SCHEDULE 14C INFORMATION STATEMENT
Information Statement Pursuant to Section 14(c)
of the Securities Exchange Act of 1934
[X] Filed by the Registrant
[ ] Filed by a Party other than the Registrant
Check the appropriate box:
[ ] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Information Statement
Interactive Marketing Technology, Inc.
Commission File Number: 0-29019
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required
[x] Fee computed on table below per Exchange Act Rules 14(a)6(i)(1) and 011.
(1) Title of each class of securities to which investment applies:
Common stock
(2) Aggregate number of securities to which investment applies:
approximately 109,623,006
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 011: (set forth the amount on which the
filing fee is calculated and state how it was determined): Pursuant to
Rule 457(f)(2), the filing fee is based on the transaction value of
US$1,170,427, which is the book value of the target as of September 30,
2004 which is anticipated to be acquired by means of a share exchange,
times the fee rate multiplier. Pursuant to Section 14(g) of the
Exchange Act, the fee was determined by multiplying the aggregate value
of the transaction by 0.0001267.
(4) Proposed Interactive Marketing aggregate value of transaction:
$1,170,427 (based on the exchange rate of 1 HKD = 0.128651 USD as
reported on November 14, 2004 as reported on XE.com).
(5) Total fee paid: $148.29
Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
011(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
1
Interactive Marketing Technology, Inc.
12400 Ventura Blvd., Suite 645
Studio City, California 91604
NOTICE OF ACTION TAKEN BY WRITTEN CONSENT OF MAJORITY SHAREHOLDERS
DEAR SHAREHOLDERS:
We are writing to advise you that Interactive Marketing Technology, Inc., a
Nevada corporation, ("we" or "Interactive Marketing") has entered into Share
Exchange Agreement ("Share Exchange" or "Share Exchange Agreement") with
Metrolink Pacific Limited., ("Metrolink") a privately held British Virgin
Islands corporation based in Hong Kong, and with its shareholder, to acquire
Metrolink as our wholly-owned subsidiary. After the acquisition is concluded, we
will change our corporate name to "China Artists Agency, Inc."
Pursuant to the terms of the Agreement, we will also effect a reverse split of
our issued and outstanding common stock on a 1.69 to 1 basis and increase the
authorized number of shares of our common stock, $.001 par value per share, from
60,000,000 to 200,000,000 as described in this Information Statement. Our
purpose in effecting a reverse split of our outstanding shares and increasing
the authorized number of shares of our common stock is to comply with the terms
of the Share Exchange Agreement.
The increase in authorized common stock, reverse split and name change will not
be effective until we amend our Articles of Incorporation by filing a
Certificate of Amendment to our Articles of Incorporation with the Nevada
Secretary of State. We intend to file the Certificates of Amendment twenty days
after this information statement is first mailed to our shareholders.
The Share Exchange Agreement, reverse split, increase in authorized common stock
and name change were approved on November 15, 2004, by unanimous approval of our
Board of Directors. In addition, our majority shareholders approved the Share
Exchange Agreement, reverse split, increase in authorized common stock and the
name change by written consent in lieu of a meeting on November 15, 2004, in
accordance with the relevant sections of the Nevada Revised Statutes.
Our purpose in entering into the Share Exchange, effecting the reverse split,
increasing our authorized common stock and changing our name to "China Artists
Agency, Inc." is to allow us to comply with the terms of an agreement we entered
into with Metrolink to acquire and operate Metrolink as our wholly-owned
subsidiary. We believe that the acquisition of Metrolink will increase our
profitability and the total value of the corporation to our investors.
2
Finally, our Board of Directors has unanimously approved a spin-off of
Interactive Marketing's existing business, including its assets and liabilities
into a Nevada corporation we intend to form as a subsidiary which we plan to
spin off into a separate public company. Additionally, shareholders representing
a majority of Interactive Marketing's shares entitled to vote on such matters
have consented in writing to the proposed action.
No action is required by you. The accompanying information statement is
furnished only to inform our shareholders of the action described above before
it takes effect in accordance with Rule 14c-2 promulgated under the Securities
Act of 1934, as amended. This information statement is being mailed to you on or
about December 1, 2004.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
COMPLETION OF THE SHARE EXCHANGE TRANSACTION WILL RESULT IN A CHANGE IN CONTROL
BY METROLINK AND AN ASSUMPTION OF METROLINK'S ASSETS, LIABILITIES AND
OPERATIONS.
PLEASE NOTE THAT THE COMPANY'S CONTROLLING STOCKHOLDERS HAVE VOTED TO APPROVE
THE SHARE EXCHANGE, THE SPIN OFF PROPOSAL, THE INCREASE IN AUTHORIZED COMMON
STOCK, REVERSE SPLIT AND THE NAME CHANGE. THE NUMBER OF VOTES HELD BY THE
CONTROLLING STOCKHOLDERS ARE SUFFICIENT TO SATISFY THE STOCKHOLDER VOTE
REQUIREMENT FOR THESE ACTIONS AND NO ADDITIONAL VOTES WILL CONSEQUENTLY BE
NEEDED TO APPROVE THESE TRANSACTIONS.
By order of the Board of Directors,
/s/ Martin Goldrod
- ------------------------------
Martin Goldrod, President
Studio City, California
November 30, 2004
3
Interactive Marketing Technology, Inc.
12400 Ventura Blvd., Suite 645
Studio City, California 91604
a Nevada corporation
INFORMATION STATEMENT REGARDING
ACTION TAKEN BY WRITTEN CONSENT OF
MAJORITY OF SHAREHOLDERS
We are furnishing this shareholder information statement to you to provide you
with information and a description of an action taken by written consent of our
majority shareholders, on November 15, 2004, in accordance with the relevant
Sections of the Nevada Revised Statutes. This action was taken by our majority
shareholders who own in excess of the required majority of our outstanding
common stock necessary for the adoption of the actions.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
This information statement is being mailed on or about December 1, 2004 to
shareholders of record on November 15, 2004. The information statement is being
delivered only to inform you of the corporate action described herein before it
takes effect in accordance with Rule 14c-2 promulgated under the Securities
Exchange Act of 1934, as amended.
We have asked brokers and other custodians, nominees and fiduciaries to forward
this Information Statement to the beneficial owners of the common stock held of
record by such persons and will reimburse such persons for out-of-pocket
expenses incurred in forwarding such material.
THIS IS NOT A NOTICE OF A MEETING OF STOCKHOLDERS AND NO STOCKHOLDERS' MEETING
WILL BE HELD TO CONSIDER ANY MATTER DESCRIBED HEREIN.
PLEASE NOTE THAT THE COMPANY'S CONTROLLING STOCKHOLDERS HAVE VOTED TO APPROVE
THE SHARE EXCHANGE, THE SPIN-OFF PROPOSAL, THE INCREASE IN AUTHORIZED COMMON
STOCK, THE REVERSE SPLIT AND THE NAME CHANGE. THE NUMBER OF VOTES HELD BY THE
CONTROLLING STOCKHOLDER IS SUFFICIENT TO SATISFY THE STOCKHOLDER VOTE
REQUIREMENT FOR THE SHARE EXCHANGE, THE SPIN-OFF PROPOSAL, THE INCREASE IN
AUTHORIZED COMMON STOCK, THE REVERSE SPLIT AND THE NAME CHANGE AND NO ADDITIONAL
VOTES WILL CONSEQUENTLY BE NEEDED TO APPROVE THESE ACTIONS.
GENERAL
On November 15, 2004, our Board of Directors unanimously approved, subject to
shareholder approval, entering into the Share Exchange Agreement with Metrolink
and an amendment to our Articles of Incorporation to change our corporate name
to "China Artists Agency, Inc." On November 15, 2004, shareholders who own in
excess of the required majority of our outstanding common stock necessary for
the adoption of the action, approved the Agreement, the increase in authorized
common stock, the reverse split and the name change. The full text of the
proposed Share Exchange Agreement is attached hereto as Exhibit A and the full
text of the proposed Certificate of Amendment to the Articles of Incorporation
is attached hereto as Exhibit B. The Share Exchange Agreement is subject to
amendment prior to the transaction being concluded.
4
Purpose of Share Exchange
Our Board of Directors believes it is desirable to enter into the Share Exchange
Agreement with Metrolink to acquire Metrolink Pacific Limited, a privately held
British Virgin Islands corporation operating in Hong Kong ("Metrolink"), as our
wholly-owned subsidiary. We believe that the acquisition of Metrolink will
increase our profitability and the total value of the corporation to our
investors.
Procedure for Approval of Share Exchange; Vote Required
Because the actions contemplated by the Share Exchange Agreement require
approval by a majority of our shareholders, a shareholder vote is required by
the Nevada Revised Statutes. The Nevada Revised Statutes provides that any
action which may be taken at a meeting of the shareholders may be taken without
a meeting and without prior notice, if a consent in writing, setting forth the
action so taken, shall be signed by the holders of a majority of the outstanding
shares entitled to vote.
On November 15, 2004, the record date for determination of the shareholders
entitled to receive this Information Statement, there were 15,248,667 shares of
common stock outstanding. The holders of common stock are entitled to one vote
for each share held of record on all matters submitted to a vote of our
shareholders. We needed the affirmative vote of at least a majority of the
outstanding shares of our common stock to approve the reverse split and the name
change. Our Board, by its unanimous written consent, adopted resolutions
approving the Share Exchange and the filing of the Certificate of Amendment to
our Articles of Incorporation to complete the Share Exchange. By action of
written consent, dated November 15, 2004, our majority shareholders who together
own 7,691,667 shares, or 50.4% of the issued and outstanding shares of our
common stock, approved the Share Exchange.
Effective Date of Share Exchange
The actions required by the terms of the Share Exchange will be given effect
twenty days after this Information Statement is first mailed to shareholders.
Purpose of Change in Name of the Corporation AND INCREASE IN AUTHORIZED COMMON
STOCK
Our Board of Directors believes it is desirable to change the name of the
Company to "China Artists Agency, Inc.," and increase our authorized common
stock to 200,000,000 shares to comply with the terms of the Share Exchange
Agreement. Our purpose in changing our name reflects the fact that we entered
into an agreement with Metrolink and Imperial International Limited, the 100%
beneficial owner of Metrolink, to acquire Metrolink as our wholly-owned
subsidiary. The terms of the Share Exchange Agreement also require that we have
200,000,000 shares of common stock authorized; our current authorized common
stock is only 60,000,000 shares, and therefore the change is required. We
believe that these changes to our Articles that enable us to complete the
acquisition of Metrolink will increase our profitability and the total value of
the corporation to our investors, though there is no guarantee that these
actions will have that result.
5
Procedure for Approval of INCREASE IN AUTHORIZED COMMON STOCK AND Name Change;
Vote Required
The actions to increase the authorized shares of our common stock and change our
corporate name require amending our Articles of Incorporation. The Nevada
Revised Statutes require that, in order for us to amend our Articles of
Incorporation, such amendment must be approved by our Board of Directors and
approved by a majority of the outstanding shares entitled to vote. The Nevada
Revised Statutes also provides that any action which may be taken at a meeting
of the shareholders may be taken without a meeting and without prior notice, if
consent in writing, setting forth the action so taken, shall be signed by the
holders of a majority of the outstanding shares entitled to vote.
Purpose in EFFECTING THE REVERSE SPLIT
Our Board of Directors believes it is desirable to effect a 1.69 to 1 reverse
split of our common stock, of which we currently have 15,248,667 shares issued
and outstanding, resulting in approximately 9,027,777 shares issued and
outstanding. The terms of the Share Exchange Agreement also require that we
issue approximately 109,623,006 shares to Metrolink such that Metrolink becomes
an approximate 85% holder of our outstanding common stock. We believe that these
changes to accommodate the terms of the Share Exchange Agreement and complete
the acquisition of Metrolink will increase our profitability and the total value
of the corporation to our investors, though there is no guarantee that these
actions will have that result.
Procedure for Approval of THE REVERSE SPLIT; Vote Required
In order to effect a reverse split of our outstanding common stock, the approval
of a majority of the holders of our common stock is required. The Nevada Revised
Statutes provides that any action which may be taken at a meeting of the
shareholders may be taken without a meeting and without prior notice, if consent
in writing, setting forth the action so taken, shall be signed by the holders of
a majority of the outstanding shares entitled to vote.
FEDERAL INCOME TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT
The following is a summary of the material federal income tax consequences of
the proposed reverse stock split. This summary does not purport to be complete
and does not address the tax consequences to holders that are subject to special
tax rules, such as banks, insurance companies, regulated investment companies,
personal holding companies, foreign entities, nonresident alien individuals,
broker-dealers and tax-exempt entities. This summary is based on the Internal
Revenue Code of 1986, as amended (the "Code"), Treasury regulations and proposed
regulations, court decision and current administrative rulings and
pronouncements of the Internal Revenue Service, all of which are subject to
change, possibly with retroactive effect, and assumes that the newly issued
common stock will be held as a "capital asset" (generally, property held for
investment) as defined in the Code. Holders of the current common stock are
advised to consult their own tax advisers regarding the federal income
consequences of the proposed reverse stock split in light of their personal
circumstances and the consequences under, state, local and foreign tax laws.
o The reverse stock split will qualify as a recapitalization described
in Section 368(a)(1)(E) of the Code.
o No gain or loss will be recognized by the Company in connection with
the reverse stock split.
o No gain or loss will be recognized by a shareholder who exchanges all
of his shares of current common stock solely for shares of
post-reverse split common stock.
o The aggregate basis of the shares of post-reverse split common stock
to be received in the reverse stock split (including any whole shares
received in lieu of fractional shares) will be the same as the
aggregate basis of the shares of current common stock surrendered in
exchange therefore.
o The holding period of the shares of post-reverse split common stock to
be received in the reverse stock split (including any whole shares
received in lieu of fractional shares) will include the holding period
of the shares of current common stock surrendered in exchange
therefor.
6
SHAREHOLDER APPROVAL
On November 15, 2004, the record date for determination of the shareholders
entitled to receive this Information Statement, there were 15,248,667 shares of
common stock outstanding. The holders of common stock are entitled to one vote
for each share held of record on all matters submitted to a vote of our
shareholders.
Thus, we needed the affirmative vote of at least a majority of the outstanding
shares of our common stock, or 7,624,334 shares to approve the actions
contemplated herein. Our Board, by its unanimous written consent, adopted a
resolution approving an amendment to our Articles of Incorporation to effect the
name change and increase our authorized shares of common stock. Our Board also
approved giving effect to the reverse stock split. By action of written consent,
dated November 15, 2004, our majority shareholders who own 7,691,667 shares, or
50.4% of the issued and outstanding shares of our common stock, approved the
these actions, including approval of the Share Exchange Agreement, amending our
Articles of Incorporation to change our name and increase our authorized common
stock, and to approve the reverse split of our outstanding common stock.
Effective Date of Amendment
The amendment to our Articles of Incorporation will become effective upon the
filing with the Nevada Secretary of State of a Certificate of Amendment to our
Articles of Incorporation, attached hereto as Exhibit B. We intend to file the
Certificates of Amendment twenty days after this Information Statement is first
mailed to shareholders.
PROPOSED SPIN-OFF OF OUR CURRENT OPERATIONS
Our Board of Directors has unanimously approved a spin-off of Interactive
Marketing's existing business, including its assets and liabilities, into a
Nevada corporation we intend to form as our wholly-owned subsidiary (referred to
in this Information Statement as the "Proposed Subsidiary"), into a separate
public company. Additionally, shareholders representing a majority of
Interactive Marketing's shares entitled to vote on such matters have consented
in writing to the proposed action, as with the other proposed actions.
Purpose and Effect of the Proposed Spin Off
Spinning out the proposed entity, the Proposed Subsidiary will allow the
subsidiary to operate as a separate public company and raise working capital
through the sale of its own equity. This will allow our management to focus
exclusively on our business after the Share Exchange Agreement is concluded,
while at the same time, allowing the spun off company to have greater exposure
by trading as an independent public company. Additionally, the shareholders and
the market will then more easily identify the results and performance of
Interactive Marketing (after it takes the name "China Artists Agency, Inc.") as
a separate entity from that of the spun-off company.
Effect OF THE NAME CHANGE, REVERSE SPLIT, INCREASED in AUTHORIZED COMMON STOCK,
SHARE EXCHANGE AGREEMENT AND SPIN-OFF on Certificates
Evidencing Shares of Interactive Marketing Technology, Inc. Stock
The changes described herein to the shares of common stock of Interactive
Marketing Technology, Inc. will be reflected in its stock records by book-entry
in Interactive Marketing Technology, Inc.'s records. For those shareholders that
hold physical certificates, please do not destroy or send to Interactive
Marketing Technology, Inc. your common stock certificates. Those certificates
will remain valid for the number of shares shown thereon, after giving effect to
the reverse split and should be carefully preserved by you.
Dissenters' Rights
Under Nevada law, a stockholder is entitled to dissent from, and obtain payment
for the fair value of his or her shares (i) in the event of consummation of a
plan of merger or plan of exchange in which the Nevada corporation is a
constituent entity, and (ii) any corporate action taken pursuant to a vote of
the stockholders to the extent that the articles of incorporation, by-laws or a
resolution of the board of directors provides that voting or non-voting
stockholders are entitled to dissent and obtain payment for their shares. The
Nevada Revised Statutes does not provide for dissenters' right of appraisal in
connection with the name change, increase in authorized common stock, the
reverse split or the spin-off.
7
Interests of Certain Persons in Matters to Be Acted Upon
No director, executive officer, nominee for election as a director, associate of
any director, executive officer or nominee or any other person has any
substantial interest, direct or indirect, by security holdings or otherwise, in
the Share Exchange, the reverse split or the name change which is not shared by
all other shareholders of the Company.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information regarding the beneficial ownership of
the shares of our common stock as of November 19, 2004, except as noted in the
footnotes below, by:
o Each person who we know to be the beneficial owner of 5% or more of
our outstanding common stock;
o Each of our executive officers; and
o Each of our directors.
The following table sets forth certain information regarding the beneficial
ownership of our common stock as of November 19, 2004, by each person or entity
known by us to be the beneficial owner of more than 5% of the outstanding shares
of common stock, each of our directors and named executive officers, and all of
our directors and executive officers as a group.
=================== =================================== ================================== ==================
Title of Class Name and Address Amount and Nature Percent of Class
of Beneficial Owner of Beneficial Owner
- ------------------- ----------------------------------- ---------------------------------- ------------------
Common Stock Martin Goldrod 7.4%
12400 Ventura Blvd., Suite 645 1,125,000 shares
Studio City, CA 91604 president, treasurer, director
- ------------------- ----------------------------------- ---------------------------------- ------------------
Common Stock Sandy Lang 43.1%
5120 Whitsett Ave.
Valley Village, CA 91604 6,566,667 shares
- ------------------- ----------------------------------- ---------------------------------- ------------------
Common Stock All directors and named executive 7.4%
officers as a group 1,125,000 shares
=================== =================================== ================================== ==================
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. In accordance with Securities and Exchange
Commission rules, shares of our common stock which may be acquired upon exercise
of stock options or warrants which are currently exercisable or which become
exercisable within 60 days of the date of the table are deemed beneficially
owned by the optionees. Subject to community property laws, where applicable,
the persons or entities named in the table above have sole voting and investment
power with respect to all shares of our common stock indicated as beneficially
owned by them.
SUMMARY TERM SHEET
This summary term sheet does not contain all of the information that is
important to you. You should carefully read the entire Information Statement and
the Appendices, as well as the information we incorporate by reference.
The Companies
Interactive Marketing Technology, Inc., a Nevada corporation, ("Interactive
Marketing"). We were incorporated in the state of Nevada as Shur De Cor, Inc. on
August 14, 1987. By 1999 Shur De Cor was a public company with no operations
searching for a business opportunity. Shur De Cor merged with Interactive
Marketing Technology, Inc., a New Jersey corporation ("Interactive New Jersey"),
in an arm's length transaction in April of 1999. Interactive New Jersey was
engaged in the business of direct marketing of consumer products and desired to
become a public company. Shur De Cor was the surviving corporation and changed
its name to Interactive Marketing Technology, Inc. Shur De Cor's management
resigned and the management of Interactive New Jersey filled the vacancies.
8
Through our wholly-owned subsidiary, IMT's Plumber, Inc., we produced, marketed,
and sold a licensed product called the Plumber's Secret, which was discontinued
during fiscal 2001. In May 2002, we discontinued our former business. We have
not conducted any business since this time. We intended to reenter our former
business of direct marketing of proprietary consumer products in the United
States and worldwide but have been unable to raise sufficient capital to do so.
We would have required additional financing to implement our business strategy.
At this time, no such additional financing has been secured or identified. Since
we have been unable to obtain debt and/or equity financing upon terms that
management deems sufficiently favorable, it has hampered our ability to reenter
our former business. Without additional capital funding, we have concluded that
we cannot reenter our former business.
Former Business. We were engaged in the direct marketing of proprietary consumer
products in the United States and worldwide. We facilitated the design and
manufacture of products and developed market strategies for such products. Our
goal was to generate awareness of new and better products for the home and
family and initiate consumer brand recognition of our products in the
marketplace. When appropriate, we contracted with well-known personalities to
serve as spokespersons for a product to increase that product's credibility and
marketability. We managed all phases of our direct marketing programs and retail
marketing for the products we sold, including:
* Product selection, testing and development
* Securing all necessary or appropriate rights to the product
* Supervision of the manufacturing process, quality control and
packaging
* Production and broadcast of infomercials and commercials
* In-bound telemarketing, order fulfillment and customer service
* Print advertisements
However, upon recent analysis of operations to date, Interactive Marketing has
decided to focus on evaluating other opportunities that may enhance stockholder
value, including the acquisition of a product or technology, or pursuing a
merger or acquisition of another business entity with long-term growth
potential. Interactive Marketing's shares currently are listed for quotation by
Pink Sheets LLC under the symbol "IAMK" and the closing price of its shares of
common stock on November 12, 2004 was $0.10 per share.
Metrolink Pacific Limited ("Metrolink") a British Virgin Islands corporation.
Metrolink Pacific Limited is a Hong Kong based company incorporated in the
British Virgin Islands, and engaged in the business of artist management.
Metrolink's registered corporate address is P.O. Box 3152, Road Town, Tortola,
British Virgin Islands with its place of business at Unit 611 Miramar Tower, 132
Nathan Road, Tsim Shat Sui, Kowloon, Hong Kong. A more detailed description of
Metrolink's operations is described in the sections entitled "Anticipated
Operations Following the Share Exchange."
Metrolink's Parent Company. The owner of Metrolink is Imperial International
Limited, a company incorporated under the laws of the British Virgin Islands
("Imperial"). Imperial owns all the issued and outstanding shares of Metrolink.
The officers, directors and majority shareholders of Imperial are specified on
the table below:
======================= ======================================= ================================== =================
Title of Class Name and Address Amount and Nature Percent of Class
of Beneficial Owner of Beneficial Owner
- ----------------------- --------------------------------------- ---------------------------------- -----------------
Common Stock Chen Ming Yin, Tiffany
Unit 503C Miramar Tower
132 Nathan Road, Tsimshatsui Kowloon, no shares directly owned 1%
Hong Kong director
- ----------------------- --------------------------------------- ---------------------------------- -----------------
Li Yee Mei
Unit 503C Miramar Tower
132 Nathan Road, Tsimshatsui Kowloon, no shares owned
Hong Kong director 0%
- ----------------------- --------------------------------------- ---------------------------------- -----------------
Common Stock Imperial International Limited 100%
Unit 503C Miramar Tower
132 Nathan Road, Tsimshatsui Kowloon,
Hong Kong 120 shares
- ----------------------- --------------------------------------- ---------------------------------- -----------------
Common Stock All directors and named executive no shares directly owned 1%
officers as a group
======================= ======================================= ================================== =================
9
The parent company and 100% owner of Imperial is Together Again Limited.
Together Again Limited is 51% owned by Colima Enterprises Limited, whose
directors are Tang Chien Chang and Kim Min Sup, Mark. Together Again Limited is
49% indirectly owned by China Star Entertainment Limited, listed on the Main
Board of The Stock Exchange of Hong Kong Limited. Chen Ming Yin, Tiffany has a
direct 2.44% interest in China Star Entertainment Limited.
The authorized capital stock of Metrolink consists of 50,000 shares of par value
US $1.00 per share, of which 120 such shares are issued and outstanding as of
the date of this information statement.
Pursuant to the terms of the Agreement, we will acquire Metrolink as our
wholly-owned subsidiary through a share exchange transaction. Following the
Share Exchange, Interactive Marketing Technology shall continue as the parent
corporation of Metrolink, but will take the name "China Artists Agency, Inc."
APPROVAL OF THIS SHARE EXCHANGE WILL RESULT IN A CHANGE IN OUR CONTROL TO
CONTROL BY METROLINK'S MANAGEMENT AND THE ASSUMPTION OF METROLINK'S OPERATIONS
AND LIABILITIES.
Preexisting Relationships
Metrolink and Interactive Marketing did not have any preexisting relationship
prior to entering into the Share Exchange Agreement. To the best of our
knowledge, none of Interactive Marketing's shareholders hold shares of Metrolink
nor do any of the stockholders of Metrolink hold shares of Interactive Marketing
Technology.
Structure of the Share Exchange
At the effective time of the Share Exchange:
o Interactive Marketing acquire Metrolink as its wholly-owned
subsidiary; and
o Interactive Marketing will issue approximately 109,623,006 shares of
its restricted common stock to the shareholders of Metrolink in
exchange for 100% of the issued and outstanding shares of Metrolink.
As a result of the Share Exchange, Interactive Marketing shall be the parent
corporation of Metrolink, and own 100% of the outstanding shares of Metrolink.
The shareholders of Metrolink will become stockholders of Interactive Marketing.
Imperial, Metrolink's parent corporation, will own approximately 85% of
Interactive Marketing's issued and outstanding shares. Interactive Marketing
will also issue additional shares as described below. The current stockholders
of Interactive Marketing will own approximately 7% of the issued and outstanding
shares of Interactive Marketing common stock, based on approximately 128,968,243
Interactive Marketing shares outstanding after the Share Exchange and subsequent
issuances described below.
Pursuant to the terms of the Share Exchange Agreement, we have agreed to issue
an additional 10,317,459 shares of our common stock as follows to conclude the
transaction: 6,809,524 shares to Orient Financial Services Limited and 3,507,936
shares to Emerging Growth Partners, Inc. Following the conclusion of the
transaction described herein, we estimate that our significant shareholders will
be as follows:
10
======================= =========================================== ================================== ==================
TITLE OF CLASS NAME AND ADDRESS AMOUNT AND NATURE PERCENT OF CLASS
OF BENEFICIAL OWNER OF BENEFICIAL OWNER (6)
- ----------------------- ------------------------------------------- ---------------------------------- ------------------
Common Stock Chen Ming Yin, Tiffany (1) no shares directly owned,
Unit 503C Miramar Tower
132 Nathan Road, Tsimshatsui Kowloon,
Hong Kong director 0%
- ----------------------- ------------------------------------------- ---------------------------------- ------------------
Tang Chien Chang(1)
Common Stock Unit 503C Miramar Tower
132 Nathan Road, Tsimshatsui Kowloon, no shares directly owned,
Hong Kong director 0%
- ----------------------- ------------------------------------------- ---------------------------------- ------------------
Imperial International Limited (2) 109,623,006 shares 85.00%
Common Stock Unit 503C Miramar Tower
132 Nathan Road, Tsimshatsui Kowloon,
Hong Kong
- ----------------------- ------------------------------------------- ---------------------------------- ------------------
Orient Financial Services Limited (3)
Common Stock 18/Fl 1 International Finance Ctr
1 Harbourview, Central
Hong Kong 6,809,524 shares 5.28%
- ----------------------- ------------------------------------------- ---------------------------------- ------------------
Emerging Growth Partners, Inc.(4)
Common Stock 468 North Camden Dr., Suite 200
Beverly Hills, CA 90210 3,507,936 shares 2.72%
- ----------------------- ------------------------------------------- ---------------------------------- ------------------
Interactive Marketing's Existing
Common Stock shareholders as a group (5)
c/o 12400 Ventura Blvd., Suite 645
Studio City, CA 91604 9,027,777 shares 7.00%
- ----------------------- ------------------------------------------- ---------------------------------- ------------------
Sandy Lang (5)
Common Stock 5120 Whitsett Ave.
Valley Village, CA 91604 3,884,507 shares 3.01%
- ----------------------- ------------------------------------------- ---------------------------------- ------------------
All directors and named executive no shares directly owned 0%
Common Stock officers as a group
======================= =========================================== ================================== ==================
(1) Chen Ming Yin, Tiffany, is a direct 2.44% shareholder of China Star
Entertainment Limited, ("China Star"), which is an indirect 49% owner
of Together Again Limited ("Together Again"). Tang Chien Chang is
indirectly a 50% owner of Colima Enterprises Limited ("Colima"), a 51%
owner of Together Again. Imperial International Limited is 100% owned
by Together Again. Imperial International Limited is anticipated to own
approximately 85% of Interactive Marketing.
(2) Imperial International Limited is 100% owned by Together Again.
