AGREEMENT AND PLAN OF BUSINESS COMBINATION
THIS AGREEMENT, made and entered into this 11 day of April, 1998, by and
between 1-800-CONSUMER INTERNATIONAL, INC., a Delaware corporation ("1-800"),
and INTERNATIONALE SHOPPING ALLIANCE, INC., a Minnesota corporation ("ISA");
WITNESSETH, whereas 1-800 is an inactive public corporation which has
recently reorganized and discontinued its former operational business, and for
some time it has been evaluating various active businesses for acquisition by
1-800; and further whereas ISA is a development stage corporation which is in
the process of becoming engaged in the business of development and marketing a
diversified multi-media shopping business employing electronic interactive home
shopping through a television home shopping network as well as telemarketing and
internet shopping channels for general consumers nationally and even the
worldwide retail marketplace;
FURTHER WHEREAS the parties hereto now mutually desire to enter into a
business combination pursuant to the terms of this Agreement which provide for a
stock exchange merger whereby 1-800 common stock will be exchanged for all of
the outstanding common stock of ISA on the terms and conditions contained
herein, after which ISA shall become a wholly-owned subsidiary of 1-800 under
its new name - "ISA Internationale Inc."
NOW THEREFORE, for valuable consideration and upon the mutual
representations, warranties, covenants, conditions and understandings contained
herein, the parties hereto agree as follows:
1. PLAN OF BUSINESS COMBINATION - It is the agreement and intention of
both parties hereto that all of the outstanding common capital stock of ISA
shall be transferred and exchanged hereunder solely for voting common stock of
1-800, and it is also the intention and understanding of both parties hereto
that this transaction shall qualify as a tax-free reorganization under Section
368(a)(1)(B) of the Internal Revenue Code of 1954, as amended, and any related
sections thereunder.
2. RESTRICTED SECURITIES - All common shares of 1-800 issued incident to
this Agreement shall be "restricted securities" as that term is defined in
federal and relevant state securities laws and regulations, basically meaning
that such shares will not be registered under either federal or any state
securities laws, and will be taken by the shareholders of ISA for long-term
investment in the combined business of the parties hereto, and not with a view
toward further transfer, resale or other disposition thereof; and accordingly
any future transfer or disposition of such shares must either (i) be registered
under relevant federal and state securities laws, or (ii) satisfy an appropriate
exemption from such registration such as Rule 144 of the Securities Act of 1933.
Any share certificates issued by 1-800 to consummate this business combination
will bear a standard restrictive legend as appropriate to evidence such
investment intent of the current shareholders of ISA.
3. EXCHANGE OF SECURITIES - Both parties hereto agree that all of the
outstanding common stock of ISA shall be exchanged for common stock of 1-800
on the basis of one share of 1-800 common stock for each share of outstanding
ISA common stock; provided, however, that (i) 1-800 shall not be required to
issue any more than 17,100,000 common shares of 1-800 incident to this stock
exchange, and (ii) this one-for-one exchange ratio is based on the common
shares of 1-800 after it completes its pending 1-for-2 reverse stock split.
Upon completion of this stock exchange, ISA shall become a wholly-owned
subsidiary of 1-800.
4. DELIVERY OF SECURITIES - On the Closing Date of this business
combination, ISA shall deliver to 1-800 certificates for all outstanding common
capital stock of ISA duly endorsed for transfer to 1-800; and simultaneously
thereto 1-800 shall submit an appropriate instruction letter to its independent
transfer agent which instructs such independent transfer agent to issue fully
paid and nonassessable restricted common stock certificates to all current
shareholders of ISA as necessary to effect the complete stock exchange required
by this business combination.
5. CLOSING DATE - The Closing Date of this business combination shall be
within five (5) days after this Agreement has been approved by the shareholders
and/or directors of the parties hereto as required by the respective corporation
laws of their states of incorporation and their respective bylaws.
6. SUBMISSION OF AGREEMENT TO SHAREHOLDERS AND DIRECTORS - Approval of
this Agreement shall be obtained from the Boards of Directors of each
constituent corporation hereto as required by their respective bylaws either by
Written Action or duly held directors' meetings, which respective Board
resolutions shall require this Agreement to be submitted to their respective
shareholders (either by Written Action or a duly held shareholders' meeting)
for shareholder approval of each party hereto pursuant to Delaware or Minnesota
corporate law, as the case may be, and the provisions of the respective Bylaws
of each party hereto. Accordingly, the respective and appropriate officers of
each corporation hereto shall prepare the necessary documents, resolutions and
Notices to Shareholders required to effectuate this business combination
promptly, with the intention of both parties hereto being that this business
combination snail be consummated as soon as possible.
