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) June 11, 1996
------------
INTERNATIONAL STANDARDS GROUP, LIMITED
--------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-20922 75-2274730
- --------------------------------------------------------------------------------
(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
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (407) 997-5880
Not Applicable
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
ITEM 5 - OTHER EVENTS
On June 11, 1996, the Company, Global Re., Ltd. ("Global") and American
Indemnity Company, Ltd. ("AIC") entered into a Stock Purchase and Exchange
Agreement (the "Agreement") pursuant to which the Company exchanged with Global
its capital stock interest in AIC in return for the securities of the Company
previously received by Global as part of the acquisition of AIC by the Company
in October 1995. The parties had entered into a Stock Purchase and Exchange
Agreement dated as of October 20, 1995, pursuant to which the Company acquired
all the issued and outstanding capital stock of AIC in exchange for which, inter
alia, the Company issued to Global shares of the Company's Series G Voting
Convertible Preferred Stock, which was subsequently converted into 35,000,000
shares of Common Stock of the Company, and options to purchase a total of
10,000,000 shares of Common Stock of the Company.
As a result of the Company's recent consummation of the acquisition of
Total National Telecommunications, Inc. and the reorientation of the strategic
focus of the Company, Global and the Company determined to terminate and
restructure the relationship of the Company with Global. In accordance with the
Agreement, ISG exchanged its entire capital stock interest in AIC and received
back all of its shares of Common Stock and the Options previously issued to
Global, and the Company's transfer agent has cancelled these shares of the
Company's Common Stock. In addition, in consideration for agreeing to the
exchange, the Company received from the Buyer the right to receive in the future
a distribution equal to 10% of the net income of Global for each annual period
commencing with the year ended 1997 through the year ended 1999. The interest in
the net income of the Buyer is to be calculated on an annual basis and not on a
cumulative basis, and the calculation of net income is not to give effect to the
payment of the net income percentage to the Company as an expense. In addition,
the Company agreed to establish a Special Trust in which ISG would contribute
shares of its Preferred Stock for an interim period concluding December 11,
1996, at which time the Trust assets will be returned to ISG unless it is
mutually agreed in writing to extend the duration of the Trust. The Trust assets
will permit AIC to undertake certain operating activities during this interim
period. Under the terms of the Agreement, Global will not pledge any Trust
assets without prior notice and written approval of the Company in accordance
with NAIC Formatted Trust procedures.
Furthermore, subject to receipt of reciprocal options from Global/AIC,
Global will receive Options to purchase 2,000,000 shares of the Company's Common
Stock at an exercise price of $1.375 and Options to purchase 1,000,000 shares of
the Company's stock at an exercise price of $2.50 exercisable for a three-year
and four-year period, respectively. Concomitantly, the Company will be entitled
2
<PAGE>
to receive Options to purchase 2,000,000 shares and Options to purchase
1,000,000 shares of a publicly-traded company into which AIC will be placed or
merged at a price of 110% of the closing price with respect to the 2,000,000
Options and 200% of the closing price with respect to 1,000,000 Options on the
date that AIC is placed or merged into such public entity.
ITEM 7 - FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS
(a) Stock Purchase and Exchange Agreement dated June 11,
1996.
3
<PAGE>
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
-------------------------------
Joseph L. Lents, President
and Chief Executive Officer
June 24, 1996
4
STOCK PURCHASE AND EXCHANGE AGREEMENT
THIS STOCK PURCHASE AND EXCHANGE AGREEMENT (the "Agreement") is dated
and effective as of the 11th day of June, 1996 by and between INTERNATIONAL
STANDARDS GROUP, LIMITED, a Delaware corporation (the "ISG"), and GLOBAL RE.,
LTD., a corporation organized under the laws of St. Christopher and Nevis,
British West Indies (the "Buyer"), relating to the sale by ISG of outstanding of
capital stock of AMERICAN INDEMNITY COMPANY, LTD., a corporation organized under
the laws of St. Christopher and Nevis, British West Indies ("AIC") to the Buyer.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, ISG, Buyer and AIC entered into that certain Stock Purchase
and Exchange Agreement dated as of October 20, 1995 (the "AIC Agreement")
pursuant to which ISG acquired all of the then issued and outstanding capital
stock of AIC (the "AIC Shares") from Buyer, the sole shareholder of AIC, in
exchange for various securities of ISG and other commitments, obligations and
consideration as provided in the AIC Agreement;
WHEREAS, ISG has recently entered into an Acquisition Agreement with
Total National Telecommunications, Inc. as a result of which a substantial
change in the scope of operations, business orientation and management of ISG
will take place and that it would be in the best interest of ISG and AIC to
terminate the relationship of each of them with each other through a disposition
of the business and control of AIC;
WHEREAS, pursuant to the AIC Agreement, disposition of the capital
stock and transfer of control of AIC is subject to approval of Buyer based on
the rights and interests provided to Buyer under the AIC Agreement; and
WHEREAS, Buyer desires to acquire all of ISG's capital stock interest
in AIC in and for the consideration hereinafter provided;
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained in this Agreement, the parties hereto
agree as follows:
SECTION 1. SALE OF AIC SHARES AND OTHER AGREEMENTS
- ---------------------------------------------------
1.1 ISG SALE OF AIC SHARES TO BUYER. ISG hereby sells, transfers and
assigns the AIC Shares to the Buyer for the consideration hereinafter provided.
