EXHIBIT 10.37
GLOBALTRON CORPORATION AND PHONE 1 INC.
COMMON STOCK PURCHASE AGREEMENT
MAY 15, 2001
COMMON STOCK
------------
PURCHASE AGREEMENT
------------------
This Common Stock Purchase Agreement (this "Agreement") is made as of
the 15th day of May, 2001 by and among GLOBALTRON CORPORATION, a Florida
corporation (the "Buyer"), and the Sellers listed on the signature page of this
Agreement (each a "Seller and collectively, the "Sellers").
RECITALS:
WHEREAS, each Seller owns the number of shares of common
stock, par value .001 per share (the "Common Stock") and the percentage of the
outstanding stock of Phone 1 Inc., a corporation organized under the laws of the
State of Florida (the "Company") set forth opposite such Seller's name on
Schedule A hereto. The Common Stock owned by the Sellers represents 100% of the
capital stock issued and outstanding of the Company.
WHEREAS, the Buyer has authorized for issuance the number of
shares of common stock, par value .001 per share (the "Globaltron Shares"), set
forth opposite each Seller's name on Schedule A hereto.
WHEREAS, the Sellers wish to sell, and the Buyer wishes to
purchase, the Common Stock for such number of Globaltron Shares set forth
opposite each Seller's name on Schedule A hereto.
NOW, THEREFORE, in consideration of the premises and of other good and
valuable consideration, receipt of which is acknowledged, it is hereby agreed as
follows:
1. Purchase and Sale of the Common Stock
-------------------------------------
1.1 Sale of the Common Stock.
-------------------------
In consideration of the issuance of Globaltron Shares and in
reliance on the representations, warranties and undertakings of the Buyer
herein, each Seller shall sell and transfer to Buyer on the Closing Date, and
Buyer shall purchase from each Seller, the amount of Common Stock set forth
opposite such Seller's name on Schedule A hereto, free and clear of all liens,
claims, pledges, charges, agreements, and encumbrances of any kind whatsoever
("Liens"). In consideration of the transfer of the Common Stock to Buyer and in
reliance on the representations, warranties and undertakings of the Sellers
herein contained, the Buyer shall sell and issue to each Seller, on the Closing
Date, and the Sellers shall purchase from the Buyer, the amount of Globaltron
Shares set forth opposite each Seller's name on Schedule A hereto, free and
clear of all Liens, with the aggregate amount of such Globaltron Shares being
12,000,000.
1.2 Closing. Subject to the conditions set forth below, the
purchase and sale of the Common Stock shall take place at the offices of
Proskauer Rose LLP, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, on or before May
31, 2001, or at such other time and place as the Buyer and the Sellers mutually
agree upon in writing (which time and place are designated as the
"Closing" and the "Closing Date"). If the Closing does not occur prior to June
30, 2001, either party may terminate this Agreement by providing the other
parties written notice of such termination. At the Closing, the Buyer shall
deliver to each Seller, stock certificates(s) representing the Globaltron Shares
(which shall have endorsed thereon the legend referred to in Section 2.21
hereof). At the Closing, each Seller shall deliver to the Buyer stock
certificate(s) representing the Common Stock owned by it free of any legends
(except for the legend described in Part 1.2 of Schedule 1) or Liens of any
kind, together with stock powers executed by it with the signatures thereon
guaranteed by a member of the New York Stock Exchange or a national bank in the
United States. All of the certificates issued pursuant to this Section 1.2 shall
be issued in the names and the amounts set forth on Schedule A hereto.
2. Representations, Warranties and Agreements of the Sellers. The
Sellers, jointly and severally, hereby represent and warrant to, and agree with,
the Buyer, except as set forth on the Schedule of Exceptions furnished to the
Buyer and attached hereto as Schedule 1, specifically identifying the relevant
subsection hereof, which exceptions shall be deemed to be representations and
warranties as if made hereunder, as follows:
2.1 Organization, Good Standing and Qualification. Each of the
Sellers and the Company, is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of formation. Each of the
Company and the Sellers has all requisite power and authority to carry on its
business as now conducted and as proposed to be conducted. Each of the Company
and the Sellers is duly qualified to transact business and is in good standing
in each jurisdiction in which the failure so to qualify could have a material
adverse effect on its business, properties, operations, earnings, assets,
liabilities, condition (financial or otherwise) (collectively, "Condition").
2.2 Capitalization. The authorized capital stock of the
Company consists of and upon the consummation of the Closing shall consist of
1,000 shares of common stock, $.001 par value per share, of which all are issued
and outstanding. All the outstanding shares have been duly and validly issued,
are fully paid and non-assessable. The Company does not have outstanding any
securities convertible into or exchangeable for its capital stock or outstanding
any rights to subscribe for or to purchase, or any options for the purchase of,
or any agreements providing for the issuance (contingent or otherwise) of, or
any calls, commitments or claims of any character relating to, its capital
stock. There are no agreements among the shareholders of the Company with
respect to the voting or transfer of the capital stock of the Company and none
of its shareholders has preemptive rights. Schedule 2 hereto includes a complete
and correct list as of immediately prior to the Closing, of the name of each of
the Company shareholders and the number of shares of stock owned by such
shareholder. Each Seller is the record and beneficial owner of the shares of
Common Stock set forth opposite such Seller's name on Schedule A hereto, which
are free and clear from any Liens. There is not outstanding any security,
option, warrant, right, agreement, understanding or commitment of any kind
entitling any person or entity to acquire any of the Common Stock. The Common
Stock has not been registered with the SEC or any state regulatory authority.
2.3 Authority; Execution and Delivery; Requisite Consents,
Nonviolation.
2
Each Seller has, and at the Closing will have, all requisite
power and authority to execute, deliver and perform this Agreement and each
other document or instrument executed by any of them, or any of its officers, in
connection herewith or therewith or pursuant hereto or thereto and to consummate
the transactions contemplated hereby and thereby. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by all
necessary action on the part of each of the Sellers. This Agreement is duly
executed and delivered by each of the Sellers and is the legal, valid and
binding obligation of each Seller, enforceable against each Seller in accordance
with its terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting the
enforceability of creditors' rights in general or by general principles of
equity. As to the Company and each of the Sellers, the execution, delivery and
performance of this Agreement, the consummation by each Seller of the
transactions contemplated hereby and thereby (including, without limitation, the
offer, sale and delivery by each Seller of the Common Stock) will not (a) except
as set forth in Part 2.3 of Schedule 1, require the consent, license, permit,
waiver, approval, authorization or other action of, by or with respect to, or
registration, declaration or filing with, any court or governmental authority,
department, commission, board, bureau, agency or instrumentality, domestic or
foreign ("Governmental Authority") or any other individual, partnership,
corporation, unincorporated organization or association, limited liability
company, trust or other entity (collectively, a "Person"); (b) contravene (i)
any requirement of law to which it is subject, including without limitation the
securities laws of any jurisdiction or the rules or regulations of any
governmental entity or self regulatory body nor (ii) any judgment, decree,
franchise, order or demand applicable to it; (c) conflict or be inconsistent
with or result in any breach of the terms, covenants, conditions or provisions
of, or constitute a default under, or result in the creation or imposition of
(or the obligation to create or impose) any Lien upon any of its properties or
assets pursuant to the terms of any indenture, mortgage, deed of trust agreement
or other instrument to which it is a party or bound or to which it may be
subject or violate any provision of its organization documents. Neither the
Company nor any of the Sellers is in default with respect to any applicable
statute, rules, writ, injunction, decree, order or regulation of any
Governmental Authority having jurisdiction over it which is likely to adversely
affect its ability to perform its obligations hereunder and entering into this
Agreement will not violate any of them.
2.4 Subsidiaries. The Company does not presently own or
control, directly or indirectly, any interest in any corporation, association,
or other business entity. The Company is not a participant in any joint venture,
partnership, or similar arrangement.
2.5 Financial Information. The financial statements of the
Company, attached hereto as Schedule 3, are true, accurate and complete and
fairly present the financial position of the Company and the results of
operations and cash flows for the periods then ended are consistent with the
books and records of the Company and there are no material changes in the
financial condition of the Company, since the date of those financial
statements, except as set forth in Part 2.5 of the Schedule 1 hereto.
2.6 Certain Changes or Events. Since April 30, 2001, (i) there
has been no change in the Condition of the Company, except for changes which
have not been, in the aggregate, materially adverse to the Company; (ii) there
has been no change of Laws (as defined
3
in Section 2.12 hereof), no revocation or change in any Contract (as defined in
Section 2.8 hereof) or Permit (as defined in Section 2.12 hereof) or right to do
business, and no other event or occurrence of any character, whether or not
insured against, which has resulted, or could reasonably be expected to result,
in a material adverse change in the Condition of the Company; (iii) the Company
has not authorized or made any distributions, or declared or paid any dividends,
upon or with respect to any of its capital stock, or other equity interests, nor
has the Company redeemed, purchased or otherwise acquired, or issued or sold,
any of its capital stock or other equity interests; (iv) Except as set forth in
part 2.6 of Schedule 1,the Company has not entered into any material
transaction, other than in the ordinary course of business and consistent with
past practice; (v) except as set forth in Part 2.6 of Schedule 1 the Company has
not incurred any indebtedness for borrowed money or made any loans or advances
to any Person; (vi) there has been no waiver by the Company of a material right
or of a material debt owed to it; (vii) the Company has not failed to satisfy or
discharge any Lien, except in the ordinary course of business and which is not
material to the Condition of the Company (as such business is presently
conducted and as it is proposed to be conducted); and (viii) there has been no
material change in any compensation, arrangement or agreement with any employee,
director, shareholders or Affiliate (as defined below). "Affiliate" of a
specified Person shall mean a Person that directly, or indirectly through one or
more intermediaries, controls or is controlled by, or is under common control
with, the Person specified and, as to any Person that is an individual, such
individual's spouse, parents, grandparents, siblings and lineal descendants.
2.7 Title to Assets. The Company and each of the Sellers has
good and marketable title to all of its assets and properties, free and clear of
any Liens. With respect to any assets or properties it leases, the Company holds
a valid and subsisting leasehold interest therein, free and clear of any Liens,
is in compliance, in all material respects, with the terms of the applicable
lease, and enjoys peaceful and undisturbed possession under such lease. All of
the assets and properties of the Company that are necessary for the conduct of
its business as presently conducted or as proposed to be conducted by the
Company are in good operating condition and repair, subject to ordinary wear and
tear.
2.8 Contracts. The Company is not a party to, nor is either of
its assets or properties bound by, or subject to, any contracts, agreements,
notes, instruments, franchises, leases, licenses, commitments, arrangements or
understandings, written or oral (collectively, "Contracts") of the following
types, except for those (the "Scheduled Contracts") listed in Part 2.8 of
Schedule 1 hereto:
(a) any Contracts pursuant to which the Company, or
another party thereto, is obligated to pay in excess of $10,000;
(b) any Contracts pursuant to which the Company acquired
the right to use any Intellectual Property (as defined in Section 2.9 hereof) or
information that is material to or necessary in the business of the Company, or
pursuant to which the Company has granted to others the right to use, or which
otherwise relates to, its Intellectual Property;
(c) any Contracts (other than advances of expenses to
employees in the ordinary course of business) involving loans, loan agreements,
debt securities, mortgages, deeds of trust, security agreements, suretyships or
guarantees;
4
(d) any Contracts between the Company, on the one hand,
and any of their respective officers, directors, employees or Persons that
beneficially own in excess of 1.0% of the outstanding equity interest of the
Company (each a "Principal Owner"), or any Affiliate or relative, or Affiliate
of a relative, of any of the foregoing, on the other;
(e) any deferred compensation agreements, bonus, pension,
profit sharing, stock option and incentive plans or arrangements,
hospitalization, medical and insurance plans, agreements and policies,
retirement and severance plans and other employee compensation policies and
agreements affecting employees of the Company;
(f) any Contracts with any labor union affecting employees
of the Company;
(g) any Contracts which restrict the Company from freely
engaging in business or competing anywhere; or
(h) any Contracts which otherwise are material to the
Condition of the Company.
