-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, N6slUD5yxYhAQ9mMV24CnCOrKmYAN7xInVd/Ij4SawrFLIzC1d5KXssfUUP/3Sqj MR2iqggA9p1EEL9Xo/CRjQ== 0000908230-03-000135.txt : 20030820 0000908230-03-000135.hdr.sgml : 20030820 20030722104617 ACCESSION NUMBER: 0000908230-03-000135 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20030721 ITEM INFORMATION: Changes in control of registrant ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Other events FILED AS OF DATE: 20030721 DATE AS OF CHANGE: 20030820 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GSV INC CENTRAL INDEX KEY: 0001051591 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374] IRS NUMBER: 133979226 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-23901 FILM NUMBER: 03795692 BUSINESS ADDRESS: STREET 1: 191 POST ROAD WEST CITY: WESTPORT STATE: CT ZIP: 06880 BUSINESS PHONE: 2125323553 MAIL ADDRESS: STREET 1: 191 POST ROAD WEST CITY: WESTPORT STATE: CT ZIP: 06880 FORMER COMPANY: FORMER CONFORMED NAME: CYBERSHOP INTERNATIONAL INC DATE OF NAME CHANGE: 19971217 8-K 1 gsv_8k071503.txt GSV, INC. 071503 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): July 21, 2003 ------------- GSV, Inc. --------- (Exact name of registrant as specified in its charter) Delaware 0-23901 13-3979226 - -------- ------- ---------- (State or other (Commission File Number) (IRS Employer jurisdiction of Identification No.) incorporation) 191 Post Road, Westport, CT 06880 --------------------------------- (Address of principal executive offices, zip code) Registrant's telephone number, including area code: (203) 221-2690 -------------- N/A --- (Former name or former address, if changed since last report) Item 1. Change in Control of Registrant See Item 2. Item 2. Acquisition or Disposition of Assets. On July 21, 2003, GSV, Inc. (the "Company") entered into an Agreement and Plan of Merger (the "Merger Agreement") with Polystick U.S. Corp., a New York corporation ("Polystick"), Cybershop, L.L.C., a New Jersey limited liability company and wholly-owned subsidiary of the Company ("Merger Sub"), and Polystick Oil & Gas, Inc., a Delaware corporation and a wholly-owned subsidiary of Polystick ("POGI"), pursuant to which, on the same day, POGI was merged into Merger Sub (the "Merger") and in consideration thereof the Company issued to Polystick 4,500,000 shares of Common Stock and 1,500,000 shares of Series B Preferred Stock. The sole stockholder of Polystick is RT Sagi Holding Ltd., an Israeli corporation ("RT Sagi"). The sole stockholder of RT Sagi and indirect owner of Polystick is Mr. Sagi Matza ("Matza"). Each share of Series B Preferred Stock is convertible at any time at the holder's option into a number of shares of Common Stock equal to $1.00 divided by the conversion price then in effect. The terms upon which the Series B Preferred Stock may be converted into Common Stock are set forth in the Certificate of Designations, Preferences and Rights of Series B Convertible Preferred Stock filed by the Company with the Secretary of State of the State of Delaware on July 18, 2003 (the "Certificate of Designations"), a copy of which is attached hereto as Exhibit 4.1 and is incorporated herein by reference. The conversion price is initially $1.00. As of July 21, 2003, the Convertible Preferred Stock owned by Polystick was convertible into 1,500,000 shares of Common Stock. No dividends are payable on the Series B Preferred Stock, except that in the event dividends are declared with respect to the Common Stock, each holder of shares of Series B Preferred Stock shall be entitled to receive an amount equal to the amount of dividends that would have been paid on the shares of Common Stock issuable upon conversion of such shares of Series B Preferred Stock had such shares of Series B Preferred Stock been converted into Common Stock immediately before such dividend was declared. Upon any Liquidation Event, as defined in the Certificate of Designations, the holders of the outstanding Series B Convertible Preferred Stock will be entitled, before any distribution or payment is made to any holder of Common Stock or any other Junior Stock (as defined in the Certificate of Designations), to be paid an amount equal to $1.00 per share plus the amount of any declared and unpaid dividends thereon. If upon any Liquidation Event the net assets of the Company distributable among the holders of the Series B Preferred Stock are insufficient to permit the payment in full of such preferential amount to the holders of the Series B Preferred Stock, then the entire net assets of the Company to be distributed to the holders of the Series B Preferred Stock will be distributed ratably among the holders of the Series B Preferred Stock in proportion to the amounts they otherwise would have been entitled to receive. The Certificate of Designations provides that so long as any shares of Series B Preferred Stock are outstanding, the Company shall not, without the written approval of the holders of at least a majority of the then-outstanding Series B Preferred Stock, increase the maximum number of directors constituting the Company's board of directors to more than seven. The Certificate of Designations also provides that, so long as any shares of Series B Preferred Stock are outstanding, the holders of the Series B Preferred Stock, voting separately as a class, shall be entitled to designate and elect three of the members of the Company's board of directors. Also, a vacancy in any directorship elected by the holders of the Series B Preferred Stock shall be filled only by vote or written consent of the holders of at least a majority of the then outstanding shares of Series B Preferred Stock. The Series B Preferred Stock has no other voting rights except as provided by applicable law. As a result of the Merger, Polystick, RT Sagi and Matza may be deemed to beneficially own an aggregate of 6,850,000 shares of Common Stock, which is approximately 79.3% of the Company's outstanding shares of Common Stock. This percentage is based on an aggregate of 8,640,090 shares of Common Stock outstanding, which consists of (i) 2,640,090 shares of Common Stock outstanding on May 15, 2003, (ii) the 4,500,000 shares of Common Stock acquired by Polystick in the Merger, and (iii) the 1,500,000 shares of Common Stock that underlie the Series B Preferred Stock acquired by Polystick in the Merger. Effective as of the consummation of the Merger, Matza was appointed to the Company's board of directors as the designee of Polystick. Polystick may in the future elect two additional persons to the Company's board of directors, but has no present plans to do so. The Company's two directors prior to the Merger, Messrs. Gilad Gat and Yoav Bitter, have continued as directors of the Company following the Merger. As a result of the Merger, the Company, through Merger Sub, has acquired an interest in a Texas limited liability company that is engaged in the business of oil and gas exploration and development in the State of Texas. Item 5. Other Events and Regulation FD Disclosure In connection with and as a condition to consummation of the Merger described in Item 2 above, the Company redeemed all of its existing outstanding Series A Convertible Preferred Stock, par value $0.001 per share (the "Series A Stock"), for $400,000.70. The Company paid $200,000.70 of the redemption price in cash and the balance by a promissory note secured by a lien on all of the Company's assets. Copies of the Stock Redemption Agreement between the Company and the holder of the Series A Stock (the "Holder"), the promissory note issued to the Holder and the Security Agreement between the Company and the Holder are attached hereto as Exhibits 4.2, 4.3 and 4.4 and are incorporated herein by reference. Item 7. Financial Statements and Exhibits (a) Financial Statements of Businesses Acquired. Financial statements required by this item and by Item 7(b) shall be filed not later than 60 days after the date that this Current Report on Form 8-K is required to be filed. (b) Pro Forma Financial Information. See response to Item 7(a). (c) Exhibits. Exhibit No. Description 2.1 Term sheet by and between GSV, Inc. and Polystick U.S. Corp. (previously filed). 2.2 Agreement and Plan of Merger dated as of July 21, 2003, by and among GSV, Inc., Cybershop L.L.C., Polystick Oil & Gas, Inc. and Polystick U.S. Corp. 4.1 Form of Certificate of Designations, Preferences and Rights of Series B Convertible Preferred Stock. 4.2 Stock Redemption Agreement dated as of July 21, 2003, between the Company and Brooks Station Holdings, Inc. 4.3 Form of promissory note issued to Brooks Station Holdings, Inc. 4.4 Security Agreement dated as of July 21, 2003, by and between the Company and Brooks Station Holdings, Inc. 99.1 Press release dated July 21, 2003. -2- SIGNATURE --------- Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. GSV, INC. (Registrant) Dated: July 21, 2003 By:/s/ Gilad Gat ------------- Gilad Gat Chief Executive Officer (Principal Executive Officer) -3- EX-2.2 3 gsv_exh22-071503.txt GSV, INC. 071503 Exhibit 2.2 ----------- AGREEMENT AND PLAN OF MERGER ---------------------------- This Agreement and Plan of Merger (the "Agreement") is made and entered into as of July 21, 2003 by and among GSV, Inc. (the "Parent"), a Delaware corporation, Cybershop, L.L.C., a New Jersey limited liability company ("Merger Sub"), Polystick Oil & Gas, Inc., a Delaware corporation (the "Company"), and Polystick U.S. Corp., a New York corporation and parent company of Merger Sub ("Polystick"). W I T N E S S E T H : - - - - - - - - - - WHEREAS, the Board of Directors of Parent, the Board of Directors of Merger Sub and the Board of Directors of the Company each have determined that it is in the best interests of their respective stockholders or members for the Company to merge with and into Merger Sub upon the terms and subject to the conditions of this Agreement; WHEREAS, Parent, Merger Sub, the Company and Polystick desire to make certain representations, warranties, covenants and agreements in connection with the Merger (as defined in Section 1.1); NOW, THEREFORE, in consideration of the mutual representations, warranties, covenants and agreements set forth herein, Parent, Merger Sub, the Company and Polystick hereby agree as follows: ARTICLE I --------- THE MERGER ---------- Section 1.1 The Merger. Subject to the terms and conditions of this Agreement, at the Effective Date (as defined in Section 1.2), the Company shall be merged with and into Merger Sub and the separate corporate existence of the Company shall thereupon cease (the "Merger"). Merger Sub (i) shall be the successor or surviving company in the Merger (sometimes herein referred to as the "Surviving Company") and (ii) shall continue to be governed by the laws of the State of New Jersey, and the separate corporate existence of Merger Sub with all its rights, privileges, immunities, powers and franchises shall continue unaffected by the Merger. The Merger shall have the effects specified in Sections 259 and 264 of the General Corporation Law of the State of Delaware and Section 42:2B-20 of the New Jersey Limited Liability Company Act. Section 1.2 Effective Date. On the Closing Date, Parent, Merger Sub and the Company will cause an executed original of an appropriate Certificate of Merger to be filed with the Secretary of State of the State of Delaware and the Secretary of State of the State of New Jersey. The Merger shall become effective on the date on which such Certificates of Merger have been duly filed, or such subsequent time as is agreed upon by Parent and the Company and specified in such Certificates of Merger, and such date is hereinafter referred to as the "Effective Date." Section 1.3 Charter Documents of the Surviving Company. 1.3.1 Certificate of Formation. The Certificate of Formation of the Surviving Company at and as of the Effective Date shall read as did the Certificate of Formation of Merger Sub immediately prior to the Effective Date. 1.3.2 Operating Agreement. The Operating Agreement of the Surviving Company shall be amended at and as of the Effective Date to read as did the Operating Agreement of Merger Sub immediately prior to the Effective Date, and such Operating Agreement shall become the Operating Agreement of the Surviving Company. Section 1.4 Directors and Officers of the Surviving Company. 1.4.1 Directors of the Surviving Company. The managers of the Surviving Company at the Effective Date shall, from and after the Effective Date, be July 21, 2003, until their successors have been duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with the Surviving Company's Operating Agreement (or other comparable charter documents). 