SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) March 22, 1999
Global Intellicom, Inc.
(Exact Name of Registrant as Specified in Charter)
Nevada 0-26684 13-3797104
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
747 Third Avenue, New York, New York 10017
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (212) 750-3772
N/A
(Former Name or Former Address, if Changed Since Last Report)
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Item 2. Acquisition or Disposition of Assets.
On March 22, 1999, pursuant to an agreement dated as of December 31, 1998,
the Registrant exchanged all of the shares of its Global-Insync, Incorporated
("GII") subsidiary for 3,500 shares of 9% preferred stock (the "GAC Preferred
Stock") of GH Acquisition Corp. ("GAC") a newly formed Delaware corporation
owned by private investors. The owners of GAC are not affiliates of the
Registrant. The GAC Preferred Stock has a liquidation preference of $1,000 per
share and the holders thereof are entitled to annual dividends of $90 per share,
payable quarterly. Dividends on the preferred shares in excess of 2% of the net
revenues of GII shall be accrued. The completion of the transaction is subject
to certain legal requirements and consents of third parties. This summary is
qualified in its entirety by the terms of the agreement which is an exhibit to
this report.
The Registrant entered into this transaction because GII had experienced
declining revenues, margins and operating results in the fourth quarter of 1998
and the first quarter of 1999 as a result of increased competition in the
segment of the computer assembly business where it operated, especially in the
last few months. Furthermore, the Registrant believed that GII's future
viability is dependant, in substantial part, on the investment of additional
capital. Since the price of the Registrant's common stock has been depressed in
recent months (See Item 5, below), the Registrant ability to raise additional
capital on any terms and to do so without unduly diluting its existing capital
has been greatly impaired. In the opinion of Registrant's management, under the
circumstances, GII was not likely to have profitable operations in the
foreseeable future. The sale of the shares of GII will also enhance the
Registrant's shareholder equity as GII had a negative net worth.
The Registrant will concentrate its efforts in its cabling operations
where it believes that margins are higher and that it will be able to take
advantage of regulatory changes and emerging technologies. The Registrant's
Board pf Directors has determined, in principle, to spin off an interest in its
cabling subsidiary to the Registrant's shareholders.
The Registrant has reduced its administrative staff and will relocate its
executive offices to smaller and less expensive space to reduce its operating
expenses so that its resources may be concentrated on its cabling business.
Item 5. Other Events.
David A. Mortman has resigned as President and a director of the
Registrant and Wayne Rogers has resigned as a director of the Registrant.
Neither Mr. Mortman nor Mr. Rogers requested that the Registrant file a report
disclosing any disagreements with the Registrant on any matter.
During February 1999, the Registrant filed an amended complaint in an
action it has brought in the United States District Court for the Southern
District of New York (99 Civ. 0342 (DLC)) against certain of the present and
past holders of its convertible preferred stock and certain of the principals
and affiliates of such holders. The amended complaint alleges, among other
things, that the defendants through their co-conspirators, have engaged in a
scheme to depress the price of the Registrant's common stock through short
selling and that under the terms of the convertible preferred
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stock such holders would improperly benefit from such scheme and the lowered
price of the Registrant's common stock which resulted from their activities. The
amended complaint alleges violations of various provisions the Securities
Exchange Act of 1934, as amended, common law fraud, aiding and abetting common
law fraud, civil conspiracy, breach of contract, breach of implied covenant of
good faith, and breach of fiduciary duty against various of the defendants. The
amended compliant seeks declaratory relief against the defendants to prohibit
them from receiving common stock upon conversion of their preferred stock; seeks
to reform the various series of preferred stock so that the defendants can not
benefit from their market manipulation; an injunction against any further short
selling; damages in excess of $20 million dollars; and punitive damages. The
Registrant has voluntarily dismissed, without prejudice, the complaint against
certain of the defendants, including Augustine Fund, L.P.; James W. Spratt, III;
Susan M. Spratt; and the Spratt Family Trust. Certain of the defendants have
failed to respond to the amended complaint and others have filed a motion to
dismiss and have obtained a stay of discovery during the pendency of their
motion. The motion to dismiss is pending. Although the Registrant believes that
it has asserted valid claims in this action, the lawsuit is in its early stages
and no discovery has been conducted. As a result, the Registrant cannot predict
the outcome or the likely recovery, if any, with any degree of certainty.
Sovereign Partners, L.P., one of the defendants in the action brought by
the Registrant in the Southern District of New York, has issued a press release
stating that it, and Canadian Advantage Limited Partnership have commenced an
action against the Registrant in Nevada State Courts seeking to compel the
Registrant to convert their preferred shares and to allow them to vote such
shares at a shareholders' meeting, which meeting they also seek to compel the
Registrant to hold. The Registrant has not received the complaint in such
action, but based upon information received to date, believes that it has valid
defenses which if supported by the facts developed through the litigation should
be adequate to defeat the claims and intends to vigorously defend the action. In
the amended complaint the Registrant asserts that to allow the defendants to
convert their preferred stock at current market prices would grant them an
improper and unwarranted benefit.
The Registrant may incur significant legal expenses in connection with the
litigations.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Business Acquired. None
(b) Pro Forma Financial Informtion. To be filed by amendment.
