Exhibit 2.1 Agreement and Plan of Merger EXECUTION COPY
AGREEMENT AND PLAN OF MERGER, dated as of August 15, 2003 (the
"Agreement"), among Irvine Pacific Corporation, a Colorado corporation,
("IPC"), IPC MERGER SUB, INC., a California corporation and wholly owned
subsidiary of IPC ("Merger Sub"), Kanona Moeai, Jr. ("Shareholder") and
HOLLYWOOD PREVIEWS, INC., a California corporation (the "Company"). IPC,
Shareholder, Merger Sub and the Company are collectively referred to herein as
the "Parties." IPC, Shareholder and Merger Sub are sometimes referred to
herein collectively as the "IPC Parties."
RECITALS:
WHEREAS, the respective boards of directors of each of IPC, Merger Sub
and the Company have approved the merger of Merger Sub with and into the
Company (the "Merger") and approved the Merger upon the terms and subject to
the conditions set forth in this Agreement;
WHEREAS, Shareholder is the beneficial owner of a majority of the
outstanding shares of IPC and will benefit from the transaction contemplated
herein;
WHEREAS, it is intended that, for federal income tax purposes, the Merger
shall qualify as a reorganization under the provisions of Section 368(a) of
the Internal Revenue Code of 1986, as amended, and the rules and regulations
promulgated thereunder (the "Code"); and
WHEREAS, the Company, Parent and Merger Sub desire to make certain
representations, warranties, covenants and agreements in connection with this
Agreement.
NOW, THEREFORE, in consideration of the premises and mutual promises
herein made, and in consideration of the representations, warranties,
covenants and agreements herein contained, and intending to be legally bound
hereby, the Parties agree as follows:
ARTICLE I
DEFINITIONS
1.1 Certain Definitions. The following terms shall, when used in
this Agreement, have the following meanings:
"Acquisition" means the acquisition by a Person of any businesses, assets
or property other than in the ordinary course, whether by way of the purchase
of assets or stock, by merger, consolidation or otherwise.
"Affiliate" means, with respect to any Person: (i) any Person directly or
indirectly owning, controlling, or holding with power to vote 10% or more of
the outstanding voting securities of such other Person (other than passive or
institutional investors); (ii) any Person 10% or more of whose outstanding
voting securities are directly or indirectly owned, controlled, or held with
power to vote, by such other Person; (iii) any Person directly or indirectly
controlling, controlled by, or under common control with such other Person;
and (iv) any officer, director or partner of such other Person. "Control" for
the foregoing purposes shall mean the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities or voting
interests, by contract or otherwise.
"Business Day" means any day other than Saturday, Sunday or a day on
which banking institutions in Los Angeles, California, are required or
authorized to be closed.
"Code" means the United States Internal Revenue Code of 1986, as amended.
"Collateral Documents" mean the Exhibits and any other documents, instruments
and certificates to be executed and delivered by the Parties hereunder or
thereunder.
"Commission" means the Securities and Exchange Commission or any
Regulatory Authority that succeeds to its functions.
"Commissioner" means the Commissioner of Corporations of the State of
California.
"Company Assets" mean all properties, assets, privileges, powers, rights,
interests and claims of every type and description that are owned, leased,
held, used or useful in the Company Business and in which the Company has any
right, title or interest or in which the Company acquires any right, title or
interest on or before the Closing Date, wherever located, whether known or
unknown, and whether or not now or on the Closing Date on the books and
records of the Company, but excluding any of the foregoing, if any,
transferred prior to the Closing pursuant to this Agreement or any Collateral
Documents.
"Company Business" means the developing, marketing and sale of video
magazines and other interactive digital media.
"Company Common Stock" means the common shares of the Company.
"Company Shareholders" means, as of any particular date, the holders of
Company Common Stock on that date.
"Encumbrance" means any material mortgage, pledge, lien, encumbrance,
charge, security interest, security agreement, conditional sale or other title
retention agreement, limitation, option, assessment, restrictive agreement,
restriction, adverse interest, restriction on transfer or exception to or
material defect in title or other ownership interest (including restrictive
covenants, leases and licenses).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time.
"IPC Assets" mean all properties, assets, privileges, powers, rights,
interests and claims of every type and description that are owned, leased,
held, used or useful in the IPC Business and in which IPC or any of its
Subsidiaries has any right, title or interest or in which IPC or any of its
Subsidiaries acquires any right, title or interest on or before the Closing
Date, wherever located, whether known or unknown, and whether or not now or on
the Closing Date on the books and records of IPC or any of its Subsidiaries.
"IPC Business" means the business conducted by IPC and its Subsidiaries.
"IPC Common Stock" means the common shares of IPC.
"IPC Securities Filings" means IPC's Registration Statement on Form 10-SB
and its quarterly reports on Form 10-QSB, and all other reports filed and to
be filed with the Commission prior to the Effective Time.
"Legal Requirement" means any statute, ordinance, law, rule, regulation,
code, injunction, judgment, order, decree, ruling, or other requirement
enacted, adopted or applied by any Regulatory Authority, including judicial
decisions applying common law or interpreting any other Legal Requirement.
"Losses" shall mean all damages, awards, judgments, assessments, fines,
sanctions, penalties, charges, costs, expenses, payments, diminutions in value
and other losses, however suffered or characterized, all interest thereon, all
costs and expenses of investigating any claim, lawsuit or arbitration and any
appeal therefrom, all actual attorneys', accountants' investment bankers' and
expert witness' fees incurred in connection therewith, whether or not such
claim, lawsuit or arbitration is ultimately defeated and, subject to Section
9.4, all amounts paid incident to any compromise or settlement of any such
claim, lawsuit or arbitration.
"Liability" means any liability or obligation (whether known or unknown,
whether asserted or unasserted, whether absolute or contingent, whether
accrued or unaccrued, whether liquidated or unliquidated, and whether due or
to become due), including any liability for Taxes.
"Material Adverse Effect" means a material adverse effect on (i) the
assets, Liabilities, properties or business of the Parties, (ii) the validity,
binding effect or enforceability of this Agreement or the Collateral Documents
or (iii) the ability of any Party to perform its obligations under this
Agreement and the Collateral Documents; provided, however, that none of the
following shall constitute a Material Adverse Effect on the Company: (i) the
filing, initiation and subsequent prosecution, by or on behalf of shareholders
of any Party, of litigation that challenges or otherwise seeks damages with
respect to the Merger, this Agreement and/or transactions contemplated thereby
or hereby, (ii) occurrences due to a disruption of a Party's business as a
result of the announcement of the execution of this Agreement or changes
caused by the taking of action required by this Agreement, (iii) general
economic conditions, or (iv) any changes generally affecting the industries in
which a Party operates.
"Merger Shares" means the shares of IPC Common Stock deliverable by IPC
in exchange for Company Common Stock pursuant to Section 2.6.
"Permit" means any license, permit, consent, approval, registration,
authorization, qualification or similar right granted by a Regulatory
Authority.
"Permitted Liens" means (i) liens for Taxes not yet due and payable or
being contested in good faith by appropriate proceedings; (ii) rights reserved
to any Regulatory Authority to regulate the affected property; (iii) statutory
liens of banks and rights of set-off; (iv) as to leased assets, interests of
the lessors and sublessors thereof and liens affecting the interests of the
lessors and sublessors thereof; (v) inchoate materialmen's, mechanics',
workmen's, repairmen's or other like liens arising in the ordinary course of
business; (vi) liens incurred or deposits made in the ordinary course in
connection with workers' compensation and other types of social security;
(vii) licenses of trademarks or other intellectual property rights granted by
the Company or IPC, as the case may be, in the ordinary course and not
interfering in any material respect with the ordinary course of the business
of the Company or IPC, as the case may be; and (viii) as to real property, any
encumbrance, adverse interest, constructive or other trust, claim, attachment,
exception to or defect in title or other ownership interest (including, but
not limited to, reservations, rights of entry, rights of first refusal,
possibilities of reverter, encroachments, easement, rights-of-way, restrictive
covenants, leases, and licenses) of any kind, which otherwise constitutes an
interest in or claim against property, whether arising pursuant to any Legal
Requirement, under any contract or otherwise, that do not, individually or in
the aggregate, materially and adversely affect or impair the value or use
thereof as it is currently being used in the ordinary course.
"Person" means any natural person, corporation, partnership, trust,
unincorporated organization, association, limited liability company,
Regulatory Authority or other entity.
"Proposed Acquisition" means any of the following transactions (other
than the transactions contemplated by this Agreement): (i) a merger,
consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving the Company pursuant to which the
shareholders of the Company immediately preceding such transaction hold less
than 50% of the aggregate equity interests in the surviving or resulting
entity of such transaction, (ii) a sale or other disposition by the Company of
assets representing in excess of 50% of the aggregate fair market value of the
Company Business immediately prior to such sale or (iii) the acquisition by
any person or group (including by way of a tender offer or an exchange offer
or issuance by the Company), directly or indirectly, of beneficial ownership
or a right to acquire beneficial ownership of shares representing in excess of
50% of the voting power of the then outstanding shares of capital stock of the
Company.
