AGREEMENT AND PLAN OF SHARE EXCHANGE
THIS AGREEMENT AND PLAN OF SHARE EXCHANGE is entered into as of December
1, 2005 by and between 110 Media Group, Inc., a Delaware corporation ("ONTN"),
and Global Portals Online, Inc., a Florida corporation ("Global").
RECITALS:
A. Each of the parties has previously executed and delivered a letter
dated October 20, 2005 (the "Letter of Intent").
B. Each of the parties desires that ONTN acquire all of the issued and
outstanding shares of common stock, par value $.0001 per share of Global (the
"Global Common Stock") in exchange for shares of common stock, par value $.001
per share of ONTN (the "ONTN Common Stock"). Such transaction is hereinafter
referred to as the "Exchange."
C. The Board of Directors of ONTN (i) has determined that the Exchange is
consistent with and in furtherance of the long-term business strategy of ONTN
and fair to, and in the best interests of, ONTN and its shareholders and (ii)
has approved this Agreement and Plan of Share Exchange (the "Agreement"), the
Exchange and the other transactions contemplated by this Agreement. None of the
aforesaid actions by the Board of Directors of ONTN has been amended, rescinded
or modified.
D. The Board of Directors of Global (i) has determined that the Exchange
is consistent with and in furtherance of the long-term business strategy of
Global and fair to, and in the best interests of, Global and its stockholders,
(ii) has approved this Agreement, the Exchange and the other transactions
contemplated by this Agreement, (iii) has adopted a resolution declaring the
Exchange advisable, and (iv) has determined to recommend that the stockholders
of Global adopt this Agreement. None of the aforesaid actions by the Board of
Directors of Global has been amended, rescinded or modified.
E. The holders of Twenty-Seven Million Six Hundred Five Thousand Two
Hundred Sixty-Four (27,605,264) shares of Global Common Stock, constituting
ninety-four and seven-tenths percent (94.7%) of the issued and outstanding
shares of Global Common Stock, have executed written consents approving the
transactions contemplated by this Agreement, including the Exchange.
NOW, THEREFORE, in consideration of the Recitals, and the respective
representations, warranties, covenants and agreements of ONTN and Global set
forth in this Agreement, each of ONTN and Global agrees as follows:
ARTICLE I
Certain Definitions
1.1 Certain Definitions. The following terms shall have the following
respective meanings when utilized in this Agreement:
"Affiliate" shall mean, with respect to any specified Person, any
other Person which, directly or indirectly, controls, or is controlled by or is
under common control with, such specified Person. For purposes of this
definition, the concept of "control," when used with respect to any specified
Person, shall signify the possession of the power to direct the management and
policies of such specified Person, directly or indirectly, whether through the
ownership of voting securities or partnership or other equity or ownership
interests, by contract or otherwise.
"Agreement" shall mean this Agreement and Plan of Share Exchange,
together with the Exhibits attached hereto.
"Certificates" shall have the meaning set forth in Section 2.5(b)
below.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Closing" shall have the meaning set forth in Article III of this
Agreement.
"Closing Date" shall have the meaning set forth in Article III of
this Agreement.
"Dissenting Shareholder" and "Dissenting Shareholders" shall have
the respective meanings set forth in Section 2.9 below.
"Exchange" shall have the meaning set forth in the Recitals.
"Effective Time" shall have the meaning set forth in Section 2.4
below.
"Exhibits" shall mean, collectively, the exhibits attached hereto.
"Expenses" shall have the meaning set forth in Section 9.2 below.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, and the rules and regulations promulgated thereunder.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"GAAP" shall mean, as of the date of determination, accounting
principles set forth as generally accepted in then currently effective (a)
Opinions of the Accounting Principles Board of the American Institute of
Certified Public Accountants or (b) Statements of the Financial Accounting
Standards Board. The term "consistently applied," as used in connection with
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such term, shall mean that the accounting principles applied are consistent in
all material respects to those applied at a prior date or for a prior period.
"Global" shall mean Global Portals Online, Inc., a Florida
corporation.
"Global Acquisition Proposal" shall have the meaning set forth in
Section 6.3(s) below.
"Global Common Stock" shall have the meaning set forth in the
Recitals.
"Global December 31, 2004 Financial Statements" shall mean the
audited consolidated balance sheets of Global as of December 31, 2004 and
December 31, 2003 and the related consolidated statements of income and cash
flows for the years ended December 31, 2004 and December 31, 2003 of Global, all
certified by Bouwhuis, Morrill & Company, Global's independent registered public
accounting firm, whose audit reports thereon are included therewith.
"Global June 30, 2005 Balance Sheet" shall mean the unaudited
consolidated balance sheet of Global as of June 30, 2005.
"Global June 30, 2005 Financial Statements" shall mean the unaudited
consolidated balance sheet of Global as of June 30, 2005, together with the
related statements of income and cash flows for the three and six month periods
ended June 30, 2005.
"Governmental Approvals" shall mean any authorization, consent,
approval, license, lease, ruling, permit, tariff, rate, certification,
exemption, filing or registration by or with any Governmental Entity.
"Governmental Entity" shall mean any national, federal, state or
local government, any political subdivision thereof, or any governmental,
quasi-governmental, judicial, public or statutory instrumentality, authority,
agency, body or entity.
"Governmental Rules" shall mean any law, rule, treaty, regulation,
ordinance, code, order, judgment, decree, directive, guideline, policy,
procedure or any similar form of decision of, or any interpretation or
administration of, any of the foregoing by, any Governmental Entity.
"Letter of Intent" shall have the meaning set forth in the Recitals.
"Lien" shall mean, with respect to any asset, any mortgage, deed of
trust, lien, pledge, negative pledge, hypothecation, security interest or other
charge, encumbrance or restriction of any kind, or any other type of
preferential arrangement (including any agreement to give any of the foregoing,
any conditional sale agreement, capital lease or other title retention
agreement, and the filing of or agreement to give any financing statement under
the Uniform Commercial Code of any jurisdiction) with respect to such asset, or
any imperfection of title or adverse claim with respect to such asset.
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"ONTN" shall mean 110 Media Group, Inc., a Delaware corporation.
"ONTN Acquisition Proposal" shall have the meaning set forth in
Section 6.2(s) below.
"ONTN Common Stock" shall have the meaning set forth in the
Recitals.
"ONTN December 31, 2004 Financial Statements" shall mean the audited
consolidated balance sheets of ONTN as of December 31, 2004 and December 31,
2003 and the related consolidated statements of income and cash flows for the
years ended December 31, 2004 and December 31, 2003 of ONTN, all certified by
Marcum & Kliegman, LLP, ONTN's then independent registered public accounting
firm, whose audit reports thereon are included therewith. The ONTN December 31,
2004 Financial Statements are included in ONTN's Annual Report on Form 10-KSB
for the period ended December 31, 2004, which has been filed by ONTN with the
SEC.
"ONTN June 30, 2005 Balance Sheet" shall mean the unaudited
consolidated balance sheet of ONTN as of June 30, 2005. The ONTN June 30, 2005
Balance Sheet is included in ONTN's Quarterly Report on Form 10-QSB for the
period ended June 30, 2005, which has been filed by ONTN with the SEC.
"ONTN June 30, 2005 Financial Statements" shall mean the unaudited
consolidated balance sheet of ONTN as of June 30, 2005, together with the
related unaudited statements of income and cash flows for the three and six
month periods ended June 30, 2005. The "ONTN June 30, 2005 Financial Statements"
are included in ONTN's Quarterly Report on Form 10-QSB for the period ended June
30, 2005, which has been filed by ONTN with the SEC.
"ONTN SEC Reports" shall have the meaning set forth in Section
4.7(a) below.
"Person" shall mean any individual, person, sole proprietorship,
company, corporation, partnership, joint venture, trust, association, entity or
Governmental Entity, or any group composed of any of the foregoing.
"SEC" shall mean the United States Securities and Exchange
Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Transfer" shall mean any sale, assignment, transfer, conveyance,
exchange, gift, pledge, hypothecation, encumbrance or other disposition of any
security. Without limiting the generality of the immediately preceding sentence,
the term "Transfer" shall include any exchange or disposition of securities
resulting from the reorganization or recapitalization of a Person or the merger
or consolidation of a Person into or with another Person.
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1.2 Interpretation. In this Agreement, the singular includes the plural
and the plural includes the singular; words importing any gender include the
other gender; references to statutes or regulations are to be construed as
including all statutory or regulatory provisions consolidating, amending or
replacing the statute or regulation referred to; references to "writing" include
printing, typing, lithography, facsimile reproduction and other means of
reproducing words in a tangible visible form; the words "including," "includes"
and "include" shall be deemed to be followed by the words "without limitation;"
references to articles, sections exhibits, annexes or schedules are to those of
this Agreement unless otherwise indicated; references to agreements and other
contractual instruments shall be deemed to include all exhibits and appendices
attached thereto and all subsequent amendments, but only to the extent such
amendments and other modifications are not prohibited by the terms of this
Agreement; and references to Persons include their respective successors and
assigns and, in the case of Governmental Entities, Persons succeeding to their
respective functions and capacities.
ARTICLE II
Plan of Share Exchange
2.1 Exchange. As of the Effective Time (as such term is hereinafter
defined), all of the shareholders of Global not dissenting from the Exchange
shall exchange all of the issued and outstanding shares of Global Common Stock
for an aggregate of Eleven Million Four Hundred Forty-Two Thousand Four Hundred
Forty-Six (11,442,446) shares of ONTN Common Stock, on the basis of Two and
Fifty-Four One Hundredths (2.54) shares of Global Common Stock for one share of
ONTN Common Stock, and Global will become a wholly-owned subsidiary of ONTN.
2.2 Satisfaction of Rights of Global Shareholders. All shares of ONTN
Common Stock into which shares of Global Common Stock shall have been converted
and become exchangeable pursuant to the Exchange shall be deemed to have been
paid in full satisfaction of such converted shares of Global Common Stock.
2.3 Fractional Shares. The shares of ONTN Common Stock issued pursuant to
the Exchange shall be rounded to the nearest whole share of ONTN Common Stock,
and no fractional shares of ONTN Common Stock shall be issued pursuant to the
Exchange.
2.4 Articles of Share Exchange. As promptly as possible after the Closing,
ONTN shall Articles of Share Exchange in substantially the form of Exhibit A
attached hereto with the Secretary of State of the State of Florida. The date
and time that the Articles of Share Exchange are so filed is hereinafter
referred to as the "Effective Time."
2.5 Surrender of Certificates.
(a) ONTN to Provide Shares. Promptly after the Effective Time, ONTN
shall make available in accordance with this Article II the ONTN Common Stock
issuable pursuant to this Article II in exchange for the outstanding shares of
Global Common Stock.
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(b) Exchange Procedure. Promptly after the Effective Time, ONTN
shall mail to each holder of record (as of the Effective Time) of a certificate
or certificates, which immediately prior to the Effective Time represented
outstanding shares of Global Common Stock (collectively, the "Certificates") (i)
a letter of transmittal in customary form (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to ONTN and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for certificates
representing shares of ONTN Common Stock. Upon surrender of Certificates for
cancellation to ONTN, together with such letter of transmittal, duly completed
and validly executed in accordance with the instructions thereto, the holders of
such Certificates shall be entitled to receive in exchange therefor certificates
representing the number of shares of ONTN Common Stock into which their shares
of Global Common Stock were converted pursuant to this Article II, and the
Certificates so surrendered shall forthwith be canceled. Until so surrendered,
outstanding Certificates will be deemed, from and after the Effective Time, to
evidence only the ownership of the number of whole shares of ONTN Common Stock
into which such shares of Global Common Stock shall have been so converted.