7. MANAGEMENT OF 1-800 AFTER CLOSING - A new Board of Directors shall
replace the current Board of Directors of 1-800 effective upon the closing of
this Agreement with the number and members of such new Board of Directors being
those nominees selected by ISA, provided that one of the current members of the
1-800 Board of Directors shall remain on the post-closing Board of Directors.
Such new Board of Directors also shall immediately elect the executive officers
of the combined company to serve after the closing of this Agreement.
8. CONDUCT OF BUSINESS - Between the date of this Agreement and the
Closing Date, ISA shall conduct its business in a normal and customary manner in
accordance with its existing preoperating policies and practices and shall (i)
preserve its business organization and business plan intact, (ii) not sell any
assets other than in accordance with its current business plan or in the
ordinary course of business, (iii) not incur any liabilities or obligations
other than in the ordinary course of its preoperating business, (iv) not issue
any shares of capital stock which would cause ISA to have outstanding capital
stock exceeding 17,100,000 shares, and (v) preserve all financing relationships
with which its is engaged in obtaining working capital for future business
operations.
Between the date of this Agreement and the Closing Date, 1-800 shall
remain inactive regarding any business transactions and shall (i) preserve it
business organization and corporate structure intact, (ii) not sell or encumber
any assets without the written consent of ISA, (iii) not incur any further
liabilities or obligations, except for expenses incident to this business
combination, (iv) preserve any goodwill with its shareholders and associates,
and (v) not issue any shares of capital stock which would cause 1-800 to have
outstanding capital stock exceeding 1,400,000 shares after completing its
pending 1-for-2 reverse stock split
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9. CONSUMMATION OF TRANSACTION - Each of 1-800 and ISA and their
respective executive officers shall use theiR best efforts to cause all
conditions precedent to their respective obligations under this Agreement to
close this business combination, or any transactions contemplated hereby to be
satisfied prior to closing, to be completed or satisfied as promptly as
possible, including but not limited to obtaining all required consents, waivers,
amendments, modifications, approvals, authorizations and meetings.
10. CONDITIONS PRECEDENT - The following shall be completed prior to
consummating this business combination:
a) 1-800 shall have changed its name to ISA Internationale Inc.
b) 1-800 shall have completed its 1-for-2 reverse stock split.
c) 1-800 shall have obtained a new CUSIP number for its common stock
certificates and shall have notified the NASD Bulletin Board of
the new name and the reverse stock split as required by their rules.
d) Both 1-800 and ISA shall have commenced their respective audits for
the 1997 yearend period in order to position the combined
company to make a filing for a Form 10 SEC registration as soon
as possible.
11. DUE DILIGENCE INVESTIGATIONS - Between the date of this Agreement and
the Closing Date, the parties hereto and their respective representatives may
make such investigations of each other and their respective businesses and
records, affairs, financial positions and assets and liabilities as each of the
parties deems necessary or advisable in furtherance of this Agreement and its
terms, including having access to the premises and books of each other at all
reasonable times; and the executive officers of each corporation hereto shall
furnish to each other whatever financial and operational data and information
with respect to each other as is reasonably requested by the other party.
Neither 1-800 or ISA or any of their management or other representatives
shall disclose any private or confidential information on the other party which
was obtained or discovered in connection with their respective due diligence
review and investigation of each other incident hereto. In the event this
business combination does not take place as contemplated for any reason
whatsoever, 1-800 and ISA shall then return to each other all documents, papers
and any other written and graphic materials obtained by them during the due
diligence reviews and investigations carried on pursuant hereto.
12. REPRESENTATIONS AND WARRANTIES OF PARTIES - The parties hereto
jointly and severally represent and warrant to each other the following:
a) All respective outstanding capital stock of each corporation has been
legally and validly issued and is fully paid and nonassessable, and none of such
shares of either corporation have been issued in violation of any preemptive or
similar rights, or in violation of any relevant federal or state securities law.
b) None of the common shares of either corporation is subject to any
voting trust or other such restrictive agreement which would restrict their
transfer.
c) There are no options or warrants outstanding in either corporation,
and none are contemplated, other than those which have been already disclosed
prior to entering into this Agreement.
d) Neither corporation hereto owns, directly or indirectly, any shares of
capital stock or other equity interest of any other corporation or
unincorporated business entity; nor does either corporation hereto have any
obligations, direct or indirect, to purchase or subscribe for any such equity
interest in a third party; nor does either corporation hereto have any
obligation to advance or loan money to any third party corporation, associate,
affiliate, individual or unincorporated entity.
