EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION is made this 6TH day of July
2001, by and between IMSCO TECHNOLOGIES, INC., a Delaware corporation having its
principal place of business at 0000 Xxxx Xxxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxxxx
Xxxxxxx, Xxxxxxxx 00000 ("IMSCO"), GLOBAL ACQUISITION CORP., a Delaware
corporation having its principal place of business at 0000 Xxxx Xxxxxxxx
Xxxxxxx, Xxxxx 000, Xxxxxxxxx Xxxxxxx, Xxxxxxxx 00000 ("Global Mergerco"),
GLOBAL SPORTS & ENTERTAINMENT, INC., a Delaware corporation having its principal
place of business at 0000 X. Xxxxx Xxxx., Xxx Xxxxx, Xxxxxx 00000 ("GLOBAL"),
TURFCLUB ACQUISITION CORP., a California corporation having its principal place
of business at 0000 Xxxx Xxxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxxxx Xxxxxxx,
Xxxxxxxx 00000 ("Turfclub Mergerco"), XXXXXXXX.XXX, INC., a California
corporation having its principal place of business at 000 Xxxxxx Xxxx, Xxxxx 000
Xxxxxx Xxxxx, Xxxxxxxxxx 00000 ("TURFCLUB"), XXXXXXX X. XXXXXX ("Xxxxxx"), XXXXX
XXXXX ROOT ("Root") and XXXXXX X. XXXXXXXXXX ("Xxxxxxxxxx").
WHEREAS, GLOBAL is authorized to issue 20,000,000 shares (the "GLOBAL
Common Shares") of its common stock, par value $.001 per share ("GLOBAL Common
Stock"), of which 10,125,000 GLOBAL Common Shares are issued and outstanding
(the "Outstanding GLOBAL Common Shares"), and 4,200,000 shares of its preferred
stock, par value $.001 per share (the "GLOBAL Preferred Shares"), of which
3,807,484 shares are issued or outstanding ("Outstanding GLOBAL Preferred
Shares"). The GLOBAL Common Shares and the GLOBAL Preferred Shares,
collectively, the "GLOBAL Shares"; and
WHEREAS, TURFCLUB is authorized to issue 20,000,000 shares (the
"TURFCLUB Common Shares") of its common stock, no par value ("TURFCLUB Common
Stock"), of which 13,968,334 TURFCLUB Common Shares are issued and outstanding
(the "Outstanding TURFCLUB Common Shares"), and 10,000,000 shares of its
preferred stock, no par value (the "TURFCLUB Preferred Shares"), of which
3,500,000 shares are issued or outstanding ("Outstanding TURFCLUB Preferred
Shares"). The TURFCLUB Common Shares and the TURFCLUB Preferred Shares,
collectively, the "TURFCLUB Shares"; and
WHEREAS, IMSCO is authorized to issue 15,000,000 shares ("IMSCO Common
Shares") of its common stock, par value $.0001 per share (the "IMSCO Common
Stock") of which 15,000,000 shares are issued and outstanding (the "Outstanding
IMSCO Common Shares"), and 1,000,000 shares ("IMSCO Preferred Shares") of its
preferred stock, par value $.00001 share (the "IMSCO Preferred Stock"), of which
no shares are issued or outstanding. The IMSCO Common Shares and the IMSCO
Preferred Shares, collectively, the "IMSCO Shares"; and
WHEREAS, Global Mergerco is a wholly owned subsidiary of IMSCO and is
authorized to issue 1,000 shares of common stock, par value $.0001 (referred to
as the "Global Mergerco Shares"), all of which such Global Mergerco Shares are
issued and outstanding and owned by IMSCO; and
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WHEREAS, Turfclub Mergerco is a wholly owned subsidiary of IMSCO and is
authorized to issue 1,000 shares of common stock, no par value (referred to as
the "Turfclub Mergerco Shares"), all of which such Turfclub Mergerco Shares are
issued and outstanding and owned by IMSCO; and
WHEREAS, the respective Boards of Directors of IMSCO, Global Mergerco,
GLOBAL, Turfclub Mergerco and TURFCLUB (collectively the "Companies") deem it
advisable and generally to the advantage and welfare of the Companies, and their
respective shareholders, that Global Mergerco be merged with and into GLOBAL
(the "GLOBAL Merger") and that Turfclub Mergerco be merged with and into
TURFCLUB (the "TURFCLUB Merger") under the terms and conditions hereinafter set
forth (the "Mergers"), the GLOBAL Merger to be effected pursuant to the Delaware
General Corporation Law, the TURFCLUB Merger to be effected pursuant to the
California General Corporation Law, and the Mergers to be tax free
reorganizations under Section 368(a)(1)(A) of the Internal Revenue Code of 1986,
as amended (the "Code"); and
WHEREAS, IMSCO desires to offer, issue and sell in a private placement
(the "IMSCO Private Placement") solely to accredited investors (as defined in
Regulation D promulgated under the Securities Act of 1933, as amended (the
"Securities Act") 64,000 shares of IMSCO Series C Preferred Stock and warrants
to purchase an additional 64,000 shares of IMSCO Series C Preferred Stock for
$1,500,000 less payment of a finder's fee of $150,000 to Xxxxxxx Investments,
LLC; and
WHEREAS, it is contemplated that the closing of the IMSCO Private
Placement and the closing of the Mergers are to take place simultaneously, each
contingent upon the others; and
NOW, THEREFORE, in consideration of the promises, covenants and
conditions hereof, the parties hereto do mutually agree as follows:
1. VOTES ON MERGERS AND RELATED MATTERS. Global Mergerco, GLOBAL,
Turfclub Mergerco and TURFCLUB (the "Constituent Corporations") shall each, as
soon as practicable but prior to closing, and in no event later than 10 days
after the execution and delivery hereof, (i) cause a special meeting of its
shareholders to be called to consider and vote upon the Merger applicable to it
("Applicable Merger") on the terms and conditions hereinafter set forth, or (ii)
obtain written consent of such shareholders as is necessary to approve the
Applicable Merger. If the Mergers are approved in accordance with applicable
law, subject to the further conditions and provisions of this Agreement, a
closing of this Agreement shall be held (the "Closing"), and a Certificate of
Merger (the "GLOBAL Certificate of Merger") and all other documents or
instruments deemed necessary or appropriate by the parties hereto to effect the
GLOBAL Merger shall be executed and filed with the Secretary of State of the
State of Delaware, and an Agreement of Merger (the "TURFCLUB Agreement of
Merger" and together with the GLOBAL Certificate of Merger, the "Certificates of
Merger") and all other documents or instruments deemed necessary or appropriate
by the parties hereto to effect the TURFCLUB Merger shall be executed and filed
with the Secretary of State of the State of California as promptly as possible
thereafter. The GLOBAL Certificate of Merger so filed shall be substantially in
the form of EXHIBIT A annexed hereto, with such changes therein as the Boards of
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Directors of the applicable Constituent Corporations shall mutually approve. The
time when the GLOBAL Certificate of Merger becomes effective is referred to
herein as the "GLOBAL Effective Time." The TURFCLUB Agreement of Merger so filed
shall be substantially in the form of EXHIBIT B annexed hereto, with such
changes therein as the Boards of Directors of the applicable Constituent
Corporations shall mutually approve. The time when the TURFCLUB Agreement of
Merger becomes effective is referred to herein as the "TURFCLUB Effective Time."
2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF GLOBAL. GLOBAL
represents, warrants and covenants as follows, except to the extent set forth on
the schedule of exceptions in the form of SCHEDULE A annexed hereto and made a
part hereof ("GLOBAL Schedule of Exceptions"):
2.1 ORGANIZATION; CAPITALIZATION. GLOBAL is, and on the
effective date of the Mergers (the "Effective Date") will be, a duly organized
and a validly existing corporation in good standing under the laws of its state
of incorporation and in such other jurisdictions as it is qualified to do
business. There are issued and outstanding, and on the Effective Date there will
be issued and outstanding, only the Outstanding GLOBAL Common Shares and
Outstanding GLOBAL Preferred Shares, all of which are, and on the Effective Date
will be, duly authorized, validly issued, fully paid and nonassessable. There
are, and on the Effective Date there will be no outstanding rights, options or
warrants to purchase any equity interest in GLOBAL, including but not limited to
any common stock of GLOBAL and there will be no other or any other issued or
outstanding securities of any nature convertible into or exercisable or
exchangeable for common stock of GLOBAL. The Outstanding GLOBAL Common Shares
and Outstanding GLOBAL Preferred Shares have all been issued pursuant to an
appropriate exemption from the registration requirements of the Securities Act
and from any applicable registration requirements of the various states.
2.2 AUTHORITY. GLOBAL has, and on the Effective Date will
have, full power and authority to enter into this Agreement and, subject to any
required shareholder or other third party approval in accordance with the laws
of the State of Delaware, to consummate the transactions contemplated hereby.
This Agreement and the transactions contemplated hereby have been duly approved
by the Board of Directors of GLOBAL and, prior to the Closing, by the
shareholders of GLOBAL.
2.3 BINDING AGREEMENT. This Agreement has been duly executed
and delivered by GLOBAL and constitutes the legal, valid and binding obligation
of GLOBAL, enforceable against it in accordance with the terms hereof, except as
may be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws of general application relating to or affecting the enforcement of rights
hereunder or general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
2.4 NO CONFLICTS. The execution and delivery by GLOBAL of this
Agreement, the consummation and performance of the transactions herein
contemplated, and compliance with the terms of this Agreement by GLOBAL will not
conflict with, result in a breach of or constitute or give rise to a default
under (i) any indenture, mortgage, deed of trust or other agreement, instrument
or Contract to which GLOBAL is now a party or by which it or any of its assets
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or properties are bound; (ii) the Certificate of Incorporation, as amended, or
the Bylaws of GLOBAL, in each case as amended; or (iii) any law, order, rule,
regulation, writ, injunction, judgment or decree of any government, governmental
instrumentality or court, domestic or foreign, having jurisdiction over GLOBAL
or any of its business or properties wherein such breach could have a material
adverse effect on GLOBAL or any of its business or properties.
2.5 SUBSIDIARIES. GLOBAL does not have, and on the Effective
Date will not have, any subsidiaries, nor does it own any direct or indirect
interest in any other business entity.
2.6 FOREIGN QUALIFICATIONS. GLOBAL is, and on the Effective
Date will be, qualified or licensed as a foreign corporation in all
jurisdictions where its business or ownership of assets so requires, except
where the failure to be qualified or licensed would not have a material adverse
effect on the business of GLOBAL. The business of GLOBAL does not require it to
be registered as an investment company or investment adviser, as such terms are
defined under the Investment Company Act of 1940 and the Investment Advisers Act
of 1940, each as amended.
2.7 FINANCIAL STATEMENTS. Within seventy (70) days of the
GLOBAL Effective Time, GLOBAL shall deliver to IMSCO the financial statements of
GLOBAL, consisting of its Balance Sheet as at December 31, 2000, its Statement
of Income (Loss) for the fiscal years ended December 31, 2000, its Statement of
Stockholders' Equity for the years ended December 31, 2000, and its Statements
of Cash Flows for the years ended December 31, 2000, which shall have been
audited by independent public accountants and shall fairly present the financial
position, results of operations and other information purported to be shown
therein, at the date and for the respective periods to which they apply. The
interim financial statements of GLOBAL, consisting of its Balance Sheets as at
December 31, 1999, December 31, 2000 and March 31, 2001, and its Statements of
Income (Loss) for the years ended December 31, 1999 and December 31, 2000 and
for the three months ended March 31, 2001, which have been delivered to IMSCO
and TURFCLUB (the "GLOBAL Financial Statements"), fairly present the financial
position, results of operations and other information purported to be shown
therein of GLOBAL, at the date and for the respective periods to which they
apply. All such financial statements have been, or will be, prepared in
conformity with generally accepted accounting principles consistently applied
throughout the periods involved, and have been or will be adjusted for all
normal and recurring accruals and are incorporated herein by reference.