"Regulatory Authority" means: (i) the United States of America; (ii) any
state, commonwealth, territory or possession of the United States of America
and any political subdivision thereof (including counties, municipalities and
the like); (iii) Canada and any other foreign (as to the United States of
America) sovereign entity and any political subdivision thereof; or (iv) any
agency, authority or instrumentality of any of the foregoing, including any
court, tribunal, department, bureau, commission or board.
"Representative" means any director, officer, employee, agent,
consultant, advisor or other representative of a Person, including legal
counsel, accountants and financial advisors.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
"Subsidiary" of a specified Person means (a) any Person if securities
having ordinary voting power (at the time in question and without regard to
the happening of any contingency) to elect a majority of the directors,
trustees, managers or other governing body of such Person are held or
controlled by the specified Person or a Subsidiary of the specified Person;
(b) any Person in which the specified Person and its subsidiaries collectively
hold a 50% or greater equity interest; (c) any partnership or similar
organization in which the specified Person or subsidiary of the specified
Person is a general partner; or (d) any Person the management of which is
directly or indirectly controlled by the specified Person and its Subsidiaries
through the exercise of voting power, by contract or otherwise.
"Tax" means any U.S. or non U.S. federal, state, provincial, local or
foreign income, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium, windfall profits, environmental,
customs duties, capital, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal property,
intangible property, recording, occupancy, sales, use, transfer, registration,
value added minimum, estimated or other tax of any kind whatsoever, including
any interest, additions to tax, penalties, fees, deficiencies, assessments,
additions or other charges of any nature with respect thereto, whether
disputed or not.
"Tax Return" means any return, declaration, report, claim for refund or
credit or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"Treasury Regulations" means regulations promulgated by the U.S. Treasury
Department under the Code.
1.2 Other Definitions. The following terms shall, when used in this
Agreement, have the meanings assigned to such terms in the Sections indicated.
Term.................................................................Schedule
"Agreement"..........................................................Preamble
"Certificate of Merger" ..................................................2.5
"CCC".....................................................................2.1
"Closing".................................................................2.8
"Closing Date"............................................................2.8
"Company Common Stock" .................................................2.6(d)
"Company Certificates"..................................................2.7(a)
"Company Financial Statements" ...........................................3.8
"Company Intellectual Property Rights" ...................................3.6
"Conversion" .......................................................2.6(a)(ii)
"Current Market Price"..................................................2.6(d)
"Dissenting Shares"...................................................... 2.8
"Effective Time"......................................................... 2.5
"Excluded Shares".......................................................2.6(a)
"IPC Parties".........................................................Preamble
"Material Company Contract" ..............................................3.4
"Material IPC Contract"...................................................4.4
"Merger" .................................................................2.1
"Options"...............................................................3.2(b)
"Parties".............................................................Preamble
"Preferred Stock" ......................................................3.2(a)
"Shareholder Meeting".....................................................5.4
"Surviving Corporation"...................................................2.1
ARTICLE II
THE MERGER
2.1 Merger; Surviving Corporation. In accordance with and subject to
the provisions of this Agreement and the California Corporations Code ("CCC"),
at the Effective Time, the Merger Sub shall be merged with and into the
Company (the "Merger"), and the Company shall be the surviving corporation in
the Merger (hereinafter sometimes called the "Surviving Corporation") and
shall continue its corporate existence under the laws of the State of
California. At the Effective Time, the separate existence of the Merger Sub
shall cease. All properties, franchises and rights belonging to the Company
and Merger Sub, by virtue of the Merger and without further act or deed, shall
be vested in the Surviving Corporation, which shall thenceforth be responsible
for all the liabilities and obligations of each of Merger Sub and the Company.
2.2 Articles of Incorporation. The Company's articles of incorporation,
as in effect at the Effective Time, shall continue in full force and effect as
the articles of incorporation of the Surviving Corporation until altered or
amended as provided therein or by law.
2.3 By-Laws. The Company's by-laws, as in effect at the Effective Time,
shall be the by-laws of the Surviving Corporation until altered, amended or
repealed as provided therein or by law.
2.4 Directors and Officers. The directors of the Company prior to the
Effective Time shall be the directors of the Surviving Corporation. The
members of the board of directors of the Surviving Corporation shall serve
thereafter in accordance with the articles of incorporation and by-laws of the
Surviving Corporation and the CCC. The officers of the Company prior to the
Effective Time shall continue to serve as officers of the Surviving
Corporation in accordance with the articles of incorporation and by-laws of
the Surviving Corporation and the CCC.
2.5 Effective Time. The Merger shall become effective at the time and
date that the agreement of merger with an officers' certificate of each of the
Merger Sub and the Company (the "Certificate of Merger"), in form and
substance acceptable to the Parties, is accepted for filing by the Secretary
of State of the State of California in accordance with the provisions of
Section 1103 of the CCC. The Certificate of Merger shall be executed by the
Merger Sub and the Company and delivered to the Secretary of State of the
State of California for filing on the Closing Date. The date and time when
the Merger becomes effective are referred to herein as the "Effective Time."
2.6 Merger Shares; Conversion and Cancellation of Securities.
(a) Conversion of Company Common Stock. At the Effective Time,
all shares of Company Common Stock outstanding immediately before the
Effective Time, other than shares described in Section 2.6(b) and other than
Dissenting Shares, collectively, the "Excluded Shares", shall be converted, by
virtue of the Merger, into 55,494,571 shares of IPC Common Stock (the "Merger
Shares") so, that the holders of Company Common Stock will own 97% of IPC's
issued and outstanding capital stock on a fully diluted basis as of the
Effective Date after giving effect to the Merger, and the note conversion
referred to below, subject to the following:
(i) the allocation of the Merger Shares among the Company
Shareholders excluding the holders of Dissenting Shares shall be as set forth
on Exhibit 2.6 to be delivered to IPC at least one business day prior to the
Closing;
(ii) the conversion (the "Conversion") by the Company's
noteholders immediately prior to the Closing of all outstanding notes owed by
the Company into 1,689,500 shares of common stock;
(iii) The cancellation (the "Cancellation") by the Company
immediately prior to the Closing of 11,000,000 shares of IPC Common Stock;
(iv) the conversion or cancellation prior to the Closing of
all outstanding shares of Preferred Stock of the Company; and
(i)If between the date of this Agreement and the Closing Date, IPC shall
declare a stock split or declare a dividend on IPC Common Stock payable in IPC
Common Stock (or set a record date with respect thereto), the number of Merger
Shares determined above shall be adjusted to reflect fully the appropriate
effect of any such subdivision, combination or dividend.
At the Effective Time, all Company Shares shall no longer be outstanding
and shall be cancelled and retired and shall cease to exist, and each
certificate formerly representing any Company Common Stock (other than
Excluded Shares) shall thereafter represent only the right to the Merger
Shares and any distribution or dividend pursuant to Section 2.6(e).
(b) Treasury Shares, Etc. Each share of Company Common Stock
held in the treasury of the Company and each share of Company Common Stock, if
any, held by IPC or any Subsidiary of IPC or of the Company immediately before
the Effective Time shall be cancelled and extinguished, and nothing shall be
issued or paid in respect thereof.
(c) Fractional Shares. No certificates or scrip evidencing
fractional shares of IPC Common Stock shall be issued in exchange for Company
Common Stock. All fractional shares amounts shall be rounded up to the
nearest whole share.
Surrender of Company Certificates.
(d) Exchange Procedures. Promptly after the Effective Time, IPC
or its appointed designee shall mail to each holder of a certificate or
certificates of Company Common Stock ("Company Certificates") whose shares are
converted into the right to receive the Merger Shares, (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Company Certificates shall pass to IPC, only upon
delivery of the Company Certificates to IPC and which shall be in such form
and have such other provisions as IPC may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Company Certificates in
exchange for the Merger Shares and any dividends or other distributions
pursuant to Section 2.6(e). Upon surrender of Company Certificates for
cancellation to IPC, together with such letter of transmittal, duly completed
and validly executed in accordance with the instructions thereto, the holders
of such Company Certificates shall be entitled to receive the Merger Shares in
exchange therefor and any dividends or distributions payable pursuant to
Section 2.6(e), and the Company Certificates so surrendered shall forthwith be
canceled. Until so surrendered, outstanding Company Certificates will be
deemed from and after the Effective Time, for all corporate purposes, subject
to Section 2.8, to evidence the ownership of the number of full shares of IPC
Common Stock into which such shares of the Company Common Stock shall have
been so converted and any dividends or distributions payable pursuant to
Section 2.6(e). Notwithstanding the foregoing, if any Company Certificate is
lost, stolen, destroyed or mutilated, such holder shall provide evidence
reasonably satisfactory to IPC as to such loss, theft, destruction or
mutilation and an affidavit in form and substance satisfactory to IPC, and,
thereupon, such holder shall be entitled to receive the Merger Shares in
exchange therefor and any dividends or distributions payable pursuant to
Section 2.6(e), and the Company Certificates so surrendered shall forthwith be
canceled.
(e) Distributions With Respect to Unexchanged Shares. No
dividends or other distributions declared or made after the date of this
Agreement with respect to IPC Common Stock with a record date after the
Effective Time, will be paid to the holders of any unsurrendered Company
Certificates with respect to the shares of IPC Common Stock represented
thereby until the holders of record of such Company Certificates shall
surrender such Company Certificates or, in the case of any Company Certificate
which is lost, stolen, destroyed or mutilated, an affidavit in form and
substance satisfactory to IPC. Subject to applicable law, following surrender
of any such Company Certificates or delivery of such affidavit, IPC shall
deliver to the record holders thereof, without interest, the Merger Shares
hereof and the amount of any such dividends or other distributions with a
record date after the Effective Time payable with respect to such whole shares
of IPC Common Stock.
