UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K/A
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 14, 2000
Commission file Number 000-28207
INTERNATIONAL BRANDS, INC.
(Exact Name of Registrant as Specified in its Charter)
Nevada 33-0652291
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
7729 Othello Ave
San Diego, CA 92111
(Address of principal executive offices) (Zip Code)
(858) 292-3380
Fax (858) 292-1528
(Registrant's Executive Office Telephone Number)
TELE SPECIAL.COM
1850 E. Flamingo Rd. #111
Las Vegas, Nevada 89119
(Former name and former address)
<PAGE>
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
(a) Pursuant to an Acquisition Agreement and Plan of Merger (the
"Merger Agreement") dated as of January 12, 2000 between International
Brands, Inc ("IBI"), a Nevada corporation, and Tele Special.Com ("TSC"), a
Nevada corporation, all the outstanding shares of common stock of TSC were
exchanged for 25,000 shares of common stock of IBI in a transaction in
which IBI was the surviving corporation.
The Merger Agreement was adopted by the unanimous consent of the Board
of Directors of TSC on January 12, 2000. The Merger Agreement was adopted
by the unanimous consent of the Board of Directors of IBI on January 12,
2000. The Articles of Merger were filed on January 12, 2000. The officers
of IBI will continue as officers of IBI.
A copy of the Merger Agreement is filed as an exhibit to this Form 8-K
and is incorporated in its entirety herein. The foregoing description is
modified by such reference.
(b) The following table contains information regarding the
shareholdings of IBI's current directors and executive officers and those
persons or entities who beneficially own more than 5% of its common stock
(giving effect to the exercise of the warrants held by each such person or
entity):
<TABLE>
Amount of Common Percent of
Stock Common Stock
Beneficially
Name Owned (1) Beneficially
Owned(2)
<S> <C> <C>
Steven Zubkis 256,260,000 72.44%
</TABLE>
(1) Based upon 353,764,173 outstanding shares of common stock
(subsequent to the merger).
(2) Assumes exercise of warrants, options or other rights to purchase
securities held by the named shareholder exercisable within six months
of the date hereof.
(3) Does not take into account the dilution as the result of the
conversion of Preferred Shares to Common Shares.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
(a) The consideration exchanged pursuant to the Merger Agreement was
negotiated between TSC and IBI.
BUSINESS
International Brands, Inc. through its wholly owned subsidiary
WorldBestBuy.com offers an Internet mega-shopping site where consumers can
purchase a wide range of products from around the world at discount prices.
WorldBestBuy.com also offers an extensive package of free services designed
to turn first-time buyers into regular customers. Among these free services
is a Garage sale area where can consumers can buy, sell and trade personal
items and a World Bazaar area where craftsmen and collectors from around
the globe can sell interesting and unusual items without paying any listing
charges or commissions.
Recently launched additions to the WorldBestBuy.com site are an
automobile auction and free Web browsing and e-mail service with nationwide
local access number support. Individuals taking advantage of the no-cost
system will have www.worldbestbuy.com automatically loaded as their home
page.
International Brands is also supporting WorldBestBuy.com with an
international marketing campaign including video infomercials on United,
TWA and USAirways; banner advertising on over 3,500 major Web sites, a
trans-European endorsement campaign by World Music Award-winning vocalist
Philip Kirkorov, the third best-selling recording artist in the world
during 1999, and motorsports sponsorships in the NASCAR Winston Cup and
Busch Series, the Indianapolis 500, and advertising in the official
magazine of the Formula One Championship for the 50th anniversary of Grand
Prix, the company is actively pursuing an associate sponsorship of Formula
One racing team.
Other marketing support for WorldBestBuy.com comes from strategic
partnerships with over 10,000 Internet Entrepreneurs who offer
WorldBestBuy.com products on their Websites on a commission basis.
<PAGE>
In addition to www.worldbestbuy.com, International Brands, Inc. owns
all or part of Jazznet.com, the Web's most complete and informative site
devoted to America's greatest cultural gift to the world; Moviment
Productions, an award-winning computer animation and video production
studio; and Majic Entertainment, which provides world-class circus
performers to Las Vegas Hotel/Casino Shows and other entertainment venues.
Litigation
There is one pending case of litigation against the company. This
action was filed prior to the company restructuring and reorganization and
is currently in a settlement stage.
Description of Securities
In September 1999 the Company's stockholders approved the increase of
capital stock to 400,000,000 shares of common stock, $.001 par value shares
and 100,000,000 preferred stock, $.001 par value. As a result of the Merger
the Company has 353,764,173 shares of common stock issued and outstanding
and 716,440 shares of preferred stock issued and outstanding.
The Amended and Restated Articles of Incorporation increasing the
capitalization are anticipated to be filed within the following week.
MARKET FOR IBI's SECURITIES
IBI is a reporting publicly traded company. IBI's common stock is
traded on the NASD OTC Bulletin Board under the symbol INBR.
MANAGEMENT
<TABLE>
Name Age Title
<S> <C> <C>
Steven Zubkis 40 President
</TABLE>
Steven Zubkis was born in the former USSR and is now married with five
children. After graduating from high school he went on to New York
University School of Continued Education for System Programming while
specializing in Operational Systems and Mainframe Computers. His jobs in
the computer industry have included, but are not limited to Computer
Programmer, System Programmer, and Tech Support for Mainframes & Databases.
He also worked in the construction industry. He went on to become a
stockbroker and eventually made the move to be CEO/President of Z3. Shortly
after he made the vertical move from Sr. Advisor of Stella Bella to owner
of the company and reorganizing the structure of into International Brands,
Inc. Created from that company is the DBA World Best Buy.com of which he
is currently the President/CEO.
Executive Compensation
The sole director, Steven Zubkis of the Company hold office until the next
annual meeting of shareholders or until their successors are elected and
qualified. At present, the Company's Bylaws provide for not less than one
nor more than nine directors. Currently, there is one director of the
Company. The Bylaws permit the Board of Directors to fill any vacancy and
such director may serve until the next annual meeting of shareholders or
until his successor is elected and qualified. Officers serve at the
discretion of the Board of Directors.
RISK FACTORS
Competition from larger and more established companies may hamper
marketability. IBI may face intense competition from similar, more well
established competitors, including national, regional and local companies
possessing substantially greater financial, marketing, personnel and other
resources than IBI. IBI may not be able to market or sell its products if
faced with direct product competition from these larger or more established
companies.
Issuance of future shares may dilute investors share value. The Articles
of Incorporation as amended of IBI authorizes the issuance of 400,000,000
shares of common stock. The future issuance of all or part of the
remaining authorized common stock may result in substantial dilution in the
percentage of the Company's common stock held by the its then existing
shareholders. Moreover, any common stock issued in the future may be
<PAGE>
valued on an arbitrary basis by IBI. The issuance of the Company's shares
for future services or acquisitions or other corporate actions may have the
effect of diluting the value of the shares held by investors, and might
have an adverse effect on any trading market, should a trading market
develop for the Company's common stock.
Current trading market for the Company's securities. IBI's common stock
is traded on the OTC Bulletin Board operated by Nasdaq under the symbol
INBR.
Penny Stock Regulation. The Company's common stock may be deemed a penny
stock. Penny stocks generally are equity securities with a price of less
than $5.00 per share other than securities registered on certain national
securities exchanges or quoted on the Nasdaq Stock Market, provided that
current price and volume information with respect to transactions in such
securities is provided by the exchange or system. The Company's securities
may be subject to "penny stock rules" that impose additional sales practice
requirements on broker-dealers who sell such securities to persons other
than established customers and accredited investors (generally those with
assets in excess of $1,000,000 or annual income exceeding $200,000 or
$300,000 together with their spouse). For transactions covered by these
rules, the broker-dealer must make a special suitability determination for
the purchase of such securities and have received the purchaser's written
consent to the transaction prior to the purchase. Additionally, for any
transaction involving a penny stock, unless exempt, the "penny stock rules"
require the delivery, prior to the transaction, of a disclosure schedule
prescribed by the Commission relating to the penny stock market. The
broker-dealer also must disclose the commissions payable to both the broker-
dealer and the registered representative and current quotations for the
securities. Finally, monthly statements must be sent disclosing recent
price information on the limited market in penny stocks. Consequently, the
"penny stock rules" may restrict the ability of broker-dealers to sell the
Company's securities. The foregoing required penny stock restrictions will
not apply to the Company's securities if such securities maintain a market
price of $5.00 or greater. There can be no assurance that the price of the
Company's securities will reach or maintain such a level. The company
currently has net tangible assets of $47,000,000 and believes that it will
no longer be subject to Penny Stock disclosure subsequent to its next
certified audit.
Computer Systems Redesigned for Year 2000. Many existing computer programs
use only two digits to identify a year in such program's date field. These
programs were designed and developed without consideration of the impact of
the change in the century for which four digits will be required to
accurately report the date. If not corrected, many computer applications
could fail or create erroneous results by or following the year 2000 (the
"Year 2000 problem"). Many of the computer programs containing such date
language problems have been corrected by the companies or governments
operating such programs. The Company's operations will be dependent upon
the timely delivery of supplies which deliveries and initial refining of
fuels may be delayed or canceled because of such Year 2000 problem computer
failures. The Company does not know what steps, if any, have been taken by
any of its potential suppliers in regard to the Year 2000 problems. It is
impossible to predict if the basic utilities serving the Company or
suppliers will continue uninterrupted.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
Not applicable.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
Not applicable.
ITEM 5. OTHER EVENTS
Not applicable.
ITEM 6. RESIGNATIONS OF DIRECTORS AND EXECUTIVE OFFICERS
Pursuant to the Merger Agreement Steven Zubkis will remain as
President of IBI.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS
No financial statements are filed herewith. The Registrant shall file
financial statements by amendment hereto not later than 60 days after the
date that this Current Report on Form 8-K must be filed.
ITEM 8. CHANGE IN FISCAL YEAR
Not applicable.
EXHIBITS
1.1 Agreement and Plan of Merger between Tele Special.Com and
International Brands, Inc.
1.2* Articles of Merger between Tele Special.Com and International Brands,
Inc,
______
*Filed in Form 8-K on January 12, 2000
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Current Report on Form 8-K to be signed on
its behalf by the undersigned hereunto duly authorized.
INTERNATIONAL BRANDS, INC.
By/s/ Steven Zubkis
President
Date: January 18, 2000
<PAGE>
EXHIBIT 1.1
ACQUISITION AGREEMENT AND PLAN OF MERGER
DATED AS OF JANUARY 12, 2000
BETWEEN
INTERNATIONAL BRANDS, INC.
AND
TELE SPECIAL.COM
TABLE OF CONTENTS
ARTICLE 1. The Merger
Section 1.1. The Merger
Section 1.2. Effective Time
Section 1.3. Closing of the Merger
Section 1.4. Effects of the Merger
Section 1.5. Board of Directors and Officers
Section 1.6. Conversion of Shares
Section 1.7. Exchange of Certificates
Section 1.8. Stock Options
Section 1.9. Taking of Necessary Action; Further Action
ARTICLE 2. Representations and Warranties of IBI
Section 2.1. Organization and Qualification
Section 2.2. Capitalization of IBI
Section 2.3.Authority Relative to this Agreement; Recommendation.
Section 2.4. SEC Reports; Financial Statements
Section 2.5. Information Supplied
Section 2.6. Consents and Approvals; No Violations
Section 2.7. No Default
Section 2.8. No Undisclosed Liabilities; Absence of Changes
Section 2.9. Litigation
Section 2.10. Compliance with Applicable Law
Section 2.11. Employee Benefit Plans; Labor Matters
Section 2.12. Environmental Laws and Regulations
Section 2.13. Tax Matters
Section 2.14. Title To Property
Section 2.15. Intellectual Property
Section 2.16. Insurance
Section 2.17. Vote Required
Section 2.18. Tax Treatment
Section 2.19. Affiliates
Section 2.20. Certain Business Practices
Section 2.21. Insider Interests
Section 2.22. Opinion of Financial Adviser
Section 2.23. Brokers
Section 2.24. Disclosure
Section 2.25. No Existing Discussion
Section 2.26. Material Contracts
<PAGE>
ARTICLE 3. Representations and Warranties of TSC.
Section 3.1. Organization and Qualification
Section 3.2. Capitalization of TSC
Section 3.3.Authority Relative to this Agreement; Recommendation
Section 3.4. SEC Reports; Financial Statements
Section 3.5. Information Supplied
Section 3.6. Consents and Approvals; No Violations
Section 3.7. No Default
Section 3.8 No Undisclosed Liabilities; Absence of Changes
Section 3.9. Litigation
Section 3.10. Compliance with Applicable Law
Section 3.11. Employee Benefit Plans; Labor Matters
Section 3.12. Environmental Laws and Regulations
Section 3.13. Tax Matters
Section 3.14. Title to Property
Section 3.15. Intellectual Property
Section 3.16. Insurance
Section 3.17. Vote Required
Section 3.18. Tax Treatment
Section 3.19. Affiliates
Section 3.20. Certain Business Practices
Section 3.21. Insider Interests
Section 3.22. Opinion of Financial Adviser
Section 3.23. Brokers
Section 3.24. Disclosure
Section 3.25. No Existing Discussions
Section 3.26. Material Contracts
ARTICLE 4. Covenants
Section 4.1. Conduct of Business of IBI
Section 4.2. Conduct of Business of TSC
Section 4.3. Preparation of 8-K and the Proxy Statement
Section 4.4. Other Potential Acquirers
Section 4.5. Meetings of Stockholders
Section 4.6. NASD OTC:BB Listing
Section 4.7. Access to Information
Section 4.8. Additional Agreements; Reasonable Efforts.