1.4.2 Officers of the Surviving Company. The officers of the Surviving Company shall, from and after the Effective Date, be July 21, 2003, until their successors have been duly elected or appointed and qualified or until their death, resignation or removal in accordance with the Surviving Company's Operating Agreement (or other comparable charter documents). ARTICLE II ---------- CONVERSION OR CANCELLATION OF STOCK IN THE MERGER; -------------------------------------------------- PURCHASE PRICE AND CLOSING -------------------------- Section 2.1 Conversion or Cancellation of Stock in the Merger. The shares of capital stock of the Company and the units representing membership interests of the Merger Sub shall be cancelled or converted in the Merger as follows: 2.1.1 At the Effective Date, each share of common stock, no par value per share, of the Company issued and outstanding immediately prior to the Effective Date ("Company Stock") shall, by virtue of the Merger and without any action on the part of the holder thereof, be canceled and converted into and represent the right to receive the Purchase Price (as defined in Section 2.3). All of such shares of Company Stock shall no longer be outstanding and shall automatically be retired and cease to exist, and each holder of a certificate representing such shares shall cease to have any rights with respect thereto, except the right to receive the Purchase Price. 2.1.2 At the Effective Date, each unit representing membership interests of Merger Sub ("Merger Sub Units") issued and outstanding immediately prior to the Effective Date shall, by virtue of the Merger and without any action on the part of Merger Sub or the holder thereof, be -2- converted into the same number of units representing membership interests of the Surviving Company ("Surviving Company Units"). Section 2.2 Surrender of Stock Certificates. At the Closing, Polystick shall surrender the certificates representing its shares of Company Stock, and in exchange therefore, Polystick shall be entitled to receive the Purchase Price. Section 2.3 Purchase Price. In full consideration for the Merger, the purchase price (the "Purchase Price") shall be $2,625,000, and shall be paid by Parent to Polystick as follows: 2.3.1 Payment in Shares. Payment of the Purchase Price shall be made by Parent to Polystick in the form of 4,500,000 shares of Parent's common stock, par value $0.001 per share (the "Parent Common Stock"), valued at $0.25 per share, and 1,500,000 shares of Parent's convertible preferred stock, par value $.001 per share (the "Series B Preferred Stock," and together with the Parent Common Stock, the "Parent Stock"). The Series B Preferred Stock shall have the rights and preferences set forth on the Certificate of Designations attached as Exhibit A hereto (the "Certificate of Designations"). Each share of Series B Preferred Stock shall have a stated value of $1.00 per share and shall be convertible into Parent Common Stock at a conversion price of $1.00 per share, subject to adjustment as set forth in the Certificate of Designations. Each certificate representing Parent Stock and any Parent Stock issued or issuable in respect of any such Parent Stock upon any stock split, stock dividend, recapitalization or similar event, shall be stamped or otherwise imprinted with a legend in the following form (in addition to any legend required under applicable securities laws): THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD OR OTHERWISE DISTRIBUTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED UNDER SUCH ACT AND LAWS. 2.3.2 Nontransferable Right to Payments. Polystick's right to receive the Purchase Price shall not be transferable or assignable, other than by operation of law. Section 2.4 Closing. The closing of the transactions contemplated by this Agreement (the "Closing") shall take place simultaneously with the execution and delivery of this Agreement on the date hereof, at the offices of Davis & Gilbert LLP, 1740 Broadway, New York, New York 10019, or by the exchange of documents and instruments by mail, courier, telecopy or wire transfer to the extent mutually acceptable to the parties hereto (such date is herein referred to as the "Closing Date"). ARTICLE III ----------- REPRESENTATIONS AND WARRANTIES OF POLYSTICK ------------------------------------------- -3- Polystick hereby represents and warrant to the Purchaser as of the Closing Date as follows: Section 3.1 Execution and Validity of Agreements; Restrictive Documents. 3.1.1 Execution and Validity. Polystick has all corporate power and authority to enter into this Agreement and to perform its obligations hereunder. This Agreement has been authorized by all necessary corporate action of Polystick's board of directors and stockholders. This Agreement has been duly and validly executed and delivered by Polystick and, assuming due authorization, execution and delivery by Parent and Merger Sub, constitutes a legal, valid and binding obligation of Polystick, enforceable against Polystick in accordance with its terms. 3.1.2 Share Ownership. Polystick is the true and lawful owner of the shares of Company Stock. All of such shares of Company Stock have been duly and validly authorized and issued and are fully paid, non-assessable and free of preemptive rights, with no personal liability attaching to the ownership thereof, except as such liability may be imposed pursuant to applicable laws, and such ownership is free and clear of all Liens (as defined in Section 7.3). 3.1.3 No Options. There are no outstanding subscriptions, options, rights (including "phantom stock rights"), warrants, calls, commitments, understandings, arrangements, plans or other agreements of any kind to acquire any shares of capital stock of the Company from Polystick and there are no agreements or understandings with respect to the sale or transfer of any shares of capital stock of the Company by Polystick, except pursuant to this Agreement. 3.1.4 No Restrictions. There is no suit, action, claim, investigation or inquiry by any court, tribunal, arbitrator, authority, agency, commission, official or other instrumentality of the United States, any foreign country or any domestic or foreign state, county, city or other political subdivision ("Governmental or Regulatory Authority"), and no legal, administrative or arbitration proceeding pending or, to Polystick's knowledge, threatened against Polystick or any of its shares of Company Stock, with respect to the execution, delivery and performance of this Agreement or the transactions contemplated hereby or any other agreement entered into by Polystick in connection with the transactions contemplated hereby. Section 3.2 Existence and Good Standing. The Company is duly incorporated and is validly existing and in good standing under the laws of the State of Delaware, with the full corporate power and authority to own its property and to carry on its business all as and in the places where such properties are now owned or operated or such business is now being conducted. The Company is duly qualified, licensed or admitted to do business and is in good corporate and tax standing in the jurisdictions set forth on Schedule 3.2, which are the only jurisdictions in which the ownership, use or leasing of its assets and properties, or the conduct or nature of its business, makes such qualification, licensing or admission necessary. Polystick is duly incorporated and is validly existing and in good standing under the laws of the State of Delaware, with the full corporate power and authority to own its property and to carry on its business all as and in the places where such properties are now owned or operated or such business is now being conducted. Polystick is duly qualified, licensed or admitted to do business and is in good corporate and tax standing in the jurisdictions set forth on Schedule 3.2, which are the only jurisdictions in which the -4- ownership, use or leasing of its assets and properties, or the conduct or nature of its business, makes such qualification, licensing or admission necessary. Section 3.3 Subsidiaries and Investments; Capital Stock. 3.3.1 Subsidiaries and Investments. The Company does not own any capital stock or other equity or ownership or proprietary interest in any person (other than investments in publicly traded debt or equity securities held for investment). 3.3.2 Capital Stock. The Company has an authorized capitalization consisting of 1,500 shares of common stock, no par value per share, of which 100 shares are issued and outstanding and no shares are held in the treasury of the Company. All such outstanding shares have been duly authorized and validly issued, are fully paid and non-assessable and have not been issued in violation of any preemptive rights of stockholders. No other class of capital stock of the Company is authorized or outstanding. There are no outstanding subscriptions, options, warrants, rights (including "phantom stock rights"), calls, commitments, understandings, conversion rights, rights of exchange, plans or other agreements of any kind providing for the purchase, issuance or sale of any shares of the capital stock of the Company. Section 3.4 Non-Contravention; Approvals and Consents. 3.4.1 Non-Contravention. The execution, delivery and performance by Polystick and the Company of their respective obligations hereunder and the consummation of the transactions contemplated hereby, will not (a) violate, conflict with or result in the breach of any provision of the Certificate of Incorporation and By-laws (or other comparable documents) of Polystick or the Company, (b) result in the violation by Polystick or the Company of any statute, law, rule, regulation or ordinance (collectively, "Laws"), or any judgment, decree, order, writ, permit or license (collectively, "Orders") of any Governmental or Regulatory Authority, applicable to Polystick or the Company or any of their respective assets or properties, or (c) if the consents and notices set forth on Schedule 3.4.2 are obtained, given or waived, conflict with, result in a violation or breach of, constitute (with or without notice or lapse of time or both) a default under, or (except as set forth on Schedule 3.4.2) require Polystick or the Company to obtain any consent, approval or action of, make any filing with or give any notice to, or result in or give to any person any right of payment or reimbursement, termination, cancellation, modification or acceleration of, or result in the creation or imposition of any Lien upon any of the assets of Polystick or the Company, under any of the terms, conditions or provisions of any agreement, commitment, lease, license, evidence of indebtedness, mortgage, indenture, security agreement, instrument, note, bond, franchise, permit, concession or other instrument, obligation or agreement of any kind, written or oral (collectively, "Contracts") to which Polystick or the Company is a party or by which Polystick or the Company or any of their respective assets or properties are bound. 3.4.2 Approvals and Consents. Except as disclosed on Schedule 3.4.2, no consent, approval or action of, filing with or notice to any Governmental or Regulatory Authority or other person is necessary or required under any of the terms, conditions or provisions of any Law or Order of any Governmental or Regulatory Authority or any Contract to which Polystick or the Company is a party or by which their respective assets or properties are bound for the execution and delivery of this Agreement by Polystick or the -5- Company, the performance by Polystick or the Company of their respective obligations hereunder or the consummation of the transactions contemplated hereby. Section 3.5 Balancing. To the best of Polystick's knowledge, as of the Closing Date, there is no gas, oil or mineral imbalance with respect to the oil, gas and mineral lease interests owned by the Company and set forth on Schedule 3.5 (the "Interests"). Section 3.6 Ownership. The Company is the owner of good and valid title to the Interests, free and clear of all Liens, and the transfer of Interests from Polystick U.S. Corp. ("Polystick"), an affiliate of the Company, to the Company was effected in accordance with all applicable Laws. Section 3.7 Litigation. Except as disclosed on Schedule 3.7, there is no action, suit or proceeding at law or in equity by any person, or any arbitration or any administrative or other proceeding by or before (or, to the knowledge of Polystick, any investigation by) any Governmental or Regulatory Authority, pending or, to the knowledge of Polystick, threatened against Polystick or the Company with respect to this Agreement or the transactions contemplated hereby, or any other agreement entered into by Polystick or the Company in connection with the transactions contemplated hereby, or against or affecting Polystick or the Company or any of their respective assets (including, without limitation, the Interests); and to the knowledge of Polystick, no acts, facts, circumstances, events or conditions occurred or exist which are a basis for any such action, proceeding or investigation. Schedule 3.7 also sets forth with respect to each pending or threatened action, suit or proceeding listed thereon, the amount of costs, expenses or damages Polystick or the Company has incurred to date and reasonably expects to incur through conclusion thereof. Neither Polystick nor the Company is not subject to any Order entered in any lawsuit or proceeding. Section 3.8 Conduct of Business. Except as disclosed on Schedule 3.8, the Company has not conducted, and will not prior to the Effective Date conduct, business of any type whatsoever, and the Company has no outstanding claims, liabilities or indebtedness of any nature whatsoever, whether accrued, absolute or contingent, determined or undetermined, asserted or unasserted, and whether due or to be come due. Section 3.9 Compliance with Laws; Permits. 