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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): January 18, 2000
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SHANECY, INC.
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(Exact name of registrant as specified in its charter)
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<CAPTION>
Delaware 0-25521 88-0407731
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<S> <C> <C>
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
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1530-625 Howe Street, Vancouver, British Columbia V6C2T6
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(Address of principal executive offices/Zip Code)
Registrant's telephone number, including area code: (604) 682-3284
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Former name, former address, and former fiscal year,
if changed since last report:
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13640 White Rock Station Road, Poway, CA 92064
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Forward-Looking Statements
There are forward-looking statements in this document, and in Shanecy,
Inc.'s (to be known as Inc.ubator Capital, Inc., and referred to in this
document as Inc.ubator) public documents to which they may refer, that are
subject to risks and uncertainties in addition to those set forth above. These
forward-looking statements include information about possible or assumed future
results of Inc.ubator's operations. Also, when any of the words "may," "will,"
"believe," "expect," "anticipate," "estimate," "continue" or similar expressions
are used, Inc.ubator is making forward-looking statements. Many possible events
or factors, including but not limited to those set forth herein, could affect
future financial results and performance. This could cause Inc.ubator's results
or performance to differ materially from those expressed in any forward-looking
statements. These and other risks are described in Inc.ubator's other publicly
filed documents and reports that are available from Inc.ubator and from the SEC.
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Item 2. Acquisition or Disposition of Assets
Brunswick Capital Partners, Inc.
On January 18, 2000, through a wholly-owned subsidiary Shanecy Holding
Inc. ("SHI"), Inc.ubator acquired preferred stock (the "BCP Stock") in Brunswick
Capital Partners, Inc. ("BCP"), convertible into 40% of the common stock of BCP.
SHI acquired the BCP Stock by way of merger, on December 30, 1999, with Thesseus
Holdings, Inc., a wholly-owned subsidiary of Thesseus International Asset Fund
N.V. ("Thesseus"). At the time of the merger, several principals of Thesseus
were also officers and/or directors of Inc.ubator. SHI was the surviving
corporation in the merger. The consideration paid for the BCP Stock, together
with the InfoBase Stock described below, was 2,000,000 shares of restricted
common stock of Inc.ubator. The amount of consideration was determined by the
market price of Inc.ubator's stock at the end of December 1999, and was
calculated to equal the book value of the BCP Stock.
BCP is a national, specialty financial services company that uses
proprietary database mining, marketing techniques, automated systems and
information technology to issue credit cards to moderate income consumers. BCP
manages the resulting portfolio of accounts in an attempt to ensure that they
remain in a performing status. General purpose credit cards have become the
primary payment mechanism for e-commerce transactions over the Internet. BCP is
headquartered in Sioux Falls, South Dakota and its management has over a
decade's experience in the origination and servicing of credit cards.
The income level of moderate income consumers ($25,000 to $50,000 per
year) presents a profile that is unattractive to the majority of credit card
issuers who are focused on the upper income consumer who can qualify for gold
and platinum cards. Given their economic circumstances, BCP believes moderate
income consumers that have had access to credit often experience problems due
largely to circumstances beyond their control (i.e. employment interruption,
marriage break-up, extended uninsured illness, etc.). Once a credit problem has
tarnished an individual's credit report, it becomes extremely difficult to
obtain new credit, regardless of the change in the individual's economic
circumstances. Compounding the credit access problems of many moderate income
consumer is the fact that they generally have not been schooled in the basics of
personal financial management.
To address the opportunity represented by this underserved, 30 million
to 40 million household market, BCP utilizes its proprietary data mining, neural
network analysis and database management software, to identify those moderate
income consumers who it believes have a high probability of handling a credit
card responsibly. Identified individuals are then sent skillfully prepared
direct mail pieces, which are then followed up by telephone contact. The
telephone contact focuses the consumer on the offer, gathers comprehensive
current information so that underwriting the credit application can properly
evaluate the consumer's present financial status and educate the consumer on the
importance of the timely payments. The telephone contact also represents the
first important step in building a personalized relationship between BCP and the
customer. The initial credit limit established is generally $300 to $2,500,
which permits the borrower to demonstrate that the credit now available can be
successfully handled. The
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consumer then earns additional credit in two ways. First, as the balance owed is
paid down, automatic access is provided to additional credit up to the approved
limit. Second, as successful payment performance is demonstrated, the credit
limit will be increased. Thus, consumers are given every incentive to properly
handle the credit made available as a means of improving their overall credit
profile, as well as gaining expanded credit availability from BCP.
BCP has established relationships with a number of leading vendors
regarding credit card origination, issuing, processing and servicing. Through
these relationships, BCP is able to cost-effectively optimize the operational
aspects of its business, as well as scale up or down as conditions and
circumstances warrant. In turn, these arrangements permit BCP's management to
concentrate their efforts and energies on marketing and account management
functions.
BCP uses several companies to market its programs and acquire
customers. One of the companies used is InfoBase Direct Marketing Services,
Inc., an affiliated company. Unsecured VISA(R) credit cards are issued to BCP's
customers through an Issuing and Participation Agreement with CorTrust Bank, NA,
Sioux Falls, South Dakota ("CTB"). CTB is responsible for compliance and
regulatory issues, account set up, daily settlement, customer service,
complaints, and customer correspondence, as well as all aspects of account
servicing and delinquency management under BCP's oversight and in accordance
with BCP's policies. BCP has also entered into an agreement with Universal
Transactions, Inc. ("UTI") to provide fully automated, on line, credit scoring
and application processing and underwriting. UTI's system accesses the
consumer's credit report and automatically evaluates it relative to underwriting
guidelines that have been established by BCP and CTB. First Data Resources, Inc.
is responsible for all credit card payment processing, collections, and billing.
BCP also intends to market credit cards to moderate income consumers
via the Internet. Developmental efforts are currently underway with respect to
an Internet based, online account processing and underwriting system. Upon
completion, the consumer would be able to apply for BCP products online and be
given a credit approval decision in seconds, all in accordance with BCP's
pre-established underwriting criteria. BCP further intends to provide
interactive customer service support, permitting the customer to make online
inquiries regarding their applications and obtain other account information,
make inquiries, resolve account issues, etc.
InfoBase Direct Marketing Services, Inc.
On January 18, 2000, through a wholly-owned subsidiary, Shanecy
Holdings, Inc. ("SHI"), Inc.ubator acquired preferred stock (the "InfoBase
Stock") in InfoBase Direct Marketing Services, Inc. ("InfoBase"),convertible
into 49% of the common stock of InfoBase. SHI acquired the InfoBase Stock by way
of merger, on December 30, 1999, with Thesseus Holdings, Inc., a wholly-owned
subsidiary of Thesseus. At the time of the merger, several principals of
Thesseus were also officers and/or directors of Inc.ubator. SHI was the
surviving corporation in the merger. The consideration paid for the InfoBase
Stock, together with the BCP Stock described above, was 2,000,000 shares of
restricted common stock of Inc.ubator. The amount of consideration was
determined by the market price of Inc.ubator's stock at the end of December
1999, and was calculated to equal the book value of the InfoBase Stock.
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InfoBase is an information based, technology driven direct marketing
company that designs, develops and implements sophisticated inbound and outbound
marketing programs using the Internet and computerized call management systems
for companies targeting the moderate income consumer. InfoBase has developed
proprietary software to facilitate sales tracking, data mining, neural
networking and data base management designed to individually target consumers.
The management of InfoBase has over 60 years experience designing and
implementing inbound and outbound programs to moderate income consumers and is
headquartered in Carlsbad, California.
InfoBase provides its clients inbound/outbound telemarketing and
Internet based services consisting of direct sales activities, integrated direct
mail programs, call list analysis profiling, sales tracking, data analysis and
reporting. Dialing strategies are created and distributed as calling campaigns
to the sales agents. InfoBase's computerized call management system utilizes
predictive dialers that automatically dial telephone numbers, determine if a
live connect is made and present connected calls to a sales agent.
InfoBase provides inbound teleservices support for activities such as
customer service, response to customer inquiries, and order processing. InfoBase
uses automated call distributors (Voice Response Units) to direct callers to the
appropriate agent, who has access to on-line support databases to address
customers' needs. Scripts are drafted and approved by the client for sales
agents to utilize. To enable quality assurance, call monitoring and sales
verification are employed. All sales confirmations are recorded and management
personnel verify accuracy and authenticity of transactions.
InfoBase utilizes the latest technologies to extract data from the
client's database for sales/performance analysis and reporting. Data mining,
neural networking and fuzzy logic software helps InfoBase's staff design,
develop and analyze key information for clients relative to the performance of
their programs. Reports are produced on request, daily, weekly and monthly. Pre
and post sales analysis of call lists are provided for the client so it may
evaluate the effectiveness of InfoBase's sales techniques and strategies.
InfoBase provides integrated direct mail programs that are developed
and tailored to each client's customer base. It achieves a higher response rate
to the mailing as calling campaigns are implemented to coincide with the mail.
Given the growing potential of primary channel alternatives, InfoBase
is constantly expanding its capabilities in database marketing. InfoBase has
brought its customer list in house for this first phase as its database
sophistication is expanded. Registration cards and periodic customer surveys
assist InfoBase in understanding its customer and measure the success of the
marketing, sales and product activities. Profile overlays of other lists fill in
the awareness gaps. This in-house presence provides the sales and technical
support teams with tools that streamline operations while updating customer
knowledge. InfoBase's customer information system helps in making sound
decisions by providing historical answers to the marketing questions posed.
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Item 7. Financial Statements and Exhibits
(a) Financial Statements of Businesses Acquired.
The most recent audited balance sheets of each of InfoBase and BCP as
of December 31, 1999 and 1998 and the related statements of operations,
shareholders equity and cash flows for each of the two years in the
period ended December 31, 1999 are included in Exhibit 99.1. (To be
filed by amendment within 60 days of February 2, 2000)
(b) Pro-forma Financial Information
The unaudited pro-forma consolidated balance sheet as at December 31,
1999, and the unaudited pro-forma consolidated statements of operations
for the nine months ended December 31, 1999 and for the year ended
March 31, 1999, give effect to the acquisition of each of InfoBase and
BCP. The unaudited pro-forma financial information is based on the
historical financial statements of the Company, InfoBase and BCP. The
unaudited pro-forma consolidated balance sheet gives effect to the
acquisitions as if they had occurred on December 31, 1999, and the
unaudited pro-forma condensed consolidated statements of operations
give effect to the acquisitions as if they had occurred on April 1,
1998. (To be filed by amendment within 60 days of February 2, 2000)
2.1 Acquisition Agreement dated December 30, 1999 between Shanecy Holdings,
Inc. and Shanecy, Inc.
2.2 Agreement and Plan of Merger dated December 30, 1999 among Shanecy
Holdings, Inc., Shanecy, Inc., Thesseus Holdings, Inc. and Thesseus
International Asset Fund N.V.
2.3 Acquisition Agreement dated December 30, 1999 between Thesseus
Holdings, Inc. and Thesseus International Asset Fund N.V.
23.1 Consent of Accountants (To be filed by amendment within 60 days of
February 2, 2000)
99.1 Audited balance sheets of InfoBase and BCP as of December 31, 1999 and
1998 and the related statements of operations, shareholders equity and
cash flows for each of the two years in the period ended December 31,
1999. (To be filed by amendment within 60 days of February 2, 2000)
99.2 Press Release dated January 20, 2000
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SHANECY, INC.
Date: 1 Feb. 2000 By: /s/ Jason W. Galanis
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Jason W. Galanis
President
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EXHIBIT INDEX
Exhibit
Number Description
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2.1 Acquisition Agreement dated December 30, 1999 between Shanecy Holdings,
Inc. and Shanecy, Inc.
2.2 Agreement and Plan of Merger dated December 30, 1999 among Shanecy
Holdings, Inc., Shanecy, Inc., Thesseus Holdings, Inc. and Thesseus
International Asset Fund N.V.
2.3 Acquisition Agreement dated December 30, 1999 between Thesseus
Holdings, Inc. and Thesseus International Asset Fund N.V.
23.1 Consent of Accountants (To be filed by amendment within 60 days of
February 2, 2000)
99.1 Audited balance sheets of InfoBase and BCP as of December 31, 1999 and
1998 and the related statements of operations, shareholders equity and
cash flows for each of the two years in the period ended December 31,
1999. (To be filed by amendment within 60 days of February 2, 2000)
99.2 Press Release dated January 20, 2000
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ACQUISITION AGREEMENT
THIS ACQUISITION AGREEMENT (the "Agreement") is entered into this 30th
day of December, 1999 by and between Shanecy, Inc., a Delaware corporation with
a place of business at 625 Howe Street, Suite 1530, Vancouver, British Columbia
V6C 2T6 ("Shanecy"), and Shanecy Holdings, Inc., a Nevada corporation with a
place of business at 625 Howe Street, Suite 1530, Vancouver, British Columbia
V6C 2T6 (the "Company").
RECITALS
WHEREAS, Shanecy is a public company that concentrates its business in
investing in companies that utilize the Internet to provide products and
services to middle income consumers; and
WHEREAS, Shanecy has created the Company as a wholly-owned subsidiary
in order to make investments in and acquire businesses that facilitate its
strategic purpose; and
WHEREAS, Shanecy has determined to transfer 2,000,000 shares of its
common stock to the Company (the "Acquired Shares") so that the Company may make
such investments; and
WHEREAS, the Company desires to acquire the Acquired Shares from
Shanecy in exchange for the issuance of shares of its common stock (the "Common
Shares") to Shanecy, and Shanecy desires to transfer the Acquired Shares to the
Company in exchange for the Common Shares, on the terms and conditions set forth
herein.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth below, it is therefore agreed as follows:
ARTICLE I
DEFINITIONS
1. Currency; Certain Definitions. Unless otherwise indicated, all
currency figures in this Agreement are denominated in U.S. dollars. Capitalized
terms used, but not defined elsewhere, in this Agreement are defined as follows:
1.1 "Acquired Shares" means the 2,000,000 shares of the
common stock of Shanecy to be acquired by the Company at the Closing.
1.2 "Affiliate" of a Person means another Person (a)
directly or indirectly controlling, controlled by, or under common control with,
such Person (for this purpose, "control" of a Person means the power (whether or
not exercised) to direct the policies,
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operations or activities of such Person by or through the ownership of, or right
to vote, or direct the manner of voting of, securities of such Person, or
pursuant to agreement or Law or otherwise) or (b) who is a director or officer
of a corporation, general partner of a partnership, manager of a limited
liability company, trustee of a trust or other Person who exercises managerial
authority with respect to the subject Person; or (c) who owns (or has the
discretionary right to acquire) 10% or more of the equity interests (including
without limitation capital stock or partnership, membership or beneficial
interests) of the subject Person.