(c) Transfers of Ownership. If certificates representing shares of
ONTN Common Stock are to be issued in a name other than that in which the
Certificates surrendered in exchange therefore are registered, it will be a
condition of the issuance thereof that the Certificates so surrendered be
properly endorsed and otherwise in proper form for transfer and that the person
requesting such exchange have (i) paid to ONTN or any agent designated by it any
transfer or other taxes required by reason of the issuance of certificates
representing ONTN Common Stock in any name other than that of the registered
holder of the Certificates surrendered, or (ii) established to the reasonable
satisfaction of ONTN or any agent designated by it that such tax has been paid
or is not payable.
(d) Restricted Securities. The shares of ONTN Common Stock issued to
the shareholders of Global shall constitute restricted securities as such term
is defined in Rule 144 promulgated by the SEC under the Securities Act. Each
certificate representing shares of ONTN Common Stock shall bear a legend in
substantially the following form:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the "Act")
or applicable state law. These securities may not be offered for
sale or sold in the absence of an effective registration statement
under the Act and applicable state law, or an opinion of counsel
reasonably satisfactory to the issuer and its counsel that
registration is not required."
(e) Required Withholding. ONTN shall be entitled to deduct and
withhold from any consideration payable or otherwise deliverable pursuant to
this Agreement to any holder or former holder of Global Common Stock such
amounts as may be required to be deducted or withheld therefrom under the Code
or other state, local or foreign tax law. To the extent that any such amount is
so deducted or withheld, such amount shall be treated for all purposes under
this Agreement as having been paid to the person to whom such amounts would
otherwise have been paid.
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(f) No Liability. Notwithstanding anything to the contrary in this
Article II, neither ONTN nor Global shall be liable to a holder of ONTN Common
Stock or Global Common Stock for any amount properly paid to a public official
pursuant to any applicable abandoned property, escheat or similar law.
2.6 Lost, Stolen or Destroyed Certificates. In the event that any
Certificates shall have been lost, stolen or destroyed, the ONTN shall issue and
pay in exchange for such lost, stolen or destroyed Certificates, upon the making
of an affidavit of that fact by the holder thereof or an officer of Global,
certificates representing the ONTN Common Stock into which the shares of Global
Common Stock represented by such Certificates were converted pursuant to this
Article II; provided, however, that ONTN may, in its discretion and as a
condition precedent to the issuance of such certificates representing ONTN
Common Stock require the owner of such lost, stolen or destroyed Certificates to
deliver a bond in such sum as it may reasonably direct as indemnity against any
claim that may be made against ONTN or Global with respect to the Certificates
alleged to have been lost, stolen or destroyed.
2.7 Tax Treatment. It is intended by the parties hereto that the Exchange
shall constitute a tax-free reorganization pursuant to the provisions of Section
368(a)(l)(B) of the Code (and comparable provisions of any applicable state or
local laws). Both prior to and after the Effective Time, each party's books and
records shall be maintained, and all federal, state and local income tax returns
and schedules thereto shall be filed in a manner consistent with, the Exchange
being qualified as a tax-free reorganization pursuant to the provisions of
Section 368(a)(l)(B) of the Code (and comparable provisions of any applicable
state or local laws).
2.8 Accounting Treatment. The Exchange shall be accounted for as a
"reverse acquisition."
2.9 Appraisal Rights. Notwithstanding anything in this Agreement to the
contrary, to the extent provided by the Florida Business Corporation Act, ONTN
will not make any payment of shares of ONTN Common Stock in exchange for shares
of Global Common Stock held by any person (each a "Dissenting Shareholder" and
collectively, the "Dissenting Shareholders") who elects to demand appraisal of
his or her shares and duly and timely complies with all of the provisions of the
Florida Business Corporation Act concerning the right of holders of Global
Common Stock to require appraisal of their shares, but such Dissenting
Shareholders shall have the right to receive such consideration from ONTN as may
be determined to be due such Dissenting Shareholders pursuant to the laws of the
State of Florida. If, after the Effective Time, a Dissenting Shareholder
withdraws his or her demand for appraisal or fails to perfect or otherwise loses
his or her right of appraisal, in any case pursuant to the Florida Business
Corporation Act, each of his or her shares of Global Common Stock will be deemed
to be converted as of the Effective Time into the right to receive shares of
ONTN Common Stock pursuant to this Article II.
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ARTICLE III
Closing
Subject to the provisions of Article VIII and IX of this Agreement, the
closing of the transactions contemplated by this Agreement (the "Closing") shall
take place at the offices of Winderweedle, Haines, Ward & Woodman, P.A., 390
North Orange Avenue, Suite 1500, Orlando, Florida 32801, at 10:00 a.m., Eastern
time, on December 8, 2005, or such other place, time or date as the parties may
mutually determine. Notwithstanding the provisions of the immediately preceding
sentence hereof, in no event shall the Closing take place later than Decmber 31,
2005. The time and date of the Closing are hereinafter referred to as the
"Closing Date."
ARTICLE IV
Representations and Warranties Regarding ONTN
In order to induce Global to execute and deliver this Agreement, and to
consummate the transactions contemplated hereby, ONTN represents and warrants to
Global as follows:
4.1 Corporate Organization and Good Standing.
(a) ONTN is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. ONTN is qualified to
transact business as a foreign corporation in every jurisdiction where the
character of its activities requires such qualification. ONTN has all requisite
corporate power, franchises, licenses and authority to own, lease and operate
its respective assets and properties and to carry on its business as presently
conducted.
(b) The business of ONTN is not conducted directly or indirectly by
means of any wholly or partially owned subsidiary or direct or indirect interest
in any other corporation, partnership, joint venture, association or other
Person, except as is set forth in the ONTN Disclosure Letter.
(c) True, correct and complete copies of the Articles of
Incorporation of ONTN, certified by the Secretary of State of the State of
Delaware, and of the Bylaws of ONTN, certified by the Secretary of ONTN, all as
in effect on the date hereof, have been delivered to Global. A true, correct and
complete copy of the minute book of ONTN has been previously delivered to
Global.
4.2 Capitalization of ONTN. The authorized capital stock of ONTN consists
solely of Ten Million (10,000,000) shares of Preferred Stock, par value $.001
per share, and One Hundred Million (100,000,000) shares of ONTN Common Stock. No
shares of Preferred Stock are issued and outstanding, and Five Million Two
Hundred One Thousand One Hundred Twelve (5,201,112) shares of ONTN Common Stock
are issued and outstanding. No other shares of ONTN's capital stock, whether
preferred or common, are authorized, issued or outstanding. All of the issued
and outstanding shares of ONTN Common Stock are duly and validly issued and
outstanding, fully paid and nonassessable, and none of the issued and
outstanding shares of ONTN Common Stock were issued in violation of the
preemptive rights of any Person.
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4.3 Options, Warrants and Rights. There are no authorized, issued,
outstanding or contemplated subscriptions, options, warrants, calls, rights,
commitments, contracts or other agreements of any nature whatsoever which
obligate ONTN to issue or sell any shares of its capital stock, including
without limitation shares of ONTN Common Stock, or any securities convertible
into or evidencing the right to purchase or subscribe for any shares of its
capital stock, including without limitation shares of ONTN Common Stock. Except
as set forth in the ONTN Disclosure Letter and except for this Agreement, there
are no authorized, outstanding or contemplated agreements or understandings,
whether written or oral, with respect to the voting, sale or Transfer of any
shares of capital stock of ONTN, including without limitation the shares of ONTN
Common Stock.
4.4 Compliance with Certain Instruments. Except as is set forth in the
ONTN Disclosure Letter, ONTN is in full compliance with all of the provisions of
each and every one of the agreements, contracts, leases, notes, mortgages,
commitments and undertakings to which it is a party or by which it or any of its
properties or assets is bound. ONTN has not received any notice, whether oral or
written, to the effect that a default has occurred under any of the provisions
of any such agreements, contracts, leases, notes, mortgages, commitments or
undertakings, and, except as is set forth in the ONTN Disclosure Letter, the
management of ONTN is not aware of any fact which would lead it to believe that
any such default (with or without the giving of notice or the lapse of time or
both) has occurred. ONTN has not waived any right or remedy under any of such
agreements, contracts, leases, notes, mortgages, commitments or undertakings.
4.5 Consents and Approvals; Conflict with Other Instruments. Except for
any required waivers, consents or approvals set forth in the ONTN Disclosure
Letter, the execution, delivery and performance by ONTN and the consummation of
the transactions contemplated hereby:
(a) do not and will not violate (with or without the giving of
notice or the lapse of time or both) any Governmental Rule, or require consent
or approval from any Governmental Entity; and
(b) do not and will not require any consent or approval under, and
do not and will not conflict with, or result in the breach or termination of any
provision of, or constitute a default under, or result in the acceleration of
the performance of the obligations of ONTN under, or result in the creation of
any Lien upon any or all of the properties, assets or business of ONTN pursuant
to, its Certificate of Incorporation or Bylaws or any indenture, mortgage, deed
of trust, lease, licensing agreement, contract, instrument or other agreement,
or any Governmental Rule, to which ONTN is a party or by which it or any of its
assets or properties are bound.
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4.6 Books and Records. The books and records of ONTN (including without
limitation the books and records of account) are all true, correct and complete,
and fairly reflect a true record of the business and affairs of ONTN.
4.7 ONTN SEC Filings and Financial Statements.
(a) ONTN has filed all forms, reports and documents required to be
filed by it with the SEC. All such required forms, reports and documents
(including the financial statements, exhibits and schedules thereto and those
documents that ONTN may file subsequent to the date hereof) are collectively
referred to herein as the "ONTN SEC Reports." As of their respective dates, the
ONTN SEC Reports (i) were prepared in accordance with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the SEC thereunder applicable to such ONTN SEC Reports and (ii)
did not at the time they were filed (or if amended or superseded by a filing
prior to the date of this Agreement, then on the date of such filing) contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(b) Each of the ONTN December 31, 2004 Financial Statements and the
ONTN June 30, 2005 Financial Statements (including, in each case, any related
notes thereto) were prepared in accordance with the books and records of ONTN,
are true, correct and complete, were prepared in accordance with GAAP applied on
a consistent basis throughout the periods involved, and each fairly presents the
consolidated financial position of ONTN as of the respective dates thereof and
the consolidated results of its operations and cash flows and stockholder equity
for the periods indicated.
4.8 Absence of Undisclosed Liabilities.
(a) ONTN does not have any liabilities or obligations, whether
absolute, contingent, accrued, asserted, unasserted or otherwise, other than (i)
those appearing and fully reserved against on the ONTN Balance Sheet, (ii) those
specifically referred to and quantified in the notes included in the ONTN June
30, 2005 Financial Statements, (iii) those set forth in the ONTN Disclosure
Letter and (iv) those to be incurred between the date of this Agreement and the
Closing Date in transactions in the ordinary and usual course of business of
ONTN.
(b) Except for checks and drafts endorsed in the ordinary and usual
course of business, ONTN has not guaranteed any obligation or indebtedness of
any Person.