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e) Each corporate party hereto is duly organized, validly existing and in
good standing in its state of incorporation, and each has full corporate power
and authority to own and operate their properties and assets and carry on any
business presently and formerly conducted by each of them.
f) This Agreement is a valid and binding agreement of each party hereto,
and compliance with the terms and conditions of this Agreement by each party
hereto will not result in (i) a breach or default under the Articles of
Incorporation or Bylaws of either party, (ii) a breach or violation under any
lien, pledge, security interest or other encumbrance on assets to which either
party is subject, (iii) a breach or default of any term or provision of any
agreement, lease, contract, note, mortgage or other obligation of either
corporation, or of any law, rule, ordinance or regulation, or governmental
judgment or decree or license to which either party is subject, unless such
breach is of a technical or minimal nature so as to not have a material adverse
effect on the financial condition, properties, business or results of operations
of either corporation hereto.
g) Neither corporation hereto is subject to any pending litigation or
governmental proceedings not reflected in their financial statements or
otherwise disclosed to the other party incident to negotiating this agreement;
and no litigation, claims, assessments or proceedings have been threatened
against either party unless disclosed to the other party prior to entering into
this Agreement.
h) The officers of each corporation executing this Agreement are duly
authorized to execute this Agreement on behalf of their respective corporations.
i) All financial statements which have been submitted to either party by
the other party incident to this business combination agreement and any
negotiations in respect thereto, and any financial statements to be submitted to
perform future due diligence by either party, have been, or will be, complete
and accurate for the dates and periods indicated thereon and fairly present the
financial condition and operations for the periods covered; and there are no
material liabilities, either fixed or contingent, not reflected in such
financial statements.
j) There have been no material changes in the financial position of
either corporate party hereto since the time of the most current financial
statements submitted to each other, other than changes in the ordinary course of
business transactions.
k) Neither party hereto has any material governmental taxes or
assessments due incident to its properties or business operations other than
what has already been disclosed to the other party on financial statements
already provided to the other party. Each party hereto has paid any and all
income or other taxes due in respect to its business and properties, and neither
party is in material default in filing any tax returns, forms or reports which
are required to have been filed prior to the date of this Agreement.
l) Each corporation has good and marketable title to any assets owned by
it, free and clear of all mortgages, liens or encumbrances except for any
reflected in the financial statements of either party hereto.
m) All corporation record books, financial records, minute books and
other corporate documents or financial statements of each party hereto shall be
made available to the other party prior to the closing of this business
combination.
n) Each party hereto has complied with all state and federal laws and
regulations regarding their respective incorporations and past issuances and/or
sales of securities, and no contingent liability exists against either corporate
party hereto regarding such incorporations or issuances of securities.
o) Neither corporate party hereto has any material outstanding debt other
than what has been disclosed to the other party in financial statements or other
written disclosure provided prior to the execution of this Agreement.
p) As of the date hereof, and as of the Closing Date, each corporate
party hereto will have, to the best of their respective knowledge and belief,
disclose to each other all events, conditions and facts materially affecting the
business
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and prospects of each corppration hereto; and neither party has now, and will
not at the Closing Date, have withheld knowledge of any such events, conditions
and facts which it knows, or has reasonable grounds to know, may materially
affect the business, worth or prospects of such party.
q) The record of all issuances and transfers of common stock of 1-800
have been maintained by its independent transfer agent in good and current order
and accurately reflects the record ownership of all issued and outstanding
common stock of 1-800. In addition, prior to closing of this Agreement, ISA will
sumbit a record of all stock ownership of ISA common stock which will likewise
reflect the record ownership of all issued and outstanding common stock of ISA
in good, current, and accurate order.
r) 1-800 is in good standing with the NASD Bulletin Board and its stock
is available for quoting by market makers who desire to enter such quotation
system and conduct market-making transactions in 1-800 common stock.
