U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report: August 20, 2004
ISA INTERNATIONALE, INC.
(Exact name of registrant as specified in its charter)
Commission File Number: 001-16423
Delaware 41-1925647
(State of incorporation) (IRS Employer Id. No.)
2560 Rice Street (651) 489-6941
St. Paul, MN 55113 (Registrant's telephone number)
(Mailing address of registrant)
On August 20, 2004 - ISA INTERNATIONALE INC. (OTCBB: ISAT) announced today
that it has completed and finalized the acquisition of the privately-held
network of financial services companies composed of Harrison Asset Management
Inc. (HAMI), Money Asset Management, Inc. (MAMI), Cash Asset Management Inc.
(CAMI), e-commerce bank First American Financial Family Services (FAFFS), and
United Recovery Inc. (URI) - a wholly-owned subsidiary of MAMI. Together
these companies have accumulated distressed portfolio assets value at more
than $300 million dollars that initially cost the companies $11 million
dollars.
ISA Internationale Inc., headquartered in St. Paul, Minnesota, was formally
in the cable television business before it ceased operations in 2000. Since
then, reorganization specialists, Doubletree Capital Partners LLC, has
internally reorganized the company and changed its direction to focus on the
financial services industry.
The companies acquired by ISAT represent wide spectrum of Fields
including: HAMI is focused on collections of present portfolios; MAMI was
established to continue private investments and portfolio acquisitions; URI
is a licensed in-house collection agency that was created to collect on
future debt purchases; and CAMI was incorporated to continue the acquisition
and collection process. As an extension of the aforementioned companies,
FAFFS is a development-stage company that was created to offer banking
products both to these companies' investors and debtors.
Together, these newly-acquired companies provide ISAT with a knowledge-base
in buying, selling and collecting several types of delinquent and defaulted
debt; In addition to the proprietary in-house collection division and
outsourcing of debt, these companies have a new third party collections
division in addition to collecting its own purchased debt.
Terms of the transaction call for ISAT to pay the acquired companies' common
and preferred shareholders 5,250,000 ISAT Common shares at closing 4,500,000
warrants for the acquisition of these companies. In addition, if the
companies achieve certain EBITDA earning objectives over the next three
years, those shareholders will be entitled to upwards of 4,000,000 bonus ISAT
shares, based upon performance. ISAT will maintain its corporate offices in
St. Paul, Minnesota, and will continue to pursue suitable acquisitions in the
financial services industry, consistent with its new business plan. The newly
acquired network will be headquartered in Calabasas, California, and will be
led by Anthony Pickett, an executive with more than 35 years of business
experience.
The agreement requires that the acquired Company's books and records are to
Be audited for the calendar years 2002 and 2003. The issuance of ISA Common
shares requires the completion of the certified audits. ISA Internationale Inc.
will file as an additional 8-k filing the results of the certified audits
within 70 days from the date of closing, August 19, 2004. Certain payment
provisions of the agreement may be affected by the results of the required
certified audits for the years above.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: August 20, 2004
ISA INTERNATIONALE, INC.
/s/ Bernard L. Brodkorb, Jr.
President and CEO
ISA INTERNATIONALE, INC.
FORM 8K
INDEX TO EXHIBITS
ITEM 10.8 ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") effective August 19,
2004, is by and between ISA INTERNATIONALE, INC. a Delaware corporation
("ISAI"), having its principal offices at 2560 N. Rice Street, St. Paul,
Minnesota 55113, and; Cash Asset Management, Inc., a California corporation
("CAMI"), Money Asset Management, Inc., a California corporation ("MAMI") and
Harrison Asset Management, Inc., a California corporation ("HAMI")
(collectively the "Companies") having their principal offices at 5000 N.
Parkway Calabasas, Suite 303, Calabasas, California 91302.
RECITALS:
A. The Companies own the assets listed in Schedule 1.0 to this
Agreement (the "The Companies' Assets").
B. It is the intention of the parties hereto that: (i) ISAI shall
acquire all of The Companies' Assets, set forth on Schedule 1, in exchange
solely for the number of voting shares of ISA Internationale, Inc.'s
authorized but unissued shares of common stock, $0.0001 par value ("ISAI
Shares"), set forth below (the "Exchange").
D. The board of directors of ISAI deems it to be in the best interest
of ISAI to acquire The Companies' Assets.
E. The boards of directors of The Companies deem it to be in the best
interest of The Companies to sell all of the Companies' Assets in exchange
for the ISAI Shares.
F. The acquisition shall be conducted by a wholly-owned subsidiary of
ISAI, ISA Acquisition Corporation ("ISA Acquisition"), a Minnesota
corporation.
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained in this Agreement, the parties
hereto agree as follows:
SECTION 1. EXCHANGE
1.1 Exchange. ISAI and the Companies hereby agree that the Companies
shall, on the Closing Date (August 19, 2004), transfer and deliver all
documentation reflecting ownership of all interests in the Companies' Assets
to ISA Acquisition and ISAI shall simultaneously cause to be delivered
5,000,000 shares of ISAI Shares to the Companies (Shares to be held in Escrow
pending allocation among CAMI, MAMI and HAMI plus any bonus or warrant
shares) and 250,000 shares to Dante Fala. The Companies will also be entitled
to warrants as described in Schedule 1.1.
The ISAI Shares shall be restricted against resale pursuant to the
provisions of Federal and state securities laws, and will have supplemental
terms regarding their value within set periods of time, and their complete
and total release from any purchase restrictions, all as
described in Schedule 1.1
1.2 Restricted Securities. The ISAI Shares provided in the Exchange
have not been registered under the Securities Act of 1933, as amended (the
"Securities Act"), and may not be resold unless the resale thereof is
registered under the Securities Act or an exemption from such registration is
available. The ISAI Shares may, after one year from the date of issuance, be
sold under the auspices of Rule 144 which state, in part, that the holder of
a restricted security must hold the stock for a period of one year and sell
such stock through a registered broker. In addition, under Rule 144, any
seller of a restricted security is limited to selling shares equal to one
percent (1%) of the total number of issued and outstanding shares of the
company in each ninety (90) day period following the one year anniversary of
issuance. Rule 144(k) allows for a complete sale of restricted securities
without the above listed restrictions after the two-year anniversary of
issuance.
Each certificate representing those ISAI Shares will have a legend thereon
in substantially the following form:
The Shares represented by this certificate have not been registered under the
Securities Act of 1933, as amended (the "Act"). The shares have been acquired
for investment and may not be sold or transferred in the absence of an
effective Registration Statement for the resale of the shares under the Act
unless in the opinion of counsel satisfactory to the Company, registration is
not required under the Act.
1.3 After Closing and determination of ISAI share allocations among the
3 Companies, ISAI will allow management of the respective Companies to offer
each accredited investor holding preferred shares in any of the Companies an
opportunity to exchange those shares for the preferred shareholder's pro-rata
interest in the shares of ISAI owned by each of the Companies. If the
shareholder is non-accredited, and the total number of non-accredited
holders desiring to exchange for ISAI shares exceeds 35, then no non-
accredited holders will be allowed to participate in the exchange, at least
at this time. The unexchanged shares (or proceeds there from if sold) will
remain in escrow until the shares or the funds are distributed pursuant to an
allowable exemption from registration.
