EXHIBIT 10(a)
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MERGER AGREEMENT
BY, BETWEEN AND AMONG
INET COMMERCE CONDUIT, INC.,
SBS ACQUISITION, INC.
AND
SBS INTERACTIVE, INC.
THIS MERGER AGREEMENT ("Agreement") is made this 22nd day of July, 2002, by
and between Inet Commerce Conduit, Inc. ("INET"), a Florida corporation, SBS
Acquisition, Inc. ("Acquisition"), a Nevada corporation and SBS Interactive,
Inc. ("SBS"), a Nevada corporation.
Subject to the provisions of this Agreement, INET will acquire SBS in a
merger of SBS with Acquisition, a subsidiary of INET and a Nevada corporation
formed by INET for purposes of this transaction, pursuant to which SBS's common
shareholders other than INET will receive INET Common Stock in the amounts set
out in this Agreement at a Closing.
INET, Acquisition and SBS agree as follows:
ARTICLE I
MERGER
1.1 INET, for the purposes of this transaction, has formed a Nevada
business corporation as a wholly-owned direct subsidiary of INET with the name
SBS Acquisition, Inc. ("Acquisition"). Acquisition shall be merged with and into
SBS ("Merger") pursuant to the laws of the State of Nevada at an Effective Time
determined under Section 1.2 below pursuant to the Articles and Plan of Merger
("Plan of Merger") attached to this Agreement as Exhibit 1, and incorporated
herein by this reference. At the Effective Time (hereinafter defined) of the
merger, the separate existence of Acquisition shall cease, Acquisition shall be
merged with and into SBS (which will be the surviving corporation) and SBS will
become a wholly owned subsidiary of INET.
1.2 The transactions contemplated by this Agreement shall be completed at a
closing ("Closing") on a closing date ("Closing Date") which shall be as soon as
practicable after the date on which all necessary orders, consents, and
approvals of the transactions contemplated by this Agreement shall have been
issued. However, the Closing Date may be such other later date as INET and SBS
may hereafter agree upon in writing.
1.3 On the Closing Date, the Plan of Merger, executed and verified in
accordance with law, shall be delivered for filing to the Secretary of State of
the State of Nevada and the Corporation Commission of the State of Nevada. The
Merger shall become effective in accordance with the laws of the States of
Nevada and Florida upon issuance of a Certificate of Merger by the Nevada
Corporation Commission pursuant to the laws of the State of Nevada. The time
when the Merger shall become effective, as defined in this Section 1.3, is
referred to as the "Effective Time."
1.4 On the Closing Date, all of the documents to be furnished by INET, SBS
and Acquisition, including the documents to be furnished pursuant to Articles 5
and 6 of the Agreement and Exhibit 1 thereto shall be duly executed and
exchanged by the parties.
1.5 At the Effective Time, each of the shares of SBS Common Stock, $.001
par value ("SBS Common Stock"), outstanding immediately prior to the Effective
Time, other than shares as to which dissenters' rights have been perfected in
accordance with Nevada law, shall be extinguished and cease to exist and shall
be converted into the right to receive 1 share of fully paid and non assessable
INET Common Stock, $.001 par value, for each 6.5 shares of SBS held ("Conversion
Price"). At the Effective Time: the shares of SBS Common Stock as to which
dissenters' rights have been perfected under Nevada law, shall be extinguished
and cease to exist, and the holders thereof shall then hold such rights with
respect thereto as provided by Nevada law. SBS shall issue and deliver to INET,
the sole shareholder of Acquisition, 1,000 shares of SBS's Common Stock which
shall then become the only issued and outstanding Capital Stock of SBS; and all
of the outstanding shares of Capital Stock of Acquisition shall be extinguished
and cease to exist.
1.6 At and after the Effective Time, each holder of a certificate or
certificates representing shares of SBS Common Stock except INET, upon
presentation and surrender of such certificate or certificates to INET shall be
entitled to receive the Conversion Price from INET, except that holders of those
shares as to which dissenters' rights shall have been asserted and perfected
pursuant to Nevada law shall not be converted into the Conversion Price, but
shall represent only such dissenters' rights and shares held by INET which shall
remain outstanding. Upon such representation, surrender, and exchange, as
provided in this Section 1.6, certificates representing shares of SBS Common
Stock previously held shall be delivered to INET. Until so presented and
surrendered, each certificate or certificates which represented issued and
outstanding shares of SBS Common Stock at the Effective Time shall be deemed for
all purposes to evidence the right to receive the Conversion Price as determined
in accordance with Section 3.1 of the Plan of Merger. If certificates
representing shares of SBS Common Stock have been lost, stolen, mutilated, or
destroyed, INET shall require the submission of an indemnity agreement and may
require the submission of a bond in lieu of such certificate. At the Effective
Time, SBS's Stock Transfer Books shall be closed and no transfer of SBS's Common
Stock outstanding prior to the effective time shall thereafter be made.
1.7 Each party to this Agreement shall take all such action as may be
reasonably necessary and appropriate and shall use its best efforts in order to
consummate the Merger as promptly as practicable.
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1.8 If at any time after the Effective Time any further action is necessary
or desirable to carry out the purposes of this Agreement and to vest unto SBS
the full right, title, and possession of all the rights, privileges, immunities,
and franchises of either SBS or Acquisition, the officers and directors of such
corporations are fully authorized, in the names of their respective corporations
or otherwise, to take, and shall take, all such action and, in doing so, shall
be indemnified by SBS and INET to the same extent as they would have been
indemnified by SBS and Acquisition had such action been taken prior to the
Effective Time.
1.9 This Agreement and the Plan of Merger are approved and adopted by the
respective parties as a "Plan of Reorganization" under the provisions of
Sections 368(a)(1)(A) and 368(a)(2)(E) of the Internal Revenue Code of 1954, as
amended.
1.10 At the Effective Time of the Merger, the provisions of Article II of
Exhibit 1 to the Merger Agreement shall apply to the Articles of Incorporation,
By-Laws and the composition of the Board of Directors and the Officers of SBS.
