SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 28, 1996
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INTERNATIONAL STANDARDS GROUP, LIMITED
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(Exact name of registrant as specified in its charter)
Delaware 0-20922 75-2274730
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
3200 North Military Trail, Suite 210, Boca Raton, FL 33431
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (407) 997-5880
Not Applicable
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(Former name or former address, if changed since last report)
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ITEM 5 - OTHER EVENTS
On May 28, 1996, the Company entered into an Agreement and Plan of
Reorganization for the acquisition of all of the outstanding capital stock of
Total National TeleCommunications, Inc. (d/b/a Total World Telecom) ("Total").
Under the terms of the stock exchange, the shareholders of Total would receive
shares of newly created series of preferred stock of the Company which would be
convertible into shares of Common Stock of the Company based upon fulfillment of
certain financial criteria established by the Company and Total subsequent to
the completion of the acquisition and the price of the Company's stock at the
time of conversion. The Series M and Series N Preferred Stock established
pursuant to the exchange will carry a cumulative dividend of 2.7% of the stated
value of the preferred stock which the Company would be required to pay until
such time as the Company's Registration Statement relating to resale of certain
of the shares of Common Stock underlying the Series of Preferred Stock is
registered under the Securities Act of 1933. The Company and Total expect the
Agreement and Plan of Reorganization to be consummated during June 1996, at
which time the Company will advance $5,000,000 for the working capital needs of
Total.
Total, which was organized in October 1991 is based in Houston, Texas.
The Company is a Tier II switch-based interexchange carrier which utilizes
state-of-the-art digital and fiber optic facilities, including five Siemens
Stromberg-Carlson DCO tandem switches located in New York, Chicago, Los Angeles,
Atlanta and Houston. In addition, TWT has deployed SS7 signaling throughout its
network in order to assure prompt, clear connections at a competitive price. The
Company's Operations Command Center is also in Houston. The Company through
long-term contracts provides origination and termination long distance services
to Tier III and Tier IV, switchless resellers. For the nine months ended
September 30, 1995, Total had aggregate revenues of $22,796,807, gross profit of
$6,310,287 and a net loss of $773,918. Total's revenues have grown from
$7,000,344 for the year ended December 31, 1993 and from $13,533,960 for the
year ended December 31, 1994. Based on the revenues for the four months ending
April 30, 1996, Total estimates the revenues to be approximately $71 million for
calendar year 1996, with an EBIT of approximately $7.56 million profit. Total's
management team consisting of Donald Booth, Steve Reemts and Larry Ashworth will
remain with Total following the acquisition and will occupy senior principal
positions with the Company once the acquisition is consummated.
ITEM 7 - FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS
(a) Agreement and Plan of Reorganization
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SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
INTERNATIONAL STANDARDS GROUP,
LIMITED
By:/s/ Joseph L. Lents
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Joseph L. Lents, President
and Chief Executive Officer
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AGREEMENT AND PLAN OF REORGANIZATION
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THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is dated
and effective as of this 28th day of May, 1996 by and among INTERNATIONAL
STANDARDS GROUP LIMITED, a Delaware corporation ("ISG"), TOTAL NATIONAL
TELECOMMUNICATIONS, INC. d/b/a TOTAL WORLD TELECOM, a Texas corporation
("Total"), and the shareholders of Total, DONALD BOOTH ("Booth"), the BOOTH 1996
PARENTS' TRUSTS (the "Parents' Trusts"), THE BOOTH 1996 SIBLINGS' TRUSTS (the
"Siblings' Trusts"), THE BOOTH 1996 NEPHEWS' & NIECES' TRUSTS (the "Nephews' &
Nieces' Trusts"), THE BOOTH 1996 DESCENDANTS' TRUSTS (the "Descendants' Trusts),
JOSEPH HARROTT ("Harrott"), DARLENE KIRKLAND ("Kirkland"), JOE W. WIGGINS
("Wiggins"), THE JOSEPH HARROTT, SR. CHARITABLE REMAINDER TRUST (the "Harrott
Trust"), THE DARLENE K. KIRKLAND CHARITABLE REMAINDER TRUST (the "Kirkland
Trust") and ROBERT LEWIS ("Lewis") (Booth, the Parents' Trusts, the Siblings'
Trusts, the Nephews' & Nieces' Trusts, the Descendants' Trusts, Harrott,
Kirkland, Wiggins, the Harrott Trust, the Kirkland Trust and Lewis being
hereinafter collectively referred to as the "Shareholders"), relating to the
acquisition by ISG of all of the outstanding capital stock of Total.
W I T N E S S E T H:
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WHEREAS, the Shareholders own all of the issued and outstanding shares
of capital stock of Total;
WHEREAS, ISG desires to acquire all of the issued and outstanding
shares of capital stock of Total so that Total will become a wholly-owned
subsidiary of ISG; and
WHEREAS, the parties intend that (i) ISG shall acquire all of the
issued and outstanding capital stock of Total in exchange solely for the number
of shares of ISG's authorized, but unissued, shares of preferred stock as
hereinafter set forth (the "Exchange"); (ii) the Exchange shall qualify as a
tax-free reorganization under Section 368(a)(1)(B) of the Internal Revenue Code
of 1986, as amended, and related sections thereunder; (iii) ISG shall issue
additional shares of preferred stock to certain present and former employees,
consultants and agents of Total in exchange for certain rights, interests and
compensation owed to such persons (the "Issuance"); and (iv) the Exchange and
Issuance shall qualify as a transaction in securities exempt from registration
or qualification under the Securities Act of 1933, as amended (the "Securities
Act"), and under the applicable securities laws of the state or jurisdiction
wherein the Shareholders and such other persons reside or under which they are
organized.
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NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained in this Agreement, the parties hereto
agree as follows:
I.
EXCHANGE AND ISSUANCE OF SHARES
1.1 EXCHANGE AND ISSUANCE OF SHARES. ISG, Total and the Shareholders
hereby agree that on the Closing Date (as hereinafter defined) that ISG shall
issue and/or the Shareholders shall exchange all of the issued and outstanding
shares of capital stock of Total for the shares of preferred stock of ISG
hereinafter described:
(i) There shall be issued to Harrott, Kirkland, Wiggins, the
Harrott Trust, the Kirkland Trust and Lewis in exchange for their
capital stock of Total an aggregate of 231,000 shares of ISG's Series M
Cumulative Convertible Voting Preferred Stock ($100 stated value)
convertible into 23,100,000 shares of Common Stock of ISG (the "Series
M Preferred Stock"). Each share of Series M Preferred Stock will be
entitled to one vote per share. The holders of the shares of Series M
Preferred Stock shall be entitled to receive a combined dividend of
$194,000 upon execution of this Agreement and a combined dividend of
$388,000 at the Closing Date, to be allocated based on each holder's
proportionate ownership of shares of Series M Preferred Stock.