(f) Transfers of Ownership. If certificates for shares of IPC
Common Stock are to be issued in a name other than that in which the Company
Certificates surrendered in exchange therefor are registered, it will be a
condition of the issuance thereof that the Company Certificates so surrendered
will be properly endorsed and otherwise in proper form for transfer and that
the persons requesting such exchange will have paid to IPC or any agent
designated by it any transfer or other taxes required by reason of the
issuance of certificates for shares of IPC Preferred Stock in any name other
than that of the registered holder of the Company Certificates surrendered, or
established to the satisfaction of IPC or any agent designated by it that such
tax has been paid or is not payable.
(g) Required Withholding. In connection with any payment to any
holder or former holder of the Company Common Stock, each of IPC and the
Surviving Corporation shall be entitled to deduct and withhold from any
consideration payable or otherwise deliverable pursuant to this Agreement to
any holder or former holder of the Company Common Stock such amounts as may be
required to be deducted or withheld therefrom under the Code or under any
provision of state, local or foreign tax law or under any other applicable
laws. To the extent such amounts are so deducted or withheld, such amounts
shall be treated for all purposes under this Agreement as having been paid to
the person to whom such amounts would otherwise have been paid.
(h) No Liability. Notwithstanding anything to the contrary in
this Section 0, neither IPC, the Surviving Corporation nor any party hereto
shall be liable to any Person for any amount properly paid to a public
official pursuant to any applicable abandoned property, escheat or similar
law. If any Company Certificate shall not have been surrendered prior to the
date immediately prior to the date on which such property would otherwise
escheat to or become the property of any Governmental or Regulatory Authority,
any such property, to the extent permitted by applicable law, shall become the
property of the Surviving Corporation, free and clear of all claims or
interest of any person previously entitled thereto.
(i) Termination. Any holders of the Company Certificates who
have not complied with this ARTICLE II shall look only to IPC or the Surviving
Corporation for, and IPC and the Surviving Corporation shall remain liable
for, payment of their claim for Merger Shares and any dividends or
distributions with respect to IPC Common Stock, without interest thereon.
2.7 Stock Transfer Books. At the Effective Time, the stock transfer
books of the Company shall be closed, and there shall be no further
registration of transfers of shares of Company Common Stock thereafter on the
records of the Company.
2.8 Dissenting Shares. Shares of Company Common Stock which are issued
and outstanding immediately prior to the Effective Time and which are held by
persons who have properly exercised, and not withdrawn or waived, appraisal
rights with respect thereto in accordance with Chapter 1300 of the California
General Corporation Laws, (the "Dissenting Shares"), will not be converted
into the right to receive the Merger Shares, and holders of such shares of
Company Common Stock will be entitled, in lieu thereof, to receive payment of
the appraised value of such shares of Company Common Stock in accordance with
the provisions of such Chapter 1300 unless and until such holders fail to
perfect or effectively withdraw or lose their rights to appraisal and payment
under the California General Corporation Laws. If, after the Effective Time,
any such holder fails to perfect or effectively withdraws or loses such right,
such shares of Company Common Stock will thereupon be treated as if they had
been converted at the Effective Time into the right to receive the Merger
Shares, without any interest thereon. The Company will give IPC prompt notice
of any demands received by the Company for appraisal of shares of Company
Common Stock. Prior to the Effective Time, the Company will not, except with
the prior written consent of IPC make any payment with respect to, or settle
or offer to settle, any such demands.
2.9 Restriction on Transfer. The Merger Shares may not be sold,
transferred, or otherwise disposed of without registration under the Act or an
exemption there from, and that in the absence of an effective registration
statement covering the Merger Shares or any available exemption from
registration under the Act, the Merger Shares must be held indefinitely. The
Company Shareholders are aware that the Merger Shares may not be sold pursuant
to Rule 144 promulgated under the Act unless all of the conditions of that
Rule are met. Among the conditions for use of Rule 144 may be the
availability of current information to the public about IPC.
1.5 Restrictive Legend. All certificates representing the Merger Shares
shall contain the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE,
INCLUDING CERTAIN VOTING AND TRANSFER RIGHTS WITH
RESPECT THERETO, ARE SUBJECT TO THE TERMS OF AN
AGREEMENT AND PLAN OF MERGER, DATED AS OF
AUGUST __, 2003, AMONG IRVINE PACIFIC CORPORATION,
IPC MERGER SUB, INC., HOLLYWOOD PREVIEWS, INC. AND
KANONA MOEAI, JR., A COPY OF WHICH IS ON FILE IN
THE PRINCIPAL OFFICE OF THE ISSUER. FURTHER, THE
SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT
BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF
WITHOUT REGISTRATION UNDER THE ACT OR AN EXEMPTION
THERE FROM."
2.10 Closing. The closing of the transactions contemplated by this
Agreement and the Collateral Documents (the "Closing") shall take place at the
offices of Loeb & Loeb LLP, 00000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx 0000, Xxx
Xxxxxxx, Xxxxxxxxxx 00000, or at such other location as the parties may agree
at 11:00 a.m., Pacific Time on the agreed by the Parties hereto (the "Closing
Date"), it being understood and agreed that the closing shall be deemed to
occur simultaneously with the execution of this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to IPC that the statements contained
in this ARTICLE III are correct and complete as of the date of this Agreement
and, except as provided in Section 7.1, will be correct and complete as of the
Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this ARTICLE III, except
in the case of representations and warranties stated to be made as of the date
of this Agreement or as of another date and except for changes contemplated or
permitted by this Agreement).
3.1 Organization and Qualification. The Company and each of its
Subsidiaries, collectively referred to herein as the Company, is a corporation
duly organized, validly existing and in good standing under the laws of its
respective jurisdiction of organization. The Company has all requisite power
and authority to own, lease and use its assets as they are currently owned,
leased and used and to conduct its business as it is currently conducted. The
Company is duly qualified or licensed to do business in and is in good
standing in each jurisdiction in which the character of the properties owned,
leased or used by it or the nature of the activities conducted by it make such
qualification necessary, except any such jurisdiction where the failure to be
so qualified or licensed would not have a Material Adverse Effect on the
Company or a material adverse effect on the validity, binding effect or
enforceability of this Agreement or the Collateral Documents or the ability of
the Company to perform its obligations under this Agreement or any of the
Collateral Documents.
3.2 Capitalization.
(a) The authorized, issued and outstanding capital stock and
other ownership interests of the Company consists of shares of 100,000,000
shares of common stock, no par value of which 49,348,333 shares were
outstanding as of the close of business on the Closing Date, and 5,000,000
shares of Preferred Stock, no par value per share (the "Preferred Stock"), of
which no shares will be outstanding as of the close of business on the Closing
Date. All of the outstanding Company Common Stock and Preferred Stock have
been duly authorized and are validly issued, fully paid and nonassessable.
(b) Schedule 3.2(b)(i) lists all outstanding or authorized
options, warrants, purchase rights, preemptive rights or other contracts or
commitments that could require the Company to issue, sell, or otherwise cause
to become outstanding any of its capital stock or other ownership interests
(collectively "Options").
(c) All of the issued and outstanding shares of Company Common
Stock have been duly authorized and are validly issued and outstanding, fully
paid and nonassessable and have been issued in compliance with applicable
securities laws and other applicable Legal Requirements or transfer
restrictions under applicable securities laws.
3.3 Authority and Validity. The Company has all requisite corporate
power to execute and deliver, to perform its obligations under, and to
consummate the transactions contemplated by, this Agreement (subject to the
approval of the Company Shareholders as contemplated by Section 6.6 and to
receipt of any consents, approvals, authorizations or other matters referred
to in Sections 6.4 and 6.5). The execution and delivery by the Company of,
the performance by the Company of its obligations under, and the consummation
by the Company of the transactions contemplated by, this Agreement have been
duly authorized by all requisite action of the Company (subject to the
approval of the Company Shareholders as contemplated by Section 6.6). This
Agreement has been duly executed and delivered by the Company and (assuming
due execution and delivery by the IPC Parties and approval by the Company
Shareholders) is the legal, valid, and binding obligation of the Company,
enforceable against it in accordance with its terms, except that such
enforcement may be subject to (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting or relating to enforcement of
creditors' rights generally and (ii) general equitable principles. Upon the
execution and delivery of the Collateral Documents by each Person (other than
the IPC Parties) that is required by this Agreement to execute, or that does
execute, this Agreement or any of the Collateral Documents, and assuming due
execution and delivery thereof by the IPC Parties, the Collateral Documents
will be the legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with their respective terms, except that
such enforcement may be subject to (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting or relating to enforcement of
creditors' rights generally and (ii) general equitable principles.