(c) Exhibits.
(1) Share Exchange Agreement, dated as of December 31, 1998, by and
among the Registrant; GII and GH Acquisition Corp.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Global Intellicom, Inc.
Date: April 5, 1999 By: /s/ N. Norman Muller
-----------------------
N. Norman Muller, Chairman
EXHIBIT 1
SHARE EXCHANGE AGREEMENT
SHARE EXCHANGE AGREEMENT made as of December 31, 1998, by and among Global
Intellicom, Inc., a Nevada corporation ("GBIT"); Global-Insync, Incorporated a
Virginia corporation ("GII" or the "Company"); and GII Acquisition Corp., a
Delaware corporation ("GAC").
WHEREAS, GII is a wholly owned subsidiary of GBIT; and
WHEREAS, GAC desires to acquire all of the issued and outstanding shares
of common stock of GII from GBIT in exchange for an aggregate of 3,500 shares of
a newly designated class of GAC preferred stock called GII Acquisition Corp.
Series A 9% Preferred Stock (the "Preferred Stock") the ("Exchange Offer"); and
WHEREAS, the voluntary share exchange contemplated hereby will result in
GBIT tendering all of the outstanding common stock of GII to GAC in exchange
solely for the Preferred Stock.
NOW, THEREFORE, in consideration of the mutual promises, covenants, and
representations contained herein, THE PARTIES HERETO AGREE AS FOLLOWS:
ARTICLE 1
EXCHANGE OF SECURITIES
1.1 Issuance of Shares. Subject to all of the terms and conditions of this
Agreement, GAC agrees to cause GII to issue 3,500 shares of Preferred Stock to
GBIT in exchange for all of the issued and outstanding shares of GII's Common
Stock.
1.2 Exemption from Registration. The parties hereto intend that the
Preferred Stock to be issued by GII to GBIT shall be exempt from the
registration requirements of the Securities Act of 1933, as amended (the "Act"),
pursuant to Section 4(2) of the Act and Rule 506 of Regulation D under such Act.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF GII
Except as disclosed in Schedule 2 which is attached hereto and
incorporated herein by reference, GII hereby represents and warrants to GAC
that:
2.1 Organization. GII is a corporation duly organized, validly existing,
and in good standing under the laws of the state of Virginia, has all necessary
corporate powers to own its properties and to carry on its business as now owned
and operated by it, and is duly qualified to do
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business and is in good standing in each of the jurisdictions where its business
requires qualification.
2.2 Capital. The authorized capital stock of the Company consists of the
shares of common stock set forth on Schedule 2. Schedule 2 also sets forth the
number of shares of common stock which are issued and outstanding. There are no
other classes of capital stock authorized, issued or outstanding. All of the
issued and outstanding shares of the Company's common stock are duly authorized,
validly issued, fully paid, and non-assessable. There are no outstanding
subscriptions, options, rights, warrants, debentures, instruments, convertible
securities, or other agreements or commitments obligating the Company to issue
or to transfer from treasury any additional shares of its capital stock of any
class.
2.3 Subsidiaries. The Company has no subsidiaries except for National
Computer Resources, Inc., a corporation ("NCRI"); and Natcom Automated
Solutions, Inc., a corporation ("NASI"). (NCRI and NASI are sometimes
hereinafter referred to collectively as the "Subsidiaries" and individually as a
"Subsidiary".)
2.4 Directors and Officers. Schedule 2 contains the names and titles of
all directors and officers of the Company and each Subsidiary as of the date of
this Agreement.
2.5 Financial Statements. The Company has delivered to GAC its audited
balance sheet, statement of operations, statement of stockholders' equity and
statement of cash flows as of and for the period ended December 31, 1997, and
its unaudited balance sheet and statement of operations for the nine months
ended September 30, 1998 (the "Company Financial Statements"). The Company
Financial Statements are complete and correct in all material respects and have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods indicated. The Financial
Statements accurately set out and describe the financial condition of the
Company as of September 30, 1998.
2.6 Absence of Changes. Since September 30, 1998, except for changes in
the ordinary course of business which have not in the aggregate been materially
adverse, to the best of the Company's knowledge, the Company has conducted its
business only in the ordinary course and has not experienced or suffered any
material adverse change in the condition (financial or otherwise), results of
operations, properties, business or prospects of the Companies taken as a whole
or waived or surrendered any claim or right of material value.
2.7 Absence of Undisclosed Liabilities. Neither the Company nor any of its
properties or assets are subject to any material liabilities or obligations of
any nature, whether absolute, accrued, contingent or otherwise and whether due
or to become due, that are not reflected in the Company Financial Statements
presented to GAC or have otherwise been disclosed in writing to GAC.
2.8 Tax Returns. Except as disclosed to GAC, within the times and in the
manner prescribed by law, the Company has filed all federal, state and local tax
returns required by law, or
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has filed extensions which have not yet expired, and has paid all taxes,
assessments and penalties due and payable, except for amounts which are not
material to the Companies, taken as a whole.