2.8 MATERIAL ADVERSE CHANGE. There has not been, and on the
Effective Date there will not have been in the aggregate, any material adverse
change in the condition, financial or otherwise, of GLOBAL from that set forth
in the GLOBAL Financial Statements.
2.9 ORDINARY COURSE OF BUSINESS. Except for transactions
occurring in the ordinary course of business, there has not been, and on the
Effective Date there will not have been, any transactions involving GLOBAL since
March 31, 2001 in an amount in excess of $50,000.
2.10 LIABILITIES; CLAIMS. There are, and on the Effective Date
will be, no liabilities (including, but not limited to, tax liabilities) or
claims against GLOBAL (whether such liabilities or claims are contingent or
absolute, direct or indirect, matured or unmatured) not appearing on the GLOBAL
Financial Statements, other than (i) liabilities incurred in the ordinary course
of business since Xxxxx 00, 0000, (xx) taxes accrued on earnings since March 31,
2001 which are not yet due or payable, or (iii) liabilities which do not exceed
$10,000.
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2.11 TAX RETURNS. All federal, state, county and local income,
excise, property and other tax returns required to be filed by GLOBAL have been
timely filed, and all required taxes, fees or assessments have been paid or an
adequate reserve therefor has been established in the GLOBAL Financial
Statements. The federal income tax returns and state and foreign income tax
returns of GLOBAL have not been audited by the Internal Revenue Service ("IRS")
or any other taxing authority within the past five (5) years. Neither the IRS
nor any state, local or other taxing authority has proposed any additional
taxes, interest or penalties with respect to GLOBAL or any of its operations or
businesses. There are no pending, or to the knowledge of GLOBAL, threatened, tax
claims or assessments, and there are no pending, or to the knowledge of GLOBAL,
threatened, tax examinations by any taxing authorities. GLOBAL has not given any
waivers of rights (which are currently in effect) under applicable statutes of
limitations with respect to the federal income tax returns of GLOBAL, for any
year.
2.12 TITLE TO ASSETS. Except as provided for in the GLOBAL
Financial Statements, GLOBAL, has, and on the Effective Date will have, good and
marketable title to all of its furniture, fixtures, equipment and other assets
owned by GLOBAL, and such assets are owned free and clear of all security
interests, pledges, liens, restrictions and encumbrances of every kind and
nature, except as set forth in the GLOBAL Financial Statements. GLOBAL is the
owner of its inventory as set forth in the GLOBAL Financial Statements and has
good and marketable title thereto. Such inventory is in all material respects
clean, current and saleable in the ordinary course of business.
2.13 ACCOUNTS RECEIVABLE. The accounts receivable as set forth
in the Financial Statements represent amounts due for goods sold or services
rendered by GLOBAL in the ordinary course of business and, except as reserved
for in the Financial Statements, are collectable in the ordinary course of
business.
2.14 MATERIAL CONTRACTS. A copy (or summary if oral) of all
agreements, contracts, arrangements, understandings and commitments, whether
written or oral, to which GLOBAL is or on the Effective Date will be, a party,
or from which GLOBAL will receive substantial benefits and which are material to
GLOBAL (collectively, "GLOBAL Contracts"), have been delivered to IMSCO and
TURFCLUB. Any GLOBAL Contracts entered into between the date hereof and the
Effective Date will be delivered to IMSCO and TURFCLUB prior to Closing. GLOBAL
is not now, nor will be on the Effective Date, in material default under any
GLOBAL Contract. The validity and enforceability of, and rights of GLOBAL
contained in, each such GLOBAL Contract shall not be adversely effected by the
Merger or the transactions contemplated hereby or any actions taken in
furtherance hereof.
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2.15 LEGAL PROCEEDINGS. There are, and on the Effective Date
there will be, no legal, administrative, arbitral or other proceedings, claims,
actions or governmental investigations of any nature pending, or to GLOBAL's
knowledge, threatened, involving GLOBAL, individually or in the aggregate in
which an unfavorable determination could result in suspension or termination of
GLOBAL's business or authority to conduct such business in any jurisdiction or
could result in the payment by GLOBAL of more than $10,000, or challenging the
validity or propriety of the transactions contemplated by this Agreement and, to
GLOBAL's best knowledge, there is no reasonable basis for any such proceeding,
claim, action or governmental investigation. GLOBAL is not a party to any order,
judgment or decree which will, or might reasonably be expected to, materially
adversely affect the business, operations, properties, assets or financial
condition of GLOBAL.
2.16 CERTAIN TRANSACTIONS. Since March 31, 2000 there have
been, and through the Effective Date there will be (i) no bonuses or
extraordinary compensation to any of the officers, directors or shareholders of
GLOBAL, (ii) no loans made to or any other transactions with any of the
officers, directors or shareholders of GLOBAL or their families and (iii) no
dividends or other distributions declared or paid by GLOBAL.
2.17 INSURANCE. GLOBAL has, and on the Effective Date will
have, maintained casualty and liability policies and other insurance policies
with respect to its business which are appropriate and customary for businesses
similar in size, industry and risk profile. Copies of all of the policies of
insurance and bonds presently in force with respect to GLOBAL, including without
limitation those covering properties, buildings, machinery, equipment, worker's
compensation, officers and directors and public liability, have been delivered
to IMSCO and TURFCLUB. All such insurance is outstanding and in full force and
effect, with all premiums thereon duly paid, and GLOBAL has not received any
notice of cancellation of any such policies.
2.18 INTELLECTUAL PROPERTY. GLOBAL has, and on the Effective
Date will have, no patents, patent applications, trademarks, trademark
registrations or applications, trade names, copyrights, copyright registrations
or applications, or other intellectual property. GLOBAL does not have knowledge
of any infringements by it of any third party's intellectual property.
2.19 COMPLIANCE WITH LAWS. Since its inception, GLOBAL has,
and on the Effective Date will have, in all material respects operated its
business and conducted its affairs in compliance with all applicable laws, rules
and regulations, except where the failure to so comply did not have and would
not be expected to have a material adverse effect on its business or property.
To the best of its knowledge, GLOBAL is not in violation of any federal, state
or local environmental law or regulation.
2.20 RELATED PARTY CONTRACTS. There are, and on the Effective
Date there will be, no loans, leases or other GLOBAL Contracts outstanding
between GLOBAL and any of its officers, directors or any person related to or
affiliated with any such officers or directors.
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2.21 OFFICER AND DIRECTOR INFORMATION. During the past five
year period neither GLOBAL, nor any of its officers or directors, nor any person
intended upon consummation of the Merger to be nominated by GLOBAL to become an
officer or director of either GLOBAL, TURFCLUB or IMSCO or any successor entity
or subsidiary, has been the subject of:
(a) a petition under the Federal bankruptcy laws or
any other insolvency or moratorium law or has a receiver, fiscal agent or
similar officer been appointed by a court for the business or property of GLOBAL
or such person, or any partnership in which GLOBAL or any such person was a
general partner at or within two years before the time of such filing, or any
corporation or business association of which GLOBAL or any such person was an
executive officer at or within two years before the time of such filing;
(b) a conviction in a criminal proceeding or a named
subject of a pending criminal proceeding (excluding traffic violations which do
not relate to driving while intoxicated or driving under the influence);
(c) any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining GLOBAL or any such person from, or
otherwise limiting, the following activities:
(i) Acting as a futures commission merchant,
introducing broker, commodity trading advisor, commodity pool operator, floor
broker, leverage transaction merchant, any other person regulated by the United
States Commodity Futures Trading Commission or an associated person of any of
the foregoing, or as an investment adviser, underwriter, broker or dealer in
securities, or as an affiliated person, director or employee of any investment
company, bank, savings and loan association or insurance company, or engaging in
or continuing any conduct or practice in connection with such activity;
(ii) Engaging in any type of business practice;
or
(iii) Engaging in any activity in connection with
the purchase or sale of any security or commodity or in connection with any
violation of Federal, state or other securities laws or commodities laws;
(d) any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any Federal, state or local authority
barring, suspending or otherwise limiting for more than 60 days the right of
GLOBAL or any such person to engage in any activity described in the preceding
sub-paragraph, or to be associated with persons engaged in any such activity;
(e) a finding by a court of competent jurisdiction in
a civil action or by the Securities and Exchange Commission (the "Commission")
to have violated any securities law, regulation or decree and the judgment in
such civil action or finding by the Commission has not been subsequently
reversed, suspended or vacated; or
(f) a finding by a court of competent jurisdiction in
a civil action or by the Commodity Futures Trading Commission to have violated
any federal commodities law, and the judgment in such civil action or finding by
the Commodity Futures Trading Commission has not been subsequently reversed,
suspended or vacated. All items described in clauses (a) through (f) above are
collectively referred to herein as "Bad Events."
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2.22 BENEFIT PLANS. GLOBAL does not have any pension plan,
profit sharing or similar employee benefit plan.
2.23 CONSENTS AND APPROVALS. Except for the consent and
approval of the shareholders of GLOBAL and the filing of the GLOBAL Certificate
of Merger, no consents or approvals of, or filings or registrations with, any
third party or any public body or authority are necessary in connection with (i)
the execution and delivery by GLOBAL of this Agreement and (ii) the consummation
by GLOBAL of the GLOBAL Merger and by GLOBAL of all other transactions
contemplated hereby.
2.24 FINDER'S FEES. GLOBAL knows of no person who rendered any
service in connection with the introduction of IMSCO, Global Mergerco, GLOBAL,
Turfclub Mergerco and TURFCLUB to any of the other Companies, for a "finder's
fee" or similar type of fee in connection with the Mergers and the other
transactions contemplated hereby except for Xxxx Xxxxxxxxx who will receive
4,800 IMSCO Series B Preferred Shares as a finder's fee in connection with the
Mergers.
2.25 EMPLOYEE MATTERS. No employees of GLOBAL are on strike or
to the best of their knowledge threatening any strike or work stoppage. GLOBAL
does not have any obligations under any collective bargaining or labor union
agreements nor is GLOBAL involved in any material controversy with any of its
employees or any organization representing any of its employees. GLOBAL believes
its relationships with its employees are good.
2.26 DISCLOSURE. None of the information supplied or to be
supplied by or about GLOBAL herein or for inclusion or incorporation by
reference in any information to be supplied to holders of IMSCO Common Stock or
TURFCLUB Common Stock concerning the Merger, or to offerees with respect to the
IMSCO Private Placement, contains any untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF TURFCLUB. TURFCLUB
represents, warrants and covenants as follows, except to the extent set forth on
the schedule of exceptions in the form of SCHEDULE B annexed hereto and made a
part hereof ("TURFCLUB Schedule of Exceptions"):
3.1 ORGANIZATION; CAPITALIZATION. TURFCLUB is, and on the
effective date of the Merger (the "Effective Date") will be, a duly organized
and a validly existing corporation in good standing under the laws of its state
of incorporation and in such other jurisdictions as it is qualified to do
business. There are issued and outstanding, and on the Effective Date there will
be issued and outstanding, only the Outstanding TURFCLUB Common Shares and
Outstanding TURFCLUB Preferred Shares, all of which are, and on the Effective
Date will be, duly authorized, validly issued, fully paid and nonassessable.
There are, and on the Effective Date there will be no outstanding rights,
options or warrants to purchase any equity interest in TURFCLUB, including but
not limited to any common stock of TURFCLUB and there will be no other or any
other issued or outstanding securities of any nature convertible into or
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exercisable or exchangeable for common stock of TURFCLUB. The Outstanding
TURFCLUB Common Shares and Outstanding TURFCLUB Preferred Shares have all been
issued pursuant to an appropriate exemption from the registration requirements
of the Securities Act and from any applicable registration requirements of the
various states.