Following the Closing Date, each share of Series M Preferred Stock
shall be entitled to a cumulative dividend of 2.7% of the stated value
to be payable on the last day of each calendar month thereafter until
such time as ISG's Registration Statement covering the resale of the
shares of Common Stock underlying the Series M Preferred Stock becomes
effective under the Securities Act of 1933. The shares of Series M
Preferred Stock shall have the benefit of a registration covenant from
ISG to permit the resale of the shares of Common Stock underlying the
Series M Preferred Stock as hereinafter provided;
(ii) There shall be issued to Booth, the Parents' Trusts, the
Siblings' Trusts, the Nephews' & Nieces' Trusts, the Descendants'
Trusts, in exchange for their capital stock of Total 66,500 shares of
ISG's Series N Cumulative Convertible Voting Preferred Stock ($100
stated value) convertible into 6,650,000 shares of Common Stock of ISG
(the "Series N Preferred Stock"). Each share of Series N Preferred
Stock will be entitled to one vote per share. As the holders of the
Series N Preferred Stock, they shall be entitled to receive a total
dividend of $56,000 upon execution of the Agreement and a total
dividend of $112,000 at the Closing Date. Following
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the Closing Date, each share of Series N Preferred Stock shall be
entitled to a cumulative dividend at the rate of 2.7% of the stated
value per month to be payable on the last day of each calendar month
until such time as ISG's Registration Statement covering the resale of
the shares of Common Stock underlying the Series N Preferred Stock
becomes effective under the Securities Act of 1933. The holders of the
Series N Preferred Stock, shall have the benefit of a registration
covenant to permit the resale of the shares of Common Stock underlying
the Series N Preferred Stock as hereinafter provided, except that they
may not commence the sale of any shares of underlying Common Stock
until after December 31, 1996 and may not dispose of in excess of 5%
(332,500 shares) of the underlying shares of Common Stock in any
calendar month;
(iii) There shall be issued 35,000 shares of ISG's Series O
Convertible Voting Preferred Stock ($100 stated value) convertible into
3,500,000 shares of Common Stock of ISG) (the "Series O Preferred
Stock") to certain former employees, consultants and agents designated
in Section A of Schedule 1.1 (iii) ("A Group") and to certain current
employees and consultants designated in Section B of Schedule 1.1 (iii)
("B Group"). Each share of Series O Preferred Stock will be entitled to
one vote per share. The Series O Preferred Stock shall not include any
dividend. The shares of Series O Preferred Stock shall have the benefit
of a registration covenant from ISG to permit the resale of the shares
of Common Stock underlying the Series O Preferred Stock as hereinafter
provided, except that members of the B Group may not sell their shares
of underlying Common Stock until after December 31, 1996;
(iv) There shall be issued to Booth, in consideration for his
entering into a five-year employment agreement with Total and ISG, and
to certain key employees of Total to be designated on Schedule 1.1 (iv)
hereto, 267,501 shares of ISG's Series P Non-Cumulative Convertible
Voting Preferred Stock ($100 stated value) (the "Series P Preferred
Stock"). Each share of Series P Preferred Stock will be entitled to one
vote per share. The Series P Preferred Stock shall not include any
dividend and shall not have the benefit of any registration rights
relating to the resale of the underlying shares of Common Stock. The
Series P Preferred Stock shall be convertible into Common Stock of ISG
at any time commencing one year following the Closing Date of this
Agreement at a conversion price equal to the lower of $3.00 per share
or the average closing price of the Common Stock for the ten (10)
trading days preceding conversion, but in any event not less
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than $1.50 per share. Accordingly, the Series P Preferred Stock shall
be convertible into a maximum of 17,833,400 shares of Common Stock and
a minimum of 8,916,700 shares of Common Stock of ISG. Booth shall be
entitled to receive 167,499 shares of Series P Preferred Stock, and the
remaining 100,002 shares of Series P Preferred Stock shall be allocated
to key employees of Total to be designated on Schedule 1.1 (iv) to this
Agreement; and
(v) There shall be issued to the persons designated on
Schedule 1.1 (v) 250,000 shares of ISG's Series Q NonCumulative
Convertible Voting Preferred Stock ($100 stated value ) (the "Series Q
Preferred Stock"). Each share of Series Q Preferred Stock will be
entitled to one vote per share and shall not have the benefit of any
registration rights relating to the resale of the underlying shares of
Common Stock. The shares of Series Q Preferred Stock may not be
converted into Common Stock of ISG for a period of two years following
the Closing Date of the Agreement, and provided further that no
conversion shall occur until certain performance criteria consisting of
revenues and profit goals for Total, as set forth in a schedule to be
agreed upon by ISG and Total, have been achieved. The shares of Series
Q Preferred Stock, assuming such performance criteria are achieved,
will be convertible into Common Stock of ISG at the lesser of $4.00 per
share or the average closing price of the Common Stock of ISG for the
ten (10) trading days preceding conversion, but in any event not less
than $2.50 per share. Accordingly, the Series Q Preferred Stock shall
be convertible into a maximum of 10,000,000 shares of Common Stock and
a minimum of 6,250,000 shares of Common Stock of ISG.
The Series M Preferred Stock, the Series N Preferred Stock, the Series O
Preferred Stock, the Series P Preferred Stock and the Series Q Preferred Stock
may hereinafter sometimes be collectively referred to as the "Preferred Stock"
and will have such terms and designations as are set forth in the Certificates
of Designation substantially in the form of Exhibits A-1, A-2, A-3, A-4 and A-5
annexed hereto. The number of shares of Total's capital stock owned by each of
the Shareholders and the number of shares of Preferred Stock which each of the
Shareholders and other persons will receive of Series M, Series N, Series O,
Series P and Series Q Preferred Stock in the Exchange and Issuance contemplated
hereby is set forth on Exhibit B annexed hereto.
1.2 REGISTRATION RIGHTS. As soon as practical following the
execution of this Agreement, ISG shall prepare and file with the Securities and
Exchange Commission (the "SEC") a Registration Statement on Form SB-2 or other
suitable registration form in order
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to register the resale of the shares of ISG Common Stock underlying the Series
M, Series N and Series O Preferred Stock. Such Registration Statement shall be
at the cost and expense of ISG, except that any legal fees incurred by the
Shareholders as a result of retention of their own counsel shall be at their own
cost and expense. ISG shall use its best efforts to process the Registration
Statement and obtain and maintain the effectiveness of such Registration
Statement (including any Post-Effective Amendment) with the SEC and with any
state regulatory authorities required in order to permit the resale of the
underlying shares of Common Stock of ISG. ISG shall also provide indemnification
to the Shareholders and other persons consistent with indemnification rights
normally afforded to shareholders in transactions of this kind. ISG agrees to
use its best efforts to obtain effectiveness of the Registration Statement on or
before December 31, 1996.
1.3 DELIVERY OF SHARES IN ESCROW. Simultaneously with the execution of
this Agreement, certificates representing the shares and rights represented by
the Series M, Series N, Series O, Series P and Series Q Preferred Stock shall be
delivered in escrow to Texas Commerce Bank National Association (the "Escrow
Agent"), and the Shareholders shall simultaneously deliver all of the shares of
capital stock of Total in escrow to the Escrow Agent. Notwithstanding the
delivery of the Series M and Series N Preferred Stock to the Escrow Agent,
payment of the dividends on the Series M and Series N Preferred Stock shall be
made directly to the Shareholders as indicated. The shares of Preferred Stock
and the shares of capital stock of Total shall remain in escrow pending the
closing of this Agreement and subject to Sections 12 and 13 hereof. The terms
and conditions of the escrow arrangements shall be included in an Escrow
Agreement in the form of Exhibit C hereto.
1.4 INVESTMENT INTENT. The Preferred Stock and the underlying shares of
Common Stock of the Company (collectively the "Securities") have not been
registered under the Securities Act and may not be resold unless the Securities
are registered under the Securities Act or an exemption from such registration
is available. The Shareholders and other holders of the Preferred Stock will
represent and warrant that they are acquiring the Securities for their own
account, for investment, and not with a view to the distribution of the
Securities. Each certificate representing the Securities will have a legend
thereon incorporating language as follows:
"The Securities represented by this certifi-
cate have not been registered under the
Securities Act of 1933, as amended. The
Securities have been acquired for investment
and may not be sold or transferred in the
absence of an effective Registration Statement
for the Securities under the Act unless, in
the opinion of counsel satisfactory to the
Company, registration is not required by the
Act."
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II.
REPRESENTATIONS AND WARRANTIES OF TOTAL
AND SHAREHOLDERS
Total and the Shareholders jointly and severally represent and warrant
(the representations and warranties of the Shareholders shall be limited to the
best of their knowledge and believe except as to subsections 2.1, 2.2 and 2.14,
as to which such representations and warranties shall not be qualified) to ISG
as follows:
2.1 ORGANIZATION AND GOOD STANDING; OWNERSHIP OF SHARES. Total is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Texas, and is entitled to own or lease its properties and to
carry on its business as and in the places where such properties are now owned,
leased or operated. Total is duly licensed or qualified and in good standing as
a foreign corporation where the character of the properties owned by it or the
nature of the business transacted by it make such licenses or qualifications
necessary. There are no outstanding subscriptions, rights, options, warrants or
other agreements obligating Total to issue, sell or transfer any stock or other
securities of Total except certain options as disclosed in subsection 5.7
hereof.