2.9 Investigation of Financial Condition. Without in any manner reducing
or otherwise mitigating the representations contained herein, GAC and/or its
attorneys shall have the opportunity to meet with accountants and attorneys to
discuss the financial condition of the Company. The Company shall make available
to GAC and/or its attorneys all books and records of the Company and each
Subsidiary. The Company may request that any person receiving information with
respect to it shall execute and deliver an appropriate confidentiality agreement
as a condition to such receipt.
2.10 Compliance with Laws. The Company and the Subsidiaries have each
complied with, and are not in violation of, applicable federal, state or local
statutes, laws and regulations (including, without limitation, any applicable
building, zoning or other law, ordinance or regulation) affecting its properties
or the operation of its business, except for matters which would not have a
material affect on the Company or its properties taken as a whole.
2.11 Litigation. Except as disclosed in writing to GAC, the Company is not
a party to any suit, action, arbitration or legal, administrative or other
proceeding, or governmental investigation pending or, to the best knowledge of
the Company, threatened against or affecting the Company or its business, assets
or financial condition, except for matters which would not have a material
affect on the Companies or their properties taken as a whole. The Company is not
in default with respect to any order, writ, injunction or decree of any federal,
state, local or foreign court, department, agency or instrumentality applicable
to it. The Company is not engaged in any lawsuit to recover any material amount
of monies due to it. GII and GBIT are subject to a temporary restraining order
(the "TRO") in an action entitled Source Code Corporation, et al v. Global
Intellicom Inc. et al 99- 270 (Massachusetts Superior Court, Norfolk) which
would prevent the consummation of this transaction. It is a condition to the
consummation of the transactions contemplated hereby that the TRO either be
modified to permit this transaction or that a consent to this transaction from
the plaintiffs be obtained by the GBIT and GII.
2.12 Authority. The Company has full corporate power and authority to
enter into this Agreement. The board of directors of the Company has taken all
action required to authorize the execution and delivery of this Agreement by or
on behalf of the Company and the performance of the obligations of the Company
under this Agreement. No other corporate proceedings on the part of the Company
are necessary to authorize the execution and delivery of this Agreement by the
Company or the performance of its obligations under this Agreement. This
Agreement is, when executed and delivered by the Company, and will be a valid
and binding agreement of the Company, enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by
general principles of equity, bankruptcy, insolvency, moratorium and similar
laws relating to creditors' rights generally.
2.13 Ability to Carry Out Obligations. Neither the execution and delivery
of this Agreement, the performance by the Company of its obligations under this
Agreement, nor the
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consummation of the transactions contemplated under this Agreement will to the
best of the Company's knowledge: (a) materially violate any provision of the
Company's articles of incorporation or by-laws; (b) with or without the giving
of notice or the passage of time, or both, violate, or be in conflict with, or
constitute a material default under, or cause or permit the termination or the
acceleration of the maturity of, any debt, contract, agreement or obligation of
the Company, or require the payment of any prepayment or other penalties; (c)
require notice to, or the consent of, any party to any agreement or commitment,
lease or license, to which the Company is bound; (d) result in the creation or
imposition of any security interest, lien, or other encumbrance upon any
material property or assets of the Company; or (e) violate any statute or law or
any judgment, decree, order, regulation or rule of any court or governmental
authority to which the Company is bound or subject. GII and GBIT are subject to
a temporary restraining order (the "TRO") in an action entitled Source Code
Corporation, et al v. Global Intellicom Inc. et al 99-270 (Massachusetts
Superior Court, Norfolk) which would prevent the consummation of this
transaction. It is a condition to the consummation of the transactions
contemplated hereby that the TRO either be modified to permit this transaction
or that a consent to this transaction from the plaintiffs be obtained by the
GBIT and GII.
2.14 Full Disclosure. None of the representations and warranties made by
the Company herein, or in any schedule, exhibit or certificate furnished or to
be furnished in connection with this Agreement by the Company, or on its behalf,
contains or will contain any untrue statement of material fact.
2.15 Assets. The Company has good and marketable title to all of its
tangible properties and such tangible properties are not subject to any material
liens or encumbrances. Notwithstanding the foregoing, the Company has financed
certain operating assets and incurred liens in connection therewith as set forth
in the Company Financial Statements.
2.16 Material Contracts and Obligations. Attached hereto on Schedule 2 is
a list of all agreements, contracts, indebtedness, liabilities and other
obligations to which each Company is a party or by which it is bound that are
material to the conduct and operations of its business and properties, which
provide for payments to or by the Company in excess of $50,000; or which involve
transactions or proposed transactions between the Company and its officers and
directors. Excluded from such list are sales in the ordinary course of business
of the Company. Copies of such agreements and contracts and documentation
evidencing such liabilities and other obligations have been made available for
inspection by GAC and its counsel. All of such agreements and contracts are
valid, binding and in full force and effect in all material respects, assuming
due execution by the other parties to such agreements and contracts.