1.3 "Closing" has the meaning set forth in Section 7.1
hereof.
1.4 "Closing Date" means the date of the Closing.
1.5 "Common Shares" means the 1,000 Common Shares of the
Company, par value $0.001, to be acquired by Shanecy.
1.6 "Consent" means any approval, authorization, consent
or ratification by or on behalf of any Person that is not a party to this
Agreement, or any waiver of, or exemption or variance from, any License or
Order.
1.7 "Contract" means any written or oral contract,
agreement, arrangement or understanding, including without limitation any loan
agreement or indenture, purchase, sales, supply or service order or agreement,
real property, equipment or other lease, or license of trade rights, to which
Shanecy or the Company is a party or by which Shanecy, the Company or any of
their respective assets are bound.
1.8 "Governing Document" means (a) the articles or
certificate of incorporation (including any restatement, amendment or correction
thereof or any certificate of designation thereunder) and the by-laws of a
corporation, and any agreement between any shareholders thereof with respect to
the voting or disposition of, or right to receive dividends or other
distributions with respect to, the capital stock of such corporation; (b) the
articles or certificate and the partnership agreement of a partnership; (c) the
articles of organization and operating agreement of a limited liability company;
(d) the trust agreement of a trust; and (e) any similar agreement, certificate
or other document, whether or not filed or required to be filed with a
Governmental Authority, governing or relating to the organization, management or
ownership of any Person.
1.9 "Governmental Authority" means any federal, state,
local or foreign government or governmental authority, agency or
instrumentality, or any court of competent jurisdiction.
1.10 "Law" means any statute, rule, regulation or
ordinance of any Governmental Authority.
1.11 "Lease" means a lease of real property.
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1.12 "License" means any license, permit, certification,
qualification or franchise issued or granted by any Governmental Authority.
1.13 "Lien" means any security interest, conditional sale
or other title retention agreement, mortgage, pledge, lien, charge, encumbrance
or other adverse claim or interest.
1.13 "Order" means any judgment, order, writ, decree,
award, directive, ruling or decision of any Governmental Authority.
1.14 "Person" includes without limitation a natural
person, corporation, joint stock company, limited liability company,
partnership, joint venture, association, trust, Governmental Authority, or any
group of the foregoing acting in concert.
1.15 "Proceeding" means any action, suit, investigation,
audit or other proceeding, at law or in equity, before or by any Taxing
Authority or Governmental Authority.
1.16 "Tax" means any tax, fee, levy, assessment or other
governmental charge imposed by any Taxing Authority (including without
limitation any income, franchise, gross receipts, property, sales, use, excise,
services, value added, ad valorem, withholding, social security, estimated,
accumulated earnings, transfer, gains, license, privilege, payroll, profits,
capital stock, employment, unemployment, severance, stamp, occupancy, customs or
occupation tax), and any interest, additions to tax and penalties in connection
therewith.
1.17 "Taxing Authority" means the U.S. Internal Revenue
Service and any other domestic or foreign Governmental Authority responsible for
the administration of any Tax.
1.18 "Tax Return" means any return, amended return,
declaration, report, estimate, information return or statement regarding Taxes
which is filed or required to be filed under applicable Law, whether on a
consolidated, combined, unitary or separate basis or otherwise.
1.19 "Transaction Document" means this Agreement and each
other agreement, instrument or other document being entered into by the Company
or Shanecy or any related party at or in connection with the Closing.
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ARTICLE II
ACQUISITION OF ACQUIRED SHARES AND COMMON SHARES
2.1 Acquisition of Acquired Shares. At the Closing, subject to the
terms and conditions set forth herein, Shanecy shall sell, assign, transfer and
deliver the Acquired Shares to the Company, and the Company shall acquire the
Acquired Shares from Shanecy.
2.2 Acquisition of Common Shares. In consideration for the
transfer of the Acquired Shares to the Company, the Company shall sell, assign,
transfer and otherwise convey to Shanecy, and Shanecy shall subscribe for, one
thousand (1,000) Common Shares of the Company.
2.3. Acquisition Price. The Acquisition Price for the Acquired
Shares, and for the Common Shares, shall be equal to the aggregate market value
of the Acquired Shares on the Closing Date, and shall in each case be satisfied
by delivery of the respective Shares to its transferee in accordance with the
terms of this Agreement.
2.4 Transactions. All of the transactions contemplated by this
Agreement are to take place on the Closing Date, with the exception of those set
forth in Article IX hereof, and are intended by the parties to be consummated
concurrently; and if any such transaction is not consummated as provided herein,
the parties shall take all actions necessary to dissolve and invalidate all
other such transactions as if none of such transactions had been consummated.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SHANECY
Shanecy hereby represents and warrants to the Company as follows:
3.1 Organization. Shanecy is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
full power and authority to own its assets and carry on its business in the
manner and places where such assets are now owned and such business is now being
conducted.
3.2 Power and Authority. Shanecy has full legal capacity, power
and authority to execute and deliver this Agreement and each other Transaction
Document to which it is a party and to assume and perform its obligations
hereunder and thereunder. This Agreement has been, and on the Closing Date each
other Transaction Document to which Shanecy is a party will be, duly executed
and delivered by Shanecy, and this Agreement is, and each other Transaction
Document to which Shanecy is a party when so executed and delivered on the
Closing Date will be, a legally valid and binding obligation of Shanecy,
enforceable against Shanecy in accordance with its respective terms, subject to
(a) bankruptcy, insolvency, reorganization, moratorium or other similar laws now
or hereafter in effect relating to
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creditors' rights generally and (b) equitable principles limiting the
availability of certain remedies.
3.3 Absence of Conflict. The execution and delivery of this
Agreement do not, and the execution and delivery of each other Transaction
Document to which it is a party and the performance by Shanecy of its
obligations hereunder or thereunder, will not, (i) violate any provision of the
Governing Documents of Shanecy, or (ii) conflict with or result in any breach of
any condition or provision of, or constitute a default under, or create or give
rise to any adverse right of termination or cancellation by, or excuse the
performance of, any other Person under, or result in the creation or imposition
of any Lien upon Shanecy.
3.4 Consents. No Consent of, or notice to, any Person is required
as to Shanecy in connection with the execution and delivery of this Agreement or
any other Transaction Document by Shanecy or the performance of its obligations
hereunder or thereunder, where the failure to obtain such Consent or give such
notice would have an adverse effect upon Shanecy or prohibit, invalidate, or
make unlawful, in whole or in part, this Agreement or any other Transaction
Document, or the carrying out of the provisions hereof or thereof or the
transactions contemplated hereby or thereby.
3.5 Litigation. No Proceeding is pending or threatened against or
affecting Shanecy in which an unfavorable outcome would have a material adverse
effect upon Shanecy or prohibit, invalidate, or make unlawful, in whole or in
part, this Agreement or any other Transaction Document, or the carrying out of
the provisions hereof or thereof or the transactions contemplated hereby or
thereby. Shanecy has not received any notice of or, to its knowledge, is in
default in respect of any Order, nor is there any such Order enjoining Shanecy
in respect of, or the effect of which is to prohibit or curtail the performance
of, the obligations of Shanecy hereunder or under any other Transaction
Document.
3.6 Title to Acquired Shares. Shanecy is the owner of the Acquired
Shares, and such Shares are duly authorized, and will be at the Closing Date,
free and clear of all Liens whatsoever, and will be validly issued, fully paid
and nonassessable.
3.7 Brokers or Finders. Neither Shanecy nor any Affiliate has
employed or engaged any Person to act as a broker, finder or other intermediary
in connection with the transactions contemplated hereby, and no Person is
entitled to any fee, commission or other compensation from the Company relating
to any such employment or engagement by Shanecy or any Affiliate of Shanecy.
3.8 Investment Intent. Shanecy is acquiring the Common Shares for
investment, for its own account, and not with a view to, or for resale in
connection with, any distribution thereof, nor with any current intention of
distributing the Securities in violation of the securities laws of the United
States or any foreign jurisdiction.
3.9 No Misrepresentation by Shanecy. No representation, warranty
or statement by Shanecy in this Agreement or in any certificate, exhibit or
schedule furnished pursuant
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hereto or in connection with the transactions contemplated hereby contains any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements or facts contained herein or therein not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Shanecy as follows:
4.1 Organization. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada, and
has full power and authority to own its assets and carry on its business in the
manner and places where such assets are now owned and such business is now being
conducted.
4.2 Power and Authority. The Company has full legal capacity,
power and authority to execute and deliver this Agreement and each other
Transaction Document to which it is a party and to assume and perform its
obligations hereunder and thereunder. This Agreement has been, and on the
Closing Date each other Transaction Document to which the Company is a party
will be, duly executed and delivered, and this Agreement is, and each other
Transaction Document to which the Company is a party when so executed and
delivered on the Closing Date will be, a legally valid and binding obligation of
the Company, enforceable against the Company in accordance with its terms,
subject to (a) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights generally
and (b) equitable principles limiting the availability of certain remedies.
4.3 Absence of Conflict. The execution and delivery of this
Agreement do not, and the execution and delivery of each other Transaction
Document to which it is a party and the performance by the Company of its
obligations hereunder and thereunder will not, violate any provision of the
Governing Documents of the Company and do not and will not conflict with or
result in any breach of any condition or provision of, or constitute a default
under, or create or give rise to any adverse right of termination or
cancellation by, or excuse the performance of, any other Person, or result in
the creation or imposition of any Lien upon the Company or any of its assets or
the acceleration of the maturity or date of payment or other performance of any
obligation of the Company by reason of the terms of, any agreement, indenture,
instrument, license, lease, Lien or Order to which the Company is a party or is
subject or which is or purports to be binding upon it.
4.4 Consents. No Consent of, or notice to, any Person is required
as to the Company in connection with the execution and delivery by the Company
of this Agreement or any other Transaction Document or the performance of the
obligations of the Company hereunder or thereunder, where the failure to obtain
such Consent or give such notice would have an adverse effect upon the Company,
or its assets or business or prohibit, invalidate,
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or make unlawful, in whole or in part, this Agreement or any other Transaction
Document, or the carrying out of the provisions hereof or thereof or the
transactions contemplated hereby or thereby.
4.5 Litigation. No Proceeding is pending or, to the best of the
Company's knowledge, threatened against or affecting the assets, operations or
financial or other condition of the Company in which an unfavorable Order would
prohibit, invalidate, or make unlawful, in whole or in part, this Agreement or
any other Transaction Document, or the carrying out of the provisions hereof or
thereof or the transactions contemplated hereby or thereby. The Company is not
in default in respect of any Order, nor is there any such Order enjoining the
Company in respect of, or the effect of which is to prohibit or curtail the
Company's performance of its obligations hereunder or under any other
Transaction Document.
4.6 Authorized Capital. The entire authorized capital of the
Company currently consists of the following: 1,000,000 shares of common stock,
par value $0.001, of which 1,000 Common Shares are issued and outstanding. All
such Common Shares are duly authorized, validly issued, fully paid and
nonassessable. No shares of common stock of the Company are reserved for
issuance, and there are no agreements, commitments or arrangements providing for
the issuance or sale of any capital stock or other interest of the Company, or
any issued or outstanding options, warrants or rights to purchase, or any
security or instrument convertible into or exchangeable for, any capital stock
or other interest of the Company.
4.7 No Undisclosed Liabilities. The Company is newly formed, and
has not engaged in business other than to establish its operations. The Company
does not have any liabilities or obligations of any kind, whether known or
unknown, or whether absolute, accrued, contingent, matured or otherwise, whether
due or to become due except liabilities or obligations that arose in the
ordinary course of business in establishing such operations.
4.8 No Adverse Change. Since the date of its formation there has
been no adverse change in the business, the assets or the financial or other
condition of the Company, and the Company has not: (a) incurred any damage,
destruction or similar loss, whether or not covered by insurance, adversely
affecting its business or its assets; (b) other than in the ordinary course of
business, sold, assigned or transferred any of its assets or any interest
therein; (c) incurred any obligation or liability (including any guaranty,
indemnity, make-whole agreement for or with respect to any obligation or
liability of another Person), or paid, satisfied or discharged any obligation or
liability prior to the due date or maturity thereof, except current obligations
and liabilities in the ordinary course of business; (d) other than in the
ordinary course of business, created, incurred, assumed, granted or suffered to
exist any Lien on any of its assets; (e) other than in the ordinary course of
business, waived any right of value or canceled, forgiven or discharged any debt
owed to it or any claim in its favor;(f) declared, set aside or paid any
dividend or made or committed to make any other distribution in respect of any
shares of its capital stock; or (g) effected any change in its business policies
or practices, accounting methods, conventions, principles or assumptions or
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any change in the nature of the business relationships with its clients; or
effected any transaction not in the ordinary course of business.
4.9 Assets and Material Contracts. Other than this Agreement and
the assets to be acquired hereby, the Company currently has no material
contracts (including, without limitation, employment or other labor agreements,
benefits arrangements and policies of insurance) and has no material assets.
4.10 Compliance with Law. The Company has all Licenses and all
Consents of Governmental Authorities required by applicable Law for it to
conduct its business. All such Licenses and Consents are in full force and
effect and the Company has not received notice of any pending cancellation or
suspension thereof nor, to the best of the Company's knowledge, is any pending
cancellation or suspension thereof threatened. The Company is in compliance in
all material respects with each Law applicable to it. The Company has not
received any notice of violation of any Law or Order.
4.11 Tax. No Tax Returns of or relating to the Company have been
filed. No Taxing Authority has asserted any claim that could result in the
imposition of any Tax for which the Company is or may be liable or that could
adversely affect the Tax liability of the Company. There is no pending
Proceeding relating to any Tax for which the Company is or may be liable or that
could adversely affect any Tax liability of the Company and, to the best of the
Company's knowledge, no Taxing Authority is contemplating such a Proceeding or
adjustment. The Company is not a party to any Tax sharing or Tax allocation
agreement, arrangement or understanding.
4.12 Brokers or Finders. Neither the Company nor any Affiliate
thereof has employed or engaged any Person to act as a broker, finder or other
intermediary in connection with the transactions contemplated hereby, and no
Person is entitled to any fee, commission or other compensation from Shanecy
relating to any such employment or engagement by the Company or any Affiliate
thereof.
