EXECUTION COPY
SHARE EXCHANGE AGREEMENT
THIS SHARE EXCHANGE AGREEMENT (this "Agreement"), is entered into as of
this 13th day of April, 2004, by and between: (i) Pacific Technology, Inc., a
Delaware corporation (the "Corporation"), (ii) Iempower, Inc. ("IEM"), a
Delaware corporation doing business in the State of New York as MyRichUncle, and
(iii) Xxxxxx Xxxx, in his capacity as a stockholder of IEM and as representative
of the other stockholders of IEM (in such capacity, the "Authorized
Representative") (all stockholders of IEM listed on Exhibit A hereto, the "IEM
Stockholders"), for purposes only of Sections 3.1, 3.5 and Article VII of this
Agreement. The Corporation, IEM and the Authorized Representative are referred
to collectively as the "Parties."
RECITALS
A. On the terms and conditions hereinafter provided, the Corporation desires to
acquire from the IEM Stockholders, and the IEM Stockholders wish to transfer to
the Corporation 100% of the issued and outstanding common stock, $0.001 par
value per share ("IEM Common Stock") of IEM (the "Transferred IEM Shares") in
exchange for 6,863,433 newly issued shares of common stock, $0.001 par value per
share ("Corporation Common Stock") of the Corporation constituting, together
with the New Warrant Shares (as defined below), 59.02% of the issued and
outstanding Corporation Common Stock (such shares, the "Issued Shares") after
giving effect to the issuance of Corporation Common Stock in the PPO (as defined
below) but before giving effect to the issuance of the Corporation Common Stock
pursuant to the exercise of the Warrants (as defined below) to be issued as part
of the PPO as of the Closing (as defined below) (such share exchange
transaction, the "Transaction"). The exchange ratio used for purposes of the
Transaction is one share of IEM Common Stock to 0.5053 shares of the Corporation
Common Stock (the "Exchange Ratio").
B. In addition, in connection with the Transaction, the Corporation will issue
to holders of warrants (the "Existing Warrants") to purchase shares of IEM
Common Stock listed on Schedule 2.7.1 hereto, upon cancellation of the Existing
Warrants, new warrants (the "New Warrants") to purchase shares of the
Corporation Common Stock, in the amounts set forth on Schedule 2.7.2 hereto, for
an aggregate 2,136,567 shares of the Corporation Common Stock (such shares
issuable upon the exercise of the New Warrants, the "New Warrant Shares").
C. In connection with the Transaction, the Corporation will also acquire
9,325,000 shares of the Corporation Common Stock held by certain officers,
directors and/or principal stockholders of the Company: Xxxxxxxx Xxxxxxxx, Xxxx
Xxxxx, Xxxxxxx XxXxxxxx and Xxxxxxxx Xxxxxxx ("Management") in exchange for all
of the Corporation's 2,010,000 shares in its Subsidiary (as defined below) (the
"Subsidiary Exchange"). The effect of the Subsidiary Exchange will be to
transfer the entire capital stock of the Subsidiary to Management.
Simultaneously with the closing of the Subsidiary Exchange, the Corporation
intends to cancel the 9,325,000 shares of the Corporation Common Stock acquired
from Management and return such shares to the Company's treasury.
D. The Authorized Representative and each of the IEM Stockholders have entered
into the Irrevocable Power of Attorney and Custody Agreement, attached hereto as
Exhibit B (the "Custody Agreement") and each of the IEM Stockholders have
executed and delivered to the Corporation a Stockholder Certificate attached
hereto as Exhibit C (each, a "Stockholder Certificate").
NOW THEREFORE, on the stated premises and for and in consideration of the
mutual covenants and agreements hereinafter set forth and the mutual benefits to
the Parties to be derived herefrom, the Parties hereto hereby agree as follows:
ARTICLE I
REPRESENTATIONS, COVENANTS AND
WARRANTIES OF THE CORPORATION
As an inducement to, and to obtain the reliance of IEM, the Corporation
hereby represents, warrants and covenants to IEM as of the date hereof , and as
of the Closing Date (as defined below), as follows:
1.1 Organization.
(a) The Corporation is a corporation duly organized and validly existing
under the laws of the State of Delaware and has the corporate power and is duly
authorized, qualified, franchised, and licensed under all applicable laws,
regulations, ordinances, and orders of public authorities to own all of its
properties and assets and to carry on its business. The following documents are
attached hereto under Exhibit D: (i) a certified copy of the certificate of
incorporation of the Corporation in effect as of the date of this Agreement;
(ii) the bylaws of the Corporation in effect as of the date of this Agreement;
and (iii) a certificate of good standing of the Corporation issued by the
Secretary of State of the State of Delaware and dated as of a recent date
preceding the date of this Agreement.
(b) The Subsidiary (as defined below) is a corporation duly organized and
validly existing under the laws of the State of Nevada and has the corporate
power and is duly authorized, qualified, franchised, and licensed under all
applicable laws, regulations, ordinances, and orders of public authorities to
own all of its properties and assets and to carry on its business. The following
documents are attached hereto under Exhibit E: (i) a certified copy of the
articles of incorporation of the Subsidiary in effect as of the date of this
Agreement; (ii) the bylaws of the Subsidiary in effect as of the date of this
Agreement; and (iii) a certificate of good standing of the Subsidiary issued by
the Secretary of State of the State of Nevada and dated as of a recent date
preceding the date of this Agreement. For purposes of this Agreement, the term
"Subsidiary" shall mean Pacific Technology, Inc., a Nevada corporation. Other
than the Subsidiary, the Corporation does not own or control 50% or more of the
securities or other interests entitled to vote in the election of directors or
others performing similar functions with respect to any corporation or other
organization, or to otherwise control any corporation, partnership, limited
liability company, limited partnership, joint venture, business trust or other
entity.
(c) The following information for the Subsidiary is set forth in Schedule
1.1(c) to this Agreement: (i) its name and jurisdiction of incorporation, (ii)
the type and percentage interest held by the Corporation in the Subsidiary and
the names of and percentage interest held by the other interest holders, if any,
in the Subsidiary, and (iii) any loans from the Corporation to, or priority
payments due to the Corporation from, the Subsidiary and the rate of return
thereon.