All of the Scheduled Contracts are in full force and effect
and constitute legal, valid and binding obligations of the Company and shall be
as of the Closing, and, to the knowledge of the Sellers, the other parties
thereto; the Company and, to the best knowledge of the Sellers, each other party
thereto, has performed in all material respects all obligations required to be
performed by it on or before the date hereof under the Scheduled Contracts, and
no violation exists in respect thereof on the part of the Company or, to the
knowledge of the Sellers, any other party thereto; none of the Scheduled
Contracts is currently being renegotiated; and the validity, effectiveness and
continuation of all Scheduled Contracts will not be materially adversely
affected by the transactions contemplated by this Agreement.
2.9 Intellectual Property.
(a) Set forth on Part 2.9 of Schedule 1 hereto is a true,
correct and complete list of (i) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof, (ii) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith, (iii) all copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith, (iv) all mask works and all
applications, registrations, and renewals in connection therewith, (v) all trade
secrets and confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, and business and
marketing plans and proposals), (vi) all computer software (including data and
related documentation), (vii) all other proprietary rights, and (viii) all
copies and tangible embodiments thereof (in whatever form or medium)
(collectively, the "Intellectual Property") of
5
any kind in which the Company has an interest or which is otherwise used in, or
relates to the business of the Company. Part 2.9 of Schedule 1 hereto contains a
true, correct and complete list of all licenses or agreements that in any way
affect the rights of the Company to any of the Intellectual Property or any
trade secret material of the Company (the "Intellectual Property Licenses").
(b) The Company is the sole and exclusive owner, free and
clear of all Liens, and has all right, title and interest in all of the
Intellectual Property listed in Part 2.9 of Schedule 1 hereto. With respect to
any Intellectual Property or trade secret necessary to conduct its business, the
Company owns or has the exclusive right to use such Intellectual Property or
trade secret in its business. The Company owns or possesses sufficient licenses
or other rights to use all Intellectual Property covered by its patents that are
necessary to conduct the business of the Company as now being conducted and as
proposed to be conducted by the Company.
(c) Each of the Intellectual Property Licenses is in full
force and effect and constitutes a legal, valid, binding and enforceable
obligation in accordance with its terms against the Company, and, to the
knowledge of the Sellers, each other party thereto. The Company has performed
all obligations imposed upon it under each of the Intellectual Property Licenses
to which it is a party. Neither the Company nor, to the knowledge of the
Sellers, any other party thereto is in default thereunder, nor, to the knowledge
of the Sellers, is there any event that with notice or lapse of time, or both,
would constitute a default thereunder. The Company has not received any notice
that any other party to any of the Intellectual Property Licenses intends to
cancel, terminate or refuse to renew the same or to exercise or decline to
exercise any option or other right thereunder. No licenses, sublicenses,
covenants or agreements have been granted or entered into by the Company in
respect of any of the Intellectual Property or any trade secret material of the
Company, except the Intellectual Property Licenses. No director, officer,
shareholder, employee or other Affiliate of the Company owns, directly or
indirectly, in whole or in part, any of the Intellectual Property or any trade
secret material of the Company. None of the officers, employees, consultants,
distributors, agents, representatives or advisors of the Company have entered
into any agreement relating to the Company's business regarding know-how, trade
secrets, assignment of rights in inventions, or prohibition or restriction of
competition or solicitation of customers, or any other similar restrictive
agreement or covenant, whether written or oral, with any Person other than the
Company.
(d) The consummation of the transactions contemplated
hereby will not alter or impair the rights of the Company to any of the
Intellectual Property, any trade secret material to the Company, or under any of
the Intellectual Property Licenses and each item of Intellectual Property owned
or used by the Company immediately prior to the Closing hereunder will be owned
or available for use by the Buyer on identical terms and conditions immediately
subsequent to the Closing.
(e) Neither the Company nor the Sellers, nor any
Affiliates, officers, shareholders, directors or employees of each of them has
disclosed any proprietary information relating to the Intellectual Property or
the Intellectual Property Licenses to any person other than the Buyer and the
employees, consultants, accountants, lawyers and other advisors of the
Companies. Each of the Company, the Sellers and any Affiliates, officers,
shareholders, directors or employees of each of them has at all times maintained
reasonable procedures to
6
protect and have enforced all trade secrets of the Company. Each of the Company,
the Sellers and any Affiliates, officers, shareholders, directors or employees
of each of them has disclosed trade secrets to other Persons solely as required
for the conduct of the Company's business and solely under nondisclosure
agreements that are enforceable by the Company. The Company is not under any
contractual or other obligation to disclose any proprietary information relating
to the Intellectual Property, any trade secret material of the Company or the
Intellectual Property Licenses, nor is any other party to the Intellectual
Property Licenses under any such obligation to disclose proprietary information
included in or relating to Intellectual Property, any trade secret material to
the Company or the Intellectual Property Licenses to any Person, and no event
has taken place, including the execution and delivery of this Agreement and the
transactions contemplated hereby or any related change in the business
activities of the Company, that would give rise to such obligation.
(f) Neither the Company nor any of the Sellers has
interfered with, infringed upon, misappropriated, or otherwise come into
conflict with any Intellectual Property rights of third parties, and none of the
Sellers, the directors and officers (and employees with responsibility for
Intellectual Property matters) of the Seller has ever received any charge,
complaint, claim, demand, or notice alleging any such interference,
infringement, misappropriation, or violation (including any claim that the
Company must license or refrain from using any Intellectual Property rights of
any third party).
(g) With respect to each item of Intellectual Property
required identified on Part 2.9 of Schedule 1: (i) the item is not subject to
any outstanding injunction, judgment, order, decree, ruling, or charge; (ii) no
action, suit, proceeding, hearing, investigation, charge, complaint, claim, or
demand is pending or is threatened which challenges the legality, validity,
enforceability, use, or ownership of the item; and (iii) the Company has never
agreed to indemnify any person for or against any interference, infringement,
misappropriation, or other conflict with respect to the item.
(h) (i) No claim with respect to the Intellectual
Property, any trade secret material to the Company, or any Intellectual Property
License which would adversely affect the ability of the Company to conduct its
business as presently conducted and as proposed to be conducted is currently
pending or, to the knowledge of the Sellers, has been asserted, or overtly
threatened by any Person, nor does any of the Sellers know of any grounds for
any claim against the Company, (A) to the effect that any operation or activity
of the Company presently occurring or contemplated, including, inter alia, the
manufacture, use or sale of any product, device, instrument, or other material
made or used according to the patents or patent applications included in the
Intellectual Property or Intellectual Property Licenses, infringes or
misappropriates any United States or foreign copyright, patent, trademark,
service ▇▇▇▇ or trade secret; (B) to the effect that any other Person infringes
on the Intellectual Property or misappropriates any trade secret or know-how or
other proprietary rights material to the Company; (C) challenging the ownership,
validity or effectiveness of any of the Intellectual Property or trade secret
material of the Company; or (D) challenging the license of the Company or other
legally enforceable right under, any Intellectual Property or the Intellectual
Property Licenses.
7
(ii) None of the Sellers is aware of any presently
existing United States or foreign patents or any patent applications, which if
issued as patents would be infringed by any activity contemplated by the
Company.
(i) All the patents and patent applications of the Company
(the "Patents and Applications") have been properly prepared and filed on behalf
of the Company and are being diligently pursued by the Company. The inventions
described in the Patents and Applications are assigned or licensed to the
Company and no other entity or individual has any right or claim in any of the
inventions, Patents and Applications or any patents to be issued therefrom. The
Sellers are not aware of any material defects in any of the Patents and
Applications which would cause any of them to be held invalid or unenforceable.
There is no objection or proceeding, pending or threatened, that would affect
the validity of any patent issued pursuant thereto.
(j) Except in connection with the prosecution of the
patent applications listed on Part 2.9 of Schedule 1 hereto, there are no
pending judicial or governmental proceedings, including but not limited to
interferences and oppositions, relating to any of the Patents and Applications
or any other proprietary information to which the Company is a party or by which
any property (such term "property" specifically to include rights pursuant to
licenses or options or other rights to acquire licenses) of the Company are
subject, and no such proceedings are threatened or contemplated by Governmental
Authorities or other Persons.
(k) None of the Sellers and the directors and officers
(and employees with responsibility for Intellectual Property matters) of the
Company has any knowledge of any new products, inventions, procedures, or
methods of manufacturing or processing that any competitors or other third
parties have developed which reasonably could be expected to supersede or make
obsolete any product or process of any of the Company.
2.10 Labor Relations; Employees.
(a) Part 2.10 of Schedule 1 hereto (i) sets forth the
name, date of employment, job title, the monthly compensation, and any bonuses
of each regular, full-time and part-time employee of the Company as of the date
hereof; (ii) lists all employment, managerial, advisory, and consulting
agreements, employee confidentiality or other agreements protecting proprietary
processes, formulae, or information to which the Company is a party, and any
employee handbook(s) published by the Company; (iii) lists every employee of the
Company on authorized leaves of absence who has a right to return to employment,
every contract employee or temporary employee; and (iv) sets forth the name,
office and years of service for each officer and each director of the Company.
(b) The Company is not in violation of any federal, state
or other applicable Law respecting employment, social security or employment
practices relating to its own employees or to the employees of any of its
subcontractors.
(c) The Company is not delinquent in payments to any of
its employees for any wages, salaries, commissions, bonuses or other direct
compensation for any services performed by them to the date hereof or amounts
required to be reimbursed to such employees,
8
(ii) there is no unfair labor practice complaint against the Company pending
before any Governmental Authority, (iii) there is no labor strike, dispute,
slowdown or stoppage actually pending or, to the knowledge of the Sellers,
threatened against or involving the Company, (iv) the Company is not a party to
or bound by any collective bargaining agreement and neither any grievance nor
any arbitration proceeding arising out of or under a collective bargaining
agreement is pending and, to the knowledge of the Sellers, no such claim has
been asserted, (v) no labor union currently represents the employees of the
Company and, to the knowledge of the Sellers, no labor union has taken any
action with respect to organizing the employees of the Company, (vi) no key
employee has informed the Company that such employee will or may terminate his
or her employment or engagement with the Company and (vii) except as otherwise
described in this Agreement, there are no payments of benefits to the employees
of the Company above or different from the statutory benefits corresponding
under the applicable labor law.
(d) The Company has filed or caused to be filed all social
security returns required under the statutes, rules or regulations of the
jurisdiction of its incorporation and all other applicable jurisdictions. All
amounts shown in said returns to be due and all additional demands received
prior to the date hereof have been paid in due time and all withholdings
required to be made prior to the date hereof have been duly made and paid in due
time. The amounts set up as accruals for social security contributions in the
Financial Statements are sufficient for the payment of all accrued and not yet
paid amounts.