Section 4.9.Employee Benefits; Stock Option and Employee Purchase Plans
Section 4.10. Public Announcements
Section 4.11. Indemnification
Section 4.12. Notification of Certain Matters
ARTICLE 5. Conditions to Consummation of the Merger
Conditions to Each Party's Obligations to Effect the
Section 5.1. Merger
Section 5.2. Conditions to the Obligations of IBI
Section 5.3. Conditions to the Obligations of TSC
<PAGE>
ARTICLE 6. Termination; Amendment; Waiver
Section 6.1. Termination
Section 6.2. Effect of Termination
Section 6.3. Fees and Expenses
Section 6.4. Amendment
Section 6.5. Extension; Waiver
ARTICLE 7. Miscellaneous
Section 7.1. Nonsurvival of Representations and Warranties
Section 7.2. Entire Agreement; Assignment
Section 7.3. Validity
Section 7.4. Notices
Section 7.5. Governing Law
Section 7.6. Descriptive Headings
Section 7.7. Parties in Interest
Section 7.8. Certain Definitions
Section 7.9. Personal Liability
Section 7.10. Specific Performance
Section 7.11. Counterparts
<PAGE>
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement"), dated as of
January 12, 2000, is between INTERNATIONAL BRANDS, INC., a Nevada
corporation ("IBI"), and Tele Special.Com, a Nevada corporation ("TSC").
Whereas, the Boards of Directors of IBI and TSC each have, in light of
and subject to the terms and conditions set forth herein, (i) determined
that the Merger (as defined below) is fair to their respective stockholders
and in the best interests of such stockholders and (ii) approved the Merger
in accordance with this Agreement;
Whereas, for Federal income tax purposes, it is intended that the
Merger qualify as a reorganization under the provisions of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code"); and
Whereas, IBI and TSC desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also
to prescribe various conditions to the Merger.
Now, therefore, in consideration of the premises and the
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, IBI and TSC hereby agree as follows:
ARTICLE I
The Merger
Section 1.1. The Merger. At the Effective Time (as defined below) and
upon the terms and subject to the conditions of this Agreement and in
accordance with the General Corporation Law of the state of Nevada (the
"NGCL"), TSC shall be merged with and into IBI (as defined below) (the
''Merger`). Following the Merger, IBI shall continue as the surviving
corporation (the "Surviving Corporation"), shall continue to be governed by
the laws of the jurisdiction of its incorporation or organization and the
separate corporate existence of TSC shall cease. Prior to the Effective
Time, the parties hereto shall mutually agree as to the name of the
Surviving Corporation; however, initially the Surviving Corporation shall
be named INTERNATIONAL BRANDS, INC. a Nevada corporation. The Merger is
intended to qualify as a tax-free reorganization under Section 368 of the
Code as relates to the non-cash exchange of stock referenced herein.
Section 1.2. Effective Time. Subject to the terms and conditions set forth
in this Agreement, a Certificate of Merger (the "Merger Certificate") shall
be duly executed and acknowledged by each of TSC and IBI, and thereafter
the Merger Certificate reflecting the Merger shall be delivered to the
Secretary of State of the State of Nevada for filing pursuant to the NGCL
on the Closing Date (as defined in Section 1.3). The Merger shall become
effective at such time as a properly executed and certified copy of the
Merger Certificate is duly filed by the Secretary of State of the State of
Nevada in accordance with the NGCL or such later time as the parties may
agree upon and set forth in the Merger Certificate (the time at which the
Merger becomes effective shall be referred to herein as the "Effective
Time").
Section 1.3. Closing of the Merger. The closing of the Merger (the
"Closing") will take place at a time and on a date to be specified by the
parties, which shall be no later than the second business day after
satisfaction of the latest to occur of the conditions set forth in Article
5 (the "Closing Date"), at the offices of Sperry Young & Stoecklein, 1850
E. Flamingo Rd., Suite 111, Las Vegas, Nevada, unless another time, date or
place is agreed to in writing by the parties hereto.
Section 1.4. Effects of the Merger. The Merger shall have the effects
set forth in the NGCL. Without limiting the generality of the foregoing,
and subject thereto, at the Effective Time, all the properties, rights,
privileges, powers of TSC shall vest in the Surviving Corporation, and all
debts, liabilities and duties of TSC shall become the debts, liabilities
and duties of the Surviving Corporation.
<PAGE>
Section 1.5. Board of Directors and Officers of IBI. At or prior to
the Effective Time, each of TSC and IBI agrees to take such action as is
necessary (i) to cause the number of directors comprising the full Board of
Directors of IBI to remain the same. In addition, IBI majority stockholders
of IBI prior to the Effective Time shall take all action necessary to
cause, to the greatest extent practicable, the IBI's Board of Directors
shall remain the same until the 2000 Annual Meeting.
Section 1.6. Conversion of Shares.
(a) At the Effective Time, each share of common stock, par value $.001
per share of TSC (individually a "TSC Share" and collectively, the "TSC
Shares") issued and outstanding immediately prior to the Effective Time
shall, by virtue of the Merger and without any action on the part of TSC,
IBI, or the holder thereof, be converted into and shall become fully paid
and nonassessable IBI common shares determined by issuing one share of IBI
common share for every 200 shares of TSC.
(b) At the Effective Time, each TSC Share held in the treasury of TSC,
by TSC immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of TSC or IBI be canceled,
retired and cease to exist and no payment shall be made with respect
thereto.
Section 1.7. Exchange of Certificates.
(a) Prior to the Effective Time, IBI shall enter into an agreement
with, and shall deposit with, Sperry Young & Stoecklein, or such other
agent or agents as may be satisfactory to IBI and TSC (the "Exchange
Agent'), for the benefit of the holders of TSC Shares, for exchange through
the Exchange Agent in accordance with this Article I: (i) certificates
representing the appropriate number of IBI Shares to be issued to holders
of TSC Shares issuable pursuant to Section 1.6 in exchange for outstanding
TSC Shares.
(b) As soon as reasonably practicable after the Effective Time, the
Exchange Agent shall mail to each holder of record of a certificate or
certificates which immediately prior to the Effective Time represented
outstanding TSC Shares (the "Certificates") whose shares were converted
into the right to receive IBI Shares pursuant to Section 1.6: (i) a letter
of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon delivery
of the Certificates to the Exchange Agent and shall be in such form and
have such other provisions as TSC and IBI may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in
exchange for certificates representing IBI Shares. Upon surrender of a
Certificate to the Exchange Agent, together with such letter of
transmittal, duly executed, and any other required documents, the holder of
such Certificate shall be entitled to receive in exchange therefor a
certificate representing that number of whole IBI Shares and, if
applicable, a check representing the cash consideration to which such
holder may be entitled on account of the Cash Fund, which such holder has
the right to receive pursuant to the provisions of this Article I, and the
Certificate so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of TSC Shares which are not registered in the
transfer records of TSC, a certificate representing the proper number of
IBI Shares may be issued to a transferee if the Certificate representing
such TSC Shares is presented to the Exchange Agent accompanied by all
documents required by the Exchange Agent or IBI to evidence and effect such
transfer and by evidence that any applicable stock transfer or other taxes
have been paid. Until surrendered as contemplated by this Section 1.7, each
Certificate shall be deemed at any time after the Effective Time to
represent only the right to receive upon such surrender the certificate
representing IBI Shares as contemplated by this Section 1.8.
(c) No dividends or other distributions declared or made after the
Effective Time with respect to IBI Shares with a record date after the
Effective Time shall be paid to the holder of any unsurrendered Certificate
with respect to the IBI Shares represented thereby until the holder of
record of such Certificate shall surrender such Certificate.
(d) In the event that any Certificate for TSC Shares or IBI Shares
shall have been lost, stolen or destroyed, the Exchange Agent shall issue
in exchange therefor, upon the making of an affidavit of that fact by the
holder thereof such IBI Shares and cash in lieu of fractional IBI Shares,
if any, as may be required pursuant to this Agreement; provided, however,
that IBI or the Exchange Agent, may, in its respective discretion, require
the delivery of a suitable bond, opinion or indemnity.
<PAGE>
(e) All IBI Shares issued upon the surrender for exchange of TSC
Shares in accordance with the terms hereof (including any cash paid
pursuant to Section 1.10 shall be deemed to have been issued in full
satisfaction of all rights pertaining to such TSC Shares. There shall be no
further registration of transfers on the stock transfer books of either of
TSC or IBI of the TSC Shares or IBI Shares which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to IBI for any reason, they shall be canceled
and exchanged as provided in this Article I.
(f) No fractional IBI Shares shall be issued in the Merger, but in
lieu thereof each holder of TSC Shares otherwise entitled to a fractional
IBI Share shall, upon surrender of its, his or her Certificate or
Certificates, be entitled to receive an additional share to round up to the
nearest round number of shares.
Section 1.8. At the Effective Time, each outstanding option to
purchase TSC Shares, if any (a "TSC Stock Option" or collectively, "TSC
Stock Options") issued pursuant to any TSC Stock Option Plan or TSC Long
Term Incentive Plan whether vested or unrested, shall be cancelled.
Section 1.9. Taking of Necessary Action; Further Action. If, at any
time after the Effective Time, TSC or IBI reasonably determines that any
deeds, assignments, or instruments or confirmations of transfer are
necessary or desirable to carry out the purposes of this Agreement and to
vest IBI with full right, title and possession to all assets, property,
rights, privileges, powers and franchises of TSC, the officers and
directors of IBI and TSC are fully authorized in the name of their
respective corporations or otherwise to take, and will take, all such
lawful and necessary or desirable action.
ARTICLE 2
Representations and Warranties of IBI
Except as set forth on the Disclosure Schedule delivered by IBI to TSC
(the "IBI Disclosure Schedule"), IBI hereby represents and warrants to TSC
as follows:
Section 2.1. Organization and Qualification.
(a) IBI is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or organization and has
all requisite power and authority to own, lease and operate its properties
and to carry on its businesses as now being conducted, except where the
failure to be so organized, existing and in good standing or to have such
power and authority would not have a Material Adverse Effect (as defined
below) on IBI. When used in connection with IBI, the term "Material Adverse
Effect" means any change or effect (i) that is or is reasonably likely to
be materially adverse to the business, results of operations, condition
(financial or otherwise) or prospects of IBI, other than any change or
effect arising out of general economic conditions unrelated to any business
in which IBI is engaged, or (ii) that may impair the ability of IBI to
perform its obligations hereunder or to consummate the transactions
contemplated hereby.
(b) IBI has heretofore delivered to TSC accurate and complete copies
of the Certificate of Incorporation and Bylaws (or similar governing
documents), as currently in effect, of IBI. Except as set forth on Schedule
2.1 of the IBI Disclosure Schedule, IBI is duly qualified or licensed and
in good standing to do business in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by
it makes such qualification or licensing necessary, except in such
jurisdictions where the failure to be so duly qualified or licensed and in
good standing would not have a Material Adverse Effect on IBI.
Section 2.2. Capitalization of IBI.
(a) The authorized capital stock of IBI consists of: (i) Four Hundred
Million (400,000,000) Shares of Common Stock, $0.001 par value, and One
Hundred Million (100,000,000) shares of Preferred stock, $0.001 par value.
As of January 12, 2000 353,764,173 shares of IBI Common Stock were issued
and outstanding and 716,440 shares of IBI Preferred Stock were issued and
outstanding. All of the outstanding IBI Shares have been duly authorized
and validly issued, and are fully paid, nonassessable and free of
preemptive rights. Except as set forth herein, as of the date hereof, there
are no outstanding (i) shares of capital stock or other voting securities
<PAGE>
of IBI, (ii) securities of IBI convertible into or exchangeable for shares
of capital stock or voting securities of IBI, except for the preferred
shares of IBI, (iii) options or other rights to acquire from IBI and, no
obligations of IBI to issue, any capital stock, voting securities or
securities convertible into or exchangeable for capital stock or voting
securities of IBI, and (iv) equity equivalents, interests in the ownership
or earnings of IBI or other similar rights (collectively, "IBI Securities")
other than warrants when fully exercised which will cause the issuance of
approximately 150,000,000 additional shares of common stock. As of the date
hereof, except as set forth on Schedule 2.2(a) of the IBI Disclosure
Schedule there are no outstanding obligations of IBI or its subsidiaries to
repurchase, redeem or otherwise acquire any IBI Securities or stockholder
agreements, voting trusts or other agreements or understandings to which
IBI is a party or by which it is bound relating to the voting or
registration of any shares of capital stock of IBI. For purposes of this
Agreement, ''Lien" means, with respect to any asset (including, without
limitation, any security) any mortgage, lien, pledge, charge, security
interest or encumbrance of any kind in respect of such asset.