1.2 Due Authorization. The Corporation has taken, or will have taken prior to
Closing (as defined below), all actions required by law, its certificate of
incorporation, its bylaws, or otherwise to authorize the execution and delivery
of this Agreement. No authorization, approval, consent, or order of, or
registration with, any court or other governmental body is required in
connection with the execution and delivery by the Corporation of this Agreement
and consummation by the Corporation of the transactions contemplated by this
Agreement, including without limitation, the issuance of New Warrants.
1.3 Absence of Violation. The execution and delivery of this Agreement, and all
exhibits hereto does not and the consummation of the transactions contemplated
hereby and thereby will not: (a) conflict with, violate, result in a breach of
or constitute a default under any provision of the certificate of incorporation
(as amended through the date hereof) or bylaws or other organizational documents
of the Corporation; (b) violate, conflict with or result in the breach or
termination of or modification, or otherwise give any other contracting party
the right to terminate or modify, or constitute a default, with or without
notice, the lapse of time or both, or cause the acceleration of any obligation,
under the terms of any contract to which the Corporation is a party; (c) result
in the creation of any lien, charge or encumbrance upon the properties or other
assets of the Corporation; or (d) conflict with, violate, result in a breach of
or constitute a default under any judgment, order, injunction, decree or award
against, or binding upon, the Corporation or upon any of its properties or
assets.
1.4 Consents. The Corporation is not subject to any law, ordinance, regulation,
rule, order, judgment, injunction, decree, charter, bylaw, contract, commitment,
lease, agreement, instrument or other restriction of any kind which would
prevent the Corporation from performing the terms of this Agreement and all
exhibits hereto or any of the transactions contemplated hereby and thereby
without the consent of any third party, or which would require the consent of
any third party for the consummation of this Agreement and all exhibits hereto
or any of the transactions contemplated hereby and thereby, or which would
result in any penalty, forfeiture or other termination as a result of such
consummation.
1.5 Binding Obligation. When executed by the Corporation, this Agreement and all
exhibits hereto and the representations and warranties contained herein and
therein will constitute a valid and binding obligation of the Corporation, its
successors and permitted assigns enforceable in accordance with their respective
terms.
1.6 Capitalization and Outstanding Shares.
(a) As of the date of this Agreement, the authorized capital of the
Corporation consists of 55,000,000 shares of capital stock, $0.001 par value per
share, of which 50,000,000 shares are common stock and 5,000,000 shares are
preferred stock. There are 12,925,000 shares of the Corporation Common Stock
currently issued and outstanding, and no shares of the Corporation's preferred
stock are issued and outstanding. Such issued and outstanding shares of the
Corporation Common Stock are validly issued, fully paid, and non-assessable and
have not been issued in violation of the pre-emptive or other rights of any
person.
(b) As of the date of this Agreement, the authorized capital of the
Subsidiary consists of 55,000,000 shares of capital stock, $0.001 par value per
share, of which 50,000,000 shares are common stock and 5,000,000 shares are
preferred stock. There are 2,010,000 shares of the Subsidiary's common stock
currently issued and outstanding, and no shares of the Subsidiary's preferred
stock are issued and outstanding. Such issued and outstanding shares of the
Subsidiary's common stock are validly issued, fully paid, and non-assessable and
have not been issued in violation of the pre-emptive or other rights of any
person.
1.7 No Options, Warrants or Subscriptions.
(a) Except as set forth on Schedule 1.7(a) to this Agreement, there are no
existing options, warrants, calls, subscriptions, commitments of any character,
or any other right (whether by law, pre-emptive or contractual) relating to any
shares of the Corporation's capital stock, or requiring the Corporation to
purchase, redeem or otherwise acquire any of its issued and outstanding shares
of capital stock. Following the Closing (as defined below), the Corporation will
have New Warrants issued and outstanding.
(b) There are no existing options, warrants, calls, subscriptions,
commitments of any character, or any other right (whether by law, pre-emptive or
contractual) relating to any shares of the Subsidiary's capital stock, or
requiring the Subsidiary to purchase, redeem or otherwise acquire any of its
issued and outstanding shares of capital stock.
1.8 Compliance With Laws and Regulations. Each of the Corporation and the
Subsidiary has complied with all applicable statutes and regulations of any
federal, state, or other governmental entity or agency thereof, except to the
extent that noncompliance would not materially and adversely affect the
business, operations, properties, assets, or condition of the Corporation or the
Subsidiary, taken individually, or except to the extent that noncompliance would
not result in the occurrence of any material liability for the Corporation or
the Subsidiary.
1.9 Litigation. There are no claims, actions, suits, proceedings or
investigations pending or threatened or reasonably anticipated against or
affecting the Corporation, or the Subsidiary or any of their respective assets
or business or this Agreement or any exhibit hereto, at law or in equity, by or
before any court, arbitrator or governmental authority, domestic or foreign.
1.10 No Bankruptcy. There has not been filed any petition or application, nor
any proceeding commenced by or against the Corporation or the Subsidiary with
respect to any assets of the Corporation or the Subsidiary under any law,
domestic or foreign, relating to bankruptcy, reorganization, fraudulent
transfer, compromise, arrangements, insolvency, readjustment of debt or
creditors' rights, and no assignment has been made by the Corporation or the
Subsidiary for the benefit of creditors generally.
1.11 Shareholder's Agreements. Except for this Agreement and any agreements
incorporated as exhibits hereto, there is no agreement which governs or purports
to govern the shareholdings of the Corporation or which restricts or purports to
restrict the exercise by any shareholder of the Corporation of his rights as a
shareholder of the Corporation, including without restriction, any such
agreement, arrangement, commitment or understanding restricting or otherwise
relating to the voting, dividend rates or disposition of the shares (or units or
other equity interest, as the case may be) of the Corporation, save as governed
by applicable law.
1.12 Option Plans. There is no share option plan or similar plan to acquire any
additional shares or units or other equity interests, as the case may be, of the
Corporation or securities convertible or exercisable into or exchangeable for,
or which otherwise confer on the holder thereof any right to acquire, any such
additional shares or units or equity interests, as the case may be, except as
set forth on Schedule 1.7(a) to this Agreement.
1.13 Financial Statements. The financial statements contained in the
Corporation's filings with the Securities and Exchange Commission ("SEC") under
the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934,
as amended, comply in all material respects with applicable accounting
requirements and the rules and regulations of the SEC with respect thereto as in
effect at the time of filing. Such financial statements have been prepared in
accordance with the United States generally accepted accounting principles
("GAAP") applied on a consistent basis during the periods involved, except as
may be otherwise specified in such financial statements or the notes thereto,
and fairly present in all material respects the financial position of the
Corporation and its consolidated subsidiaries as of and for the dates thereof
and the results of operations and cash flows for the periods then ended,
subject, in the case of unaudited statements, to normal, immaterial, year-end
audit adjustments.