Together Again is 51% owned by Colima, whose directors are Tang Chien
Chang and Kim Min Sup, Mark. Colima is 50% owned by Stylish Century
Enterprises, Inc., ("Stylish") whose director is Kim Min Sup, Mark;
Stylish is 100% owned by Mantex Holdings Limited, whose owner and
director is Kim Min Sup, Mark. Colima is 50% owned by Givon Enterprises
Corp., ("Givon") whose director is Tang Chien Chang; Givon is 100%
owned by Chartwell Overseas Limited ("Chartwell"), whose owner and
director is Tang Chien Chang. Together Again is 49% owned by China
Star, listed on the Main Board of The Stock Exchange of Hong Kong
Limited. China Star is 2.44% owned directly by Ms. Chen Ming Yin,
Tiffany; 13.39% owned by Porterstone Limited ("Porterstone"); 4.74%
owned by Mr. Heung Wah Keung, and 6.09% owned by Dorest Company Limited
("Dorest"). Dorest is 100% owned by Glenstone Investments Limited
("Glenstone"); Glenstone is 40% owned by Mr. Heung Wah Kueng, and 60%
owned by Porterstone.
(3) Messrs. Nils Ollquist and David Sih are the directors and shareholders
of Orient Financial Services Ltd. (4) Mr. Kevin Welch is the director
and primary shareholder of Emerging Growth Partners, Inc. (5) Mr. Sandy
Lang is one of Interactive Marketing's existing shareholders as
described herein. (6) Figures may vary slightly due to rounding.
11
We are relying on Rule 506 of Regulation D of the Securities Act of 1933, as
amended (the "Act") in regard to the shares we anticipate issuing pursuant to
the Share Exchange. We believe this offering qualifies as a "business
combination" as defined by Rule 501(d). Reliance on Rule 506 requires that there
are no more than 35 non-accredited purchasers of securities from the issuer in
an offering under Rule 506. Metrolink has represented to us that they have one
stockholder, who has certified to Metrolink that it is an `accredited investor'
as defined in Rule 501(a) of Regulation D. Metrolink also has represented to us
that there has been no advertising or general solicitation in connection with
this transaction.
Interactive Marketing's Reasons for the Share Exchange
Interactive Marketing's board of directors considered various factors in
approving the Share Exchange and the Share Exchange Agreement, including:
o its inability to expand its current level of operations;
o the business operations and financial resources possessed by
Metrolink;
o Metrolink's prospects for the future;
o the quality and experience of management services available and the
depth of Metrolink management;
o Metrolink's potential for growth or expansion;
o Metrolink's profit potential; and
o an anticipated increase in stockholder value as a result of the Share
Exchange.
Interactive Marketing's board of directors considered various factors, but
primarily that Interactive Marketing's management has not been able to expand
Interactive Marketing's operations to profitability. In considering the Share
Exchange with Metrolink, Interactive Marketing's board of directors anticipated
that this lack of profitability was likely to continue for the foreseeable
future. Given those circumstances, Interactive Marketing's board decided that
the best course of action for Interactive Marketing and its shareholders was to
enter into and conclude the proposed Share Exchange with Metrolink, after which
Interactive Marketing's management would resign. In agreeing to the Share
Exchange, Interactive Marketing's board hoped that by relinquishing control to
Metrolink's management and adopting Metrolink's assets and operations, that such
a move would eventually add value to Interactive Marketing and the interests of
its shareholders. Interactive Marketing's board of directors reached this
conclusion after analyzing Metrolink's operations, intellectual property and
managerial resources, which are described in more detail below. Interactive
Marketing's board of directors believes that acquiring Metrolink's potential for
profitable operations by means of the Share Exchange was the best opportunity to
increase value to Interactive Marketing's shareholders. Interactive Marketing's
board of directors did not request a fairness opinion in connection with the
Share Exchange.
Metrolink's Reasons for the Share Exchange
Metrolink's board of directors considered various factors in approving the Share
Exchange and the Share Exchange Agreement, including:
o the increased market liquidity expected to result from exchanging
stock in a private company for publicly traded securities of
Interactive Marketing;
o the ability to use registered securities to make acquisition of assets
or businesses;
o increased visibility in the financial community;
o enhanced access to the capital markets;
o improved transparency of operations; and
o perceived credibility and enhanced corporate image of being a publicly
traded company.
Metrolink's board of directors did not request a fairness opinion in connection
with the Share Exchange.
12
Risk Factors
This information statement contains "forward looking statements" which can be
identified by the use of forward-looking words such as "believes", "estimates",
"could", "possibly", "probably", "anticipates", "estimates", "projects",
"expects", "may" or "should" or other variations or similar words. No assurances
can be given that the future results anticipated by the forward-looking
statements will be achieved. The following matters constitute cautionary
statements identifying important factors with respect to those forward-looking
statements, including certain risks and uncertainties that could cause actual
results to vary materially from the future results anticipated by those
forward-looking statements. Among the key factors that have a direct bearing on
our results of operations are the effects of various governmental regulations,
the fluctuation of our direct costs and the costs and effectiveness of our
operating strategy. Other factors could also cause actual results to vary
materially from the future results anticipated by those forward-looking
statements.
The Share Exchange entails several risks, including:
o Upon completion of the Share Exchange, we will assume Metrolink's plan
of operation, which may require substantial additional funds to fully
implement. Metrolink's management anticipates that after giving effect
to the Share Exchange, substantial additional funds may be required to
implement its business plan. However, there can be no assurance that
management will be successful in raising such additional capital.
o Our current stockholders will be diluted by the shares issued as part
of the Share Exchange and may be diluted by future issuances of shares
to satisfy our working capital needs. We are issuing approximately
109,623,006 shares of our common stock to the shareholder of Metrolink
as part of the Share Exchange. The above issuances, along with
anticipated issuances to raise working capital, will reduce the
percentage ownership of our current stockholders to 7% of the issued
outstanding shares of our common stock.
o The market price of our common stock may decline as a result of the
Share Exchange if the integration of the Interactive Marketing and
Metrolink businesses is unsuccessful.
o The stockholders of Metrolink will own approximately 85% of our common
stock following completion of the Share Exchange, which will limit the
ability of other stockholders to influence corporate matters.
Risks Related to Metrolink's Business
Metrolink depends on a limited pool of acting and recording talent. Its failure
to maintain or renew contracts with these individuals will significantly hinder
its ability to generate revenues.
Metrolink manages the contracts of acting talent and recording artists in
relation to those artists' engagements with, among other things, the film,
recording, television and video industry. It depends on a pool of individuals
willing and able to accept production assignments as negotiated. Metrolink's
ability to succeed will be significantly impaired if it is unable to arrange for
suitable projects for its talent while providing them with attractive
compensation packages. The highly personalized nature of the services contracted
for and required in this industry makes it extremely difficult to predict the
availability of current and future performers, Metrolink's ability to continue
to engage that talent and Metrolink's ability arrange for suitable engagements
for their services. Metrolink is materially dependent upon the continued
availability of such talent and opportunities for their engagement. Metrolink's
failure to continue those operations will significantly hinder its ability to
conduct business and generate revenues.
Metrolink caters exclusively to the film, television, and recording and movie
industries and therefore is affected by changes or trends occurring within those
industries.
13
The film, recording, television and movie industries, and entertainment industry
in general is a speculative venture which involves substantial risks. There is
no certainty that the engagements that Metrolink arranges, the talent it engages
ad the efforts and expenditures it makes will continue to result in commercially
profitable business. The marketability of Metrolink's talent will be affected by
numerous factors which affect the motion picture, recording, television and
video industries and are beyond its control. These factors include market
fluctuations, and the general state of the economy, including the rate of
inflation, consumer tastes and local economic conditions, which can affect
peoples' discretionary spending. These factors or any combination of these
factors may hinder Metrolink's ability to generate revenues consistently.
Metrolink's operating results will fluctuate due to a number of factors,
including but not limited to, risks associated with the development, production,
and completion of film, recording, television or video projects.
Due to the numerous factors that affect how a film, television program, musical
recording or other artistic production is developed and produced, Metrolink
cannot be certain as to how successful its operations will be at any given time.
Additional variables that will affect its success include location and timing of
film, television, recording or video productions and the conditions under which
the talent that Metrolink engages are required to perform. Typically, project
production dates for larger scale endeavors are well in advance of release
dates. Smaller scale production endeavors are usually scheduled closer to their
release date.
Metrolink anticipates that its operating results will fluctuate as a result of
these and other factors, including overall trends in the economy and client
engagement patterns, which are characterized by individual engagements from
clients rather than long-term contracts. As such, it may not be able to
anticipate, for more than a few months in advance, the number, size and
profitability of talent engagements in a given period. Consequently, the
operating results for one quarter are not necessarily indicative of the
operating results for future quarters.
Metrolink may be subject to litigation in connection with talent it engages and
its operations will be adversely affected as a consequence of such litigation.
Metrolink may be engaged in litigation from time to time, during the ordinary
course of business, in connection with disputes as to contract interpretations,
compensation and other matters. Metrolink may not be able to adequately forecast
the effect such litigation will have on its operations. Any litigation that
Metrolink may become involved in may hinder its ability to conduct operations.
Metrolink competes with Emperor Entertainment Group in the Hong Kong market for
talent and may not succeed in obtaining or keeping artistic talent in our pool
of individuals.
Metrolink believes that Emperor Entertainment Group is one of its primary
competitors. Emperor Entertainment Group is based in Hong Kong, and engages in
the production and distribution of local and foreign records, artiste
management, and organization of concerts, stage performances and dramas.
Emperor may be able to maintain or increase its market share by negotiating more
favorable terms with artists and obtaining a greater pool of talent with which
to operate. Metrolink expects ongoing competition and pricing pressure from
Emperor. Metrolink cannot guarantee that it will be able to obtain market share
or profitability.
14
Risks related to owning our common stock:
Metrolink's principal security holder, Imperial International Limited, will own
approximately 85% of our outstanding common stock at the conclusion of the Share
Exchange, allowing this shareholder to control matters requiring approval of our
shareholders.
Metrolink's principal security holder will own approximately 85% of our
outstanding shares of common stock following the conclusion of the Share
Exchange. Such concentrated control of the company may adversely affect the
price of our common stock. Metrolink's principal security holder will control
matters requiring approval by our security holders, including the election of
directors. Such concentrated control may also make it difficult for our
shareholders to receive a premium for their shares of our common stock in the
event we merge with a third party or enter into different transactions which
require shareholder approval. In addition, certain provisions of the Nevada
Revised Statutes could have the effect of making it more difficult or more
expensive for a third party to acquire, or of discouraging a third party from
attempting to acquire, control of us in the future.
Because our common stock will be subject to the "penny stock" rules, the level
of trading activity in our stock may be reduced, which may make it difficult for
investors in its common stock to sell their shares.
Broker-dealer practices in connection with transactions in "penny stocks" are
regulated by certain penny stock rules adopted by the Securities and Exchange
Commission. Penny stocks, like shares of our common stock, generally are equity
securities with a price of less than $5.00, other than securities registered on
certain national securities exchanges or quoted on NASDAQ. The penny stock rules
require a broker-dealer, prior to a transaction in a penny stock not otherwise
exempt from the rules, to deliver a standardized risk disclosure document that
provides information about penny stocks and the nature and level of risks in the
penny stock market. The broker-dealer also must provide the customer with
current bid and offer quotations for the penny stock, the compensation of the
broker-dealer and its salesperson in the transaction, and, if the broker-dealer
is the sole market maker, the broker-dealer must disclose this fact and the
broker-dealer's presumed control over the market, and monthly account statements
showing the market value of each penny stock held in the customer's account. In
addition, broker-dealers who sell these securities to persons other than
established customers and "accredited investors" must make a special written
determination that the penny stock is a suitable investment for the purchaser
and receive the purchaser's written agreement to the transaction. Consequently,
these requirements may have the effect of reducing the level of trading
activity, if any, in the secondary market for a security subject to the penny
stock rules, and investors in our common stock may find it difficult to sell
their shares.
15
Directors and Senior Management of Interactive Marketing Following the Share
Exchange
Following completion of the Share Exchange, the board of directors of
Interactive Marketing will resign and new appointees will consist of directors
which will be designated by Metrolink. The management and directors are
anticipated to include Ms. Chen Ming Yin, Tiffany and Mr. Tang Chien Chang.
Tiffany Chen Ming Yin, 47, is anticipated to join our board of directors. Ms.
Chen has produced a number of blockbuster films and is the vice chairman and
executive director of two Hong Kong Main Board listed companies in the
entertainment and multi-media industries. She has over 15 years of experience in
those industries. Ms. Chen is not an officer or director of any other US
reporting company.
Tang Chien Chang, 46, is anticipated to join our board of directors. Mr. Tang
has been self-employed as a businessman and investor in the entertainment
industry for at least the last five years. Mr. Tang is not an officer or
director of any other US reporting company.
There is no family relationship between any of our current and proposed officers
and directors. There are no orders, judgments, or decrees of any governmental
agency or administrator, or of any court of competent jurisdiction, revoking or
suspending for cause any license, permit or other authority to engage in the
securities business or in the sale of a particular security or temporarily or
permanently restraining any of our officers or directors from engaging in or
continuing any conduct, practice or employment in connection with the purchase
or sale of securities, or convicting such person of any felony or misdemeanor
involving a security, or any aspect of the securities business or of theft or of
any felony. Nor are any of the officers or directors of any corporation or
entity affiliated with us so enjoined.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT FOLLOWING THE SHARE EXCHANGE
We currently have 15,248,667 shares of our common stock issued and outstanding.
Following the contemplated reverse split, we will have approximately 9,027,777
shares issued and outstanding. Pursuant to the terms of the Share Exchange, we
anticipate that approximately 109,623,006 shares of our common stock will be
issued to Metrolink's shareholders will result in approximately 128,968,243
shares of our common stock outstanding after giving effect to the Share
Exchange.
APPROVAL OF THE SHARE EXCHANGE WILL RESULT IN A CHANGE IN CONTROL FROM OUR
MANAGEMENT TO CONTROL BY METROLINK'S MANAGEMENT AND THE ASSUMPTION OF
METROLINK'S OPERATIONS AND LIABILITIES.
The following table sets forth certain information regarding the beneficial
ownership of our common stock after giving effect to the Share Exchange and the
reverse split by each person or entity known by us to be the beneficial owner of
more than 5% of the outstanding shares of common stock, each of our directors
and named executive officers, and all of our directors and executive officers as
a group.
====================== =========================================== ================================= ==================
TITLE OF CLASS NAME AND ADDRESS AMOUNT AND NATURE PERCENT OF CLASS
OF BENEFICIAL OWNER OF BENEFICIAL OWNER (6)
- ---------------------- ------------------------------------------- --------------------------------- ------------------
Sandy Lang
Common Stock 5120 Whitsett Ave. 3,884,507 shares 3.01%
Valley Village, CA 91604
- ---------------------- ------------------------------------------- --------------------------------- ------------------
Martin Goldrod 665,493 shares 0.52%
Common Stock 12400 Ventura Blvd., Suite 645
Studio City, CA 91604 former officer and director
- ---------------------- ------------------------------------------- --------------------------------- ------------------
Together Again Limited (1)
Common Stock Unit 503C Miramar Tower 109,623,006 shares 85.0%
132 Nathan Road, Tsimshatsui Kowloon,
Hong Kong
- ---------------------- ------------------------------------------- --------------------------------- ------------------
Chen Ming Yin, Tiffany (2)
Common Stock Unit 503C Miramar Tower no shares directly owned, 0%
132 Nathan Road, Tsimshatsui Kowloon, director
Hong Kong
- ---------------------- ------------------------------------------- --------------------------------- ------------------
Tang Chien Chang (2)
Common Stock Unit 503C Miramar Tower no shares directly owned, 0%
132 Nathan Road, Tsimshatsui Kowloon, director
Hong Kong
- ---------------------- ------------------------------------------- --------------------------------- ------------------
Imperial International Limited (3)
Common Stock Unit 503C Miramar Tower 109,623,006 shares 85.0%
132 Nathan Road, Tsimshatsui Kowloon,
Hong Kong
- ---------------------- ------------------------------------------- --------------------------------- ------------------
Orient Financial Services Limited (4) 5.28%
Common Stock 18/Fl 1 International Finance Ctr 6,809,524 shares
1 Harbourview, Central
Hong Kong
- ---------------------- ------------------------------------------- --------------------------------- ------------------
Emerging Growth Partners (5) 2.72%
Common Stock 468 North Camden Dr., Suite 200 3,507,936 shares
Beverly Hills, CA 90210
- ---------------------- ------------------------------------------- --------------------------------- ------------------
Common Stock All officers and directors as a group no shares directly owned 0%
====================== =========================================== ================================= ==================
16
(1) Together Again is anticipated to indirectly own an approximately 85%
share of Metrolink Pacific Limited after the Share Exchange is
concluded in that Together Again owns 100% of Imperial International
Limited, which will be an approximately 85% owner of our issued and
outstanding common stock.
(2) Chen Ming Yin, Tiffany, is a direct 2.44% shareholder of China Star),
which is an indirect 49% owner of Together Again. Tang Chien Chang is
indirectly a 50% owner of Colima Enterprises Limited ("Colima"), a 51%
owner of Together Again. Imperial International Limited is 100% owned
by Together Again. Imperial International Limited is anticipated to own
approximately 85% of Interactive Marketing.
(3) Imperial International Limited is 100% owned by Together Again.
Together Again is 51% owned by Colima, whose directors are Tang Chien
Chang and Kim Min Sup, Mark. Colima is 50% owned by Stylish, whose
director is Kim Min Sup, Mark; Stylish is 100% owned by Mantex Holdings
Limited, whose owner and director is Kim Min Sup, Mark. Colima is 50%
owned by Givon, whose director is Tang Chien Chang; Givon is 100% owned
by Chartwell, whose owner and director is Tang Chien Chang. Together
Again is 49% owned by China Star, listed on the Main Board of The Stock
Exchange of Hong Kong Limited. China Star is 2.44% directly owned by
Ms. Chen Ming Yin, Tiffany; 13.39% owned by Porterstone, 4.74% owned by
Mr. Heung Wah Keung, and 6.09% owned by Dorest. Dorest is 100% owned by
Glenstone; Glenstone is 40% owned by Mr. Heung Wah Kueng, and 60% owned
by Porterstone.
(4) Messrs. Nils Ollquist and David Sih are the directors and shareholders
of Orient Financial Services Ltd. (5) Mr. Kevin Welch is the director
and primary shareholder of Emerging Growth Partners, Inc. (6) Figures
may vary due to rounding.
Beneficial ownership is determined in accordance with the Rule 13d-3(a) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and generally
includes voting or investment power with respect to securities. Except as
subject to community property laws, where applicable, the person named above has
sole voting and investment power with respect to all shares of Metrolink's
common stock shown as beneficially owned by him.
Interests of Directors, Executive Officers and Principal Stockholders in the
Share Exchange
Some of the directors and executive officers of Metrolink have interests in the
Share Exchange that are different from, or are in addition to, the interests of
their shareholders. These interests include positions as directors or executive
officers of Interactive Marketing following the Share Exchange, potential
benefits under employment or benefit arrangements as a result of the Share
Exchange, and potential severance and other benefit payments in the event of
termination of employment following the Share Exchange. On November 19, 2004,
Metrolink's directors, executive officers and their affiliates owned
approximately 100% of Metrolink common stock entitled to vote on adoption of the
Share Exchange Agreement. The board of Interactive Marketing was aware of these
interests and considered them in approving the Share Exchange.
Anticipated Operations Following the Share Exchange.
Description of Metrolink's Business. Metrolink Pacific Limited ("Metrolink") is
a Hong Kong based company incorporated in the British Virgin Islands, and
engaged in the business of, among other things, artist management.
Metrolink, which was founded in August 1999, has under contract a large number
of Hong Kong and mainland China's leading film and recording stars. Metrolink
operates under a similar business model to the US based Creative Artists Agency
("CAA") and International Creative Management ("ICM") by managing, on a turnkey
basis, all of its clients film and recording contract commitments as well as
product endorsements and advertising. Metrolink provides training, management
and agency services to both new and established artists and is actively engaged
in image management promotion and marketing of its clients. In return for its
services management, receives up to 80% of gross revenues due under contracts
negotiated on behalf of its clients.
17
Given the success of Hong Kong stars such as Jackie Chan and Michelle Yeoh,
Metrolink recently began making its clients available for US based productions
and anticipates US based revenues to becoming a significant contributor to
operating income over the next 12 months. As of September, 2004 Metrolink
managed 8 performance contracts and 18 management contracts with well known
stars and artists in Hong Kong/China.
Among other things, Metrolink intends to utilize the entertainment industry
experience and resources of the existing management of IAMK in developing
opportunities for joint productions with US and Asian artists, including
"fusion" US/Chinese film projects and joint distribution of movie libraries.
Development of these joint opportunities will underscore continued growth in
profitability of Metrolink.
In 2003, Metrolink generated audited net income of approximately US$3.6 million
on revenues of approximately US$6 million. On the basis of existing client
contracts alone, Metrolink's management estimates its 2004 revenues at
approximately US$7.8 million and net income at approximately US$4.8 million.
According to recent industry research conducted by CTR and AdamGO, advertising
on television and print media in China amounted to approximately US$19 billion
in 2003, representing an increase of 40% over the previous year. With China's
accession to the World Trade Organization, Beijing's successful bid for the 2008
Olympic Games and the implementation of the Closer Economic Partnership
Arrangement trade pact with Hong Kong, industry projections are for advertising
expenditures to increase over 50% in 2004.
As China transitions to a market based, customer driven economy, advertising and
entertainment expenditures are increasing exponentially. Metrolink holds a
significant advantage as increasing demand for its' soft assets i.e. clients, is
reflected in higher production and advertising budgets for film and TV product
necessary to feed increasing demand both for entertainment and consumer
products.
As one of the top artist management agencies in Asia, Metrolink believes it is
positioned to generate significant revenue growth as both demand for and the
price of its entertainment talent increases. Metrolink's management expects that
growth in the China market alone will underwrite enormous increases in the
number of film and TV productions and corresponding demand for popular talent.
Given its close association with China Star Group and ability to minimize
overhead costs, Metrolink estimates that it generates a net profit margin in
excess of 60%. Metrolink's management believes that its leading market position
gives it leverage in negotiating contracts with production houses and
advertisers and management is actively developing the company to be the CAA of
the Asian entertainment industry. The relationship with former management of
IAMK will add an important additional dimension to Metrolink's growth.
18
Artist contracts. Metrolink's artists comprise mainly of actors and actresses
who act and may also perform as vocalists, although their main talent is acting.
Metrolink estimates that it is the main provider of management and related
services to artists appearing in primarily international and Asian Pacific area
films. Metrolink currently has management contracts and performance contacts
with a number of artists, as indicated below. A management contract is where
Metrolink and or one or more of its subsidiaries serve as a manager for that
talent. A performance contract is an arrangement by which Metrolink and or one
of its subsidiaries sells or commits the artist to directors and producers for
films. There is no commission basis as in artist contracts, but fees are charged
at a mark-up for the artist's services in regard to the film. The specific terms
of these contracts are of a confidential nature.
Management's Discussion and Analysis of Operations. According to its management,
Metrolink's net volume of business per year is as follows:
- ----------------------------- --------------------- ---------------------------
Period Amount US $
Equivalent(1)
- ----------------------------- --------------------- ---------------------------
Net 2002 HK$14,504,483 $1,866,416
- ----------------------------- --------------------- ---------------------------
Net 2003 HK$45,102,220 $5,803,690
- ----------------------------- --------------------- ---------------------------
Net 2004 HK$31,500,498 $4,053,439
(for the nine months
ending September 30, 2004)
- ----------------------------- --------------------- ---------------------------
(1) based on the exchange rate of 1 HKD = 0.128651 USD as reported on November
14, 2004 on XE.com.
Metrolink's management estimates that its monthly burn rate is approximately
HK$720,000, or approximately US $92,632. As of September 30, 2004, Metrolink has
approximately HK$6,300,000 in cash, or approximately US $810,675 and no
outstanding bank loans. Metrolink's financial statements through the period
ending September 30, 2004 are attached hereto as an exhibit. Exchange rates are
based on the exchange rate of 1 HKD = 0.128651 USD as reported on November 14,
2004 on XE.com.
Subsidiaries. Metrolink has three wholly-owned subsidiaries, which together have
collaborated with numerous agents and brokers and as a group have established a
massive database of artists to satisfy the various demands for talent in
different cities in the People's Republic of China ("PRC"). These subsidiaries
are: China Star Management Limited, a Hong Kong corporation; Anglo Market
International Limited, a British Virgin Islands corporation; and Metrolink
Global Limited, a British Virgin Islands corporation. All have their offices
located at Unit 611 Miramar Tower, 132 Nathan Road, Tsim Sha Tsui, Kowloon, Hong
Kong.
China Star Management is in the business talent management and talent brokering
including locating projects, contract negotiations, works scheduling, artistry
training and development, image building and improvement, conducting on-going
publicity campaigns and providing personal assistant service in Hong Kong.
Metrolink Global mainly manages one artist's PRC business. Anglo Market manages
all the other artists' overseas business, i.e. other than Hong Kong, such as the
PRC and elsewhere.
Competition. Metrolink estimates that Emperor Entertainment Group is one of its
primary competitors. Emperor Entertainment Group is based in Hong Kong, and is
emerging a market competitor of the entertainment industry in Hong Kong. Emperor
Entertainment Group engages in the production and distribution of local and
foreign records, artist management, and organization of concerts, stage
performances and dramas. Metrolink's talent comprises mainly of actors and
actresses who appear in films and may also perform as vocalists, although their
main talent is in acting. In contrast, Emperor's artists are mainly local
singers who also incidentally appear in films and other performances. Therefore,
Metrolink believes that it is primarily a provider of management and related
services to acting talent, while Emperor is a competitor in a slightly different
market, that of vocalists. In addition, Metrolink's artists tend to appear in
more international and Asia Pacific films whereas Emperor's artists tend to
appear in more productions local to Hong Kong.
19
Government regulations. Metrolink's activities are subject to various
governmental laws and regulations concerning business activities generally.
Metrolink believes it is in compliance with all applicable laws and regulations.
Research and development. Metrolink is not currently conducting any research and
development activities. Metrolink does not anticipate conducting such activities
in the near future.
Executive Compensation. Metrolink has one employee whose annual compensation
exceeds US $50,000 per year. That individual is Metrolink's Talent Controller &
PR Manager, Li Yee Mei, whose annualized salary is approximately US $120,417,
based on a monthly salary of HK$78,000 and the exchange rate of 1 HKD = 0.128651
USD as reported on November 14, 2004 on XE.com.
Employees. At September 30, 2004, Metrolink employs approximately 13 full-time
employees. Metrolink believes that its relationship with its employees is good
and is not a party to any collective bargaining agreements.
Facilities. Metrolink's administrative offices are located at Unit 611, Miramar
Tower, 132 Nathan Road, Tsimshatsui, Kowloon, Hong Kong; these facilities
measure approximately 2,500 square feet. Metrolink believes its office space is
adequate for its purposes for the next twelve to eighteen months.
Legal Proceedings. From time to time, Metrolink may be involved in litigation
relating to claims arising out of our operations in the normal course of
business. Metrolink currently is not a party to any legal proceedings, the
adverse outcome of which, in its management's opinion, individually or in the
aggregate, would have a material adverse effect on its results of operations or
financial position.
Anticipated Liquidity and Capital Resources Following the Share Exchange
We will assume Metrolink's assets and liabilities following the Share Exchange.
Metrolink's management anticipates that after giving effect to the Share
Exchange, substantial additional capital may be required to implement its
business plan. However, there can be no assurance that management will be
successful. If additional funds are raised through the issuance of equity or
convertible debt securities, the percentage ownership of our stockholders will
be reduced, stockholders may experience additional dilution and such securities
may have rights, preferences and privileges senior to those of our common stock.
There can be no assurance that additional financing will be available on terms
favorable to us or at all. If adequate funds are not available or are not
available on acceptable terms, we may not be able to fund expansion, take
advantage of unanticipated acquisition opportunities, develop or enhance
services or products or respond to competitive pressures. Such inability could
harm our business, results of operations and financial condition.
What We Need to Do to Complete the Share Exchange
Interactive Marketing and Metrolink will complete the Share Exchange only if the
conditions set forth in the Share Exchange Agreement are satisfied or, in some
cases, waived. These conditions include:
o the approval and adoption of the Share Exchange Agreement by the
requisite vote of the stockholders of Interactive Marketing and
Metrolink and other parties;
o no statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or enforced
by any United States court or Governmental Entity which prohibits,
restrains, enjoins or restricts the consummation of the Share
Exchange;
o accuracy of each company's representations and warranties;
o performance by each company of its obligations under the Share
Exchange Agreement; and o the mailing of this information to all
Interactive Marketing stockholders as of the record date.
20
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Some statements in this Proxy Statement contain certain "forward-looking"
statements of management of Interactive Marketing. Forward-looking statements
are statements that estimate the happening of future events are not based on
historical fact. Forward-looking statements may be identified by the use of
forward-looking terminology, such as "may," "shall," "could," "expect,"
"estimate," "anticipate," "predict," "probable," "possible," "should,"
"continue," or similar terms, variations of those terms or the negative of those
terms. The forward-looking statements specified in the following information
have been compiled by our management on the basis of assumptions made by
management and considered by management to be reasonable. Our future operating
results, however, are impossible to predict and no representation, guaranty, or
warranty is to be inferred from those forward-looking statements.