4.13 Investment Intent. The Company is acquiring the Acquired
Shares for investment, for its own account, and not with a view to, or for
resale in connection with, any distribution thereof, nor with any current
intention of distributing the Acquired Shares, or any portion thereof, in
violation of the securities laws of the United States or any foreign
jurisdiction.
4.14 No Misrepresentation by the Company. No representation,
warranty or statement by the Company in this Agreement or in any certificate,
exhibit or schedule furnished pursuant hereto or in connection with the
transactions contemplated hereby contains any untrue statement of a material
fact or omits to state a material fact necessary to make the statements or facts
contained herein or therein not misleading.
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ARTICLE V
COVENANTS
5.1 Best Efforts. From and after the date hereof and until the
Closing, Shanecy and the Company shall use their respective best efforts, and
shall cooperate with each other, to cause the consummation of the transactions
contemplated hereby in accordance with the terms and conditions hereof.
5.2 The Company to Conduct Business in the Ordinary Course. From
and after the date hereof and until the Closing, except as otherwise provided
elsewhere herein or as Shanecy may otherwise consent (which consent shall not be
unreasonably withheld), the Company shall, except as contemplated by Section 5.3
below: (a) not amend any of its Governing Documents; (b) not merge or
consolidate with any other Person or effect any capital reorganization; (c) not
declare, set aside or pay any dividend or make or commit to make any other
distribution in respect of any shares of capital stock or other equity
interests; (d) not acquire the business or assets, substantially as a whole, of
any other Person or make any capital expenditure in excess of $25,000; and (e)
not solicit or respond to any inquiry or proposal relating to any sale of its
business or assets from any Person, other than Shanecy.
5.3 Merger with Thesseus Holdings, Inc. The Company shall move
promptly to complete its proposed merger with Thesseus Holdings, Inc., a Nevada
corporation ("THI"), whereby THI shall merge with the Company and the Company
shall be the surviving entity.
5.4 Further Information. From and after the date hereof and until
the Closing, each party shall furnish to the other party such information as
either party may from time to time reasonably request and shall permit such
party and its authorized representatives access during regular business hours
and upon reasonable notice, at such party's sole expense, to examine the other
party's books and records (which each party shall assemble and maintain at its
principal executive offices) and to make inquiries of responsible Persons
designated by each party with respect thereto; provided, that any information so
disclosed by either party shall not constitute an additional representation or
warranty beyond those expressly set forth in Articles III and IV hereof; and
provided further that all such information shall be subject to Section 5.6.
5.5 Public Announcements. From and after the date hereof and until
the Closing; neither Shanecy nor the Company shall make or permit any Affiliate
thereof to make, any press release or other public announcement with respect to
this Agreement or the transactions contemplated hereby, without the prior
written consent of the other party (which consent shall not be unreasonably
withheld), unless such announcement is required by Law, in which case the other
parties shall be given notice of such requirement prior to such announcement and
the parties shall consult with each other as to the scope and substance of such
disclosure.
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5.6 Confidentiality. Each party acknowledges that all information
relating to or concerned with the business and affairs of the other party
including without limitation all product information, customer and supplier
lists, marketing and sales data, personnel and financing and Tax matters, is
proprietary and that its confidentiality is absolutely essential to the
operation of the business of the other party. Accordingly, from and after the
date hereof and until the Closing, neither party shall use or disclose to any
Person any such information, without the other party's prior written consent,
except to counsel for, or other representatives or agents of, such party or
prospective lenders or other financing sources to such party as may be necessary
or appropriate in order to effect the transactions contemplated hereby (in which
case, any Person to whom any such information is disclosed shall be bound by the
provisions of this Section 5.6) or as may be required by Law (in which case,
such party shall promptly give notice to the other party of any demand,
subpoena, order or legal process requiring disclosure so that such other party
may seek a protective order or other confidential treatment of such
information), unless, with respect to disclosure of such information to a third
party, such party can demonstrate that such information was already known to
such Person without any breach or violation of any confidentiality agreement for
the benefit of the other party.
ARTICLE VI
CONDITIONS TO CLOSING
6.1 Conditions of Shanecy's Obligation to Close. The obligation of
Shanecy to consummate the acquisition of the Common Shares in accordance
herewith shall be subject to the satisfaction (or waiver) prior to or at the
Closing of each of the following conditions:
(a) the representations and warranties made by the Company
herein shall be true in all material respects on and as of the Closing Date,
except those made as of a certain date which shall be true in all material
respects as of such date (provided that participation in the Closing by Shanecy
shall not in any way be deemed to waive any claim it may have for breach of any
representation or warranty whether or not such breach was material);
(b) the Company shall have performed and complied with all
obligations and conditions to be performed or complied with by it hereunder,
including the consummation of the merger between it and THI;
(c) no Order or Law shall be in effect which prohibits Shanecy
from consummating the transactions contemplated hereby;
(d) each Consent of, or notice to, any Governmental Authority
or other Person required for the consummation of the purchase of the Securities
shall have been obtained or given;
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(e) there shall not have been any adverse change in the
business of the Company since the date hereof; and
(f) the Company shall execute and/or deliver at the Closing
all the documents so to be executed and/or delivered by the Company pursuant to
Section 7.2.
6.2 Conditions of the Obligation of the Company to Close. The
obligation of the Company to consummate the acquisition of the Acquired Shares
in accordance herewith shall be subject to the satisfaction (or waiver by the
Company) prior to or at the Closing of each of the following conditions:
(a) the representations and warranties made by Shanecy herein
shall be true in all material respects on and as of the Closing Date, except
those made as of a certain date which shall be true in all material respects as
of such date (provided that the Company's participation in the Closing shall not
in any way be deemed to waive any claim it may have for breach of any
representation or warranty whether or not such breach was material);
(b) Shanecy shall have performed and complied with all
obligations and conditions to be performed or complied with by it hereunder;
(c) no Order or Law shall be in effect which prohibits Shanecy
from consummating the transactions contemplated hereby;
(d) each Consent of, or notice to, any Governmental Authority
or other Person required for the issuance of the Securities; and
(e) Shanecy shall execute and/or deliver at the Closing all
the documents so to be executed and/or delivered by Shanecy pursuant to Section
7.3.
ARTICLE VII
CLOSING MATTERS
7.1 The Closing. The closing of the transaction contemplated
hereby (the "Closing") shall be held at the offices of the Company, on January
18, 2000, or at such other place or on such other date, and at such time, as the
parties hereto may agree. The execution and/or delivery of each document to be
executed and/or delivered at the Closing and each other action to be taken at
the Closing shall be subject to the condition that every other document to be
executed and/or delivered at the Closing is so executed and/or delivered and
every other action to be taken at the Closing is so taken, and all such
documents and actions shall be deemed to be executed and/or delivered or taken,
as the case may be, simultaneously. When all such documents are so executed
and/or delivered and all such actions are so taken, the closing of the
transactions provided for herein shall be effective as of the opening of
business on the Closing Date.
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7.2 Deliveries by the Company. At the Closing, the Company shall
deliver to Shanecy:
(a) a certificate in the name of Shanecy representing the
Common Shares; and
(b) a certificate of an authorized officer of the Company to
the effect that all the conditions to closing set forth in Section 6.1 have been
satisfied.
7.3 Deliveries by Shanecy. At the Closing, Shanecy shall deliver
to the Company:
(a) a certificate in the name of the Company representing the
Acquired Shares; and
(b) a certificate of an authorized officer of Shanecy to the
effect that all the conditions to closing set forth in Section 6.2 have been
satisfied.
ARTICLE VIII
TERMINATION
8.1 Termination in General. This Agreement may be terminated at
any time prior to the Closing:
(a) by the mutual agreement of Shanecy and the Company;
(b) by either Shanecy or the Company (if such party is not in
breach of or default under this Agreement) giving written notice to such effect
to the other party if the Closing shall not have occurred on or before February
29, 2000, or such later date as the parties shall have agreed upon prior to the
giving of such notice; or
(c) by either Shanecy in the event of a material breach by or
default of the Company, or by the Company in the event of a material breach by
or default of Shanecy.
8.2 Effect of Termination. Upon termination of this Agreement, all
obligations of the parties shall terminate except those under Section 5.6 and
Article XI; provided, however, that no such termination shall relieve the
Company of any liability to Shanecy, or Shanecy of any liability to the Company,
by reason of any breach of or default under this Agreement.
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ARTICLE IX
POST-CLOSING COVENANTS
9.1 Confidentiality. From and after the date of the Closing, the
parties hereto shall keep absolutely confidential all information relating to or
concerned with the Company or the investment of Shanecy therein. The parties
shall not, at any time after the date hereof, use or disclose to any Person any
such information without the written consent of all other parties, except as may
be required by Law (in which case the party shall promptly give notice to the
other parties of any demand, subpoena, order or other legal process requiring
disclosure, in order to permit such parties to seek an appropriate protective
order or other confidential treatment of such information).
9.2 Keeping of Books and Records; Inspection thereof. The Company
shall keep adequate records and books of account, with complete entries made in
accordance with generally accepted accounting principles consistently applied,
reflecting all of its financial transactions. The Company shall permit and
direct Shanecy, or any agents or representatives thereof, at any reasonable time
and from time to time upon reasonable prior notice, to examine and make copies
of and abstracts from the Company's records and books of account, to visit and
inspect the Company's properties and it discuss the Company's affairs, finances
and accounts with any of the directors, officers, employees or other
representatives of the Company.
9.3 Cooperation in Regulatory Filings. The Company shall provide
all reasonable cooperation to Shanecy and its authorized representatives in the
preparation and making of any necessary regulatory filings with any Governmental
Authority.
ARTICLE X
INDEMNIFICATION
10.1 Indemnification by the Company. From and after the Closing,
the Company shall indemnify and defend Shanecy against, and hold Shanecy
harmless from, and will pay to Shanecy the amount of, any loss, claim,
liability, obligation, damage or expense (including without limitation
attorneys' and consultants' fees and disbursements and expenses of
investigating, defending and prosecuting) which Shanecy or any shareholder,
director, officer, member, manager, employee or agent of Shanecy may suffer or
incur (including without limitation incidental to any claim or any Proceeding
against Shanecy or any shareholder, director, officer, member, manager, employee
or agent of Shanecy) based upon or resulting from:
(a) the breach or inaccuracy of any representation or warranty
made by the Company herein or pursuant hereto; or
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(b) the failure of the Company to perform or to comply with
any covenant or condition required of the Company to be performed or complied
with hereunder.
10.2 Indemnification by Shanecy. From and after the Closing,
Shanecy shall indemnify and defend the Company against, and hold the Company
harmless from, and will pay to the Company the amount of, any loss, claim,
liability, obligation, damage or expense (including without limitation
attorneys' and consultants' fees and disbursements and expenses of
investigating, defending and prosecuting) which the Company may suffer or incur
(including without limitation incidental to any claim or any Proceeding against
the Company) based upon or resulting from:
(a) the breach or inaccuracy of any representation or warranty
made by Shanecy herein or pursuant hereto; or
(b) Shanecy's failure to perform or to comply with any
covenant or condition required of Shanecy to be performed or complied with
hereunder.
10.3 Indemnification Procedures.
(a) Promptly after notice to an indemnified party of any claim
or the commencement of any Proceeding by a third party subject to Sections 10.1
or 10.2 above, such indemnified party shall, if a claim for indemnification in
respect thereof is to be made against an indemnifying party pursuant to this
Article 10, give written notice to the latter of the commencement of such claim
or Proceeding, setting forth in reasonable detail the nature thereof and the
basis upon which such party seeks indemnification hereunder, provided, however,
that the failure of any indemnified party to give such notice shall not relieve
the indemnifying party of its obligations hereunder, except to the extent that
the indemnifying party is actually prejudiced by the failure to give such
notice.
(b) In case any Proceeding is brought against an indemnified
party, and provided that proper notice is duly given, the indemnifying party
shall assume the defense thereof insofar as such Proceeding involves any loss,
liability, claim, obligation, damage or expense in respect of which
indemnification may be sought hereunder, with counsel reasonably satisfactory to
such indemnified party and, after notice from the indemnifying party to the
indemnified party of its assumption of the defense thereof, the indemnifying
party shall not be liable to the indemnified party for any legal or other
expenses subsequently incurred by the latter in connection with the defense
thereof (but the indemnified party shall have the right, but not the obligation,
to participate at its own expense in such defense by counsel of its own choice)
or for any amounts paid or foregone by the latter as a result of the settlement
or compromise thereof (without the written consent of the indemnifying party).
If the indemnifying party shall assume the defense of a Proceeding, the
indemnified party shall cooperate fully with the indemnifying party and shall
appear and give testimony, produce documents and other tangible evidence, allow
the indemnifying party access to the books and records of the indemnified party
and otherwise assist the indemnifying party in conducting such defense.
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(c) If both the indemnifying party and the indemnified party
are named as parties in or are subject to a Proceeding and either such party
determines with advice of counsel that there may be one or more legal defenses
available to it that are different from or additional to those available to the
other party or that a material conflict of interest between such parties may
exist in respect of such Proceeding, the indemnifying party may decline to
assume the defense on behalf of the indemnified party or the indemnified party
may retain the defense on its own behalf and, in either such case, after notice
to such effect is duly given hereunder to the other party, the indemnifying
party shall be relieved of its obligation to assume the defense on behalf of the
indemnified party, but shall be required to pay any legal or other expenses,
including, without limitation, reasonable attorneys' fees and disbursements
incurred by the indemnified party in such defense; provided, however, that the
indemnifying party shall not be liable for such expense on account of more than
one separate firm of attorneys (and, if necessary, local counsel) at any time
representing such indemnified party in connection with any Proceeding or
separate Proceedings in the same jurisdiction arising out of or based upon
substantially the same allegations or circumstances.
(d) No indemnifying party shall, without the consent of the
indemnified party, consent to entry of any judgment or enter into any settlement
or compromise which does not include as an unconditional term thereof the giving
by the claimant or plaintiff to such indemnified party of a release from all
liability in respect of such Proceeding (but the indemnifying party shall have
the right to participate at its own cost and expense in such defense by counsel
of its own choice) and may make in good faith any compromise or settlement with
respect thereto, and recover the entire cost and expense thereof, including
without limitation reasonable attorneys' fees and disbursements and all amounts
paid and foregone as a result of such Proceeding, or the settlement or
compromise thereof, from the indemnifying party. The indemnification required
shall be made by periodic payments of the amount thereof during the course of
the investigation or defense, as and when bills or invoices are received or
loss, liability, obligation, damage or expense is actually suffered or incurred.