4.9 Changes in Business. Except as set forth in the ONTN Disclosure
Letter, since June 30, 2005:
(a) there has not been any material adverse change in the financial
condition, assets, properties, liabilities, business, affairs or operations of
ONTN;
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(b) there has not been any damage, destruction or loss as a result
of any event (whether or not covered by insurance), including without limitation
fire, explosion, pollution, accident, earthquake, lightning, weather, hurricane,
tornado, smoke, hail, flood, Act of God, strike, work stoppage, lockout,
combination of workmen, sabotage, condemnation, riot, civil disturbance,
vandalism, terrorism, war or act of public enemy, or any cancellation of any
supplier, license, lease, sales or other agreement to which ONTN is a party,
which adversely affects the assets, properties, business, affairs or operations
of ONTN;
(c) ONTN has not engaged in any activity or entered into or carried
out any transaction, other than in the ordinary and usual course of its
business, or experienced any occurrence or circumstance which has had or might
be expected to have a material adverse effect on ONTN's financial condition,
results of operations, assets, properties, liabilities, business, affairs or
operations;
(d) ONTN has not paid or committed itself to pay to or for the
benefit of any its directors, officers, employees or any other Person, any
salary, wage, bonus, profit-sharing, pension, retirement, deferred compensation,
severance or termination payment, or any other form of direct or indirect bonus,
special compensation or benefit, other than in the ordinary and usual course of
its business consistent with prior practices;
(e) ONTN has not made or permitted itself to make, amend, modify, or
cancel any agreement, waive any right of value, or engaged in any activity,
which may have the effect of accelerating the payment of any purchase price, fee
or other amount in connection with any of its accounts payable or other
obligations;
(f) ONTN has not written down the value of any asset reflected on
the ONTN June 30, 2005 Balance Sheet, nor written off as uncollectible or
otherwise any note or account receivable or portion thereof reflected on the
ONTN June 30, 2005 Balance Sheet;
(g) there has not been any amendment or termination, or any notice
of any proposed amendment or termination, of any contract, agreement,
instrument, plan, lease or license to which ONTN is a party or by which it or
any of its assets or properties may be bound;
(h) there has not been any cancellation or termination or any
threatened cancellation or termination by any supplier of goods or services to
ONTN;
(i) there has not been granted, modified, amended or terminated any
Lien with respect to any asset or property of ONTN, any commitment made or
liability incurred by ONTN, any cancellation or compromise of any debt or claim
of ONTN, or any disposition, or agreement for disposition, of any asset or
property of ONTN, other than in the ordinary and usual course of business of
ONTN;
(j) there has not been any labor strike, labor dispute or any
attempt by any labor union to organize any of the employees of ONTN, nor any
threat of any labor strike, labor dispute or attempt to organize employees of
ONTN;
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(k) there has not been any charge filed against or with respect ONTN
involving or relating to any unlawful employment practice or occupational safety
or health standard pursuant to any federal, state or local law, nor any threat
of the filing of any such charge;
(l) there has been no issuance of any purchase order by ONTN for
properties, assets, goods or services, or any incurrence by ONTN of any
liability, other than in the ordinary and usual course of ONTN's business;
(m) ONTN has not made or permitted itself to make any distribution
of its assets by way of declaration or payment of any dividend, redemption or
purchase of any shares of capital stock or other securities of ONTN, including
without limitation shares of ONTN Common Stock, or otherwise;
(n) ONTN has not incurred or become subject to any claim or
liability for damages or alleged damages for any actual or alleged negligence,
products liability or other tort or breach of contract or otherwise;
(o) ONTN has not undertaken any borrowing or loan transaction
(whether as lender or borrower) with any Person, including without limitation
any director, officer, employee, shareholder or Affiliate of ONTN;
(p) ONTN has not offered, issued or sold, or agreed to offer, issue
or sell, any of its shares of capital stock or other securities of ONTN,
including without limitation shares of ONTN Common Stock, or granted or agreed
to grant any option, warrant or other right to acquire any of its shares of
capital stock or other securities of ONTN, including without limitation shares
of ONTN Common Stock; and
(q) ONTN has not entered into, or agreed to enter into, any merger,
consolidation or sale of all or substantially all of its assets and properties.
4.10 Disputes and Litigation. Except as is set forth in the ONTN
Disclosure Letter, there is no claim, arbitration, litigation, proceeding or
governmental investigation in progress, pending or threatened against or
affecting ONTN or the properties, assets, business, affairs or operations of
ONTN. Except as is set forth in the ONTN Disclosure Letter, ONTN does not have
any dispute in progress, pending or threatened, involving, with or against any
supplier, creditor, customer, landlord, licensor or other third party with whom
or with which ONTN does business, nor with any of the employees of ONTN, nor
with any other Person. The management of ONTN has no knowledge of any fact or
circumstance which might lead it to believe that any dispute or litigation
involving or affecting ONTN or its properties, assets, business, affairs or
operations might arise. ONTN is not subject to any judgment, order, writ,
injunction or decree of any court or governmental authority.
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4.11 Properties and Assets. The properties and assets owned by ONTN
include:
(a) the properties and assets reflected on the ONTN June 30, 2005
Balance Sheet, except for those properties and assets of ONTN which were
disposed of at not less than their respective fair market values subsequent to
June 30, 2005 in the ordinary and usual course of ONTN's business; and
(b) the properties and assets acquired by ONTN subsequent to June
30, 2005 in the ordinary and usual course of its business, other than those
properties and assets subsequently disposed of at not less than their respective
fair market values in the ordinary and usual course of ONTN's business.
ONTN is in possession of all of the properties and assets owned or leased by it
or required for the conduct of business in the ordinary and usual course
thereof.
4.12 Title to Property. ONTN holds good, valid and marketable title to all
of its properties and assets (which includes without limitation all of those
properties and assets described in Section 4.11 above), free and clear of any
and all Liens, other than (a) Liens for taxes not yet due and payable, and (b)
such Liens as are listed in the ONTN Disclosure Letter.
4.13 Condition of Assets. All of the properties and assets owned, leased
or utilized by ONTN in its business, whether real, personal or mixed, are in
good condition and repair, ordinary wear and tear excepted, are in good
operating order and are fit for the purposes for which they are used and are
intended to be used.
4.14 Real Property Ownership. ONTN does not own any real property.
4.15 Real Property Leases.
(a) The ONTN Disclosure Letter sets forth a true, correct and
complete list of all of the real property leases to which ONTN is a party as
tenant, including the street address of each property, the name and address of
each landlord and property manager and the expiration date of each lease. True,
correct and complete copies of each such lease, and any and all amendments,
modifications and extensions thereof, have previously been delivered to Global.
(b) Except as is set forth in the ONTN Disclosure Letter, ONTN is
not in default under any real property lease to which it is a party, and there
has not occurred and there does not exist under any such lease, any event of
default or event which, with notice or the lapse of time or both, would
constitute a default. Except as is set forth in the ONTN Disclosure Letter, ONTN
has not received any notice of noncompliance with any applicable Governmental
Rule relating to any real property as to which it is a tenant or the
condemnation of any real property as to which it is a tenant.
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4.16 Related Party Transactions. Except as is set forth in the ONTN
Disclosure Letter, ONTN has no receivables owing by, or payables owing to, any
of its shareholders, directors, officers or other employees, or their relatives,
or by any Affiliate of any of them. Except as is set forth in the ONTN
Disclosure Letter, since January 1, 2003, ONTN has not engaged in any
transaction with any of its shareholders, directors, officers or other
employees, or their relatives, or any Affiliate of any of them, which is not
disclosed in the ONTN SEC Reports.
4.17 Intangible Personal Property.
(a) The ONTN Disclosure Letter sets forth a true, correct and
complete list of all customer and supplier lists, franchises, non-competition
covenants, patents, patent applications, inventions, trademarks, trademark
application, copyrights, trade names, licenses and securities which are owned,
used by or accrue to the benefit of ONTN, including, where applicable, the
jurisdiction or jurisdictions in which such items are licensed or registered.
Such scheduled items of intangible personal property are all of the items of
intangible personal property required and necessary for ONTN to conduct its
business as presently conducted.
(b) Except as is set forth in the ONTN Disclosure Letter, ONTN is
the sole and exclusive owner of, and has the unrestricted right to use, each of
the scheduled items of intangible personal property. No claims or demands have
been asserted against ONTN with respect to any of the scheduled items of
intangible personal property and no proceedings have been instituted, are
pending or have been threatened which challenge the rights of ONTN with respect
to any of such items of intangible personal property. There are no facts known
to the management of ONTN which might reasonably serve as the basis, in whole or
in part, of any claim that any asset utilized by ONTN infringes upon the rights
of any other Person, or of any claim that ONTN has not, in all material
respects, performed all obligations required to be performed by it, or of any
claim that ONTN is in default in any respect under or with respect to any of
such items of intangible personal property. The ONTN Disclosure Letter sets
forth the name, address and percentage of ownership of any Person, other than
ONTN, who or which owns each item of intangible personal property which ONTN
uses and specifies the date of the agreement authorizing such use. True, correct
and complete copies of all such agreements have previously been delivered to
Global.
(c) Except as is set forth in the ONTN Disclosure Letter, since the
beginning of the negotiations culminating in the execution of this Agreement, no
action has been taken by ONTN or any of its officers, directors, employees or
agents with respect to any item of intangible property, which will have an
adverse effect upon the goodwill of ONTN, including without limitation its
relationship with any supplier or customer, other than those actions customarily
taken and consistent with the ordinary and usual business practices of ONTN and
as incidents of its day-to-day operations of its business as heretofore
conducted. During the one year period preceding the beginning of negotiations
between ONTN and Global, information as to or contained in customer and supplier
lists, and other similar items, have not been made available to any Person,
other than Global, except to the extent that disclosure thereof may have been
required by any Governmental Rule or by any Governmental Entity having
jurisdiction with respect thereto.
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(d) Upon the consummation of the transactions contemplated by this
Agreement, Global will have the exclusive and unrestricted right to grant the
right to use the trade name, logo and other intangible property associated with
the operation of the business of ONTN.
4.18 Written and Oral Contracts and Commitments. The ONTN Disclosure
Letter sets forth a true, correct and complete list with respect to ONTN of (a)
each and every oral and written contract or commitment involving more than One
Thousand Dollars ($1,000) for the purchase or sale of goods, supplies,
equipment, capital assets, products or services, (b) each and every oral and
written contract with or commitment to any employee, officer or consultant, (c)
each and every oral and written contract or commitment evidencing or providing
for any financing of ONTN or its business or assets, (d) each and every oral and
written contract or commitment for sales representation, (e) each and every oral
and written supplier or subcontractor agreement, (f) each and every service
contract not terminable by ONTN on thirty days notice and (g) each and every
oral and written contract and commitment not entered into by ONTN in the
ordinary and usual course of its business or which is material as to amount or
effect on its business or which may materially affect its suppliers, customers
or accounts.
True, correct and complete copies of each and every one of the written contracts
and commitments and true, correct and complete summaries of each and every one
of the oral contracts and commitments listed in the ONTN Disclosure Letter have
previously been delivered to Global. All of the contracts and commitments listed
or described in the ONTN Disclosure Letter are valid, binding, in full force and
effect and enforceable in accordance with their respective terms, and no
occurrence or circumstance exists which constitutes a breach or default or which
by lapse of time and/or by giving of notice would constitute a breach or
defaults by any party thereto (including without limitation ONTN) under any such
contract or commitment. ONTN is not a party to, or otherwise bound by, any
contract or commitment to purchase above the current market price, or to sell
below its current list price, any supplies, equipment capital assets, products
or services. ONTN is not a party to or otherwise bound by any contract or
commitment (whether or not listed in the ONTN Disclosure Letter) which is
adverse, onerous or harmful to its business.
4.19 Promissory Notes. The ONTN Disclosure Letter sets forth a true,
correct and complete list of all notes payable and all notes receivable to which
ONTN is a party, including the names of the other parties thereto, the interest
rates and terms of payment. A true, correct and complete copy of each and every
one of the notes listed in the ONTN Disclosure Letter has previously been
delivered to Global.
4.20 Insurance. ONTN has maintained such insurance against loss or damage
of the kinds and the amounts customarily insured against by corporations
similarly situated, with reputable companies, or with a Governmental Entity, as
is adequate both as to the type and amount of coverage to protect the assets and
business of ONTN. The properties of ONTN of an insurable nature are adequately
insured under such policies. The ONTN Disclosure Letter sets forth a true,
correct and complete list of all policies of insurance, and any pending claims
thereunder, related to the assets, properties, business and operations of ONTN.
