the stockholders entitled to vote thereat, present in
person or by proxy, shall have the power to adjourn the meeting, from time to
time, until the quorum shall be present or represented. At such rescheduled
meeting at which a quorum-specified item of business may be transacted which
might have been transacted at the meeting as originally notified.
The number of votes or consents of the holders of any class of stock
having voting power which shall be necessary for the transaction of any business
or any specified item of business at any meeting of stockholders, or the giving
of any consent, shall be a majority of the outstanding shares of the Corporation
entitled to vote, represented in person or by proxy.
Section 9. Informal Action by Stockholders. Any action required to be
taken at a meeting of the stockholders, or any other action which may be taken
at a meeting of the stockholders, may be taken at a meeting if a consent in
writing setting forth the action so taken shall be signed by all of the
stockholders entitled to vote with respect to the subject matter thereof.
ARTICLE II
DIRECTORS
Section 1. Number. The affairs and business of this Corporation shall be managed
by a Board of Directors. The first Board of Directors shall consist of Three (3)
members. Thereafter the number of directors may be increased to not more than
Nine (9) by resolution of the Board of Directors. Directors need not be
residents of the State of Nevada and need not be stockholders of the
Corporation.
Section 2. Election. The Directors shall be elected at each annual
meeting of the stockholders, but if any such annual meeting is not held, or the
Directors are not elected thereat, the Directors may be elected at any special
meeting of the Stockholders held for that purpose.
Section 3. Term of Office. The term of office of each of the Directors
shall be one (1) year, which shall continue until his successor has been elected
and qualified.
Section 4. Duties. The Board of Directors shall have the control and
general management of the affairs and business of the Corporation. Such
Directors shall in all cases act as a Board, except as herein provided in
Section 1, regularly convened, by a majority, and may adopt such rules and
regulations for the conduct of meetings and the management of the Corporation,
as may be deemed proper, so long as it is not inconsistent with these Bylaws and
the Laws of the State of Nevada.
Section 5. Directors' Meetings. Regular meetings of the Board of
Directors shall be held immediately following the annual meeting of the
stockholders, and at such other time and places as the Board of Directors may
determine. Special meetings of the Board of Directors may be called by the
President or the Secretary upon the written request of two (2) Directors.
Section 6. Notice of Meetinqs. Notice of meetings other than the
regular annual meeting shall be given by service upon each Director in person,
or by mailing to him at his last known address, at least three (3) days before
the date therein designated for such meeting, including the day of mailing, of
a written or printed notice thereof specifying the time and place of such
meeting, and the business to be before the meeting, and no business other than
that specified in such notice shall be transacted at any special meeting. At
any Directors' meeting at which a quorum of the Board of Directors shall be
present (although held without notice), any and all business may be transacted
which might have been transacted if the meeting had been duly called if a
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quorum of the Directors waive or are willing to waive the notice requirements
of such meeting.
Any Directors may waive notice of any meeting under the provisions of
Article XII. The attendance of a Director at a meeting shall constitute a
waiver of notice of such meeting except where a Director attends a meeting for
the express purpose of objecting to the transaction of any business because
the meeting is not lawfully convened or called.
Section 7. Voting. At all meetings of the Board of Directors, each Director
is to have one (1) vote. The act 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 8. Vacancies. Vacancies in the board occurring between annual
meetings shall be filled for the unexpired portion of the term by a majority of
the remaining Directors.
Section 9. Removal of Directors. Any one or more of the Directors may
be removed, with or without cause, at any time, by a vote of the stockholders
holding a majority of the stock, at any special meeting called for that purpose.
Section 10. Ouorum. The number of Directors who shall be present at any
meeting of the board of directors in order to constitute a quorum for the
transaction of any business or any specified item of business shall be a
majority.
The number or votes of directors that shall be necessary for the
transaction of any business of any specified item of business at any meeting of
the Board of Directors shall be a majority.
If a quorum shall not be present at any meeting of the board of
directors, those present may adjourn the meeting, from time to time, until a
quorum shall be present. Section 11. Executive Committee. By resolution of the
Board of Directors and at their option, the Directors may designate an Executive
Committee which includes at least three (3) Directors, to manage and direct the
daily affairs of the Corporation. Said Executive Committee shall have and may
exercise all of the authority that is vested in the Board of Directors as if the
Board of Directors were regularly convened, except that the Executive Committee
shall not have authority to amend these By-Laws.
At all meetings of the Executive Committee, each member of said
committee shall have one (1) vote and the act of a majority of the members
present at a meeting at which a quorum is present shall be the act of the
Executive Committee.
The number of Executive Committee members who shall be present at any
meeting of the Executive Committee in order to constitute a quorum for the
transaction of business or any specified item of business shall be a majority.
The number of votes of Executive Committee members that shall be
necessary for the transaction of any business or any specified item of business
at any meeting of the Executive Committee shall be a majority.
Section 12. Compensation. By resolution of the Board of Directors, the
Directors may be paid their expenses, if any, of attendance at each meeting of
the Board of Directors or each may be paid a stated salary as Director. No such
payment shall preclude any Director from serving the Corporation in any other
capacity and receiving compensation therefor.
Section 13. Presumption of Assent. A Director of the corporation who is
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
his dissent is entered in the minutes of the meeting or unless he shall file his
written dissent to such action with the person acting as the Secretary of the
meeting before the adjournment thereof or shall forward such dissent by
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registered mail to the Secretary of the Corporation immediately after the
adjournment of the meeting. Such right to dissent shall not apply to a Director
who voted in favor of such action.
ARTICLE IV
OFFICERS
Section 1. Number. The officers of the Corporation shall be: President,
Vice-President, Secretary, and Treasurer, and such assistant Secretaries as the
President shall determine. An officer may hold more than one (1) office.
Section 2. Election. All officers of the Corporation shall be elected
annually by the Board of Directors at its meeting held immediately following the
meeting of the stockholders, and shall hold office for the term of one (1) year
or until their successors are duly elected. Officers need not be members of the
Board of Directors.
The Board may appoint such other officers, agents and employees as it
shall deem necessary who shall have such authority and shall perform such duties
as, from time to time, shall be prescribed by the Board.
Section 3. Duties of Officers. The duties and powers of the
officers of the Corporation shall be as follows:
PRESIDENT
The President shall, when present, preside at all meetings of the
stockholders and Directors. He shall present at each annual meeting of the
stockholders and Directors, a report of the condition of the business of the
Corporation. He shall cause to be called regular and special meetings of the
stockholders and Directors in accordance with these By-laws. He shall appoint
and remove, employ and discharge, and fix the compensation of all agents,
employees, and clerks of the corporation other than the duly appointed officers,
subject to the approval of the Board of Directors. He shall sign and make all
contracts and agreements in the name of the Corporation, subject to the approval
of the Board of Directors. He shall see that the books, reports, statements and
certificates required by the statutes are properly kept, made and filed
according to law. He shall sign all certificates of stock, notes, drafts, or
bills of exchange, warrants or other orders for the payment of money duly drawn
by the Treasurer; and he shall enforce these By-laws and perform all the duties
incident to the position and office, and which are required by law.
VICE PRESIDENT
During the absence or inability of the President to render and perform
his duties or exercise his powers, as set forth in these Bylaws or in the acts
under which the Corporation is organized, the same shall be performed and
exercised by the Vice-President; and when so acting, he shall have all the
powers and be subject to all the responsibilities hereby given to or imposed
upon such President.
SECRETARY
The Secretary shall keep the minutes of the meetings of the Board of
Directors and of the stockholders in appropriate books, provided for that
purpose. He shall give and serve all notices of the Corporation. He shall be
custodian of the records and of the corporate seal and affix the latter when
required. He shall keep the stock and transfer books in the manner prescribed
By-laws, so as to show at all times the amount of capital stock issued and
outstanding; the manner and the time compensation for the same was paid; the
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names of the owners thereof, alphabetically arranged; the number of shares owned
by each; the time at which each person became such owner; and the amount paid
thereon; and keep such stock and transfer books open daily during the business
hours of the office of the corporation, subject to the inspection of any
stockholder of the corporation, and permit such stockholder to make extracts
from said books to the extent prescribed by law. He shall sign all certificates
of stock. He shall present to the Board of Directors their stated meetings all
communications addressed to him officially by the President or any officer or
stockholder of the Corporation; and he shall attend to all correspondence and
perform all the duties incident to the office of Secretary.
TREASURER
The Treasurer shall have the care and custody of and be responsible for all the
funds and securities of the Corporation, and deposit all such funds in the name
of the Corporation in such bank or banks, trust company or trust companies or
safe deposit vaults as the Board of Directors may designate. He shall exhibit at
all reasonable times his books and accounts to any Director or stockholder of
the Corporation upon application at the office of the Corporation during
business hours. He shall render a statement of the conditions of the finances of
the Corporation at each regular meeting of the Board of Directors, and at such
other times as shall be required of him, and a full financial report at the
annual meeting of the Stockholders. He shall keep, at the office of the
Corporation, correct books of account of all its business and transactions and
such other books of account as the Board of Directors may require. He shall do
and perform all duties appertaining to the office of Treasurer. The Treasurer
shall, if required by the Board of Directors, give to the Corporation such
security or bond for the Faithful discharge of his duties as the Board may
direct. He shall perform such other duties as from time to time may be assigned
to him by the President or by the Directors.
Section 4. Bond. The Treasurer shall, if required by the Board of
Directors, give to the Corporation such security for the faithful discharge of
his duties as the board may direct.
Section 5. Vacancies. How Filled. All vacancies in any office shall be
filled by the Board of Directors without undue delay, either at its regular
meeting or at a meeting specifically called for that purpose. In the case of the
absence of any officer of the Corporation or for any reason that the Board of
Directors may deem sufficient, the Board may, except as specifically otherwise
provided in these By-laws, delegate the power or duties of such officers to any
other officer or Director for the time being; provided, a majority of the entire
Board concur therein.
Section 6. Compensation of Officers. The officers shall receive such
salary or compensation as may be determined by the Board of Directors.
Section 7. Removal of Officers. The Board of Directors may remove any
officer, by a majority vote, at any time with or without cause.
ARTICLE V
CERTIFICATES OF STOCK
Section 1. Description of Stock Certificates. The certificates of stock
representing shares shall be in such form as shall be determined by the
Directors and shall be numbered and registered in the order in which they are
issued. They shall be bound in a book and shall be issued in consecutive order
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therefrom, and in the margin thereof shall be entered the name of the person
owing the shares therein represented, with the number of shares and the date
thereof. Such certificates shall exhibit the holder's name, number of shares and
date of issue. They shall be signed by the President or Vice-President, and
countersigned by the Secretary or Treasurer and sealed with the Seal of the
Corporation.
Section 2. Transfer of Stock. The stock of the Corporation shall be
assignable and transferable on the books of the Corporation only by the person
in whose name it appears on said books, his legal representatives or by his duly
authorized agent. In case of transfer by attorney, the power of attorney, duly
executed and acknowledged, shall be deposited with the secretary. In all cases
of transfer, the former certificate must be surrendered up and canceled before a
new certificate may be issued. No transfer shall be made upon the books of the
corporation within ten (10) days next preceding the annual meeting of the
stockholders.
Section 3. Lost Certificates. If a stockholder shall claim to have lost
or destroyed a certificate or certificates of stock issued by the Corporation,
the Board of Directors may, at its discretion, direct a new certificate or
certificates to be issued, upon the making of an affidavit of that fact by the
person claiming the certificate of stock to be lost or destroyed, and upon the
deposit of a bond or other indemnity in such form and with such securities if
any that the Board may require.
ARTICLE VI
SEAL
Section 1. Seal. The seal of the Corporation shall be as follows:
ARTICLE VII
DIVIDENDS
Section 1. When Declared. The Board of Directors shall by vote declare dividends
from the surplus profits of the Corporation whenever, in their opinion, the
condition of the Corporation's affairs will render it expedient for such
dividends to be declared.
Section 2. Reserve. The Board of Directors may set aside, out of the
net profits of the Corporation available for dividends, such sum or sums
(before payment of dividends) as the Board, in their absolute discretion,
think proper as a reserve fund, to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the Corporation, or
for such other purpose as the Directors shall think conducive to the interest
of the Corporation, and they may abolish or modify any such reserve in the
manner which it was created.
ARTICLE VIII
INDEMNIFICATION
Section 1. Any person made a party to or involved in any civil,
criminal or administrative action, suit or proceeding by reason of the fact
that he or his testator or intestate is or was a Director, officer, or
employee of the Corporation, or of any corporation which he, the testator, or
intestate served as such at the request of the Corporation, shall be
indemnified by the Corporation against expenses reasonably incurred by him or
imposed on him in connection with or resulting from the defense of such
action, suit, or proceeding and in connection with or resulting from any
appeal thereon, except with respect to matters as to which it is adjudged in
such action, suit or proceeding that such officer, Director, or employee was
liable to the Corporation, or to such other corporation, for negligence of
misconduct in the performance of his duty. As used herein the term "expense"
shall include all obligations incurred by such person for the payment of
money, including without limitation, attorney's fees, judgments, awards,
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fines, penalties, and amounts paid in satisfaction of judgment or in
settlement of any such action, suit, or proceedings, except amounts paid to
the Corporation or such other corporation by him.
A judgment or conviction whether based on plea of guilty or nolo contenders or
its equivalent, or after trial, shall not of itself be deemed an adjudication
that such Director, officer or employee is liable to the Corporation, or such
other corporation, for negligence of misconduct in the performance of his
duties. Determination of the rights of such indemnification and the amount
thereof may be made at the option of the person to be indemnified pursuant to
procedure set forth, from time to time, in the By-laws or by any of the
following procedures:
a) order of the Court or administrative body or agency having
jurisdiction on the action, suit, or proceeding
b) resolution adopted by a majority of the quorum of the Board of
Directors of the Corporation without counting in such majority
any Directors who have incurred expenses in connection with
such action, suit or proceeding
c) if there is no quorum of Directors who have not incurred
expense in connection with such action, suit, or proceeding,
then by resolution adopted by a majority of the committee of
stockholders and Directors who have not incurred such expenses
appointed by the Board of Directors
d) resolution adopted by a majority of the quorum of the
Directors entitled to vote at any meeting; or
e) order of any Court having jurisdiction over the Corporation.
Any such determination that a payment by way of indemnification should be made
will be binding upon the Corporation. Such right of indemnification shall not be
exclusive of any other right which such
Directors, officers and employees of the Corporation and other person above
mentioned may have or hereafter acquire, and without limiting the generality of
such statement, they shall be entitled to their respective rights of
indemnification under any By-law, Agreement, vote of stockholders, provision of
law, or otherwise in addition to their rights under this Article. The provisions
of this Article shall apply to any member of any committee appointed by the
Board of Directors as fully as though each person had been Director, officer or
employee of the Corporation.
ARTICLE X
AMENDMENTS
Section 1. How Amended. These By-laws may be altered, amended, repealed
or added to by the vote of the Board of Directors of the Corporation at any
regular meeting of said Board, or at a special meeting of Directors called for
that purpose, provided a quorum of the Directors as provided by law and by the
Articles of Incorporation, are present at such regular meeting or special
meeting. These By-laws and amendments thereto and new By-laws added by the
Directors may be amended, altered or replaced by the stockholders at any annual
or special meeting of the stockholders.
Section 2. Limitation of Liability of Directors. The Directors of the
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corporation are provided the maximum protection and limited liability as
provided under Nevada Revised Statutes Section 78.300.
ARTICLE XI
FISCAL YEAR
Section 1. Fiscal Year. The fiscal year shall begin January 1 and end
December 31.
ARTICLE XII
WAIVER OF NOTICE
Section 1. Whenever any notice is required to be given to any
shareholders or Directors of the Corporation under the provisions of these
By-laws or under the Articles of Incorporation under the provisions of the
Nevada Business Corporation Act, a waiver thereof in writing, signed by the
person or persons entitled to such notice, whether before or after the time
stated therein, shall be deemed equivalent to the giving of such notice.
GRGL43.1
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=================================================
EX-10.i.a
PARTIAL LIQUIDATION AGREEMENT
BY AND BETWEEN
GLOBAL RESOURCES GROUP, INC.
and
INTERNATIONAL TELEDATA AND ITS SHAREHOLDERS
==================================================
Dated: March 20, 1998
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Table of Contents
<TABLE>
<S> <C> <C>
1. Delivery of Assets of the Company ................................................................ 1
2. Consideration for Transfer of Assets ............................................................... 1
3. Miscellaneous Provisions Relating to Delivery of Global Resources
Group, Inc.'s Common Stock ............................................................................ 1
4. Access to Books and Records .......................................................................... 2
5. Closing................................................................................................ 2
6. Representations and Warranties of the Shareholders ..................................... 2
a. Organization and Standing..................................................................... 2
b. Subsidiaries, Etc............................................................................. 2
c. Capital Stock................................................................................. 3
d. Indebtedness.................................................................................. 3
e. Financial Statements............................................................. ............ 3
f. Contracts and Other Commitments ....................................................... 3
g. Intellectual Property......................................................................... 4
h. Assets........................................................................................ 4
i. Insurance..................................................................................... 5
j. Litigation.................................................................................... 5
k. Accounts Receivable........................................................................... 5
l. Inventories................................................................................... 6
m. Purchase Commitments and Outstanding Bids ..................................... 6
n. Real Estate................................................................................... 6
o. Changes, Dividends, Etc....................................................................... 6
p. Tax Returns and Liabilities................................................................... 7
q. Breaches of Contracts, Etc.................................................................... 7
r. Title to Company Stock........................................................................ 7
s. Conflict of Interests......................................................................... 8
t. Disclosure.................................................................................... 8
7. Representations and Warranties of Global Resources Group, Inc. .................. 8
a. Organization and Standing .................................................................. 8
b. Capital Stock.................................................................................. 9
c. Validity of Shares............................................................................. 9
d. Changes, Dividends, Etc. .................................................................... 9
e. Authorization of Agreement .................................................................. 9
f. No Violation of Law, Etc. ..................................................................... 9
g. Financial Statements........................................................................... 9
h. No Material Changes........................................................................... 9
8. Conditions to Obligations of Global Resources Group, Inc. .......................... 10
</TABLE>
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Table of Contents
<TABLE>
<S> <C> <C>
9. Conditions to Obligations of the Company and the Shareholders ................. 12
10. Certain Covenants Prior to Closing ............................................................... 14
11. Survival of Representations and Warranties; Indemnification ........................ 15
a. Survival..................................................................................... 15
b. Indemnification by Company and Shareholders ................................. 15
c. Indemnification by Global Resources Group, Inc. ............................... 16
d. Procedure for Indemnification ............................................................. 16
e. After - Tax Basis............................................................................ 17
12. Investment Representation ............................................................................ 17
13. Further Assurances.................................................................................... 18
14. Expenses.............................................................................................. 19
15. Partial Liquidation................................................................................... 19
16. Directors............................................................................................. 19
17. Other Matters......................................................................................... 19
a. No Other Agreements ......................................................................... 19
b. Amendment.................................................................................... 19
c. Notices...................................................................................... 19
d. Specific Performance......................................................................... 19
e. Assignment................................................................................... 20
f. Paragraphs and Other Headings ........................................................ 20
g. Choice of Law................................................................................ 20
h. No Waiver.................................................................................... 20
i. Severability................................................................................. 20
j. Counterparts................................................................................. 20
k. Non-Competition Agreement ............................................................... 20
1. Definitions ........................................................................ 21
2. Ownership ......................................................................... 21
3. Term .............................................................................. 21
4. Remedies............................................................................ 21
5. Disclaimer ........................................................................ 22
18. Settlement of the Company's Debentures ...................................................... 22
19. The Company's Dividends .............................................................................. 22
</TABLE>
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PARTIAL LIQUIDATION AGREEMENT
PARTIAL LIQUIDATION AGREEMENT (the "Agreement"), dated as of March 20,
1998, between Global Resources Group, Inc., a Nevada corporation ("GRG") and
International TeleData Corporation, a New York corporation (the "Company") and
all of the Shareholders of the Company whose names appear in Exhibit "A" hereto
("Shareholders").
Witnesseth:
WHEREAS, the Shareholders represent that they are the legal and
beneficial owners of all of the outstanding shares of capital stock of the
Company; and
WHEREAS, the Shareholders desire to sell its overseas long distance
telecommunications aggregation business for shares of Common Stock of GRG, and
GRG desires to effect such exchange, all on the terms and conditions hereinafter
set forth in such a manner that the exchange will constitute a tax-free partial
liquidation pursuant to the provisions of the Internal Revenue Code of 1986, as
amended.
NOW THEREFORE, in consideration of the premises and the mutual
agreements and undertakings hereinafter set forth, the parties do hereby adopt
said plan of reorganization, and, in order to consummate said plan, do hereby
agree as follows:
1. Delivery of Assets of the Company. The Company agrees to transfer and deliver
to GRG, and GRG agrees to acquire the assets, contracts and leads relating to
its long distance telecommunications international aggregation business,
including but not limited to those contracts known as the CFC deal and China I
and China II deals, as more fully described in Exhibit "A" attached.
2. Consideration for Transfer of Assets. Upon the terms and subject to the
conditions set forth in this Agreement, GRG agrees to deliver 1,000,000 shares
to the Company upon closing and, 4,000,000 shares shall be placed in escrow to
be released upon signing contracts yielding in excess of four-million dollars
($4,000,000.00) of gross profit. In addition to the stock transfer, GRG will
advance to the Company up to six- hundred thousand dollars ($600,000.00) and up
to an additional one-million dollars ($1,000,000.00) within thirty (30) business
days of Closing which will be used specifically for working capital for the
Company. In addition, one (1) seat will be made available and will be filled
immediately on the Board of Directors of GRG by a designated individual of the
Company.
3. Miscellaneous Provisions Relating to Delivery of GRG's Common Stock. No
fractional shares of Common Stock of GRG will be delivered and the number of
shares to be issued to any of the Shareholders will be rounded up to the nearest
whole share if the Shareholder is entitled to receive one-half or more of a
share and rounded down to the nearest whole share if the Shareholder is entitled
to receive less than one-half of a share.
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4. Access to Books and Records. Except as hereinafter provided, GRG and its
officers, employees and agents, shall have full access at all reasonable times
from and after the date hereof to the plants, facilities, books and records of
the Company and the Company shall cooperate fully with GRG to the end that it
may become familiar with the properties and business of the Company. GRG agrees
to treat any information which is disclosed to GRG by the Company and is
proprietary or confidential to the Company, as confidential information, and in
the event the closing does not take place, all documents will be returned to the
Company and GRG and will not make or retain copies of any documents or make use
of any confidential information disclosed to it in the conduct of its business.
5. Closing. The Closing of the exchange provided for herein will take place at
GRG's office at 5841 Corporate Way, Suite 104, West Palm Beach, Florida, 34407
on March 20, 1998, such date being herein referred to as the "Closing Date". At
the Closing, the Shareholders arranged to deliver to GRG all certificates,
assignments, and other instruments which may be necessary, desirable, or
appropriate in order to transfer to GRG all of the outstanding shares of capital
stock of the Company, all in form and substance reasonably satisfactory to
counsel for GRG. At such Closing, GRG shall deliver to the Company certificates
evidencing the shares of Common Stock of GRG to be delivered to the Shareholders
pursuant to Paragraph 2 hereof, together with such other instruments which may
be necessary, desirable, or appropriate to accomplish such transfers, all in
form and substance satisfactory to counsel for Shareholders.
6. Representations and Warranties of the Shareholders. The Shareholders jointly
and severally represent and warrant to and agree with GRG as follows:
a. Organization and Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
State of New York, with full corporate power to carry on its business
as now being conducted and to own and operate the property and assets
now owned and operated by it, and is duly qualified to transact
business and in good standing in each jurisdiction where the ownership
of its properties or the conduct of its business requires it to be
licensed or qualified to do business. The Company also delivered to GRG
a copy of its Articles of Incorporation and all amendments thereto,
certified by the Secretary of State of the State of New York, and a
copy of its By-Laws as amended, certified by its Secretary, which
documents are complete and correct as of the date of this Agreement.
b. Subsidiaries, Etc. The Company has no subsidiaries and is not party
to any partnership, joint venture of similar agreement, except as
disclosed in the schedule referred to in subparagraph (f) of Paragraph
6 hereof.
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c. Capital Stock. The authorized capital stock of the Company consists
of 20,000,000 shares of Common Stock, $0.001 par value, of which
8,936,440 shares are validly issued and outstanding. All of said
outstanding shares of the Company have been duly authorized and validly
issued, are fully paid and nonassessable. There are no options,
warrants or other agreements or commitments which are now or may in the
future obligate the Company to issue or purchase any shares of its
capital stock or other securities.
d. Indebtedness. The Company has delivered to GRG a schedule,
identified by reference to this subparagraph, listing all promissory
notes payable by the Company, all agreements of the Company to borrow
money from others, and all commitments by others to lend money to the
Company. As to each note, obligation to borrow and loan commitment,
such schedule accurately sets forth the interest rate, terms of payment
of principal and interest, identity of security (if any) and any other
material terms of such indebtedness. The Company is not in default in
any respect under, and is not otherwise, in violation or contravention
of, any of the terms or provisions of any note, loan agreement,
agreement to borrow money from others or any commitment by others to
lend money.
e. Financial Statements. The Company has delivered to GRG a balance
sheet (the "Balance Sheet") of the Company as of December 31, 1997 (the
"Balance Sheet Date") and an income statement and statement of retained
earnings for the year then ended. Such statements have been initialed
by officers of the Company and GRG for identification. All of such
financial statements are complete and fairly present the financial
position of the Company on the indicated dates and the results of its
present financial position of the Company on the indicated dates and
the results of its operations for the indicated periods. All of such
statements have been prepared on the tax basis of accounting
consistently applied. The Company has no liabilities, whether absolute,
accrued, contingent or otherwise, other than (i) liabilities disclosed,
(ii) incurred in "arms-length" transactions in the ordinary course of
business since the Balance Sheet Date and (iii) liabilities disclosed
in subparagraph (k) of this Paragraph 6 or the schedule referred to in
subparagraph (f) of this paragraph 6.
f. Contracts and Other Commitments. The Company has delivered to GRG a
complete and accurate schedule, identified by reference to this
subparagraph, listing and briefly describing all Material Contracts.