10.4 Survival of Representations and Warranties. The
representations and warranties of each party herein shall survive the Closing,
notwithstanding any investigation or inquiry made by the other party, and
continue until the later of three years after the Closing or until the
expiration of the applicable statute of limitations. Any claim for
indemnification under Section 10.1 (a) or Section 10.2 (a) shall be made within
the applicable survival period set forth in this Section 10.4.
ARTICLE XI
MISCELLANEOUS
11.1 Limitation of Authority. No provision hereof shall be deemed
to create any partnership, joint venture or joint enterprise or association
between the parties hereto, or to authorize or to empower either party hereto to
act on behalf of, obligate or bind the other party hereto.
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11.2 Fees and Expenses. Each party hereto shall bear such costs,
fees and expenses as may be incurred by it in connection with this Agreement and
the transactions contemplated hereby, and Shanecy shall not pay any of the costs
of this Agreement or the transactions contemplated hereby incurred on behalf of
the Company (including but not limited to the fees and expenses of the legal,
tax and accounting counsel and advisors for the Company).
11.3 Notices. Any notice or demand required or permitted to be
given or made hereunder to or upon either party hereto shall be deemed to have
been duly given or made for all purposes if (a) in writing and sent by (i)
messenger or an overnight courier service against receipt, or (ii) certified or
registered mail, postage paid, return receipt requested, or (b) sent by
telegram, facsimile transmission, telex or similar electronic means, provided
that a written copy thereof is sent on the same day by postage paid first-class
mail, to such party at the its address first set forth above, or such other
address as either party hereto may at any time, or from time to time, direct by
notice given to the other party in accordance with this Section. The date of
giving or making of any such notice or demand shall be, in the case of clause
(a)(i), the date of the receipt; in the case of clause (a)(ii), five business
days after such notice or demand is sent; and, in the case of clause (b), the
business day next following the date such notice or demand is sent.
11.4 Amendment. Except as otherwise provided herein, no amendment
of this Agreement shall be valid or effective, unless in writing and signing by
or on behalf of the parties hereto.
11.5 Waiver. No course of dealing or omission or delay on the part
of either party hereto in asserting or exercising any right hereunder shall
constitute or operate as a waiver of any such right. No waiver of any provision
hereof shall be effective, unless in writing and signed by or on behalf of the
party to be charged therewith. No waiver shall be deemed a continuing waiver or
waiver in respect of any other or subsequent breach or default, unless expressly
so stated in writing.
11.6 Governing Law. This Agreement shall be governed by, and
interpreted and enforced in accordance with, the laws of the State of Delaware,
without regard to principles of choice of law or conflict of laws.
11.7 Remedies. In the event of any actual or prospective breach or
default by either party hereto, the other party shall be entitled to equitable
relief, including remedies in the nature of rescission, injunction and specific
performance. All remedies hereunder are cumulative and not exclusive, and
nothing herein shall be deemed to prohibit or limit either party from pursuing
any other remedy or relief available at law or in equity for such actual or
prospective breach or default, including the recovery of damages; provided,
however, that the indemnification provisions of Article 10 shall be the sole and
exclusive remedy with respect to claims for monetary damages.
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11.8 Severability. The provisions hereof are severable and in the
event that any provision of this Agreement shall be determined to be invalid or
unenforceable in any respect by a court of competent jurisdiction, the remaining
provisions hereof shall not be affected, but shall, subject to the discretion of
such court, remain in full force and effect, and any invalid or unenforceable
provision shall be deemed, without further action on the part of the parties
hereto, amended and limited to the extent necessary to render the same valid and
enforceable.
11.9 Further Assurances. Each party hereto covenants and agrees
promptly to execute, deliver, file or record such agreements, instruments,
certificates and other documents and to perform such other and further acts as
the other party hereto may reasonably request or as may otherwise be necessary
or proper to consummate and perfect the transactions contemplated hereby.
11.10 Assignment. This Agreement, and each right, interest and
obligation hereunder, may not be assigned, whether by operation of law, merger,
consolidation or otherwise, by any party hereto without the prior written
consent of the other parties hereto, and any purported assignment without such
consent shall be void and without effect.
11.11 Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
permitted assigns. This Agreement is not intended, and shall not be deemed, to
create or confer any right or interest for the benefit of any Person not a party
hereto.
11.12 Incorporation by Reference. The Exhibits and Schedules hereto
are an integral part of this Agreement and are incorporated in their entirety
herein by this reference.
11.13 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which shall be deemed to be an original, but all of which taken together shall
constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement by their
duly authorized representatives as of the date first above written.
SHANECY, INC. SHANECY HOLDINGS, INC.
By: By:
-------------------------- ------------------------------
Harry J. Weitzel Jason Galanis
Its Chief Executive Officer Its President
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is made and entered
into as of this 30th day of December, 1999, by and among Shanecy Holdings, Inc.,
a Nevada corporation with a place of business at 1530 - 625 Howe Street,
Vancouver, British Columbia V6C 2T6 ("SHI"), Shanecy, Inc., a Delaware
corporation with a place of business at 1530 - 625 Howe Street, Vancouver,
British Columbia V6C 2T6 (the "Company" or the "SHI Shareholder"), Thesseus
Holdings, Inc., a Nevada corporation with a place of business at 318 N. Carson
Street, Suite 214, Carson City, Nevada 89701 ("THI"), and Thesseus International
Asset Fund N.V., a Netherlands Antilles corporation with a place of business at
Zeelandia Office Park, 16 Kaya W.F.G. (Jombi) Mensing, Curacao, Netherlands
Antilles (the "Fund" or the "the THI Shareholder").
RECITALS:
(A) The Directors of SHI and THI have each determined that the merger of
THI with and into SHI would be advantageous and beneficial to the respective
shareholders, employees, and customers of those companies.
(B) The Company owns 100% of the issued and outstanding shares of common
stock of SHI (the "SHI Shares"), and Thesseus owns 100% of the issued and
outstanding shares of common stock of THI (the "THI Shares").
(C) It is the intention of the parties hereto that: (i) THI shall be merged
with and into SHI (the "Merger") in exchange for the delivery to the THI
Shareholder of 2,000,000 shares of restricted common stock of the Company to be
held by SHI (the "Merger Stock"), as more specifically set forth below; (ii) the
Merger shall qualify as a transaction in securities exempt from registration or
qualification under the Securities Act of 1933 (the "Act") and under the
applicable securities laws of the state of Nevada; and (iii) the Merger shall
qualify as a tax-free reorganization under Section 368 of the Internal Revenue
Code of 1986 as amended (the "Code").
NOW, THEREFORE, for the mutual consideration set out herein, the parties hereto
agree as follows:
1. Merger. SHI, the SHI Shareholder, THI and the THI Shareholder agree
that effective upon execution of this Agreement and the filing of articles of
merger with the Secretary of State of Nevada (which shall be substantially in
the form attached hereto as Exhibit "A"), THI shall be merged with and into SHI.
SHI shall be the surviving corporation and SHI shall retain its name. Pursuant
to the Merger, the THI Shareholder shall surrender all of the THI Shares, which
shall be canceled and, upon the closing of that certain Acquisition Agreement
dated December 30, 1999 between SHI and the SHI
<PAGE>
Shareholder (the "SHI Acquisition Agreement"), the THI Shareholder shall receive
in exchange the Merger Stock. No other consideration shall be payable to the THI
Shareholder in connection with the Merger. The issuance of the Merger Stock will
not be registered pursuant to the Securities Act.
2. Delivery of THI Shares. Upon the execution of this Agreement, the
THI Shareholder will deliver to SHI for cancellation the certificate(s)
representing all of THI Shares, duly endorsed (or with duly executed stock
powers) so as to transfer title to all of THI Shares to SHI, free and clear of
all liens, claims and encumbrances. The Merger shall not be effected unless
certificates representing all of THI Shares are delivered to SHI, free and clear
of all liens, claims and encumbrances.
3. Representations and Warranties of THI and the THI Shareholder. THI
and the THI Shareholder, jointly and severally, as a material inducement to SHI
and the SHI Shareholder to enter into this Agreement and consummate the
transactions contemplated hereby, make the following representations and
warranties to SHI and the SHI Shareholder, which representations and warranties
are true and correct in all material respects at this date:
(a) Shareholder of THI. The THI Shareholder is the sole owner, of
record and beneficially, of all the issued and outstanding shares of THI's
capital stock.
(b) Financial Statements. Attached hereto as Schedule 3(b) is a pro
forma balance sheet and income statement, unaudited, of THI as of December 30,
1999 (the "THI Financial Statements"), giving effect to the closing of that
certain Acquisition Agreement dated December 30, 1999 between THI and the Fund
(the "THI Acquisition Agreement"), whereby THI acquired all of the Fund's
interest in Brunswick Capital Partners, Inc. ("BCP") and InfoBase Direct
Marketing Services, Inc. ("IDMS"). The THI Financial Statements and financial
information contained therein present fairly the financial condition of THI for
the period covered (subject to normal year-end audit adjustments which will not
be material to THI, taken as a whole, in amount or effect), and are prepared in
accordance with generally accepted accounting principles, consistently applied.
The books and records of THI, financial and otherwise, are in all material
respects complete and correct and have been maintained in accordance with good
business and accounting practices.
(c) Undisclosed Liabilities. THI is newly formed, and has not engaged
in business other than to establish its operations. THI does not have any
liabilities or obligations of any kind, whether known or unknown, or whether
absolute, accrued, contingent, matured or otherwise, whether due or to become
due except liabilities or obligations that arose in the ordinary course of
business in establishing such operations.
(d) Materially Adverse Change. Since the date of its formation, the
business of THI has been operated in the ordinary course and there has not been:
(i) Any materially adverse change in the business, condition
(financial or otherwise), results of operations, prospects, properties, assets,
liabilities, earnings or net worth of THI for such period or at any time during
such period;
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(ii) Any material damage, destruction or loss (whether or not
covered by insurance) affecting THI or its respective assets, properties or
businesses;
(iii) Any declaration, setting aside or payment of any
dividend or other distribution in respect of any shares of the capital stock of
THI, or any direct or indirect redemption, purchase or other acquisition of any
such stock or any agreement to do so;
(iv) Any issuance or sale by THI, or agreement by THI or the
THI Shareholder, to sell or pledge any of THI's securities, nor have any
irrevocable proxies been given with respect to THI's securities;
(v) Any statute, rule, regulation or order adopted by any
governmental body, agency or authority (including orders of regulatory
authorities with jurisdiction over THI) that materially and adversely affects
THI or its business or financial conditions;
(vi) Any material increase in the rate of compensation or in
bonus or commission payments payable or to become payable to any of the salaried
employees of THI; or
(vii) Any other events or conditions of any character that may
reasonably be expected to have a materially adverse effect on THI or its
business or financial condition.
(e) Litigation. There are no actions, suits, claims, investigations or
legal, administrative or arbitration proceedings pending or, to the knowledge of
THI or the THI Shareholder, threatened against THI, whether at law or in equity,
or before or by any federal, state, municipal, local, foreign or other
governmental department, commission, board, bureau, agency or instrumentality,
nor does THI or the THI Shareholder know of any basis for any such action, suit,
claim, investigation or proceeding.
(f) Compliance: Governmental Authorizations. THI has complied in all
material respects with all federal, state, local or foreign laws, ordinances,
regulations and orders applicable to its business, including without limitation,
federal and state securities, banking collection and consumer protection laws
and regulations that, if not complied with, would materially and adversely
affect its businesses. THI has all federal, state, local and foreign
governmental licenses and permits necessary for the conduct of its business.
Such licenses and permits are in full force and effect. THI does not know of any
violations of any such licenses or permits. No proceedings are pending or
threatened to revoke or limit the use of such licenses or permits.
(g) Due Organization. THI is a corporation duly organized and validly
existing; its status is active; it is qualified to do business and in good
standing in each state where the property owned, leased or operated, or the
business conducted, by it requires such qualification and where failure to so
qualify would have a material adverse effect on its financial condition,
properties, business or results of operations. THI has the power to own its
properties and assets and to carry on its business as now presently conducted.
True and complete copies of the Articles of Incorporation and Bylaws of THI have
been heretofore delivered to SHI.
(h) Tax Matters. As a newly-formed entity, THI has not yet filed any
federal, state and local tax or related returns and reports. There are no tax
liens with respect to any properties owned by THI.
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(i) Agreements. Other than the THI Acquisition Agreement, this
Agreement and any related agreements, THI has no material agreements, and there
is no act that (alone or with the happening or occurrence of any other event)
would constitute a material default by THI under any such agreements. Neither
THI nor the THI Stockholder have knowledge of any material default by the other
parties to such agreements.
(j) Title to Property and Related Matters. THI has good and marketable
title to all of its properties, interests in properties and assets, real,
personal and mixed, owned by it at the date of this Agreement, of any kind or
character, free and clear of any liens or encumbrances, except for liens for
current taxes not yet delinquent.
(k) Licenses; Trademarks; Trade Names. THI does not have nor does it
own any licenses, trademarks, trade names, service marks (other than the common
law rights to the ownership and use of the names "Brunswick Capital Partners,"
"InfoBase Direct Marketing Services, Inc." and any derivations thereof),
copyrights, patents or any applications for any of the foregoing that relate to
its businesses.
(l) Due Authorization. This Agreement has been duly authorized,
executed and delivered by THI and constitutes a valid and binding agreement of
THI, enforceable in accordance with its terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency, moratorium, and other similar laws
relating to, limiting or affecting the enforcement of creditors rights generally
or by the application of equitable principles. Neither the execution and
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, nor compliance with any of the provisions hereof, will
violate in any material respect any order, writ, injunction or decree of any
court or governmental authority, or violate or conflict with in any material
respect or constitute a default under (or give rise to any right of termination,
cancellation or acceleration under), any provisions of THI's Articles of
Incorporation or Bylaws, the terms or conditions or provisions of any note,
bond, lease, mortgage, obligation, agreement, understanding, arrangement or
restriction of any kind to which THI is a party or by which THI or its
properties may be bound, or violate in any material respect any statute, law,
rule or regulation applicable to THI. No consent or approval by any governmental
authority is required in connection with the execution and delivery by THI of
this Agreement or the consummation of the transactions contemplated hereby.