1.4 Registration of Shares. ISAI agrees that the ISAI Shares provided
in the Exchange shall be included in any registration submitted by the
Company after the Closing.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANIES
The Companies hereby represent and warrant as follows:
2.1 Organization and Good Standing. The Companies are entities, duly
organized, validly existing and in good standing under the laws of the
California. The Companies have the corporate power and authority to carry on
their businesses as presently conducted, and are qualified to do business in
all jurisdictions where the failure to be so qualified would have a material
adverse effect on their businesses.
2.2 Corporate Authority. The Companies have the power to operate as a
corporation and to perform any corporate obligations hereunder. The execution
and delivery of this Agreement by the Companies, and the consummation of the
transaction contemplated hereby, do not violate any State, Governmental or
corporate restrictions governing these transactions. The execution and
performance of this Agreement will not constitute a breach of any agreement,
indenture, mortgage, license or other instrument or document to which the
Companies are a party and will not violate any judgment, decree, order, writ,
rule, statute, or regulation applicable to the Companies or their assets. The
execution and performance of this Agreement will not violate or conflict with
any provision of the laws of the State of California.
2.3 The The Companies Assets. The Companies are the owners of record
and beneficially of all of the The Companies' Assets. Except as set forth on
Schedule 1.0, each of the Companies represent and warrant that they own such
assets free and clear of all rights, claims, liens and encumbrances, and the
interests have not been sold, pledged, assigned or otherwise transferred
except pursuant to this Agreement.
2.4 Receipt of Corporate Information; Independent Investigation;
Access. ISAI is a fully reporting, public entity and, as such, files all
pertinent financial and corporate data with the SEC. All of this information
is available to the Companies via the EDGAR website. As requested, all
publicly-available documents, records and books pertaining to ISAI and the
ISAI Shares have been delivered to the Companies. All of The Companies'
questions and requests for information have been answered to the Companies'
satisfaction. The Companies acknowledge that they, in making the decision to
exchange the all of their interests in the the Companies' Assets for ISAI
Shares, have relied upon independent investigations made by them or their
representatives, if any, and they have been given access to and the
opportunity to examine all material contracts and documents relating to this
Agreement and an opportunity to ask questions of, and to receive information
from, ISAI or any person acting on its behalf concerning the terms and
conditions of this Agreement. Each of the Companies advisors, if any, has
been furnished with access to all publicly available materials relating to
the business,
finances and operation of ISAI and materials relating to the ISAI Shares
which have been requested. The Companies and their advisors, if any, have
received complete and satisfactory answers to any such inquiries.
2.5 Financial Statements: Books and Records. The Companies will provide
audited financial statements in accordance with SEC Rules and Regulations
(the "Companies Financial Statements") to ISAI within 70 days of the Closing.
These Financial Statements shall fairly represent the financial position of
the Companies at those dates and the results of their operations for the
periods then ended. The Companies' Financial Statements will be prepared in
accordance with generally accepted accounting principles applied on a
consistent
basis with prior periods except as otherwise stated therein. The books of
account and other financial records of the Companies are complete and correct
in all material respects and are maintained in accordance with good business
and accounting practices. These Financial Statements will be utilized to
apportion the 5,000,000 shares among the three Companies in accordance with
the asset values being transferred from each of the Companies to ISAI.
ISAI reserves the right to adjust the issuance of the number of
bonus shares (4,000,000 maximum) that are to be issued upon the achievement
of certain EBITDA milestones based upon audit adjustments and/or carrying
value adjustments downward from the estimated value of the assets of the
Companies enumerated on Schedule 1.0 of this agreement. These will be
revalued by the certified audits that the Companies are required to deliver
within 70 days from the Closing. Should the audit valuation be less than
$5,400,000, then ISAI
may, at its option, adjust the bonus shares to be issued as initially
required by this agreement by the same percentage of downward adjustment
(i.e., audit value divided by 5,400,000, then multiplied by 4,000,000). Any
shares that are removed from the 4,000,000 bonus share issuance will be
removed from the earliest to-be-released shares, and will be accordingly
added to the 1st year group of warrants that possess an exercise price of
$1.25 and such increase on the warrants issuable as herein prescribed shall
have similar terms as the other year 1 group warrants as per schedule 1.1
Warrant Terms.
2.6 No Material Adverse Changes.
Except as described on Schedule 2.6, since July 9, 2004, there has not
been:
(i) any material adverse changes in the financial position or
operations of the Companies except changes arising in the ordinary course of
business, which changes will in no event materially and adversely affect the
financial position of the Companies.
(ii) any damage, destruction or loss materially affecting the
assets, prospective business, operations or condition (financial or
otherwise) of the Companies whether or not covered by insurance;
(iii) any declaration setting aside or payment of any dividend or
distribution with respect to any redemption or repurchase of the Companies
capital stock, other than as agreed upon among the parties;
(iv) any sale of an asset (other than as described in (iii)
above, or in the ordinary course of business) or any mortgage pledge by the
Companies of any properties or assets; or
(v) adoption or modification of any pension, profit sharing,
retirement, stock bonus, stock option or similar plan or arrangement.
(vi) except in the ordinary course of business, incurred or
assumed any indebtedness or liability, whether or not currently due and
payable;
(vii) any loan or advance made to any of The Companies'
Shareholders, officers, directors, employees, consultants, agents or other
representatives or made any other loan or advance otherwise than in the
ordinary course of business. However, it is expressly understood that any
loans to common shareholders or affiliated entities of common shareholders of
the Companies, and others including, but not limited to Dante Fala, Joseph
Fala and Financial Consultant Associates are not acquired assets herein;
(viii) any material increase in the annual level of compensation
of any executive employees of the Companies;
(ix) any modification of any existing contract, agreement or
transaction.
2.7 Risks. The Companies acknowledge and understand that the exchange
for the ISAI Shares involves a high degree of risk and is suitable only for
persons of adequate financial means who have no need for liquidity in this
investment in the ISAI Shares that (i) The Companies may not be able to
liquidate the investment in the event of an emergency; (ii) transferability is
extremely limited; and (iii) in the event of a disposition or other adverse
events, the Companies could sustain a complete loss of their entire
investments. Shareholders understand and acknowledge that ISAI
currently has no material assets and no operating business. The
Companies further understand and acknowledge that ISAI has
liabilities as listed in Schedule 3.4. The Companies are sufficiently
experienced in financial and business matters to be capable of
evaluating the merits and risks of an investment in ISAI; have
evaluated such merits and risks, including risks particular to this
situation; and have determined that this investment is suitable for
the Companies. The Companies have adequate financial resources
and can bear a complete loss of the ISAI investment.
2.8 Anticipated Exchange. The Companies have no contract, undertaking,
agreement or arrangement with any person to sell, transfer or otherwise
distribute to any person or to have any person sell, transfer or otherwise
distribute the Stock, save only the tentative proposal set forth in paragraph
1.3 of this agreement, allowing, at a point in the future, an exchange offer
to preferred shareholders of each of the Companies. The Companies are
presently not engaged, nor do the Companies plan to engage within the
presently foreseeable future, in any discussion with any person regarding
such a sale, transfer or other distribution of the ISAI Shares or any
interest therein, other than current shareholders of the Companies.