3.2 AUTHORITY. TURFCLUB has, and on the Effective Date will
have, full power and authority to enter into this Agreement and, subject to any
required shareholder or other third party approval in accordance with the laws
of the State of Delaware, to consummate the transactions contemplated hereby.
This Agreement and the transactions contemplated hereby have been duly approved
by the Board of Directors of TURFCLUB and, prior to the Closing, by the
shareholders of TURFCLUB.
3.3 BINDING AGREEMENT. This Agreement has been duly executed
and delivered by TURFCLUB and constitutes the legal, valid and binding
obligation of TURFCLUB, enforceable against it in accordance with the terms
hereof, except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws of general application relating to or affecting the
enforcement of rights hereunder or general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
3.4 NO CONFLICTS. The execution and delivery by TURFCLUB of
this Agreement, the consummation and performance of the transactions herein
contemplated, and compliance with the terms of this Agreement by TURFCLUB will
not conflict with, result in a breach of or constitute or give rise to a default
under (i) any indenture, mortgage, deed of trust or other agreement, instrument
or contract to which TURFCLUB is now a party or by which it or any of its assets
or properties are bound; (ii) the Articles of Incorporation, as amended, or the
By-laws of TURFCLUB, in each case as amended; or (iii) any law, order, rule,
regulation, writ, injunction, judgment or decree of any government, governmental
instrumentality or court, domestic or foreign, having jurisdiction over TURFCLUB
or any of its business or properties wherein such breach could have a material
adverse effect on TURFCLUB or any of its business or properties.
3.5 SUBSIDIARIES. TURFCLUB does not have, and on the Effective
Date will not have, any subsidiaries, nor does it own any direct or indirect
interest in any other business entity.
3.6 FOREIGN QUALIFICATIONS. TURFCLUB is, and on the Effective
Date will be, qualified or licensed as a foreign corporation in all
jurisdictions where its business or ownership of assets so requires, except
where the failure to be qualified or licensed would not have a material adverse
effect on the business of TURFCLUB. The business of TURFCLUB does not require it
to be registered as an investment company or investment adviser, as such terms
are defined under the Investment Company Act of 1940 and the Investment Advisers
Act of 1940, each as amended.
3.7 FINANCIAL STATEMENTS. Within seventy (70) days of the
TURFCLUB Effective Time, TURFCLUB shall deliver to IMSCO the financial
statements of TURFCLUB, consisting of its Balance Sheet as at December 31, 2000,
its Statement of Income (Loss) for the fiscal years ended December 31, 2000 and
1999, its Statement of Stockholders' Equity for the years ended December 31,
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2000 and 1999, and its Statements of Cash Flows for the years ended December 31,
2000 and 1999, which shall have been audited by independent public accountants
and shall fairly present the financial position, results of operations and other
information purported to be shown therein, at the date and for the respective
periods to which they apply. The interim financial statements of TURFCLUB,
consisting of its Balance Sheets as at December 31, 1999, December 31, 2000 and
March 31, 2001, and its Statements of Income (Loss) for the years ended December
31, 1999 and December 31, 2000 and for the three months ended March 31, 2001,
which have been delivered to IMSCO and GLOBAL ("TURFCLUB Financial Statements"),
fairly present the financial position, results of operations and other
information purported to be shown therein of TURFCLUB, at the date and for the
respective periods to which they apply. All such financial statements have been,
or will be, prepared in conformity with generally accepted accounting principles
consistently applied throughout the periods involved, and have been, or will be,
adjusted for all normal and recurring accruals and are incorporated herein by
reference.
3.8 MATERIAL ADVERSE CHANGE. There has not been, and on the
Effective Date there will not have been in the aggregate, any material adverse
change in the condition, financial or otherwise, of TURFCLUB from that set forth
in the TURFCLUB Financial Statements.
3.9 ORDINARY COURSE OF BUSINESS. Except for transactions
occurring in the ordinary course of business, there has not been, and on the
Effective Date there will not have been, any transactions involving TURFCLUB
since March 31, 2001 in an amount in excess of $50,000.
3.10 LIABILITIES; CLAIMS. There are, and on the Effective Date
will be, no liabilities (including, but not limited to, tax liabilities) or
claims against TURFCLUB (whether such liabilities or claims are contingent or
absolute, direct or indirect, matured or unmatured) not appearing on the
Financial Statements, other than (i) liabilities incurred in the ordinary course
of business, (ii) taxes accrued on earnings since March 31, 2001 which are not
yet due or payable, or (iii) liabilities which do not exceed $10,000.
3.11 TAX RETURNS. All federal, state, county and local income,
excise, property and other tax returns required to be filed by TURFCLUB have
been timely filed, and all required taxes, fees or assessments have been paid or
an adequate reserve therefor has been established in the TURFCLUB Financial
Statements. The federal income tax returns and state and foreign income tax
returns of TURFCLUB have not been audited by the Internal Revenue Service
("IRS") or any other taxing authority within the past five (5) years. Neither
the IRS nor any state, local or other taxing authority has proposed any
additional taxes, interest or penalties with respect to TURFCLUB or any of its
operations or businesses. There are no pending, or to the knowledge of TURFCLUB,
threatened, tax claims or assessments, and there are no pending, or to the
knowledge of TURFCLUB, threatened, tax examinations by any taxing authorities.
TURFCLUB has not given any waivers of rights (which are currently in effect)
under applicable statutes of limitations with respect to the federal income tax
returns of TURFCLUB, for any year.
10
3.12 TITLE TO ASSETS. Except as provided for in the TURFCLUB
Financial Statements, TURFCLUB, has, and on the Effective Date will have, good
and marketable title to all of its furniture, fixtures, equipment and other
assets owned by TURFCLUB, and such assets are owned free and clear of all
security interests, pledges, liens, restrictions and encumbrances of every kind
and nature, except as set forth in the TURFCLUB Financial Statements. TURFCLUB
is the owner of its inventory as set forth in the TURFCLUB Financial Statements
and each has good and marketable title thereto. Such inventory is in all
material respects clean, current and saleable in the ordinary course of
business.
3.13 ACCOUNTS RECEIVABLE. The accounts receivable as set forth
in the Financial Statements represent amounts due for goods sold or services
rendered by TURFCLUB in the ordinary course of business and, except as reserved
for in the Financial Statements, are collectable in the ordinary course of
business.
3.14 MATERIAL CONTRACTS. A copy (or summary if oral) of all
agreements, contracts, arrangements, understandings and commitments, whether
written or oral, to which TURFCLUB, is or on the Effective Date will be, a
party, or from which TURFCLUB will receive substantial benefits and which are
material to TURFCLUB (collectively, "TURFCLUB Contracts"), have been delivered
to IMSCO and TURFCLUB. A list of such TURFCLUB Contracts is set forth on the
TURFCLUB Schedule of Exceptions, which such Schedule shall be amended at the
Effective Date to reflect any TURFCLUB Contracts entered into between the date
hereof and the Effective Date. TURFCLUB is not now, nor will be on the Effective
Date, in material default under any TURFCLUB Contract. The validity and
enforceability of, and rights of TURFCLUB contained in, each such TURFCLUB
Contract shall not be adversely effected by the Mergers or the transactions
contemplated hereby or any actions taken in furtherance hereof.
3.15 LEGAL PROCEEDINGS. There are, and on the Effective Date
there will be, no legal, administrative, arbitral or other proceedings, claims,
actions or governmental investigations of any nature pending, or to TURFCLUB's
knowledge, threatened, involving TURFCLUB, individually or in the aggregate in
which an unfavorable determination could result in suspension or termination of
TURFCLUB's business or authority to conduct such business in any jurisdiction or
could result in the payment by TURFCLUB of more than $10,000, or challenging the
validity or propriety of the transactions contemplated by this Agreement and, to
TURFCLUB's best knowledge, there is no reasonable basis for any such proceeding,
claim, action or governmental investigation. TURFCLUB is not a party to any
order, judgment or decree which will, or might reasonably be expected to,
materially adversely affect the business, operations, properties, assets or
financial condition of TURFCLUB.
3.16 CERTAIN TRANSACTIONS. Since March 31, 2000 there have
been, and through the Effective Date there will be (i) no bonuses or
extraordinary compensation to any of the officers, directors or shareholders of
TURFCLUB, (ii) no loans made to or any other transactions with any of the
officers, directors or shareholders of TURFCLUB or their families, and (iii) no
dividends or other distributions declared or paid by TURFCLUB.
3.17 INSURANCE. TURFCLUB has, and on the Effective Date will
have, maintained casualty and liability policies and other insurance policies
with respect to its business which are appropriate and customary for businesses
similar in size, industry and risk profile. Copies of all of the policies of
insurance and bonds presently in force with respect to TURFCLUB, including
without limitation those covering properties, buildings, machinery, equipment,
11
worker's compensation, officers and directors and public liability, have been
delivered to IMSCO and GLOBAL. All such insurance is outstanding and in full
force and effect, with all premiums thereon duly paid, and TURFCLUB has not
received any notice of cancellation of any such policies.
3.18 INTELLECTUAL PROPERTY. TURFCLUB has, and on the Effective
Date will have, no patents, patent applications, trademarks, trademark
registrations or applications, trade names, copyrights, copyright registrations
or applications, or other intellectual property. TURFCLUB does not have
knowledge of any infringements by it of any third party's intellectual property.
3.19 COMPLIANCE WITH LAWS. Since its inception, TURFCLUB has,
and on the Effective Date will have, in all material respects operated its
business and conducted its affairs in compliance with all applicable laws, rules
and regulations, except where the failure to so comply did not have and would
not be expected to have a material adverse effect on its business or property.
To the best of its knowledge, TURFCLUB is not in violation of any federal, state
or local environmental law or regulation.
3.20 RELATED PARTY CONTRACTS. There are, and on the Effective
Date there will be, no loans, leases or other TURFCLUB Contracts outstanding
between TURFCLUB and any of its officers, directors or any person related to or
affiliated with any such officers or directors.
3.21 OFFICER AND DIRECTOR INFORMATION. During the past five
year period neither TURFCLUB, nor any of its officers or directors, nor any
person intended upon consummation of the Merger to be nominated by TURFCLUB to
become an officer or director of either TURFCLUB, GLOBAL or IMSCO or any
successor entity or subsidiary, has been the subject of any Bad Events.
3.22 BENEFIT PLANS. TURFCLUB does not have any pension plan,
profit sharing or similar employee benefit plan.
3.23 CONSENTS AND APPROVALS. Except for the consent and
approval of the shareholders of TURFCLUB and the filing of the TURFCLUB
Agreement of Merger, no consents or approvals of, or filings or registrations
with, any third party or any public body or authority are necessary in
connection with (i) the execution and delivery by TURFCLUB of this Agreement and
(ii) the consummation by TURFCLUB of the TURFCLUB Merger and by TURFCLUB of all
other transactions contemplated hereby.
3.24 FINDER'S FEES. TURFCLUB knows of no person who rendered
any service in connection with the introduction of IMSCO, Global Mergerco,
GLOBAL, Turfclub Mergerco and TURFCLUB to any of the other Companies, for a
"finder's fee" or similar type of fee in connection with the Mergers and the
other transactions contemplated hereby except for Xxxx Xxxxxxxxx who will
receive 4,800 IMSCO Series B Preferred Shares as a finder's fee in connection
with the Mergers.
3.25 EMPLOYEE MATTERS. No employees of TURFCLUB are on strike
or to the best of their knowledge threatening any strike or work stoppage.