True, correct and complete copies of all such insurance policies have previously
been delivered to Global.
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4.21 Employees.
(a) ONTN has never been a party to any collective bargaining
agreement or other labor agreement.
(b) The ONTN Disclosure Letter sets forth a true, correct and
complete list of all written employment, profit sharing, deferred compensation,
bonus, stock option, stock purchase, pension, retainer, consulting, retirement,
welfare, benefit or incentive plans or contracts (including all plan
descriptions, actuarial statements and other reports relating thereto), to which
ONTN is a party or by which it is bound. Except as is set forth in the ONTN
Disclosure Letter, ONTN is not in default with respect to any of the agreements,
contracts and plans listed therein and all such agreements, contracts and plans
are in full compliance with all Governmental Rules. None of such agreements,
contracts or plans is subject to ERISA.
(c) The ONTN Disclosure Letter sets forth a true, correct and
complete list of all oral and written plans or agreements to which ONTN is a
party and which grant "fringe benefits" of any nature to the employees of ONTN,
including without limitation vacation plans or programs, leave plans or
programs, employee discounts and related benefits. True, correct and complete
copies of all written agreements, plans and programs and summaries of all oral
agreements and commitments have been previously delivered to Global.
(d) The ONTN Disclosure Letter sets forth a true, correct and
complete list of the names of all employees of ONTN, together with their
respective job titles and the amount of their respective compensation and fringe
benefits.
(e) ONTN is in substantial compliance with Governmental Rules with
respect to employment, wages and hours. ONTN is not engaged in any unfair labor
practice, nor are any unfair labor practice complaints against it filed with or
threatened to be filed with or by any employee, the National Labor Relations
Board, Equal Employment Opportunity Commission, Department of Labor or any other
Governmental Entity. ONTN is in substantial compliance with all applicable
Governmental Rules with respect to occupational safety and health standards and
has not received any complaints from any employee or any Governmental Entity
alleging any violation of any Governmental Rule with respect to occupational
safety and health standards.
4.22 Taxes.
(a) Except as is set forth in the ONTN Disclosure Letter, all tax
returns (including information returns) and reports required by any applicable
Governmental Rule to be filed prior to the date hereof have been duly filed by
ONTN and were true, correct and complete as of the date of filing. Except as is
set forth in the ONTN Disclosure Letter, all taxes, assessments, fees,
penalties, interest and other governmental charges with respect to ONTN which
have become due and payable have been paid. Except as is set forth in the ONTN
Disclosure Letter, the provisions for taxes with respect to all Governmental
Entities reflected in the ONTN June 30, 2005 Financial Statements are adequate
to cover the liabilities of ONTN for such taxes with respect to the periods then
ended and for all prior periods. Except as is set forth in the ONTN Disclosure
Letter, there is no pending or threatened claim by any Governmental Entity
against, or with respect to, ONTN for payment of additional taxes for any period
prior to the date hereof, in excess of the amount of the provisions therefor
referred to in the preceding sentence. All monies required to be withheld by
ONTN from employees for income taxes, social security taxes and unemployment
insurance taxes have been collected or withheld, and either paid to the
respective Governmental Entities, or set aside in accounts for such purpose, or
accrued, reserved against, and entered upon the books of ONTN. The consummation
of the transactions contemplated by this Agreement will not result in the
imposition of any additional taxes or other assessments on ONTN.
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(b) There have previously been delivered to Global copies of the
federal income and state income and franchise tax returns of ONTN for the
taxable years ended December 31, 2004, 2003 and 2002 and, except as set forth in
the ONTN Disclosure Letter, the taxes paid and payable as reflected thereon
state accurately the total tax payable for the period designated. No income,
franchise, sales and other federal, state and local tax returns have been
audited by the appropriate taxing authorities. ONTN has not executed any waiver
of any statute of limitations against assessment or collection of taxes, nor has
any such waiver been executed or is in force with respect or applicable to ONTN.
4.23 Banks. The ONTN Disclosure Letter sets forth a true, correct and
complete list of each and every bank account of, and safe deposit box leased by,
ONTN, together with the identifying numbers thereof and the names of all persons
authorized to draw thereon or have access thereto.
4.24 Compliance with Law.
(a) The business of ONTN has at all times been conducted in
substantial compliance with all applicable Governmental Rules, and there is no
Governmental Rule which would restrict ONTN from carrying on its business and
operations in the same manner as presently conducted. ONTN has not received any
notice, claim or complaint that it has not conducted or is not presently
conducting its business in accordance with all Governmental Rules.
(b) ONTN has obtained all Governmental Approvals under all
applicable Governmental Rules in order to conduct its business as presently
conducted, and all Governmental Approvals are in full force and effect.
(c) The ONTN Disclosure Letter sets forth a true, correct and
complete list of all of the Governmental Approvals relating to the business and
operations of ONTN under all applicable Governmental Rules, including all
registrations, permits or licenses of its officers and employees and any Person
otherwise affiliated with it. All of such Governmental Approvals are in full
force and effect. No proceedings have been instituted or threatened with a view
toward terminating or limiting any such Governmental Approvals and none of such
Governmental Approvals are subject to any outstanding order, decree, judgment or
stipulation, investigation or proceeding. A true, correct and complete copy of
each and every one of the Governmental Approvals listed or described in the ONTN
Disclosure Letter has been previously delivered to Global.
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4.25 No Brokerage. No broker, finder or Person acting in a similar
capacity has been employed or retained by ONTN or any of its Affiliates in
connection with the transactions contemplated by this Agreement, and no Person
is entitled to receive any brokerage, finders' or similar fee or commission in
connection with this Agreement and the transactions contemplated hereby.
4.26 ONTN Disclosure Letter. All of the facts recited in the ONTN
Disclosure Letter are true, correct and complete and shall be deemed to be
representations and warranties of fact as though set forth in this Article IV.
4.27 Full Disclosure. No representation or warranty made by ONTN in this
Agreement, and no certification to be furnished by ONTN to Global pursuant to
this Agreement, contains or will contain any untrue statement of a material
fact, or omits or will omit to state any material fact required to be stated
herein or therein or necessary in order to make the statements contained herein
or therein, in the light of the circumstances under which they were made, not
misleading.
ARTICLE V
Representations and Warranties Regarding Global
In order to induce ONTN to execute and deliver this Agreement, and to
consummate the transactions contemplated hereby, Global represents and warrants
to ONTN as follows:
5.1 Corporate Organization and Good Standing.
(a) Global is a corporation duly organized, validly existing and in
good standing under the laws of the State of Florida. Global is qualified to
transact business as a foreign corporation in every jurisdiction where the
character of its activities requires such qualification. Global has all
requisite corporate power, franchises, licenses and authority to own, lease and
operate its respective assets and properties and to carry on its business as
presently conducted.
(b) The business of Global is not conducted directly or indirectly
by means of any wholly or partially owned subsidiary or direct or indirect
interest in any other corporation, partnership, joint venture, association or
other Person.
(c) True, correct and complete copies of the Articles of
Incorporation of Global, certified by the Secretary of State of the State of
Florida, and of the Bylaws of Global, certified by the Secretary of Global, all
as in effect on the date hereof, have been delivered to ONTN. A true, correct
and complete copy of the minute book of Global has been previously delivered to
ONTN.
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5.2 Capitalization of Global. The authorized capital stock of Global
consists solely of Five Million (5,000,000) shares of Preferred Stock, par value
$.0001 per share, and Five Hundred Million (500,000,000) shares of Global Common
Stock. No shares of Preferred Stock and Twenty-Nine Million One Hundred Fifty
Thousand Eight (29,150,008) shares of Global Common Stock are issued and
outstanding. No other shares of Global's capital stock, whether preferred or
common, are authorized, issued or outstanding. All of the issued and outstanding
shares of Global Common Stock are duly and validly issued and outstanding, fully
paid and nonassessable, and none of the issued and outstanding shares of Global
Common Stock were issued in violation of the preemptive rights of any Person.
5.3 Options, Warrants and Rights. There are no authorized, issued,
outstanding or contemplated subscriptions, options, warrants, calls, rights,
commitments, contracts or other agreements of any nature whatsoever which
obligate Global to issue or sell any shares of its capital stock, including
without limitation shares of Global Common Stock, or any securities convertible
into or evidencing the right to purchase or subscribe for any shares of its
capital stock, including without limitation shares of Global Common Stock.
Except as set forth in the Global Disclosure Letter and except for this
Agreement, there are no authorized, outstanding or contemplated agreements or
understandings, whether written or oral, with respect to the voting, sale or
Transfer of any shares of capital stock of Global, including without limitation
the shares of Global Common Stock.
5.4 Compliance with Certain Instruments. Except as is set forth in the
Global Disclosure Letter, Global is in full compliance with all of the
provisions of each and every one of the agreements, contracts, leases, notes,
mortgages, commitments and undertakings to which it is a party or by which it or
any of its properties or assets is bound. Global has not received any notice,
whether oral or written, to the effect that a default has occurred under any of
the provisions of any such agreements, contracts, leases, notes, mortgages,
commitments or undertakings, and, except as is set forth in the Global
Disclosure Letter, the management of Global is not aware of any fact which would
lead it to believe that any such default (with or without the giving of notice
or the lapse of time or both) has occurred. Global has not waived any right or
remedy under any of such agreements, contracts, leases, notes, mortgages,
commitments or undertakings.
5.5 Consents and Approvals; Conflict with Other Instruments. Except for
any required waivers, consents or approvals set forth in the Global Disclosure
Letter, the execution, delivery and performance by Global and the consummation
of the transactions contemplated hereby:
(a) do not and will not violate (with or without the giving of
notice or the lapse of time or both) any Governmental Rule, or require consent
or approval from any Governmental Entity; and
(b) do not and will not require any consent or approval under, and
do not and will not conflict with, or result in the breach or termination of any
provision of, or constitute a default under, or result in the acceleration of
the performance of the obligations of Global under, or result in the creation of
any Lien upon any or all of the properties, assets or business of Global
pursuant to, its Articles of Incorporation or Bylaws or any indenture, mortgage,
deed of trust, lease, licensing agreement, contract, instrument or other
agreement, or any Governmental Rule, to which Global is a party or by which it
or any of its assets or properties are bound.
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5.6 Books and Records. The books and records of Global (including without
limitation the books and records of account) are all true, correct and complete,
and fairly reflect a true record of the business and affairs of Global.
5.7 Global Financial Statements. The Global December 31, 2004 Financial
Statements and the Global June 30, 2005 Financial Statements have previously
been delivered to ONTN. Each of the Global December 31, 2004 Financial
Statements and the Global June 30, 2005 Financial Statements (including, in each
case, any related notes thereto) were prepared in accordance with the books and
records of Global, are true, correct and complete, were prepared in accordance
with GAAP applied on a consistent basis throughout the periods involved, and
each fairly presents the consolidated financial position of Global as of the
respective dates thereof and the consolidated results of its operations and cash
flows and stockholder equity for the periods indicated.
5.8 Absence of Undisclosed Liabilities.
(a) Global does not have any liabilities or obligations, whether
absolute, contingent, accrued, asserted, unasserted or otherwise, other than (i)
those appearing and fully reserved against on the Global June 30, 2005 Balance
Sheet, (ii) those specifically referred to and quantified in the notes included
in the Global June 30, 2005 Financial Statements, (iii) those set forth in the
Global Disclosure Letter and (iv) those to be incurred between the date of this
Agreement and the Closing Date in transactions in the ordinary and usual course
of business of Global.
(b) Except for checks and drafts endorsed in the ordinary and usual
course of business, Global has not guaranteed any obligation or indebtedness of
any Person.