2.2. OWNERSHIP OF SHARES. The Shareholders are the owners of record and
beneficially of all of the shares of the capital stock of Total free and clear
of all rights, claims, liens and encumbrances, and which shares have not been
sold, pledged, assigned or otherwise transferred except pursuant to this
Agreement.
2.3 FINANCIAL STATEMENTS, BOOKS AND RECORDS. Total has provided to ISG
the preliminary audited consolidated balance sheet of Total as of December 31,
1995 (the "Balance Sheet") and the related consolidated statement of operations
for the year then ended (collectively the "Financial Statements"). The Financial
Statements fairly represent the consolidated financial position of Total as at
such date and the consolidated results of its operations for the period then
ended. Definitive audited financial statements will be provided to ISG on or
prior to the Closing Date. The Financial Statements will be audited by Peat
Marwick LLP, and will be prepared in accordance with generally accepted
accounting principles applied on a consistent basis with prior periods except as
otherwise will be stated therein. The books of account and other financial
records of Total, financial or other, are in all material respects complete and
correct and are maintained in accordance with good business and accounting
practices.
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2.4 NO MATERIAL ADVERSE CHANGES. Except as set forth on Schedule 2.4,
since the date of the Balance Sheet there has not been:
(i) any material adverse change in the assets, operations,
condition (financial or otherwise) or prospective business of Total;
(ii) any incurrence by Total of any indebtedness for borrowed
money not in the ordinary course;
(iii) any damage, destruction or loss materially affecting the
assets, prospective business, operations or condition (financial or
otherwise) of Total, whether or not covered by insurance;
(iv) any declaration, setting aside or payment of any dividend or
distribution with respect to any redemption or repurchase Total's
capital stock;
(v) any sale of an asset or any mortgage or pledge by Total of
any properties or assets (other than in the ordinary course of
business);
(vi) adoption of any pension, profit sharing, retirement, stock
bonus, stock option or similar plan or arrangement;
(vii) termination or failure to renew, or receipt of any threat
(that was not subsequently withdrawn) to terminate or fail to renew,
any contract, licensing arrangement, tariff or other agreement; or
(viii) except in the ordinary course of business, any contract,
agreement or transaction consummated.
2.5 TAXES. Total has prepared and filed all appropriate federal, state
and local tax returns of every kind and category (including, without limitation,
income taxes, estimated taxes, excise taxes, sales taxes, inventory taxes, use
taxes, gross receipt taxes, franchise taxes and property taxes) for all periods
prior to and through the date hereof for which any such returns have been
required to be filed by it, or the failure to make such filings and resulting
liability would not be material relative to the results of operations of Total.
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Total has paid all taxes shown to be due by said returns or on any assessments
received by it or has made adequate provision for the payment thereof.
2.6 COMPLIANCE WITH LAWS. Total has complied with all federal, state,
county and local laws, ordinances, regulations, inspections, orders, judgments,
injunctions, awards or decrees applicable to it or its business which, if not
complied with, would materially and adversely affect the business of Total.
2.7 NO BREACH. The execution, delivery and performance of this Agree-
ment and the consummation of the transactions contemplated hereby will not:
(i) violate any provision of the Articles of Incorporation or
By-Laws of Total;
(ii) violate, conflict with or result in the breach of any of the
terms of, result in a material modification of, otherwise give any
other contracting party the right to terminate, or constitute (or with
notice or lapse of time or both constitute) a default under, any
contract or other agreement to which Total is a party or by or to which
they or any of its assets or properties may be bound or subject;
(iii ) violate any order, judgment, injunction, award or decree of
any court, arbitrator or governmental or regulatory body against, or
binding upon Total, or upon the properties or business of Total; or
(iv) violate any statute, law or regulation of any jurisdiction
applicable to the transactions contemplated herein.
2.8 ACTIONS AND PROCEEDINGS. Except as set forth on Schedule 2.8 or
otherwise provided in writing to ISG, there is no outstanding order, judgment,
injunction, award or decree of any court, governmental or regulatory body or
arbitration tribunal against or involving Total. Except as set forth, there is
no action, suit or claim or legal, administrative or arbitral proceeding or any
investigation (whether or not the defense thereof or liabilities in respect
thereof are covered by insurance) pending or, to the best knowledge of Total and
the Shareholders, threatened against or involving Total or any of its properties
or assets. None of the actions suits, claims, proceedings or investigations set
forth, individually or together with any other, will have a material adverse
effect on the assets, properties, business operations, or condition (financial
or otherwise) of Total, or will result in any order, judgment, injunction, award
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or decree of any court, governmental or regulatory body or arbitration tribunal
that is not adequately reserved against. Except as set forth, there is no fact,
event or circumstances known to Total or the Shareholders that may give rise to
any material suit, action, claim, investigation or proceeding that would be
required to be set forth on Schedule 2.8 if currently pending or threatened.
(i) Total has heretofore disclosed to ISG that certain
proceeding styled I.96-04024 investigation by the Public Utility
Commission of California relating to the licensing and tariffing of
business in California under the name Heartline Communications and/or
Total World Telecom exists. The parties agree that the existence and
any outcome of this proceeding shall not affect the consummation of
this Agreement or the obligations of the parties to each other.
2.9 BROKERS OR FINDERS. Except as disclosed on Schedule 2.9, no
broker's or finder's fee will be paid by Total in connection with the
transactions contemplated by this Agreement, nor will any such fee be incurred
as a result of any actions by Total or the Shareholders.
2.10 REAL ESTATE. Total does not own or lease any real estate, nor
does Total have any option to purchase any interest in real property except as
disclosed in the Financial Statements.
2.11 TANGIBLE ASSETS. Total has made available for review a listing of
all machinery, equipment, furniture, leasehold improvements, fixtures, vehicles,
structures, any related capitalized items or other tangible property material to
the business of Total (the "Tangible Assets"). Except as set forth on Schedule
2.11, Total holds all right, title and interest in all the properties, interests
in properties and assets, real, personal and mixed reflected as being owned by
it on the Balance Sheet or acquired by if after the date of the Balance Sheet
free and clear of all liens, pledges, mortgages, security interests, conditional
sales contracts or any other encumbrances except as set forth on Schedule 2.11.
All of the Tangible Assets are in good operating condition and repair and are
usable in the ordinary course of business of Total and, to the best of Total's
and the Shareholders' knowledge, conform to all applicable laws, ordinances and
governmental orders, rules and regulations relating to their construction and
operation.
2.12 LIABILITIES. As at the date of the Balance Sheet, except as set
forth on Schedule 2.12 or arising in the ordinary course of business, Total does
not have any direct or indirect indebtedness, liability, claim, loss, damage,
deficiency, obligation or responsibility, which are material to its operations,
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whether known or unknown, fixed or unfixed, liquidated or unliquidated, secured
or unsecured, accrued or absolute, contingent or otherwise, including, without
limitation, any liability on account of taxes, any other governmental charge or
lawsuit brought, whether or not of a kind required by generally accepted
accounting principles to be set forth on a financial statement (all of the
foregoing collectively defined to as "Liabilities"), which were not fully,
fairly and adequately reflected on the Balance Sheet. As of the Closing Date,
Total will not have any Liabilities, other than Liabilities fully and adequately
reflected on the Balance Sheet or on Schedule 2.12, except for Liabilities
incurred since the date of the Balance Sheet, in the ordinary course of business
or otherwise consented to by ISG. To the best knowledge of Total and the
Shareholders, there is no circumstance, condition, event or arrangement which
may hereafter give rise to any Liabilities not in the ordinary course of
business, except as set forth on Schedule 2.12.
2.13 ENVIRONMENT, HEALTH AND SAFETY. Except as set forth on Schedule
2.13, Total has complied with all material environmental, health and safety
laws, and no action, suit proceeding, hearing, investigation, charge, complaint,
claim, demand or notice has been filed or commenced against it alleging any
failure so to comply. Without limiting the generality of the preceding sentence,
Total has obtained and been in compliance in all material respects with the
terms and conditions of all permits, licenses and other authorizations which are
required under, and has complied in all material respects with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables which are contained in applicable
environmental, health and safety laws.