3.4 No Breach or Violation. Subject to obtaining the consents,
approvals, authorizations, and orders of and making the registrations or
filings with or giving notices to Regulatory Authorities and Persons
identified herein, the execution, delivery and performance by the Company of
this Agreement and the Collateral Documents to which it is a party, and the
consummation of the transactions contemplated hereby and thereby in accordance
with the terms and conditions hereof and thereof, do not and will not conflict
with, constitute a violation or breach of, constitute a default or give rise
to any right of termination or acceleration of any right or obligation of the
Company under, or result in the creation or imposition of any Encumbrance upon
the Company, the Company Assets, the Company Business or the Company Common
Stock by reason of the terms of (i) the articles of incorporation, by-laws or
other charter or organizational document of the Company or any Subsidiary of
the Company, (ii) any material contract, agreement, lease, indenture or other
instrument to which the Company is a party or by or to which the Company, or
the Assets may be bound or subject and a violation of which would result in a
Material Adverse Effect on the Company, (iii) any order, judgment, injunction,
award or decree of any arbitrator or Regulatory Authority or any statute, law,
rule or regulation applicable to the Company or (iv) any Permit of the
Company, which in the case of (ii), (iii) or (iv) above would have a Material
Adverse Effect on the Company or a material adverse effect on the validity,
binding effect or enforceability of this Agreement or the Collateral Documents
or the ability of the Company to perform its obligations under this Agreement
or any of the Collateral Documents.
3.5 Consents and Approvals. Except for requirements described in
Sections 6.4 and 6.5, no consent, approval, authorization or order of,
registration or filing with, or notice to, any Regulatory Authority or any
other Person is necessary to be obtained, made or given by the Company in
connection with the execution, delivery and performance by the Company of this
Agreement or any Collateral Document or for the consummation by the Company of
the transactions contemplated hereby or thereby, except to the extent the
failure to obtain any such consent, approval, authorization or order or to
make any such registration or filing would not have a Material Adverse Effect
on the Company or a material adverse effect on the validity, binding effect or
enforceability of this Agreement or the Collateral Documents or the ability of
the Company to perform its obligations under this Agreement or any of the
Collateral Documents.
3.6 Intellectual Property. To the knowledge of the Company, the
Company has good title to or the right to use all material company
intellectual property rights and all material inventions, processes, designs,
formulae, trade secrets and know-how necessary for the operation of the
Company Business without the payment of any royalty or similar payment.
3.7 Compliance with Legal Requirements. The Company has operated the
Company Business in compliance with all Legal Requirements applicable to the
Company except to the extent the failure to operate in compliance with all
material Legal Requirements would not have a Material Adverse Effect on the
Company or Material Adverse Effect on the validity, binding effect or
enforceability of this Agreement or the Collateral Documents.
3.8 Financial Statements. The Company has provided IPC with an
unaudited balance sheet of the Company as of June 30, 2003 and a statement of
operations and cash flow for the six months then ended. Such financial
statements ("Company Financial Statements") present fairly in all material
respects the financial condition of the Company and its results of operations
as of the date and for the period indicated subject to year-end adjustments
based on the Company's outside auditors' review of such Financial Statements.
3.9 Ordinary Course. The Company conducted its business, marketed its
real property and equipment and kept its books of accounts, records and files,
substantially in the same manner as previously conducted.
3.10 Litigation. Except as set forth on Schedule 3.10, as of the date
of this Agreement (i) there are no outstanding judgments or orders against or
otherwise affecting or related to the Company, the Company Business or the
Company Assets; (ii) there is no action, suit, complaint, proceeding or
investigation, judicial, administrative or otherwise, that is pending or, to
the Company's knowledge, threatened that, if adversely determined, would have
a Material Adverse Effect on the Company or a material adverse effect on the
validity, binding effect or enforceability of this Agreement or the Collateral
Documents.
3.11 Taxes. The Company has duly and timely filed in proper form all
Tax Returns for all Taxes required to be filed with the appropriate Regulatory
Authority, except where such failure would not have a Material Adverse Effect
on the Company.
3.12 Books and Records. The books and records of the Company
accurately and fairly represent the Company Business and its results of
operations in all material respects. All accounts receivable and inventory of
the Company Business are reflected properly on such books and records in all
material respects.
3.13 Brokers or Finders. Except as set forth on Item 3.13 of the
Disclosure Schedule, all negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by the Company or any
of its Affiliates in connection with the transactions contemplated by this
Agreement, and neither the Company, nor any of its Affiliates has incurred any
obligation to pay any brokerage or finder's fee or other commission in
connection with the transaction contemplated by this Agreement.
3.14 Proxies. Company management holds, or prior to the Closing will
hold, irrevocable proxies from the Company Shareholders adequate to ensure
Company Shareholder approval of the Merger as required by applicable law.
3.15 Disclosure. No representation or warranty of the Company in this
Agreement or in the Collateral Documents and no statement in any certificate
furnished or to be furnished by the Company pursuant to this Agreement
contained, contains or will contain on the date such agreement or certificate
was or is delivered, or on the Closing Date, any untrue statement of a
material fact, or omitted, omits or will omit on such date to state any
material fact necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE IPC PARTIES
Each of the IPC Parties, jointly and severally, represent and warrant to
the Company that the statements contained in this ARTICLE IV are correct and
complete as of the date of this Agreement and, except as provided in Section
8.1, will be correct and complete as of the Closing Date (as though made then
and as though the Closing Date were substituted for the date of this Agreement
throughout this ARTICLE IV, except in the case of representations and
warranties stated to be made as of the date of this Agreement or as of another
date and except for changes contemplated or permitted by the Agreement).
4.1 Organization and Qualification. Each of IPC and Merger Sub is a
corporation duly organized, validly existing and in good standing under the
laws of Colorado and California, respectively. Each of IPC and Merger Sub has
all requisite power and authority to own, lease and use its assets as they are
currently owned, leased and used and to conduct its business as it is
currently conducted. Both IPC and Merger Sub are duly qualified or licensed
to do business in and are each in good standing in each jurisdiction in which
the character of the properties owned, leased or used by it or the nature of
the activities conducted by it makes such qualification necessary, except any
such jurisdiction where the failure to be so qualified or licensed and in good
standing would not have a Material Adverse Effect on IPC or a Material Adverse
Effect on the validity, binding effect or enforceability of this Agreement or
the Collateral Documents or the ability of the Company or any of the IPC
Parties to perform their obligations under this Agreement or any of the
Collateral Documents.
4.2 Capitalization.
(a) As of the date hereof, the authorized capital stock of IPC
consists of 500,000,00,000 shares of common stock $0.001 par value of which
there are 11,527,546 shares outstanding and 20,000,000 shares of Preferred
Stock $0.001 par value, of which there are no shares outstanding. The shares
of IPC Common Stock included in the Merger Shares, when issued in accordance
with this Agreement, will have been duly authorized, validly issued and
outstanding and will be fully paid and nonassessable.
(b) As of the date hereof, the authorized capital stock of Merger
Sub consists of 100 shares of common stock no par value of which there are 100
shares outstanding. Each outstanding share of Merger Sub is duly authorized,
validly issued and outstanding and will be fully paid and nonassessable and
are owned by IPC.
(c) Schedule 4.2(c) lists all outstanding or authorized options,
warrants, purchase rights, preemptive rights or other contracts or commitments
that could require IPC or any of its Subsidiaries to issue, sell, or otherwise
cause to become outstanding any of its capital stock or other ownership
interests.
(d) All of the issued and outstanding shares of IPC Capital
Stock, and all outstanding ownership interests of each of IPC's Subsidiaries
have been duly authorized and are validly issued and outstanding, fully paid
and nonassessable (with respect to Subsidiaries that are corporations) and
have been issued in compliance with applicable securities laws and other
applicable Legal Requirements.
4.3 Authority and Validity. Each IPC Party has all requisite power to
execute and deliver, to perform its obligations under, and to consummate the
transactions contemplated by, this Agreement and the Collateral Documents.
The execution and delivery by each IPC Party of, the performance by each IPC
Party of its respective obligations under, and the consummation by the IPC
Parties of the transactions contemplated by, this Agreement and the Collateral
Documents have been duly authorized by all requisite action of each IPC Party.
This Agreement has been duly executed and delivered by each of the IPC Parties
and (assuming due execution and delivery by the Company) is the legal, valid
and binding obligation of each IPC Party, enforceable against each of them in
accordance with its terms. Upon the execution and delivery by each of the IPC
Parties of the Collateral Documents to which each of them is a party, and
assuming due execution and delivery thereof by the other parties thereto, the
Collateral Documents will be the legal, valid and binding obligations of each
such Person, as the case may be, enforceable against each of them in
accordance with their respective terms.
4.4 No Breach or Violation. Subject to obtaining the consents,
approvals, authorizations, and orders of and making the registrations or
filings with or giving notices to Regulatory Authorities and Persons
identified herein, the execution, delivery and performance by the IPC Parties
of this Agreement and the Collateral Documents to which each is a party and
the consummation of the transactions contemplated hereby and thereby in
accordance with the terms and conditions hereof and thereof, do not and will
not conflict with, constitute a violation or breach of, constitute a default
or give rise to any right of termination or acceleration of any right or
obligation of any IPC Party under, or result in the creation or imposition of
any Encumbrance upon the property of IPC or Merger Sub by reason of the terms
of (i) the articles of incorporation, by-laws or other charter or
organizational document of any IPC Party, (ii) any contract, agreement, lease,
indenture or other instrument to which any IPC Party is a party or by or to
which any IPC Party or their property may be bound or subject and a violation
of which would result in a Material Adverse Effect on the Company taken as a
whole, (iii) any order, judgment, injunction, award or decree of any
arbitrator or Regulatory Authority or any statute, law, rule or regulation
applicable to any IPC Party or (iv) any Permit of IPC or Merger Sub, which in
the case of (ii), (iii) or (iv) above would have a Material Adverse Effect on
IPC or a material adverse effect on the validity, binding effect or
enforceability of this Agreement or the Collateral Documents or the ability of
any IPC Party to perform its obligations hereunder or thereunder.