1.11 At the Effective Time of the Merger, the membership of the Board of
Directors of INET shall consist of Todd Gotlieb and Barry Alter and they shall
so serve until their respective successors are elected and qualified in
accordance with the law and the By-Laws of INET; and the membership of the Board
of Directors of SBS shall be Todd Gotlieb and Barry Alter and they shall so
serve until their respective successors are elected and qualified in accordance
with the law and the By-Laws of SBS.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SBS
2.1 No representations or warranties are made by any director, officer,
employee, or shareholder of SBS as individuals, except as and to the extent
stated in this Agreement or in a separate written statement (the "SBS Disclosure
Statement"). SBS represents and warrants as of the date of this Agreement and as
of the Closing Date, as follows in this Article 2.
2.2 SBS is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Nevada, and has the corporate power and
authority to own or lease its properties and to carry on its business as it is
now being conducted. The copy of each of SBS's Articles of Incorporation and
By-Laws which have been delivered to INET is complete and accurate, and SBS's
Minute Book contains a record, which is complete and accurate in all material
respects, of all meetings and other corporate actions of its shareholders and
Board of Directors.
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2.3 As of the date hereof, SBS's authorized capital stock consists of
50,000,000 shares of common stock, $.001 par value per share of which 20,676,000
shares are issued and outstanding. All of the outstanding shares of capital
stock of SBS have been duly authorized and are validly issued, fully paid, and
non assessable and are not subject to preemptive rights. No dividends are in
default, and there are no outstanding options, agreements, contracts, calls, or
commitments of any character issued by or entered into by SBS which restrict the
transfer of SBS capital stock or require the issuance by SBS of any capital
stock.
2.4 SBS conducts all of its business directly and does not have any
ownership in any subsidiary corporation save and except High Plateau Holdings
Inc..
2.5 SBS has delivered to INET unaudited financial statements dated June 30,
2001, ("SBS Financial Statements"). The SBS Statements were and will be prepared
in accordance with generally accepted accounting principles applied on a
consistent basis throughout the periods involved (except as otherwise stated in
the SBS Statements) and present fairly or will present fairly the consolidated
financial position, of SBS as of the date and for the period indicated therein,
subject to the omission of certain footnotes.
2.6 Except as and to the extent stated in the SBS Financial Statements, and
except for those liabilities incurred in the normal course of business, SBS does
not have any material liabilities or obligations, secured or unsecured (whether
accrued, absolute, contingent, or otherwise), including any pension or profit
sharing plan costs or obligations required to conform to the provisions of the
Employees Retirement Income Security Act of 1974 ("ERISA"). ;
2.7 There are no actions, suits, proceedings, or claims (whether or not
purportedly on behalf of SBS) pending or, to the knowledge of SBS, threatened
against SBS or its properties or assets or its directors or officers, at law or
in equity, or before or by any governmental department, commission, board,
bureau, agency, or instrumentality, domestic or foreign, or before any
arbitrator of any kind; and SBS has no knowledge of any default on its part with
respect to any judgment, order, writ, injunction, decree, or award of any court,
arbitrator, or governmental department, commission, board, bureau, agency, or
instrumentality, or failure to comply with any law, regulation, or other
requirement of law, which default or failure would have a material adverse
effect on the business, operations, properties, assets, or condition (financial
or otherwise) of SBS taken as a whole.
2.8 SBS owns, free and clear of any material liens, claims, charges,
options, or other encumbrances, all of the property reflected in the SBS
Statements and all property acquired since such date.
2.9 SBS has no agreements with any labor or other organization representing
employees for collective bargaining or other labor relations purposes and has no
employment contracts with any individuals.
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2.10 SBS is in substantial compliance with all applicable laws relating to
its business or employment practices, or the ownership of its properties, and is
in substantial compliance with each applicable law, ordinance, order, decree, or
regulation of any governmental entity applicable to the conduct thereof, or the
ownership of the properties related thereto, except in each case for violations
which, either singly or in the aggregate, do not and will not have a material
adverse effect on the business, financial condition, or results of operations of
SBS taken as a whole. SBS has in effect all approvals, authorizations, consents,
licenses, clearances, and orders of and registrations with all governmental and
regulatory authorities, except in each case for failure, either singly or in the
aggregate, do not and will not have a material adverse effect on the business,
financial condition, or results of operations of SBS taken as a whole.
2.11The execution, delivery, and performance of this Agreement by SBS has
been duly authorized and approved by its Board of Directors; and subject to the
approval by SBS's shareholders, this Agreement and the consummation of the
transactions contemplated in this Agreement have been duly and validly
authorized by all necessary corporate action on the part of SBS so that this
Agreement is binding upon and enforceable against SBS in accordance with its
terms. The execution of this Agreement does not and performance of it will not
(a) violate any statute, decree, or ordinance; (b) violate the provisions of the
Articles of Incorporation or By-Laws of SBS; or (c) violate the provisions of or
place SBS in default under any agreement, indenture, mortgage, lien, lease,
contract, instrument, order, judgment, decree, ordinance, statute, or regulation
to which SBS is subject, to which any property of SBS is subject, or to which
SBS is a party.
2.12 Since June 30, 2001, there has not been any material adverse change in
the condition (financial or otherwise), properties, assets, liabilities,
business, or operations of SBS taken as a whole.
2.13 No representation or warranty by SBS in this Agreement or any
certificate delivered pursuant hereto contains any untrue statement of a
material fact or omits to state any material fact necessary to make such
representation or warranty not misleading.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF INET
3.1 No representations or warranties are made by any director, officer,
employee, or shareholder of INET or its subsidiaries as individuals, except as
and to the extent stated in this Agreement or in a separate written statement
(the "INET Disclosure Statement"). INET represents and warrants as of the date
of this Agreement and as of the Closing Date, as follows in this Article 3.