The assumptions used for purposes of the forward-looking statements specified in
the following information represent estimates of future events and are subject
to uncertainty as to possible changes in economic, legislative, industry, and
other circumstances. As a result, the identification and interpretation of data
and other information and their use in developing and selecting assumptions from
and among reasonable alternatives require the exercise of judgment. To the
extent that the assumed events do not occur, the outcome may vary substantially
from anticipated or projected results, and, accordingly, no opinion is expressed
on the achievability of those forward-looking statements. We cannot guaranty
that any of the assumptions relating to the forward-looking statements specified
in the following information are accurate, and we assume no obligation to update
any such forward-looking statements.
FINANCIAL AND OTHER INFORMATION
Interactive Marketing Audited Financial Statements
The financial statements of Interactive Marketing as of February 29, 2004 and
February 28, 2003 and are contained in Interactive Marketing's Annual Report on
Form 10-KSB for the year ended February 29, 2004 which is included in this
document as Exhibit D. These financial statements have been audited by Malone
and Bailey, independent auditors. You are encouraged to review the financial
statements, related notes and other information included elsewhere in this
filing.
Metrolink Unaudited Financial Statements
The financial statements of Metrolink Pacific Limited ("Metrolink") for the
period ending September 30, 2004 are attached hereto as Exhibit E. These
statements were prepared by Metrolink's management.
Summary Financial Information
The following gives a summary of the most recent unaudited balance sheet data of
Interactive Marketing as of August 31, 2004 and (2) the unaudited statements of
operations data of Interactive Marketing for the six months ended August 31,
2004.
Income Statement Interactive Marketing Interactive Marketing
Six month period ending Year ending
August 31, 2004 February 29, 2004
$ $
Income 0 0
Gross Profit (Operating Loss) 0 0
Net Loss 0 0
Net Loss Per Share 0.00 0.00
Balance Sheet August 31, 2004 February 29, 2004
$ $
Total Assets 0 0
Total Liabilities 741,497 741,497
Shareholders' Equity (Deficit) (741,497) (741,497)
The following gives a summary of the most recent unaudited balance sheet data of
Metrolink for the period from January 1, 2004 to September 30, 2004 and (2) the
unaudited statements of operations data of Metrolink for the period from January
1, 2004 to September 30, 2004.
Income Statement Metrolink
Period from January 1, 2004 to Equivalent in US$
September 30, 2004
HK$
Net Income 31,501,127.97 4,052,660
Net Profit 25,030,610.35 3,220,220
Dividend paid (25,000,000.00) (3,216,282)
Net Income Per Share 209,000 26,888
Balance Sheet September 30, 2004
HK$ US$
Total Assets 26,541,068.89 3,414,542
Total Liabilities 17,445,849.31 2,244,430
Shareholders' Equity 9,097,670.58 1,170,426
(1) based on the exchange rate of 1 HKD = 0.128651 USD as reported on November
14, 2004 on XE.com.
21
This information is only a summary. You should also read the historical
information, management's discussion and analysis and related notes of
Interactive Marketing contained it its Quarterly Report on Form 10-QSB as filed
with the Securities and Exchange Commission for the six month period ended
August 31, 2004, which are incorporated by reference into this document and the
historical financial statements, management's discussion and analysis and
related notes for Interactive Marketing contained elsewhere in this document.
We are providing above financial and other information for informational
purposes only. It does not necessarily represent or indicate what the financial
position and results of operations of Interactive Marketing will be once the
Share Exchange is concluded.
DESCRIPTION OF THE PROPOSED SPIN-OFF
Spin-off. We are considering the potential spin-off of the wholly-owned
subsidiary (the "Proposed Subsidiary") we intend to form which will continue to
pursue our former business and commence operations. We will form this Proposed
Subsidiary in Nevada. We propose to eventually distribute all of the issued and
outstanding shares of the Proposed Subsidiary's common stock pro rata to all of
our stockholders of record of Interactive Marketing as of November 19, 2004.
Each stockholder will receive one share of the Proposed Subsidiary's common
stock for each share of common stock of Interactive Marketing, which will be
issued simultaneously with the effectiveness of a Registration Statement to be
filed at a future date with the Securities and Exchange Commission. You will not
be required to pay cash or provide any other consideration or to surrender or
exchange any shares of our common stock in order to receive the distribution of
the Proposed Subsidiary's common stock.
Prior to releasing the common stock of the Proposed Subsidiary to shareholders,
we intend to file the relevant Registration Statement with the Securities and
Exchange Commission for the purpose of registering the Proposed Subsidiary
common stock under the Securities Exchange Act of 1934. Shares of the Proposed
Subsidiary's common stock will be issued and distributed once the Registration
Statement is effective. Until the Registration Statement is effective the shares
of the Proposed Subsidiary will be recorded as book entry with the transfer
agent.
Our reasons for considering the spinning off of this Proposed Subsidiary are as
follows: o to allow our current management to focus exclusively on its former
business; and o to allow the spun off company to have greater exposure by
trading as an independent public company.
Any offering of the securities of the Proposed Subsidiary will be made only by
means of a prospectus included in a registration statement to be filed with the
Securities and Exchange Commission. This information statement shall not
constitute an offer to sell or solicitation of an offer to buy any securities.
RISKS ASSOCIATED WITH THE PROPOSED SPIN-OFF
There is no guarantee that Interactive Marketing's management and the Board of
Directors will proceed with the spin-off.
The proposed spin-off is subject to a number of contingencies and Interactive
Marketing reserves the right to revoke the proposed spin-off at any time prior
to the distribution date. There can be no assurances that the proposed spin-off
will actually occur. Our Board of Directors may determine not to proceed based
on any number of reasons, including overall economic conditions, general stock
market conditions and the continuing results of Interactive Marketing, as well
as the risk factors listed from time to time in the SEC filings of Interactive
Marketing. Interactive Marketing can give no assurance that any such transaction
will be consummated.
The Proposed Subsidiary could still be subject to the Penny Stock Rules once its
common stock becomes eligible for trading, though there is no guarantee they
will ever become eligible for trading. These rules may adversely affect trading
in the Proposed Subsidiary's common stock.
We expect that if the Proposed Subsidiary's common stock does not qualify for
registration on a recognized exchange, it will be a "low-priced" security under
rules promulgated under the Securities Exchange Act of 1934. In accordance with
these rules, broker-dealers participating in transactions in low-priced
securities must first deliver a risk disclosure document which describes the
risks associated with such stocks, the broker-dealer's duties in selling the
stock, the customer's rights and remedies and certain market and other
information. Furthermore, the broker-dealer must make a suitability
determination approving the customer for low-priced stock transactions based on
the customer's financial situation, investment experience and objectives.
Broker-dealers must also disclose these restrictions in writing to the customer,
obtain specific written consent from the customer, and provide monthly account
statements to the customer. The effect of these restrictions will probably
decrease the willingness of broker-dealers to make a market in Proposed
Subsidiary's common stock, decreases liquidity of Proposed Subsidiary's common
stock and increases transaction costs for sales and purchases of Proposed
Subsidiary's common stock as compared to other securities.
22
ADDITIONAL INFORMATION
Interactive Marketing will furnish without charge to any stockholder, upon
written or oral request, any documents filed by Interactive Marketing pursuant
to the Securities Exchange Act. Requests for such documents should be addressed
to Interactive Marketing, Inc., 12400 Ventura Blvd., # 645, Studio City,
California 91604. Documents filed by Interactive Marketing pursuant to the
Securities Exchange Act may be reviewed and/or obtained through the Securities
and Exchange Commission's Electronic Data Gathering Analysis and Retrieval
System, which is publicly available through the Securities and Exchange
Commission's web site (http://www.sec.gov).
DISSENTERS' RIGHTS
As an owner of Interactive Marketing common stock, you have the right to dissent
from this Share Exchange and obtain cash payment for the "fair value" of your
shares, as determined in accordance with the Nevada Revised Statutes ("NRS").
Below is a description of the steps you must take if you wish to exercise
dissenters' rights with respect to the Share Exchange under NRS Sections 92A.300
to 92A.500, the Nevada dissenters' rights statute. The text of the statute is
set forth in Exhibit C. This description is not intended to be complete. If you
are considering exercising your dissenters' rights, you should review NRS
Sections 92A.300 to 92A.500 carefully, particularly the steps required to
perfect dissenters' rights. Failure to take any one of the required steps may
result in termination of your dissenters' rights under Nevada law. If you are
considering dissenting, you should consult with your own legal advisor.
To exercise your right to dissent, you must:
o before the effective date of the share exchange, deliver written
notice to us at Interactive Marketing, Inc., 12400 Ventura Blvd., #
645, Studio City, California 91604, Attn: Corporate Secretary, stating
that you intend to demand payment for your shares if the Share
Exchange is completed; and
o not vote your shares in favor of the Share Exchange, either by proxy
or in person.
If you satisfy those conditions, we will send you a written dissenter's notice
within 10 days after the Share Exchange is effective. This dissenter's notice
will:
o specify where you should send your payment demand and where and when
you must deposit your stock certificates, if any;
o inform holders of uncertificated shares to what extent the transfer of
their shares will be restricted after their payment demand is
received;
o supply a form of payment demand that includes the date the Share
Exchange was first publicly announced and the date by which you must
have acquired beneficial ownership of your shares in order to dissent;
o set a date by when we must receive the payment demand, which may not
be less than 30 or more than 60 days after the date the dissenters'
notice is delivered; and
o provide you a copy of Nevada's dissenters' rights statute.
After you have received a dissenter's notice, if you still wish to exercise your
dissenters' rights, you must:
o demand payment either through the delivery of the payment demand form
to be provided or other comparable means;
o certify whether you have acquired beneficial ownership of the shares
before the date set forth in the dissenter's notice; and
o deposit your certificates, if any, in accordance with the terms of the
dissenter's notice.
Failure to demand payment in the proper form or deposit your certificates as
described in the dissenter's notice will terminate your right to receive payment
for your shares pursuant to Nevada's dissenters' rights statute. Your rights as
a stockholder will continue until those rights are canceled or modified by the
completion of the Share Exchange.
Within 30 days after receiving your properly executed payment demand, we will
pay you what we determine to be the fair value of your shares, plus accrued
interest (computed from the effective date of the Share Exchange until the date
of payment). The payment will be accompanied by:
o our balance sheet as of the end of a fiscal year ended not more than
16 months before the date of payment, an income statement for that
year, a statement of changes in stockholders' equity for that year,
and the latest available interim financial statements, if any;
o an explanation of how we estimated the fair value of the shares and
how the interest was calculated;
o information regarding your right to challenge the estimated fair
value; and
o a copy of Nevada's dissenters' rights statute.
We may elect to withhold payment from you if you became the beneficial owner of
the shares on or after the date set forth in the dissenter's notice. If we
withhold payment, after the consummation of the Share Exchange, we will estimate
the fair value of the shares, plus accrued interest, and offer to pay this
amount to you in full satisfaction of your demand. The offer will contain a
statement of our estimate of the fair value, an explanation of how the interest
was calculated, and a statement of dissenters' rights to demand payment under
NRS Section 92A.480.
23
If you believe that the amount we pay in exchange for your dissenting shares is
less than the fair value of your shares or that the interest is not correctly
determined, you can demand payment of the difference between your estimate and
ours. You must make such demand within 30 days after we have made or offered
payment; otherwise, your right to challenge our calculation of fair value
terminates.
If there is still disagreement about the fair market value within 60 days after
we receive your demand, we will petition the District Court of Clark County,
Nevada to determine the fair value of the shares and the accrued interest. If we
do not commence such legal action within the 60-day period, we will have to pay
the amount demanded for all unsettled demands. All dissenters whose demands
remain unsettled will be made parties to the proceeding, and are entitled to a
judgment for either:
o the amount of the fair value of the shares, plus interest, in excess
of the amount we paid; or
o the fair value, plus accrued interest, of the after-acquired shares
for which we withheld payment.
We will pay the costs and expenses of the court proceeding, unless the court
finds the dissenters acted arbitrarily, vexatiously or in bad faith, in which
case the costs will be equitably distributed. Attorney fees will be divided as
the court considers equitable.
Failure to follow the steps required by NRS Sections 92A.400 through 92A.480 for
perfecting dissenters' rights may result in the loss of such rights. If
dissenters' rights are not perfected, you will be entitled to receive the
consideration receivable with respect to such shares in accordance with the
Share Exchange agreement. In view of the complexity of the provisions of
Nevada's dissenters' rights statute, if you are considering objecting to the
Share Exchange you should consult your own legal advisor.
31
Exhibit A
SHARE EXCHANGE AGREEMENT
SHARE EXCHANGE AND REORGANIZATION AGREEMENT, dated as of November 17,
2004 (the "Agreement"), between INTERACTIVE MARKETING TECHNOLOGY, INC., a Nevada
corporation ("IAMK"); and METROLINK PACIFIC LIMITED, a British Virgin Islands
("BVI") corporation ("MPL"), and IMPERIAL INTERNATIONAL LIMITED, the 100%
beneficial stockholder of MPL (the "MPL Shareholder"), ORIENT FINANCIAL SERVICES
LIMITED and EMERGING GROWTH PARTNERS INC.
INTRODUCTION
IAMK desires to acquire all of the issued and outstanding shares of MPL
(together with all securities representing equity ownership in MPL, "MPL Capital
Stock") solely in exchange for an aggregate of 109,623,006 shares of authorized,
but theretofore unissued, shares of common stock, par value $0.01 per share, of
IAMK (the "IAMK Common Stock"), representing 85.0% of the fully diluted
outstanding IAMK Common Stock giving effect to such issuance. The MPL
Shareholder desires to exchange all of its beneficially owned shares of MPL
Capital Stock solely for shares of IAMK Common Stock in the amount set forth
herein.
Prior to the date hereof, the respective boards of directors or
analogous governing body of each of IAMK and MPL have, and the MPL Shareholder
has, approved and adopted this Agreement and it is the intent of the parties
hereto that the transactions contemplated hereby be structured so as to qualify
as a tax-free exchange under Subchapter C of the U.S. Internal Revenue Code of
1986, as amended (the "Code"), and the provisions of this Agreement will be
interpreted in a manner consistent with this intent.
NOW, THEREFORE, in consideration of the premises and mutual
representations, warranties and covenants herein contained, the parties hereby
agree as follows:
ARTICLE I
ACQUISITION AND EXCHANGE OF SHARES
Section 1.01 The Agreement. The parties hereto hereby agree that IAMK
shall acquire all of the issued and outstanding shares of MPL Capital Stock
solely in exchange for an aggregate of 109,623,006 shares of authorized, but
theretofore unissued, shares of IAMK Common Stock. The parties hereto agree that
at the closing of the transactions contemplated by this Agreement (the
"Closing"): (i) MPL will become a wholly-owned subsidiary of IAMK subject to the
conditions and provisions of Section 1.03 hereof; and (ii) IAMK will amend its
certificate and articles of incorporation and other related charter and
authorization documents with the relevant state authorities so as to cause the
corporate name thereof to be reasonably satisfactory to MPL.
Section 1.02 Exchange of Shares.
(a) At the Closing, IAMK will cause to be issued and held for delivery
to the MPL Shareholder or its designees, stock certificates representing an
aggregate of 109,623,006 shares of IAMK Common Stock, representing 85.0% of the
fully diluted outstanding IAMK Common Stock giving effect to such issuance, in
exchange for all of the issued and outstanding shares of MPL Capital Stock,
which shares will be delivered to IAMK at the Closing.
1
(b) The shares of IAMK Common Stock to be issued pursuant to paragraph
(a) of this Section 1.02 will be authorized, but theretofore unissued shares of
IAMK Common Stock, and will be issued to the MPL Shareholder or as directed
thereby as set forth in Schedule 1.02(b) hereof credited as fully paid.
(c) All shares of IAMK Common Stock to be issued hereunder shall be
deemed "restricted securities" as defined in paragraph (a) of Rule 144 under the
Securities Act of 1933, as amended (the "Securities Act"), and the MPL
Shareholder will represent in writing that they are acquiring said shares for
investment purposes only and without the intent to make a further distribution
of such shares. All shares of IAMK Common Stock to be issued under the terms of
this Agreement shall be issued pursuant to an exemption from the registration
requirements of the Securities Act, under Section 4(2) of the Securities Act and
the rules and regulations promulgated thereunder. Certificates representing the
shares of IAMK Common Stock to be issued hereunder shall bear a restrictive
legend in substantially the following form:
The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended, and may not be offered for sale,
sold, or otherwise disposed of, except in compliance with the registration
provisions of such Act or pursuant to an exemption from such registration
provisions, the availability of which is to be established to the satisfaction
of the Company.
Section 1.03 Closing. Conditional upon MPL and MPL Shareholder being in
their sole and absolute discretion satisfied with the content of the IAMK
Disclosure Letter (as defined in Section 2.01) and notifying such to IAMK in
writing and there being no breach of any of the representations and warranties
of IAMK as set out in Section 2.01 or otherwise in this Agreement, the Closing
will take place at a date and time (the "Closing Date") and place to be mutually
agreed upon by the parties hereto, which shall be on or before December 20, 2004
(or such later date as the parties may agree in writing), and will be subject to
the provisions of Article IV of this Agreement. At the Closing:
(a) MPL Shareholder will deliver to IAMK share certificates or other
evidences representing all of the issued and outstanding MPL Capital Stock, duly
endorsed, so as to make IAMK the holder thereof, free and clear of all liens,
claims and other encumbrances;
(b) IAMK will deliver to, or at the direction of, the MPL Shareholder,
in accordance with Schedule 1.02(b) hereof, stock certificates representing an
aggregate of 109,623,006 shares of IAMK Common Stock, which certificates will
bear a standard restrictive legend in the form customarily used with restricted
securities and as set forth in Section 1.02(c) above and which shares shall
represent approximately 85.0% of the outstanding IAMK Common Stock giving effect
to the issuance thereof and the issuance of 10,317,459 shares of IAMK Common
Stock issued pursuant to Section 3.01(q);
(c) IAMK will deliver an Officer's Certificate as described in Sections
4.02(a) and 4.02(b) hereof, dated the Closing Date, certifying that all
representations, warranties, covenants, and conditions set forth herein by IAMK
are true and correct and not misleading as of, or have been fully performed and
complied with by, the Closing Date;
(d) MPL will deliver an Officer's Certificate as described in Sections
4.01(a) and 4.01(b) hereof, dated the Closing Date, certifying that all
representations, warranties, covenants and conditions set forth herein by MPL
are true and correct as of, or have been fully performed and complied with by,
the Closing Date; and
(e) IAMK will deliver to MPL evidence that all filings required to be
made by it as mentioned in Sections 2.01(c) above has been completed.
Section 1.04 Approval by Board of Directors. In anticipation of this
Agreement, IAMK has taken all necessary and requisite corporate and other
action, including without limitation, actions of the Board of Directors in order
to approve this Agreement and all transactions contemplated hereby and in
connection herewith.
Section 1.05 Consummation of Transaction. If at the Closing, no
condition exists which would permit any of the parties to terminate this
Agreement, or a condition then exists and the party entitled to terminate
because of that condition elects not to do so, then the transactions herein
contemplated shall be consummated upon such date, and then and thereupon, IAMK
will file any additional necessary documents that may be required by the State
of Nevada, the United States of America, or otherwise.
2
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.01 Representations and Warranties of IAMK. IAMK hereby
represents and warrants to, and agrees with, MPL and the MPL Shareholder that
all representations and statements in this Section 2.01 or otherwise contained
in this Agreement are and will be true and accurate in all respects as at the
date hereof and at all times up to and as at Closing:
(a) Organization and Qualification. Other than as set forth in Section
A of the disclosure letter from IAMK to MPL and the MPL Shareholder in the
agreed form (the "IAMK Disclosure Letter"), IAMK has no subsidiaries or
affiliated corporation or owns any interest (whether directly or indirectly) in
any other enterprise (whether or not such enterprise is a corporation). IAMK is
a corporation duly organized, validly existing, and in good standing under the
laws of the State of Nevada, with all requisite power and authority, and all
necessary consents, authorizations, approvals, orders, licenses, certificates,
and permits of and from, and declarations and filings with, all federal, state,
local, and other governmental authorities and all courts and other tribunals, to
own, lease, license, and use its properties and assets, to issue an aggregate of
119,940,465 IAMK Common Stock contemplated herein and to carry on the businesses
in which it is now engaged and the businesses in which it contemplates engaging.
Other than as set forth in Section A of the IAMK Disclosure Letter, IAMK is duly
qualified to transact the businesses in which it is engaged and is in good
standing as a foreign corporation in every jurisdiction in which its ownership,
leasing, licensing, or use of property or assets or the conduct of its
businesses makes such qualification necessary.
(b) Capitalization. The authorized capital stock of IAMK immediately
prior to a share consolidation of approximately 1.69 to 1 and prior to giving
effect to the transactions contemplated hereby to consist of 100,000,000 shares,
$.001 par value, of IAMK Common Stock, of which 9,027,777 shares are
outstanding, and zero shares of preferred stock. Prior to Closing, IAMK
shareholders shall approve and caused to become effective the charter amendments
contemplated by Section 3.01 hereof. Each of such outstanding shares of IAMK
Common Stock is validly authorized, validly issued, fully paid, and
nonassessable, has not been issued and is not owned or held in violation of any
preemptive or similar right of stockholders. There is no commitment, plan, or
arrangement to issue, and no outstanding option, warrant, or other right calling
for the issuance of, any share of capital stock of IAMK or any security or other
instrument convertible into, exercisable for, or exchangeable for capital stock
of IAMK. There is outstanding no security or other instrument convertible into,
or exchangeable or exercisable for, capital stock of IAMK.
(c) Financial Condition. IAMK is required to and has prior to closing
filed with the United States Securities and Exchange (the "SEC") true and
correct copies of the following: audited balance sheets of IAMK as of fiscal
year-ended February 28, 2003 and 2004; and unaudited balance sheets of IAMK for
the quarterly periods ended May 31, 2004 and August 31, 2004; audited statements
of income, statements of stockholders' equity, and statements of cash flows of
IAMK for the years ended February 28, 2003 and 2004; and unaudited statements of
income, statements of stockholders' equity, and statements of cash flows of IAMK
for the quarterly periods ended May 31, 2004 and August 31, 2004. Each such
balance sheet shall present fairly the financial condition, assets, liabilities,
and stockholders' equity of IAMK as of its respective date; each such statement
of income and statement of stockholders' equity shall present fairly the results
of operations of IAMK for the period indicated; and each such statement of cash
flows shall present fairly the information purported to be shown therein. The
financial statements referred to in this Section 2.01(c) will have been prepared
in accordance with generally accepted accounting principles in the United States
consistently applied throughout the periods involved and shall be in accordance
with the books and records of IAMK. The financial statements referred to in this
Section 2.01(c) contain all certifications and statements required the SEC's
Order, dated June 27, 2002, pursuant to Section 21(a)(1) of the Exchange Act
(File No. 4-460), Rule 13a-14 or 15d-14 under the Exchange Act, or 18 U.S.C.
Section 1350 (Sections 302 and 906 of the Sarbanes-Oxley Act of 2002) with
respect to the report relating thereto. Since August 31, 2004:
(i) there has at no time been a material adverse change in the
financial condition, results of operations, businesses, properties, assets,
liabilities, or future prospects of IAMK;
3
(ii) IAMK has not authorized, declared, paid, or effected any dividend
or liquidating or other distribution in respect of its capital stock or any
direct or indirect redemption, purchase, or other acquisition of any stock of
IAMK; and
(iii) the operations and businesses of IAMK have been conducted in all
respects only in the ordinary course, except as described in the filings made by
IAMK with the SEC.
There is no fact known to IAMK which materially adversely affects or in the
future (as far as IAMK can reasonably foresee) may materially adversely affect
the financial condition, results of operations, businesses, properties, assets,
liabilities, or future prospects of IAMK; provided, however, that IAMK expresses
no opinion as to political or economic matters of general applicability. IAMK
has made known, or caused to be made known, to the accountants or auditors who
have prepared, reviewed, or audited the aforementioned consolidated financial
statements all material facts and circumstances which could affect the
preparation, presentation, accuracy, or completeness thereof.
(d) Tax and Other Liabilities. IAMK does not have any material
liability of any nature, accrued or contingent, including, without limitation,
liabilities for federal, state, local, or foreign taxes and penalties, interest,
and additions to tax ("Taxes"), and liabilities to customers or suppliers, other
than the following:
(i) Liabilities for which full provision has been made on the balance
sheet and the notes thereto (the "Last IAMK Balance Sheet") as of February 28,
2004 (the "Last IAMK Balance Sheet Date") referred to in Section 2.01(c); and
(ii) Other liabilities arising since the Last IAMK Balance Sheet Date
and prior to Closing in the ordinary course of business (which shall not include
liabilities to customers on account of defective products or services) which are
not material nor inconsistent with the representations and warranties of IAMK or
any other provision of this Agreement.
Without limiting the generality of the foregoing, the amounts set up as
provisions for Taxes on the Last IAMK Balance Sheet are sufficient for all
accrued and unpaid Taxes of IAMK, whether or not due and payable and whether or
not disputed, under tax laws, as in effect on the Last IAMK Balance Sheet Date
or now in effect, for the period ended on such date and for all fiscal periods
prior thereto. The execution, delivery, and performance of this Agreement by
IAMK will not cause any Taxes to be payable (other than those that may possibly
be payable by the MPL Shareholder as a result of the contribution of their
shares of MPL Capital Stock to IAMK) or cause any lien, charge, or encumbrance
to secure any Taxes to be created either immediately or upon the nonpayment of
any Taxes other than on the properties or assets of the MPL Shareholder. The
Internal Revenue Service has audited and settled or the statute of limitations
has run upon all federal income tax returns of IAMK for all taxable years up to
and including the taxable year ended February 28, 2004. IAMK has filed all
federal, state, local, and foreign tax returns required to be filed by it; has
delivered to the MPL Shareholder a true and correct copy of each such return
which was filed in the past six years; has paid (or has established on the Last
IAMK Balance Sheet a reserve for) all Taxes, assessments, and other governmental
charges payable or remittable by it or levied upon it or its properties, assets,
income, or franchises which are due and payable; and has delivered to the MPL
Shareholder a true and correct copy of any report as to adjustments received by
it from any taxing authority during the past six years and a statement as to any
litigation, governmental or other proceeding (formal or informal), or
investigation pending, threatened, or in prospect with respect to any such
report or the subject matter of such report.
4
(e) Litigation and Claims. Except as described in Section G of the IAMK
Disclosure Letter, there is no litigation, arbitration, claim, governmental or
other proceeding (formal or informal), or investigation pending or, to the best
of IAMK's knowledge, threatened, or in prospect (or any basis therefor known to
IAMK) with respect to IAMK or any of its businesses, properties, or assets. IAMK
is not affected by any present or threatened strike or other labor disturbance
nor to the knowledge of IAMK, is any union attempting to represent any employee
of IAMK as collective bargaining agent. IAMK is not in violation of, or in
default with respect to, any law, rule, regulation, order, judgment, or decree
which violation or default would have a material adverse effect on IAMK or its
business and operations; nor is IAMK required to take any action in order to
avoid such violation or default.
(f) Properties.
(i) IAMK owns no real property. IAMK has good title to all
personal properties and assets material to IAMK and used in its businesses or
owned by it (except real and other properties and assets material to IAMK as are
held pursuant to leases or licenses described in Section B or C of the IAMK
Disclosure Letter), free and clear of all liens, mortgages, security interests,
pledges, charges, and encumbrances (except such as are listed in Section D of
the IAMK Disclosure Letter).
(ii) Set forth in Section B of the IAMK Disclosure Letter is a
true and complete list of all tangible properties and assets owned by IAMK or
leased or licensed by IAMK from or to a third party (including inventory but not
including Intangibles (as hereinafter defined)), and with respect to such
properties and assets leased or licensed by IAMK from or to a third party, a
description of such lease or license. All such properties and assets (including
Intangibles) owned by IAMK are reflected on the Last IAMK Balance Sheet (except
for acquisitions subsequent to the Last IAMK Balance Sheet Date and prior to the
Closing Date, which are either noted in Section B or C of the IAMK Disclosure
Letter or are approved in writing by MPL). All tangible properties and assets
owned by IAMK or leased or licensed by IAMK from or to a third party are in good
and usable condition (reasonable wear and tear which is not such as to affect
adversely the operation of the businesses of IAMK excepted).
(iii) To the best of IAMK's knowledge, no real property leased
or licensed by IAMK from or to a third party lies in an area which is, or will
be, subject to zoning, use, or building code restrictions which would prohibit,
and, to the best of IAMK's knowledge, no state of facts relating to the actions
or inaction of another person or entity or his or its ownership, leasing, or
licensing of any real or personal property exists or will exist which would
prevent, the continued effective ownership, leasing, or licensing of such real
property in the businesses in which IAMK is now engaged or the businesses in
which it contemplates engaging.
(iv) The properties and assets (including Intangibles (as
hereinafter defined)) owned by IAMK (other than those leased or licensed by IAMK
to a third party) or leased or licensed by IAMK from a third party constitute
all such properties and assets which are necessary to the businesses of IAMK as
presently conducted.
