Exhibit 10.3
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made
this 9th day of October 2003, by and among Prelude Ventures, Inc., a Nevada
corporation ("Prelude"); Xx Xxxxxxx, Xxxxx Xxxx, Xxxxx Xxxxxxx, Xxx Xxxx, (the
"MPW Stockholders", based on the following:
RECITALS
Prelude, through its subsidiary, Tri-State Stores Acquisition Corp., a
Delaware Corporation ("NEWCO"), wishes to acquire an option to purchase 100% of
the shares of MPW in exchange for shares of common stock of Prelude in a
transaction intended to qualify as a tax-free exchange pursuant to section
368(a)(1)(B) of the Internal Revenue Code of 1986, as amended. The parties
intend for this Agreement to represent the terms and conditions of such tax-free
reorganization, which Agreement the parties hereby adopt.
AGREEMENT
Based on the stated premises, which are incorporated herein by
reference, and for and in consideration of the mutual covenants and agreements
hereinafter set forth, the mutual benefits to the parties to be derived
herefrom, and other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, it is hereby agreed as follows:
ARTICLE I
ISSUANCE OF STOCK FOR ASSETS
1.01 Exchange of Shares. On the terms and subject to the conditions set
forth in this Agreement, on the Closing Date (as defined in Section 1.02
hereof), the MPW Stockholders shall assign, transfer, and deliver to Prelude, an
option to purchase all the issued and outstanding shares of MPW (the "MPW
Option"), as set forth on the appropriate Schedule 1.01 annexed hereto, for an
aggregate purchase price of 5,000,000 shares of common stock. The Shares to be
issued as the purchase price are to be issued as set forth opposite the MPW
Stockholder's respective names in Exhibit A-1. All shares of Prelude Common
Stock to be issued and delivered pursuant to this Agreement shall be
appropriately adjusted to take into account any stock split, stock dividend,
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reverse stock split, recapitalization, or similar change in the Prelude Common
Stock which may occur between the date of the execution of this Agreement and
the Closing Date, if any.
1.02 Closing and Parties. The Closing contemplated hereby shall be held
at a mutually agreed upon time and place on or about October 9, 2003, or on
another date to be agreed to in writing by the parties (the "Closing Date"). The
Agreement may be closed at any time following approval by a majority of the
shareholders of Prelude Common Stock as set forth in Section 4.02 hereof and the
MPW Stockholders as set forth in Section 5.02. The Closing may be accomplished
by wire, express mail, overnight courier, conference telephone call or as
otherwise agreed to by the respective parties or their duly authorized
representatives.
1.03 Closing Events
(a) Prelude Deliveries. Subject to fulfillment or waiver of the
conditions set forth in Article IV, Prelude shall deliver to MPW at Closing all
the following:
(i) A certificate of good standing from the secretary of State
of Nevada, issued as of a date within sixty days prior to the
Closing Date, certifying that Prelude is in good standing as a
corporation in the State of Nevada:
(ii) Incumbency and specimen signature certificates dated the
Closing Date with respect to the officers of Prelude executing
this Agreement and any other document delivered pursuant
hereto on behalf of Prelude;
(iii) Copies of the resolution of Prelude board of directors
and shareholder minutes or consents authorizing the execution
and performance of this Agreement and the contemplated
transactions, certified by the secretary or an assistant
secretary of Prelude as of the Closing Date;
(iv) The certificate contemplated by Section 4.02, duly
executed by the chief executive officer of Prelude;
(v) The certificate contemplated by Section 4.03, dated the
Closing Date, signed by the chief executive officer of
Prelude;
(vi) Certificates for 5,000,000 shares of Prelude Common Stock
in the names of the MPW Stockholders and in the amounts set
forth in Exhibit "A-1" and;
(ix) Prelude shall enter into Consulting Agreements with New
Century Capital Consultants, Inc. Alpha Advisors LLC, National
Securities Corporation and Commonwealth Partners NY LLC, on
the terms and conditions as agreed upon by all parties; and
In addition to the above deliveries, Prelude shall take all steps and
actions as MPW and MPW Stockholders may reasonably request or as may otherwise
be reasonably necessary to consummate the transactions contemplated hereby.
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(b) MPW Deliveries. Subject to fulfillment or waiver of the conditions
set forth in Article V, MPW and/or MPW Stockholder's shall deliver to Prelude at
Closing all the following:
(i) The Option Agreement as specified in Section 1.01.