(b) The IBI Shares constitute the only class of equity securities of
IBI registered or required to be registered under the Exchange Act.
(c) IBI does not own directly or indirectly more than fifty percent
(50%) of the outstanding voting securities or interests (including
membership interests) of any entity, other than as specifically disclosed
in the disclosure documents.
Section 2.3. Authority Relative to this Agreement; Recommendation.
(a) IBI has all necessary corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of IBI (the "IBI Board") and no other
corporate proceedings on the part of IBI are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby, except, as
referred to in Section 2.17, the approval and adoption of this Agreement by
the holders of at least a majority of the then outstanding IBI Shares. This
Agreement has been duly and validly executed and delivered by IBI and
constitutes a valid, legal and binding agreement of IBI, enforceable
against IBI in accordance with its terms.
(b) The IBI Board has resolved to recommend that the stockholders of
IBI approve and adopt this Agreement.
Section 2.4. SEC Reports; Financial Statements.
IBI is not required to file forms, reports and documents with the SEC.
Section 2.5. Information Supplied. None of the information supplied or
to be supplied by IBI for inclusion or incorporation by reference in
connection with the Merger (the "Proxy Statement") will at the date mailed
to stockholders of IBI and at the times of the meeting or meetings of
stockholders of IBI to be held in connection with the Merger, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Proxy Statement, insofar as it relates to the meeting of
IBI's stockholders to vote on the Merger, will comply as to form in all
material respects with the provisions of the Exchange Act and the rules and
regulations thereunder.
Section 2.6. Consents and Approvals; No Violations. Except for
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Securities Act, the
Exchange Act, state securities or blue sky laws, the Hart-Scott-Rodino
Antitrust Improvements Act of 1916, as amended (the ''HSR Act''), the rules
of the National Association of Securities Dealers, Inc. ("NASD"), the
filing and recordation of the Merger Certificate as required by the NGCL,
and as set forth on Schedule 2.6 of the IBI Disclosure Schedule no filing
with or notice to, and no permit, authorization, consent or approval of,
any court or tribunal or administrative, governmental or regulatory body,
agency or authority (a "Governmental Entity") is necessary for the
execution and delivery by IBI of this Agreement or the consummation by IBI
of the transactions contemplated hereby, except where the failure to obtain
such permits, authorizations, consents or approvals or to make such filings
or give such notice would not have a Material Adverse Effect on IBI.
Except as set forth in Section 2.6 of the IBI Disclosure Schedule,
neither the execution, delivery and performance of this Agreement by IBI
nor the consummation by IBI of the transactions contemplated hereby will
(i) conflict with or result in any breach of any provision of the
respective Certificate of Incorporation or Bylaws (or similar governing
documents) of IBI, (ii) result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give
rise to any right of termination, amendment, cancellation or acceleration
or Lien) under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, lease, license, contract, agreement or other
instrument or obligation to which IBI is a party or by which any of its
properties or assets may be bound, or (iii) violate any order, writ,
injunction, decree, law, statute, rule or regulation applicable to IBI or
any of its properties or assets, except in the case of (ii) or (iii) for
violations, breaches or defaults which would not have a Material Adverse
Effect on IBI.
Section 2.7. No Default. Except as set forth in Section 2.7 of the IBI
Disclosure Schedule, IBI is not in breach, default or violation (and no
event has occurred which with notice or the lapse of time or both would
constitute a breach default or violation) of any term, condition or
provision of (i) its Certificate of Incorporation or Bylaws (or similar
governing documents), (ii) any note, bond, mortgage, indenture, lease,
license, contract, agreement or other instrument or obligation to which IBI
is now a party or by which any of its respective properties or assets may
be bound or (iii) any order, writ injunction, decree, law, statute, rule or
regulation applicable to IBI or any of its respective properties or assets,
except in the case of (ii) or (iii) for violations, breaches or defaults
that would not have a Material Adverse Effect on IBI. Except as set forth
in Section 2.7 of the IBI Disclosure Schedule, each note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or
obligation to which IBI is now a party or by which its respective
properties or assets may be bound that is material to IBI and that has not
expired is in full force and effect and is not subject to any material
default thereunder of which IBI is aware by any party obligated to IBI
thereunder.
Section 2.8. No Undisclosed Liabilities; Absence of Changes. Except as
and to the extent disclosed by IBI in the IBI, none of IBI or its
subsidiaries had any liabilities or obligations of any nature, whether or
not accrued, contingent or otherwise, that would be required by generally
accepted accounting principles to be reflected on a consolidated balance
sheet of IBI and its consolidated subsidiaries (including the notes
thereto) or which would have a Material Adverse Effect on IBI. Except as
disclosed by IBI, none of IBI or its subsidiaries has incurred any
liabilities of any nature, whether or not accrued, contingent or otherwise,
which could reasonably be expected to have, and there have been no events,
changes or effects with respect to IBI or its subsidiaries having or which
could reasonably be expected to have, a Material Adverse Effect on IBI.
Except as and to the extent disclosed by IBI there has not been (i) any
material change by IBI in its accounting methods, principles or practices
(other than as required after the date hereof by concurrent changes in
generally accepted accounting principles), (ii) any revaluation by IBI of
any of its assets having a Material Adverse Effect on IBI, including,
without limitation, any write-down of the value of any assets other than in
the ordinary course of business or (iii) any other action or event that
would have required the consent of any other party hereto pursuant to
Section 4.2 of this Agreement had such action or event occurred after the
date of this Agreement.
Section 2.9. Litigation. Except as set forth in Schedule 2.9 of the
IBI Disclosure Schedule there is no suit, claim, action, proceeding or
investigation pending or, to the knowledge of IBI, threatened against IBI
or any of its subsidiaries or any of their respective properties or assets
before any Governmental Entity which, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect on IBI or
could reasonably be expected to prevent or delay the consummation of the
transactions contemplated by this Agreement. Except as disclosed by IBI,
none of IBI or its subsidiaries is subject to any outstanding order, writ,
injunction or decree which, insofar as can be reasonably foreseen in the
future, could reasonably be expected to have a Material Adverse Effect on
IBI or could reasonably be expected to prevent or delay the consummation of
the transactions contemplated hereby.
Section 2.10. Compliance with Applicable Law. Except as disclosed by
IBI, IBI and its subsidiaries hold all permits, licenses, variances,
exemptions, orders and approvals of all Governmental Entities necessary for
the lawful conduct of their respective businesses (the "IBI Permits"),
except for failures to hold such permits, licenses, variances, exemptions,
orders and approvals which would not have a Material Adverse Effect on IBI.
Except as disclosed by IBI, IBI and its subsidiaries are in compliance with
the terms of the IBI Permits, except where the failure so to comply would
not have a Material Adverse Effect on IBI. Except as disclosed by IBI, the
businesses of IBI and its subsidiaries are not being conducted in violation
of any law, ordinance or regulation of any Governmental Entity except that
no representation or warranty is made in this Section 2.10 with respect to
Environmental Laws and except for violations or possible violations which
do not, and, insofar as reasonably can be foreseen, in the future will not,
have a Material Adverse Effect on IBI. Except as disclosed by IBI no
investigation or review by any Governmental Entity with respect to IBI or
its subsidiaries is pending or, to the knowledge of IBI, threatened, nor,
to the knowledge of IBI, has any Governmental Entity indicated an intention
to conduct the same, other than, in each case, those which IBI reasonably
believes will not have a Material Adverse Effect on IBI.
<PAGE>
Section 2.11. Employee Benefit Plans; Labor Matters.
(a) Except as set forth in Section 2.11(a) of the IBI Disclosure
Schedule with respect to each employee benefit plan, program, policy,
arrangement and contract (including, without limitation, any "employee
benefit plan," as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")), maintained or contributed to
at any time by IBI or any entity required to be aggregated with IBI
pursuant to Section 414 of the Code (each, a "IBI Employee Plan"), no event
has occurred and to the knowledge of IBI, no condition or set of
circumstances exists in connection with which IBI could reasonably be
expected to be subject to any liability which would have a Material Adverse
Effect on IBI.
(b) (i) No IBI Employee Plan is or has been subject to Title IV of
ERISA or Section 412 of the Code; and (ii) each IBI Employee Plan intended
to qualify under Section 401(a) of the Code and each trust intended to
qualify under Section 501(a) of the Code is the subject of a favorable
Internal Revenue Service determination letter, and nothing has occurred
which could reasonably be expected to adversely affect such determination.
(c) Section 2.11(c) of the IBI Disclosure Schedule sets forth a true
and complete list, as of the date of this Agreement, of each person who
holds any IBI Stock Options, together with the number of IBI Shares which
are subject to such option, the date of grant of such option, the extent to
which such option is vested (or will become vested as a result of the
Merger), the option price of such option (to the extent determined as of
the date hereof), whether such option is a nonqualified stock option or is
intended to qualify as an incentive stock option within the meaning of
Section 422(b) of the Code, and the expiration date of such option. Section
2.11(c) of the IBI Disclosure Schedule also sets forth the total number of
such incentive stock options and such nonqualified options. IBI has
furnished TSC with complete copies of the plans pursuant to which the IBI
Stock Options were issued. Other than the automatic vesting of IBI Stock
Options that may occur without any action on the part of IBI or its
officers or directors, IBI has not taken any action that would result in
any IBI Stock Options that are unvested becoming vested in connection with
or as a result of the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.
(d) IBI has made available to TSC (i) a description of the terms of
employment and compensation arrangements of all officers of IBI and a copy
of each such agreement currently in effect; (ii) copies of all agreements
with consultants who are individuals obligating IBI to make annual cash
payments in an amount exceeding $60,000; (iii) a schedule listing all
officers of IBI who have executed a non-competition agreement with IBI and
a copy of each such agreement currently in effect; (iv) copies (or
descriptions) of all severance agreements, programs and policies of IBI
with or relating to its employees, except programs and policies required to
be maintained by law; and (v) copies of all plans, programs, agreements and
other arrangements of IBI with or relating to its employees which contain
change in control provisions all of which are set forth in Section 2.11(d)
of the IBI Disclosure Schedule.
(e) There shall be no payment, accrual of additional benefits,
acceleration of payments, or vesting in any benefit under any IBI Employee
Plan or any agreement or arrangement disclosed under this Section 2.11
solely by reason of entering into or in connection with the transactions
contemplated by this Agreement.
(f) There are no controversies pending or, to the knowledge of IBI,
threatened, between IBI and any of their employees, which controversies
have or could reasonably be expected to have a Material Adverse Effect on
IBI. Neither IBI nor any of its subsidiaries is a party to any collective
bargaining agreement or other labor union contract applicable to persons
employed by IBI or any of its subsidiaries (and neither IBI nor any of its
subsidiaries has any outstanding material liability with respect to any
terminated collective bargaining agreement or labor union contract), nor
does IBI know of any activities or proceedings of any labor union to
organize any of its or employees. IBI has no knowledge of any strike,
slowdown, work stoppage, lockout or threat thereof, by or with respect to
any of its employees.
Section 2.12. Environmental Laws and Regulations.
(a) Except as publicly disclosed by IBI in the IBI SEC Reports, (i)
IBI is in material compliance with all applicable federal, state, local and
foreign laws and regulations relating to pollution or protection of human
health or the environment (including, without limitation, ambient air,
surface water, ground water, land surface or subsurface strata)
(collectively, "Environmental Laws"), except for non-compliance that would
<PAGE>
not have a Material Adverse Effect on IBI, which compliance includes, but
is not limited to, the possession by IBI of all material permits and other
governmental authorizations required under applicable Environmental Laws,
and compliance with the terms and conditions thereof; (ii) IBI has not
received written notice of, or, to the knowledge of IBI, is the subject of,
any action, cause of action, claim, investigation, demand or notice by any
person or entity alleging liability under or non-compliance with any
Environmental Law (an ''Environmental Claim") that could reasonably be
expected to have a Material Adverse Effect on IBI; and (iii) to the
knowledge of IBI, there are no circumstances that are reasonably likely to
prevent or interfere with such material compliance in the future.
(b) Except as publicly disclosed by IBI, there are no Environmental
Claims which could reasonably be expected to have a Material Adverse Effect
on IBI that are pending or, to the knowledge of IBI, threatened against IBI
or, to the knowledge of IBI, against any person or entity whose liability
for any Environmental Claim IBI has or may have retained or assumed either
contractually or by operation of law.
Section 2.13. Tax Matters.