(v) IAMK has not caused or permitted its businesses
properties, or assets to be used to generate, manufacture, refine, transport,
treat, store, handle, dispose of, transfer, produce, or process any Hazardous
Substance (as such term is defined in this Section 2.01(f)(v)) except in
compliance with all applicable laws, rules, regulations, orders, judgments, and
decrees, and has not caused or permitted the Release (as such term is defined in
this Section 2.01(f)(v)) of any Hazardous Substance on or off the site of any
property of IAMK. The term "Hazardous Substance" shall mean any hazardous waste,
as defined by 42 U.S.C. ss.6903(5), any hazardous substance, as defined by 42
U.S.C. ss.9601(14), any pollutant or contaminant, as defined by 42 U.S.C.
ss.9601(33), and all toxic substances, hazardous materials, or other chemical
substances regulated by any other law, rule, or regulation. The term "Release"
shall have the meaning set forth in 42 U.S.C. ss.9601(22).
(g) Contracts and Other Instruments. Section D of the IAMK Disclosure
Letter contains a true and correct statement of the information required to be
contained therein regarding material contracts, agreements, instruments, leases,
licenses, arrangements, or understandings with respect to IAMK. IAMK has
furnished to the MPL Shareholder (i) the certificate of incorporation (or other
charter document) and by-laws of IAMK and all amendments thereto, as presently
in effect, and (ii) the following: (A) true and correct copies of all material
contracts, agreements, and instruments referred to in Section D of the IAMK
Disclosure Letter; (B) true and correct copies of all material leases and
licenses referred to in Section B or C of the IAMK Disclosure Letter hereto; and
(C) true and correct written descriptions of all material supply, distribution,
agency, financing, or other arrangements or understandings referred to in
Section B or C of the IAMK Disclosure Letter. To the best of IAMK's knowledge,
neither IAMK nor (to the knowledge of IAMK) any other party to any such material
contract, agreement, instrument, lease, or license is now or expects in the
future to be in violation or breach of, or in default with respect to complying
with, any term thereof, and each such material contract, agreement, instrument,
lease, or license is in full force and is (to the best of IAMK's knowledge in
the case of third parties) the legal, valid, and binding obligation of the
parties thereto and (subject to applicable bankruptcy, insolvency, and other
laws affecting the enforceability of creditors' rights generally) is enforceable
as to them in accordance with its respective terms. Each such material supply,
distribution, agency, financing, or other arrangement or understanding is a
valid and continuing arrangement or understanding; neither IAMK nor any other
party to any such arrangement or understanding has given notice of termination
or taken any action inconsistent with the continuance of such arrangement or
understanding; and the execution, delivery, and performance of this Agreement
will not prejudice any such arrangement or understanding in any way. IAMK enjoys
peaceful and undisturbed possession under all material leases and licenses under
which it is operating. IAMK is not party to, or bound by, any contract,
agreement, instrument, lease, license, arrangement, or understanding, or subject
to any charter or other restriction, which has had or (to the knowledge of IAMK)
may in the future have a material adverse effect on the financial condition,
results of operations, businesses, properties, assets, liabilities, or future
prospects of IAMK. IAMK has not engaged within the last five years in, is not
engaging in, and does not intend to engage in any transaction with, and has not
had within the last five years, does not now have, and does not intend to have
any material contract, agreement, instrument, lease, license, arrangement, or
understanding with, any stockholder of IAMK, any director, officer, or employee
of IAMK (except for employment agreements listed in Section D of the IAMK
Disclosure Letter and employment and compensation arrangements described in
Section E of the IAMK Disclosure Letter), any relative or affiliate of any
stockholder of IAMK or of any such director, officer, or employee, or any other
corporation or enterprise in which any stockholder of IAMK, any such director,
officer, or employee, or any such relative or affiliate then had or now has a 5%
or greater equity or voting or other substantial interest, other than those
listed and so specified in Section D of the IAMK Disclosure Letter. The stock
ledgers and stock transfer books relating to all issuances and transfers of
stock by IAMK and the minute book records of IAMK and all proceedings of the
stockholders and the Board of Directors and committees thereof of IAMK since
their respective incorporations made available to counsel to MPL and the MPL
Shareholder are the original stock ledgers and stock transfer books and minute
book records of IAMK or exact copies thereof. IAMK is not in violation or breach
of, or in default with respect to, any term of its certificate of incorporation
(or other charter document) or by-laws.
5
(h) Employees.
(i) IAMK does not have, or contribute to, any pension,
profit-sharing, option, other incentive plan, or any other type of Employee
Benefit Plan (as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")), or has any obligation to or
customary arrangement with employees for bonuses, incentive compensation,
vacations, severance pay, sick pay, sick leave, insurance, service award,
relocation, disability, tuition refund, or other benefits, whether oral or
written, except as set forth in Section E of the IAMK Disclosure Letter. IAMK
has furnished to MPL and the MPL Shareholder: (A) true and correct copies of all
documents evidencing plans, obligations, or arrangements referred to in Section
E of the IAMK Disclosure Letter (or true and correct written summaries, so
initialed, of such plans, obligations, or arrangements to the extent not
evidenced by documents) and true and correct copies, so initialed, of all
documents evidencing trusts, summary plan descriptions, and any other summaries
or descriptions relating to any such plans; (B) the two most recent annual
reports (Form 5500's), if any, including all schedules thereto and the most
recent annual and periodic accounting of related plan assets with respect to
each Employee Benefit Plan; (C) the two most recent actuarial valuations with
respect to each Pension Plan (as defined in Section 3(2) of ERISA) subject to
Title IV of ERISA; and (D) the most recent determination letter issued by the
Internal Revenue Service with respect to each Pension Plan.
(ii) If any Employee Benefit Plan of IAMK were to be
terminated on the day prior to Closing Date, (A) no liability under Title IV of
ERISA would be incurred by IAMK or MPL and (B) all Accrued Benefits (as defined
in this Section 2.01(h)(ii)) to such day prior to the Closing Date (whether or
not vested) would be fully funded in accordance with the assumptions contained
in the regulations of the Pension Benefit Guaranty Corporation governing the
funding of terminated defined benefit plans. For purposes hereof, "Accrued
Benefits" shall include the value of disability, pre-retirement, death benefits,
and all supplements, subsidized, ancillary, and optional forms of benefits. All
Accrued Liabilities (for contributions or otherwise) (as defined in this Section
2.01(h)(ii)) of IAMK as of the Closing Date to each Employee Benefit Plan and
with respect to each obligation to, or customary arrangement with, employees for
bonuses, incentive compensation, vacations, severance pay, sick pay, sick leave,
insurance, service award, relocation, disability, tuition refund, or other
benefits, whether oral or written, have been paid or accrued for all periods
ending prior to the Closing Date and no payment to any Employee Benefit Plan or
with respect to any such obligation or arrangement since the Last IAMK Balance
Sheet Date has been disproportionately large compared to prior payments. For
purposes hereof, "Accrued Liabilities" shall include a pro rata contribution to
each Employee Benefit Plan or with respect to each such obligation or
arrangement for that portion of a plan year or other applicable period which
commences prior to, and ends after, the Closing Date, and Accrued Liabilities
for any portion of a plan year or other applicable period shall be determined by
multiplying the liability for the entire such year or period by a fraction, the
numerator of which is the number of days preceding the Closing Date in such year
or period and the denominator of which is the number of days in such year or
period, as the case may be.
(iii) There has been no violation of the reporting and
disclosure requirements imposed either under ERISA or the Code for which a
penalty has been or may be imposed with respect to any Employee Benefit Plan of
IAMK. There has been no breach of fiduciary duty or responsibility with respect
to any Employee Benefit Plan of IAMK. No Employee Benefit Plan of IAMK or
related trust has any liability of any nature, accrued or contingent, including
without limitation liabilities for Taxes, other than for routine payments to be
made in due course to participants and beneficiaries, except as set forth in
Section E of the IAMK Disclosure Letter. IAMK does not have any formal plan or
commitment, whether or not legally binding, to create any additional or modify
any existing Employee Benefit Plan or benefit obligation or arrangement
described in Section 2.01(h)(i)). Each Employee Benefit Plan of IAMK which is a
group health plan within the meaning of Section 5000(b)(1) of the Code is and
has been maintained in full compliance with the applicable requirements of
Section 4980B of the Code. Other than the health care continuation requirements
of Section 4980B of the Code, IAMK does not have any obligation to provide
post-retirement medical benefits or life insurance coverage or any deferred
compensation benefits to any present or former employees. There is no
litigation, arbitration, claim, governmental or other proceeding (formal or
informal), or investigation pending, threatened, or (to the best of IAMK's
knowledge) in prospect (or any basis therefore known to IAMK) with respect to
any Employee Benefit Plan of IAMK or related trust or with respect to any
fiduciary, administrator, or sponsor (in its capacity as such) of any Employee
Benefit Plan. No Employee Benefit Plan of IAMK or related trust and no such
obligation or arrangement is in violation of, or in default with respect to, any
law, rule, regulation, order, judgment, which violation or default would have a
material adverse effect thereon or decree nor is IAMK, any Employee Benefit Plan
of IAMK, or any related trust required to take any action in order to avoid any
such violation or default. No event has occurred, or is (to the best of IAMK's
knowledge) threatened or about to occur, which would constitute a prohibited
transaction under Section 406 of ERISA.
6
(iv) Each Pension Plan maintained for the employees of IAMK
has been qualified, from its inception, under Section 401(a) of the Code and any
related trust has been an exempt trust for such period under Section 501 of the
Code. Each Pension Plan has been operated in accordance with its terms. No
Pension Plan which is subject to Title IV of ERISA has an accumulated or waived
funding deficiency within the meaning of Section 412 of the Code. No
investigation or review by the Internal Revenue Service is currently pending or
(to the knowledge of IAMK) is contemplated in which the Internal Revenue Service
has asserted or may assert that any Pension Plan is not qualified under Section
401(a) of the Code or that any related trust is not exempt under Section 501 of
the Code. Neither IAMK, nor any organization to which IAMK is a successor or
parent corporation, within the meaning of Section 4069(b) of ERISA, has divested
itself of any entity maintaining or with an obligation to contribute to any
Pension Plan which had an "amount of unfunded benefit liabilities," as defined
in Section 4001(a)(18) of ERISA, at the time of such divestiture. No assessment
of any federal taxes with respect to any Employee Benefit Plan of IAMK has been
made or (to the knowledge of IAMK) is contemplated against IAMK, or any related
trust of any Pension Plan of IAMK, and nothing has occurred which would result
in the assessment of unrelated business taxable income under the Code with
respect to any Employee Benefit Plan of IAMK. Form 5500's have been timely filed
with respect to all Pension Plans of IAMK. No event has occurred or (to the
knowledge of IAMK) is threatened or about to occur which would constitute a
reportable event within the meaning of Section 4043(b) of ERISA. No notice of
termination has been filed by the plan administrator pursuant to Section 4041 of
ERISA or issued by the Pension Benefit Guaranty Corporation pursuant to Section
4042 of ERISA with respect to any Pension Plan of IAMK.
(v) IAMK does not currently contribute to, and has not ever
effectuated either a complete or partial withdrawal from, any multiemployer
Pension Plan within the meaning of Section 3(37) of ERISA.
(vi) Section E of the IAMK Disclosure Letter contains a true
and correct statement of the names, relationship with IAMK, present rates of
compensation (whether in the form of salary, bonuses, commissions, or other
supplemental compensation now or hereafter payable), and aggregate compensation
for the fiscal year ended December 31, 2003 of (A) each director, officer, or
other employee of IAMK whose aggregate compensation for the fiscal year ended
December 31, 2003 exceeded US$25,000 or whose aggregate compensation presently
exceeds the rate of US$25,000 per annum and (B) all sales agents, dealers, or
distributors of IAMK. Since January 1, 2004, IAMK has not changed the rate of
compensation of any of its directors, officers, employees, agents, dealers, or
distributors, nor has any Employee Benefit Plan or program of IAMK been
instituted or amended to increase benefits thereunder. There is no contract,
agreement, plan, arrangement, or understanding covering any person that,
individually or collectively, could give rise to the payment of any amount that
would not be deductible by IAMK by reason of Section 280G of the Code.
(vii) IAMK has not extended or maintained credit, arranged for
the extension of credit, or renewed an extension of credit, in the form of a
personal loan to or for any director or executive officer (or equivalent
thereof) thereof.
(i) Patents, Trademarks, Et Cetera. IAMK does not own or have pending,
and is not licensed or otherwise permitted to use, any material patent, patent
application, trademark, trademark application, service mark, copyright,
copyright application, franchise, trade secret, computer program (in object or
source code or otherwise), or other intangible property or asset (collectively,
"Intangibles"), other than as described in Section C of the IAMK Disclosure
Letter. Each Intangible is validly issued and is currently in force and
uncontested in all jurisdictions in which it is used or in which such use is
contemplated. Section C of the IAMK Disclosure Letter contains a true and
correct listing of: (i) all Intangibles which are owned (either in whole or in
part), used by, or licensed to IAMK or which otherwise relate to the businesses
of IAMK, and a description of each such Intangible which identifies its owner,
registrant, or applicant; (ii) all contracts, agreements, instruments, leases,
and licenses and identification of all parties thereto under which IAMK owns or
uses any Intangible (whether or not under license from third parties), together
with the identification of the owner, registrant, or applicant of each such
Intangible; (iii) all contracts, agreements, instruments, leases, and licenses
and identification of all parties thereto under which IAMK grants the right to
use any Intangible; (iv) all validity, infringement, right-to-use, or other
opinions of counsel (whether in-house or outside) which concern the validity,
infringement, or enforceability of any Intangible owned or controlled by a party
other than IAMK which relates to the businesses, properties, or assets of IAMK.
Except as specified in Section C of the IAMK Disclosure Letter, to the knowledge
of IAMK: (v) IAMK is the sole and exclusive owner or licensee of, and (other
than those exclusively licensed by IAMK to a third party) has the right to use,
all Intangibles; (vi) no Intangible is subject to any order, judgment, decree,
contract, agreement, instrument, lease, or license restricting the scope of the
use thereof; (vii) during the last five years, IAMK has not been charged with,
and has not charged others with, unfair competition, infringement of any
Intangible, or wrongful use of confidential information, trade secrets, or
secret processes; and (viii) IAMK is not using any patentable invention,
confidential information, trade secret, or secret process of others. There is no
right under any Intangible necessary to the businesses of IAMK as presently
conducted or as it contemplates conducting, except such as are so designated in
Section C of the IAMK Disclosure Letter. Except as described in Section C of the
IAMK Disclosure Letter, IAMK has not infringed, is not infringing, and has not
received notice of infringement in respect of the Intangibles or asserted
Intangibles of others, nor has IAMK been advised by counsel or others that it is
infringing or may infringe the Intangibles or asserted Intangibles of others if
any currently contemplated business activity is effectuated. To the knowledge of
IAMK, there is no infringement by others of Intangibles of IAMK. As far as IAMK
can reasonably foresee, there is no Intangible or asserted Intangible of others
that may materially adversely affect the financial condition, results of
operations, businesses, properties, assets, liabilities, or future prospects of
IAMK. All material contracts, agreements, instruments, leases, and licenses
pertaining to Intangibles to which IAMK is a party, or to which any of its
businesses, properties, or assets are subject, are in compliance in all material
respects with all laws, rules, regulations, orders, judgments, and decrees
binding on IAMK or to which any of its businesses, properties, or assets are
subject. IAMK did not register any trademark, tradename or service mark, design,
or name used by IAMK to identify its products, businesses, or services. Neither
any stockholder of IAMK, any director, officer, or employee of IAMK, any
relative or affiliate of any stockholder of IAMK, any such director, officer, or
employee, nor any other corporation or enterprise in which any stockholder of
IAMK, any such director, officer, or employee, or any such relative or affiliate
had or now has a 5% or greater equity or voting or other substantial interest,
possesses any Intangible which relates to the businesses of IAMK.
(j) Questionable Payments. Neither IAMK, nor any director, member of
management, officer, agent, employee, or other person associated with, or acting
on behalf of, IAMK, nor any stockholder of IAMK has, directly or indirectly:
used any corporate funds for unlawful contributions, gifts, entertainment, or
other unlawful expenses relating to political activity; made any unlawful
payment to foreign or domestic government officials or employees or to foreign
or domestic political parties or campaigns from corporate funds; violated any
provision of the Foreign Corrupt Practices Act of 1977, as amended; or made any
bribe, rebate, payoff, influence payment, kickback, or other unlawful payment.
7
(k) Authority. IAMK has all requisite power and authority to execute,
deliver, and perform this Agreement. All necessary corporate proceedings of IAMK
have been duly taken to authorize the execution, delivery, and performance of
this Agreement thereby. This Agreement has been duly authorized, executed, and
delivered by IAMK, constitutes the legal, valid, and binding obligation of IAMK,
and is enforceable as to IAMK in accordance with its terms. Except as otherwise
set forth in this Agreement, no consent, authorization, approval, order,
license, certificate, or permit of or from, or declaration or filing with, any
federal, state, local, or other governmental authority or any court or other
tribunal is required by IAMK for the execution, delivery, or performance of this
Agreement by IAMK. No consent of any party to any material contract, agreement,
instrument, lease, license, arrangement, or understanding to which IAMK is a
party, or to which it or any of its businesses, properties, or assets are
subject, is required for the execution, delivery, or performance of this
Agreement (except such consents referred to in Section D of the IAMK Disclosure
Letter); and the execution, delivery, and performance of this Agreement will not
(if the consents referred to in Section D of the IAMK Disclosure Letter are
obtained prior to the Closing) violate, result in a breach of, conflict with, or
(with or without the giving of notice or the passage of time or both) entitle
any party to terminate or call a default under, entitle any party to receive
rights or privileges that such party was not entitled to receive before this
Agreement was executed under, or create any obligation on the part of IAMK to
which it was not subject immediately before this Agreement was executed under,
any term of any such material contract, agreement, instrument, lease, license,
arrangement, or understanding, or violate or result in a breach of any term of
the certificate of incorporation (or other charter document) or by-laws of IAMK,
or (if the provisions of this Agreement are satisfied) violate, result in a
breach of, or conflict with any law, rule, regulation, order, judgment, or
decree binding on IAMK or to which any of its businesses, properties, or assets
are subject, which violation or breach would have a material adverse effect on
IAMK. Neither IAMK, nor any of its officers, members of management, directors,
employees, or agents has employed any broker or finder or incurred any liability
for any fee, commission, or other compensation payable by any person on account
of alleged employment as a broker or finder, or alleged performance of services
as a broker or finder, in connection with or as a result of this Agreement or
the transactions contemplated hereby and in connection herewith.
(l) Status of Shares of IAMK Common Stock To Be Issued. Assuming
without investigation that the MPL Common Stock outstanding on the Closing Date
are validly authorized, validly issued and fully paid, the shares of IAMK Common
Stock to be issued pursuant to Section 1.02(a) hereof, and, in any case, the
shares of IAMK Common Stock issuable pursuant to Section 3.01(q) hereof, are
validly authorized and, when the such shares of IAMK Common Stock have been duly
delivered pursuant to the terms of this Agreement, such shares of IAMK Common
Stock will be validly issued, fully paid, and nonassessable and will not have
been issued, owned or held in violation of any preemptive or similar right of
stockholder.
(m) Insurance. All policies of fire and other insurance against
casualty and other losses and public liability insurance carried by IAMK are
described in Section F of the IAMK Disclosure Letter (including the risks
covered and limits of such policies) and are in full force and effect. All
premiums in respect of such policies for which premium notices have been
received have been paid in full as the same become due and payable. IAMK has not
failed to give any notice or present any claim under any insurance policy in due
and timely fashion. There are no actual claims or claims threatened in writing,
or claims which the board of directors of IAMK are aware of against IAMK which
could come within the scope of such coverage nor are any such policies currently
threatened with cancellation. There are no outstanding requirements or
recommendations by any insurance company that issued a policy with respect to
any of the respective assets, the businesses, or operations of IAMK or by any
Board of Fire Underwriters or other body exercising similar functions or by any
governmental authority requiring or recommending any repairs or other work to be
done on, or with respect to, any of the assets of IAMK or requiring or
recommending any equipment or facilities to be installed on any premises from
which the businesses of IAMK is conducted or in connection with any of the
respective assets thereof. IAMK does not have any knowledge of any material
proposed increase in applicable insurance rates or of any conditions or
circumstances applicable to the businesses thereof that might result in such
increases. No such policy is terminable by virtue of the transactions
contemplated by this Agreement.
(n) Trading Matters. At the date hereof and at the Closing Date:
(i) the IAMK Common Stock is traded and quoted in the pink sheet over the
counter market of the National Association of Securities Dealers;
(ii) IAMK has and shall have performed or satisfied all of its undertakings to,
and of its obligations and requirements with, the SEC; and
(iii) IAMK has not, and shall not have taken any action that
would preclude, or otherwise jeopardize, the inclusion of the IAMK Common Stock
for quotation on the OTC Bulletin Board.
8
(o) Reorganization.
(i) IAMK has not taken and has not agreed to take any action
(other than actions contemplated by this Agreement) that could reasonably be
expected to prevent the transactions contemplated by this Agreement from
constituting a "reorganization" under section 368(b) of the Code or as an
acquisition of in excess of 80% of the stock of a corporation in exchange for
property under Section 351 of the Code. IAMK is not aware of any agreement, plan
or other circumstance that could reasonably be expected to prevent the
transactions contemplated by this Agreement from so qualifying.
(ii) IAMK has no plan or intention to reacquire, and, to
IAMK's knowledge, no person related to IAMK within the meaning of Treasury
Regulations Section 1.368-1 has a plan or intention to acquire, any of the IAMK
Common Stock to be issued pursuant to Section 1.02(a) hereof.
(p) Completeness of Disclosure. No representation or warranty by IAMK
in this Agreement contains or, and at the Closing Date will contain, an untrue
or misleading statement of material fact or omits or, at the Closing Date, will
omit to state a material fact required to be stated therein or necessary to make
the statements made not misleading.
(q) Periodic Reporting.
(i) The IAMK Common Stock has been registered under Section 12 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and IAMK is subject to the
periodic reporting requirements of Section 13 of the Exchange Act. IAMK has
heretofore provided to MPL and the MPL Shareholder true, complete, and correct
copies of all forms, reports, schedules, statements, and other documents
required to be filed by it under the Exchange Act since at least March 2, 2001
as such documents have been amended since the time of the filing thereof (the
"IAMK SEC Documents"). The IAMK SEC Documents, including, without limitation,
any financial statements and schedules included therein, at the time filed or,
if subsequently amended, as so amended, (i) did not contain any untrue statement
of a material fact required to be stated therein or necessary in order to make
the statements therein not misleading and (ii) complied in all respects with the
applicable requirements of the Exchange Act and the applicable rules and
regulations thereunder. The financial statements included in the IAMK SEC
Documents complied when filed as to form in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto, have been prepared in accordance with generally
accepted accounting principles in the United States, applied on a consistent
basis during the periods involved (except as may be indicated in the notes
thereto or, in the case of unaudited financial statements, as permitted by the
rules and regulations of the Commission) and fairly present, subject in the case
of the unaudited financial statements, to customary year end audit adjustments,
the financial position of IAMK as at the dates thereof and the results of its
operations and cash flows.
(ii) The Company maintains disclosure controls and procedures required by Rule
13a-15 or 15d-15 under the Exchange Act; such controls and procedures are
effective to ensure that all material information concerning the Company and its
subsidiaries is made known on a timely basis to the individuals responsible for
the preparation of the Company's filings with the SEC and other public
disclosure documents. IAMK has delivered to MPL copies of, all written
descriptions of, and all policies, manuals and other documents promulgating,
such disclosure controls and procedures. To IAMK's knowledge, each director and
executive officer thereof has filed with the SEC on a timely basis all
statements required by Section 16(a) of the Exchange Act and the rules and
regulations thereunder since January 1, 2002. As used in the this Section
2.01(r), the term "file" shall be broadly construed to include any manner in
which a document or information is furnished, supplied or otherwise made
available to the SEC.
(iii) The Chief Executive Officer and the Chief Financial Officer of IAMK have
signed, and the Company has furnished to the SEC, all certifications required by
Sections 302 and 906 of the Sarbanes-Oxley Act of 2002; such certifications
contain no qualifications or exceptions to the matters certified therein and
have not been modified or withdrawn; and neither IAMK nor any of its officers
has received notice from any governmental entity questioning or challenging the
accuracy, completeness, form or manner of filing or submission of such
certifications.
(iv) IAMK has heretofore provided MPL with complete and correct copies of all
certifications filed with the SEC pursuant to Sections 302 and 906 of
Sarbanes-Oxley Act of 2002 and hereby reaffirms, represents and warrants to MPL
the matters and statements made in such certificates.
(r) Compliance with Law and Government Regulations.
(i) IAMK is in compliance with, and is not in violation of, applicable federal,
state, local or foreign statutes, laws and regulations (including without
limitation, any applicable building, zoning or other law, ordinance or
regulation) affecting its properties, assets or the operation of its business.
IAMK is not subject to any order, decree, judgment or other sanction of any
court, administrative agency or other tribunal.
9
(ii) Each of IAMK, its directors and its senior financial officers has consulted
with IAMK's independent auditors and with IAMK's outside counsel with respect
to, and (to the extent applicable to IAMK) is familiar in all material respects
with all of the requirements of, Sarbanes-Oxley Act of 2002. IAMK is in
compliance with the provisions of such act applicable to it as of the date
hereof and has implemented such programs and has taken reasonable steps, upon
the advice of IAMK's independent auditors and outside counsel, respectively, to
ensure IAMK's future compliance (not later than the relevant statutory and
regulatory deadlines therefore) with all provisions of such act which shall
become applicable thereto after the date hereof.
(s) Legal Proceedings and History. IAMK hereby represents that, unless
otherwise disclosed herein or in the IAMK Disclosure Letter, no officer,
director or affiliate of IAMK, has been, within the five years ending on the
Closing Date, a party to any bankruptcy petition against such person or against
any business of which such person was affiliated; convicted in a criminal
proceeding or subject to a pending criminal proceeding (excluding traffic
violations and other minor offenses); subject to any order, judgment or decree,
not subsequently reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining, barring, suspending or
otherwise limiting their involvement in any type of business, securities or
banking activities; or found by a court of competent jurisdiction in a civil
action, by the SEC or the Commodity Futures Trading Commission to have violated
a federal or state securities or commodities law, and the judgment has not been
reversed, suspended or vacated.
Section 2.02 Representations and Warranties of MPL. MPL hereby
represents and warrants to, and agrees with, IAMK:
(a) Organization and Qualification. MPL owns no subsidiary or affiliate
corporation or owns any interest in any other enterprise (whether or not such
enterprise is a corporation) other than those disclosed to IAMK in the MPL
Disclosure Letter (as herein defined). Section A of the letter, dated even date
herewith, from MPL to IAMK (the "MPL Disclosure Letter"), correctly sets forth
as to MPL its place of incorporation, principal place of business, jurisdictions
in which it is qualified to do business, and the businesses which it presently
conducts and which it contemplates conducting. MPL is a corporation duly
organized, validly existing, and in good standing under the laws of BVI, with
all requisite power and authority, and all necessary consents, authorizations,
approvals, orders, licenses, certificates, and permits of and from, and
declarations and filings with, all federal, state, local, and other governmental
authorities and all courts and other tribunals, to own, lease, license, and use
its properties and assets and to carry on the businesses in which it is now
engaged and the businesses in which it contemplates engaging. Except in the BVI,
MPL is duly qualified to transact the businesses in which it is engaged. MPL is
in good standing as a foreign corporation in every jurisdiction in which its
ownership, leasing, licensing, or use of property or assets or the conduct of
its businesses makes such qualification necessary.
(b) Capitalization. The authorized capital stock of MPL consists of
50,000 shares of US$1.00 each, one hundred and twenty of which shares are issued
and outstanding. Each of the outstanding shares of MPL Capital Stock is validly
authorized, validly issued, fully paid, and nonassessable, has not been issued
and is not owned or held in violation of any preemptive right of stockholders
and by the owners set forth in Section A of the MPL Disclosure Letter, in each
case free and clear of all liens, security interests, pledges, charges,
encumbrances, stockholders' agreements, and voting trusts. There is no
commitment, plan, or arrangement to issue, and no outstanding option, warrant,
or other right calling for the issuance of, any share of MPL Capital Stock or
any security or other instrument convertible into, exercisable for, or
exchangeable for MPL Capital Stock. There is outstanding no security or other
instrument convertible into or exercisable or exchangeable for MPL Capital
Stock.