(m) Capitalization. The authorized capitalization of THI consists of an
1,000,000 shares of common stock, par value $0.001 per share, of which 1,000
shares are issued and outstanding in favor of the THI Shareholder. All
outstanding securities have been duly authorized, validly issued, and are fully
paid and nonassessable, and all such securities were issued in compliance with
applicable federal and state securities laws and regulations. There are no
outstanding or presently authorized securities, warrants, preemptive rights,
subscription rights, options or related commitments or agreements of any nature
to issue any of THI's securities.
(n) Full Disclosure. THI has disclosed to SHI in the Exhibits or
Schedules to this Agreement or independently, or made available to SHI,
documents, books and records pertaining to, all events, conditions and facts
materially affecting the properties, business and prospects of THI that are
known to THI and the THI Shareholder. THI has not and will not have, at the
Closing Date, withheld disclosure or availability of any events,
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conditions and facts of which it may have knowledge and that may materially and
adversely affect the properties, businesses or prospects of THI.
(o) Brokerage Fees. THI has not incurred, and will not incur, any
liability for brokerage or finder's fees or similar charges in connection with
this Agreement.
(p) Share Ownership. The THI Shares to be surrendered in the Merger are
owned of record and beneficially, by the THI Shareholder, free and clear of all
liens and encumbrances of any kind and nature, and, to THI's knowledge, have not
been sold, pledged, assigned or otherwise transferred. There are no agreements
(other than this Agreement) to sell, pledge, assign or otherwise transfer such
securities.
(q) Obligation of the THI Shareholder. This Agreement constitutes the
valid and legally binding obligation of the THI Shareholder. Neither the
execution of this Agreement, nor the consummation of the transactions
contemplated hereby, will constitute in any material respect a violation of or
default under, or conflict in any material respect with, any judgment, decree,
statute or regulation of any governmental authority applicable to the THI
Shareholder or any contract, commitment, agreement or restriction of any kind to
which any of the THI Shareholder is a party or by which the THI Shareholder is
bound. The execution and delivery of this Agreement does not, and the
consummation of the transactions described herein will not, violate in any
material respect applicable law, or any mortgage, lien, agreement, indenture,
lease or understanding (whether oral or written) of any kind outstanding
relative to the THI Shareholder.
(r) Closing and Effect of THI Acquisition Agreement. Contemporaneous
herewith, THI and the THI Shareholder have effected the transfer to THI of the
THI Shareholder's interests in BCP and IDMS. The THI Shareholder acknowledges
and agrees that all representations, warranties and covenants set forth in the
THI Acquisition Agreement, and the indemnification provisions related thereto,
shall continue in full force and effect and to the benefit of SHI as if herein
made. Attached hereto as Exhibit "B" is a true and correct copy of the THI
Acquisition Agreement.
(s) Approvals Required. No approval, authorization, consent, order or
other action of, or filing with, any person, firm or corporation or any court,
administrative agency or other governmental authority is required in connection
with the execution and delivery by THI or the THI Shareholder of this Agreement
or the consummation of the transactions described herein, except to the extent
that THI or the THI Shareholder may be required to file reports in accordance
with relevant regulations under federal and state securities laws upon execution
of this Agreement or consummation of the transactions contemplated hereby.
4. Representations and Warranties of SHI and the SHI Shareholder. SHI
and the SHI Shareholder, as a material inducement to THI and the THI Shareholder
to enter into this Agreement and consummate the transactions contemplated
hereby, makes the following representations and warranties to THI and the THI
Shareholder, which representations and warranties are true and correct in all
material respects at this date:
(a) Shareholder of SHI. The SHI Shareholder is the sole owner, of
record and beneficially, of all the issued and outstanding shares of SHI's
capital stock.
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(b) Financial Statements. Attached hereto as Schedule 4(b) is a
consolidated pro forma balance sheet and income statement, unaudited, of the
Company and SHI as of December 30, 1999 (the "Company Financial Statements"),
giving effect to the closing of the SHI Acquisition Agreement whereby SHI will
acquire title to the Merger Stock. The Company Financial Statements and
financial information contained therein present fairly the financial condition
of the Company for the period covered (subject to normal year-end audit
adjustments which will not be material to the Company, taken as a whole, in
amount or effect), and are prepared in accordance with generally accepted
accounting principles, consistently applied. The books and records of the
Company and SHI, financial and otherwise, are in all material respects complete
and correct and have been maintained in accordance with good business and
accounting practices.
(c) Undisclosed Liabilities. SHI is newly formed, and has not engaged
in business other than to establish its operations. SHI does not have any
liabilities or obligations of any kind, whether known or unknown, or whether
absolute, accrued, contingent, matured or otherwise, whether due or to become
due except liabilities or obligations that arose in the ordinary course of
business in establishing such operations. Other than as set forth on the Company
Financial Statements or in public filings with the U.S. Securities and Exchange
Commission (the "Filings"), the Company does not have any material liabilities
or obligations of any kind, whether known or unknown, or whether absolute,
accrued, contingent, matured or otherwise, whether due or to become due, except
liabilities or obligations that arose in the ordinary course of business.
(d) Materially Adverse Change. Since the date of its formation, the
business of SHI has been operated in the ordinary course and there has been no
materially adverse change with respect thereto. Other than as set forth on the
Company Financial Statements or the Filings, there has been no material adverse
change in the business, the assets or the financial or other condition of the
Company, and there has not been:
(i) Any materially adverse change in the business, condition
(financial or otherwise), results of operations, prospects, properties, assets,
liabilities, earnings or net worth of the Company;
(ii) Any material damage, destruction or loss (whether or not
covered by insurance) affecting the Company or its respective assets, properties
or businesses;
(iii) Any declaration, setting aside or payment of any
dividend or other distribution in respect of any shares of the capital stock of
the Company, or any direct or indirect redemption, purchase or other acquisition
of any such stock or any agreement to do so;
(iv) Any issuance or sale by the Company, or agreement by the
Company, to sell or pledge any of its securities, nor have any irrevocable
proxies been given with respect to its securities;
(v) Any statute, rule, regulation or order adopted by any
governmental body, agency or authority (including orders of regulatory
authorities with jurisdiction over the Company) that materially and adversely
affects the Company or its business or financial conditions;
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<PAGE>
(vi) Any material increase in the rate of compensation or in
bonus or commission payments payable or to become payable to any of the salaried
employees of the Company;
(vii) Any merger, consolidation, or reorganization, or any
amendment to the certificate of incorporation or bylaws of the Company,
provided, however, that the Company intends to file an amended and restated
certificate of incorporation to, among other things: change the name of the
Company from Shanecy, Inc. to Inc.ubator Capital, Inc.; increase the number of
authorized shares of capital stock from 20,000,000 shares to 100,000,000 shares;
authorize the issuance of "blank check" preferred stock and a series of
preferred stock identified as the Series A Preferred Stock; eliminate cumulative
voting for the election of directors; and classify its board of directors into
three classes; or
(vii) Any other events or conditions of any character that may
reasonably be expected to have a materially adverse effect on the Company or its
business or financial condition.
(e) Litigation. There are no actions, suits, claims, investigations or
legal, administrative or arbitration proceedings pending or, to the knowledge of
SHI or the SHI Shareholder, threatened against SHI or the SHI Shareholder,
whether at law or in equity, or before or by any federal, state, municipal,
local, foreign or other governmental department, commission, board, bureau,
agency or instrumentality, nor does SHI or the SHI Shareholder know of any basis
for any such action, suit, claim, investigation or proceeding.
(f) Compliance: Governmental Authorizations. SHI and the SHI
Shareholder have each complied in all material respects with all federal, state,
local or foreign laws, ordinances, regulations and orders applicable to its
business, including without limitation, federal and state securities, banking
collection and consumer protection laws and regulations that, if not complied
with, would materially and adversely affect its businesses. SHI and the SHI
Shareholder have all federal, state, local and foreign governmental licenses and
permits necessary for the conduct of their respective businesses. Such licenses
and permits are in full force and effect. Neither SHI nor the SHI Shareholder
knows of any violations of any such licenses or permits. No proceedings are
pending or threatened to revoke or limit the use of such licenses or permits.
(g) Due Organization. Each of SHI and the SHI Shareholder is a
corporation duly organized and validly existing; its status is active; it is
qualified to do business and in good standing in each state where the property
owned, leased or operated, or the business conducted, by it requires such
qualification and where failure to so qualify would have a material adverse
effect on its financial condition, properties, business or results of
operations. Each of SHI and the SHI Shareholder has the power to own its
properties and assets and to carry on its business as now presently conducted.
True and complete copies of the Articles of Incorporation and Bylaws of SHI and
the SHI Shareholder have been heretofore delivered to THI.
(h) Tax Matters. As a newly-formed entity, SHI has not yet filed any
federal, state and local tax or related returns and reports. There are no tax
liens with respect to
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<PAGE>
any properties owned by SHI. With respect to the SHI Shareholder, it has made
all requisite federal, state and local tax filings, or sought appropriate
extensions therefor. No taxing authority has asserted any claim that could
result in the imposition of any tax for which the SHI Shareholder is or may be
liable that could have a material adverse effect upon the business or prospects
of the SHI Shareholder. There is no pending proceeding relating to any tax for
which the SHI Shareholder is or may be liable or that could materially adversely
affect any tax liability of the SHI Shareholder and, to the best its knowledge,
no such proceeding is contemplated.
(i) Agreements. Other than the SHI Acquisition Agreement, this
Agreement or any agreements referred to in the Company Financial Statements or
the Filings, neither SHI nor the SHI Shareholder has any material agreements,
and there is no act that (alone or with the happening or occurrence of any other
event) would constitute a material default by either SHI or the SHI Shareholder
under any such agreements. Neither SHI nor the SHI Stockholder have knowledge of
any material default by the other parties to such agreements.
(j) Title to Property and Related Matters. Each of SHI and the SHI
Shareholder has good and marketable title to all of its properties, interests in
properties and assets, real, personal and mixed, owned by it at the date of this
Agreement or to be acquired by it pursuant to the SHI Acquisition Agreement, of
any kind or character, free and clear of any liens or encumbrances, except for
liens for current taxes not yet delinquent.
(k) Licenses; Trademarks; Trade Names. SHI does not have nor does it
own any licenses, trademarks, trade names, service marks, copyrights, patents or
any applications for any of the foregoing that relate to its businesses.
(l) Due Authorization. This Agreement has been duly authorized,
executed and delivered by SHI and constitutes a valid and binding agreement of
SHI, enforceable in accordance with its terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency, moratorium, and other similar laws
relating to, limiting or affecting the enforcement of creditors rights generally
or by the application of equitable principles. Neither the execution and
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, nor compliance with any of the provisions hereof, will
violate in any material respect any order, writ, injunction or decree of any
court or governmental authority, or violate or conflict with in any material
respect or constitute a default under (or give rise to any right of termination,
cancellation or acceleration under), any provisions of SHI's Articles of
Incorporation or Bylaws, the terms or conditions or provisions of any note,
bond, lease, mortgage, obligation, agreement, understanding, arrangement or
restriction of any kind to which SHI is a party or by which SHI or its
properties may be bound, or violate in any material respect any statute, law,
rule or regulation applicable to SHI. No consent or approval by any governmental
authority is required in connection with the execution and delivery by SHI of
this Agreement or the consummation of the transactions contemplated hereby.
(m) Capitalization of SHI. The authorized capitalization of SHI
consists of an 1,000,000 shares of common stock, par value $0.001 per share, of
which 1,000 shares are issued and outstanding in favor of the SHI Shareholder.
All outstanding securities have
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<PAGE>
been duly authorized, validly issued, and are fully paid and nonassessable, and
all such securities were issued in compliance with applicable federal and state
securities laws and regulations. There are no outstanding or presently
authorized securities, warrants, preemptive rights, subscription rights, options
or related commitments or agreements of any nature to issue any of SHI's
securities.
(n) Capitalization of SHI Shareholder. The entire authorized capital of
the SHI Shareholder currently consists of 20,000,000 shares of common stock, par
value $0.001. All such securities are duly authorized, of which 17,990,000
shares of common stock are currently outstanding, all of which are validly
issued, fully paid and nonassessable. No shares of preferred stock have been
authorized and issued but the SHI Shareholder has agreed to seek shareholder
approval of the amendment of its articles of incorporation to permit the
issuance of preferred stock, and otherwise as described in Section 4(d)(vii)
above. The Merger Stock will be, at the time of issuance, duly authorized,
validly issued, fully paid and non-assessable, and free and clear of all liens,
claims and encumbrances whatsoever. Other than as set forth in the Filings, none
of the securities of the SHI Shareholder are reserved for issuance, and there
are no agreements, commitments or arrangements providing for the issuance or
sale of any capital stock or other interest of the SHI Shareholder, or any
issued or outstanding options, warrants or rights to purchase, or any security
or instrument convertible into or exchangeable for, any capital stock or other
interest of the SHI Shareholder.
(o) Full Disclosure. SHI and the SHI Shareholder have disclosed to THI
in the Exhibits or Schedules to this Agreement or independently, or made
available to THI, documents, books and records pertaining to, all events,
conditions and facts materially affecting the properties, business and prospects
of SHI that are known to SHI and the SHI Shareholder. SHI and the SHI
Shareholder have not withheld disclosure or availability of any events,
conditions and facts of which either of them may have knowledge and that may
materially and adversely affect the properties, businesses or prospects of SHI
or the SHI Shareholder.
(p) Brokerage Fees. SHI has not incurred, and will not incur, any
liability for brokerage or finder's fees or similar charges in connection with
this Agreement.
(q) Obligation of the SHI Shareholder. This Agreement constitutes the
valid and legally binding obligation of the SHI Shareholder. Neither the
execution of this Agreement, nor the consummation of the transactions
contemplated hereby, will constitute in any material respect a violation of or
default under, or conflict in any material respect with, any judgment, decree,
statute or regulation of any governmental authority applicable to the SHI
Shareholder or any contract, commitment, agreement or restriction of any kind to
which any of the SHI Shareholder is a party or by which the SHI Shareholder is
bound. The execution and delivery of this Agreement does not, and the
consummation of the transactions described herein will not, violate in any
material respect applicable law, or any mortgage, lien, agreement, indenture,
lease or understanding (whether oral or written) of any kind outstanding
relative to the SHI Shareholder.