3.9.1 Compliance. The Company is, and its business has been conducted, in compliance with all applicable Laws and Orders, except in each case (other than with respect to compliance with environmental Laws and Orders relating to the regulation or protection of the environment ("Environmental Laws and Orders")) where the failure to so comply would not reasonably be expected to have a material and adverse effect on the financial condition, results of operations, assets (including, without limitation, the Interests), properties, prospects or business of the Company taken as a whole, including without limitation: (a) all Laws and Orders promulgated by any Governmental or Regulatory Authority; (b) all Environmental Laws and Orders; and (c) all Laws and Orders relating to labor, civil rights, and occupational safety and health laws, worker's -6- compensation, employment and wages, hours and vacations or pay equity. The Company has not been charged with, or, to Polystick's knowledge, threatened with or under any investigation with respect to, any charge concerning any violation of any Laws or Orders. 3.9.2 Licenses. The Company has all permits, licenses, and other government certificates, authorizations and approvals ("Permits") required by any Governmental or Regulatory Authority for the operation of its business and the use of its assets as presently operated or used, except where the failure to have such Permits would not reasonably be expected to have a material and adverse effect on the financial condition, results of operations, assets, properties, prospects or business of the Company taken as a whole. All of the Permits are in full force and effect and no action or claim is pending, nor, to Polystick's knowledge, is threatened to revoke or terminate any of such Permits or declare any such Permit invalid in any material respect. Section 3.10 Disclosure. Polystick has disclosed to Parent all known conditions and risks that may materially affect the production attributable to the Interests. Neither this Agreement, the exhibits and schedules hereto nor any other document or certificate delivered by Polystick to Parent, Merger Sub or their attorneys or agents in connection herewith or therewith or with the transactions contemplated hereby or thereby, when read or considered together, contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein or herein not misleading. Section 3.11 Brokers. No broker, finder, agent or similar intermediary has acted on behalf of the Company or Polystick in connection with this Agreement or the transactions contemplated hereby, and no brokerage commissions, finder's fees or similar fees or commissions are payable by the Company or Polystick in connection therewith based on any agreement, arrangement or understanding with any of them. Section 3.12 Copies of Documents. Polystick and the Company have caused to be made available for inspection and copying by Parent and its advisers, true, complete and correct copies of all documents specifically referred to in this Article III or in any Schedule. Section 3.13 Investment Representations. 3.13.1 Disclosure of Information. Polystick has had an opportunity to ask questions and receive answers from the Parent regarding the terms and conditions of the Parent Stock, as well as the business, properties, prospects and financial condition of Parent. Polystick has reviewed Parent's Annual Report on Form 10-KSB for the year ended December 31, 2002 and Parent's Quarterly Report on Form 10-QSB for the quarter ended March 31, 2003. 3.13.2 Accredited Investor. Polystick is an "accredited investor" as that term is defined in Rule 501(a) of Regulation D promulgated under the Securities Act of 1933, as amended (the "Securities Act"). Polystick is experienced in evaluating and investing in private placement transactions of securities of companies in a similar stage of development, is able to fend for itself and can bear the economic risk of this investment. -7- 3.13.3 Purchase Entirely for Own Account. This Agreement is made with the Company and Polystick in reliance upon representations of Polystick to Parent, which by the execution of this Agreement by Polystick it hereby confirms, that the Parent Stock to be acquired by Polystick will be acquired for investment for Polystick's own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that Polystick has no present intention of selling, granting any participation in, or otherwise distributing the same. By executing this Agreement, Polystick further represents that Polystick has no contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participation to such person or to any third person, with respect to any of the Parent Stock. 3.13.4 No Public Market. Polystick understands that no public market now exists for the Parent Stock and that the Purchaser has made no assurances that a public market will ever exist for the Parent Stock. 3.13.5 Restricted Securities. Polystick understands that the Parent Stock has not been, and will not be, registered under the Securities Act by reason of a specific exemption from the registration provisions of the Securities Act which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of the Company's representations as expressed herein. Polystick understands that the Parent Stock constitutes "restricted securities" under applicable U.S. federal and state securities laws and regulations, and that pursuant to these laws, Polystick must hold the Parent Stock indefinitely unless the Parent Stock is registered with the Securities and Exchange Commission and qualified by state authorities or an exemption from such registration and qualification requirements is available. Polystick acknowledges that if an exemption from registration or qualification is available, it may be conditioned on various requirements including, but not limited to, the time and manner of sale, the holding period for the Parent Stock, and requirements relating to Parent which are outside of Polystick's control and which Parent is under no obligation, and may not be able, to satisfy. 3.13.6 Legends. It is understood that the Parent Stock, and any securities issued in respect thereof or exchange therefor, may bear the following legend and any legend required by the Blue Sky laws of any state of the United States to the extent such laws are applicable to the shares represented by the certificate so legended: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED UNDER SUCH ACT AND LAWS." ARTICLE IV ---------- REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB ------------------------------------------------------- -8- Parent and Merger Sub hereby represent and warrant to Polystick as follows: Section 4.1 Organization and Existence. Parent is duly organized, validly existing and in good standing under the laws of the State of Delaware. Merger Sub is duly organized, validly existing and in good standing under the laws of the State of New Jersey. Section 4.2 Authority; Binding Effect. Each of Parent and Merger Sub has all corporate power and authority to enter into this Agreement and to perform its obligations hereunder. This Agreement has been duly authorized, executed and delivered by each of Parent and Merger Sub, and is the legal, valid and binding obligation of each, enforceable against each in accordance with its terms. Section 4.3 Authorization, Validity and Issuance of Common Stock. The Parent Stock to be issued pursuant to Section 2.3.1, upon ratification of this Agreement by the board of directors of Parent, will be duly authorized. Subject to the foregoing, upon delivery of the Purchase Price pursuant to Section 2.3.1 and upon ratification of this Agreement by the board of directors of Parent, the Parent Stock will be validly issued, fully paid and non-assessable, free and clear of all Liens and rights of first refusal, other than Liens created by the Company, and will not be subject to any preemptive or similar rights. The Parent Stock issued pursuant to this Agreement may not be sold, disposed, transferred or otherwise distributed without an effective registration statement related thereto or an opinion of counsel satisfactory to Parent that registration of the Common Stock is not required under the Securities Act or under any applicable state securities laws. Section 4.4 Investment Risk. Parent and Merger Sub acknowledge the inherent risk associated with the purchase and ownership of oil and gas interests, and have performed due diligence to their satisfaction with respect to the business of the Company. The foregoing shall have no effect on the representations and warranties of Polystick set forth in this Agreement. ARTICLE V --------- ACTIONS BY THE COMPANY AND POLYSTICK ------------------------------------ Prior to or simultaneously herewith: Section 5.1 Required Approvals and Consents. Polystick and the Company shall have obtained or given, at no expense to Merger Sub or Parent, and there shall not have been withdrawn or modified, any consents, approvals, waivers, notices or other actions listed on Schedule 3.4.2 hereof (including, without limitation, obtaining all such consents, approvals, waivers, notices or other actions required in order to permit the consummation of the transactions contemplated by this Agreement without causing or resulting in a default, event of default, acceleration event or termination event under any Contracts and without entitling any party to any of such documents to exercise any other right or remedy adverse to the interests of Merger Sub, Parent or the Company). Each such consent or approval shall be in form satisfactory to counsel for Parent. -9- Section 5.2 Regulatory Consents and Approvals. All consents, approvals and actions of, filings with and notices to any Governmental or Regulatory Authority necessary to permit the Company and Polystick to perform their respective obligations under this Agreement and to consummate the transactions contemplated thereby shall have been duly obtained, made or given and shall be in full force and effect, and all terminations or expirations of waiting periods imposed by any Governmental or Regulatory Authority necessary for the consummation of the transactions contemplated by this Agreement shall have occurred. Section 5.3 Certified Resolutions. Polystick shall have delivered to Merger Sub and Parent a copy of the resolutions of the Board of Directors and stockholders of the Company and the Board of Directors and stockholders of Polystick, in each case certified by the corporate secretary of such corporation, authorizing the execution, delivery and performance of this Agreement and the transactions contemplated hereby, certified by an officer of the Company as of the Closing Date. Section 5.4 Good Standing Certificates. Polystick shall have delivered to Parent: (a) a copy of the Company's Certificate of Incorporation, including all amendments, certified by the Secretary of State of the State of Delaware; (b) a certificate from the applicable governmental authority in the State of Delaware that the Company is in good standing in such state (with any applicable tax status certificate); and (c) a certificate from the appropriate authority of each state in which the Company is qualified as a foreign corporation to do business to the effect that the Company is in good standing in such state (in each case together with any applicable tax status certificate). Section 5.5 Transfer Documents. Polystick shall have delivered to the Purchaser a copy of the transfer documents evidencing the transfer of Interests from Polystick to the Company in form satisfactory to counsel for Parent. Section 5.6 Engineer's Report; Financial Information. Polystick shall have delivered to the Purchaser an independent engineer's report, by Pressler Petroleum Consultants, Inc., dated as of May 6, 2002, setting forth the estimated oil and gas reserves of the Interests and the expected cash flow and revenues therefrom. Section 5.7 Proceedings. All proceedings to be taken in connection with the transactions contemplated by this Agreement and all documents incident thereto must be reasonably satisfactory in form and substance to Merger Sub and Parent and their counsel, and Merger Sub and Parent shall have received copies of all such documents and other evidences as they or their counsel reasonably requested in order to establish the consummation of such transactions and the taking of all proceedings in connection therewith. ARTICLE VI ---------- ACTIONS BY PARENT AND MERGER SUB -------------------------------- Prior to or simultaneously herewith: -10- Section 6.1 Regulatory Consents and Approvals. All consents, approvals and actions of, filings with and notices to any Governmental or Regulatory Authority necessary to permit Parent and Merger Sub to perform their respective obligations under this Agreement and to consummate the transactions contemplated thereby shall have been duly obtained, made or given and shall be in full force and effect, and all terminations or expirations of waiting periods imposed by