In addition to the above deliveries, MPW shall take all steps and
actions as Prelude may reasonably request or as may otherwise be reasonably
necessary to consummate the transactions contemplated hereby.
1.04. Termination
(a) This Agreement may be terminated by the board of directors of
either Prelude or MPW at any time prior to the Closing Date if:
(i) There shall be any actual or threatened action of
proceeding before any court or any governmental body which
shall seek to restrain, prohibit, or invalidate the
transaction contemplated by this Agreement and which, in the
reasonable judgment of such board of directors, made in good
faith and based upon the advice of its legal counsel, makes it
inadvisable to proceed with the transactions contemplated by
this Agreement;
(ii) Any of the transactions contemplated hereby are
disapproved by any regulatory authority whose approval is
required to consummate such transactions or in the reasonable
judgment of such board of directors, made in good faith and
based on the advice of counsel, there is substantial
likelihood that any such approval will not be obtained or will
be obtained only on a condition or conditions which would be
unduly burdensome, making it inadvisable to proceed with the
exchange;
In the event of termination pursuant to this paragraph (a) of Section
1.07, no obligation, right, or liability shall arise hereunder, and each party
shall bear all of the expenses incurred by it in contemplated hereby.
ARTICLE II
REPRESENTATION, COVENANTS, AND WARRANTIES OF PRELUDE
As an inducement to, and to obtain the reliance of MPW and/or MPW
shareholders, Prelude represents and warrants as follows:
2.01 Organization. Prelude is, and will be on the Closing Date, a
corporation duly organized, validly existing, and in good standing under the
laws of the state of Nevada and has the corporate power and is and will be 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 in all material respects as
it is now being conducted, and there are no other jurisdictions in which it is
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not so qualified in which the character and location of the assets owned by it
or the nature of the material business transacted by it requires qualification,
except where failure to do so would not have a material adverse effect on its
business, operation, properties, assets or condition. The execution and delivery
of this Agreement does not, and the consummation of the transactions
contemplated by this Agreement in accordance with the terms hereof will not,
violate any provision of Prelude articles of incorporation or bylaws, or other
agreement to which it is a party or by which it is bound.
2.02 Approval of Agreement. Prelude has full power, authority, and
legal right and has taken, or will take, all action required by law, its
articles of incorporation, bylaws, and otherwise to execute and deliver this
Agreement and to consummate the transaction herein contemplated. The board of
directors of Prelude has authorized and approved the execution, delivery, and
performance of this Agreement and the transactions contemplated hereby; subject
to the approval of the Prelude shareholders and compliance with state and
federal corporate and securities laws.
2.03 Capitalization. The authorized capitalization of Prelude consists
of 100,000,000 shares, of common stock, $0.001 par value, of which approximately
15,000,000 shares are issued and outstanding and 10,000,000 shares of preferred
stock, $0.001 par value of which none are issued and outstanding. All issued and
outstanding shares of Prelude are legally issued, fully paid, and nonassessable
and not issued in violation of the preemptive or other right of any person.
There are no dividends or other amounts due or payable with respect to any of
the shares of capital stock of Prelude.
2.04 Financial Statements.
(a) Included in the Schedules are the audited balance sheets of Prelude
as of December 31, 2002 and 2001, and the related statement of operations,
stockholder's equity (deficit), and cash flows for the fiscal year ended
December 31, 2002, and 2001, including the notes thereto, and the accompanying
report of XXXXXXX XXXXXX; independent certified public accountants. At or prior
to the Closing Date, Prelude shall deliver the un-audited balance sheet of
Prelude as of June 30, 2003, and the related statements of operations,
stockholders' equity (deficit), and cash flows for the six months ended June 30,
2003, together with the notes thereto and representations by the principal
accounting and financial officer of Prelude to the effect that such financial
statements contain all adjustments (all of which are normal recurring
adjustments) necessary to present fairly the results of operations and financial
position for the periods and as of the dates indicated and such financial
statements shall not reflect any material changes since the December 31, 2002,
financial statements. All documents referred to herein are available as public
disclosure document pursuant to the Periodic Filing Requirements and as listed
on the XXXXX system of the SEC.