(c) Financial Condition. MPL has delivered to IAMK true and correct
copies of the following: proforma audited combined balance sheets of MPL as of
December 31, 2002 and December 31, 2003; and proforma audited combined
statements of operations, statements of stockholders' equity, and statements of
cash flows of MPL for the two years ended December 31, 2002 and December 31,
2003. Each such balance sheet presents fairly the financial condition, assets,
liabilities, and stockholders' equity of MPL as of its date; each such statement
of income and consolidated statement of stockholders' equity presents fairly the
results of operations of MPL for the period indicated; and each such statement
of cash flows presents fairly the information purported to be shown therein. The
financial statements referred to in this Section 2.02(c) have been prepared in
accordance with generally accepted accounting principles in the United States
consistently applied throughout the periods involved and are in accordance with
the books and records of MPL. Since December 31, 2003:
(i) there has at no time been a material adverse change in the
financial condition, results of operations, business, properties, assets,
liabilities, or future prospects of MPL;
(ii) MPL has not authorized, declared, paid, or effected any
dividend or liquidating or other distribution in respect of its capital stock or
any direct or indirect redemption, purchase, or other acquisition of any stock
of MPL;
(iii) The operations and businesses of MPL have been conducted
in all respects only in the ordinary course, except for the transactions
contemplated hereby and in connection herewith;
(iv) There has been no accepted purchase order or quotation,
arrangement, or understanding for future sale of the products or services of MPL
that MPL expects will not be profitable; and
(v) MPL has not suffered an extraordinary loss (whether or not
covered by insurance) or waived any right of substantial value.
10
There is no fact known to MPL which materially adversely affects or in the
future (as far as MPL can reasonably foresee) may materially adversely affect
the financial condition, results of operations, business, properties, assets,
liabilities, or future prospects of MPL; provided, however, that MPL expresses
no opinion as to political or economic matters of general applicability. MPL has
made known, or caused to be made known, to the accountants or auditors who have
prepared, reviewed, or audited the aforementioned consolidated financial
statements all material facts and circumstances which could affect the
preparation, presentation, accuracy or completeness thereof. The statement of
combined operations of MPL for the year ended December 31, 2003 shall be audited
in accordance with generally accepted accounting principles in the United States
consistently applied throughout the periods involved, shall contain all
certifications and statements required pursuant to the SEC's Order, dated June
27, 2002, pursuant to Section 21(a)(1) of the Exchange Act (File No. 4-460),
Rule 13a-14 or 15d-14 under the Exchange Act, or 18 U.S.C. Section 1350
(Sections 302 and 906 of the Sarbanes-Oxley Act of 2002) with respect to the
report relating thereto, and shall indicate that: (vi) the gross revenue of MPL
for such period shall be approximately US$5,000,000 and net income of at least
US$3,500,000.
(d) Tax and Other Liabilities. MPL does not have any material liability
of any nature, accrued or contingent, including, without limitation, liabilities
for Taxes, and liabilities to customers or suppliers, other than the following:
(i) Liabilities for which full provision has been made on the
combined proforma balance sheet and the notes thereto (the "Last MPL Balance
Sheet") as of December 31, 2003 (the "Last MPL Balance Sheet Date") referred to
in Section 2.02(c); and
(ii) Other liabilities arising since the Last MPL Balance
Sheet Date and prior to the Closing Date in the ordinary course of business
(which shall not include liabilities to customers on account of defective
products or services) or in connection with the transactions contemplated hereby
or in connection herewith which are not inconsistent with the representations
and warranties of MPL or any other provision of this Agreement.
Without limiting the generality of the foregoing, the amounts set up as
provisions for Taxes on the Last MPL Balance Sheet are sufficient for all
accrued and unpaid Taxes of MPL, whether or not due and payable and whether or
not disputed, under tax laws, as in effect on the Last MPL Balance Sheet Date or
now in effect, for the period ended on such date and for all fiscal periods
prior thereto. The execution, delivery, and performance of this Agreement by MPL
will not cause any Taxes to be payable other than by the stockholders of MPL or
cause any lien, charge, or encumbrance to secure any Taxes to be created either
immediately or upon the nonpayment of any Taxes other than on the properties or
assets of the stockholders of MPL. MPL was incorporated in the BVI under the
International Business Companies Act and is exempted from tax filings in the
BVI. MPL has not been required to file any tax returns by any overseas tax
authorities or required to pay any taxes, assessments, and other governmental
charges payable or remittable by it or levied upon it or its properties, assets,
income, or franchises which are due and payable. MPL is not subject to any
litigation, governmental or other proceeding (formal or informal), or
investigation pending, threatened, or in prospect with respect to any such
report or the subject matter of such report.
(e) Litigation and Claims. There is no litigation, arbitration, claim,
governmental or other proceeding (formal or informal), or investigation pending,
threatened, or, to the best of MPL's knowledge, in prospect (or any basis
therefor known to MPL), with respect to MPL or any of its businesses,
properties, or assets. MPL is not affected by any present or threatened strike
or other labor disturbance nor to the knowledge of MPL is any union attempting
to represent any employee of MPL as collective bargaining agent. MPL is not in
violation of, or in default with respect to, any law, rule, regulation, order,
judgment, or decree which violation or default would have a material adverse
effect upon MPL; nor is MPL required to take any action in order to avoid such
violation or default.
(f) Properties.
(i) MPL does not own any legal or equitable interest in any
real property. MPL has good title to all other properties and assets
material to MPL, used in its business or owned by it (except real and
other properties and assets as are held pursuant to leases or licenses
described in Section B or C of the MPL Disclosure Letter), free and
clear of all liens, mortgages, security interests, pledges, charges,
and encumbrances (except such as are listed in Section D of the MPL
Disclosure Letter).
(ii) All accounts and notes receivable reflected on the Last
MPL Balance Sheet, or arising since the Last MPL Balance Sheet Date,
have been collected, or are and will be good and collectible, in each
case at the aggregate recorded amounts thereof without right of
recourse, defense, deduction, return of goods, counterclaim, offset, or
set off on the part of the obligor, and, if not collected, can
reasonably be anticipated to be paid within 180 days of the date
incurred.
(iii) All production in progress of MPL is usable, in current
production and marketable, on a normal basis in the existing film
production business of MPL.
(iv) Attached as Section B of the MPL Disclosure Letter is a
true and complete list of the classes of all tangible properties and
assets owned by MPL or leased or licensed by MPL from or to a third
party (including inventory but not including Intangibles, as defined in
Section 2.02(i)), and with respect to such properties and assets leased
or licensed by MPL from or to a third party, a description of such
lease or license. All such properties and assets (including
Intangibles) owned by MPL are reflected on the Last MPL Balance Sheet
(except for acquisitions subsequent to the Last MPL Balance Sheet Date
and prior to the Closing Date which are either noted in Section B or C
of the MPL Disclosure Letter or are approved in writing by IAMK). All
real and other tangible properties and assets owned by MPL or leased or
licensed by MPL from or to a third party are in good and usable
condition (reasonable wear and tear which is not such as to affect
adversely the operation of the business of MPL excepted).
(v) To the best of MPL's knowledge, no real property owned by
MPL or leased or licensed by MPL from or to a third party lies in an
area which is, or will be, subject to zoning, use, or building code
restrictions which would prohibit, and, to the best of MPL's knowledge,
no state of facts relating to the actions or inaction of another person
or entity or his or its ownership, leasing, or licensing of any real or
personal property exists or will exist which would prevent, the
continued effective ownership, leasing, or licensing of such real
property in the businesses in which MPL is now engaged or the
businesses in which it contemplates engaging.
(vi) The properties and assets (including Intangibles) owned
by MPL (other than those leased or licensed by MPL to a third party) or
leased or licensed by MPL from a third party constitute all such
properties and assets which are necessary to the business of MPL as
presently conducted or as it contemplates conducting.
(vii) MPL has not caused or permitted its businesses
properties, or assets to be used to generate, manufacture, refine,
transport, treat, store, handle, dispose of, transfer, produce, or
process any Hazardous Substance (as such term is defined in Section
2.01(f)(v)) except in compliance with all applicable laws, rules,
regulations, orders, judgments, and decrees, and has not caused or
permitted the Release (as such term is defined in Section 2.01(f)(v))
of any Hazardous Substance on or off the site of any property of MPL.
11
(g) Contracts and Other Instruments. Section D of the MPL Disclosure
Letter contains a true and correct statement of the information required to be
contained therein regarding material contracts, material agreements,
instruments, leases, licenses, arrangements, or understandings with respect to
MPL. Material contracts and agreements shall mean those contracts and agreements
which have been entered into other than in MPL's ordinary course of business and
which in the opinion of the MPL board, may be material. MPL has furnished to
IAMK: (i) the certificate of incorporation and articles of association of MPL
(or, in each case, the comparable charter documents, if any, under applicable
law) and all amendments thereto, as presently in effect, certified by the
Secretary or an authorized signatory of MPL and (ii) the following: (A) true and
correct copies of all material contracts, material agreements, and instruments
referred to in Section D of the MPL Disclosure Letter; (B) true and correct
copies of all material leases and licenses referred to in Section B or C of the
MPL Disclosure Letter; and (C) true and correct written descriptions of all
material supply, distribution, agency, financing, or other arrangements or
understandings referred to in Section D of the MPL Disclosure Letter. Except as
set forth in Section D of the MPL Disclosure Letter, MPL is not party to any
employment agreement with any employee thereof. To the best of MPL's knowledge,
none of MPL or any other party to any such contract, agreement, instrument,
lease, or license is now or expects in the future to be in violation or breach
of, or in default with respect to complying with, any term thereof, and each
such material contract, agreement, instrument, lease, or license is in full
force and is (to the best of MPL's knowledge in the case of third parties) the
legal, valid, and binding obligation of the parties thereto and (subject to
applicable bankruptcy, insolvency, and other laws affecting the enforceability
of creditors' rights generally) is enforceable as to them in accordance with its
terms. Each such material supply, distribution, agency, financing, or other
arrangement or understanding is a valid and continuing arrangement or
understanding; none of MPL or any other party to any such arrangement or
understanding has given notice of termination or taken any action inconsistent
with the continuance of such arrangement or understanding; and the execution,
delivery, and performance of this Agreement will not prejudice any such
arrangement or understanding in any way. MPL enjoys peaceful and undisturbed
possession under all leases and licenses under which it is operating. MPL is not
party to or bound by any contract, agreement, instrument, lease, license,
arrangement, or understanding, or subject to any charter or other restriction,
which has had or, to the best of MPL's knowledge, may in the future have a
material adverse effect on the financial condition, results of operations,
businesses, properties, assets, liabilities, or future prospects of MPL and,
following the consummation of the transactions contemplated hereby, IAMK. MPL
has not engaged within the last five years in, is engaging in, or intends to
engage in any transaction with, or has had within the last five years, now has,
or intends to have any contract, agreement, instrument, lease, license,
arrangement, or understanding with, any stockholder of MPL, any director,
officer, or employee of MPL (except for employment agreements listed in Section
D of the MPL Disclosure Letter and employment and compensation arrangements
described in Section E of the MPL Disclosure Letter), any relative or affiliate
of any stockholder of MPL, any such director, officer, or employee, or any other
corporation or enterprise in which any stockholder of MPL, any such director,
officer, or employee, or any such relative or affiliate then had or now has a 5%
or greater equity or voting or other substantial interest, other than those
listed and so specified in Section D of the MPL Disclosure Letter. The stock
ledgers and stock transfer books and the minute book records of MPL relating to
all issuances and transfers of stock by MPL and all proceedings of the
stockholders and the Board of Directors and committees thereof of MPL since its
incorporation made available to IAMK are the original stock ledgers and stock
transfer books and minute book records of MPL or exact copies thereof. MPL is
not in violation or breach of, or in default with respect to, any term of its
certificate of incorporation or articles of association (or the comparable
charter document, if any, under applicable law).
12
(h) Employees.
(i) MPL does not have, or contribute to, any pension,
profit-sharing, option, other incentive plan, or any other type of Employee
Benefit Plan or has any obligation to or customary arrangement with employees
for bonuses, incentive compensation, vacations, severance pay, sick pay, sick
leave, insurance, service award, relocation, disability, tuition refund, or
other benefits, whether oral or written, except as set forth in Section E of the
MPL Disclosure Letter. MPL has furnished to IAMK true and correct copies, of all
documents evidencing plans, obligations, or arrangements referred to in Section
E of the MPL Disclosure Letter (or true and correct written summaries of such
plans, obligations, or arrangements to the extent not evidenced by documents)
and true and correct copies, so initialed, of all documents evidencing trusts,
summary plan descriptions, and any other summaries or descriptions relating to
any such plans.
(ii) Section E of the MPL Disclosure Letter contains a true
and correct statement of the names, relationship with MPL, present rates of
compensation (whether in the form of salary, bonuses, commissions, or other
supplemental compensation now or hereafter payable), and aggregate compensation
for the fiscal year ended December 31, 2003 of (A) each director, officer, or
other employee of MPL whose aggregate compensation for the fiscal year ended
December 31, 2003 exceeded US$25,000 or whose aggregate compensation presently
exceeds the rate of US$25,000 per annum and (B) all sales agents, dealers, or
distributors of MPL. Since December 31, 2003, MPL has not changed the rate of
compensation of any of its directors, officers, employees, agents, dealers, or
distributors, nor has any Employee Benefit Plan or program of MPL been
instituted or amended to increase benefits thereunder.
(i) Patents, Trademarks, Et Cetera. MPL does not own or have pending,
and is not licensed or otherwise permitted to use, any material Intangible,
other than as described in Section C of the MPL Disclosure Letter. Each
Intangible is validly issued and is currently in force and uncontested in all
jurisdictions in which it is used or in which such use is contemplated. Section
C of the MPL Disclosure Letter contains a true and correct listing of: (i) all
Intangibles which are owned (either in whole or in part), used by, or licensed
to MPL or which otherwise relate to the businesses of MPL, and a description of
each such Intangible which identifies its owner, registrant, or applicant; (ii)
all contracts, agreements, instruments, leases, and licenses and identification
of all parties thereto under which MPL owns or uses any Intangible (whether or
not under license from third parties), together with the identification of the
owner, registrant, or applicant of each such Intangible; (iii) all contracts,
agreements, instruments, leases, and licenses and identification of all parties
thereto under which MPL grants the right to use any Intangible; and (iv) all
validity, infringement, right-to-use, or other opinions of counsel (whether
in-house or outside) which concern the validity, infringement, or enforceability
of any Intangible owned or controlled by a party other than MPL which relates to
the businesses, properties, or assets of MPL. Except as specified in Section C
of the MPL Disclosure Letter: (v) MPL is the sole and exclusive owner or
licensee of, and (other than those licensed by MPL to a third party) has the
right to use, all Intangibles; (vi) no Intangible is subject to any order,
judgment, decree, contract, agreement, instrument, lease, or license restricting
the scope of the use thereof; (vii) during the last five years, MPL has not been
charged with, and has not charged others with, unfair competition, infringement
of any Intangible, or wrongful use of confidential information, trade secrets,
or secret processes; and (viii) MPL is not using any patentable invention,
confidential information, trade secret, or secret process of others. There is no
right under any Intangible necessary to the businesses of MPL as presently
conducted or as it contemplates conducting, except such as are so designated in
Section C of the MPL Disclosure Letter. MPL has not infringed, is not
infringing, and has not received notice of infringement in respect of the
Intangibles or asserted Intangibles of others, nor has MPL been advised by
counsel or others that it is infringing or may infringe the Intangibles or
asserted Intangibles of others if any currently contemplated business activity
is effectuated. To the knowledge of MPL, there is no infringement by others of
Intangibles of MPL. As far as MPL can foresee, there is no Intangible or
asserted Intangible of others that may materially adversely affect the financial
condition, results of operations, businesses, properties, assets, liabilities,
or future prospects of MPL. All contracts, agreements, instruments, leases, and
licenses pertaining to Intangibles to which MPL is a party, or to which any of
its businesses, properties, or assets are subject, are in compliance with all
laws, rules, regulations, orders, judgments, and decrees binding on MPL or to
which any of its businesses, properties, or assets are subject. There is no
trademark, tradename or service mark used by MPL to identify, respectively, its
products, businesses, or services. Neither the MPL Shareholder, any director,
officer, or employee of MPL, any relative or affiliate of the MPL Shareholder or
any such director, officer, or employee, nor any other corporation or enterprise
in which the MPL Shareholder, any such director, officer, or employee, or any
such relative or affiliate had or now has a 5% or greater equity or voting or
other substantial interest, possesses any Intangible which relates to the
businesses of MPL.
13
() Questionable Payments. Neither MPL, nor any director, officer,
agent, employee, or other person associated with, or acting on behalf of, MPL,
nor the MPL Shareholder, has, directly or indirectly: used any corporate funds
for unlawful contributions, gifts, entertainment, or other unlawful expenses
relating to political activity; made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political parties or
campaigns from corporate funds; violated any provision of the Foreign Corrupt
Practices Act of 1977, as amended; or made any bribe, rebate, payoff, influence
payment, kickback, or other unlawful payment.
(k) Authority. MPL has all requisite power and authority to execute,
deliver, and perform this Agreement. All necessary corporate proceedings of MPL
have been duly taken to authorize the execution, delivery, and performance of
this Agreement by MPL. This Agreement has been duly authorized, executed, and
delivered by MPL, constitutes the legal, valid, and binding obligation of MPL,
and is enforceable as to MPL in accordance with its terms. Except as otherwise
set forth in this Agreement, no consent, authorization, approval, order,
license, certificate, or permit of or from, or declaration or filing with, any
federal, state, local, or other governmental authority or any court or other
tribunal is required by MPL for the execution, delivery, or performance of this
Agreement by MPL. No consent of any party to any material contract, material
agreement, instrument, lease, license, arrangement, or understanding to which
MPL is a party, or to which its or any of its businesses, properties, or assets
are subject, is required for the execution, delivery, or performance of this
Agreement (except such consents referred to in Section D of the MPL Disclosure
Letter); and the execution, delivery, and performance of this Agreement will not
(if the consents referred to in Section D of the MPL Disclosure Letter are
obtained prior to the Closing) violate, result in a breach of, conflict with, or
(with or without the giving of notice or the passage of time or both) entitle
any party to terminate or call a default under, entitle any party to receive
rights or privileges that such party was not entitled to receive immediately
before this Agreement was executed under, or create any obligation on the part
of MPL or IAMK to which it was not subject immediately before this Agreement was
executed under, any term of any such material contract, agreement, instrument,
lease, license, arrangement, or understanding, or violate or result in a breach
of any term of the certificate of incorporation or by-laws of MPL (or the
comparable charter documents, if any, under applicable law), or (if the
provisions of this Agreement are satisfied) violate, result in a breach of, or
conflict with any law, rule, regulation, order, judgment, or decree binding on
MPL or to which any of its businesses, properties, or assets are subject. Except
as set forth in Section G of the MPL Disclosure Letter, neither MPL nor any of
its officers, directors, employees, or agents has employed any broker or finder
or incurred any liability for any fee, commission, or other compensation payable
by any person on account of alleged employment as a broker or finder, or alleged
performance of services as a broker or finder, in connection with or as a result
of this Agreement or the other transactions contemplated hereby and in
connection herewith.
(l) Insurance. All policies of fire and other insurance against
casualty and other losses and public liability insurance carried by MPL are
described in Section H of the MPL Disclosure Letter (including the risks covered
and limits of such policies) and are in full force and effect. A full and
complete copy of each such insurance policy has been provided to IAMK, and such
policies are summarized in Section F of the MPL Disclosure Letter. All premiums
in respect of such policies for which premium notices have been received have
been paid in full as the same become due and payable. MPL have not failed to
give any notice or present any claim under any insurance policy in due and
timely fashion. There are no actual claims or claims threatened in writing
against MPL which could come within the scope of such coverage nor are any such
policies currently threatened with cancellation. There are no outstanding
requirements or recommendations by any insurance company that issued a policy
with respect to any of the respective assets, the businesses, or operations of
MPL or by any Board of Fire Underwriters or other body exercising similar
functions or by any governmental authority requiring or recommending any repairs
or other work to be done on, or with respect to, any of the respective assets of
MPL or requiring or recommending any equipment or facilities to be installed on
any premises from which the respective businesses of MPL is conducted or in
connection with any of the respective assets thereof. MPL does not have any
knowledge of any material proposed increase in applicable insurance rates or of
any conditions or circumstances applicable to the respective businesses thereof
that might result in such increases. No such policy is terminable by virtue of
the transactions contemplated by this Agreement.
14
(m) Business Conducted in No Other Name. Subject to the next sentence,
all business of MPL has been conducted in its and for their benefit and there
are no parties related or affiliated with MPL, either directly or indirectly,
which are competing for the business of MPL.
(n) Customers and Suppliers. There has been no termination or
cancellation of any relationship between MPL and any material supplier, or any
customer or group of customers which, individually or in the aggregate,
represented more than five (5%) percent of the gross revenues of MPL taken as a
whole during the year ended December 31, 2003, nor is there any reason to
believe that any such terminations or cancellations of such magnitudes are
pending or threatened.
() Completeness of Disclosure. No representation or warranty by MPL in
this Agreement contains, or at the Closing Date will contain, an untrue
statement of material fact or omits or at the Closing Date will omit to state a
material fact required to be stated therein or necessary to make the statements
made not misleading.
(p) Compliance with Law and Government Regulations. MPL is in
compliance in all material respects with, and is not in violation of, applicable
local or foreign statutes, laws and regulations (including without limitation,
any applicable building, zoning or other law, ordinance or regulation) affecting
its properties or the operation of its business. MPL is not subject to any
order, decree, judgment or other sanction of any court, administrative agency or
other tribunal.
Section 2.03 Representations and Warranties of the MPL Shareholder. The
MPL Shareholder hereby represents and warrants to, and agrees with, IAMK as
follows:
(a) Representations and Warranties of MPL. To the knowledge of the MPL
Shareholder, the representations and warranties of MPL set forth in Section 2.02
hereof are true and correct in all material respects. Nothing has come to the
attention of the MPL Shareholder that would lead the MPL Shareholder to believe
that any representation or warranty of MPL set forth on Section 2.02 hereof is
untrue or incorrect in any material respect.
(b) Authority. MPL and the MPL Shareholder have each approved this
Agreement and duly authorized the execution and delivery hereof. The MPL
Shareholder has full power and authority under the laws thereof to execute,
deliver, and perform this Agreement and the transactions contemplated hereby and
in connection herewith.
(c) Ownership of Shares. The MPL Shareholder owns beneficially all of
the shares of MPL Capital Stock. The MPL Shareholder has full power and
authority to transfer such shares of MPL Capital Stock to IAMK under, pursuant
to, and in accordance with, this Agreement, and such shares are free and clear
of any liens, charges, mortgages, pledges or encumbrances and such shares are
not subject to any claims as to the ownership thereof, or any rights, powers or
interest therein, by any third party and are not subject to any preemptive or
similar rights of stockholders.
(d) Investment Representations and Covenants.
(i) The MPL Shareholder represents that it is acquiring the
shares of IAMK Common Stock to be issued pursuant to Section 1.02(a) hereof for
its own account and for investment only and not with a view to distribution or
resale thereof within the meaning of such phrase as defined under the Securities
Act. The MPL Shareholder shall not dispose of any part or all of such shares of
IAMK Common Stock in violation of the provisions of the Securities Act and the
rules and regulations promulgated under the Securities Act by the SEC and all
applicable provisions of state securities laws and regulations.
(ii) The certificate or certificates representing the shares
of IAMK Common Stock shall bear a legend in substantially the form set forth
in Section 1.02(c) hereof.
(iii) The MPL Shareholder acknowledges being informed that the
shares of IAMK Common Stock to be issued pursuant to Section 1.02(a) hereof
shall be unregistered, shall be "restricted securities" as defined in
paragraph (a) of Rule 144 under the Securities Act, and must be held
indefinitely unless (a) they are subsequently registered under the Securities
Act, or (b) an exemption from such registration is available. The MPL
Shareholder further acknowledges that IAMK does not have an obligation to
currently register such securities for the account of MPL Shareholder.
(iv) The MPL Shareholder acknowledges that it has been
afforded access to all material information which they have requested relevant
to its decision to acquire the shares of IAMK Common Stock and to ask
questions of IAMK's management and that, except as set forth herein, neither
IAMK nor anyone acting on behalf of IAMK has made any representations or
warranties to the MPL Shareholder which have induced, persuaded, or stimulated
the MPL Shareholder to acquire such shares of IAMK Common Stock.
(v) Either alone, or together with their investment
advisor(s), the MPL Shareholder has the knowledge and experience in financial
and business matters to be capable of evaluating the merits and risks of the
prospective investment in the shares of IAMK Common Stock, and the MPL
Shareholder is and will be able to bear the economic risk of the investment in
such shares of IAMK Common Stock.
15
ARTICLE III
COVENANTS
Section 3.01 Covenants of IAMK. IAMK covenants and agrees that, after
the date hereof and through the earlier of the Closing or the date of the
termination of this Agreement pursuant to Article IV hereof (the earlier of such
times, the "Release Time"), unless MPL will otherwise approve in writing, which
approval will not be unreasonably withheld:
(a) (i) Until the Release Time, no dividend or liquidating or other
distribution or stock split shall be authorized, declared, paid, or effected by
IAMK in respect of the outstanding shares of IAMK Common Stock.
(ii) Until the Release Time, no share of capital stock of IAMK
or warrant for any such share, right to subscribe to or purchase any such share,
or security convertible into, or exchangeable or exercisable for, any such
share, shall be issued or sold by IAMK.
(b) Until the Release Time, IAMK will afford the officers, directors,
employees, counsel, agents, investment bankers, accountants, and other
representatives of MPL and the MPL Shareholder free and full access to the
plants, properties, books, and records of IAMK. IAMK will permit them to make
extracts from and copies of such books and records, and will from time to time
furnish MPL and the MPL Shareholder with such additional financial and operating
data and other information as to the financial condition, results of operations,
businesses, properties, assets, liabilities, or future prospects of IAMK as MPL
or the MPL Shareholder from time to time may request. Until the Release Time,
IAMK will cause the independent certified public accountants of IAMK to make
available to MPL, its independent certified public accountants, and the MPL
Shareholder, the work papers relating to the audits of IAMK referred to in
Section 2.01(c) of this Agreement.
(c) Until the Release Time, IAMK will conduct its affairs, so that on
the Closing Date, no representation or warranty of IAMK will be inaccurate or
misleading, no covenant or agreement of IAMK will be breached, and no condition
in this Agreement will remain unfulfilled by reason of the actions or omissions
of IAMK. Except as otherwise consented to by MPL in writing, until the Release
Time, IAMK will conduct its affairs in all respects only in the ordinary course.
(d) Until the Release Time, IAMK will immediately advise MPL in a
detailed written notice of any material fact or occurrence or any pending or
threatened material occurrence of which it obtains knowledge and which (if
existing and known at the date of the execution of this Agreement) would have
been required to be set forth or disclosed in or pursuant to this Agreement or
in the IAMK Disclosure Letter, which (if existing and known at any time prior to
or at the Closing) would make the performance by any party of a covenant
contained in this Agreement impossible or make such performance materially more
difficult than in the absence of such fact or occurrence, or which (if existing
and known at the time of the Closing) would cause a condition to any party's
obligations under this Agreement not to be fully satisfied.
(e) IAMK shall use its commercially reasonable efforts to insure that
all confidential information which IAMK or any of its officers, directors,
employees, counsel, agents, investment bankers, or accountants may now possess
or may hereafter create or obtain relating to the financial condition, results
of operations, businesses, properties, assets, liabilities, or future prospects
of MPL, any affiliate of MPL, or any customer or supplier of MPL or any such
affiliate shall not be published, disclosed, or made accessible by any of them
to any other person or entity without the prior written consent of MPL, which
written consent shall not be unreasonably withheld; provided, however, that the
restrictions of this sentence shall not apply (i) as may otherwise be required
by law, (ii) as may be necessary or appropriate in connection with the
enforcement of this Agreement, or (iii) to the extent the information shall have
otherwise become publicly available. IAMK shall, and shall cause all other such
persons and entities to, deliver to MPL all tangible evidence of the
confidential information relating to MPL, any affiliate of MPL, or (insofar as
such confidential information was provided by, or on behalf of, MPL, or any such
affiliate of MPL) any customer or supplier of any of them or any such affiliate
to which the restrictions of the foregoing sentence apply immediately after the
termination of this Agreement pursuant to Article IV or V hereof.
(f) Before IAMK releases any information concerning this Agreement or
any of the other transactions contemplated hereby or in connection herewith
which is intended for or may result in public dissemination thereof, IAMK shall
cooperate with MPL, shall furnish drafts of all documents or proposed oral
statements to MPL for comment, and shall not release any such information
without the written consent of MPL. Nothing contained herein shall prevent IAMK
from releasing any information if required to do so by law.
(g) IAMK shall not make any agreement or reach any understanding not
approved in writing by MPL as a condition for obtaining any consent,
authorization, approval, order, license, certificate, or permit required for the
consummation of the transactions contemplated by this Agreement.
(h) IAMK shall promptly prepare all required or, in the reasonable
opinion of the parties hereto, appropriate Periodic Reports (as hereinafter
defined) and other regulatory filings relating to this Agreement and the
transactions contemplated hereby and in connection herewith. IAMK shall furnish
or cause to be furnished, for inclusion in the Periodic Reports, such
information about IAMK, and IAMK's security holders as may be required or as may
be reasonably requested by MPL, and shall continue to furnish or cause to be
furnished such information as is necessary to keep such information correct and
complete in all material respect until the Release Time. IAMK represents and
warrants that the information that it has furnished to date, taken as a whole,
does not now, and will not at any time prior to the Release Time, (i) contain an
untrue or misleading statement of fact or (ii) omit to state a fact required to
be stated therein or necessary to make the statements therein not false or
misleading. IAMK shall take any action required to be taken by it under state
"blue-sky," securities, or take-over laws in connection with the issuance of
IAMK Common Stock pursuant to the transactions contemplated hereby and in
connection herewith. The filings made by IAMK within the past six years with the
SEC were, if filed under the Exchange Act, prepared in accordance with the then
existing requirements of the Exchange Act and the rules and regulations
thereunder and, if filed under the Securities Act, prepared in accordance with
the then existing requirements of the Securities Act and the rules and
regulations thereunder. Such filings when filed, and the press releases and
other public statements IAMK has made subsequent to the last such filing when
considered together with such filings, did not at the time of filing or issuance
of the press releases or other public statements, as the case may be, and (with
respect to the press releases and other public statements, when considered
together with such filings) do not now (i) contain an untrue statement of a
material fact or (ii) omit to state a material fact required to be stated
therein or necessary to make the statements therein not false or misleading.