4.5 Consents and Approvals. Except for requirements under applicable
United States or state securities laws, no consent, approval, authorization or
order of, registration or filing with, or notice to, any Regulatory Authority
or any other Person is necessary to be obtained, made or given by any IPC
Party in connection with the execution, delivery and performance by them of
this Agreement or any Collateral Documents or for the consummation by them of
the transactions contemplated hereby or thereby, except to the extent the
failure to obtain such consent, approval, authorization or order or to make
such registration or filings or to give such notice would not have a Material
Adverse Effect on IPC or a material adverse effect on the validity, binding
effect or enforceability of this Agreement or the Collateral Documents or the
ability of the Company or any of the IPC Parties to perform its obligations
under this Agreement or any of the Collateral Documents.
4.6 Compliance with Legal Requirements. IPC and its Subsidiaries
have operated IPC Business in compliance with all material Legal Requirements
including, without limitation, the Exchange Act and the Securities Act
applicable to IPC and its Subsidiaries, except to the extent the failure to
operate in compliance with all material Legal Requirements, would not have a
Material Adverse Effect on IPC or a Material Adverse Effect on the validity,
binding effect or enforceability of this Agreement or the Collateral
Documents.
4.7 Litigation. There are no outstanding judgments or orders against
or otherwise affecting or related to IPC, any of its Subsidiaries, or their
business or assets; and (ii) there is no action, suit, complaint, proceeding
or investigation, judicial, administrative or otherwise, that is pending or,
to the best knowledge of any IPC Party, threatened that, if adversely
determined, would have a Material Adverse Effect on IPC or a material adverse
effect on the validity, binding effect or enforceability of this Agreement or
the Collateral Documents.
4.8 Ordinary Course. Since the date of the balance sheet included in
the most recent IPC Securities Filings filed through the date hereof, there
has not been any occurrence, event, incident, action, failure to act or
transaction involving IPC or any of its Subsidiaries which is reasonably
likely, individually or in the aggregate, to have a Material Adverse Effect on
IPC.
4.9 Assets and Liabilities. As of the date of this Agreement, neither
IPC nor any of its Subsidiaries has any Assets or Liability, except for the
(i) Assets and Liabilities disclosed on Schedule 4.9 and (ii) Liabilities
incurred in connection with this Agreement.
4.10 Taxes. IPC has, and each of its Subsidiaries has, duly and timely
filed in proper form all Tax Returns for all Taxes required to be filed with
the appropriate Governmental Authority, except where such failure to file
would not have a Material Adverse Effect on IPC.
4.11 Books and Records. The books and records of IPC and its
Subsidiaries accurately and fairly represent the IPC Business and its results
of operations in all material respects. All accounts receivable and inventory
of the IPC Business are reflected properly on such books and records in all
material respects.
4.12 Environmental Matters. Neither IPC nor any of the IPC
Subsidiaries has violated any Environmental Laws, lacks any permits, licenses
or other approvals required of them under applicable Environmental Laws or is
violating any term or condition of any such permit, license or approval,
except in each case as would not, individually or in the aggregate, result in
a Material Adverse Effect on IPC.
4.13 Financial and Other Information.
(a) The historical financial statements (including the notes
thereto) contained (or incorporated by reference) in the IPC Securities
Filings have been prepared in accordance with GAAP applied on a consistent
basis throughout the periods covered thereby (except as may be indicated in
the notes thereto), and present fairly the financial condition of IPC and its
results of operations as of the dates and for the periods indicated, subject
in the case of the unaudited financial statements only to normal year-end
adjustments (none of which will be material in amount) and the omission of
footnotes.
(b) To the knowledge of current management, the IPC Securities
Filings did not, as of their filing dates, contain (directly or by
incorporation by reference) any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein (or incorporated therein by reference), in light of the
circumstances under which they were or will be made, not misleading.
4.14 Trading. No order suspending the sale or ceasing the trading or
quotation of the IPC Common Stock on the Pink Sheets has been issued by any
court, securities commission or regulatory authority in the United States, and
no proceedings for such purpose are pending or, to the knowledge of IPC, after
reasonable inquiry, threatened.
4.15 Brokers or Finders. No broker or finder has acted directly or
indirectly for IPC, any IPC Party or any of their Affiliates in connection
with the transactions contemplated by this Agreement, and neither IPC, any IPC
Party nor any of their Affiliates has incurred any obligation to pay any
brokerage or finder's fee or other commission in connection with the
transaction contemplated by this Agreement.
4.16 Disclosure. No representation or warranty of IPC in this
Agreement or in the Collateral Documents and no statement in any certificate
furnished or to be furnished by IPC pursuant to this Agreement contained,
contains or will contain on the date such agreement or certificate was or is
delivered, or on the Closing Date, any untrue statement of a material fact, or
omitted, omits or will omit on such date to state any material fact necessary
in order to make the statements made, in light of the circumstances under
which they were made, not misleading.
4.17 Filings. To the knowledge of current management, IPC has made all
of the filings required by the Securities Act of 1933, as amended, and the
Exchange Act of 1934, as amended, required to be made and no such filing
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements made, not misleading.
ARTICLE V
COVENANTS OF THE COMPANY
Between the date of this Agreement and the Closing Date:
5.1 Additional Information. The Company shall provide to IPC and its
Representatives such financial, operating and other documents, data and
information relating to the Company, the Company Business and the Company
Assets and Liabilities of the Company, as IPC or its Representatives may
reasonably request. In addition, the Company shall take all action necessary
to enable IPC and its Representatives to review, inspect and audit the Company
Assets, the Company Business and Liabilities of the Company and discuss them
with the Company's officers, employees, independent accountants, customers,
licensees, and counsel. Notwithstanding any investigation that IPC may
conduct of the Company, the Company Business, the Company Assets and the
Liabilities of the Company, the IPC Parties may fully rely on the Company's
warranties, covenants and indemnities set forth in this Agreement.
5.2 Continuity and Maintenance of Operations. The Company shall, and
shall cause each of its Subsidiaries to use its commercially reasonable
efforts to promote the financial success of the Company Business and promptly
notify IPC of any material adverse change in the condition (financial or
otherwise) of the Company Business and use its commercially reasonable efforts
to promote, develop and preserve its relationships with its present employees
as well as the goodwill of its customers and promptly notify IPC of any
material adverse change in such relationships.
5.3 Consents and Approvals. As soon as practicable after execution of
this Agreement, the Company shall use commercially reasonable efforts to
obtain any necessary consent, approval, authorization or order of, make any
registration or filing with or give any notice to, any Regulatory Authority or
Person as is required to be obtained, made or given by the Company to
consummate the transactions contemplated by this Agreement and the Collateral
Documents.
5.4 Consents of the Company Shareholders. Promptly after the date
hereof, the Company will take all action necessary in accordance with its
Articles of Incorporation and by-laws to solicit consents from the Company's
shareholders for the adoption and approval of this Agreement and approval of
the Merger. The Company will use its reasonable efforts to solicit from its
shareholders consents in favor of the adoption and approval of this Agreement
and the approval of the Merger and will take all other action necessary or
advisable to secure the consent of its shareholders required by the CCC to
obtain such approvals.
5.5 Notification of Certain Matters. The Company shall promptly notify
IPC of any fact, event, circumstance or action known to it that is reasonably
likely to cause the Company to be unable to perform any of its covenants
contained herein or any condition precedent in ARTICLE VII not to be
satisfied, or that, if known on the date of this Agreement, would have been
required to be disclosed to IPC pursuant to this Agreement or the existence or
occurrence of which would cause any of the Company's representations or
warranties under this Agreement not to be correct and/or complete. The
Company shall give prompt written notice to IPC of any adverse development
causing a breach of any of the representations and warranties in ARTICLE III
as of the date made.
5.6 Company Disclosure Schedule. The Company shall, from time to time
prior to Closing, supplement the Company Disclosure Statement with additional
information that, if existing or known to it on the date of delivery to the
IPC Parties, would have been required to be included therein. For purposes of
determining the satisfaction of any of the conditions to the obligations of
the IPC Parties in ARTICLE VII, the Company Disclosure Statement shall be
deemed to include only (a) the information contained therein on the date of
this Agreement and (b) information added to the Company Disclosure Statement
by written supplements delivered prior to Closing by the Company that (i) are
accepted in writing by IPC, or (ii) reflect actions taken or events occurring
after the date hereof prior to Closing.
5.7 State Statutes. The Company and its Board of Directors shall, if
any state takeover statute or similar law is or becomes applicable to the
Merger, this Agreement or any of the transactions contemplated by this
Agreement, use all reasonable efforts to ensure that the Merger and the other
transactions contemplated by this Agreement may be consummated as promptly as
practicable on the terms contemplated by this Agreement and otherwise to
minimize the effect of such statute or regulation on the Merger, this
Agreement and the transactions contemplated hereby.