2.11 Litigation. Except as set forth in Part. 2.11 of Schedule
1 (i), there is no action, suit, proceeding, investigation or governmental
approval process (collectively, "Actions") pending or, to the best knowledge of
the Sellers, threatened or which could be threatened against the Company, or
affecting any of the properties or assets of the Company (including, without
limitation, any of its Permits) which individually or in the aggregate could
have a material adverse effect on the Condition of the Company, nor is there any
basis for any such Action; and (ii) to the knowledge of the Sellers, there is no
Action against any director, officer or employee of the Company in connection
with the business of such Company which, in the event of an adverse judgment
against any such Person, could have a material adverse effect on the Condition
of the Company, nor is there any basis for any such Action. The foregoing
includes, without limitation, any Action pending or, to the Sellers' knowledge,
threatened (or any basis therefor known to the Company) involving the prior
employment of any employees of the Company, their use in connection with the
business of the Company of any information or techniques allegedly proprietary
to any of their former employers, or their obligations under any agreements with
prior employers. Neither the Company nor any of its respective assets or
properties, nor, in connection with its business, any shareholder, director,
officer or employee of the Company, is subject to any order, judgment, writ,
injunction, compliance agreement, decree, ruling or decision (collectively, an
"Order") of any Governmental Authority which is material to the Condition of the
Company. There is no Action by the Company currently pending or which the
Company intends to initiate, which is material to the Condition of the Company.
2.12 Compliance with Laws; Permits. Except as described in a
separate letter that the Buyer acknowledge having received on the date hereof,
the Company has not violated or failed to comply with, in any material respect,
any law, statute, treaty, ordinance, rule, regulation or policy, domestic or
foreign, of any Governmental Authority (collectively, "Laws") to which it or any
of its properties or assets is subject. The Company has all federal, state,
local and foreign
9
government licenses, permits, orders, certificates authorizations and approvals
of any Governmental Authority (collectively, the "Permits") that are necessary
for the conduct of its business as presently conducted except to the extent the
failure to have any such Permit would not materially adversely affect the
Condition of the Company; all such Permits are, and as of the Closing will be,
in full force and effect; no violations or notices of failure to comply have
been issued or recorded in respect of any such Permits; there are no proceedings
pending, or to the knowledge of the Sellers, threatened, to revoke, suspend or
limit any such Permit, nor to the knowledge of any Sellers is there any
reasonable basis therefor. All applications, reports, notices and other
documents required to be filed by the Company with all Governmental Authorities
on or before the date hereof have been timely filed and are complete and correct
in all material respects as filed or as amended prior to the date hereof, except
to the extent the failure to timely make such filings or the incompletion of
such filing would not materially adversely affect the Condition of the Company.
With respect to any required Permits, applications for which are either pending
or contemplated to be made pursuant to the business strategy of the Company,
none of the Sellers knows of any reason why such Permits should not be approved
and granted by the appropriate Governmental Authority. Neither the Company nor
any of its officers or agents has made any illegal or improper payments to, or
provided any illegal or improper inducement for, any governmental official or
other Person in an attempt to influence any such Person to take or to refrain
from taking any action relating to the Company. Part 2.12 of Schedule 1 lists
all Permits of the Company that are required for the conduct of its business.
2.13 Taxes. Except as set forth on Part 2.13 of Schedule 1,
and except as described in a separate letter that the Buyer acknowledge having
received on the date hereof, (i) all foreign and domestic federal, state, city,
county, local and foreign income, franchise, sales, use and value added tax
returns and reports, and all other tax returns, reports and statements required
to be filed by the Company in those or in any other foreign or domestic
jurisdiction (collectively, "Returns") have been timely filed; (ii) all such
Returns are true, correct and complete in all material respects; (iii) all
taxes, assessments, fees, interest, penalties and other charges of kind
whatsoever (collectively, "Taxes") due or claimed to be due from the Company
have been paid except to the extent properly reserved against on the Financial
Statements; and (iv) no income tax return of the Company has been audited by any
Governmental Authority, and there are in effect no waivers of the applicable
statute of limitations for Taxes in any jurisdiction for the Company for any
period.
2.14 Books and Records. The books of account, ledgers and
records of the Company accurately and completely reflect in all material
respects all information relating to its business, the nature, acquisition,
maintenance, location and collection of its assets, and the nature of all
transactions giving rise to its obligations or accounts receivable. The minute
books of the Company fully set forth all action taken by the Board of Directors,
shareholders and, if any, executive board (or other committee thereof) of the
Company.
2.15 Transactions with Affiliates. The Company does not have
any obligation to or claim against any past or present Principal Owner of the
Company, or any of such Principal Owner's Affiliates, associates or relatives,
and no such Person has any obligation to or claim against the Company. All
products, services or benefits provided to the Company by any such Person, or
provided by the Company to any such Person, are set forth on Part 2.16 of
Schedule 1 and are provided at a charge equal to the fair market value of such
products, services or benefits.
10
No past or present Principal Owner of the Company, nor any of such Principal
Owner's Affiliates, associates or relatives, has any direct or indirect interest
of any kind in any business or entity, which is competitive with the Company.
2.16 No Brokers or Finders. None of the Sellers nor any of
their respective Affiliates has entered into or will enter into any agreement
pursuant to which any of the Buyer or the Company will be liable, as a result of
the transactions contemplated by this Agreement, for any claim of any person for
any commission, fee or other compensation as finder or broker.
2.17 Employment of Officers, Employees and Consultants. To the
knowledge of the Sellers, no third party has any valid claim against the
Company, the Buyer or any Designated Person (as hereinafter defined) with
respect to (a) the continued employment by, or association with, the Company, of
any of the present officers or employees of or consultants to the Company
(collectively, the "Designated Persons") or (b) the use, in connection with the
business of the Company as presently conducted or proposed to be conducted by
the Company or any of the Designated Persons of any information which the
Company or any of the Designated Persons would be prohibited from using under
any prior agreements or arrangements or any legal considerations applicable to
unfair competition, trade secrets or proprietary information. Each employee and
consultant of the Company has executed an agreement with the Company (in form
and substance satisfactory to the Buyer) agreeing to maintain the
confidentiality of proprietary information and agreeing to assign certain
inventions to the Company.
2.18 Insurance
The Company presently maintains and has maintained in effect
since its formation all the insurance policies required by applicable law or
reasonably appropriate in connection with the operation of its business as
presently conducted.
2.19 Absence of Undisclosed Liabilities. The Company does not
have any obligation, indebtedness, commitment, guaranty, and other item
constituting a liability under GAAP, whether direct or indirect, absolute,
accrued, contingent, or otherwise, and whether due or to become due (each, a
"Liability") of any nature whatsoever except for (a) Liabilities reflected or
reserved against in the balance sheet as of March 31, 2001 (the "Balance
Sheet"), or (b) Liabilities and obligations incurred by the Company and not
required by GAAP to be set forth in the Balance Sheet for the appropriate
period, or (c) Liabilities incurred in the ordinary course of business and
consistent with past practice after the date of the Balance Sheet. For purposes
hereof, "GAAP" means generally accepted accounting principles consistently
applied.
2.20 Disclosure. In connection with the purchase of the Common
Stock by the Buyer as contemplated hereby, the Company and the Sellers have, to
their actual knowledge after due inquiry among themselves and discussions and
inquiries of customers, vendors and parties with whom the Company has done or
may do business in the future ("Knowledge"), disclosed to the Buyer all material
facts and information concerning the Company, its Condition and the Common
Stock, and have, to their Knowledge, not made any untrue statement of a material
fact or omitted to state any material fact necessary in order to make the
statements contained herein not misleading. To the Sellers' Knowledge, there is
no fact or circumstance which has, or is
11
reasonably likely to have, an adverse effect on the Company which has not been
disclosed herein.
2.21 Security Matters
(a) The Globaltron Shares are received by each of the
Sellers for investment purposes for its own account, and not with the view to,
or for resale in connection with, any distribution thereof. Seller understands
that the Globaltron Shares have not been registered under the Securities Act of
1933, as amended (the "Securities Act"), or under the securities laws of various
states, by reason of a specified exemption from the registration provisions
thereunder.
(b) Each of the Sellers acknowledges that the Globaltron
Shares must be held indefinitely unless they are subsequently registered under
the Securities Act and under applicable state securities laws or an exemption
from such registration is available. Each of the Sellers has been advised or is
aware of the provisions of Rule 144 promulgated under the Securities Act which
permits limited resale of the securities purchased in a private placement
subject to the satisfaction of certain conditions including, among other things,
the availability of certain current public information about Buyer and
compliance with applicable requirements regarding the holding period and the
amount of securities to be sold and the manner of sale.
(c) Each Seller is a sophisticated investor with knowledge
and experience in business and financial matters and is able to bear the
economic risk and lack of liquidity inherent in owning the Globaltron Shares.
(d) Each Seller has received and carefully reviewed (i)
Buyer's Registration Statement on Form S-1, (ii) all other information filed by
Buyer pursuant to the Securities Act or the Securities Exchange Act of 1934, as
amended.
(e) Each Seller is aware that no federal or state or other
agency has passed upon or made any finding or determination concerning the
fairness of the transactions contemplated by this Agreement or the adequacy of
the disclosure of the exhibits and schedules hereto and each Seller must forego
the Globaltron Shares, if an, that such a review would provide.
(f) Each Seller understands and acknowledges that neither
the Internal Revenue Service nor any other tax authority has been asked to rule
on nor has it ruled on the tax consequences of the transactions contemplated
hereby.
(g) Each Seller represents and covenants that it is and
"Accredited Investor" as the term is defined in Rule 501(a) of Regulation D
under the Securities Act.
(h) Each Seller understands that all certificates for the
Globaltron Shares shall bear a legend in substantially the following form:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR QUALIFIED UNDER ANY STATE SECURITIES LAWS. THE
SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED OR
12
OTHERWISE DISPOSED OF WITHOUT SUCH REGISTRATION OR THE DELIVERY TO THE
ISSUER OF AN OPINION OF COUNSEL, SATISFACTORY TO THE ISSUER, THAT SUCH
DISPOSITION WILL NOT REQUIRE REGISTRATION OF SUCH SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS."
3. Representations, Warranties and Agreements of the Buyer. The Buyer,
hereby represents and warrants to, and agrees with, each of the Sellers as
follows:
3.1 Organization, Good Standing and Qualification. Buyer, is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Florida. Buyer has all requisite power and authority to carry on
its business as now conducted and as proposed to be conducted. Buyer has all
requisite power and authority to enter into and perform this Agreement and the
transactions contemplated hereby. Buyer is duly qualified to transact business
and is in good standing in each jurisdiction in which the failure so to qualify
could have a material adverse effect on its Condition.
3.2 Capitalization. The authorized capital stock of Buyer
immediately upon the consummation of the Closing shall consist of (i)
100,000,000 shares of common stock, $.001 par value per share, of which
40,738,702 shares are issued and outstanding (ii) 5,000,000 shares of preferred
stock, $.001 par value per share, of which none are issued and outstanding. All
of the outstanding shares have been duly and validly issued, are fully paid and
non-assessable. Upon the consummation of the Closing, all of the outstanding
Globaltron Shares shall be duly and validly issued and will be fully paid and
non-assessable. The Globaltron Shares are free and clear from any Liens and
Buyer shall deliver to each Seller, certificate(s) representing the Globaltron
Shares.
3.3 Authority; Execution and Delivery; Requisite Consents,
Nonviolation.