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3.2 INET is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Florida and its business does not
presently require that it be qualified to do business as a foreign corporation
in any other state. INET has the corporate power and authority to own or lease
its properties and to carry on its business as it is now being conducted and is
duly qualified to do business and holds all licenses, franchises, permits, and
other governmental authorizations required to enable it to conduct business or
own properties in every jurisdiction where the failure to do so would have a
material adverse effect on its business, properties, or ability or conduct the
business currently conducted by it. At all times prior to and on the Closing
Date and at the Effective Time, all of the shares of capital stock of
Acquisition shall be owned of record and beneficially directly by INET. The copy
of INET's Certificate of Incorporation and By-Laws, which have been delivered to
SBS, is complete and accurate, and INET's Minute Books contain a record, which
is complete and accurate in all material respects, of all meetings and other
corporate activities of its shareholders and the Board of Directors. INET has
registered its common stock under Section 12(g) of the Securities Exchange Act
of 1934, as amended ("Exchange Act") and is current in the filings with the
Securities and Exchange Commisssion ("SEC") required by such registration.
3.3 As of the Closing Date, Acquisitions will be a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada. INET will deliver to SBS, prior to or at the Closing a copy of it's
articles of Incorporation and By-Laws and it's Minute Books, which shall contain
a record, which is complete and accurate in all material respects, of all
meetings and other corporate activities of it's shareholders and Board of
Directors. Acquisition will then have an authorized capitalization of 50,000
shares of $0.01 par value Common Stock of which 5,000 shares shall be
outstanding, all held by INET. Acquisition will, as of the Closing Date, have no
material assets or liabilities.
3.4 As of the date of the Agreement, INET's authorized capital stock
consists of 50,000,000 shares of common stock ("Common Stock"), $.001 par value,
of which 7,017,200 shares are issued and outstanding. As of the date of the
Agreement, there are no subscriptions, options, warrants or other rights,
agreements or commitments obligating INET to issue, sell or transfer any shares
of it's Capital Stock. All of INET's outstanding shares of Capital Stock have
been duly authorized and validly issued, are fully paid and non-assessable, and
are not subject to statutory preemptive rights. The shares of INET Common Stock,
when delivered pursuant to this Agreement, will be duly authorized and validly
issued, fully paid, and will have sufficient authorized but non-issued shares of
Common Stock to meet its obligations under this Agreement.
3.5.INET has delivered to SBS a copy of its Annual Report on Form 10-KSB
for the year ended December 31, 2001 and its Quarterly Report on Form 10-QSB for
the quarter ended March 31, 2002 (This Form 10-KSB and this Form 10-QSB are
hereinafter "INET SEC Reports"). The audited financial statements contained in
the Form 10-KSB are for the years ended December 31, 2000 and December 31, 2001,
as well as since inception if INET in some cases. The unaudited financial
statements contained in the Form 10-QSB are for the three month periods ended
March 31, 2001 and March 31, 2002, as well as since inception of INET in some
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cases (the financial statements contained in the Form 10-KSB and Form 10-QSB are
hereinafter "INET Financial Statements"). The INET Financial Statements were
prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the periods involved and present fairly the
financial position, and results of operations, of INET as of the date and for
the periods indicated therein, subject to the omission of certain footnotes.
3.6 The execution, delivery, and performance of this Agreement by INET has
been duly authorized and approved by its Board of Directors; this Agreement and
the consummation of the transactions contemplated in this Agreement have been
duly and validly authorized by all necessary corporate action on the part of
INET and by the Closing Date will be so authorized by Acquisition; and this
Agreement is binding upon and enforceable against INET in accordance with its
terms. The execution of this Agreement does not and performance of it will not
(a) violate the provisions of or place INET or any subsidiary in default under
any agreement, indenture, mortgage, lien, lease, contract, instrument, order,
judgment, decree, ordinance, statute, or regulation to which INET or any
subsidiary is subject, to which any property of INET or any subsidiary is
subject, or to which INET or any subsidiary is a party other than, in the case
of this clause (b), such violations or defaults which would not in the aggregate
have a material adverse effect on the business, operations, properties, assets,
or condition (financial or otherwise) of INET and its subsidiaries taken as a
whole.
3.7 Since March 31, 2002 there has not been any material adverse change in
the condition (financial or otherwise), properties, assets, liabilities,
business, or operations of INET and its subsidiaries taken as a whole.
3.8 Except as and to the extent stated in the INET Financial Statements and
INET Disclosure Statement and the INET Disclosure Statement, and except for
those liabilities incurred in the normal course of INET's business, INET does
not have any material liabilities or obligations, secured or unsecured (whether
accrued, absolute, contingent, or otherwise), including any additional pension
or profit sharing plan costs or obligations required to conform to the
provisions of ERISA.
3.9 There are no actions, suits, proceedings, or claims (whether or not
purportedly on behalf of INET) pending or, to the knowledge of INET, threatened
against INET, any of its subsidiaries, or their respective properties or assets
or their directors or officers, at law or in equity, or before or by any
governmental department, commission, board, bureau, agency, or instrumentality,
domestic or foreign, or before any arbitrator of any kind; neither INET nor any
of its subsidiaries are in default with respect to any judgment, order, writ,
injunction, decree, or award of any court arbitrator, or governmental
department, commission, board, bureau, agency, or instrumentality, which default
would have a material adverse effect on the business, operations, properties,
assets, or condition (financial or otherwise) of INET and its subsidiaries taken
as a whole.
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3.10 The provisions for taxes in the INET Financial Statements are believed
by INET to be sufficient for payment of all accrued and unpaid federal, state,
county, and local taxes of INET (including any penalties or interest payable
with respect to such taxes), whether or not disputed, for the periods then ended
and for all prior fiscal periods. All returns and reports or other information
required or requested by federal, state, county, and local tax authorities have
been filed or supplied in a timely fashion, and all such information is true and
correct in all material respects except where the failure of such information to
be true and correct would not have a material adverse effect on the business,
properties, assets, or condition (financial or otherwise) of INET and its
subsidiaries taken as a whole. The Federal Income Tax Returns for the three
preceding tax years ended December 31, 2001, have been filed, and provision for
their payment has been made.
3.11As of the date of the Agreement, the only material interest INET has in
any subsidiary corporation is it's stock ownership of 100% of Acquisition's
outstanding stock.