2.9 Compliance with Federal and State Securities Laws. The Companies
understand that the ISAI Shares have not been registered under the Securities
Act. The Companies understand that the ISAI Shares must be held indefinitely
unless the sale or other transfer thereof is subsequently registered under
the Securities Act, or an exemption from such registration is available.
Moreover, the Companies understand that it's right to transfer the ISAI
Shares will be subject to certain restrictions, which include restrictions
against transfer under the Securities Act and applicable state securities
laws. The ISAI Shares may, after one year from the date of issuance, be sold
under the auspices of Rule 144 which state, in part, that the holder of a
restricted security must hold the stock for a period of one year and sell
such stock through a registered broker. In addition, under Rule 144, any
seller of a restricted security is limited to selling shares equal to one
percent (1%) of the total number of issued and outstanding shares of the
company in each ninety (90) day period following the one year anniversary of
issuance. Rule 144(k) allows for a complete sale of restricted securities
without the above listed restrictions after the two-year anniversary of
issuance.
The Companies realize that they may not be able to sell or dispose of
the ISAI Shares as there may be no public or other market for them. The
Companies understand that certificates evidencing the ISAI Shares shall bear
a legend substantially as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
APPLICABLE STATE LAW. THEY MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR
PLEDGED UNLESS REGISTERED UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE
LAW OR PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS
2.10 Approvals. No approval, authorization, consent, order or other
action of, or filing with, any person, firm or corporation or any court,
administrative agency or other governmental authority is required in
connection with the execution and delivery of this Agreement by the Companies
for the consummation of the transactions described herein, other than as set
forth
on Schedule 2.10.
2.11 No Breach. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby will
not:
(i) violate any provision of the Articles of Incorporation or the
Bylaws of the Companies;
(ii) violate, conflict with or result in the breach of any of the
terms of, result in a material modification of, otherwise give any other
contracting party the right to terminate, or constitute (or with notice or
lapse of time, or both constitute) a default under any contract or other
agreement to which the Companies are a party or by or to which they or any of
their assets or properties may be bound or subject;
(iii) violate any order, judgment, injunction, award or decree of
any court, arbitrator or governmental or regulatory body against, or binding
upon, the Companies or upon the properties or businesses of the Companies; or
(iv) violate any statute, law or regulation of any jurisdiction
applicable to the transactions contemplated herein which could have a
material, adverse effect on The Companies or the businesses or operations of
The Companies.
2.12 Actions and Proceedings. The Companies are not parties to any
material pending litigation or, to the knowledge of the Companies, after
reasonable inquiry, any governmental investigation or proceeding not
reflected in the Companies' Financial Statements and, to their best
knowledge, no material litigation, claims, assessments, governmental
inquiries or non-governmental proceedings are threatened against the
Companies except as set forth on Schedule 2.12 attached hereto and made a
part hereof.
2.13 No General Solicitation. The Companies are not exchanging for the
ISAI Shares because of or following any advertisement, article, notice or
other communication published in any newspaper, magazine or similar media or
broadcast over television or radio, or presented at any seminar or meeting,
or any solicitation or a subscription by a person other than a representative
of ISAI.
2.14 Taxes. The Companies attest to the fact that the Companies have
filed, or will file by September 15, 2004, all tax, governmental and/or
related forms and reports (or extensions thereof) due or required to be filed
and has paid or made adequate provisions in the Companies' Financial
Statements for all taxes or assessments which would become due as of the
Closing Date, and there are no deficiency or audit notices outstanding. No
extensions of time for the assessment of deficiencies for any tax period is
in effect. No deficiency or audit notice is proposed or, to the knowledge of
the Companies, after reasonable inquiry, threatened against the Companies.
2.15 Compliance with Laws. The Companies have, to the best of their
knowledge, complied with all federal, state, county and local laws,
ordinances, regulations, inspections, orders, judgments, injunctions, awards
or decrees applicable to it or its business which, if not complied with,
would materially and adversely affect the businesses of the Companies.
2.16 Agreements. Schedule 2.16 sets forth any contract or arrangement
to which the Companies are subject, whether written or oral.
2.17 Brokers or Finders. No broker's or finder's fee will be payable by
the Companies in connection with the transactions contemplated by this
Agreement, nor will any such fee be incurred as a result of any actions by
the Companies.
2.18 Real Estate. Except as set forth on Schedule 2.18, the Companies
represent that they own no real estate interests and that the Companies are
not parties to any leasehold agreement affecting the Companies. All uses of
the the Companies' facilities by the Companies conforms in all material
respects to all applicable building and zoning ordinances, laws and
regulations. There are no visible or known signs of releases, spills,
discharges, leaks or disposal (collectively, referred to as "Releases") of
hazardous substances at, upon, under or within The Companies' facilities.
2.19 OSHA and Environmental Compliance. To the knowledge of the the
Companies, the Companies have duly complied with, and their offices, real
property, businesses, assets, leaseholds and equipment are in compliance in
all material respects with, the provisions of the Federal Occupational Safety
and Health Act, the Environmental Protection Act, and all other environmental
laws. There have been no outstanding citations, notices or orders of non-
compliance issued to any of the Companies or relating to their businesses,
assets, properties, leaseholders or equipment under such laws, rules or
regulations.
The Companies have been issued all required federal, state and
local licenses, certificates or permits relating to all applicable
environmental laws. There are no visible signs of releases of hazardous
substances at, upon, under or within the real property owned by the
Companies. There are no underground storage tanks or polychlorinated
biphenyls on that real property. To the best of the the Companies' knowledge,
after reasonable inquiry, the real property has never been used as a
treatment, storage or disposal facility of hazardous waste. To the best of
the Companies' knowledge, after reasonable inquiry, no hazardous substances
are present on the real property or any premises leased by the Companies
excepting such quantities as are handled in accordance with all applicable
manufacturer's instructions and governmental regulations and in the proper
storage containers and as are necessary for the operation of the commercial
businesses of the Companies.
2.20 Tangible Assets. To the knowledge of the the Companies, the
Companies have full title and interest in all real estate, machinery,
equipment, furniture, leasehold improvements, fixtures, projects, owned or
leased by the Companies, any related capitalized items or other tangible
property material to the businesses of the Companies (the "Tangible Assets").
Other than as set forth in Schedule 2.20, the Companies hold all rights,
title and interest in all the Tangible Assets owned by them and included in
the the Companies' Financial Statements or acquired by them after the date on
the The Companies' Financial Statements free and clear of all liens, pledges,
mortgages, security interests, conditional sales contracts or any other
encumbrances. All of the Tangible Assets are in good operating condition and
repair and are usable in the ordinary course of businesses of the Companies
and conform to all applicable laws, ordinances and government orders, rules
and regulations relating to their construction and operation, except as set
forth on Schedule 2.20 hereto. The Companies have clear title to all of its
fictional business names, trading names, registered and unregistered
trademarks, service marks and applications (collectively, the "Marks") and
Marks are included as Tangible Assets.