For this purpose, the term "Material Contracts" shall be defined to
mean (i) all contracts and commitments out of the ordinary course of
business; (ii) all contracts and commitments involving an obligation
which cannot or, in reasonable probability, will not be performed or
terminated within sixty (60) days from the date hereof; (iii) all
bonus, incentive compensation, pension, group insurance or employee
welfare plans of any nature whatsoever; (iv) all collective bargaining
agreements or other contracts or commitments to or with any labor
unions or other employee representatives or
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groups of employees; (v) employment contracts and other contracts,
agreements or commitments to or with individual employees, agents or
consultants extending for a period of more than three (3) months from
the date hereof or providing for earlier termination only upon the
payment of a penalty or equivalent thereof; or (vi) all other contracts
or commitments providing for payments based in any manner upon the
sales, purchases or profits of the Company. There has not been any
material default in any obligation to be performed by the Company under
any material contract listed on the said schedule, and the Company has
not waived any material right under any such material contract.
g. Intellectual Property. The Company owns, or is licensed or otherwise
has the full and exclusive rights to use, all patents, trademarks,
trade names, copyrights, technology, know-how, processes, names and
likenesses used in or necessary for the conduct of its business as
heretofore conducted. The Company has delivered to GRG a complete and
accurate schedule identified by reference to this subparagraph, listing
all domestic and foreign patents, patent applications, licenses,
formulae, trademarks, trade names and copyrights owned or held by the
Company and a summary of the terms of all agreements relating to
technology, know-how or processes which the Company is licensed or
authorized to use by others. Except as set forth in this schedule, the
Company is licensed or authorized to use by others. Except as set forth
in this schedule, the Company has the sole and exclusive right to use
the patents, trademarks, trade names, copyright, technology, know-how,
processes, names and likenesses referred to therein, and the
consummation of the contemplated transactions will not alter or impair
any such rights; no claims have been asserted by any person to the use
of any such patents, trademarks, trade names, copyrights, technology,
know-how, processes, names and likenesses or challenging or questioning
the validity or effectiveness of any such licenses or agreements, and
there is no valid basis for any such claim and the use of such patents,
trademarks, trade names, copyrights, technology, know-how, processes,
names and likenesses by the Company does not infringe on the rights of
any person.
h. Assets. The Company has delivered to GRG a complete and accurate
schedule, identified by reference to this subparagraph, containing (i)
a complete legal description of all real property owned, leased or
otherwise used or occupied by the Company, (ii) a list of all banks and
other institutions in which the Company has any account or safe deposit
showing the identifying numbers and names of the persons authorized to
draw thereon or have access thereto, and (iii) a list of all
capitalized machinery, tools, equipment owned, leased or otherwise used
by the Company. Except as disclosed on the schedule referred to in
subparagraph (f) of this Paragraph 6, except as disclosed in the
schedule of assets supplied pursuant to this subparagraph, and except
as acquired after the date hereon on terms approved by GRG, the Company
and good and marketable title to all property and assets used in its
business, including all property and assets
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reflected in the schedule referred to in this subparagraph and in the
Balance Sheet and all properties and assets acquired after the Balance
Sheet Date (other than assets disposed of since the Balance Sheet Date
in the ordinary course of business), subject to no liens, mortgages,
pledges, encumbrances or charges of any kind. The machinery, equipment
and other facilities of the Company are in satisfactory operating
condition and repair for the business now conducted by the Company. At
the Closing, the Company will deliver to Buyer copies of all records,
including all signatures or authorization cards, pertaining to such
safe deposit boxes and bank accounts.
i. Insurance. The Company has delivered to GRG a complete and accurate
schedule, identified by reference to this subparagraph, listing and
briefly describing all policies of fire, liability, life, workmen's
compensation and other insurance maintained by the Company. All such
policies are in full force and effect, all premiums with respect
thereto covering all periods up to and including the Closing Date have
been paid, and no notice of cancellation or termination has been
received with respect to any such policy. Such policies are sufficient
for compliance with all requirements of law and all agreements to which
the Company is a party; are valid, outstanding and enforceable
policies; provide adequate insurance coverage for the assets and
operations of the Company, will remain in full force and effect through
the Closing Date without the payment of additional premiums, and will
not in any way be affected by, or terminate or lapse by reason of, the
contemplated transactions. The schedule provided by the Company
identifies all risks that have been designated as being self insured.
No insurance carrier has refused to insure any operations or property
assets of the Company, nor has any insurance carrier, which has
carried, or received any application for, any such insurance limited
the coverage during the last three (3) years.
j. Litigation. Except as identified in a complete and accurate
schedule, identified by reference to this subparagraph and delivered to
GRG, the Company is not engaged in or threatened with any legal action
or other proceeding before any court or administrative agency. The
Company has not violated any laws, regulations or order applicable to
its business or activities, and the conduct of the present business of
the Company at the present location is in conformity with all zoning
and building code requirements.
k. Accounts Receivable. All accounts receivable of the Company, whether
or not reflected in the Balance Sheets or the Interim Balance Sheet,
represent sales actually made in the ordinary course of business, and
are current and collectible net of any reserves shown on the Balance
Sheets or the Interim Balance Sheet (which reserves are adequate and
were calculated consistent with past practice). Subject to such
reserves, each of the accounts receivable has been collected in full or
will be collected in full, without any set-off, within ninety (90) days
after the day on which it first becomes due and payable.
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l. Inventories. All inventory of the Company, whether or not reflected
in the Balance Sheets or the Interim Balance Sheet, consists of a
quality and quantity usable and salable in the ordinary course of
business, except for obsolete items and items of below-standard
quality, all of which have been written off or written down to net
realizable value in the Balance Sheets or the Interim Balance Sheet.
All inventories not written off have been recorded at the lower of
average cost or market. The quantities of each type of inventory
(whether raw materials, work-in-process, or finished goods) are not
excessive, but are reasonable and warranted in the present
circumstances of the Company. All work in process and finished goods
inventory is free from any defect or other deficiency.
m. Purchase Commitments and Outstanding Bids. No purchase commitment of
the Company is in excess of normal, ordinary and usual requirements of
its business, or was made at any price in excess of the then current
market price, or contains terms and conditions more onerous than those
usually and customary in the industry. In the aggregate, the
outstanding bids, sales proposals, contracts or unfilled orders of the
Company (i) will not (based on today's costs and reasonably foreseeable
increases in such costs) require the Company to supply goods or
services at cost to the Company in excess of the revenues to be
received therefrom, and (ii) quote prices which include a mark-up over
reasonably estimated costs consistent with past mark-ups on similar
business.
n. Real Estate. The Company shall have delivered to GRG a schedule
identified by reference to this subparagraph listing all contracts or
commitments affecting ownership of, title to, use of, or any interest
in real estate. All such leases of real property are valid, binding,
and enforceable in accordance with their terms, and are in full force
and effect; there are no existing defaults (or events which, with
notice or lapse of time or both, would constitute a default) by the
Company, and all lessors under such leases have consented (where such
consent is necessary) to the consummation of the contemplated
transactions without requiring modification in the rights or
obligations of the lessee under such leases and all such consents are
listed in the schedule provided to GRG. The Company has delivered
executed counterpart copies of all consents referred to in the
preceding sentence to GRG.
o. Changes, Dividends, Etc. Since the Balance Sheet Date there has been
no material adverse change in the condition (financial or otherwise),
physical assets, capitalization or business of the Company, no dividend
or other distribution declared, paid or made on any of the shares of
the Company's capital stock, no direct or indirect redemption, purchase
or other acquisition by the Company of any shares of its capital stock,
no damage, destruction or loss (whether or not covered by insurance)
adversely affecting the properties, business or prospects of the
Company, no increase in the rate of compensation payable or to become
payable to any officer or other employee of the Company (except as
disclosed in the
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schedule referred to in subparagraph (j) of the Paragraph 6 or approved
in writing by GRG), no significant labor disturbances, and no other
event or condition which materially and adversely affects the business
of the Company. Since the Balance Sheet Date, the business of the
Company has been conducted diligently and in the ordinary course; the
Company has not sold or transferred any of its property or assets
except in the ordinary course of business, and no contracts have been
entered into by the Company except in the ordinary course of business
or with the written approval of GRG.
p. Tax Returns and Liabilities. The Company has filed on a timely basis
all tax returns that are or were required to be filed pursuant to the
laws, regulations or administrative requirements of each governmental
body with taxing power of it or its assets. The Company has delivered
to GRG all such Tax Returns filed since the Company's inception. The
Company has paid, all Taxes that have or may have become due pursuant
to those Tax Returns, or otherwise, or pursuant to any assessment
received by the Company, except such Taxes, if any, as are set forth in
a schedule and are being contested in good faith and as to which
adequate reserves (determined in accordance with the tax basis of
accounting consistently applied) have been provided for in the Balance
Sheets and Interim Balance Sheets.
q. Breaches of Contracts, Etc. Neither the execution nor the delivery
of this Agreement by the Company, nor the performance of any of its
obligations hereunder, will result in a breach or violation of any term
or provision of or constitute a default under any indenture, mortgage
or other agreement or instrument to which the Company is a party.
Neither the execution nor the delivery of this Agreement by the
Shareholders, nor the performance of any of their obligations
hereunder, will result in a breach or violation of any term or
provision of or constitute a default under any indenture, mortgage, or
other agreement which any of them is bound, or any law or order, rule,
regulation, writ, injunction or decree of any government, governmental
instrumentality or court having jurisdiction over the Shareholders or
any of their assets or rights, or results in the creation or imposition
of any lien, charge or encumbrance of any kind whatsoever on any of
such assets or rights.
r. Title to Company Stock. Each of the Shareholders represents and
warrants for themselves and not for the others; that this Agreement has
been duly executed and delivered by the Shareholder(s) and is, as to
themselves, a valid agreement binding upon them in accordance with its
terms; that he individually has valid title to the shares of capital
stock of the Company set forth opposite their name in Exhibit "A"
hereto, with full right, power and authority to transfer, sell and
deliver such shares pursuant to this Agreement; and that, upon delivery
of their shares pursuant to this Agreement, GRG will receive valid and
marketable title to their shares, free and clear of all voting or other
trust arrangements, liens, encumbrances, restrictions, and adverse
claims, whether existing or contingent.
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s. Conflict of Interests. Neither the Company nor any of its affiliates
(as this term is defined in the Securities Act of 1933 [the "1933 Act"]
and in the rules and regulations promulgated by the Securities and
Exchange Commission ["SEC"] thereunder) has, either directly or
indirectly, (i) an interest in any corporation, partnership,
proprietorship, association or other person or entity which produces or
sells those products and services which are produced or sold by the
Company, or (ii) a beneficial interest in any contract or agreement to
which the Company is a party or by which the Company may be bound. For
the purpose of this subparagraph, there shall be disregarded any
interest which arises solely from the ownership of less than a 5%
equity interest in a corporation which has a class of securities
regularly traded on any securities exchange or in the over-the-counter
market, or quoted on any inter dealer quotation system.
t. Disclosure. No representations or warranties by the Shareholders or
the Company in this Agreement and no statement contained in any
document (including, without limitation, financial statements, the
schedules), certificate, or other writing furnished or to be furnished
to GRG or any of its representatives pursuant to the provisions hereof
or in connection with the contemplated transactions, contains or will
contain any untrue statement of material fact or omits or will not
state any material fact necessary to make the statements herein or
therein, in light of the circumstances under which they are made, not
misleading. Documents delivered or to be delivered to GRG pursuant to
this Agreement are or will be true and complete copies of what they
purport to be. There is no fact known to the officers, directors or
employees of the Company unknown to GRG on the date of this Agreement
that may affect or does affect in a materially adverse manner GRG's
ability to conduct the business of the Company substantially as
conducted prior to such date.
7. Representations and Warranties of GRG. GRG represents and warrants to and
agrees with the Company as follows:
a. Organization and Standing. GRG is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Nevada, with full corporate power to carry on its business as now being
conducted and to own and operate the property and assets now owned and
operated by it, and is duly qualified to transact business and in good
standing in each jurisdiction where the ownership of its properties or
the conduct of its business requires it to be licensed or qualified to
do business.
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b. Capital Stock. The authorized capital stock of GRG consists of
100,000,000 shares of Common Stock, $.0005 par value, 10,350,000 shares
of Common Stock are presently issued and outstanding. All of said
outstanding shares are validly issued, fully paid and non-assessable.
At the close of business on March 4, 1998 an aggregate of -0- shares of
Common Stock of GRG were reserved for issuance upon the exercise of
options granted and which may be granted to employees of GRG and its
subsidiaries, and no additional shares were reserved for issuance upon
conversion of outstanding convertible subordinate debentures.
c. Validity of Shares. The shares of Common Stock to be delivered by
GRG pursuant to this Agreement will, when so delivered, be validly
issued and outstanding, fully paid and non-assessable.
d. Changes, Dividends, Etc. Prior to the Closing hereunder, GRG will
not split, combine or otherwise change or reclassify its outstanding
Common Stock or declare or distribute any cash or stock dividend upon
such Common Stock.
e. Authorization of Agreement. GRG's Board of Directors has duly
authorized the execution, delivery and performance of this Agreement by
GRG has been duly authorized by GRG's Board of Directors, and will not
result in any breach of or violate or constitute a default under its
Articles of Incorporation or By-Laws or any indenture, mortgage or
other agreement or instrument to which it is a party.
f. No Violation of Law, Etc. Neither the execution, nor the delivery of
this Agreement by GRG, nor the performance of any of its obligations
hereunder will result in a breach or violation of any law, order, rule,
regulation, writ, injunction or decree or any governmental
instrumentality or court having jurisdiction over GRG or any of its
assets or rights, or result in the creation or imposition of any lien,
charge or encumbrance of any kind whatever on any of such assets or
rights.
g. Financial Statements. GRG has delivered to the Company its annual
reports for the past two (2) years which contains a consolidated
balance sheet as of December 31, 1996, and the related statement of
consolidated income for the year then ended. Such financial statements
have been initialed by officers of GRG and the Company for
identification. Such financial statements are complete, have been
prepared in accordance with the tax basis of accounting consistently
applied and fairly present the consolidated financial position of GRG
at such date, and the results of its operations for the period therein
specified.
h. No Material Changes. Since December 31, 1997, there has been no
material change in the condition (financial or otherwise), assets,
liabilities, capitalization or business of GRG, which have not been
disclosed to the Company.
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8. Conditions to Obligations of GRG. The obligations of GRG under this Agreement
are of the following conditions precedent:
a. All representations and warranties of the Shareholders and the
Company contained herein and in any certificate or other investment
delivered pursuant to the provisions hereof, or in connection with the
transactions contemplated hereby, shall be true on the Closing Date
with the same force and effect as though such representations and
warranties had been made on the Closing Date.
b. The Shareholders and the Company shall have performed and complied
with all of the terms, covenants and conditions of this Agreement to be
performed or complied with by them, respectively, on or before the
Closing Date.
c. The Directors of the Company shall have taken all necessary action
to authorize the execution and performance of this Agreement, and the
Company shall have delivered to GRG true and complete copies, certified
by the Secretary, of Resolutions of its Board of Directors evidencing
such action.
d. The Shares of GRG's Common Stock, $.0005 par value, which are to be
delivered on the Closing Date to the Shareholders in accordance with
the terms hereof shall have been listed or authorized to be listed on
the Exhibit "B".
e. The Shareholders and the Company shall have delivered to GRG such
certificates dated as of the Closing Date. Certifying in such detail as
GRG may reasonably request to the fulfillment of the conditions
specified in this Paragraph 8. No legend or other reference to any
purported encumbrance shall appear on any certificate. The delivery of
certificates to GRG provided in Paragraph 2 will result in GRG's
immediate acquisition of record and beneficial ownership of the Shares,
free and clear of all encumbrances (which term shall be hereinafter
defined as any security interest, mortgage, lien charge, adverse claim
or restriction of any kind, including, but not limited to, any
restriction on the use, voting, transfer, receipt of income or other
exercise of any attributes of ownership).
f. The Company shall have delivered to GRG an opinion of its counsel
for the Shareholders and the Company, dated as of the Closing Date, to
the effect that:
i. The Company is duly organized, validly existing and in good
standing under the laws of the State of Florida, with full
corporate power and authority to enter into and perform its
obligations under this Agreement, to own and hold its
properties owned and leased and to carry on the business in
which it is engaged, and is legally qualified to do business
as a foreign corporation in good standing in each jurisdiction
wherein the nature of its activities or its properties owned
or leased makes such qualification necessary.
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ii. The execution, delivery and performance of this Agreement
and the instruments executed and delivered to GRG pursuant to
this Agreement by the Company, have been duly and validly
authorized and approved (as required by law and the terms of
this Agreement) by the Company's Board of Directors and this
Agreement and such instruments have been duly executed and
delivered by the Company and the Shareholders and constitute
the valid and binding obligation of the Company and the
Shareholders, respectively, enforceable in accordance with
their respective terms, except as limited by bankruptcy,
insolvency and other laws affecting the enforcement or
creditor's rights.
iii. The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated herein
will not result in any breach or violation of any of the terms
or provisions of, or constitute a default under, the Company's
Articles of incorporation or By-Laws, or, to the knowledge of
such counsel, any term or provision of any indenture,
mortgage, deed of trust, lease, loan agreement, security
agreement, or other agreement, instrument, commitment or
arrangement, to which the Company or any of its Shareholders
is a party or by which the Company or any of the Shareholders
is bound or to which any of the Company's properties is
subject.
iv. The Company is authorized by its Articles of Incorporation
to issue 20,000,000 shares of capital stock, $0.001 par value,
of which there are 8,936,440 shares issued and outstanding,
all of which are duly authorized, validly issued and
outstanding, fully paid or nonassessable, and the issuance and
sale of such shares did not to the knowledge of such counsel
violate the 1933 Act or the rules and regulations of the SEC
thereunder or any applicable state securities or Blue Sky
Laws. The Company has no other authorized or outstanding
series or class of capital stock or other securities, or
outstanding options, warrants or other rights to acquire
securities of the Company. The Shareholders are the record and
beneficial owners of the respective number of shares of the
Company's capital stock set forth opposite their names in
Exhibit "A" hereto.
v. Insofar as is known to such counsel, all assignments,
powers and other documents necessary to effect the transfer
and delivery of the outstanding shares of capital stock of the
Company to GRG as provided for herein have been duly executed
and delivered by the Shareholders and are adequate to transfer
to GRG valid and marketable title to said shares.
vi. Such counsel has no knowledge of any litigation,
proceeding or governmental investigation or labor dispute or
labor trouble, pending or threatened against the Company,
except matters specifically mentioned in the schedule required
by subparagraph (m) of Paragraph 6 above.
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vii. The issuance and delivery of the shares of GRG's Common
Stock to be issued and delivered to the Shareholders pursuant
to Paragraph 2 hereof is exempt from the registration or
qualification requirements of the state securities laws of the
State of Florida.
In rendering such opinion, such counsel may rely on certificates of public
officials and upon certificates of officers of the Company and the Shareholders
and upon opinions of counsel retained by the Company or the Shareholders in
States other than Florida, copies of which certificates and opinion shall be
furnished to GRG.
g. No action or proceeding by any governmental body or agency shall
have been threatened, asserted or instituted to restrain or prohibit
the carrying out of the transactions contemplated by this Agreement.
h. All corporate and other proceedings and action taken in connection
with the transactions contemplated by this Agreement and all
certificates, opinions, agreements, instruments, and documents
mentioned in this Paragraph 8 or incident to any such transaction shall
be reasonably satisfactory in form and substance to GRG and to its
counsel.
The conditions contained in this Paragraph 8 are included herein for the benefit
of GRG and, without constituting a waiver of any of its rights hereunder, may be
waived, in whole or in part, by GRG.
9. Conditions to Obligations of the Company and the Shareholders. The Company
and the Shareholders under this Agreement are subject to the fulfillment, on or
before the Closing Date, of the following conditions:
a. All representations and warranties of GRG contained herein and in
any certificate or other instrument delivered pursuant to the
provisions hereof, or in connection with the transactions contemplated
hereby, shall be true on the Closing Date with the same force and
effect as though such representations and warranties had been made on
the Closing Date.
b. GRG shall have performed and complied with all of the terms,
covenants and conditions of this Agreement to be performed or complied
with by it on or before the Closing Date.
c. GRG shall have delivered to the Shareholders a certificate of its
President or a Vice President and its Secretary or an Assistant
Secretary, dated as of the Closing Date, certifying in such detail as
the Shareholders may reasonably request to the fulfillment of the
conditions specified in this Paragraph 9.
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d. The Shares of GRG's Common Stock, $.0005 par value, which are to be
issued to the Shareholders on the Closing Date in accordance with the
terms hereof shall have been listed or authorized for listing on the
Exhibit "B".
e. The Board of Directors of GRG shall have taken all necessary action
to authorize the execution and performance of this Agreement, including
the delivery of shares of Common Stock of GRG to the Shareholders in
accordance with this Agreement, and GRG shall have delivered to the
Shareholders true and complete copies certified by its Secretary or
Assistant Secretary, of Resolutions of its Board of Directors
evidencing such action.
f. GRG shall represent to the Shareholders that:
i. GRG is a corporation duly organized, validly existing and
in good standing under the laws of the State of Nevada, with
an authorized capitalization as set forth in subparagraph (b)
of Paragraph 7 of this Agreement, with full corporate power
and authority to enter into and perform its obligations under
this Agreement, to own and hold its properties owned and
leased and to carry on the business in which it is engaged.
ii. The Execution, delivery and performance of this Agreement
by GRG have been duly and validly authorized and approved (as
required by law and by the terms of this Agreement) by GRG's
Board of Directors and this Agreement has been duly executed
and delivered by GRG and constitutes the valid and binding
obligation of GRG in accordance with its terms, except as
limited by bankruptcy, insolvency, and other laws affecting
the enforcement of creditors' rights.
iii. The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated herein
will not result in any breach or violation of any of the terms
or provisions of, or constitute a default under, the Articles
of Incorporation or By-Laws of GRG or, to the knowledge of
such counsel, any statue, law, order, rule or regulation of
any court of governmental agency or body having jurisdiction
over GRG or any of its activities or properties or, to the
knowledge of such counsel, any term or provision of any
indenture, mortgage, security agreement, or other agreement,
instrument, commitment or arrangement, to which GRG is a party
or by which it is bound or to which its property is subject.
iv. The shares of GRG to be delivered to the Shareholders on
the Closing Date pursuant to Paragraph 2 hereof, have been
duly authorized and upon such delivery will be validly issued,
fully paid, nonassessable and listed or authorized for listing
on the Exhibit "B".
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g. No action or proceeding by any governmental body or agency shall
have been threatened, asserted or instituted to restrain or prohibit
the carrying out of the transactions contemplated by this Agreement.
h. All corporate and other proceedings and actions taken in connection
with the transactions contemplated hereby and all certificates,
opinions, agreements, instruments and documents mentioned in this
Paragraph 9 or incident to any such transaction shall be satisfactory
in form and substance to the Shareholders and their counsel.
The conditions contained in this Paragraph 9 are included herein for the benefit
of the Shareholders and, without constituting a waiver of any of its rights
hereunder, may be waived, in whole or in part, by the Shareholders.
10. Certain Covenants Prior to Closing.
a. The Shareholders will use their best efforts, and take such other
action as may be necessary, to fulfill all of the conditions contained
in Paragraph 8 hereof and to authorize and consummate, and cause the
Company to authorize and consummate, all of the transactions herein
contemplated.
b. GRG will use its best efforts, and take such other action as may be
necessary, to fulfill all of the conditions contained in Paragraph 9
hereof and to authorize and consummate all of the transactions herein
contemplated.
c. Between the date of this Agreement and the Closing Date, the Company
and Shareholders shall (a) give GRG and its authorized representatives
full access to all offices, warehouses and other facilities and
properties of the Company and to the books and records of the Company
(and permit GRG to make copies thereof), (b) permit GRG to make
inspections thereof, and (c) cause its officers and its advisors
(including, without limitation, its auditors, attorneys, financial
advisors and other consultants, agents and advisors) to furnish GRG
with such financial and operating data and other information with
respect to the business and properties of the Company, and to discuss
with GRG and its authorized representatives the affairs of the Company,
all as GRG may from time to time reasonably request.
d. Between the date of this Agreement and the Closing Date, the Company
and Shareholders shall give notice to GRG promptly upon the Company or
Shareholders becoming aware of (a) any inaccuracy of a representation
or warranty set forth in any schedule or (b) any event or state of
facts that, if it had occurred or existed on or prior to the date of
this Agreement, would have caused any such representation and warranty
to be inaccurate, any such notice to describe such inaccuracy, event or
state of facts in reasonable detail.
