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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT: (DATE OF EARLIEST EVENT REPORTED): MAY 27, 2004
COMMISSION FILE NO.: 000-50298
IGUANA VENTURES LTD.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEVADA 98-0376008
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(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER IDENTIFICATION NO.)
INCORPORATION
156 5TH AVENUE, SUITE 1034, NEW YORK, NEW YORK 10010
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(212) 244-4141
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(ISSUER TELEPHONE NUMBER)
SUITE 1400, 1500 WEST GEORGIA STREET
VANCOUVER, B.C., CANADA V6G 2Z6
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(FORMER NAME AND ADDRESS)
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
As a result of the acquisition of Integrated Security Technologies, Inc., a
New Jersey corporation ("Integrated" or "ISTI"), control of the Registrant
shifted to the former shareholders of Integrated. In addition, James Lee
entered into a stock purchase agreement with Michael Young pursuant to which Mr.
Lee acquired 6,000,000 shares of the Registrant's common stock. As a result of
these transactions, the following individual will exercise control over the
Registrant:
Name No. of Shares Percentage
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James Lee 10,069,013 66.3%
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On May 27, 2004, the Registrant acquired 100% of the issued and
outstanding shares of Integrated in exchange for 4,623,878 shares of the
Registrant's common stock. All of the shareholders of Integrated approved the
transaction. In addition, James Lee entered into a stock purchase agreement with
Michael Young pursuant to which Mr. Lee acquired 6,000,000 shares of the
Registrant's common stock for $20,000. Immediately after the issuance of shares
to the Integrated shareholders, there will be 15,177,878 shares of the
Registrant's common stock issued and outstanding.
BUSINESS DEVELOPMENT
ISTI was incorporated in New Jersey on July 11, 2002, and is headquartered
in New York City. ISTI is a value-added provider of security products and
services to the private and non-private sectors. ISTI provides comprehensive
security consulting services and solutions, security surveillance systems, and
access control systems. ISTI's objective is to provide a complete solution from
evaluation through system design and eventual implementation of comprehensive
physical and information technology (IT) security systems and products. ISTI's
target markets include government organizations, the commercial and industrial
sector, business owners and executives, facility and human resource managers and
security directors.
ISTI also has exclusive rights to distribute a highly unique and effective
technology based perimeter intrusion detection ("PID") system named FOMGuard(TM)
in certain parts of the U.S. and Canada. As the FOMGuard(TM) business develops,
ISTI intends to also generate additional revenue from the sale of related
security systems, and the provisioning of consulting and design services, IT
security and integration services, and maintenance services.
DESCRIPTION OF THE PRINCIPAL PRODUCTS AND SERVICES
Currently, ISTI provides a limited amount of closed circuit TV ("CCTV")
surveillance systems and security consulting services. ISTI also offers several
DVR and digital camera models. ISTI's current DVR models have a four (4) to
sixteen (16) channel capability and duplex operation, allowing both playback and
continuous recording capabilities. In addition, ISTI offers digital audio
recorders and access control systems such as proximity card readers.
In addition to its current products and services, ISTI intends to sell
FOMGuard(TM). ISTI entered into an agreement with Zinus, Inc. ("Zinus") giving
ISTI the exclusive right to distribute FOMGuard(TM) in the U.S. (excluding the
States of California and Hawaii) and Canada (the "Distributor Agreement").
FOMGuard(TM) is a highly unique and effective technology based PID system.
Compared to other PID systems, FOMGuard(TM) is unique in its high probability of
detection, low nuisance/false alarm rate, durability, ease of maintenance and
pinpoint intrusion location methodology.
FOMGuard(TM) is considered an "intelligent" system. It utilizes fiber
optic transmissions with data processing to detect and pinpoint any and all
intrusion attempts. FOMGuard(TM) does not contain any electrical, optical or
mechanical components in the detection generation and analysis sub-system which
makes FOMGuard(TM) impervious to environmental factors such as rain, wind, snow,
fog or electromagnetic radiation and not susceptible to nuisance/false alarms
associated with such environmental factors. Other systems are susceptible to
such environmental factors and nuisance/false alarms. FOMGuard(TM) requires
little or no maintenance. ISTI believes that FOMGuard(TM) is superior to all
competing technologies and products.
The underlying patented technology utilized by FOMGuard(TM) is the
processing of infra-red laser light pulses that are beamed through a fiber optic
mesh ("FOM") or net. The FOM serves as a sensor "skin" that is attached to an
existing perimeter barrier of any type (e.g., a fence or a wall). A proprietary
computing algorithm processes the timing and strength of the return laser pulses
(or "echo") to detect a loss of transmission or significant change resulting
from an intrusion attempt. In this manner, FOMGuard(TM) continuously monitors
the perimeter barrier and will detect any attempt to cut, climb or blast through
a perimeter barrier equipped with FOMGuard(TM). If the system detects an
irregular return pulse, it immediately sends an internal alarm to measure and
pinpoint the intrusion location on a perimeter map and simultaneously generates
an audio and video signal. FOMGuard(TM) can calculate the location of the
intrusion attempt within meters. FOMGuard(TM) can also be set up on a
stand-alone basis for immediate and localized intrusion detection and
prevention.
FOMGuard(TM) operates in concert with an Optical Sensing Unit ("OSU") which
is controlled and monitored by an Alarm Control Station ("ACS") at a central
control center. The system is modular and can cover increasing distances with
light generating modules and electronics. One ACS can cover a distance of
twenty (20) miles. Longer distances can be covered by linking several ACS
units.
ISTI believes that FOMGuard(TM) is perfectly suited as an anti-terrorist
system as it does not generate false alarms due to environmental effects and it
provides near perfect intrusion detection. FOMGuard(TM) is ideally situated for
high-security and high-risk areas that require low maintenance perimeter
security. FOMGuard(TM) is suitable for use at airports, power plants, military
facilities, chemical plants, water facilities, communication and transportation
hubs, prisons and other high-security locations.
DISTRIBUTION METHODS
ISTI plans to sell its security solutions through several channels. ISTI
will establish a direct sales force focused on high revenue and high exposure
clients. ISTI will supplement this marketing effort by partnering with
marketing agents, outside sales agents, resellers, manufacturing partnerships,
security consulting and integration companies and construction management
companies.
ISTI also intends to engage various marketing representative firms as well
as several strategic resellers and system integrators to market its products and
services. ISTI intends to develop relationships with security consulting
companies in order to increase awareness of FOMGuard(TM) with the existing
client base of these companies. ISTI will work with these security consulting
companies to develop a performance specification program for FOMGuard(TM) so
that FOMGuard(TM) may be specified for future projects with the existing clients
of these companies.
ISTI has a website at www.istecs.com to lead interested parties to either ISTI
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provided products and services or partnership opportunities.
MARKET OVERVIEW
The security industry is growing and rapidly evolving. The growth is
spurred by the continual evolution of technology that provides both security and
convenience, and the fact that security services can be obtained at reasonable
prices. Crime also drives the security industry. Although crime rates have
dropped, the random nature of crime combined with the competitive process and
built-in convenience of security systems makes security systems an attractive
purchase. In recent years, the threat of terrorism has created an upsurge in
the security industry.
COMPETITIVE BUSINESS CONDITIONS AND TARGET MARKETS
ISTI's current and potential competition is comprised of manufacturers and
distributors of substitute products such as taut-wire, vibration IR beam,
photoelectric beam and microwave systems, and security system integrators and
consultants. ISTI intends to distinguish itself by offering FOMGuard(TM).
The security products and services industry has some big players such as
Tyco/ADT, Honeywell and Johnson Controls. There is, however, no dominant player
that covers all the significant segments of the industry which are commercial,
government and retail. ISTI believes that there is plenty of opportunity to
generate value and to provide unique services within this competitive landscape.