TURFCLUB does not have any obligations under any collective bargaining or labor
union agreements nor is TURFCLUB involved in any material controversy with any
of its employees or any organization representing any of its employees. TURFCLUB
believes its relationships with its employees are good.
12
3.26 DISCLOSURE. None of the information supplied or to be
supplied by or about TURFCLUB for inclusion or incorporation by reference in any
information to be supplied to holders of IMSCO Common Stock or Global Common
Stock concerning the Merger, or to offerees with respect to the IMSCO Private
Placement, contains any untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are made,
not misleading.
4. REPRESENTATIONS AND WARRANTIES OF GLOBAL MERGERCO. Global Mergerco
represents and warrants as follows:
4.1 ORGANIZATION; CAPITALIZATION. Global Mergerco is, and on
the Effective Date will be, a duly organized and validly existing corporation in
good standing under the laws of the State of Delaware, authorized to issue only
the Global Mergerco Shares. On the Effective Date there will be issued and
outstanding all of the Global Mergerco Shares, which shall be fully paid and
nonassessable and all of which shall be owned by IMSCO. There are no, and on the
Effective Date there will be no issued or outstanding options or warrants to
purchase Global Mergerco Shares or any issued or outstanding securities of any
nature convertible into Global Mergerco Shares, or any agreements or
understandings to issue any Global Mergerco Shares, options or warrants.
4.2 AUTHORITY. Global Mergerco has, and on the Effective Date
will have, full power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. This Agreement and the
transactions contemplated hereby have been duly approved by the Board of
Directors of Global Mergerco.
4.3 NO BUSINESS ACTIVITY. Global Mergerco has been organized
solely for the purpose of consummating the GLOBAL Merger and, since its
inception, has had no business activity of any nature other than those related
to its organization or as contemplated by this Agreement.
4.4 ISSUANCE OF SECURITIES. Since its inception, Global
Mergerco has not issued or committed itself to issue, and to the Effective Date
will not issue or commit to issue, any Global Mergerco Shares or any options,
rights, warrants, or other securities convertible into Global Mergerco Shares,
except for the issuance of the Global Mergerco Shares to IMSCO.
4.5 CONSENTS AND APPROVALS. Except for the consent and
approval of the shareholders of GLOBAL and the Board of Directors and
shareholder of Global Mergerco, and the filing of the GLOBAL Certificate of
Merger, no consents or approvals of, or filings or registrations with, any third
party or any public body or authority are necessary in connection with (i) the
execution and delivery by Global Mergerco of this Agreement and (ii) the
consummation by Global Mergerco of the GLOBAL Merger and the other transactions
contemplated hereby.
13
4.6 NO CONFLICTS. The execution and delivery by Global
Mergerco of this Agreement, the consummation and performance of the transactions
herein contemplated, and compliance with the terms of this Agreement by Global
Mergerco will not conflict with, result in a breach of or constitute or give
rise to a default under any indenture, mortgage, deed of trust or other
agreement, instrument or contract to which Global Mergerco is now a party or by
which it or any of its assets or properties are bound or its Certificate of
Incorporation, as amended, or the bylaws of Global Mergerco as amended, or any
law, order, rule or regulation, writ, injunction, judgment or decree of any
government, governmental instrumentality or court, domestic or foreign, having
jurisdiction over Global Mergerco or any of its businesses or properties.
4.7 SUBSIDIARIES. Global Mergerco has, and on the Effective
Date will have, no subsidiaries.
4.8 FINANCIAL CONDITION. Except for (i) the incurring of
expenses of its organization, (ii) the issuance of the Global Mergerco Shares to
IMSCO, (iii) the incurring of expenses relating to this Agreement and the
consummation of the transactions contemplated by this Agreement, and (iv) the
consummation of the GLOBAL Merger, Global Mergerco has had, and on the Effective
Date will have had, no business and no financial or other transactions of any
nature whatsoever.
4.9 LIABILITIES. Global Mergerco has, and on the Effective
Date will have no liabilities (including, but not limited to, tax liabilities)
nor are there, or on the Effective Date will there be, any claims against Global
Mergerco (whether such liabilities or claims are contingent or absolute, direct
or indirect, and matured or unmatured) except for liabilities for its
organization expenses or expenses incurred in connection with the Merger.
4.10 ASSETS. Global Mergerco has, and on the Effective Date
will have no fixtures, furniture, equipment, inventory or accounts receivable.
4.11 CONTRACTS. Global Mergerco has, and on the Effective Date
will have, no contracts and commitments to which it is, or on the Effective Date
will be, a party, except for this Agreement and other documents and instruments
contemplated hereby in connection with the GLOBAL Merger.
4.12 LEGAL PROCEEDINGS. There are, and on the Effective Date
there will be, no legal, administrative, arbitral or other proceedings, claims,
actions or governmental investigations of any nature against Global Mergerco, or
challenging the validity or propriety of the transactions contemplated by this
Agreement and, to Global Mergerco's best knowledge, there is no reasonable basis
for any other proceeding, claim, action or governmental investigation against
Global Mergerco. Global Mergerco is not a party to any order, judgment or decree
which will, or might reasonably be expected to, materially adversely affect the
business, operations, properties, assets or financial condition of Global
Mergerco.
4.13 EMPLOYEE MATTERS; RELATED PARTY TRANSACTIONS. Since the
inception of Global Mergerco there have been, and to the Effective Date there
will be (i) no salaried or otherwise compensated employees and no bonuses paid
to any officer or director of Global Mergerco; (ii) no loans made to or any
transactions with any officer or director of Global Mergerco; (iii) no dividends
or other distributions declared or paid by Global Mergerco; and (iv) no purchase
by Global Mergerco of any Global Mergerco Shares.
14
4.14 INTELLECTUAL PROPERTY. Global Mergerco has no patents,
patent applications, trademarks, trademark registrations, tradenames,
copyrights, copyright registrations or applications therefor.
4.15 COMPLIANCE WITH LAWS. Since its inception, Global
Mergerco has, and on the Effective Date will have in all material respects
conducted its affairs in compliance with all applicable laws, rules and
regulations.
4.16 OFFICER AND DIRECTOR INFORMATION. During the past five
year period, no officer or director of Global Mergerco has been the subject of
any Bad Events.
4.17 BENEFIT PLANS. Global Mergerco has no pension plan,
profit sharing or similar employee benefit plan.
4.18 FINDER'S FEES. Global Mergerco knows of no person who
rendered any service in connection with the introduction of IMSCO, Global
Mergerco, GLOBAL, Turfclub Mergerco or TURFCLUB to any of the other Companies,
for a "finder's fee" or similar type of fee in connection with the Mergers and
the other transactions contemplated hereby except for Xxxx Xxxxxxxxx who will
receive 4,800 IMSCO Series B Preferred Shares as a finder's fee in connection
with the Mergers.
5. REPRESENTATIONS AND WARRANTIES OF TURFCLUB MERGERCO. Turfclub
Mergerco represents and warrants as follows:
5.1 ORGANIZATION; CAPITALIZATION. Turfclub Mergerco is, and on
the Effective Date will be, a duly organized and validly existing corporation in
good standing under the laws of the State of California, authorized to issue
only the Turfclub Mergerco Shares. On the Effective Date there will be issued
and outstanding all of the Turfclub Mergerco Shares, which shall be fully paid
and nonassessable and all of which shall be owned by IMSCO. There are no, and on
the Effective Date there will be no issued or outstanding options or warrants to
purchase Turfclub Mergerco Shares or any issued or outstanding securities of any
nature convertible into Turfclub Mergerco Shares, or any agreements or
understandings to issue any Turfclub Mergerco Shares, options or warrants.
5.2 AUTHORITY. Turfclub Mergerco has, and on the Effective
Date will have, full power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. This Agreement and the
transactions contemplated hereby have been duly approved by the Board of
Directors of Turfclub Mergerco.
5.3 NO BUSINESS ACTIVITY. Turfclub Mergerco has been organized
solely for the purpose of consummating the TURFCLUB Merger and, since its
inception, has had no business activity of any nature other than those related
to its organization or as contemplated by this Agreement.
15
5.4 ISSUANCE OF SECURITIES. Since its inception, Turfclub
Mergerco has not issued or committed itself to issue, and to the Effective Date
will not issue or commit to issue, any Turfclub Mergerco Shares or any options,
rights, warrants, or other securities convertible into Turfclub Mergerco Shares,
except for the issuance of the Turfclub Mergerco Shares to IMSCO.
5.5 CONSENTS AND APPROVALS. Except for the consent and
approval of the shareholders of TURFCLUB and the Board of Directors and
shareholder of TURFCLUB Mergerco, and the filing of the TURFCLUB Agreement of
Merger, no consents or approvals of, or filings or registrations with, any third
party or any public body or authority are necessary in connection with (i) the
execution and delivery by Turfclub Mergerco of this Agreement and (ii) the
consummation by Turfclub Mergerco of the TURFCLUB Merger and the other
transactions contemplated hereby.
5.6 NO CONFLICTS. The execution and delivery by Turfclub
Mergerco of this Agreement, the consummation and performance of the transactions
herein contemplated, and compliance with the terms of this Agreement by Turfclub
Mergerco will not conflict with, result in a breach of or constitute or give
rise to a default under any indenture, mortgage, deed of trust or other
agreement, instrument or contract to which Turfclub Mergerco is now a party or
by which it or any of its assets or properties are bound or its Articles of
Incorporation, as amended, or the bylaws of Turfclub Mergerco as amended, or any
law, order, rule or regulation, writ, injunction, judgment or decree of any
government, governmental instrumentality or court, domestic or foreign, having
jurisdiction over Turfclub Mergerco or any of its businesses or properties.
5.7 SUBSIDIARIES. Turfclub Mergerco has, and on the Effective
Date will have, no subsidiaries.
5.8 FINANCIAL CONDITION. Except for (i) the incurring of
expenses of its organization, (ii) the issuance of the Turfclub Mergerco Shares
to IMSCO, (iii) the incurring of expenses relating to this Agreement and the
consummation of the transactions contemplated by this Agreement, and (iv) the
consummation of the TURFCLUB Merger, Turfclub Mergerco has had, and on the
Effective Date will have had, no business and no financial or other transactions
of any nature whatsoever.
5.9 LIABILITIES. Turfclub Mergerco has, and on the Effective
Date will have no liabilities (including, but not limited to, tax liabilities)
nor are there, or on the Effective Date will there be, any claims against
Turfclub Mergerco (whether such liabilities or claims are contingent or
absolute, direct or indirect, and matured or unmatured) except for liabilities
for its organization expenses or expenses incurred in connection with the
Merger.
5.10 ASSETS. Turfclub Mergerco has, and on the Effective Date
will have no fixtures, furniture, equipment, inventory or accounts receivable.
5.11 CONTRACTS. Turfclub Mergerco has, and on the Effective
Date will have, no contracts and commitments to which it is, or on the Effective
Date will be, a party, except for this Agreement and other documents and
instruments contemplated hereby in connection with the TURFCLUB Merger.
16
5.12 LEGAL PROCEEDINGS. There are, and on the Effective Date
there will be, no legal, administrative, arbitral or other proceedings, claims,
actions or governmental investigations of any nature against Turfclub Mergerco,
or challenging the validity or propriety of the transactions contemplated by
this Agreement and, to Turfclub Mergerco's best knowledge, there is no
reasonable basis for any other proceeding, claim, action or governmental
investigation against Turfclub Mergerco. Turfclub Mergerco is not a party to any
order, judgment or decree which will, or might reasonably be expected to,
materially adversely affect the business, operations, properties, assets or
financial condition of Turfclub Mergerco.