1.14 Tax Returns. All required tax returns and information returns and reports
of or relating to any tax and the information and data contained therein have
been properly and accurately compiled and completed in all material respects,
and filed in a timely manner with the appropriate taxation authority for the
Corporation.
1.15 Guarantees. The Corporation does not have any outstanding contracts or
commitments guaranteeing (or indemnifying or making contribution to others for
breaches in connection with) the payment or collection or the performance of the
obligations of others, and the Corporation has not entered into any deficiency
agreements, or issued any comfort letters, or otherwise granted any material
financial assistance to any person, firm, corporation or other entity.
1.16 No Non-Competition Agreement. There is no restriction agreement nor any
non-solicitation or non-competition agreement or other agreement restricting in
any way the carrying on of the business of the Corporation binding upon the
Corporation.
1.17 Real Property. The Corporation does not own any real or otherwise immovable
property, and the Corporation does not hold as tenant any leases.
1.18 Employment Matters. The Corporation does not have any employment,
consulting or severance contract, arrangement or understanding with any person
whomsoever. The Corporation has not granted any "golden parachute" to any of its
past or present employees. The salaries and bonuses of all officers and
employees of the Corporation have been paid in full by the Corporation. The
Corporation is in compliance in all material respects with all applicable laws
relating to employment in all relevant jurisdictions. There is no pending or
outstanding employment dispute within the Corporation. The consummation of the
transactions contemplated by this Agreement will not give rise to any liability
of the Corporation for bonuses, severance pay, termination benefits or other
amounts.
1.19 Intellectual Property. The Corporation has not and is not violating any
patents, material trademarks, trade names, copyrights, service marks,
applications therefor and other industrial and intellectual property.
1.20 Issuance of Shares Exempt from Registration. The issuance of the Issued
Shares and New Warrants to the IEM Stockholders is exempt from registration
under United States federal and state securities laws and regulations.
1.21 No Materially Adverse Undisclosed Facts. There is no fact known to the
management of the Corporation which has not previously been disclosed in writing
to IEM which may materially adversely affect the Corporation or its respective
assets, properties, business, prospects, operation or condition (financial or
otherwise), or which should be disclosed to IEM in order to make any of the
warranties and representations herein true and not misleading and no state of
facts is known (or with reasonable diligence would be known) to the management
of the Corporation that would operate to prevent the Corporation from continuing
to carry on its business in the manner in which carried on at the date hereof.
1.22 Absence of Certain Changes or Events. Except in order to fulfill the
obligations created by this Agreement and to complete the transactions
contemplated herein, from the date of this Agreement until the completion of the
Closing (as described below) the Corporation will: (a) not incur any liability
or obligation whatsoever, secured or unsecured, direct or indirect, other than
in the ordinary and usual course of its business; (b) not enter into any
contracts or agreements whatsoever, other than in the ordinary and usual conduct
and course of its business; (c) not change any of its accounting methods,
principles, practices or policies; (d) not cease to operate its properties and
to carry on its business as heretofore carried on, nor fail to maintain all of
its properties, rights and assets consistently with past practices; (e) not sell
or otherwise in any way alienate or dispose of any of its assets other than in
the ordinary course of business and in a manner consistent with past practices;
(f) not modify its certificate of incorporation, bylaws or capital structure,
except in accordance with this Agreement; (g) not make any modification to its
authorized or issued shares, nor redeem, retire, repurchase or otherwise
acquire, nor issue, sell or otherwise dispose of, shares of its capital stock
other equity interests or warrants, bonds or rights in its own capital, (h) not
make any distribution, by way of dividend or otherwise, to any of its
shareholders or to any affiliate or associate thereof, or reserve or declare any
dividend; (i) not make any material change in the form of compensation or
remuneration payable or to become payable to any of its shareholders, directors,
officers, employees or agents nor in the rate thereof; (j) other than the
ordinary course of business, not grant to any customer any special allowance or
discount, or change its pricing, credit or payment policies; (k) not make any
loan or advance, or assume, guarantee or otherwise become liable with respect to
the liabilities or obligations of any person; (l) not permit, cause or suffer
any extraordinary losses not covered by insurance; (m) not remove any director
or auditor or terminate any officer or have any of the foregoing resign, except
as set forth on Schedule 1.22(m) to this Agreement; (n) not purchase or
otherwise acquire any shares or other equity interest, as the case may be, in
any person. The Corporation further represents that: (o) it is not currently
facing any action or suit, proceeding, inquiry, or any threat thereof, against
or affecting the Corporation at law or in equity or before or by any foreign,
federal, state, provincial, municipal or other governmental department,
commission, board, bureau, agency or instrumentality which may in any way
materially and adversely affect the Corporation; (p) except as described in its
SEC filings, and/or the Corporation's interim financial statements, there have
not been any transactions, agreements, arrangements or payments (including,
without limitation, salaries, bonuses, royalties or fees) relating to or
affecting the Corporation or its business: (i) involving any related entity of
the Corporation; (ii) involving any current or former director, officer,
shareholder of the Corporation; (iii) involving any member of the immediate
family of any individual described in clause (ii) above; (iv) involving any
other person not acting at arm's length with the Corporation; or (v) not
otherwise at arm's length.
1.23 Reliance. All representations and warranties of the Corporation contained
herein shall be deemed to have been relied upon by IEM notwithstanding any
investigation heretofore or hereafter made by IEM or by its counsel or by any
other representative of IEM and shall survive the date hereof and continue in
full force and effect for the benefit of IEM for an unlimited duration in case
of fraud, gross negligence, material willful concealment or until the limitation
period under any applicable tax statute has expired or, in all other cases,
until the second anniversary of the date hereof.
ARTICLE II
REPRESENTATIONS, COVENANTS, AND WARRANTIES
OF IEM
As an inducement to, and to obtain the reliance of the Corporation, IEM
hereby represents, warrants and covenants to the Corporation as of the date
hereof , and as of the Closing Date, as follows:
2.1 Organization. IEM is a company duly organized and validly existing under the
laws of the State of Delaware and has the corporate power and is duly
authorized, qualified and licensed under all applicable laws, regulations,
ordinances, and orders of public authorities to own all of its properties and
assets and to carry on its business, except as disclosed in the Offering
Memorandum (as defined below). The following documents are attached hereto under
Exhibit F: (i) a certified copy of the certificate of incorporation of IEM in
effect as of the date of this Agreement; (ii) the bylaws of IEM in effect as of
the date of this Agreement; and (iii) a certificate of good standing of IEM as
of a recent date.