2.21 Liabilities. To the knowledge of the Companies, the Companies do
not have any material direct or indirect indebtedness, liabilities, claims,
losses, damages, deficiencies, obligations or responsibilities, known or
unknown, fixed or unfixed, liquidated or unliquidated, secured or unsecured,
accrued or absolute, contingent or otherwise, including, without limitation,
any liability on account of taxes, any governmental charge or lawsuit (all of
the foregoing collectively defined to as "Liabilities"), which are not fully,
fairly and adequately reflected on the the Companies' Financial Statements,
except for any specific Liabilities set forth on Schedule 2.21 attached
hereto and made a part hereof. As of the date of Closing, the Companies will
not have incurred any Liabilities, other than Liabilities fully and
adequately reflected on the Financial Statements except for Liabilities
incurred in the ordinary course of business and as set forth in Schedule
2.21, and which will not exceed $1,000 on the Closing date.
2.22 Operations of the Company. From the date of the Financial
Statements, as described in Section 2.5 through the date of Closing, the
Companies have not and will not, outside of the ordinary course of business,
have:
(i) incurred any indebtedness or borrowed money that is or will be
charged against the Companies;
(ii) declared or paid any dividend or declared or made any payment
or distribution of any kind to any Shareholder, or made any direct or
indirect redemption, retirement, purchase or other acquisition of any
interests in its capital structure;
(iii) made any loan or advance to any Shareholder, officer,
director, employee, consultant, agent or other representative or made any
other loan or advance after June 30, 2004;
(iv) disposed of any assets of the Companies;
(v) materially increased the annual level of compensation of any
executive employees of or consultants to the Companies;
(vi) increased, terminated, amended or otherwise modified any plan
for the benefit of employees of the Companies;
(vii) issued any equity securities or rights to acquire such
equity securities; or
(viii) entered into or modified any contract, agreement or
transaction.
2.23 Access to Records. The corporate financial records, minute books,
and other documents and records of the Companies will be made available to
ISAI prior to the Closing hereof.
2.24 Intangible Assets. To the knowledge of the Companies, the
Companies have full title and interest in all licenses, patents or other
intangible property material to the business of the Companies (the
"Intangible Assets"). Other than as set forth in Schedule 2.24, the Companies
hold all rights, title and interest in all the Intangible Assets owned by
them in the the Companies' Financial Statements or used in their operations
free and clear of all liens, pledges, mortgages, security interests,
conditional sales contracts or any other encumbrances.
2.25 Full Disclosure. No representation or warranty by the Companies in
this Agreement or in any document or schedule to be delivered by them
pursuant hereto, and no written statement, certificate or instrument
furnished or to be furnished by the Companies pursuant hereto or in
connection with the negotiation, execution or performance of this Agreement
contains or will contain any untrue statement of a material fact or omits or
will omit to state any fact necessary to make any statement herein or therein
not materially misleading or necessary to complete and correct presentation
of all material aspects of the businesses of the Companies.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF ISAI
ISAI hereby represents and warrants as follows:
3.1 Organization and Good Standing. ISAI is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Delaware. It has the corporate power to own its own property and to carry
on its business as now being conducted and is duly qualified to do business
in any jurisdiction where so required except where the failure to so qualify
would have no material adverse effect on its business.
3.2 Corporate Authority. ISAI has the corporate power to enter into
this Agreement and to perform its obligations hereunder. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby have been, or will be prior to the Closing Date, duly
authorized by the Board of Directors of ISAI as required by Delaware law. The
execution and performance of this Agreement will not constitute a material
breach of any agreement, indenture, mortgage, license or other instrument or
document to which ISAI is a party and will not violate any judgment, decree,
order, writ, rule, statute, or regulation applicable to ISAI or its
properties. The execution and performance of this Agreement will not violate
or conflict with any provision of the Articles of Incorporation or by-laws of
ISAI.
3.3 The ISAI Shares. At the Closing, the ISAI Shares to be issued and
delivered to the Companies hereunder, including the 5,000,000 shares to be
released from escrow, will, when so issued and delivered, constitute valid
and legally issued Stock of ISAI, fully paid and non-assessable.
3.4 Financial Statement: Books and Records. Attached as Schedule 3.4
are the audited financial statements (balance sheet, income statement and
Notes) of ISAI for the fiscal year ended December 31, 2003, and the un-
audited quarterly statements for the periods ending March 31, 2004 and June
30, 2004 (collectively the "ISAI Financial Statements"), which are on file
with the U.S. Securities and Exchange Commission's EDGAR system.
The ISAI Financial Statements fairly represent the financial position of ISAI
as at such date and the results of their operations for the periods then
ended. The ISAI Financial Statements were prepared in accordance with
generally accepted accounting principles applied on a consistent basis with
prior periods except as otherwise stated therein. The books of account and
other financial records of ISAI are in all respects complete and correct in
all material respects and are maintained in accordance with good business and
accounting practices.
3.5 No Material Adverse Changes.
Except as described on Schedule 3.5, since June 30, 2004, there has not
been:
(i) any material adverse changes in the financial position of ISAI
except changes arising in the ordinary course of business, which changes will
in no event materially and adversely affect the financial position of ISAI.
(ii) any damage, destruction or loss materially affecting the
assets, prospective business, operations or condition (financial or
otherwise) of ISAI whether or not covered by insurance;
(iii) any declaration setting aside or payment of any dividend or
distribution with respect to any redemption or repurchase of ISAI capital
stock, other than as agreed upon among the parties;
(iv) any sale of an asset (other than as described in (iii) above,
or in the ordinary course of business) or any mortgage pledge by ISAI of any
properties or assets; or
(v) adoption or modification of any pension, profit sharing,
retirement, stock bonus, stock option or similar plan or arrangement.
(vi) except in the ordinary course of business, incurred or assumed
any indebtedness or liability, whether or not currently due and payable;
(vii) any loan or advance to any ISAI Shareholder, officer,
director, employee, consultant, agent or other representative or any other
loan or advance otherwise than in the ordinary course of business;
(viii) any material increase in the annual level of compensation of
any executive employee of ISAI;
(ix) any modification of any existing contract, agreement or
transaction;
3.6 Taxes. ISAI has filed and paid all tax, governmental and/or related
forms and reports (or extensions thereof) due or required to be filed as of
December 31, 2003.
3.7 Compliance with Laws. Except as described on Schedule 3.7, ISAI has
complied with all federal, state, county and local laws, ordinances,
regulations, inspections, orders, judgments, injunctions, awards or decrees
applicable to it or its business, which, if not complied with, would
materially and adversely affect the business of ISAI.
3.8 Actions and Proceedings. ISAI is not a party to any material
pending litigation or, to the knowledge of the ISAI, after reasonable
inquiry, any governmental investigation or proceeding not reflected in the
ISAI Financial Statements and, to their best knowledge, no material
litigation, claims, assessments or non-governmental proceedings are
threatened against ISAI except as set forth on Schedule 3.8 attached hereto
and made a part hereof.
3.9 Periodic Reports. ISAI is a Section 12(g) reporting company and
therefore must file periodic reports pursuant to the Securities Exchange Act
of 1934, as amended, for purposes of trading on the OTC Bulletin Board. These
reports are current as of the date of execution of
this Agreement.