ARTICLE VI
COVENANTS OF THE IPC PARTIES
Between the date of this Agreement and the Closing Date,
6.1 Additional Information. IPC shall provide to the Company and its
Representatives such financial, operating and other documents, data and
information relating to IPC and its Subsidiaries, the IPC Business and the IPC
Assets and the Liabilities of IPC and its Subsidiaries, as the Company or its
Representatives may reasonably request. In addition, the Company shall take
all action necessary to enable the Company and its Representatives to review
and inspect the IPC Assets, the IPC Business and the Liabilities of IPC and
its Subsidiaries and discuss them with the Company's officers, employees,
independent accountants and counsel. Notwithstanding any investigation that
the Company may conduct of IPC and its Subsidiaries, the IPC Business, the IPC
Assets and the Liabilities of IPC and its Subsidiaries, the Company may fully
rely on the IPC Parties' warranties, covenants and indemnities set forth in
this Agreement.
6.2 No Solicitations. From and after the date of this Agreement until
the Effective Time or termination of this Agreement pursuant to ARTICLE X, IPC
will not nor will it authorize or permit any of its officers, directors,
affiliates or employees or any investment banker, attorney or other advisor or
representative retained by it, directly or indirectly, (i) solicit or initiate
the making, submission or announcement of any other acquisition proposal, (ii)
participate in any discussions or negotiations regarding, or furnish to any
person any non-public information with respect to any other acquisition
proposal, (iii) engage in discussions with any Person with respect to any
other acquisition proposal, except as to the existence of these provisions,
(iv) approve, endorse or recommend any other acquisition proposal or (v) enter
into any letter of intent or similar document or any contract agreement or
commitment contemplating or otherwise relating to any other acquisition
proposal.
6.3 Continuity and Maintenance of Operations. IPC shall promptly
notify the Company of any material adverse change in the condition (financial
or otherwise) of IPC.
6.4 Consents and Approvals. As soon as practicable after execution of
this Agreement, the IPC Parties shall use their commercially reasonable
efforts to obtain any necessary consent, approval, authorization or order of,
make any registration or filing with or give notice to, any Regulatory
Authority or Person as is required to be obtained, made or given by any of the
IPC Parties to consummate the transactions contemplated by this Agreement and
the Collateral Documents.
6.5 Notification of Certain Matters. IPC shall promptly notify the
Company of any fact, event, circumstance or action known to it that is
reasonably likely to cause any IPC Party to be unable to perform any of its
covenants contained herein or any condition precedent in ARTICLE VIII not to
be satisfied, or that, if known on the date of this Agreement, would have been
required to be disclosed to the Company pursuant to this Agreement or the
existence or occurrence of which would cause any of the IPC Parties'
representations or warranties under this Agreement not to be correct and/or
complete. The IPC Parties shall give prompt written notice to the Company of
any adverse development causing a breach of any of the representations and
warranties in ARTICLE IV.
6.6 IPC Disclosure Schedule. The IPC Parties shall, from time to time
prior to Closing, supplement the IPC Disclosure Statement with additional
information that, if existing or known to it on the date of this Agreement,
would have been required to be included therein. For purposes of determining
the satisfaction of any of the conditions to the obligations of the Company in
ARTICLE VIII, the IPC Disclosure Statement shall be deemed to include only (a)
the information contained therein on the date of delivery to the Company and
(b) information added to the IPC Disclosure Statement by written supplements
delivered prior to Closing by the IPC Parties that (i) are accepted in writing
by the Company or (ii) reflect actions taken or events occurring after the
date hereof and prior to Closing.
6.7 Securities Filings. IPC will timely file all reports and other
documents relating to the operation of IPC prior to June 30, 2003, required to
be filed with the Securities and Exchange Commission, which reports and other
documents do not and will not contain any misstatement of a material fact, and
do not and will not omit any material fact necessary to make the statements
therein not misleading.
6.8 Election to IPC's Board of Directors. At the Effective Time of the
Merger, IPC shall promptly secure the resignation of present directors in
order to cause the nominees of the Company, Messers. Xxxxx XxxXxxxxxx, Xxxxx
Xxxx and Xxxxxxxx Xxxxx, to be appointed to IPC's board of directors and,
subject to fiduciary obligations under applicable law.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE IPC PARTIES
All obligations of the IPC Parties under this Agreement shall be subject
to the fulfillment at or prior to Closing of each of the following conditions,
it being understood that the IPC Parties may, in their sole discretion, to the
extent permitted by applicable Legal Requirements, waive any or all of such
conditions in whole or in part.
7.1 Accuracy of Representations. All representations and warranties of
the Company contained in this Agreement, the Collateral Documents and any
certificate delivered by any of the Company at or prior to Closing shall be,
if specifically qualified by materiality, true in all respects and, if not so
qualified, shall be true in all material respects, in each case on and as of
the Closing Date with the same effect as if made on and as of the Closing
Date, except for representations and warranties expressly stated to be made as
of the date of this Agreement or as of another date other than the Closing
Date and except for changes contemplated or permitted by this Agreement. The
Company shall have delivered to IPC and Merger Sub a certificate dated the
Closing Date to the foregoing effect.
7.2 Covenants. The Company shall, in all material respects, have
performed and complied with each of the covenants, obligations and agreements
contained in this Agreement and the Collateral Documents that are to be
performed or complied with by them at or prior to Closing. The Company shall
have delivered to IPC and Merger Sub a certificate dated the Closing Date to
the foregoing effect.
7.3 Consents and Approvals. All consents, approvals, permits,
authorizations and orders required to be obtained from, and all registrations,
filings and notices required to be made with or given to, any Regulatory
Authority or Person as provided herein.
7.4 Delivery of Documents. The Company shall have delivered, or caused
to be delivered, to IPC and Merger Sub the following documents:
(i) Certified copies of the Company's articles of
incorporation and by-laws and certified resolutions of the board of directors
and Shareholders of the Company authorizing the execution of this Agreement
and the Collateral Documents to which it is a party and the consummation of
the transactions contemplated hereby and thereby.
(ii) Such other documents and instruments as IPC may
reasonably request: (A) to evidence the accuracy of the Company's
representations and warranties under this Agreement, the Collateral Documents
and any documents, instruments or certificates required to be delivered
thereunder; (B) to evidence the performance by the Company of, or the
compliance by the Company with, any covenant, obligation, condition and
agreement to be performed or complied with by the Company under this Agreement
and the Collateral Documents; or (C) to otherwise facilitate the consummation
or performance of any of the transactions contemplated by this Agreement and
the Collateral Documents.
7.5 No Material Adverse Change. Since the date hereof, there shall
have been no material adverse change in the Company Assets, the Company
Business or the financial condition or operations of the Company, taken as a
whole.
7.6 Consulting Agreement. IPC shall have entered into a consulting
agreement with Xxxxx Consulting Corp. to be effective as of the Effective Date
in form and substance satisfactory to Xxxxx Consulting Corp. and the Company.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY
All obligations of the Company under this Agreement shall be subject to
the fulfillment at or prior to Closing of the following conditions, it being
understood that the Company may, in its sole discretion, to the extent
permitted by applicable Legal Requirements, waive any or all of such
conditions in whole or in part.
8.1 Accuracy of Representations. All representations and warranties of
the IPC Parties contained in this Agreement and the Collateral Documents and
any other document, instrument or certificate delivered by any of the IPC
Parties at or prior to the Closing shall be, if specifically qualified by
materiality, true and correct in all respects and, if not so qualified, shall
be true and correct in all material respects, in each case on and as of the
Closing Date with the same effect as if made on and as of the Closing Date,
except for representations and warranties expressly stated to be made as of
the date of this Agreement or as of another date other than the Closing Date
and except for changes contemplated or permitted by this Agreement. The IPC
Parties shall have delivered to the Company a certificate dated the Closing
Date to the foregoing effect.
8.2 Covenants. The IPC Parties shall, in all material respects, have
performed and complied with each obligation, agreement, covenant and condition
contained in this Agreement and the Collateral Documents and required by this
Agreement and the Collateral Documents to be performed or complied with by the
IPC Parties at or prior to Closing. The IPC Parties shall have delivered to
the Company a certificate dated the Closing Date to the foregoing effect.
8.3 Consents and Approvals. All consents; approvals, authorizations
and orders required to be obtained from, and all registrations, filings and
notices required to be made with or given to, any Regulatory Authority or
Person as provided herein.
8.4 Delivery of Documents. The IPC Parties, as applicable, shall have
executed and delivered, or caused to be executed and delivered, to the Company
the following documents:
(i) Certified copies of the articles of incorporation and
by-laws of IPC and certified resolutions by the board of directors authorizing
the execution of this Agreement and the Collateral Documents and the
consummation of the transactions contemplated hereby.
(ii) Such other documents and instruments as the Company may
reasonably request: (A) to evidence the accuracy of the representations and
warranties of the IPC Parties under this Agreement and the Collateral
Documents and any documents, instruments or certificates required to be
delivered thereunder; (B) to evidence the performance by the IPC Parties of,
or the compliance by the IPC Parties with, any covenant, obligation, condition
and agreement to be performed or complied with by the IPC Parties under this
Agreement and the Collateral Documents; or (C) to otherwise facilitate the
consummation or performance of any of the transactions contemplated by this
Agreement and the Collateral Documents.