2.2 Due Authorization. IEM has taken, or will have taken prior to Closing, all
actions required by law, its articles of incorporation, its bylaws, or otherwise
to authorize the execution and delivery of this Agreement. No authorization,
approval, consent, or order of, or registration, declaration, or filing with,
any court or other governmental body is required in connection with the
execution and delivery by IEM of this Agreement and consummation by IEM of the
transactions contemplated by this Agreement.
2.3 Absence of Violation. The execution and delivery of this Agreement, and all
exhibits hereto does not and the consummation of the transactions contemplated
hereby and thereby will not (a) conflict with, violate, result in a breach of or
constitute a default under any provision of the articles of incorporation (as
amended) or bylaws or other organizational documents of IEM; (b) violate,
conflict with or result in the breach or termination of or modification, or
otherwise give any other contracting party the right to terminate or modify, or
constitute a default, with or without notice, the lapse of time or both, or
cause the acceleration of any obligation, under the terms of any contract to
which IEM is a party; (c) result in the creation of any lien, charge or
encumbrance upon the properties or other assets of IEM; or (d) conflict with,
violate, result in a breach of or constitute a default under any judgment,
order, injunction, decree or award against, or binding upon, IEM or upon any of
its properties or assets.
2.4 Consents. Except as set forth on Schedule 2.4 to this Agreement, IEM is not
subject to any law, ordinance, regulation, rule, order, judgment, injunction,
decree, charter, bylaw, contract, commitment, lease, agreement, instrument or
other restriction of any kind which would prevent IEM from performing the terms
of this Agreement and all exhibits hereto or any of the transactions
contemplated hereby and thereby without the consent of any third party, or which
would require the consent of any third party for the consummation of this
Agreement and all exhibits hereto or any of the transactions contemplated hereby
and thereby, or which would result in any penalty, forfeiture or other
termination as a result of such consummation.
2.5 Binding Obligation. When executed by IEM, this Agreement, and all exhibits
hereto and the representations and warranties contained herein and therein will
constitute a valid and binding obligation of IEM, its successors and permitted
assigns enforceable in accordance with their respective terms.
2.6 IEM Transferred Shares. IEM hereby represents and warrants that the
Transferred IEM Shares constitute all of IEM's issued and outstanding share
capital. Xxxxxx Xxxx, in his capacity as a stockholder of IEM, hereby represents
and warrants that, with respect to the number of shares of IEM Common Stock set
forth beside his name on the signature page hereto (representing all of the
securities of IEM held thereby), such securities are (i) free and clear of any
claims, charges, equities, liens, security interests, and encumbrances
whatsoever (including but not limited to any marital or community property
interest); and (ii) delivery of such securities on the Closing Date will convey
to the Corporation good and marketable title to such securities, free and clear
of any claims, charges, equities, liens, security interests and encumbrances
whatsoever.
2.7 Options or Warrants or Subscriptions. Except as set forth on Schedule 2.7.1
to this Agreement, there are no existing options, warrants, calls, subscriptions
or commitments of any character relating to the authorized and unissued share
capital of IEM, including, but not limited to the common stock of IEM.
2.8 Compliance With Laws and Regulations. Except as set forth on Schedule 2.8 to
this Agreement, to the actual knowledge of IEM, it has complied with all
applicable statutes and regulations of any federal, state or other governmental
entity or agency thereof, except to the extent that noncompliance would not
materially and adversely affect the business, operations, properties, assets, or
condition of IEM or except to the extent that noncompliance would not result in
the occurrence of any material liability for IEM.
2.9 Litigation. There are no claims, actions, suits, proceedings or
investigations pending or threatened or reasonably anticipated against or
affecting IEM or any of their assets or business or this Agreement or any
exhibit hereto, at law or in equity, by or before any court, arbitrator or
governmental authority, domestic or foreign.
2.10 No Bankruptcy. There has not been filed any petition or application, nor
any proceeding commenced by or against IEM with respect to any assets of IEM
under any law, domestic or foreign, relating to bankruptcy, reorganization,
fraudulent transfer, compromise, arrangements, insolvency, readjustment of debt
or creditors' rights, and no assignment has been made by IEM for the benefit of
creditors generally.
2.11 Option Plans. There is no share option plan or similar plan to acquire any
additional shares or units or other equity interests, as the case may be, of IEM
or securities convertible or exercisable into or exchangeable for, or which
otherwise confer on the holder thereof any right to acquire, any such additional
shares or units or equity interests, as the case may be.
2.12 Financial Statements. The financial statements attached hereto under
Exhibit F accurately reflect, subject to further auditing according to GAAP: (a)
the assets of IEM (cash and in kind); and (b) all outstanding obligations of IEM
whatsoever. With the exception of the senior promissory note in the principal
amount of $750,000, dated March 30, 2004, made by IEM in favor of Xx. Xxxx
Xxxxxxxx, IEM has no other material outstanding obligations.
IEM shall provide the audited financial statements for the fiscal years of
2002 and 2003 within 60 days after the Closing Date to be filed with the SEC on
Form 8-K.
2.13 Tax Returns. Except as set forth on Schedule 2.13, all required tax returns
and information returns and reports of or relating to any tax and the
information and data contained therein have been properly and accurately
compiled and completed in all material respects, and filed in a timely manner
with the appropriate taxation authority for IEM.
2.14 Guarantees. IEM does not have any outstanding contracts or commitments
guaranteeing (or indemnifying or making contribution to others for breaches in
connection with) the payment or collection or the performance of the obligations
of others, and has not entered into any deficiency agreements, or issued any
comfort letters, or otherwise granted any material financial assistance to any
person, firm, corporation or other entity.
2.15 No Non-Competition Agreement. There is no restriction agreement nor any
non-solicitation or non-competition agreement or other agreement restricting in
any way the carrying on of the business of IEM binding upon IEM.