2.17 Consents and Approvals. No consent, approval or authorization of, or
declaration, filing or registration with, any governmental or regulatory
authority is required to be made or obtained by the Company in connection with:
(a) the execution and delivery by the Company of this Agreement; (b) the
performance by the Company of its obligations under this Agreement; or (c) the
consummation by the Company of the transactions contemplated under this
Agreement.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF GBIT
Except as disclosed in Schedule 3 which is attached hereto and
incorporated herein by reference, or in the Disclosure Documents (as hereinafter
defined), GBIT hereby represents and warrants to GAC that:
3.1 Organization. GBIT is a corporation duly organized, validly existing,
and in good standing under the laws of the state of Nevada, has all necessary
corporate powers to own its properties and to carry on its business as now owned
and operated by it, and is duly qualified to do business and is in good standing
in each of the jurisdictions where its business requires qualification.
3.2 Stock Ownership. GBIT owns all of the capital stock of GII free and
clear of any claim or encumbrance.
3.3 Subsidiaries. Except as set forth in schedule 3, GBIT has no
subsidiaries.
3.4 Directors and Officers. Schedule 3 contains the names and titles of
all directors and officers of GBIT as of the date of this Agreement.
3.5 Financial Statements and Disclosure Documents. GBIT has delivered to
GAC its audited consolidated balance sheet, consolidated statement of
operations, consolidated statement of stockholders' equity and consolidated
statement of cash flows as of and for the period ended December 31, 1997, and
its unaudited consolidated balance sheet, and consolidated statement of
operations for the nine months ended September 30, 1998 (the "GBIT Financial
Statements"). The GBIT Financial Statements are complete and correct in all
material respects and have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
indicated. The Financial Statements accurately set out and describe the
financial condition of the Companies as of September 30, 1998. GBIT has also
delivered to GAC a copy of each and every document filed by it since January 1,
1998 with the Securities and Exchange Commission (the "SEC") under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). Such documents
are hereinafter referred to as the "Disclosure Documents". Any information
included in the Disclosure Documents, or in any exhibit thereto (copies of which
exhibits will be made available to GAC and/or its attorneys on request) shall be
deemed to be a part of Schedule 3, and Schedule 2, as though fully set forth
therein.
3.6 Absence of Changes. Since September 30, 1998, except for changes in
the ordinary course of business which have not in the aggregate been materially
adverse, to the best of GBIT's knowledge, GBIT has conducted its business only
in the ordinary course and has not experienced or suffered any material adverse
change in the condition (financial or otherwise), results of
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operations, properties, business or prospects of GBIT taken as a whole or waived
or surrendered any claim or right of material value.
3.7 Absence of Undisclosed Liabilities. GBIT and its properties or assets
are subject to any material liabilities or obligations of any nature, whether
absolute, accrued, contingent or otherwise and whether due or to become due,
that are not reflected in the Financial Statements or Disclosure Documents
presented to GAC or have otherwise been disclosed in writing to GAC.
3.8 Tax Returns. Within the times and in the manner prescribed by law,
GBIT has filed all federal, state and local tax returns required by law, or has
filed extensions which have not yet expired, and has paid all taxes, assessments
and penalties due and payable, except for amounts which are not material to
GBIT, taken as a whole.
3.9 Investigation of Financial Condition. Without in any manner reducing
or otherwise mitigating the representations contained herein, GAC and/or its
attorneys shall have the opportunity to meet with accountants and attorneys to
discuss the financial condition of GBIT. GBIT shall make available to GAC and/or
its attorneys all books and records of such Company. A Company may request that
any person receiving information with respect to it shall execute and deliver an
appropriate confidentiality agreement as a condition to such receipt.
3.10 Compliance with Laws. GBIT have each complied with, and is not in
violation of, applicable federal, state or local statutes, laws and regulations
(including, without limitation, any applicable building, zoning or other law,
ordinance or regulation) affecting its properties or the operation of its
business, except for matters which would not have a material affect on GBIT or
its properties taken as a whole. Further, GBIT has filed all periodic reports
required to be filed by it under the Exchange Act. GBIT represents that the
reports filed by GAC under the 1934 Act are true, accurate and complete and do
not omit to state a fact necessary to be stated in order to make the statements
made therein not misleading.
3.11 Litigation. Except as disclosed in writing to GAC, GBIT is not a
party to any suit, action, arbitration or legal, administrative or other
proceeding, or governmental investigation pending or, to the best knowledge of
GBIT, threatened against or affecting GBIT or its business, assets or financial
condition, except for matters which would not have a material affect on GBIT or
their properties taken as a whole. GBIT is not in default with respect to any
order, writ, injunction or decree of any federal, state, local or foreign court,
department, agency or instrumentality applicable to it. GBIT is not engaged in
any lawsuit to recover any material amount of monies due to it. GII and GBIT are
subject to a temporary restraining order (the "TRO") in an action entitled
Source Code Corporation, et al v. Global Intellicom Inc. et al 99-270
(Massachusetts Superior Court, Norfolk) which would prevent the consummation of
this transaction. It is a condition to the consummation of the transactions
contemplated hereby that the TRO either be modified to permit this transaction
or that a consent to this transaction from the plaintiffs be obtained by the
GBIT and GII.