(a) Except as set forth in Section 2.13 of the IBI Disclosure
Schedule: (i) IBI has filed or has had filed on its behalf in a timely
manner (within any applicable extension periods) with the appropriate
Governmental Entity all income and other material Tax Returns (as defined
herein) with respect to Taxes (as defined herein) of IBI and all Tax
Returns were in all material respects true, complete and correct; (ii) all
material Taxes with respect to IBI have been paid in full or have been
provided for in accordance with GAAP on IBI's most recent balance sheet
which is part of the IBI SEC Documents. (iii) there are no outstanding
agreements or waivers extending the statutory period of limitations
applicable to any federal, state, local or foreign income or other material
Tax Returns required to be filed by or with respect to IBI; (iv) to the
knowledge of IBI none of the Tax Returns of or with respect to IBI is
currently being audited or examined by any Governmental Entity; and (v) no
deficiency for any income or other material Taxes has been assessed with
respect to IBI which has not been abated or paid in full.
(b) For purposes of this Agreement, (i) "Taxes" shall mean all taxes,
charges, fees, levies or other assessments, including, without limitation,
income, gross receipts, sales, use, ad valorem, goods and services,
capital, transfer, franchise, profits, license, withholding, payroll,
employment, employer health, excise, estimated, severance, stamp,
occupation, property or other taxes, customs duties, fees, assessments or
charges of any kind whatsoever, together with any interest and any
penalties, additions to tax or additional amounts imposed by any taxing
authority and (ii) "Tax Return" shall mean any report, return, documents
declaration or other information or filing required to be supplied to any
taxing authority or jurisdiction with respect to Taxes.
Section 2.14. Title to Property. IBI has good and defensible title to
all of its properties and assets, free and clear of all liens, charges and
encumbrances except liens for taxes not yet due and payable and such liens
or other imperfections of title, if any, as do not materially detract from
the value of or interfere with the present use of the property affected
thereby or which, individually or in the aggregate, would not have a
Material Adverse Effect on IBI; and, to IBI's knowledge, all leases
pursuant to which IBI leases from others real or personal property are in
good standing, valid and effective in accordance with their respective
terms, and there is not, to the knowledge of IBI, under any of such leases,
any existing material default or event of default (or event which with
notice of lapse of time, or both, would constitute a default and in respect
of which IBI has not taken adequate steps to prevent such a default from
occurring) except where the lack of such good standing, validity and
effectiveness, or the existence of such default or event, would not have a
Material Adverse Effect on IBI.
Section 2.15. Intellectual Property.
(a) IBI owns, or possesses adequate licenses or other valid rights to
use, all existing United States and foreign patents, trademarks, trade
names, service marks, copyrights, trade secrets and applications therefor
that are material to its business as currently conducted (the "IBI
Intellectual Property Rights").
(b) The validity of the IBI Intellectual Property Rights and the title
thereto of IBI is not being questioned in any litigation to which IBI is a
party.
(c) Except as set forth in Section 2.15(c) of the IBI Disclosure
Schedule, the conduct of the business of IBI as now conducted does not, to
IBI's knowledge, infringe any valid patents, trademarks, trade names,
service marks or copyrights of others. The consummation of the transactions
completed hereby will not result in the loss or impairment of any IBI
Intellectual Property Rights.
<PAGE>
(d) IBI has taken steps it believes appropriate to protect and
maintain its trade secrets as such, except in cases where IBI has elected
to rely on patent or copyright protection in lieu of trade secret
protection.
Section 2.16. Insurance. IBI currently does not maintain general
liability and other business insurance.
Section 2.17. Vote Required. The affirmative vote of the holders of at
least a majority of the outstanding IBI Shares is the only vote of the
holders of any class or series of IBI's capital stock necessary to approve
and adopt this Agreement and the Merger.
Section 2.18. Tax Treatment. Neither IBI nor, to the knowledge of IBI,
any of its affiliates has taken or agreed to take action that would prevent
the Merger from constituting a reorganization qualifying under the
provisions of Section 368(a) of the Code.
Section 2.19. Affiliates. Except for Principal IBI Stockholder
("IBIS") and the directors and executive officers of IBI, each of whom is
listed in Section 2.19 of the IBI Disclosure Schedule, there are no persons
who, to the knowledge of IBI, may be deemed to be affiliates of IBI under
Rule 1-02(b) of Regulation S-X of the SEC (the "IBI Affiliates").
Section 2.20. Certain Business Practices. None of IBI or any
directors, officers, agents or employees of IBI has (i) used any funds for
unlawful contributions, gifts, entertainment or other unlawful expenses
relating to political activity, (ii) made any unlawful payment to foreign
or domestic government officials or employees or to foreign or domestic
political parties or campaigns or violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended (the "FCPA"), or (iii) made any
other unlawful payment.
Section 2.21. Insider Interests. Except as set forth in Section 2.21
of the IBI Disclosure Schedule, neither PVS nor any officer or director of
IBI has any interest in any material property, real or personal, taTSCble
or intaTSCble, including without limitation, any computer software or IBI
Intellectual Property Rights, used in or pertaining to the business of IBI,
expect for the ordinary rights of a stockholder or employee stock
optionholder.
Section 2.22. Opinion of Financial Adviser. No advisers, as of the
date hereof, have delivered to the IBI Board a written opinion to the
effect that, as of such date, the exchange ratio contemplated by the Merger
is fair to the holders of IBI Shares.
Section 2.23. Brokers. No broker, finder or investment banker (other
than the IBI Financial Adviser, a true and correct copy of whose engagement
agreement has been provided to TSC) is entitled to any brokerage, finder's
or other fee or commission in connection with the transactions contemplated
by this Agreement based upon arrangements made by or on behalf of IBI.
Section 2.24. Disclosure. No representation or warranty of IBI in this
Agreement or any certificate, schedule, document or other instrument
furnished or to be furnished to TSC pursuant hereto or in connection
herewith contains, as of the date of such representation, warranty or
instrument, or will contain any untrue statement of a material fact or, at
the date thereof, omits or will omit to state a material fact necessary to
make any statement herein or therein, in light of the circumstances under
which such statement is or will be made, not misleading.
Section 2.25. No Existing Discussions. As of the date hereof, IBI is
not engaged, directly or indirectly, in any discussions or negotiations
with any other party with respect to any Third Party Acquisition (as
defined in Section 4.4).
Section 2.26. Material Contracts.
(a) IBI has delivered or otherwise made available to TSC true, correct
and complete copies of all contracts and agreements (and all amendments,
modifications and supplements thereto and all side letters to which IBI is
a party affecting the obligations of any party thereunder) to which IBI is
a party or by which any of its properties or assets are bound that are,
material to the business, properties or assets of IBI taken as a whole,
including, without limitation, to the extent any of the following are,
individually or in the aggregate, material to the business, properties or
assets of IBI taken as a whole, all: (i) employment, product design or
development, personal services, consulting, non-competition, severance,
<PAGE>
golden parachute or indemnification contracts (including, without
limitation, any contract to which IBI is a party involving employees of
IBI); (ii) licensing, publishing, merchandising or distribution agreements;
(iii) contracts granting rights of first refusal or first negotiation; (iv)
partnership or joint venture agreements; (v) agreements for the
acquisition, sale or lease of material properties or assets or stock or
otherwise entered into since June 30, 1999; (vi) contracts or agreements
with any Governmental Entity. and (vii) all commitments and agreements to
enter into any of the foregoing (collectively, together with any such
contracts entered into in accordance with Section 4.1 hereof, the "IBI
Contracts"). IBI is not a party to or bound by any severance, golden
parachute or other agreement with any employee or consultant pursuant to
which such person would be entitled to receive any additional compensation
or an accelerated payment of compensation as a result of the consummation
of the transactions contemplated hereby.
(b) Each of the IBI Contracts is valid and enforceable in accordance
with its terms, and there is no default under any IBI Contract so listed
either by IBI or, to the knowledge of IBI, by any other party thereto, and
no event has occurred that with the lapse of time or the giving of notice
or both would constitute a default thereunder by IBI or, to the knowledge
of IBI, any other party, in any such case in which such default or event
could reasonably be expected to have a Material Adverse Effect on IBI.
(c) No party to any such IBI Contract has given notice to IBI of or
made a claim against IBI with respect to any breach or default thereunder,
in any such case in which such breach or default could reasonably be
expected to have a Material Adverse Effect on IBI.
ARTICLE 3
Representations and Warranties of TSC
Except as set forth on the Disclosure Schedule delivered by TSC to IBI
(the "TSC Disclosure Schedule"), TSC hereby represents and warrants to IBI
as follows:
Section 3.1. Organization and Qualification.
(a) Each of TSC and its subsidiaries is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization and has all requisite power and authority to
own, lease and operate its properties and to carry on its businesses as now
being conducted, except where the failure to be so organized, existing and
in good standing or to have such power and authority would not have a
Material Adverse Effect (as defined below) on TSC. When used in connection
with TSC, the term "Material Adverse Effect'' means any change or effect
(i) that is or is reasonably likely to be materially adverse to the
business, results of operations, condition (financial or otherwise) or
prospects of TSC and its subsidiaries, taken as a whole, other than any
change or effect arising out of general economic conditions unrelated to
any businesses in which TSC and its subsidiaries are engaged, or (ii) that
may impair the ability of TSC to consummate the transactions contemplated
hereby.
(b) TSC has heretofore delivered to IBI accurate and complete copies
of the Certificate of Incorporation and Bylaws (or similar governing
documents), as currently in effect, of TSC. Each of TSC and its
subsidiaries is duly qualified or licensed and in good standing to do
business in each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification or licensing necessary except in such jurisdictions where the
failure to be so duly qualified or licensed and in good standing would not
have a Material Adverse Effect on TSC.
Section 3.2. Capitalization of TSC.
(a) As of November 9, 1999, the authorized capital stock of TSC
consists of; (i) Twenty Million (20,000,000) TSC common Shares, $.001 par
value, of which 5,000,000 common Shares are issued and outstanding, and
(ii) Five Million (5,000,000) TSC preferred shares, $.001 par value, and no
preferred shares are issued and outstanding. All of the outstanding TSC
Shares have been duly authorized and validly issued, and are fully paid,
nonassessable and free of preemptive rights.
(b) Except as set forth in Section 3.2(b) of the TSC Disclosure
Schedule, TSC is the record and beneficial owner of all of the issued and
outstanding shares of capital stock of its subsidiaries.
(c) Except as set forth in Section 3.2(c) of the TSC Disclosure
Schedule, between December 31, 1999 and the date hereof, no shares of TSC's
capital stock have been issued and no TSC Stock options have been granted.
Except as set forth in Section 3.2(a) above, as of the date hereof, there
are no outstanding (i) shares of capital stock or other voting securities
of TSC, (ii) securities of TSC or its subsidiaries convertible into or
exchangeable for shares of capital stock or voting securities of TSC, (iii)
options or other rights to acquire from TSC or its subsidiaries, or
obligations of TSC or its subsidiaries to issue, any capital stock, voting
securities or securities convertible into or exchangeable for capital stock
or voting securities of TSC, or (iv) equity equivalents, interests in the
ownership or earnings of TSC or its subsidiaries or other similar rights
(collectively, "TSC Securities"). As of the date hereof, there are no
outstanding obligations of TSC or any of its subsidiaries to repurchase,
redeem or otherwise acquire any TSC Securities. There are no stockholder
agreements, voting trusts or other agreements or understandings to which
TSC is a party or by which it is bound relating to the voting or
registration of any shares of capital stock of TSC.
(d) Except as set forth in Section 3.2(d) of the TSC Disclosure
Schedule, there are no securities of TSC convertible into or exchangeable
for, no options or other rights to acquire from TSC, and no other contract,
understanding, arrangement or obligation (whether or not contingent)
providing for the issuance or sale, directly or indirectly, of any capital
stock or other ownership interests in, or any other securities of, any
subsidiary of TSC.
(e) The TSC Shares constitute the only class of equity securities of
TSC or its subsidiaries.
(f) Except as set forth in Section 3.2(f) of the TSC Disclosure
Schedule, TSC does not own directly or indirectly more than fifty percent
(50%) of the outstanding voting securities or interests (including
membership interests) of any entity.
Section 3.3. Authority Relative to this Agreement; Recommendation.
(a) TSC has all necessary corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of TSC (the "TSC Board"), and no other
corporate proceedings on the part of TSC are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby, except, as
referred to in Section 3.17, the approval and adoption of this Agreement by
the holders of at least a majority of the then outstanding TSC Shares. This
Agreement has been duly and validly executed and delivered by TSC and
constitutes a valid, legal and binding agreement of TSC, enforceable
against TSC in accordance with its terms.
(b) The TSC Board has resolved to recommend that the stockholders of
TSC approve and adopt this Agreement.
Section 3.4. SEC Reports; Financial Statements.