5.9 Changes in Business. Except as set forth in the Global Disclosure
Letter, since June 30, 2005:
(a) there has not been any material adverse change in the financial
condition, assets, properties, liabilities, business, affairs or operations of
Global;
(b) there has not been any damage, destruction or loss as a result
of any event (whether or not covered by insurance), including without limitation
fire, explosion, pollution, accident, earthquake, lightning, weather, hurricane,
tornado, smoke, hail, flood, Act of God, strike, work stoppage, lockout,
combination of workmen, sabotage, condemnation, riot, civil disturbance,
vandalism, terrorism, war or act of public enemy, or any cancellation of any
supplier, license, lease, sales or other agreement to which Global is a party,
which adversely affects the assets, properties, business, affairs or operations
of Global;
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(c) Global has not engaged in any activity or entered into or
carried out any transaction, other than in the ordinary and usual course of its
business, or experienced any occurrence or circumstance which has had or might
be expected to have a material adverse effect on Global's financial condition,
results of operations, assets, properties, liabilities, business, affairs or
operations;
(d) Global has not paid or committed itself to pay to or for the
benefit of any its directors, officers, employees or any other Person, any
salary, wage, bonus, profit-sharing, pension, retirement, deferred compensation,
severance or termination payment, or any other form of direct or indirect bonus,
special compensation or benefit, other than in the ordinary and usual course of
its business consistent with prior practices;
(e) Global has not made or permitted itself to make, amend, modify,
or cancel any agreement, waive any right of value, or engaged in any activity,
which may have the effect of accelerating the payment of any purchase price, fee
or other amount in connection with any of its accounts payable or other
obligations;
(f) Global has not written down the value of any asset reflected on
the Global June 30, 2005 Balance Sheet, nor written off as uncollectible or
otherwise any note or account receivable or portion thereof reflected on the
Global June 30, 2005 Balance Sheet;
(g) there has not been any amendment or termination, or any notice
of any proposed amendment or termination, of any contract, agreement,
instrument, plan, lease or license to which Global is a party or by which it or
any of its assets or properties may be bound;
(h) there has not been any cancellation or termination or any
threatened cancellation or termination by any supplier of goods or services to
Global;
(i) there has not been granted, modified, amended or terminated any
Lien with respect to any asset or property of Global, any commitment made or
liability incurred by Global, any cancellation or compromise of any debt or
claim of Global, or any disposition, or agreement for disposition, of any asset
or property of Global, other than in the ordinary and usual course of business
of Global;
(j) there has not been any labor strike, labor dispute or any
attempt by any labor union to organize any of the employees of Global, nor any
threat of any labor strike, labor dispute or attempt to organize employees of
Global;
(k) there has not been any charge filed against or with respect
Global involving or relating to any unlawful employment practice or occupational
safety or health standard pursuant to any federal, state or local law, nor any
threat of the filing of any such charge;
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(l) there has been no issuance of any purchase order by Global for
properties, assets, goods or services, or any incurrence by Global of any
liability, other than in the ordinary and usual course of Global's business;
(m) Global has not made or permitted itself to make any distribution
of its assets by way of declaration or payment of any dividend, redemption or
purchase of any shares of capital stock or other securities of Global, including
without limitation shares of Global Common Stock, or otherwise;
(n) Global has not incurred or become subject to any claim or
liability for damages or alleged damages for any actual or alleged negligence,
products liability or other tort or breach of contract or otherwise;
(o) Global has not undertaken any borrowing or loan transaction
(whether as lender or borrower) with any Person, including without limitation
any director, officer, employee, shareholder or Affiliate of Global;
(p) Global has not offered, issued or sold, or agreed to offer,
issue or sell, any of its shares of capital stock or other securities of Global,
including without limitation shares of Global Common Stock, or granted or agreed
to grant any option, warrant or other right to acquire any of its shares of
capital stock or other securities of Global, including without limitation shares
of Global Common Stock; and
(q) Global has not entered into, or agreed to enter into, any
merger, consolidation or sale of all or substantially all of its assets and
properties.
5.10 Disputes and Litigation. Except as is set forth in the Global
Disclosure Letter, there is no claim, arbitration, litigation, proceeding or
governmental investigation in progress, pending or threatened against or
affecting Global or the properties, assets, business, affairs or operations of
Global. Except as is set forth in the Global Disclosure Letter, Global does not
have any dispute in progress, pending or threatened, involving, with or against
any supplier, creditor, customer, landlord, licensor or other third party with
whom or with which Global does business, nor with any of the employees of
Global, nor with any other Person. The management of Global has no knowledge of
any fact or circumstance which might lead it to believe that any dispute or
litigation involving or affecting Global or its properties, assets, business,
affairs or operations might arise. Global is not subject to any judgment, order,
writ, injunction or decree of any court or governmental authority.
5.11 Properties and Assets. The properties and assets owned by Global
include:
(a) the properties and assets reflected on the Global June 30, 2005
Balance Sheet, except for those properties and assets of Global which were
disposed of at not less than their respective fair market values subsequent to
June 30, 2005 in the ordinary and usual course of Global's business; and
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(b) the properties and assets acquired by Global subsequent to June
30, 2005 in the ordinary and usual course of its business, other than those
properties and assets subsequently disposed of at not less than their respective
fair market values in the ordinary and usual course of Global's business.
Global is in possession of all of the properties and assets owned or leased by
it or required for the conduct of business in the ordinary and usual course
thereof.
5.12 Title to Property. Global holds good, valid and marketable title to
all of its properties and assets (which includes without limitation all of those
properties and assets described in Section 5.11 above), free and clear of any
and all Liens, other than (a) Liens for taxes not yet due and payable, and (b)
such Liens as are listed in the Global Disclosure Letter.
5.13 Condition of Assets. All of the properties and assets owned, leased
or utilized by Global in its business, whether real, personal or mixed, are in
good condition and repair, ordinary wear and tear excepted, are in good
operating order and are fit for the purposes for which they are used and are
intended to be used.
5.14 Real Property Ownership. Global does not own any real property.
5.15 Real Property Leases.
(a) The Global Disclosure Letter sets forth a true, correct and
complete list of all of the real property leases to which Global is a party as
tenant, including the street address of each property, the name and address of
each landlord and property manager and the expiration date of each lease. True,
correct and complete copies of each such lease, and any and all amendments,
modifications and extensions thereof, have previously been delivered to ONTN.
(b) Except as is set forth in the Global Disclosure Letter, Global
is not in default under any real property lease to which it is a party, and
there has not occurred and there does not exist under any such lease, any event
of default or event which, with notice or the lapse of time or both, would
constitute a default. Except as is set forth in the Global Disclosure Letter,
Global has not received any notice of noncompliance with any applicable
Governmental Rule relating to any real property as to which it is a tenant or
the condemnation of any real property as to which it is a tenant.
5.16 Related Party Transactions. Except as is set forth in the Global
Disclosure Letter, Global has no receivables owing by, or payables owing to, any
of its shareholders, directors, officers or other employees, or their relatives,
or by any Affiliate of any of them. Except as is set forth in the Global
Disclosure Letter, since January 1, 2003, Global has not engaged in any
transaction with any of its shareholders, directors, officers or other
employees, or their relatives, or any Affiliate of any of them.
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5.17 Intangible Personal Property.
(a) The Global Disclosure Letter sets forth a true, correct and
complete list of all customer and supplier lists, franchises, non-competition
covenants, patents, patent applications, inventions, trademarks, trademark
application, copyrights, trade names, licenses and securities which are owned,
used by or accrue to the benefit of Global, including, where applicable, the
jurisdiction or jurisdictions in which such items are licensed or registered.
Such scheduled items of intangible personal property are all of the items of
intangible personal property required and necessary for Global to conduct its
business as presently conducted.
(b) Except as is set forth in the Global Disclosure Letter, Global
is the sole and exclusive owner of, and has the unrestricted right to use, each
of the scheduled items of intangible personal property. No claims or demands
have been asserted against Global with respect to any of the scheduled items of
intangible personal property and no proceedings have been instituted, are
pending or have been threatened which challenge the rights of Global with
respect to any of such items of intangible personal property. There are no facts
known to the management of Global which might reasonably serve as the basis, in
whole or in part, of any claim that any asset utilized by Global infringes upon
the rights of any other Person, or of any claim that Global has not, in all
material respects, performed all obligations required to be performed by it, or
of any claim that Global is in default in any respect under or with respect to
any of such items of intangible personal property. The Global Disclosure Letter
sets forth the name, address and percentage of ownership of any Person, other
than Global, who or which owns each item of intangible personal property which
Global uses and specifies the date of the agreement authorizing such use. True,
correct and complete copies of all such agreements have previously been
delivered to ONTN.
(c) Except as is set forth in the Global Disclosure Letter, since
the beginning of the negotiations culminating in the execution of this
Agreement, no action has been taken by Global or any of its officers, directors,
employees or agents with respect to any item of intangible property, which will
have an adverse effect upon the goodwill of Global, including without limitation
its relationship with any supplier or customer, other than those actions
customarily taken and consistent with the ordinary and usual business practices
of Global and as incidents of its day-to-day operations of its business as
heretofore conducted. During the one year period preceding the beginning of
negotiations between Global and ONTN, information as to or contained in customer
and supplier lists, and other similar items, have not been made available to any
Person, other than ONTN, except to the extent that disclosure thereof may have
been required by any Governmental Rule or by any Governmental Entity having
jurisdiction with respect thereto.
5.18 Written and Oral Contracts and Commitments. The Global Disclosure
Letter sets forth a true, correct and complete list with respect to Global of
(a) each and every oral and written contract or commitment involving more than
One Thousand Dollars ($1,000) for the purchase or sale of goods, supplies,
equipment, capital assets, products or services, (b) each and every oral and
written contract with or commitment to any employee, officer or consultant, (c)
each and every oral and written contract or commitment evidencing or providing
for any financing of Global or its business or assets, (d) each and every oral
and written contract or commitment for sales representation, (e) each and every
oral and written supplier or subcontractor agreement, (f) each and every service
contract not terminable by Global on thirty days notice and (g) each and every
oral and written contract and commitment not entered into by Global in the
ordinary and usual course of its business or which is material as to amount or
effect on its business or which may materially affect its suppliers, customers
or accounts.
24
True, correct and complete copies of each and every one of the written contracts
and commitments and true, correct and complete summaries of each and every one
of the oral contracts and commitments listed in the Global Disclosure Letter
have previously been delivered to ONTN. All of the contracts and commitments
listed or described in the Global Disclosure Letter are valid, binding, in full
force and effect and enforceable in accordance with their respective terms, and
no occurrence or circumstance exists which constitutes a breach or default or
which by lapse of time and/or by giving of notice would constitute a breach or
defaults by any party thereto (including without limitation Global) under any
such contract or commitment. Global is not a party to, or otherwise bound by,
any contract or commitment to purchase above the current market price, or to
sell below its current list price, any supplies, equipment capital assets,
products or services. Global is not a party to or otherwise bound by any
contract or commitment (whether or not listed in the Global Disclosure Letter)
which is adverse, onerous or harmful to its business.
5.19 Promissory Notes. The Global Disclosure Letter sets forth a true,
correct and complete list of all notes payable and all notes receivable to which
Global is a party, including the names of the other parties thereto, the
interest rates and terms of payment. A true, correct and complete copy of each
and every one of the notes listed in the Global Disclosure Letter has previously
been delivered to ONTN.
5.20 Insurance. Global has maintained such insurance against loss or
damage of the kinds and the amounts customarily insured against by corporations
similarly situated, with reputable companies, or with a Governmental Entity, as
is adequate both as to the type and amount of coverage to protect the assets and
business of Global. The properties of Global of an insurable nature are
adequately insured under such policies. The Global Disclosure Letter sets forth
a true, correct and complete list of all policies of insurance, and any pending
claims thereunder, related to the assets, properties, business and operations of
Global. True, correct and complete copies of all such insurance policies have
previously been delivered to ONTN.