The most likely customers for FOMGuard(TM) are those facilities or
locations that contain high-value assets or have a high-risk/high-security
situation and that have sufficient funding to purchase a leading edge security
product. Most locations require a minimum level of security. FOMGuard(TM),
however, provides a heightened level of perimeter security and is best suited
for those situations where there is little or no tolerance for breaches of
security. ISTI considers FOMGuard(TM) as one of the best in the breed of PID
systems and as an excellent deterrence and prevention mechanism.
ISTI will target the following facilities or locations for FOMGuard(TM) sales:
international and regional airports, support companies in the financial sector,
operators of nuclear, power and chemical plants, federal, state and local
government agencies and organizations, water treatment facilities, construction
companies, prisons and national borders.
DEPENDENCE ON ONE OR A FEW CUSTOMERS
ISTI will depend on a few customers with the following specific
characteristics: facilities or locations that contain high-value assets or that
have a high-risk/high-security situation and that have sufficient funding to
purchase a leading edge product such as FOMGuard(TM).
PATENTS, TRADEMARKS & LICENSES
None.
NEED FOR GOVERNMENTAL APPROVAL AND THE EFFECTS OF REGULATIONS
Generally, ISTI does not need government approval for its current products
and services or for FOMGuard(TM). In the event that ISTI sells FOMGuard(TM) to
a government agency or military facility, FOMGuard(TM) would have to pass
certain performance testing set up by such agency or military facility.
RESEARCH & DEVELOPMENT OVER THE PAST TWO YEARS
None.
EMPLOYEES
ISTI has three (3) employees all of which are employed on a full-time
basis.
DESCRIPTION OF PROPERTY
In March 2004, ISTI entered into a one-year lease for approximately 1,000
square feet of office space in New York City for a monthly rental payment of
$3,000. ISTI subleases this office space from Worldwide Trade Resources,
Inc. ("WTR"). James Lee is the Chief Executive Officer of WTR, ISTI
and the Registrant.
LEGAL PROCEEDINGS
ISTI is not a party to, and its property is not the subject of, any pending
legal proceeding.
RELATED PARTY TRANSACTIONS
James Lee, ISTI's Chief Executive Officer, is also the Chief Executive
Officer of WTR. WTR has loaned ISTI approximately $275,000, which, in
connection with the acquisition of ISTI by the Registrant, will be converted
into 1,100,000 post-forward split shares of the Registrant's common stock. In
addition, ISTI leases approximately 1,000 square feet of office space from WTR
for $3,000 per month.
RISK FACTORS
NEED FOR ADDITIONAL FINANCING. The Registrant will need to raise
approximately $1,000,000 of additional financing during the next twelve (12)
months to fully implement its business plan and to continue with its current
operations. In connection with the acquisition of ISTI, the Registrant has
obtained two commitments from a party not affiliated with the Registrant to
purchase an aggregate 850,000 post-forward split shares of the Registrant's
common stock for $425,000 (or $0.50 per share). The Registrant does not have
any other commitments or identified sources of additional capital from third
parties or from the Registrant's officers, directors or majority shareholders.
There is no assurance that additional financing will be available on favorable
terms, if at all. If the Registrant is unable to raise such additional
financing, it would have a materially adverse effect upon the Registrant's
ability to fully implement its business plan or to continue with its current
operations.
EXCLUSIVE DISTRIBUTION RIGHTS. On August 21, 2002, ISTI entered into a
one-year Distributor Agreement with Zinus giving ISTI the exclusive right to
distribute FOMGuard(TM) in the U.S. (excluding the States of California and
Hawaii) and Canada. As originally drafted, the Distributor Agreement was to
automatically renew each year thereafter if ISTI fulfilled the following sales
quotas: $400,000 in the first year, $600,000 in the second year, $900,000 in the
third year and $1,500,000 in the fourth year and thereafter (the "Quota"). On
April 14, 2004, ISTI and Zinus signed an addendum to the Distributor Agreement
(the "Addendum") whereby ISTI and Zinus extended the Distributor Agreement for
the period from April 13, 2004 to April 13, 2005. If ISTI is unable to meet
the Quota, it may not be able to renew the Distributor Agreement. If ISTI is
unable to renew the Distributor Agreement, it would have a materially adverse
effect on ISTI's ability to distribute FOMGuard(TM) and ISTI's business
operations.
RELIANCE ON KEY MANAGEMENT. The success of the ISTI depends upon the
personal efforts and abilities of James Lee, a Director of the Registrant and
Chief Executive Officer, Secretary and Treasurer of the Registrant, as well as
Alex Jeon, a Director of the Registrant and President of the Registrant. The
Registrant's ability to operate and implement its business plan is heavily
dependent on the continued service of Messrs. Lee and Jeon and the Registrant's
ability to attract, retain and motivate other qualified personnel, particularly
in the area of sales and marketing. The Registrant faces competition for such
personnel. The Registrant cannot be certain that it will be able to attract,
retain and motivate such personnel. The loss of Mr. Lee or Mr. Jeon or the
Registrant's inability to hire, retain and motivate qualified sales and
marketing personnel would have a material adverse effect on the Registrant's
business and operations.
BECAUSE MR. JAMES LEE, OWNS 66.3% OF OUR OUTSTANDING COMMON STOCK, HE WILL
EXERCISE CONTROL OVER CORPORATE DECISIONS THAT MAY BE DISADVANTAGEOUS TO OTHER
MINORITY SHAREHOLDERS. James Lee, a Director of the Registrant and the
Registrant's Chief Executive Officer, Secretary and Treasurer owns approximately
66.3% of the issued and outstanding shares of our common stock. Accordingly, he
will exercise control in determining the outcome of all corporate transactions
or other matters, including mergers, consolidations and the sale of all or
substantially all of our assets, and also the power to prevent or cause a change
in control. The interests of Mr. Lee may differ from the interests of the other
stockholders and thus result in corporate decisions that are disadvantageous to
other shareholders.
IF THERE'S A MARKET FOR OUR COMMON STOCK, OUR STOCK PRICE MAY BE VOLATILE.
If there's a market for our common stock, we anticipate that such market would
be subject to wide fluctuations in response to several factors, including, but
not limited to:
(1) actual or anticipated variations in our results of operations;
(2) our ability or inability to generate new revenues;
(3) increased competition; and
(4) conditions and trends in the security industry.
Further, because our common stock is traded on the NASD over the counter
bulletin board, our stock price may be impacted by factors that are unrelated or
disproportionate to our operating performance. These market fluctuations, as
well as general economic, political and market conditions, such as recessions,
interest rates or international currency fluctuations may adversely affect the
market price of our common stock.
ITEM 5. OTHER EVENTS
On May 27, 2004, the Registrant's Board of Directors appointed James Lee
and Alex Jeon as Directors to fill vacancies thereon. On that same date, Michael
Young resigned as the Registrant's President and Chief Executive Officer and as
a Director, and Vicki White resigned as the Registrant's Secretary, Treasurer
and Chief Financial Officer and as a Director. James Lee, a Director and the
Chief Executive Officer of ISTI, was appointed as the Chief Executive Officer,
Secretary and Treasurer of the Registrant. Alex Jeon, a Director and the
President of ISTI, was also appointed as the President of the Registrant.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
Financial statements for Integrated Security Technologies, Inc.
(c) Financial Statements of Business Acquired To Be Provided
(d) Pro Forma Financial Information To Be provided
(e) Exhibits:
2.1 Exchange Agreement
Signatures
Pursuant to the requirement of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Iguana Ventures Ltd.
June 9, 2004
/s/ James Lee
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James Lee
Chief Executive Officer
Exhibit 2.l
EXCHANGE AGREEMENT
Between
IGUANA VENTURES LTD.
and
INTEGRATED SECURITY TECHNOLOGIES, INC.