3.10 Capitalization. As of August 19, 2004, there were approximately
300 shareholders of record that are the owners no more than 2,651,162 Shares
of ISAI Common Stock. 240,105 of these Common Shares were remaining to be
issued, subject to receipt by ISAI of required paperwork as requested by ISAI
for such issuance. Doubletree Capital Partners, Inc., has conversion rights
of their loans and accrued interest due as of August 19, 2004, which loans
and accumulated interest can be converted into common shares at the
conversion price of $0.70 per common share (maximum total would be
approximately 1,050,000). Doubletree Capital Partners, Inc., also owns and
possesses an anti-dilution clause in their preferred shares that upon
conversion into Common shares, the shares of common stock into which the
Preferred will be converted into no less than a 75% ownership position,
exclusive of shares owned via all prior conversions of loans and accumulated
interest and indemnification shares issued to them. ISAI has 300,000,000
shares of common stock authorized, $0.0001 par value, and has 30,000,000
Shares of Preferred Stock authorized, $0.0001 par value, of which 5,000,000
were issued and outstanding as of August 19, 2004. ISA has issued to
Doubletree Capital Partners a common stock option for the purchase of
6,000,000 common shares with an exercise price of $0.60 per common share,
effective July 28, 2004 and for a period of 5 years. Doubletree Capital
Partners does not own any other warrants or options as of August 19, 2004.
There are other outstanding warrants, stock options and stock rights and
other commitments as indicated on SEC filings, but not to Doubletree Capital
Partners.
ISAI agrees not to allow Doubletree Capital Partners to convert more
than 10% of its preferred stock in any of the first three corporate fiscal
years, commencing at Closing.
3.11 Access to Records. The corporate financial records, minute books,
and other documents and records of ISAI have been made available to The
Companies prior to the Closing hereof.
3.12 No Breach. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby will
not:
(i) violate any provision of the Articles of Incorporation or By-
Laws of ISAI;
(ii) violate, conflict with or result in the breach of any of the
material terms of, result in a material modification of, otherwise give any
other contracting party the right to terminate, or constitute (or with notice
or lapse of time or both constitute) a default under, any contract or other
agreement to which ISAI is a party or by or to which it or any of its assets
or properties may be bound or subject;
(iii) violate any order, judgment, injunction, award or decree of
any court, arbitrator or governmental or regulatory body against, or binding
upon, ISAI or upon the securities, properties or business to ISAI; or
(iv) violate any statute, law or regulation of any jurisdiction
applicable to the transactions contemplated herein, which violation could
have a material adverse effect on the business or operations of ISAI.
3.13 Brokers or Finders. No broker's or finder's fee will be payable by
ISAI in connection with the transactions contemplated by this Agreement, nor
will any such fee be incurred as a result of any actions of ISAI.
3.14 Corporate Authority. ISAI has the corporate power to enter into
this Agreement and to perform its obligations hereunder. The execution and
delivery of this Agreement and the consummation of the transaction
contemplated hereby have been duly authorized by the Board of Directors and a
majority of the shareholders of ISAI. The execution and performance of this
Agreement will not constitute a material breach of any agreement, indenture,
mortgage, license or other instrument or document to which ISAI is a party
and will not violate any judgment, decree, order, writ, rule, statute, or
regulation applicable to ISAI or its properties. The execution and
performance of this Agreement will not violate or conflict with any
provision of the Certificate of
Incorporation or by-laws of ISAI.
3.15 Full Disclosure. No representation or warranty by ISAI in this
Agreement or in any document or schedule to be delivered by them pursuant
hereto, and no written statement, certificate or instrument furnished or to
be furnished by ISAI pursuant hereto or in connection with the negotiation,
execution or performance of this Agreement contains or will contain any
untrue statement of a material fact or omits or will omit to state any fact
necessary to make any statement herein or therein not materially misleading
or necessary to complete and correct presentation of all material aspects of
the business of ISAI.
3.16 No Claims Outstanding. ISAI represents that it is not subject to
any claims, litigation, or other charges against its assets, has no real
estate or real estate holdings, has 1 employee, 2 officers, 2 consultants and
4 directors, all serving without pay, and therefore there can be no OSHA or
other personnel claims outstanding or potentially ascertainable against the
company. Furthermore, there have been no material changes in the company's
position, and the company has conducted no other business, since June 30,
2004.
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions Precedent to the Obligation of The Companies. All
obligations of The Companies under this Agreement are subject to the
fulfillment, prior to or as of the Closing Date, as indicated below, of each
of the following conditions:
(a) The representations and warranties by or on behalf of ISAI
contained in this Agreement or in any certificate or document delivered
pursuant to the provisions hereof shall be true in all material respects at
and as of Closing Date as though such representations
and warranties were made at and as of such time.
(b) ISAI shall have performed and complied in all material
respects, with all covenants, agreements, and conditions set forth in, and
shall have executed and delivered all documents required by this Agreement to
be performed or complied with or executed and delivered by them prior to or
at the Closing Date unless the Companies provide waiver of such covenant,
agreement or condition in writing.
(c) On or before the Closing Date, the Board of Directors and a
majority of the shareholders of ISAI shall have approved, in accordance with
Delaware law, the execution, delivery and performance of this Agreement and
the consummation of the transaction contemplated herein and authorized all of
the necessary and proper action to enable ISAI to comply with the terms of
the Agreement, to include any requisite filings with the state of
Delaware designating the ISAI Shares to be issued pursuant to the terms of
this Agreement and with the Securities and Exchange Commission ("SEC"), such
as Form 8-K notifying the Commission of the transaction.
(d) ISAI shall have sufficient Stock of ISAI common stock and ISAI
Shares authorized but un-issued to complete the Exchange.
(e) All instruments and documents delivered to the Companies
pursuant to provisions hereof shall be reasonably satisfactory to legal
counsel for the Companies.
(f) The ISAI Shares to be issued to the Companies at the Closing
shall constitute a minimum of 36% of the total issued and outstanding stock
of ISAI after giving effect to the exercise of any and all notes, options and
warrants outstanding on the date of Closing.
(g) There shall be a minimum of four (4) market makers for the
common stock of ISAI.
(h) On the Closing Date, ISAI shall have its common stock trading
on the Over-the-Counter Bulletin Board (OTC).
(i) ISAI shall provide The Companies with an Executive Summary of its
business operations describing ISAI's business plan, potential future
acquisitions, intended additional shares issuances, if any, and the
general plan for the future of ISAI.
(j) SAI shall agree to use its best efforts to structure an
ongoing compensation package for the management teams of The Companies.
(k) On the day of Closing, the common stock of ISAI shall be trading
at a minimum price of $1.20 per share as quoted on the NASDAQ Over-the-
Counter Bulletin Board.
(l) There are no "off-balance sheet" agreements.
4.2 Conditions Precedent to the Obligations of ISAI. All
obligations of ISAI under this Agreement are subject to the fulfillment,
prior to or at the Closing Date, of each of the following conditions:
(a) The representations and warranties by the Companies contained in
this Agreement or in any certificate or document delivered pursuant to the
provisions hereof shall be true in all material respects at and as of the
Closing Date as though such representations and warranties were made at and
as of such time, and specifically, that the cumulative cash and cash
equivalent accounts and marketable securities accounts that existed on July
9, 2004 have not been diminished or decreased from their respective amounts
on that date;
(b) The Companies shall have performed and complied with, in all
material respects, all covenants, agreements, and conditions set forth in,
and shall have executed and delivered all documents required by this
Agreement to be performed or complied or executed and delivered by them prior
to or at the Closing;
(c) The Companies will have delivered all required documents to
ISAI, which are satisfactory to ISAI for purposes of determining all assets,
liens, easements, claims, rights, exemptions and other encumbrances against
the Companies, identifying all aspects of ownership, such that ISAI,
following Closing, can demonstrate to representatives of the Securities and
Exchange Commission that ISAI owns or controls the assets being transferred
by the Companies.