16
(i) If, prior to the Release Time, IAMK Common Stock shall be
recapitalized or reclassified or IAMK shall effect any stock dividend, stock
split, or reverse stock split of IAMK Common Stock, then the shares of IAMK
Common Stock to be delivered under this Agreement or upon exercise, conversion,
or exchange of any security to be delivered under this Agreement or assumed by
IAMK as contemplated by this Agreement shall be appropriately and equitably
adjusted to the kind and amount of shares of stock and other securities and
property to which the holders of such shares of IAMK Common Stock or such other
security would have been entitled to receive had such stock or such other
security been issued and outstanding as of the record date for determining
stockholders entitled to participate in such corporate event.
(j) IAMK shall timely prepare and file any declaration or filing
necessary to comply with any transfer tax statutes that require any such filing
before the Closing.
(k) Until the Release Time, IAMK shall not, and shall not authorize or
permit any officer, director, employee, counsel, agent, investment banker,
accountant, or other representative of IAMK, directly or indirectly, to
contemplate or enter into any transaction the effect of which may be to
prohibit, restrict, or delay the consummation of the transactions contemplated
by this Agreement or impair the contemplated benefits to IAMK's stockholders of
the transactions contemplated by this Agreement.
(l) (i) Following the consummation of the transactions contemplated
hereby and in connection herewith, IAMK will cause MPL to continue its historic
business or to use a significant portion of MPL's historic business assets in a
business, in each case within the meaning of section 1.368-1(d) of the Treasury
Regulations, assuming that the assets of, and the business conducted by, MPL at
the Closing Date constitute MPL's historic business assets and historic
business, respectively.
(ii) Following the consummation of the transactions
contemplated hereby and in connection herewith, IAMK will not permit MPL to
issue additional shares that would result in IAMK losing control of MPL within
the meaning of section 368(c) of the Code.
(m) IAMK shall use best efforts to file, within 30 days following the
Closing, with the National Association of Securities Dealers, Inc., or its
affiliates, all information required by Rule 15c2-11 under the Exchange Act,
if required.
(n) Prior to the Closing, IAMK shall cause its certificate and articles
of incorporation to be amended as follows: (i) to cause the corporate name
thereof to be changed to a name nominated by MPL or MPL Shareholder; (ii) to
reverse split the number of shares of IAMK common stock to 9,027,777 shares;
(iii) to increase the number of shares of IAMK Common Stock authorized
thereunder to 200,000,000 shares.
(o) Effective at the Closing, each member of the Board of Directors of
IAMK shall tender his or her respective resignation therefrom and shall
appoint such individuals as MPL may nominate and notified to IAMK as directors
of IAMK.
(p) On or prior to the Closing Date, IAMK shall deliver to MPL and the
MPL Shareholder the completed IAMK Disclosure Letter, which letter shall be
correct and complete in all material respects and in the agreed form between
the parties hereto.
(q) In addition to the shares of IAMK Common Stock to be delivered
pursuant to Sections 1.02(a) and 1.03(a) hereof, 5,195,000 new shares of IAMK
Common Stock shall be issued and delivered in certificated form at the Closing
to, or to the order of, the following: (i) 3,428,700 shares to Orient
Financial Services Limited; (ii) 1,766,300 shares to Emerging Growth Partners,
Inc.
(r) As soon as reasonably practical following the Closing, IAMK shall
apply to have the IAMK Common Stock listed upon the American Stock Exchange or
included for quotation on the Nasdaq Stock Market.
(s) Existing affiliate shareholders of IAMK shall agree to place in
escrow and exchange, on the 91st day following the Closing, 3,000,000
restricted common shares held in excess of two years for 3,000,000 newly
issued restricted common shares issued to MPL's financial advisors, Emerging
Growth Partners, Inc. and Orient Financial Services, Ltd.
Section 3.02 Covenants of MPL. MPL covenants and agrees that, after the
date hereof and through the Release Time, unless IAMK will otherwise approve in
writing, which approval will not be unreasonably withheld or delayed:
(a) Until the Release Time, no amendment will be made in the
certificate of incorporation or articles of association (or, in each case, the
comparable charter documents, if any, under applicable law) of MPL.
(b) Until the Release Time, no share of MPL Capital Stock, option or
warrant for any such share, right to subscribe to or purchase any such share, or
security convertible into, or exchangeable or exercisable for, any such share,
shall be issued or sold by MPL, otherwise than as contemplated by, or in
connection with, this Agreement.
(c) Until the Release Time, no dividend or liquidating or other
distribution or stock split shall be authorized, declared, paid, or effected by
MPL in respect of the outstanding shares of MPL Capital Stock. Until the Release
Time, no direct or indirect redemption, purchase, or other acquisition shall be
made by MPL of shares of MPL Capital Stock.
(d) Until the Release Time, except in the ordinary course of its
business, MPL shall not borrow money, guarantee the borrowing of money, engage
in any transaction, or enter into any material agreement other than in
connection with the transactions contemplated hereby or in connection herewith
or otherwise pursuant to any currently outstanding credit line of MPL. For
purposes of this Agreement and unless otherwise defined, references to
"material", as well as correlative terms (e.g., materially, materiality, etc.),
shall be deemed to refer to amounts of US$50,000 or more or effects or
consequences of US$50,000 or more.
17
(e) Until the Release Time, MPL will afford the officers, directors,
employees, counsel, agents, investment bankers, accountants, and other
representatives of IAMK and lenders, investors, and prospective lenders and
investors free and full access to the plants, properties, books, and records of
MPL, will permit them to make extracts from and copies of such books and
records, and will from time to time furnish IAMK with such additional financial
and operating data and other information as to the financial condition, results
of operations, businesses, properties, assets, liabilities, or future prospects
of MPL as IAMK from time to time may request. Until the Release Time, MPL will
cause the independent certified public accountants of MPL to make available to
IAMK and its independent certified public accountants the work papers relating
to the audits of MPL referred to in Section 2.02(c) of this Agreement.
(f) Until the Release Time, MPL will conduct its affairs so that at the
Closing, no representation or warranty of MPL will be inaccurate in any material
respect, no covenant or agreement of MPL will be breached, and no condition in
this Agreement will remain unfulfilled by reason of the actions or omissions of
MPL. Except as otherwise consented to by IAMK in writing, until the Release
Time, MPL will use its best efforts to preserve the business operations of MPL
intact, to keep available the services of its present personnel, to preserve in
full force and effect the contracts, agreements, instruments, leases, licenses,
arrangements, and understandings of MPL, and to preserve the good will of its
suppliers, customers, and others having business relations with any of them.
(g) Until the Release Time, MPL will immediately advise IAMK in a
detailed written notice of any material fact or occurrence or any pending or
threatened material occurrence of which it obtains knowledge and which (if
existing and known at the date of the execution of this Agreement) would have
been required to be set forth or disclosed in or pursuant to this Agreement or
the MPL Disclosure Letter, which (if existing and known at any time prior to or
at the Closing) would make the performance by any party of a covenant contained
in this Agreement impossible or make such performance materially more difficult
than in the absence of such fact or occurrence, or which (if existing and known
at the time of the Closing) would cause a condition to any party's obligations
under this Agreement not to be fully satisfied.
(h) MPL shall use its commercially reasonable efforts to insure that
all confidential information which MPL or any of its respective officers,
directors, employees, counsel, agents, investment bankers, or accountants may
now possess or may hereafter create or obtain relating to the financial
condition, results of operations, businesses, properties, assets, liabilities,
or future prospects of IAMK, any affiliate thereof, or any customer or supplier
thereof or of any such affiliate shall not be published, disclosed, or made
accessible by any of them to any other person or entity at any time or used by
any of them except in the ordinary course of business and for the benefit of
MPL; provided, however, that the restrictions of this sentence shall not apply
(A) after this Agreement is terminated pursuant to Article IV or V hereof or
otherwise, (B) as may otherwise be required by law, (C) as may be necessary or
appropriate in connection with the enforcement of this Agreement, or (D) to the
extent the information shall have otherwise become publicly available.
(i) Before MPL releases any information concerning this Agreement or
any of the transactions contemplated by this Agreement which is intended for, or
may result in, public dissemination thereof, MPL shall cooperate with IAMK,
shall furnish drafts of all documents or proposed oral statements to IAMK for
comment, and shall not release any such information without the written consent
of IAMK, which consent shall not be unreasonably withheld. Nothing contained
herein shall prevent MPL from releasing any information if required to do so by
law or by regulatory bodies in Hong Kong including The Stock Exchange of Hong
Kong Limited and the Hong Kong Securities and Futures Commission.
(j) MPL shall not make any agreement or reach any understanding not
approved in writing by IAMK as a condition for obtaining any consent,
authorization, approval, order, license, certificate, or permit required for the
consummation of the transactions contemplated by this Agreement.
(k) MPL shall so far as is reasonably required by law or relevant
regulations and not in contravention of any laws or regulations of any
applicable jurisdiction furnish, or cause to be furnished, for inclusion in the
periodic and other reports of IAMK on Forms 8-K, 10-QSB, 10-KSB, 14C, 14F-1, or
otherwise (such periodic and other reports, together with all financial
statements, exhibits, amendments, and supplements thereto, in the form filed by
IAMK with the SEC being hereinafter referred to as the "Periodic Reports"), to
be filed pursuant to the Exchange Act in connection with the transactions
contemplated by this Agreement, or for inclusion in IAMK's filings under state
"blue-sky," securities, or take-over laws, such information about MPL or the MPL
Shareholder as may be required or as may be reasonably requested by IAMK, and
shall continue to furnish or cause to be furnished such information as is
necessary to keep such information correct and complete in all material respect
until the Release Time. MPL represents and warrants that the information that it
has furnished to date, taken as a whole, does not now, and will not at any time
prior to the Release Time, (i) contain an untrue statement of a material fact or
(ii) omit to state a material fact required to be stated therein or necessary to
make the statements therein not false or misleading.
18
(l) MPL shall timely prepare and file any declaration or filing
necessary to comply with any transfer tax statutes that require any such filing
before the Closing.
(m) On or prior to the Closing Date, MPL and the MPL Shareholder shall
deliver to IAMK the completed MPL Disclosure Letter, which letter shall be
correct and complete in all material respects.
Section 3.03 Covenants of the MPL Shareholder. The MPL Shareholder
covenants and agrees that, after the date hereof and through the Release Time,
unless IAMK will otherwise approve in writing, which approval will not be
unreasonably withheld, as follows:
(a) The MPL Shareholder will use best efforts to cause MPL to perform
each covenant thereof set forth herein on a timely basis.
(b) Until the earlier of the Release Time, the MPL Shareholder shall
take no action the result of which shall be to cause MPL to make any amendment
in the certificate of incorporation or articles of association (or, in each
case, the comparable charter documents, if any, under applicable law) thereof.
(c) Before the MPL Shareholder release any information concerning this
Agreement or any of the transactions contemplated by this Agreement which is
intended for, or may result in, public dissemination thereof, the MPL
Shareholder shall cooperate with IAMK, shall furnish drafts of all documents or
proposed oral statements to IAMK for comment, and shall not release any such
information without the written consent of IAMK, which consent shall not be
unreasonably withheld. Nothing contained herein shall prevent the MPL
Shareholder from releasing any information if required to do so by law or by
regulatory bodies in Hong Kong including The Stock Exchange of Hong Kong Limited
and the Hong Kong Securities and Futures Commission.
(d) The MPL Shareholder shall furnish, or cause to be furnished, for
inclusion in the Periodic Reports to be filed pursuant to the Exchange Act in
connection with the transactions contemplated by this Agreement, or for
inclusion in IAMK's filings under state "blue-sky," securities, or take-over
laws, such information about MPL or the MPL Shareholder as may be required or as
may be reasonably requested by IAMK, and shall continue to furnish or cause to
be furnished such information as is necessary to keep such information correct
and complete in all material respect until the Release Time. The MPL Shareholder
represents and warrants that the information in writing that they have furnished
to date regarding themselves, taken as a whole, do not now, and will not at any
time prior to the Release Time, (i) contain an untrue statement of a material
fact or (ii) omit to state a material fact required to be stated therein or
necessary to make the statements therein not false or misleading.
ARTICLE IV
CONDITIONS; ABANDONMENT AND TERMINATION
Section 4.01 Right of IAMK to Abandon. IAMK's Board of Directors shall
have the right to abandon or terminate this Agreement if any of the following
conditions shall not be true or shall not have occurred, as the case may be, as
of the specified date or dates:
(a) All representations and warranties of MPL and the MPL Shareholder
contained in this Agreement shall be accurate when made and, in addition, shall
be accurate as of the Closing Date as though such representations and warranties
were then made in exactly the same language by MPL or the MPL Shareholder, as
applicable, and regardless of knowledge or lack thereof on the part of MPL or
the MPL Shareholder (as applicable) or changes beyond its control; as of the
Closing Date, MPL and the MPL Shareholder shall have performed and complied with
all covenants and agreements and satisfied all conditions required to be
performed and complied with by it at or before the Closing Date, respectively,
by this Agreement; and IAMK shall have received a certificate executed by the
chief executive officer and the chief financial officer of MPL and the MPL
Shareholder, dated the Closing Date, to that effect.
(b) MPL and the MPL Shareholder shall have delivered to IAMK at or
prior to the Closing Date such other documents (including certificates of
officers of MPL) as IAMK may reasonably request in order to enable IAMK to
determine whether the conditions to their obligations under this Agreement have
been met and otherwise to carry out the provisions of this Agreement.
(c) All actions, proceedings, instruments, and documents required by
MPL and the MPL Shareholder to carry out this Agreement or incidental thereto
and all other related legal matters shall be subject to the reasonable approval
of counsel to IAMK, and MPL and the MPL Shareholder shall have furnished such
counsel such documents as such counsel may have reasonably requested for the
purpose of enabling them to pass upon such matters.
(d) At the Closing, there shall not be pending any legal proceeding
relating to, or seeking to prohibit or otherwise challenge the consummation of,
the transactions contemplated by this Agreement, or to obtain substantial
damages with respect thereto.
(e) There shall not have been any action taken, or any law, rule,
regulation, order, judgment, or decree proposed, promulgated, enacted, entered,
enforced, or deemed applicable to the transactions contemplated by this
Agreement by any federal, state, local, or other governmental authority or by
any court or other tribunal, including the entry of a preliminary or permanent
injunction, which, in the reasonable judgment of IAMK, (i) makes this Agreement
or any of the transactions contemplated by this Agreement illegal, (ii) results
in a delay in the ability of MPL or IAMK to consummate the transactions
contemplated by this Agreement beyond December 20, 2004, (iii) requires the
divestiture by IAMK of a material portion of the business of either IAMK or of
MPL, (iv) imposes material limitations on the ability of IAMK effectively to
exercise full rights of ownership of shares of MPL including the right to vote
such shares on all matters properly presented to the MPL Shareholder, or (v)
otherwise prohibits, restricts, or delays consummation of the transactions
contemplated by this Agreement or impairs the contemplated benefits to IAMK of
this Agreement or any of the other transactions contemplated by this Agreement.
19
(f) The parties to this Agreement shall have obtained at or prior to
the Closing Date all unconditional written approval to this Agreement and to the
execution, delivery, and performance of this Agreement by each of them of
relevant governmental authorities having jurisdiction over IAMK or MPL or the
subject matter of this Agreement.
(g) The parties to this Agreement shall have obtained at or prior to
the Closing Date all consents required for the consummation of the transactions
contemplated by this Agreement from any unrelated third party to any contract,
agreement, instrument, lease, license, arrangement, or understanding to which
any of them is a party, or to which any of them or any of their respective
businesses, properties, or assets are subject.
(h) There shall not have been any material adverse change in the
condition (financial or otherwise), operations, business, assets, liabilities,
earnings or prospects of MPL since the date hereof.
(i) IAMK shall conduct a due diligence review of MPL and the MPL
Shareholder, including, without limitation, a review of the MPL Disclosure
Letter and the documents referenced therein delivered prior to the Closing Date,
and shall be reasonably satisfied with the result of such review.
Section 4.02 Right of MPL and the MPL Shareholder to Abandon. By the
election of the MPL Shareholder, the MPL Shareholder or, otherwise, MPL's Board
of Directors shall have the right to abandon or terminate this Agreement if any
of the following conditions shall not be true or shall not have occurred, as the
case may be, as of the specified date or dates:
(a) All representations and warranties of IAMK contained in this
Agreement shall be accurate when made and, in addition, shall be accurate as of
the Closing Date as though such representations and warranties were then made in
exactly the same language by IAMK and regardless of knowledge or lack thereof on
the part of IAMK or changes beyond its control; as of the Closing Date, IAMK
shall have performed and complied with all covenants and agreements and
satisfied all conditions required to be performed and complied with by them at
or before the Closing Date by this Agreement; and MPL shall have received
certificates executed by the chief executive officer and the chief financial
officer of IAMK, dated the Closing Date, to that effect.
(b) MPL shall have received at the Closing, certificates executed by
the chief executive officer and the chief financial officer of IAMK, dated as of
such dates, to the effect that they have carefully examined the Periodic
Reports, and any amendment or supplement thereto, and, to the best of their
knowledge, (i) neither any Periodic Report, nor any amendment or supplement
thereto (A) contains an untrue statement of a material fact or (B) omits to
state a material fact required to be stated therein or necessary to make the
statements therein not false or misleading, provided in each case that such
untrue statement or omission relates to information furnished by or on behalf
of, or pertaining to, IAMK or any IAMK security holder, (ii) since the date of
the filing of any Periodic Report, no event with respect to IAMK or any IAMK
security holder has occurred which should have been set forth in an amendment or
a supplement to such Periodic Report which has not been set forth in such an
amendment or supplement, (iii) any contract, agreement, instrument, lease, or
license regarding IAMK required to be filed as an exhibit to any Periodic Report
has been filed as an exhibit to or has been incorporated as an exhibit by
reference into such Periodic Report, and (iv) to the effect of clause (k) of
this Section 4.02.
(c) IAMK shall have delivered to MPL and the MPL Shareholder at or
prior to the Closing such other documents (including certificates of officers of
IAMK) as MPL and the MPL Shareholder may reasonably request in order to enable
MPL and the MPL Shareholder to determine whether the conditions to IAMK's
obligations under this Agreement have been met and otherwise to carry out the
provisions of this Agreement.
(d) All actions, proceedings, instruments, and documents required by
IAMK to carry out this Agreement or incidental thereto and all other related
legal matters shall be subject to the reasonable approval of counsel to MPL and
the MPL Shareholder, and IAMK shall have furnished such counsel such documents
as such counsel may have reasonably requested for the purpose of enabling them
to pass upon such matters.
(e) At the Closing Date, there shall not be pending any legal
proceeding relating to, or seeking to prohibit or otherwise challenge the
consummation of, the transactions contemplated by this Agreement, or to obtain
substantial damages with respect thereto.
(f) There shall not have been any action taken, or any law, rule,
regulation, order, judgment, or decree proposed, promulgated, enacted, entered,
enforced, or deemed applicable to the transactions contemplated by this
Agreement by any federal, state, local, or other governmental authority or by
any court or other tribunal, including the entry of a preliminary or permanent
injunction, which, in the reasonable judgment of MPL or the MPL Shareholder, (i)
makes this Agreement or any of the transactions contemplated by this Agreement
illegal, (ii) results in a delay in the ability of IAMK or MPL to consummate any
of the transactions contemplated by this Agreement beyond December 20, 2004, or
(iii) otherwise prohibits, restricts, or delays consummation of the other
transactions contemplated by this Agreement or impairs the contemplated benefits
to the MPL Shareholder of this Agreement or any of the transactions contemplated
by this Agreement.
(g) The parties to this Agreement shall have obtained at or prior to
the Closing Date all unconditional written approval to this Agreement and to the
execution, delivery, and performance of this Agreement by each of them of
relevant governmental authorities having jurisdiction over IAMK or MPL or the
subject matter of this Agreement.
(h) At or prior to the Closing Date, IAMK shall have made all filings,
and taken all actions, necessary to comply with all reporting requirements under
federal and state securities laws (including without limitation, applicable
"blue-sky" laws with regard to the issuance of IAMK Common Stock as contemplated
by this Agreement) other than the filing of Form D up to 15 days following the
Closing. Without limiting the generality of the foregoing, any prescribed
periods within which a "blue sky" or securities law administrator may disallow
IAMK's notice of reliance on an exemption from such state's requirements, shall
have elapsed at or prior to the Closing Date.
20
(i) The parties to this Agreement shall have obtained at or prior to
the Closing Date all consents required for the consummation of the transactions
contemplated by this Agreement from any unrelated third party to any contract,
agreement, instrument, lease, license, arrangement, or understanding to which
any of them is a party, or to which any of them or any of their respective
businesses, properties, or assets are subject.
(j) MPL and the MPL Shareholder shall conduct a due diligence review of
IAMK, including, without limitation, a review of the IAMK Disclosure Letter and
the documents referenced therein delivered prior to the Closing Date, and same
shall be satisfactory in the reasonable opinion of MPL and the MPL Shareholder.
(k) At the Closing Date, IAMK shall have no assets and no liabilities,
determined in accordance with generally accepted accounting principles in effect
in the United States applied on a basis consistent with that of the financial
statements of IAMK hereinabove referenced.
(l) At or prior to the Closing Date, all holders of 5% or more of the
outstanding IAMK Common Stock immediately prior to such date shall have executed
and delivered to MPL the escrow agreement substantially in the form of Exhibit
4.02(l) hereto, and shall have deposited into the escrow created thereby an
aggregate of 6,000,000 shares of IAMK Common Stock beneficially owned thereby
that are "restricted securities" as defined in Rule 144 under the Securities
Act, that have been held thereby for at least two years.
(m) At or prior to the Closing Date, the officers, directors, and
holders of 5% or more of the outstanding IAMK Common Stock immediately prior to
such date shall have executed and delivered to MPL an agreement mutually
acceptable in form and substance to each of such person or entity, on the one
hand, and MPL, on the other hand, providing for restrictions on resale and a
"leak-out" of securities following the Closing Date.
Section 4.03 Optional Abandonment. In addition to the provisions of
Section 4.01 and Section 4.02 above, the transactions contemplated by this
Agreement may be abandoned or terminated at or before the Closing
notwithstanding adoption and approval of this Agreement and the transactions
contemplated hereby by the stockholders of the parties hereto:
(a) by mutual agreement of the Boards of Directors of IAMK and MPL
Shareholder;
(b) at the option of IAMK's Board of Directors or MPL Shareholder, if
the Closing Date shall not have occurred on or before December 20, 2004 (or such
later date as the parties may agree);
(c) at the option of IAMK's Board of Directors, if facts exist which
render impossible compliance with one or more of the conditions set forth in
Section 4.01 and such are not waived by IAMK; and
(d) at the option of MPL Shareholder if facts exist which render
impossible compliance with one or more of the conditions set forth in Section
4.02 and such are not waived by MPL Shareholder.
Section 4.04 Effect of Abandonment. If the transactions contemplated by
this Agreement are abandoned or terminated as provided for in this Article IV,
except for Sections 3.01(e), 3.02(h), 4.01, 4.02 and 4.03, this Agreement shall
forthwith become wholly void and of no further force or effect without liability
on the part of either party to this Agreement or on the part of any officer,
director, controlling person (if any), employee, counsel, agent, or stockholder
thereof; provided, however, that nothing in this Section 4.04 shall release IAMK
or MPL or any officer, director, controlling person (if any), employee, counsel,
agent, or stockholder thereof from liability for a willful failure to carry out
its respective obligations under this Agreement.
21
ARTICLE V
MISCELLANEOUS
Section 5.01 Expenses. Whether or not the transactions contemplated in
this Agreement are consummated, all costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby, will be paid by
the party incurring such expense or as otherwise agreed to herein.
Section 5.02 Brokers and Finders. Each of the parties hereto
represents, as to itself, that no agent, broker, investment banker or firm or
person is or will be entitled to any broker's or finder's fee or any other
commission or similar fee in connection with any of the transactions
contemplated by this Agreement, except as may be otherwise set forth herein or
by separate document.
Section 5.03 Necessary Actions. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use all reasonable efforts
to take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement.
In the event at any time after the Closing, any further action is necessary or
desirable to carry out the purposes of this Agreement, the proper executive
officers and/or directors of IAMK or MPL, as the case may be, or the relevant
MPL Shareholder or MPL Shareholder will take all such necessary action.
Section 5.04 Extension of Time; Waivers. At any time prior to
the Closing Date:
(a) IAMK may (i) extend the time for the performance of any of the
obligations or other acts of MPL or any MPL Shareholder or MPL Shareholder, (ii)
waive any inaccuracies in the representations and warranties of MPL or any MPL
Shareholder or MPL Shareholder, or contained herein or in any document delivered
pursuant hereto by MPL or any MPL Shareholder or MPL Shareholder, and (iii)
waive compliance with any of the agreements or conditions contained herein to be
performed by MPL or any MPL Shareholder or MPL Shareholder. Any agreement on the
part of IAMK to any such extension or waiver will be valid only if set forth in
an instrument, in writing, signed on behalf of IAMK.
(b) MPL and the MPL Shareholder (by action of the MPL Shareholder), may
(i) extend the time for the performance of any of the obligations or other acts
of IAMK, (ii) waive any inaccuracies in the representations and warranties of
IAMK contained herein or in any document delivered pursuant hereto by IAMK and
(iii) waive compliance with any of the agreements or conditions contained herein
to be performed by IAMK. Any agreement on the part of MPL and to any such
extension or waiver will be valid only if set forth in an instrument, in
writing, signed on behalf of MPL.
Section 5.05 Notices. Any notice to any party hereto pursuant to this
Agreement will be in writing and given by Certified or Registered Mail or by
facsimile, addressed as follows:
Interactive Marketing Technology, Inc.
12400 Ventura Blvd.. Metrolink Global Limited
Suite 645 Unit 503C, 5th Floor, Miramar Tower,
Stidio City, CA 132 Nathan Road, Kowloon, Hong Kong
USA Hong Kong
For the attention of Mr. Martin Goldrod For the attention of Ms. Chen Ming Yin,
Tiffany
Fax: (805) 526-8519 Fax: +852 2191 9890
Copy to: Copy to:
John Holt Smith Robert Steven Brown
Kelly Litton & Vann Reitler Brown LLC
1900 Avenue of the Stars 800 Third Avenue
Suite 1450 21st Floor
Los Angeles, CA 90067 New York, New York 10022
Fax: (310) 277-5953 Fax: (212) 371-5500
Additional notices are to be given as to each party, at such other
address as should be designated in writing complying as to delivery with the
terms of this Section 5.05. All such notices will be effective when received.
Section 5.06 Parties in Interest. This Agreement will inure to the
benefit of and be binding upon the parties hereto and the respective successors
and assigns. Nothing in this Agreement is intended to confer, expressly or by
implication, upon any other person any rights or remedies under or by reason of
this Agreement.
Section 5.07 Counterpart. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original and all together will
constitute one document. The delivery by facsimile of an executed counterpart of
this Agreement will be deemed to be an original and will have the full force and
effect of an original executed copy.
22
Section 5.08 Severability. The provisions of this Agreement will be
deemed severable and the invalidity or unenforceability of any provision hereof
will not affect the validity or enforceability of any of the other provisions
hereof. If any provisions of this Agreement, or the application thereof to any
person or any circumstance, is illegal, invalid or unenforceable, (a) a suitable
and equitable provision will be substituted therefor in order to carry out, so
far as may be valid and enforceable, the intent and purpose of such invalid or
unenforceable provision, and (b) the remainder of this Agreement and the
application of such provision to other persons or circumstances will not be
affected by such invalidity or unenforceability, nor will such invalidity or
unenforceability affect the validity or enforceability of such provision, or the
application thereof, in any other jurisdiction.
Section 5.09 Headings. The Article and Section headings are provided
herein for convenience of reference only and do not constitute a part of this
Agreement and will not be deemed to limit or otherwise affect any of the
provisions hereof.
Section 5.10 Governing Law. This Agreement will be deemed to be made in
and in all respects will be interpreted, construed and governed by and in
accordance with the law of the State of New York, without regard to the conflict
of law principles thereof.
Section 5.11 Survival of Representations and Warranties. All terms,
conditions, representations and warranties set forth in this Agreement or in any
instrument, certificate, opinion, or other writing providing for in it, will
survive the Closing and the delivery of the shares of IAMK Common Stock to be
issued hereunder at the Closing for a period of two years after Closing,
regardless of any investigation made by or on behalf of any of the parties
hereto.