(b) The financial statements of Prelude delivered pursuant to Section
2.04(a) have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved as explained in
the notes to such financial statements. The Prelude financial statements present
fairly, in all material respects, as of their respective dates, the financial
position of Prelude. Prelude did not have, as of the date of any such financial
statements, except as and to the extent reflected or reserved against therein,
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any liabilities or obligations (absolute or contingent) which should be
reflected therein in accordance with generally accepted accounting principles,
and all assets reflected therein presently fairly the assets of Prelude in
accordance with generally accepted accounting principles
(c) Prelude has filed or will file as the Closing Date all tax returns
required to be filed by it from inception to the Closing Date. All such returns
and reports are accurate and correct in all material respect. Prelude has no
material liabilities with respect to the payment of any federal, state, county,
local, or other taxes (including any deficiencies, interest, or penalties)
accrued for or applicable to the period ended on the date of the most recent
balance sheet of Prelude, except to the extent reflected on such balance sheet
and all such dates and years and periods prior thereto and for which Prelude may
at said date have been liable in its own right or as transferee of the assets
of, or as successor to, any other corporation or entity, except for taxes
accrued but not yet due and payable, and to the best knowledge of Prelude, no
deficiency assessment or proposed adjustment of any such tax return is pending,
proposed or contemplated. To the best knowledge of Prelude, none of such income
tax returns has been examined or is currently being examined by the Internal
Revenue Service and no deficiency assessment or proposed adjustment of any such
return is pending, proposed or contemplated. Prelude has not made any election
pursuant to the provisions of any applicable tax laws (other than elections that
relate solely to methods of accounting, depreciation, or amortization) that
would have a material adverse affect on Prelude, its financial condition, its
business as presently conducted or proposed to be conducted, or any of its
respective properties or material assets. There are no outstanding agreements or
waivers extending the statutory period of limitation applicable to any tax
return of Prelude.
2.05 Outstanding Warrants and Options. Prelude has no existing
Warrants, options, calls, or commitments of any nature relating to the
authorized and un-issued Prelude Common Stock.
2.06 Information. The information concerning Prelude set forth in this
Agreement is complete and accurate in all material respects and does not contain
any untrue statement of a material fact or omit to state a material fact
required to make the statements made, in light of the circumstances under which
they were made, not misleading. Prelude shall cause the schedules delivered by
it pursuant hereto and the instruments delivered to MPW hereunder to be updated
after the date hereof up to and including the Closing Date.
2.07 Absence of Certain Changes or Events. Except as set forth in this
Agreement or the schedules hereto, since the date of the most recent Prelude
balance sheet described in Section 2.04 and included in the information referred
to in Section 2.06.
(a) There has not been (i) any material adverse change in the business,
operations, properties, level of inventory, assets, or condition of Prelude or
(ii) any damage, destruction, or loss to Prelude (whether or not covered by
insurance) materially and adversely affecting the business, operations,
properties, assets, or conditions of Prelude;
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(b) Prelude has not (i) amended its articles of incorporation or
bylaws; (ii) declared or made, or agreed to declare or make, any payment of
dividends or distributions of any assets of any kind whatsoever to stockholders
or purchased or redeemed, or agreed to purchase or redeem, any of its capital
stock; (iii) waived any rights of value which in the aggregate are extraordinary
or material considering the business of Prelude; (iv) made any material change
in its method of management, operation, or accounting; (v) entered into any
other material transactions; (vi) made any accrual or arrangement for or payment
of bonuses or special compensation of any kind or any severance or termination
pay to any present or former officer or employee; (vii) increased the rate of
compensation payable or to become payable by it to any of its officers or
directors or any of its employees whose monthly compensation exceeds $1,000; or
(viii) made any increase in any profit-sharing, bonus, deferred compensation,
insurance, pension, retirement, or other employee benefit plan, payment, or
arrangement made to, for, or with its officers, directors, or employees;
(c) Prelude has not (i) granted or agreed to grant any options,
warrants, or other rights for its stocks, bonds, or other corporate securities
calling for the issuance thereof; (ii) borrowed or agreed to borrow any funds or
incurred, or become subject to, any material obligation or liability (absolute
or contingent) except liabilities incurred in the ordinary course of business;
(iii) paid any material obligation or liability (absolute or contingent) other
than current liabilities reflected in or shown on the most recent Prelude
balance sheet and current liabilities incurred since that date in the ordinary
course of business; (iv) sold or transferred, or agreed to sell or transfer, any
of its material assets, properties, or rights (except assets, properties, or
rights not unused or un-useful in its business which, in the aggregate have a
value of less than $5,000 or canceled, or agreed to cancel, any debts or claims
(except debts and claims which in the aggregate are of a value of less than
$5,000; (v) made or permitted any amendment or termination of any contract,
agreement, or license to which it is a party if such amendment or termination is
material, considering the business of Prelude; or (vi) issued, delivered, or
agreed to issue or deliver any stock, bonds, or other corporate securities
including debentures (whether authorized and un-issued or held as treasury
stock); and
(d) To the best knowledge of Prelude, it has not become subject to any
law or regulation which materially and adversely affects, or in the future would
be reasonably expected to adversely affect, the business, operations,
properties, assets, or condition of Prelude.