3.12INET is in substantial compliance with all applicable laws relating to
it's business or employment practices, or the ownership of it's properties, and
is in substantial compliance with each applicable law, ordinance, order, decree,
or regulation of any governmental entity applicable to the conduct thereof, or
the ownership of the properties related thereto, except in each case for
violations which, either singly or in the aggregate, do not and will not have a
material adverse effect on the business, financial condition, or results of
operations of INET taken as a whole. In effect all approvals, authorizations,
consents, licenses, clearances, and orders of and registrations with all
governmental and regulatory authorities, except in each case for failures which,
either single or in the aggregate, do not and will not have a material adverse
effect on the business, financial condition, or results of operations of INET
and its subsidiaries taken as a whole.
3.13No representation or warranty by INET in this Agreement, the INET
Disclosure Statement, or any certificate delivered pursuant hereto contains any
untrue statement of material fact or omits to state any material fact necessary
to make such representation or warranty not misleading.
ARTICLE 4
CLOSING PREPARATIONS
4.1 INET shall, as promptly as practicable after the date of the Agreement,
make available to SBS and it's shareholders all the material information about
INET necessary to enable SBS and it's shareholders make an informed investment
decision as to the acquisitions of INET Common Stock to be issued pursuant to
the Agreement. In addition to it's corporate and financial records and the other
written material to be delivered pursuant to the provisions of this paragraph,
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INET shall make available to SBS and it's shareholders, members of INET's
management and it's legal and accounting advisors to any questions SBS and/or
it's shareholders may have concerning INET and it's Common Stock.
4.2 It is understood and agreed by the parties that:
(a) the INET Common Stock to be issued to the present stockholders of
SBS will constitute "restricted securities" as that term is
defined under the Securities Act of 1933 ("Act")
(b) the INET Common Stock being so issued is being offered and sold
in reliance upon the exemption from the registration requirements
of Section 5 of the Act set out in Section 4(2) of the Act as a
transaction not involving any public offerings
(c) the INET Common Stock is being acquired solely for investment and
not for the purpose of resale or other distribution
(d) no sale or transfer of the INET Common Stock being issued
hereunder may be made unless INET has been provided with an
opinion of counsel satisfactorily to INET that the purported sale
or transfer can be made without occasioning a violation of the
registration requirements of the federal and any applicable state
securities law.
4.3 SBS agrees that the stock certificates to be issued representing the
INET Common Stock shall bear a legend substantially as follows:
"The Shares represented by this Certificate have not been registered
under the Securities Act of 1933 (the "Act") or the securities laws of
any state and such shares may not be sold or transferred except upon
registration under such Act and applicable state laws or upon delivery
of an opinion of counsel acceptable to the Corporation that
registration is not required for such sale or transfer."
4.4 Prior to the closing INET shall take all corporate action necessary to
authorize and direct it's officers to carry out and complete the actions
necessary on the part of INET to complete the transactions provided for in the
Agreement.
4.5 Prior to the Closing, INET shall take all action necessary to cause
Acquisition's Board of Directors and shareholders to authorize and approve the
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Merger and to take any other corporate action necessary on the part of
Acquisitions to complete such Merger and perform the transactions contemplated
thereby.
4.6 SBS and INET shall promptly provide each other information as to any
significant developments in the performance of this Agreement and shall promptly
notify the other if it discovers that any of its representations and warranties
contained in this Agreement or in any document delivered in connection with this
Agreement was not true and correct in all material respects or became untrue or
incorrect in any material respect.
4.7 SBS agrees that between the date of this Agreement and the Closing
Date, unless the written consent of INET is first obtained:
(a) SBS will not encumber any asset, incur any long-term
indebtedness, enter into any transaction, or make any commitment
material to SBS, other than in the ordinary course of business;
(b) SBS shall operate its business in only the ordinary course
consistent with past practice;
(c) SBS shall not change any accounting policy;
(d) Except as contemplated by this Agreement, SBS shall not
(1) enter into or institute any material employment contract or
any deferred compensation, non-competition, bonus,
profit-sharing, pension, thrift, medical, or other personal
insurance or incentive plan or any other similar plan or
material similar arrangement for any individual; or
(2) grant any material increase in the salary or employee
benefits of any officer, employee, or agent except in the
ordinary course of business and consistent with prior
practice;
(e) SBS will not amend its Articles of Incorporation or By-Laws,
merge or consolidate, with any other business, sell or lease all
or substantially all of its assets or business, acquire all or
substantially all of the capital stock or the business or assets
of any other person, or waive or surrender any authorizations or
licenses to conduct business it presently holds;
(f) SBS will not declare, set aside, or pay any dividend or other
distribution in respect of its capital stock;
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(g) SBS will not declare any dividend payable in shares of its
capital stock, split or combine or reclassify its outstanding
shares of capital stock, make any changes in its authorized,
issued, or outstanding capital stock, acquire any stock for its
Treasury, grant any option to purchase its Common Stock or enter
into any other agreement for the sale of its capital stock, adopt
any stock option plan to increase the number of shares of capital
stock subject to any grant, or issue any securities convertible
into shares of its capital stock;
(h) SBS will use reasonable efforts to retain for the benefit of INET
the continuing services of the present officers and employees of
SBS, to preserve the good will of customers and others having
business relations with SBS, to preserve the benefits of all
contractual relationships with others, to keep in force to at
least their present limits all policies of insurance;
(i) SBS will not enter into any agreement to take any of the actions
restricted in this Section 4;
4.10 INET and SBS shall use their best efforts to cause the Closing Date
and Effective Time under this Agreement to occur on or before March 31, 1995.
ARTICLE 5
CONDITIONS TO INET'S OBLIGATION TO CLOSE
5.1 The obligations of INET to consummate this Agreement are subject to the
satisfaction on the Closing Date of the following conditions:
(a) Each of the acts and undertakings of SBS to be performed on or
before the Closing Date pursuant to the terms of this Agreement
shall have been duly performed, and INET shall have received at
the Closing a certificate to that effect, dated the Closing Date
and executed on behalf of SBS by a senior officer of SBS.