Dated May 27, 2004
EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT (hereinafter referred to as this "Agreement") is
entered into as of this 27th day of May, 2004, by and between IGUANA VENTURES
LTD., a Nevada corporation (hereinafter referred to as the "Company"),
INTEGRATED SECURITY TECHNOLOGIES, INC., a New Jersey corporation (hereinafter
referred to as "Integrated"), and the persons executing this Agreement listed on
the signature page hereto (referred to collectively as "Integrated
Shareholders") who own one hundred percent (100%) of the outstanding shares of
Integrated, upon the following premises:
Premises.
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WHEREAS, the Integrated Shareholders own one hundred percent (100%) of the
Issued and outstanding shares of the capital stock of Integrated;
WHEREAS, the Company is a publicly held corporation whose common stock is
quoted on the OTC Bulletin Board under the symbol "IGVL";
WHEREAS, Integrated is a privately held corporation organized under the
laws of New Jersey;
WHEREAS, the Company desires to acquire 100% of the issued and outstanding
shares of Common Stock of Integrated in exchange for unissued shares of its
Common Stock (the "Common Stock") (the "Exchange Offer"), so that Integrated
will become a wholly owned subsidiary of the Company; and
WHEREAS, Integrated Shareholders desire to exchange all of their
Shares of capital stock of Integrated solely in exchange for the shares of
authorized but unissued Common Stock, $.001 par value, of the Company.
Agreement
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NOW THEREFORE, on the stated premises and for and in consideration of the
mutual covenants and agreements hereinafter set forth and the mutual benefits to
the parties to be derived herefrom, it is hereby agreed as follows:
ARTICLE I
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF INTEGRATED
AND THE INTEGRATED SHAREHOLDERS
As an inducement to and to obtain the reliance of the Company, except as
set forth on the Integrated Schedules (as hereinafter defined), Integrated and
the Integrated Shareholders represent and warrant as follows:
Section 1.01 Organization. Integrated is a corporation duly organized,
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validly existing, and in good standing under the laws of New Jersey and has the
corporate power and is duly authorized, qualified, franchised, and licensed
under all applicable laws, regulations, ordinances, and orders of public
authorities to own all of its properties and assets and to carry on its business
in all material respects as it is now being conducted, including qualification
to do business as a foreign corporation in the states or countries in which the
character and location of the assets owned by it or the nature of the business
transacted by it requires qualification, except where failure to be so qualified
would not have a material adverse effect on its business. Included in the
Integrated Schedules are complete and correct copies of the Articles of
Incorporation and Bylaws of Integrated as in effect on the date hereof. The
execution and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby will not, violate any provision of Integrated's
Articles of Incorporation or Bylaws. Integrated has taken all actions required
by law, its Articles of Incorporation, or otherwise to authorize the execution
and delivery of this Agreement. Integrated has full power, authority, and legal
right and has taken all action required by law, its Articles of Incorporation,
and otherwise to consummate the transactions herein contemplated.
Section 1.02 Capitalization. The authorized capitalization of
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Integrated consists of 1,500 shares of common stock, $.01 par value per share,
of which 1,500 shares are currently issued and outstanding and no shares of
preferred stock. All issued and outstanding shares are legally issued, fully
paid, and non-assessable and not issued in violation of the preemptive or other
rights of any person.
Section 1.03 Subsidiaries and Predecessor Corporations. Integrated
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does not have any predecessor corporation(s) or subsidiary(ies), and does not
own, beneficially or of record, any shares of any other corporation, unless
otherwise disclosed to the Company in writing.
Section 1.04 Other Information.
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(a) Except as otherwise provided, Integrated has no liabilities with
respect to the payment of any federal, state, county, local or other taxes
(including any deficiencies, interest or penalties), except for taxes accrued
but not yet due and payable.
(b) Integrated has filed all state, federal or local income and/or
franchise tax returns required to be filed by it from inception to the date
hereof. Each of such income tax returns reflects the taxes due for the period
covered thereby, except for amounts which, in the aggregate, are immaterial.
(c) The books and records of Integrated are in all material respects
complete and correct and have been maintained in accordance with good business
and accounting practices.
(d) Integrated has no material liabilities, direct or indirect, matured
or unmatured, contingent or otherwise in excess of Twenty-Five Thousand Dollars
($25,000), except as disclosed in writing to the Company on Schedule 1.04.
Section 1.05 Information. The information concerning Integrated set
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forth in this Agreement and in the Integrated Schedules is complete and accurate
in all material respects and does not contain any untrue statement of a material
fact or omit to state a material fact required to make the statements made, in
light of the circumstances under which they were made, not misleading. In
addition, Integrated has fully disclosed in writing to the Company (through this
Agreement or the Integrated Schedules) all information relating to matters
involving Integrated or its assets or its present or past operations or
activities which (i) indicated or may indicate, in the aggregate, the existence
of a greater than Twenty-Five Thousand Dollars ($25,000) liability or diminution
in value, (ii) have led or may lead to a competitive disadvantage on the part of
Integrated, or (iii) either alone or in aggregation with other information
covered by this Section, otherwise have led or may lead to a material adverse
effect on the transactions contemplated herein or on Integrated, its assets, or
its operations or activities as presently conducted or as contemplated to be
conducted after the Closing Date, including, but not limited to, information
relating to governmental, employee, environmental, litigation and securities
matters and transactions with affiliates.
Section 1.06 Options or Warrants. There are no existing options,
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warrants, calls, or commitments of Integrated of any character relating to the
authorized and unissued Integrated common stock, except options, warrants, calls
or commitments, if any, to which Integrated is not a party and by which it is
not bound.
Section 1.07 Absence of Certain Changes or Events. Except as set forth
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in this Agreement or the Integrated Schedules, since inception on July 11, 2002:
(a) there has not been (i) any material adverse change in the proposed
business, operations, properties, assets, or condition of Integrated or (ii) any
damage, destruction, or loss to Integrated (whether or not covered by insurance)
materially and adversely affecting the business or financial condition of
Integrated;
(b) Integrated has not (i) amended its Articles of Incorporation or
Bylaws; (ii) declared or made, or agreed to declare or make, any payment of
dividends or distributions of any assets of any kind whatsoever to stockholders
or purchased or redeemed, or agreed to purchase or redeem, any of its capital
stock; (iii) waived any rights of value which in the aggregate are outside of
the ordinary course of business or material considering the business of
Integrated; (iv) made any material change in its method of management, operation
or accounting; (v) entered into any other material transaction other than sales
in the ordinary course of its business; (vi) made any accrual or arrangement for
payment of bonuses or special compensation of any kind or any severance or
termination pay to any present or former officer or employee; (vii) increased
the rate of compensation payable or to become payable by it to any of its
officers or directors or any of its salaried employees whose monthly
compensation exceeds Ten Thousand Dollars ($10,000); or (viii) made any increase
in any profit sharing, bonus, deferred compensation, insurance, pension,
retirement, or other employee benefit plan, payment, or arrangement made to,
for, or with its officers, directors, or employees;
(c) Integrated has not (i) borrowed or agreed to borrow any funds or
incurred, or become subject to, any material obligation or liability (absolute
or contingent) in excess of $25,000 except as disclosed herein and except
liabilities incurred in the ordinary course of business; (ii) paid or agreed to
pay any material obligations or liability (absolute or contingent) other than
current liabilities, and current liabilities incurred in the ordinary course of
business and professional and other fees and expenses in connection with the
preparation of this Agreement and the consummation of the transactions
contemplated hereby; (iii) sold or transferred, or agreed to sell or transfer,
any of its assets, properties, or rights (except assets, properties, or rights
not used or useful in its business which, in the aggregate have a value of less
than Twenty-Five Thousand Dollars ($25,000)), or canceled, or agreed to cancel,
any debts or claims (except debts or claims which in the aggregate are of a
value of less than Twenty-Five Thousand Dollars ($25,000)); or (iv) made or
permitted any amendment or termination of any contract, agreement, or license to
which it is a party if such amendment or termination is material, considering
the business of Integrated; and
(d) To the best knowledge of Integrated, Integrated has not become
subject to any law or regulation which materially and adversely affects, or in
the future may adversely affect, the business, operations, properties, assets,
or condition of Integrated.