2.08 Litigation and Proceeding. There are no material actions, suits,
or administrative or other proceedings pending or, to the knowledge of Prelude,
threatened by or against Prelude or adversely affecting Prelude or its
properties, at law or in equity, before any court or other governmental agency
or instrumentality, domestic or foreign, or before any arbitrator of any kind.
Prelude does not have any knowledge of any default on its part with respect to
any default on its part with respect to any judgment, order, writ, injunction,
decree, award, rule, or regulation of any court, arbitrator, or governmental
agency or instrumentality.
2.09 Compliance With Laws and Regulations. Prelude 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
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(i) could not materially and adversely affect the business, operations,
properties, assets, or conditions of Prelude or (ii) could not result in the
occurrence of any material liability for Prelude. To the best knowledge of
Prelude, the consummation of this transaction will comply with all applicable
statures and regulations, subject to the preparation and filing of any forms
required by state and federal securities laws.
2.10 Material Contract Defaults. Prelude is not in default in any
material respect under the terms of any outstanding contract, agreement, lease,
or other commitment which is material to the business, operations, properties,
assets, or condition of Prelude, and there is no event of default in any
material respect under any such contract, agreement, lease, or other commitment
in respect of which Prelude has not taken adequate steps to prevent such a
default from occurring.
2.11 No Conflict With Other Instrument. The execution of this Agreement
and the consummation of the transactions contemplated by this Agreement will not
result in the breach of any term or provision of, or constitute an event of
default under, any material indenture, mortgage, deed of trust, or other
material contract, agreement, or instrument to which Prelude is a party or to
which any of its properties or operations are subject.
2.12 Subsidiary. Prelude does not own, beneficially or of record, any
equity securities in any other entity, other than as previously disclosed and
the NEWCO
2.13 Prelude Schedules. Prelude has delivered to MPW the following
schedules, which are collectively referred to as the "Prelude Schedules" and
which consist of the following separate schedules dated as of the date of
execution of this Agreement, all certified by a duly authorized officer of
Prelude as complete, true and accurate:
(a) A schedule including copies of the articles of incorporation and
bylaws of Prelude in effect as of the date of this Agreement;
(b) A schedule containing copies of resolutions adopted by the board of
directors of Prelude approving this Agreement and the transactions herein
contemplated;
(c) A schedule setting forth a description of any material adverse
change in the business, operations, property, inventory, assets, or condition of
Prelude since the most recent Prelude balance sheet, required to be provided
pursuant to Section 2.04 hereof,
(d) A schedule setting forth the financial statements required pursuant
to Section 2.04(a) hereof; and
(e) A schedule setting forth any other information, together with any
required copies of documents, required to be disclosed in the Prelude Schedules
by Sections 2.01 through 2.12.
Prelude shall cause the Prelude Schedules and the instruments delivered
to MPW hereunder to be updated after the date hereof up to and including a
specified date not more than three business days prior to the Closing Date. Such
updated Prelude Schedules, certified in the same manner as the original Prelude
Schedules, shall be delivered prior to and as a condition precedent to the
obligation of the MPW to close.
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2.14 Additional Conditions. Prelude shall have at the closing described
herein a commitment of a minimum of $500,000 equity working capital for NEWCO,
or shall have available a minimum of $500,000 in ready funds in NEWCO.
Immediately after closing, Prelude and NEWCO shall attempt to, and make a best
efforts attempt, to secure new financing to pay off the current secured debt of
MPW in the approximate amount of $3,000,000
ARTICLE III
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF MPW
As an inducement to, and to obtain the reliance of, Prelude, MPW
represents and warrants as follows:
3.01 Organization. MPW Shareholders own or have an option to purchase
100% of the shares of MPW.