2.14 AUTHORITY TO EXECUTE AND PERFORM AGREEMENTS. Total and the
Shareholders have the full legal right and power and all authority and approval
required to enter into, execute and deliver this Agreement and to perform fully
their obligations hereunder. This Agreement has been duly executed and delivered
and is the valid and binding obligation of Total and the Shareholders in
accordance with its terms. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby and thereby and the
performance by Total and the Shareholders of this Agreement, in accordance with
its respective terms and conditions will not:
(i) require the approval or consent of any foreign, federal,state,
county, local or other governmental or regulatory body or the approval
or consent of any other person;
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(ii) conflict with or result in any breach or violation of any of
the terms and conditions of, or constitute (or with notice or lapse of
time or both would constitute) a default under any order, judgment or
decree applicable to Total, or any instrument, contract or other
agreement to which Total or the Shareholders is a party, or by or to
which Total or the Shareholders is bound or subject; or
(iii) result in the creation of any lien or other encumbrance on
the assets or properties of Total.
2.15 FULL DISCLOSURE. No representation or warranty by Total or the
Shareholders in this Agreement or in any document or schedule to be delivered by
it pursuant hereto, and no written statement, certificate or instrument
furnished or to be furnished to ISG pursuant hereto or in connection with the
negotiation, execution or performance of this Agreement contains or will contain
any untrue statement of a material fact or omits or will omit to state any
material fact necessary to make any statement herein or therein not materially
misleading or necessary to a complete and correct presentation of all material
aspects of the business of Total. To the best knowledge of Total and the
Shareholders, there is no fact, development or threatened development (except
for general economic conditions affecting business generally) which Total and
the Shareholders have not disclosed to ISG in writing and which materially
adversely affects the business of Total.
2.16 REPRESENTATIONS AND WARRANTIES ON CLOSING DATE. The
representations and warranties contained in this Section 2 shall be true and
complete on the Closing Date with the same force and effect as though such
representations and warranties had been made on and as of the Closing Date.
III.
REPRESENTATIONS AND WARRANTIES OF ISG
ISG hereby represents and warrants to Total and the Shareholders as
follows:
3.1 ORGANIZATION AND GOOD STANDING. ISG is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and is entitled to own or lease its properties and to carry on its
business as and in the places where such properties are now owned, leased, or
operated and such business is now conducted. ISG is duly licensed or qualified
and in good standing as a foreign corporation where the character of the
properties owned by ISG or the nature of the business transacted by it make such
license or qualification necessary. At
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or about the date of closing, Total and the Shareholders shall have received a
certificate of good standing to the effect that ISG is in good standing under
the laws of its jurisdiction of incorporation.
3.2 OUTSTANDING CAPITALIZATION. As of the date hereof, the
capitalization of ISG is as set forth on Schedule 3.2 hereof without giving
effect to the issuance of the Preferred Stock. The various series of preferred
stock are convertible into the number of shares of Common Stock of ISG listed on
Schedule 3.2. There are no other issued or outstanding shares of capital stock
of ISG as to the date hereof. As of such date, there were also issued and
outstanding the warrants, options, rights, commitments to issue and other
derivative securities which are issuable upon exercise or conversion of such
securities into Common Stock of ISG as listed on Schedule 3.2.
3.3 FINANCIAL STATEMENTS, BOOKS AND RECORDS. ISG has provided to
Total the unaudited consolidated balance sheet of ISG as of March 31, 1996 (the
"Balance Sheet") and the audited balance sheet of ISG as at September 30, 1995,
and the related statements of operation for the period and year then ended
(collectively the "Financial Statements"). The Financial Statements fairly
represent the financial position of ISG as at such dates and the results of its
operations for the period and year then ended. The Financial Statements were
prepared in accordance with generally accepted accounting principles applied on
a consistent basis with prior periods except as otherwise stated therein. The
books of account and other financial records of ISG, financial or otherwise, are
in all material respects complete and correct and are maintained in accordance
with good business and accounting practices.
3.4 NO MATERIAL ADVERSE CHANGES. Except as set forth on Schedule 3.4
or in the Periodic Reports filed by ISG under the Securities Exchange Act of
1934 ("Periodic Reports"), since the date of the Balance Sheet there has not
been:
(i) any material adverse change in the assets, operations,
condition (financial or otherwise) or prospective business of ISG;
(ii) any incurrence by ISG of any indebtedness for borrowed money;
(iii) any loan or advance by ISG to any of its stockholders,
officers, directors, employees, consultants, agents or other
representatives (other than travel advances made in the ordinary course
of business) or made any other
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loan or advance otherwise than in the ordinary course of
business;
(iv) any damage, destruction or loss materially affecting the
assets, prospective business, operations or condition (financial or
otherwise) of ISG, whether or not covered by insurance;
(v) any declaration, setting aside or payment of any dividend or
distribution with respect to any redemption or repurchase of ISG's
capital stock;
(vi) any sale of an asset (other than in the ordinary course of
business) or any mortgage or pledge by ISG of any properties or assets;
(vii) adoption of any pension, profit sharing, retirement, stock
bonus, stock option or similar plan or arrangement;
(viii) any payment or commitment to pay any severance or termination
pay to any of the officers, directors, employees, consultants, agents,
or other representatives of ISG;
(ix) termination or failure to renew, or receipt of any threat
(that was not subsequently withdrawn) to terminate or fail to renew,
any contract or other agreement; or
(x) except in the ordinary course of business, any contract,
agreement or transaction consummated.
3.5 TAXES. ISG has prepared and filed all appropriate federal, state
and local tax returns of every kind and category (including, without limitation,
income taxes, estimated taxes, excise taxes, sales taxes, inventory taxes, use
taxes, gross receipt taxes, franchise taxes and property taxes) for all periods
prior to and through the date hereof for which any such returns have been
required to be filed by it or the failure to make such filings and resulting
liability would not be material relative to the results of operations of ISG.
ISG has paid all taxes shown to be due by said returns or on any assessments
received by it or has made adequate provision for the payment thereof.
3.6 COMPLIANCE WITH LAWS. ISG has complied with all federal, state,
county and local laws, ordinances, regulations, inspections, orders, judgments,
injunctions, awards or decrees applicable to it or its business which, if not
complied with, would materially and adversely affect the business of ISG.
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3.7 NO BREACH. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby
will not:
(i) violate any provision of the Certificate of Incorporation,
Articles of Incorporation or By-Laws ISG;
(ii) violate, conflict with or result in the breach of any of the
terms of, result in a material modification of, otherwise give any
other contracting party the right to terminate, or constitute (or with
notice or lapse of time or both constitute) a default under, any
contract or other agreement to which ISG is a party or by or to which
it or any of its assets or properties may be bound or subject;
(iii) violate any order, judgment, injunction, award or decree of
any court, arbitrator or governmental or regulatory body against, or
binding upon, ISG, or upon the securities properties or business of
ISG; or
(iv) violate any statute, law or regulation of any jurisdiction
applicable to the transactions contemplated herein.
3.8 ACTIONS AND PROCEEDINGS. Except as set forth on Schedule 3.8, in
the Financial Statements or in any Periodic Reports filed with the SEC, there is
no outstanding order, judgment, injunction, award or decree of any court,
governmental or regulatory body or arbitration tribunal against or involving
ISG. Except as set forth on Schedule 3.8, the Financial Statements or Periodic
Reports, there is no action, suit or claim or legal, administrative or arbitral
proceeding or any investigation (whether or not the defense thereof or
liabilities in respect thereof are covered by insurance) pending or, to the best
knowledge of ISG, threatened against or involving ISG or any properties or
assets of ISG. None of the actions suits, claims, proceedings or investigations
set forth on Schedule 3.8, the Financial Statements or Periodic Reports,
individually or together with any other, will have a material adverse effect on
the assets, properties, business operations, or condition (financial or
otherwise) of ISG, or will result in any order, judgment, injunction, award or
decree of any court, governmental or regulatory body or arbitration tribunal
that is not adequately reserved against. Except as set forth on Schedule 3.8,
the Financial Statements or Periodic Reports, there is no fact, event or
circumstances known to ISG that may give rise to any suit, action, claim,
investigation or proceeding that would be required to be set forth on Schedule
3.8 if currently pending or threatened. There is no action, suit or claim or
legal, administrative or arbitral proceeding pending or, to the best
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knowledge of ISG, threatened that would give rise to any right of
indemnification on the part of any director or officer of ISG or the heirs,
executors or administrators of such director or officer against ISG.