Section 1.08 Title and Related Matters. No third party has any right
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to, and Integrated has not received any notice of infringement of or conflict
with asserted rights of others with respect to, any product, technology, data,
trade secrets, know-how, proprietary techniques, trademarks, service marks,
trade names, or copyrights which, individually or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would have a materially
adverse effect on the proposed business, operations, financial condition,
income, or business prospects of Integrated or any material portion of its
properties, assets, or rights.
Section 1.09 Litigation and Proceedings. Except as otherwise provided,
--------------------------
there are no actions, suits, or proceedings pending or, to the knowledge of
Integrated after reasonable investigation, threatened by or against Integrated
or affecting Integrated or its properties, at law or in equity, before any court
or other governmental agency or instrumentality, domestic or foreign, or before
any arbitrator of any kind. Integrated does not have any knowledge of any
material default on its part with respect to any judgment, order, injunction,
decree, award, rule, or regulation of any court, arbitrator, or governmental
agency or instrumentality or of any circumstances which, after reasonable
investigation, would result in the discovery of such a default.
Section 1.10 Contracts.
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(a) There are no material contracts, agreements, franchises, license
agreements, debt instruments or other commitments to which Integrated is a party
or by which it or any of its assets, products, technology, or properties are
bound other than those incurred in the ordinary course of business (as used in
this Agreement, a "material" contract, agreement, franchise, license agreement,
debt instrument or commitment is one which (i) will remain in effect for more
than six (6) months after the date of this Agreement and (ii) involves aggregate
obligations of at least Twenty-Five Thousand Dollars ($25,000) unless otherwise
disclosed pursuant to this Agreement;
(b) All contracts, agreements, franchises, license agreements, and
other commitments, if any, to which Integrated is a party and which are material
to the operations of Integrated taken as a whole are valid and enforceable by
Integrated in all respects, except as limited by bankruptcy and insolvency laws
and by other laws affecting the rights of creditors generally;
(c) Integrated is not a party to or bound by, and the properties of
Integrated are not subject to, any contract, agreement, other commitment or
instrument; any charter or other corporate restriction; or any judgment, order,
writ, injunction, decree, or award which materially and adversely affects, the
business operations, properties, assets, or condition of Integrated; and
(d) Except as included or described in the Integrated Schedules,
Integrated is not a party to any oral or written (i) contract for the employment
of any officer or employee which is not terminable on thirty (30) days, or less
notice; (ii) profit sharing, bonus, deferred compensation, stock option,
severance pay, pension benefit or retirement plan; (iii) agreement, contract, or
indenture relating to the borrowing of money; (iv) guaranty of any obligation,
other than one on which Integrated is a primary obligor, for the borrowing of
money or otherwise, excluding endorsements made for collection and other
guaranties of obligations which, in the aggregate do not exceed more than one
(1) year or provide for payments in excess of Twenty-Five Thousand Dollars
($25,000) in the aggregate; (v) collective bargaining agreement; or (vi)
agreement with any present or former officer or director of Integrated.
Section 1.11 Material Contract Defaults. Integrated is not in default
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in any material respect under the terms of any outstanding material contract,
agreement, lease, or other commitment which is material to the business,
operations, properties, assets or condition of Integrated and there is no event
of default in any material respect under any such contract, agreement, lease, or
other commitment in respect of which Integrated has not taken adequate steps to
prevent such a default from occurring.
Section 1.12 No Conflict With Other Instruments. The execution of this
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Agreement and the consummation of the transactions contemplated by this
Agreement will not result in the breach of any term or provision of, constitute
an event of default under, or terminate, accelerate or modify the terms of any
material indenture, mortgage, deed of trust, or other material contract,
agreement, or instrument to which Integrated is a party or to which any of its
properties or operations are subject.
Section 1.13 Governmental Authorizations. Except as set forth in the
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Integrated Schedules, Integrated has all licenses, franchises, permits, and
other governmental authorizations that are legally required to enable it to
conduct its business in all material respects as conducted on the date hereof.
Except for compliance with federal and state securities and corporation laws, as
hereinafter provided, no authorization, approval, consent, or order of, or
registration, declaration, or filing with, any court or other governmental body
is required in connection with the execution and delivery by Integrated of this
Agreement and the consummation by Integrated of the transactions contemplated
hereby.
Section 1.14 Compliance With Laws and Regulations. Except as set forth
------------------------------------
in the Integrated Schedules, to the best of its knowledge Integrated has
complied with all applicable statutes and regulations of any federal, state, or
other governmental entity or agency thereof, except to the extent that
noncompliance would not materially and adversely affect the business,
operations, properties, assets, or condition of Integrated or except to the
extent that noncompliance would not result in the occurrence of any material
liability for Integrated.
Section 1.15 Approval of Agreement. The Board of Directors of
-----------------------
Integrated has authorized the execution and delivery of this Agreement by
Integrated and has approved this Agreement and the transactions contemplated
hereby, and will recommend to the Integrated Shareholders that the Exchange
Offer be accepted by them.
Section 1.16 Material Transactions or Affiliations. Set forth in the
--------------------------------------
Integrated Schedules is a description, if applicable, of every contract,
agreement, or arrangement between Integrated and any predecessor and any person
who was at the time of such contract, agreement, or arrangement an officer,
director, or person owning of record, or known by Integrated to own
beneficially, five percent (5%) or more of the issued and outstanding common
stock of Integrated and which is to be performed in whole or in part after the
date hereof or which was entered into not more than three (3) years prior to the
date hereof. Except as disclosed in the Integrated Schedules or otherwise
disclosed herein, no officer, director, or five percent (5%) shareholder of
Integrated has, or has had since inception of Integrated, any known interest,
direct or indirect, in any transaction with Integrated which was material to the
business of Integrated. There are no commitments by Integrated, whether written
or oral, to lend any funds, or to borrow any money from, or enter into any other
transaction with, any such affiliated person.
Section 1.17 Integrated Schedules. Integrated will deliver to the
---------------------
Company the following schedules, if such schedules are applicable to the
business of Integrated, which are collectively referred to as the " Integrated
Schedules" and which consist of separate schedules dated as of the date of
execution of this Agreement, all certified by the principal executive officer of
Integrated as complete, true, and correct as of the date of this Agreement in
all material respects:
(a) a schedule containing complete and correct copies of the Articles
of Incorporation in effect as of the date of this Agreement;
(b) a schedule containing complete and correct copies of the Bylaws of
Integrated in effect as of the date of this Agreement;
(c) a schedule containing any Corporate Resolutions of the Shareholders of
Integrated;
(d) a schedule containing Minutes of meetings of the Board of Directors of
Integrated;
(e) a schedule containing a list indicating the name and address of each
shareholder of Integrated together with the number of shares owned by him, her
or it;
(f) a schedule listing any and all federal, state and local tax
identification numbers of Integrated and containing complete and correct copies
of all federal, state and local tax returns filed by Integrated; and
(g) a schedule setting forth any other information, together with any
required copies of documents, required to be disclosed by Integrated. Any fact
known to be, or to the best knowledge of Integrated or the Integrated
Shareholders after reasonable investigation, reasonably believed to be, contrary
to the representations, covenants, and warranties made in Article I are required
to be disclosed in the Integrated Schedules pursuant to this Section 1.17(g).
Integrated shall cause the Integrated Schedules and the instruments and
data delivered to the Company hereunder to be promptly updated after the date
hereof up to and including the Closing Date.
It is understood and agreed that not all of the schedules referred to above
have been completed or are available to be furnished by Integrated. Integrated
shall have until June 15, 2004 to provide such schedules. If Integrated cannot
or fails to do so, or if the Company acting reasonably finds any such schedules
or updates provided after the date hereof to be unacceptable according to the
criteria set forth herein, the Company may terminate this Agreement by giving
written notice to Integrated within five (5) days after the schedules or updates
were due to be produced or were provided. For purposes of the foregoing, the
Company may consider a disclosure in the Integrated Schedules to be
"unacceptable" only if that item would have a material adverse impact on the
financial condition of Integrated, taken as a whole.