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3.12 Authority. GBIT has full corporate power and authority to enter into
this Agreement. The board of directors of GBIT has taken all action required to
authorize the execution and delivery of this Agreement by or on behalf of GBIT
and the performance of the obligations of GBIT under this Agreement. No other
corporate proceedings on the part of GBIT are necessary to authorize the
execution and delivery of this Agreement by GBIT or the performance of its
obligations under this Agreement. This Agreement is, when executed and delivered
by GBIT, and will be a valid and binding agreement of GBIT, enforceable against
GBIT in accordance with its terms, except as such enforceability may be limited
by general principles of equity, bankruptcy, insolvency, moratorium and similar
laws relating to creditors' rights generally.
3.13 Ability to Carry Out Obligations. Neither the execution and delivery
of this Agreement, the performance by GBIT of its obligations under this
Agreement, nor the consummation of the transactions contemplated under this
Agreement will to the best of GBIT's knowledge: (a) materially violate any
provision of GBIT's articles of incorporation or by-laws; (b) with or without
the giving of notice or the passage of time, or both, violate, or be in conflict
with, or constitute a material default under, or cause or permit the termination
or the acceleration of the maturity of, any debt, contract, agreement or
obligation of GBIT, or require the payment of any prepayment or other penalties;
(c) require notice to, or the consent of, any party to any agreement or
commitment, lease or license, to which GBIT is bound; (d) result in the creation
or imposition of any security interest, lien, or other encumbrance upon any
material property or assets of GBIT; or (e) violate any statute or law or any
judgment, decree, order, regulation or rule of any court or governmental
authority to which GBIT is bound or subject. GII and GBIT are subject to a
temporary restraining order (the "TRO") in an action entitled Source Code
Corporation, et al v. Global Intellicom Inc. et al 99-270 (Massachusetts
Superior Court, Norfolk) which would prevent the consummation of this
transaction. It is a condition to the consummation of the transactions
contemplated hereby that the TRO either be modified to permit this transaction
or that a consent to this transaction from the plaintiffs be obtained by the
GBIT and GII.
3.14 Full Disclosure. None of the representations and warranties made by
GBIT herein, or in any schedule, exhibit or certificate furnished or to be
furnished in connection with this Agreement by GBIT, or on its behalf, contains
or will contain any untrue statement of material fact.
3.15 Assets. GBIT has good and marketable title to all of the shares of
the Companies.
3.16 Material Contracts and Obligations. Included in Schedule 3 or in the
Disclosure Documents incorporated therein is a list of all agreements,
contracts, indebtedness, liabilities and other obligations to which each Company
is a party or by which it is bound that are material to the conduct and
operations of its business and properties, which provide for payments to or by
GBIT in excess of $50,000; or which involve transactions or proposed
transactions between GBIT and its officers and directors. Excluded from such
list are sales in the ordinary course of business of GBIT. Copies of such
agreements and contracts and documentation evidencing such liabilities and other
obligations have been made available for inspection by GAC and its counsel. All
of such agreements
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and contracts are valid, binding and in full force and effect in all material
respects, assuming due execution by the other parties to such agreements and
contracts.
3.17 Consents and Approvals. No consent, approval or authorization of, or
declaration, filing or registration with, any governmental or regulatory
authority is required to be made or obtained by GBIT in connection with: (a) the
execution and delivery by GBIT of this Agreement; (b) the performance by GBIT of
its obligations under this Agreement; or (c) the consummation by GBIT of the
transactions contemplated under this Agreement.
3.18 No Prior or Pending Investigation. GBIT is not aware of any prior or
pending investigations or legal proceedings by the SEC, any state securities
regulatory agency, or any other governmental agency regarding GBIT or any
officers or directors of GBIT or any shareholders or controlling persons of such
shareholders.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF GAC
Except as disclosed in Schedule 4 which is attached hereto and
incorporated herein by reference, GAC represents and warrants to GBIT and each
Company:
4.1 Organization. GAC is a corporation duly organized, valid existing, and
in good standing under the laws of Delaware, has all necessary corporate powers
to own properties and to carry on business, and it is not now conducting any
business, except to the extent to which the effecting of the transaction
contemplated by this Agreement constitutes doing business.
4.2 Capitalization. The authorized capital stock of GAC consists of 1,000
shares of no par value Common Stock all of which are currently issued and
outstanding and 10,000 shares of "blank check" preferred stock, par value $.01
per share, of which 3,500 shares have been designated as the Preferred Stock, no
shares of any series of preferred stock are issued and outstanding. All of the
issued and outstanding shares of Common Stock are duly authorized, validly
issued, fully paid and nonassessable. There are no outstanding subscriptions,
options, rights, warrants, convertible securities, or other agreements or
commitments obligating GAC to issue or to transfer from treasury any additional
shares of its capital stock of any class.
4.3 Subsidiaries. GAC does not presently have any subsidiaries or own any
interest in any other enterprise (whether or not such enterprise is a
corporation).
4.4 Directors and Officers. Schedule 4 contains the names and titles of
all directors and officers of GAC as of the date of this Agreement.
4.5 Financial Statements. GAC does not have any financial statements. GAC
has been organized expressly for the purpose of entering into this transaction
and other than for activities incident to its organization, has not engaged in
any business activities.
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4.6 Absence of Changes. GAC's business prior to the closing hereunder
shall consist solely of activities preparatory to the closing hereunder.