(iii) Letters of resignation from IPC's current officers and
directors to be effective upon the Closing.
(iv) Board resolutions from IPC's current directors
appointing designees of the Company to IPC's board of directors.
8.5 No Material Adverse Change. There shall have been no material
adverse change in the business, financial condition or operations of IPC and
its Subsidiaries taken as a whole.
8.6 No Litigation. No action, suit or proceeding shall be pending or
threatened by or before any Regulatory Authority and no Legal Requirement
shall have been enacted, promulgated or issued or deemed applicable to any of
the transactions contemplated by this Agreement and the Collateral Documents
that would: (i) prevent consummation of any of the transactions contemplated
by this Agreement and the Collateral Documents; (ii) cause any of the
transactions contemplated by this Agreement and the Collateral Documents to be
rescinded following consummation; or (iii) have a Material Adverse Effect on
IPC.
8.7 No Assets & Liabilities. IPC and its Subsidiaries shall have no
assets or liabilities.
8.8 Lock-Up Agreement/Transfer Agent's Consent. Sussux Financial Group
LTD, as the holder of 1,600,000 shares of IPC Common Stock, prior to the
Effective Time shall have executed a Lock-Up Agreement in the form attached
hereto as Exhibit A. The transfer agent for IPC shall deliver a written
consent in the form acceptable to Company setting forth its consent to notify
the Company upon the removal of stop transfer instructions related to the
shares subject to the Lock-Up Agreement.
8.9 Pink Sheet Listing. The IPC Common Stock shall be quoted on Pink
Sheets.
8.10 Exchange Act Requirements. The Company shall have complied with
the provisions of Rule 14f-1 of the Exchange Act, if necessary.
8.11 Instructions Regarding Cancellation of Shares. Shareholder shall
have delivered to the Company an irrevocable letter of instruction and all
such other necessary documentation required for the cancellation of 11,000,000
IPC Common Stock in form and substance reasonably satisfactory to the Company.
8.12 Conversion. The Conversion shall have taken place.
8.13 Expenses. Shareholder shall have paid or arranged for the payment
of all of the costs and expenses of the IPC Parties associated with this
Agreement and the transaction contemplated hereby.
ARTICLE IX
INDEMNIFICATION
9.1 Indemnification by the Company. The Company shall, prior to (but
not after) the Closing, indemnify, defend and hold harmless (i) IPC, (ii) each
of IPC's assigns and successors in interest to the Company Shares, and (iii)
each of their respective shareholders, members, partners, directors, officers,
managers, employees, agents, attorneys and representatives, from and against
any and all Losses which may be incurred or suffered by any such party and
which may arise out of or result from any breach of any representation,
warranty, covenant or agreement of the Company contained in this Agreement.
9.2 Indemnification by the IPC Parties. The IPC Parties shall
indemnify, defend and hold harmless the Company and each of the Company
Shareholders from and against any and all Losses which may be incurred or
suffered by any such party hereto and which may arise out of or result from
any breach of any representation, warranty, covenant or agreement of the IPC
Parties contained in this Agreement.
9.3 Notice to Indemnifying Party. If any party (the "Indemnified
Party") receives notice of any claim or other commencement of any action or
proceeding with respect to which any other party (or parties) (the
"Indemnifying Party") is obligated to provide indemnification pursuant to
Sections 9.1 or 9.2, the Indemnified Party shall promptly give the
Indemnifying Party written notice thereof, which notice shall specify in
reasonable detail, if known, the amount or an estimate of the amount of the
liability arising therefrom and the basis of the claim. Such notice shall be
a condition precedent to any liability of the Indemnifying Party for
indemnification hereunder, but the failure of the Indemnified Party to give
prompt notice of a claim shall not adversely affect the Indemnified Party's
right to indemnification hereunder unless the defense of that claim is
materially prejudiced by such failure. The Indemnified Party shall not settle
or compromise any claim by a third party for which it is entitled to
indemnification hereunder without the prior written consent of the
Indemnifying Party (which shall not be unreasonably withheld or delayed)
unless suit shall have been instituted against it and the Indemnifying Party
shall not have taken control of such suit after notification thereof as
provided in Section 9.4.
9.4 Defense by Indemnifying Party. In connection with any claim giving
rise to indemnity hereunder resulting from or arising out of any claim or
legal proceeding by a Person who is not a party to this Agreement, the
Indemnifying Party at its sole cost and expense may, upon written notice to
the Indemnified Party, assume the defense of any such claim or legal
proceeding (i) if it acknowledges to the Indemnified Party in writing its
obligations to indemnify the Indemnified Party with respect to all elements of
such claim (subject to any limitations on such liability contained in this
Agreement) and (ii) if it provides assurances, reasonably satisfactory to the
Indemnified Party, that it will be financially able to satisfy such claims in
full if the same are decided adversely. If the Indemnifying Party assumes the
defense of any such claim or legal proceeding, it may use counsel of its
choice to prosecute such defense, subject to the approval of such counsel by
the Indemnified Party, which approval shall not be unreasonably withheld or
delayed. In this regard, Loeb & Loeb LLP is hereby approved by IPC as counsel
to the Company (in its capacity as the Indemnifying Party). The Indemnified
Party shall be entitled to participate in (but not control) the defense of any
such action, with its counsel and at its own expense; provided, however, that
if the Indemnified Party, in its sole discretion, determines that there exists
a conflict of interest between the Indemnifying Party (or any constituent
party thereof) and the Indemnified Party, the Indemnified Party (or any
constituent party thereof) shall have the right to engage separate counsel,
the reasonable costs and expenses of which shall be paid by the Indemnified
Party. If the Indemnifying Party assumes the defense of any such claim or
legal proceeding, the Indemnifying Party shall take all steps necessary to
pursue the resolution thereof in a prompt and diligent manner. The
Indemnifying Party shall be entitled to consent to a settlement of, or the
stipulation of any judgment arising from, any such claim or legal proceeding,
with the consent of the Indemnified Party, which consent shall not be
unreasonably withheld or delayed; provided, however, that no such consent
shall be required from the Indemnified Party if (i) the Indemnifying Party
pays or causes to be paid all Losses arising out of such settlement or
judgment concurrently with the effectiveness thereof (as well as all other
Losses theretofore incurred by the Indemnified Party which then remain unpaid
or unreimbursed), (ii) in the case of a settlement, the settlement is
conditioned upon a complete release by the claimant of the Indemnified Party
and (iii) such settlement or judgment does not require the encumbrance of any
asset of the Indemnified Party or impose any restriction upon its conduct of
business.
ARTICLE X
TERMINATION
10.1 Termination. This Agreement may be terminated, and the
transactions contemplated hereby may be abandoned, at any time prior to the
Effective Time.
(a) by mutual written agreement of IPC and the Company hereto
duly authorized by action taken by or on behalf of their respective Boards of
Directors; or
(b) by either the Company or IPC upon notification to the
non-terminating party by the terminating party:
(i) if the terminating party is not in material breach of
its obligations under this Agreement and there has been a material breach of
any representation, warranty, covenant or agreement on the part of the
non-terminating party set forth in this Agreement such that the conditions in
Sections 7.1, 7.2, 8.1 or 8.2 will not be satisfied; provided, however, that
if such breach is curable by the non-terminating party and such cure is
reasonably likely to be completed prior to the date specified in Section
10.1(b)(i), then, for so long as the non-terminating party continues to use
commercially reasonable efforts to effect and cure, the terminating party may
not terminate pursuant to this Section 10.1(b)(i);
(ii) if the Closing has not transpired on or before August
30, 2003.
(iii) if any court of competent jurisdiction or other
competent Governmental or Regulatory Authority shall have issued an order
making illegal or otherwise permanently restricting, preventing or otherwise
prohibiting the Merger and such order shall have become final and
nonappealable; or
10.2 Effect of Termination. If this Agreement is validly terminated by
either the Company or IPC pursuant to Section 10.1, this Agreement will
forthwith become null and void and there will be no liability or obligation on
the part of the parties hereto, except that nothing contained herein shall
relieve any party hereto from liability for willful breach of its
representations, warranties, covenants or agreements contained in this
Agreement.
ARTICLE XI
MISCELLANEOUS
11.1 Parties Obligated and Benefited. This Agreement shall be binding
upon the Parties and their respective successors by operation of law and shall
inure solely to the benefit of the Parties and their respective successors by
operation of law, and no other Person shall be entitled to any of the benefits
conferred by this Agreement, except that the Company Shareholders shall be
third party beneficiaries of this Agreement. Without the prior written
consent of the other Party, no Party may assign this Agreement or the
Collateral Documents or any of its rights or interests or delegate any of its
duties under this Agreement or the Collateral Documents.
11.2 Publicity. The initial press release shall be a joint press
release and thereafter the Company and IPC each shall consult with each other
prior to issuing any press releases or otherwise making public announcements
with respect to the Merger and the other transactions contemplated by this
Agreement and prior to making any filings with any third party and/or any
Regulatory Authorities (including any national securities interdealer
quotation service) with respect thereto, except as may be required by law or
by obligations pursuant to any listing agreement with or rules of any national
securities interdealer quotation service.