Buyer has, and at the Closing will have, all requisite power
and authority to execute, deliver and perform this Agreement and each other
document or instrument executed by it, or any of its officers, in connection
herewith or therewith or pursuant hereto or thereto and to consummate the
transactions contemplated hereby and thereby. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by all
necessary action on the part of each of the Buyer. This Agreement is duly
executed and delivered by the Buyer and the legal, valid and binding obligation
of the Buyer, enforceable against the Buyer in accordance with its terms, except
as the enforceability thereof may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting the enforceability of creditors'
rights in general or by general principles of equity. The execution, delivery
and performance of this Agreement, the consummation by the Buyer of the
transactions contemplated hereby and thereby (including, without limitation, the
offer, sale and delivery by the Buyer of the Globaltron Shares) will not (a)
require the consent, license, permit, waiver, approval, authorization or other
action of, by or with respect to, or registration, declaration or filing with,
any Governmental Authority or any other Person; (b) contravene (i) any
requirement of law to which it is subject, including the securities laws of any
jurisdiction or the rules or regulations of any governmental entity or self
regulatory body nor (ii) any judgment, decree, franchise, order or demand
applicable to it (c) conflict or be
13
inconsistent with or result in any breach of the terms, covenants, conditions or
provisions of, or constitute a default under, or result in the creation or
imposition of (or the obligation to create or impose) any lien upon any of its
properties or assets pursuant to the terms of any indenture, mortgage, deed of
trust agreement or other instrument to which it is a party or bound or to which
it may be subject or violate any provision of its organization documents. Buyer
is not in default with respect to any applicable statute, rules, writ,
injunction, decree, order or regulation of any governmental authority having
jurisdiction over it which is likely to adversely affect its ability to perform
its obligations hereunder and entering into this Agreement will not violate any
of them.
3.4 SEC Filings. Financial Statements. Buyer has filed all
reports required to be filed by it with the SEC since September 2000
(collectively, the "Buyer SEC Reports"). As of the respective dates they became
effective, the Buyer SEC Reports which were filed pursuant to the Securities Act
and as of the respective dates of filing of the last applicable amendment
thereto the Buyer SEC Reports which were filed pursuant to the Exchange Act, did
not contain any untrue statement of a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Other than as
described in a separate letter that the Sellers acknowledge having received on
the date hereof, to the Knowledge of the Buyer, the financial statements of
Buyer included in the Buyer SEC Reports complied as to form in all material
respects with the applicable published rules and regulations of the SEC with
respect thereto, were prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods involved (except
as otherwise noted therein) and fairly present the consolidated financial
position of Buyer and its consolidated subsidiaries as at the dates thereof and
the consolidated results of operations and cash flows for the periods then
ended, except that in the case of the unaudited consolidated financial
statements included in any form 10-Q, the presentation and disclosure conform
with the applicable rules of the Securities Exchange Act of 1934 and are subject
to year-end adjustments.
3.5 Certain Changes or Events. To the knowledge of the Buyer,
after inquiry of senior management officers of Buyer and except as described in
a separate letter that the Sellers acknowledge having received on the date
hereof, since January 31, 2001 (i) there has been no change of Laws, no
revocation or change in any Contract or Permit or right to do business, and no
other event or occurrence of any character, whether or not insured against,
which has resulted, or could reasonably be expected to result, in a material
adverse change in the Condition of the Buyer; (ii) the Buyer has not authorized
or made any distributions, or declared or paid any dividends, upon or with
respect to any of its capital stock, or other equity interests, nor has the
Buyer redeemed, purchased or otherwise acquired, or issued or sold, any of its
capital stock or other equity interests; (iii) the Buyer has not entered into
any material transaction (except a private sale of 40,000 shares), other than in
the ordinary course of business and consistent with past practice; (iv) there
has been no waiver by the Buyer of a material right or of a material debt owed
to it; or (v) the Buyer has not failed to satisfy or discharge any Lien, except
in the ordinary course of business and which is not material to the Condition of
the Buyer (as such business is presently conducted and as it is proposed to be
conducted).
3.6 Title to Assets. Except as set forth in Part 3.6 of
Schedule 1 hereto, the Buyer has good and marketable title to all of its assets
and properties, free and clear of any Liens. With respect to any assets or
properties it leases, the Buyer holds a valid and subsisting leasehold
14
interest therein, free and clear of any Liens, is in compliance, in all material
respects, with the terms of the applicable lease, and enjoys peaceful and
undisturbed possession under such lease. All of the assets and properties of the
Buyer that are necessary for the conduct of its business as presently conducted
or as proposed to be conducted by the Buyer are in good operating condition and
repair, subject to ordinary wear and tear.
3.7 Labor Relations; Employees.
(a) The Buyer is not in violation of any federal, state or
other applicable Law respecting employment, social security or employment
practices relating to its own employees or to the employees of any of its
subcontractors.
(b) The Buyer is not materially delinquent in payments to
any of its employees for any wages, salaries, commissions, bonuses or other
direct compensation for any services performed by them to the date hereof or
amounts required to be reimbursed to such employees, (ii) there is no unfair
labor practice complaint against the Buyer pending before any Governmental
Authority, (iii) there is no labor strike, dispute, slowdown or stoppage
actually pending or, to the knowledge of the Buyer, threatened against or
involving the Buyer, (iv) the Buyer is not a party to or bound by any collective
bargaining agreement and neither any grievance nor any arbitration proceeding
arising out of or under a collective bargaining agreement is pending and, to the
knowledge of the Buyer, no such claim has been asserted, (v) no labor union
currently represents the employees of the Buyer and, to the knowledge of the
Buyer, no labor union has taken any action with respect to organizing the
employees of the Buyer, (vi) no key employee has informed the Buyer that such
employee will or may terminate his or her employment or engagement with the
Buyer and (vii) except as otherwise described in this Agreement, there are no
payments of benefits to the employees of the Buyer above or different from the
statutory benefits corresponding under the applicable labor law.
(c) The Buyer has filed or caused to be filed all social
security returns required under the statutes, rules or regulations of the
jurisdiction of its incorporation and all other applicable jurisdictions. All
amounts shown in said returns to be due and all additional demands received
prior to the date hereof have been paid in due time and all withholdings
required to be made prior to the date hereof have been duly made and paid in due
time. The amounts set up as accruals for social security contributions in the
Financial Statements are sufficient for the payment of all accrued and not yet
paid amounts.
3.8 Litigation. There is no Action pending or, to the best
knowledge of the Buyer, threatened against the Buyer, or affecting any of the
properties or assets of the Buyer (including, without limitation, any of its
Permits) which individually or in the aggregate could have a material adverse
effect on the Condition of the Buyer, nor is there any basis for any such
Action. To the knowledge of the Buyer, there is no Action against any director,
officer or employee of the Buyer in connection with the business of the Buyer
which, in the event of an adverse judgment against any such Person, could have a
material adverse effect on the Condition of the Buyer, nor is there any basis
for any such Action. The foregoing includes, without limitation, any Action
pending or, to the Buyer's knowledge, threatened (or any basis therefor known to
the Buyer) involving the prior employment of any employees of the Buyer, their
use in connection with the business of the Buyer of any information or
techniques allegedly proprietary to any of
15
their former employers, or their obligations under any agreements with prior
employers. Neither the Buyer nor any of its respective assets or properties,
nor, in connection with its business, any shareholder, director, officer or
employee of the Buyer, is subject to any Order of any Governmental Authority
which is material to the Condition of the Buyer. There is no Action by the Buyer
currently pending or which the Buyer intends to initiate, which is material to
the Condition of the Buyer.
3.9 Compliance with Laws; Permits. The Buyer has not violated
or failed to comply with, in any material respect, any Laws to which it or any
of its properties or assets is subject. The Buyer has all material Permits that
are necessary for the conduct of its business as presently conducted except to
the extent the failure to have any such Permit would not materially adversely
affect the Condition of the Buyer; all such Permits are, and as of the Closing
will be, in full force and effect; no violations or notices of failure to comply
have been issued or recorded in respect of any such Permits; there are no
proceedings pending, or to the knowledge of the Buyer, threatened, to revoke,
suspend or limit any such Permit, nor to the knowledge of any Buyer is there any
reasonable basis therefor. All applications, reports, notices and other
documents required to be filed by the Buyer with all Governmental Authorities on
or before the date hereof have been timely filed and are complete and correct in
all material respects as filed or as amended prior to the date hereof, except to
the extent the failure to timely make such filings or the incompletion of such
filing would not materially adversely affect the Condition of the Buyer. With
respect to any required Permits, applications for which are either pending or
contemplated to be made pursuant to the business strategy of the Buyer, the
Buyer does not know of any reason why such Permits should not be approved and
granted by the appropriate Governmental Authority. Neither the Buyer nor any of
its officers or agents has made any illegal or improper payments to, or provided
any illegal or improper inducement for, any governmental official or other
Person in an attempt to influence any such Person to take or to refrain from
taking any action relating to the Buyer.
3.10 Taxes. To Buyer's knowledge, all Returns have been timely
filed and are true, correct and complete in all material respects. All Taxes due
or claimed to be due from the Buyer have been paid except to the extent reserved
against on the Financial Statements. No income tax return of the Buyer has been
audited by any Governmental Authority, and there are in effect no waivers of the
applicable statute of limitations for Taxes in any jurisdiction for the Buyer
for any period.
3.11 Books and Records. The books of account, ledgers and
records of the Buyer accurately and completely reflect in all material respects
all information relating to its business, the nature, acquisition, maintenance,
location and collection of its assets, and the nature of all transactions giving
rise to its obligations or accounts receivable. The minute books of the Buyer
fully set forth all action taken by the Board of Directors, shareholders and, if
any, executive board (or other committee thereof) of the Buyer.
3.12 No Brokers or Finders. Buyer has not and will not enter
into any agreement pursuant to which the Company or any of the Sellers will be
liable, as a result of the transactions contemplated by this Agreement, for any
claim of any person for any commission, fee or other compensation as finder or
broker.
16
Nothing contained in this Section 3 shall in any respect limit or
modify the representations, warranties and agreements of the Sellers in Section
2 of this Agreement or the right of the Buyer to rely thereon.
4. Conditions of Buyer's Obligations at Closing. The obligation of
Buyer to purchase the Common Stock to be purchased by it at the Closing is
subject to the fulfillment, to Buyer's satisfaction, prior to or at the Closing,
of each of the following conditions:
4.1 Representations and Warranties. The representations and
warranties of the Sellers contained in this Agreement shall be true and correct
in all material respects on the date hereof and on and as of the Closing Date as
if made on and as of such date.
4.2 Performance. The Sellers shall have performed and complied
in all material respects with all agreements and conditions required by this
Agreement to be performed or complied with by it prior to or at the Closing.
4.3 Stock Certificates, Etc. At the Closing, the Sellers shall
have tendered to the Buyer a certificate representing shares of Common Stock,
together with a stock power, in accordance with Section 1.2 hereof. All
certificates delivered by the Sellers shall be in form and substance
satisfactory to the Buyer and sufficient to transfer to and vest in Buyer good
and valid title to such Common Stock, free and clear of any Lien.
4.4 No Material Adverse Change. There shall not have occurred
any material adverse change in the Condition of the Company since the date
hereof.
4.5 Consents. The Sellers shall have obtained all consents,
approvals or waivers from Governmental Authorities and third Persons necessary
for the execution, delivery and performance of this Agreement and the
transactions contemplated hereby and thereby, all without material cost or other
adverse consequences to the Company.