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e. Between the date of this Agreement and the Closing Date, the Company
and Shareholders shall cause (a) copies of all reports and other
documents given to the members of the Board of Directors (or any
committee thereof) of the Company to be delivered to GRG at the same
time and (b) copies of the minutes of all meetings of, and actions
taken without a meeting by, the Board of Directors (or any committee
thereof) of the Company to be delivered to GRG promptly after the
preparation thereof. Between the date of this Agreement and the
Closing, the Company and Shareholders shall give GRG at least three (3)
days prior notice of any meeting of or action to be taken without a
meeting by, the Board of Directors or committee thereof, of the Company
and shall cause the Company to permit one individual designated by GRG
to attend each such meeting as an observer.
f. Between the date of this Agreement and the Closing Date, GRG, the
Company and Shareholders shall discuss and coordinate with respect to
any public filing or announcement concerning any of the contemplated
transactions.
g. GRG and Shareholders shall cause the Company to, (a) file with
applicable regulatory authorities the applications and related
documents required to be filed by them (and prosecute diligently and
related proceedings) in order to consummate the contemplated
transactions and (b) cooperate with the others as they may reasonably
request in connection with the following.
11. Survival of Representations and Warranties; Indemnification.
a. Survival. All representations, warranties and agreements contained
in this Agreement shall survive the Closing notwithstanding any
investigation conducted with respect thereto; however, a party shall
have no liability with respect to a representation and warranty, or an
agreement to be performed or complied with prior to the Closing Date,
to the extent that the inaccuracy of such representation and warranty
or the failure to perform and comply with such agreement was not
intentional and was disclosed in a schedule delivered pursuant to this
Agreement.
b. Indemnification by Company and Shareholders. The Company and
Shareholders, jointly and severally, shall indemnify and hold harmless
GRG, and shall reimburse GRG for any loss, liability, claim, damage,
expense (including, but not limited to, costs of investigation and
defense and reasonable attorneys' fees) or diminution of value
(collectively "Damages") arising from or in connection with, (a) any
inaccuracy in any of the representations and warranties of the Company
or Shareholders in this Agreement, or any actions, omissions or state
of facts inconsistent with any such representation or warranty, (b) any
failure by the Company or Shareholders to perform or comply with any
agreement in this Agreement, (c) any claim by any person for brokerage
or finder's fees or commissions or similar payments based upon any
agreement or understanding alleged to have been made by any such person
with the Company or any Shareholder (or any person acting on their
behalf) in connection with any of the contemplated transactions.
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c. Indemnification by GRG. GRG shall indemnify and hold harmless the
Company and Shareholders, and shall reimburse the Company and
Shareholders for, any Damages arising from or in connection with (a)
any inaccuracy in any of the representations and warranties of GRG in
this Agreement, or any actions, omissions or state of facts
inconsistent with any such representation or warranty, (b) any failure
by GRG to perform or comply with any agreement in this Agreement, or
(c) any claim by any person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or
understanding alleged to have been made by such person with GRG (or any
person acting on its behalf) in connection with any of the contemplated
transactions without having been discussed by the Company.
d. Procedure for Indemnification. Promptly after receipt by an
indemnified party of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made
against an indemnifying party under such section, give notice to the
indemnifying party of the commencement thereof, but the failure so to
notify the indemnifying party shall not relieve it of any liability
that it may have to any indemnified party except to the extent the
indemnifying party demonstrates that the defense of such action is
prejudiced thereby. In case any such action shall be brought against an
indemnified party and it shall give notice to the indemnifying party of
the commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, to assume
the defense thereof with counsel satisfactory to such indemnified party
and, after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying
party under such section for any fees of other counsel or any other
expenses, in each case subsequently incurred by such indemnified party
in connection with the defense thereof, other than reasonable costs of
investigation. If an indemnifying party assumes the defense of such an
action, (a) no compromise or settlement thereof may be effected by the
indemnifying party without the indemnified party's consent, which shall
not be unreasonably withheld unless (i) there is no finding or
admission of any violation of law or any violation of the rights of any
person and no effect on any other claims that may be made against the
indemnified party and (b) the indemnifying party shall have no
liability with respect to any compromise or settlement thereof effected
without its consent, which shall not be unreasonably withheld. If
notice is given to an indemnifying party of the commencement of any
action and it does not, within ten (10) days after indemnified party's
notice is given, give notice to the indemnified party of its election
to assume the defense thereof, the indemnifying party shall be bound by
any determination made in such action or any compromise or settlement
thereof effected by the indemnified party. Notwithstanding the
foregoing, if an indemnified party determines in good faith that there
is a reasonable probability that an action may adversely affect it
other than as a result of monetary damages, such indemnified party may,
by notice to the indemnifying party, assume the exclusive right to
defend, compromise or settle such action, but the indemnifying party
shall not be bound by any determination of an action so defended or any
compromise or settlement thereof effected without its consent, which
shall not be unreasonably withheld.
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e. After-Tax Basis. In determining the Damages suffered by any person,
the amount thereof shall be reduced by any tax benefit realized by such
person as a result of the incurrence of such Damages. Any payment
required by this Paragraph 11 (for indemnification or otherwise) in
respect of the Damages suffered by any person shall be in an amount
that after deducting any tax cost incurred by the person receiving that
payment equal the amount required to be paid as determined under the
applicable provisions (other than this sentence) of this Paragraph 11.
The tax benefit realized by a person by reason of any payment or other
matter shall be the amount by which (a) the aggregate federal and state
income and franchise taxes that would have been, but for such payment
or other matter, payable by such person for the fiscal year, if any, in
which such payment or other matter is taken into account ("but-for
tax") exceeds (b) the aggregate federal and state income and franchise
taxes actually payable by such person for such fiscal year ("actual
tax") and the tax cost of any payment shall be the amount by which the
actual tax exceeds but-for tax.
f. Notwithstanding anything hereinabove contained to the contrary in
Paragraph 11, (i) none of the provisions of this Paragraph 11 shall
apply to any liability (whether by GRG to one or more of the
Shareholders or by one or more the Shareholders to GRG) arising out of
or by virtue of the Provisions of Paragraph 12 below or any violation
of the provisions of Paragraph 12, and (ii) the provisions of said
Paragraph 12 shall survive the Closing Date.
12. Investment Representation. Each of the Shareholders acknowledges his
understanding that the shares of GRG's Common Stock to be delivered to the
Shareholders pursuant to this Agreement will not be registered pursuant to the
1933 Act and each of the Shareholders further represents to and agrees with GRG
as follows:
a. He/she is acquiring the shares of GRG's Common Stock pursuant to
this Agreement for his/her own private personal investment account and
with no present intention of reselling or distributing such shares or
any portion thereof to others.
b. They fully comprehend that in connection with the issuance of shares
of GRG's Common Stock pursuant to this Agreement, GRG is relying to a
material degree on the representations, warranties and covenants
contained herein, and with such realization he/she authorizes GRG to
act as it may see fit in full reliance hereon.
c. He/she agrees that none of such shares will be transferred or
distributed unless (i) they are covered by an effective Registration
Statement prepared in accordance with the 1933 Act and are distributed
in a manner complying with the 1933 Act and with the Rules and
Regulations promulgated thereunder; or (ii) they may be transferred in
accordance with Rule 144 of the Rules and Regulations
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pursuant to the 1933 Act (or such similar Rule as may be applicable to
such shares at the time of transfer) so long as such transfer strictly
complies with said Rule 144 and with such procedures as GRG may
reasonably establish in connection therewith; or (iii) there is first
delivered to GRG the written legal opinion of legal counsel in form and
substance reasonably satisfactory to GRG's legal counsel or a "no
action letter" from SEC indicating that any of the provisions of the
1933 Act and the Rules and Regulations promulgated thereunder. In the
event such legal opinion is based upon the exemption now contained in
Section 4(2) of the 1933 Act, the person acquiring shares or some
portion thereof shall execute and deliver to GRG a letter agreement
complying with the 1933 Act and the Rules and Regulations promulgated
thereunder.
d. He/she hereby agrees that the certificate(s) representing such
shares may bear a legend, as set forth below, setting forth the
restrictions upon transfer which are contained in the foregoing
subparagraph (c) and that GRG may deliver to its transfer agents a
"stop transfer order" directing the transfer agents not to effect any
transfer of such shares without having received the permission of GRG
and evidence of compliance with applicable provisions of the 1933 Act
and the terms of this Agreement.
The shares represented by this certificate have not been
registered under the Securities Act of 1933 (the "Act") and
are "restricted securities" as that term is defined in Rule
144 under the Act. The shares may not be offered for sale,
sold or otherwise transferred except pursuant to an exemption
from registration under the Act, the availability of which is
to be established to the satisfaction of GRG.
e. He/she hereby agrees that to indemnify GRG against and hold it
harmless from all losses, liabilities, costs and expenses (including
reasonable attorneys' fees) which shall arise as a result of a sale or
distribution by him of such shares or any portion thereof in violation
of the 1933 Act or the terms of this Agreement.
13. Further Assurances.
a. At the request of GRG, and without further consideration, the
Company and Shareholders will execute and deliver such additional
instruments of transfer and will take such other action as GRG
reasonably may request in order more effectively to transfer to GRG
full ownership and control of the Company.
b. At the request of one or more of the Shareholders, and without
further consideration, GRG will execute and deliver such additional
instruments and will take such other actions as Shareholders may
reasonably request in order more effectively to carry out the
transaction contemplated hereby.
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14.Expenses. Each party shall bear its own expenses incident to the preparation,
negotiation and delivery of this Agreement and the performance of its
obligations hereunder.
15. Partial Liquidation. Supplemental to this Agreement, the Company agrees to
dividend out, on a basis acceptable to it without any approval on GRG's part,
any or all of the GRG shares it receives to its Shareholders as a non-taxable
partial liquidation. Upon such dividend, the Company agrees to non longer
aggregate international long distance traffic for three (3) years.
16. Directors. All Directors of the Company whose resignations shall have been
requested by GRG not less than five (5) days before the Closing Date shall have
submitted their resignations or been removed effective as of the Closing Date.
One (1) seat on the Board of Directors will be available for the Company.
17. Other Matters.
a. No Other Agreements. All terms and conditions of this Agreement are
set forth herein, and there are no warranties, agreements or
understandings, express or implied, except those expressly set forth
herein.
b. Amendment. This Agreement may be amended only by a written
instrument executed on behalf of GRG, the Company and the Shareholders;
provided, however, that after the Closing provided for herein, GRG and
the Shareholders may amend this Agreement without the execution or
approval of the Company.
c. Notices. Any notice or other communication required or permitted to
be given hereunder shall be deemed properly given if personally
delivered or deposited in the United States mail, registered or
certified and postage prepaid, addressed to the Company or the
Shareholders at 5841 Corporate Way, Suite 104, West Palm Beach,
Florida, 34407, or at such other addresses as may from time to time be
designated by the respective parties in writing.
d. Specific Performance. The parties acknowledge that the subject
matter of this Agreement (i.e., the business and assets of the Company)
is unique and that no adequate remedy of law would be available for
breach of this Agreement. Accordingly, each party agrees that the other
parties will be entitled to an appropriate decree of specific
performance or other equitable remedies to enforce this Agreement
(without any bond or other security being required) and each party
waives the defense in any action or proceeding brought to enforce this
Agreement that there exists an adequate remedy at law.
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e. Assignment. Except as specifically permitted by the terms of this
Agreement, neither this Agreement nor any right created hereby shall be
assignable by GRG. The Company or the Shareholders (or their respective
successors in interest) without the prior written consent of all other
parties hereto, and any such attempted assignment shall be void.
Nothing in this agreement, expressed or implied, is intended to convert
upon any person, other than the parties hereto, any rights or remedies
under or by reason of this Agreement. Notwithstanding any other
provisions herein to the contrary, the right of each of the
Shareholders to receive shares of GRG's Common Stock pursuant to
Paragraph 2 hereof shall not be assignable except upon the death of
such Shareholder by testamentary disposition or the law of intestate
succession.
f. Paragraphs and Other Headings. Paragraphs or other headings
contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement.
g. Choice of Law. It is the intention of the parties that the laws of
the State of Florida should govern the validity of this Agreement, the
construction of its terms and the interpretation of the rights and
duties of the parties.
h. No Waiver. The failure of any party to insist upon strict adherence
to any term of this Agreement on any occasion shall not be considered a
waiver or deprive that party of the right thereafter to insist upon
strict adherence to that term or any other term of this Agreement. Any
waiver must be in writing.
i. Severability. In the event that any one or more of the provisions
contained in this Agreement shall for any reason be held to be invalid,
illegal or unenforceable, the same shall not affect any other
provisions of this Agreement, but this Agreement shall be construed as
if such invalid, illegal or unenforceable provisions had never been
contained herein.
j. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all shall
constitute one and the same instrument.
k. Non-Competition Agreement. The Company agrees to the
following terms governing the confidentiality of any and all
confidential information it has obtained from GRG and/or has provided
to GRG:
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1. Definitions. For purposes of this Non-Competition
Agreement, "Confidential Information" means all information of GRG or another
party whose information GRG has in its possession under obligations of
confidentiality, in whatever form transmitted, relating to business plans,
operations, systems and/or the proposed sale, purchase and use of services which
(i) is disclosed by GRG or its affiliates to Recipient or its affiliates,
indicating its confidential or proprietary nature or obviously confidential or
proprietary by its nature, or (ii) is developed during the relationship between
the parties and would give or increase the advantage of GRG's competitors over
GRG or diminish GRG's advantage over its competitors. The term "affiliate" shall
mean any person or entity controlling, controlled by or under common control
with a party.
Confidential Information shall not include any information of GRG that: (i) is
already known to the Company at time of its disclosure; (ii) is or becomes
publicly known through no wrongful act of the Company; (iii) is communicated to
a third party with express written consent of GRG; (iv) is independently
developed by the Company ; or (v) is lawfully required to be disclosed, provided
that, before making such disclosure, the Company shall immediately give GRG
written notice and cooperate in GRG's actions to assure confidential handling of
such information.
2. Ownership. All Confidential Information in whatever form
(including without limitation, information in computer software or held in
electronic storage media) shall be and remain property of GRG. All such
Confidential Information shall be returned to GRG promptly upon written request
and shall not be retained in any form by the Company.
3. Term. For a period of three (3) years from the date of
disclosure, the Company shall not disclose any Confidential Information to any
person or entity except employees of the Company and its affiliates who have a
need to know and who have been informed of the Company's obligations under this
Confidentiality Agreement. The Company shall use not less than the same degree
of care to avoid disclosure of Confidential Information as the Company uses for
its own confidential information of like importance and, at a minimum, shall
exercise reasonable care. Either party may terminate this Confidentiality
Agreement by written notice to the other. However, all rights and obligations
under this Agreement shall survive with respect to Confidential Information
disclosed prior to termination.
4. Remedies. The parties agree that, in the event of a breach
or threatened breach of the terms of this Confidentiality Agreement, GRG shall
be entitled to an injunction in addition to and not in lieu of any other legal
or equitable relief including monetary damages. The parties acknowledge that
Confidential Information is valuable and unique and that disclosure will result
in irreparable injury to GRG.
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5. Disclaimer. This Agreement and the disclosure and receipt
of Confidential Information do not create or imply (i) any agreement with
respect to the sale, purchase or pricing of any product or service; or (ii) any
right conferred, by license or otherwise, in any Confidential Information or in
any patent, trademark, service mark, copyright or other intellectual property.
18. Settlement of the Company's Debentures. The Company agrees to settle or
release GRG from all of its liabilities, including debentures in accordance with
the plan indicated in Exhibit "B".
19. The Company's Dividends. Pursuant to this plan, the Company agrees to
dividend its Shareholders as a partial liquidation in a manner prescribed by the
Company's Board of Directors. The Company shall hold, indemnify and hold GRG
harmless with respect to this distribution.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
GLOBAL RESOURCES GROUP, INC.
-------------------------------------
Christopher R. Beck
President/Chief Executive Officer
INTERNATIONAL TELEDATA CORPORATION
-------------------------------------
Ranald Stewart
Chairman
GRGL06.2
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EXHIBIT "A"
Assets
Contracts and Leads Sold
and
Assets Excluded
The assets sold comprise of a group of contracts and potential
contracts, and any manpower used to bring such contracts to maturity,
originating in 1998 which are as follows; all operating assets relating to these
assets, and are associated with the aggregation of international long distance
traffic.
CFC Contract
PointCom Carrier Relationship
PointCom Customer Relationship
CRC Contract
AT&T Carrier Relationship
Contract in China known as, Shenzen Agreement, China II,
and Related Modifications
Telex Contract
Ameritech Relationship
Qwest
Smart Talk
Intelect
JMR
PacAmtel
I.C.E. / Caricom
Orion / Patrick Flaherty & related companies
AATA
Coyote
Prinvest
RC&A
Rhinos
AIT / Interoute
Fusion
SCI / Bill Richardson
Sprint
MCIWorldcom
Realtime Media
Teleprizes and any and all associated contacts
MCG / 5OO to 1 Compression
G.D.C.
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EXHIBIT "A"
(Continued)
Assets
Contracts and Leads Sold
and
Assets Excluded
Nations Bell
Quest
NexCom
SDS
VitalNetworks
ComLink
Any and all agents of GRG, Inc.
Any and all Non-Disclosures, Confidentiality and Non-Circumvention Agreements
The assets excluded consist entirely of the assets of the SAS relationship,
contracts, rights, receivables and/or settlements associated with the Company's
long distance business assets of the like, with the exception of the monies
advanced to China One (1) which are part of AATA Agreement.
The Company is held harmless from any potential violations of the non-compete
clauses associated with the activation of SAS.
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EXHIBIT "B"
Settlement of Liabilities
The Company agrees to execute settlements for its May 31, 1999 convertible
debentures in the following manner:
From the Company's pool of shares, the Company agrees to issue up to 203,840 *
GRG shares to the convertible debenture holders on December 31, 1998. GRG agrees
to issue any additional shares as of the settlement date to cover any shortfall
to such parties in the event that the value of the stock issued using the bid
price at the settlement date if less than the debenture amount below.
* To be released in the following names
<TABLE>
<CAPTION>
Debenture Amount Names Settlement Date No. of Shares
<S> <C> <C> <C>
$24,000.00 Adrian B. Rhodes, Jr. April 1, 2000 13,440
$20,000.00 Harland L. Whichello April 1, 2000 11,200
$10,000.00 Robert S. Miller April 1, 2000 5,600
$10,000.00 Charles Dorris April 1, 2000 5,600
$100,000.00 John J. MacWilliams, Jr. May 31, 1999 56,000
$50,000.00 Stanton Moyer May 31, 1999 28,000
$50,000.00 Samuel Greenawalt May 31, 1999 28,000
$100,000.00 Tristram C. Colket, Jr. May 31, 1999 56,000
</TABLE>
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EXHIBIT "C"
Modifications
To facilitate the final settlement of the Company's Convertible Debenture
Holders, it is hereby agreed that GRG will issue 105,840 shares to the Debenture
Holders. The Company shall negotiate, on GRG's behalf, the successful return in
a manner acceptable to GRG of 200,000 free trading GRG shares held by SAS, Inc.,
or agree to return 200,000 shares to the treasury of GRG in the event of failure
to negotiate the successful return of such shares.
- --------------------------- ---------------------------
Christopher R. Beck Ranald Stewart
President/Chief Executive Officer Chairman
Global Resources Group, Inc. International TeleData Corporation
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EXHIBIT "D"
International TeleData Corporation hereby assigns, grants and transfers
all rights it has obtained under noncircumvention and noncompetition agreements
to Global Resources Group, Inc.
GRG, Inc. agrees to issue up to 200,000 shares of its common stock as
settlement for any obligations due to Mr. Robert Alexander associated with
employment contracts or promised employment contracts between Mr. Alexander and
International TeleData Corporation and/or GRG, Inc. International TeleData
Corporation agrees to use its good offices to settle all matters with Mr.
Alexander with the understanding that in 1999 the management of GRG, Inc. can
negotiate arrangements with Mr. Alexander for future services without further
reference to any past arrangements.
- --------------------------- ------------------------------
Ranald Stewart, Chairman O. Howard Davidsmeyer, Chairman
International TeleData Corporation Global Resources Group, Inc.
- ---------------------------
Robert Alexander, Individually
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4
EX-10.i.b
AGREEMENT TO PURCHASE AND SALE OF EXCLUSIVE
MARKETING RIGHTS
Agreement dated as of the 19th day of March, 1998 by and among Catalyst
Communications, Inc., a Utah corporation maintaining its business at 355
Interstate Blvd., Sarasota, FL, 34240, (the "Seller"); and Global Resources
Group, Inc., (the "Buyer"), a Nevada corporation, maintaining its business
office at 5841 Corporate Way, Suite 104, W Palm Beach, FL, 34407.
Background Information
Seller is engaged in the prepaid phone card business. Buyer desires to acquire
certain Exclusive Marketing Rights to products described within agreements
signed between Seller and RealTime Media, Inc. on July 14, 1997 and September
12, 1997, held by Seller. In addition, Buyer desires to buy all existing retail
contracts for said products. Seller is willing to sell the exclusive marketing
rights to Buyer, but only upon the terms and conditions hereinafter set forth.
Accordingly, in consideration of the premises and the mutual agreements
contained in this Agreement, Seller and Buyer hereby agree as follows:
Operative Provisions
1. Agreement to Sell and Purchase. Subject to the terms and conditions of this
Agreement, at the closing referred to in Section 2. hereof (the "Closing"), the
Buyer shall acquire all exclusive marketing rights of Seller in and to the
internationally patented products listed or described in "Exhibit A" attached
hereto.
2. Closing. The consummation of the transactions contemplated by this Agreement
shall take place at a closing (the "Closing") to be held on March 4, 1998 (the
"Closing Date"), at the office of the Seller, or at such other date or place as
the parties hereto may mutually agree; provided that either party may terminate
this Agreement immediately upon notice if the closing shall not have occurred by
7:00 p.m., Sarasota, Florida time on March 5, 1998. Buyer shall deliver to
Seller all common stock shares of Global Resources Groups, Inc. in accordance
with Section 3 (a) (1) hereof.
3. Purchase Price and Payments.
(a) The Purchase Price shall be paid in the following manner:
(1) At the Closing, the Buyer shall deliver 3,150,000 common shares
of Global Resources Group, Inc. stock, of which 3,000,000 will be
restricted common stock shares and 150,000 will be market
tradeable common stock.
4. No Assumption of Liabilities.
(a) Liabilities Not Assumed. Buyer shall not assume or be responsible
for any liability or obligation of Seller, and Seller shall continue to
be responsible for all its known and unknown liabilities and
obligations, whether arising prior to, on, or subsequent to the Closing
Date ("Retained Liabilities").
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(b) Adjustments. Buyer and Seller shall make adjustments to the Purchase
Price that may be appropriate so that Buyer does not both pay Seller for
any asset and assume Seller's liability to pay the Purchase Price
thereof to a third party.
5. Representations and Warranties by Seller and Shareholder. To induce the
Buyer to enter into this Agreement, Seller represent and warrants as
follows:
(a) Organization and Standing by Seller. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Utah; and has all requisite corporate power and authority to
perform its duties under the Contracts and to provide the Services now
being offered pursuant thereto. The Seller is licensed to do business
and/or qualified as a foreign corporation in any jurisdiction in which
it is registered to perform the Services under the Contract. Seller has
the corporate power to sell, assign, transfer, convey and deliver the
Exclusive Marketing Rights contemplated by this Agreement.
(b) Authorization. The execution, delivery and performance of this
Agreement by Seller and its consummation of the transactions
contemplated hereby have been duly authorized by Seller, which
authorization and approval constitute all authorization necessary on the
part of Seller. The execution, delivery and performance of this
Agreement do not and will not violate or result in a breach or give rise
to any fight of termination or acceleration under any provision of any
obligation, agreement, instrument or other document to which Seller is a
party or by which it is otherwise bound, or any order or judgement of
any court or governmental authority having jurisdiction over Seller or
any of its assets, and will not violate any provision of Seller's
Articles of Incorporation or By-Laws. This Agreement constitutes the
legal, valid and binding obligation of Seller, enforceable in accordance
with its terms.
(c) Compliance with Laws. Seller has materially complied with all
applicable laws and regulations of foreign, federal, state, local and
other governmental authorities and agencies which affect the aforesaid
marketing rights. Neither Seller nor Buyer has received a notice or been
made aware of any charge asserting any violation of any law with regard
to the Services provided pursuant to the marketing rights.
(d) Absence of Undisclosed Liabilities. To the best knowledge of Seller,
Seller has no liabilities or obligations of any nature, whether accrued,
absolute, contingent or otherwise, arising under or claiming an interest
in said marketing rights. Seller knows nor has any reason to know of any
basis for the assertion of any such liability or obligation.
6. Buyer's Representations and Warranties. To induce Seller to enter into this
Agreement, Buyer represents and warrants as follows:
(a) Organization and Standing of Buyer. The Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the
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State of Nevada, is properly qualified to do business in Florida as a
foreign corporation and has all requisite corporate power and authority,
and all contract rights, to own its assets and to carry on and engage in
its business affairs as now conducted.
