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)
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):
Amount of Common Percent of
Stock Common Stock
Beneficially Benificially
Owned (1) Owned(2)
Name Position
Dennis Hayes CEO 45,000 .oo6
Joseph Sterle Director 729,608 1
Kellie Fitzgerald Secretary 15,000 .02
Alumni Motorsports None 6,578,000 9.7
Steven Zubkis None 14,556,560 21.5
(1) Based upon 67,696,347 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.
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
On May 9, 2000, the Company received a final judgement against it
as a result of litigation initiated by the State of New Jersey against
International Brands and several other defendants. As a result, the
Company is enjoined from selling any of its stock within the State of
New Jersey. In addition, International Brands shall send a notice to
all New Jersey residents who purchased stock, allowing them a right of
recision. International Brands, Z3 Capital Corporation and its chief
executive are liable to the State of New Jersey for $7,770 in civil
monetary penalties. This amount has been accrued on the Company's books
and is reflected as a liability at December 31, 1999 and March 31, 2000
since the source for payment of the penalty shall come from the
Company. The Company is currently appealing this judgement, however the
success of this appeal is in doubt.
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.
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
Name Age Title
Dennis Hayes 50 C.E.O
Dennis C. Hayes invented the PC modem in 1977, establishing the
critical technology that allowed today's online and Internet industries
to emerge and grow.
He sold the first Hayes modem products to computer hobbyists in April
of 1977 and founded D.C. Hayes Associates, Inc., the company known
today as Hayes Corp., in January of 1978. Hayes quality and innovation
resulted in performance enhancements and cost reductions that led the
industry in the conversion from leased line modems to intelligent dial
modems - the PC Modem.
When he started the company, Hayes already had more than ten years
experience working with large and small computer systems,
telecommunications, manufacturing and electronic product development.
While attending the Georgia Institute of Technology, Hayes participated
in a co-op program working for AT&T Long Lines. Later, he joined
Financial Data Sciences where he worked on systems using the first
four-bit microprocessor. After concluding his studies at Georgia Tech,
Hayes worked for National Data Corporation where he developed
microcomputer-based systems to interconnect networks. Hayes attended
the School of Management and Strategic Studies at the Western Behavior
Sciences Institute.
D.C. Hayes Associates was founded on a dining room table in Hayes'
home, where he started with a modest $5000 investment and boot-strapped
the company to become the leader in the industry. The first products
were modem boards for the S-100 bus and then for the Apple II
computers. Solving the interface problems to allow any computer using a
standard serial port to control the modem functions with software, he
invent ed the Hayes Standard AT command set introducing the first PC
modem in June 1981.
The Hayes Smartmodem quickly became the standard by which modem
compatibility was measured and the company grew rapidly. In more than
twenty years as Chairman of Hayes, he led the company as a visionary
who saw the opportunity for the development of PC communications and
the virtual workplace.
After successfully guiding the company through a merger that resulted
in a new, publicly-owned Hayes Corporation, Dennis C. Hayes retired as
Chairman in late1998 to pursue other industry interests, among these
his chairmanship of the US Internet Industry Association.
A native of Spartanburg, South Carolina, Hayes is also active in other
community and industry associations. He served as a founder and Co
Chair of the Public Policy Committee of CompTIA, the Computing
Technology Industry Association, Founding Chairman of the Georgia High
Tech Alliance, founding member of the Governor's Advisory council on
Science and Technology Development and founding Board Member of the
Georgia Center for Advanced Telecommunications Technology. Hayes is one
of four initial inductees into Georgia's Technology Hall of Fame.
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 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
defining 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
On March 20th, 2000, Steven Zubkis resigned as C.E.O. of International
Brands. On April 5th, 2000, the Board appointed Dennis Hayes as C.E.O.
See attached Exhibit 99.3 (Press Release dated March 14th, 2000) and
Exhibit 99.4 (Press Release dated April 12, 2000.)
ITEM 7. FINANCIAL STATEMENTS
The financials for Tele Special.Com, Inc. are attached as Exhibit
99.1. The financials for International Brands, Inc. are attached as
Exhibit 99.2
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,
99.1 Financials attached for Tele Special.Com, Inc.
99.2 Financials attached for International Brand, Inc.
99.3 Press release dated March 14th, 2000
99.4 Press Release date April 12th, 2000.
______
*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/ Dennis Hayes
President
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
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
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
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.
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
cancelled, 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.
(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
cancelled 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 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.
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 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
therefore 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.
(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, 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.
(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 herein 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 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.
(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
DisclosureSchedule 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 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.
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 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:
(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
otherreorganization 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;
(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
theforegoing, 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;
(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.
(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.
(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
here to 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;
(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 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 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
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.
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
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
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