ARTICLE IV
CONDITIONS PRECEDENT TO OBLIGATIONS OF MPW
The obligations of MPW under this Agreement are subject to the
satisfaction of MPW, at or before the Closing Date, of the following conditions;
4.01 Shareholder Approval. Prelude shall call and hold a meeting of its
shareholders, or obtain the written consent of a majority of its shareholders,
to approve the transactions contemplated by this agreement the option to
purchase MPW through the issuance of Prelude Common Stock.
4.02 Accuracy of Representation. The representations and warranties
made by Prelude in this Agreement were true when made and shall be true at the
closing Date with the same force and affect as if such representations and
warranties were made at and as of the Closing Date (except for changes therein
permitted by this Agreement), and Prelude shall have performed or complied with
all covenants and conditions required by this Agreement to be performed or
complied with by Prelude prior to or at the Closing. MPW shall be furnished with
certificates, signed by duly authorized officers of Prelude and dated the
Closing Date, to the foregoing effect.
4.03 Officer's Certificates. MPW shall have been furnished with
certificates dated the Closing Date and signed by the duly authorized chief
executive officer of Prelude to the effect that to such officers best knowledge
no litigation, proceeding, investigation, or inquiry is pending or, to the best
knowledge of Prelude threatened, which might result in an action to enjoin or
prevent the consummation of the transactions contemplated by this Agreement.
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Furthermore, based on certificates of good standing, representations of
government agencies, and Prelude own documents and information, the certificate
shall represent, to the best knowledge of the officer, that:
(a) This Agreement has been duly approved by Prelude board of directors
and shareholders and has been duly executed and delivered in the name and on
behalf of Prelude by its duly authorized officers pursuant to, and in compliance
with, authority granted by the board of directors of Prelude pursuant to a
unanimous consent;
(b) There has been no material adverse changes in Prelude up to and
including the date of the certificate;
(c) All conditions required by this Agreement has been met, satisfied,
or performed by Prelude;
(d) All authorizations, consents, approvals, registrations, and/or
filings with any governmental body, agency, or court required in connection with
the execution and delivery of the documents by Prelude have been obtained and
are in full force and effect or, if not required to have been obtained, will be
in full force and effect by such time as may be required; and
(e) There is no material action, suit, proceeding, inquiry, or
investigation at law or in equity by any public board or body pending or
threatened against Prelude, wherein an unfavorable decision, ruling, or finding
could have an adverse effect on the financial condition of Prelude, the
operation of Prelude, or the acquisition and reorganization contemplated herein,
or any agreement or instrument by which Prelude is bound or in any way contests
the existence of Prelude.
4.04 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 Prelude, 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 Prelude.
4.05 Good Standings. MPW shall have received a certificate of good
standing from the secretary of state of Nevada, dated as of the date within five
days prior to the Closing Date, certifying that Prelude is in good standing as a
corporation in the State of Nevada.
4.06 Other Items. MPW shall have received such further documents,
certificates, or instruments relating to the transactions contemplated hereby as
MPW may reasonably request.
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS OF PRELUDE
The obligations of Prelude under this Agreement are subject to the
satisfaction, at or before the Closing Date, of the following conditions;
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5.01 Accuracy of Representations. The representations and warranties
made by MPW Stockholders in this Agreement were true when made and shall be true
at the Closing Date with the same force and affect as if such representations
and warranties were made at and as of the Closing Date (except for changes
therein permitted by this Agreement), and MPW shall have performed or complied
with all covenants and conditions required by this Agreement to be performed or
complied with by MPW prior to or at the Closing.
5.02 Other Items. Prelude shall have received such further documents,
certificates, or instruments relating to the transactions contemplated hereby as
Prelude may reasonably request.
ARTICLE VI
SPECIAL COVENANTS
6.01 Access to Properties and Records. Until the Closing Date, MPW and
Prelude will afford to the other party's officers and authorized representatives
full access to the properties, books, and records of the other party in order
that each party may have full opportunity to make such reasonable investigation
as it shall desire to make of the affairs of MPW or Prelude and will furnish the
other party with such additional financial and other information as to the
business and properties of MPW or Prelude as each party shall from time to time
reasonably request.