5.21 Employees.
(a) Global has never been a party to any collective bargaining
agreement or other labor agreement.
(b) The Global Disclosure Letter sets forth a true, correct and
complete list of all written employment, profit sharing, deferred compensation,
bonus, stock option, stock purchase, pension, retainer, consulting, retirement,
welfare, benefit or incentive plans or contracts (including all plan
descriptions, actuarial statements and other reports relating thereto), to which
Global is a party or by which it is bound. Except as is set forth in the Global
Disclosure Letter, Global is not in default with respect to any of the
agreements, contracts and plans listed therein and all such agreements,
contracts and plans are in full compliance with all Governmental Rules. None of
such agreements, contracts or plans is subject to ERISA.
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(c) The Global Disclosure Letter sets forth a true, correct and
complete list of all oral and written plans or agreements to which Global is a
party and which grant "fringe benefits" of any nature to the employees of
Global, including without limitation vacation plans or programs, leave plans or
programs, employee discounts and related benefits. True, correct and complete
copies of all written agreements, plans and programs and summaries of all oral
agreements and commitments have been previously delivered to ONTN.
(d) The Global Disclosure Letter sets forth a true, correct and
complete list of the names of all employees of Global, together with their
respective job titles and the amount of their respective compensation and fringe
benefits.
(e) Global is in substantial compliance with Governmental Rules with
respect to employment, wages and hours. Global is not engaged in any unfair
labor practice, nor are any unfair labor practice complaints against it filed
with or threatened to be filed with or by any employee, the National Labor
Relations Board, Equal Employment Opportunity Commission, Department of Labor or
any other Governmental Entity. Global is in substantial compliance with all
applicable Governmental Rules with respect to occupational safety and health
standards and has not received any complaints from any employee or any
Governmental Entity alleging any violation of any Governmental Rule with respect
to occupational safety and health standards.
5.22 Taxes.
(a) Except as is set forth in the Global Disclosure Letter, all tax
returns (including information returns) and reports required by any applicable
Governmental Rule to be filed prior to the date hereof have been duly filed by
Global and were true, correct and complete as of the date of filing. Except as
is set forth in the Global Disclosure Letter, all taxes, assessments, fees,
penalties, interest and other governmental charges with respect to Global which
have become due and payable have been paid. Except as is set forth in the Global
Disclosure Letter, the provisions for taxes with respect to all Governmental
Entities reflected in the Global June 30, 2005 Financial Statements are adequate
to cover the liabilities of Global for such taxes with respect to the periods
then ended and for all prior periods. Except as is set forth in the Global
Disclosure Letter, there is no pending or threatened claim by any Governmental
Entity against, or with respect to, Global for payment of additional taxes for
any period prior to the date hereof, in excess of the amount of the provisions
therefor referred to in the preceding sentence. All monies required to be
withheld by Global from employees for income taxes, social security taxes and
unemployment insurance taxes have been collected or withheld, and either paid to
the respective Governmental Entities, or set aside in accounts for such purpose,
or accrued, reserved against, and entered upon the books of Global. The
consummation of the transactions contemplated by this Agreement will not result
in the imposition of any additional taxes or other assessments on Global.
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(b) There have previously been delivered to ONTN copies of the
federal income and state income and franchise tax returns of Global for the
taxable years ended December 31, 2004, 2003 and 2002 and, except as set forth in
the Global Disclosure Letter, the taxes paid and payable as reflected thereon
state accurately the total tax payable for the period designated. No income,
franchise, sales and other federal, state and local tax returns have been
audited by the appropriate taxing authorities. Global has not executed any
waiver of any statute of limitations against assessment or collection of taxes,
nor has any such waiver been executed or is in force with respect or applicable
to Global.
5.23 Banks. The Global Disclosure Letter sets forth a true, correct and
complete list of each and every bank account of, and safe deposit box leased by,
Global, together with the identifying numbers thereof and the names of all
persons authorized to draw thereon or have access thereto.
5.24 Compliance with Law.
(a) The business of Global has at all times been conducted in
substantial compliance with all applicable Governmental Rules, and there is no
Governmental Rule which would restrict Global from carrying on its business and
operations in the same manner as presently conducted. Global has not received
any notice, claim or complaint that it has not conducted or is not presently
conducting its business in accordance with all Governmental Rules.
(b) Global has obtained all Governmental Approvals under all
applicable Governmental Rules in order to conduct its business as presently
conducted, and all Governmental Approvals are in full force and effect.
(c) The Global Disclosure Letter sets forth a true, correct and
complete list of all of the Governmental Approvals relating to the business and
operations of Global under all applicable Governmental Rules, including all
registrations, permits or licenses of its officers and employees and any Person
otherwise affiliated with it. All of such Governmental Approvals are in full
force and effect. No proceedings have been instituted or threatened with a view
toward terminating or limiting any such Governmental Approvals and none of such
Governmental Approvals are subject to any outstanding order, decree, judgment or
stipulation, investigation or proceeding. A true, correct and complete copy of
each and every one of the Governmental Approvals listed or described in the
Global Disclosure Letter has been previously delivered to ONTN.
5.25 No Brokerage. No broker, finder or Person acting in a similar
capacity has been employed or retained by Global or any of its Affiliates in
connection with the transactions contemplated by this Agreement, and no Person
is entitled to receive any brokerage, finders' or similar fee or commission in
connection with this Agreement and the transactions contemplated hereby.
5.26 Global Disclosure Letter. All of the facts recited in the Global
Disclosure Letter are true, correct and complete and shall be deemed to be
representations and warranties of fact as though set forth in this Article V.
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5.27 Full Disclosure. No representation or warranty made by Global in this
Agreement, and no certification to be furnished by Global to ONTN pursuant to
this Agreement, contains or will contain any untrue statement of a material
fact, or omits or will omit to state any material fact required to be stated
herein or therein or necessary in order to make the statements contained herein
or therein, in the light of the circumstances under which they were made, not
misleading.
ARTICLE VI
Conduct Prior to the Effective Time
6.1. Conduct of Business by the Parties. During the period from the date
of this Agreement and continuing until the earlier of the termination of this
Agreement pursuant to its terms or the Closing Date, each of ONTN and Global
shall carry on its respective businesses in the ordinary and usual course in
substantially the same manner as heretofore conducted and in substantial
compliance with all applicable laws and regulations, pay their respective debts
and taxes when due. subject to good faith disputes over such debts or taxes, pay
or perform other material obligations when due, subject to good faith disputes
over such obligations, and use their commercially reasonable efforts consistent
with past practices and policies to (i) preserve intact their present business
organizations, (ii) keep available the services of each of their present
officers and employees, respectively, and (iii) preserve their relationships
with customers, suppliers, distributors, licensors, licensees and others with
which each party has business dealings material to its respective business.
6.2 Certain Covenants of ONTN. Without limiting the generality of Section
6.1 above as it relates to ONTN, during the period commencing on the date of
this Agreement and continuing until the earlier of the termination of this
Agreement pursuant to its terms or the Closing Date, ONTN shall not do any of
the following:
(a) incur any liability or obligation, make any commitment or
disbursement, acquire or dispose of any property or asset, make any contract or
agreement, or engage in any transaction, other than in the ordinary and usual
course of its business;
(b) issue any purchase order for goods, assets or services, other
than in the ordinary and usual course of its business, or make any capital
expenditure, other than those required to maintain its assets and property in a
state of ordinary and usual repair;
(c) subject any of its property or assets to any Lien, except for
Liens for taxes not yet due and payable and any Liens set forth in the ONTN
Disclosure Letter;
28
(d) increase or decrease, or agree to increase or decrease, the rate
of compensation of any employee whose present rate of compensation exceeds
Twenty-Five Thousand Dollars ($25,000) per annum or increase, or agree to
increase, the present rate of compensation of any employee whose present rate of
compensation is less than Twenty-Five Thousand Dollars ($25,000) per annum to a
rate in excess of Twenty-Five Thousand Dollars ($25,000) per annum;
(e) create, modify, amend, extend or modify any employee benefit
plan, or increase or decrease any severance or termination pay benefit or any
other fringe benefits of any employee of ONTN;
(f) sell all or substantially all, or agree to sell all or
substantially all, of its assets;
(g) merge or consolidate, or agree to merge or consolidate, with any
Person;
(h) amend or modify in any manner its Certificate of Incorporation
or Bylaws;
(i) offer, sell or issue any shares of it capital stock, or offer,
sell or issue any option, warrant, convertible security or other right to
acquire any shares of its capital stock;
(j) declare or pay any dividend or make any other distribution with
respect to its capital stock, or directly or indirectly redeem, purchase or
acquire any shares of its issued and outstanding shares of capital stock;
(k) cancel, amend or modify any policy of insurance or permit any
such policy to lapse or terminate;
(l) commit any unlawful act or breach or violate any Governmental
Rule;
(m) acquire or agree to acquire by merging or consolidating with, or
by purchasing any equity interest in or a portion of the assets of, or by any
other manner, any business or any Person or division thereof, or otherwise
acquire or agree to enter into any joint venture, strategic partnership or
strategic investment;
(n) sell or Transfer any properties or assets except in the ordinary
and usual course of business consistent with past practice;
(o) incur any indebtedness for borrowed money or guarantee any such
indebtedness of another Person, issue or sell any debt securities or options,
warrants, calls or other rights to acquire any debt securities of ONTN, enter
into any "keep well" or other agreement to maintain any financial statement
condition or enter into any arrangement having the economic effect of any of the
foregoing;
29
(p) except in the ordinary and usual course of business consistent
with past practice, materially modify or amend, or terminate, any contract or
agreement set forth in the ONTN Disclosure Letter or waive, delay the exercise
of, release or assign any material rights or claims thereunder;
(q) except as required by GAAP, revalue any of its assets or make
any change in its accounting methods, principles or practices;
(r) make any tax election or accounting method change (except as
required by GAAP) inconsistent with past practice that, individually or in the
aggregate, is reasonably likely to adversely affect in any material respect the
tax liability or tax attributes of ONTN, settle or compromise any tax liability
or consent to any extension or waiver of any limitation period with respect to
taxes;
(s) communicate, solicit, initiate, encourage or participate in any
discussions or negotiations with regard to any proposal to acquire, directly or
indirectly, any securities of ONTN, including without limitation shares of ONTN
Common Stock or to invest any funds in ONTN, whether such proposal, acquisition,
investment or other transaction involves a stock sale, a tender offer, exchange
offer, merger or other business combination involving ONTN or for the
acquisition of a substantial portion of the assets of ONTN. ONTN shall
immediately communicate to Global the identity of the other party and the
initial terms of any proposal it or any of its shareholders, directors, officers
or agents may receive from any other party in respect of any of the
above-referenced proposals (each an "ONTN Acquisition Proposal"). The Board of
Directors of ONTN shall not (i) withdraw or modify or propose to withdraw or
modify, their approval of this Agreement, (ii) approve any letter of intent,
agreement in principle, acquisition agreement or similar agreement relating to
any ONTN Acquisition Proposal or (iii) approve or recommend, or propose to
approve or recommend, any ONTN Acquisition Proposal, or (iv) enter into an
agreement to do any of the foregoing;
(t) do anything, or fail to do anything, which would cause a breach
or default in any contract, agreement, commitment or obligation to which ONTN is
a party or by which it or any of its assets may be bound; or
(u) engage in any activity or enter into any transaction which would
be inconsistent with any of the representations and warranties of ONTN set forth
in this Agreement if such representations and warranties were made as of a date
subsequent to such activity or transaction and all references to the date of
this Agreement were deemed to be such latter date.