4.7 Absence of Undisclosed Liabilities. To the best of GAC's knowledge,
neither GAC nor any of its properties or assets are subject to any liabilities
or obligations of any nature, whether absolute, accrued, contingent or otherwise
and whether due other than the costs and expenses of its organization and of the
transaction contemplated by this Agreement.
4.8 Tax Returns. GAC has not been required to file any tax returns.
4.9 Investigation of Financial Condition. Without in any manner reducing
or otherwise mitigating the representations contained herein, GBIT and each
Company shall have the opportunity to meet with GAC's accountants and attorneys
to discuss the financial condition of GAC. GAC shall make available to GBIT and
each Company all books and records of GAC.
4.10 Compliance with Laws. To the best of GAC's knowledge, GAC has
complied with, and is not in violation of, applicable federal, state or local
statutes, laws and regulations (including, without limitation, any applicable
building, zoning, or other law, ordinance, or regulation) affecting its
properties or the operation of its business.
4.11 Litigation. GAC is not a party to any suit, action, arbitration, or
legal, administrative, or other proceeding, or governmental investigation
pending or, to the best knowledge of GAC, threatened against or affecting GAC or
its business, assets, or financial condition. GAC is not in default with respect
to any order, writ, injunction, or decree of any federal, state, local, or
foreign court, department agency, or instrumentality. GAC is not engaged in any
legal action to recover moneys due to it.
4.12 Authority. GAC has full corporate power and authority to enter into
this Agreement and to consummate the transactions contemplated by this
Agreement. The Board of Directors of GAC has taken all action required to
authorize the execution and delivery of this Agreement by or on behalf of GAC,
the performance of the obligations of GAC under this Agreement and the
consummation by GAC of the transactions contemplated under this Agreement. No
other corporate proceedings on the part of GAC are necessary to authorize the
execution and delivery of this Agreement by GAC in the performance of its
obligations under this Agreement. This Agreement is, and when executed and
delivered by GAC, will be a valid and binding agreement of GAC, enforceable
against GAC in accordance with its terms, except as such enforceability may be
limited by general principles of equity, bankruptcy, insolvency, moratorium and
similar laws relating to creditors rights generally.
4.13 Ability to Carry Out Obligations. Neither the execution and delivery
of this Agreement, the performance by GAC of its obligations under this
Agreement, nor the consummation of the transactions contemplated under this
Agreement will, to the best of GAC's knowledge: (a) violate any provision of
GAC's articles of incorporation or bylaws; (b) with or without the giving
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of notice or the passage of time, or both, violate, or be in conflict with, or
constitute a default under, or cause or permit the termination or the
acceleration of the maturity of, any debt, contract, agreement or obligation of
GAC, or require the payment of any prepayment or other penalties; (c) require
notice to, or the consent of, any party to any agreement or commitment, lease or
license, to which GAC is bound; (d) result in the creation or imposition of any
security interest, lien or other encumbrance upon any property or assets of GAC;
or (e) violate any statute or law or any judgment, decree, order, regulation or
rule of any court or governmental authority to which GAC is bound or subject.
4.14 Validity of GAC Shares. The shares of Preferred Stock to be delivered
pursuant to this Agreement, when issued in accordance with the provisions of
this Agreement, will be duly authorized, validly issued, fully paid and
non-assessable.
4.15 Full Disclosure. None of the representations and warranties made by
GAC herein, or in any exhibit, certificate or memorandum furnished or to be
furnished by GAC, or on its behalf, contains or will contain any untrue
statement of material fact, or omit any material fact the omission of which
would be misleading.
4.16 Assets. GAC has good and marketable title to all of its tangible
properties and such tangible properties are not subject to any material liens or
encumbrances.
4.17 Material Contracts and Obligations. GAC has no material contracts to
which it is a party or by which it is bound.
4.18 Consents and Approvals. No consent, approval or authorization of, or
declaration, filing or registration with, any governmental or regulatory
authority is required to be made or obtained by GAC in connection with: (a) the
execution and delivery by GAC of its obligations under this Agreement; (b) the
performance by GAC of its obligations under this Agreement; or (c) the
consummation by GAC of the transactions contemplated by this Agreement.
4.19 Real Property. GAC does not own, use or claim any interest in any
real property, including without limitation any license, leasehold or any
similar interest in real property.
ARTICLE 5
COVENANTS
5.1 Investigative Rights. From the date of this Agreement until the
Closing Date, each party shall provide to the other party, and such other
party's counsels, accountants, auditors, and other authorized representatives,
full access during normal business hours and upon reasonable advance written
notice to all of each party's properties, books, contracts, commitments, and
records for the purpose of examining the same. Each party shall furnish the
other party with all information concerning each party's affairs as the other
party may reasonably request. If the transaction contemplated hereby is not
completed, all documents received by each party and/or its attorneys and
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accountants, auditors or other authorized representatives shall be returned to
the other party who provided same upon request. The parties hereto, their
directors, employees, agents and representatives shall not disclose any of the
information described above unless such information is already disclosed to the
public, without the prior written consent of the party to which the confidential
information pertains. Each party shall take such steps as are necessary to
prevent disclosure of such information to unauthorized third parties.