4.6 No Actions. No action, proceeding, investigation,
regulation or legislation shall have been instituted, threatened or proposed
before any court, governmental agency or authority or legislative body to
enjoin, restrain, prohibit, or obtain substantial damages in respect of, this
Agreement or the consummation of the transactions contemplated by this
Agreement.
4.7 Compliance Certificate. The Buyer shall have received
certificates dated as of the day of the Closing executed by a senior officer of
each of the Sellers certifying that the conditions specified in Sections 4.1,
4.2, 4.4, 4.5 and 4.6 have been fulfilled.
4.8 Related Documents. The Pledge and Security Agreement to be
entered into by and among the Buyer and each of the Sellers substantially in the
form attached as Exhibit A hereto (the "Pledge Agreement") shall have been
executed and delivered by each of the parties thereto and in full force and
effect.
4.9 Proceedings and Documents. All proceedings in connection
with the transactions contemplated hereby and all documents and instruments
incident to such transactions shall be satisfactory in substance and form to the
Buyer and its counsel, and the
17
Buyer shall have received all such counterpart originals or certified or other
copies of such documents as the Buyer may reasonably request.
4.10 Employment Agreements. If elected by the Buyer, any
person providing consulting services or being employed by the Company as
described in Part 2.10 of Schedule 1 shall have executed employment agreements
containing, without limitation, provisions with regard to non-competition,
non-solicitation, and inventions, in each case in form and substance
satisfactory to the Buyer.
5. Conditions of the Sellers' Obligations at Closing. The obligations
of the Sellers to the Buyer under this Agreement are subject to the fulfillment,
to Sellers' satisfaction, prior to or at the Closing, of each of the following
conditions:
5.1 Representations and Warranties. The representations and
warranties of Buyer contained in this Agreement shall be true and correct in all
material respects on and as of the Closing Date as if made on and as of such
date.
5.2 Performance. The Buyer shall have performed and complied
in all material respects with all agreements and conditions required by this
Agreement to be performed or complied with by it prior to or at the Closing.
5.3 Payment of the Common Stock. At the Closing, the Buyer
shall have tendered to each of the Sellers a certificate(s) representing
Globaltron Shares in accordance with Section 1.2 hereof. All certificates
delivered by the Buyer shall be in form and substance satisfactory to the
Sellers and sufficient to transfer to and vest in the Sellers good and valid
title to such Globaltron Shares, free and clear of any Lien.
5.4 No Material Adverse Change. There shall not have occurred
any material adverse change in the Condition of the Buyer since the date hereof.
5.5 No Actions. No action, proceeding, investigation,
regulation or legislation shall have been instituted, threatened or proposed
before any court, governmental agency or authority or legislative body to
enjoin, restrain, prohibit, or obtain substantial damages in respect of, this
Agreement or the consummation of the transactions contemplated by this
Agreement.
5.6 Proceedings and Documents. All proceedings in connection
with the transactions contemplated hereby and all documents and instruments
incident to such transactions shall be satisfactory in substance and form to the
Sellers and their counsel, and the Sellers shall have received all such
counterpart originals or certified or other copies of such documents as it may
reasonably request.
5.7 Compliance Certificate. The Buyer shall have received
certificates dated as of the day of the Closing executed by a senior officer of
each of the Sellers certifying that the conditions specified in Sections 5.1,
5.2, 5.4 and 5.5 have been fulfilled.
5.8 Related Documents. The Pledge Agreement shall have been
executed and delivered by each of the parties thereto and in full force and
effect.
18
6. Registration Rights.
6.1 Request for Registration.
(a) If (i) at any time after one hundred eighty (180) days
after the Closing Date, the Buyer shall receive a written request (the
"Request") sent by Sellers holding in the aggregate more than 50% of the
Globaltron Shares (the "Initiating Holders") that the Buyer file a registration
statement under the Securities Act to effect any registration, qualification or
compliance with respect to any of the Globaltron Shares not pledged under the
Pledge Agreement (the "Current Registrable Securities") or (ii) at any time
after the termination of the Pledge Agreement, the Buyer shall receive a Request
sent by the Initiating Holders that the Buyer file a registration statement
under the Securities Act to effect any registration, qualification or compliance
with respect to any of the Globaltron Shares, including those released by the
Escrow Agent (as such term is defined under the Pledge Agreement) to Sellers, as
described in the Pledge Agreement (the "Pledged Registrable Securities", and
together with the Current Registrable Securities, the "Registrable Securities"),
then the Buyer shall, within fifteen (15) days of the receipt thereof, give
written notice of such request to all the Sellers and subject to the limitations
of Section 6.1(b) below shall file (as expeditiously as practicable, and in any
event within ninety (90) days of the receipt of such request) and use its best
efforts to effect, a registration statement under the Securities Act with
respect to all Registrable Securities which the Sellers request to be registered
within twenty (20) days of the mailing of such notice by the Buyer.
(b) If Initiating Holders intend to distribute the
Registrable Securities covered by their request by means of an underwriting,
they shall so advise the Buyer as a part of their Request. In such event, the
right of any Seller to include such Seller's Registrable Securities in such
registration shall be conditioned upon such Seller's participation in such
underwriting and the inclusion of such Seller's Registrable Securities in the
underwriting (unless otherwise mutually agreed by a majority in interest of the
Initiating Holders) to the extent provided herein. The Buyer shall select the
managing underwriter or underwriters in such underwriting. All Sellers proposing
to distribute their securities through such underwriting shall (together with
the Buyer as provided herein enter into an underwriting agreement in customary
form with the underwriter or underwriters so selected for such underwriting by a
majority in interest of the Initiating Holders. Notwithstanding the provisions
of this Section 6.1(b), if the underwriter advises the Initiating Holders that
marketing factors require a limitation of the number of shares to be
underwritten, then the Initiating Holders shall so advise the Buyer and the
Buyer shall so advise all holders of Registrable Securities which would
otherwise be underwritten pursuant hereto, and the number of shares of
Registrable Securities that may be included in the underwriting shall be
allocated among the Sellers that have elected to participate in such
underwritten offering, in proportion (as nearly as practicable) to the aggregate
amount of Registrable Securities held by all such Sellers, until such holders
have included in the underwriting all shares requested by such holders to be
included, in such event, the initiating Holders may withdraw the registration.
(c) The Buyer shall be obligated to effect only two (2)
registration pursuant to a Request under this Section 6.1 (an offering which is
not consummated shall not be counted for this purpose); provided that (i) the
Buyer shall not be obligated to effect the second registration Request if it is
done within 180 days or less from the first requested offering; (ii) the
19
Buyer shall not be obligated to effect any registration which is requested
within 180 days or less from a registration made by the Buyer as described in
Section 6.2.
(d) Notwithstanding the foregoing, if the Buyer shall
furnish to Sellers requesting a registration statement pursuant to this Section
6.1, a certificate signed by the President or Chief Executive Officer of the
Buyer stating that in the good faith judgment of the Board of Directors of the
Buyer, it would be seriously detrimental to the Buyer and its Sellers for such
registration statement to be filed by reason of a material pending transaction
and it is therefore essential to defer the filing of such registration
statement, the Buyer shall have the right to defer such filing for a period of
not more than one (9) nine months after receipt of the Request
6.2 Buyer Registration. If (but without any obligation to do
so) the Buyer proposes to register any of its stock or other securities under
the Securities Act in connection with the public offering of such securities
solely for cash (other than a registration on Form S-8 (or similar or successor
form) relating solely to the sale of securities to participants in a Buyer stock
plan or to other compensatory arrangements to the extent includable on Form S-8
(or similar or successor form), or a registration on Form S-4 (or similar or
successor form)), the Buyer shall, at such time, promptly give each Seller
written notice of such registration. Upon the written request of each Seller
given within twenty (20) days after mailing of such notice by the Buyer, the
Buyer shall, subject to the provisions of Section 6.5, use its best efforts to
cause to be registered under the Securities Act all of the Globaltron Shares
Securities that each such Seller has requested to be registered. The Buyer shall
have no obligation under this Section 6.2 to make any offering of its
securities, or to complete an offering of its securities that it proposes to
make. The Sellers may exercise the rights described in this Section 6.2 an
unlimited number of times.
6.3 Furnish Information. It shall be a condition precedent to
the obligations of the Buyer to take any action pursuant to this Agreement with
respect to this Section that each Seller willing to register its Registrable
Securities furnishes to the Buyer such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of
such securities as shall be required to effect the registration of such Seller's
Registrable Securities. If any registration statement or comparable statement
under the Securities Act refers to a Seller or any of its affiliates, by name or
otherwise, as the holder of any securities of the Buyer then, unless counsel to
the Buyer advises the Buyer that the Securities Act requires that such reference
be included in any such statement, each such holder shall have the right to
require the deletion of such reference to itself and its affiliates.
6.4 Expenses of Registration. (a) Expenses of Demand
Registration. All expenses incurred in connection with registrations, filings or
qualifications pursuant to Section 6.1, including without limitation all
registration, filing and qualification fees, printers' and accounting fees, fees
and disbursements of counsel for the Buyer, and the reasonable fees and
disbursements of one counsel (selected by a majority in interest of the
Initiating Holders) for the selling Sellers shall be borne by the Buyer.
(b) Expenses of Buyer Registration. The Buyer shall bear
and pay all expenses incurred in connection with any registration, filing or
qualification of Registrable Securities with respect to the registrations
pursuant to Section 6.2 for each Seller, including
20
without limitation all registration, filing and qualification fees, printers'
and accounting fees relating or apportionable thereto and the fees and
disbursements of one counsel for the selling Sellers (selected by the holders of
a majority of the Registrable Securities being registered); provided, however,
that the fees and expenses of complying with the securities or blue sky laws
applicable to the Registrable Securities to be registered in any state in which
the Buyer is not registering its shares, all attorney fees, underwriting
discounts and selling commissions shall be borne by the Sellers.
6.5 Underwriting Requirements. In connection with any offering
involving an underwriting of shares being issued by the Buyer, the Buyer shall
not be required under Section 6.2 to include any Seller's securities in such
underwriting unless such Seller accepts the terms of the underwriting as agreed
upon between the Buyer and the underwriters selected by it, and then only in
such quantity as will not, in the opinion of the underwriters, exceed the
largest number of securities requested to be included in such offering which can
be sold without having an adverse effect on such offering by the Buyer. If the
total number of securities, including Registrable Securities, requested by
Sellers to be included in such offering (or in any other offering in which
Sellers shall have the right to include Registrable Securities pursuant to this
Section 6) exceeds the largest number of securities that the underwriters
reasonably believe can be sold without having an adverse effect on such
offering, then the Buyer shall be required to include in the offering only that
number of such securities, including Registrable Securities, which the
underwriters believe will not have an adverse effect on such offering, and the
number of shares that may be included in the underwriting shall be allocated as
follows: (i) first, that number of shares sought to be registered by the Buyer,
and (ii) second, among all Sellers that have elected to participate in such
underwritten offering, in proportion (as nearly as practicable) to the amount of
the Registrable Securities held by such Sellers.
6.6 "Market Stand-Off" Agreement. Each Seller hereby agrees
that, during the period of ninety (90) days following the effective date of a
registration statement of the Buyer filed under the Securities Act in connection
with an underwritten offering, it shall not, if requested by the Buyer and such
underwriter, sell or otherwise transfer or dispose of (other than to donees,
affiliates or partners who agree to be similarly bound) any Globaltron Shares
held by it except Globaltron Shares included in such registration.