3.9 BROKERS OR FINDERS. No broker's or finder's fee will be payable by
ISG in connection with the transactions contemplated by this Agreement, nor will
any such fee be incurred as a result of any actions by ISG.
3.10 OPERATIONS OF ISG. Except as set forth in Schedule 3.10, the
Financial Statements or Periodic Reports or reflected in this Agreement, since
March 31, 1996, ISG has not:
(i) amended its Certificate of Incorporation or By-Laws or
merged with or into or consolidated with any other person, subdivided
or in any way reclassified any shares of its capital stock or change or
agreed to change in any manner the rights of its outstanding capital
stock or the character of its business;
(ii) declared or paid any dividend or declared or made any
distribution of any kind to its stockholders, or made any direct or
indirect redemption, retirement, purchase or other acquisition of any
shares of its capital stock; or
(iii) suffered or incurred any damage, destruction or loss (whether
or not covered by insurance) materially affecting the assets,
properties, business, operations or conditions (financial or otherwise)
of ISG.
3.11 AUTHORITY TO EXECUTE AND PERFORM AGREEMENTS. ISG has the full
legal right and power and all authority and approval required to enter into,
execute and deliver this Agreement and to perform fully their obligations
hereunder. This Agreement has been duly executed and delivered and is the valid
and binding obligation of ISG enforceable in accordance with its terms, except
as may be limited by bankruptcy, moratorium, insolvency or other similar laws
generally affecting the enforcement of creditors' rights. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby and the performance by ISG of this Agreement, in accordance with its
respective terms and conditions will not:
(i) require the approval or consent of its stockholders;
(ii) require the approval or consent of any foreign, federal,
state, county, local or other governmental or regulatory body or the
approval or consent of any other person;
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(iii) conflict with or result in any breach or violation of any of
the terms and conditions of, or constitute (or with any notice or lapse
of time or both would constitute) a default under, any order, judgment
or decree applicable to the Buyer, or any instrument, contract or other
agreement to which ISG is a party or by or to which ISG is bound or
subject; or
(iv) result in the creation of any lien or other encumbrance on
the assets or properties of ISG.
3.12 LIABILITIES. As at March 31, 1996, except as set forth on Schedule
3.12 or in the Periodic Reports, ISG does not have any direct or indirect
indebtedness, liability, claim, loss, damage, deficiency, obligation or
responsibility, which are material to its operations, whether known or unknown,
fixed or unfixed, liquidated or unliquidated, secured or unsecured, accrued or
absolute, contingent or otherwise, including, without limitation, any liability
on account of taxes, any other governmental charge or lawsuit brought, whether
or not of a kind required by generally accepted accounting principles to be set
forth on a financial statement (all of the foregoing collectively defined to as
"Liabilities"), which were not fully, fairly and adequately reflected on the
Balance Sheet included as part of Schedule 3.3 hereof. As of the Closing Date,
ISG will not have any Liabilities, other than Liabilities fully and adequately
reflected on such Balance Sheet or on Schedule 3.12, except for Liabilities
incurred since March 31, 1996 in the ordinary course of business, disclosed in
the Financial Statements or Periodic Reports, or otherwise consented to by
Total. To the best knowledge of ISG, there is no circumstance, condition, event
or arrangement which may hereafter give rise to any Liabilities not in the
ordinary course of business, except as set forth on Schedule 3.12 or disclosed
in the Financial Statements or Periodic Reports.
3.13 DELIVERY OF PERIODIC REPORTS; COMPLIANCE WITH 1934 ACT. ISG has
provided Total with access to all of its Periodic Reports filed with the SEC
since January 1, 1994. ISG has filed all required Periodic Reports and is in
compliance with its reporting obligations under the Securities Exchange Act of
1934 as a result of having been registered under Section 12(g) of that Act. All
reports filed pursuant to such Act are complete and correct in all material
respects. All material contracts relative to ISG are included in the Periodic
Reports.
3.14 ENVIRONMENT, HEALTH AND SAFETY. Except as set forth on Schedule
3.14, to the best of its knowledge, ISG has complied in all material respects
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with all material environmental, health and safety laws, and no action, suit,
proceeding, hearing, investigation, charge, complaint, claim, demand or notice
has been filed or commenced against it alleging any failure so to comply.
Without limiting the generality of the preceding sentence, to the best of its
knowledge, ISG has obtained and been in compliance in all material respects with
the terms and conditions of all material permits, licenses and other
authorizations which are required under, and has complied in all material
respects with all other material limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
which are contained in applicable environmental, health and safety laws.
3.15 THE SECURITIES. The Preferred Stock to be issued to the
Shareholders and to other persons have been duly authorized by all necessary
corporate any stockholder actions and, when so issued in accordance with the
terms of this Agreement, will be validly issued, fully paid and non-assessable.
3.16 AUTHORITY TO EXECUTE AND PERFORM AGREEMENTS. ISG has the full
legal right and power and all authority and approval required to enter into,
execute and deliver this Agreement and to perform fully its obligations
hereunder unless disclosed in this Agreement. This Agreement has been duly
executed and delivered and is the valid and binding obligation of ISG in
accordance with its terms. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby and thereby and the
performance by ISG of this Agreement, in accordance with its respective terms
and conditions will not:
(i) require the approval or consent of any foreign, federal,
state, county, local or other governmental or regulatory body or the
approval or consent of any other person;
(ii) conflict with or result in any breach or violation of any of
the terms and conditions of, or constitute (or with notice or lapse of
time or both would constitute) a default under any order, judgment or
decree applicable to ISG, or any instrument, contract or other
agreement to which ISG is a party or by or to which ISG is bound; or
(iii) result in the creation of any lien or other encumbrance on
the assets or properties of ISG.
3.17 FULL DISCLOSURE. No representation or warranty by ISG in
this Agreement or in any document or schedule to be delivered by it pursuant
hereto, and no written statement, certificate or instrument furnished or to be
furnished to Total and the Shareholders pursuant hereto or in connection with
the negotiation, execution or performance of this Agreement contains or will
contain any untrue statement of a material fact or omits or will omit to state
any material fact necessary to make any statement herein or therein not
materially misleading or necessary to a complete and correct presentation of all
material aspects of the business of ISG. To the best knowledge of ISG, there is
no material fact, development or threatened development (except for general
economic conditions affecting business generally) which ISG has not disclosed in
writing and which materially adversely affects ISG or the transactions
contemplated hereby.
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3.18 REPRESENTATIONS AND WARRANTIES ON CLOSING DATE. The
representations and warranties contained in this Section 3 shall be true and
complete on the Closing Date with the same force and effect as though such
representations and warranties had been made on and as of the Closing Date.
IV.
COVENANTS OF TOTAL AND SHAREHOLDERS
Total and the Shareholders covenant to ISG as follows:
4.1 CONDUCT OF BUSINESS. From the date hereof through the Closing Date,
the Shareholders and Total shall cause Total conduct its business in the
ordinary course and, without the prior written consent of ISG, shall ensure that
Total does not undertake any of the actions specified in Subsection 2.4 hereof.
4.2 PRESERVATION OF BUSINESS. From the date hereof through the Closing
Date, the Shareholders and Total will cause Total to use its best efforts to
preserve its business organization intact, keep available the services of its
present employees, consultants and agents, maintain its present suppliers and
clients and preserve its goodwill.
4.3 LITIGATION. Total and the Shareholders shall promptly notify ISG of
any lawsuits, claims, proceedings or investigations which after the date hereof
are threatened or commenced against Total.