any Governmental or Regulatory Authority necessary for the consummation of the transactions contemplated by this Agreement shall have occurred. Section 6.2 Certified Resolutions. Each of Merger Sub and Parent shall have delivered to Polystick a copy of the resolutions of its Board of Directors or equivalent, in each case certified by the corporate officer (or equivalent) of such company, authorizing the execution, delivery and performance of this Agreement and the transactions contemplated hereby, certified by one of its officers. Section 6.3 Series A Redemption. The Parent shall redeem all shares of the Series A Convertible Preferred Stock, par value $0.001, of the Parent outstanding as of the date hereof. Section 6.4 Proceedings. All proceedings to be taken in connection with the transactions contemplated by this Agreement and all documents incident thereto must be reasonably satisfactory in form and substance to Polystick, and Polystick shall have received copies of all such documents and other evidences as they reasonably request in order to establish the consummation of such transactions and the taking of all proceedings in connection therewith. ARTICLE VII ----------- MISCELLANEOUS ------------- Section 7.1 Survival of Representations and Warranties. The representations and warranties in this Agreement shall survive the Closing for a period of one (1) year following the Closing Date. All covenants, agreements and indemnities contained herein which, by their terms, are to be performed after the Closing shall survive the Closing. Section 7.2 Financial Information. Polystick covenants and agrees that within 30 days after the Closing Date it shall deliver to Parent balance sheets of the Texas limited liability company through which the Interests are held (the "Interestholder") as of the end of the Interestholder's two most recent fiscal years and as of the end of the most recent fiscal quarter, and statements of income and cash flows of the Interestholder for each of the three most recent fiscal years of the Interestholder, and for the most recent completed fiscal quarter and the corresponding period of the prior fiscal year (collectively, the "Financial Statements"), in each case prepared in accordance with generally accepted accounting standards in the United States and audited by an accounting firm with relevant experience auditing financial statements for inclusion in filings made with the Securities and Exchange Commission. Polystick covenants and agrees that the Financial Statements will not contain a misstatement of material fact or omit to state a material fact necessary to make the statements made therein, in light of the circumstances in which they were made, not misleading. -11- Section 7.3 "Liens" Defined. With respect to any asset, a "Lien" shall mean (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset or (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (other than an operating lease) (or any financial lease having substantially the same economic effect as any of the foregoing) relating to such asset. With respect to any securities, a "Lien" shall mean any purchase option, call or similar right of a third party with respect to such securities. Section 7.4 "Person" Defined. "Person" shall mean and include an individual, a company, a joint venture, a corporation (including any non-profit corporation), an estate, an association, a trust, a general or limited partnership, a limited liability company, a limited liability partnership, an unincorporated organization and a government or other department or agency thereof. Section 7.5 "Knowledge" Defined. Where any representation and warranty contained in this Agreement is expressly qualified by reference to the knowledge of Polystick, Parent or Merger Sub, as the case may be, such term shall be limited to the actual knowledge of the executive officers of such respective entity and, unless otherwise stated, such knowledge that would have been discovered by such executive officers after reasonable inquiry. Section 7.6 "Affiliate" Defined. As used in this Agreement, an "affiliate" of any person shall mean any person that, directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with such person. Section 7.7 Notices. Any notice, request, instruction, correspondence or other document to be given hereunder by either party to the other (herein collectively called "Notice") shall be in writing and delivered in person or by courier service requiring acknowledgment of receipt of delivery or mailed by certified mail, postage prepaid and return receipt requested, or by telecopier, as follows: If to the Parent or the Surviving Company, addressed to: GSV, Inc. 191 Post Road West Westport, Connecticut 06880 Attn: Gilad Gat, President Facsimile: (203) 221-2691 with a copy to: Davis & Gilbert LLP 1740 Broadway, 3rd floor New York, New York 10019 Attn: Ralph W. Norton, Esq. Facsimile: (212) 468-4888 -12- If to the Company or Polystick, addressed to: Polystick U.S. Corp. 1290 Avenue of the Americas New York, New York 10104 Attn: Sagi Matza Section 7.8 Governing Law. The provisions of this Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York and the federal laws of the United States. Each party hereto hereby irrevocably and unconditionally (a) consents and submits to the exclusive jurisdiction of the courts of the State of New York and of the United States of America located in the State of New York (each a "New York Court") for any actions, suits or proceedings arising out of or relating to this Agreement or the transactions contemplated hereby, (b) agrees that any such action, suit or proceedings may be brought or maintained only in a New York Court and in no other forum, (c) agrees that service of any process, summons, notice or document by U.S. Registered or certified mail to such party at the address specified in Section 7.7 shall be effective service of process in any such action, suit or proceeding in any New York Court, and (d) irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or proceeding arising out of or related to this Agreement or the transactions contemplated hereby in any New York Court, and further irrevocably and unconditionally waives and agrees not to plead a claim in any such court that any such action, suit or proceeding has been brought in an inconvenient forum. Section 7.9 Entire Agreement; Amendments and Waivers. This Agreement constitutes the entire agreement between the parties hereto pertaining to the subject matter hereof and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, of the parties, and there are no warranties, representations or other agreements between the parties in connection with the subject matter hereof except as set forth specifically herein or contemplated hereby. No supplement, modification or waiver of this Agreement shall be binding unless executed in writing by the party to be bound thereby. The failure of a party to exercise any right or remedy shall not be deemed or constitute a waiver of such right or remedy in the future. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision hereof (regardless of whether similar), nor shall any such waiver constitute a continuing waiver unless otherwise expressly provided. Section 7.10 Binding Effect and Assignment. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective permitted successors and assigns; but neither this Agreement nor any of the rights, benefits or obligations hereunder shall be assigned, by operation of law or otherwise, by any party hereto without the prior written consent of the other parties. Nothing in this Agreement, express or implied, is intended to confer upon any person or entity other than the parties hereto and their respective permitted successors and assigns, any rights, benefits or obligations hereunder. Section 7.11 Severability. If any provision of the Agreement is rendered or declared illegal or unenforceable by reason of any existing or subsequently enacted legislation or by -13- decree of a court of last resort, the parties hereto shall promptly meet and negotiate substitute provisions for those rendered or declared illegal or unenforceable, but all of the remaining provisions of this Agreement shall remain in full force and effect. Section 7.12 Third Party Beneficiaries. Each party hereto intends that this Agreement shall not benefit or create any right or cause of action in or on behalf of any person other than the parties hereto and their respective permitted successors and assigns. Section 7.13 Use of Terms. Whenever the context so requires or permits, all references to the masculine herein shall include the feminine and neuter, all references to the neuter herein shall include the masculine and feminine, all references to the plural shall include the singular and all references to the singular shall include the plural. Section 7.14 No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rule of law or contract interpretation that provides that in the case of ambiguity or uncertainty a provision should be construed against the draftsman will be applied against any party hereto. Section 7.15 Execution. This Agreement may be executed in multiple counterparts each of which shall be deemed an original and all of which shall constitute one instrument. -14- IN WITNESS WHEREOF, the parties hereto have executed this Agreement and Plan of Merger, on the day and year first above written. GSV, INC. By:/s/ Gilad Gat ------------- Name: Gilad Gat Title: President and Chief Executive Officer CYBERSHOP, L.L.C. By: GSV, Inc. By: /s/ Gilad Gat ------------- Name: Gilad Gat Title: President and Chief Executive Officer POLYSTICK OIL & GAS, INC. By:/s/ Sagi Matza -------------- Name: Sagi Matza Title: President POLYSTICK U.S. CORP. By:/s/ Sagi Matza -------------- Name: Sagi Matza Title: President -15- EX-4.1 4 gsv_exh41071503.txt GSV, INC. 071503 Exhibit 4.1 ----------- CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS OF SERIES B CONVERTIBLE PREFERRED STOCK OF GSV, INC. GSV, Inc. (the "Corporation"), a corporation organized and existing under the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY: That, pursuant to authority conferred upon the Board of Directors of the Corporation (the "Board") by the Certificate of Incorporation (as amended) (the "Certificate of Incorporation") of said corporation, the Board adopted a resolution, which resolution is as follows: RESOLVED, that a series of the Company's Preferred Stock consisting of 1,500,000 shares of Preferred Stock, be and hereby is, designated as "Series B Convertible Preferred Stock", par value $.001 per share (the "Series B Preferred Stock"), and that the Series B Preferred Stock shall have the designations, powers, preferences, rights and qualifications, limitations and restrictions as set forth in the Certificate of Designations, Preferences and Rights of Series B Convertible Preferred Stock (the "Series B Certificate"). That said Series B Certificate states that the Board does hereby fix and herein state and express such designations, powers, preferences and relative and other special rights and qualifications, limitations and restrictions thereof as follows. 1. Certain Definitions. Unless the context otherwise requires, the terms defined herein shall have the meanings herein specified. (a) Common Stock. The term "Common Stock" shall mean the Common Stock of the Corporation, $.001 par value per share. (b) Junior Stock. The term "Junior Stock" shall mean the Common Stock and any class or series of stock of the Corporation, whether now or hereafter authorized, that by the terms of the Certificate of Incorporation or of an instrument of the Board of Directors, acting pursuant to authority granted in the Certificate of Incorporation establishing such class or series shall be subordinated to the Series B Preferred Stock in respect of the right to receive dividends and in respect to the right to receive any assets upon liquidation, dissolution or winding up of the affairs of the Corporation. The Series A Preferred Stock will be Junior Stock. (c) Parity Stock. The term "Parity Stock" shall mean any class or series of stock of the Corporation, whether now or hereafter authorized, that by the terms of the Certificate of Incorporation or of an instrument of the Board of Directors, acting pursuant to authority granted in the Certificate of Incorporation establishing such class or series shall be pari passu to the Series B Preferred Stock in respect of the right to receive dividends and in respect to the right to receive any assets upon liquidation, dissolution or winding up of the affairs of the Corporation. (d) Senior Stock. The term "Senior Stock" shall mean any class or series of stock of the Corporation, whether now or hereafter authorized, that by the terms of the Certificate of Incorporation or of an instrument of the Board of Directors, acting pursuant to authority granted in the Certificate of Incorporation establishing such class or series shall be senior to the Series B Preferred Stock in respect of the right to receive dividends and in respect to the right to receive any assets upon liquidation, dissolution or winding up of the affairs of the Corporation. (e) Series A Preferred Stock. The term "Series A Preferred Stock" shall mean the shares of the Series A Convertible Preferred Stock, $.001 par value per share, currently outstanding. (f) Series B Preferred Stock. The term "Series B Preferred Stock" shall mean the shares of Series B Convertible Preferred Stock, $.001 par value per share, authorized herein. 