(b) Authorization. When executed and delivered by the Buyer, this
Agreement will constitute a valid and binding obligation of the Buyer,
enforceable in accordance with its terms.
7. Further Assurances. Seller agrees that, at any time and from time to time
after the Closing Date, it will execute and deliver to Buyer such further
conveyances, assignments and other written assurances as Buyer may reasonably
request in order to vest and confirm in Buyer, or its assignee, title to the
Exclusive Marketing Rights to be transferred, assigned and conveyed hereunder.
Following the Closing Date, Seller will provide without charge such
explanations, descriptions and general information as Buyer may reasonably
request with respect to the Exclusive Marketing Rights.
8. Survival of Warranties. All representations and warranties in this Agreement
shall survive for a period of three (3) years following the Closing Date,
notwithstanding any investigation by or on behalf of any party.
9. Brokerage Fees. Seller and Buyer hereby severally represent and warrant
to each other that they have not, respectively, incurred any liability
for brokerage or finders' fees or agents' commissions in connection
with this Agreement or the transactions contemplated hereby.
10. Miscellaneous.
(a) Assignability. This Agreement shall not be assignable by either party
without the prior written consent of the other party. This Agreement
shall inure to the benefit of and be enforceable by the permitted
successors and assigns of the parties hereto and shall be binding upon
their respective permitted successors and assigns.
(b) Notices. All notices, requests, demands and other communications in
connection with this Agreement shall be made in writing (including
facsimile transmission or similar writing) addressed:
If to Seller:
Carl L. Smith
Chief Executive Officer
Catalyst Communications, Inc.
355 Interstate Blvd.
Sarasota, FL 34240
941/923-1949 - 941/921-2821 (FAX)
If to Buyer:
Chris Beck
Chief Executive Officer
Global Resources Group, Inc
5841 Corporate Way
Suite 104
W. Palm Beach, FL 34407
561/802-3111
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Each notice, request, demand or other communication shall be effective
and deemed to have been received, (a) if given by facsimile, when such
facsimile is transmitted to the facsimile number specified above and
confirmation is received, (b) if given by mail, the earlier of actual
receipt or 72 hours after such communication is deposited in the mail
with registered first class postage prepaid, addressed as aforesaid,
(c) if given by an overnight courier service of national recognition,
the business day following the business day of deposit with such
service, together with a proper airbill affixed, addressed as aforesaid
and shipping charges prepaid or prearranged, or (d) if given by any
other means, when delivered to the aforesaid address. Either party may
change the address to which notices are to be delivered to it by giving
written notice of such other address to the other party.
(d) Severability; Amendments; Captions. The invalidity or
unenforceability of any provision herein shall not offset the validity
or enforceability of any provision hereof. This Agreement shall not be
modified, amended or terminated except by written agreement of both
parties. Captions appearing in this Agreement are for convenience only
and shall not be deemed to explain, limit, or amplify the provisions
hereof.
(e) Application of Florida Law; Venue. This Agreement, and the applications
or interpretation thereof, shall be governed exclusively by its terms
and by the laws of the State of Florida. Venue for any legal action
which may be brought thereunder shall be deemed to lie in Palm Beach
County, Florida.
(f) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto the
day and year first above written.
Attest: CATALYST COMMUNICATIONS, INC.
By: Carl L Smith
Secretary Carl L. Smith
Chairman
Attest: GLOBAL RESOURCES GROUP, INC.
By: Chris Beck
Secretary Chris Beck
Chief Executive Officer
CCL98.1
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EX-10.i.c
06/22/99 Page 9 0f 10
Initials: GRGI____________ RealTIME_________
JOINT MARKETING AGREEMENT
THIS JOINT MARKETING AGREEMENT is made this ____ day of June 1999, by
and between Global Resources Group, Inc., (GRGI), a Nevada Corporation with
offices at 100 Second Avenue North, Suite 200, St. Petersburg, Florida 33701,
and RealTIME Media, Inc., (RTM), a Pennsylvania Corporation, with offices at 15
Haverford Station Road, Haverford, Pennsylvania 19041.
WHEREAS, RTM is in the business of creating, developing, marketing,
and managing programs and promotions which incorporate games, contests and
sweepstakes on the Internet, and;
WHEREAS, GRGI is in the business of creating, developing, and
marketing promotions through the Internet and electronic retail networks, and;
WHEREAS, GRGI and RTM have agreed to jointly develop and market
internet and electronic promotions with a scratch off instant win prize
component, to be called (the "Promotion"), pursuant to the terms and conditions
of this Agreement. The parties, under the terms and conditions set forth herein,
agree to distribute any profits as may be realized from sales to third parties,
as described in Distribution Schedule A, attached hereto, and any future
distribution schedules which are agreed to between the parties and incorporated
hereto in the future. Such profits, if any, as may be realized shall be from the
sale of the Promotions products through the internet and other such electronic
networks as the parties may decide are mutually advantageous.
NOW, THEREFORE, for good and sufficient consideration, GRGI and
RTM, agree to enter into this Agreement, on the terms and conditions set forth
herein, and by this reference hereby incorporate the above mentioned Recitals
into the body of this Agreement:
1. Purpose of the Joint Marketing Agreement:
This Agreement shall be for the purpose of developing and implementing
Promotions on the world wide web, online marketing operations and other
electronic transaction networks whose purpose shall be to engage in all
activities reasonably necessary to the greatest financial success that can be
achieved from the online sales of the Promotion, or related products, which may
be developed by the Parties. RTM agrees to provide technical, creative, and
computer expertise in the development and implementation of the Promotions,
through which users may learn about and purchase the services, or other Internet
promotions and to employ RTM's patent pending Scratch and Win technology to
instantly determine winners and prizes won (the "Instant-Win"). GRGI agrees to
provide RTM with artwork, written promotional materials, and other items, which
GRGI may possess and which may be required to fully develop the Promotion.
2. Instant-Win:
The Promotion product offered for sale, by GRGI, will contain a "Scratch Off"
graphical element, delivered to the purchaser's browser software at the time of
their purchase of the product. The purchaser will use their computer's mouse to
"Scratch Off" the topmost graphic image on the Promotion revealing the game
results underneath. If the purchaser receives a game with the required number of
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matching elements out of the total elements on the game, they are eligible to
win that prize.
3. Interest in the Joint Marketing Venture
A. Ownership of Assets. The parties agree (unless defined in a schedule agreed
to by the parties, in writing, and incorporated at a future date to this
Agreement) that RTM owns the assets specific to the Instant-Win technology.
This includes, but is not limited to, the host computer server, and other
hardware, software, programming language, HTML, copyrights, trademarks,
patents, patents pending, and all other intellectual property specific to
the development and implementation of any games, contests, sweepstakes, or
any other incentive based promotional programs that RTM develops in behalf
of the joint marketing Agreement. All computer software related to the
implementation of the Scratch-Off portion of the Promotions, and the
awarding or prizes, is the property of RTM.
B. Marketing of the Promotion. The parties agree that the marketing of the
promotion is the responsibility of GRGI.
C. Third Party Profits. The parties agree that GRGI and RTM will share in
the profits derived from the sale of RTM Promotions to third parties,
as specified in Distribution Schedule "A" herein.
4. Contributions to the Joint Marketing Agreement
A. By GRGI
I. GRGI agrees to provide all necessary materials which may be
required on a timely basis, including any logo artwork,
promotional text copy, photographs, and other similar
materials.
II. GRGI agrees to provide the tokens for the prizes and will
handle the conversion to points for all token prizes won in
the promotion via a designated URL to the exchange center at
RTM.
B. By RTM.
I. RTM agrees to contribute to Promotion and its operation the
staff, Internet expertise, programming experience, and any
equipment, which RTM determines, at their sole discretion, is
necessary for the development and management of the Promotion.
II. RTM agrees to utilize their Promotion technology (patent
pending), including the associated Java programming code and
necessary files, to provide the Promotion site with an
Instant-Win program..
III. RTM will invoice client and distribute any profits to GRGI
which may result from the sale of the promotional games by RTM
and GRGI according to Distribution Schedule A, attached
hereto.
C. By Both Parties:
I. Both of the parties hereto agree to exert such reasonable
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efforts as would be calculated to lead to the achievement of
the maximum sales of Promotional product. The parties agree
that they have other business pursuits independent of
Promotion and there is no obligation under the terms of this
Agreement that either party abandon such outside or other
enterprises, or place the interests of Promotion ahead of such
outside or other enterprises.
II. The Parties agree to evenly divide any and all additional
direct costs that may be incurred to further promote the sale
of the Promotional product, excluding token fulfillment, over
the Internet, such additional costs requiring the approval of
both parties.
5. Representation of the Venture
A. Management shall be by RTM. RTM management shall perform the management
of Promotion. The terms of this Agreement shall constitute written
consent for the parties to undertake the actions addressed herein. No
further consent shall be required in order for the parties to proceed
as provided for herein.
B. Representation of the Venture. It is the intention of the parties
hereto, that no representative is authorized to unilaterally commit the
venture to any further obligations not defined herein without the
written consent of both parties. Failure to respect these limitations
by either party or authority shall be cause to terminate this Agreement
by the aggrieved party after thirty (30) days notice, which shall
provide the defaulting party with the opportunity to cure any such
defaulting events.
6. Advance Payment
The parties agree that in consideration for RTM agreeing to develop and market
the promotion, GRGI will pay for the costs associated with the development,
programming and management of the Promotion. The payment for the Promotion will
be paid according to the terms and conditions as set forth in and specified in
Distribution Schedule "A" defined herein and attached hereto. These payments are
fees and development costs to RTM and are not part of the shared expenses of the
parties.
7. Late Payments
Any payment not made when due under the terms of this Agreement shall be
considered a breach of this Agreement and shall be subject to any and all
remedies available hereunder.
8. Prizes Awarded
GRGI shall be responsible for fulfillment of all token prizes, including any and
all cost, which are awarded under the Promotion program. Fulfillment of such
prizes will be handled as defined in Schedule "B" attached hereto. RealTIME
shall be responsible for fulfillment of all cash prizes according to Schedule
"B".
9. Early Termination
In the event that the parties mutually agree that the Promotion programs are
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unmarketable or, after the exertion of reasonable efforts by GRGI for a period
of one hundred eighty (180) days (or such other period mutually agreed to by the
parties) after the execution of this Agreement, then the agreement for the
specific Promotion shall immediately terminate and any hardware or software
developed for the Agreement, shall remain the property of RTM, unless otherwise
agreed to by GRGI and RTM.
10. An Exclusive Arrangement
The terms of the relationship between the parties will be mutually exclusive.
RTM agrees not to enter into any other agreement to offer Instant-Win technology
to or through any and all Virtual Internet Malls, excluding search engines or
portals, as long as GRGI maintains gross revenues of Two Hundred Fifty Thousand
($250,000) annually with Fifty Percent (50%) yearly increases in gross revenue,
and timely maintains any and all promotional token fulfillment obligations as
determined by the rules of the Promotion. GRGI agrees not to sell Instant-Win
technology, without prior approval of RTM, to any party, or through any party
other than RTM. The mutual exclusivity of this Agreement will end immediately
upon the termination of this Agreement.
11. Ownership of the Database
The parties agree that title to any customer information database will be held
jointly by GRGI and RTM and will not be licensed, sold or otherwise used
commercially in anyway whatsoever that would exploit the rights or invade the
privacy of the customer. However, the parties do agree that RTM or GRGI may use
the Database at their sole discretion to further the marketing and sales efforts
of their respective businesses. RTM shall maintain the Database at its principle
place of business and agrees that GRGI will be furnished copies of the database,
in the format utilized by RTM, on a monthly basis at no additional charge. Any
costs for custom formatting or duplication of the Database at GRGI's request
will be the sole responsibility of GRGI.
12. Record Keeping and Reporting
A. Maintenance of Records. The parties agree that throughout the duration
of this Agreement, RTM will keep and maintain full, clear and reasonable
records of the activities of the sales of products through the
Promotions.
B. Inspection and Storage of Records. These records shall be available for
inspection at all reasonable times by the parties, or their authorized
representatives. Copies of all such records and agreements shall be
maintained at RTM's principle place of business or accessible storage
facility, for two years from the date such records are created,
irrespective of any intervening expiration or termination of this
Agreement. The terms of this provision shall survive any termination or
expiration of this Agreement.
13. Indemnification of GRGI by RTM
A. It is agreed that RTM shall indemnify, defend and hold GRGI and its
principals harmless from any and all damages, losses, liabilities, suits
and expenses, including reasonable attorneys fees, which GRGI may incur
due to RTM's actions or omissions under this Agreement.
B. RTM shall maintain, throughout the operation of the Promotion: (1)
appropriate workers' compensation insurance for its employees as required
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by applicable law; (2) comprehensive general liability insurance having (i)
limits of at least One Million Dollars ($1,000,000) per occurrence with
respect to each loss or claim involving the same act, failure to act or
matter, whether made by one or more persons and regardless of the frequency
of repetition. and (ii) limits of at least Two Million Dollars ($2,000,000)
with respect to all such claims or losses; (3) a policy of errors and
omissions liability insurance applicable to the operation of the Promotion,
having (i) limits of at least One Million Dollars ($1,000,000) per
occurrence with respect to each loss or claim involving the same offending
act, failure to act, or matter whether made by one or more persons and
regardless of the frequency of repetition; (ii) limits of at least Two
Million Dollars ($2,000,000) with respect to all such claims or losses;
and, (iii) a deductible of not more than Ten Thousand Dollars ($10,000) and
insuring RTM against all liability assumed by RTM hereunder. GRGI shall be
named as an additional insured under RTM's comprehensive liability, and
errors and omissions liability insurance policies. Upon execution of this
agreement RTM shall furnish GRGI with the usual certificates attesting to
such insurance, outlining its term and limits, providing that it may not be
canceled or altered without thirty (30) days prior written notice to GRGI.
14. Indemnification of RTM by GRGI
A. It is agreed that GRGI shall indemnify, defend and hold RTM and its
principals harmless from any and all damages, losses, liabilities, suits
and expenses, including reasonable attorneys fees, which RTM may incur
due to GRGI's actions or omissions under this Agreement.
B. GRGI shall be added to RTM's insurance policy, the cost of which will be
paid by GRGI when due. RTM's insurance policy for GRGI shall maintain,
throughout the operation of the Promotion: (1) appropriate workers'
compensation insurance for its employees as required by applicable law; (2)
comprehensive general liability insurance having (i) limits of at least One
Million Dollars ($1,000,000) per occurrence with respect to each loss or
claim involving the same act, failure to act or matter, whether made by one
or more persons and regardless of the frequency of repetition. and (ii)
limits of at least Two Million Dollars ($2,000,000) with respect to all
such claims or losses; (3) a policy of errors and omissions liability
insurance applicable to the operation of the Promotion, having (i) limits
of at least One Million Dollars ($1,000,000) per occurrence with respect to
each loss or claim involving the same offending act, failure to act, or
matter whether made by one or more persons and regardless of the frequency
of repetition; (ii) limits of at least Two Million Dollars ($2,000,000)
with respect to all such claims or losses; and, (iii) a deductible of not
more than Ten Thousand Dollars ($10,000) and insuring GRGI against all
liability assumed by GRGI hereunder. RTM shall be named as an additional
insured under GRGI's comprehensive liability, and errors and omissions
liability insurance policies. Upon execution of this agreement GRGI shall
furnish RTM with the usual certificates attesting to such insurance,
outlining its term and limits, providing that it may not be canceled or
altered without thirty (30) days prior written notice to RTM.
15. Term and Termination
A. In General. This Agreement commences on the date of the last signature
and shall remain in effect for Five (5) years, unless terminated
earlier pursuant to the terms of this Agreement. However this Agreement
will stay in force as long as RTM operates Promotional sites and GRGI
continues to provide the promotion pursuant to paragraph "10" of the
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agreement. Either party may, at its option, terminate this Agreement
if, after having given the other party written notice of the other
party's failure to comply with any term of this Agreement said default
is not cured within thirty (30) days after service of said written
notification.
B. Termination Due to Insolvency. This Agreement may be terminated
immediately in the event of either party's voluntary filing for
insolvency. In the event of an involuntary filing or proceeding by or
against either party seeking relief from creditors, the non-insolvent
party may also terminate this Agreement, if such filing or action is
not cured within a period of (sixty) 60 days from such filing.
C. Procedure Upon Termination. In the event of expiration or termination of
this Agreement it is the intention of the parties hereto that the affairs
of the venture be promptly wound up and the proceeds distributed as
provided for herein.
16. Further Actions
The parties agree that upon the request of the other, it will, from time to
time, execute and deliver to such other party all such instruments and documents
of further assurance or otherwise, and will do any and all other acts and things
as may reasonably be required, to carry out the obligations of such party
hereunder and to consummate the transactions contemplated hereunder.
17. Headings
The subject headings of the paragraphs of this Agreement are included for
purposes of convenience only, and shall not affect the construction or
interpretation of any of the provisions of this Agreement.
18. Entire Agreement
This Agreement embodies the entire agreement between the parties hereto
pertaining to the subject matter hereof and supersedes all prior and
contemporaneous agreements and understandings of the parties in connection
therewith. No supplement, modification or amendment of this Agreement shall be
binding unless executed in writing by the parties hereto. The parties hereto, by
mutual consent, may amend or modify this Agreement by written instrument.
19. Waiver
No waiver of any of the provisions of this Agreement shall be deemed, or shall
constitute, a waiver of any other provision hereof nor shall such waiver
constitute a continuing waiver and no waiver shall be binding unless executed in
writing by the party making the waiver.
20. Parties in Interest
Nothing in this Agreement whether expressed or implied, is intended to confer
upon any person other than the parties hereto, their respective shareholders,
and their respective successors and assigns, any rights or remedies under or by
reason of this Agreement. All of the terms and provisions of this Agreement
shall be binding upon, and inure to the benefit of, and be enforceable by the
respective successors and permitted assigns of GRGI and RTM and their
shareholders. There are no intended third party beneficiaries.
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21. Notices
All notices, requests, demands and other communications hereunder shall be in
writing and shall be deemed to have been duly given upon the date of such
service if served personally upon the party for whom it is intended or on the
second business day after the date of the postmark if mailed, postage prepaid,
to such party at its address as herein before shown, or as otherwise designated
by such party in writing from time to time. Except as otherwise specifically
provided herein, the contents of a fax transmission shall be deemed served the
next business day from the date stamp shown on the transmission.
- ---------------------- ---------------------------------------------------------
Global Resources Group, Inc. RealTIME MEDIA Inc.
Vincent P. Murone Chuck Seidman
100 Second Avenue N., Suite 200 15 Haverford Station Road
St. Petersburg, FL 33701 Haverford, PA 19041
Tel: 727-550-2442 Tel: 610-896-9400
Fax: 727-550-2446 Fax: 610-896-9416
E-mail: [email protected] E-mail: [email protected]
- ---------------------- ---------------------------------------------------------
22. Arbitration
The parties agree that they will use their best efforts to amicably resolve any
dispute arising out of or relating to this Agreement. Any dispute that cannot be
resolved amicably shall be settled by final binding arbitration in accordance
with the rules of the American Arbitration Association and judgment upon the
award rendered by the arbitrator or arbitrators may be entered in any court
having jurisdiction thereof. Any such arbitration shall be conducted in such
place as may be mutually agreed upon by the parties. Within fifteen (15) days
after the commencement of the arbitration, each party shall select one person to
act as arbitrator, and the two arbitrators so selected shall select a third
arbitrator within ten (10) days of their appointment. Each party shall bear its
own costs and expenses and an equal share of the arbitrator's expenses and
administrative fees of arbitration.
23. Attorneys' Fees, Expenses and Costs
Any administrative expenses, expert, accounting or investigator fees, any
statutorily awarded costs and all attorneys' fees reasonably incurred by either
party in enforcing its rights under this Agreement against the other party shall
be awarded to the prevailing party either as additional damages, or as
statutorily awarded costs, and shall be paid by the defaulting party.
24. Governing Law
This Agreement shall be governed and construed under the laws of the
Commonwealth of Pennsylvania.
25. Severability
If any provision of this Agreement shall be declared invalid, by statute or
otherwise, then such provision shall be deemed automatically adjusted to conform
within the requirements for validity declared at that time and, as so adjusted,
shall be deemed a provision of this Agreement as if originally included herein.
In the event the provision invalidated cannot be so adjusted, the provision
shall he deemed deleted from this Agreement as though the provision had never
been included herein. In either case, the remaining provisions of this Agreement
shall not be affected thereby.
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26. Force Majeure
No party to this Agreement shall be liable for damages arising from a delay in
performance, or a failure to perform, caused by an accidents, fire, labor
dispute, strike, riot, war, governmental regulation, acts of God or other causes
over which the party has no control, or which the other party could not have
been reasonably expected to avoid by the exercise of due care.
27. Execution in Duplicate and by Counterparts:
This Agreement shall be executed in duplicate, each copy of which, when executed
and delivered shall be an original, but all of the copies shall together
constitute one and the same instrument The execution of this Agreement may be by
way of several counterparts, all of which together shall constitute one
agreement binding on all parties hereto. Telecopier transmission of an executed
counterpart to the remaining parties shall be sufficient to fully bind the
parties whose signatures are set forth on the transmission of said counterpart.
In the event that Telecopier executes the counterparts, then the parties to this
Agreement shall fully cooperate in arranging for ink signed original
counterparts to be circulated and distributed among the parties forthwith.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day
and year first above written.
Global Resources Group, Inc. RealTIME Media, Inc.
By: By:
Its: Its:
Date: Date:
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Distribution Schedule "A" Page 10 of 10
Project Name: Number:
I. Payment of Advance
An initial fee for development of the Promotion site, will be paid by GRGI to
RTM. Fees and payment for the site will be as follows:
1. $15,000 payable upon execution of this Agreement
2. $30,000 payable upon approval of the work schedule for the site
3. $30,000 payable upon activation and acceptance of the site
II. Distribution of Third Party Profits
Distribution of the profits from the sale of promotions to any third party shall
be according to the following formula based on thirty cents ($.30) per
impression, with a minimum of 100,000 plays per mall and a minimum of 25,000
plays per store in the mall:
1. Once the initial fee of $75,000 is paid to RTM, an equal amount of
$75,000 will be paid to GRGI out of the next revenues from the
sweepstakes as follows:
$.05 for tokens to GRGI
$.05 for prizes to RealTIME
$.20 until $75,000 received, then split between GRGI
and RealTIME.
2. A management fee of $5,000 per month will be paid to RTM regardless of
sales of the promotion and shall be due on the first of the month
beginning thirty (30) days from the completion of the development of
the promotion.
3. The retail selling price of the promotion, LESS any costs for prizes,
LESS any mutually agreed upon third party costs and charges which must
be shared, including, but not limited to sales commissions, shall yield
the GROSS PROFITS from such third party sales.
GRGI and RTM shall then divide any such GROSS PROFITS based upon 50% to
RTM and 50% to GRGI.
4. On a quarterly basis GRGI and RTM will reconcile all unused game plays
that expired or the game has concluded due to its termination date. The
unused games (known as breakage) value, based on sold cost will be
divided based upon 50% to RTM and 50% to GRGI.
III. Back-end Games
GRGI and RTM will divide back-end games based upon 50% to RTM and 50% to GRGI.
Back-end games are where the customer has purchased a game for a one-time fee
such as added membership for a group, a subscription, or acquiring a new
customer(s). The cost for each game will be $0.10 with the remaining revenue per
play split as identified.
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Schedule "B" Page 10 of 10
Fulfillment:
1. In the case of GRGI providing prepaid cards as a prize component within a
promotion, RTM will transmit an electronic PIN number, provided by GRGI, to
Purchasers to activate their products use. This PIN number will be sent to
the Purchaser by e-mail at the same time as their Product is delivered to
their Internet browser.
2. Prizes or free play requests will be fulfilled by RTM according to the
complete official rules of the promotion.
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EX-10.i.d
7
PROMISSORY NOTE
$50,000 Date: August 5, 1999
For value received, Global Resources Group, Inc., (the "Borrower"), at 100 2nd
Avenue North, Suite 200, St. Petersburg, Florida, 33701, promises to pay to the
order of Mr. F. Stanton Moyer (the "Lender"), located at 445 Caversham Road,
Bryn Mawr, PA 19010, (or at such other place as the Lender may designate in
writing) the sum of $50,000.00 with interest from August 5, 1999, on the unpaid
principle at the rate of 10% per annum.
Unpaid principle after the Due Date shown below shall accrue interest at a rate
of 18% annually until paid. The unpaid principle and accrued interest shall be
payable in monthly installments of $2,184.47, beginning on September 5, 1999,
and continuing until August 5, 2001, (the "Due Date"), at which time the
remaining unpaid principle or principle and interest shall be due in full.
All payments on this Note shall be applied first in payment of accrued interest
and any remainder in payment of principle.
If any installment is not paid within thirty (30) days after Due Date, the
remaining unpaid balance and accrued interest shall become due immediately,
(after a fifteen [15] day cure period), at the option of the Lender.
The Borrower reserves the right to prepay this Note (in whole or in part) prior
to the Due Date with a prepayment penalty of the next twelve (12) months of
scheduled interest from the date of the prepayment.
If any payment obligation under this Note is not paid when due, the Borrower
promises to pay all costs of collection, including reasonable attorney fees,
whether or not a lawsuit is commenced as part of the collection process.