(a) TSC has filed all required forms, reports and documents with the
Securities and Exchange Commission (the "SEC") since November 19, 1999,
each of which has complied in all material respects with all applicable
requirements of the Securities Act of 1933, as amended (the "Securities
Act"), and the Exchange Act (and the rules and regulations promulgated
thereunder, respectively), each as in effect on the dates such forms,
reports and documents were filed. TSC has heretofore delivered or promptly
will deliver prior to the Effective Date to TSC, in the form filed with the
SEC (including any amendments thereto but excluding any exhibits), (i) its
Annual Report on Form 10-KSB for the fiscal year ended December 31, 1999,
(ii) all definitive proxy statements relating to TSC's meetings of
stockholders (whether annual or special) held since December 31, 1999, if
any, and (iii) all other reports or registration statements filed by TSC
with the SEC since December 31, 1999 (all of the foregoing, collectively,
the "TSC SEC Reports"). None of such TSC SEC Reports, including, without
limitation, any financial statements or schedules included or incorporated
by reference therein, contained, when filed, any untrue statement of a
material fact or omitted to state a material fact required to be stated or
incorporated by reference therein or necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading. The audited financial statements of TSC included in
the TSC SEC Reports fairly present, in conformity with generally accepted
accounting principles applied on a consistent basis (except as may be
indicated in the notes thereto), the financial position of TSC as of the
dates thereof and its results of operations and changes in financial
position for the periods then ended. All material agreements, contracts and
other documents required to be filed as exhibits to any of the TSC SEC
Reports have been so filed.
<PAGE>
(b) TSC has heretofore made available or promptly will make available
to IBI a complete and correct copy of any amendments or modifications which
are required to be filed with the SEC but have not yet been filed with the
SEC, to agreements, documents or other instruments which previously had
been filed by TSC with the SEC pursuant to the Exchange Act.
Section 3.5. Information Supplied. None of the information supplied or
to be supplied by TSC for inclusion or incorporation by reference to (i)
the 8-K will, at the time the 8-K is filed with the SEC and at the time it
becomes effective under the Securities Act, contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading and (ii)
the Proxy Statement will, at the date mailed to stockholders of IBI, if
any, and at the times of the meeting or meetings of stockholders of IBI to
be held in connection with the Merger, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. The Proxy
Statement, insofar as it relates to the meeting of TSC's stockholders to
vote on the Merger, will comply as to form in all material respects with
the provisions of the Exchange Act and the rules and regulations
thereunder, and the 8-K will comply as to form in all material respects
with the provisions of the Securities Act and the rules and regulations
thereunder.
Section 3.6. Consents and Approvals; No Violations. Except as set
forth in Section 3.6 of the TSC Disclosure Schedule, and for filings,
permits, authorizations, consents and approvals as may be required under,
and other applicable requirements of, the Securities Act, the Exchange Act,
state securities or blue sky laws, the HSR Act, the rules of the NASD, and
the filing and recordation of the Merger Certificate as required by the
NGCL, no filing with or notice to, and no permit, authorization, consent or
approval of, any Governmental Entity is necessary for the execution and
delivery by TSC of this Agreement or the consummation by TSC of the
transactions contemplated hereby, except where the failure to obtain such
permits, authorizations consents or approvals or to make such filings or
give such notice would not have a Material Adverse Effect on TSC.
Neither the execution, delivery and performance of this Agreement by
TSC nor the consummation by TSC of the transactions contemplated hereby
will (i) conflict with or result in any breach of any provision of the
respective Certificate of Incorporation or Bylaws (or similar governing
documents) of TSC or any of TSC's subsidiaries, (ii) result in a violation
or breach of, or constitute (with or without due notice or lapse of time or
both) a default (or give rise to any right of termination, amendment,
cancellation or acceleration or Lien) under, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, lease, license,
contract, agreement or other instrument or obligation to which TSC or any
of TSCis subsidiaries is a party or by which any of them or any of their
respective properties or assets may be bound or (iii) violate any order,
writ, injunction, decree, law, statute, rule or regulation applicable to
TSC or any of TSC's subsidiaries or any of their respective properties or
assets, except in the case of (ii) or (iii) for violations, breaches or
defaults which would not have a Material Adverse Effect on TSC.
Section 3.7. No Default. None of TSC or any of its subsidiaries is in
breach, default or violation (and no event has occurred which with notice
or the lapse of time or both would constitute a breach, default or
violation) of any term, condition or provision of (i) its Certificate of
Incorporation or Bylaws (or similar governing documents), (ii) any note,
bond, mortgage, indenture, lease, license, contract, agreement or other
instrument or obligation to which TSC or any of its subsidiaries is now a
party or by which any of them or any of their respective properties or
assets may be bound or (iii) any order, writ, injunction, decree, law,
statute, rule or regulation applicable to TSC, its subsidiaries or any of
their respective properties or assets, except in the case of (ii) or (iii)
for violations, breaches or defaults that would not have a Material Adverse
Effect on TSC. Each note, bond, mortgage, indenture, lease, license,
contract, agreement or other instrument or obligation to which TSC or any
of its subsidiaries is now a party or by which any of them or any of their
respective properties or assets may be bound that is material to TSC and
its subsidiaries taken as a whole and that has not expired is in full force
and effect and is not subject to any material default thereunder of which
TSC is aware by any party obligated to TSC or any subsidiary thereunder.
Section 3.8. No Undisclosed Liabilities; Absence of Changes. Except as
set forth in Section 2.8 of the TSC Disclosure Schedule and except as and
to the extent publicly disclosed by TSC in the TSC SEC Reports, as of
December 31, 1999, TSC does not have any liabilities or obligations of any
nature, whether or not accrued, contingent or otherwise, that would be
required by generally accepted accounting principles to be reflected on a
balance sheet of TSC (including the notes thereto) or which would have a
Material Adverse Effect on TSC. Except as publicly disclosed by TSC, since
November 19, 1999, TSC has not incurred any liabilities of any nature,
whether or not accrued, contingent or otherwise, which could reasonably be
expected to have, and there have been no events, changes or effects with
respect to TSC having or which reasonably could be expected to have, a
<PAGE>
Material Adverse Effect on TSC. Except as and to the extent publicly
disclosed by TSC in the TSC SEC Reports and except as set forth in Section
2.8 of the TSC Disclosure Schedule, since November 19,1999, there has not
been (i) any material change by TSC in its accounting methods, principles
or practices (other than as required after the date hereof by concurrent
changes in generally accepted accounting principles), (ii) any revaluation
by TSC of any of its assets having a Material Adverse Effect on TSC,
including, without limitation, any write-down of the value of any assets
other than in the ordinary course of business or (iii) any other action or
event that would have required the consent of any other party hereto
pursuant to Section 4.1 of this Agreement had such action or event occurred
after the date of this Agreement.
Section 3.9. Litigation. Except as publicly disclosed by TSC in the
TSC SEC Reports, there is no suit, claim, action, proceeding or
investigation pending or, to the knowledge of TSC, threatened against TSC
or any of its subsidiaries or any of their respective properties or assets
before any Governmental Entity which, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect on TSC or
could reasonably be expected to prevent or delay the consummation of the
transactions contemplated by this Agreement. Except as publicly disclosed
by TSC in the TSC SEC Reports, TSC is not subject to any outstanding order,
writ, injunction or decree which, insofar as can be reasonably foreseen in
the future, could reasonably be expected to have a Material Adverse Effect
on TSC or could reasonably be expected to prevent or delay the consummation
of the transactions contemplated hereby.
Section 3.10. Compliance with Applicable Law. Except as publicly
disclosed by TSC in the TSC SEC Reports, TSC holds all permits, licenses,
variances, exemptions, orders and approvals of all Governmental Entities
necessary for the lawful conduct of their respective businesses (the `'TSC
Permits"), except for failures to hold such permits, licenses, variances,
exemptions, orders and approvals which would not have a Material Adverse
Effect on TSC. Except as publicly disclosed by TSC in the TSC SEC Reports,
TSC is in compliance with the terms of the TSC Permits, except where the
failure so to comply would not have a Material Adverse Effect on TSC.
Except as publicly disclosed by TSC in the TSC SEC Reports, the business of
TSC is not being conducted in violation of any law, ordinance or regulation
of any Governmental Entity except that no representation or warranty is
made in this Section 2.10 with respect to Environmental Laws (as defined in
Section 2.12 below) and except for violations or possible violations which
do not, and, insofar as reasonably can be foreseen, in the future will not,
have a Material Adverse Effect on TSC. Except as publicly disclosed by TSC
in the TSC SEC Reports, no investigation or review by any Governmental
Entity with respect to TSC is pending or, to the knowledge of TSC,
threatened, nor, to the knowledge of TSC, has any Governmental Entity
indicated an intention to conduct the same, other than, in each case, those
which TSC reasonably believes will not have a Material Adverse Effect on
TSC.
Section 3.11. Employee Benefit Plans; Labor Matters.
(a) With respect to each employee benefit plan, program, policy,
arrangement and contract (including, without limitation, any "employee
benefit plan," as defined in Section 3(3) of ERISA), maintained or
contributed to at any time by TSC, any of its subsidiaries or any entity
required to be aggregated with TSC or any of its subsidiaries pursuant to
Section 414 of the Code (each, a "TSC Employee Plan"), no event has
occurred and, to the knowledge of TSC, no condition or set of circumstances
exists in connection with which TSC or any of its subsidiaries could
reasonably be expected to be subject to any liability which would have a
Material Adverse Effect on TSC.
(b) (i) No TSC Employee Plan is or has been subject to Title IV of
ERISA or Section 412 of the Code; and (ii) each TSC Employee Plan intended
to qualify under Section 401(a) of the Code and each trust intended to
qualify under Section 501(a) of the Code is the subject of a favorable
Internal Revenue Service determination letter, and nothing has occurred
which could reasonably be expected to adversely affect such determination.
(c) Section 3.11(c) of the TSC Disclosure Schedule sets forth a true
and complete list, as of the date of this Agreement, of each person who
holds any TSC Stock Options, together with the number of TSC Shares which
are subject to such option, the date of grant of such option, the extent to
which such option is vested (or will become vested as a result of the
Merger), the option price of such option (to the extent determined as of
the date hereof), whether such option is a nonqualified stock option or is
intended to qualify as an incentive stock option within the meaning of
Section 422(b) of the Code, and the expiration date of such option. Section
3.11(c) of the TSC Disclosure Schedule also sets forth the total number of
such incentive stock options and such nonqualified options. TSC has
furnished IBI with complete copies of the plans pursuant to which the TSC
Stock Options were issued. Other than the automatic vesting of TSC Stock
Options that may occur without any action on the part of TSC or its
officers or directors, TSC has not taken any action that would result in
any TSC Stock Options that are unvested becoming vested in connection with
or as a result of the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.
<PAGE>
(d) TSC has made available to IBI (i) a description of the terms of
employment and compensation arrangements of all officers of TSC and a copy
of each such agreement currently in effect; (ii) copies of all agreements
with consultants who are individuals obligating TSC to make annual cash
payments in an amount exceeding $60,000; (iii) a schedule listing all
officers of TSC who have executed a non-competition agreement with TSC and
a copy of each such agreement currently in effect; (iv) copies (or
descriptions) of all severance agreements, programs and policies of TSC
with or relating to its employees, except programs and policies required to
be maintained by law; and (v) copies of all plans, programs, agreements and
other arrangements of the TSC with or relating to its employees which
contain change in control provisions.
(e) Except as disclosed in Section 3.11(e) of the TSC Disclosure
Schedule there shall be no payment, accrual of additional benefits,
acceleration of payments, or vesting in any benefit under any TSC Employee
Plan or any agreement or arrangement disclosed under this Section 3.11
solely by reason of entering into or in connection with the transactions
contemplated by this Agreement.
(f) There are no controversies pending or, to the knowledge of TSC
threatened, between TSC or any of its subsidiaries and any of their
respective employees, which controversies have or could reasonably be
expected to have a Material Adverse Effect on TSC. Neither TSC nor any of
its subsidiaries is a party to any collective bargaining agreement or other
labor union contract applicable to persons employed by TSC or any of its
subsidiaries (and neither TSC nor any of its subsidiaries has any
outstanding material liability with respect to any terminated collective
bargaining agreement or labor union contract), nor does TSC know of any
activities or proceedings of any labor union to organize any of its or any
of its subsidiaries' employees. TSC has no knowledge of any strike,
slowdown, work stoppage, lockout or threat thereof by or with respect to
any of its or any of its subsidiaries' employees.
Section 3.12. Environmental Laws and Regulations.
(a) Except as disclosed by TSC, (i) each of TSC and its subsidiaries
is in material compliance with all Environmental Laws, except for
non-compliance that would not have a Material Adverse Effect on TSC, which
compliance includes, but is not limited to, the possession by TSC and its
subsidiaries of all material permits and other governmental authorizations
required under applicable Environmental Laws, and compliance with the terms
and conditions thereof; (ii) none of TSC or its subsidiaries has received
written notice of, or, to the knowledge of TSC, is the subject of, any
Environmental Claim that could reasonably be expected to have a Material
Adverse Effect on TSC; and (iii) to the knowledge of TSC, there are no
circumstances that are reasonably likely to prevent or interfere with such
material compliance in the future.
(b) Except as disclosed by TSC, there are no Environmental Claims
which could reasonably be expected to have a Material Adverse Effect on TSC
that are pending or, to the knowledge of TSC, threatened against TSC or any
of its subsidiaries or, to the knowledge of TSC, against any person or
entity whose liability for any Environmental Claim TSC or its subsidiaries
has or may have retained or assumed either contractually or by operation of
law.