Section 5.12 Assignability. This Agreement will not be assignable by
operation of law or otherwise and any attempted assignment of this Agreement in
violation of this subsection will be void ab initio.
Section 5.13 Amendment. This Agreement may be amended with the approval
of the MPL Shareholder and the boards of directors of each of IAMK and MPL at
any time. This Agreement may not be amended except by an instrument, in writing,
signed on behalf of each of the parties hereto.
23
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement in a manner legally binding upon them as of the date first above
written.
INTERACTIVE MARKETING
TECHNOLOGY, INC.
By_________________________
Name:
Title:
Attest:
- ------------------------------
Name:
Title:
METROLINK PACIFIC LIMITED
By_________________________
Name:
Title:
Attest:
- ------------------------------
Name:
Title:
MPL SHAREHOLDER:
By______________________________
Name:
Attest:
- ------------------------------
Name:
Title:
24
ORIENT FINANCIAL SERVICES LIMITED
By____________________________
Name:
Title:
Attest:
- ------------------------------
Name:
Title:
EMERGING GROWTH PARTNERS INC.
By____________________________
Name:
Title:
Attest:
- ------------------------------
Name:
Title:
Exhibit B
Certificate of Amendment
(Pursuant to NRS 78.385 and 78.390)
Certificate of Amendment to Articles of Incorporation
For Nevada Profit corporations
(Pursuant to NRS 78.385 and 78.390 - After Issuance of Stock)
1. Name of corporation: Interactive Marketing Technology, Inc.
2. The articles have been amended as follows (provide article numbers, if
available):
I. The name of this corporation is China Artists Agency, Inc.
IV. The Corporation is authorized to issue 200,000,000 shares of
common stock, par value $.001 per share.
3. The vote by which the stockholders holding such shares in the corporation
entitling them to exercise at least a majority of the voting power, or such
greater proportion of the voting power as may be required in the case of a vote
by classes or series, or as may be required by the provisions of the * articles
of incorporation have voted in favor of the amendment is: __50.4%
4. Effective date of filing (optional): ______________________________ (must
not be later than 90 days after the certificate is filed)
5. Officer Signature (required):______________________________________________
*If any proposed amendment would alter or change any preference or any
relative or other right given to any class or series of outstanding shares,
then the amendment must be approved by the vote, in addition to the
affirmative vote otherwise required, of the holders of shares representing
a majority of the voting power of each class or series affected by the
amendment regardless of limitations or restrictions on the voting power
thereof.
IMPORTANT: Failure to include any of the above information and submit the
proper fees may cause this filing to be rejected.
25
Exhibit C
NEVADA DISSENTERS' RIGHTS STATUTE -- RIGHTS OF DISSENTING OWNERS
NRS 92A.300 Definitions. As used in NRS 92A.300 to 92A.500, inclusive, unless
the context otherwise requires, the words and terms defined in NRS 92A.305 to
92A.335, inclusive, have the meanings ascribed to them in those sections.
NRS 92A.305 "Beneficial stockholder" defined. "Beneficial stockholder" means a
person who is a beneficial owner of shares held in a voting trust or by a
nominee as the stockholder of record.
NRS 92A.310 "Corporate action" defined. "Corporate action" means the action of a
domestic corporation.
NRS 92A.315 "Dissenter" defined. "Dissenter" means a stockholder who is entitled
to dissent from a domestic corporation's action under NRS 92A.380 and who
exercises that right when and in the manner required by NRS 92A.400 to 92A.480,
inclusive.
NRS 92A.320 "Fair value" defined. "Fair value," with respect to a dissenter's
shares, means the value of the shares immediately before the effectuation of the
corporate action to which he objects, excluding any appreciation or depreciation
in anticipation of the corporate action unless exclusion would be inequitable.
NRS 92A.325 "Stockholder" defined. "Stockholder" means a stockholder of record
or a beneficial stockholder of a domestic corporation.
NRS 92A.330 "Stockholder of record" defined. "Stockholder of record" means the
person in whose name shares are registered in the records of a domestic
corporation or the beneficial owner of shares to the extent of the rights
granted by a nominee's certificate on file with the domestic corporation.
NRS 92A.335 "Subject corporation" defined. "Subject corporation" means the
domestic corporation which is the issuer of the shares held by a dissenter
before the corporate action creating the dissenter's rights becomes effective or
the surviving or acquiring entity of that issuer after the corporate action
becomes effective.
NRS 92A.340 Computation of interest. Interest payable pursuant to NRS 92A.300 to
92A.500, inclusive, must be computed from the effective date of the action until
the date of payment, at the average rate currently paid by the entity on its
principal bank loans or, if it has no bank loans, at a rate that is fair and
equitable under all of the circumstances.
NRS 92A.350 Rights of dissenting partner of domestic limited partnership. A
partnership agreement of a domestic limited partnership or, unless otherwise
provided in the partnership agreement, an agreement of merger or exchange, may
provide that contractual rights with respect to the partnership interest of a
dissenting general or limited partner of a domestic limited partnership are
available for any class or group of partnership interests in connection with any
merger or exchange in which the domestic limited partnership is a constituent
entity.
26
NRS 92A.360 Rights of dissenting member of domestic limited-liability company.
The articles of organization or operating agreement of a domestic
limited-liability company or, unless otherwise provided in the articles of
organization or operating agreement, an agreement of merger or exchange, may
provide that contractual rights with respect to the interest of a dissenting
member are available in connection with any merger or exchange in which the
domestic limited-liability company is a constituent entity.
NRS 92A.370 Rights of dissenting member of domestic nonprofit corporation.
1. Except as otherwise provided in subsection 2, and unless otherwise
provided in the articles or bylaws, any member of any constituent domestic
nonprofit corporation who voted against the merger may, without prior notice,
but within 30 days after the effective date of the merger, resign from
membership and is thereby excused from all contractual obligations to the
constituent or surviving corporations which did not occur before his resignation
and is thereby entitled to those rights, if any, which would have existed if
there had been no merger and the membership had been terminated or the member
had been expelled.
2. Unless otherwise provided in its articles of incorporation or bylaws, no
member of a domestic nonprofit corporation, including, but not limited to, a
cooperative corporation, which supplies services described in chapter 704 of NRS
to its members only, and no person who is a member of a domestic nonprofit
corporation as a condition of or by reason of the ownership of an interest in
real property, may resign and dissent pursuant to subsection 1.
NRS 92A.380 Right of stockholder to dissent from certain corporate actions and
to obtain payment for shares.
1. Except as otherwise provided in NRS 92A.370 and 92A.390, a stockholder
is entitled to dissent from, and obtain payment of the fair value of his shares
in the event of any of the following corporate actions:
(a) Consummation of a plan of merger to which the domestic corporation is
a constituent entity:
(1) If approval by the stockholders is required for the merger by NRS
92A.120 to 92A.160, inclusive, or the articles of incorporation,
regardless of whether the stockholder is entitled to vote on the
plan of merger; or
(2) If the domestic corporation is a subsidiary and is merged with
its parent pursuant to NRS 92A.180.
(b) Consummation of a plan of exchange to which the domestic corporation
is a constituent entity as the corporation whose subject owner's
interests will be acquired, if his shares are to be acquired in the
plan of exchange.
(c) Any corporate action taken pursuant to a vote of the stockholders to
the event that the articles of incorporation, bylaws or a resolution
of the board of directors provides that voting or nonvoting
stockholders are entitled to dissent and obtain payment for their
shares.
2. A stockholder who is entitled to dissent and obtain payment pursuant to
NRS 92A.300 to 92A.500, inclusive, may not challenge the corporate action
creating his entitlement unless the action is unlawful or fraudulent with
respect to him or the domestic corporation.
NRS 92A.390 Limitations on right of dissent: Stockholders of certain classes or
series; action of stockholders not required for plan of merger.
1. There is no right of dissent with respect to a plan of merger or
exchange in favor of stockholders of any class or series which, at the record
date fixed to determine the stockholders entitled to receive notice of and to
vote at the meeting at which the plan of merger or exchange is to be acted on,
were either listed on a national securities exchange, included in the national
market system by the National Association of Securities Dealers, Inc., or held
by at least 2,000 stockholders of record, unless:
(a) The articles of incorporation of the corporation issuing the shares
provide otherwise; or
(b) The holders of the class or series are required under the plan of
merger or exchange to accept for the shares anything except:
(1) Cash, owner's interests or owner's interests and cash in lieu of
fractional owner's interests of:
(I) The surviving or acquiring entity; or
(II) Any other entity which, at the effective date of the plan of
merger or exchange, were either listed on a national securities
exchange, included in the national market system by the National
Association of Securities Dealers, Inc., or held of record by a
least 2,000 holders of owner's interests of record; or
(2) A combination of cash and owner's interests of the kind described
in sub-subparagraphs
(I) and
(II) of subparagraph (1) of paragraph (b).
2. There is no right of dissent for any holders of stock of the surviving
domestic corporation if the plan of merger does not require action of the
stockholders of the surviving domestic corporation under NRS 92A.130.
NRS 92A.400 Limitations on right of dissent: Assertion as to portions only to
shares registered to stockholder; assertion by beneficial stockholder.
1. A stockholder of record may assert dissenter's rights as to fewer than
all of the shares registered in his name only if he dissents with respect to all
shares beneficially owned by any one person and notifies the subject corporation
in writing of the name and address of each person on whose behalf he asserts
dissenter's rights. The rights of a partial dissenter under this subsection are
determined as if the shares as to which he dissents and his other shares were
registered in the names of different stockholders.
2. A beneficial stockholder may assert dissenter's rights as to shares held
on his behalf only if:
(a) He submits to the subject corporation the written consent of the
stockholder of record to the dissent not later than the time the
beneficial stockholder asserts dissenter's rights; and
(b) He does so with respect to all shares of which he is the
beneficial stockholder or over which he has power to direct the
vote.
27
NRS 92A.410 Notification of stockholders regarding right of dissent.
1. If a proposed corporate action creating dissenters' rights is submitted
to a vote at a stockholders' meeting, the notice of the meeting must state that
stockholders are or may be entitled to assert dissenters' rights under NRS
92A.300 to 92A.500, inclusive, and be accompanied by a copy of those sections.
2. If the corporate action creating dissenters' rights is taken by written
consent of the stockholders or without a vote of the stockholders, the domestic
corporation shall notify in writing all stockholders entitled to assert
dissenters' rights that the action was taken and send them the dissenter's
notice described in NRS 92A.430.
NRS 92A.420 Prerequisites to demand for payment for shares.
1. If a proposed corporate action creating dissenters' rights is submitted
to a vote at a stockholders' meeting, a stockholder who wishes to assert
dissenter's rights:
(a) Must deliver to the subject corporation, before the vote is
taken, written notice of his intent to demand payment for his
shares if the proposed action is effectuated; and
(b) Must not vote his shares in favor of the proposed action.
2. A stockholder who does not satisfy the requirements of subsection 1 and
NRS 92A.400 is not entitled to payment for his shares under this chapter.
NRS 92A.430 Dissenter's notice: Delivery to stockholders entitled to assert
rights; contents.
1. If a proposed corporate action creating dissenters' rights is authorized
at a stockholders' meeting, the subject corporation shall deliver a written
dissenter's notice to all stockholders who satisfied the requirements to assert
those rights.
2. The dissenter's notice must be sent no later than 10 days after the
effectuation of the corporate action, and must:
(a) State where the demand for payment must be sent and where and
when certificates, if any, for shares must be deposited;
(b) Inform the holders of shares not represented by certificates to
what extent the transfer of the shares will be restricted after
the demand for payment is received;
(c) Supply a form for demanding payment that includes the date of the
first announcement to the news media or to the stockholders of
the terms of the proposed action and requires that the person
asserting dissenter's rights certify whether or not he acquired
beneficial ownership of the shares before that date;
(d) Set a date by which the subject corporation must receive the
demand for payment, which may not be less than 30 nor more than
60 days after the date the notice is delivered; and
(e) Be accompanied by a copy of NRS 92A.300 to 92A.500, inclusive.
NRS 92A.440 Demand for payment and deposit of certificates; retention of rights
of stockholder.
1. A stockholder to whom a dissenter's notice is sent must:
(a) Demand payment;
(b) Certify whether he acquired beneficial ownership of the shares
before the date required to be set forth in the dissenter's
notice for this certification; and
(c) Deposit his certificates, if any, in accordance with the terms of
the notice.
2. The stockholder who demands payment and deposits his certificates, if
any, before the proposed corporate action is taken retains all other
rights of a stockholder until those rights are canceled or modified by
the taking of the proposed corporate action.
3. The stockholder who does not demand payment or deposit his
certificates where required, each by the date set forth in the
dissenter's notice, is not entitled to payment for his shares under
this chapter.
28
NRS 92A.450 Uncertificated shares: Authority to restrict transfer after demand
for payment; retention of rights of stockholder.
1. The subject corporation may restrict the transfer of shares not
represented by a certificate from the date the demand for their payment is
received.
2. The person for whom dissenter's rights are asserted as to shares not
represented by a certificate retains all other rights of a stockholder until
those rights are canceled or modified by the taking of the proposed corporate
action.
NRS 92A.460 Payment for shares: General requirements.
1. Except as otherwise provided in NRS 92A.470, within 30 days after
receipt of a demand for payment, the subject corporation shall pay each
dissenter who complied with NRS 92A.440 the amount the subject corporation
estimates to be the fair value of his shares, plus accrued interest. The
obligation of the subject corporation under this subsection may be enforced by
the district court:
(a) Of the county where the corporation's registered office is
located; or
(b) At the election of any dissenter residing or having its
registered office in this state, of the county where the
dissenter resides or has its registered office. The court shall
dispose of the complaint promptly.
2. The payment must be accompanied by:
(a) The subject corporation's balance sheet as of the end of a fiscal
year ending not more than 16 months before the date of payment, a
statement of income for that year, a statement of changes in the
stockholders' equity for that year and the latest available
interim financial statements, if any;
(b) A statement of the subject corporation's estimate of the fair
value of the shares;
(c) An explanation of how the interest was calculated;
(d) A statement of the dissenter's rights to demand payment under NRS
92A.480; and
(e) A copy of NRS 92A.300 to 92A.500, inclusive.
NRS 92A.470 Payment for shares: Shares acquired on or after date of dissenter's
notice.
1. A subject corporation may elect to withhold payment from a dissenter
unless he was the beneficial owner of the shares before the date set forth in
the dissenter's notice as the date of the first announcement to the news media
or to the stockholders of the terms of the proposed action.
2. To the extent the subject corporation elects to withhold payment, after
taking the proposed action, it shall estimate the fair value of the shares, plus
accrued interest, and shall offer to pay this amount to each dissenter who
agrees to accept it in full satisfaction of his demand. The subject corporation
shall send with its offer a statement of its estimate of the fair value of the
shares, an explanation of how the interest was calculated, and a statement of
the dissenters' right to demand payment pursuant to NRS 92A.480.
NRS 92A.480 Dissenter's estimate of fair value: Notification of subject
corporation; demand for payment of estimate.
1. A dissenter may notify the subject corporation in writing of his own
estimate of the fair value of his shares and the amount of interest due, and
demand payment of his estimate, less any payment pursuant to NRS 92A.460, or
reject the offer pursuant to NRS 92A.470 and demand payment of the fair value of
his shares and interest due, if he believes that the amount paid pursuant to NRS
92A.460 or offered pursuant to NRS 92A.470 is less than the fair value of his
shares or that the interest due is incorrectly calculated.
2. A dissenter waives his right to demand payment pursuant to this section
unless he notifies the subject corporation of his demand in writing within 30
days after the subject corporation made or offered payment for his shares.
29
NRS 92A.490 Legal proceeding to determine fair value: Duties of subject
corporation; powers of court; rights of dissenter.
1. If a demand for payment remains unsettled, the subject corporation shall
commence a proceeding within 60 days after receiving the demand and petition the
court to determine the fair value of the shares and accrued interest. If the
subject corporation does not commence the proceeding within the 60-day period,
it shall pay each dissenter whose demand remains unsettled the amount demanded.
2. A subject corporation shall commence the proceeding in the district
court of the county where its registered office is located. If the subject
corporation is a foreign entity without a resident agent in the state, it shall
commence the proceeding in the county where the registered office of the
domestic corporation merged with or whose shares were acquired by the foreign
entity was located.
3. The subject corporation shall make all dissenters, whether or not
residents of Nevada, whose demands remain unsettled, parties to the proceeding
as in an action against their shares. All parties must be served with a copy of
the petition. Nonresidents may be served by registered or certified mail or by
publication as provided by law.
4. The jurisdiction of the court in which the proceeding is commenced under
subsection 2 is plenary and exclusive. The court may appoint one or more persons
as appraisers to receive evidence and recommend a decision on the question of
fair value. The appraisers have the powers described in the order appointing
them, or any amendment thereto. The dissenters are entitled to the same
discovery rights as parties in other civil proceedings.
5. Each dissenter who is made a party to the proceeding is entitled to a
judgment:
(a) For the amount, if any, by which the court finds the fair value
of his shares, plus interest, exceeds the amount paid by the
subject corporation; or
(b) For the fair value, plus accrued interest, of his after-acquired
shares for which the subject corporation elected to withhold
payment pursuant to NRS 92A.470.
NRS 92A.500 Legal proceeding to determine fair value: Assessment of costs and
fees.
1. The court in a proceeding to determine fair value shall determine all of
the costs of the proceeding, including the reasonable compensation and expenses
of any appraisers appointed by the court. The court shall assess the costs
against the subject corporation, except that the court may assess costs against
all or some of the dissenters, in amounts the court finds equitable, to the
extent the court finds the dissenters acted arbitrarily, vexatiously or not in
good faith in demanding payment.
2. The court may also assess the fees and expenses of the counsel and
experts for the respective parties, in amounts the court finds equitable:
(a) Against the subject corporation and in favor of all dissenters if
the court finds the subject corporation did not substantially
comply with the requirements of NRS 92A.300 to 92A.500,
inclusive; or
(b) Against either the subject corporation or a dissenter in favor of
any other party, if the court finds that the party against whom
the fees and expenses are assessed acted arbitrarily, vexatiously
or not in good faith with respect to the rights provided by NRS
92A.300 to 92A.500, inclusive.
3. If the court finds that the services of counsel for any dissenter were
of substantial benefit to other dissenters similarly situated, and that the fees
for those services should not be assessed against the subject corporation, the
court may award to those counsel reasonable fees to be paid out of the amounts
awarded to the dissenters who were benefited.
4. In a proceeding commenced pursuant to NRS 92A.460, the court may assess
the costs against the subject corporation, except that the court may assess
costs against all or some of the dissenters who are parties to the proceeding,
in amounts the court finds equitable, to the extent the court finds that such
parties did not act in good faith in instituting the proceeding.
5. This section does not preclude any party in a proceeding commenced
pursuant to NRS 92A.460 or 92A.490 from applying the provisions of N.R.C.P. 68
or NRS 17.115.
30
Exhibit D
Interactive Marketing Technology, Inc. Form 10-KSB for 02/29/04
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 For the fiscal year ended February 29, 2004
-----------------
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
----------------- ---------------------
Commission File Number: 0-29019
Interactive Marketing Technology, Inc.
--------------------------------------
(Exact name of small business issuer as specified in its charter)
Nevada 22-3617931
- ------ ----------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
12400 Ventura Blvd., Suite 645, Studio City, California 91604
- --------------------------------------------------------------------------------
(Address of principal executive offices)
(818) 618-3038
--------------
(Issuer's Telephone Number)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. ( ) Yes (X) No
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.
State issuer's revenues for its most recent fiscal year. $0.
State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was sold, or the average bid and asked price of such common equity, as of a
specified date within the past 60 days. (See definition of affiliate in Rule
12b-2 of the Exchange Act.) As of November 10, 2004, there were 8,832,000
non-affiliate shares; price of $.14 per share as of November 4, 2004, resulting
in aggregate market value of approximately $1,236,480.
As of November 10, 2004, there were 13,823,667 shares of the issuer's $.001 par
value common stock issued and outstanding.
Documents incorporated by reference. There are no annual reports to security
holders, proxy information statements, or any prospectus filed pursuant to Rule
424 of the Securities Act of 1933 incorporated herein by reference.
Transitional Small Business Disclosure format (check one):
( ) Yes (X) No
1
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
- --------------------------------
OUR BACKGROUND. We were incorporated in the state of Nevada as Shur De Cor, Inc.
on August 14, 1987. By 1999 Shur De Cor was a public company with no operations
searching for a business opportunity. Shur De Cor merged with Interactive
Marketing Technology, Inc., a New Jersey corporation ("Interactive New Jersey"),
in an arm's length transaction in April of 1999. Interactive New Jersey was
engaged in the business of direct marketing of consumer products and desired to
become a public company.
Shur De Cor was the surviving corporation and changed its name to Interactive
Marketing Technology, Inc. Shur De Cor's management resigned and the management
of Interactive New Jersey filled the vacancies.
Through our wholly-owned subsidiary, IMT's Plumber, Inc., we produced, marketed,
and sold a licensed product called the Plumber's Secret, which was discontinued
during fiscal 2001. In May 2002, we discontinued our former business. We have
not conducted any business since this time. We intend to reenter our former
business of direct marketing of proprietary consumer products in the United
States and worldwide provided that we can raise sufficient capital to do so.
We will require additional financing to implement its business strategy. At this
time, no such additional financing has been secured or identified. If we are
unable to obtain debt and/or equity financing upon terms that management deems
sufficiently favorable, or at all, it would have a materially adverse impact
upon our ability to reenter our former business. Without additional capital
funding, we cannot reenter our former business. We are currently exploring all
opportunities to raise the necessary capital.
FORMER BUSINESS. We were engaged in the direct marketing of proprietary consumer
products in the United States and worldwide. We facilitated the design and
manufacture of products and developed market strategies for such products. Our
goal was to generate awareness of new and better products for the home and
family and initiate consumer brand recognition of our products in the
marketplace. When appropriate, we contracted with well-known personalities to
serve as spokespersons for a product to increase that product's credibility and
marketability. We managed all phases of our direct marketing programs and retail
marketing for the products we sold, including:
* Product selection, testing and development
* Securing all necessary or appropriate rights to the product
* Supervision of the manufacturing process, quality control and packaging
* Production and broadcast of infomercials and commercials
* In-bound telemarketing, order fulfillment and customer service
* Print advertisements
Recent Developments. Marty Goldrod, our chief executive officer and a member of
our former management, is attempting to raise capital to reenter our former
business.
TRADEMARKS, LICENSE AND INTELLECTUAL PROPERTY. We do not own any patents,
trademarks, licenses or other forms of intellectual property.
GOVERNMENT REGULATIONS. Various aspects of our former business were subject to
regulation and ongoing review by a variety of federal, state, local and foreign
government agencies. The products we sold were subject to the evaluation by the
Consumer Products Safety Commission ("CPSC") which protects the public from
unreasonable risk of injuries and death associated with consumer products. The
advertising and marketing of the products was regulated by the Federal Trade
Commission ("FTC") and the Federal Communications Commission, ("FCC"), which
enforce consumer protection laws in regards to truth in advertising. When we
relied on the U.S. Mail for shipment of our products the United States Post
Office regulated the types of products and the manner in which they could be
distributed. Each state has various comparable agencies or laws that States'
Attorneys General enforce in the areas of consumer protection. These statutes,
rules and regulations which were applicable to our former business were
numerous, complex and subject to change.
2
EMPLOYEES. We do not currently have any employees hired on a full-time basis.
FACILITIES. Our headquarters are located at 12400 Ventura Blvd., Suite 645,
Studio City, California 91604. The Company's principal executive office is
located in the home of Marty Goldrod, the Company's chief executive officer, at
12400 Ventura Blvd. # 645, Studio City, California 91604. We have not entered
into a lease of office space with Mr. Goldrod. Mr. Goldrod provides this office
space to us on a rent-free basis. We do not own or otherwise use any other
property. We believe that our facilities are adequate for our current needs and
that additional suitable space will be available on acceptable terms as
required.
ITEM 2. DESCRIPTION OF PROPERTY.
PROPERTY HELD BY US. As of the date specified in the following table, we held
the following property:
================================ ===================== =========================
PROPERTY FEBRUARY 29, 2004 FEBRUARY 29, 2003
- -------------------------------- --------------------- -------------------------
Cash $0 $0
- -------------------------------- --------------------- -------------------------
Property and Equipment, net $0 $0
================================ ===================== =========================
OUR FACILITIES. Our principal executive office is located in the home of Marty
Goldrod, our chief executive officer, at 12400 Ventura Blvd. # 645, Studio City,
California 91604. We have not entered into a lease of office space with Mr.
Goldrod. Mr. Goldrod provides this office space to us on a rent-free basis. We
do not own or otherwise use any other property.
ITEM 3. LEGAL PROCEEDINGS.
We are not a party to any legal proceedings or threatened proceedings as of the
date of this filing.
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of Security Holders during the period of
this report.
PART II
ITEM 5. MARKET PRICE FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
REPORTS TO SECURITY HOLDERS. We are a reporting company with the Securities and
Exchange Commission, or SEC. The public may read and copy any materials filed
with the SEC at the SEC's Public Reference Room at 450 Fifth Street N.W.,
Washington, D.C. 20549. The public may also obtain information on the operation
of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC
maintains an Internet site that contains reports, proxy and information
statements, and other information regarding issuers that file electronically
with the SEC. The address of that site is http://www.sec.gov.
Our securities are not listed for trading on any exchange or quotation service.
We are not required to comply with the timely disclosure policies of any
exchange or quotation service. The requirements to which we would be subject if
our securities were so listed typically include the timely disclosure of a
material change or fact with respect to our affairs and the making of required
filings. Although we are not required to deliver an annual report to security
holders, we intend to provide an annual report to our security holders, which
will include audited financial statements.
3
MARKET INFORMATION. Our common stock is traded over-the-counter and quoted on
The National Quotation Bureau's Pink Sheets under the symbol "IAMK". Until April
17, 2000 our common stock was quoted on the OTC NASDAQ Electronic Bulletin Board
under the symbols "IAMK" and "IAMKE". Our stock is currently traded on Pink
Sheets under the symbol "IAMK". The following table represents the range of the
high and low bid prices of our stock as reported by the Nasdaq Trading and
Market Services for each fiscal quarter for the last two fiscal years ending
February 29, 2004. The quotations reflect inter-dealer prices, retail mark-up,
markdown, or commission and may not represent actual transactions.
- --------------------------- -------------------------- ----------------------
QUARTER ENDED HIGH LOW
- --------------------------- -------------------------- ----------------------
February 28, 2004 .10 .10
- --------------------------- -------------------------- ----------------------
November 30, 2003 .04 .04
- --------------------------- -------------------------- ----------------------
August 31, 2003 .01 .01
- --------------------------- -------------------------- ----------------------
May 31, 2003 .00 .00
- --------------------------- -------------------------- ----------------------
February 28, 2003 .001 .001
- --------------------------- -------------------------- ----------------------
November 30, 2002 .002 .002
- --------------------------- -------------------------- ----------------------
August 31, 2002 .002 .002
- --------------------------- -------------------------- ----------------------
May 31, 2002 .015 .015
- --------------------------- -------------------------- ----------------------
We had approximately 78 stockholders of record as of March 5, 2004. We have
never paid a cash dividend on its common stock and do not anticipate the payment
of a cash dividend in the foreseeable future. We intend to reinvest in our
business operations any funds that could be used to pay a cash dividend.
RECENT SALES OF UNREGISTERED SECURITIES. We did not sell any equity securities
during the period covered by this report that were not registered under the
Securities Act.
DESCRIPTION OF CAPITAL STOCK. Our authorized capital stock consists of
60,000,000 shares of $.001 par value common stock, of which 13,823,667 are
issued and outstanding as of February 29, 2004. Holders of shares of our common
stock are entitled to receive dividends when and as declared by our Board of
Directors from funds legally available therefore. All the shares of our common
stock have equal voting rights and, according to the opinion of our legal
counsel, are nonassessable. Each shareholder of our common stock is entitled to
share ratably in any assets available for distribution to holders our equity
securities upon our liquidation. Holders of our common stock do not have
preemption rights.
EQUITY COMPENSATION PLANS. We have no securities authorized for issuance under
any equity compensation plans.
PENNY STOCK REGULATION. Shares of our common stock are subject to rules adopted
by the Securities and Exchange Commission that regulate broker-dealer practices
in connection with transactions in "penny stocks". Penny stocks are generally
equity securities with a price of less than $5.00 (other than securities
registered on certain national securities exchanges or quoted on the Nasdaq
system, provided that current price and volume information with respect to
transactions in those securities is provided by the exchange or system). The
penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from those rules, deliver a standardized risk
disclosure document prepared by the Securities and Exchange Commission, which
contains the following:
o a description of the nature and level of risk in the market for penny
stocks in both public offerings and secondary trading;
o a description of the broker's or dealer's duties to the customer and
of the rights and remedies available to the customer with respect to
violation to such duties or other requirements of securities' laws;
o a brief, clear, narrative description of a dealer market, including
"bid" and "ask" prices for penny stocks and the significance of the
spread between the "bid" and "ask" price;
o a toll-free telephone number for inquiries on disciplinary actions;
o definitions of significant terms in the disclosure document or in the
conduct of trading in penny stocks; and
o such other information and is in such form (including language, type,
size and format), as the Securities and Exchange Commission shall
require by rule or regulation.