6.3 Certain Covenants of Global. Without limiting the generality of
Section 6.1 above as it relates to Global, during the period commencing on the
date of this Agreement and continuing until the earlier of the termination of
this Agreement pursuant to its terms or the Closing Date, Global shall not do
any of the following:
(a) incur any liability or obligation, make any commitment or
disbursement, acquire or dispose of any property or asset, make any contract or
agreement, or engage in any transaction, other than in the ordinary and usual
course of its business; (b) issue any purchase order for goods, assets or
services, other than in the ordinary and usual course of its business, or make
any capital expenditure, other than those required to maintain its assets and
property in a state of ordinary and usual repair;
30
(c) subject any of its property or assets to any Lien, except for
Liens for taxes not yet due and payable and any Liens set forth in the Global
Disclosure Letter;
(d) increase or decrease, or agree to increase or decrease, the rate
of compensation of any employee whose present rate of compensation exceeds
Twenty-Five Thousand Dollars ($25,000) per annum or increase, or agree to
increase, the present rate of compensation of any employee whose present rate of
compensation is less than Twenty-Five Thousand Dollars ($25,000) per annum to a
rate in excess of Twenty-Five Thousand Dollars ($25,000) per annum;
(e) create, modify, amend, extend or modify any employee benefit
plan, or increase or decrease any severance or termination pay benefit or any
other fringe benefits of any employee of Global;
(f) sell all or substantially all, or agree to sell all or
substantially all, of its assets;
(g) merge or consolidate, or agree to merge or consolidate, with any
Person;
(h) amend or modify in any manner its Articles of Incorporation or
Bylaws;
(i) offer, sell or issue any shares of it capital stock, or offer,
sell or issue any option, warrant, convertible security or other right to
acquire any shares of its capital stock;
(j) declare or pay any dividend or make any other distribution with
respect to its capital stock, or directly or indirectly redeem, purchase or
acquire any shares of its issued and outstanding shares of capital stock;
(k) cancel, amend or modify any policy of insurance or permit any
such policy to lapse or terminate;
(l) commit any unlawful act or breach or violate any Governmental
Rule;
(m) acquire or agree to acquire by merging or consolidating with, or
by purchasing any equity interest in or a portion of the assets of, or by any
other manner, any business or any Person or division thereof, or otherwise
acquire or agree to enter into any joint venture, strategic partnership or
strategic investment;
(n) sell or Transfer any properties or assets except in the ordinary
and usual course of business consistent with past practice;
31
(o) incur any indebtedness for borrowed money or guarantee any such
indebtedness of another Person, issue or sell any debt securities or options,
warrants, calls or other rights to acquire any debt securities of Global, enter
into any "keep well" or other agreement to maintain any financial statement
condition or enter into any arrangement having the economic effect of any of the
foregoing;
(p) except in the ordinary and usual course of business consistent
with past practice, materially modify or amend, or terminate, any contract or
agreement set forth in the Global Disclosure Letter or waive, delay the exercise
of, release or assign any material rights or claims thereunder;
(q) except as required by GAAP, revalue any of its assets or make
any change in its accounting methods, principles or practices;
(r) make any tax election or accounting method change (except as
required by GAAP) inconsistent with past practice that, individually or in the
aggregate, is reasonably likely to adversely affect in any material respect the
tax liability or tax attributes of Global, settle or compromise any tax
liability or consent to any extension or waiver of any limitation period with
respect to taxes;
(s) communicate, solicit, initiate, encourage or participate in any
discussions or negotiations with regard to any proposal to acquire, directly or
indirectly, any securities of Global, including without limitation shares of
Global Common Stock or to invest any funds in Global, whether such proposal,
acquisition, investment or other transaction involves a stock sale, a tender
offer, exchange offer, merger or other business combination involving Global or
for the acquisition of a substantial portion of the assets of Global. Global
shall immediately communicate to Global the identity of the other party and the
initial terms of any proposal it or any of its shareholders, directors, officers
or agents may receive from any other party in respect of any of the
above-referenced proposals (each a "Global Acquisition Proposal"). The Board of
Directors of Global shall not (i) withdraw or modify or propose to withdraw or
modify, their approval of this Agreement, (ii) approve any letter of intent,
agreement in principle, acquisition agreement or similar agreement relating to
any Global Acquisition Proposal or (iii) approve or recommend, or propose to
approve or recommend, any Global Acquisition Proposal, or (iv) enter into an
agreement to do any of the foregoing;
(t) do anything, or fail to do anything, which would cause a breach
or default in any contract, agreement, commitment or obligation to which Global
is a party or by which it or any of its assets may be bound; or
(u) engage in any activity or enter into any transaction which would
be inconsistent with any of the representations and warranties of Global set
forth in this Agreement if such representations and warranties were made as of a
date subsequent to such activity or transaction and all references to the date
of this Agreement were deemed to be such latter date.
32
6.4 Furnishing of Information. During the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
pursuant to its terms or the Closing Date:
(a) ONTN shall (i) provide to Global and its representatives, during
normal business hours or otherwise if so requested, full access to all of its
properties, assets, personnel, books, agreements, commitments, files and
records, in whatever form; (ii) furnish to Global and its representatives all
data and information concerning the business, operations, assets, properties,
liabilities, revenues, expenses and affairs of ONTN as Global and its
representatives may reasonably request; (iii) use its best efforts to cause the
past and present auditors and accounting personnel of ONTN to make available to
Global and its representatives all financial information relating to ONTN as is
reasonably requested, including the right to examine all working papers
pertaining to audits and reviews previously or hereafter made by such auditors;
(iv) provide such cooperation as Global and its representatives may reasonably
request in connection with any audit or review of ONTN which Global may direct
its representatives to make; and (v) furnish to Global and its representatives
true, correct and complete copies of all financial and operating statements of
ONTN, tax returns of ONTN and all documents, agreements and instruments
described herein or listed in the ONTN Disclosure Letter.
(b) Global shall (i) provide to ONTN and its representatives, during
normal business hours or otherwise if so requested, full access to all of its
properties, assets, personnel, books, agreements, commitments, files and
records, in whatever form; (ii) furnish to ONTN and its representatives all data
and information concerning the business, operations, assets, properties,
liabilities, revenues, expenses and affairs of Global as ONTN and its
representatives may reasonably request; (iii) use its best efforts to cause the
past and present auditors and accounting personnel of Global to make available
to ONTN and its representatives all financial information relating to Global as
is reasonably requested, including the right to examine all working papers
pertaining to audits and reviews previously or hereafter made by such auditors;
(iv) provide such cooperation as ONTN and its representatives may reasonably
request in connection with any audit or review of Global which ONTN may direct
its representatives to make; and (v) furnish to ONTN and its representatives
true, correct and complete copies of all financial and operating statements of
Global, tax returns of Global and all documents, agreements and instruments
described herein or listed in the Global Disclosure Letter.
ARTICLE VII
Certain Agreements of the Parties
7.1 Public Disclosure. The parties shall consult with each other and
mutually agree as to the content and timing before issuing any press release or
otherwise making any public statement with respect to the Exchange or this
Agreement and will not issue any such press release or make any such public
statement prior to such consultation and agreement.
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7.2 Commercially Reasonable Efforts; Notification.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties agrees to use commercially reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, and to
assist and cooperate with the other parties in doing, all things necessary,
proper or advisable to consummate and make effective, in the most expeditious
manner practicable, the Exchange and the other transactions contemplated by this
Agreement, including to accomplish the following: (i) causing the conditions
precedent set forth in Article VIII to be satisfied; (ii) obtaining all
necessary Governmental Approvals; (iii) making all necessary registrations,
declarations and filings (including registrations, declarations and filings with
Governmental Entities, if any); (iv) obtaining all consents, approvals or
waivers from third parties required as a result of the transactions contemplated
by this Agreement; (v) defending any suits, claims, actions, investigations or
proceedings, whether judicial or administrative, challenging this Agreement or
the consummation of the transactions contemplated hereby, including seeking to
have any stay or temporary restraining order entered by any court or other
Governmental Entity vacated or reversed; and (vi) executing or delivering any
additional instruments reasonably necessary to consummate the transactions
contemplated by, and to fully carry out the purposes of, this Agreement.
(b) ONTN shall give prompt notice to Global upon becoming aware that
any representation or warranty made by it contained in this Agreement has become
untrue or inaccurate, or of any failure of ONTN to comply with or satisfy in any
material respect any covenant, condition or agreement to be complied with or
satisfied by it under this Agreement, in each case, where the conditions set
forth in Section 8.2 would not be satisfied as a result thereof; provided,
however, that no such notification in and of itself shall affect the
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement.
(c) Global shall give prompt notice to ONTN upon becoming aware that
any representation or warranty made by it contained in this Agreement has become
untrue or inaccurate, or of any failure of Global to comply with or satisfy in
any material respect any covenant, condition or agreement to be complied with or
satisfied by it under this Agreement, in each case, where the conditions set
forth in Section 8.1 would not be satisfied as a result thereof; provided,
however, that no such notification in and of itself shall affect the
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement.
7.3 Third Party Consents. ONTN and Global will each use its commercially
reasonable efforts to obtain any consents, waivers and approvals under any of
its respective agreements, contracts, licenses or leases required to be obtained
in connection with the consummation of the transactions contemplated hereby.
7.4 ONTN Board of Directors. Prior to or at the Closing, the Board of
Directors of ONTN, in accordance with applicable law and ONTN's Certificate of
Incorporation and Bylaws, shall take all necessary action (which action may
include the resignation of existing directors) (a) to cause the Board of
Directors of Parent, as of the Closing Date, to consist of not more than five
directors, with all of the directors designated by Global, and (b) to appoint
William A. Mobley, Jr. as Chief Executive Officer of ONTN and Andre L. Forde as
Chief Operating Officer of ONTN.
34
7.5 ONTN Management. At the Closing:
(a) ONTN shall enter into an Employment Agreement with William A.
Mobley, Jr. in the form and substance attached as Exhibit B as Chief Executive
Officer of ONTN.
(b) ONTN shall enter into an Employment Agreement with Andre L.
Forde in the form and substance attached as Exhibit C as Chief Operating Officer
of ONTN.
7.6 Confidentiality. Each of the parties shall hold all data and
information obtained with respect to the other party in strict confidence and
not use such data or information or disclose it to others, except (a) as
permitted by the other party, (b) to the extent such data or information is
published or is a matter of public knowledge or (c) as may be required by law or
judicial or administrative process.
7.7 SEC Reporting. As soon as practicable after the Effective Time, the
Board of Directors of ONTN, in accordance with applicable law and the
Certificate of Incorporation and Bylaws of Parent, shall take all necessary
action and shall cause its authorized officers to make all necessary filings
with the SEC, for ONTN to maintain its status as a reporting company pursuant to
Section 12(g)(1) of the Exchange Act.
7.8 Financing. At or prior to Closing, ONTN shall issue and sell Six
Hundred Ninety-Three Thousand Four Hundred Eighty-Two (693,482) post-reverse
split shares of ONTN Common Stock for not less than Two Hundred Thousand Dollars
($200,000) in cash.
7.9 Reverse Stock Split. Prior to Closing, ONTN shall effect a fifteen for
one reverse stock split. Global acknowledges that ONTN has effected such reverse
split.
7.10 Formation of ONTN Subsidiary. At or prior to Closing, ONTN shall form
a wholly-owned subsidiary corporation and transfer all of its Web 1000
technology to such subsidiary in consideration of such subsidiary's assumption
of all of ONTN's indebtedness to third parties. Such indebtedness shall not
exceed Seven Hundred Fifty Thousand Dollars ($750,000). Payment such
indebtedness may be secured by a lien on the assets of such subsidiary.