4.4 CONTINUED EFFECTIVENESS OF REPRESENTATIONS AND WARRANTIES. From the
date hereof through the Closing Date, the Shareholders and Total shall cause
Total to conduct its business in such a manner so that the representations and
warranties contained in Section 2 shall continue to be true and correct on and
as of the Closing Date and as if made on and as of the Closing Date, and shall:
(i) promptly give notice to ISG of any event, condition or
circumstance occurring from the date hereof through the Closing Date
which would render any of the representations or warranties untrue,
incomplete, insufficient or constitute a violation or breach of this
Agreement; and
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(ii) supplement the information contained herein in order that the
information contained herein is kept current, complete and accurate in
all material respects.
4.5 TERMINATION OF PAYMENTS TO HOLDERS OF PREFERRED STOCK. During such
period as the holders of any series of the Preferred Stock are entitled to
receive cumulative dividends under the terms of their series of Preferred Stock
and this Agreement, the holders will not receive from Total any payment of
salaries, contractual payments or any compensation from Total based on their
status as an employee, consultant or a contracting party of Total.
V.
COVENANTS OF ISG
ISG covenants to Total and the Shareholders as follows:
5.1 CONDUCT OF BUSINESS. From the date hereof through the Closing Date,
ISG shall conduct its business in the ordinary course and, without the prior
written consent of Total, shall ensure that ISG does not undertake any of the
actions specified in Section 3.4 hereof.
5.2 PRESERVATION OF BUSINESS. From the date hereof through the Closing
Date, ISG shall preserve its business organizations intact, use its best efforts
to keep available the services of its present employees, consultants and agents
and preserve ISG's goodwill.
5.3 LITIGATION. ISG shall promptly notify Total of any lawsuits,
claims, proceedings or investigations which after the date hereof are threatened
or commenced against ISG.
5.4 CONTINUED EFFECTIVENESS OF REPRESENTATIONS AND WARRANTIES. From the
date hereof through the Closing Date, ISG shall conduct its business in such a
manner so that the representations and warranties contained in Section 3 shall
continue to be true and correct on and as of the Closing Date and as if made on
and as of the Closing Date, and shall:
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(i) promptly give notice to Total of any event, condition or
circumstance occurring from the date hereof through the Closing Date
which would render any of the representations or warranties materially
untrue, incomplete, insufficient or constitute a violation or breach of
this Agreement; and
(ii) supplement the information contained herein in order that the
information contained herein is kept current, complete and accurate in
all material respects.
5.5 INCREASED CAPITALIZATION. As soon as practical following the
Closing Date, ISG will file a Preliminary Proxy Statement or Preliminary
Information Statement with the SEC to increase its capitalization or effectuate
a reverse stock split of the outstanding Common Stock as hereinafter provided.
ISG will use its best efforts to obtain necessary authorizations and approvals
of the stockholders of ISG and the Securities and Exchange Commission for the
increase of the authorized Common Stock or reverse stock split of the
outstanding Common Stock of ISG to permit the Shareholders of Total and other
holders of Preferred Stock to convert the Preferred Stock into Common Stock of
ISG. Following approval by the SEC of the Proxy Statement or Information
Statement providing for the increase in capitalization or reverse stock split,
ISG shall immediately provide notice to all the stockholders of ISG of a meeting
for the purpose of voting for an increase in the capitalization or reverse stock
split for the Common Stock and conduct such meeting and complete the vote as
soon as legally possible to allow the Preferred Stock to be converted into
Common Stock of the Company.
5.6 FILING OF REGISTRATION STATEMENT. As soon as practical following
the execution of this Agreement, ISG will file a Registration Statement on Form
SB-2 or other applicable form with the SEC in order to register the resale of
the shares of ISG common stock underlying the Series M and Series O Preferred
Stock. ISG will use its best efforts to obtain the necessary effectiveness of
such Registration Statement from the SEC and to maintain the effectiveness of
such Registration Statement (by filing any necessary post-effective amendments)
in order to permit the resale of the shares of common stock underlying the
Series M Preferred Stock.
5.7 RELEASE OF PERSONAL GUARANTEES. ISG agrees to use itsbest efforts
immediately following the Closing Date to release Booth from certain personal
guaranties of obligations and indebtedness of Total.
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5.8 WORKING CAPITAL ADVANCE. Simultaneously with the closing of this
Agreement, ISG will advance $5,000,000 to Total for its working capital needs.
VI
ADDITIONAL COVENANTS
6.1 CORPORATE EXAMINATIONS AND INVESTIGATIONS. Prior to the Closing
Date, Total and ISG shall each be entitled, through their employees and
representatives, to make such investigation of the assets, properties, business
and operations, books, records and financial condition of the other as they each
may reasonably require. Any such investigation and examination shall be
conducted at reasonable times and under reasonable circumstances, and each party
shall cooperate fully therein. No investigation by a party hereto shall,
however, diminish or waive in any way any of the representations, warranties,
covenants or agreements of the other party under this Agreement. In order that
each party may have the full opportunity to make such business, accounting and
legal review, examination or investigation as it may wish of the business and
affairs of the other, each party shall furnish the other during such period with
all such information and copies of such documents concerning the affairs of it
as the other party may reasonably request and cause its officers, employees,
consultants, agents, accountants and attorneys to cooperate fully in connection
with such review and examination and to make full disclosure to the other
parties all material facts affecting its financial condition and business
operations. All such examinations and investigations shall be completed by all
parties by June 10, 1996.
6.2 EXPENSES. Each party hereto agrees to pay its own costs
and expenses incurred in negotiating this Agreement and
consummating the transactions described herein.
6.3 FURTHER ASSURANCES. The parties shall execute such documents and
other papers and take such further actions as may be reasonably required or
desirable to carry out the provisions hereof and the transactions contemplated
hereby. Each such party shall use its best efforts to fulfill or obtain the
fulfillment of the conditions to the Closing, including, without limitation, the
execution and delivery of any documents or other papers, the execution and
delivery of which are conditions precedent to the Closing.
6.4 CONFIDENTIALITY. In the event the transactions contemplated by this
Agreement are not consummated, Total and ISG agree to keep confidential any
information disclosed to each other in connection therewith for a period of two
(2) years from the date hereof; provided, however, such obligation shall not
apply to information which:
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(i) at the time of disclosure was public knowledge;
(ii) after the time of disclosure becomes public knowledge
(except due to the action of the receiving party); or
(iii) the receiving party had within its possession at the time of
disclosure.
6.5 ELECTION OF DIRECTORS. For a period of five years from the date of
closing, the Shareholders shall have the right to designate as directors of ISG
two individuals who may be affiliates of Total. ISG agrees to use its best
efforts to obtain the election of the two designees of Total as directors of
ISG. Total agrees that ISG will have the right to have at least one of ISG's
designees appointed as directors of Total prior to the termination of the Escrow
Agreement.
VII.
CONDITIONS PRECEDENT TO THE OBLIGATION OF ISG TO CLOSE
The obligation of ISG to enter into and complete the Closing is
subject, at the option of ISG, to the fulfillment on or prior to the Closing
Date of the following conditions, any one or more of which may be waived by ISG
in writing:
7.1 REPRESENTATIONS AND COVENANTS. The representations and warranties
of Total and the Shareholders contained in this Agreement shall be true in all
material respects on and as of the Closing Date with the same force and effect
as though made on and as of the Closing Date. Total and the Shareholders shall
have performed and complied in all material respects with all covenants and
agreements required by this Agreement to be performed or complied with by Total
and the Shareholders on or prior to the Closing Date. Total and the Shareholders
shall have delivered to ISG, if requested, a certificate, dated the Closing
Date, to the foregoing effect.
7.2 GOVERNMENTAL PERMITS AND APPROVALS; CORPORATE RESOLUTIONS. Any and
all permits and approvals from any governmental or regulatory body required for
the lawful consummation of the Closing shall have been obtained. Total shall
advise all Public Utility Commissions of the change of ownership resulting from
the consummation of this Agreement, and any approvals required thereby shall be
obtained as contemplated herein. The Board of Directors or other management
group of Total shall have approved the transactions contemplated by this
Agreement and Total shall have delivered to ISG, if requested by ISG,
resolutions by its Board of Directors, or other management group, certified by
the Secretary of Total authorizing the transactions contemplated by this
Agreement.