4
Prior to effecting any transaction in penny stock, the broker-dealer also must
provide the customer the following:
o the bid and offer quotations for the penny stock;
o the compensation of the broker-dealer and its salesperson in the
transaction;
o the number of shares to which such bid and ask prices apply, or other
comparable information relating to the depth and liquidity of the
market for such stock; and
o monthly account statements showing the market value of each penny
stock held in the customer's account.
In addition, the penny stock rules require that prior to a transaction in a
penny stock not otherwise exempt from those rules, the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written acknowledgment of the receipt
of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a written suitably statement. These
disclosure requirements may have the effect of reducing the trading activity in
the secondary market for a stock that becomes subject to the penny stock rules.
Holders of shares of our common stock may have difficulty selling those shares
because our common stock will probably be subject to the penny stock rules.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF
OPERATION.
THIS FOLLOWING INFORMATION SPECIFIES CERTAIN FORWARD-LOOKING STATEMENTS OF
MANAGEMENT OF THE COMPANY. FORWARD-LOOKING STATEMENTS ARE STATEMENTS THAT
ESTIMATE THE HAPPENING OF FUTURE EVENTS ARE NOT BASED ON HISTORICAL FACT.
FORWARD-LOOKING STATEMENTS MAY BE IDENTIFIED BY THE USE OF FORWARD-LOOKING
TERMINOLOGY, SUCH AS "MAY", "SHALL", "COULD", "EXPECT", "ESTIMATE",
"ANTICIPATE", "PREDICT", "PROBABLE", "POSSIBLE", "SHOULD", "CONTINUE", OR
SIMILAR TERMS, VARIATIONS OF THOSE TERMS OR THE NEGATIVE OF THOSE TERMS. THE
FORWARD-LOOKING STATEMENTS SPECIFIED IN THE FOLLOWING INFORMATION HAVE BEEN
COMPILED BY OUR MANAGEMENT ON THE BASIS OF ASSUMPTIONS MADE BY MANAGEMENT AND
CONSIDERED BY MANAGEMENT TO BE REASONABLE. OUR FUTURE OPERATING RESULTS,
HOWEVER, ARE IMPOSSIBLE TO PREDICT AND NO REPRESENTATION, GUARANTY, OR WARRANTY
IS TO BE INFERRED FROM THOSE FORWARD-LOOKING STATEMENTS.
THE ASSUMPTIONS USED FOR PURPOSES OF THE FORWARD-LOOKING STATEMENTS SPECIFIED IN
THE FOLLOWING INFORMATION REPRESENT ESTIMATES OF FUTURE EVENTS AND ARE SUBJECT
TO UNCERTAINTY AS TO POSSIBLE CHANGES IN ECONOMIC, LEGISLATIVE, INDUSTRY, AND
OTHER CIRCUMSTANCES. AS A RESULT, THE IDENTIFICATION AND INTERPRETATION OF DATA
AND OTHER INFORMATION AND THEIR USE IN DEVELOPING AND SELECTING ASSUMPTIONS FROM
AND AMONG REASONABLE ALTERNATIVES REQUIRE THE EXERCISE OF JUDGMENT. TO THE
EXTENT THAT THE ASSUMED EVENTS DO NOT OCCUR, THE OUTCOME MAY VARY SUBSTANTIALLY
FROM ANTICIPATED OR PROJECTED RESULTS, AND, ACCORDINGLY, NO OPINION IS EXPRESSED
ON THE ACHIEVABILITY OF THOSE FORWARD-LOOKING STATEMENTS. NO ASSURANCE CAN BE
GIVEN THAT ANY OF THE ASSUMPTIONS RELATING TO THE FORWARD-LOOKING STATEMENTS
SPECIFIED IN THE FOLLOWING INFORMATION ARE ACCURATE, AND WE ASSUME NO OBLIGATION
TO UPDATE ANY SUCH FORWARD-LOOKING STATEMENTS.
CRITICAL ACCOUNTING POLICY AND ESTIMATES.
- -----------------------------------------
Our Management's Discussion and Analysis of Financial Condition and Results of
Operations section discusses our financial statements, which have been prepared
in accordance with accounting principles generally accepted in the United States
of America. The preparation of these financial statements requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. On an on-going basis,
management evaluates its estimates and judgments, including those related to
revenue recognition, accrued expenses, financing operations, and contingencies
and litigation. Management bases its estimates and judgments on historical
experience and on various other factors that are believed to be reasonable under
the circumstances, the results of which form the basis for making judgments
about the carrying value of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these estimates under
different assumptions or conditions. The most significant accounting estimates
inherent in the preparation of our financial statements include estimates as to
the appropriate amounts to accrue for accounting and legal expenses. These
accounting policies are described at relevant sections in this discussion and
analysis and in the notes to the financial statements included in our Annual
Report on Form 10-KSB for the year ended February 29, 2004.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
- ---------------------------------------------------------------------------
FOR THE YEAR ENDED FEBRUARY 29, 2004 COMPARED TO THE YEAR ENDED FEBRUARY 29,
2003.
PLAN OF OPERATION. We intend to reenter our former business of direct marketing
of proprietary consumer products in the United States and worldwide.
In May 2002, we discontinued our former business. We were engaged in the direct
marketing of proprietary consumer products in the United States and worldwide.
We facilitated the design and manufacture of products and developed market
strategies for such products. Our goal was to generate awareness of new and
better products for the home and family and initiate consumer brand recognition
of our products in the marketplace. When appropriate, we contracted with
well-known personalities to serve as spokespersons for a product to increase
that product's credibility and marketability. We managed all phases of our
direct marketing programs and retail marketing for the products we sold.
It is imperative that we raise capital to reenter our former business. We will
require additional financing. At this time, no such additional financing has
been secured or identified. If we are unable to obtain debt and/or equity
financing upon terms that management deems sufficiently favorable, or at all, it
would have a materially adverse impact upon our ability to reenter our former
business. Without additional capital funding, we cannot reenter our former
business. We are currently exploring all opportunities to raise the necessary
capital.
There can be no assurance that any new capital would be available to us or that
there would be adequate funds for our operations, whether from our revenues,
financial markets, or other arrangements available when needed or on terms
satisfactory to us. We have no commitments from officers, directors or
affiliates to provide funding. Our failure to obtain adequate additional
financing will require us to forego reentering our former business.
INCOME, LIQUIDITY AND CAPITAL RESOURCES. We did not have revenues for the fiscal
years ended February 28, 2003 and February 29, 2004. Operating expenses were
zero for the fiscal year ended February 29, 2004 as compared to $58,385 for the
fiscal year ended February 28, 2003. In May 2002, we discontinued our
operations. We recorded $1,292,270 of income from discontinued operations for
the fiscal year ended February 28, 2003, that was attributable to the relief of
indebtedness from bankruptcy. Net income was zero for the fiscal year ended
February 28, 2004 as compared to a net loss of $1,233,885 for the fiscal year
ended February 28, 2003.
We have experienced cumulative operating losses since our inception of
approximately $3,106,337. We did not have any assets as of the fiscal year ended
February 28, 2004. We had current liabilities of $741,497 for such period.
Current liabilities consisted of accounts payable of $253,449, accrued expenses
of $336,457, shareholder advances of $26,902 and notes payable to shareholders
$124,689.
OFF-BALANCE SHEET ARRANGEMENTS. There are no off balance sheet arrangements that
have or are reasonably likely to have a current or future effect on our
financial condition, changes in financial condition, revenues or expenses,
results of operations, liquidity, capital expenditures or capital resources that
are material to investors
5
ITEM 7. FINANCIAL STATEMENTS
The financial statements required by Item 7 are presented in the following
order:
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Interactive Marketing Technology, Inc.
Studio City, California
We have audited the accompanying consolidated balance sheet of Interactive
Marketing Technology, Inc. as of February 29, 2004 and the related consolidated
statements of operations, stockholders' deficit, and cash flows and for each of
the years ended February 29, 2004 and February 28, 2003. These consolidated
financial statements are the responsibility of Interactive's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Interactive Marketing Technology, Inc. as of February 29, 2004 and the results
of its consolidated operations and its cash flows for the years ended February
29, 2004 and February 28, 2003, in conformity with accounting principles
generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming
that Interactive Marketing Technology, Inc. will continue as a going concern. As
discussed in Note 2 to the consolidated financial statements, Interactive
Marketing Technology, Inc. suffered losses from operations since inception and
has a working capital deficiency, which raises substantial doubt about its
ability to continue as a going concern. Management's plans regarding those
matters also are described in Note 2. The consolidated financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
Malone & Bailey, PLLC
Houston, Texas
www.malone-bailey.com
September 27, 2004
6
INTERACTIVE MARKETING TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEET
February 29, 2004
ASSETS $ -
=============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 253,449
Accrued expenses 336,457
Shareholder advances 26,902
Notes payable - shareholders 124,689
-------------
Total current liabilities 741,497
-------------
Commitments
STOCKHOLDERS' DEFICIT:
Common stock, $.001 par value, 60,000,000 shares authorized,
13,823,667 shares issued and outstanding 13,824
Additional paid-in capital 2,351,016
Accumulated deficit (3,106,337)
-------------
Total Stockholders' Deficit (741,497)
-------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ -
=============
See accompanying summary of accounting policies
and notes to financial statements.
7
INTERACTIVE MARKETING TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended February 29, 2004 and February 28, 2003
2004 2003
-------------- ---------------
Operating expense:
General, administrative and selling - 58,385
-------------- --------------
Total operating expenses - 58,385
============== ==============
Loss from continuing operations - (58,385)
Income (loss) from discontinued operations - 1,292,270
-------------- --------------
Net income (loss) $ - $ 1,233,885
============== ==============
Net income (loss) per share:
Basic and diluted - continuing operations $ (0.00) $ (0.00)
============== ==============
Basic and diluted - discontinued operations $ 0.00 $ 0.09
============== ==============
Weighted average shares outstanding:
Basic and diluted 13,823,667 13,823,667
============== ==============
See accompanying summary of accounting policies
and notes to financial statements.
8
INTERACTIVE MARKETING TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
Years Ended February 29, 2004 and February 28, 2003
ADDITIONAL
COMMON STOCK PAID-IN ACCUMULATED TOTAL
SHARES AMOUNT CAPITAL DEFICIT
------------- ------------- --------------- ---------------- ----------------
Balances,
February 28, 2002 13,823,667 $ 13,824 $ 2,351,016 $ (4,340,222) $ (1,975,382)
Net income - - - 1,233,885 1,233,885
------------- ------------- --------------- ---------------- ----------------
Balances,
February 28, 2003 13,823,667 13,824 2,351,016 (3,106,337) (741,497)
Net income - - - - -
------------- ------------- --------------- ---------------- ----------------
Balances,
February 29, 2004 13,823,667 $ 13,824 $ 2,351,016 $ (3,106,337) $ (741,497)
============= ============= ============== ================ ================
See accompanying summary of accounting policies
and notes to financial statements.
9
INTERACTIVE MARKETING TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended February 29, 2004 and February 28, 2003
2004 2003
--------------- ----------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ - $ 1,233,885
Adjustments to reconcile net loss to cash used in
operating activities:
Relief of debt from bankruptcy - (1,292,270)
Changes in assets and liabilities:
Accounts payable - 50,188
-------------- ---------------
CASH FLOWS USED IN OPERATING ACTIVITIES - (8,197)
-------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from shareholder advances - 8,197
-------------- ---------------
NET CHANGE IN CASH - -
Cash, beginning of period - -
-------------- ---------------
Cash, end of period $ - $ -
============== ===============
See accompanying summary of accounting policies
and notes to financial statements.
10
INTERACTIVE MARKETING TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of business. Interactive Marketing Technology, Inc. ("Interactive"), a
Nevada corporation, was formed on April 21, 1998. Until 2001, Interactive was
engaged in the direct marketing and retail of proprietary consumer products in
the United States of America and worldwide. Since early 2002, Interactive has
been inactive.
Interactive's wholly owned subsidiary IMT's Plumber, Inc., which was formed
February 4, 1999, produced, marketed and sold a licensed product called The
Plumber's Secret, which was discontinued during fiscal 2001 (see Note 3).
Principles of Consolidation. The consolidated financial statements include the
accounts of Interactive's wholly owned subsidiary. All significant intercompany
transactions and balances have been eliminated. Interactive's consolidated
financial statements include the results of operations from the respective dates
of acquisition through February 29, 2004, as applicable.
Use of Estimates. In preparing financial statements, management makes estimates
and assumptions that affect the reported amounts of assets and liabilities in
the balance sheet and revenue and expenses in the statement of expenses. Actual
results could differ from those estimates.
Cash and Cash Equivalents. For purposes of the statement of cash flows,
Interactive considers all highly liquid investments purchased with an original
maturity of three months or less to be cash equivalents.
Revenue Recognition. Interactive recognizes revenue when persuasive evidence of
an arrangement exists, services have been rendered, the sales price is fixed or
determinable, and collectibility is reasonably assured. Interactive had no
revenues for fiscal 2004 or 2003.
Income taxes. Interactive recognizes deferred tax assets and liabilities based
on differences between the financial reporting and tax bases of assets and
liabilities using the enacted tax rates and laws that are expected to be in
effect when the differences are expected to be recovered. Interactive provides a
valuation allowance for deferred tax assets for which it does not consider
realization of such assets to be more likely than not.
Loss per Share. The basic net income (loss) per common share is computed by
dividing the net loss applicable to common stockholders by the weighted average
number of common shares outstanding.
Diluted net income (loss) per common share is computed by dividing the net loss
applicable to common stockholders, adjusted on an "as if converted" basis, by
the weighted average number of common shares outstanding plus potential dilutive
securities. For the year ended February 29, 2004, potential dilutive securities
had an anti-dilutive effect and were not included in the calculation of diluted
net income (loss) per common share.
Interactive adopted the disclosure requirements of Financial Accounting Standard
No. 123, Accounting for Stock-Based Compensation (FAS No. 123) and FAS No. 148
with respect to pro forma disclosure of compensation expense for options issued.
For purposes of the pro forma disclosures, the fair value of each option grant
is estimated on the grant date using the Black-Scholes option-pricing model.
Interactive applies APB No. 25 in accounting for its stock option plans and,
accordingly, no compensation cost would be recognized in Interactive's financial
statements for stock options under any of the stock plans which on the date of
grant the exercise price per share was equal to or exceeded the fair value per
share. However, compensation cost would be recognized for warrants and options
granted to non-employees for services provided. There were no options or
warrants granted in fiscal 2004 or 2003.
Recently issued accounting pronouncements. Interactive does not expect the
adoption of recently issued accounting pronouncements to have a significant
impact on Interactive's results of operations, financial position or cash flow.
11
NOTE 2 - GOING CONCERN
As shown in the accompanying consolidated financial statements, Interactive
incurred recurring losses from continuing operations of $0 and $58,385 in fiscal
2004 and 2003, respectively and has a working capital deficit of $741,497 as of
February 29, 2004. These conditions create an uncertainty as to Interactive's
ability to continue as a going concern. Management is trying to raise additional
capital through sales of common stock or convertible instruments as well as
seeking financing from third parties. The consolidated financial statements do
not include any adjustments that might be necessary if Integrated is unable to
continue as a going concern.
NOTE 3 - DISCONTINUED OPERATIONS
In November 2000, Interactive abandoned its efforts of selling the Plumber's
Secret product line to retailers. The results of operations of the product line
have been reported separately as discontinued operations.
In March 2002, the joint venture "The Plumbers Secret, LLC" filed for bankruptcy
under Chapter 7 in the USBC Central District of Los Angeles California. In July
2002, the joint venture was granted relief and, accordingly, Interactive no
longer has any remaining obligations for the joint venture and recorded income
from discontinued operations of $1,292,270 for the cancelation of debt.
NOTE 4 - COMMITMENTS
Interactive neither owns nor leases any real or personal property, and a related
party has provided office services without charge. Such costs are immaterial to
the financial statements and accordingly are not reflected herein.
NOTE 5 - INCOME TAXES
For the years ended February 29, 2004 and 2003, Interactive incurred net losses
and, therefore, has no tax liability. The net deferred tax asset generated by
the loss carry-forward has been fully reserved. The cumulative net operating
loss carry-forward is approximately $3,100,000 at February 29, 2004, and will
expire in the years 2014 through 2024.
Deferred income taxes consist of the following at February 29, 2004:
Long-term:
Deferred tax assets $ 1,050,000
Valuation allowance (1,050,000)
--------------
$ -
==============
NOTE 6 - COMMON STOCK AND STOCK OPTIONS
Stock Options
In March 2000, Interactive's board of directors and shareholders approved and
adopted the 2000 Stock Option Plan ("the 2000 plan"), as amended in June 2000.
An aggregate of 10,000,000 shares of common stock are reserved for issuance
under the 2000 plan.
The exercise price for each option shall be equal to not less than 100% of the
fair market value of the common stock on the date of grant, as defined. The 2000
plan shall terminate ten years after its adoption by the board of directors and
may be terminated by the board of directors on any earlier date, as defined.
There were no options issued for fiscal 2004 or 2003.
The following table summarizes stock option activity
WEIGHTED AVERAGE
OPTIONS SHARE PRICE
------------- --------------
Outstanding, March 1, 2002 2,642,000 n/a
Granted - n/a
Canceled (1,892,000) n/a
Exercised - n/a
------------- -------------
Outstanding, February 28, 2003 750,000 n/a
Granted - n/a
Canceled - n/a
Exercised - n/a
------------- -------------
Outstanding, February 29, 2004 750,000 n/a
------------- -------------
Exercisable at February 29, 2004 750,000 n/a
============= =============
Weighted-average remaining, years
of contractual life as of February 29, 2004 6 n/a
============= =============
12
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
There have been no changes in or disagreements with our accountants since our
formation required to be disclosed pursuant to Item 304 of Regulation S-B.
ITEM 8A. CONTROLS AND PROCEDURES.
(a) Evaluation of disclosure controls and procedures. We maintain controls and
procedures designed to ensure that information required to be disclosed in the
reports that we file or submit under the Securities Exchange Act of 1934 is
recorded, processed, summarized and reported within the time periods specified
in the rules and forms of the Securities and Exchange Commission. Based upon
their evaluation of those controls and procedures performed as of the end of the
period covered by this annual report, our chief executive officer and the
principal financial officer concluded that our disclosure controls and
procedures were adequate.
(b) Changes in internal controls. There were no significant changes in our
internal controls or in other factors that could significantly affect these
controls subsequent to the date of the evaluation of those controls by the chief
executive officer and principal financial officer.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
Executive Officers and Directors. Our officers and directors are specified on
the table below:
================ ======== =====================================================
Name Age Position
- ---------------- -------- -----------------------------------------------------
Martin Goldrod 62 President, Chief Executive Officer, Chief
Financial Officer, Treasurer, Secretary, Director
================ ======== =====================================================
MARTIN GOLDROD. Mr. Goldrod has been employed us in various capacities since May
1996. Mr. Goldrod has served as our President and Chief Executive Officer since
January 15, 2002. He served as our Executive Vice President and Chief Operating
Officer from February 1999 to January 15, 2002. Mr. Goldrod was appointed as a
Director on January 28, 2000 and appointed as Secretary on April 7, 2000. He
served as our Vice President of Operations from May 1996 to February 1999. Mr.
Goldrod has over 25 years experience in management and promotion on the local,
regional and national level related to record companies such as Capital Records,
Arista Records and Mercury Records. Mr. Goldrod is not an officer or directory
of any other reporting company.
There are no orders, judgments, or decrees of any governmental agency or
administrator, or of any court of competent jurisdiction, revoking or suspending
for cause any license, permit or other authority to engage in the securities
business or in the sale of a particular security or temporarily or permanently
restraining any of our officers or directors from engaging in or continuing any
conduct, practice or employment in connection with the purchase or sale of
securities, or convicting such person of any felony or misdemeanor involving a
security, or any aspect of the securities business or of theft or of any felony.
Nor are any of the officers or directors of any corporation or entity affiliated
with us so enjoined.
AUDIT COMMITTEE AND FINANCIAL EXPERT. Because our Board of Director currently
consists of only one member and we do not have the resources to expand our
management at this time, we do not have an audit committee, nor do we have a
financial expert on our Board of Directors as that term is defined by Item
401(e)2.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE. Section 16(a) of the
securities Exchange Act of 1934, as amended, requires our directors, executive
officers and persons who own more than 10% of a class of our equity securities
which are registered under the Exchange Act to file with the Securities and
Exchange Commission initial reports of ownership and reports of changes of
ownership of such registered securities. Such executive officers, directors and
greater than 10% beneficial owners are required by Commission regulation to
furnish us with copies of all Section 16(a) forms filed by such reporting
persons.
13
To our knowledge, based solely on a review of the copies of such reports
furnished to us and on representations that no other reports were required, no
person required to file such a filed such a report during fiscal 2004. Based on
stockholder filings with the SEC, Martin Goldrod is subject to Section 16(a)
filing requirements.
CODE OF ETHICS. The Board of Directors adopted a Code of Ethics in February
2004, meeting the requirements of Section 406 of the Sarbanes-Oxley Act of 2002.
We will provide to any person without charge, upon request, a copy of such Code
of Ethics. Persons wishing to make such a request should contact Martin Goldrod,
Chief Executive Officer, 12400 Ventura Blvd. #645, Studio City, California
91604, (818) 618-3038.
ITEM 10. EXECUTIVE COMPENSATION
Any compensation received by our officers, directors, and management personnel
will be determined from time to time by our Board of Directors. Our officers,
directors, and management personnel will be reimbursed for any out-of-pocket
expenses incurred on our behalf.
SUMMARY COMPENSATION TABLE. The table set forth below summarizes the annual and
long-term compensation for services in all capacities to us payable to our chief
executive officer and our other executive officers during the year ending
February 29, 2003 and 2003. Our Board of Directors may adopt an incentive stock
option plan for our executive officers which would result in additional
compensation.
=================== ======= =================================== ========================================== =================
ANNUAL COMPENSATION LONG TERM COMPENSATION
- ------------------- ------- ----------------------------------- ------------------------------------------ -----------------
NAME AND YEAR SALARY BONUS OTHER ANNUAL AWARDS PAYOUTS ALL OTHER
PRINCIPAL POSITION ($) ($) COMPENSATION ($) COMPENSATION
- ------------------- ------- -------- -------- ----------------- ------------------------------ ----------- -----------------
RESTRICTED SECURITIES LTIP
STOCK UNDERLYING PAYOUTS
AWARDS ($) OPTIONS/SARS (#) ($)
- ------------------- ------- -------- -------- ----------------- ------------ ----------------- ----------- -----------------
Martin Goldrod, 2004 None None None None None None None
CEO and Director
- ------------------- ------- -------- -------- ----------------- ------------ ----------------- ----------- -----------------
2003 None None None None None None None
=================== ======= ======== ======== ================= ============ ================= =========== =================
COMPENSATION OF DIRECTORS. Our current director receives no extra compensation
for his service on our board of directors.
COMPENSATION OF OFFICERS. As of November 14, 2004, our officers have received
no compensation for their services provided to us.
EMPLOYMENT CONTRACTS. We have not entered into formal written employment
agreements with our officer and director.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
- ------------------------------------------------------------------------
The following table sets forth certain information regarding the beneficial
ownership of our common stock as of November 14, 2004, by each person or entity
known by us to be the beneficial owner of more than 5% of the outstanding shares
of common stock, each of our directors and named executive officers, and all of
our directors and executive officers as a group. The percentages in the table
assume that the selling security holders will not sell any of their shares which
are being registered in this registration statement.
=============== ====================================== ================================== ================
TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL OWNER AMOUNT AND NATURE OF BENEFICIAL PERCENT OF CLASS
OWNER(1)
- --------------- -------------------------------------- ---------------------------------- ----------------
Common Stock Martin Goldrod 3.4%
12400 Ventura Blvd., Suite 645 475,000 shares
Studio City, CA 91604 president, treasurer, director
- --------------- -------------------------------------- ---------------------------------- ----------------
Common Stock Sandy Lang 32.7%
5120 Whitsett Ave.
Valley Village, CA 91604 4,516,667 shares
- --------------- -------------------------------------- ---------------------------------- ----------------
Common Stock All directors and named executive 3.4%
officers as a group 475,000 shares
=============== ====================================== ================================== ================
14
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. In accordance with Securities and Exchange
Commission rules, shares of our common stock which may be acquired upon exercise
of stock options or warrants which are currently exercisable or which become
exercisable within 60 days of the date of the table are deemed beneficially
owned by the optionees. Subject to community property laws, where applicable,
the persons or entities named in the table above have sole voting and investment
power with respect to all shares of our common stock indicated as beneficially
owned by them.
CHANGES IN CONTROL. Our management is not aware of any arrangements which may
result in "changes in control" as that term is defined by the provisions of Item
403(c) of Regulation S-B.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
- ---------------------------------------------------------
RELATED PARTY TRANSACTIONS. We have not been a party to any actual or proposed
transactions in which our executive officers, directors, 5% stockholders or
immediate family members of such persons had or is to have a direct or indirect
material interest.
With regard to any future related party transactions, we plan to fully disclose
any and all related party transactions, including, but not limited to, the
following:
o disclose such transactions in prospectuses where required;
o disclose in any and all filings with the Securities and Exchange
Commission, where required;
o obtain disinterested directors consent; and
o obtain shareholder consent where required.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBIT NO.
3.1 Articles of Amendment to Articles of Incorporation (1)
3.2 Articles of Incorporation (2)
3.2 Bylaws (2)
31 Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer and
Chief Financial Officer
32 Section 906 Certification by Chief Executive Officer and Chief Financial
Officer
(1) Filed as Exhibit 3.1 to our Form 10-QSB, as amended, filed with the
Securities and Exchange Commission on October 23, 2001, and incorporated herein
by reference.
(2) Filed as Exhibit 2.1 and 2.3 to our Form 10-SB, as amended, filed with the
Securities and Exchange Commission on January 19, 2000, and incorporated herein
by reference.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the last quarter of the period covered
by this annual report on Form 10-KSB.
15
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
- --------------------------------------------------
AUDIT FEES. The aggregate fees billed in each of the years ended February 29,
2004 and February 28, 2003 for professional services rendered by the principal
accountant for the audit of our annual financial statements and review of the
financial statements included in our Form 10-KSB or services that are normally
provided by the accountant in connection with statutory and regulatory filings
or engagements for those years were $3,500 and $0, respectively.
AUDIT-RELATED FEES. There were no fees billed for services reasonably related to
the performance of the audit or review of the financial statements outside of
those fees disclosed above under "Audit Fees" for years ended February 29, 2004
and 2002.
TAX FEES. For the years ended February 29, 2004 and February 28, 2003, our
principal accountants did not render any services for tax compliance, tax
advice, and tax planning work.
ALL OTHER FEES. The aggregate fees billed for each of the fiscal years ended
February 28, 2003 and February 29, 2004 and for products and services provided
by the principal accountant, other than the services reported above was $0.
PRE-APPROVAL POLICIES AND PROCEDURES. Prior to engaging its accountants to
perform a particular service, our board of directors obtains an estimate for the
service to be performed. All of the services described above were approved by
the board of directors in accordance with its procedures.
16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned in Studio City, California, on November 10, 2004.
Interactive Marketing Technology, Inc.
a Nevada corporation
By: /s/ Martin Goldrod
-------------------------------------------
Martin Goldrod
Its: principal executive officer and financial officer
President, secretary, treasurer, and a director
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Martin Goldrod November 10, 2004
--------------------------------------------
Martin Goldrod
Its: principal executive officer, principal financial officer
president, secretary, treasurer and a director
Exhibit E
MPL FINANCIAL STATEMENTS
Together Again Limited/Merolink Pacific Limited
For the period from 1 January 2004 to 30 September 2004
Consolidation Total
HK$
Income Statement
Income
Net Service Income 19,605,624.16
--------------------------
Artists Income 15,389,843.00
Less: Artists Commission (3,494,969.00)
--------------------------
Net Artists Income 11,894,874.00
--------------------------
Other Income
Interest received 629.81
Total Net Income 31,501,127.97
Administration Expenses (6,470,517.62)
--------------------------
Net profit for the period 25,030,610.35
Dividend paid (25,000,000.00)
Retained earning/(loss) bought forward 4,849,797.03
--------------------------
Retained earning carried forward 4,880,407.38
==========================
Balance Sheet
Non-current assets
Property, plant and equipment 2,451.00
Investment in subsidiaries 0.00
--------------------------
2,451.00
--------------------------
Current assets
Trade debtors 1,559,687.92
Deposits and prepayments 18,597,038.25
Amount due from shareholders 83,473.80
Short term loan receivable 14,766.00
Bank balances and cash 6,286,102.92
--------------------------
26,541,068.89
--------------------------
Current liabilities
Trade creditors (53,940.80)
Accounts payable (1,232,885.47)
Other creditors and accruals (16,159,023.04)
--------------------------
(17,445,849.31)
--------------------------
Net Current Assets 9,095,219.58
--------------------------
9,097,670.58
==========================
Capital and reserves
Share capital 375,024.00
Share premium 3,842,239.20
Retained profits 4,880,407.38
--------------------------
9,097,670.58
==========================
Control total
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