2.16 Real Property. IEM does not own any real or otherwise immovable property.
2.17 Intellectual Property. To the knowledge of IEM, and except as may be
disclosed in the Offering Memorandum, it has not and is not violating any
patents, material trade marks, trade names, copyrights, service marks and other
industrial and intellectual property.
2.18 No Materially Adverse Undisclosed Facts. There is no fact known to the
management of IEM which has not previously been disclosed in writing to the
Corporation which may materially adversely affect IEM or its respective assets,
properties, business, prospects, operation or condition (financial or
otherwise), or which should be disclosed to the Corporation in order to make any
of the warranties and representations herein true and not misleading and no
state of facts is known (or with reasonable diligence would be known) to the
management of IEM, which would operate to prevent IEM from continuing to carry
on its business in the manner in which carried on at the date hereof.
2.19 Reliance. All representations and warranties of IEM contained herein, shall
be deemed to have been relied upon by the Corporation notwithstanding any
investigation heretofore or hereafter made by the Corporation or by their
counsel or by any other representative of IEM and shall survive the date hereof
and continue in full force and effect for the benefit of Corporation for an
unlimited duration in case of fraud, gross negligence, material willful
concealment or until the limitation period under any applicable tax statute has
expired or, in all other cases, until the second anniversary of the date hereof.
2.20 Absence of Certain Changes or Events. Except in order to fulfill the
obligations created by this Agreement and to complete the transactions
contemplated herein, from the date of this Agreement until the completion of the
Closing (as defined below), IEM will: (a) not incur any liability or obligation
whatsoever, secured or unsecured, direct or indirect, other than in the ordinary
and usual course of its business; (b) not enter into any contracts or agreements
whatsoever, other than in the ordinary and usual conduct and course of its
business; (c) not change any of its accounting methods, principles, practices or
policies; (d) not cease to operate its properties and to carry on its business
as heretofore carried on, nor fail to maintain all of its properties, rights and
assets consistently with past practices; (e) not sell or otherwise in any way
alienate or dispose of any of its assets other than in the ordinary course of
business and in a manner consistent with past practices; (f) not modify its
articles of incorporation, bylaws or capital structure; (g) not make any
modification to its authorized or issued shares, nor redeem, retire, repurchase
or otherwise acquire, nor issue, sell or otherwise dispose of, shares of its
capital stock, other equity interests or warrants, bonds or rights in its own
capital, (h) not make any distribution, by way of dividend or otherwise, to any
of its shareholders or to any affiliate or associate thereof, or reserve or
declare any dividend; (i) not make any material change in the form of
compensation or remuneration payable or to become payable to any of its
shareholders, directors, officers, employees or agents nor in the rate thereof;
(j) other than the ordinary course of business, not grant to any customer any
special allowance or discount, or change its pricing, credit or payment
policies; (k) not make any loan or advance, or assume, guarantee or otherwise
become liable with respect to the liabilities or obligations of any person; (l)
not permit, cause or suffer any extraordinary losses not covered by insurance;
(m) not remove any director or auditor or terminate any officer or have any of
the foregoing resign; (n) not purchase or otherwise acquire any shares or other
equity interest, as the case may be, in any person. IEM further represents that
(o) it is not currently facing any action or suit, proceeding, inquiry, or any
threat thereof, against or affecting IEM at law or in equity or before or by any
foreign, federal, state, provincial, municipal or other governmental department,
commission, board, bureau, agency or instrumentality which may in any way
materially and adversely affect IEM; (p) except as described in IEM's financial
statements, there have not been any transactions, agreements, arrangements or
payments (including, without limitation, salaries, bonuses, royalties or fees)
relating to or affecting IEM or its business: (i) involving any related entity
of IEM, (ii) involving any current or former director, officer, shareholder of
IEM, or (iii) involving any member of the immediate family of any individual
described in clause (ii) above, (iv) involving any other person not acting at
arm's length with IEM or (v) not otherwise at arm's length.
ARTICLE III
THE CLOSING
3.1 The Exchange.
(a) The Authorized Representative hereby agrees, with respect to the IEM
Common Stock he holds in the amount set forth next to his name on the signature
page hereto and for and on behalf of each of the IEM Stockholders by the powers
granted to him in Custody Agreement, to assign, transfer and deliver to the
Corporation, all of the Transferred IEM Shares, and the Corporation agrees to
acquire such Transferred IEM Shares by issuing and delivering to the IEM
Stockholders and/or their designees in exchange therefor the Issued Shares,
subject to adjustment according to subsection (d) of this Section 3.1.
(b) In connection with the Transaction, at Closing, the Authorized
Representative, for and on behalf of each holder of the Existing Warrants, shall
deliver to the Corporation evidence of cancellation of such Existing Warrants as
set forth in Section 3.5, and the Corporation, upon receipt of such evidence,
shall issue to such holders the New Warrants in the amounts set forth on
Schedule 2.7.2 hereto and shall deliver such New Warrants to the Authorized
Representative, at Closing, for prompt delivery thereby to such holders. The New
Warrants shall have substantially the same terms as the Existing Warrants.
(c) Based on the Exchange Ratio, as a result of the Closing, each IEM
Stockholder is entitled to receive, in exchange for his or its portion of the
Transferred IEM Shares, that number of the Issued Shares that is set forth
opposite such IEM Stockholder's name on Exhibit A hereto.
(d) In the event that, during the period commencing from the Closing Date
(as defined below) and ending on the first anniversary of the Closing Date, IEM
becomes aware of any undisclosed liabilities or contingent liabilities (together
and as applicable, the "Liabilities") relating to the Corporation and/or its
operations, including but not limited to (i) any and all litigation threatened,
pending or for which a basis exists, that has resulted or may result in the
entry of judgment in damages or otherwise against the Corporation; (ii) any and
all outstanding debts owed by the Corporation; (iii) any and all internal or
employee related disputes, arbitrations or administrative proceedings
threatened, pending or otherwise outstanding, and (iv) any and all liens,
foreclosures, settlements, or other threatened, pending or otherwise outstanding
financial, legal or similar obligations of the Corporation, as such Liabilities
are determined by the Corporation's independent auditors, on a quarterly basis,
then on the fifth day following the filing by the Corporation with the SEC of a
quarterly report relating to the most recent completed quarter for which such
determination has been made, the Corporation shall issue to IEM Stockholders
and/or their designees such number of shares as would result from dividing (x)
the whole dollar amount representing such Liabilities by (y) $1.60, which amount
represents the purchase price per share of the Corporation's common stock based
on the valuation established for purposes of the PPO.