If any of the following events of default occur, this Note and any other
obligations of the Borrower to the Lender, shall become due immediately, without
demand or notice:
1. the failure of the Borrower to pay the principle and any
accrued interest in full on or before the Due Date;
2. the death of the Borrower(s) or Lender(s);
3. the filing of bankruptcy proceedings involving the Borrower as
a Debtor;
4. the application for appointment of a receiver for the
Borrower;
5. the making of a general assignment for the benefit of the
Borrower's creditors;
6. the insolvency of the Borrower; or
7. the misrepresentation by the Borrower to the Lender for the
purpose of obtaining or extending credit.
If any one or more of the provisions of this Note are determined to be
unenforceable, in whole or in part, for any reason, the remaining provisions
shall remain fully operative.
All payments of principle and interest on this Note shall be paid in the legal
currency of the United States. Borrower waives presentment for payment, protest,
and notice of protest and nonpayment of this Note.
No renewal or extension of this Note, delay in enforcing any right of the Lender
under this Note, or assignment by Lender of this Note shall affect the liability
of the Borrower. All rights of the Lender under this Note are cumulative and may
be exercised concurrently or consecutively at the Lender's option.
This Note shall be construed in accordance with the laws of the State of Nevada.
Signed this day of , 1999.
Borrower:
Global Resources Group, Inc.
By: O. Howard Davidsmeyer
Chairman of the Board
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Transfer of this Warrant is subject to restriction.
Void after July 8, 2003
For 50,000 Shares
Common Stock Purchase Warrant
Global Resources Group, Inc., a Nevada corporation, (the "Company")
hereby certifies that, in consideration of the sum of $10.00, and other good and
valuable consideration, receipt and sufficiency of which are hereby
acknowledged, F. Stanton Moyer, (the "Holder") is entitled, subject to the terms
and conditions set forth below, to purchase from the Company at any time or from
time to time, on or before July 8, 2003, 50,000 fully paid and non-assessable
Shares (the "Shares") of Common Stock, $.01 par value, of the Company (the
"Common Stock") at a price of one dollar and fifty cents ($1.50) per Share (the
"Exercise Price"), and further subject to the terms and conditions set forth
herein. Transfer is subject to restrictions as set forth in Sections 2(e), 3 and
5 hereof.
1. Investment in Notes. This Warrant is issued to Holder in connection
with its Promissory Note with the Company.
The terms "Warrant" or "Warrants", as used herein, shall mean this
Warrant, and any Warrant or Warrants issued in exchange for, to replace or upon
partial exercise of this Warrant.
2. Piggyback Registration Rights. The Company agrees that:
(a) Upon written request made by Holder at any time after January 8,
2000, the Company will include the Warrant (but shall not be so obliged more
than once) in any registration statement filed under the Securities Act of 1933,
as amended (the "Act"), in conformity with the Act and rules and regulations
(the "Rules under the Act") of the Securities and Exchange Commission (the
"Commission") thereunder and will thereafter use its best efforts to cause said
registration to become effective as soon as possible so as to permit the holders
of the Warrant or of the Shares publicly to offer or sell the Warrant or the
Shares through the facilities of the over-the-counter market or any securities
exchange on which the Company's Common Stock may be listed. The Company shall
include in such registration the Shares subject to this Warrant. The Company may
include other Shares of its Common Stock in any such registration unless the
underwriter of such offering advises the Company that the inclusion of such
other Shares would adversely affect the market. Such registration relating to
the Warrant or the Shares purchased upon exercise of the Warrant which is
undertaken pursuant to a request to the Company made in accordance with this
subjection 2(a) shall be solely at the cost and expense of the Company.
(b) If at any time the Company proposes to register any Shares of its
Common Stock under the Act (other than securities being registered in connection
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with an acquisition by the Company or pursuant to an employee stock option or
similar plan), the Company will each such time give written notice of its
intention to do so to Warrant Holder and to any other record holder or holders
of the Warrant or Warrants, as the case may be, and, if the Warrants have been
exercised in whole or in part, to each holder of record of the Shares purchased
upon such exercise, and on Holder's written request given within twenty (20)
days after receipt of the notice, the Company shall use its best efforts to
cause the Warrants or Shares, the holders of which shall have requested
registration thereof, to be included with the securities registered under the
Act; provided that the Company need not register such Warrants and/or Shares as
exceed fifty percent (50%) of the total amount being registered without the
Company's consent. The Company shall give written notice to Holder and to each
such holder or holders of the proposed filing of a registration statement at
least thirty (30) days prior to such filing, and a prompt written notice of the
proposed filing of amendments to such registration statement. Any registration
of the Warrants or Shares which is undertaken pursuant to a request to the
Company made in accordance with this subsection 2(b) shall be solely at the cost
and expense of the Company.
(c) The costs and expenses to be borne by the Company for purposes of
subsection 2(a) and subsection 2(b) shall include, without limitation, all
printing expenses (including a reasonable number of prospectuses for circulation
by the selling holders of the Warrants or the Shares), all legal fees and
disbursements of the Company's counsel, Blue Sky expenses, accounting fees of
the Company, and filing fees, and all accountable expenses of the underwriters'
commissions or similar charges attributable to the Warrants or Shares owned by
the holders thereof, and, notwithstanding the foregoing, the Company's
obligation to register the Warrants or Shares pursuant to this Section 2 shall
be limited such that: (i) the Company shall have no obligation to include Shares
in a registration statement under the Act to the extent that in the opinion of
Counsel satisfactory to the holder of such Shares is then eligible to resell
such Shares under Rule 144 under; (ii) the Company shall be required to register
securities only if and to the extent that holders seeking to register furnish
the Company with a written statement of their intention to sell and such other
information as the Company may reasonably request; (iii) the Company's
obligation to register the Warrants or Shares pursuant to subsections 2(a) or
2(b) shall expire after the five (5) years following the date the Warrants
become exercisable or the Company shall have purchased the Warrants or the
Shares in respect of which registration was requested, pursuant to subsection
2(e) below; and (iv) the Company shall not be obligated to keep any registration
statement filed in accordance with this Section 2 effective for more than ninety
(90) days.
(d) To the fullest extent permitted by law, the Company agrees to
indemnify each holder, and each underwriter, of the Warrants or Shares being
sold by any such holder pursuant to this Section 2 (and any person who controls
such holder or underwriter within the meaning of Section 15 of the Act) against
all claims, losses, damages, liabilities and expenses under the Act, the
Securities and Exchange Act of 1934, as amended, or other Federal or State
statutory law or regulation, at common law or otherwise, insofar as such losses,
claims, damages, liabilities and expenses (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of
material fact contained in any registration statement filed pursuant to this
Section 2 or in any amendment thereof, or in any preliminary prospectus or
prospector relating thereto, or in any amendment thereof or supplement thereto,
or any omission or alleged omission to state a material fact required thereto,
or in any amendment thereof or supplement thereto, or any omission or alleged
omission to state a material fact required to be stated therein or necessary to
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make the statements therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that the Company shall not be
liable to any such holder or underwriter in respect of any claims, losses,
damages, liabilities or expenses resulting from any untrue statement or alleged
untrue statement or omission or alleged omission made in reliance upon and in
conformity with written information furnished to the Company by such holder or
underwriter specifically for use in connection with such registration statement
and prospectus; and each holder and underwriter agrees to indemnify, to the
fullest extent permitted by law, the Company, each person, if any, who controls
the Company within the meaning of said Section 15, and each Director and Officer
of the Company who signs the registration statement in question, against claims,
losses, damages, liabilities and expenses which they may incur by reason of any
such untrue statement or alleged untrue statement or omission or alleged
omission made in reliance upon and in conformity with written information
furnished to the Company by such holder or underwriter, as the case may be,
specifically for use in connection with such registration statement prospectus.
(e) The holder agrees that this Warrant and any Shares issued upon
exercise of this Warrant will be held subject to any restrictions on resales
thereof by reason of application of the Act and that the following legend may be
affixed to this Warrant or such Shares:
THE SECURITIES REPRESENTED HEREBY MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED WITHOUT COMPLIANCE WITH THE REGISTRATION OR QUALIFICATION
PROVISIONS OF APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT AN EXEMPTION
THEREFROM IS AVAILABLE.
3. Exercise of Warrant; Partial Exercise. This Warrant may be exercised for the
full number of Shares within the time called for hereby by the holder
surrendering this Warrant, properly endorsed, to the Company at its principal
office, accompanied by payment, in cash or by certified or official bank check,
payable to the order of the Company, of the sum obtained by multiplying (a) the
number of Shares called for on the face of this Warrant (or such applicable
number of Shares as may result from an adjustment pursuant to Section 7 hereof)
by (b) the Exercise Price.
Upon each exercise of this Warrant, the holder or holders of this
Warrant shall be deemed to be the holder or holders of record of Shares issuable
upon such exercise, notwithstanding that the stock transfer books of the Company
shall then be closed or certificates representing such Shares shall not have
actually been delivered to said holder or holders. As soon as practicable after
each such exercise of this Warrant, the Company shall issue and deliver to the
holder or holders of such Shares a certificate or certificates for such Shares
issuable upon such exercise registered in the name of the holder or holders or
its designee.
This Warrant may be exercised for less than the full number of Shares
within the time called for hereby by such a surrender accompanied by payment of
the Exercise Price for the number of Shares in respect of which it is being
exercised. Upon any such partial exercise, the Company at its expense will
forthwith issue to the holder hereof a new Warrant or Warrants of like tenor
calling in the aggregate on their face for the number of Shares for which this
Warrant shall not have been exercised, issued in the name of the holder hereof
or as such holder (upon payment by such holder of any applicable transfer taxes)
may direct, subject however, to subsection 2(e) hereof; provided, that, in case
this Warrant shall not have been registered under the Act as then in effect (or
any similar statute then in effect), the Company shall not be obligated to issue
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and deliver any Warrant or Warrants to or in the name of any person other than
the holder of this Warrant unless, in the opinion of counsel satisfactory to the
Company, such Warrant or Warrants may be so issued and delivered without
registration under such Act and qualifications under applicable Blue Sky or
other State securities laws.
4. Reservation of Shares Issuable on Exercise of Warrant. The Company will at
all times reserve and keep available, solely for issuance and delivery upon the
exercise of this Warrant, the Shares and any other stock, securities and
property as from time to time shall be receivable upon the exercise of this
Warrant.
5. Adjustments. This Warrant is subject to the following terms and
conditions during the term thereof:
(a) Stock Distributions and Splits. In case (i) the outstanding Shares
of the Common Stock shall be subdivided into a greater number of Shares, (ii) a
dividend in Common Stock shall be paid in respect of the Common Stock or (iii)
there shall be any other distribution on the Common Stock payable otherwise than
out of earnings, retained earnings or earned surplus, the Exercise Price per
share in effect immediately prior to such subdivision or at the record date of
such dividend or distribution shall simultaneously with the effectiveness of
such subdivision or immediately after the record date of such dividend or
distribution be proportionately reduced; and, conversely, if outstanding Shares
of Common Stock shall be combined into a smaller number of Shares thereof, the
Exercise Price per Share in effect immediately prior to such combination be
proportionately increased. If there shall be a distribution described in
subparagraph (iii) of this subsection 5(e), the Exercise Price per Share in
effect immediately prior to such distribution shall be reduced by an amount
equal to the fair value thereof per Share of Common Stock. Any dividend paid or
distributed on the Common Stock in stock of any other class or securities
convertible into Shares of Common Stock shall be treated as a dividend paid in
Common Stock to the extent that Shares of Common Stock are issuable upon the
conversion thereof.
(b) Adjustment of Underlying Shares. Whenever the Exercise Price per
Share is adjusted as provided in subsection 5(a) above, the number of Shares
purchasable upon exercise of the Warrant immediately prior to such adjustment
shall be adjusted, effective simultaneously with such adjustment, to equal the
product obtained (calculated to the nearest full Share) by multiplying such
number of Shares by a fraction, the numerator of which is the Exercise Price per
Share in effect immediately prior to such adjustment and the denominator of
which is the Exercise Price per Share in effect upon such adjustment, which
adjusted number of Shares shall thereupon be the number of Shares purchasable
upon exercise of the Warrant until adjusted as provided herein.
(c) Notice of Change of Exercise Price. Whenever the Company shall be
required to give effect to an adjustment in the Exercise Price per Share or the
kind or amount of securities purchasable upon exercise of the Warrants shall be
adjusted pursuant to any of the provisions hereof, the Company shall forthwith
thereafter cause to be sent to each holder of the Warrants a certificate setting
forth the adjustments in the Exercise Price per Share and/or in said kind or
amount or securities, and also setting forth in detail the facts requiring such
adjustments. In addition, the Company at its expense shall, within ninety (90)
calendar days following the end of each of its fiscal years during the term
hereof, and promptly upon reasonable request of any holder of the Warrant in
connection with the exercise from time to time of all or any portion of the
Warrant, cause independent certified public accountants of recognized standing
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selected by the Company to compute any such adjustment in accordance with the
terms of the Warrant and prepare a certificate setting forth such adjustment and
showing in detail the facts upon which such adjustment is based.
(d) Notice of Record Date. In the event of (i) any taking by the
Company of a record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend (other
than a cash dividend payable out of earnings, retained earnings or earned
surplus of the Company) or other distribution, or any right to subscribe for,
purchase or otherwise acquire any Shares of stock of any class or any other
securities or property, or to receive any other right, or (ii) any capital
reorganization of the Company, or any reclassification or recapitalization of
the capital stock of the Company, or any transfer of all or substantially all of
the assets of the Company or consolidation or merger of the Company with or into
any other person, or (iii) any voluntary or involuntary dissolution or
liquidation of the Company, then and in each such event the Company will mail or
cause to be mailed to each holder of the Warrant a notice specifying not only
the date on which any such record is to be taken for the purpose of such
dividend, distribution or right, and stating the amount and character of such
dividend, distribution, or right, but also the date on which any such
reorganization, reclassification, recapitalization, transfer, consolidation,
merger, dissolution, liquidation or winding-up is to take place, and the time,
if any, as of which the holders Shares of Common Stock for securities or other
property deliverable upon such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution, liquidation or
winding-up. Such notice shall be mailed at least thirty (30) calendar days prior
to the proposed record date therein specified.
6. Notices. All notices and other communications of the Company to the holder or
holders of this Warrant or Warrants, as the case may be, shall be mailed by
first class registered or certified mail, postage prepaid, to the last address
or addresses furnished to the Company in writing by Warrant Holder and the
holder or holders thereof.
7. Change; Waiver. Neither this Warrant nor any term hereof may be changed,
waived, discharged or terminated orally but only by an instrument in writing
signed by the party against which enforcement of the change, waiver, discharge
or termination is sought.
8. Choice of Law. This Warrant shall be construed in accordance with the laws of
the State of Nevada without consideration of any principles of conflict of law.
Dated:
GLOBAL RESOURCES GROUP, INC.
By:
O. Howard Davidsmeyer, Chairman
Attest:
GRGL38.1
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EX-10.i.e
7
PROMISSORY NOTE
$150,000 Date: August 15, 1999
For value received, Global Resources Group, Inc., (the "Borrower"), at 100 2nd
Avenue North, Suite 200, St. Petersburg, Florida, 33701, promises to pay to the
order of Mr. John J. MacWilliams (the "Lender"), located at PO Box 4157, Old
Lyme, CT 06371, (or at such other place as the Lender may designate in writing)
the sum of $150,000.00 with interest from August 15, 1999, on the unpaid
principle at the rate of 10% per annum.
Unpaid principle after the Due Date shown below shall accrue interest at a rate
of 18% annually until paid. The unpaid principle and accrued interest shall be
payable in monthly installments of $6,553.40, beginning on September 15, 1999,
and continuing until August 15, 2001, (the "Due Date"), at which time the
remaining unpaid principle or principle and interest shall be due in full.
All payments on this Note shall be applied first in payment of accrued interest
and any remainder in payment of principle.
If any installment is not paid within thirty (30) days after Due Date, the
remaining unpaid balance and accrued interest shall become due immediately,
(after a fifteen [15] day cure period), at the option of the Lender.
The Borrower reserves the right to prepay this Note (in whole or in part) prior
to the Due Date with a prepayment penalty of the next twelve (12) months of
scheduled interest from the date of the prepayment.
If any payment obligation under this Note is not paid when due, the Borrower
promises to pay all costs of collection, including reasonable attorney fees,
whether or not a lawsuit is commenced as part of the collection process.
If any of the following events of default occur, this Note and any other
obligations of the Borrower to the Lender, shall become due immediately, without
demand or notice:
1. the failure of the Borrower to pay the principle and any
accrued interest in full on or before the Due Date;
2. the death of the Borrower(s) or Lender(s);
3. the filing of bankruptcy proceedings involving the Borrower as
a Debtor;
4. the application for appointment of a receiver for the
Borrower;
5. the making of a general assignment for the benefit of the
Borrower's creditors;
6. the insolvency of the Borrower; or
7. the misrepresentation by the Borrower to the Lender for the
purpose of obtaining or extending credit.
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If any one or more of the provisions of this Note are determined to be
unenforceable, in whole or in part, for any reason, the remaining provisions
shall remain fully operative.
All payments of principle and interest on this Note shall be paid in the legal
currency of the United States. Borrower waives presentment for payment, protest,
and notice of protest and nonpayment of this Note.
No renewal or extension of this Note, delay in enforcing any right of the Lender
under this Note, or assignment by Lender of this Note shall affect the liability
of the Borrower. All rights of the Lender under this Note are cumulative and may
be exercised concurrently or consecutively at the Lender's option.
This Note shall be construed in accordance with the laws of the State of Nevada.
Signed this day of , 1999.
Borrower:
Global Resources Group, Inc.
By: O. Howard Davidsmeyer
Chairman of the Board
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Transfer of this Warrant is subject to restriction.
Void after July 8, 2003
For 150,000 Shares
Common Stock Purchase Warrant
Global Resources Group, Inc., a Nevada corporation, (the "Company")
hereby certifies that, in consideration of the sum of $10.00, and other good and
valuable consideration, receipt and sufficiency of which are hereby
acknowledged, Mr. John J. MacWilliams, (the "Holder") is entitled, subject to
the terms and conditions set forth below, to purchase from the Company at any
time or from time to time, on or before July 8, 2003, 150,000 fully paid and
non-assessable Shares (the "Shares") of Common Stock, $.01 par value, of the
Company (the "Common Stock") at a price of one dollar and fifty cents ($1.50)
per Share (the "Exercise Price"), and further subject to the terms and
conditions set forth herein. Transfer is subject to restrictions as set forth in
Sections 2(e), 3 and 5 hereof.
1. Investment in Notes. This Warrant is issued to Holder in connection
with its Promissory Note with the Company.
The terms "Warrant" or "Warrants", as used herein, shall mean this
Warrant, and any Warrant or Warrants issued in exchange for, to replace or upon
partial exercise of this Warrant.
2. Piggyback Registration Rights. The Company agrees that:
(a) Upon written request made by Holder at any time after January 8,
2000, the Company will include the Warrant (but shall not be so obliged more
than once) in any registration statement filed under the Securities Act of 1933,
as amended (the "Act"), in conformity with the Act and rules and regulations
(the "Rules under the Act") of the Securities and Exchange Commission (the
"Commission") thereunder and will thereafter use its best efforts to cause said
registration to become effective as soon as possible so as to permit the holders
of the Warrant or of the Shares publicly to offer or sell the Warrant or the
Shares through the facilities of the over-the-counter market or any securities
exchange on which the Company's Common Stock may be listed. The Company shall
include in such registration the Shares subject to this Warrant. The Company may
include other Shares of its Common Stock in any such registration unless the
underwriter of such offering advises the Company that the inclusion of such
other Shares would adversely affect the market. Such registration relating to
the Warrant or the Shares purchased upon exercise of the Warrant which is
undertaken pursuant to a request to the Company made in accordance with this
subjection 2(a) shall be solely at the cost and expense of the Company.
(b) If at any time the Company proposes to register any Shares of its
Common Stock under the Act (other than securities being registered in connection
with an acquisition by the Company or pursuant to an employee stock option or
similar plan), the Company will each such time give written notice of its
intention to do so to Warrant Holder and to any other record holder or holders
of the Warrant or Warrants, as the case may be, and, if the Warrants have been
exercised in whole or in part, to each holder of record of the Shares purchased
upon such exercise, and on Holder's written request given within twenty (20)
days after receipt of the notice, the Company shall use its best efforts to
cause the Warrants or Shares, the holders of which shall have requested
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registration thereof, to be included with the securities registered under the
Act; provided that the Company need not register such Warrants and/or Shares as
exceed fifty percent (50%) of the total amount being registered without the
Company's consent. The Company shall give written notice to Holder and to each
such holder or holders of the proposed filing of a registration statement at
least thirty (30) days prior to such filing, and a prompt written notice of the
proposed filing of amendments to such registration statement. Any registration
of the Warrants or Shares which is undertaken pursuant to a request to the
Company made in accordance with this subsection 2(b) shall be solely at the cost
and expense of the Company.
(c) The costs and expenses to be borne by the Company for purposes of
subsection 2(a) and subsection 2(b) shall include, without limitation, all
printing expenses (including a reasonable number of prospectuses for circulation
by the selling holders of the Warrants or the Shares), all legal fees and
disbursements of the Company's counsel, Blue Sky expenses, accounting fees of
the Company, and filing fees, and all accountable expenses of the underwriters'
commissions or similar charges attributable to the Warrants or Shares owned by
the holders thereof, and, notwithstanding the foregoing, the Company's
obligation to register the Warrants or Shares pursuant to this Section 2 shall
be limited such that: (i) the Company shall have no obligation to include Shares
in a registration statement under the Act to the extent that in the opinion of
Counsel satisfactory to the holder of such Shares is then eligible to resell
such Shares under Rule 144 under; (ii) the Company shall be required to register
securities only if and to the extent that holders seeking to register furnish
the Company with a written statement of their intention to sell and such other
information as the Company may reasonably request; (iii) the Company's
obligation to register the Warrants or Shares pursuant to subsections 2(a) or
2(b) shall expire after the five (5) years following the date the Warrants
become exercisable or the Company shall have purchased the Warrants or the
Shares in respect of which registration was requested, pursuant to subsection
2(e) below; and (iv) the Company shall not be obligated to keep any registration
statement filed in accordance with this Section 2 effective for more than ninety
(90) days.
(d) To the fullest extent permitted by law, the Company agrees to
indemnify each holder, and each underwriter, of the Warrants or Shares being
sold by any such holder pursuant to this Section 2 (and any person who controls
such holder or underwriter within the meaning of Section 15 of the Act) against
all claims, losses, damages, liabilities and expenses under the Act, the
Securities and Exchange Act of 1934, as amended, or other Federal or State
statutory law or regulation, at common law or otherwise, insofar as such losses,
claims, damages, liabilities and expenses (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of
material fact contained in any registration statement filed pursuant to this
Section 2 or in any amendment thereof, or in any preliminary prospectus or
prospector relating thereto, or in any amendment thereof or supplement thereto,
or any omission or alleged omission to state a material fact required thereto,
or in any amendment thereof or supplement thereto, or any omission or alleged
omission to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that the Company shall not be
liable to any such holder or underwriter in respect of any claims, losses,
damages, liabilities or expenses resulting from any untrue statement or alleged
untrue statement or omission or alleged omission made in reliance upon and in
conformity with written information furnished to the Company by such holder or
underwriter specifically for use in connection with such registration statement
and prospectus; and each holder and underwriter agrees to indemnify, to the
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fullest extent permitted by law, the Company, each person, if any, who controls
the Company within the meaning of said Section 15, and each Director and Officer
of the Company who signs the registration statement in question, against claims,
losses, damages, liabilities and expenses which they may incur by reason of any
such untrue statement or alleged untrue statement or omission or alleged
omission made in reliance upon and in conformity with written information
furnished to the Company by such holder or underwriter, as the case may be,
specifically for use in connection with such registration statement prospectus.
(e) The holder agrees that this Warrant and any Shares issued upon
exercise of this Warrant will be held subject to any restrictions on resales
thereof by reason of application of the Act and that the following legend may be
affixed to this Warrant or such Shares:
THE SECURITIES REPRESENTED HEREBY MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED WITHOUT COMPLIANCE WITH THE REGISTRATION OR QUALIFICATION
PROVISIONS OF APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT AN EXEMPTION
THEREFROM IS AVAILABLE.
3. Exercise of Warrant; Partial Exercise. This Warrant may be exercised for the
full number of Shares within the time called for hereby by the holder
surrendering this Warrant, properly endorsed, to the Company at its principal
office, accompanied by payment, in cash or by certified or official bank check,
payable to the order of the Company, of the sum obtained by multiplying (a) the
number of Shares called for on the face of this Warrant (or such applicable
number of Shares as may result from an adjustment pursuant to Section 7 hereof)
by (b) the Exercise Price.
Upon each exercise of this Warrant, the holder or holders of this
Warrant shall be deemed to be the holder or holders of record of Shares issuable
upon such exercise, notwithstanding that the stock transfer books of the Company
shall then be closed or certificates representing such Shares shall not have
actually been delivered to said holder or holders. As soon as practicable after
each such exercise of this Warrant, the Company shall issue and deliver to the
holder or holders of such Shares a certificate or certificates for such Shares
issuable upon such exercise registered in the name of the holder or holders or
its designee.