2. Designation, Amount and Par Value. The series of preferred stock shall be designated as its Series B Convertible Preferred Stock (the "Series B Preferred Stock") and the number of shares so designated shall be 1,500,000 (which shall not be subject to increase without the consent of the holders of the Series B Preferred Stock (each, a "Holder" and collectively the "Holders")). Each share of Series B Preferred Stock shall have a par value of $.001 per share. 3. Voting. Except as set forth in Section 5 below and except as to matters on which the holders of Series B Preferred Stock may otherwise be entitled to vote as a matter of law, no holder of Series B Preferred Stock shall be entitled to vote for any matter. 4. Dividends. Except as set forth in the following sentence, no dividends shall be payable on the Series B Preferred Stock. In the event any dividends are declared with respect to the Common Stock, each holder of shares of the Series B Preferred Stock shall be entitled to receive an amount equal to the amount of dividends that would have been paid on the shares of Common Stock issuable upon conversion of such shares of Series B Preferred Stock had such shares of Series B Preferred Stock been converted into Common Stock immediately before such dividend was declared. 5. Election of Directors. (a) So long as any shares of Series B Preferred Stock remain outstanding, the Corporation shall not, without the written approval of Holders of at least a majority of the then-outstanding shares of Series B Preferred Stock, increase the maximum number of directors constituting the board of directors to a number in excess of seven (7). (b) So long as any shares of Series B Preferred Stock are outstanding, the holders of Series B Preferred Stock, voting separately as a class, shall be entitled to designate and elect three (3) of the members of the board of directors. For any meeting (or written consent in lieu thereof) held for the purpose of electing directors, the presence in person or by proxy (or the written consent) of the holders of at least a majority of the then outstanding shares of Series B Preferred Stock shall constitute a quorum of the Series B Preferred Stock for the election of directors to be elected solely by the holders of the Series B Preferred Stock. A vacancy in any directorship elected by the holders of the Series B Preferred Stock shall be filled only by vote or written consent of the holders of at least a majority of the then outstanding shares of Series B Preferred Stock. 6. Liquidation. (a) Upon liquidation, dissolution or winding up of the Corporation (each a "Liquidation Event"), whether voluntary or involuntary, the Holders shall be entitled, before any distribution or payment is made to any holder of Common Stock or any other Junior Stock, to be paid an amount equal to $1.00 per share plus the amount of any declared and unpaid dividends thereon, if any, -2- such amount payable with respect to one share of Series B Preferred Stock being sometimes referred to as the "Series B Liquidation Preference Payment" and with respect to all shares of Series B Preferred Stock being sometimes referred to as the "Series B Liquidation Preference Payments." If, upon any Liquidation Event, the net assets of the Corporation distributable among the holders of all outstanding shares of the Series B Preferred Stock shall be insufficient to permit the payment in full to such Holders of all amounts to which such Holders shall be entitled upon a Liquidation Event, then the entire net assets of the Corporation to be distributed to the Holders shall be distributed among the Holders ratably in proportion to the full amounts to which they would otherwise be respectively entitled in the event of a Liquidation Event. (b) After the distributions described in Section 6(a) above have been paid, subject to the rights of a series of Senior Stock or Parity Stock that may from time to time come into existence, the remaining assets of the Corporation available for distribution to the stockholders shall be distributed among the holders of the Junior Stock in accordance with the Certificate of Incorporation or an instrument of the Board of Directors, acting pursuant to authority granted in the Certificate of Incorporation. (c) Notwithstanding the provisions of Section 7(f), any consolidation, merger, sale of all or substantially all of the Corporation's assets or other similar transaction that has not been approved by the holders of at least two-thirds of the Series B Preferred Stock then outstanding shall be treated as a Liquidation Event, and the holders of the Series B Preferred Stock shall be entitled in such event to receive stock, securities or assets on the basis of (i) the provisions of Section 7(f) or (ii) the priorities set forth in Section 6(a), whichever is greater. Any consolidation, merger, sale of all or substantially all of the Corporation's assets or other similar transaction that has been approved by the holders of at least two-thirds of the Series B Preferred Stock shall be subject to Section 7(f), and not this Section 6(c). 7. Conversions. The holders of Series B Preferred Stock shall have the following conversion rights: (a) Right to Convert. Subject to the terms and conditions of this Section 7, the Holder of any share or shares of Series B Preferred Stock shall have the right, at its option at any time, to convert any such shares of Series B Preferred Stock (except that upon any Liquidation Event of the Corporation pursuant to Section 6, the right of conversion shall terminate at the close of business on the business day prior to the business day fixed for payment of the amount distributable on the Series B Preferred Stock). The date of determination of the number of shares of Common Stock issued upon conversion of the Series B Preferred Stock pursuant to this Section 7(a) shall be the date (the "Conversion Date"), that the Conversion Notice and the certificate or certificates for the shares so converted is received by the Corporation. (b) Conversion Process. To effect conversions of Series B Preferred Stock, Holders shall deliver to the Corporation at its principal office during its usual business hours, the certificate or certificates for the shares so converted, together with a duly completed and executed Conversion Notice, in the form attached hereto as Exhibit A. As promptly as practicable thereafter, the Corporation shall issue and deliver to such Holder a certificate or certificates, registered in the name of such Holder, for the number of whole shares of Common Stock to which such Holder is entitled upon such conversion, together with any cash dividends and payment in lieu of fractional shares to which such Holder may be entitled. Once delivered, a delivery of a Conversion Notice shall be irrevocable. (c) Conversion Price. Subject to the terms and conditions of this Section 7, the Series B Preferred Stock shall convert into such number of fully paid and non-assessable shares of Common Stock as is obtained by (i) multiplying the number of shares of Series B Convertible Preferred Stock to be so converted by $1.00 per share and (ii) dividing the result by the conversion price (which shall initially -3- be $1.00) per share or, in case an adjustment of such price has taken place pursuant to the further provisions of Section 7(e), then by the conversion price as last adjusted and in effect at the date any share or shares of Series B Preferred Stock are surrendered for conversion pursuant to Section 7(a) (such price, or such price as last adjusted, being referred to as the "Series B Conversion Price"). (d) Fractional Shares. No fractional shares shall be issued upon conversion of Series B Preferred Stock into Common Stock. If any fractional shares of Common Stock would be delivered upon such conversion, the Corporation, in lieu of delivering such fractional share, shall pay to the Holder surrendering the Series B Preferred Stock for conversion an amount in cash equal to the current fair market value of such fractional share as determined in good faith by the Board of Directors of the Corporation. (e) Adjustment of Price Upon Issuance of Common Stock. Except as provided in Section 7(f), if and whenever the Corporation shall issue or sell, or is, pursuant to Section 7(e)(i) through (vii), deemed to have offered, sold, granted any option to purchase, or otherwise disposed of (or announced any offer, sale, grant or any option to purchase or other disposition) any shares of Common Stock ("Additional Stock") at a price that is, at the issuance thereof, or at any later time due to adjustment, reset, additional issuances or otherwise, less than the Series B Conversion Price, then the Series B Conversion Price shall be adjusted to a price equal to the quotient obtained by dividing the total computed under clause (x) below by the total computed under clause (y) below as follows: (x) an amount equal to the sum of: (1) the product obtained by multiplying (a) the total number of shares of Common Stock outstanding immediately prior to such issuance (including, without limitation, any shares of Common Stock deemed to have been issued prior to such issuance) by (b) the Series B Conversion Price in effect immediately prior to such issuance, plus (2) the aggregate consideration, if any, received by the Corporation in connection with such issuance of the Additional Stock; (y) the total number of shares of Common Stock outstanding immediately after such issuance (including, without limitation, any Common Stock deemed to have been issued prior to, or in connection with, such issuance). For purposes of this Section 7(e), the following subsections (i) to (vii) shall also be applicable: (i) Issuance of Rights or Options. In case at any time the Corporation shall in any manner grant (whether directly or by assumption in a merger or otherwise) any warrants or other rights to subscribe for or to purchase, or any options for the purchase of, Common Stock or to purchase any stock or security convertible into or exchangeable, directly or indirectly, for Common Stock (such warrants, rights or options being called "Options" and such convertible or exchangeable stock or securities being called "Convertible Securities") whether or not such Options or the right to convert or exchange any such Convertible Securities are immediately exercisable, and the price per share for which Common Stock is issuable upon the exercise of such Options or upon the conversion or exchange of such Convertible Securities (determined by dividing (x) the total amount, if any, received or receivable by the Corporation as consideration for the granting of such Options, plus the minimum aggregate amount of additional consideration payable to the Corporation upon the exercise of all such Options, plus, in the case -4- of such Options which relate to Convertible Securities, the minimum aggregate amount of additional consideration, if any, payable to the Corporation upon the issue or sale of such Convertible Securities and upon the conversion or exchange thereof, by (y) the total maximum number of shares of Common Stock issuable upon the exercise of such Options or upon the conversion or exchange of all such Convertible Securities issuable upon the exercise of such Options) shall be less than the Series B Conversion Price in effect immediately prior to the time of the granting of such Options, then the total maximum number of shares of Common Stock issuable upon the exercise of such Options or upon conversion or exchange of the total maximum amount of such Convertible Securities issuable upon the exercise of such Options shall be deemed to have been issued for such price per share as of the date of granting of such Options and thereafter shall be deemed to be outstanding. Except as otherwise provided in subsection (iii), no adjustment of the Series B Conversion Price shall be made upon the actual issue of such Common Stock or of such Convertible Securities upon exercise of such Options or upon the actual issue of such Common Stock upon conversion or exchange of such Convertible Securities. (ii) Issuance of Convertible Securities. In case the Corporation shall in any manner issue (whether directly or by assumption in a merger or otherwise) or sell any Convertible Securities, whether or not the rights to exchange or convert any such Convertible Securities are immediately exercisable, and the price per share for which Common Stock is issuable upon such conversion or exchange (determined by dividing (x) the total amount received or receivable by the Corporation as consideration for the issue or sale of such Convertible Securities plus the minimum aggregate amount of additional consideration, if any, payable to the Corporation upon the conversion or exchange thereof, by (y) the total maximum number of shares of Common Stock issuable upon the conversion or exchange of all such Convertible Securities) shall