3.2 Closing. The closing ("Closing") of the transactions contemplated by this
Agreement shall be on May 31, 2004, at the offices of Xxxxx & XxXxxxxx located
at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, or at such other time and place as the
parties may mutually agree ("Closing Date").
3.3 Conditions Precedent to Closing.
The conditions precedent to the obligations set forth in this Agreement include:
(a) the resignation of the entire current board of directors, the
executive officers and current employees of the Corporation and the
simultaneous election of the new board of directors consisting of the
total of five (5) directors, four of which are to be designated by IEM and
one of which is to be designated by the Corporation;
(b) the closing of a private placement offering (the "PPO") with a minimum
of $4,000,000 of gross proceeds, whereby an aggregate of up to 2,650,000
"Units" at $1.60 per Unit shall be offered directly to various
institutional and accredited investors, and each such "Unit" shall
comprise of (i) one (1) share of the Corporation's common stock; and (ii)
one (1) three (3) year callable warrant for each five and three tenths
(5.3) Units to purchase one (1) share of the Corporation's common stock at
$2.00 per share, as such PPO is described in further detail in the
Confidential Private Placement Memorandum of the Corporation (the
"Offering Memorandum"), to be prepared by the Corporation in consultation
with IEM and Xxxxx Xxxxxx & Co., Inc., the placement agent in connection
with the PPO, upon advice of their respective counsel;
(c) all necessary filings with the SEC and any and all other governmental
bodies;
(d) the execution and delivery of lock-up agreements (the "Lock-up
Agreements") with the Corporation with all officers, directors and IEM
Stockholders who will own 5% or more of the Corporation's common stock on
the Closing Date;
(e) completion of the Subsidiary Exchange; and
(f) any other conditions precedent set forth in Articles V and VI of this
Agreement;
provided, however, that no Closing shall occur without the prior written consent
("Consent") of the parties to this Agreement on any date that occurs after the
one hundred and eightieth (180) day from the date of the execution of this
Agreement (such date, the "Termination Date") and, unless Consent shall have
been given prior to the Termination Date, that this Agreement shall be null and
void and neither party hereto shall have any further obligation to the other;
and provided further, that IEM and the Corporation shall use their best efforts
to achieve a Closing prior to the Termination Date.
3.4 Appropriate Approval. All of the items set forth in Section 3.3 of this
Agreement and all of the transactions contemplated hereunder, shall have been
properly authorized and approved by the stockholders of the Corporation.
3.5 Closing Events. At the Closing, each of the respective Parties hereto shall
execute, acknowledge, and/or deliver, as applicable, or shall ensure the
execution, acknowledgement, and delivery of, as applicable, the following:
(a) In the case of IEM (and Xx. Xxxx for himself and as Authorized
Representative, with respect to subsections (ii) and (vi) hereof only):
(i) each of the Schedules set forth in Article II of this Agreement; (ii)
power of stock transfer and share certificates evidencing the transfer of
the Transferred IEM Shares to the Corporation; (iii) the Lock-Up
Agreements in substantially the form of Exhibit G attached hereto; (iv) a
certificate of an officer of IEM certifying that certain facts are true as
of the Closing Date, in accordance with Article V of this Agreement, which
certificate shall be in form and substance satisfactory to the
Corporation; (v) assignment ("Assignment") of the Employment Agreements
between each of Raza Khan and Xxxxxx Xxxx and IEM to the Corporation; (vi)
evidence of cancellation of the Existing Warrants; (vii) evidence of
conversion of all outstanding shares of Series A Preferred Stock of IEM
into IEM Common Stock; and (viii) an opinion of counsel of IEM as to: (A)
valid existence and good standing of IEM on the date of the opinion; (B)
the due authorization by IEM of this Agreement and all exhibits hereto;
and (C) the enforceability against IEM of the Agreement and all exhibits
hereto.
(b) In the case of the Corporation: (i) each of the Schedules set forth in
Article I of this Agreement; (ii) share certificates evidencing the
ownership by the IEM Stockholders of the Issued Shares; (iii) the
Certificate of Incorporation, as amended through the Closing Date,
certified by an officer of the Corporation to be in force as of the
Closing Date; (iv) all documentation relating to the PPO; (v) a
certificate of an officer of the Corporation certifying that certain facts
are true as of the Closing Date, in accordance with Article VI of this
Agreement, which certificate shall be in form and substance satisfactory
to IEM; (vi) the New Warrants; (vii) an opinion of counsel of the
Corporation as to: (A) valid existence and good standing of the
Corporation on the date of the opinion; (B) the due authorization by the
Corporation of this Agreement and all exhibits hereto; and (C) the
enforceability against the Corporation of the Agreement, all exhibits
hereto and the transactions contemplated by this Agreement; (viii)
acknowledgement and acceptance of the Assignment; and (ix) the exemption
from registration under U.S. federal and state securities laws and
regulations of the issuance of the Issued Shares and the New Warrants to
the IEM Stockholders.
(c) Any and all certificates, together with such other items as may be
reasonably requested by the Parties hereto and their respective legal
counsel in order to effectuate or evidence the transactions contemplated
hereby.
ARTICLE IV
SPECIAL REPRESENTATIONS, COVENANTS, AND WARRANTIES
OF IEM WITH RESPECT TO THE SUBSCRIPTION OF THE ISSUED SHARES
The Issued Shares shall be issued to the IEM Stockholders only for the
respective accounts of the IEM Stockholders, and the New Warrants shall be
issued to the holders set forth on Schedule 2.7.2 hereto only for the respective
accounts of such holders, pursuant to an exemption from the registration
requirements of the U.S. federal and state securities laws and regulations. Each
certificate representing the Issued Shares issued and delivered at the Closing
will have typed or printed thereon a restricted legend which will read
substantially as follows:
"The shares represented by this certificate have not
been registered under the Securities Act of 1933, as
amended (the "Securities Act"), or any state securities
laws, but have been acquired by the registered owner
hereof for the purpose of investment and in reliance
upon the statutory exemptions contained in the
Securities Act and similar provisions of any applicable
state securities laws. The shares may not be sold,
pledged, transferred or assigned except in accordance
with tHE SECURITIES ACT and all other applicable state
securities laws."
The New Warrants shall bear a legend substantially to the same effect.