6.02 The Acquisition of Prelude Common Stock. Prelude and MPW
understand and agree that the consummation of this Agreement including the
issuance of the Prelude Common Stock to MPW in exchange for the MPW shares as
contemplated hereby, constitutes the offer and sale of securities under the
Securities Act and applicable state statutes. Prelude and MPW agree that such
transactions shall be consummated in reliance on exemptions from the
registration and prospectus delivery requirements of such statutes that depend,
among other items, on the circumstances under which such securities are
acquired.
(a) In order to provide documentation for reliance upon exemption from
the registration and prospectus delivery requirements for such transactions, the
signing of this Agreement and the delivery of appropriate separate
representations shall constitute the parties acceptance of, and concurrence in,
the following representations and warranties:
(i) The MPW Stockholders acknowledge that neither the SEC nor
the securities commission of any state or other federal agency
has made any determination as to the merits of acquiring
Prelude Common Stock, and that this transaction involves
certain risks.
(ii) The MPW Stockholders have received and read the Agreement
and understand the risks related to the consummation of the
transactions herein contemplated.
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(iii) MPW Stockholders have such knowledge and experience in
business and financial matters that they are capable of
evaluating each business.
(iv) MPW Stockholders have been provided with copies of all
materials and information requested by them or their
representatives, including any information requested to verify
any information furnished (to the extent such information is
available or can be obtained without unreasonable effort or
expense), and the parties have been provided the opportunity
for direct communication regarding the transactions
contemplated hereby.
(v) All information which the MPW Stockholders have provided
to Prelude or their representatives concerning their
suitability and intent to hold shares in Prelude following the
transactions contemplated hereby is complete, accurate, and
correct.
(vi) The MPW Stockholders have not offered or sold any
securities of Prelude or interest in this Agreement and have
no present intention of dividing the Prelude Common Stock or
MPW Shares to be received or the rights under this Agreement
with others or of reselling or otherwise disposing of any
portion of such stock or rights, either currently or after the
passage of a fixed or determinable period of time or on the
occurrence or nonoccurrence of any predetermined event or
circumstance.
(vii) The MPW Stockholders understand that the Prelude Common
Stock has not been registered, but is being acquired by reason
of a specific exemption under the Securities Act as well as
under certain state statutes for transactions not involving
any public offering and that any disposition of the subject
Prelude Common Stock may, under certain circumstances, be
inconsistent with this exemption and may make MPW or Prelude
an "underwriter", within the meaning of the Securities Act. It
is understood that the definition of "underwriter" focuses
upon the concept of "distribution" and that any subsequent
disposition of the subject Prelude Common Stock can only be
effected in transactions, which are not considered
distributions. Generally, the term "distribution" is
considered synonymous with "public offering" or any other
offer or sale involving general solicitation or general
advertising. Under present law, in determining whether a
distribution occurs when securities are sold into the public
market, under certain circumstances one must consider the
availability of public information regarding the issuer, a
holding period for the securities sufficient to assure that
the persons desiring to sell the securities without
registration first bear the economic risk of their investment,
and a limitation on the number of securities which the stock
holder is permitted to sell and on the manner of sale, thereby
reducing the potential impact of the sale on the trading
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markets. These criteria are set forth specifically in rule 144
promulgated under the Securities Act, and, after two years
after the date the Prelude Common Stock or MPW Shares are
fully paid for, as calculated in accordance with rule 144(d),
sales of securities in reliance upon rule 144 can only be made
in limited amounts in accordance with the terms and conditions
of that rule. After two years from the date the securities are
fully paid for, as calculated in accordance with rule 144(d),
they can generally be sold without meeting those conditions,
provided the holder is not (and has not been for the preceding
three months) an affiliate of the issuer.
(viii) The MPW Stockholders acknowledge that the shares of
Prelude Common Stock, must be held and may not be sold,
transferred, or otherwise disposed of for value unless they
are subsequently registered under the Securities Act or an
Exemption from such registration is available. Prelude is not
under any obligation to register the Prelude Common Stock
under the Securities Act. If Rule 144 is available after one
year and prior to two years following the date the shares are
fully paid for, only routine sales of such Prelude Common
Stock in limited amounts can be made in reliance upon rule 144
in accordance with the terms and conditions of that rule.