6.7 Indemnification. In the event any Registrable Securities
are included in a registration statement under this Section 6:
(a) The Buyer will indemnify and hold harmless each
Seller, the partners or officers, directors and shareholders of each Seller,
legal counsel and accountants for each Seller, any underwriter (as defined in
the Act) for such Seller and each person, if any, who controls such Seller or
underwriter within the meaning of the Act or the 1934 Act, against any losses,
claims, damages or liabilities (joint or several) to which they may become
subject under the Act, the 1934 Act or any state securities laws, insofar as
such losses, claims, damages, or liabilities (or actions in respect thereof)
arise out of or are based upon any of the following statements, omissions or
violations (collectively a "Violation"): (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated
21
therein, or necessary to make the statements therein not misleading, or (iii)
any violation or alleged violation by the Buyer of the Act, the 1934 Act, any
state securities laws or any rule or regulation promulgated under the Act, the
1934 Act or any state securities laws; and the Buyer will reimburse each such
Seller, underwriter or controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that the
indemnity agreement contained in this subsection 6.7 (a) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Buyer (which consent
shall not be unreasonably withheld), nor shall the Buyer be liable in any such
case for any such loss, claim, damage, liability or action to the extent that it
arises out of or is based upon a Violation that occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by any such Seller, underwriter or controlling person;
provided further, however, that the foregoing indemnity agreement with respect
to any preliminary prospectus shall not inure to the benefit of any Seller or
underwriter, or any person controlling such Seller or underwriter, from whom the
person asserting any such losses, claims, damages or liabilities purchased
shares in the offering, if a copy of the prospectus (as then amended or
supplemented if the Buyer shall have furnished any amendments or supplements
thereto) was not sent or given by or on behalf of such Seller or underwriter to
such person, if required by law so to have been delivered, at or prior to the
written confirmation of the sale of the shares to such person, and if the
prospectus (as so amended or supplemented) would have cured the defect giving
rise to such loss, claim, damage or liability.
(b) Each Seller will indemnify and hold harmless the
Buyer, each of its directors, each of its officers who has signed the
registration statement, each person, if any, who controls the Buyer within the
meaning of the Act, legal counsel and accountants for the Buyer, any
underwriter, any other Seller selling securities in such registration statement
and any controlling person of any such underwriter or other Seller, against any
losses, claims, damages or liabilities (joint or several) to which any of the
foregoing persons may become subject, under the Act, the 1934 Act or any state
securities laws, insofar as such losses, claims, damages or liabilities (or
actions in respect thereto) arise out of or are based upon any Violation, in
each case to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by such
Seller expressly for use in connection with such registration; and each such
Seller will reimburse any person intended to be indemnified pursuant to this
subsection, for any legal or other expenses reasonably incurred by such person
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement contained
in this subsection 6.7(b) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability or action if such settlement is effected
without the consent of the Seller (which consent shall not be unreasonably
withheld).
(c) Promptly after receipt by an indemnified party under
this Section 6.7 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 6.7, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however,
22
that an indemnified party (together with all other indemnified parties that may
be represented without conflict by one counsel) shall have the right to retain
one separate counsel, with the fees and expenses to be paid by the indemnifying
party, if representation of such indemnified party by the counsel retained by
the indemnifying party would be inappropriate due to actual or potential
differing interests between such indemnified party and any other party
represented by such counsel in such proceeding. No indemnifying party shall,
without the consent of the indemnified party, consent to entry of any judgment
or enter into any settlement of any such action which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a complete and full release from all liability in respect
of such claim or litigation. No indemnified party shall consent to entry of any
judgment or enter into any settlement of any such action the defense of which
has been assumed by an indemnifying party without the consent of such
indemnifying party.
(d) If the indemnification provided for in this Section
6.7 is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability, claim, damage or expense
referred to herein, then the indemnifying party, in lieu of indemnifying such
indemnified party hereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such loss, liability, claim, damage or
expense in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and of the indemnified party on the other
in connection with the statements or omissions that resulted in such loss,
liability, claim, damage or expense, as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
(e) No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. Notwithstanding anything to the contrary in this Section 6.7,
no indemnified party shall be required, pursuant to this Section 6.7, to
contribute any amount in excess of the net proceeds received by such
indemnifying party from the sale of securities in the offering to which the
losses, claims, damages, liabilities or expenses of the indemnified party relate
(f) The obligations of the Buyer and Sellers under this
Section 6.7 shall survive (i) the completion of any offering of Registrable
Securities in a registration statement under this Section 6.7, (ii) any
investigation made by or on behalf of any indemnified party or by or on behalf
of the Buyer, and (iii) the consummation of the sale or successive resale of the
Registrable Securities.
7. Miscellaneous.
--------------
7.1 Indemnification
(a) The Sellers, jointly and severally, agree to indemnify the
Buyer and each officer, director, employee, agent, partner, shareholder and
affiliate of the Buyer (collectively, the "Buyer Indemnified Parties") for, and
hold each Buyer Indemnified Party harmless from and against: (i) any and all
damages, losses, claims and other liabilities of any and
23
every kind, including, without limitation, judgments and costs of settlement,
and (ii) any and all out-of- pocket costs and expenses of any and every kind,
including, without limitation, reasonable fees and disbursements of counsel for
such Buyer Indemnified Parties (all of which expenses periodically shall be
reimbursed as incurred and are referred to as "Indemnified Costs")), in each
case, arising out of or suffered or incurred in connection with any of the
following: (a) any misrepresentation or any breach of any warranty made by the
Sellers herein or in any documents related hereto, (b) any breach or
non-fulfillment of any covenant or agreement made by the Sellers herein, and (c)
any claim relating to or arising out of a violation of applicable federal or
state securities laws by the Sellers in connection with the sale of the
Globaltron Shares.
(b) As security for the accuracy of the representations,
warranties and undertakings of the Sellers, the parties shall execute the Pledge
Agreement on the Closing Date, under which the Sellers will pledge to the Buyer,
in the aggregate, 7,200,000 Globaltron Shares as described in Schedule I hereto
plus such other securities as set forth in the Pledge Agreement (the "Pledge
Shares").
(c) The Buyer agrees to indemnify the Sellers and each
officer, director, employee, agent, partner, shareholder and affiliate of each
of the Sellers (collectively, the "Sellers Indemnified Parties") for, and hold
each Sellers Indemnified Party harmless from and against any Indemnified Costs
arising out of or suffered or incurred in connection with any of the following:
(a) any misrepresentation or any breach of any warranty made by the Sellers
herein or in any documents related hereto and (b) any breach or non-fulfillment
of any covenant or agreement made by the Sellers herein.
7.2 Survival. All representations, warranties, covenants and
agreements contained in or made pursuant to this Agreement or contained in any
certificate delivered pursuant to this Agreement, shall remain operative and in
full force and effect, regardless of any investigation made by or on behalf of
any party hereto, and shall survive the transfer and payment for the Common
Stock and the consummation of the transactions contemplated hereby for a period
of 12 months, unless a claim is made prior thereto; provided, however, that
neither a Buyer Indemnified Party nor a Sellers Indemnified Party shall be
entitled to make any claim under Section 7.1 hereof unless the aggregate amount
of all Indemnified Costs incurred by such party as a result of all
misrepresentations and breaches of the other party(ies) hereto is equal to or
greater than $200,000 in which case such Buyer Indemnified Party or Sellers
Indemnified Party will be entitled to the amount of its claim in excess of
$200,000; and further provided, that a Buyer Indemnified Party's only recourse
and remedy under this Agreement shall be limited to the Pledged Shares.
7.3 Assignment. This Agreement and all the provisions hereof
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and assigns. Any assignees or successors shall take
any such assignment(s) subject to all obligations of the assigning or original
party and subject to any and all defenses. Nothing herein shall relieve an
assigning party of its obligations under this Agreement.
7.4 Amendment; Waiver. Any term, covenant, agreement or
condition of this Agreement may be amended, and compliance therewith may be
waived (either generally or in a
24
particular circumstance and either retroactively or prospectively), by one or
more substantially concurrent written instruments signed by the Sellers and the
Buyer. Any amendment or waiver effected in accordance with this paragraph shall
be binding upon each Seller and the Buyer.
7.5 Governing Law This agreement shall be governed by and
construed and enforced in accordance with, the laws of the State of Florida,
without regard to conflicts of law principles. Any disputes with respect to the
interpretation of this Agreement or the rights and obligations of the parties
hereto shall be exclusively brought in the U.S. District Court for the Southern
District of Florida or, if such Court lacks subject matter jurisdiction, in the
court of general jurisdiction in Dade County, Miami, Florida. Each of the
parties waives any right to object to the jurisdiction or venue of either of
such Courts or to claim that such Courts are an inconvenient forum
7.6 Notices. All notices and other communications provided for
herein shall be dated and in writing and shall be deemed to have been duly given
(x) on the date of delivery, if delivered personally or by telecopier, receipt
confirmed, (y) on the second following business day, if delivered by a
recognized overnight courier service, or (z) seven days after mailing, if sent
by registered or certified mail, return receipt requested, postage prepaid, in
each case, to the party to whom it is directed at the following address (or at
such other address as any party hereto shall hereafter specify by notice in
writing to the other parties hereto):
(i) If to the Buyer, to it at the following address:
Globaltron Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chief Financial Officer
with a copy to:
Proskauer Rose LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇, Esq.
(ii) If to any Sellers, to it at the address set forth
below its name on the signature page hereto.
7.7 Integration. This Agreement and the documents referred to
herein or delivered pursuant hereto or pursuant to such documents, including all
exhibits and schedules, contain the entire understanding of the parties with
respect to their subject matter and supersede all prior agreements and
understandings between the parties with respect to their subject matter.
25
7.8 Severability. Each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be prohibited or invalid under
applicable law, such provision will be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of this Agreement.
7.9 Descriptive Headings. The section and other headings
contained in this Agreement are for convenience of reference only and shall not
affect the meaning or interpretation of this Agreement.
7.10 Counterparts. This Agreement may be executed in two or
more counterparts, each of which when so executed and delivered shall be deemed
to be an original and all of which together shall be deemed to be one and the
same agreement.
* * * *
26
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
THE BUYER:
GLOBALTRON CORPORATION
By:
-------------------------------------------
Name:
Title:
SELLERS:
▇▇▇▇▇▇▇ LIMITED.
By:
-------------------------------------------
Name:
Title:
Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Aleman, Cordero, ▇▇▇▇▇▇▇ & ▇▇▇ Trust
(Panama) S.A.
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ Bank Building
East 53rd Street, Marbella
▇.▇. ▇▇▇ ▇-▇▇▇▇ ▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ of Panama
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ OVERSEAS, S.A..
By:
-------------------------------------------
Name:
Title:
Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Aleman, Cordero, ▇▇▇▇▇▇▇ & ▇▇▇ Trust
(Panama) S.A.
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ Bank Building
East 53rd Street, Marbella
▇.▇. ▇▇▇ ▇-▇▇▇▇ ▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ of Panama
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
NERCOL INVESTMENTS, S.A..
By:
-------------------------------------------
Name:
Title:
Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Aleman, Cordero, ▇▇▇▇▇▇▇ & ▇▇▇ Trust
(Panama) S.A.
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ Bank Building
East 53rd Street, Marbella
▇.▇. ▇▇▇ ▇-▇▇▇▇ ▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ of Panama
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
BRISCORD TRADING, S.A..
By:
-------------------------------------------
Name:
Title:
Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Aleman, Cordero, ▇▇▇▇▇▇▇ & ▇▇▇ Trust
(Panama) S.A.