(r) Closing and Effect of SHI Acquisition Agreement. Contemporaneous
herewith, SHI and the SHI Shareholder have enter into the SHI Acquisition
Agreement,
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<PAGE>
whereby SHI shall acquire the Merger Stock, and SHI and the SHI Shareholder
shall move promptly to consummate such transaction. The SHI Shareholder
acknowledges and agrees that all representations, warranties and covenants set
forth in the SHI Acquisition Agreement, and the indemnification provisions
related thereto, shall continue in full force and effect and to the benefit of
SHI as if herein made. Attached hereto as Exhibit "C" is a true and correct copy
of the SHI Acquisition Agreement. In the event that the acquisition of the
Merger Stock has not been consummated on or before February 29, 2000, SHI and
the SHI Shareholder shall move promptly to dissolve SHI or take such other
appropriate action in order to secure the return of all assets originally the
property of THI to THI.
(s) Approvals Required. No approval, authorization, consent, order or
other action of, or filing with, any person, firm or corporation or any court,
administrative agency or other governmental authority is required in connection
with the execution and delivery by SHI or the SHI Shareholder of this Agreement
or the consummation of the transactions described herein, except to the extent
that SHI or the SHI Shareholder may be required to file reports in accordance
with relevant regulations under federal and state securities laws upon execution
of this Agreement or consummation of the transactions contemplated hereby.
5. Exchange of Documentation. Upon the execution of this Agreement,
THI, the THI Shareholder, SHI and the SHI Shareholder shall exchange the
following documentation:
(a) THI and the THI Shareholder. THI and the THI Shareholder shall
deliver to SHI and the SHI Shareholder: (i) the certificate(s) evidencing the
THI Shares; (ii) evidence of due authorization and approval by the Board of
Directors and Shareholder of THI of the execution of this Agreement and the
Merger contemplated thereby; (iii) all of the Exhibits and Schedules required
herein, and copies of the documents referred to therein, in form reasonably
acceptable to SHI; and (iv) from the THI Shareholder, an "investment letter"
agreeing that the shares of the Merger Stock are being acquired for investment
purposes only and not with a view to public resale or distribution in violation
of any applicable securities laws, substantially in the form of Exhibit "D"
attached hereto.
(b) SHI and SHI Shareholder. SHI and the SHI Shareholder shall deliver
to THI and the THI Shareholder: (i) evidence of due authorization and approval
by the Board of Directors and Shareholder of SHI of the execution of this
Agreement and the Merger contemplated thereby; (ii) all of the Exhibits and
Schedules required herein, and copies of the documents referred to therein, in
form reasonably acceptable to THI.
Upon the closing of the transactions contemplated by the SHI Acquisition
Agreement, the SHI Shareholder shall deliver the certificate(s) evidencing the
Merger Stock to the THI Shareholder.
6. Nature of Representations and Warranties. All of the parties hereto
are executing and carrying out the provisions of this Agreement in reliance on
the representations, warranties, covenants and agreements contained in this
Agreement, and
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<PAGE>
any investigation that they might have made or any other representations,
warranties, covenants, agreements, promises or information, written or oral,
made by the other party or parties or any other person shall not be deemed a
waiver of any breach of any such representation, warranty, covenant or
agreement. In the event of any breach of representation, warranty, covenant or
agreement hereunder, or of any loss, cost, damage or expense otherwise sustained
or alleged to have been sustained by any party hereto, the indemnification
provisions of the THI Acquisition Agreement or the SHI Acquisition Agreement
(determined by that agreement providing the basis for relief pursuant to
Sections 3(r) and 4(q), as the case may be) shall govern the resolution of any
such issue.
7. Miscellaneous.
(a) Notices. All notices or other communications required or permitted
hereunder shall be in writing and shall be deemed to have been duly given if
delivered in person or sent by overnight delivery, confirmed telecopy or prepaid
first class registered or certified mail, return receipt requested, to the
addresses first set forth above, or such other addresses as are given to the
other parties to this Agreement in the manner set forth herein. Any such notices
shall be effective when delivered in person or sent by telecopy, one business
day after being sent by overnight delivery or three business days after being
sent by registered or certified mail. Any of the foregoing addresses may be
changed by giving notice of such change in the foregoing manner, except that
notices for changes of address shall be effective only upon receipt.
(b) Further Assurances. At any time, and from time to time, each party
will execute such additional instruments and take such further action as may be
reasonably requested by the other party to confirm or perfect title to any
property transferred hereunder or otherwise to carry out the intent and purposes
of this Agreement.
(c) Costs and Expenses. Each party hereto agrees to pay its own costs
and expenses incurred in negotiating this Agreement and consummating the
transactions described herein.
(d) Time. Time is of the essence.
(e) Survival of Representations. All covenants, agreements,
representations and warranties made herein shall continue in full force and
effect through all applicable statutes of limitation. All covenants and
agreements by or on behalf of the parties hereto that are contained or
incorporated in this Agreement shall bind and inure to the benefit of the
successors and assigns of all parties hereto.
(f) Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof. It
supersedes all prior negotiations, letters and understandings relating to the
subject matter hereof.
(g) Amendment. This Agreement may not be amended, supplemented or
modified in whole or in part except by an instrument in writing signed by the
party or parties against whom enforcement of any such amendment, supplement or
modification is sought.
(g) Assignment. This Agreement may not be assigned by any party hereto
without the prior written consent of the other party.
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<PAGE>
(h) Choice of Law. This Agreement shall be interpreted, construed and
enforced in accordance with the laws of the State of Nevada, without regard to
any applicable conflicts of law provisions.
(i) Headings. The section and subsection headings in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this agreement.
(j) Pronouns. All pronouns and any variations thereof shall be deemed
to refer to the masculine, feminine, neuter, singular or plural as the context
may require.
(k) Number and Gender. Words used in this Agreement, regardless of the
number and gender specifically used, shall be deemed and construed to include
any other number, singular or plural, and any other gender, masculine, feminine
or neuter, as the context indicates is appropriate.
(l) Construction. The parties hereto and their respective legal counsel
participated in the preparation of this Agreement; therefore, this Agreement
shall be construed neither against nor in favor of any of the parties hereto,
but rather in accordance with the fair meaning thereof.
(m) Effect of Waiver. The failure of any party at any time or times to
require performance of any provision of this Agreement will in no manner affect
the right to enforce the same. The waiver by any party of any breach of any
provision of this Agreement will not be construed to be a waiver by any such
party of any succeeding breach of that provision or a waiver by such party of
any breach of any other provision.
(n) Severability. The invalidity, illegality or unenforceability of any
provision or provisions of this Agreement will not affect any other provision of
this Agreement, which will remain in full force and effect, nor will the
invalidity, illegality or unenforceability of a portion of any provision of this
Agreement affect the balance of such provision. In the event that any one or
more of the provisions contained in this Agreement or any portion thereof shall
for any reason be held to be invalid, illegal or unenforceable in any respect,
this Agreement shall be reformed, construed and enforced as if such invalid,
illegal or unenforceable provision had never been contained herein.
(o) Enforcement. Should it become necessary for any party to institute
legal action to enforce the terms and conditions of this Agreement, the
successful party will be awarded reasonable attorneys' fees at all trial and
appellate levels, expenses and costs. Any suit, action or proceeding with
respect to this Agreement shall be brought before a single arbitrator pursuant
to the Commercial Arbitration Rules of the American Arbitration Association in
Las Vegas, Nevada.
(p) Remedy. The parties hereto acknowledge and agree that any party's
remedy at law for a breach or threatened breach of any of the provisions of this
Agreement would be inadequate and such breach or threatened breach shall be per
se deemed as causing irreparable harm to such party. Therefore, in the event of
such breach or threatened breach, the parties hereto agree that, in addition to
any available remedy at law, including but not limited to monetary damages, an
aggrieved party, without posting any bond, shall be entitled to obtain, and the
offending party agrees not to oppose the aggrieved party's request for,
equitable relief in the form of specific enforcement, temporary restraining
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order, temporary or permanent injunction, or any other equitable remedy that may
then be available to the aggrieved party.
(q) Binding Nature. This Agreement will be binding upon and will inure
to the benefit of any successor or successors of the parties hereto.
(r) No Third-Party Beneficiaries. No person shall be deemed to possess
any third-party beneficiary right pursuant to this Agreement. It is the intent
of the parties hereto that no direct benefit to any third party is intended or
implied by the execution of this Agreement.
(s) Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original and all of which together
will constitute one and the same instrument.
(t) Facsimile Signature. This Agreement may be executed and accepted by
facsimile signature and any such signature shall be of the same force and effect
as an original signature.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
THESSEUS HOLDINGS, INC. SHANECY HOLDINGS, INC.
By: By:
----------------------------- ----------------------------
Barry Feiner Jason Galanis
Its President Its President
THESSEUS INTERNATIONAL SHANECY, INC.
ASSET FUND N.V.
By: By:
----------------------------- ----------------------------
Barry Feiner Jason Galanis
Its President Its President
ATTACHMENTS:
Exhibit "A" Articles of Merger
Exhibit "B" THI Acquisition Agreement
Exhibit "C" SHI Acquisition Agreement
Exhibit "D" Investment Letter
Schedule 3(b) THI Financial Statements
Schedule 4(b) Company Financial Statements
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ACQUISITION AGREEMENT
THIS ACQUISITION AGREEMENT (the "Agreement") is entered into this 30th
day of December, 1999 by and between Thesseus International Asset Fund N.V., a
Netherlands Antilles corporation with a place of business at Zeelandia Office
Part, 16 Kaya W.F.G (Jombi) Mensing, Curacao, Netherlands Antilles ("Thesseus"),
and Thesseus Holdings, Inc., a Nevada corporation with a place of business at
625 Howe Street, Suite 1530, Vancouver, British Columbia V6C 2T6 (the
"Company").
RECITALS
WHEREAS, Thesseus is a closed-end investment fund which seeks to
achieve long-term capital appreciation by blending value-based investment
principles with venture capital techniques; and
WHEREAS, Thesseus owns and holds the following portfolio interests: (a)
in Brunswick Capital Partners, Inc., a South Dakota corporation ("BCP"), shares
of preferred stock convertible into 40% of the shares of common stock of BCP on
a fully-diluted basis (the "BCP Shares"); and (b) in InfoBase Direct Marketing
Services, Inc., a Nevada corporation ("IDMS"), shares of preferred stock
convertible into 49% of the shares of common stock of IDMS on a fully-diluted
basis (the "IDMS Shares"; collectively, with the BCP Shares, the "Portfolio
Shares"); and
WHEREAS, Thesseus has determined to transfer the Portfolio Shares into
a wholly-owned subsidiary in order to facilitate further investments by it; and
WHEREAS, Thesseus has created the Company as its wholly-owned
subsidiary in order to hold the Portfolio Shares; and
WHEREAS, the Company desires to acquire the Portfolio Shares from
Thesseus in exchange for the issuance of shares of its common stock (the "Common
Shares") to Thesseus, and Thesseus desires to transfer the Portfolio Shares to
the Company in exchange for the Common Shares, on the terms and conditions set
forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth below, it is therefore agreed as follows:
<PAGE>
ARTICLE I
DEFINITIONS
1. Currency; Certain Definitions. Unless otherwise indicated, all
currency figures in this Agreement are denominated in U.S. dollars. Capitalized
terms used, but not defined elsewhere, in this Agreement are defined as follows:
1.1 "Affiliate" of a Person means another Person (a)
directly or indirectly controlling, controlled by, or under common control with,
such Person (for this purpose, "control" of a Person means the power (whether or
not exercised) to direct the policies, operations or activities of such Person
by or through the ownership of, or right to vote, or direct the manner of voting
of, securities of such Person, or pursuant to agreement or Law or otherwise) or
(b) who is a director or officer of a corporation, general partner of a
partnership, manager of a limited liability company, trustee of a trust or other
Person who exercises managerial authority with respect to the subject Person; or
(c) who owns (or has the discretionary right to acquire) 10% or more of the
equity interests (including without limitation capital stock or partnership,
membership or beneficial interests) of the subject Person.
1.2 "BCP" means Brunswick Capital Partners, Inc., a South
Dakota corporation, and any permitted successor thereto.
1.3 "BCP Shares" means the 490 shares of preferred stock
of BCP owned and held by Thesseus, which shares are convertible into 40% of the
shares of common stock of BCP on a fully-diluted basis, and are otherwise
governed by the BCP Statement of Rights and Preferences.
1.4 "BCP Statement of Rights and Preferences" means the
Statement of Rights and Preferences governing the BCP Shares as filed with the
South Dakota Secretary of State, a copy of which is attached hereto as Exhibit
"A".
1.5 "Common Shares" means the 1,000 Common Shares of the
Company, par value $0.001, to be acquired by Thesseus.
1.6 "Consent" means any approval, authorization, consent
or ratification by or on behalf of any Person that is not a party to this
Agreement, or any waiver of, or exemption or variance from, any License or
Order.
1.7 "Contract" means any written or oral contract,
agreement, arrangement or understanding, including without limitation any loan
agreement or indenture, purchase, sales, supply or service order or agreement,
real property, equipment or other lease, or license of trade rights, to which
Thesseus or the Company is a party or by which Thesseus, the Company or any of
their respective assets are bound.
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1.8 "Governing Document" means (a) the articles of
association or certificate of incorporation (including any restatement,
amendment or correction thereof or any certificate of designation thereunder)
and the by-laws of a corporation, and any agreement between any shareholders
thereof with respect to the voting or disposition of, or right to receive
dividends or other distributions with respect to, the capital stock of such
corporation; (b) the articles or certificate and the partnership agreement of a
partnership; (c) the articles of organization and operating agreement of a
limited liability company; (d) the trust agreement of a trust; and (e) any
similar agreement, certificate or other document, whether or not filed or
required to be filed with a Governmental Authority, governing or relating to the
organization, management or ownership of any Person.
1.9 "Governmental Authority" means any federal, state,
local or foreign government or governmental authority, agency or
instrumentality, or any court of competent jurisdiction.
1.10 "IDMS" means InfoBase Direct Marketing Services,
Inc., a Nevada corporation, and any permitted successor thereto.
1.11 "IDMS Shares" means the 4,900 shares of preferred
stock of IDMS, which shares are convertible into 40% of the shares of common
stock of IDMS on a fully-diluted basis, and are otherwise governed by the IDMS
Statement of Rights and Preferences.
1.12 "IDMS Statement of Rights and Preferences" means the
Statement of Rights and Preferences governing the IDMS Shares as filed with the
Nevada Secretary of State, a copy of which is attached hereto as Exhibit "B".