(d) The acquisition shall comprise all of the the ownership
interests in the assets described on Schedule 1.0 currently owned by the
Companies, it being expressly understood that sufficient cash will be
reserved by the Companies to pay for the cost of the Audit, and that the Fala
loans referred to above will not be included in the acquisition.
SECTION 5. COVENANTS
5.1 Corporate Examinations and Investigations. Prior to the
Closing Date, the parties acknowledge that they have been entitled, through
their employees and representatives, to make such investigation of the
assets, properties, business and operations, books, records and financial
condition of the other as they each may reasonably require. No
investigations, by a party hereto shall, however, diminish or waive any of
the representations, warranties covenants or agreements of the other party
under this Agreement.
5.2 Further Assurances. The parties shall execute such documents
and other papers and take such further actions as may be reasonably required
or desirable to carry out the provisions hereof and the transactions
contemplated hereby. Each such party shall use its best efforts to fulfill or
obtain the fulfillment of the conditions to the Closing, including, without
limitation, the execution and delivery of any documents or other papers, the
execution and delivery of which are necessary or appropriate to the Closing.
5.3 Confidentiality. In the event the transactions contemplated
by this Agreement are not consummated, ISAI and the Companies agree to keep
confidential any information disclosed to each other in connection therewith
for a period of one year from the date hereof; provided, however, such
obligation shall not apply to information which:
(i) at the time of the disclosure was public knowledge;
(ii) after the time of disclosure becomes public knowledge (except
due to the action of the receiving party); or
(iii) the receiving party had within its possession at the time of
disclosure; or
(iv) is ordered disclosed by a Court of proper jurisdiction; or
(v) is required of ISAI under applicable federal and state laws or
regulations or upon the advice of counsel.
SECTION 6. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
Notwithstanding any right of any party to investigate
the affairs of the other parties, each party has the right to rely fully upon
representations, warranties, covenants and agreements of the other parties
and its contained in this Agreement or in any document delivered to one by
another or any of their representatives, in connection with the transactions
contemplated by this Agreement. All such representations, warranties,
covenants and agreements shall survive the execution and delivery hereof and
the closing hereunder for one year following the Closing Date.
SECTION 7. INDEMNIFICATION
7.1 Each party shall assume all liability and responsibility for
any legal or financial transactions entered into by it.
7.2 For a period of one year from the Closing Date, the Companies
agree to indemnify and hold harmless ISAI, its officers, directors and
principal shareholders, and ISAI agrees to indemnify and hold harmless the
Companies against and in respect of any liability, damage, or deficiency, all
actions, suits, proceedings, demands, assessments, judgments, costs and
expenses, including attorneys' fees, incident to any of the foregoing,
resulting from any material misrepresentation made by any indemnifying party
to an indemnified party, an indemnifying party's breach of a covenant or
warranty or an indemnifying party's non-fulfillment of any agreement
hereunder, or from any material misrepresentation or omission from any
schedule, certificate, financial statement or tax return furnished or to be
furnished hereunder for any period up to and including 120 days after the
Closing Date of this Agreement.
If the indemnified party receives written notice of the commencement
of any legal action, suit or proceeding with respect to which the
indemnifying party is or may be obligated to provide indemnification pursuant
to this Section, the indemnified party shall, within 30 days of the receipt
of such written notice, give the indemnifying party written notice thereof (a
"Claim Notice"). Failure to give such Claim Notice within such 30 day period
shall not constitute a waiver by the indemnified party or its rights to
indemnity hereunder with respect to such action, suit or proceeding unless
the defense thereof is prejudiced thereby. Upon receipt by the indemnifying
party of a Claim Notice from the indemnified party with respect to any claim
for indemnification which is based upon a claim made by a third party ("Third
Party Claim"), the indemnifying party may assume the defense of the Third
Party Claim with counsel of its own choosing, as described below. The
indemnified party shall cooperate in the defense of the Third Party Claim and
shall furnish such records, information and testimony and attend all such
conferences, discovery proceedings, hearings, trials and appeals as may be
reasonably required in connection therewith. The indemnified party shall have
the right to employ its own counsel in any such action, but the fees and
expenses of such counsel shall be at the expense of the indemnified party
unless the indemnifying party shall not have with reasonable promptness
employed counsel to assume the defense of the Third Party Claim, in which
event such fees and expenses shall be borne solely by the indemnifying party.
The indemnifying party shall not satisfy or settle any Third Party Claim for
which indemnification has been sought and is available hereunder, without
the prior written consent of the indemnified party, which consent shall not be
delayed or which shall not be required if the indemnified party is granted a
release in connection therewith. If the indemnifying party shall fail with
reasonable
promptness to defend such Third Party Claim, the indemnified party may defend
satisfy or settle the Third Party Claim at the expense of the indemnifying party
and the indemnifying party shall pay to the indemnified party the amount of
such Loss within ten days after written demand thereof. The indemnification
provisions hereof shall survive the termination of this Agreement.
SECTION 8. DOCUMENTS AT CLOSING AND THE CLOSING
8.1 Documents at Closing. At the Closing Date, which must occur
on or before August 23, 2004 the following transactions shall occur, all of
such transactions being deemed to occur simultaneously:
(a) The Companies will deliver, or will cause to be delivered, to
ISAI the following:
(i) a certificate executed by the Presidents and Secretaries of the
Companies to the effect that all representations and warranties made by the
Companies under this Agreement as to the Companies are true and correct as of
the Closing Date, the same as though originally given to ISAI on said date;
(ii) The Companies shall deliver an opinion of its legal counsel,
limited as to any portion of the opinion as to an aspect of the agreement
governed by the application of California law, to ISAI to the effect that:
(a) The Companies are corporations validly existing and in good
standing under the laws of the state of California and are duly qualified to
do business in any jurisdiction where so required except where the failure to
so qualify would have no material adverse impact on the company;
(b) The Companies have the corporate power to carry on their
businesses as now being conducted; and
(c) This Agreement has been duly authorized, executed and
delivered by The Companies by their Board of Directors.
(d) This Agreement is valid and binding on The Companies and
enforceable according to its terms.
(iv) all other items, the delivery of which is a condition precedent
to the obligations of ISAI, as set forth in Section 4.