7.11 Survival; Remedies. None of the representations or warranties of the
parties set forth in this Agreement shall survive the Closing, and the sole and
exclusive remedy of either party for the material breach or violation of any
such representation or warranty by the other party shall be the termination of
this Agreement as provided in Article IX below. All of the covenants and
obligations of the parties to this Agreement, which by their terms are to be
performed or will become effective after the Closing, including without
limitation those contained in Sections 2.4, 2.5, 2.6, 2.9 and 7.7 shall survive
the Closing. All of the other covenants and agreements of the parties set forth
in this Agreement shall not survive the Closing, and the sole and exclusive
remedy of either party for the material breach or violation of any such covenant
or agreement by the other party shall be the termination of this Agreement as
provided in Article IX below.
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ARTICLE VIII
Conditions Precedent to Closing
8.1 Conditions Precedent to Obligations of ONTN. The obligations of ONTN
to consummate the transactions contemplated hereby shall be subject to the
satisfaction at or prior to the Closing Date of all of the following conditions
precedent (any or all of which may be waived, in whole or in part, by ONTN in
its discretion):
(a) No preliminary or permanent injunction or other order issued by
a court of competent jurisdiction or by any other Governmental Entity, nor any
Governmental Rule enacted or promulgated subsequent to the date of this
Agreement, which prohibits the consummation of the transactions contemplated
hereby shall be in effect.
(b) Global shall have performed in all material respects its
obligations under this Agreement required to be performed by it on or prior to
the Closing Date.
(c) The representations and warranties of Global contained in this
Agreement shall be true and correct in all material respects at and as of the
Closing Date as if made at and as of such time, except as affected by
transactions contemplated hereby and except to the extent that any such
representation or warranty is made as of a specified date (in which case such
representation and warranty shall have been true and correct as of such date).
(d) ONTN shall have received a certificate, dated the Closing Date,
of the President of Global to the effect that the conditions precedent specified
in paragraphs (b) and (c) of this Section 8.1 have been satisfied.
(e) All audits and investigations of Global, its business, affairs
and operations undertaken by Global shall have been completed to the reasonable
satisfaction of Global.
(f) There shall have been received all of the waivers, consents and
approvals set forth in the ONTN Disclosure Letter and the Global Disclosure
Letter.
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8.2 Conditions Precedent to the Obligations of Global. The obligations of
Global to consummate the transactions contemplated hereby shall be subject to
the satisfaction at or prior to the Closing Date of all of the following
conditions precedent (any or all of which may be waived, in whole or in part, by
Global in its discretion):
(a) No preliminary or permanent injunction or other order issued by
a court of competent jurisdiction or by any other Governmental Entity, nor any
Governmental Rule enacted or promulgated subsequent to the date of this
Agreement, which prohibits the consummation of the transactions contemplated
hereby shall be in effect.
(b) Global shall have performed in all material respects its
obligations under this Agreement required to be performed by it on or prior to
the Closing Date.
(c) The representations and warranties of ONTN contained in this
Agreement shall be true and correct in all material respects at and as of the
Closing Date as if made at and as of such time, except as affected by
transactions contemplated hereby and except to the extent that any such
representation or warranty is made as of a specified date (in which case such
representation and warranty shall have been true and correct as of such date).
(d) Global shall have received a certificate, dated the Closing
Date, of the President of ONTN to the effect that the conditions precedent
specified in paragraphs (b) and (c) of this Section 8.2 have been satisfied.
(e) All audits and investigations of ONTN, its business, affairs and
operations undertaken by Global shall have been completed to the reasonable
satisfaction of Global.
(f) There shall have been received all of the waivers, consents and
approvals set forth in the ONTN Disclosure Letter and the Global Disclosure
Letter.
(g) Global shall have received the written resignations of each and
every director and officer of ONTN, and the persons designated by Global shall
have been appointed directors and officers of ONTN.
(h) ONTN shall have entered into an Employment Agreement with
William A. Mobley, Jr. in the form and substance attached as Exhibit B as Chief
Executive Officer of ONTN.
(i) ONTN shall have entered into an Employment Agreement with Andre
L. Forde in the form and substance attached as Exhibit C as Chief Operating
Officer of ONTN.
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ARTICLE IX
Termination, Amendment and Waiver
9.1 Termination. This Agreement may be terminated at any time prior to the
Closing: (a) by mutual written consent duly authorized by the respective Boards
of Directors of ONTN and Global;
(b) by ONTN or Global if the Exchange shall not have been
consummated by December 31, 2005; provided, however, that the right to terminate
this Agreement pursuant to his Section 9.1(b) shall not be available to a party
whose action or failure to act has been a principal cause of or resulted in the
failure of the Closing to occur on or before such date if such action or failure
to act constitutes a breach of this Agreement;
(c) by either ONTN or Global if a Governmental Entity shall have
issued an order, decree or ruling or taken any other action, in any case having
the effect of permanently restraining, enjoining or otherwise prohibiting the
Exchange, which order, decree, ruling or other action shall have become final
and nonappealable or any law, order, rule or regulation is in effect or is
adopted or issued, which has the effect of prohibiting the Exchange;
(d) by ONTN if Global has materially breached or violated any
representation, warranty, covenant or agreement made by Global in this
Agreement, and such breach or violation is not corrected within ten days after
notice thereof has been given by ONTN to Global;
(e) by Global if ONTN has materially breached or violated any
representation, warranty, covenant or agreement made by ONTN in this Agreement,
and such breach or violation is not corrected within ten days after notice
thereof has been given by Global to ONTN;
(f) by ONTN if any condition precedent to ONTN's obligations set
forth in Section 8.1 above shall not have been satisfied or waived by ONTN on or
before December 31, 2005; and
(g) by Global if any condition precedent to Global's obligations set
forth in Section 8.2 above shall not have been satisfied or waived by Global on
or before December 31, 2005.
9.2 Fees and Expenses. All Expenses (as such term is hereinafter defined)
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such Expenses, regardless of whether
the Exchange is consummated: As used in this Agreement, "Expenses" shall include
all reasonable out-of-pocket expenses (including without limitation all fees and
expenses of counsel, accountants, experts and consultants to a party and its
Affiliates) incurred by a party or on its behalf in connection with or related
to the authorization, preparation, negotiation, execution and performance of
this Agreement and all other matters relating to the closing of the Exchange and
the other transactions contemplated hereby.
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9.3 Amendment. This Agreement may be amended by the parties by action
taken by or on behalf of their respective Boards of Directors at any time prior
to the Closing; provided, however, that there shall not be any amendment that by
law requires further approval by the shareholders of Global without the further
approval of such Global shareholders.
9.4 Extension; Waiver. At any time prior to the Closing, either party may,
to the extent legally allowed, (i) extend the time for the performance of any of
the obligations or other acts of the other party, (ii) waive any inaccuracies in
the representations and warranties made to such party contained herein or in any
document delivered pursuant hereto and (iii) waive compliance with any of the
agreements or conditions for the benefit of such party contained herein. Any
agreement on the part of a party to any such extension or waiver shall be valid
only if set forth in an instrument in writing signed on behalf of such party.
ARTICLE X
Miscellaneous Provisions
10.1 Further Assurances. From and after the date of this Agreement, each
of the parties shall cooperate with one another, shall do and perform such
actions and things, and shall execute and deliver such documents and
instruments, as may be reasonable and necessary to effectuate the purposes and
intents of this Agreement.
10.2 Governing Law. This Agreement shall be governed by, and shall be
construed and interpreted in accordance, with the laws of the State of Florida,
without giving effect to the principles of conflicts of law thereof.
10.3 Notices. Any and all notices and other communications required or
permitted to be given pursuant to this Agreement shall be in writing and shall
be deemed to have been duly given (a) when delivered by hand, (b) two days after
having been delivered to Federal Express, DHL, UPS, Airborne or another
recognized overnight courier or delivery service, (c) when delivered by
facsimile transmission, provided that an original copy of such transmission
shall be sent by first class mail, postage prepaid, or (d) five days after
having been deposited into the United States mail, by registered or certified
mail, return receipt requested, postage prepaid, to the respective parties at
their respective addresses or to their respective facsimile telephone numbers,
as follow:
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If to ONTN: 110 Media Group, Inc.
95 Broadhollow Road
Suite 110
Melville, New York 1747
Attention: President
Facsimile: ( )
with a copy to: Herbert H. Sommer, Esq.
Sommer & Schneider LLP
595 Stewart Avenue, Suite 710
Garden City, NY 11530
Facsimile: (516) 228-8211
If to Global: Global Portals Online, Inc.
100 West Lucerne Circle
Suite 600
Orlando, Florida 32801
Attention: President
Facsimile: (407) 849-9834
with a copy to: Gary D. Lipson, Esq.
Winderweedle, Haines, Ward & Woodman, P.A.
390 North Orange Avenue
Suite 1500
Orlando, Florida 32801
Facsimile: (407) 423-7014
or to such other address as any party may from time to time give written notice
of to the other parties.
10.4 Entire Agreement. This Agreement, together with the exhibits attached
hereto, constitutes the entire agreement between the parties with respect to the
subject matter hereof and supersedes all prior agreements, understandings,
negotiations and arrangements, both oral and written, between the parties with
respect to such subject matter. Without limiting the generality of the
immediately preceding sentence, the Letter of Intent is superceded by this
Agreement and shall be of no further force or effect. This Agreement may not be
amended or modified in any manner, except by a written instrument executed by
each of the parties.
10.5 Benefits; Binding Effect. This Agreement shall be for the benefit of,
and shall be binding upon, the parties and their respective sucessors and
assigns.
10.6 Severability. The invalidity of any one or more of the words,
phrases, sentences, clauses or sections contained in this Agreement shall not
affect the enforceability of the remaining portions of this Agreement or any
part hereof, all of which are inserted conditionally on their being valid in
law. If any one or more of the words, phrases, sentences, clauses or sections
contained in this Agreement shall be declared invalid by any court of competent
jurisdiction, then, in any such event, this Agreement shall be construed as if
such invalid word or words, phrase or phrases, sentence or sentences, clause or
clauses, or section or sections had not been inserted.
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10.7 Jurisdiction and Venue. Any claim or dispute arising out of,
connected with, or in any way related to this Agreement shall be instituted by
the complaining party and adjudicated in a court of competent jurisdiction
located in Orange County, Florida, and the parties to this Agreement consent to
the personal jurisdiction of and venue in such courts. In no event shall any
party to this Agreement contest the personal jurisdiction of such courts over or
the venue of such courts.
10.8 Waiver of Jury Trial. EACH OF THE PARTIES IRREVOCABLY WAIVES ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED
ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
THE ACTIONS OF THE PARTIES IN CONNECTION WITH THE NEGOTIATION, ADMINISTRATION,
PERFORMANCE AND ENFORCEMENT HEREOF.
10.9 No Waivers. The waiver by either party of a breach or violation of
any provision of this Agreement by the other party shall not operate nor be
construed as a waiver of any subsequent breach or violation,. The waiver by
either party to exercise any right or remedy it may possess shall not operate
nor be construed as a bar to the exercise of such right or remedy by such party
upon the occurrence of any subsequent breach or violation.
10.10 Headings. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
any or all of the provisions hereof.
10.11 Counterparts. This Agreement may be executed in any number of
counterparts and by the separate parties in separate counterparts, each of which
shall be deemed to constitute an original and all of which shall be deemed to
constitute the one and the same instrument.
IN WITNESS WHEREOF, each of the parties, by and through its undersigned
officer thereunto duly authorized, has executed and delivered this Agreement on
the date first written above.
110 Media Group, Inc.
By /s/ Darren J. Cioffi
----------------------------
Darren J. Cioffi,
Chief Financial Officer
Global Portals Online, Inc.
By /s/ William A. Mobley, Jr.
-------------------------------------
William A. Mobley, Jr., Chairman
and Chief Executive Officer
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