(b) SBS shall have furnished INET with:
(1) A certified copy of a resolution or resolutions duly adopted
by the Board of Directors of SBS approving this Agreement
and the transactions contemplated by it and directing the
submission thereof to a vote of the shareholders of SBS.
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(2) A certified copy of a resolution of resolutions duly adopted
by the holders of more than two-thirds of all the
outstanding shares of SBS Common Stock approving this
Agreement and the transactions contemplated by it.
(3) A favorable opinion of Conway Kleinman Kornhauser, LLP,
counsel to SBS, dated the Closing Date, concerning the
corporate standing, capitalization, due authorization and
enforceability, and to the knowledge of counsel, compliance
with this Agreement and litigation status of SBS. In the
course of the discussions of litigation status, such opinion
shall discuss the litigation to which SBS is then subject,
together with any claims which SBS informs counsel to SBS
have been threatened, which, in the opinion of counsel to
SBS, individually or in the aggregate, would have a material
adverse effect on the business, operations, properties,
assets, or condition, financial or otherwise, of SBS. The
opinion shall also state that the necessary actions have
been taken to obtain the requisite approvals of the
Agreement and the transactions contemplated by it from the
shareholders of SBS. The opinion shall be based on such
investigation and SBS officer representations as such
counsel shall deem necessary in connection with such
opinion, it being understood that such counsel shall not be
required to conduct a general "due diligence" investigation
of the affairs of SBS.
(c) The representations and warranties of SBS contained in this
Agreement shall be true in all material respects on and as of the
Closing Date, with the same effect as though such representations
and warranties had been made on and as of such date, except to
the extent that such representations and warranties shall be
untrue on and as of the Closing Date because of (1) changes
caused by transactions suggested or approved in writing by INET
or (2) events or changes (which shall not, in the aggregate, have
materially and adversely affected the business, assets, or
financial condition of SBS) occurring or arising after the date
of this Agreement, and INET shall have received at the Closing a
certificate to that effect, dated the Closing Date and executed
on behalf of SBS by a senior officer of SBS.
(d) More than two-thirds of the total number of the outstanding
shares of the Common Stock of SBS shall have been voted for the
approval of this Agreement and the transactions contemplated by
this Agreement.
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(e) Neither INET nor SBS shall be subject to any order, decree, or
injunction of a court or agency of competent jurisdiction which
enjoins or prohibits the Merger or any of the transactions
contemplated by this Agreement.
(f) If the holders of more than 10% of the outstanding shares of SBS
have elected to dissent from the Merger as provided in the Nevada
Private Corporations Act, INET shall have the right and option to
either close the Agreement and complete the Merger or to rescind
and terminate the Agreement upon five days written notice.
ARTICLE 6
CONDITIONS TO SBS'S OBLIGATION TO CLOSE
6.1 The obligations of SBS to consummate this Agreement are subject to the
satisfaction on the Closing Date of the following conditions:
(a) Each of the acts and undertakings of INET to be performed on or
before the Closing Date pursuant to the terms of this Agreement
shall have been duly performed, and SBS shall have received at
the Closing a certificate to that effect, dated the Closing Date
and executed on behalf of INET by a senior officer of INET.
(b) INET shall have furnished SBS with:
(1) A certified copy of a resolution or resolutions, duly
adopted by the Board of Directors of INET approving this
Agreement and the transactions contemplated by it.
(2) A certified copy of resolutions, duly adopted by the Boards
of Directors and shareholder of Acquisition approving this
Agreement and the transactions contemplated by it.
(3) A favorable opinion, dated the Closing Date, of Gilbert L.
McSwain, Esq., counsel for INET, concerning the corporate
standing and capitalization of INET and Acquisition; the due
authorizations of INET and Acquisition of the execution and
delivery of the Agreement and Exhibit 1 thereto and their
enforceability as to INET and Acquisition; the validity of
the INET Common Stock to be issued in the Merger, and to the
knowledge of counsel, compliance by INET and Acquisition
13
with the Agreement and the litigation status of INET and
Acquisition. In the course of its discussions of litigation
status, such opinion shall discuss the litigation to which
INET or Acquisition is then subject, together with any
claims which INET or Acquisition informs counsel to INET or
Acquisition have been threatened, which, in the opinion of
counsel to INET, individually or in the aggregate, would
have a material adverse effect on the business, operations,
properties, assets, or condition, financial or otherwise, of
INET or Acquisition. The opinion shall be based on such
investigation and INET officer representations as such
counsel shall deem necessary in connection with such
opinion, it being understood that such counsel shall not be
required to conduct a general "due diligence" investigation
of the affairs of INET or Acquisition.
(c) The representations and warranties of INET contained in this
Agreement shall be true in all material respects on and as of the
Closing Date, with the same effect as though such representations
and warranties had been made on and as of such date, except to
the extent that such representations and warranties shall be
untrue on and as of the Closing Date because of (1) changes
caused by transactions approved in writing by SBS or (2) events
or changes (which shall not, in the aggregate, have materially
and adversely affected the business, prospects, assets, or
financial condition of INET and its subsidiaries taken as a
whole) occurring or arising after the date of this Agreement, and
SBS shall have received at the Closing a certificate to that
effect, dated the Closing Date and executed on behalf of INET by
a senior officer of INET.
(d) Neither INET nor SBS shall be subject to any order, decree, or
injunction of a court or agency of competent jurisdiction which
enjoins or prohibits the Merger or any of the transactions
contemplated by this Agreement.
(e) More than two-thirds of the total number of the outstanding
shares of the Stock of the Acquisition shall have been voted for
the approval of this Agreement and the transactions contemplated
by this Agreement.
ARTICLE 7
AMENDMENT AND TERMINATION
7.1 At any time, whether before or after submission to or approval by the
shareholders of SBS of the transactions contemplated by this Agreement, this
Agreement may be amended in matters of form or supplemented by additional
agreements, articles, or certificates as may be determined in the judgment of
the President of SBS and the President of INET or the President of Acquisition
14
to be necessary, desirable, or expedient to clarify the intentions of the
parties to this Agreement or to effect or facilitate the filing, recording, or
official approval of this Agreement and consummation thereof in accordance with
the purpose and intent of this Agreement; provided, however, that no such
amendment or modification shall be made after submission to or approval of the
shareholders of SBS if such alteration of change would adversely affect the
shareholders of SBS.