5.13 EMPLOYEE MATTERS; RELATED PARTY TRANSACTIONS. Since the
inception of Turfclub Mergerco there have been, and to the Effective Date there
will be (i) no salaried or otherwise compensated employees and no bonuses paid
to any officer or director of Turfclub Mergerco; (ii) no loans made to or any
transactions with any officer or director of Turfclub Mergerco; (iii) no
dividends or other distributions declared or paid by Turfclub Mergerco; and (iv)
no purchase by Turfclub Mergerco of any Turfclub Mergerco Shares.
5.14 INTELLECTUAL PROPERTY. Turfclub Mergerco has no patents,
patent applications, trademarks, trademark registrations, tradenames,
copyrights, copyright registrations or applications therefor.
5.15 COMPLIANCE WITH LAWS. Since its inception, Turfclub
Mergerco has, and on the Effective Date will have in all material respects
conducted its affairs in compliance with all applicable laws, rules and
regulations.
5.16 OFFICER AND DIRECTOR INFORMATION. During the past five
year period, no officer or director of Turfclub Mergerco has been the subject of
any Bad Events.
5.17 BENEFIT PLANS. Turfclub Mergerco has no pension plan,
profit sharing or similar employee benefit plan.
5.18 FINDER'S FEES. Turfclub Mergerco knows of no person who
rendered any service in connection with the introduction of IMSCO, Global
Mergerco, GLOBAL, Turfclub Mergerco or TURFCLUB to any of the other Companies,
for a "finder's fee" or similar type of fee in connection with the Mergers and
the other transactions contemplated hereby except for Xxxx Xxxxxxxxx who will
receive 4,800 IMSCO Series B Preferred Shares as a finder's fee in connection
with the Mergers.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF IMSCO. IMSCO
represents, warrants and covenants as follows, except to the extent set forth in
the Schedule of Exceptions in the form of SCHEDULE C annexed hereto and made
part hereof ("IMSCO Schedule of Exceptions"):
6.1 ORGANIZATION; CAPITALIZATION. IMSCO is a duly organized
and validly existing corporation in good standing under the laws of the State of
Delaware, authorized to issue an aggregate of 15,000,000 shares of IMSCO Common
Stock and 1,000,000 shares of IMSCO Preferred Stock. Prior to the Effective
Date, IMSCO shall designate a series of 850,000 shares IMSCO Preferred Stock as
"Series B Preferred Shares" and 150,000 shares of IMSCO Preferred Stock as
17
"Series C Preferred Shares" which shall have the rights, preferences and
privileges substantially as set forth on the Certificate of Designations in the
form annexed hereto as EXHIBIT C ("Certificate of Designations"). On the
Effective Date, there will be issued and outstanding no more than 15,000,000
shares of IMSCO Common Stock, all of which such issued and outstanding shares
will be validly issued, fully paid and nonassessable. On the Effective Date,
there will be issued and outstanding no shares of IMSCO Preferred Stock. Except
as contemplated by this Agreement, on the Effective Date there will be no issued
or outstanding securities and no issued or outstanding options, warrants or
other rights, or commitments or agreements of any kind, contingent or otherwise,
to purchase or otherwise acquire shares of IMSCO Common Stock or any issued or
outstanding securities of any nature convertible into shares of IMSCO Common
Stock other than the 15,000,000 shares of IMSCO Common Stock which are currently
outstanding. There is no proxy or any other agreement, arrangement or
understanding of any kind authorized or outstanding which restricts, limits or
otherwise affects the right to vote any shares of IMSCO Common Stock. The IMSCO
Series B Preferred Shares issuable pursuant to the terms hereof, when issued in
accordance with the terms of this Agreement, will be duly authorized, validly
issued, fully paid and nonassessable. The IMSCO Series B Preferred Shares will
be free of any liens or encumbrances, except for any restrictions imposed by
federal or state securities laws.
6.2 BINDING AGREEMENT. This Agreement and the transactions
contemplated hereby have been, or will be prior to the Effective Date, duly
approved by the Board of Directors of IMSCO. This Agreement has been duly
executed and delivered by IMSCO and constitutes the legal, valid and binding
obligation of IMSCO enforceable against it in accordance with the terms hereof
except as may be limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws of general application relating to or affecting the enforcement
of rights hereunder or general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
6.3 RECENT BUSINESS OPERATIONS. The business of IMSCO and the
IMSCO Subsidiaries (as hereinafter defined) for at least the last one year has
been limited to the search for an acquisition or merger partner and certain
transactions described in its filings with the Commission (the "SEC Filings"),
and except for transactions described in the SEC Filings, IMSCO and the IMSCO
Subsidiaries have not engaged in any other business for at least the last one
year.
6.4 FOREIGN QUALIFICATIONS. IMSCO is, and on the Effective
Date will be, duly authorized, qualified and licensed under any and all
applicable laws, regulations, ordinances or orders of public authorities to
carry on its business in the places and in the manner as presently conducted.
The business of IMSCO does not require it to be registered as an investment
company or investment advisor, as such terms are defined under the Investment
Company Act and the Investment Advisors Act of 1940.
6.5 SUBSIDIARIES. IMSCO has, and on the Effective Date will
have, no subsidiaries, except for Global Mergerco and Turfclub Mergerco and
those subsidiaries identified on the IMSCO Schedule of Exceptions (the "IMSCO
Subsidiaries").
18
6.6 FINANCIAL STATEMENTS. The financial statements of IMSCO,
consisting of its Balance Sheets as at December 31, 2000 and 1999, and its
Statement of Operations for the fiscal years ended December 31, 2000 and 1999,
its Statement of Stockholders' Equity as of December 31, 2000 and 1999, and its
Statement of Cash Flows for the fiscal years ended December 31, 2000 and 1999,
all together with accompanying notes, have been audited by independent public
accountants, are complete and correct in all material respects, present fairly
the financial position of IMSCO and the results of operations and changes in
financial position for the respective periods ended on such dates, and were
prepared in accordance with generally accepted accounting principles
consistently applied during the periods. The interim financial statements of
IMSCO, consisting of its Balance Sheet as at March 31, 2001 and its Statement of
Operations, Statement of Stockholders' Equity and Statement of Cash Flows for
the three-month period ending March 31, 2001 have been prepared in accordance
with generally accepted accounting principles and have been adjusted for all
normal and recurring accruals and present fairly the financial position of IMSCO
and the results of operations and changes in financial position for the
respective periods ended on such dates, and were prepared in accordance with
generally accepted accounting principles consistently applied during the
periods. All the financial statements referenced herein regarding IMSCO are
collectively referred to as the "IMSCO Financial Statements", all of which have
been delivered to GLOBAL and TURFCLUB and are true and complete in all material
respects.
6.7 NO ADVERSE CHANGES. There has not been, and on the
Effective Date there will not have been, any material change in the financial
condition of IMSCO and the IMSCO Subsidiaries from that set forth in the IMSCO
Financial Statements except for (i) transactions in the ordinary course of
business, (ii) transactions relating to this Agreement, and (iii) the incurring
of expenses and liabilities relating to this Agreement not to exceed $30,000.
6.8 LIABILITIES. There are, and on the Effective Date will be,
no liabilities (including, but not limited to, tax liabilities) or claims
against IMSCO or the IMSCO Subsidiaries (whether such liabilities or claims are
contingent or absolute, direct or indirect, accrued or unaccrued and matured or
unmatured) not appearing on the IMSCO Financial Statements, except for (i)
liabilities for expenses incurred relating to this Agreement and the
consummation of the transactions contemplated hereby and (ii) liabilities and
commitments incurred or made in the ordinary course of IMSCO's business or taxes
incurred on earnings since March 31, 2001.
6.9 TAX RETURNS. All federal, state, county and local income,
excise, property or other tax returns required to be filed by IMSCO and the
IMSCO Subsidiaries have been filed and all required taxes, fees or assessments
have been paid or an adequate reserve therefore has been set up in the IMSCO
Financial Statements.
6.10 ASSETS. IMSCO and the IMSCO Subsidiaries have, and on the
Effective Date will have, no fixtures, furniture, equipment, inventory or
accounts receivable.
6.11 MATERIAL CONTRACTS. IMSCO and the IMSCO Subsidiaries
have, and on the Effective Date will have, no material contracts to which it is,
or on the Effective Date will be, a party, except as described in the IMSCO
Financial Statements or the Form 10-KSB for the year ended December 31, 2000.
19
6.12 NO CONFLICTS. The execution and delivery by IMSCO of this
Agreement, the consummation and performance of the transactions herein
contemplated, and compliance with the terms of this Agreement by IMSCO will not
conflict with, result in a breach of or constitute a default under (i) any
indenture, mortgage, deed of trust or other agreement, instrument or contract to
which IMSCO or the IMSCO Subsidiaries is now a party or by which it or any of
its assets or properties is bound; (ii) the Certificate of Incorporation, as
amended, or the bylaws of IMSCO, in each case as amended; or (iii) any law,
order, rule or regulation, writ, injunction, judgment or decree of any
government, governmental instrumentality or court, domestic or foreign, having
jurisdiction over IMSCO or the IMSCO Subsidiaries or any of their respective
business or properties.
6.13 LEGAL PROCEEDINGS. There are, and on the Effective Date
there will be, no legal, administrative, arbitral or other proceedings, claims,
actions or governmental investigations of any nature pending or to IMSCO's
knowledge threatened in writing, against IMSCO or any of the IMSCO Subsidiaries,
including, but not limited to any shareholder claims or derivative actions, or
challenging the validity or propriety of the transactions contemplated by this
Agreement, and, to IMSCO's best knowledge, there is no reasonable basis for any
proceeding, claim, action or governmental investigation against IMSCO or any of
the IMSCO Subsidiairies. IMSCO or any of the IMSCO Subsidiaries are not a party
to any order, judgment or decree which will, or might reasonably be expected to,
materially adversely affect the business, operations, properties, assets or
financial condition of IMSCO.
6.14 CERTAIN TRANSACTIONS. Since January 1, 2000, other than
as disclosed in the SEC Filings, there have been, and to the Effective Date
there will be (i) no salaried or otherwise compensated employees and no bonuses
paid to any officer or director of IMSCO or the IMSCO Subsidiaries; (ii) no
loans made to or transactions with any officer or director of IMSCO or the IMSCO
Subsidiaries; (iii) no dividends or other distributions declared or paid by
IMSCO; and (iv) no purchase by IMSCO of any of the IMSCO Common Shares.
6.15 ISSUANCES OF SECURITIES. IMSCO has not, except as
disclosed in the SEC Filings, issued or committed itself to issue, and to the
Effective Date will not issue or commit itself to issue, any additional common
shares or any options, rights, warrants, or other securities convertible into
common shares, except as contemplated by this Agreement and in connection with
the IMSCO Private Placement.
6.16 INTELLECTUAL PROPERTY. IMSCO and the IMSCO Subsidiaries
have no patents, patent applications, trademarks, trademark registrations, trade
names, copyrights, copyright registrations or applications therefor. IMSCO has
no knowledge of any infringements by IMSCO or the IMSCO Subsidiaries it of any
third party's intellectual property.
6.17 COMPLIANCE WITH LAWS. IMSCO and the IMSCO Subsidiaries
have, and on the Effective Date will have, in all material respects operated its
business and conducted its affairs in compliance with all applicable laws, rules
and regulations, except where the failure to so comply did not have and would
not be expected to have a material adverse effect on its business or property.
To the best of its knowledge, IMSCO and the IMSCO Subsidiaries are not in
violation of any federal, state or local environmental law or regulation.
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6.18 RELATED PARTY TRANSACTIONS. On the Effective Date there
will be no loans, leases, commitments, arrangements or other contracts of any
kind or nature outstanding between (i) IMSCO or any of the IMSCO Subsidiaries
and (ii) any officer or director of IMSCO or the IMSCO Subsidiaries or any
person related to or affiliated with any officer or director of IMSCO or any of
the IMSCO Subsidiaries.
