Exhibit 2-1
Agreement and Plan of Merger
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: /s/ Kanona Moeai
-------------------------------------------
Name: Kanona Moeai, Jr.
IPC Merger Sub, Inc., a California corporation
By: : /s/ Kanona Moeai
-------------------------------------------
Name: Kanona Moeai, Jr.
Hollywood Previews, Inc., a California corporation
By: /s/ Xxxxx XxxXxxxxxx
-------------------------------------------
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