13. MUTUAL COVENANTS - 1-800 and ISA both hereby covenant, warrant and
agree that from the date hereof to the Closing Date of this Agreement, unless
express written permission is obtained from the other party, each party shall:
(i) conduct their respective business and operations pursuant to their
respective business plans and not outside the normal and ordinary course of
business;
(ii) not make any material increase in debt or encumbrances against any
assets or properties owned by either party, and shall not transfer or sell any
of such assets or properties;
(iii) not make any termination, change or violation of any lease, contract,
license or other commitment having a material adverse effect on the business or
assets of either party;
(iv) neither party shall declare any cash dividend or stock dividend;
neither shall either party make any distribution to shareholders of any kind by
way of liquidation dividend, partial distribution, redemption or otherwise;
(v) pay no bonuses or salary increases or extraordinary compensation to
officers or directors or enter into employment contracts unless consented to by
the other party in writing;
(vi) not make any loan, advance or material transaction with any officer,
director, affiliate or associate without the express written consent of the
other party;
(vii) make no purchase of real property or material personal property other
than in the ordinary course of business or with the written consent of the other
party;
(viii) not amend any bylaws, articles of incorporation or make any material
changes in accounting or financial practices other than contemplated by the
terms of this Agreement;
(ix) not borrow any money unless consented to in writing by the other
party;
(x) not enter into any other business combination or letter of intent
thereto for a merger or similar arrangement with a third party, or offer assets
or capital stock to a third party in a business combination, unless this
Agreement has been terminated in accordance with its terms;
(xi) Each party hereto warrants and represents hereby that any information
or data supplied to the other party from the date hereof for the purpose of
furthering or consummating this business combination, shall not contain any
statement which, at the time and in the light of the circumstances under which
it is offered or made, is false or misleading with respect to any material fact.
14. SURVIVAL AND ACCURACY OF REPRESENTATIONS AND WARRANTIES - Prior to
the Closing Date of this Agreement, neither party hereto shall enter into any
transaction or take any action, and each party hereto shall use its best efforts
to
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prevent the occurrence of any event, which would result in any of the
representations, warranties or covenants contained herein (or in any agreement,
document, or instrument delivered pursuant hereto) not to be true and correct,
or not to be performed as contemplated, at and as of the time immediately after
the occurrence of such transaction or event.
All representations, covenants and warranties contained herein shall
survive the Closing Date of this Agreement and the consummation of the
transactions hereby for two years from the date hereof; provided, however, that
the parties hereto agree that no officer, shareholder, or director of either
party hereto shall be personally liable for any damages, liabilities or expenses
resulting from the inaccuracy or incompleteness of any representation or
warranty contained herein which is made in good faith.
15. CLOSING CONDITIONS - Unless waived in writing, all obligations of the
parties hereto under this Agreement are subject to fulfillment of the following
conditions prior to or as of the Closing Date:
i) The representations and warranties herein and in any documents or
certificates delivered incident hereto shall be true and correct in all material
respects at and as of the Closing Date as though such warranties and
representations were made at and as of such time;
ii) all conditions precedent to the consummation of this Agreement shall
be satisfied or waived by the other party;
iii) Both parties shall have complied with and performed all material terms
of this Agreement necessary to complete this business combination;
iv) This Agreement shall have been approved by the directors/shareholders
of the parties hereto as required by their respective corporate laws;
v) The common shares being issued by 1-800 in this transaction shall be
issued pursuant to all corporate action legally taken for their issuance, and
shall be fully paid and nonassessable and issued in whatever certificate amounts
are required to exchange for all outstanding common stock of ISA, and such
certificates shall be in proper form and amount and carry the standard
restrictive legend to satisfy the requirements of securities laws regarding
their exemption from registration;
vi) As of the Closing Date, neither party shall have any outstanding
securities other than one class of common shares;
vii) Each party hereto shall have completed its due diligence review of the
business and financial records of the other party and shall be satisfied
therewith;
viii) There shall be no pending action or proceeding seeking to enjoin or
impair the consummation of this business combination; and
ix) There shall have been no material adverse change in the business or
financial condition of either corporate party hereto; and
x) No material claim, suit action or governmental proceeding shall be
pending or threatened against either corporate party hereto, which if adversely
determined would prevent or materially hinder the consummation of this business
combination, or result in the payment of substantial damages as a result
thereof.