be less than the Series B Conversion Price in effect immediately prior to the time of such issue or sale, then the total maximum number of shares of Common Stock issuable upon conversion or exchange of all such Convertible Securities shall be deemed to have been issued for such price per share as of the date of the issue or sale of such Convertible Securities and thereafter shall be deemed to be outstanding, provided that (a) except as otherwise provided in subparagraph (iii), no adjustment of the Series B Conversion Price shall be made upon the actual issue of such Common Stock upon conversion or exchange of such Convertible Securities and (b) if any such issue or sale of such Convertible Securities is made upon exercise of any Options to purchase any such Convertible Securities for which adjustments of the Series B Conversion Price have been or are to be made pursuant to other provisions of this Section 7(e), no further adjustment of the Series B Conversion Price shall be made by reason of such issue or sale. (iii) Change in Option Price or Conversion Rate. Upon the happening of any of the following events, namely, if (1) the maximum number of shares of Common Stock issuable in connection with any Option referred to in subparagraph (i), (2) the purchase price provided for in any Option referred to in subparagraph (i), (3) the additional consideration, if any, payable upon the conversion or exchange of any Convertible Securities referred to in subparagraph (i) or (ii), or (4) the rate at which Convertible Securities referred to in subparagraph (i) or (ii) are convertible into or exchangeable for Common Stock, shall change at any time (including, but not limited to, changes under or by reason of provisions designed to protect against dilution), the Series B Conversion Price in effect at the time of such event shall forthwith be readjusted to the Series B Conversion Price that would have been in effect at such time had such Options or Convertible Securities still outstanding provided for such changed maximum number of shares, changed purchase price, changed additional consideration or changed conversion rate, as the case may be, at the time initially granted, issued or sold, and on the termination of any Option or any such right to convert or exchange Convertible Securities, the Series B Conversion Price then in effect hereunder shall forthwith be increased to the Series B Conversion Price that would have been in effect at the time of such termination had such Option or Convertible Securities, to the extent outstanding immediately prior to such termination, never been issued. -5- (iv) Stock Dividends. In case the Corporation shall declare a dividend or make any other distribution upon any stock of the Corporation (other than the Series B Preferred Stock) payable in Common Stock, Options or Convertible Securities, then any Common Stock, Options or Convertible Securities, as the case may be, issuable in payment of such dividend or distribution shall be deemed to have been issued or sold without consideration. (v) Consideration for Stock. In case any shares of Common Stock, Options or Convertible Securities shall be issued or sold for cash, the consideration received therefor shall be deemed to be the amount received by the Corporation therefor, without deduction therefrom of any expenses incurred or any underwriting commissions or concessions paid or allowed by the Corporation in connection therewith. In case any shares of Common Stock, Options or Convertible Securities shall be issued or sold for a consideration other than cash, the amount of the consideration other than cash received by the Corporation shall be deemed to be the fair value of such consideration as determined in good faith by the Board of Directors of the Corporation, without deduction of any expenses incurred or any underwriting commissions or concessions paid or allowed by the Corporation in connection therewith. In case any Options shall be issued in connection with the issue and sale of other securities of the Corporation, together comprising one integral transaction in which no specific consideration is allocated to such Options by the parties thereto, such Options shall be deemed to have been issued for such consideration as determined in good faith by the Board of Directors of the Corporation. (vi) Record Date. In case the Corporation shall take a record of the holders of its Common Stock for the purpose of entitling them (x) to receive a dividend or other distribution payable in Common Stock, Options or Convertible Securities or (y) to subscribe for or purchase Common Stock, Options or Convertible Securities, then such record date shall be deemed to be the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase, as the case may be. (vii) Treasury Shares. The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of the Corporation, and the disposition of any such shares shall be considered an issue or sale of Common Stock for the purpose of this Section 7(e). (f) Reorganization or Reclassification. If any capital reorganization, reclassification, recapitalization, consolidation, merger, sale of all or substantially all of the Corporation's assets or other similar transaction (any such transaction being referred to herein as an "Organic Change") shall be effected in such a way that holders of Common Stock shall be entitled to receive stock, securities or assets with respect to or in exchange for Common Stock, then, as a condition of such Organic Change, lawful and adequate provisions shall be made whereby each holder of a share or shares of Series B Preferred Stock that remains outstanding thereafter shall thereupon have the right to receive, upon the basis and upon the terms and conditions specified herein and in lieu of or in addition to, as the case may be, the shares of Common Stock immediately theretofore receivable upon the conversion of such share or shares of Series B Preferred Stock, such shares of stock, securities or assets as may be issued or payable with respect to or in exchange for a number of outstanding shares of such Common Stock equal to the number of shares of such Common Stock immediately theretofore receivable upon such conversion had such Organic Change not taken place, and appropriate provisions shall be made with respect to the rights and interests of each Holder to the end that the provisions hereof (including without limitation provisions for adjustments of the Series B Conversion Price) shall thereafter be applicable, as nearly as may be, in relation to any shares of stock, securities or assets thereafter deliverable upon the exercise of such conversion rights. -6- (g) Employee Reserved Shares. Anything to the contrary contained in this Section 7 notwithstanding, no adjustment shall be made in the Conversion Price as a result of or pursuant to the granting of any Option, or the issuance of Common Stock or Common Stock Equivalents, to officers, employees or directors of, or consultants to, the Corporation, pursuant to any agreement, plan or arrangement approved by a majority of the Corporation's board of directors. 8. Notices. Any and all notices or other communications or deliveries to be provided by the Holders of the Series B Preferred Stock hereunder, including, without limitation, any Conversion Notice, shall be in writing and delivered personally, by facsimile or sent by a nationally recognized overnight courier service, addressed to the attention of the Chief Executive Officer of the Corporation addressed to 191 Post Road West, Westport, CT, 06880, Facsimile No.: (203) 221-2691 Attention Chief Executive Officer, or to such other address or facsimile number as shall be specified in writing by the Corporation for such purpose. Any and all notices or other communications or deliveries to be provided by the Corporation hereunder shall be in writing and delivered personally, by facsimile or sent by a nationally recognized overnight courier service, addressed to each Holder at the facsimile telephone number or address of such Holder appearing on the books of the Corporation, or if no such facsimile telephone number or address appears, at the principal place of business of the Holder. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section prior to 6:30 p.m. (New York City time) (with confirmation of transmission), (ii) the date after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section later than 6:30 p.m. (New York City time) on any date and earlier than 11:59 p.m. (New York City time) on such date (with confirmation of transmission), (iii) upon receipt, if sent by a nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. 9. Stock to be Reserved. The Corporation will at all times reserve and keep available out of its authorized Common Stock, solely for the purpose of issuance upon the conversion of Series B Preferred Stock as herein provided, such number of shares of Common Stock as shall then be issuable upon the conversion of all outstanding shares of Series B Preferred Stock. 10. Issue Tax. The issuance of certificates for shares of Common Stock upon conversion of Series B Preferred Stock shall be made without charge to the holders thereof for any issuance tax in respect thereof, provided that the Corporation shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than that of the holder of the Series B Preferred Stock that is being converted. 11. Status of Converted Shares. In case any shares of Series B Preferred Stock shall be converted pursuant hereto, the shares of Series B Preferred Stock so converted shall be canceled, shall not be re-issuable and shall cease to be part of the authorized capital stock of the Corporation. 12. Amendments. Except where the vote or written consent of the holders of a greater number of shares of the Corporation is required herein or by law, no provision of this Series B Certificate that adversely affects the Series B Preferred Stock may be amended, modified or waived without the written consent or affirmative vote of the holders of at least a two-thirds of the then outstanding shares of Series B Preferred Stock consenting or voting, as the case may be, separately as a class. 13. Lost Certificates. Upon receipt of evidence reasonably satisfactory to the Corporation of the loss, theft, destruction or mutilation of a stock certificate and, in the case of any such loss, theft or destruction, upon receipt of an indemnity agreement reasonably satisfactory to the Corporation, or in the case of any such mutilation upon surrender and cancellation of such stock certificate, the Corporation will -7- make and deliver a new stock certificate, of like tenor, in lieu of the lost, stolen, destroyed or mutilated stock certificate at the Corporation's own expense. IN WITNESS WHEREOF, GSV, Inc. has caused this certificate to be signed by its officers as of this 18th day of July, 2003. GSV, INC. By:/s/ Gilad Gat ------------- Name: Gilad Gat Title: Chief Executive Officer -8- EX-4.2 5 gsv_exh42071503.txt GSV, INC. 071503 Exhibit 4.2 ----------- STOCK REDEMPTION AGREEMENT STOCK REDEMPTION AGREEMENT (the "Agreement"), dated as of the 21st day of July 2003, between GSV, INC., a Delaware corporation (the "Company"), and BROOKS STATION HOLDINGS, INC., a Delaware corporation (the "Stockholder"). W I T N E S S E T H: - - - - - - - - - - WHEREAS, the Stockholder owns 363,637 shares of Series A Convertible Preferred Stock, par value $0.001 per share, of the Company (the "Series A Stock"); WHEREAS, Paragraph 7 of the Certificate of Designations, Preferences and Rights of Series A Convertible Preferred Stock of the Company (the "Certificate of Designations") provides that upon a Change of Control Transaction (as defined in the Certificate of Designations), the Stockholder shall have the right to require the Company to redeem all or a portion of the Series A Stock then held by the Stockholder; WHEREAS, the Company proposes to execute a Merger Agreement constituting a Change of Control Transaction of the Company ; and WHEREAS, in connection with such Merger Agreement, the Stockholder and the Company have agreed to redeem all of the Stockholder's shares of Series A Stock; NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements hereinafter contained, the parties agree as follows: 1. Redemption. ----------- Effective the date hereof, the Company shall redeem all of the shares of Series A Stock then owned by the Stockholder. In full consideration for such redemption, the Company shall pay the Stockholder the Redemption Price as defined in and in accordance with the provisions of the Certificate of Designations, which is an amount equal to $1.10 per share of Series A Stock plus accrued and unpaid dividends. The Redemption Price shall be paid as follows: $263,800.70, which amount includes $63,800 of accrued and unpaid dividends, will be paid in cash on the date hereof, and $200,000 will be paid in the form of a full recourse promissory note bearing interest at a rate of 8% per annum and due September 1, 2004, which note shall be in the form of Exhibit A hereto (the "Note"). Payment of the Note will be secured pursuant to a security agreement executed by the Company in favor of the Stockholder, which security agreement shall be in the form of Exhibit B hereto (the "Security Agreement"). 