Section 3.13. Tax Matters. Except as set forth in Section 3.13 of the
TSC Disclosure Schedule: (i) TSC and each of its subsidiaries has filed or
has had filed on its behalf in a timely manner (within any applicable
extension periods) with the appropriate Governmental Entity all income and
other material Tax Returns with respect to Taxes of TSC and each of its
subsidiaries and all Tax Returns were in all material respects true,
complete and correct; (ii) all material Taxes with respect to TSC and each
of its subsidiaries have been paid in full or have been provided for in
accordance with GAAP on TSC's most recent balance sheet which is part of
the TSC SEC Documents; (iii) there are no outstanding agreements or waivers
extending the statutory period of limitations applicable to any federal,
state, local or foreign income or other material Tax Returns required to be
filed by or with respect to TSC or its subsidiaries; (iv) to the knowledge
of TSC none of the Tax Returns of or with respect to TSC or any of its
subsidiaries is currently being audited or examined by any Governmental
Entity; and (v) no deficiency for any income or other material Taxes has
been assessed with respect to TSC or any of its subsidiaries which has not
been abated or paid in full.
Section 3.14. Title to Property. TSC and each of its subsidiaries have
good and defensible title to all of their properties and assets, free and
clear of all liens, charges and encumbrances except liens for taxes not yet
due and payable and such liens or other imperfections of title, if any, as
do not materially detract from the value of or interfere with the present
use of the property affected thereby or which, individually or in the
aggregate, would not have a Material Adverse Effect on TSC; and, to TSC's
<PAGE>
knowledge, all leases pursuant to which TSC or any of its subsidiaries
lease from others real or personal property are in good standing, valid and
effective in accordance with their respective terms, and there is not, to
the knowledge of TSC, under any of such leases, any existing material
default or event of default (or event which with notice or lapse of time,
or both, would constitute a material default and in respect of which TSC or
such subsidiary has not taken adequate steps to prevent such a default from
occurring) except where the lack of such good standing, validity and
effectiveness, or the existence of such default or event of default would
not have a Material Adverse Effect on TSC.
Section 3.15. Intellectual Property.
(a) Each of TSC and its subsidiaries owns, or possesses adequate
licenses or other valid rights to use, all existing United States and
foreign patents, trademarks, trade names, services marks, copyrights, trade
secrets, and applications therefore that are material to its business as
currently conducted (the "TSC Intellectual Property Rights").
(b) Except as set forth in Section 3.15(b) of the TSC Disclosure
Schedule the validity of the TSC Intellectual Property Rights and the title
thereto of TSC or any subsidiary, as the case may be, is not being
questioned in any litigation to which TSC or any subsidiary is a party.
(c) The conduct of the business of TSC and its subsidiaries as now
conducted does not, to TSCis knowledge, infringe any valid patents,
trademarks, tradenames, service marks or copyrights of others. The
consummation of the transactions contemplated hereby will not result in the
loss or impairment of any TSC Intellectual Property Rights.
(d) Each of TSC and its subsidiaries has taken steps it believes
appropriate to protect and maintain its trade secrets as such, except in
cases where TSC has elected to rely on patent or copyright protection in
lieu of trade secret protection.
Section 3.16. Insurance. TSC and its subsidiaries maintain general
liability and other business insurance that TSC believes to be reasonably
prudent for its business.
Section 3.17. Vote Required. The affirmative vote of the holders of at
least a majority of the outstanding TSC Shares is the only vote of the
holders of any class or series of TSC's capital stock necessary to approve
and adopt this Agreement and the Merger.
Section 3.18. Tax Treatment. Neither TSC nor, to the knowledge of TSC,
any of its affiliates has taken or agreed to take any action that would
prevent the Merger from constituting a reorganization qualifying under the
provisions of Section 368(a) of the Code.
Section 3.19. Affiliates. Except for the directors and executive
officers of TSC, each of whom is listed in Section 3.19 of the TSC
Disclosure Schedule, there are no persons who, to the knowledge of TSC, may
be deemed to be affiliates of TSC under Rule 1-02(b) of Regulation S-X of
the SEC (the "TSC Affiliates").
Section 3.20. Certain Business Practices. None of TSC, any of its
subsidiaries or any directors, officers, agents or employees of TSC or any
of its subsidiaries has (i) used any funds for unlawful contributions,
gifts, entertainment or other unlawful expenses relating to political
activity, (ii) made any unlawful payment to foreign or domestic government
officials or employees or to foreign or domestic political parties or
campaigns or violated any provision of the FCPA, or (iii) made any other
unlawful payment.
Section 3.21. Insider Interests. Except as set forth in Section 3.21
of the TSC Disclosure Schedule, no officer or director of TSC has any
interest in any material property, real or personal, taTSCble or
intaTSCble, including without limitation, any computer software or TSC
Intellectual Property Rights, used in or pertaining to the business of TSC
or any subsidiary, except for the ordinary rights of a stockholder or
employee stock optionholder.
Section 3.22. Opinion of Financial Adviser. No advisers, as of the
date hereof, have delivered to the TSC Board a written opinion to the
effect that, as of such date, the exchange ratio contemplated by the Merger
is fair to the holders of TSC Shares.
<PAGE>
Section 3.23. Brokers. No broker, finder or investment banker (other
than the TSC Financial Adviser, a true and correct copy of whose engagement
agreement has been provided to IBI) is entitled to any brokerage, finders
or other fee or commission in connection with the transactions contemplated
by this Agreement based upon arrangements made by or on behalf of TSC.
Section 3.24. Disclosure. No representation or warranty of TSC in this
Agreement or any certificate, schedule, document or other instrument
furnished or to be furnished to IBI pursuant hereto or in connection
herewith contains, as of the date of such representation, warranty or
instrument, or will contain any untrue statement of a material fact or, at
the date thereof, omits or will omit to state a material fact necessary to
make any statement herein or therein, in light of the circumstances under
which such statement is or will be made, not misleading.
Section 3.25. No Existing Discussions. As of the date hereof, TSC is
not engaged, directly or indirectly, in any discussions or negotiations
with any other party with respect to any Third Party Acquisition (as
defined in Section 5.4).
Section 3.26. Material Contracts.
(a) TSC has delivered or otherwise made available to IBI true, correct
and complete copies of all contracts and agreements (and all amendments,
modifications and supplements thereto and all side letters to which TSC is
a party affecting the obligations of any party thereunder) to which TSC or
any of its subsidiaries is a party or by which any of their properties or
assets are bound that are, material to the business, properties or assets
of TSC and its subsidiaries taken as a whole, including, without
limitation, to the extent any of the following are, individually or in the
aggregate, material to the business, properties or assets of TSC and its
subsidiaries taken as a whole, all: (i) employment, product design or
development, personal services, consulting, non-competition, severance,
golden parachute or indemnification contracts (including, without
limitation, any contract to which TSC is a party involving employees of
TSC); (ii) licensing, publishing, merchandising or distribution agreements;
(iii) contracts granting rights of first refusal or first negotiation; (iv)
partnership or joint venture agreements; (v) agreements for the
acquisition, sale or lease of material properties or assets or stock or
otherwise. (vi) contracts or agreements with any Governmental Entity; and
(vii) all commitments and agreements to enter into any of the foregoing
(collectively, together with any such contracts entered into in accordance
with Section 5.2 hereof, the 'TSC Contracts"). Neither TSC nor any of its
subsidiaries is a party to or bound by any severance, golden parachute or
other agreement with any employee or consultant pursuant to which such
person would be entitled to receive any additional compensation or an
accelerated payment of compensation as a result of the consummation of the
transactions contemplated hereby.
(b) Each of the TSC Contracts is valid and enforceable in accordance
with its terms, and there is no default under any TSC Contract so listed
either by TSC or, to the knowledge of TSC, by any other party thereto, and
no event has occurred that with the lapse of time or the giving of notice
or both would constitute a default thereunder by TSC or, to the knowledge
of TSC, any other party, in any such case in which such default or event
could reasonably be expected to have a Material Adverse Effect on TSC.
(c) No party to any such TSC Contract has given notice to TSC of or
made a claim against TSC with respect to any breach or default thereunder,
in any such case in which such breach or default could reasonably be
expected to have a Material Adverse Effect on TSC.
ARTICLE 4
Covenants
Section 4.1. Conduct of Business of IBI. Except as contemplated by
this Agreement or as described in Section 4.1 of the IBI Disclosure
Schedule, during the period from the date hereof to the Effective Time, IBI
will conduct its operations in the ordinary course of business consistent
with past practice and, to the extent consistent therewith, with no less
diligence and effort than would be applied in the absence of this
Agreement, seek to preserve intact its current business organization, keep
available the service of its current officers and employees and preserve
its relationships with customers, suppliers and others having business
dealings with it to the end that goodwill and ongoing businesses shall be
unimpaired at the Effective Time. Without limiting the generality of the
foregoing, except as otherwise expressly provided in this Agreement or as
described in Section 4.1 of the IBI Disclosure Schedule, prior to the
Effective Time, IBI will not, without the prior written consent of TSC:
<PAGE>
(a) amend its Certificate of Incorporation or Bylaws (or other similar
governing instrument);
(b) amend the terms of any stock of any class or any other securities
(except bank loans) or equity equivalents.
(c) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its
capital stock, make any other actual, constructive or deemed distribution
in respect of its capital stock or otherwise make any payments to
stockholders in their capacity as such, or redeem or otherwise acquire any
of its securities;
(d) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other
reorganization of IBI (other than the Merger);
(e) (i) incur or assume any long-term or short-term debt or issue any
debt securities except for borrowings or issuances of letters of credit
under existing lines of credit in the ordinary course of business; (ii)
assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any
other person. (iii) make any loans, advances or capital contributions to,
or investments in, any other person; (iv) pledge or otherwise encumber
shares of capital stock of IBI; or (v) mortgage or pledge any of its
material assets, or create or suffer to exist any material Lien thereupon
(other than tax Liens for taxes not yet due);
(f) except as may be required by law, enter into, adopt or amend or
terminate any bonus, profit sharing, compensation, severance, termination,
stock option, stock appreciation right, restricted stock, performance unit,
stock equivalent, stock purchase agreement, pension, retirement, deferred
compensation, employment, severance or other employee benefit agreement,
trust, plan, fund or other arrangement for the benefit or welfare of any
director, officer or employee in any manner, or increase in any manner the
compensation or fringe benefits of any director, officer or employee or pay
any benefit not required by any plan and arrangement as in effect as of the
date hereof (including, without limitation, the granting of stock
appreciation rights or performance units); provided, however, that this
paragraph (f) shall not prevent IBI from (i) entering into employment
agreements or severance agreements with employees in the ordinary course of
business and consistent with past practice or (ii) increasing annual
compensation and/or providing for or amending bonus arrangements for
employees for fiscal 1999 in the ordinary course of year-end compensation
reviews consistent with past practice and paying bonuses to employees for
fiscal 1999 in amounts previously disclosed to TSC (to the extent that such
compensation increases and new or amended bonus arrangements do not result
in a material increase in benefits or compensation expense to IBI);
(g) acquire, sell, lease or dispose of any assets in any single
transaction or series of related transactions (other than in the ordinary
course of business);
(h) except as may be required as a result of a change in law or in
generally accepted accounting principles, change any of the accounting
principles or practices used by it;
(i) revalue in any material respect any of its assets including,
without limitation, writing down the value of inventory or writing-off
notes or accounts receivable other than in the ordinary course of business;
(j) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization or
division thereof or any equity interest therein; (ii) enter into any
contract or agreement other than in the ordinary course of business
consistent with past practice which would be material to IBI; (iii)
authorize any new capital expenditure or expenditures which, individually
is in excess of $1,000 or, in the aggregate, are in excess of $5,000;
provided, however that none of the foregoing shall limit any capital
expenditure required pursuant to existing contracts;
(k) make any tax election or settle or compromise any income tax
liability material to IBI;
(l) settle or compromise any pending or threatened suit, action or
claim which (i) relates to the transactions contemplated hereby or (ii) the
settlement or compromise of which could have a Material Adverse Effect on
IBI;
<PAGE>
(m) commence any material research and development project or
terminate any material research and development project that is currently
ongoing, in either case, except pursuant to the terms of existing contracts
or in the ordinary course of business; or
(n) take, or agree in writing or otherwise to take, any of the actions
described in Sections 4.1(a) through 4.1(m) or any action which would make
any of the representations or warranties of contained in this Agreement
untrue or incorrect.