This Warrant may be exercised for less than the full number of Shares
within the time called for hereby by such a surrender accompanied by payment of
the Exercise Price for the number of Shares in respect of which it is being
exercised. Upon any such partial exercise, the Company at its expense will
forthwith issue to the holder hereof a new Warrant or Warrants of like tenor
calling in the aggregate on their face for the number of Shares for which this
Warrant shall not have been exercised, issued in the name of the holder hereof
or as such holder (upon payment by such holder of any applicable transfer taxes)
may direct, subject however, to subsection 2(e) hereof; provided, that, in case
this Warrant shall not have been registered under the Act as then in effect (or
any similar statute then in effect), the Company shall not be obligated to issue
and deliver any Warrant or Warrants to or in the name of any person other than
the holder of this Warrant unless, in the opinion of counsel satisfactory to the
Company, such Warrant or Warrants may be so issued and delivered without
registration under such Act and qualifications under applicable Blue Sky or
other State securities laws.
4. Reservation of Shares Issuable on Exercise of Warrant. The Company will at
all times reserve and keep available, solely for issuance and delivery upon the
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exercise of this Warrant, the Shares and any other stock, securities and
property as from time to time shall be receivable upon the exercise of this
Warrant.
5. Adjustments. This Warrant is subject to the following terms and conditions
during the term thereof:
(a) Stock Distributions and Splits. In case (i) the outstanding Shares
of the Common Stock shall be subdivided into a greater number of Shares, (ii) a
dividend in Common Stock shall be paid in respect of the Common Stock or (iii)
there shall be any other distribution on the Common Stock payable otherwise than
out of earnings, retained earnings or earned surplus, the Exercise Price per
share in effect immediately prior to such subdivision or at the record date of
such dividend or distribution shall simultaneously with the effectiveness of
such subdivision or immediately after the record date of such dividend or
distribution be proportionately reduced; and, conversely, if outstanding Shares
of Common Stock shall be combined into a smaller number of Shares thereof, the
Exercise Price per Share in effect immediately prior to such combination be
proportionately increased. If there shall be a distribution described in
subparagraph (iii) of this subsection 5(e), the Exercise Price per Share in
effect immediately prior to such distribution shall be reduced by an amount
equal to the fair value thereof per Share of Common Stock. Any dividend paid or
distributed on the Common Stock in stock of any other class or securities
convertible into Shares of Common Stock shall be treated as a dividend paid in
Common Stock to the extent that Shares of Common Stock are issuable upon the
conversion thereof.
(b) Adjustment of Underlying Shares. Whenever the Exercise Price per
Share is adjusted as provided in subsection 5(a) above, the number of Shares
purchasable upon exercise of the Warrant immediately prior to such adjustment
shall be adjusted, effective simultaneously with such adjustment, to equal the
product obtained (calculated to the nearest full Share) by multiplying such
number of Shares by a fraction, the numerator of which is the Exercise Price per
Share in effect immediately prior to such adjustment and the denominator of
which is the Exercise Price per Share in effect upon such adjustment, which
adjusted number of Shares shall thereupon be the number of Shares purchasable
upon exercise of the Warrant until adjusted as provided herein.
(c) Notice of Change of Exercise Price. Whenever the Company shall be
required to give effect to an adjustment in the Exercise Price per Share or the
kind or amount of securities purchasable upon exercise of the Warrants shall be
adjusted pursuant to any of the provisions hereof, the Company shall forthwith
thereafter cause to be sent to each holder of the Warrants a certificate setting
forth the adjustments in the Exercise Price per Share and/or in said kind or
amount or securities, and also setting forth in detail the facts requiring such
adjustments. In addition, the Company at its expense shall, within ninety (90)
calendar days following the end of each of its fiscal years during the term
hereof, and promptly upon reasonable request of any holder of the Warrant in
connection with the exercise from time to time of all or any portion of the
Warrant, cause independent certified public accountants of recognized standing
selected by the Company to compute any such adjustment in accordance with the
terms of the Warrant and prepare a certificate setting forth such adjustment and
showing in detail the facts upon which such adjustment is based.
(d) Notice of Record Date. In the event of (i) any taking by the
Company of a record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend (other
than a cash dividend payable out of earnings, retained earnings or earned
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surplus of the Company) or other distribution, or any right to subscribe for,
purchase or otherwise acquire any Shares of stock of any class or any other
securities or property, or to receive any other right, or (ii) any capital
reorganization of the Company, or any reclassification or recapitalization of
the capital stock of the Company, or any transfer of all or substantially all of
the assets of the Company or consolidation or merger of the Company with or into
any other person, or (iii) any voluntary or involuntary dissolution or
liquidation of the Company, then and in each such event the Company will mail or
cause to be mailed to each holder of the Warrant a notice specifying not only
the date on which any such record is to be taken for the purpose of such
dividend, distribution or right, and stating the amount and character of such
dividend, distribution, or right, but also the date on which any such
reorganization, reclassification, recapitalization, transfer, consolidation,
merger, dissolution, liquidation or winding-up is to take place, and the time,
if any, as of which the holders Shares of Common Stock for securities or other
property deliverable upon such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution, liquidation or
winding-up. Such notice shall be mailed at least thirty (30) calendar days prior
to the proposed record date therein specified.
6. Notices. All notices and other communications of the Company to the holder or
holders of this Warrant or Warrants, as the case may be, shall be mailed by
first class registered or certified mail, postage prepaid, to the last address
or addresses furnished to the Company in writing by Warrant Holder and the
holder or holders thereof.
7. Change; Waiver. Neither this Warrant nor any term hereof may be changed,
waived, discharged or terminated orally but only by an instrument in writing
signed by the party against which enforcement of the change, waiver, discharge
or termination is sought.
8. Choice of Law. This Warrant shall be construed in accordance with the laws of
the State of Nevada without consideration of any principles of conflict of law.
Dated:
GLOBAL RESOURCES GROUP, INC.
By:
O. Howard Davidsmeyer, Chairman
Attest:
GRGL38.1
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EX-10.i.g
7
PROMISSORY NOTE
$75,000 Date: October 5, 1999
For value received, Global Resources Group, Inc., (the "Borrower"), at 100 2nd
Avenue North, Suite 200, St. Petersburg, Florida, 33701, promises to pay to the
order of Mr. F. Stanton Moyer (the "Lender"), located at 445 Caversham Road,
Bryn Mawr, PA 19010, (or at such other place as the Lender may designate in
writing) the sum of $75,000.00 with interest from October 5, 1999, on the unpaid
principle at the rate of 10% per annum.
Unpaid principle after the Due Date shown below shall accrue interest at a rate
of 18% annually until paid. The unpaid principle and accrued interest shall be
payable in monthly installments of $3,276.70, beginning on November 5, 1999, and
continuing until October 5, 2001, (the "Due Date"), at which time the remaining
unpaid principle or principle and interest shall be due in full.
All payments on this Note shall be applied first in payment of accrued interest
and any remainder in payment of principle.
If any installment is not paid within thirty (30) days after Due Date, the
remaining unpaid balance and accrued interest shall become due immediately,
(after a fifteen [15] day cure period), at the option of the Lender.
The Borrower reserves the right to prepay this Note (in whole or in part) prior
to the Due Date with a prepayment penalty of the next twelve (12) months of
scheduled interest from the date of the prepayment.
If any payment obligation under this Note is not paid when due, the Borrower
promises to pay all costs of collection, including reasonable attorney fees,
whether or not a lawsuit is commenced as part of the collection process.
If any of the following events of default occur, this Note and any other
obligations of the Borrower to the Lender, shall become due immediately, without
demand or notice:
1. the failure of the Borrower to pay the principle and any
accrued interest in full on or before the Due Date;
2. the death of the Borrower(s) or Lender(s);
3. the filing of bankruptcy proceedings involving the Borrower
as a Debtor;
4. the application for appointment of a receiver for the
Borrower;
5. the making of a general assignment for the benefit of the
Borrower's creditors;
6. the insolvency of the Borrower; or
7. the misrepresentation by the Borrower to the Lender for the
purpose of obtaining or extending credit.
If any one or more of the provisions of this Note are determined to be
unenforceable, in whole or in part, for any reason, the remaining provisions
shall remain fully operative.
All payments of principle and interest on this Note shall be paid in the legal
currency of the United States. Borrower waives presentment for payment, protest,
and notice of protest and nonpayment of this Note.
No renewal or extension of this Note, delay in enforcing any right of the Lender
under this Note, or assignment by Lender of this Note shall affect the liability
of the Borrower. All rights of the Lender under this Note are cumulative and may
be exercised concurrently or consecutively at the Lender's option.
This Note shall be construed in accordance with the laws of the State of Nevada.
Signed this day of , 1999.
Borrower:
Global Resources Group, Inc.
By: O. Howard Davidsmeyer
Chairman of the Board
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<PAGE>
Transfer of this Warrant is subject to
restriction.
Void after July 8, 2003
For 75,000 Shares
Common Stock Purchase Warrant
Global Resources Group, Inc., a Nevada corporation, (the "Company")
hereby certifies that, in consideration of the sum of $10.00, and other good and
valuable consideration, receipt and sufficiency of which are hereby
acknowledged, F. Stanton Moyer, (the "Holder") is entitled, subject to the terms
and conditions set forth below, to purchase from the Company at any time or from
time to time, on or before July 8, 2003, 75,000 fully paid and non-assessable
Shares (the "Shares") of Common Stock, $.01 par value, of the Company (the
"Common Stock") at a price of one dollar and fifty cents ($1.50) per Share (the
"Exercise Price"), and further subject to the terms and conditions set forth
herein. Transfer is subject to restrictions as set forth in Sections 2(e), 3 and
5 hereof.
1. Investment in Notes. This Warrant is issued to Holder in connection
with its Promissory Note with the Company.
The terms "Warrant" or "Warrants", as used herein, shall mean this
Warrant, and any Warrant or Warrants issued in exchange for, to replace or upon
partial exercise of this Warrant.
2. Piggyback Registration Rights. The Company agrees that:
(a) Upon written request made by Holder at any time after January 8,
2000, the Company will include the Warrant (but shall not be so obliged more
than once) in any registration statement filed under the Securities Act of 1933,
as amended (the "Act"), in conformity with the Act and rules and regulations
(the "Rules under the Act") of the Securities and Exchange Commission (the
"Commission") thereunder and will thereafter use its best efforts to cause said
registration to become effective as soon as possible so as to permit the holders
of the Warrant or of the Shares publicly to offer or sell the Warrant or the
Shares through the facilities of the over-the-counter market or any securities
exchange on which the Company's Common Stock may be listed. The Company shall
include in such registration the Shares subject to this Warrant. The Company may
include other Shares of its Common Stock in any such registration unless the
underwriter of such offering advises the Company that the inclusion of such
other Shares would adversely affect the market. Such registration relating to
the Warrant or the Shares purchased upon exercise of the Warrant which is
undertaken pursuant to a request to the Company made in accordance with this
subjection 2(a) shall be solely at the cost and expense of the Company.
(b) If at any time the Company proposes to register any Shares of its
Common Stock under the Act (other than securities being registered in connection
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with an acquisition by the Company or pursuant to an employee stock option or
similar plan), the Company will each such time give written notice of its
intention to do so to Warrant Holder and to any other record holder or holders
of the Warrant or Warrants, as the case may be, and, if the Warrants have been
exercised in whole or in part, to each holder of record of the Shares purchased
upon such exercise, and on Holder's written request given within twenty (20)
days after receipt of the notice, the Company shall use its best efforts to
cause the Warrants or Shares, the holders of which shall have requested
registration thereof, to be included with the securities registered under the
Act; provided that the Company need not register such Warrants and/or Shares as
exceed fifty percent (50%) of the total amount being registered without the
Company's consent. The Company shall give written notice to Holder and to each
such holder or holders of the proposed filing of a registration statement at
least thirty (30) days prior to such filing, and a prompt written notice of the
proposed filing of amendments to such registration statement. Any registration
of the Warrants or Shares which is undertaken pursuant to a request to the
Company made in accordance with this subsection 2(b) shall be solely at the cost
and expense of the Company.
(c) The costs and expenses to be borne by the Company for purposes of
subsection 2(a) and subsection 2(b) shall include, without limitation, all
printing expenses (including a reasonable number of prospectuses for circulation
by the selling holders of the Warrants or the Shares), all legal fees and
disbursements of the Company's counsel, Blue Sky expenses, accounting fees of
the Company, and filing fees, and all accountable expenses of the underwriters'
commissions or similar charges attributable to the Warrants or Shares owned by
the holders thereof, and, notwithstanding the foregoing, the Company's
obligation to register the Warrants or Shares pursuant to this Section 2 shall
be limited such that: (i) the Company shall have no obligation to include Shares
in a registration statement under the Act to the extent that in the opinion of
Counsel satisfactory to the holder of such Shares is then eligible to resell
such Shares under Rule 144 under; (ii) the Company shall be required to register
securities only if and to the extent that holders seeking to register furnish
the Company with a written statement of their intention to sell and such other
information as the Company may reasonably request; (iii) the Company's
obligation to register the Warrants or Shares pursuant to subsections 2(a) or
2(b) shall expire after the five (5) years following the date the Warrants
become exercisable or the Company shall have purchased the Warrants or the
Shares in respect of which registration was requested, pursuant to subsection
2(e) below; and (iv) the Company shall not be obligated to keep any registration
statement filed in accordance with this Section 2 effective for more than ninety
(90) days.
(d) To the fullest extent permitted by law, the Company agrees to
indemnify each holder, and each underwriter, of the Warrants or Shares being
sold by any such holder pursuant to this Section 2 (and any person who controls
such holder or underwriter within the meaning of Section 15 of the Act) against
all claims, losses, damages, liabilities and expenses under the Act, the
Securities and Exchange Act of 1934, as amended, or other Federal or State
statutory law or regulation, at common law or otherwise, insofar as such losses,
claims, damages, liabilities and expenses (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of
material fact contained in any registration statement filed pursuant to this
Section 2 or in any amendment thereof, or in any preliminary prospectus or
prospector relating thereto, or in any amendment thereof or supplement thereto,
or any omission or alleged omission to state a material fact required thereto,
or in any amendment thereof or supplement thereto, or any omission or alleged
omission to state a material fact required to be stated therein or necessary to
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make the statements therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that the Company shall not be
liable to any such holder or underwriter in respect of any claims, losses,
damages, liabilities or expenses resulting from any untrue statement or alleged
untrue statement or omission or alleged omission made in reliance upon and in
conformity with written information furnished to the Company by such holder or
underwriter specifically for use in connection with such registration statement
and prospectus; and each holder and underwriter agrees to indemnify, to the
fullest extent permitted by law, the Company, each person, if any, who controls
the Company within the meaning of said Section 15, and each Director and Officer
of the Company who signs the registration statement in question, against claims,
losses, damages, liabilities and expenses which they may incur by reason of any
such untrue statement or alleged untrue statement or omission or alleged
omission made in reliance upon and in conformity with written information
furnished to the Company by such holder or underwriter, as the case may be,
specifically for use in connection with such registration statement prospectus.
(e) The holder agrees that this Warrant and any Shares issued upon
exercise of this Warrant will be held subject to any restrictions on resales
thereof by reason of application of the Act and that the following legend may be
affixed to this Warrant or such Shares:
THE SECURITIES REPRESENTED HEREBY MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED WITHOUT COMPLIANCE WITH THE REGISTRATION OR QUALIFICATION
PROVISIONS OF APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT AN EXEMPTION
THEREFROM IS AVAILABLE.
3. Exercise of Warrant; Partial Exercise. This Warrant may be exercised for the
full number of Shares within the time called for hereby by the holder
surrendering this Warrant, properly endorsed, to the Company at its principal
office, accompanied by payment, in cash or by certified or official bank check,
payable to the order of the Company, of the sum obtained by multiplying (a) the
number of Shares called for on the face of this Warrant (or such applicable
number of Shares as may result from an adjustment pursuant to Section 7 hereof)
by (b) the Exercise Price.
Upon each exercise of this Warrant, the holder or holders of this
Warrant shall be deemed to be the holder or holders of record of Shares issuable
upon such exercise, notwithstanding that the stock transfer books of the Company
shall then be closed or certificates representing such Shares shall not have
actually been delivered to said holder or holders. As soon as practicable after
each such exercise of this Warrant, the Company shall issue and deliver to the
holder or holders of such Shares a certificate or certificates for such Shares
issuable upon such exercise registered in the name of the holder or holders or
its designee.
This Warrant may be exercised for less than the full number of Shares
within the time called for hereby by such a surrender accompanied by payment of
the Exercise Price for the number of Shares in respect of which it is being
exercised. Upon any such partial exercise, the Company at its expense will
forthwith issue to the holder hereof a new Warrant or Warrants of like tenor
calling in the aggregate on their face for the number of Shares for which this
Warrant shall not have been exercised, issued in the name of the holder hereof
or as such holder (upon payment by such holder of any applicable transfer taxes)
may direct, subject however, to subsection 2(e) hereof; provided, that, in case
this Warrant shall not have been registered under the Act as then in effect (or
any similar statute then in effect), the Company shall not be obligated to issue
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and deliver any Warrant or Warrants to or in the name of any person other than
the holder of this Warrant unless, in the opinion of counsel satisfactory to the
Company, such Warrant or Warrants may be so issued and delivered without
registration under such Act and qualifications under applicable Blue Sky or
other State securities laws.
4. Reservation of Shares Issuable on Exercise of Warrant. The Company will at
all times reserve and keep available, solely for issuance and delivery upon the
exercise of this Warrant, the Shares and any other stock, securities and
property as from time to time shall be receivable upon the exercise of this
Warrant.
5. Adjustments. This Warrant is subject to the following terms and
conditions during the term thereof:
(a) Stock Distributions and Splits. In case (i) the outstanding Shares
of the Common Stock shall be subdivided into a greater number of Shares, (ii) a
dividend in Common Stock shall be paid in respect of the Common Stock or (iii)
there shall be any other distribution on the Common Stock payable otherwise than
out of earnings, retained earnings or earned surplus, the Exercise Price per
share in effect immediately prior to such subdivision or at the record date of
such dividend or distribution shall simultaneously with the effectiveness of
such subdivision or immediately after the record date of such dividend or
distribution be proportionately reduced; and, conversely, if outstanding Shares
of Common Stock shall be combined into a smaller number of Shares thereof, the
Exercise Price per Share in effect immediately prior to such combination be
proportionately increased. If there shall be a distribution described in
subparagraph (iii) of this subsection 5(e), the Exercise Price per Share in
effect immediately prior to such distribution shall be reduced by an amount
equal to the fair value thereof per Share of Common Stock. Any dividend paid or
distributed on the Common Stock in stock of any other class or securities
convertible into Shares of Common Stock shall be treated as a dividend paid in
Common Stock to the extent that Shares of Common Stock are issuable upon the
conversion thereof.
(b) Adjustment of Underlying Shares. Whenever the Exercise Price per
Share is adjusted as provided in subsection 5(a) above, the number of Shares
purchasable upon exercise of the Warrant immediately prior to such adjustment
shall be adjusted, effective simultaneously with such adjustment, to equal the
product obtained (calculated to the nearest full Share) by multiplying such
number of Shares by a fraction, the numerator of which is the Exercise Price per
Share in effect immediately prior to such adjustment and the denominator of
which is the Exercise Price per Share in effect upon such adjustment, which
adjusted number of Shares shall thereupon be the number of Shares purchasable
upon exercise of the Warrant until adjusted as provided herein.
(c) Notice of Change of Exercise Price. Whenever the Company shall be
required to give effect to an adjustment in the Exercise Price per Share or the
kind or amount of securities purchasable upon exercise of the Warrants shall be
adjusted pursuant to any of the provisions hereof, the Company shall forthwith
thereafter cause to be sent to each holder of the Warrants a certificate setting
forth the adjustments in the Exercise Price per Share and/or in said kind or
amount or securities, and also setting forth in detail the facts requiring such
adjustments. In addition, the Company at its expense shall, within ninety (90)
calendar days following the end of each of its fiscal years during the term
hereof, and promptly upon reasonable request of any holder of the Warrant in
connection with the exercise from time to time of all or any portion of the
Warrant, cause independent certified public accountants of recognized standing
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selected by the Company to compute any such adjustment in accordance with the
terms of the Warrant and prepare a certificate setting forth such adjustment and
showing in detail the facts upon which such adjustment is based.
(d) Notice of Record Date. In the event of (i) any taking by the
Company of a record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend (other
than a cash dividend payable out of earnings, retained earnings or earned
surplus of the Company) or other distribution, or any right to subscribe for,
purchase or otherwise acquire any Shares of stock of any class or any other
securities or property, or to receive any other right, or (ii) any capital
reorganization of the Company, or any reclassification or recapitalization of
the capital stock of the Company, or any transfer of all or substantially all of
the assets of the Company or consolidation or merger of the Company with or into
any other person, or (iii) any voluntary or involuntary dissolution or
liquidation of the Company, then and in each such event the Company will mail or
cause to be mailed to each holder of the Warrant a notice specifying not only
the date on which any such record is to be taken for the purpose of such
dividend, distribution or right, and stating the amount and character of such
dividend, distribution, or right, but also the date on which any such
reorganization, reclassification, recapitalization, transfer, consolidation,
merger, dissolution, liquidation or winding-up is to take place, and the time,
if any, as of which the holders Shares of Common Stock for securities or other
property deliverable upon such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution, liquidation or
winding-up. Such notice shall be mailed at least thirty (30) calendar days prior
to the proposed record date therein specified.
6. Notices. All notices and other communications of the Company to the holder or
holders of this Warrant or Warrants, as the case may be, shall be mailed by
first class registered or certified mail, postage prepaid, to the last address
or addresses furnished to the Company in writing by Warrant Holder and the
holder or holders thereof.
7. Change; Waiver. Neither this Warrant nor any term hereof may be changed,
waived, discharged or terminated orally but only by an instrument in writing
signed by the party against which enforcement of the change, waiver, discharge
or termination is sought.
8. Choice of Law. This Warrant shall be construed in accordance with the laws of
the State of Nevada without consideration of any principles of conflict of law.
Dated:
GLOBAL RESOURCES GROUP, INC.
By:
O. Howard Davidsmeyer, Chairman
Attest:
GRGL38.1
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EX-10. (i) (h)
7
PROMISSORY NOTE
$50,000 Date: November 5, 1999
For value received, Global Resources Group, Inc., (the "Borrower"), at 100 2nd
Avenue North, Suite 200, St. Petersburg, Florida, 33701, promises to pay to the
order of Mr. F. Stanton Moyer (the "Lender"), located at 445 Caversham Road,
Bryn Mawr, PA 19010, (or at such other place as the Lender may designate in
writing) the sum of $50,000.00 with interest from November 5, 1999, on the
unpaid principle at the rate of 10% per annum.
Unpaid principle after the Due Date shown below shall accrue interest at a rate
of 18% annually until paid. The unpaid principle and accrued interest shall be
payable in monthly installments of $2,184.47, beginning on December 5, 1999, and
continuing until November 5, 2001, (the "Due Date"), at which time the remaining
unpaid principle or principle and interest shall be due in full.
All payments on this Note shall be applied first in payment of accrued interest
and any remainder in payment of principle.
If any installment is not paid within thirty (30) days after Due Date, the
remaining unpaid balance and accrued interest shall become due immediately,
(after a fifteen [15] day cure period), at the option of the Lender.
The Borrower reserves the right to prepay this Note (in whole or in part) prior
to the Due Date with a prepayment penalty of the next twelve (12) months of
scheduled interest from the date of the prepayment.
If any payment obligation under this Note is not paid when due, the Borrower
promises to pay all costs of collection, including reasonable attorney fees,
whether or not a lawsuit is commenced as part of the collection process.
If any of the following events of default occur, this Note and any other
obligations of the Borrower to the Lender, shall become due immediately, without
demand or notice:
1. the failure of the Borrower to pay the principle and any
accrued interest in full on or before the Due Date;
2. the death of the Borrower(s) or Lender(s);
3. the filing of bankruptcy proceedings involving the Borrower as
a Debtor;
4. the application for appointment of a receiver for the
Borrower;
5. the making of a general assignment for the benefit of the
Borrower's creditors;
6. the insolvency of the Borrower; or
7. the misrepresentation by the Borrower to the Lender for the
purpose of obtaining or extending credit.
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If any one or more of the provisions of this Note are determined to be
unenforceable, in whole or in part, for any reason, the remaining provisions
shall remain fully operative.
All payments of principle and interest on this Note shall be paid in the legal
currency of the United States. Borrower waives presentment for payment, protest,
and notice of protest and nonpayment of this Note.
No renewal or extension of this Note, delay in enforcing any right of the Lender
under this Note, or assignment by Lender of this Note shall affect the liability
of the Borrower. All rights of the Lender under this Note are cumulative and may
be exercised concurrently or consecutively at the Lender's option.
This Note shall be construed in accordance with the laws of the State of Nevada.
Signed this day of , 1999.
Borrower:
Global Resources Group, Inc.
By: O. Howard Davidsmeyer
Chairman of the Board
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Transfer of this Warrant is subject to
restriction.