The parties acknowledge that the Buyer and AIC may enter into certain other
agreements and other understandings governing the parties which are not the
<PAGE>
subject of or which will affect the terms and conditions of this Agreement. ISG
has included an appropriate stock power duly executed by it to effectuate the
sale and transfer to the Buyer.
1.2 BUYER SELLS/TRANSFERS ISG SHARES TO ISG. Pursuant to the terms of
the AIC Agreement, Buyer received 233,333 shares of Series G Voting Convertible
Preferred Stock which were converted into 35,000,000 shares of Common Stock of
ISG. In consideration for the execution of this Agreement, Buyer hereby
transfers, sells and assigns to ISG the shares of Common Stock of ISG received
upon such conversion accompanied by the duly executed stock power of Buyer. In
addition, in connection with the AIC Agreement, Buyer received separate options
to purchase an aggregate of 10,000,000 shares of ISG. In consideration for the
execution of this Agreement, Buyer hereby transfers, assigns and returns to ISG
and hereby agrees to the termination of such options and herewith transfers the
instruments evidencing such options.
1.3 MANAGEMENT ARRANGEMENTS. In connection with the AIC Agreement,
Buyer had certain rights with respect to the election of directors and
management of ISG. In consideration of the execution of this Agreement, Buyer
hereby agrees to relinquish all rights with respect to the selection of
management of ISG.
1.4 PROFIT PARTICIPATION IN BUYER. In consideration for the sale,
assignment and transfer of the AIC Shares, ISG shall receive from the Buyer the
right to receive a distribution equal to 10% of the net income of the Buyer for
each annual period commencing with the year ended 1997 through the year ended
1999. The interest in the net income of the Buyer shall be calculated on an
annual basis and not on a cumulative basis, and the calculation of net income
shall not give effect to the payment of the net income percentage to ISG as an
expense which would reduce the net income of the Buyer.
1.5 ISG TO ESTABLISH TRUST. In consideration for the consummation of
this Agreement, ISG agrees to establish a special trust pursuant to which ISG
will contribute preferred stock which will be used by Buyer for an interim
period for purposes of undertaking certain operations. The duration of the trust
shall extend until December 11, 1996, at which time the trust assets will be
transferred, assigned and returned to ISG unless mutually agreed upon in writing
to extend the duration of the trust by both Buyer and ISG. The Buyer agrees to
execute and provide any and all documents, undertakings and agreements requested
by ISG in order to return the trust assets to ISG. The Buyer agrees that any
pledge of trust assets will be subject to prior notice, review and written
approval relating to the specific application of trust assets by ISG in
accordance with the NAIC Formatted Trust. The Buyer hereby
2
<PAGE>
agrees to indemnify and hold harmless ISG for any loss, damage or liability
incurred by ISG as a result of the use of the trust assets and the undertaking
of the arrangements under the trust.
1.6 OPTIONS TO BUYER. In consideration for the transfer of stock
options at Section 1.7, the Buyer will receive from ISG 2,000,000 options for
shares of Common Stock of ISG, exercisable for a three-year period at 110% of
the closing price for ISG stock on the date of signing of this Agreement. In
addition, the Buyer will receive from ISG 1,000,000 options for shares of Common
Stock of ISG, exercisable for a four-year period at 200% of the closing price
for ISG Common Stock on the date of signing of this Agreement. This section does
not become effective as for the issuance of options until Section 1.7 is
effective.
1.7 OPTIONS TO ISG. It is the Buyer's intent to merge AIC into or be
acquired by a public reporting company, at which time ISG will be entitled to
receive 2,000,000 options for shares of common stock of the new public company,
and will be exercisable for a three-year period at 110% of the closing price of
the new public company's common stock on the date thereof as to 1,000,000 shares
and will be exercisable for a four-year period at 200% of the closing price of
the new public company's common stock on the date thereof as to the remaining
1,000,000 shares.
1.8 INVESTMENT INTENT. All the parties hereto agree that all of the
securities to be issued to any of the parties pursuant to this Agreement are
subject to receipt and imprinting of appropriate legends on the certificates and
documents evidencing such securities reflecting restrictions under the
Securities Act of 1933.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF ISG
- -------------------------------------------------
ISG represents and warrants to the Buyer as follows:
2.1 OWNERSHIP OF AIC SHARES. ISG is the owner of record and
beneficially of the AIC Shares 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.
2.2 DUE DILIGENCE. ISG hereby acknowledges that it has received copies
of or has had access to all corporate records, information and corporation
documentation of the Buyer.
2.3 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
3
<PAGE>
its obligations hereunder. 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.
2.4 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 the Buyer 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 fact, development or threatened
development (except for general economic conditions affecting business
generally) which ISG has not disclosed to the Buyer in writing and which
materially adversely affects the business of ISG. ISG acknowledges that AIC has
booked insurance business and agrees to sell AIC with that business and does not
warrant or indemnify the profitability, loss or claims to be derived from that
business.