5.2 Conduct of Business. Prior to the Closing, each party each conduct its
business in the normal course, and shall not sell, pledge, or assign any assets,
without the prior written approval of the other party, except in the regular
course of business. Except for the filling of a certificate of designation for
the Preferred Shares as provided herein, no party shall amend its Articles of
Incorporation or By-laws, declare dividends, redeem or sell stock or other
securities, incur additional or newly-funded liabilities, acquire or dispose of
fixed assets, change employment terms, enter into any material or long-term
contract, guarantee obligations of any third party, settle or discharge any
balance sheet receivable for less than its stated amount, pay more on any
liability than its stated amount, or enter into any other transaction other than
in the regular course of business except as otherwise contemplated herein.
Notwithstanding the foregoing GBIT shall be allowed to seek additional financing
and issue stock, preferred stock and indebtedness without the consent of GAC or
the Companies.
ARTICLE 6
CONDITIONS PRECEDENT TO GAC'S PERFORMANCE
6.1 Conditions. The obligations of GAC hereunder shall be subject to the
satisfaction, at or before the Closing, of all the conditions set forth in this
Article 5. GAC may waive any or all of these conditions in whole or in part
without prior notice; provided, however, that no such waiver of a condition
shall constitute a waiver by GAC of any other condition of or any of GAC's other
rights or remedies, at law or in equity, if GBIT or any of the Companies shall
be in default of any of their representations, warranties, or covenants under
this Agreement.
6.2 Accuracy of Representations. Except as otherwise permitted by this
Agreement, all representations and warranties by GBIT and GII in this Agreement
or in any written statement that shall be delivered to GAC by GBIT and/or the
any Company under this Agreement shall be true and accurate on and as of the
Closing Date in all material respects as though made at that time.
6.3 Performance. GBIT and GII shall have performed, satisfied, and
complied with all covenants, agreements, and conditions required by this
Agreement to be performed or complied with by it, on or before the Closing Date.
6.4 Absence of Litigation. No action, suit, or proceeding before any court
or any governmental body or authority, pertaining to the transaction
contemplated by this Agreement or to its consummation, shall have been
instituted or threatened against GBIT or GII on or before the Closing Date. In
furtherance thereof, GBIT and/or GII shall have either effected a lifting or
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modification of the TRO or shall have obtained such consents as the TRO, in the
reasonable opinion of GAC and its counsel shall not be an impediment to this
transaction.
6.5 Officer's Certificate. GBIT and GII shall have delivered to GAC a
certificate, dated the Closing Date, and signed by the Chief Executive Officer
of GBIT, certifying that each of the conditions specified in Sections 6.2
through 6.4 hereof have been fulfilled.
6.6 Indemnification Agreement. GAC shall have received the GBIT's
agreement, in form and substance reasonably satisfactory to GAC and its counsel,
to indemnify GAC and its officers, directors, employees and agents against any
claim bought by or in the name of GBIT or its shareholders relating to the
transactions contemplated by this Agreement.
ARTICLE 7
CONDITIONS PRECEDENT TO GBIT's PERFORMANCE
7.1 Conditions. GBIT's obligations hereunder shall be subject to the
satisfaction, at or before the Closing, of all the conditions set forth in this
Article 7. GBIT may waive any or all of these conditions in whole or in part
without prior notice; provided, however, that no such waiver of a condition
shall constitute a waiver by GBIT of any other condition of or any of GBIT's
rights or remedies, at law or in equity, if GAC shall be in default of any of
its representations, warranties, or covenants under this Agreement.
7.2 Accuracy of Representations. Except as otherwise permitted by this
Agreement, all representations and warranties by GAC in this Agreement or in any
written statement that shall be delivered to GBIT or the Companies by GAC under
this Agreement shall be true and accurate on and as of the Closing Date as
though made at that time.
7.3 Performance. GAC shall have performed, satisfied, and complied with
all covenants, agreements, and conditions required by this Agreement to be
performed or complied with by them, on or before the Closing Date. GAC shall
have filed a Certificate of Designation for the Preferred Shares with the
Secretary of State of the State of Delaware which shall have terms and
conditions reasonably acceptable to GBIT.
7.4 Absence of Litigation. No action, suit or proceeding before any court
or any governmental body or authority, pertaining to the transaction
contemplated by this Agreement or to its consummation, shall have been
instituted or threatened against GAC on or before the Closing Date.
7.5 Officer's Certificate. GAC shall have delivered to GBIT and the
Companies a certificate, dated the Closing Date, and signed by a duly authorized
person of GAC certifying that each of the conditions specified in Sections 7.2
through 7.4 have been fulfilled.
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ARTICLE 8
CLOSING
8.1 Closing. The Closing of this transaction shall be held at the offices
of Frank J. Hariton, Esq., The Empire State Building, 350 Fifth Avenue - Suite
3000, New York, New York 10118, or such other place as shall be mutually agreed
upon, on March 31, 1999, or such other date as shall be mutually agreed upon by
the parties. At the Closing:
(a) GBIT shall deliver the certificates for the shares of GII to
GAC.
(b) GBIT shall receive a certificate for 3,500 shares of Preferred
Stock.
(c) GAC shall deliver a signed Consent and/or Minutes of the
Directors of GAC approving this Agreement and each matter to be approved by the
Directors of GAC under this Agreement.