Section 4.2. Conduct of Business of TSC. Except as contemplated by
this Agreement or as described in Section 4.2 of the TSC Disclosure
Schedule during the period from the date hereof to the Effective Time, TSC
will conduct its operations in the ordinary course of business consistent
with past practice and, to the extent consistent therewith, with no less
diligence and effort than would be applied in the absence of this
Agreement, seek to preserve intact its current business organization, keep
available the service of its current officers and employees and preserve
its relationships with customers, suppliers and others having business
dealings with it to the end that goodwill and ongoing businesses shall be
unimpaired at the Effective Time. Without limiting the generality of the
foregoing, except as otherwise expressly provided in this Agreement or as
described in Section 4.2 of the TSC Disclosure Schedule, prior to the
Effective Time, TSC will not, without the prior written consent of:
(a) amend its Certificate of Incorporation or Bylaws (or other similar
governing instrument);
(b) authorize for issuance, issue, sell, deliver or agree or commit to
issue, sell or deliver (whether through the issuance or granting of
options, warrants, commitments, subscriptions, rights to purchase or
otherwise) any stock of any class or any other securities (except bank
loans) or equity equivalents (including, without limitation, any stock
options or stock appreciation rights;
(c) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its
capital stock, make any other actual, constructive or deemed distribution
in respect of its capital stock or otherwise make any payments to
stockholders in their capacity as such, or redeem or otherwise acquire any
of its securities;
(d) adopt a plan of complete or partial liquidation, dissolution,
merger consolidation, restructuring, recapitalization or other
reorganization of TSC (other than the Merger);
(e) (i) incur or assume any long-term or short-term debt or issue any
debt securities except for borrowings or issuances of letters of credit
under existing lines of credit in the ordinary course of business. (ii)
assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any
other person; (iii) make any loans, advances or capital contributions to or
investments in, any other person; (iv) pledge or otherwise encumber shares
of capital stock of TSC or its subsidiaries; or (v) mortgage or pledge any
of its material assets, or create or suffer to exist any material Lien
thereupon (other than tax Liens for taxes not yet due);
(f) except as may be required by law, enter into, adopt or amend or
terminate any bonus, profit sharing, compensation, severance, termination,
stock option, stock appreciation right, restricted stock, performance unit
stock equivalent, stock purchase agreement, pension, retirement, deferred
compensation, employment, severance or other employee benefit agreement,
trust, plan, fund or other arrangement for the benefit or welfare of any
director, officer or employee in any manner, or increase in any manner the
compensation or fringe benefits of any director, officer or employee or pay
any benefit not required by any plan and arrangement as in effect as of the
date hereof (including, without limitation, the granting of stock
appreciation rights or performance units); provided, however, that this
paragraph (f) shall not prevent TSC or its subsidiaries from (i) entering
into employment agreements or severance agreements with employees in the
ordinary course of business and consistent with past practice or (ii)
increasing annual compensation and/or providing for or amending bonus
arrangements for employees for fiscal 1999 in the ordinary course of year
end compensation reviews consistent with past practice and paying bonuses
to employees for fiscal 1999 in amounts previously disclosed to (to the
extent that such compensation increases and new or amended bonus
arrangements do not result in a material increase in benefits or
compensation expense to TSC);
(g) acquire, sell, lease or dispose of any assets in any single
transaction or series of related transactions other than in the ordinary
course of business;
<PAGE>
(h) except as may be required as a result of a change in law or in
generally accepted accounting principles, change any of the accounting
principles or practices used by it;
(i) revalue in any material respect any of its assets, including,
without limitation, writing down the value of inventory of writing-off
notes or accounts receivable other than in the ordinary course of business;
(j) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership, or other business organization or
division thereof or any equity interest therein; (ii) enter into any
contract or agreement other than in the ordinary course of business
consistent with past practice which would be material to TSC; (iii)
authorize any new capital expenditure or expenditures which, individually,
is in excess of $1,000 or, in the aggregate, are in excess of $5,000:
provided, however that none of the foregoing shall limit any capital
expenditure required pursuant to existing contracts;
(k) make any tax election or settle or compromise any income tax
liability material to TSC and its subsidiaries taken as a whole;
(l) settle or compromise any pending or threatened suit, action or
claim which (i) relates to the transactions contemplated hereby or (ii) the
settlement or compromise of which could have a Material Adverse Effect on
TSC;
(m) commence any material research and development project or
terminate any material research and development project that is currently
ongoing, in either case, except pursuant to the terms of existing contracts
or except in the ordinary course of business; or
(n) take, or agree in writing or otherwise to take, any of the actions
described in Sections 4.2(a) through 4.2(m) or any action which would make
any of the representations or warranties of the TSC contained in this
Agreement untrue or incorrect.
Section 4.3. Preparation of 8-K and the Proxy Statement. TSC and
shall promptly prepare and file with the SEC the Proxy Statement, if
required by counsel.
Section 4.4. Other Potential Acquirers.
(a) TSC, its affiliates and their respective officers, directors,
employees, representatives and agents shall immediately cease any existing
discussions or negotiations, if any, with any parties conducted heretofore
with respect to any Third Party Acquisition.
Section 4.5. Meetings of Stockholders. Each of TSC and IBI shall take
all action necessary, in accordance with the respective General Corporation
Law of its respective state, and its respective certificate of
incorporation and bylaws, to duly call, give notice of, convene and hold a
meeting of its stockholders as promptly as practicable, to consider and
vote upon the adoption and approval of this Agreement and the transactions
contemplated hereby. The stockholder votes required for the adoption and
approval of the transactions contemplated by this Agreement shall be the
vote required by the NGCL and its charter and bylaws, in the case of IBI
and the General Corporation Law of its respective state, and its charter
and bylaws, in the case of TSC. IBI and TSC will, through their respective
Boards of Directors, recommend to their respective stockholders approval of
such matters
Section 4.6. OTC:BB Listing. The parties shall use all reasonable
efforts to cause the IBI Shares, subject to Rule 144, to be traded on the
Over The Counter Bulletin Board (OTC:BB).
Section 4.7. Access to Information.
(a) Between the date hereof and the Effective Time, IBI will give TSC
and its authorized representatives, and TSC will give IBI and its
authorized representatives, reasonable access to all employees, plants,
offices, warehouses and other facilities and to all books and records of
itself and its subsidiaries, will permit the other party to make such
inspections as such party may reasonably require and will cause its
officers and those of its subsidiaries to furnish the other party with such
financial and operating data and other information with respect to the
business and properties of itself and its subsidiaries as the other party
may from time to time reasonably request.
<PAGE>
(b) Between the date hereof and the Effective Time, IBI shall furnish
to TSC, and TSC will furnish to IBI, within 25 business days after the end
of each quarter, quarterly statements prepared by such party in conformity
with its past practices) as of the last day of the period then ended.
(c) Each of the parties hereto will hold and will cause its
consultants and advisers to hold in confidence all documents and
information furnished to it in connection with the transactions
contemplated by this Agreement.
Section 4.8. Additional Agreements, Reasonable Efforts. Subject to the
terms and conditions herein provided, each of the parties hereto agrees to
use all reasonable efforts to take, or cause to be taken, all action, and
to do, or cause to be done, all things reasonably necessary, proper or
advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement, including,
without limitation, (i) cooperating in the preparation and filing of the
Proxy Statement and the 8-K, any filings that may be required under the HSR
Act, and any amendments to any thereof; (ii) obtaining consents of all
third parties and Governmental Entities necessary, proper or advisable for
the consummation of the transactions contemplated by this Agreement; (iii)
contesting any legal proceeding relating to the Merger and (iv) the
execution of any additional instruments necessary to consummate the
transactions contemplated hereby. Subject to the terms and conditions of
this Agreement, TSC and IBI agree to use all reasonable efforts to cause
the Effective Time to occur as soon as practicable after the stockholder
votes with respect to the Merger. In case at any time after the Effective
Time any further action is necessary to carry out the purposes of this
Agreement, the proper officers and directors of each party hereto shall
take all such necessary action.
Section 4.9. Indemnification.
(a) To the extent, if any, not provided by an existing right under one
of the parties' directors and officers liability insurance policies, from
and after the Effective Time, IBI shall, to the fullest extent permitted by
applicable law, indemnify, defend and hold harmless each person who is now,
or has been at any time prior to the date hereof, or who becomes prior to
the Effective Time, a director, officer or employee of the parties hereto
or any subsidiary thereof (each an "Indemnified Party" and, collectively,
the ''Indemnified Parties") against all losses, expenses (including
reasonable attorneys' fees and expenses), claims, damages or liabilities
or, subject to the proviso of the next succeeding sentence, amounts paid in
settlement arising out of actions or omissions occurring at or prior to the
Effective Time and whether asserted or claimed prior to, at or after the
Effective Time) that are in whole or in part (i) based on, or arising out
of the fact that such person is or was a director, officer or employee of
such party or a subsidiary of such party or (ii) based on, arising out of
or pertaining to the transactions contemplated by this Agreement. In the
event of any such loss expense, claim, damage or liability (whether or not
arising before the Effective Time), (i) IBI shall pay the reasonable fees
and expenses of counsel selected by the Indemnified Parties, which counsel
shall be reasonably satisfactory to IBI, promptly after statements
therefore are received and otherwise advance to such Indemnified Party upon
request reimbursement of documented expenses reasonably incurred, in either
case to the extent not prohibited by the NGCL or its certificate of
incorporation or bylaws, (ii) IBI will cooperate in the defense of any such
matter and (iii) any determination required to be made with respect to
whether an Indemnified Party's conduct complies with the standards set
forth under the NGCL and IBI's certificate of incorporation or bylaws shall
be made by independent counsel mutually acceptable to IBI and the
Indemnified Party; provided, however, that IBI shall not be liable for any
settlement effected without its written consent (which consent shall not be
unreasonably withheld). The Indemnified Parties as a group may retain only
one law firm with respect to each related matter except to the extent there
is, in the opinion of counsel to an Indemnified Party, under applicable
standards of professional conduct, c conflict on any significant issue
between positions of any two or more Indemnified Parties.
(b) In the event IBI or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity or such consolidation or
merger or (ii) transfers all or substantially all of its properties and
assets to any person, then and in either such case, proper provision shall
be made so that the successors and assigns of IBI shall assume the
obligations set forth in this Section 4.11.
(c) To the fullest extent permitted by law, from and after the
Effective Time, all rights to indemnification now existing in favor of the
employees, agents, directors or officers of IBI and TSC and their
subsidiaries with respect to their activities as such prior to the
Effective Time, as provided in IBI's and TSC's certificate of incorporation
or bylaws, in effect on the date thereof or otherwise in effect on the date
hereof, shall survive the Merger and shall continue in full force and
effect for a period of not less than six years from the Effective Time.
<PAGE>
(d) The provisions of this Section 4.11 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party, his or her
heirs and his or her representatives.
Section 4.10. Notification of Certain Matters. The parties hereto
shall give prompt notice to the other parties, of (i) the occurrence or
nonoccurrence of any event the occurrence or nonoccurrence of which would
be likely to cause any representation or warranty contained in this
Agreement to be untrue or inaccurate in any material respect at or prior to
the Effective Time, (ii) any material failure of such party to comply with
or satisfy any covenant, condition or agreement to be complied with or
satisfied by it hereunder, (iii) any notice of, or other communication
relating to, a default or event which, with notice or lapse of time or
both, would become a default, received by such party or any of its
subsidiaries subsequent to the date of this Agreement and prior to the
Effective Time, under any contract or agreement material to the financial
condition, properties, businesses or results of operations of such party
and its subsidiaries taken as a whole to which such party or any of its
subsidiaries is a party or is subject, (iv) any notice or other
communication from any third party alleging that the consent of such third
party is or may be required in connection with the transactions
contemplated by this Agreement, or (v) any material adverse change in their
respective financial condition, properties, businesses, results of
operations or prospects taken as a whole, other than changes resulting from
general economic conditions; provided, however, that the delivery of any
notice pursuant to this Section 4.12 shall not cure such breach or
non-compliance or limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
ARTICLE 5
Conditions to Consummation of the Merger
Section 5.1. Conditions to Each Party's Obligations to Effect the
Merger. The respective obligations of each party hereto to effect the
Merger are subject to the satisfaction at or prior to the Effective Time of
the following conditions:
(a) this Agreement shall have been approved and adopted by the
requisite vote of the stockholders of IBI and TSC;
(b) this Agreement shall have been approved and adopted by the Board
of Directors of IBI and TSC;
(c) no statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or enforced by any
United States court or United States governmental authority which
prohibits, restrains, enjoins or restricts the consummation of the Merger;
(d) any waiting period applicable to the Merger under the HSR Act
shall have terminated or expired, and any other governmental or regulatory
notices or approvals required with respect to the transactions contemplated
hereby shall have been either filed or received; and
Section 5.2. Conditions to the Obligations of IBI. The obligation of
IBI to effect the Merger is subject to the satisfaction at or prior to the
Effective Time of the following conditions:
(a) the representations of TSC contained in this Agreement or in any
other document delivered pursuant hereto shall be true and correct (except
to the extent that the breach thereof would not have a Material Adverse
Effect on TSC) at and as of the Effective Time with the same effect as if
made at and as of the Effective Time (except to the extent such
representations specifically related to an earlier date, in which case such
representations shall be true and correct as of such earlier date), and at
the Closing TSC shall have delivered to IBI a certificate to that effect;
(b) each of the covenants and obligations of TSC to be performed at or
before the Effective Time pursuant to the terms of this Agreement shall
have been duly performed in all material respects at or before the
Effective Time and at the Closing TSC shall have delivered to IBI a
certificate to that effect;
(d) TSC shall have obtained the consent or approval of each person
whose consent or approval shall be required in order to permit the Merger
as relates to any obligation, right or interest of TSC under any loan or
credit agreement, note, mortgage, indenture, lease or other agreement or
instrument, except those for which failure to obtain such consents and
approvals would not, in the reasonable opinion of IBI, individually or in
the aggregate, have a Material Adverse Effect on TSC;
<PAGE>
(e) there shall have been no events, changes or effects with respect
to TSC or its subsidiaries having or which could reasonably be expected to
have a Material Adverse Effect on TSC; and
Section 5.3. Conditions to the Obligations of TSC. The respective
obligations of TSC to effect the Merger are subject to the satisfaction at
or prior to the Effective Time of the following conditions:
(a) the representations of IBI contained in this Agreement or in any
other document delivered pursuant hereto shall be true and correct (except
to the extent that the breach thereof would not have a Material Adverse
Effect on IBI) at and as of the Effective Time with the same effect as if
made at and as of the Effective Time (except to the extent such
representations specifically related to an earlier date, in which case such
representations shall be true and correct as of such earlier date), and at
the Closing IBI shall have delivered to TSC a certificate to that effect;
(b) each of the covenants and obligations of IBI to be performed at or
before the Effective Time pursuant to the terms of this Agreement shall
have been duly performed in all material respects at or before the
Effective Time and at the Closing IBI shall have delivered to TSC a
certificate to that effect;
(c) there shall have been no events, changes or effects with respect
to IBI having or which could reasonably be expected to have a Material
Adverse Effect on IBI.