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE CORPORATION
In addition to the conditions precedent set forth in Section 3.2 of this
Agreement, the obligations of the Corporation under this Agreement are subject
to the satisfaction, at or before the Closing Date, of the following conditions:
5.1 Accuracy of Representations. The representations and warranties made by IEM
in this Agreement were true when made and shall be true at the Closing Date with
the same force and effect as if such representations and warranties were made at
and as of the Closing Date (except for changes therein permitted by this
Agreement), and IEM shall have performed or complied with all covenants and
conditions required by this Agreement to be performed or complied with by IEM
prior to or at the Closing.
5.2 No Material Adverse Change. Prior to the Closing Date, there shall not have
occurred any material adverse change in the financial condition, business, or
operations of IEM nor shall any event have occurred which, with the lapse of
time or the giving of notice, may cause or create any material adverse change in
the financial condition, business or operations of IEM.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF IEM
In addition to the conditions precedent set forth in Section 3.2 to this
Agreement, The obligations of IEM under this Agreement are subject to the
satisfaction, at or before the Closing Date, of the following conditions:
6.1 Accuracy of Representations. The representations and warranties made by the
Corporation in this Agreement were true when made and shall be true as of the
Closing Date (except for changes therein permitted by this Agreement) with the
same force and effect as if such representations and warranties were made at and
as of the Closing Date, and the Corporation shall have performed and complied
with all covenants and conditions required by this Agreement to be performed or
complied with by the Corporation prior to or at the Closing.
6.2 No Material Adverse Change. Prior to the Closing Date, there shall not have
occurred any material adverse change in the financial condition, business, or
operations of the Corporation nor shall any event have occurred which, with the
lapse of time or the giving of notice, may cause or create any material adverse
change in the financial condition, business or operations of the Corporation.
6.3 Discharge of Existing Liabilities. The Corporation shall discharge all the
existing liabilities in excess of $5,000 before or simultaneously with the
Closing Date.
6.4 Reservation of Stock. The Corporation shall reserve from the authorized and
unissued shares of the Corporation Common Stock a sufficient number of shares to
provide for the issuance of New Warrant Shares upon the exercise or conversion
of New Warrants. Issuance of the New Warrants shall constitute full authority to
the Corporation's officers who are charged with the duty of executing stock
certificates to execute, issue and deliver the necessary certificates for New
Warrant Shares issuable upon the exercise or conversion of the New Warrants.
ARTICLE VII
LIMITATION OF LIABILITY
7.1 Limitation of Liability of IEM Stockholders. None of the IEM Stockholders,
in their capacity as stockholders of IEM, makes any representations, warranties,
covenants and agreements set forth in this Agreement, or in connection herewith
or with the transactions contemplated hereby, except for the statements made
severally by each IEM Stockholder in the Stockholder Certificate. The
Corporation hereby acknowledges, agrees and confirms that the IEM Stockholders,
in their capacity as stockholders of IEM, shall have no responsibility or
liability whatsoever with respect to this Agreement, or in connection herewith
or with the transactions contemplated hereby, except in connection with the
Stockholder Certificate.
7.2 Limitation of Liability of the Authorized Representative. The Authorized
Representative, in his capacity as such, is a party to this Agreement for the
limited purpose of Sections 3.1, 3.5 and this Article VII, and makes no
representation or warranties and has no obligations hereunder in his capacity as
the Authorized Representative, other than with respect to the above provisions
of this Agreement and except for its obligations as Custodian under the Custody
Agreement. The Corporation hereby acknowledges, agrees and confirms that the
Authorized Representative shall have no responsibility or liability whatsoever
with respect to this Agreement, other than with respect to the above provisions
of this Agreement and except for its obligations as Custodian under the Custody
Agreement.
7.3 The parties hereto hereby agree that the limitation of liability set forth
in this Article VII is not intended in any way to limit or affect the
obligations or liability of IEM or its affiliates.
ARTICLE VIII
MISCELLANEOUS
8.1 Governing Law. This Agreement shall be governed by, enforced, and construed
under and in accordance with the laws the State of New York without regard to
its conflicts of laws principles.
8.2 Resolution of Disputes.
(a) Any dispute, controversy or claim arising out of or relating to this
Agreement, or the interpretation, breach, termination or validity hereof, shall
first be resolved through friendly consultation, if possible. Such consultation
shall begin immediately after one party has delivered to the other party a
written request for such consultation (the "Consultation Date"). If the dispute
cannot be resolved within 30 days following the Consultation Date, the dispute
shall be submitted to arbitration upon the request of either party, with written
notice to the other party.
(b) Arbitration. The arbitration shall be conducted by a tribunal (the
"Tribunal") in New York, New York under the auspices of the American Arbitration
Association ("AAA") in accordance with the commercial arbitration rules and
supplementary procedures for international commercial arbitration of the AAA.
There shall be three arbitrators - one arbitrator shall be chosen by each party
to the dispute and those two arbitrators shall choose the third arbitrator. All
arbitration proceedings shall be conducted in English. Each party shall
cooperate with the other in making full disclosure of and providing complete
access to all information and documents requested by the other party in
connection with the arbitration proceedings. Arbitration shall be the sole,
binding, exclusive and final remedy for resolving any dispute between the
parties; either party may apply to any court of competent jurisdiction in
relevant jurisdictions for enforcement of any award granted by the Tribunal.
(c) During the period when a dispute is being resolved, except for the matter
being disputed, the parties shall in all other respects continue to abide by the
terms of this Agreement.
8.3 Notices. Any notice or other communications required or permitted hereunder
shall be sufficiently given if personally delivered to it or sent by registered
mail or certified mail, postage prepaid, or by prepaid telegram addressed as
follows:
(a) If to the Corporation, addressed as follows:
Attn: Xxxxxxxx Xxxxxxx
Pacific Technology, Inc.
00000 Xxxxxxxx
Xxxxxxx Xxxxx, XX 00000
Facsimile: (000) 000-0000
With a copy to (which shall not, of itself, constitute sufficient notice):
Gottbetter & Partners, LLP
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxxxxx
Facsimile: (000) 000-0000
(b) If to IEM or to the Authorized Representative, addressed as follows:
Iempower, Inc.
000 Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxx, Managing Director
Facsimile: (000) 000-0000
With a copy to (which shall not, of itself, constitute sufficient notice):
Xxxxx & XxXxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxx, Esq.
Facsimile: (000) 000-0000
or such other addresses as shall be furnished in writing by any party in the
manner for giving notices hereunder, and any such notice or communication shall
be deemed to have been given as of the date so delivered, mailed or telegraphed.