(d) GBIT and the Company shall deliver a signed Consent or Minutes
of the Directors of GBIT and of the Company approving this Agreement and each
matter to be approved by the Directors of GBIT or the Company under this
Agreement.
(e) GAC shall deliver to GBIT an authorized person's certificate, as
described in Section 7.5 hereof, dated the Closing Date, that all
representations, warranties, covenants and conditions set forth in this
Agreement on behalf of GAC are true and correct as of, or have been fully
performed and complied with by, the Closing Date.
(f) GBIT and the Company shall deliver an officer's certificate, as
described in Section 6.5 hereof, dated the Closing Date, that all
representations, warranties, covenants and conditions set forth in this
Agreement on behalf of GBIT and the Company are true and correct as of, or have
been fully performed and complied with by, the Closing Date.
(g) GBIT shall deliver to GAC the indemnification agreement required
under Section 6.6 hereof.
ARTICLE 9
MISCELLANEOUS
9.1 Captions and Headings. The Article and paragraph headings throughout
this Agreement are for convenience and reference only, and shall in no way be
deemed to define, limit, or add to the meaning of any provision of this
Agreement.
9.2 No Oral Change. This Agreement and any provision hereof, may not be
waived, changed, modified, or discharged orally, but it can be changed by an
agreement in writing signed by the party against whom enforcement of any waiver,
change, modification, or discharge is sought.
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9.3 Non-Waiver. Except as otherwise expressly provided herein, no waiver
of any covenant, condition, or provision of this Agreement shall be deemed to
have been made unless expressly in writing and signed by the party against whom
such waiver is charged; and (i) the failure of any party to insist in any one or
more cases upon the performance of any of the provisions, covenants, or
conditions of this Agreement or to exercise any option herein contained shall
not be construed as a waiver or relinquishment for the future of any such
provisions, covenants, or conditions, (ii) the acceptance of performance of
anything required by this Agreement to be performed with knowledge of the breach
or failure of a covenant, condition, or provision hereof shall not be deemed a
waiver of such breach or failure, and (iii) no waiver by any party of one breach
by another party shall be construed as a waiver with respect to any other or
subsequent breach.
9.4 Time of Essence. Time is of the essence of this Agreement and of each
and every provision hereof.
9.5 Entire Agreement. This Agreement contains the entire Agreement and
understanding between the parties hereto, and supersedes all prior agreements
and understandings.
9.6 Choice of Law. This Agreement and its application shall be governed by
the laws of the State of New York, except to the extent its conflict of laws
provisions would apply the laws of another jurisdiction.
9.7 Notices. All notices, requests, demands, and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given on the date of service if served personally on the party to whom notice is
to be given, or on the third day after mailing if mailed to the party to whom
notice is to be given, by first class mail, registered or certified, postage
prepaid, and properly addressed or the following day if sent by Federal Express,
Airborne Express, DHL, UPS or other recognized overnight courier. Any notice
hereunder shall also be transmitted by facsimile. The addresses and facsimile
numbers to be used are as follows:
GAC:
GAC Acquisition Corp.
1461A First Avenue - Suite 334
New York, New York 10021
Fax: (212) 713-5629
with a copy to:
Frank J. Hariton, Esq.
The Empire State Building
350 Fifth Avenue - Suite 3000
New York, New York 10118
Fax: (212) 695-6007 and (914) 693-2963
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GBIT and the Company:
c/o Global Intellicom, Inc
747 Third Avenue - 17th Floor
New York, New York 10117
Fax (212) 750-2320
9.8 Binding Effect. This Agreement shall inure to and be binding upon the
heirs, executors, personal representatives, successors and assigns of each of
the parties to this Agreement.
9.9 Mutual Cooperation. The parties hereto shall cooperate with each other
to achieve the purpose of this Agreement, and shall execute such other and
further documents and take such other and further actions as may be necessary or
convenient to effect the transaction described herein.
9.10 Brokers. The parties hereto represent and agree that no broker has
brought about the aforementioned transaction and no finder's fee has been paid
or is payable by any party. Each of the parties hereto shall indemnify and hold
the other harmless against any and all claims, losses, liabilities or expenses
which may be asserted against it as a result of its dealings, arrangements or
agreements with any broker or person, except as described in this paragraph.
9.11 Announcements. GAC and GBIT will consult and cooperate with each
other as to the timing and content of any announcements of the transactions
contemplated hereby to the general public or to employees, customers or
suppliers.
9.12 Expenses. GAC and GBIT will pay their own legal, accounting and any
other out-of-pocket expenses reasonably incurred in connection with this
transaction, whether or not the transaction contemplated hereby is consummated.
9.13 Exhibits. As of the execution hereof, the parties hereto have
provided each other with the Exhibits provided for herein above, including any
items referenced therein or required to be attached thereto. Any material
changes to the Exhibits shall be immediately disclosed to the other party.
AGREED TO AND ACCEPTED as of the date first above written.
GAC ACQUISITION CORP. GLOBAL INTELLICOM, INC. and GLOBAL -
INSYNC, INC
By /s/ By /s/
--------------------------------- ---------------------------------
Authorized Signatory N. Norman Muller, Chairman of the Board
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