Section 1.18 Valid Obligation. This Agreement and all agreements and
-----------------
other documents executed by Integrated in connection herewith constitute the
valid and binding obligation of Integrated, enforceable in accordance with its
or their terms, except as may be limited by bankruptcy, insolvency, moratorium
or other similar laws affecting the enforcement of creditors' rights generally
and subject to the qualification that the availability of equitable remedies is
subject to the discretion of the court before which any proceeding therefor may
be brought.
Section 1.19 Acquisition of the Shares by the Integrated Shareholders.
--------------------------------------------------------
The Integrated Shareholders are acquiring the Shares for their own account
without the participation of any other person and with the intent of holding the
Shares for investment and without the intent of participating, directly or
indirectly, in a distribution of the Shares, or any portion thereof, and not
with a view to, or for resale in connection with, any distribution of the
Shares, or any portion thereof. The Integrated Shareholders have read,
understand and consulted with their legal counsel regarding the limitations and
requirements of Section 5 of the 1933 Act. The Integrated Shareholders will
offer, sell, pledge, convey or otherwise transfer the Shares, or any portion
thereof, only if: (i) pursuant to an effective registration statement under the
1933 Act and any and all applicable state securities or Blue Sky laws or in a
transaction which is otherwise in compliance with the 1933 Act and such laws; or
(ii) pursuant to a valid exemption from registration.
Section 1.20 Exemption from Registration. The Exchange and the
------------------------------
transactions contemplated thereby, meet an exemption from registration pursuant
to Rule 506 of Regulation D promulgated under the 1933 Act.
ARTICLE II
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF THE COMPANY
As an inducement to, and to obtain the reliance of Integrated and the
Integrated Shareholders, except as set forth in the Company Schedules (as
hereinafter defined), the Company represents and warrants as follows:
Section 2.01 Organization. The Company is a corporation duly
------------
organized, validly existing, and in good standing under the laws of the State of
Nevada and has the corporate power and is duly authorized, qualified,
franchised, and licensed under all applicable laws, regulations, ordinances, and
orders of public authorities to own all of its properties and assets, to carry
on its business in all material respects as it is now being conducted, and
except where failure to be so qualified would not have a material adverse effect
on its business, there is no jurisdiction in which it is not qualified in which
the character and location of the assets owned by it or the nature of the
business transacted by it requires qualification. Included in the Company
Schedules are complete and correct copies of the Articles of Incorporation and
Bylaws of the Company as in effect on the date hereof. The execution and
delivery of this Agreement does not, and the consummation of the transactions
contemplated hereby will not, violate any provision of the Company's Articles of
Incorporation or Bylaws. The Company has taken all action required by law, its
Articles of Incorporation, its Bylaws, or otherwise to authorize the execution
and delivery of this Agreement, and the Company has full power, authority, and
legal right and has taken all action required by law, its Articles of
Incorporation, Bylaws, or otherwise to consummate the transactions herein
contemplated.
Section 2.02 Capitalization. The Company is authorized to issue
--------------
100,000,000 shares of Common Stock, par value $.001 per share, of which
10,554,000 shares will be issued and outstanding on the closing date prior to
the issuance of the shares to the Integrated Shareholders as set forth in
Section 3.01(ii), as defined herein, and 100,000,000 shares of preferred stock,
par value $.001 per share ("Preferred Stock"), of which no shares will be issued
and outstanding on the closing date. All issued and outstanding shares are
legally issued, fully paid, and non-assessable and not issued in violation of
the preemptive or other rights of any person.
Section 2.03 Subsidiaries and Predecessor Corporations. The Company does
-------------------------------------------
not have any predecessor corporation(s) or subsidiaries, and does not own,
beneficially or of record, any shares of any other corporation.
Section 2.04 Financial Statements.
---------------------
(a) Included in the Company Schedules are (i) the audited balance
sheets of the Company and the related statements of operations and cash flows as
of and for the twelve (12) months ended November 30, 2003 and (ii) the unaudited
balance sheets of the Company and the related statements of operations and cash
flows for the three (3) months ended February 29, 2004.
(b) All such financial statements have been prepared in accordance
with generally accepted accounting principles consistently applied throughout
the periods involved. The Company balance sheets present fairly as of their
respective dates the financial condition of the Company. As of the date of such
balance sheets, except as and to the extent reflected or reserved against
therein, the Company had no liabilities or obligations (absolute or contingent)
which should be reflected in the balance sheets or the notes thereto prepared in
accordance with generally accepted accounting principles, and all assets
reflected therein are properly reported and present fairly the value of the
assets of the Company, in accordance with generally accepted accounting
principles. The statements of operations, stockholders' equity and cash flows
reflect fairly the information required to be set forth therein by generally
accepted accounting principles.
(c) The Company has no liabilities with respect to the payment of any
federal, state, county, local or other taxes (including any deficiencies,
interest or penalties), except for taxes accrued but not yet due and payable.
(d) The books and records, financial and otherwise, of the Company are
in all material aspects complete and correct and have been maintained in
accordance with good business and accounting practices.
(e) All of the Company's assets are reflected on its financial
statements, and, except as set forth in the Company Schedules or the financial
statements of the Company or the notes thereto, the Company has no material
liabilities, direct or indirect, matured or unmatured, contingent or otherwise.
Section 2.05 Information. The information concerning the Company set
-----------
forth in this Agreement and the Company Schedules is complete and accurate in
all material respects and does not contain any untrue statements of a material
fact or omit to state a material fact required to make the statements made, in
light of the circumstances under which they were made, not misleading. In
addition, the Company has fully disclosed in writing to Integrated (through this
Agreement or the Company Schedules) all information relating to matters
involving the Company or its assets or its present or past operations or
activities which (i) indicated or may indicate, in the aggregate, the existence
of a greater than One Thousand Dollars ($1,000) liability or diminution in
value, (ii) have led or may lead to a competitive disadvantage on the part of
the Company or (iii) either alone or in aggregation with other information
covered by this Section, otherwise have led or may lead to a material adverse
effect on the transactions contemplated herein or on the Company, its assets, or
its operations or activities as presently conducted or as contemplated to be
conducted after the Closing Date, including, but not limited to, information
relating to governmental, employee, environmental, litigation and securities
matters and transactions with affiliates.
Section 2.06 Options or Warrants. There are no existing options,
---------------------
warrants, calls, or commitments of any character relating to the authorized and
unissued stock of the Company.
Section 2.07 Absence of Certain Changes or Events. Except as disclosed
------------------------------------
in Schedule 2.07, or permitted in writing by Integrated, since the date of the
most recent Company balance sheet:
(a) there has not been (i) any material adverse change in the business,
operations, properties, assets or condition of the Company or (ii) any damage,
destruction or loss to the Company (whether or not covered by insurance)
materially and adversely affecting the business, operations, properties, assets
or condition of the Company;
(b) The Company has not and will not (i) amend its Articles of
Incorporation or Bylaws except to complete the performance of the Company as set
forth herein; (ii) declare or make, or agree to declare or make any payment of
dividends or distributions of any assets of any kind whatsoever to stockholders
or purchase or redeem, or agree to purchase or redeem, any of its capital stock;
(iii) waive any rights of value which in the aggregate are outside of the
ordinary course of business or material considering the business of the Company;
(iv) make any material change in its method of management, operation, or
accounting; (v) enter into any transaction or agreement other than in the
ordinary course of business; (vi) make any accrual or arrangement for or payment
of bonuses or special compensation of any kind or any severance or termination
pay to any present or former officer or employee; (vii) increase the rate of
compensation payable or to become payable by it to any of its officers or
directors or any of its salaried employees whose monthly compensation exceed One
Thousand Dollars ($1,000); or (viii) make any increase in any profit sharing,
bonus, deferred compensation, insurance, pension, retirement, or other employee
benefit plan, payment, or arrangement, made to, for or with its officers,
directors, or employees;
(c) The Company has not (i) granted or agreed to grant any options or
warrants; (ii) borrowed or agreed to borrow any funds or incurred, or become
subject to, any material obligation or liability (absolute or contingent) except
liabilities incurred in the ordinary course of business; (iii) paid or agreed to
pay any material obligations or liabilities (absolute or contingent) other than
current liabilities reflected in or shown on the most recent Company balance
sheet and current liabilities incurred since that date in the ordinary course of
business and professional and other fees and expenses in connection with the
preparation of this Agreement and the consummation of the transaction
contemplated hereby; (iv) sold or transferred, or agreed to sell or transfer,
any of its assets, properties, or rights (except assets, properties, or rights
not used or useful in its business which, in the aggregate have a value of less
than One Thousand Dollars ($1,000)), or canceled, or agreed to cancel, any debts
or claims (except debts or claims which in the aggregate are of a value less
than One Thousand Dollars ($1,000)); and (v) made or permitted any amendment or
termination of any contract, agreement, or license to which it is a party if
such amendment or termination is material, considering the business of the
Company; and
(d) The Company has not become subject to any law or regulation which
materially and adversely affects, or in the future, may adversely affect, the
business, operations, properties, assets or condition of the Company.