2.5 AUDIT FEES. All costs paid for the audit of AIC at December 1995
have been paid with no amount due and owing.
2.6 AUDITORS' FEES. Any and all costs incurred by AIC's auditors as of
the date of signing have been paid or will remain an expense of ISG.
2.7 RESIGNATION OF DIRECTOR. Joseph L. Lents, the President
of ISG, shall immediately resign as Director of AIC.
4
<PAGE>
SECTION 3. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to ISG as follows:
3.1 OWNERSHIP OF SHARES AND OUTSTANDING CAPITALIZATION OF AIC. To the
best of its knowledge, ISG is the owner of record and beneficially of the AIC
Shares free and clear (as outlined in section 2.4 above) of all rights, claims,
liens and encumbrances, and which shares have not been sold, pledged, assigned
or otherwise transferred except pursuant to this Agreement. The AIC Shares
represent all of the issued and outstanding capital stock of AIC, and Buyer and
ISG (to the best of the knowledge of Buyer with respect to ISG) have not made
any commitments, undertaken any obligations or agreed to consummate any
transaction which would affect the capital stock of AIC.
3.2 ORGANIZATION AND GOOD STANDING. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the St.
Christopher and Nevis, 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.
3.3 OUTSTANDING CAPITALIZATION. As of the date hereof, the
capitalization of the Buyer is as set forth in its periodic reports filed with
the Securities and Exchange Commission. There are no other issued or outstanding
capital stock of the Buyer as of the date hereof. As of such date, there were no
issued or outstanding options, rights, warrants, commitments to issue or other
derivative securities except as set forth in the periodic reports of the Buyer
filed with the Securities and Exchange Commission.
3.4 DUE DILIGENCE. Buyer hereby acknowledges that it has received
copies of or has had access to all corporate records, information, corporation
documentation and filings under the Securities Exchange Act of 1934 of ISG.
3.5 AUTHORITY TO EXECUTE AND PERFORM AGREEMENTS. Buyer has the full
legal right and power and all authority and approval required to enter into,
execute and deliver this Agreement and to perform its obligations hereunder.
This Agreement has been duly executed and delivered and is the valid and binding
obligation of Buyer 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 Buyer of this Agreement in accordance with its
respective terms and conditions will not:
5
<PAGE>
(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 Buyer, or any instrument, contract or other agreement to which Buyer is a
party or by or to which Buyer is bound; or
(iii) result in the creation of any lien or other encumbrance on
the assets or properties of Buyer.
3.6 FULL DISCLOSURE. No representation or warranty by Buyer 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
Buyer. To the best knowledge of Buyer, there is no fact, development or
threatened development (except for general economic conditions affecting
business generally) which Buyer has not disclosed to ISG in writing and which
materially adversely affects the business of Buyer.
SECTION 4. MISCELLANEOUS
4.1 CORPORATE EXAMINATIONS AND INVESTIGATIONS. Prior to the Closing
Date, ISG and the Buyer 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
6
<PAGE>
such review and examination and to make full disclosure to the other parties all
material facts affecting its financial condition and business operations.
4.2 EXPENSES. Each party hereto agrees to pay its own costs and
expenses incurred in negotiating this Agreement and consummating the
transactions described herein.
4.3 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.
4.4 CONFIDENTIALITY. Upon the completion of the proposed transactions
contemplated by this Agreement, ISG and the Buyer 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:
(i) any release that is required in order to comply with all rules
and regulations required by federal an/or state laws;
(ii) at the time of disclosure was public knowledge;
(iii) after the time of disclosure becomes public knowledge (except
due to the action of the receiving party); or
(iv) the receiving party had within its possession at the
time of disclosure.
4.5 CLOSING. The Closing shall take place simultaneously with the
execution of this Agreement.
4.6 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 facsimile transmission or if mailed, four (4) days after the date of
mailing, as follows:
(i) If to ISG:
7
<PAGE>
International Standards Group, Limited
3200 North Military Trail, Suite 300
Boca Raton, Florida 33431
Attention: Joseph L. Lents, President
(ii) If to Buyer:
Global Re., Ltd.
33 Old West Indies
St. Christopher and Nevis
British West Indies
Attention: Miguel Golcher, Managing Director
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.
4.7 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 exchange of the Securities and
the AIC Shares and related transactions, and supersede all prior agreements,
written or oral, with respect thereto.
4.8 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 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.
8
<PAGE>
4.9 GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Florida applicable to agreements made
and to be performed entirely within such State.
4.10 NO ASSIGNMENT. This Agreement is not assignable except by
operation of law.
4.11 EXHIBITS AND SCHEDULES. The Exhibits and Schedules to this
Agreement are a part of this Agreement as if set forth in full herein.
4.12 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.
4.13 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.
4.14 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
GROUP, LIMITED
By:/S/ JOSEPH L. LENTS
--------------------------
Joseph L. Lents, President
GLOBAL RE., LTD.
By:/S/ MIGUEL GOLCHER
--------------------------
Miguel Golcher,
Managing Director
9