6.19 OFFICERS AND DIRECTORS. During the past five year period,
no current officer or director of IMSCO or the IMSCO Subsidiaries has been the
subject of any Bad Event.
6.20 EMPLOYEE BENEFIT PLANS. IMSCO and the IMSCO Subsidiaries
have no pension plan, profit sharing or similar employee benefit plans.
6.21 CONSENTS. Except for the consent and approval of the
Board of Directors of IMSCO, GLOBAL, TURFCLUB, Global Mergerco and Turfclub
Mergerco and the shareholders of GLOBAL and TRUFCLUB to the Mergers, the filing
of the Certificates of Merger and the filing of Commission Form 8-K, no consents
or approvals of, or filings or registrations with, any third party or any public
body or authority are necessary in connection with (i) the execution and
delivery by IMSCO of this Agreement and (ii) the consummation of the Mergers and
the other transactions contemplated hereby. IMSCO has, and on the Effective Date
will have, full power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby.
6.22 FINDER'S FEES. IMSCO knows of no person who rendered any
service in connection with the introduction of IMSCO, Global Mergerco, GLOBAL,
Turfclub Mergerco or TURFCLUB to any of the other Companies, for a "finder's
fee" or similar type of fee in connection with the Mergers and the other
transactions contemplated hereby except for Xxxx Xxxxxxxxx who will receive
4,800 IMSCO Series B Preferred Shares as a finder's fee in connection with the
Mergers.
6.23 EMPLOYEES. IMSCO and the IMSCO Subsidiaries have no
employees.
6.24 DISCLOSURE. None of the information supplied or to be
supplied by or about IMSCO or the IMSCO Subsidiaries to GLOBAL or TURFCLUB
concerning the Merger contains any untrue statement of a material fact or omits
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
are made, not misleading.
7. REPRESENTATIONS TO SURVIVE CLOSING. All of the representations,
covenants and warranties contained in this Agreement (including all statements
contained in any certificate or other instrument delivered by or on behalf of
IMSCO, Global Mergerco, GLOBAL, Turfclub Mergerco or TURFCLUB pursuant hereto or
in connection with the transactions contemplated hereby) shall survive the
Closing for a period of three (3) years from the Effective Date.
8. SURVIVING CORPORATIONS. The surviving corporation in the GLOBAL
Merger shall be GLOBAL. GLOBAL's name, identities, certificate of incorporation,
by-laws, existence, purposes, powers, objects, franchises, rights and immunities
shall be unaffected and unimpaired by the Merger, except as described in the
GLOBAL Certificate of Merger. The surviving corporation in the TURFCLUB Merger
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shall be TURFCLUB. TURFCLUB's name, identities, certificate of incorporation,
by-laws, existence, purposes, powers, objects, franchises, rights and immunities
shall be unaffected and unimpaired by the Merger, except as described in the
TURFCLUB Agreement of Merger.
9. TREATMENT OF SHARES OF CONSTITUENT CORPORATIONS IN THE GLOBAL
MERGER. The terms and conditions of the GLOBAL Merger, the mode of carrying the
same into effect, and the manner and basis of converting the securities of each
of the applicableConstituent Corporations are as follows:
9.1 TREATMENT OF GLOBAL SHARES. The Outstanding GLOBAL Shares
shall be converted by virtue of the GLOBAL Merger, and at the Effective Date,
into 475,048 IMSCO Series B Preferred Shares, on the basis of .0340964 IMSCO
Series B Preferred Shares for each Outstanding GLOBAL Share, without any action
on the part of the holders thereof. After the Effective Date, each holder of
Outstanding GLOBAL Shares prior to the Merger shall be entitled, upon surrender
to receive from IMSCO a certificate representing the number of IMSCO Series B
Preferred Shares to which such holder shall be entitled, which certificate shall
contain any appropriate restrictive legend concerning the resale of such IMSCO
Series B Preferred Shares. Until so surrendered, any outstanding certificates or
other documentation which, prior to the Effective Date, represented Outstanding
GLOBAL Shares, shall be deemed for all corporate purposes to evidence ownership
of IMSCO Series B Preferred Shares into which such Outstanding GLOBAL Shares
shall have been converted. Upon such surrender, Outstanding GLOBAL Shares so
surrendered shall no longer be outstanding and shall automatically be canceled
and retired, and shall cease to exist. Upon conversion, any fractional IMSCO
Series B Preferred Shares resulting from conversion shall be preserved and shall
not be rounded or cashed out.
9.2 TREATMENT OF GLOBAL WARRANTS. Up to1,903,743 existing
warrants of GLOBAL entitling their holders to purchase GLOBAL common shares
shall be replaced at Closing by warrants to purchase IMSCO Series B Preferred
Shares on the same basis of conversion as set forth in Section 9.1 above.
9.3 TREATMENT OF GLOBAL OPTIONS. Up to 1,958,750 currently
existing options to purchase GLOBAL Common Shares shall be replaced at closing
by options to purchase IMSCO Series B Preferred Shares on the same basis of
conversion as set forth in Section 9.1 above.
9.4 TREATMENT OF GLOBAL CONVERTIBLE DEBENTURES. Up to $187,500
of GLOBAL convertible debentures convertible into up to 4,000 GLOBAL Preferred
Shares shall be convertible into IMSCO Series B Preferred Shares on the same
basis of conversion as set forth in Section 9.1 above.
9.5 EXISTENCE OF GLOBAL MERGERCO. The separate existence and
corporate organization of Global Mergerco, except insofar as it may be continued
by statute, shall cease on Effective Date and GLOBAL shall become a wholly owned
subsidiary of XXXXX.
00
00. RIGHTS AND LIABILITIES OF SURVIVING CORPORATION IN GLOBAL MERGER.
(a) On and after the Effective Date, GLOBAL, as the surviving corporation of the
GLOBAL Merger, shall succeed to and possess, without further act or deed, all of
the estate, rights, privileges, powers and franchises, both public and private,
and all of the property, real, personal, and mixed, of Global Mergerco; all
debts due to Global Mergerco on whatever account shall be vested in GLOBAL; all
claims, demands, property, rights, privileges, powers, franchises and every
other interest of Global Mergerco shall be as effectively the property of GLOBAL
as they were of Global Mergerco; the title to any real estate by deed or
otherwise in Global Mergerco shall not revert or be in any way impaired by
reason of the GLOBAL Merger, but shall be vested in GLOBAL; all rights of
creditors and all liens upon any property of Global Mergerco shall be preserved
unimpaired, limited in lien to the property affected by such lien at the
Effective Date; all debts, liabilities, and duties of Global Mergerco shall
thenceforth attach to GLOBAL and may be enforced against it to the same extent
as if such debts, liabilities, and duties had been incurred or contracted by it;
and GLOBAL shall indemnify and hold harmless IMSCO and the officers and
directors of Global Mergerco against all such debts, liabilities, and duties,
and against all claims and demands arising out of the GLOBAL Merger.
11. TREATMENT OF SHARES OF CONSTITUENT CORPORATIONS IN THE TURFCLUB
MERGER. The terms and conditions of the TURFCLUB Merger, the mode of carrying
the same into effect, and the manner and basis of converting the securities of
each of the applicable Constituent Corporations are as follows:
11.1 TREATMENT OF TURFCLUB SHARES. The Outstanding TURFCLUB
Shares shall be converted by virtue of the TURFCLUB Merger, and at the Effective
Date, into 194,416 IMSCO Series B Preferred Shares, on the basis of ..0111296
IMSCO Series B Preferred Shares for each Outstanding TURFCLUB Share, without any
action on the part of the holders thereof. After the Effective Date, each holder
of Outstanding TURFCLUB Shares prior to the TURFCLUB Merger shall be entitled
upon surrender to receive from IMSCO a certificate representing the number of
IMSCO Series B Preferred Shares to which such holder shall be entitled, which
certificate shall contain any appropriate restrictive legend concerning the
resale of such IMSCO Series B Preferred Shares. Until so surrendered, any
outstanding certificates or other documentation which, prior to the Effective
Date, represented Outstanding TURFCLUB Shares, shall be deemed for all corporate
purposes to evidence ownership of IMSCO Series B Preferred Shares into which
such Outstanding TURFCLUB Shares shall have been converted. Upon such surrender,
Outstanding TURFCLUB Shares so surrendered shall no longer be outstanding and
shall automatically be canceled and retired, and shall cease to exist. Upon
conversion, any fractional IMSCO Preferred Shares resulting from conversion
shall be preserved and shall not be rounded or cashed out.
11.2 TREATMENT OF TURFCLUB OPTIONS. Up to 2,600,000 currently
existing options to purchase TURFCLUB Common Shares shall be replaced at closing
by options to purchase IMSCO Series B Preferred Shares on the same basis of
conversion as set forth in Section 11.1 above.
11.3 EXISTENCE OF TURFCLUB MERGERCO. The separate existence
and corporate organization of Turfclub Mergerco, except insofar as it may be
continued by statute, shall cease on Effective Date and TURFCLUB shall become a
wholly owned subsidiary of XXXXX.
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00. RIGHTS AND LIABILITIES OF SURVIVING CORPORATION IN TURFCLUB MERGER.
(a) On and after the Effective Date, TURFCLUB, as the surviving corporation of
the TURFCLUB Merger, shall succeed to and possess, without further act or deed,
all of the estate, rights, privileges, powers and franchises, both public and
private, and all of the property, real, personal, and mixed, of Turfclub
Mergerco; all debts due to Turfclub Mergerco on whatever account shall be vested
in TURFCLUB; all claims, demands, property, rights, privileges, powers,
franchises and every other interest of Turfclub Mergerco shall be as effectively
the property of TURFCLUB as they were of Turfclub Mergerco; the title to any
real estate by deed or otherwise in Turfclub Mergerco shall not revert or be in
any way impaired by reason of the TURFCLUB Merger, but shall be vested in
TURFCLUB; all rights of creditors and all liens upon any property of Turfclub
Mergerco shall be preserved unimpaired, limited in lien to the property affected
by such lien at the Effective Date; all debts, liabilities, and duties of
Turfclub Mergerco shall thenceforth attach to TURFCLUB and may be enforced
against it to the same extent as if such debts, liabilities, and duties had been
incurred or contracted by it; and TURFCLUB shall indemnify and hold harmless
IMSCO and the officers and directors of Turfclub Mergerco against all such
debts, liabilities, and duties, and against all claims and demands arising out
of the TURFCLUB Merger.
13. FURTHER ASSURANCES OF TITLE. As and when requested by GLOBAL, or by
any of its successors or assigns, Global Mergerco shall execute and deliver, or
cause to be executed and delivered, all such deeds and instruments and will take
or cause to be taken all such further action as GLOBAL may deem necessary or
desirable in order to vest in and confirm to GLOBAL title to and possession of
the property acquired by GLOBAL by reason or as a result of the GLOBAL Merger,
and otherwise to carry out the intent and purposes hereof, and the officers and
directors of GLOBAL and IMSCO are fully authorized in the name of GLOBAL or
IMSCO or otherwise to take any and all such action. As and when requested by
TURFCLUB, or by any of its successors or assigns, Turfclub Mergerco shall
execute and deliver, or cause to be executed and delivered, all such deeds and
instruments and will take or cause to be taken all such further action as
TURFCLUB may deem necessary or desirable in order to vest in and confirm to
TURFCLUB title to and possession of the property acquired by TURFCLUB by reason
or as a result of the TURFCLUB Merger, and otherwise to carry out the intent and
purposes hereof, and the officers and directors of TURFCLUB and IMSCO are fully
authorized in the name of TURFCLUB or IMSCO or otherwise to take any and all
such action.