(b) ISAI will deliver or cause to be delivered to the Companies:
(i) a certificate from ISAI executed by the President or Secretary
of ISAI, to the effect that all representations and warranties of ISAI made
under this Agreement are true and correct as of the Closing, the same as
though originally given to the Companies on said date;
(ii) copies of resolutions by ISAI Board of Directors authorizing
this transaction;
(iii) certificates from Delaware dated at or about the Closing Date
that ISAI is in good standing under the laws of said jurisdiction;
(iv) an opinion of counsel, limited as to any portion of the opinion
that applies to an aspect governed by the application of Delaware law, dated
as of the Closing Date to the effect that:
(a) ISAI is a corporation validly existing and in good standing
under the laws of Delaware;
(b) This Agreement has been duly authorized executed and
delivered by ISAI and is a valid and binding obligation of ISAI enforceable
in accordance with its terms;
(c) ISAI, through its Board of Directors and its shareholders,
has taken all corporate action necessary for performance under this
Agreement;
(d) The documents executed and delivered to the Companies
hereunder are valid and binding in accordance with their terms;
(e) The ISAI Shares to be issued pursuant to Section 1.1 hereof,
when issued, will be duly and validly issued, fully paid and non-assessable;
and
(f) ISAI has the corporate power to execute the Agreement,
deliver the ISAI Shares and perform under this Agreement.
(v) all other items, the delivery of which is a condition precedent
to the obligations of The Companies as set forth in Section 4 hereof.
8.2 The Closing. The Closing shall take place at the time or
place as shall be designated by the Board of Directors of ISAI after all pre-
conditions have been met. At the Closing, the parties shall provide each
other with such documents as may be necessary.
SECTION 9. MISCELLANEOUS
9.1 Waivers. The waiver of a breach of this Agreement or the
failure of any party hereto to exercise any right under this Agreement shall
in no way constitute waiver as to future breach whether similar or dissimilar
in nature or as to the exercise of any further right under this Agreement.
9.2 Amendment. This Agreement may be amended or modified only by
an instrument of equal formality signed by the parties or the duly authorized
representatives of the respective parties.
9.3 Assignment. This Agreement is not assignable except by
operation of law.
9.4 Notice. Until otherwise specified in writing, the mailing
addresses and fax numbers of the parties to this Agreement shall be as
follows:
To: ISAI:
Bernard L. Brodkorb, President and CEO
ISAI Internationale, Inc.
2560 N. Rice Street
St. Paul, Minnesota 55113
with copy to:
Christopher Dieterich
Dieterich & Associates
11300 West Olympic Boulevard, Suite 800
Los Angeles, California 90064
Fax: (310) 312-6680
To: The Companies:
Dante Fala, President
Asset Management Group
5000 N. Parkway Calabasas, Suite 303
Calabsas, California 91302
with copy to:
R. John Kohlbrand
Law Office of R. John Kohlbrand
3075 E. Thousand Oaks Blvd., #103
Westlake Village, CA 91361
Fax: (805) 496-0825
Any notice or statement given under this Agreement shall be deemed to have
been given if sent by registered mail addressed to the other party at the
address indicated above or at such other address which shall have been
furnished in writing to the addressor.
9.5 Governing Law. This Agreement shall be construed, and the legal
relations between the parties determined, in accordance with the laws of the
State of California thereby precluding any choice of law rules that may
direct the application of the laws of any other jurisdiction.
9.6 Publicity. No publicity release or announcement concerning this
Agreement or the transactions contemplated hereby shall be issued by any
party hereto at any time from the signing hereof without advance approval in
writing of the form and substance by the other parties except as may be
appropriate at the sole discretion of counsel to ISAI for the purposes of
meeting its disclosure obligation under federal and state securities laws.
9.7 Entire Agreement. This Agreement (including the Exhibits and
Schedules to be attached hereto) and the collateral agreements executed in
connection with the consummation of the transactions contemplated herein
contain the entire agreement among the parties with respect to the Exchange
and issuance of the ISAI Shares and related transactions, and supersede all
prior agreements, written or oral, with respect thereto.
9.8 Headings. The headings in this Agreement are for reference purposes
only and shall not in any way affect the meaning or interpretation of this
Agreement.
9.9 Sever ability of Provisions. The invalidity or unenforceability of
any term, phrase, clause, paragraph, restriction, covenant, agreement or
provision of this Agreement shall in no way affect the validity or
enforcement of any other provision or any part thereof.
9.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed, shall constitute an original
copy hereof, but all of which together shall consider but one and the same
document.
9.11 Binding Effect. This Agreement shall be binding upon the parties
hereto and inure to the benefit of the parties, their respective heirs,
administrators, executors, successors and assigns.
9.12 Tax Treatment. ISAI and the Companies acknowledge that they each
have been represented by their own tax advisors in connection with this
transaction; that none of them has made a representation or warranty to any
of the other parties with respect to the tax treatment accorded this
transaction, or the effect individually or corporately on any party under the
applicable tax laws, regulations, or interpretations; and that no opinion of
counsel or private revenue ruling has been obtained with respect to the
effects of this transaction under the Code.
9.13 Expenses. ISAI shall be responsible for payment of specific
expenses preceding the Closing with respect to the actual property transfer
transaction, all appraisals and audits of the Companies and any other expense
attributable to this transaction, to include normal legal, accounting and
government reporting obligations incident to ISAI that occur during the
pendency of this transaction.
9.14 Dispute Resolution. In the event that a dispute arises between the
parties to this agreement, ISAI and the Companies agree to submit the dispute
to arbitration. Such arbitration shall be conducted by and pursuant to the
rules of the American Arbitration Association in Los Angeles County,
California. The prevailing party in any dispute arising from the transactions
contemplated by this Agreement shall be entitled to reimbursement for
reasonable attorney's fees associated with the resolution of the dispute.
9.15 Name Reservation. ISAI reserves the right to take and use the
corporate names of the Companies and the Companies shall amend their articles
of incorporation, changing their corporate names.
9.16 Non-Compete Clause. Dante Fala agrees that for a period of 5 years
he will not compete with ISAI or any of the business services formerly
associated with the assets being sold by the Companies to ISAI, within a
radius of 150 miles from Calabasas, California.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.
ISA Internationale, Inc.
A Delaware corporation
/s/ Bernard L. Brodkorb
By: Bernard L. Brodkorb, President and
Chief Executive Officer
Cash Asset Management, Inc.,
A California Corporation
/s/ Dante Fala
By: Dante Fala, President
Money Asset Management, Inc.,
A California Corporation
/s/ Dante Fala
By: Dante Fala, President
Harrison Asset Management, Inc.,
A California Corporation
/s/ Dante Fala
By: Dante Fala, President
SCHEDULES
The Companies Schedules
1.0 Assets of the Companies
See exhibit 1.0
1.1 Warrant Terms
See exhibit IV
2.6 Material Adverse Changes in the Companies
None
2.10 The Companies Consents, if required.
See exhibit 1.0
2.12 Description of Actions and Proceedings brought by or against The
Companies.
Cease and Desist Orders by California Department of Corporations
2.16 Significant contracts affecting The Companies
None
2.18 List of Real Estate owned by The Companies or leases entered into by
The Companies
(Lease by MAMI in Calabasas, California) - United Recovery, Inc.,
No other Real Estate
2.20 List of all tangible assets of The Companies
See exhibit 1.0
2.21 Liabilities of The Companies
See exhibit 1.0
2.24 List of all intangible assets of The Companies
See exhibit 1.0
ISAI Schedules
3.4 ISAI Financial Statements
10KSB AS OF DECEMBER 31, 2003
10QSB AS OF MARCH 31, 2004
10QSB AS OF JUNE 30, 2004
3.5 List of material adverse changes
None.