1.13 "Law" means any statute, rule, regulation or
ordinance of any Governmental Authority.
1.14 "Lease" means a lease of real property.
1.15 "License" means any license, permit, certification,
qualification or franchise issued or granted by any Governmental Authority.
1.16 "Lien" means any security interest, conditional sale
or other title retention agreement, mortgage, pledge, lien, charge, encumbrance
or other adverse claim or interest.
1.17 "Order" means any judgment, order, writ, decree,
award, directive, ruling or decision of any Governmental Authority.
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1.18 "Person" includes without limitation a natural
person, corporation, joint stock company, limited liability company,
partnership, joint venture, association, trust, Governmental Authority, or any
group of the foregoing acting in concert.
1.19 "Portfolio Shares" means, collectively, the BCP
Shares and the IDMS Shares.
1.20 "Proceeding" means any action, suit, investigation,
audit or other proceeding, at law or in equity, before or by any Taxing
Authority or Governmental Authority.
1.21 "Tax" means any tax, fee, levy, assessment or other
governmental charge imposed by any Taxing Authority (including without
limitation any income, franchise, gross receipts, property, sales, use, excise,
services, value added, ad valorem, withholding, social security, estimated,
accumulated earnings, transfer, gains, license, privilege, payroll, profits,
capital stock, employment, unemployment, severance, stamp, occupancy, customs or
occupation tax), and any interest, additions to tax and penalties in connection
therewith.
1.22 "Taxing Authority" means the U.S. Internal Revenue
Service and any other domestic or foreign Governmental Authority responsible for
the administration of any Tax.
1.23 "Tax Return" means any return, amended return,
declaration, report, estimate, information return or statement regarding Taxes
which is filed or required to be filed under applicable Law, whether on a
consolidated, combined, unitary or separate basis or otherwise.
1.24 "Transaction Document" means this Agreement and each
other agreement, instrument or other document being entered into by the Company
or Thesseus or any related party at or in connection with the transaction
contemplated hereby.
ARTICLE II
ACQUISITION OF PORTFOLIO SHARES AND COMMON SHARES
2.1 Acquisition of Portfolio Shares. Upon the execution of this
Agreement, subject to the terms and conditions set forth herein, Thesseus shall
sell, assign, transfer and deliver the Portfolio Shares to the Company, and the
Company shall acquire the Portfolio Shares from Thesseus.
2.2 Acquisition of Common Shares. Upon the execution of this
Agreement, in consideration for the transfer of the Portfolio Shares to the
Company, the Company shall
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sell, assign, transfer and otherwise convey to Thesseus, and Thesseus shall
subscribe for, one thousand (1,000) Common Shares of the Company.
2.3. Acquisition Price. The Acquisition Price for the Portfolio
Shares, and for the Common Shares, shall be equal to the aggregate book value of
the Portfolio Shares on December 30, 1999, and shall in each case be satisfied
by delivery of the respective Shares to its transferee in accordance with the
terms of this Agreement.
2.4 Transactions. All of the transactions contemplated by this
Agreement are to take place upon the execution of this Agreement, with the
exception of those set forth in Article VI hereof, and are intended by the
parties to be consummated concurrently; and if any such transaction is not
consummated as provided herein, the parties shall take all actions necessary to
dissolve and invalidate all other such transactions as if none of such
transactions had been consummated.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THESSEUS
Thesseus hereby represents and warrants to the Company as follows:
3.1 Organization. Thesseus is a corporation duly organized,
validly existing and in good standing under the laws of the Netherlands Antilles
and has full power and authority to own its assets and carry on its business in
the manner and places where such assets are now owned and such business is now
being conducted.
3.2 Power and Authority. Thesseus has full legal capacity, power
and authority to execute and deliver this Agreement and each other Transaction
Document to which it is a party and to assume and perform its obligations
hereunder and thereunder. This Agreement and each other Transaction Document to
which Thesseus is a party has been duly executed and delivered by Thesseus, and
this Agreement and each other Transaction Document to which Thesseus is a party
is, a legally valid and binding obligation of Thesseus, enforceable against
Thesseus in accordance with its respective terms, subject to (a) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and (b) equitable principles
limiting the availability of certain remedies.
3.3 Absence of Conflict. The execution and delivery of this
Agreement and each other Transaction Document to which it is a party do not, and
the performance by Thesseus of its obligations hereunder or thereunder, will
not, (i) violate any provision of the Governing Documents of Thesseus, or (ii)
conflict with or result in any breach of any condition or provision of, or
constitute a default under, or create or give rise to any adverse
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right of termination or cancellation by, or excuse the performance of, any other
Person under, or result in the creation or imposition of any Lien upon Thesseus.
3.4 Consents. No Consent of, or notice to, any Person is required
as to Thesseus in connection with the execution and delivery of this Agreement
or any other Transaction Document by Thesseus or the performance of its
obligations hereunder or thereunder, where the failure to obtain such Consent or
give such notice would have an adverse effect upon Thesseus or prohibit,
invalidate, or make unlawful, in whole or in part, this Agreement or any other
Transaction Document, or the carrying out of the provisions hereof or thereof or
the transactions contemplated hereby or thereby.
3.5 Litigation. No Proceeding is pending or threatened against or
affecting Thesseus in which an unfavorable outcome would have a material adverse
effect upon Thesseus or prohibit, invalidate, or make unlawful, in whole or in
part, this Agreement or any other Transaction Document, or the carrying out of
the provisions hereof or thereof or the transactions contemplated hereby or
thereby. Thesseus has not received any notice of or, to its knowledge, is in
default in respect of any Order, nor is there any such Order enjoining Thesseus
in respect of, or the effect of which is to prohibit or curtail the performance
of, the obligations of Thesseus hereunder or under any other Transaction
Document.
3.6 Title to Portfolio Shares; Rights and Preferences. Thesseus is
the owner of the Portfolio Shares, and such Shares are duly authorized, validly
issued, fully paid and nonassessable and free and clear of all Liens whatsoever.
With respect to each of the BCP and IDMS Statements of Rights and Preferences
attached hereto as Exhibits "A" and "B", respectively, (a) such document is a
true and correct copy of the document on file with the relevant Governmental
Authority, (b) there has been no amendment or other document relating to or
affecting such Statement filed with such Governmental Authority, and (c) to the
knowledge of Thesseus, no action has been taken by either BCP or IDMS, its
stockholders, directors or officers in contemplation of the filing of any such
amendment or other document.
3.7 Brokers or Finders. Neither Thesseus nor any Affiliate has
employed or engaged any Person to act as a broker, finder or other intermediary
in connection with the transactions contemplated hereby, and no Person is
entitled to any fee, commission or other compensation from the Company relating
to any such employment or engagement by Thesseus or any Affiliate of Thesseus.
3.8 Investment Intent. Thesseus is acquiring the Common Shares for
investment, for its own account, and not with a view to, or for resale in
connection with, any distribution thereof, nor with any current intention of
distributing the Securities in violation of the securities laws of the United
States or any foreign jurisdiction.
3.9 No Misrepresentation by Thesseus. No representation, warranty
or statement by Thesseus in this Agreement or in any certificate, exhibit or
schedule furnished
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pursuant hereto or in connection with the transactions contemplated hereby
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements or facts contained herein or therein not
misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Thesseus as follows:
4.1 Organization. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada, and
has full power and authority to own its assets and carry on its business in the
manner and places where such assets are now owned and such business is now being
conducted.
4.2 Power and Authority. The Company has full legal capacity,
power and authority to execute and deliver this Agreement and each other
Transaction Document to which it is a party and to assume and perform its
obligations hereunder and thereunder. This Agreement and each other Transaction
Document to which the Company is a party has been duly executed and delivered,
and this Agreement and each other Transaction Document to which the Company is a
party is, a legally valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, subject to (a) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and (b) equitable principles
limiting the availability of certain remedies.
4.3 Absence of Conflict. The execution and delivery of this
Agreement and each other Transaction Document to which it is a party do not, and
the performance by the Company of its obligations hereunder and thereunder will
not, violate any provision of the Governing Documents of the Company and do not
and will not conflict with or result in any breach of any condition or provision
of, or constitute a default under, or create or give rise to any adverse right
of termination or cancellation by, or excuse the performance of, any other
Person, or result in the creation or imposition of any Lien upon the Company or
any of its assets or the acceleration of the maturity or date of payment or
other performance of any obligation of the Company by reason of the terms of,
any agreement, indenture, instrument, license, lease, Lien or Order to which the
Company is a party or is subject or which is or purports to be binding upon it.
4.4 Consents. No Consent of, or notice to, any Person is required
as to the Company in connection with the execution and delivery by the Company
of this Agreement or any other Transaction Document or the performance of the
obligations of the Company hereunder or thereunder, where the failure to obtain
such Consent or give such notice would have an adverse effect upon the Company,
or its assets or business or prohibit, invalidate, or
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make unlawful, in whole or in part, this Agreement or any other Transaction
Document, or the carrying out of the provisions hereof or thereof or the
transactions contemplated hereby or thereby.
4.5 Litigation. No Proceeding is pending or, to the best of the
Company's knowledge, threatened against or affecting the assets, operations or
financial or other condition of the Company in which an unfavorable Order would
prohibit, invalidate, or make unlawful, in whole or in part, this Agreement or
any other Transaction Document, or the carrying out of the provisions hereof or
thereof or the transactions contemplated hereby or thereby. The Company is not
in default in respect of any Order, nor is there any such Order enjoining the
Company in respect of, or the effect of which is to prohibit or curtail the
Company's performance of its obligations hereunder or under any other
Transaction Document.
4.6 Authorized Capital. The entire authorized capital of the
Company currently consists of the following: 1,000,000 shares of common stock,
par value $0.001, of which 1,000 Common Shares are to be issued and outstanding
in the name of Thesseus upon execution of this Agreement. All such Common Shares
are duly authorized, validly issued, fully paid and nonassessable. No shares of
common stock of the Company are reserved for issuance, and there are no
agreements, commitments or arrangements providing for the issuance or sale of
any capital stock or other interest of the Company, or any issued or outstanding
options, warrants or rights to purchase, or any security or instrument
convertible into or exchangeable for, any capital stock or other interest of the
Company.
4.7 No Undisclosed Liabilities. The Company is newly formed, and
has not engaged in business other than to establish its operations. The Company
does not have any liabilities or obligations of any kind, whether known or
unknown, or whether absolute, accrued, contingent, matured or otherwise, whether
due or to become due except liabilities or obligations that arose in the
ordinary course of business in establishing such operations.
4.8 Assets and Material Contracts. Other than this Agreement and
the assets to be acquired hereby, the Company currently has no material
contracts (including, without limitation, employment or other labor agreements,
benefits arrangements and policies of insurance) and has no material assets.
4.9 Compliance with Law. The Company has all Licenses and all
Consents of Governmental Authorities required by applicable Law for it to
conduct its business. All such Licenses and Consents are in full force and
effect and the Company has not received notice of any pending cancellation or
suspension thereof nor, to the best of the Company's knowledge, is any pending
cancellation or suspension thereof threatened. The Company is in compliance in
all material respects with each Law applicable to it. The Company has not
received any notice of violation of any Law or Order.
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4.10 Tax. No Tax Returns of or relating to the Company have been
filed. No Taxing Authority has asserted any claim that could result in the
imposition of any Tax for which the Company is or may be liable or that could
adversely affect the Tax liability of the Company. There is no pending
Proceeding relating to any Tax for which the Company is or may be liable or that
could adversely affect any Tax liability of the Company and, to the best of the
Company's knowledge, no Taxing Authority is contemplating such a Proceeding or
adjustment. The Company is not a party to any Tax sharing or Tax allocation
agreement, arrangement or understanding.
4.11 Brokers or Finders. Neither the Company nor any Affiliate
thereof has employed or engaged any Person to act as a broker, finder or other
intermediary in connection with the transactions contemplated hereby, and no
Person is entitled to any fee, commission or other compensation from Thesseus
relating to any such employment or engagement by the Company or any Affiliate
thereof.
4.12 Investment Intent. The Company is acquiring the Portfolio
Shares for investment, for its own account, and not with a view to, or for
resale in connection with, any distribution thereof, nor with any current
intention of distributing the Note, or any portion thereof, in violation of the
securities laws of the United States or any foreign jurisdiction.
4.13 No Misrepresentation by the Company. No representation,
warranty or statement by the Company in this Agreement or in any certificate,
exhibit or schedule furnished pursuant hereto or in connection with the
transactions contemplated hereby contains any untrue statement of a material
fact or omits to state a material fact necessary to make the statements or facts
contained herein or therein not misleading.
ARTICLE V
DELIVERY OF DOCUMENTS
5.1 Deliveries by the Company. Upon execution of the Agreement,
the Company shall deliver to Thesseus a certificate in the name of Thesseus
representing the Common Shares.
5.2 Deliveries by Thesseus. Upon execution of this Agreement,
Thesseus shall deliver to the Company the certificates representing the
Portfolio Shares, duly endorsed in favor of the Company or with a duly executed
blank stock power in its favor.
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ARTICLE VI
POST-CLOSING COVENANTS
6.1 Confidentiality. From and after the execution of this
Agreement, the parties hereto shall keep absolutely confidential all information
relating to or concerned with the Company or the investment of Thesseus therein.
The parties shall not, at any time after the date hereof, use or disclose to any
Person any such information without the written consent of all other parties,
except as may be required by Law (in which case the party shall promptly give
notice to the other parties of any demand, subpoena, order or other legal
process requiring disclosure, in order to permit such parties to seek an
appropriate protective order or other confidential treatment of such
information).
6.2 Keeping of Books and Records; Inspection thereof. The Company
shall keep adequate records and books of account, with complete entries made in
accordance with generally accepted accounting principles consistently applied,
reflecting all of its financial transactions. The Company shall permit and
direct Thesseus, or any agents or representatives thereof, at any reasonable
time and from time to time upon reasonable prior notice, to examine and make
copies of and abstracts from the Company's records and books of account, to
visit and inspect the Company's properties and it discuss the Company's affairs,
finances and accounts with any of the directors, officers, employees or other
representatives of the Company.
6.3 Cooperation in Regulatory Filings. The Company shall provide
all reasonable cooperation to Thesseus and its authorized representatives in the
preparation and making of any necessary regulatory filings with any Governmental
Authority.