Prelude is not under any obligation to make Rule 144 available
except as set forth in this Agreement and in the event Rule
144 is not available, compliance with Regulation A or some
other disclosure exemption may be required before MPW
Stockholders can sell, transfer, or otherwise dispose of such
Prelude Common Stock without registration under the Securities
Act. Subject to compliance with federal and state securities
laws, Prelude registrar and transfer agent will maintain a
stop transfer order against the registration and transfer of
the Prelude Common Stock held by MPW Stockholders and the
certificates representing the Prelude Common Stock will bear a
legend in substantially the following form so restricting the
sale of such securities:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED ("ACT"), AND MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO (I) AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT, (II) TO THE EXTENT
APPLICABLE, RULE 144 UNDER THE ACT (OR ANY SIMILAR
RULE UNDER SUCH ACT RELATING TO THE DISPOSITION OF
SECURITIES), OR (III) AN OPINION OF COUNSEL, IF SUCH
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OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL
TO THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION
UNDER SUCH ACT IS AVAILABLE."
(ix) Subject to compliance with federal and state securities
laws, Prelude may refuse to register further transfers or
resale's of the Prelude Common Stock in the absence of
compliance with rule 144 unless the MPW Stockholders furnish
Prelude with an opinion of counsel reasonably acceptable to
Prelude stating that the transfer is proper. Further, unless
such opinion states that the shares of Prelude Common Stock
are free of any restrictions under the Securities Act, Prelude
may refuse to transfer the securities to any transferee who
does not furnish in writing to Prelude the same
representations and agree to the same conditions with respect
to such Prelude Common Stock as set forth herein. Prelude may
also refuse to transfer the Prelude Common Stock if any
circumstances are present reasonably indicating that the
transferee's representations are not accurate.
(b) In connection with the transaction contemplated by this Agreement,
MPW and Prelude shall each file with the assistance of the other and their
respective legal counsel, such notices, applications, reports, or other
instruments as may be deemed by them to be necessary or appropriate in an effort
to document reliance on such exemptions, and the appropriate regulatory
authority in the states where the MPW Stockholders reside unless an exemption
requiring no filing is available in such jurisdictions, all to the extent and in
the manner as may be deemed by such parties to be appropriate.
(c) In order to more fully document reliance on the exemptions as
provided herein, MPW, the MPW Stockholders, and Prelude shall execute and
deliver to the other, at or prior to the Closing, such further letters of
representation, acknowledgment, suitability, or the like as Prelude or MPW and
their respective counsel may reasonably request in connection with reliance on
exemptions from registration under such securities laws.
(d) The MPW Stockholders acknowledge that the basis for relying on
exemptions from registration or qualification are factual, depending on the
conduct of the various parties, and that no legal opinion or other assurance
will be required or given to the effect that the transactions contemplated
hereby are in fact exempt from registration or qualification.
6.06 Prelude Liabilities. Immediately prior to the Closing Date,
Prelude shall have no material assets and no liabilities in excess of $1,000 and
all expenses related to this Agreement or otherwise shall have been paid.
6.07 Sales of Securities Under Rule 144, If Applicable.
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(a) Prelude will use its best efforts to at all times satisfy the
current public information requirements of rule 144 promulgated under the
Securities Act so that its shareholders can sell restricted securities that have
been held for two years or more or such other restricted period as required by
rule 144 as it is from time to time amended.
(b) Upon being informed in writing by any person holding restricted
stock of Prelude as of the date of this Agreement that such person intends to
sell any shares under rule 144 promulgated under the Securities Act (including
any rule adopted in substitution or replacement thereof), Prelude will certify
in writing to such person that it is compliance with rule 144 current public
information requirement to enable such person to sell such person's restricted
stock under rule 144, as may be applicable under the circumstances.
(c) If any certificate representing any such restricted stock is
presented to Prelude transfer agent for registration or transfer in connection
with any sales theretofore made under Rule 144, provided such certificate is
duly endorsed for transfer by the appropriate person(s) or accompanied by a
separate stock power duly executed by the appropriate person(s) in each case
with reasonable assurances that such endorsements are genuine and effective, and
is accompanied by an opinion of counsel satisfactory to Prelude and its counsel
that such transfer has complied with the requirements of rule 144, as the case
may be, Prelude will promptly instruct its transfer agent to register such
transfer and to issue one or more new certificates representing such shares to
the transferee and, if appropriate under the provisions of rule 144, as the case
may be, free of any stop transfer order or restrictive legend. The provisions of
this Section 6.07 shall survive the Closing and the consummation of the
transactions contemplated by this Agreement for a period of two years.