11.3 Notices. Any notices and other communications required or
permitted hereunder shall be in writing and shall be effective upon delivery
by hand or upon receipt if sent by certified or registered mail (postage
prepaid and return receipt requested) or by a nationally recognized overnight
courier service (appropriately marked for overnight delivery) or upon
transmission if sent by telex or facsimile (with request for immediate
confirmation of receipt in a manner customary for communications of such
respective type and with physical delivery of the communication being made by
one or the other means specified in this Section as promptly as practicable
thereafter). Notices shall be addressed as follows:
(a) If to the IPC Parties or the Surviving Corporation, to:
IPC, Inc.
0000 Xxxxx Xxxxx Xxxxx Xxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Attention: Kanona Moeai, Jr.
If to the Company to:
0000 Xxxxxx Xxxxx Xxxxxx
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxxxxxx
Facsimile No. (000) 000-0000
With a copy to:
Loeb & Loeb LLP
00000 Xxxxx Xxxxxx Xxxx., Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxxxx, Esq.
Facsimile No. (000) 000-0000
Any Party may change the address to which notices are required to be sent by
giving notice of such change in the manner provided in this Section.
11.4 Attorneys' Fees. In the event of any action or suit based upon or
arising out of any alleged breach by any Party of any representation,
warranty, covenant or agreement contained in this Agreement or the Collateral
Documents, the prevailing Party shall be entitled to recover reasonable
attorneys' fees and other costs of such action or suit from the other Party.
11.5 Headings. The Article and Section headings of this Agreement are
for convenience only and shall not constitute a part of this Agreement or in
any way affect the meaning or interpretation thereof.
11.6 Choice of Law. This Agreement and the rights of the Parties under
it shall be governed by and construed in all respects in accordance with the
laws of the State of California, without giving effect to any choice of law
provision or rule (whether of the State of California or any other
jurisdiction that would cause the application of the laws of any jurisdiction
other than the State of California).
11.7 Rights Cumulative. All rights and remedies of each of the Parties
under this Agreement shall be cumulative, and the exercise of one or more
rights or remedies shall not preclude the exercise of any other right or
remedy available under this Agreement or applicable law.
11.8 Further Actions. The Parties shall execute and deliver to each
other, from time to time at or after Closing, for no additional consideration
and at no additional cost to the requesting party, such further assignments,
certificates, instruments, records, or other documents, assurances or things
as may be reasonably necessary to give full effect to this Agreement and to
allow each party fully to enjoy and exercise the rights accorded and acquired
by it under this Agreement.
11.9 Time of the Essence. Time is of the essence under this Agreement.
If the last day permitted for the giving of any notice or the performance of
any act required or permitted under this Agreement falls on a day which is not
a Business Day, the time for the giving of such notice or the performance of
such act shall be extended to the next succeeding Business Day.
11.10 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.11 Entire Agreement. This Agreement (including the Exhibits, the
Company Disclosure Statement, the IPC Disclosure Statement and any other
documents, instruments and certificates referred to herein, which are
incorporated in and constitute a part of this Agreement) contains the entire
agreement of the Parties.
11.12 Expenses. Each party will be responsible for payment of its
expenses in connection with the transactions contemplated by this Agreement.
10.13Survival of Representations and Covenants. Notwithstanding any right of
the IPC Parties fully to investigate the affairs of the Company and
notwithstanding any Knowledge of facts determined or determinable by the IPC
Parties pursuant to such investigation or right of investigation, the IPC
Parties shall have the right to rely fully upon the representations,
warranties, covenants and agreements of the Company contained in this
Agreement. Each representation, warranty, covenant and agreement of the
Company contained herein shall survive the execution and delivery of this
Agreement and the Closing and shall thereafter terminate and expire on the
first anniversary of the Closing Date unless, prior to such date, IPC has
delivered to the Company Shareholders a written notice of a claim with respect
to such representation, warranty, covenant or agreement.
IN WITNESS WHEREOF, the Parties hereto have duly executed this Agreement
as of the day and year first above written.
Irvine Pacific Corporation, a Colorado corporation
By:_______________________________________________
Name: Kanona Moeai, Jr.
IPC Merger Sub, Inc., a California corporation
By:_______________________________________________
Name: Kanona Moeai, Jr.
Hollywood Previews, Inc., a California corporation
By:_______________________________________________
Name: Xxxxx XxxXxxxxxx
Title: Chief Executive Officer
EXHIBIT A
[Form of Lock-Up]
_____________, 2003
[Shareholder]
Re: Lock-Up Agreement
Dear Sir or Madam:
Reference is made to that certain Agreement and Plan of Merger (the
"Merger Agreement"), dated as of August 18, 2003, among Irvine Pacific Corp.,
a Colorado corporation ("IPC"), IPC Merger Sub, Inc. ("Merger Sub"), a
California corporation, Kanona Moeai, Jr. and Hollywood Previews, Inc., a
California corporation (the "Company"), pursuant to which Merger Sub will
merge with and into the Company (the "Merger").
The Company has determined that the prospect of sales of the IPC's common
stock ("Common Stock"), held by the undersigned shareholders (each a
"Shareholder" and collectively, the "Shareholders') within eighteen months
after the Merger could be detrimental to the Company. The Company has
requested that, except as set forth herein, the Shareholders agree not to sell
certain shares of Common Stock until the expiration of a period ending
eighteen months after the date hereof.
The Shareholders recognize that it is in the best financial interests of
the Shareholders, as holders of IPC Common Stock, that IPC complete the
Merger.
The undersigned further recognizes that the Shareholders' Common Stock
is, or may be, subject to certain restrictions on its transferability,
including those imposed by the federal securities laws. Notwithstanding these
restrictions, the Shareholders have agreed to enter into this letter agreement
to further assure certain of the shares of the Company's Common Stock, now
held by the Shareholders, will not enter the public market.
The Shareholders, therefore, hereby acknowledge and agree that the
Shareholders will not, directly or indirectly, without the prior written
consent of the IPC, sell, offer, contract to sell, pledge, grant any option to
purchase or otherwise dispose (collectively, a "Disposition") of the shares of
Common Stock set forth on Schedule A attached hereto (the "Lock-Up Shares"),
for a period of eighteen months from the date hereof (the "Lock-Up Period").
The foregoing restriction is expressly agreed to preclude, among other
Dispositions, the holder of Lock-Up Shares from engaging in any hedging or
other transaction which is designed to or reasonably expected to lead to or
result in a Disposition of Lock-Up Shares during the Lock-Up Period, even if
such Lock-Up Shares would be disposed of by someone other than such holder.
Such prohibited hedging or other transactions would include, without
limitation, any short sale (whether or not against the box) or any purchase,
sale or grant of any right (including, without limitation, any put or call
option) with respect to any Lock-Up Shares or with respect to any security
(other than a broad-based market basket or index) that includes, relates to or
derives any significant part of its value from Lock-Up Shares.
Notwithstanding the foregoing, the Shareholders may transfer the Lock-Up
Shares (i) as a bona fide gift or gifts, (ii) as a distribution to limited
partners or shareholders of such person; provided, however, that in any such
case it shall be a condition to the transfer that the transferee execute an
agreement stating that the transferee is receiving and holding the Lock-Up
Shares subject to the provisions of this letter agreement, (iii) beginning on
the six month anniversary of the date hereof, no more than 12,500 Lock-Up
Shares per week (without any right of carryforward or carryback ), or (iv) at
such time as the shares of Common Stock are traded on the NASDAQ Stock Market
and have a 30-day average daily trading volume of at least 250,000 shares. In
the event that more than one Shareholder desires to sell Lock-Up Shares in any
week so that the aggregate number of shares is in excess of 12,500, in the
absence of an agreement among such Shareholders, the allocation shall be on a
pro rata basis. If, however, an Event of Default, as defined in the Financial
Consulting Services Agreement, dated as of August __, 2003, (the "Consulting
Agreement") among IPC, the Company and Xxxxx Consulting Corp., occurs and is
continuing for thirty (30) days, by notice in writing to the Company, the
Shareholder shall be allowed to double, in the aggregate, the amount of shares
that may be sold pursuant to subsections (iii) and (iv) of this paragraph.
Should an Event of Default continue for more than ninety days, this Lock-Up
Agreement shall be null and void, and the Shareholders shall not be bound to
the provisions hereof.
Any transferor transferring pursuant to subsections (i) or (ii) above
shall notify the Company in writing prior to the transfer. There shall be no
further transfer of such Lock-Up Shares except in accordance with this letter
agreement.
The undersigned also agrees and consents to the entry of stop transfer
instructions with the Company's transfer agent against the transfer of any
Lock-Up Shares. In connection therewith, the transfer agent shall be given
written instructions from the Company authorizing the weekly release of 12,500
shares of stock in this lock-up agreement without any further authorization
required from the Company, provided, however, if an Event of Default, as
defined in the Consulting Agreement, has occurred, the transfer agent shall be
notified in writing of the total number shares which may be sold until the
Event of Default is cured. Further, the transfer agent shall deliver a
consent in writing to the Company, confirming its obligation to notify the
Company in writing upon each removal of the stop transfer instructions.
Executed as an instrument under seal this ___ day of ________________, 2003.
Very truly yours,
Securityholder
By:____________________________________________
Signature of Securityholder
_______________________________________________
Name of Co-Securityholder, if applicable
(please print)
By:____________________________________________
Signature of Co-Securityholder, if applicable