7.2 This Agreement may be terminated at any time prior to the Closing Date,
whether before or after action thereon by the shareholders of SBS, upon the
occurrence of any of the events specified in this Section 7.2. In the event that
either party elects to terminate this Agreement as herein provided, it shall
give written notice to the other party, specifying the basis for such
termination:
(a) By the mutual written consent of SBS and INET;
(b) By action of the Board of Directors of SBS if it shall have
become impossible for INET to fulfill any of the conditions to
the obligations of SBS contained herein;
(c) By action of the Board of Directors of INET if it shall have
become impossible for SBS to fulfill any of the conditions to the
obligations of INET contained herein; or
(d) By action of the Board of Directors of either SBS or INET in the
event of a material breach by the other party of any
representation, warranty, or agreement that is not cured within
30 days after written notice.
7.3 In any event, this Agreement shall automatically terminate on September
9, 2002, if the Merger shall not have become effective on or before such date
unless INET and SBS shall otherwise agree in writing to extend such date.
7.4 In the event that this Agreement shall be terminated pursuant to this
Article 7 or because of the failure to satisfy any of the conditions specified
in Articles 5 or 6 for any reason other than the willful and bad faith breach by
the party not satisfying the condition, all further obligations of SBS and INET
under this Agreement shall terminate without further liability of INET or its
subsidiaries to SBS, or of SBS to INET or its subsidiaries. Nevertheless,
anything in this Agreement to the contrary notwithstanding, but subject to
applicable law, if any of the conditions specified in Article 5 hereof have not
been satisfied, INET, in addition to any other rights which may be available to
it, shall have the right to waive such condition and to proceed with the
transactions contemplated by this Agreement; and if any of the conditions
specified in Article 6 hereof have not been satisfied, SBS, by action of its
15
Board of Directors and without further shareholder action, in addition to any
other rights which may be available to it, shall have the right to waive such
condition and proceed with the transactions contemplated by this Agreement.
ARTICLE 8
MISCELLANEOUS
8.1 The representations and warranties contained in this Agreement or in
any instrument of transfer or other document delivered pursuant to this
Agreement shall survive the Closing Date, as well as the covenants and
agreements of the parties to this Agreement.
8.2 SBS and INET each represent to the other that it has not employed any
investment bankers, brokers, finders, or intermediaries in connection with the
transactions contemplated hereby who might be entitled to any fee or other
payment from SBS or INET or any subsidiary of INET upon the consummation of the
transactions contemplated by this Agreement.
8.3 All legal, accounting, and other costs and expenses incurred in
connection with this Agreement, and the transactions contemplated hereby, shall
be paid by the party incurring such expenses on a current basis.
8.4 Any notices, requests, or other communications required or permitted
hereunder shall be sufficiently given if delivered personally or sent by Federal
Express or similar overnight courier service, fees prepaid, addressed as
follows:
To INET or Acquisition:
Inet Commerce Conduit, Inc.
Attention: Paul Stone, President
With a copy to:
Gilbert L. McSwain, Esq.
1660 South Albion Street
Suite 309
Denver, Colorado 80222
To SBS:
SBS Interactive, Inc.
200 Viceroy Road, Unit 5
Concord, Ontario, L4K 3N8
Attention: Todd Gotlieb, President
16
With a copy to:
Conway Kleinman Kornhauser
390 Bay Street, Suite 1102
Toronto, Ontario, M5H 2Y2
Attention: David N. Kornhauser
or to such other address as shall be furnished in writing by any party, and any
such notice or communication shall be deemed to have been give as of the date
received.
8.5 This Agreement and the annex thereto, which is an integral part of this
Agreement, constitutes the entire agreement of the parties pertaining to the
subject matter contained in it and supersedes all prior and contemporaneous
agreements, representations, and understandings of the parties. No supplement,
modification, or amendment of this Agreement shall be binding unless executed in
writing by all the parties. No waiver of any of the provisions of this Agreement
shall be deemed, or shall constitute, a waiver of any other provision, whether
or not similar, nor shall any waiver constitute a continuing waiver. No waiver
shall be binding unless executed in writing making the waiver.
8.6 This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and assigns, provided that
this Agreement may not be assigned by any party without the consent of the other
party.
8.7 This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same Agreement, and shall become effective
when one or more counterparts have been signed by each of the parties and
delivered to the other parties.
8.8 The SBS Disclosure Statement and the INET Disclosure Statement may be
attached to this Merger Agreement within 15 days of the date first above
written, except that no item may be included in a Disclosure Statement delivered
following the execution of this Agreement which has not been called to the
attention of the other party, orally or in writing, prior to such execution.
8.9 This Agreement shall be construed in accordance with the laws of the
States of Nevada and Florida, as appropriate.
8.10 This Agreement may be executed in several counterparts and all so
executed shall constitute one Agreement, binding on all the parties hereto even
though all the parties are not signatories to the original or the same
counterpart.
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WITNESS the signatures and seals of the parties to this Merger Agreement by
their duly authorized officers as of the date first above written.
INET COMMERCE CONDUIT, INC.
By: /s/ Paul H. Stone
---------------------------------------
Paul H. Stone, President
SBS INTERACTIVE, INC.
By: /s/ Todd Gotlieb
---------------------------------------
Todd Gotlieb, President
SBS ACQUISITION, INC.
By: /s/ Paul H. Stone
---------------------------------------
Paul H. Stone, President
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Exhibit 1
---------
ARTICLES AND PLAN OF MERGER
OF
SBS ACQUISITION, INC.
WITH AND INTO
SBS INTERACTIVE, INC.