14. CONDITIONS OF OBLIGATIONS OF GLOBAL MERGERCO, TURFCLUB MERGERCO AND
IMSCO. The obligation of Global Mergerco, Turfclub Mergerco and IMSCO to
consummate the Mergers is subject to the following conditions prior to the
Effective Date:
14.1 COMPLIANCE WITH REPRESENTATIONS AND WARRANTIES. That
GLOBAL and TURFCLUB shall each be in compliance with their respective
representations, warranties and covenants contained herein, and that Global
Mergerco, Turfclub Mergerco and IMSCO shall each receive from GLOBAL and
TURFCLUB certificates to such effect from the respective Presidents of GLOBAL
and TURFCLUB as of the Effective Date.
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14.2 LOSSES. Neither GLOBAL nor TURCLUB shall have suffered a
loss on account of fire, flood, accident, or other calamity of such a character
as to interfere materially with the continuous operation of its respective
business or materially affect adversely its respective condition, financial or
otherwise, regardless of whether or not such loss shall have been insured.
14.3 NO MATERIAL TRANSACTIONS. That no material transactions
shall have been entered into by GLOBAL or TURFCLUB other than transactions in
the ordinary course of business between March 31, 2001 and the Effective Date,
other than as referred to in this Agreement or in the schedules annexed, except
with the prior written consent of IMSCO.
14.4 NO MATERIAL ADVERSE CHANGE. Except as disclosed in this
Agreement or in the schedules annexed hereto, that no material adverse change in
the aggregate shall have occurred in the financial condition of GLOBAL or
TURFCLUB since March 31, 2001.
14.5 DISPOSITION OF ASSETS. That none of the properties or
assets of GLOBAL or TURFCLUB shall have been sold or otherwise disposed of other
than in the ordinary course of business in accordance with past practice during
such period, except with the prior written consent of IMSCO.
14.6 CONDITIONS. That GLOBAL and TURFCLUB shall each have
performed and complied with the provisions and conditions of this Agreement on
its respective part to be performed and complied with.
14.7 FILINGS AND APPROVALS. That all applicable filings and
regulatory approvals required to be made or obtained by GLOBAL or TURFCLUB have
been made or obtained.
14.8 BOARD OF SHAREHOLDER APPROVALS. That this Agreement and
the transactions contemplated hereby shall have been approved by appropriate
corporate action of GLOBAL and TURFCLUB and that the respective Board and
shareholder votes and resolutions to that effect in form and substance
reasonably satisfactory to IMSCO and its counsel have been delivered to IMSCO.
14.9 COMPLIANCE WITH SECURITIES LAWS. That there shall have
been full compliance with the applicable securities or "blue sky" laws and
regulations of any state or other governmental body having jurisdiction over the
Mergers.
14.10 RIGHTS AND PREFERENCES OF IMSCO PREFERRED STOCK. The
Board of Directors of IMSCO shall have adopted resolutions establishing the
rights and preferences of the IMSCO Series B Preferred Shares as set forth on
the Certificate of Designations and shall have filed the Certificate of
Designations setting forth a copy of such resolutions as required by Section
151(g) of the Delaware General Corporation Law and such filing shall be
effective.
14.11 PRIVATE PLACEMENT. That the IMSCO Private Placement
shall have been consummated or shall be consummated contemporaneous with the
Merger.
14.12 OPINIONS OF COUNSEL. That IMSCO shall have received
opinions from counsel to GLOBAL and counsel to TURFCLUB, in customary form and
in form and substance reasonably satisfactory to IMSCO's counsel.
25
14.13 INVESTMENT REPRESENTATION. That GLOBAL and TURFCLUB have
obtained an instrument, in the form annexed hereto as EXHIBIT D, from not less
than a majority of their respective shareholders including a representation that
the IMSCO Series B Preferred Shares being acquired by such shareholders as a
result of the transactions contemplated by this Agreement are being issued to
such shareholders for investment purposes only and not with a view to, or sale
in connection with, any distribution within the meaning of the Securities Act.
Compliance with the provisions of Section 14 shall be evidenced by the
respective certificates of the Presidents and Secretaries of GLOBAL and
TURFCLUB.
15. CONDITIONS OF OBLIGATIONS OF GLOBAL. The obligations of GLOBAL to
consummate the GLOBAL Merger are subject to the following conditions prior to
the Effective Date:
15.1 COMPLIANCE WITH REPRESENTATIONS AND WARRANTIES. That
Global Mergerco, Turfclub Mergerco, IMSCO and TURFCLUB are in compliance with
their respective representations, warranties and covenants contained herein, and
that GLOBAL shall receive from each of Global Mergerco, Turfclub Mergerco, IMSCO
and TURFCLUB a certificate to such effect from their respective Presidents as of
the Effective Date.
15.2 LOSSES. That Global Mergerco, Turfclub Mergerco, IMSCO
and TURFCLUB shall not have suffered any loss on account of fire, flood,
accident, or other calamity of such a character as to interfere materially with
the continuous operation of their respective businesses or materially affect
adversely their respective condition, financial or otherwise, regardless of
whether or not such loss shall have been insured.
15.3 NO MATERIAL TRANSACTIONS. That no material transactions
shall have been entered into by Global Mergerco, Turfclub Mergerco, IMSCO or
TURFCLUB other than transactions in the ordinary course of business since March
31, 2001, other than as referred to in this Agreement or in connection herewith,
except with the prior written consent of GLOBAL.
15.4 NO MATERIAL ADVERSE CHANGE. That no material adverse
change shall have occurred in the financial condition of Global Mergerco,
Turfclub Mergerco, IMSCO or TURFCLUB since March 31, 2001 other than as referred
to in this Agreement.
15.5 DISPOSAL OF ASSETS. That none of the properties or assets
of Global Mergerco, Turfclub Mergerco, IMSCO or TURFCLUB shall have been sold or
otherwise disposed of other than in the ordinary course of business March 31,
2001, except with the written consent of GLOBAL.
15.6 COMPLIANCE WITH CONDITIONS. That Global Mergerco,
Turfclub Mergerco, IMSCO and TURCLUB shall each have performed and complied with
the provisions and conditions of this Agreement on its part to be performed and
complied with.
15.7 FILINGS AND APPROVALS. That all applicable filings and
regulatory approvals required to be made or obtained by IMSCO or TURFCLUB have
been made or obtained.
26
15.8 RIGHTS AND PREFERENCES OF IMSCO PREFERRED STOCK. The
Board of Directors of IMSCO shall have adopted resolutions establishing the
rights and preferences of the IMSCO Preferred Stock as set forth on the
Certificate of Designations and shall have filed the Certificate of Designations
setting forth a copy of such resolutions as required by Section 151(g) of the
Delaware General Corporation Law and such filing shall have become effective.
15.9 BOARD RESIGNATIONS. That IMSCO shall have held a meeting
of its Board of Directors at which meeting all of its directors shall have
resigned seriatim and the persons designated by GLOBAL and TURFCLUB shall have
been elected as directors of IMSCO, all subject to the consummation of the
Mergers.
15.10 PRIVATE PLACEMENT. That the IMSCO Private Placement
shall have been consummated or shall be consummated contemporaneous with the
Merger.
15.11 OPINIONS. That GLOBAL shall have received opinions from
counsel to Global Mergerco, Turfclub Mergerco, IMSCO and TURFCLUB in customary
form and in form and substance reasonably satisfactory to GLOBAL's counsel.
Compliance with the provisions of this Section 15 shall be evidenced by
the certificates of the respective Presidents and Secretaries of each of Global
Mergerco, Turfclub Mergerco, IMSCO and TURFCLUB to be delivered at Closing.
16. CONDITIONS OF OBLIGATIONS OF TURFCLUB. The obligations of TURFCLUB
to consummate the TURFCLUB Merger are subject to the following conditions prior
to the Effective Date:
16.1 COMPLIANCE WITH REPRESENTATIONS AND WARRANTIES. That
Global Mergerco, Turfclub Mergerco, IMSCO and GLOBAL are in compliance with
their respective representations, warranties and covenants contained herein, and
that TURFCLUB shall receive from each of Global Mergerco, Turfclub Mergerco,
IMSCO and GLOBAL a certificate to such effect from their respective Presidents
as of the Effective Date.
16.2 LOSSES. That Global Mergerco, Turfclub Mergerco, IMSCO
and GLOBAL shall not have suffered any loss on account of fire, flood, accident,
or other calamity of such a character as to interfere materially with the
continuous operation of their respective businesses or materially affect
adversely their respective condition, financial or otherwise, regardless of
whether or not such loss shall have been insured.
16.3 NO MATERIAL TRANSACTIONS. That no material transactions
shall have been entered into by Global Mergerco, Turfclub Mergerco, IMSCO or
GLOBAL other than transactions in the ordinary course of business since March
31, 2001, other than as referred to in this Agreement, except with the prior
written consent of TURFCLUB.
16.4 NO MATERIAL ADVERSE CHANGE. That no material adverse
change shall have occurred in the financial condition of Global Mergerco,
Turfclub Mergerco, IMSCO or GLOBAL since March 31, 2001 other than as referred
to in this Agreement.
27
16.5 DISPOSAL OF ASSETS. That none of the properties or assets
of Global Mergerco, Turfclub Mergerco, IMSCO or GLOBAL shall have been sold or
otherwise disposed of other than in the ordinary course of business March 31,
2001, except with the written consent of TURFCLUB.
16.6 COMPLIANCE WITH CONDITIONS. That Global Mergerco,
Turfclub Mergerco, IMSCO and GLOBAL shall each have performed and complied with
the provisions and conditions of this Agreement on its part to be performed and
complied with.
16.7 FILINGS AND APPROVALS. That all applicable filings and
regulatory approvals required to be made or obtained by IMSCO or GLOBAL have
been made or obtained.
16.8 RIGHTS AND PREFERENCES OF IMSCO PREFERRED STOCK. The
Board of Directors of IMSCO shall have adopted resolutions establishing the
rights and preferences of the IMSCO Preferred Stock as set forth on the
Certificate of Designations and shall have filed the Certificate of Designations
setting forth a copy of such resolutions as required by Section 151(g) of the
Delaware General Corporation Law and such filing shall be effective.
16.9 BOARD RESIGNATIONS. That IMSCO shall have held a meeting
of its Board of Directors at which meeting all of its directors shall have
resigned seriatim and the persons designated by GLOBAL and TURFCLUB shall have
been elected as directors of IMSCO, all subject to the consummation of the
Mergers.
16.10 PRIVATE PLACEMENT. That the IMSCO Private Placement
shall have been consummated or shall be consummated contemporaneous with the
Mergers.
16.11 OPINIONS. That TURFCLUB shall have received opinions
from counsel to Global Mergerco, Turfclub Mergerco, IMSCO and GLOBAL in
customary form and in form and substance reasonably satisfactory to TURFCLUB's
counsel.
Compliance with the provisions of this Section 16 shall be evidenced by
the certificates of the respective Presidents and Secretaries of each of Global
Mergerco, Turfclub Mergerco, IMSCO and GLOBAL to be delivered at Closing.
17. POST CLOSING COVENANTS.
17.1 AMENDMENT OF IMSCO CERTIFICATE OF INCORPORATION. Promptly
following the Closing, IMSCO shall prepare and file preliminary proxy materials
to be sent to the shareholders of IMSCO and call a meeting of the shareholders
of IMSCO (the "Special Meeting") to be held not later than 60 days after the
Closing, for the purpose of amending IMSCO's Certificate of Incorporation to
increase its authorized common stock to 50,000,000 shares, to effect a
one-for-four reverse stock split and to change its corporate name to name
approved by Xxxxxx and Xxxxxxxxxx. IMSCO shall use its best efforts to promptly
and substantively respond to any Commission comments to such preliminary proxy
materials and to file with the Commission and mail to IMSCO shareholders
definitive proxy materials as soon as practicable thereafter.