3.8 Description of Actions and Proceedings brought by or against ISAI
None since December 31, 2003 through August 19, 2004
Exhibit 1
1.0 THE ASSETS OF THE COMPANIES
CASH ASSET MANAGEMENT, INC.
CASH AND EQUIVALENTS $ 6,245
PORTFOLIO (NET OF RECOVERIES) 743,599
OFFICE EQUIPMENT, FIXTURES & FURNISHINGS 11,083
OTHER ASSETS 12,000
CORPORATE NAME 1
COVENANT NOT TO COMPETE 1
MAILING LIST OF PREFERRED SHAREHOLDERS 1
LESS: LIABILITIES -5,700
TOTAL ASSETS ACQUIRED: $ 767,230
HARRISON ASSET MANAGEMENT INC.
CASH, CASH EQUIVALENTS AND BOND $ 157,796
PORTFOLIO (NET OF RECOVERIES) 1,407,411
OFFICE EQUIPMENT, FIXTURES & FURNISHINGS 14,230
OTHER ASSETS 25,184
CORPORATE NAME 1
COVENANT NOT TO COMPETE 1
MAILING LIST OF PREFERRED SHAREHOLDERS 1
LESS: LIABILITIES -7,755
TOTAL ASSETS ACQUIRED: 1,596,869
MONEY ASSET MANAGEMENT INC.
CASH, CASH EQUIVALENTS AND BOND 4,558
MARKETABLE SECURITIES 29,062
PORTFOLIO (NET OF RECOVERIES) 3,419,566
OFFICE EQUIPMENT & FURNITURE 20,115
OTHER ASSETS 17,500
2000 COMMON SHARES OF UNITED RECOVERY INC. 1
CORPORATE NAME 1
COVENANT NOT TO COMPETE 1
MAILING LIST OF PREFERRED SHAREHOLDERS 1
LESS: LIABILITIES 0
TOTAL ASSETS ACQUIRED: 3,490,805
UNITED RECOVERY INC.
CASH, CASH EQUIVALENTS AND BOND 19,227
PORTFOLIO (NET OF RECOVERIES) 78,111
OFFICE EQUIPMENT 48,817
OTHER ASSETS 17,500
LESS: LIABILITIES 0
TOTAL ASSETS ACQUIRED: 163,655
TOTAL ASSETS ACQUIRED COMBINED $6,018,560
PAYMENT SCHDEULE
1. ISAI WILL ISSUE THE COMMON SHARES AS FOLLOWS:
Upon signing of the final agreement
(to preferred holders) 5,000,000 shares
Upon signing of the final agreement
(to Dante Fala) 250,000 shares
Assuming $600,000 EBITDA* level met after 1st year
(to be held in reserve) 833,333 shares
Assuming $600,000 EBITDA* level met after 2nd year
(to be held in reserve) 833,333 shares
Assuming $600,000 EBITDA* level met after 3rd year
(to be held in reserve) 833,334 shares
All shares to be "reserved" for this acquisition will be issued
now and held in escrow until the EBITDA levels have been
achieved. The years of EBITDA determination shall be calendar
years 2005, 2006 and 2007. Further, should the EBITDA level be
achieved at a minimum of 75 % of the $600,000, common shares
will be issuable on a pro-rata basis from the 75 % upward. All
common shares for
the 1st and 2nd years can be pooled together to allow attainment
of maximum issuance of shares based upon above EBITDA levels above.
2. ISAI WILL ALSO ISSUE 2,500,000 WARRANTS TO PURCHASE
COMMON SHARES AS FOLLOWS:
At $1.25 exercisable during first 12 months of agreement
(to be issue now) (calendar year 2005) 833,333 warrants
At $2.00 exercisable during second 12 months of agreement
(to be issued now) (calendar year 2006) 833,333 warrants
At $2.75 exercisable during last 12 months of agreement (to be issued now)
(calendar year 2007) 833,334 warrants
3. ISAI WILL ALSO ISSUE TO THE COMPANIES ADDITIONAL SHARES
OF COMMON STOCK (quantity of shares due computable at
$1.25 Per Common Share over EBITDA levels attained) SHOULD EBITDA* LEVELS OF
$600,000 BE EXCEEDED IN ANY OF THE THREE YEARS AS FOLLOWS:
End of year 1 (calendar year 2005) 500,000 shares (potentially)
End of year 2 (calendar year 2006) 500,000 shares (potentially)
End of year 3 (calendar year 2007) 500,000 shares (potentially)
All common shares for the 1st and 2nd years can be pooled together
to allow attainment of maximum issuance of shares based upon above
EBITDA levels above. Should the COMPANIES not be able to obtain any of
the additional item 3 shares above, which require the obtainment of the
minimum divisional EBITDA of $600,000, then in that event the unearned
common shares will convert to
common stock warrants exercisable at the same terms and prices
as in item 2 above as follows:
2005 unearned shares will be exercisable anytime in year 2006 at $1.25,
2006 unearned shares will be exercisable anytime in year 2007 at $2.00,
2007 unearned shares will be exercisable anytime in year 2008 at $2.75.
4. ISAI WILL ISSUE 2,000,000 WARRANT'S TO PURCHASE COMMON
SHARES TO DANTE FALA AT THE SAME PRICES AS LISTED UNDER SECTION
2 OF THIS SCHEDULE.
5. THE SHARES ALLOCATED UNDER PARAGRAPHS OF THIS SCHEDULE
ARE ALL ALLOCATED TO THE BENEFIT OF PREFERRED SHHAREHOLDERS'
6. EMPLOYEES OF THE COMPANIES WILL BE ISSUED 750,000
WARRANTS UPON THE EXECUTION OF THE FINAL AGREEMENT.
* EBITDA levels refer to the performance of THE COMPANIES only and not the
performance of ISAI as a whole.
ITEM 10.9 STOCK PURCHASE AGREEMENT
STOCK ACQUISITION AGREEMENT
This Asset Purchase Agreement (the "Agreement") effective
August 19, 2004, is by and between ISA ACQUISITION CORP. ("ISAI"), a
Minnesota corporation and a wholly-owned subsidiary of ISA INTERNATIONALE,
INC., having its principal offices at 2560 N. Rice Street, St. Paul,
Minnesota 55113, and; DANTE FALA ("FALA"), an individual and sole shareholder
or FIRST AMERICAN FAMILY FINANCIAL SERVICES CORP., a Nevada corporation
("FAFFS") having its principal offices at 5000 N. Parkway Calabasas, Suite
303, Calabasas, California 91302.
AGREEMENT
In exchange for $1.00 and other valuable consideration, FALA
agrees to transfer all rights, title and interests in FAFFS to ISAI. FALA
hereby attests to the fact that he is the owner of 100% of the equity
interests of FAFFS and that FAFFS is a validly formed Nevada corporation, in
good standing, with no assets and no liabilities.
IN WITNESS WHEREOF, the parties have executed this Agreement
on the date first above written.
ISA ACQUISITION CORPORATION
A Minnesota corporation
by:/s/Bernard L. Brodkorb, President and
Chief Executive Officer
FIRST AMERICAN FAMILY
FINANCIAL SERVICES CORP.
A Nevada Corporation
by:/s/ Dante Fala
Dante Fala, President