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7.3 THIRD PARTY CONSENTS. All consents, permits and approvals from
parties to any contracts, loan agreements or other agreements with Total which
may be required in connection with the performance by Total of its obligations
under such contracts or other agreements after the Closing shall have been
obtained.
7.4 SATISFACTORY BUSINESS REVIEW. ISG shall have reasonably satisfied
itself, after receipt and consideration of the Schedules and after ISG and its
representatives have completed the review of the business of Total contemplated
by this Agreement, that none of the information revealed thereby or in the
Financial Statements has resulted in, or in the reasonable opinion of ISG may
result in, a material adverse change in the assets, properties, business,
operations or condition (financial or otherwise) of Total. Such review shall be
completed by June 10, 1996.
7.5 LITIGATION. No action, suit or proceeding shall have been
instituted before any court or governmental or regulatory body or instituted or
threatened by any governmental or regulatory body to restrain, modify or prevent
the carrying out of the transactions contemplated hereby or to seek damages or a
discovery order in connection with such transactions, or which has or may have,
in the reasonable opinion of ISG, a materially adverse effect on the assets,
properties, business, operations or condition (financial or otherwise) of Total.
7.6 AUDITED FINANCIAL STATEMENTS. The definitive audited financial
statements of Total shall not reflect any material adverse changes or trends
from the preliminary financial statements delivered to ISG.
7.7 CERTIFICATE OF GOOD STANDING. ISG shall have received a certificate
of good standing dated at or about the Closing Date to the effect that Total is
in good standing under the laws of its jurisdictions of incorporation.
7.8 STOCK CERTIFICATES. At the date of this Agreement, the Shareholders
shall have delivered to the Escrow Agent the certificates representing the Total
shares of capital stock duly endorsed (or with executed stock powers).
7.9 CERTIFICATES OF TOTAL AND THE SHAREHOLDERS. If requested by ISG,
Total and the Shareholders shall each have delivered a certificate in that all
the representations and warranties made by Total and the Shareholders in this
Agreement are true and correct in all material respects on the Closing Date.
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7.10 OTHER DOCUMENTS. Total and the Shareholders shall have delivered
such other documents, instruments and certificates, if any, as are required to
be delivered pursuant to the provisions of this Agreement or which may be
reasonably requested in furtherance of the provisions of this Agreement.
VIII.
CONDITIONS PRECEDENT TO THE OBLIGATION OF TOTAL
AND SHAREHOLDERS TO CLOSE
The obligation of Total and the Shareholders to enter into and complete
the Closing is subject, at the option of Total and the Shareholders, to the
fulfillment on or prior to the Closing Date of the following conditions, any one
or more of which may be waived in writing by Total and the Shareholders.
8.1 REPRESENTATIONS AND COVENANTS. The representations and warranties
of ISG contained in this Agreement shall be true in all material respects on the
Closing Date with the same force and effect as though made on and as of the
Closing Date. ISG shall have performed and complied with all covenants and
agreements required by the Agreement to be performed or complied with by ISG on
or prior to the Closing Date. ISG shall have delivered to Total and the
Shareholders, if requested, a certificate, dated the Closing Date and signed by
an executive officer of ISG, to the foregoing effect.
8.2 GOVERNMENTAL PERMITS AND APPROVALS; CORPORATE RESOLUTIONS. Any and
all permits and approvals from any governmental or regulatory body required for
the lawful consummation of the Closing shall have been obtained. Total shall
advise all Public Utility Commissions of the change of ownership resulting from
the consummation of this Agreement, and any approvals required thereby shall be
obtained as contemplated herein. The Board of Directors of ISG shall have
approved the transactions contemplated by this Agreement, and ISG shall have
delivered to Total and the Shareholders, if requested, resolutions by its Board
of Directors certified by the Secretary of ISG authorizing the transactions
contemplated by this Agreement.
8.3 THIRD PARTY CONSENTS. All consents, permits and approvals from
parties to any contracts, loan agreements or other agreements with ISG which may
be required in connection with the performance by ISG of its obligations under
such contracts or other agreements after the Closing shall have been obtained.
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8.4 SATISFACTORY BUSINESS REVIEW. Total and the Shareholders shall have
reasonably satisfied themselves, after review of the information provided hereby
or in connection herewith, or following any discussions with management or
representatives of ISG, that none of the information revealed thereby has
resulted in or in the reasonable opinion of Total may result in a material
adverse change in the assets, properties, business, operations or condition
(financial or otherwise) of ISG. Such review shall be completed by June 10,
1996.
8.5 LITIGATION. No action, suit or proceeding shall have been
instituted before any court or governmental or regulatory body or instituted or
threatened by any governmental or regulatory body to restrain, modify or prevent
the carrying out of the transactions contemplated hereby or to seek damages or a
discovery order in connection with such transactions, or which has or may, in
the reasonable opinion of Total, have a materially adverse effect on the assets,
properties, business, operations or condition (financial or otherwise) of ISG.
8.6 STOCK CERTIFICATES. Immediately following the execution hereof,
ISG shall deliver certificates representing the Preferred Stock to be received
pursuant hereto.
8.7 OTHER DOCUMENTS. ISG shall have delivered such other instruments,
documents and certificates, if any, as are required to be delivered pursuant to
the provisions of this Agreement or which may be reasonably requested in
furtherance of the provisions of this Agreement.
IX.
SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF
TOTAL AND THE SHAREHOLDERS
Notwithstanding any right of ISG fully to investigate the affairs of
Total and notwithstanding any knowledge of facts determined or determinable by
ISG pursuant to such investigation or right or investigation, ISG shall have the
right to rely fully upon the representations, warranties, covenants and
agreements of Total and the Shareholders contained in this Agreement or in any
document delivered to ISG by Total or the Shareholders or any of its
representatives, in connection with the transactions contemplated by this
Agreement. All such representations, warranties, covenants and agreements shall
survive the execution and delivery hereof and the Closing hereunder for a period
of one year.
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X.
SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF ISG
Notwithstanding any right of Total and the Shareholders fully to
investigate the affairs of ISG and notwithstanding any knowledge of facts
determined or determinable by Total and the Shareholders pursuant to such
investigation or right or investigation, Total and the Shareholders have the
right to rely fully upon the representations, warranties, covenants and
agreements of ISG contained in this Agreement or in any document delivered to
Total and the Shareholders by ISG or any of its representatives, in connection
with the transactions contemplated by this Agreement. All such representations,
warranties, covenants and agreements shall survive the execution and delivery
hereof and the Closing hereunder for a period of one year.
XI.
INDEMNIFICATION
11.1 OBLIGATION OF TOTAL AND THE SHAREHOLDERS TO INDEMNIFY. Subject to
the limitations on the survival of representations and warranties contained in
Section 9, Total and the Shareholders jointly and severally hereby agree to
indemnify, defend and hold harmless ISG from and against any losses,
liabilities, damages, deficiencies, costs or expenses (including interest,
penalties and reasonable attorneys' fees and disbursements) (a "Loss") based
upon, arising out of or otherwise due to any inaccuracy in or any breach of any
representation, warranty, covenant or agreement of Total and the Shareholders
contained in this Agreement or in any document or other writing delivered
pursuant to this Agreement.
11.2 OBLIGATION OF ISG TO INDEMNIFY. Subject to the limitations on the
survival of representations and warranties contained in Section 10, ISG agrees
to indemnify, defend and hold harmless Total and the Shareholders from and
against any Loss, based upon, arising out of or otherwise due to any inaccuracy
in or any breach of any representation, warranty, covenant or agreement made by
ISG and contained in this Agreement or in any document or other writing
delivered pursuant to this Agreement.