(The Surviving Corporation)
Pursuant to the provisions of the Nevada Private Corporation Act, SBS
Interactive, Inc., a Nevada corporation ("SBS"), and SBS Acquisition, Inc., a
Nevada corporation ("Acquisition"), such corporations sometimes called the
"Constituent Corporations," and joined in by Inet Commerce Conduit, Inc., a
Florida corporation ("INET"), for certain purposes, but not as a Constituent
Corporation, set forth the following information and execute and enter into this
Articles and Plan of Merger ("Merger Plan") on July 22, 2002.
W I T N E S S E T H:
SBS has authorized capital stock consisting of 50,000,000 shares of Common
Stock, $.001 par value per share ("SBS Common Stock"), of which, as of the date
first above written, 20,676,000 shares are issued and outstanding.
As of the date first above written, Acquisition has authorized capital
stock of 50,000 shares of Common Stock, $.01 par value per share, ("Acquisition
Stock") of which 5,000 shares are issued and outstanding, all of which are owned
by INET.
SBS and INET have entered into a Merger Agreement, dated July 22, 2002
("Merger Agreement"), setting forth certain representations, warranties,
conditions, and agreements relating to the transactions provided for herein;
The Boards of Directors of the Constituent Corporations deem it fair
and equitable to, and in the best interests of, their respective shareholders,
that Acquisition be merged into SBS, with SBS ("Merger") being the Surviving
Corporation (as hereinafter defined), on terms and conditions set forth under
and pursuant to the applicable statutes of the State of Nevada; and they have
approved this Merger Plan and the Merger Agreement, have authorized their
execution and delivery, and have directed their submission to their respective
shareholders for approval.
A majority of the SBS shareholders voted in favor of the Merger Plan
on July 22, 2002. The sole shareholder of Acquisition voted all shares of
Acquisition in favor of this Merger Plan on July 22, 2002.
In consideration of the premises and the mutual agreements, provisions, and
covenants herein contained, and as further provided in the Merger Agreement, and
for the purposes of prescribing the terms and conditions of the Merger, the mode
of carrying the same into effect, the manner and basis of converting the shares
of SBS Common Stock into the Common Stock, par value $.001 per share, of INET
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("INET Common Stock"), and such other details and provisions that are deemed
necessary or desirable, the parties hereto hereby agree in accordance with the
applicable statutes of the State of Nevada that SBS and Acquisition shall be,
and they hereby are, at the Effective Time (as defined in Section 4.1 of this
Merger Plan and Section 1.3 of the Merger Agreement), merged into a single
corporation existing under the laws of the State of Nevada, to wit: SBS, which
shall be the Surviving Corporation, (such corporation in its capacity as such
Surviving Corporation being heretofore and hereafter sometimes called the
"Surviving Corporation"); and all of the parties signatory hereto adopt and
agree to the following agreements, terms and conditions relating to the Merger
and the mode of carrying the same into effect.
ARTICLE I
1.1 SURVIVING CORPORATION. In accordance with the provisions of the
applicable statutes of the State of Nevada, Acquisition shall be, at the
Effective Time, merged into SBS, which shall be the Surviving Corporation, and
SBS shall continue to exist as a Nevada corporation in accordance with the laws
of the State of Nevada. The corporate existence and rights of Acquisition shall
be merged into SBS, and SBS, as the Surviving Corporation, shall be fully vested
therewith. The separate existence and corporate organization of Acquisition,
except insofar as they may be continued by statute, shall cease when the Merger
shall become effective. Except as herein specifically set forth, the Surviving
Corporation shall possess the rights, privileges, immunities, and franchises,
public and private, of the Constituent Corporations. All real, personal, and
mixed property, and all debts due, and other choses in action, and every other
interest of or belonging to or due to each of the Constituent Corporations are
transferred to and vested in the Surviving Corporation. The title to real
estate, or interest in real estate, vested in the Constituent Corporations does
not revert nor is it in any way impaired because of the Merger. The Surviving
Corporation shall be liable for the liabilities and obligations of each of the
Constituent Corporations. A claim existing or action or proceeding pending by or
against the Constituent Corporations may be prosecuted as if the Merger had not
taken place, or the Surviving Corporation may be substituted in a Constituent
Corporation's place. Neither the rights of creditors nor liens upon the property
of the Constituent Corporations shall be impaired by the Merger.
ARTICLE II
2.1 NAME. The name of the corporation that survives the Merger shall be and
continue to be, on and after the Effective Time, "SBS Interactive, Inc." until
amended as provided by law.
2.2 ARTICLES OF INCORPORATION. The Articles of Incorporation of SBS, as in
effect immediately prior to the Effective Time, shall, from and after the
Effective Time, be and shall continue to be the Articles of Incorporation of the
Surviving Corporation until amended as provided by law.
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2.3 BY-LAWS. The By-Laws of SBS, as in effect immediately prior to the
Effective Time, shall, from and after the Effective Time, be and shall continue
to be the By-Laws of the Surviving Corporation until the same shall be altered,
amended, or rescinded as therein provided or as provided in the Articles of
Incorporation of the Surviving Corporation.
2.4 DIRECTORS. The directors of SBS in office immediately prior to the
Effective Time shall be the directors of the Surviving Corporation and shall
hold office from the Effective Time until their respective successors are
elected and qualified in accordance with the law and the By-Laws of the
Surviving Corporation.
2.5 OFFICERS. The officers of SBS in office immediately prior to the
Effective Time shall be the officers of the Surviving Corporation and shall hold
their respective offices from the Effective Time until their respective
successors are elected and qualified in accordance with the law and the By-Laws
of the Surviving Corporation.
ARTICLE III
3.1 MANNER AND BASIS OF CONVERTING SHARES. At the Effective Time:
(a) Each share of Acquisition Stock which is issued and outstanding
immediately prior to the Effective Time shall be canceled.
(b) The 20,676,000 shares of SBS Common Stock which are issued
and outstanding immediately prior to the Effective Time shall be converted into
approximately 3,180,923 shares of INET Common Stock at the ratio of 6.5 shares
of SBS Common Stock for each share of INET ("Conversion Price").
(c) SBS shall issue and deliver to INET 1,000 shares of SBS
Common Stock which shall become the only remaining issued and outstanding shares
of Capital Stock of SBS as of the Effective Time.