2. Closing. -------- Simultaneously herewith, the Stockholder has delivered to the Company all stock certificates representing the shares of Series A Stock being redeemed hereunder, duly endorsed for transfer to the Company, and the Company has delivered to the Stockholder the Note, the Security Agreement and the cash portion of the Redemption Price. 3. Waiver and Release. ------------------- The Stockholder hereby waives all rights it has or had as a holder of the Series A Stock and, except as set forth in Section 4(a) below, forever releases and discharges the Company and its affiliates, successors, predecessors and assigns, and each of their respective present and former directors, managers, stockholders, members, officers, employees and agents (collectively, the "Company Related Parties"), from any and all liabilities, losses, claims, demands, obligations, rights, actions, causes of action, proceedings or suits of any kind or nature, debts, sums of money, accounts, bonds, bills, covenants, contracts, agreements, promises, damages, judgments, executions and demands whatsoever, in law or equity (collectively, "Claims"), that the Stockholder or its respective affiliates, successors, predecessors and assigns ever had, now has or ever will have in the future, upon or by reason of any matter, cause or thing whatsoever, whether presently known or unknown, against any Company Related Party relating to or arising out of the Series A Stock, or any action taken or failed to be taken by any of the above with respect to such matters; provided, however, the foregoing shall not apply to the payment of the Redemption Price. 4. Indemnification. ---------------- (a) The Company hereby agrees to indemnify the Stockholder and its affiliates, successors, predecessors and assigns, and each of their respective present and former directors, managers, stockholders, members, officers, employees and agents (collectively, the "Stockholder Related Parties") against, and to protect, save and keep harmless the Stockholder Related Parties from, and to pay on behalf of or reimburse the Stockholder Related Parties as and when incurred for, any and all claims, actions or suits, in each case by one or more third parties against any Stockholder Related Party as a consequence of, in connection with, incident to, resulting from or arising out of this Agreement, and any liabilities (including liabilities for taxes), obligations, losses, damages, penalties, demands, claims, actions, suits, judgments, settlements, penalties, interest, out-of-pocket costs, expenses and disbursements (including reasonable costs of investigation, and reasonable attorneys', accountants' and expert witnesses' fees) of whatever kind and nature (collectively, "Losses") related thereto that may be imposed on or incurred by any Stockholder Related Party; provided, however, that the Company shall not be required to indemnify any Stockholder Related Party with respect to any Losses resulting from or arising out of the Stockholder's negligence, bad faith or willful misconduct. (b) The Stockholder hereby agrees to indemnify the Company Related Parties against, and to protect, save and keep harmless the Company Related Parties from, and to pay on behalf of or reimburse the Company Related Parties as and when incurred for, any and all claims, actions or suits, in each case by one or more third parties against any Company Related Party as a consequence of, in connection with, incident to, resulting from or arising out of this Agreement, and any Losses related thereto that may be imposed on or incurred by any Company Related -2- Party; provided, however, that the Stockholder shall not be required to indemnify any Company Related Party with respect to any Losses resulting from or arising out of the Company's negligence, bad faith or willful misconduct. 5. Governing Law. -------------- The interpretation and construction of this Agreement, and all matters relating hereto (including, without limitation, the validity or enforcement of this Agreement), shall be governed by the laws of Delaware without regard to any conflicts or choice of laws provisions of Delaware that would result in the application of the law of any other jurisdiction. 6. Entire Agreement; Amendments and Waivers. ----------------------------------------- This Agreement constitutes the entire agreement between the parties hereto pertaining to the subject matter hereof and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, of the parties, and there are no warranties, representations or other agreements between the parties in connection with the subject matter hereof except as set forth specifically herein or contemplated hereby. No supplement, modification or waiver of this Agreement shall be binding unless executed in writing by the party to be bound thereby. The failure of a party to exercise any right or remedy shall not be deemed or constitute a waiver of such right or remedy in the future. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision hereof (regardless of whether similar), nor shall any such waiver constitute a continuing waiver unless otherwise expressly provided. 7. Execution. ---------- This Agreement may be executed in multiple counterparts each of which shall be deemed an original and all of which shall constitute one instrument. -3- IN WITNESS WHEREOF, the parties hereto have executed this Stock Redemption Agreement, all as of the day and year first above written. GSV, INC. By: /s/ Gilad Gat ------------- Name: Gilad Gat Title: President BROOKS STATION HOLDINGS, INC. By: /s/ Daniel Golan ---------------- Name: Daniel Golan Title: Vice President and Secrtary -4- EX-4.3 6 gsv_exh43071503.txt GSV, INC. 071503 Exhibit 4.3 ----------- PROMISSORY NOTE --------------- $200,000 July 21, 2003 FOR VALUE RECEIVED, GSV, Inc., a Delaware corporation with corporate offices located at 191 Post Road, Westport, Connecticut 06880 ("Payor"), hereby unconditionally promises to pay, in lawful money of the United States and in immediately available funds, to the order of Brooks Station Holdings, Inc., a Delaware corporation with corporate offices located at c/o Cavallo Capital Corp., 660 Madison Avenue, New York, New York 10021 ("Payee"), at said address or at such other address as Payee may from time to time designate, the principal sum of TWO HUNDRED THOUSAND DOLLARS ($200,000) pursuant to the terms and conditions contained below. Interest shall accrue on the outstanding principal amount hereof at a rate equal to 8%. All computations of interest shall be made on the basis of a 365-day year. Such accrued interest shall be payable on an annual basis, and at such other times as any principal amount is paid. 1. The principal amount of this Note, together with any unpaid accrued interest thereon, shall be due and payable on September 1, 2004. 2. Payor shall have the right to prepay the principal sum, in whole or in part, at any time without penalty or notice. 3. Payment of this Note by the Payor is secured pursuant to a security agreement (the "Security Agreement") executed by the Payor in favor of the Payee. 4. Upon the occurrence and continuance of any one or more of the following events of default, all amounts then remaining unpaid on this Note shall become immediately due and payable: (a) Payor shall (i) apply for or consent to the appointment of a receiver, (ii) admit in writing its inability to pay its debts as they become due, (iii) make a general assignment for the benefit of creditors, (iv) have filed against it an involuntary petition in bankruptcy or other insolvency proceeding that is not stayed or dismissed within sixty (60) days, (v) file a voluntary petition in bankruptcy or other insolvency proceeding, or a petition or an answer seeking reorganization, or an arrangement with creditors or (vi) file an application for judicial dissolution; or (b) an order, judgment or decree shall be entered against Payor by any court of competent jurisdiction, approving a petition seeking reorganization of Payor of all or a substantial part of the properties or assets of Payor or appointing a receiver, trustee or liquidator for Payor. 5. Payor further agrees to pay all expenses, including reasonable attorneys' fees and legal expenses, incurred by Payee in endeavoring to collect any amounts payable hereunder that are not paid when due upon maturity or an event of default as set forth in paragraph 4 above. 6. This Note may not be changed or discharged orally, but only by an agreement in writing signed by the party against whom enforcement of any such change or discharge is sought. 7. Presentment for payment, notice of dishonor, protest and notice of protest are hereby waived. 8. Any demand, notice or other communication to be given hereunder shall be in writing and personally delivered, sent by courier guaranteeing overnight delivery or sent by registered or certified mail, return receipt requested, postage prepaid to the parties hereto at the addresses set forth above, or as to any party, to such other address as shall be designated by such party in a notice to the other parties. All such demands, notices and other communications shall be deemed duly given upon receipt. 9. This Note shall be governed by, enforced under, and construed according to the laws of the State of New York, without regard to principles of conflicts of laws. * * * * * * * -2- IN WITNESS WHEREOF, Payor has executed and delivered this Note as of the day and year first above written. GSV, Inc. By:/s/ Gilad Gat ------------- Name: Gilad Gat Title: President -3- EX-4.4 7 gsv_exh44071503.txt GSV, INC. 071503 Exhibit 4.4 ----------- SECURITY AGREEMENT This Security Agreement (the "Security Agreement"), dated as of July 21, 2003, is by and between GSV, Inc., a Delaware corporation (the "Debtor"), and Brooks Station Holdings, Inc., a Delaware corporation (the "Secured Party"). Background ---------- 1. Pursuant to a stock redemption agreement between the Debtor and the Secured Party of even date herewith (the "Redemption Agreement"), the Debtor has redeemed 363,637 shares of its Series A Convertible Preferred Stock, par value $0.001 per share (the Series A Stock"), from the Secured Party in exchange for a payment of $263,800.70 in cash and a promissory note of the Debtor in the amount of $200,000 (the "Promissory Note"). 2. To induce the Secured Party to surrender the Series A Stock in exchange for the cash payment and the Promissory Note, the Debtor has agreed to provide the Secured Party with a first priority security interest in its assets under the terms and conditions set forth below. N O W, T H E R E F O R E , In consideration of the premises and the mutual covenants and agreements herein set forth, and in order to induce the Secured Party to surrender the Series A Stock in exchange for the cash payment and the Promissory Note, the Debtor hereby agrees with the Secured Party as follows: Section 1. Grant of Security Interest. The Debtor hereby grants to the Secured Party, on the terms and conditions hereinafter set forth, a first priority security interest in the collateral hereinafter identified (the "Collateral"). Section 2. Collateral. The Collateral is all tangible and intangible assets of the Debtor of whatever kind and nature (including without limitation all accounts, chattel paper, commercial tort claims, documents, equipment, farm products, general intangibles, instruments, inventory, investment property, patents, trademarks tradenames, copyrights and all other intellectual property and the stock of all of Debtor's subsidiaries), in each case whether now owned or hereafter acquired and wherever located, and all proceeds thereof, together with all proceeds, products, replacements and renewals thereof. Section 3. Representations and Warranties; Covenants. The Debtor hereby warrants and covenants as follows: (a) The Debtor has title to the Collateral free from any lien, security interest, encumbrance or claim. (b) The Debtor will maintain the Collateral so as to preserve its value. (c) The Debtor is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. (d) The Debtor will pay when due all existing or future charges, liens, or encumbrances on the Collateral, and will pay when due all taxes and assessments now or hereafter imposed on or affecting it unless such taxes or assessments are diligently contested by the Debtor in good faith and reasonable reserves are established therefor. (e) All information with respect to the Promissory Note and the Collateral and account debtors set forth in any schedule, certificate or other writing at any time heretofore or hereafter furnished by the Debtor to the Secured Party, and all other written information heretofore or hereafter furnished by the Debtor to the Secured Party, is or will be true and correct in all material respects, as of the date furnished. (f) As soon as practicable following the date of execution of this Security Agreement, the Debtor will prepare, execute and file in Delaware a UCC-1 Financing Statement covering all Collateral, naming the Secured Party as a secured party thereunder. (g) The Debtor will maintain accurate records concerning the Collateral. Such records