Section 2.08 Title and Related Matters. The Company has good and
----------------------------
marketable title to all of its properties, inventory, interest in properties,
and assets, real and personal, which are reflected in the most recent Company
balance sheet or acquired after that date (except properties, inventory,
interest in properties, and assets sold or otherwise disposed of since such date
in the ordinary course of business), free and clear of all liens, pledges,
charges, or encumbrances except (a) statutory liens or claims not yet
delinquent; (b) such imperfections of title and easements as do not and will not
materially detract from or interfere with the present or proposed use of the
properties subject thereto or affected thereby or otherwise materially impair
present business operations on such properties; and (c) as described in the
Company Schedules. Except as set forth in the Company Schedules, the Company
owns, free and clear of any liens, claims, encumbrances, royalty interests, or
other restrictions or limitations of any nature whatsoever, any and all products
it is currently manufacturing, including the underlying technology and data, and
all procedures, techniques, marketing plans, business plans, methods of
management, or other information utilized in connection with the Company's
business. Except as set forth in the Company Schedules, no third party has any
right to, and the Company has not received any notice of infringement of or
conflict with asserted rights of others with respect to any product, technology,
data, trade secrets, know-how, proprietary techniques, trademarks, service
marks, trade names, or copyrights which, individually or in the aggregate, if
the subject of an unfavorable decision, ruling or finding, would have a
materially adverse effect on the business, operations, financial condition,
income, or business prospects of the Company or any material portion of its
properties, assets, or rights.
Section 2.09 Litigation and Proceedings. There are no actions, suits,
--------------------------
proceedings or investigations pending or, to the knowledge of the Company after
reasonable investigation, threatened by or against the Company or affecting the
Company or its properties, at law or in equity, before any court or other
governmental agency or instrumentality, domestic or foreign, or before any
arbitrator of any kind. The Company has no knowledge of any default on its part
with respect to any judgment, order, writ, injunction, decree, award, rule or
regulation of any court, arbitrator, or governmental agency or instrumentality,
or any circumstance which after reasonable investigation would result in the
discovery of such default.
Section 2.10 Contracts.
---------
(a) The Company is not a party to, and its assets, products, technology
and properties are not bound by, any material contract, franchise, license
agreement, agreement, debt instrument or other commitments whether such
agreement is in writing or oral.
(b) All contracts, agreements, franchises, license agreements, and
other commitments to which the Company is a party or by which its properties are
bound and which are material to the operations of the Company taken as a whole
are valid and enforceable by the Company in all respects, except as limited by
bankruptcy and insolvency laws and by other laws affecting the rights of
creditors generally;
(c) The Company is not a party to or bound by, and the properties of
the Company are not subject to any contract, agreement, other commitment or
instrument; any charter or other corporate restriction; or any judgment, order,
writ, injunction, decree, or award which materially and adversely affects, the
business operations, properties, assets, or condition of the Company; and
(d) Except as included or described in the Company Schedules or
reflected in the most recent Company balance sheet, the Company is not a party
to any oral or written (i) contract for the employment of any officer or
employee which is not terminable on thirty (30) days, or less notice; (ii)
profit sharing, bonus, deferred compensation, stock option, severance pay,
pension benefit or retirement plan, (iii) agreement, contract, or indenture
relating to the borrowing of money, (iv) guaranty of any obligation, other than
one on which the Company is a primary obligor, for the borrowing of money or
otherwise, excluding endorsements made for collection and other guaranties of
obligations which, in the aggregate do not exceed more than one year or provide
for payments in excess of Twenty-Five Thousand Dollars ($25,000) in the
aggregate; (v) collective bargaining agreement; or (vi) agreement with any
present or former officer or director of the Company.
Section 2.11 Material Contract Defaults. The Company is not in default
--------------------------
in any respect under the terms of any outstanding contract, agreement, lease, or
other commitment which is material to the business, operations, properties,
assets or condition of the Company and there is no event of default in any
material respect under any such contract, agreement, lease, or other commitment
in respect of which the Company has not taken adequate steps to prevent such a
default from occurring.
Section 2.12 No Conflict With Other Instruments. The execution of this
----------------------------------
Agreement and the consummation of the transactions contemplated by this
Agreement will not result in the breach of any term or provision of, constitute
a default under, or terminate, accelerate or modify the terms of, any indenture,
mortgage, deed of trust, or other material agreement or instrument to which the
Company is a party or to which any of its assets or operations are subject.
Section 2.13 Governmental Authorizations. The Company has all
----------------------------
licenses, franchises, permits, and other governmental authorizations, that are
legally required to enable it to conduct its business operations in all material
respects as conducted on the date hereof. Except for compliance with federal
and state securities or corporation laws, as hereinafter provided, no
authorization, approval, consent or order of, or registration, declaration or
filing with, any court or other governmental body is required in connection with
the execution and delivery by the Company of this Agreement and the consummation
by the Company of the transactions contemplated hereby.
Section 2.14 Compliance With Laws and Regulations. To the best of its
------------------------------------
knowledge, the Company has complied with all applicable statutes and regulations
of any federal, state, or other applicable governmental entity or agency
thereof, except to the extent that noncompliance would not materially and
adversely affect the business, operations, properties, assets or condition of
the Company or except to the extent that noncompliance would not result in the
occurrence of any material liability. This compliance includes, but is not
limited to, the filing of all reports, filings and schedules to date with
federal and state securities authorities.
Section 2.15 Approval of Agreement. The Board of Directors of the
-----------------------
Company has authorized the execution and delivery of this Agreement by the
Company and has approved this Agreement and the transactions contemplated
hereby.
Section 2.16 Material Transactions or Affiliations. Except as
------------------------------------------
disclosed herein and in the Company Schedules, there exists no contract,
agreement or arrangement between the Company and any predecessor and any person
who was at the time of such contract, agreement or arrangement an officer,
director, or person owning of record or known by the Company to own
beneficially, five percent (5%) or more of the issued and outstanding Common
Stock of the Company and which is to be performed in whole or in part after the
date hereof or was entered into not more than three years prior to the date
hereof. Neither any officer, director, nor five percent (5%) shareholder of the
Company has, or has had since inception of the Company, any known interest,
direct or indirect, in any such transaction with the Company which was material
to the business of the Company. The Company has no commitment, whether written
or oral, to lend any funds to, borrow any money from, or enter into any other
transaction with, any such affiliated person.