8.4 Schedules; Knowledge. Each party is presumed to have full knowledge of all
information set forth in the other party's schedules delivered pursuant to this
Agreement.
8.5 Entire Agreement. This Agreement constitutes the entire agreement between
the parties hereto relating to the matters set forth herein and supersedes any
prior understanding or agreement, oral or written, with respect thereto. The
representations, warranties, covenants and agreements set forth in this
Agreement constitute all representations, warranties, covenants and agreements
of the parties hereto and upon which the parties have relied.
8.6 Survival; Termination. The representations, warranties, and covenants of the
respective parties shall survive the Closing Date and the consummation of the
transactions herein contemplated for a period of three months. All rights and
obligations under this entire Agreement shall be binding upon and inure to the
benefit of the heirs, executors, administrators and assigns of the parties.
8.7 Counterparts. This Agreement may be executed in multiple counterparts, each
of which shall be deemed an original and all of which taken together shall be
but a single instrument. For purposes of this Agreement, facsimile signatures
may be deemed originals.
8.8 Amendment or Waiver. Every right and remedy provided herein shall be
cumulative with every other right and remedy, whether conferred herein, at law,
or in equity, and may be enforced concurrently herewith, and no waiver by any
party of the performance of any obligation by the other shall be construed as a
waiver of the same of any other default then, theretofore, or thereafter
occurring or existing. At any time prior to the Closing Date, this Agreement may
be amended by a writing signed by all parties hereto, with respect to any of the
terms contained herein, and any term or condition of this Agreement may be
waived or the time for performance may be extended by a writing signed by the
party or parties for whose benefit the provision is intended.
8.9 Exclusivity. From and after the date of execution of this Agreement and
during a period ending on the Termination Date (the "Exclusivity Period"), each
of IEM and the Corporation hereby respectively agrees that it will not enter
into any agreement or consummate any transaction with any third party, in
whatever form (including, without limitation, joint venture, sale, license,
distribution agreement, etc.) or enter into any other transaction that would
preclude the consummation of the transactions contemplated by this Agreement.
During the Exclusivity Period, both the Corporation and IEM will incur
additional legal and other costs and expenses in connection with the negotiation
of the transactions contemplated by this Agreement and certain due diligence
activities related thereto. Only in the event that either IEM or the Corporation
breaches the aforementioned exclusivity covenant, IEM or the Corporation, as
applicable, will reimburse the other party for its documented costs and expenses
incurred prior to and after the date of this Agreement in connection with the
transaction up to an amount not to exceed $100,000.
[The remainder of this page intentionally left blank]
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
each party hereto as of the date first above written.
PACIFIC TECHNOLOGY, INC.
By:
---------------------------------------------------
Name:
Title:
IEMPOWER, INc.
By:
---------------------------------------------------
Name:
Title:
Xxxxxx Xxxx, as Authorized Representative
---------------------------------------------------
Xxxxxx Xxxx, as stockholder of IEM
with respect to 4,300,000 shares of IEM Common Stock
---------------------------------------------------
EXHIBIT A
IEM STOCKHOLDERS
------------------------------------------------ -------------------------------------- -----------------------------------------
NAME OF IEM STOCKHOLDER NUMBER OF SHARES OF IEM STOCK OWNED NUMBER OF SHARES OF THE CORPORATION'S
COMMON STOCK TO BE RECEIVED UPON
CLOSING
------------------------------------------------ -------------------------------------- -----------------------------------------
Xxxxxxxxxxx International IT Master Fund Ltd. 400,000 (Series A Preferred) 202,135
------------------------------------------------ -------------------------------------- -----------------------------------------
Xxxxxxxxxxx Global Frontier Markets Master 250,000 (Series A Preferred) 126,334
Fund LP
------------------------------------------------ -------------------------------------- -----------------------------------------
Xxxxxxxxxxx Global Frontier Markets Fund, LLC 150,000 (Series A Preferred) 75,801
------------------------------------------------ -------------------------------------- -----------------------------------------
Xxxxxx X. Xxxxxx 100,000 (Series A Preferred) 50,534
------------------------------------------------ -------------------------------------- -----------------------------------------
Raza Khan 4,600,000 (Common) 2,324,553
------------------------------------------------ -------------------------------------- -----------------------------------------
Xxxxxx Xxxx 4,300,000 (Common) 2,172,952
------------------------------------------------ -------------------------------------- -----------------------------------------
Indus Consulting, Inc. 1,000,000 (Common) 505,338
------------------------------------------------ -------------------------------------- -----------------------------------------
Xxxx Xxxxxxxxxxx 300,000 (Common) 151,601
------------------------------------------------ -------------------------------------- -----------------------------------------
Xxxxx Xxxx 100,000 (Common) 50,534
------------------------------------------------ -------------------------------------- -----------------------------------------
Global Business Inc. 1,031,250 (Common) 521,129
------------------------------------------------ -------------------------------------- -----------------------------------------
Alliance Global Finance Inc. 1,031,250 (Common) 521,129
------------------------------------------------ -------------------------------------- -----------------------------------------
Xxxx Xxxxxxxxxx 34,375 (Common) 17,371
------------------------------------------------ -------------------------------------- -----------------------------------------
Xxxxx Xxxxxxx 10,000 (Common) 5,053
------------------------------------------------ -------------------------------------- -----------------------------------------
Xxxxxxxxxxx Xxxxxx 50,000 (Common) 25,267
------------------------------------------------ -------------------------------------- -----------------------------------------
Xxxx Xxxxx 50,000 (Common) 25,267
------------------------------------------------ -------------------------------------- -----------------------------------------
Xxxx Xxx 50,000 (Common) 25,267
------------------------------------------------ -------------------------------------- -----------------------------------------
Xxxxxxx Xxxxxxxxx 25,000 (Common) 12,633
------------------------------------------------ -------------------------------------- -----------------------------------------
Xxxxxx Xxxxxx 100,000 (Common) 50,534
------------------------------------------------ -------------------------------------- -----------------------------------------
TOTAL: 13,581,875 6,863,433
------------------------------------------------ -------------------------------------- -----------------------------------------
EXHIBIT B
FORM OF POWER OF ATTORNEY AND CUSTODY AGREEMENT
EXHIBIT C
FORM OF STOCKHOLDER CERTIFICATE