Void after July 8, 2003
For 50,000 Shares
Common Stock Purchase Warrant
Global Resources Group, Inc., a Nevada corporation, (the "Company")
hereby certifies that, in consideration of the sum of $10.00, and other good and
valuable consideration, receipt and sufficiency of which are hereby
acknowledged, F. Stanton Moyer, (the "Holder") is entitled, subject to the terms
and conditions set forth below, to purchase from the Company at any time or from
time to time, on or before July 8, 2003, 50,000 fully paid and non-assessable
Shares (the "Shares") of Common Stock, $.01 par value, of the Company (the
"Common Stock") at a price of one dollar and fifty cents ($1.50) per Share (the
"Exercise Price"), and further subject to the terms and conditions set forth
herein. Transfer is subject to restrictions as set forth in Sections 2(e), 3 and
5 hereof.
1. Investment in Notes. This Warrant is issued to Holder in connection
with its Promissory Note with the Company.
The terms "Warrant" or "Warrants", as used herein, shall mean this
Warrant, and any Warrant or Warrants issued in exchange for, to replace or upon
partial exercise of this Warrant.
2. Piggyback Registration Rights. The Company agrees that:
(a) Upon written request made by Holder at any time after January 8,
2000, the Company will include the Warrant (but shall not be so obliged more
than once) in any registration statement filed under the Securities Act of 1933,
as amended (the "Act"), in conformity with the Act and rules and regulations
(the "Rules under the Act") of the Securities and Exchange Commission (the
"Commission") thereunder and will thereafter use its best efforts to cause said
registration to become effective as soon as possible so as to permit the holders
of the Warrant or of the Shares publicly to offer or sell the Warrant or the
Shares through the facilities of the over-the-counter market or any securities
exchange on which the Company's Common Stock may be listed. The Company shall
include in such registration the Shares subject to this Warrant. The Company may
include other Shares of its Common Stock in any such registration unless the
underwriter of such offering advises the Company that the inclusion of such
other Shares would adversely affect the market. Such registration relating to
the Warrant or the Shares purchased upon exercise of the Warrant which is
undertaken pursuant to a request to the Company made in accordance with this
subjection 2(a) shall be solely at the cost and expense of the Company.
(b) If at any time the Company proposes to register any Shares of its
Common Stock under the Act (other than securities being registered in connection
with an acquisition by the Company or pursuant to an employee stock option or
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similar plan), the Company will each such time give written notice of its
intention to do so to Warrant Holder and to any other record holder or holders
of the Warrant or Warrants, as the case may be, and, if the Warrants have been
exercised in whole or in part, to each holder of record of the Shares purchased
upon such exercise, and on Holder's written request given within twenty (20)
days after receipt of the notice, the Company shall use its best efforts to
cause the Warrants or Shares, the holders of which shall have requested
registration thereof, to be included with the securities registered under the
Act; provided that the Company need not register such Warrants and/or Shares as
exceed fifty percent (50%) of the total amount being registered without the
Company's consent. The Company shall give written notice to Holder and to each
such holder or holders of the proposed filing of a registration statement at
least thirty (30) days prior to such filing, and a prompt written notice of the
proposed filing of amendments to such registration statement. Any registration
of the Warrants or Shares which is undertaken pursuant to a request to the
Company made in accordance with this subsection 2(b) shall be solely at the cost
and expense of the Company.
(c) The costs and expenses to be borne by the Company for purposes of
subsection 2(a) and subsection 2(b) shall include, without limitation, all
printing expenses (including a reasonable number of prospectuses for circulation
by the selling holders of the Warrants or the Shares), all legal fees and
disbursements of the Company's counsel, Blue Sky expenses, accounting fees of
the Company, and filing fees, and all accountable expenses of the underwriters'
commissions or similar charges attributable to the Warrants or Shares owned by
the holders thereof, and, notwithstanding the foregoing, the Company's
obligation to register the Warrants or Shares pursuant to this Section 2 shall
be limited such that: (i) the Company shall have no obligation to include Shares
in a registration statement under the Act to the extent that in the opinion of
Counsel satisfactory to the holder of such Shares is then eligible to resell
such Shares under Rule 144 under; (ii) the Company shall be required to register
securities only if and to the extent that holders seeking to register furnish
the Company with a written statement of their intention to sell and such other
information as the Company may reasonably request; (iii) the Company's
obligation to register the Warrants or Shares pursuant to subsections 2(a) or
2(b) shall expire after the five (5) years following the date the Warrants
become exercisable or the Company shall have purchased the Warrants or the
Shares in respect of which registration was requested, pursuant to subsection
2(e) below; and (iv) the Company shall not be obligated to keep any registration
statement filed in accordance with this Section 2 effective for more than ninety
(90) days.
(d) To the fullest extent permitted by law, the Company agrees to
indemnify each holder, and each underwriter, of the Warrants or Shares being
sold by any such holder pursuant to this Section 2 (and any person who controls
such holder or underwriter within the meaning of Section 15 of the Act) against
all claims, losses, damages, liabilities and expenses under the Act, the
Securities and Exchange Act of 1934, as amended, or other Federal or State
statutory law or regulation, at common law or otherwise, insofar as such losses,
claims, damages, liabilities and expenses (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of
material fact contained in any registration statement filed pursuant to this
Section 2 or in any amendment thereof, or in any preliminary prospectus or
prospector relating thereto, or in any amendment thereof or supplement thereto,
or any omission or alleged omission to state a material fact required thereto,
or in any amendment thereof or supplement thereto, or any omission or alleged
omission to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
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were made, not misleading; provided, however, that the Company shall not be
liable to any such holder or underwriter in respect of any claims, losses,
damages, liabilities or expenses resulting from any untrue statement or alleged
untrue statement or omission or alleged omission made in reliance upon and in
conformity with written information furnished to the Company by such holder or
underwriter specifically for use in connection with such registration statement
and prospectus; and each holder and underwriter agrees to indemnify, to the
fullest extent permitted by law, the Company, each person, if any, who controls
the Company within the meaning of said Section 15, and each Director and Officer
of the Company who signs the registration statement in question, against claims,
losses, damages, liabilities and expenses which they may incur by reason of any
such untrue statement or alleged untrue statement or omission or alleged
omission made in reliance upon and in conformity with written information
furnished to the Company by such holder or underwriter, as the case may be,
specifically for use in connection with such registration statement prospectus.
(e) The holder agrees that this Warrant and any Shares issued upon
exercise of this Warrant will be held subject to any restrictions on resales
thereof by reason of application of the Act and that the following legend may be
affixed to this Warrant or such Shares:
THE SECURITIES REPRESENTED HEREBY MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED WITHOUT COMPLIANCE WITH THE REGISTRATION OR QUALIFICATION
PROVISIONS OF APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT AN EXEMPTION
THEREFROM IS AVAILABLE.
3. Exercise of Warrant; Partial Exercise. This Warrant may be exercised for the
full number of Shares within the time called for hereby by the holder
surrendering this Warrant, properly endorsed, to the Company at its principal
office, accompanied by payment, in cash or by certified or official bank check,
payable to the order of the Company, of the sum obtained by multiplying (a) the
number of Shares called for on the face of this Warrant (or such applicable
number of Shares as may result from an adjustment pursuant to Section 7 hereof)
by (b) the Exercise Price.
Upon each exercise of this Warrant, the holder or holders of this
Warrant shall be deemed to be the holder or holders of record of Shares issuable
upon such exercise, notwithstanding that the stock transfer books of the Company
shall then be closed or certificates representing such Shares shall not have
actually been delivered to said holder or holders. As soon as practicable after
each such exercise of this Warrant, the Company shall issue and deliver to the
holder or holders of such Shares a certificate or certificates for such Shares
issuable upon such exercise registered in the name of the holder or holders or
its designee.
This Warrant may be exercised for less than the full number of Shares
within the time called for hereby by such a surrender accompanied by payment of
the Exercise Price for the number of Shares in respect of which it is being
exercised. Upon any such partial exercise, the Company at its expense will
forthwith issue to the holder hereof a new Warrant or Warrants of like tenor
calling in the aggregate on their face for the number of Shares for which this
Warrant shall not have been exercised, issued in the name of the holder hereof
or as such holder (upon payment by such holder of any applicable transfer taxes)
may direct, subject however, to subsection 2(e) hereof; provided, that, in case
this Warrant shall not have been registered under the Act as then in effect (or
any similar statute then in effect), the Company shall not be obligated to issue
and deliver any Warrant or Warrants to or in the name of any person other than
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the holder of this Warrant unless, in the opinion of counsel satisfactory to the
Company, such Warrant or Warrants may be so issued and delivered without
registration under such Act and qualifications under applicable Blue Sky or
other State securities laws.
4. Reservation of Shares Issuable on Exercise of Warrant. The Company will at
all times reserve and keep available, solely for issuance and delivery upon the
exercise of this Warrant, the Shares and any other stock, securities and
property as from time to time shall be receivable upon the exercise of this
Warrant.
5. Adjustments. This Warrant is subject to the following terms and
conditions during the term thereof:
(a) Stock Distributions and Splits. In case (i) the outstanding Shares
of the Common Stock shall be subdivided into a greater number of Shares, (ii) a
dividend in Common Stock shall be paid in respect of the Common Stock or (iii)
there shall be any other distribution on the Common Stock payable otherwise than
out of earnings, retained earnings or earned surplus, the Exercise Price per
share in effect immediately prior to such subdivision or at the record date of
such dividend or distribution shall simultaneously with the effectiveness of
such subdivision or immediately after the record date of such dividend or
distribution be proportionately reduced; and, conversely, if outstanding Shares
of Common Stock shall be combined into a smaller number of Shares thereof, the
Exercise Price per Share in effect immediately prior to such combination be
proportionately increased. If there shall be a distribution described in
subparagraph (iii) of this subsection 5(e), the Exercise Price per Share in
effect immediately prior to such distribution shall be reduced by an amount
equal to the fair value thereof per Share of Common Stock. Any dividend paid or
distributed on the Common Stock in stock of any other class or securities
convertible into Shares of Common Stock shall be treated as a dividend paid in
Common Stock to the extent that Shares of Common Stock are issuable upon the
conversion thereof.
(b) Adjustment of Underlying Shares. Whenever the Exercise Price per
Share is adjusted as provided in subsection 5(a) above, the number of Shares
purchasable upon exercise of the Warrant immediately prior to such adjustment
shall be adjusted, effective simultaneously with such adjustment, to equal the
product obtained (calculated to the nearest full Share) by multiplying such
number of Shares by a fraction, the numerator of which is the Exercise Price per
Share in effect immediately prior to such adjustment and the denominator of
which is the Exercise Price per Share in effect upon such adjustment, which
adjusted number of Shares shall thereupon be the number of Shares purchasable
upon exercise of the Warrant until adjusted as provided herein.
(c) Notice of Change of Exercise Price. Whenever the Company shall be
required to give effect to an adjustment in the Exercise Price per Share or the
kind or amount of securities purchasable upon exercise of the Warrants shall be
adjusted pursuant to any of the provisions hereof, the Company shall forthwith
thereafter cause to be sent to each holder of the Warrants a certificate setting
forth the adjustments in the Exercise Price per Share and/or in said kind or
amount or securities, and also setting forth in detail the facts requiring such
adjustments. In addition, the Company at its expense shall, within ninety (90)
calendar days following the end of each of its fiscal years during the term
hereof, and promptly upon reasonable request of any holder of the Warrant in
connection with the exercise from time to time of all or any portion of the
Warrant, cause independent certified public accountants of recognized standing
selected by the Company to compute any such adjustment in accordance with the
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terms of the Warrant and prepare a certificate setting forth such adjustment and
showing in detail the facts upon which such adjustment is based.
(d) Notice of Record Date. In the event of (i) any taking by the
Company of a record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend (other
than a cash dividend payable out of earnings, retained earnings or earned
surplus of the Company) or other distribution, or any right to subscribe for,
purchase or otherwise acquire any Shares of stock of any class or any other
securities or property, or to receive any other right, or (ii) any capital
reorganization of the Company, or any reclassification or recapitalization of
the capital stock of the Company, or any transfer of all or substantially all of
the assets of the Company or consolidation or merger of the Company with or into
any other person, or (iii) any voluntary or involuntary dissolution or
liquidation of the Company, then and in each such event the Company will mail or
cause to be mailed to each holder of the Warrant a notice specifying not only
the date on which any such record is to be taken for the purpose of such
dividend, distribution or right, and stating the amount and character of such
dividend, distribution, or right, but also the date on which any such
reorganization, reclassification, recapitalization, transfer, consolidation,
merger, dissolution, liquidation or winding-up is to take place, and the time,
if any, as of which the holders Shares of Common Stock for securities or other
property deliverable upon such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution, liquidation or
winding-up. Such notice shall be mailed at least thirty (30) calendar days prior
to the proposed record date therein specified.
6. Notices. All notices and other communications of the Company to the holder or
holders of this Warrant or Warrants, as the case may be, shall be mailed by
first class registered or certified mail, postage prepaid, to the last address
or addresses furnished to the Company in writing by Warrant Holder and the
holder or holders thereof.
7. Change; Waiver. Neither this Warrant nor any term hereof may be changed,
waived, discharged or terminated orally but only by an instrument in writing
signed by the party against which enforcement of the change, waiver, discharge
or termination is sought.
8. Choice of Law. This Warrant shall be construed in accordance with the laws of
the State of Nevada without consideration of any principles of conflict of law.
Dated:
GLOBAL RESOURCES GROUP, INC.
By:
O. Howard Davidsmeyer, Chairman
Attest:
GRGL38.1
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EX-10.ii.a
5
EMPLOYMENT AGREEMENT
This Employment Agreement (hereinafter referred to as the "Agreement"),
made as of this 1st day of November, 1998 between Global Resources Group, Inc.,
(GRG) as employer, a Florida corporation with a principal place of business
located at 235 Sunrise Avenue, Suite C-24, Palm Beach, FL 33480 (hereinafter
referred to as "Company"), and Jeffrey Michael Good, residing at 6158 Palma Del
Mar Blvd., Suite 301 -B, St. Petersburg, FL 33715 (hereinafter referred to as
"Executive").
WITNESSETH:
WHEREAS, the Board of Directors of the Company believes that it is in the
best interest of the Company to enter into this Agreement with Executive and
Executive desires to enter into this Agreement with Company.
NOW, THEREFORE, in consideration of the foregoing and the promises, covenants
and agreements hereinafter set forth, Company and Executive hereby agree as
follows:
1. Term of Employment. The term of this Agreement shall be for an initial period
of three (3) years commencing November 1, 1998 and terminating October 31, 2001
and shall be automatically renewed thereafter for additional one (1) year
periods, unless at least sixty (60) days prior to the renewal date, the parties
have terminated this relationship.
2. Position. Executive shall hold the office of Director of Business
Development of GRG, Inc.
3 Duties. Executive shall have the responsibilities and perform the duties,
including but not limited to, the general duties outlined in Appendix A,
Executive Function.
4. Best Efforts. While employed by the Company, Executive shall at all times
faithfully, industriously, and to the best of his ability, experience, and
talents, perform all of the duties that may be required of, and from him
pursuant to the express and implicit terms hereof, to the satisfaction of the
Company. Executive shall work full time for Company.
5. Indemnification. The Company shall, to the maximum extent permitted by and in
accordance with applicable law, indemnify and hold the Executive harmless for
expenses, including reasonable attorney's fees, judgments, fines, settlements,
and other amounts actually and reasonably incurred in connection with any
proceeding arising by reason of the Executive's employment by the Company.
Executive agrees to promptly notify Company of any actual or threatened claim
arising out of or as a result of his employment with Company.
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6. Compensation. The Executive's compensation for services provided
hereunder shall consist of:
(a) An annual base salary of One Hundred Forty Thousand Dollars
($140,000). The base salary shall be payable in equal installments not less than
two times per month. Increases in the Executive's base salary may be awarded
from time to time as determined by the Board of Directors of the Company.
(b) An annual incentive compensation plan for each year of employment
shall be available to the Executive as per Appendix B, Incentive Plan.
7. Stock. Executive shall be entitled to receive and participate in the Capital
Stock Ownership and Stock Option Plan as outlined herein in Appendix C,
Executive Capital Stock Ownership and Stock Option Plan.
8. Benefits. Executive and his dependents shall be entitled to participate in
all employee welfare benefits plans (as that term is defined in Section 3(l) of
the Employee Retirement Income Security Act of 1974,as amended) and to receive
or participate in all other benefit arrangements, policies or practices to which
any executives of Company and/or their dependents are or shall become entitled
to receive or participate in at any time during the term of this Agreement. In
addition, without limiting the foregoing, Executive shall be entitled to receive
the perquisites as outlined herein, in Appendix D, Executive Benefits Package
and in Appendix E, Executive Relocation Package.
9. Office Space, Furnishings, Equipment, and Support Staff. Throughout the term
of his employment, Company shall provide Executive with appropriate furnished
office space, and equipment.
10. Reimbursement for Expenses. Company shall reimburse Executive for all of his
approved actual, reasonable and customary business-related expenses, including,
but not limited to, business class travel, transportation, meals and lodging,
telephone, and entertainment. Reimbursement shall be made by Company within
fifteen (15) days of submission by Executive of proof of his expenses.
11. Non-Competition. Executive shall not, during the term of this Agreement, be
interested directly or indirectly, in any manner, as partner, officer, director,
advisor, employee or in any other capacity in any other business similar to
Company's business provided however, that nothing herein contained shall be
deemed to prevent or limit the right of Executive to invest any of his funds in
the capital stock of other securities of any corporation whose stock or
securities are publicly owned or are regularly traded on any public exchange.
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12. Proprietary Information. The Executive recognizes and acknowledges that his
engagement by Company will result in disclosure to him of confidential
information which is a valuable, special and unique asset of the Company's
business. Any written materials with regard to concepts and ideas, sales
strategy, marketing policies, processes, and any other information treated or
described by the Company as confidential shall not be disclosed by Executive to
any person, firm, corporation, association, or other entity for any reason or
purpose whatsoever during or after the term of this agreement and any renewals.
Upon termination of this Agreement by either party for any reason, all files,
manuals, client lists or other documents containing any such information shall
forthwith be returned to the Company by Executive.
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Termination for "Cause". The term Termination for Cause shall mean a
termination based upon:
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Verification to the Board of Directors that the Executive committed any
material act of gross carelessness or misconduct causing
damage to the Business,
The commission by Executive of any felony or crime involving moral
turpitude; or
The engagement of Executive in any business that is directly
competitive with the primary business of Company. In the event
that the Company terminates Executive's employment with the
Company for Cause, Executive's right to future compensation
and benefits of any kind shall immediately cease.
<PAGE>
Termination Without "Cause". Provided that the Executive has been terminated
without "Cause", Executive shall be entitled to the following:
<PAGE>
Severance pay in the amount equal to 1/2 of the annual base salary in
effect at the time of termination, Applicable Bonuses due at time of
termination, Any past due payments owed to the Executive, Acceleration
to 100% of all options granted to Executive under any incentive or
bonus plan of Company
with a thirty (30) day right to exercise said plan(s); and,
Continuation, at no charge to Executive, of all health insurance plans
and programs in effect at time of termination for a period of
three (3) months. In the event that within the three (3) month
period Executive becomes covered by another employer's group
plan, the Company's similar plans and programs shall no longer
continue. Additionally, COBRA is available for eighteen (18)
months at Executive's expense.
15. Notices. Any notice given under this Agreement shall be sufficient if in
writing, sent by registered or certified mail, postage prepaid, addressed, in
the case of Company, to its principal office and to the attention of its Board
of Directors; in the case of Executive, to his last known address; in the case
of the designated beneficiary, to his, or their last known address; or, in the
case of Executive's dependents, to their last known address.
16. Successors: Binding Effect.
(a) The Company will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business or assets of the Company, by agreement in forms and substance
reasonably acceptable to Executive, to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform if no such succession had taken place.
(b) This Agreement and all rights of Executive hereunder shall inure to
the benefit of and be enforceable by Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributes,
devisees and legatees. If Executive should die while any amounts would be
payable to him hereunder if he had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to Executive's devisee, legatee, or other designees or, if there be no
such designee, to Executive's estate.
17. Non-Waiver of Breach. Either party may specifically waive any breach of this
Agreement by the other party, provided that no such waiver shall be binding or
effective unless in writing and no such waiver shall constitute a continuing
waiver of similar or other breaches. A waiving party may at any time, upon
notice given in writing to the breaching party, direct future compliance with
the waived term or terms of this Agreement, in which event the breaching party
shall comply as directed from such time forward.
18. Governing Law. All questions relating to the validity, construction,
interpretation, performance and administration of the Employment Agreement shall
be governed by and construed in accordance with the laws of the State of Florida
covering contracts made and to be performed in that state.
19. Submission to Jurisdiction. Each party agrees that it shall bring any action
or proceeding in respect to any claim arising out of or in respect of this
Employment Agreement whether in tort or contract or law or in equity,
exclusively in the United States District Court for the Southern District of
Florida or the Supreme Court of the State of Florida for the county of Pinellas
(the "Chosen Courts), and (I) irrevocably submits to the exclusive jurisdiction
of the chosen courts, (II) waives any objection to laying of venue in any such
action or proceeding in the chosen courts, and (III) waives any objection that
the chosen courts are an inconvenient forum or do not have jurisdiction over any
party hereto.
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20. Severability. The provisions of the Employment Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof If any
provision of this Employment Agreement is invalid or unenforceable, (a) a
suitable and equitable provision shall be substituted therefor in order to carry
out, so far as may be valid and enforceable, the intent and purpose of such
invalid or unenforceable provision and (b) the remainder of this Employment
Agreement shall not be affected by such invalidity or unenforceability, nor
shall such invalidity or unenforceability affect the validity or enforceability
of such provision, or the application thereof, in any other jurisdiction.
21. Representations and Warrants, Consultation Obligations. Each party
represents and warrants to, and agrees with, the other that it has the right,
power, and authority to enter into and perform its obligations under this
Agreement.
22. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which shall
constitute one and the same Agreement.
23. Modifications. This Agreement may not be modified except in writing
and signed by both parties.
24. Confidentiality. The terms of this Agreement and all matters relating hereto
shall be confidential and shall not be disclosed to any person or entity except
as necessary to carry out the terms hereof or to comply with any laws or
regulations applicable hereto.
IN WITNESS WHEREOF, this Agreement has been executed as a sealed
instrument by Company, by its officer duly authorized by vote of its Board of
Directors, and by Executive, as of the date first above written.
By: Global Resources Group, Inc.
Jeffrey Michael Good, Executive
By:
O. Howard Davidsmeyer, Chairman
Date:
Sworn and subscribed before me this
_______ day of _____________, 19____
- -------------------------------------
(Signature of Notary Public - State of Florida)
GRGL40.1
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EX-10.ii.b
EMPLOYMENT AGREEMENT
Agreement made this 1st day of October, 1999 by and between Global
Resources Group, Inc., a Utah corporation (the "Company") having its principal
place of business at 100 second Avenue North, Suite 200, St. Petersburg,
Florida, and Ken Craig (the "Employee") currently residing at 612 Downs Avenue,
Temple Terrace, Florida.
BACKGROUND INFORMATION
The Company wishes to secure the employment services of the Employee
for a definite period of time and upon the particular terms and conditions
hereinafter set forth. The Employee is willing to be so employed.
Accordingly, the parties agree as follows:
OPERATIVE PROVISIONS
1. Employment and Term.
The Company hereby employs Employee and the latter hereby accepts
employment by the Company for a (3) year term commencing on October 1, 1999,
(the "Commencement Date") and expiring September 30, 2002, which employment
shall be automatically extended for unlimited successive two (2) year terms
unless it is terminated during any such term, whether initial or extended, by
the occurrence of one of the events described in Section 8 or at the end of any
such term (subject to extension by operation of the disability provisions
contained in Section 8) by one party furnishing the other with written notice,
at least one hundred twenty days notice (120) days prior to the expiration of
such term, of any intent to terminate this Agreement upon the expiration of
current term.
2. Duties.
During the term of this Agreement, whether initial or extended, the
Employee shall render to the Company services as Chief Executive Officer and
shall perform such duties as may be designated by and subject to the supervision
of the Company's Board of Directors, and shall serve in such additional
capacities appropriate to his responsibilities and skills as shall be designated
by the Company, through action of its Board of Directors. During such period,
the Employee shall devote his full attention, time and energies to the business
affairs of the Company (subject to the terms of Section 4. below), and will use
his best efforts to promote the interests and reputation of the Company;
provided that he may pursue such non-competitive activities during weekdays and
on weekends, such as teaching, entertaining, consulting or other remunerative or
non-remunerative affairs, as do not interfere, with the complete performance of
his obligations hereunder. Hours of service to the Company during the term of
this Agreement shall be a minimum of forty per week. During the term of this
Agreement, without his written consent, the Company shall not remove the
Employee's permanent place of business from Tampa / St. Petersburg area of
Florida.
3. Compensation.
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For the services to be rendered by the Employee under this Agreement,
the Company shall pay him, while he is rendering such services and performing
his duties hereunder, and the Employee shall accept as full payment for such
service, a base compensation of $150,000 per year, (inclusive of any amounts
subject to federal or state employment related withholding requirements),
payable in arrears in equal installments on the last business day of each week
occurring during the period of employment or otherwise as the parties may agree.
Such base compensation may be periodically increased on any anniversary of the
Commencement Date to take into account superior performance or increases, if
any, in the annual cost of living, and may at such time be supplemented by
discretionary bonuses or other benefits payable from time to time, all as
determined by action of the Company's Board of Directors.