Section 2.17 The Company Schedules. Within ten (10) days following the
---------------------
Closing, the Company will deliver to Integrated the following schedules, which
are collectively referred to as the "Company Schedules" and which consist of
separate schedules, which are dated the date of this Agreement, all certified by
the principal executive officer of the Company to be complete, true, and
accurate in all material respects as of the date of this Agreement:
(a) a schedule containing complete and accurate copies of the Articles
of Incorporation and Bylaws of the Company as in effect as of the date of this
Agreement;
(b) a schedule containing the financial statements of the Company
identified herein;
(c) a certified list from the Company's Transfer Agent setting forth
the name and address of each shareholder of the Company together with the number
of shares owned by him, her or it;
(d) a schedule containing a description of all real property owned by
the Company, together with a description of every mortgage, deed of trust,
pledge, lien, agreement, encumbrance, claim, or equity interest of any nature
whatsoever in such real property;
(e) copies of all licenses, permits, and other governmental
authorizations (or requests or applications therefor) pursuant to which the
Company carries on or proposes to carry on its business (except those which, in
the aggregate, are immaterial to the present or proposed business of the
Company);
(f) a schedule listing the accounts receivable and notes and other
obligations receivable of the Company as of May 31, 2004, or thereafter other
than in the ordinary course of business of the Company, indicating the debtor
and amount, and classifying the accounts to show in reasonable detail the length
of time, if any, overdue, and stating the nature and amount of any refunds, set
offs, reimbursements, discounts, or other adjustments which are in the aggregate
material and due to or claimed by such debtor;
(g) a schedule listing the accounts payable and notes and other
obligations payable of the Company as of May 31, 2004, or that arose thereafter
other than in the ordinary course of the business of the Company, indicating the
creditor and amount, classifying the accounts to show in reasonable detail the
length of time, if any, overdue, and stating the nature and amount of any
refunds, set offs, reimbursements, discounts, or other adjustments, which in the
aggregate are material and due to or claimed by the Company respecting such
obligations;
(h) a schedule setting forth a description of any material adverse
change in the business, operations, property, inventory, assets, or condition of
the Company since November 30, 2003;
(i) a schedule listing any and all federal, state and local tax
identification numbers of the Company and containing complete and correct copies
of all federal, state and local tax returns filed by the Company; and
(j) a schedule setting forth any other information, together with any
required copies of documents, required to be disclosed by the Company. Any fact
known to be, or to the best knowledge of the Company after reasonable
investigation, reasonably believed to be, contrary to the representations,
covenants, and warranties made in Article II are required to be disclosed in the
Company Schedules pursuant to this Section 2.17(j).
The Company shall cause the Company Schedules and the instruments and data
delivered to Integrated hereunder to be promptly updated after the date hereof
up to and including the Closing Date.
It is understood and agreed that not all of the schedules referred to above
have been completed or are available to be furnished by the Company. The
Company shall have until June 15, 2004 to provide such schedules. If the
Company cannot or fails to provide the schedules required by this Section, or if
Integrated or the Integrated Shareholders find any such schedules or updates
provided after the date hereof to be unacceptable, Integrated or the Integrated
Shareholders may terminate this Agreement by giving written notice to the
Company within five (5) days after the schedules or updates were due to be
produced or were provided. For purposes of the foregoing, the Integrated may
consider a disclosure in the Company Schedules to be "unacceptable" only if that
item would have a material adverse impact on the financial condition of the
Company, taken as a whole.
Section 2.18 Valid Obligation. This Agreement and all agreements and
-----------------
other documents executed by the Company in connection herewith constitute the
valid and binding obligation of the Company, enforceable in accordance with its
or their terms, except as may be limited by bankruptcy, insolvency, moratorium
or other similar laws affecting the enforcement of creditors' rights generally
and subject to the qualification that the availability of equitable remedies is
subject to the discretion of the court before which any proceeding therefor may
be brought.
Section 2.19 Liabilities. The Company acknowledges that it will
-----------
have no liabilities outstanding on the Closing Date (as defined in Section
3.02).
Section 2.20 Reporting Requirements of the Company. The Company is
----------------------------------------
subject to the reporting and filing requirements of the Securities Exchange Act
of 1934 ("the Exchange Act') including (1) the periodic reporting requirements
and (2) the Proxy Rules set forth thereunder. The Company and its officers,
directors, and beneficial owners are subject to the provisions of the Exchange
Act Section 16 relating to short-swing profit recapture, reports of beneficial
ownership and short sale prohibitions and the Company and its officers,
directors, and beneficial owners have timely complied in all respects with the
filing requirements of the Exchange Act.
Section 2.21 Quotation on the OTC Bulletin Board. The Company's Common
-----------------------------------
Stock is quoted on the OTC Bulletin Board under the symbol "IGVL" and the
Company will retain such quotation on the OTC Bulletin Board until the Closing
of the transactions contemplated herein.
Section 2.22 Approval of the Exchange by the Company's Shareholders.
--------------------------------------------------------
The transactions contemplated by this Agreement do not require the approval of
the Company's shareholders and the Company is not required to file a Schedule
14A or 14C with the Securities and Exchange Commission as a result of this
Agreement.
Section 2.23 The Directors of the Company shall have approved the
Exchange Offer and the related transactions described herein.
Section 2.24 Approval of the Exchange Offer and related transactions by
the Company's Shareholders is not required by Nevada law or the Company's
Articles of Incorporation or Bylaws or any amendments thereto.
ARTICLE III
PLAN OF EXCHANGE
Section 3.01 The Exchange. (i) On the terms and subject to the
-------------
conditions set forth in this Agreement, on the Closing Date (as defined in
Section 3.02), each Integrated Shareholder who shall elect to accept the
Exchange Offer described herein shall assign, transfer and deliver, free and
clear of all liens, pledges, encumbrances, charges, restrictions or known claims
of any kind, nature, or description, the number of shares of common stock of
Integrated set forth herein, in the aggregate constituting at least 80% of the
issued and outstanding shares of common stock of Integrated. After the
acquisition of at least 80% of the outstanding shares of Integrated, Integrated
shall become a subsidiary of the Company.
Section 3.01(ii) The Integrated Shareholders will receive three
thousand eighty-two and 5856/10,000 (3,082.5856) shares of the Company's common
stock for every One (1) share of Integrated common stock held or an aggregate
amount of 4,623,878 shares of the Company's Common Stock. Simultaneously with
the execution of this Agreement, James Lee is executing a Stock Purchase
Agreement to purchase 6,000,000 shares of Company Common Stock from Mr. Michael
Young. Following the execution of this Agreement and the Stock Purchase
Agreement, the Integrated Shareholders shall own 10,623,878 shares out of
15,177,878 shares outstanding in the Company, representing approximately Seventy
Percent (70%) of the Company's then outstanding Common Stock.
Section 3.02 Closing. The closing ("Closing") of the transaction
-------
contemplated by this Agreement shall be on a date and at such time as the
parties may agree ("Closing Date") but not later than May , 2004, subject to
the right of the Company or Integrated to extend such Closing Date by up to an
additional ten (10) days. Such Closing shall take place at a mutually agreeable
time and place. At Closing, or immediately thereafter, the following will
occur:
a) The Integrated Shareholders shall surrender the certificates evidencing
at least 80% of the shares of Integrated stock, duly endorsed with Medallion
Guaranteed stock powers so as to make the Company the sole owner thereof;
b) The Company will issue and deliver up to 4,623,878 newly issued treasury
shares of the Company's Common Stock in the name of the Integrated Shareholders
in accordance with this Agreement;
c) At Closing, the current Directors of the Company shall increase the
number of Directors to Four (4), shall appoint James Lee and Alex Jeon as
Directors of the Company, contemporaneously therewith the current Directors of
the Company shall resign, and the remaining Directors of the Company shall
decrease the number of Directors from Four (4) to Two (2); and
d) At the Closing, the Company, Integrated and each of the Integrated
Shareholders shall execute, acknowledge, and deliver (or shall ensure to be
executed, acknowledged, and delivered) any and all certificates, opinions,
financial statements, schedules, agreements, resolutions, rulings or other
instruments required by this Agreement to be so delivered at or prior to the
Closing, together with such other items as may be reasonably requested by the
parties hereto and their respective legal counsel in order to effectuate or
evidence the transactions contemplated hereby. Among other things, the Company
shall provide an opinion of counsel acceptable to Integrated as to such matters
as Integrated may reasonably request, which shall include, but not be limited
to, a statement, to the effect that to such counsel's best knowledge, after
reasonable investigation, from inception until the Closing Date, the Company has
complied with all applicable statutes and regulations of any federal, state, or
other applicable governmental entity or agency thereof, except to the extent
that noncompliance would not materially and adversely affect the business,
operations, properties, assets or condition of the Company or except to the
extent that noncompliance would not result in the occurrence of any material
liability (such compliance including, but not being limited to, the filing of
all reports to date with federal and state securities authorities).