3.2 CESSATION OF SHAREHOLDERS STATUS OF PRIOR SHAREHOLDERS. Holders of
certificates which represent shares of SBS Common Stock outstanding immediately
prior to the Effective Time (hereinafter called the "Old Certificates" when
referring to SBS) shall cease to be, and shall have no rights as, shareholders
of SBS as of the Effective Time.
3.3 EXCHANGE AGENT. SBS shall act as it's own Agent ("Exchange Agent") to
accept surrender of the Old Certificates representing shares of SBS Common Stock
and to deliver, in exchange for such surrendered certificates, INET Common Stock
at the Conversion Price for the shares of SBS Common Stock represented by such
certificates.
3.4 FRACTIONAL SHARES. Each holder of Old Certificates who would otherwise
have been entitled to receive a fraction of a share of INET Common Stock (after
taking into account all of the shares of the capital stock of SBS represented by
the Old Certificates then delivered by such holder) share of INET Common Stock
shall receive, in lieu thereof, one additional share of INET Common Stock.
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3.5 ANTI-DILUTION ADJUSTMENT. If between the date of this Merger Plan and
the Effective Time the outstanding shares of INET Common Stock shall have been
changed, without receipt by INET of consideration for such change, into a
different number of shares or a different class by reason of any
reclassification, recapitalization, split-up, combination, exchange of shares,
or readjustment, or a stock dividend thereon shall be declared with a record
date within said period, adjustments will be made to the Conversion Price as
appropriate.
ARTICLE IV
4.1 FILING OF MERGER ARTICLES. On the Closing Date (as set forth in the
Merger Agreement), or as soon thereafter as practicable, this Merger Plan, and
any other certificates, articles, or required documents, executed and verified
in accordance with law, shall be delivered for filing to the Secretary of State
of the State of Nevada. The Merger shall become effective in accordance with the
laws of the State of Nevada upon the filing of the Articles of Merger pursuant
to the provisions of the Nevada Corporation Laws. The time when the Merger shall
become effective is herein called the "Effective Time."
4.2 FURTHER ASSURANCES. Each party to this Merger Plan shall take all such
action as may be reasonably necessary and appropriate in order to consummate the
Merger as promptly as practicable. If at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Merger Plan and to vest unto SBS the full right, title, and possession of all of
the rights, privileges, immunities and franchises of either SBS or Acquisition,
the officers and directors of such corporations are fully authorized, in the
names of their respective corporations or otherwise, to take, and shall take,
all such action and, in doing so, shall be indemnified by SBS to the same extent
as they would have been indemnified had such action been taken prior to the
Effective Time.
4.3 COUNTERPARTS. This Merger Plan may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one agreement.
4.4 GOVERNING LAW. This Merger Plan shall be governed in all respects,
including, but not limited to, validity, interpretation, effect, and
performance, by the laws of the State of Nevada.
4.5 AMENDMENT. Subject to applicable law, this Merger Plan may be amended,
modified, or supplemented only by written agreement to INET, Acquisition, and
SBS, or by the respective officers there unto duly authorized, at any time prior
to the Effective Time; provided, however, that after the adoption of the Merger
Agreement by the shareholders of SBS, no such amendment, modification, or
supplement shall alter or change the amount of INET Common Stock to be received
on conversion of SBS Common Stock, as provided in this Merger Plan and the
Merger Agreement, or alter or change any of the terms and conditions of this
Merger Plan or the Merger Agreement if such alteration or change would adversely
affect the holders of any class or series of stock of the Constituent
Corporations.
4.6 WAIVER. Any of the terms or conditions of this Merger Plan may be
waived at any time by whichever of the Constituent Corporations is, or the
shareholders of which are, entitled to the benefit thereof by action taken by
the Boards of Directors of such Constituent Corporation.
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4.7 TERMINATION. This Merger Plan shall terminate upon the termination of
the Merger Agreement, and there shall be no liability on the part of any of the
parties hereto (or any of their respective directors or officers).
IN WITNESS WHEREOF, each of the Constituent Corporations and INET have
caused this Merger Plan to be executed on their-behalf by their officers
hereunto duly authorized and their respective corporate seals to be affixed
hereto, all as of the date first above written.
(SEAL) SBS INTERACTIVE, INC.
By: /s/ Todd Gotlieb
---------------------------------
Todd Gotlieb, President
(SEAL) SBS ACQUISITION, INC.
By: /s/ Patti Cooke
---------------------------------
Patti Cooke, President
(SEAL) INET COMMERCE CONDUIT, INC.
By: /s/ Paul H. Stone
---------------------------------
Paul H. Stone, President
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PROVIDENCE OF ONTARIO)
) ss.
CANADA )
On this ____ day of ____________, 2002, before me personally came Todd
Gotlieb, who, being by me duly sworn, did depose and say that he is the
President of SBS Interactive, Inc.; that he signed the foregoing Articles and
Plan of Merger as President of said corporation in accordance with a resolution
of the Board of Directors of said Corporation; that the statements contained
therein are true; and that said Corporation executed the same.
My commission expires:
-------------------
------------------------------------------
Notary Public
PROVIDENCE OF ONTARIO)
) ss.
CANADA )
On this ____ day of ____________, 2002, before me personally came Patti
Cooke, who, being by me duly sworn, did depose and say that she is the President
of SBS Acquisition, Inc.; that she signed the foregoing Articles and Plan of
Merger as President of said corporation in accordance with a resolution of the
Board of Directors of said Corporation; that the statements contained therein
are true; and that said Corporation executed the same.
My commission expires:
-------------------
------------------------------------------
Notary Public
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PROVIDENCE OF ONTARIO)
) ss.
CANADA )
On this ____ day of ____________, 2002, before me personally came Paul H.
Stone, who, being by me duly sworn, did depose and say that he is the President
of Inet Commerce Conduit, Inc.; that he signed the foregoing Articles and Plan
of Merger as President of said corporation in accordance with a resolution of
the Board of Directors of said Corporation; that the statements contained
therein are true; and that said Corporation executed the same.
My commission expires:
-------------------
------------------------------------------
Notary Public
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