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17.2 APPRAISAL RIGHTS AND DISSENTERS' RIGHTS. Following the
Closing, GLOBAL shall comply with the appraisal rights provisions of the
Delaware General Corporation Law and TURFCLUB shall comply with the dissenters'
rights provisions of the California General Corporation Law.
17.3 REGISTRATION RIGHTS. Following the Closing, IMSCO shall
provide piggyback registration rights covering 500,000 shares of IMSCO Common
Stock to be acquired by Xxxx Xxxxxxxx upon conversion of IMSCO Series B
Preferred Shares acquired by Xxxx Xxxxxxxx pursuant to the TURFCLUB Merger and
2,400 of the shares of IMSCO Common Stock to be acquired by Xxxx Xxxxxxxxx as a
finder's fee in connection with the Merger.
18. COVENANTS OF PRINCIPAL SHAREHOLDERS OF GLOBAL AND TURFCLUB.
18.1 AMENDMENT OF IMSCO CERTIFICATE OF INCORPORATION. Xxxxxx,
Root and Xxxxxxxxxx each agree that they will vote all shares of IMSCO capital
stock beneficially owned or controlled by them in favor of the amendment of
IMSCO's Certificate of Incorporation to increase its authorized common stock to
50,000,000 shares, to effect a one-for-four reverse stock split and to change
its corporate name to a name approved by Xxxxxx and Xxxxxxxxxx.
18.2 ELECTION OF DIRECTOR. Xxxxxx, Root and Xxxxxxxxxx each
agree that, for a period of two years following the Closing, they will vote all
shares of IMSCO capital stock beneficially owned or controlled by them in favor
of the election a person chosen by Xxxxxxx X. Xxxxxxx, and reasonably acceptable
to the IMSCO Board of Directors, as a member of the Board of Directors of IMSCO.
The person initially chosen by Xxxxxxx X. Xxxxxxx to be elected as a member of
the Board of Directors of IMSCO, and who is acceptable to the IMSCO Board of
Directors, is Xxxxx X. Xxxxxxx.
18.3 NO REGISTRATION FOR PRINCIPAL SHAREHOLDERS. Xxxxxx, Root
and Xxxxxxxxxx each agree that, for a period of one year following the Closing,
they will not register, have registered on their behalf or seek registration
under the Securities Act of 1933, as amended, of the IMSCO Common Stock or other
IMSCO capital stock beneficially owned or controlled by them or vote in favor of
IMSCO filing a registration statement covering any shares of IMSCO Common Stock
or other IMSCO capital stock beneficially owned or controlled by them.
19. MANAGEMENT REGISTRATION RIGHTS. If applicable regulatory
authorities shall determine that any IMSCO Shares (the "IMSCO Management
Shares") beneficially owned by Xxxxxxx X. Xxxxxxx, hereinafter referred to as
"IMSCO Management," may not be sold in the public market pursuant to Rule 144
under the Securities Act even after applicable holding periods, such member of
IMSCO Management shall receive one demand registration right. Additionally, if
after the Effective Date IMSCO shall determine to proceed with the preparation
and filing of a registration statement pursuant to the Securities Act, in
connection with the proposed offer and sale of any of its securities by it or
any of its security holders (other than a registration statement on Form X-0,
X-0 or other similar limited purpose form), IMSCO will give written notice of
its determination to the IMSCO Management. Upon receipt of a written request
29
from the IMSCO Management within thirty (30) days after receipt of any such
notice, IMSCO will, except as herein provided, cause all of the IMSCO Management
Shares to be included in such registration statement, all to the extent required
to permit the sale or other disposition by IMSCO Management of the IMSCO
Management Shares. If any registration pursuant hereto shall be underwritten in
whole or in part, IMSCO may require that the IMSCO Management Shares requested
for inclusion hereunder be included in the underwriting on the same terms and
conditions as the securities otherwise being sold through the underwriters. In
the event the IMSCO Management Shares requested for inclusion pursuant hereto,
together with any other shares would, in the good faith judgment of the managing
underwriter of such public offering, reduce the number of shares to be offered
by IMSCO or interfere with the successful marketing of the securities offered by
IMSCO, IMSCO will include in such registration the number of IMSCO Management
Shares which is pro rata, based on the number of securities which in the opinion
of such underwriters can be sold and on the number of securities which all
holders request be included in the registration, provided that any shares of
IMSCO Common Stock proposed to be included in such registration statement that
are owned by the then-directors or officers of IMSCO shall be excluded on a pari
passu basis with the IMSCO Management Shares. The obligation of IMSCO hereunder
shall be unlimited as to the number of registration statements to which it
applies. Costs and expenses with respect to any registration hereunder shall be
borne by IMSCO. Notwithstanding that the IMSCO Management Shares will be
registered and immediately available for sale, any IMSCO Management Shares which
are not being sold through underwriters of an IMSCO public offering shall be
sold only in amounts which would be permitted by the volume limitations of Rule
144 under the Securities Act.
20. ABANDONMENT. This Agreement and the Merger may be abandoned (a) by
any of the Companies, acting by its Board of Directors, at any time prior to its
adoption by the shareholders of such Company, as provided by law, (b) by any of
the Companies, acting by its Board of Directors by written notice to the other
parties hereto, at any time in the event of the failure of any condition in
favor of such entity as to which the consummation of the Merger is subject, or
(c) by the consent of all the Companies, acting each by its Board of Directors,
at any time after such adoption by such shareholders and prior to the Effective
Date. In the event of abandonment of this Agreement, the same shall become
wholly void and of no effect, and there shall be no further liability or
obligation hereunder on the part of any of the Companies, their respective
Boards of Directors or any other party to this Agreement.
21. CLOSING OR TERMINATION. In the event the Closing of this Agreement
shall not take place by July 31, 2001, due to failure of any condition of
closing required herein, then any party shall have the right to terminate this
Agreement, in which event no party shall have any further right or obligation as
against any other. If GLOBAL or TURFCLUB shall fail to close for any reason
other than failure of any condition of closing required herein to be performed
on the part of IMSCO, then GLOBAL and TURFCLUB shall each pay to IMSCO one-half
of the reasonable costs for legal fees incurred in connection with the proposed
Merger and IMSCO Private Placement, such sum not to exceed $30,000.
22. DELIVERY OF CORPORATE PROCEEDINGS OF IMSCO, GLOBAL MERGERCO AND
TURFCLUB MERGERCO. At the Closing, IMSCO, Global Mergerco and Turfclub Mergerco
shall deliver to counsel for GLOBAL and TURFCLUB the originals of all of the
corporate proceedings of IMSCO, Global Mergerco and Turfclub Mergerco, duly
certified by their respective Secretaries, relating to this Agreement.
30
23. DELIVERY OF CORPORATE PROCEEDINGS OF GLOBAL AND TURFCLUB. At the
Closing, GLOBAL and TURFCLUB shall each deliver to counsel for IMSCO, Global
Mergerco and Turfclub Mergerco the originals of all of the corporate proceedings
of GLOBAL and TURFCLUB, duly certified by their respective Secretaries, relating
to this Agreement.
24. LIMITATION OF LIABILITY. The representations and warranties made by
any party to this Agreement are intended to be relied upon only by the other
parties to this Agreement and by no other person. Nothing contained in this
Agreement shall be deemed to confer upon any person not a party to this
Agreement any third party beneficiary rights or any other rights of any nature
whatsoever.
25. FURTHER INSTRUMENTS AND ACTIONS. Each party shall deliver such
further instruments and take such further action as may be reasonably requested
by any other in order to carry out the intent and purposes of this Agreement.
26. GOVERNING LAW. This Agreement is being delivered and is intended to
be performed in the State of Delaware, and shall be construed and enforced in
accordance with the laws of such State without regard to conflicts of laws
thereof.
27. NOTICES. All notices or other communications to be sent by any
party to this Agreement to any other party to this Agreement shall be sent by
certified mail, nationwide overnight delivery service or by personal delivery or
nationwide overnight courier to the addresses hereinbefore designated, or such
other addresses as may hereafter be designated in writing by a party.
28. BINDING AGREEMENT. This Agreement represents the entire agreement
among the parties hereto with respect to the matters described herein and is
binding upon and shall inure to the benefit of the parties hereto and their
legal representatives, successors and permitted assigns. This Agreement may not
be assigned and, except as stated herein, may not be altered or amended except
in writing executed by the party to be charged.
29. COUNTERPARTS. This Agreement may be executed in counterparts, all
of which, when taken together, shall constitute the entire Agreement.
30. SEVERABILITY. The provisions of this Agreement shall be severable,
so that the unenforceability, validity or legality of any one provision shall
not affect the enforceability, validity or legality of the remaining provisions
hereof.
31. JOINT DRAFTING. This Agreement shall be deemed to have been drafted
jointly by the parties hereto, and no inference or interpretation against any
party shall be made solely by virtue of such party allegedly having been the
draftsperson of this Agreement.
32. RELIANCE ON CERTIFICATES. In rendering any opinion referred to
herein, counsel for the parties hereto may rely, as to any factual matters
involved in their respective opinions, on certificates of public officials and
of corporate and company officers, and on such other evidence as such counsel
may reasonably deem appropriate and, as to the matters governed by the laws of
jurisdictions other than the United States or the States of Delaware and
31
California, an opinion of local counsel in such other jurisdiction(s), which
counsel shall be satisfactory to the other parties in the exercise of their
reasonable discretion.
33. PUBLIC ANNOUNCEMENTS. All parties hereto agree that any public
announcement, press release or other public disclosure of the signing of this
Agreement shall be made jointly and only after all parties hereto have reviewed
and approved the language and timing of such disclosure, except as such
disclosure may be required pursuant to any legal obligation or order of any
court having proper jurisdiction over any of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have made and executed this
Agreement as of the day and year first above written.
IMSCO TECHNOLOGIES INC.,
a Delaware corporation
By: /S/ XXXXXXX X. XXXXXXX
-------------------------------------------
Xxxxxxx X. Xxxxxxx, Chairman and Chief
Executive Officer
GLOBAL ACQUISITION CORP.,
a Delaware corporation
By: /S/ XXXXXXX X. XXXXXXX
-------------------------------------------
Xxxxxxx X. Xxxxxxx, Chief Executive
Officer
TURFCLUB ACQUISITION CORP.,
a California corporation
By: /S/XXXXXXX X. XXXXXXX
-------------------------------------------
Xxxxxxx X. Xxxxxxx, Chief Executive
Officer
GLOBAL SPORTS & ENTERTAINMENT, INC.,
a Delaware corporation
By: /S/ XXXXXXX X. XXXXXX
-------------------------------------------
Xxxxxxx X. Xxxxxx, President and Chief
Operating Officer
XXXXXXXX.XXX, INC., a California corporation
By: /S/ XXXXXX X. XXXXXXXXXX
-------------------------------------------
Xxxxxx X. Xxxxxxxxxx, Chief Executive
Officer
32
As to the provisions of Section 18 of the Agreement and Plan of Reorganization:
/S/ XXXXXXX X. XXXXXX
---------------------------------------
XXXXXXX X. XXXXXX
/S/ XXXXX XXXXX ROOT
---------------------------------------
XXXXX XXXXX ROOT
/S/ XXXXXX X. XXXXXXXXXX
---------------------------------------
XXXXXX X. XXXXXXXXXX
33
Schedule A GLOBAL Schedule of Exceptions
Schedule B TURFCLUB Schedule of Exceptions
Schedule C IMSCO Schedule of Exceptions
Exhibit A GLOBAL Certificate of Merger
Exhibit B TURFCLUB Agreement of Merger
Exhibit C Certificate of Designations
Exhibit D Investment Representation
34