4. Vacation; Fringe Benefits; Reimbursement of Expenses.
The Employee shall be entitled to three (3) weeks of fully paid
vacation during the initial and each extended term of this Agreement. He shall
not be entitled to receive monetary or other valuable consideration for vacation
time to which he is entitled but does not take. The timing of vacation periods
shall be within the discretion of the Company, reasonably exercised so as not to
unnecessarily inconvenience the Employee.
During his period of employment hereunder, the Employee shall further
be entitled to (a) such leave by reason of physical or mental disability or
incapacity and to such participation in medical and life insurance, pension
benefits, disability and other fringe benefit plans as the Company may make
generally available to all of its executive employees from time to time;
subject, however, as to such plans, to such budgetary constraints or other
limitations as may be imposed by the Board of Directors of the Company from time
to time; and (b) reimbursement for all normal and reasonable expenses
necessarily incurred by him in the performance of his obligations hereunder,
subject to such reasonable substantiation requirements as may be imposed by the
Company. (c) Paid Holidays as approved by the Company for all employees.
5. Proprietary Interests.
During or after the expiration of his term of employment with the
Company, the Employee shall not communicate or divulge to, or use for the
benefit of, any individual, association, partnership, trust, corporation or
other entity except the Company, any proprietary information of the Company
received by the Employee by virtue of such employment, without first being in
receipt of the Company's written consent to do so.
6. Restrictive Covenant.
During the term of his employment hereunder and for one year following
the termination thereof for any reason other than (a) the Company's
discontinuance of activities; (b) an adjudication of the Company's material
breach of any of its obligations set forth in Sections 1-4, inclusive; or (c) a
termination of the Employee by the Company under the provisions of subparagraph
d (2) of Section 8, the Employee shall not, directly or indirectly, engage in or
become an owner of, render any service to, enter the employment of, or represent
or solicit for any business which competes with any activity of the Company
conducted at any time during the Employee's period of employment and which is
located in any county of the State of Florida in which the Company shall
maintain activity. The parties expressly agree that the duration and
geographical area of this restrictive covenant are reasonable.
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This covenant shall be construed as an agreement independent of any
other provision herein, and the existence of any claim or cause of action of the
Employee against the Company regardless of how arising, shall not constitute a
defense to the enforcement by the Company of its terms. If any portion of the
covenant is held by a court of law to be unenforceable with respect either to
its duration or geographical area, for whatever reason, it shall be considered
divisible both as to time and geographical area, so that each month of the
specified period shall be deemed a separate period of time and each county
within the State of Florida a separate geographical area, resulting in an
intended requirement that the longest lesser period of time or largest lesser
geographical area found by such court to be a reasonable restriction shall
remain an effective restrictive covenant, specifically enforceable against the
Employee.
Notwithstanding any statement contained in this Section to the
contrary, legal or beneficial ownership by the Employee of a less than five
percent (5%) interest in a competitive corporation at least one (1) class of
capital stock of which is publicly traded on a national or regional stock
exchange or by means of an electronic interdealer quotation system, shall not be
deemed to constitute a breach by the Employee of the terms hereof.
7. Remedies for Breach of Employee's Obligations.
The parties agree that the services of the Employee are of a personal,
specific, unique and extraordinary character and cannot be readily replaced by
the Company. They further agree that in the course of performing his services,
the Employee will have access to various types of proprietary information of the
Company, which, if released to others or used by the Employee other than for the
benefit of the Company, in either case without the Company's consent, could
cause the Company to suffer irreparable injury. Therefore, the obligations of
the Employee established under Sections 5 and 6 hereof shall be enforceable both
at law and in equity, by injunction, specific performance, damages or other
remedy; and the right of the Company to obtain any such remedy shall be
cumulative and not alternative and shall not be exhausted by any one or more
uses thereof.
8. Modifications and Termination.
a. Modification. This Agreement may be amended or modified
only with the mutual written consent of the parties, and in its present form
consists of the entire Agreement between the parties.
b. Termination - General. This Agreement is subject to termination
prior to the expiration of its initial or any extended term, if by the Employee
upon delivery to the Company of written notice of such intention, which notice
shall be deemed to result in termination one hundred twenty days (120) days
after its receipt by the Company (the Company having the right following such
receipt to accelerate the effective date of termination but retaining the
obligation to pay Employee his compensation due for the full period); and if by
the Company upon the occurrence of any one of the following events: (a) the
complete discontinuance of the Company's activities; (b) the death of the
Employee; (c) the occurrence to Employee of a physical or mental disability
which, in the judgment, reasonably exercised, of the Board of Directors, renders
him unable to perform his normal duties on behalf of the Company for a
continuous period of three(3) months (measured from the first day of the month
immediately following the occurrence of such disability); or (d) a determination
by the Board of Directors that there is cause (as described in subsection d.
below) to terminate Employee's employment.
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c. By Death or Disability. In the event of the Employee's death, his
base compensation otherwise due for the succeeding six full calendar months
following his death shall be paid to his Beneficiary. In the event of his
disability, for the period ending on the last business day of the third calendar
month following the occurrence of such disability, the Employee shall be paid
his base compensation (reduced by any amount received by the Employee under the
terms of any disability insurance policy maintained by the Company at its sole
expense); thereafter, for the succeeding three shall be treated as being on an
authorized but unpaid leave of absence.
d. For Cause. In the event of a decision by the Board of Directors to
terminate Employee's employment for cause:
(1) If, in the judgment of the Company's Board of Directors,
reasonably exercised, such termination is due to (i) the
Employee's willful misconduct or gross negligence; (ii) his
conscious disregard of his obligations hereunder or of any
other duties reasonably assigned him by the Company; (iii) his
repeated conscious violation of any provision of the Company's
By-Laws or of its other stated policies, standards or
regulations; (iv) his commission of any act involving moral
turpitude; or (v) a determination that he has demonstrated a
dependence upon any addictive substance, including alcohol,
controlled substances, narcotics or barbiturates; then, upon
termination, he shall be entitled to receive severance pay in
an amount equal to 12.5% of his annual base compensation. As a
condition precedent to the Company's right to terminate this
Agreement for one of the causes specified in the preceding
sentence which requires a repeated action or omission by the
Employee [clauses (i), (ii) and (iii)], there shall have been
created by the Company and furnished to the Employee, within
the sixty (60) day period immediately following commission of
the proscribed act or omission, a written description thereof
and a statement and a statement advising him that the Company
views such conduct as being of the type which could lead to a
termination of this Agreement under the provisions of Section
8d. Further, if the Company seeks to terminate this Agreement
on the basis of clause (iii), it must be able to demonstrate
that the Employee has been furnished with a copy of the By-Law
provision, or of the policy, standard or regulation, which he
is being accused of having violated, at a time prior to the
alleged commission of the violation.
(2) if such termination is for a cause (the nature of which
may be arbitrarily determined) other than as specified in
subparagraph ((1)) above, he shall be entitled to receive:
(a) if before 10-1-2000 5% of his annual base
(b)10-1-2000 to 9-30-2001 50% of annual base.
(c) 10-1-2001 to 9-30-200275% of annual base.
(d) 10-1-2002 forward 100% of annual base.
e. Payment of Termination Compensation
Effectiveness of Certain Obligations. Any compensation or
severance due the Employee as a result of the premature termination of his
employment status shall be paid to him within seven (7) days after termination
as one lump sum. No termination or expiration of this Agreement, whether
consummated by action of either party or by operation of the terms hereof, shall
relieve the Employee from his continued performance of the obligations
established under Sections 5 and 6.
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9. Indebtedness of Employee. If, during the course of his employment,
Employee becomes indebted to the Company for any reason, the Company shall, if
it so elects, have the right to set-off and to collect any sums due it from the
Employee out of any amounts which it may owe to the Employee for unpaid
compensation. In the event that this Agreement terminates for any reason, all
sums owed by the Employee to the Company shall become immediately due and
payable.
10. Miscellaneous Provisions.
a. Nonassignability: Neither this Agreement nor any
right or interest hereunder shall be assignable by the Employee, his
Beneficiary of his legal representatives except as otherwise
expressly provided herein.
b. Enforceability: If any term or condition or this Agreement
shall be invalid or unenforceable to any extent or in any application,
then the remainder of this Agreement, and such term or condition except
to such extent or in such application, shall not be affected thereby
and each and every term and condition of this Agreement shall be valid
and enforced to the fullest extent and in the broadest application
permitted by law.
c. Notice: All notices or other communications required or
permitted to be furnished pursuant to this Agreement shall be in
writing and shall be considered as properly furnished if hand
delivered, mailed from within the United States by certified or
registered mail, or sent by prepaid telegram to the recipient party at
the address appearing in the preamble to this Agreement or to such
other address as any such party may have designated by like notice
forwarded to the other party hereto. Change of address notices shall be
deemed furnished when received. All other notices shall be deemed
furnished when mailed, telegraphed or hand delivered.
d. Application of Florida Law: This Agreement, and the
application or interpretation thereof, shall be governed exclusively by
its terms and by the laws of the State of Florida. Venue shall be
deemed located in Sarasota County, Florida.
e. Counterparts: This Agreement may be executed by any number
of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
f. Binding Effect: Each of the provisions and agreements
herein contained shall be binding upon and inure to the benefit of the
personal representatives, devisees, heirs, successors, transferees and
assigns of the respective parties hereto.
g. Beneficiary: As used herein, the term "Beneficiary" shall
mean the person or persons (who may be designated contingently or
successively and who may be an entity other than an individual,
including an estate or trust) designated on a written form prescribed
by the Board of Directors to receive the expiration of Agreement or
death benefits described in Section 8 above. Each Beneficiary
designation shall be effective only when filed with the Secretary of
the Company during the Employee's lifetime. Each Beneficiary
designation filed with the Secretary will cancel all designations
previously so filed.
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If the Employee fails to properly designate a Beneficiary or
if the Beneficiary predeceases the Employee or dies before complete
distribution of the benefit has been made, the Company shall distribute
the benefit (or balance thereof) to the surviving spouse of the
Employee or if he/she be then deceased to the Employee's estate.
h. Legal Fees and Costs: If a legal action is initiated by any
party to this Agreement against another, arising out of or relating to
the alleged performance or non-performance of any right or obligation
established hereunder, or any dispute concerning the same, any and all
fees, costs and expenses reasonably incurred by successful party or
legal counsel thereof, in investigating, preparing for, prosecuting,
defending against, or providing evidence, producing documents or taking
any other action in respect of, such action shall be the joint and
several obligation of and shall be paid or reimbursed by the
unsuccessful party.
IN WITNESS WHEREOF, the parties have hereunto executed this Agreement
as of the date stated above.
Attest: Global Resources Group, Inc.
By: _________________________ By: O. Howard Davidsmeyer, Jr.
O. Howard Davidsmeyer, Jr.
Chairman of the Board
Witnesses: EMPLOYEE
Sign _________________________ Ken Craig
Ken Craig
Print _________________________
GRGL11.
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EX-1.ii.c
4
GRG, INC.
Performance Stock Agreement
This Performance Stock Agreement (the "Agreement"), effective as of
November 2, 1999 is made by and between Global Resources Group, Inc., a Nevada
corporation (the "Company"), and Jeffrey M. Good hereinafter referred to as the
"Grantee" and supercedes exhibit "C" of that certain Employment Agreement dated
November 2, 1998 between the Company and Jeffrey Michael Good.
WHEREAS, THE Company wishes to grant shares of the Company's common
stock to the Grantee pursuant to the terms of the Company's Stock Performance
Plan (the "Plan") and subject to certain conditions established by the Company's
Board of Directors;
NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties agree as follows:
ARTICLE I
GRANT OF STOCK
Section 1.1 - Grant of Stock
In consideration of service to the Company and for other good
and valuable consideration, the Company grants to the Grantee 1,560,000 shares
of the Company's common stock which equates to an initial value of $1,560 based
upon a $0.001 par value (the "Performance Shares") in accordance with, and
subject to, the terms and conditions of the Plan, and subject to the conditions
described below. The Grantee's rights with respect to the Performance Shares
shall be governed by the terms herein.
Section 1.2 - Adjustments in Number of Shares
In the event that the shares of the Company's common stock are changed
into or exchanged for a different number or kind of shares of the Company or
other securities of the Company by reason of merger, consolidation,
recapitalization, reclassification, stock split, stock dividend or combination
of shares, the number and kind of Performance Shares will be equitably adjusted
to retain the same percentage of ownership.
172
<PAGE>
ARTICLE II
Section 2.1 - Resale to Company
The Grantee has the right to apply future Gross Profits from contracts
signed, negotiated or pending acceptance at the time of termination to the
removal of Performance Condition Legends for a period of twelve months. Further,
at the end of that period Grantee has the right for a period of ninety (90) days
to have the Performance Condition Legend, from all shares held subject to same,
removed at a cost to the Grantee not to exceed fifty percent (50%) of market
value on a per share basis. Should Grantee not exercise the right, Company will
buy back shares at par value.
Section 2.2 - Performance Condition
It shall be a condition to removal of the Performance Condition Legend
from the Performance Shares that one share shall have said legend removed for
each two dollars of gross profit produced by the Company between this date and
November 1, 2001. Gross profit is defined as defined by G.A.A.P.
Section 2.3 - Issuance of Stock Certificates
A certificate representing the Granted Shares shall be issued
immediately. Said common stock shall have legends indicating the restrictive
nature of Rule 144 and the Performance Condition of the Plan.
Section 2.4 - Dividend Rights
If a cash dividend is declared on shares of the Company's common stock,
the Company will pay the dividend to the Grantee as the holder of the stock.
Section 2.5 - Voting Rights
The Grantee will be allowed to exercise voting rights with respect to
those Performance Shares.
Section 2.6 - Change of Control
If the Company agrees to sell all or substantially all of its assets or
agrees to any merger, reorganization, or other corporate transaction in which
its common stock is converted into another security or into the right to receive
securities or property, and such agreement does not provide for the assumption
or substitution of the Performance Shares, all such Performance Shares shall
have the Performance Condition Legend removed. In the event of a Change in
Control, this Agreement shall remain in full force and effect with respect to
the Performance Shares under the Plan. Furthermore, the Board of Directors has
the right to take different actions with respect to different Grantees or
different groups of Grantees as the Board deems appropriate under the
circumstances.
ARTICLE III
MISCELLANEOUS
Section 3.1 - Notices
Any notice to be given under the terms of this Agreement to the Company
shall be addressed to the Company in care of its Secretary and any notice to be
given to the Grantee shall be addressed to the address given beneath the
Grantee's signature below. By a notice given pursuant to this Section 3.4,
either party may hereafter designate a different address for notices to be given
to such party. Any notice required to be given to the Grantee shall, if the
Grantee is then deceased, be given to the Grantee's personal representative if
such representative has previously informed the Company of his/her status and
address by written notice under this Section. Any notice shall have been deemed
duly given when enclosed in a properly sealed envelope addressed as aforesaid,
deposited (with postage prepaid) in a United States postal receptacle.
Section 3.2 - Titles
Titles are provided herein for convenience only and are not to serve as
a basis for interpretation or construction of this Agreement.
Section 3.3 - Disposition
At the request of Grantee and upon receipt of any of the Performance
Shares after satisfaction of all conditions to the Grant, the Company shall
remove the Performance Condition Legend and reissue the stock free of said
legend.
Section 3.4 - Counterparts
This Agreement may be executed in two (2) or more counterparts, each of
which shall be deemed an original and all of which together shall constitute one
(1) agreement.
173
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed and delivered by
the parties as of the date first written above.
GRG, INC.
By: O. Howard Davidsmeyer, Jr.
O. Howard Davidsmeyer, Jr.
Chairman of the Board
GRANTEE
Jeffrey M. Good
Jeffrey M. Good
Chief Operating Officer
4490 38th Way South
St. Petersburg, FL 33711
GRGL35.1
174
<PAGE>
EX-10.ii.d
4
GRG, INC.
Performance Stock Agreement
This Performance Stock Agreement (the "Agreement"), effective as of
October 1, 1999, is made by and between Global Resources Group, Inc., a Nevada
corporation (the "Company"), and Kenneth W. Craig hereinafter referred to as the
"Grantee".
WHEREAS, THE Company wishes to grant shares of the Company's common
stock to the Grantee pursuant to the terms of the Company's Stock Performance
Plan (the "Plan") and subject to certain conditions established by the Company's
Board of Directors;
NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties agree as follows:
ARTICLE I
GRANT OF STOCK
Section 1.1 - Grant of Stock
In consideration of service to the Company and for other good
and valuable consideration, the Company grants to the Grantee 1,560,000 shares
of the Company's common stock which equates to an initial value of $1,560 based
upon a $0.001 par value (the "Performance Shares") in accordance with, and
subject to, the terms and conditions of the Plan, and subject to the conditions
described below. The Grantee's rights with respect to the Performance Shares
shall be governed by the terms herein.
Section 1.2 - Adjustments in Number of Shares
In the event that the shares of the Company's common stock are changed
into or exchanged for a different number or kind of shares of the Company or
other securities of the Company by reason of merger, consolidation,
recapitalization, reclassification, stock split, stock dividend or combination
of shares, the number and kind of Performance Shares will be equitably adjusted
to retain the same percentage of ownership.
175
<PAGE>
ARTICLE II
Section 2.1 - Resale to Company
The Grantee agrees to sell back to the Company any Performance Shares
which have not had the Performance Condition Legend removed prior to expiration
of this agreement or upon termination for cause shall be sold back to the
Company for par value.
Section 2.2 - Performance Condition
It shall be a condition to removal of the Performance Condition Legend
from the Performance Shares that one share shall have said legend removed for
each two dollars of gross profit produced by the Company between this date and
September 30, 2002. Gross profit is defined as defined by G.A.A.P.
Section 2.3 - Issuance of Stock Certificates
A certificate representing the Granted Shares shall be issued
immediately. Said common stock shall have legends indicating the restrictive
nature of Rule 144 and the Performance Condition of the Plan.
Section 2.4 - Dividend Rights
If a cash dividend is declared on shares of the Company's common stock,
the Company will pay the dividend to the Grantee as the holder of the stock.
Section 2.5 - Voting Rights
The Grantee will be allowed to exercise voting rights with respect to
those Performance Shares.
Section 2.6 - Change of Control
If the Company agrees to sell all or substantially all of its assets or
agrees to any merger, reorganization, or other corporate transaction in which
its common stock is converted into another security or into the right to receive
securities or property, and such agreement does not provide for the assumption
or substitution of the Performance Shares, all such Performance Shares shall
have the Performance Condition Legend removed. In the event of a Change in
Control, this Agreement shall remain in full force and effect with respect to
the Performance Shares under the Plan. Furthermore, the Board of Directors has
the right to take different actions with respect to different Grantees or
different groups of Grantees as the Board deems appropriate under the
circumstances.
ARTICLE III
MISCELLANEOUS
Section 3.1 - Administration
The Board of Directors shall have the power to interpret this Agreement
and to adopt such rules for administration, interpretation and application of
the Agreement as are consistent with the Plan and to interpret or revoke any
such rules. All actions taken and all interpretations and determinations made by
the Board of Directors in good faith shall be final and binding upon the
Grantee, the Company and all interested persons. No member of the Board of
Directors shall be personally liable for any action, determination or
interpretation made in good faith with respect to this Agreement or any similar
agreement to which the Company is a party.
Section 3.2 - Notices
Any notice to be given under the terms of this Agreement to the Company
shall be addressed to the Company in care of its Secretary and any notice to be
given to the Grantee shall be addressed to the address given beneath the
Grantee's signature below. By a notice given pursuant to this Section 3.4,
either party may hereafter designate a different address for notices to be given
to such party. Any notice required to be given to the Grantee shall, if the
Grantee is then deceased, be given to the Grantee's personal representative if
such representative has previously informed the Company of his/her status and
address by written notice under this Section. Any notice shall have been deemed
duly given when enclosed in a properly sealed envelope addressed as aforesaid,
deposited (with postage prepaid) in a United States postal receptacle.
Section 3.3 - Titles
Titles are provided herein for convenience only and are not to serve as
a basis for interpretation or construction of this Agreement.
Section 3.4 - Disposition
At the request of Grantee and upon receipt of any of the Performance
Shares after satisfaction of all conditions to the Grant, the Company shall
remove the Performance Condition Legend and reissue the stock free of said
legend.
Section 3.5 - Counterparts
This Agreement may be executed in two (2) or more counterparts, each of
which shall be deemed an original and all of which together shall constitute one
(1) agreement.
176
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed and delivered by
the parties as of the date first written above.
GRG, INC.
By: O. Howard Davidsmeyer, Jr.
O. Howard Davidsmeyer, Jr.
Chairman of the Board
GRANTEE
Ken Craig
Ken Craig
Chief Executive Officer
612 Downs Ave.
Temple Terrace, FL 33617
GRGL35.1
177
<PAGE>
EX-16
ANDERSON, ANDERSON & STRONG
941 East 3300 South
Salt Lake City, Utah 84109
November 5, 1999
United States Securities and Exchange Commission
450 5th Street, N.W.
Washington, D.C. 20549
Re: GRG, Inc. d/b/a/Global Resource Group, Inc., f/k/al Ghiglieri Corporation
("GRG")
Sir or Madam:
Anderson, Anderson and Strong, L.C., Certified Public Accountants, of Salt Lake
City, Utah, audited the financial statements of GRG for the calendar years ended
December 31, 1997, 1996 and 1995.
Jones, Jensen & Company, LLC, Certified Public Accounts, of Salt Lake City, Utah
were engaged by the Board of Directors of GRG to prepare the audited financial
statements of GRG for the year ended December 31, 1998; and will prepare the
financial statements for the calendar year 1999.
There were no disagreements between us and GRG, whether resolved or not
resolved, on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure, which, if not resolved,
would have caused them to make reference to the subject matter of the
disagreement in connection with their reports.
Our report did not contain any adverse opinion or disclaimer of opinion, and
with the exception of a "going concern" qualification because of the lack of
material operations of GRG on the date of the report, were not qualified or
modified as to uncertainty, audit scope or accounting principles.
During GRG's three most recent calendar years, and since then, we have not
advised GRG that any of the following exists or is applicable:
(1) That the internal controls necessary for GRG to develop reliable
financial statements do not exist, that information has come to their
attention that has lead them to no longer be able to rely on
management's representations or that has made them unwilling to be
associated with the financial statements prepared by management;
(2) That GRG needs to expand significantly the scope of its audit, or that
information has come to their attention that if further investigated
may materially impact the fairness or reliability of a previously
issued audit report or the underlying financial statements or any other
financial presentation, or cause them to be unwilling to rely on
management's representations or be associated with GRG's financial
statements for the foregoing reasons or any other reason; or
(3) That they have advised the Company that information has come to their
attention that they have concluded materially impacts the fairness or
reliability of either a previously issued audit report or the
underlying financial statements for the foregoing reasons or any other
reason.
178
<PAGE>
During the Company's three most recent calendar years and since then, the
Company has not consulted us regarding the application of accounting principles
to a specified transaction, either completed or proposed; or the type of audit
opinion that might be rendered on the Company's financial statements or any
other financial presentation whatsoever.
The Company has provided Andersen, Andersen & Strong with a copy of the
disclosure provided under this caption of this Registration Statement, and has
advised us to provide the Company with a letter addressed to the Securities and
Exchange Commission as to whether we agree or disagree with the disclosures made
herein. By this letter, we agree with the disclosures made relating to our firm.
Thank you for your cooperation in this matter.
Very truly yours,
/s/
Rex Anderson
Partner
cc: Leonard Burningham
Gordon Jones
Matthew Veal
179
<PAGE>
EX-23
JONES, JENSEN & COMPANY
Board of Directors
GRG, Inc.
St. Petersburg, Florida
We consent to the use in this registration Statement of GRG, Inc. on Form 10-SB,
of our report dated November 10, 1999 of GRG, Inc. for the years ended December
31, 1998 and 1997, which are part of this Registration Statement, and to all
references to our firm included in this Registration Statement.
/s/ JONES, JENSEN & COMPANY
Salt Lake City, Utah
November 12, 1999
180
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
EX-27
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1999
<PERIOD-END> DEC-31-1998 SEP-30-1999
<CASH> 100,060 74,033
<SECURITIES> 0 0
<RECEIVABLES> 0 1,500
<ALLOWANCES> 0 0
<INVENTORY> 0 50,000
<CURRENT-ASSETS> 100,170 128,143
<PP&E> 13,424 341,460
<DEPRECIATION> 1,134 19,517
<TOTAL-ASSETS> 333,394 581,632
<CURRENT-LIABILITIES> 24,041 65,428
<BONDS> 0 0
0 0
0 0
<COMMON> 16,900 19,219
<OTHER-SE> 292,453 303,566
<TOTAL-LIABILITY-AND-EQUITY> 333,394 581,632
<SALES> 0 49,304
<TOTAL-REVENUES> 0 49,304
<CGS> 0 76,869
<TOTAL-COSTS> 4,747,263 1,172,330
<OTHER-EXPENSES> 1,110,493 604
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 1,544
<INCOME-PRETAX> (5,857,756) (1,202,043)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (5,857,756) (1,202,043)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (5,857,756) (1,202,043)
<EPS-BASIC> (0.48) (0.07)
<EPS-DILUTED> (0.48) (0.07)
</TABLE>