16. EXPENSES OF PARTIES AND NO FINDER - Each party hereto shall pay its
legal, accounting and any other incidental expenses incident to the
negotiation, entering into, and consummation of this business combination; and
each party hereto also shall pay its respective audit expenses to complete their
respective audits for the planned Form 10 registration with the SEC. Each party
hereto also hereby represents that no finder or similar person is involved in
this business combination, and each party thereby owes no fees to any "finding"
person as to the business combination.
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17. CLOSING - Upon the Closing of this Agreement, the following
transactions shall occur or have occurred, all of which shall be deemed to be
simultaneous:
a) ISA and its shareholders shall have delivered to 1-800 all stock
certificates representing outstanding common stock of ISA, duly endorsed
thereon for exchange pursuant to this Agreement; and
b) 1-800 shall have delivered appropriate instructions to its
independent transfer agent to cause the issuance promptly of certificates for
all shareholders of ISA exchanging their ISA common stock hereby, in the same
amount as currently held pursuant to the one-for-one share exchange under this
Agreement; and
c) If required by either party hereto, each party shall deliver to
the requesting party a Certificate of President and Certificate of Incumbency
(which may be on the same document) certifying that all representations and
warranties made in this Agreement by such party are true and correct as of the
Closing Date, and certifying and including the current signatures of all
officers and directors of the party.
d) Each corporate party hereto shall deliver at Closing Date
certified copies of resolutions of the respective Boards of Directors and
Shareholders of each party adopting and approving this Agreement and business
combination; and
e) Each party hereto also shall furnish the other party with
whatever instruments and documents as are required to be delivered pursuant to
this Agreement, or which may be reasonably requested in furtherance of the
intent and provisions hereof.
18. TERMINATION - This Agreement and the transactions contemplated hereby
may be terminated at any time prior to Closing Date:
i) by written mutual consent of both parties hereto; or
ii) by either party hereto, if there has been a material
misrepresentation or breach of the warranties herein of a material
nature by the other party; provided, however, that if such breach
can and is cured by the breaching party within 15 days of
notification in writing to the breaching party by the other party,
it shall not constitute grounds for termination; or
iii) by either party hereto, if a material term of the closing conditions
or conditions precedent are not satisfied, unless the party not
required to perform such condition has waived its performance in
writing; or
iv) by either party hereto if the Closing has not taken place by May 15,
1998.
19. GENERAL -
I. NOTICES - Any and all notices required hereunder shall be in writing
and hand-delivered or sent by certified mail, directed as follows:
If to 1-800: Xxxxxx Xxxxxx If to ISA: Xxxxxx Xxxxxx
00000 Xxxxxx Xxx. 000 Xxxxxxx Xxx-Xxxxx 000
Xxxxxx Xxxx, XX 00000 Xxxxxxxxx, XX 00000
II. SEVERABILITY - If any part of this Agreement is deemed to be
unenforceable the balance of the Agreement shall remain in full force and
effect.
III. WAIVER - Any failure on the part of a party hereto to comply with
any of the terms and conditions of this Agreement may be waived in writing by
the other party hereto.
IV. ENTIRE AGREEMENT - This Agreement constitutes the entire agreement for
this business combination, and supersedes and cancels any prior written or oral
agreements or understandings regarding the subject matter hereof; and this
Agreement cannot be amended or modified unless by mutual written consent of
all parties hereto.
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V. PARTIES IN INTEREST AND ASSIGNMENT - This Agreement shall inure to the
benefit of and bind the parties hereto, and their respective successors, legal
representatives or authorized assigns, as the case may be; provided, however,
that neither party hereto shall assign any interest in this Agreement without
the express written consent of the other party hereto.
VI. EXPENSES IF ABANDONED OR TERMINATED - In the event this Agreement is
terminated incident to its terms, or abandoned by mutual consent of both parties
hereto for any reason or purpose, each party hereto shall pay its own expenses
incident to preparation for and any other matters related to the subject matter
of this Agreement.
VII. GOVERNING LAW - This Agreement shall be governed by the laws of the
State of Minnesota, except as Delaware corporate law is relevant to the
corporate approval and filing of this business combination due to 1-800 being a
Delaware corporation.
VIII. COUNTERPARTS - This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed to be an original but all of
which together shall constitute one and the same document.
IN WITNESS WHEREOF, the above parties hereto have executed this Agreement
as of the day and year first above written.
1-800 Consumer International, Inc.
By /s/ Xxxxx X. Xxxxxxx,
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Xxxxx X. Xxxxxxx, President
And /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx, Secretary
Internationale Shopping Alliance, Inc.
By /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx, President
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