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ Bank Building
East 53rd Street, Marbella
▇.▇. ▇▇▇ ▇-▇▇▇▇ ▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ of Panama
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
TRENSOR INVETMENTS, S.A.
By:
-------------------------------------------
Name:
Title:
Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Aleman, Cordero, ▇▇▇▇▇▇▇ & ▇▇▇ Trust
(Panama) S.A.
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ Bank Building
East 53rd Street, Marbella
▇.▇. ▇▇▇ ▇-▇▇▇▇ ▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ of Panama
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
BONING INTERNATIONAL, S.A..
By:
-------------------------------------------
Name:
Title:
Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Aleman, Cordero, ▇▇▇▇▇▇▇ & ▇▇▇ Trust
(Panama) S.A.
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ Bank Building
East 53rd Street, Marbella
▇.▇. ▇▇▇ ▇-▇▇▇▇ ▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ of Panama
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
SANDBAY INC.
By:
-------------------------------------------
Name:
Title:
Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Loeb Block & Partners LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇, Esq.
HEBRON LIMITED (BVI)
By:
-------------------------------------------
Name:
Title:
Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Loeb Block & Partners LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇, Esq.
OCEAN SPRAY INVESTMENTS S.A.
By:
-------------------------------------------
Name:
Title:
Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Loeb Block & Partners LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇, Esq.
TABLE OF CONTENTS
Section Page
1. Purchase and Sale of the Common Stock...........................................................1
-------------------------------------
1.1 Sale of the Common Stock...............................................................1
1.2 Closing................................................................................1
2. Representations, Warranties and Agreements of the Sellers.......................................2
---------------------------------------------------------
2.1 Organization, Good Standing and Qualification..........................................2
2.2 Capitalization.........................................................................2
2.3 Authority; Execution and Delivery; Requisite Consents, Nonviolation....................3
2.4 Subsidiaries...........................................................................3
2.5 Financial Information..................................................................3
2.6 Certain Changes or Events..............................................................4
2.7 Title to Assets........................................................................4
2.8 Contracts..............................................................................4
2.9 Intellectual Property..................................................................5
2.10 Labor Relations; Employees.............................................................8
2.11 Litigation.............................................................................9
2.12 Compliance with Laws; Permits.........................................................10
2.13 Taxes.................................................................................10
2.14 Books and Records.....................................................................11
2.15 Transactions with Affiliates..........................................................11
2.16 No Brokers or Finders.................................................................11
2.17 Employment of Officers, Employees and Consultants.....................................11
2.18 Insurance.............................................................................12
2.19 Absence of Undisclosed Liabilities....................................................12
2.20 Disclosure............................................................................12
2.21 Security Matters......................................................................12
3. Representations, Warranties and Agreements of the Buyer........................................13
-------------------------------------------------------
3.1 Organization, Good Standing and Qualification.........................................13
3.2 Capitalization........................................................................14
3.3 Authority; Execution and Delivery; Requisite Consents, Nonviolation...................14
3.4 SEC Filings. Financial Statements.....................................................14
3.5 Certain Changes or Events.............................................................15
3.6 Title to Assets.......................................................................15
3.7 Labor Relations; Employees............................................................16
3.8 Litigation............................................................................16
3.9 Compliance with Laws; Permits.........................................................17
3.10 Taxes.................................................................................17
3.11 Books and Records.....................................................................17
3.12 No Brokers or Finders.................................................................17
i
4. Conditions of Buyer's Obligations at Closing...................................................18
--------------------------------------------
4.1 Representations and Warranties........................................................18
4.2 Performance...........................................................................18
4.3 Stock Certificates, Etc...............................................................18
4.4 No Material Adverse Change............................................................18
4.5 Consents..............................................................................18
4.6 No Actions............................................................................18
4.7 Compliance Certificate................................................................19
4.8 Related Documents.....................................................................19
4.9 Proceedings and Documents.............................................................19
4.10 Employment Agreements.................................................................19
5. Conditions of the Sellers' Obligations at Closing..............................................19
-------------------------------------------------
5.1 Representations and Warranties........................................................19
5.2 Performance...........................................................................19
5.3 Payment of the Common Stock...........................................................20
5.4 No Material Adverse Change............................................................20
5.5 No Actions............................................................................20
5.6 Proceedings and Documents.............................................................20
5.7 Compliance Certificate................................................................20
5.8 Related Documents.....................................................................20
6. Registration Rights............................................................................20
-------------------
6.1 Request for Registration..............................................................20
6.2 Buyer Registration....................................................................22
6.3 Furnish Information...................................................................22
6.4 Expenses of Registration..............................................................22
6.5 Underwriting Requirements.............................................................23
6.6 "Market Stand-Off" Agreement..........................................................23
6.7 Indemnification.......................................................................23
7. Miscellaneous..................................................................................25
-------------
7.1 Indemnification.......................................................................25
7.2 Survival..............................................................................26
7.3 Assignment............................................................................26
7.4 Amendment; Waiver.....................................................................27
7.5 Governing Law.........................................................................27
7.6 Notices...............................................................................27
7.7 Integration...........................................................................28
7.8 Severability..........................................................................28
7.9 Descriptive Headings..................................................................28
7.10 Counterparts..........................................................................28
ii
EXHIBIT LIST
------------
Exhibit A Form of Pledge Agreement
SCHEDULE LIST
-------------
Schedule A Schedule of Sellers
Schedule 1 Schedule of Exceptions
Schedule 2 Names of Shareholders and holders of Options and/or
Warrants, etc.
Schedule 3 Financial Statements of the Company
Schedule A
Aggregate number
----------------
Common Stock to be Aggregate number of of Globaltron Shares
------------------- ------------------- --------------------
sold to Buyer at Percentage of Common Globaltron Shares to pledged to the
----------------- -------------------- -------------------- ----------------
Seller Closing Stock of the Company be received at Closing Buyer at the Closing
------ ------- -------------------- ---------------------- --------------------
▇▇▇▇▇▇▇ Limited 798 79.80% 9,576,000 5,745,600
▇▇▇▇▇▇ Overseas, S.A. 30 3.00% 360,000 216,000
Nercol Investments, S.A. 30 3.00% 360,000 216,000
Briscord Trading, S.A. 30 3.00% 360,000 216,000
Trensor Investments, S.A. 30 3.00% 360,000 216,000
Boning International, 30 3.00% 360,000 216,000
S.A.
Sandbay Inc. 10 1.00% 120,000 72,000
Hebron Limited (BVI) 8 0.80% 96,000 57,600
Ocean Spray Investments 34 3.40% 408,000 244,800
S.A.
Total 1,000 100% 12,000,000 7,200,000
PHONE1, INC.
SCHEDULE 1
Schedule of Exceptions
Any disclosure under one Part of this Schedule 1 shall be
deemed disclosure under all Parts of Schedule 1 and the Agreement. Disclosure of
any matter in Schedule 1 shall not constitute an expression of a view that such
matter is material or is required to be disclosed pursuant to the Agreement. To
the extent that any representation or warranty set forth in the Agreement is
qualified by the materiality of the matter(s) to which the representation or
warranty relates, the inclusion of any matter in Schedule 1 does not constitute
a determination by the Sellers or the Buyer that any such matter is material.
The disclosure of any information concerning a matter in Schedule 1 does not
imply that any other, undisclosed matter which has a greater significance or
value is material.
PHONE1, INC.
Part 2.5
Financial Information
[To be provided by Accountant and Company.]
PHONE1, INC.
Part 2.6
Certain Changes or Events
-------------------------
Promissory Note made by the Company in favor of GNB Bank Panama S.A. in
the principal sum of Two Million Seven Hundred Fifty Thousand dollars
($2,750,000.00), dated May 8, 2001, bearing interest at a rate of 2% above the
base rate quoted by CitiBank N.A. which matures on June 8, 2001, together with
all interest on the unpaid balance until paid.
PHONE1, INC.
Part 2.8
Contracts
---------
The following are contracts which the Company is obligated to pay in excess of
$10,000:
Consulting Agreement by and between Phone1, Inc. and ▇▇▇▇ ▇▇▇▇▇▇ dated
March 1, 2001.
Contract for Creative and Advertising Agency Services by and among
Phone1, Inc., Fire Sign, Inc. and ▇▇▇▇▇ & ▇▇▇▇▇ Associates, Inc. dated
March 8, 2001.
Consulting Agreement by and between Phone1, Inc. and ▇▇▇▇▇▇ ▇▇▇▇▇▇
dated May 4, 2001.
Public Relations contract by and between The ▇▇▇▇▇ Group and Phone1,
Inc.
The Company has verbal agreements with the following vendors:
1 Triad Universal LLC
2 Inktel Corp.
The Company has verbal agreements with the following consultants which the
Company agreed to pay until December 2001:
1 Franck Pigeon
2 ▇▇▇▇▇▇ ▇▇-▇▇▇▇▇▇
▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ Corp.
4 ▇▇▇▇▇ ▇▇▇▇▇▇▇
5 Aldax, Inc.
6 ▇▇▇▇▇ ▇▇▇▇▇▇
7 Nortek Systems Corp.
8 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
9 ▇▇▇▇▇▇ ▇▇▇▇▇▇
The Company acquired certain Intellectual Property rights pursuant to the
following agreements:
Domain Name Assignment and Transfer Agreement by and between ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ and Phone1, Inc. dated December 12, 2000.
Registrant Name Change Agreement by and between Network Solutions,
Inc., ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and Phone1, Inc. dated April 6, 2001.
PHONE1, INC.
Part 2.8
Contracts
---------
(Con't)
The Company is a party to the following promissory note:
Promissory Note made by the Company in favor of GNB Bank Panama S.A. in
the principal sum of Two Million Seven Hundred Fifty Thousand dollars
($2,750,000.00), dated May 8, 2001, bearing interest at a rate of 2%
above the base rate quoted by CitiBank N.A. which matures on June 8,
2001, together with all interest on the unpaid balance until paid.
2
PHONE1, INC.
Part 2.9
Intellectual Property
---------------------
The Company has the following Intellectual Property, including all copies and
tangible embodiments therein:
1. Domain Name:
-----------
"▇▇▇.▇▇▇▇▇▇.▇▇▇"
2. Trademarks, Service Marks and Logos:
-----------------------------------
a. Pending trademark/service ▇▇▇▇ application for PHONE1
filed with the United States Patent and Trademark
Office on April 30, 2001 under Serial No. 78/061152.
b. Pending trademark/service ▇▇▇▇ application of PHONE1
logo filed with the United States Patent and Trademark
Office on May 1, 2001 (no Serial No. issued as of May
11, 2001).
3. Patents:
-------
None.
4. Copyrights:
----------
The Company has copyrights in written materials produced by or
for the Company, such as manuals, brochures and promotional
materials. For example, the Company is in the process of
developing a manual describing the steps for payphone owners
to enter rate tables into payphones.
5. Trade Secrets:
-------------
The Company has trade secrets in business and commercial
information including such items as customer lists, marketing
strategy reports, memoranda and information, price lists and
cost information relating to the services provided by the
Company, and other non-public and proprietary financial and
business information that would have an economic value to
competitors of the Company.
PHONE1, INC.
Part 2.9
Intellectual Property
---------------------
(con't)
6. Software:
--------
The Company retained ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ in and around December
2000 and January 2001 to develop an in-house software program
(a telephone rate calculator). The software program calculates
per minute rates depending on the destination entered and
compares the rates to Net-to-phone & AT&T rates. The program
also calculates the number of minutes a consumer may speak
given a destination and amount of money inputed. This program
is for in-house purposes only. There was no plan to formally
protect this software. The full amount paid for this software
was approximately $3,000.00.