will be of such character as to enable the Secured Party or its representatives to determine at any time the status thereof. (h) The Debtor will permit the Secured Party and its representatives at any reasonable time to inspect any and all of the Collateral, and to inspect, audit and make copies of and extracts from all records and all other papers in possession of the Debtor pertaining to the Promissory Note and the Collateral. Section 4. Disposition of Collateral in Ordinary Course. Nothing herein shall prevent the Debtor from selling, trading in, or replacing any of the Collateral in the ordinary course of its business. Section 5. Secured Parties May Perform. Upon the occurrence of an "event of default" under the Promissory Note, at the option of the Secured Party, the Secured Party may discharge taxes, liens or security interests, or other encumbrances at any time hereafter levied or placed on the Collateral; and may pay for the maintenance and preservation of the Collateral. Until default, the Debtor may have possession of the Collateral and use it in any lawful manner not inconsistent with this Security Agreement. -2- Section 6. Obligations Secured; Certain Remedies. This Security Agreement secures the payment and performance of all obligations of the Debtor to the Secured Party under the Promissory Note, whether now existing or hereafter arising and whether for principal, interest, costs, fees or otherwise (collectively, the "Obligations"). Upon the occurrence of an event of default under the Promissory Note, the Secured Party may declare all obligations secured hereby immediately due and payable and may exercise the remedies of a secured party under the Uniform Commercial Code. Without limiting the foregoing, the Secured Party may require the Debtor to assemble the Collateral and make it available to the Secured Party at a place to be designated by the Secured Party that is reasonably convenient to both parties or to execute appropriate documents of assignment, transfer and conveyance, in each case, in order to permit the Secured Party to take possession of and title to the Collateral. Unless the Collateral is perishable or threatens to decline rapidly in value or is of a type customarily sold on a recognized market, the Secured Party will give the Debtor reasonable notice of the time and place of any public sale thereof or of the time after which any private sale or any other intended disposition thereof is to be made. The requirements of reasonable notice shall be met if such notice is mailed to the Debtor via registered or certified mail, postage prepaid, at least fifteen (15) days before the time of sale or disposition. Expenses of retaking, holding, preparing for sale, selling or the like, shall include the Secured Party's reasonable attorneys' fees and legal expenses. Section 7. Debtor Remains Liable. Anything herein to the contrary notwithstanding: (a) Notwithstanding the exercise of any remedy available to the Secured Party hereunder or at law in connection with an event of default, the Debtor shall remain liable to repay the balance, if any, remaining unpaid and outstanding under the Promissory Note after the value or proceeds received by the Secured Party in connection with such remedy is subtracted. The Secured Party shall promptly deliver and pay over to the Debtor any portion of the value or proceeds received in connection with such remedy that remains after the unpaid and outstanding portion of the Promissory Note is paid in full. (b) The Debtor shall remain liable under the contracts and agreements included in the Collateral to the extent set forth therein, and shall perform all of its duties and obligations under such contracts and agreements to the same extent as if this Security Agreement had not been executed; (c) The exercise by the Secured Party of any of its rights hereunder shall not release the Debtor from any of its duties or obligations under any such contracts or agreements included in the Collateral; and (d) The Secured Party shall not have any obligation or liability under any such contracts or agreements included in the Collateral by reason of this Security Agreement, nor shall the Secured Party be obligated to perform any of the obligations or duties of the Debtor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder. -3- Section 8. Security Interest Absolute. All rights of the Secured Party and the security interests granted to the Secured Party hereunder shall be absolute and unconditional, to the maximum extent permitted by law, irrespective of: (a) Any lack of validity or enforceability of the Promissory Note or any other document or instrument relating thereto; (b) Any change in the time, manner or place of payment of, or in any other term of, all or any part of the Obligations or any other amendment to or waiver of or any consent to any departure from the Promissory Note or any other document or instrument relating thereto; (c) Any exchange, release or non-perfection of any collateral (including the Collateral), or any release of or amendment to or waiver of or consent to or departure from any guaranty, for all or any of the Obligations; or (d) Any other circumstance that might otherwise constitute a defense available to, or a discharge of, the Debtor, a guarantor or a third party grantor of a security interest. Section 9. Additional Assurances. At the request of the Secured Party, the Debtor will join in executing or will execute, as appropriate, all necessary financing statements in a form satisfactory to the Secured Party, and the Debtor will pay the cost of filing such statements, including all statutory fees. The Debtor will further execute all other instruments deemed necessary by the Secured Party and pay the cost of filing such instruments. Section 10. Representations, Warranties and Covenants Concerning Debtor's Legal Status. The Debtor covenants with the Secured Party as follows: (i) without providing 15 days prior written notice to the Secured Party, Debtor will not change its name, its place of business, or, if more than one, its chief executive offices or its mailing address; and (ii) without providing 15 days prior written notice to the Secured Party, Debtor will not change its type of organization, jurisdiction of organization or other legal structure. Section 11. Expenses. The Debtor will upon demand pay to the Secured Party the amount of any and all reasonable expenses, including the reasonable fees and disbursements of its counsel and of any experts and agents, that the Secured Party may incur in connection with (i) the custody, preservation, use or operation of, or the sale of, collection from, or other realization -4- upon, any of the Collateral upon the occurrence of an event of default, (ii) the exercise or enforcement of any of the rights of the Secured Party hereunder, or (iii) the failure by the Debtor to perform or observe any of the provisions hereof. Section 12. Notices of Loss or Depreciation. The Debtor will immediately notify the Secured Party of any claim, suit or proceeding against any Collateral or any event causing loss or depreciation in the value of Collateral, including the amount of such loss or depreciation. Section 13. No Waivers. No waiver by the Secured Party of any default shall operate as a waiver of any other default or of the same default on any subsequent occasion. Section 14. Continuing Security Interest. This Agreement shall create a continuing security interest in the Collateral and shall (i) remain in full force and effect until the payment in full of the Obligations, (ii) be binding upon Debtor, its successors and assigns, and (iii) inure to the benefit of, and be enforceable by, the Secured Party and its successors, transferees and assigns. Upon the payment in full of the Obligations, the security interest granted hereby shall terminate and all rights to the Collateral shall revert to the Debtor. Upon any such termination, the Secured Party will execute and deliver to the Debtor such documents as the Debtor shall reasonably request to evidence such termination. Section 15. Governing Law. This Security Agreement shall be governed by the laws of the State of New York, without giving effect to such jurisdiction's principles of conflict of laws, except to the extent that the validity or the perfection of the security interest hereunder, or remedies hereunder, in respect of any particular Collateral are governed by the laws of a jurisdiction other than the State of New York. Section 16. Counterparts. This Security Agreement may be executed in any number of counterparts, each of which will be deemed an original, but all of which together shall constitute one and the same instrument. Section 17. Remedies Cumulative. The rights and remedies herein are cumulative, and not exclusive of other rights and remedies which may be granted or provided by law. Section 18. Notices. Any demand upon or notice to the Debtor hereunder shall be effective when delivered by hand or when properly deposited in the mails postage prepaid, or sent by electronic facsimile transmission, receipt acknowledged, or delivered to an overnight courier, in each case addressed to the Debtor at the address shown below or such other address as the Debtor advises the Secured Party in writing. Any notice by the Debtor to the Secured Party shall be given as aforesaid, addressed to the Secured Party at the address shown below or such other address as the Secured Party may advises the Debtor in writing: If to Secured Party: Brooks Station Holdings, Inc. c/o Cavallo Capital Corp. 660 Madison Avenue New York, New York 10021 -5- If to Debtor: GSV, Inc. 191 Post Road Westport, Connecticut 06880 With a copy to: Davis & Gilbert LLP 1740 Broadway New York, New York 10019 Attn: Ralph W. Norton, Esq. Section 19. Entire Agreement. This Security Agreement and the documents and instruments referred to herein embody the entire agreement entered into between the parties relating to the subject matter hereof, and may not be amended, waived, or discharged except by an instrument in writing executed by the party against whom enforcement of said amendment, waiver, or discharge is sought. [THE REMAINDER OF THIS PAGE IS LEFT BLANK INTENTIONALLY] -6- IN WITNESS WHEREOF, the parties hereto, by their duly authorized agents, have executed this Security Agreement as of the date set forth above. GSV, INC. By: /s/ Gilad Gat ------------- Name: Gilad Gat Title: President BROOKS STATION HOLDINGS, INC. By: /s/ Daniel Golan ---------------- Name: Daniel Golan Title: Vice President and Secrtary -7- EX-99.1 8 gsv_exh991071503.txt GSV, INC. 071503 Exhibit 99.1 ------------ GSV, Inc. FOR IMMEDIATE RELEASE: GSV, INC. ACQUIRES TEXAS OIL AND GAS INTERESTS Westport, CT, July 21, 2003. GSV, Inc. (OTCBB Symbol: GSVI) reported today that it had acquired certain oil and gas interests in Texas from Polystick U.S. Corp., a New York corporation and shareholder of GSV ("Polystick"). The transaction involves the merger of Cybershop, L.L.C., a New Jersey limited liability company and wholly-owned subsidiary of GSV, and Polystick Oil & Gas, Inc., a Delaware corporation and a wholly-owned subsidiary of Polystick. In exchange for the oil and gas interests, GSV issued 4,500,000 shares of Common Stock and 1,500,000 shares of newly authorized Series B Convertible Preferred Stock to Polystick. Gilad Gat, President and CEO of GSV, said, "this is a major step forward in our plans to transform our business and become a player in the domestic oil and gas industry. Given the recognized need for increased production of natural gas in this country, we believe this is a great time to increase our stake in this exciting industry." In connection with the acquisition of the oil and gas interests and the issuance of the Series B Preferred Convertible Stock, GSV redeemed all of its existing outstanding Series A Convertible Preferred Stock for $400,000.70. GSV paid $200,000.70 of the redemption price in cash and the balance by a promissory note secured by a lien on all of GSV's assets. Forward-Looking Statements Some of the statements in this press release are forward-looking statements that involve risks and uncertainties. These forward-looking statements include statements about our plans, objectives, expectations, intentions and assumptions that are not statements of historical fact. You can identify these statements by the following words: - - "may" - - "will" - - "should" - - "estimates" - - "plans" - - "expects" - - "believes" - - "intends" and similar expressions. We cannot guarantee our future results, performance or achievements. Our actual results and the timing of corporate events may differ significantly from the expectations discussed in the forward-looking statements. You are cautioned not to place undue reliance on any forward- looking statements. Potential risks and uncertainties that could affect our future operating results include, but are not limited to, our limited operating history, history of losses, need to raise additional capital, and the high risk nature of our business, as well as other risks described in our most recent annual report on Form 10-KSB filed with the Securities and Exchange Commission. -----END PRIVACY-ENHANCED MESSAGE-----