11.3 CLAIMS BY THIRD PARTIES. Promptly after receipt by either party
hereto (the "Indemnitee") of notice of any demand, claim or circumstances which,
with the lapse of time, would give rise to a claim or the commencement (or
threatened commencement) of any action, proceeding or investigation (an
"Asserted Liability") that may result in a Loss, the Indemnitee shall give
notice thereof (the "Claims Notice") to the other party or parties (the
"Indemnitor"). The Claims Notice shall describe the Asserted Liability in
reasonable detail, and shall indicate the amount (estimated, if necessary) of
the Loss that has been or may be suffered by the Indemnitee.
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11.4 OPPORTUNITY TO DEFEND. Indemnitor may elect to compromise or
defend, at its own expense and by its own counsel, any Asserted Liability. If
the Indemnitor elects to compromise or defend such Asserted Liability, it shall
within fifteen (15) days (or sooner, if the nature of the Asserted Liability so
requires) notify the Indemnitee of its intent to do so, and the Indemnitee shall
cooperate, at the expense of the Indemnitor in the compromise of, or defense
against, such Asserted Liability. The Indemnitee may participate at its own
expense, in the defense of such Asserted Liability. If Indemnitor elects not to
compromise or defend the Asserted Liability, fails to notify the Indemnitee of
its election as herein provided, contests its obligations to indemnify under
this Agreement, or at any time fails to pursue in good faith the resolution of
any Asserted Liability, in the opinion of Indemnitee, then Indemnitee may, upon
ten days' notice to Indemnitor pay, compromise or defend any such Asserted
Liability. If the Indemnitor choose to defend any claim, the Indemnitee shall
make available to the Indemnitor any books, records or other documents within
its control that are necessary or appropriate for such defense.
XII.
TERMINATION OF AGREEMENT
This Agreement may be terminated prior to the Closing Date as follows:
(i) at the election of ISG, if any one or more of the conditions
to the obligation of ISG to close has not been fulfilled as of the
Closing Date;
(ii) at the election of Total, if any one or more of the conditions
to the obligation of Total and the Shareholders to close has not been
fulfilled as of the Closing Date;
(iii) at the election of ISG, if Total or the Shareholders have
breached any material representations, warranty, covenant or agreement
contained in this Agreement;
(iv) at the election of Total, if ISG has breached any material
representation, warranty, covenant or agreement contained in this
Agreement;
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(v) at the election of ISG or Total, if any legal proceeding is
commenced or threatened by any governmental or regulatory agency or
other person directed against the consummation of the Closing or any
other transaction contemplated under this Agreement and either ISG or
Total, as the case may be, reasonably and in good faith deem it
impractical or inadvisable to proceed in view of such legal proceeding
or threat thereof; and
(vi) at any time on or prior to the Closing Date, by mutual written
consent of ISG and Total.
If this Agreement is terminated and the transactions contemplated
hereby are not consummated as described herein, this Agreement shall become null
and void and of no further force and effect, except for the provisions of
subsection 6.4 hereof relating to the obligation of the parties to keep
information confidential. None of the parties shall have any liability in
respect of a termination of this Agreement except to the extent that failure to
satisfy the conditions of Section 9 and 10 results from the violation of the
representations, warranties, covenants or agreements of such party under this
Agreement.
XIII.
THE CLOSING
The Closing shall take place on or prior to June 20, 1996 (the "Closing
Date") or at such other time and the location as may be agreed upon by the
parties hereto, including by facsimile and overnight mail.
XIV.
MISCELLANEOUS
14.1 PUBLICITY. No publicity release or announcement concerning this
Agreement or the transactions contemplated hereby shall be issued by ISG or
Total at any time from the signing hereof without advance approval in writing of
the form and substance thereof by the other party.
14.2 NOTICES. Any notice or other communication required or which may
given hereunder shall be in writing by a party or by an attorney to a party and
shall be delivered personally, telegraphed, telexed, sent by facsimile
transmission or sent by certified, registered, or express mail, postage prepaid,
and shall be deemed given when so delivered personally, telegraphed, telexed or
sent by
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facsimile transmission or if mailed, four (4) days after the date of mailing, as
follows:
(i) If to ISG:
International Standards Group, Limited
3200 North Military Trail, Suite 210
Boca Raton, Florida 33431
Attention: President
(ii) If to Total, to:
Total National Telecommunications, Inc.
1001 Fannin, Suite 300
Houston, Texas 77002
Attention: President
(iii) If to the Shareholders:
c/o Mr. Donald Booth
1001 Fannin, Suite 300
Houston, Texas 77002
Any party may by notice given in accordance with this Section to the
other parties designate another address or person for receipt of notice
hereunder.
14.3 ENTIRE AGREEMENT. This Agreement (including the Exhibits and
Schedules hereto) and the collateral agreements executed in connection with the
consummation of the transactions contemplated herein contain the entire
agreement among the parties with respect to the purchase of the securities and
related transactions, and supersede all prior agreements, written or oral, with
respect thereto.
14.4 WAIVERS AND AMENDMENTS. This Agreement may be amended, modified,
superseded, cancelled, renewed or extended, and the terms and conditions hereof
may be waived, only by a written instrument signed by the parties or, in the
case of a waiver, by the party waiving compliance. No delay on the part of any
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any waiver on the part of any party of any right,
power or privilege hereunder, nor any single or partial exercise of any right,
power or privilege hereunder, preclude any other or further exercise thereof or
the exercise of any other right, power or privilege hereunder. The rights and
remedies herein provided are cumulative and are not exclusive of any rights or
remedies which any party may otherwise have at law or in equity. The rights and
remedies of any party based upon, arising out of or
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otherwise in respect of any inaccuracy in or breach of any representation,
warranty, covenant or agreement contained in this Agreement shall in no way be
limited by the fact that the act, omission, occurrence or other state of facts
upon which the claim of any inaccuracy or breach is based may also be the
subject matter of any other representation, warranty, covenant or agreement
contained in this Agreement (or in any other agreement between the parties) as
to which there is no inaccuracy or breach.
14.5 GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware applicable to agreements made
and to be performed entirely within such State.
14.6 NO ASSIGNMENT. This Agreement is not assignable except by
operation of law.
14.7 EXHIBITS AND SCHEDULES. The Exhibits and Schedules to this Agree-
ment are a part of this Agreement as if set forth in full herein.
14.8 HEADINGS. The headings in this Agreement are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
14.9 SEVERABILITY OF PROVISIONS. The invalidity or unenforceability of
any term, phrase, clause, paragraph, restriction, covenant, agreement or other
provision of this Agreement shall in no way affect the validity or enforcement
of any other provision or any part thereof.
14.10 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which when so executed, shall constitute an original
copy hereof, but all of which together shall consider but one and the same
document.
IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of the date first above written.
INTERNATIONAL STANDARDS
Witness: GROUP, LIMITED
____________________________ By:___________________________
President
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TOTAL NATIONAL
Witness: TELECOMMUNICATIONS, INC
By:
- ---------------------------- ----------------------------
President
Witness:
- ---------------------------- ------------------------------
DONALD BOOTH, Shareholder
- ---------------------------- ------------------------------
THE BOOTH 1996 PARENTS' TRUSTS,
Witness: Shareholder
By:
- ---------------------------- ----------------------------
Witness: THE BOOTH 1996 SIBLINGS' TRUSTS,
By:
- ---------------------------- ----------------------------
THE BOOTH 1996 NEPHEWS' &
Witness: NIECES' TRUSTS, Shareholder
By:
- ---------------------------- ----------------------------
THE BOOTH 1996 DESCENDANTS'
Witness: TRUSTS, Shareholder
By:
- ---------------------------- --------------------------
Witness:
- ---------------------------- ------------------------------
JOSEPH HARROTT, Shareholder
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Witness:
- ---------------------------- ------------------------------
DARLENE KIRKLAND, Shareholder
Witness:
- ---------------------------- ------------------------------
JOE W. WIGGINS, Shareholder
THE JOSEPH HARROTT, SR.
CHARITABLE REMAINDER TRUST,
Witness: Shareholder
By:
- ---------------------------- ----------------------------
THE DARLENE K. KIRKLAND
CHARITABLE REMAINDER TRUST,
Witness: Shareholder
By:
- ---------------------------- ---------------------------
Witness:
- ---------------------------- ------------------------------
ROBERT LEWIS, Shareholder
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