(d) The shareholders of Prelude as of the date of this Agreement, as
well as those receiving Prelude Common Stock pursuant to this Agreement, are
intended third-party beneficiaries of this Section 6.07.
6.08 New Board of Directors and Officers. Upon closing of the
transactions contemplated by this Agreement and the simultaneous Agreement with
Alliance Petroleum, Inc., the current board of directors and officers of Prelude
shall resign and in their place nominees of MPW and Alliance shall be appointed,
subject to the approval of the suitability and qualifications of such nominees.
6.09 Prelude Capitalization. For a period of eighteen months from the
Closing Date, Prelude will not engage in any reverse split of its issued and
outstanding Common Stock without the prior written approval of the holders of a
majority in interest of the issued and outstanding Prelude Common Stock on the
date of this Agreement, other than a secondary offering of common stock in order
to raise working capital.
ARTICLE VII
MISCELLANEOUS
7.01 Brokers. Except as provided herein, Prelude and MPW agree that
there were no finders or brokers involved in bringing the parties together or
who were instrumental in the negotiation, execution, or consummation of this
50
Agreement. Further, Prelude and MPW each agree to indemnify the other against
any claim by any third person for any commission, brokerage, or finder's fee or
other payment with respect to this Agreement or the transactions contemplated
hereby based on any alleged agreement or understanding between such party and
such third person, whether express or implied, from the actions of such party.
The covenants set forth in this section shall survive the Closing Date
and the consummation of the transactions herein contemplated.
7.02 No Representation Regarding Tax Treatment. No representation or
warranty is being made by any party to any other regarding the treatment of this
transaction for federal or state income taxation. Each party has relied
exclusively on its own legal, accounting, and other tax adviser regarding the
treatment of this transaction for federal and state income taxes and on
representation, warranty, or assurance from any other party or such other
party's legal, accounting, or other adviser.
7.03 Governing Law. This Agreement shall be governed by, enforced and
constructed under and in accordance with the laws of the State of Nevada.
7.04 Notices. Any notices or other communications required or permitted
hereunder shall be sufficiently given if personally delivered, if sent by
facsimile or telecopy transmission or other electronic communication confirmed
by registered or certified mail, postage prepaid, or if sent by prepaid
overnight courier addressed to the last known business address 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 or sent by facsimile or telecopy
transmission or other electronic communication, or one day after the date so
sent by overnight courier.
7.05 Attorney's Fees. In the event that any party institutes any action
or suit to enforce this Agreement or to secure relief from any default hereunder
or breach hereof, the breaching party or parties shall reimburse the
non-breaching party or parties from all costs, including reasonable attorneys
fees, incurred in connection therewith and in enforcing or collecting any
judgment rendered therein.
7.06 Entire Agreement. This Agreement represents the entire agreement
between the parties relating to the subject matter hereof. All previous
agreements between the parties, whether written or oral, have been merged into
this Agreement. The Agreement alone fully and completely expresses the agreement
of the parties relating to the subject matter hereof. There are no other courses
of dealing, understandings, agreements, representations, or warranties, written
or oral, except as set forth herein.
7.07 Survival Termination. The representations, warranties, and
covenants of the respective parties shall survive the Closing Date and the
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consummation of the transactions herein contemplated for a period of six months
from the Closing Date, unless otherwise provided herein.
7.08 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.
7.9 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 such remedies may be enforced concurrently, and no waiver
by any party of the performance of any obligation by the other shall be
construed as a waiver of the same or 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 thereof may be extended by a
writing signed by the party or parties for whose benefit the provision is
intended.
IN WITNESS WHEREOF, the corporate parties hereto have caused this
Agreement to be executed by their respective officers, hereunto duly authorized,
as of the date first above written.
PRELUDE VENTURES, INC.
A Nevada Corporation
By: __________________________
Xxxxxxx Sarvuicci,
President
MPW Shareholders
----------------------------
Xx Xxxxxxx
----------------------------
Xxxxx Xxxx
----------------------------
Xxxxx Xxxxxxx
----------------------------
Don Mago
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Exhibit A-1
Stockholders of MPW
Xx Xxxxxxx
1,250,000 shares
Xxxxx Xxxx
1,250,000 shares
Xxxxx Xxxxxxx
1,250,000 shares
Don Mago
1,250,000 shares
53