Currently, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ is in the process of developing
another software program or module that will be used in Las
Vegas to input all payphone service providers ("PSP"). This
software is intended to keep track of the PSPs and track any
follow-up actions needed to get telephone services contracts
signed and the related payphones implemented. ▇▇. ▇▇▇▇▇▇▇ was
paid $7,000.00 for this task. The Company has no plans to
formally protect this software, as it is only used in-house.
The Company also licenses certain software from third parties
including, without limitation, for billing and
telecommunications services from Buyer, and certain desktop
PC-based software products for office and clerical functions.
The trademark and service ▇▇▇▇ applications identified in Section 2 above have
only recently been filed and it is too early to determine if any oppositions,
office actions or other objections to such applications will be filed. However
the Company has provided copies of the opinions of its trademark counsel, ▇▇▇▇▇
& ▇▇▇▇▇▇▇▇, as to the possible business risks associated with the use of the
PHONE1 marks in light of the existing closely related marks either applied for
or registered with the U.S. Patent and Trademark Office.
2
PHONE1, INC.
Part 2.10
Labor Relations; Employees
--------------------------
The below chart provides a complete list of the employees of the Company:
Date of Monthly
Employee Employment Title Salary Bonus
-------- ---------- ----- ------ -----
▇▇▇▇▇▇ ▇▇▇▇▇▇ April 1, 2001 Administrative $1,400 None
Assistant
The Company does not have employment agreements with any employee.
The following is a list of the Company's agreements which
contain confidential or proprietary information restrictions:
Consultant's Agreement Concerning Proprietary Information and
Inventions by and between Phone1, Inc. and Aldax, Inc., dated May 4,
2001.
Consultant's Agreement Concerning Proprietary Information and
Inventions by and between Phone1, Inc. and Unitec of America Corp.,
dated May 4, 2001.
Consultant's Agreement Concerning Proprietary Information and
Inventions by and between Phone1, Inc. and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, dated May 4,
2001.
Consultant's Agreement Concerning Proprietary Information and
Inventions by and between Phone1, Inc. and Franck Pigeon, dated May 4,
2001.
Consultant's Agreement Concerning Proprietary Information and
Inventions by and between Phone1, Inc. and ▇▇▇▇▇ ▇▇▇▇▇▇, dated May 4,
2001.
Consultant's Agreement Concerning Proprietary Information and
Inventions by and between Phone1, Inc. and ▇▇▇▇▇▇ ▇. ▇▇-▇▇▇▇▇▇, dated
May 4, 2001.
Consultant's Agreement Concerning Proprietary Information and
Inventions by and between Phone1, Inc. and ▇▇▇▇▇▇ ▇▇▇▇▇▇, dated May 4,
2001.
Consultant's Agreement Concerning Proprietary Information and
Inventions by and between Phone1, Inc. and ▇▇▇▇▇ ▇▇▇▇▇▇▇, dated May 4,
2001.
PHONE1, INC.
Part 2.10
Labor Relations; Employees
--------------------------
(Con't.)
Consultant's Agreement Concerning Proprietary Information and
Inventions by and between Phone1, Inc. and Nortek Systems Corp., dated
May 4, 2001.
Confidential Information and Invention Assignment Agreement for
Consultant by and between Phone1, Inc. and ▇▇▇▇ ▇▇▇▇▇▇, dated March 1,
2001.
Non-Disclosure Agreement by and between Phone1, Inc. and ▇▇▇▇▇▇▇▇▇ ▇▇▇,
dated January 19, 2001.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ has been the sole Director, President, Chief
Executive Officer, Secretary and Treasurer of the Company since its inception.
2
PHONE1, INC.
Part 2.11
Litigation
----------
The trademark and service ▇▇▇▇ applications identified in Section 2 of Part 2.9
have only recently been filed and it is too early to determine if any
oppositions, office actions or other objections to such applications will be
filed. However, the Company has provided copies of the opinions of its trademark
counsel, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, as to the possible business risks associated with the
use of the PHONE1 marks in light of the existing closely related marks either
applied for or registered with the U.S. Patent and Trademark Office.
PHONE1, INC.
Part 2.12
Compliance with Laws; Permits
-----------------------------
The following is a list of the Company's Permits:
City of Miami - Certificate of Use, Fire Safety Permit
City of Miami - Occupational License
On March 15, 2001, the Company filed with the Internal Revenue Service (the
"IRS") Form 7004, Application for Automatic Extension of Time to File
Corporation Income Tax Return, which granted the Company an automatic extension
of time until September 15, 2000 to file its corporate return.
PHONE1, INC.
Part 2.13
Taxes
-----
On March 15, 2001, the Company filed with the Internal Revenue Service (the
"IRS") Form 7004, Application for Automatic Extension of Time to File
Corporation Income Tax Return, which granted the Company an automatic extension
of time until September 15, 2000 to file its corporate return.
PHONE1, INC.
Part 2.16
Transactions with Affiliates
----------------------------
Beneficial owners of certain Sellers may have to make certain filings with the
Securities and Exchange Commission under applicable securities laws related to
the ownership of Buyer shares.
GLOBALTRON CORPORATION
Part 3.6
Title to Assets
---------------
Cisco Systems Capital Corporation ("Cisco") has filed, on December 21, 2000, a
UCC 1 Financing Statement in the State of Florida to register its lien interest
in the following equipment owned by Globaltron Communications Corporation
("Globaltron"):
(i) all Equipment from time to time subject to a Master Agreement to
Lease Equipment No. 2529 dated October 27, 1999, between Globaltron and
Cisco and any and all Schedules entered into under such Master
Agreement, (ii) all insurance, warranty, rental and other claims and
rights to payment and chattel paper arising out of such Equipment, and
(iii) all books, records and proceeds relating to the foregoing.
Equipment shall mean routers, router components, other computer
networking and telecommunications equipment and other equipment,
manufactured by Cisco Systems, Inc. its affiliates and others, together
with all software and software license rights relating to the foregoing
and all substitutions, replacements, upgrades, repairs, parts and
attachments, improvements and accessions thereto.
Buyer does not have possession of certain Cisco equipment, which Cisco claims
having delivered it to the Buyer and Buyer claims not having received such
equipment.
PHONE1, INC.
Schedule 2
The below chart represents the name of each of the Company's shareholders and
the number of shares of stock owned by each such shareholder.
Amount of
Shareholder Shares
----------- ------
▇▇▇▇▇▇ Overseas, S.A. 30
Nercol Investments, S.A. 30
Briscord Trading, S.A. 30
Trensor Investments, S.A. 30
Boning International, S.A. 30
Sandbay International Inc. 10
Hebron Limited (BVI) 8
Ocean Spray Investment S.A. 34
▇▇▇▇▇▇▇ Limited 798
PHONE1, INC.
Schedule 3
See attached financial statements of the Company.
PHONE1, INC.
FINANCIAL STATEMENTS
APRIL 30, 2001
PHONE1, INC.
Financial Statements
Table of Contents
================================================================================
PAGE
----
ACCOUNTANTS' COMPILATION REPORT 1
FINANCIAL STATEMENTS
Balance Sheet 2
Statement of Operations and Accumulated Deficit 3
SUPPLEMENTARY INFORMATION
Operating and administrative expenses 5
[ T&T TSIMOGIANNIS & ▇▇▇▇▇ | --------------------------------
LOGO] Accountants and Management Consultants| Directors: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ o
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
------------------------------------------------------------------------
770 ▇▇▇▇▇ De ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇ ▇▇▇ ▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ o
Tel: ▇▇▇.▇▇▇.▇▇▇▇ o Fax: ▇▇▇.▇▇▇.▇▇▇▇
To the Board of Directors
Phone1 Inc.
Miami, Florida
We have compiled the accompanying balance sheet of Phone1, Inc. as of April 30,
2001, and the related statement of operations and accumulated deficit for the
four months then ended, and the accompanying supplementary information contained
in Schedule I, which is presented for supplementary analysis purposes, in
accordance with Statements on Standards for Accounting and Review Services
issued by the American Institute of Certified Public Accountants.
A compilation is limited to presenting in the form of financial statements and
supplementary schedules information that is the representation of management. We
have not audited or reviewed the accompanying financial statements and
supplementary schedules and, accordingly, do not express an opinion or any other
form of assurance on them.
Management has elected to omit substantially all of the disclosures and the
statement of cash flows ordinarily required by generally accepted accounting
principles. If the omitted disclosures and the statement of cash flows were
included in the financial statements, they might influence the user's
conclusions about the Company's financial position, results of operations, and
cash flows. Accordingly, these financial statements are not designed for those
who are not informed about such matters.
/s/ Tsimogiannis & ▇▇▇▇▇
---------------------------------
TSIMOGIANNIS & ▇▇▇▇▇
Coral Gables, Florida
May 14, 2001
PHONE1, INC.
BALANCE SHEET PAGE 2
April 30, 2001
================================================================================
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 5,022
-----------
Total current assets 5,022
-----------
PROPERTY AND EQUIPMENT
Computer equipment 38,294
Telephone equipment 4,327
-----------
42,621
-----------
Less: accumulated depreciation (3,122)
-----------
39,499
-----------
OTHER ASSETS
Web domain 46,440
Software 15,524
-----------
61, 964
Less: accumulated amortization (3,670)
-----------
58,294
-----------
$ 102,815
===========
LIABILITIES & STOCKHOLDER'S DEFICIT
CURRENT LIABILITIES
Accounts payable $ 60,740
-----------
Total current liabilities 60,740
-----------
LONG-TERM DEBT 2,254,790
-----------
Total liabilities 2,254,790
-----------
STOCKHOLDER'S EQUITY
Capital stock, 1,000 shares of common stock authorized
issued, and outstanding with a par value of $1 1,000
Additional paid-in capital 49,000
Retained earnings (2,262,715)
-----------
(2,212,715)
-----------
$ 102,815
===========
SEE ACCOUNTANTS' COMPILATION REPORT.
2
PHONE1 INC.
STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT PAGE 3
FOR THE FOUR MONTHS ENDED APRIL 30, 2001
================================================================================
REVENUES $ 200,000
COST OF REVENUES --
------------
GROSS PROFIT 200,000
------------
EXPENSES:
Depreciation and amortization 5,778
Operating and administrative expanses 2,136,157
------------
2,141,935
NET LOSS (1,941,935)
ACCUMULATED DEFICIT, beginning of year (320,780)
------------
ACCUMULATED DEFICIT, April 30, 2001 $ (2,262,715)
============
SEE ACCOUNTANTS' COMPILATION REPORT,
3
[GRAPHIC OMITTED]
SUPPLEMENTARY INFORMATION
4
PHONE1 INC.
SCHEDULE I - OPERATING AND ADMINISTRATIVE EXPENSES PAGE 5
FOR THE FOUR MONTHS ENDED APRIL 30, 2001
================================================================================
OPERATING AND ADMINISTRATIVE EXPENSES
Advertising and marketing $1,486,713
Consulting fees 427,206
Legal and professional fees 129,641
Travel and entertainment 68,673
Office expenses 8,291
Automobile 4,240
Telephone 4,043
Rent 3,800
Dues and subscriptions 3,000
Other: 550
-----------
$ 2,136,157
===========
SEE ACCOUNTANTS' COMPILATION REPORT.
5