ARTICLE 6
Termination; Amendment; Waiver
Section 6.1. Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, whether
before or after approval and adoption of this Agreement by IBI's or TSC's
stockholders:
(a) by mutual written consent of IBI and TSC;
(b) by TSC or IBI if (i) any court of competent jurisdiction in the
United States or other United States Governmental Entity shall have issued
a final order, decree or ruling or taken any other final action
restraining, enjoining or otherwise prohibiting the Merger and such order,
decree, ruling or other action is or shall have become nonappealable or
(ii) the Merger has not been consummated by November 30, 1999; provided,
however, that no party may terminate this Agreement pursuant to this clause
(ii) if such party's failure to fulfill any of its obligations under this
Agreement shall have been the reason that the Effective Time shall not have
occurred on or before said date;
(c) by IBI if (i) there shall have been a breach of any representation
or warranty on the part of TSC set forth in this Agreement, or if any
representation or warranty of TSC shall have become untrue, in either case
such that the conditions set forth in Section 5.2(a) would be incapable of
being satisfied by November 30, 1999 (or as otherwise extended), (ii) there
shall have been a breach by TSC of any of their respective covenants or
agreements hereunder having a Material Adverse Effect on TSC or materially
adversely affecting (or materially delaying) the consummation of the
Merger, and TSC, as the case may be, has not cured such breach within 20
business days after notice by IBI thereof, provided that IBI has not
breached any of its obligations hereunder, (iii) IBI shall have convened a
meeting of its stockholders to vote upon the Merger and shall have failed
to obtain the requisite vote of its stockholders; or (iv) IBI shall have
convened a meeting of its Board of Directors to vote upon the Merger and
shall have failed to obtain the requisite vote;
(d) by TSC if (i) there shall have been a breach of any representation
or warranty on the part of IBI set forth in this Agreement, or if any
representation or warranty of IBI shall have become untrue, in either case
such that the conditions set forth in Section 5.3(a) would be incapable of
being satisfied by November 30, 1999 (or as otherwise extended), (ii) there
shall have been a breach by IBI of its covenants or agreements hereunder
having a Material Adverse Effect on IBI or materially adversely affecting
(or materially delaying) the consummation of the Merger, and IBI, as the
case may be, has not cured such breach within twenty business days after
notice by TSC thereof, provided that TSC has not breached any of its
obligations hereunder, (iii) the IBI Board shall have recommended to IBI's
<PAGE>
stockholders a Superior Proposal, (iv) the IBI Board shall have withdrawn,
modified or changed its approval or recommendation of this Agreement or the
Merger or shall have failed to call, give notice of, convene or hold a
stockholders' meeting to vote upon the Merger, or shall have adopted any
resolution to effect any of the foregoing, (v) TSC shall have convened a
meeting of its stockholders to vote upon the Merger and shall have failed
to obtain the requisite vote of its stockholders or (vi) IBI shall have
convened a meeting of its stockholders to vote upon the Merger and shall
have failed to obtain the requisite vote of its stockholders.
Section 6.2. Effect of Termination. In the event of the termination
and abandonment of this Agreement pursuant to Section 6.1, this Agreement
shall forthwith become void and have no effect, without any liability on
the part of any party hereto or its affiliates, directors, officers or
stockholders, other than the provisions of this Section 6.2 and Sections
4.7(c) and 6.3 hereof. Nothing contained in this Section 6.2 shall relieve
any party from liability for any breach of this Agreement.
Section 6.3. Fees and Expenses. Except as specifically provided in
this Section 6.3, each party shall bear its own expenses in connection with
this Agreement and the transactions contemplated hereby.
Section 6.4. Amendment. This Agreement may be amended by action taken
by IBI and TSC at any time before or after approval of the Merger by the
stockholders of IBI and TSC (if required by applicable law) but, after any
such approval, no amendment shall be made which requires the approval of
such stockholders under applicable law without such approval. This
Agreement may not be amended except by an instrument in writing signed on
behalf of the parties hereto.
Section 6.5. Extension; Waiver. At any time prior to the Effective
Time, each party hereto may (i) extend the time for the performance of any
of the obligations or other acts of any other party, (ii) waive any
inaccuracies in the representations and warranties of any other party
contained herein or in any document, certificate or writing delivered
pursuant hereto or (iii) waive compliance by any other party with any of
the agreements or conditions contained herein. Any agreement on the part of
any party hereto to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party. The
failure of any party hereto to assert any of its rights hereunder shall not
constitute a waiver of such rights.
ARTICLE 7
Miscellaneous
Section 7.1. Nonsurvival of Representations and Warranties. The
representations and warranties made herein shall not survive beyond the
Effective Time or a termination of this Agreement. This Section 7.1 shall
not limit any covenant or agreement of the parties hereto which by its
terms requires performance after the Effective Time.
Section 7.2. Entire Agreement; Assignment. This Agreement (a)
constitutes the entire agreement between the parties hereto with respect to
the subject matter hereof and supersedes all other prior agreements and
understandings both written and oral, between the parties with respect to
the subject matter hereof and (b) shall not be assigned by operation of law
or otherwise.
Section 7.3. Validity. If any provision of this Agreement, or the
application thereof to any person or circumstance, is held invalid or
unenforceable, the remainder of this Agreement, and the application of such
provision to other persons or circumstances, shall not be affected thereby,
and to such end, the provisions of this Agreement are agreed to be
severable.
Section 7.4. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly given upon receipt) by delivery in person, by
facsimile or by registered or certified mail (postage prepaid, return
receipt requested), to each other party as follows:
If to TSC:
Tele Special.Com
1850 East Flamingo Rd. Suite 111
Las Vegas, Nevada 89119
<PAGE>
with a copy to:
Donald J. Stoecklein
Sperry Young & Stoecklein
1850 East Flamingo Rd. Suite 111
Las Vegas, Nevada 89119
(702) 792-2590
(702) 794-0744
if to IBI:
INTERNATIONAL BRANDS, INC.
7729 Othello Avenue
San Diego CA 92111
(858) 292-3380
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth
above.
Section 7.5. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Nevada, without
regard to the principles of conflicts of law thereof.
Section 7.6. Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part
of or to affect the meaning or interpretation of this Agreement.
Section 7.7. Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto and its successors and
permitted assigns, and except as provided in Sections 4.9 and 4.11, nothing
in this Agreement, express or implied, is intended to or shall confer upon
any other person any rights, benefits or remedies of any nature whatsoever
under or by reason of this Agreement.
Section 7.8. Certain Definitions. For the purposes of this Agreement,
the term:
(a) "affiliate" means (except as otherwise provided in Sections 2.19,
3.19 and 4.13) a person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control
with, the first mentioned person;
(b) "business day" means any day other than a day on which Nasdaq is
closed;
(c) "capital stock" means common stock, preferred stock, partnership
interests, limited liability company interests or other ownership interests
entitling the holder thereof to vote with respect to matters involving the
issuer thereof;
(d) "knowledge'' or "known'' means, with respect to any matter in
question, if an executive officer of IBI or TSC or its subsidiaries, as the
case may be, has actual knowledge of such matter;
(e) "person" means an individual, corporation, partnership, limited
liability company, association, trust, unincorporated organization or other
legal entity; and
(f) "subsidiary" or "subsidiaries" of IBI, TSC or any other person,
means any corporation, partnership, limited liability company, association,
trust, unincorporated association or other legal entity of which IBI, TSC
or any such other person, as the case may be (either alone or through or
together with any other subsidiary), owns, directly or indirectly, 50% or
more of the capital stock, the holders of which are generally entitled to
vote for the election of the board of directors or other governing body of
such corporation or other legal entity.
Section 7.9. Personal Liability. This Agreement shall not create or be
deemed to create or permit any personal liability or obligation on the part
of any direct or indirect stockholder of IBI, TSC or Newco or any officer,
director, employee, agent, representative or investor of any party hereto.
<PAGE>
Section 7.10. Specific Performance. The parties hereby acknowledge and
agree that the failure of any party to perform its agreements and covenants
hereunder, including its failure to take all actions as are necessary on
its part to the consummation of the Merger, will cause irreparable injury
to the other parties for which damages, even if available, will not be an
adequate remedy. Accordingly, each party hereby consents to the issuance of
injunctive relief by any court of competent jurisdiction to compel
performance of such party's obligations and to the granting by any court of
the remedy of specific performance of its obligations hereunder; provided,
however, that, if a party hereto is entitled to receive any payment or
reimbursement of expenses pursuant to Sections 6.3(a), (b) or (c), it shall
not be entitled to specific performance to compel the consummation of the
Merger.
Section 7.11. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, but all
of which shall constitute one and the same agreement.
In Witness Whereof, each of the parties has caused this Agreement to be
duly executed on its behalf as of the day and year first above written.
IBI Coporation
By:/s/ Steven Zubkis
Name: Steven Zubkis
Title: President
Tele Special.Co,.
By:/s Anthony DeMint
Name: Anthony N. DeMint
Title: President
<PAGE>
IBI DISCLOSURE SCHEDULE
Schedule 2.1 Organization See Amended Articles/Bylaws
Schedule 2.6 Consents & Approvals None Provided
Schedule 2.7 No Default Not Applicable
Schedule 2.8 No Undisclosed Liability None Exist
Schedule 2.9 Litigation None Exist
Schedule 2.10 Compliance with Applicable Law None
Schedule 2.11 Employee Benefit Plans None Provided
Schedule 2.12 Environmental Laws and Regs Not Applicable
Schedule 2.13 Tax Matters None Exist
Schedule 2.14 Title to Property None Exist
Schedule 2.15 Intellectual Property None Exist
Schedule 2.16 Insurance None Exist
Schedule 2.17 Vote Required None Required
Schedule 2.18 Tax Treatment Not Applicable
Schedule 2.19 Affiliates None Provided
Schedule 2.20 Certain Business Practices None Exist
Schedule 2.21 Insider Interest None Exist
Schedule 2.22 Opinion of Financial Adviser Waived - None Exist
Schedule 2.23 Broker None Exist
Schedule 4.1 Conduct of Business None Provided
<PAGE>
TSC DISCLOSURE SCHEDULE
Schedule 3.2(b) Subsidiary Stock None Exist
Schedule 3.2(c) Capital Stock Rights None Exist other than as
in Articles
Schedule 3.2(d) Securities conversions None Exist
Schedule 3.2 (f) Subsidiaries None Exist
Schedule 3.6 Consents & Approvals Provided
Schedule 3.7 No Default Not Applicable
Schedule 3.8 No Undisclosed Liability None Exist
Schedule 3.9 Litigation None Exist
Schedule 3.10 Compliance with Applicable Law Not Applicable - full
disclosed in 10KSB
Schedule 3.11 Employee Benefit Plans Section 3.11( c)No Options
Exist
Section 3.11(e) No Agreements Exist
Schedule 3.12 Environmental Laws and Regs Not Applicable
Schedule 3.13 Tax Matters None Exist
Schedule 3.14 Title to Property None Exist
Schedule 3.15(b) Intellectual Property None Exist
Schedule 3.16 Insurance None Exist
Schedule 3.17 Vote Required See Shareholder Meeting
Certificate
Schedule 3.18 Tax Treatment Not Applicable
Schedule 3.19 Affiliates None Exist
Schedule 3.20 Certain Business Practices None Exist
Schedule 3.21 Insider Interest None Exist
Schedule 3.22 Opinion of Financial Adviser Waived - None Exist
Schedule 2.23 Broker None Exist
Schedule 4.2 Conduct of Business See Amended & Restated
Articles