6.4 Public Announcements. Neither Thesseus nor the Company shall
make or permit any Affiliate thereof to make, any press release or other public
announcement with respect to this Agreement or the transactions contemplated
hereby, without the prior written consent of the other party (which consent
shall not be unreasonably withheld), unless such announcement is required by
Law, in which case the other parties shall be given notice of such requirement
prior to such announcement and the parties shall consult with each other as to
the scope and substance of such disclosure.
ARTICLE VII
INDEMNIFICATION
7.1 Indemnification by the Company. From and after the execution
of this Agreement, the Company shall indemnify and defend Thesseus against, and
hold Thesseus harmless from, and will pay to Thesseus the amount of, any loss,
claim, liability, obligation, damage or expense (including without limitation
attorneys' and consultants' fees and
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disbursements and expenses of investigating, defending and prosecuting) which
Thesseus or any shareholder, director, officer, member, manager, employee or
agent of Thesseus may suffer or incur (including without limitation incidental
to any claim or any Proceeding against Thesseus or any shareholder, director,
officer, member, manager, employee or agent of Thesseus) based upon or resulting
from:
(a) the breach or inaccuracy of any representation or
warranty made by the Company herein or pursuant hereto; or
(b) the failure of the Company to perform or to comply
with any covenant or condition required of the Company to be performed or
complied with hereunder.
7.2 Indemnification by Thesseus. From and after the execution of
this Agreement, Thesseus shall indemnify and defend the Company against, and
hold the Company harmless from, and will pay to the Company the amount of, any
loss, claim, liability, obligation, damage or expense (including without
limitation attorneys' and consultants' fees and disbursements and expenses of
investigating, defending and prosecuting) which the Company may suffer or incur
(including without limitation incidental to any claim or any Proceeding against
the Company) based upon or resulting from:
(a) the breach or inaccuracy of any representation or
warranty made by Thesseus herein or pursuant hereto; or
(b) Thesseus's failure to perform or to comply with any
covenant or condition required of Thesseus to be performed or complied with
hereunder.
7.3 Indemnification Procedures.
(a) Promptly after notice to an indemnified party of any
claim or the commencement of any Proceeding by a third party subject to Sections
7.1 or 7.2 above, such indemnified party shall, if a claim for indemnification
in respect thereof is to be made against an indemnifying party pursuant to this
Article VII, give written notice to the latter of the commencement of such claim
or Proceeding, setting forth in reasonable detail the nature thereof and the
basis upon which such party seeks indemnification hereunder, provided, however,
that the failure of any indemnified party to give such notice shall not relieve
the indemnifying party of its obligations hereunder, except to the extent that
the indemnifying party is actually prejudiced by the failure to give such
notice.
(b) In case any Proceeding is brought against an
indemnified party, and provided that proper notice is duly given, the
indemnifying party shall assume the defense thereof insofar as such Proceeding
involves any loss, liability, claim, obligation, damage or expense in respect of
which indemnification may be sought hereunder, with counsel
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reasonably satisfactory to such indemnified party and, after notice from the
indemnifying party to the indemnified party of its assumption of the defense
thereof, the indemnifying party shall not be liable to the indemnified party for
any legal or other expenses subsequently incurred by the latter in connection
with the defense thereof (but the indemnified party shall have the right, but
not the obligation, to participate at its own expense in such defense by counsel
of its own choice) or for any amounts paid or foregone by the latter as a result
of the settlement or compromise thereof (without the written consent of the
indemnifying party). If the indemnifying party shall assume the defense of a
Proceeding, the indemnified party shall cooperate fully with the indemnifying
party and shall appear and give testimony, produce documents and other tangible
evidence, allow the indemnifying party access to the books and records of the
indemnified party and otherwise assist the indemnifying party in conducting such
defense.
(c) If both the indemnifying party and the indemnified
party are named as parties in or are subject to a Proceeding and either such
party determines with advice of counsel that there may be one or more legal
defenses available to it that are different from or additional to those
available to the other party or that a material conflict of interest between
such parties may exist in respect of such Proceeding, the indemnifying party may
decline to assume the defense on behalf of the indemnified party or the
indemnified party may retain the defense on its own behalf and, in either such
case, after notice to such effect is duly given hereunder to the other party,
the indemnifying party shall be relieved of its obligation to assume the defense
on behalf of the indemnified party, but shall be required to pay any legal or
other expenses, including, without limitation, reasonable attorneys' fees and
disbursements incurred by the indemnified party in such defense; provided,
however, that the indemnifying party shall not be liable for such expense on
account of more than one separate firm of attorneys (and, if necessary, local
counsel) at any time representing such indemnified party in connection with any
Proceeding or separate Proceedings in the same jurisdiction arising out of or
based upon substantially the same allegations or circumstances.
(d) No indemnifying party shall, without the consent of
the indemnified party, consent to entry of any judgment or enter into any
settlement or compromise which does not include as an unconditional term thereof
the giving by the claimant or plaintiff to such indemnified party of a release
from all liability in respect of such Proceeding (but the indemnifying party
shall have the right to participate at its own cost and expense in such defense
by counsel of its own choice) and may make in good faith any compromise or
settlement with respect thereto, and recover the entire cost and expense
thereof, including without limitation reasonable attorneys' fees and
disbursements and all amounts paid and foregone as a result of such Proceeding,
or the settlement or compromise thereof, from the indemnifying party. The
indemnification required shall be made by periodic payments of the amount
thereof during the course of the investigation or defense, as and when bills or
invoices are received or loss, liability, obligation, damage or expense is
actually suffered or incurred.
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7.4 Survival of Representations and Warranties. The
representations and warranties of each party herein shall, notwithstanding any
investigation or inquiry made by the other party, continue until the later of
three years after the execution of this Agreement or until the expiration of the
applicable statute of limitations. Any claim for indemnification under Section
7.1 (a) or Section 7.2 (a) shall be made within the applicable survival period
set forth in this Section 7.4.
ARTICLE VIII
MISCELLANEOUS
8.1 Limitation of Authority. No provision hereof shall be deemed
to create any partnership, joint venture or joint enterprise or association
between the parties hereto, or to authorize or to empower either party hereto to
act on behalf of, obligate or bind the other party hereto.
8.2 Fees and Expenses. Each party hereto shall bear such costs,
fees and expenses as may be incurred by it in connection with this Agreement and
the transactions contemplated hereby.
8.3 Notices. Any notice or demand required or permitted to be
given or made hereunder to or upon either party hereto shall be deemed to have
been duly given or made for all purposes if (a) in writing and sent by (i)
messenger or an overnight courier service against receipt, or (ii) certified or
registered mail, postage paid, return receipt requested, or (b) sent by
telegram, facsimile transmission, telex or similar electronic means, provided
that a written copy thereof is sent on the same day by postage paid first-class
mail, to such party at the its address first set forth above, or such other
address as either party hereto may at any time, or from time to time, direct by
notice given to the other party in accordance with this Section. The date of
giving or making of any such notice or demand shall be, in the case of clause
(a)(i), the date of the receipt; in the case of clause (a)(ii), five business
days after such notice or demand is sent; and, in the case of clause (b), the
business day next following the date such notice or demand is sent.
8.4 Amendment. Except as otherwise provided herein, no amendment
of this Agreement shall be valid or effective, unless in writing and signing by
or on behalf of the parties hereto.
8.5 Waiver. No course of dealing or omission or delay on the part
of either party hereto in asserting or exercising any right hereunder shall
constitute or operate as a waiver of any such right. No waiver of any provision
hereof shall be effective, unless in writing and signed by or on behalf of the
party to be charged therewith. No waiver shall be deemed a continuing waiver or
waiver in respect of any other or subsequent breach or default, unless expressly
so stated in writing.
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<PAGE>
8.6 Governing Law. This Agreement shall be governed by, and
interpreted and enforced in accordance with, the laws of the State of Nevada,
without regard to principles of choice of law or conflict of laws.
8.7 Remedies. In the event of any actual or prospective breach or
default by either party hereto, the other party shall be entitled to equitable
relief, including remedies in the nature of rescission, injunction and specific
performance. All remedies hereunder are cumulative and not exclusive, and
nothing herein shall be deemed to prohibit or limit either party from pursuing
any other remedy or relief available at law or in equity for such actual or
prospective breach or default, including the recovery of damages; provided,
however, that the indemnification provisions of Article 10 shall be the sole and
exclusive remedy with respect to claims for monetary damages.
8.8 Severability. The provisions hereof are severable and in the
event that any provision of this Agreement shall be determined to be invalid or
unenforceable in any respect by a court of competent jurisdiction, the remaining
provisions hereof shall not be affected, but shall, subject to the discretion of
such court, remain in full force and effect, and any invalid or unenforceable
provision shall be deemed, without further action on the part of the parties
hereto, amended and limited to the extent necessary to render the same valid and
enforceable.
8.9 Further Assurances. Each party hereto covenants and agrees
promptly to execute, deliver, file or record such agreements, instruments,
certificates and other documents and to perform such other and further acts as
the other party hereto may reasonably request or as may otherwise be necessary
or proper to consummate and perfect the transactions contemplated hereby.
8.10 Assignment. This Agreement, and each right, interest and
obligation hereunder, may not be assigned, whether by operation of law, merger,
consolidation or otherwise, by any party hereto without the prior written
consent of the other parties hereto, and any purported assignment without such
consent shall be void and without effect.
8.11 Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
permitted assigns. This Agreement is not intended, and shall not be deemed, to
create or confer any right or interest for the benefit of any Person not a party
hereto.
8.12 Incorporation by Reference. The Exhibits and Schedules hereto
are an integral part of this Agreement and are incorporated in their entirety
herein by this reference.
8.13 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which shall be deemed to be an original, but all of which taken together shall
constitute one and the same agreement.
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement by their
duly authorized representatives as of the date first above written.
THESSEUS INTERNATIONAL THESSEUS HOLDINGS, INC.
ASSET FUND N.V.
By: By:
------------------------- -----------------------------
Jason Galanis Barry Feiner
Its Secretary Its President
ATTACHMENTS:
Exhibit "A" BCP Statement of Rights and Preferences
Exhibit "B" IDMS Statement of Rights and Preferences
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<PAGE>
Shanecy Completes Investments in Two Technology Companies; Combined $6.592
Million of Preferred Stock Purchased
CARLSBAD, Calif, Jan. 20 /PRNewswire/ -- Shanecy, Inc. (OTC Bulletin Board:
SECY), an Internet-related operating company that invests in businesses using
the Internet to provide products, services and personal empowerment information
to moderate-income consumers, announced that on January 18 it completed the
acquisition of preferred stock in Brunswick Capital Partners, Inc. of Sioux
Falls, South Dakota and Infobase Direct Marketing of Carlsbad, California. The
investments represent an important further diversification of Shanecy
(to-be-named Inc.ubator Capital, as announced) as a technology and Internet
holding company and are consistent with Shanecy's objective of investing in
businesses that bring the benefits of Net to the average consumer.
In the transactions, Shanecy purchased a combined $6.592 million in preferred
stock in the two companies. At its option, Shanecy has the right to convert the
preferred stock into 40% of the common stock of Brunswick and 49% of the common
stock of Infobase, respectively.
Jason Galanis, President of Shanecy said, "As a consumer-oriented Internet
investor, we believe in systems and technologies that help consumers do business
on the Internet. Brunswick and InfoBase offer what we believe is essential
technology for consumers looking to use the Net. We're excited about the growth
prospects of these latest investments as Internet penetration increases
nationally among the emerging Internet population."
Brunswick Capital Partners ("BCP") is an information-based issuer and manager of
credit cards targeted to moderate-income consumers. Brunswick owns certain
proprietary database management technologies to assist in managing cardholder
acquisition and subsequent cross-marketing and other electronic advertising
opportunities. Brunswick also intends to use the Internet to solicit new
customers and to deliver services to its customers. Shanecy determined that
Brunswick has a market advantage, possibly as a "first-mover", in using the
Internet to deliver an "e-commerce" credit card to moderate-income consumers. To
date, Internet-based delivery of such services has been generally limited to
more affluent customers only.
Brunswick currently owns approximately $430 million in non-performing loan
inventory representing a proprietary database of over 200 thousand consumers.
BCP also has approximately $1.6 million of credit card receivables from
consumers generated from that database now making timely payments.
BCP maintains a relationship with a third-party commercial bank covering the
issuance of credit cards to its moderate-income customers.
InfoBase is a database marketing company focused on the analysis of
consumer-related information used to target-market various financial and other
products to the moderate-income consumer. The company uses technology to perform
one-to-one marketing through the "mass customization" process.
Interests in the companies were acquired by way of newly established holding
companies and completed through a tax free exchange. Shanecy acquired the stock
from Thesseus International Asset Fund, a closed-end venture capital company.
Three of the directors of the Company are directors of Thesseus, one is a major
shareholder and one is the CFO. Each are considered to be affiliates of
Thesseus. Aggregate consideration of 2 million restricted common shares was paid
by Shanecy.
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Shanecy is pleased with the quality of the management teams of both companies
and the innovative technologies they possess. Shanecy believes that both
companies have the potential of strong near term growth. Further, the
investments are also complementary to the other investments of Shanecy, which
may expand revenue opportunities for each company and their parent investor.
If Brunswick and Infobase perform as anticipated, Shanecy expects that one or
both may be spun-off in the future through a registration statement forming an
independent public company, which, should this occur, would provide existing
shareholders of Shanecy an early opportunity to participate in another emerging
technology company's stock.
About Shanecy, Inc.
Shanecy is a publicly traded Internet operating company that invests in
businesses using the Internet to provide products, services and personal
empowerment information to moderate-income consumers. Based on research and
published US government studies, this population represents an under-served
market of 30 to 40 million households. The Company seeks to identify companies
demonstrating superior strategies in innovating and deploying Internet-based
information technology for business-to-consumer e-commerce applications.
Shanecy provides its shareholders with the ability to invest in a portfolio of
emerging growth Internet companies and possible future opportunities for
participation in the IPO, directed share program, rights offering, spin-off,
sale or merger of Internet investment subsidiaries.
There are forward-looking statements in this document, and in the Company's
public documents to which they may refer, that are subject to risks and
uncertainties in addition to those set forth above. These forward-looking
statements include information about possible or assumed future results of the
Company's operations. Also, when any of the words "believes," "expects,"
"anticipates" or similar expressions are used, the Company is making
forward-looking statements. Many possible events or factors could affect future
financial results and performance. This could cause Company results or
performance to differ materially from those expressed in their forward-looking
statements. These and other risks are described in the Company's publicly filed
documents and reports that are available from the Company and from the SEC.