Section 3.03 Name Change. Subsequent to the Closing, the Company
-----------
will change its name from Iguana Ventures Ltd. to Integrated Security
Technologies, Inc. In connection therewith the Company will timely comply with
Nevada law in all respects including amending its Articles of Incorporation.
Section 3.04 Tradability of Shares. The shares of the Common Stock of
----------------------
the Company to be issued to the Integrated Shareholders have not been registered
under the 1933 Act, nor registered under any state securities law, and are
"restricted securities" as that term is defined in Rule 144 under the 1933 Act.
The securities may not be offered for sale, sold or otherwise transferred except
pursuant to an effective registration statement under the 1933 Act, or pursuant
to an exemption from registration under the 1933 Act. The shares to be issued to
the Integrated Shareholders will bear the following restrictive legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, AND MAY
NOT BE SOLD, TRANSFERRED, PLEDGED, OR HYPOTHECATED WITHOUT EITHER: i)
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE
SECURITIES LAWS, OR ii) SUBMISSION TO THE CORPORATION OF AN OPINION OF COUNSEL,
SATISFACTORY TO THE CORPORATION THAT SAID SHARES AND THE TRANSFER THEREOF ARE
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933 AND
APPLICABLE STATE SECURITIES LAWS."
Section 3.05 Anti-Dilution. The number of shares of the Company's
-------------
Common Stock issuable upon the Exchange Offer shall be appropriately adjusted to
take into account any other stock split, stock dividend, reverse stock split,
recapitalization, or similar change in the Company's Common Stock which may
occur (i) between the date of the execution of this Agreement and the Closing
Date.
Section 3.06 Termination.
-----------
(a) This Agreement may be terminated by the Board of Directors of
either the Company or Integrated or by the Integrated Shareholders at any time
prior to the Closing Date if:
(i) there shall be any actual or threatened action or proceeding
before any court or any governmental body which shall seek to restrain,
prohibit, or invalidate the transactions contemplated by this Agreement and
which, in the judgment of such Board of Directors, made in good faith and
based upon the advice of its legal counsel, makes it inadvisable to proceed
with the Exchange;
(ii) any of the transactions contemplated hereby are disapproved by
any regulatory authority whose approval is required to consummate such
transactions (which does not include the Securities and Exchange
Commission) or in the judgment of such board of directors, made in good
faith and based on the advice of counsel, there is substantial likelihood
that any such approval will not be obtained or will be obtained only on a
condition or conditions which would be unduly burdensome, making it
inadvisable to proceed with the Exchange; or
(iii) if less than eighty percent (80%) of the Integrated Shareholders
agree to the Exchange Offer.
In the event of termination pursuant to this paragraph, no obligation, right or
liability shall arise hereunder, and each party shall bear all of the expenses
incurred by it in connection with the negotiation, drafting, and execution of
this Agreement and the transactions herein contemplated.
(b) This Agreement may be terminated by the Board of Directors of the
Company at any time prior to the Closing Date if:
(i) the Board of Directors of the Company determines in good faith
that one or more of the Company's conditions to Closing has not occurred,
through no fault of the Company.
(ii) The Company takes the termination action specified in Section
1.17 as a result of Integrated Schedules or updates thereto which the
Company finds unacceptable; or
(iii) Integrated shall fail to comply in any material respect with any
of its covenants or agreements contained in this Agreement or if any of the
representations or warranties of Integrated contained herein shall be
inaccurate in any material respect, where such noncompliance or inaccuracy
has not been cured within ten (10) days after written notice thereof.
If this Agreement is terminated pursuant to this paragraph, this Agreement shall
be of no further force or effect, and no obligation, right or liability shall
arise hereunder, except that Integrated shall bear the costs in connection with
the negotiation, preparation, and execution of this Agreement and qualifying the
offer and sale of securities to be issued in the Exchange under the registration
requirements, or exemption from the registration requirements, of state and
federal securities laws.
(c) This Agreement may be terminated by the Board of Directors of
Integrated or by the Integrated Shareholders at any time prior to the Closing
Date if:
(i) there shall have been any change after the date of the latest
balance sheet of the Company in the assets, properties, business or
financial condition of the Company which could have a material adverse
effect on the financial statements of the Company listed in Section 2.04(a)
and 2.04(b) taken as a whole, except any changes disclosed in the Company
Schedules;
(ii) the Board of Directors of Integrated determines in good faith
that one or more of Integrated's conditions to Closing has not occurred,
through no fault of Integrated;
(iii) Integrated takes the termination action specified in Section
2.17 as a result of the Company Schedules or updates thereto which
Integrated finds unacceptable;
(iv) on or before May , 2004, if Integrated notifies the Company that
Integrated's investigation pursuant to Section 4.01 below has uncovered
information which it finds unacceptable by the same criteria set forth
herein; or
(v) The Company shall fail to comply in any material respect with any
of its covenants or agreements contained in this Agreement or if any of the
representations or warranties of the Company contained herein shall be
inaccurate in any material respect, where such noncompliance or inaccuracy
has not been cured within ten (10) days after written notice thereof.
If this Agreement is terminated pursuant to this paragraph, this Agreement shall
be of no further force or effect, and no obligation, right or liability shall
arise hereunder.
No revenue ruling or opinion of counsel will be sought as to the tax-free
nature of the subject Exchange and such tax treatment is not a condition to
Closing herein.
ARTICLE IV
SPECIAL COVENANTS
Section 4.01 Access to Properties and Records. The Company and Integrated
---------------------------------
will each afford to the officers and authorized representatives of the other
full access to the properties, books and records of the Company or Integrated,
as the case may be, in order that each may have a full opportunity to make such
reasonable investigation as it shall desire to make of the affairs of the other,
and each will furnish the other with such additional financial and operating
data and other information as to the business and properties of the Company or
Integrated, as the case may be, as the other shall from time to time reasonably
request. Any such investigation and examination shall be conducted at
reasonable times and under reasonable circumstances, and each party hereto shall
cooperate fully therein. No investigation by a party hereto shall, however,
diminish or waive in any way any of the representations, warranties, covenants
or agreements of the other party under this Agreement. In order that each party
may investigate as it may wish the business affairs of the other, each party
shall furnish the other during such period with all such information and copies
of such documents concerning the affairs of it as the other party may reasonably
request, and cause its officer, employees, consultants, agents, accountants, and
attorneys to cooperate fully in connection with such review and examination, and
to make full disclosure to the other parties all material facts affecting its
financial condition, business operations, and the conduct of operations.
Without limiting the foregoing, as soon as practicable after the end of each
fiscal quarter (and in any event through the last fiscal quarter prior to the
Closing Date), the Company shall provide Integrated with quarterly internally
prepared and unaudited financial statements for all periods up to the date of
Closing.
Section 4.02 Delivery of Books and Records and the Company's Accounts.
--------------------------------------------------------
At the Closing, Integrated shall deliver to the Company copies of the corporate
minute books, books of account, contracts, records, and all other books or
documents of Integrated now in the possession of Integrated or its
representatives. At the Closing, the Company shall execute such documents as
are necessary to make James Lee, or such other person or persons designated by
James Lee, the authorized signor on all of the Company's bank accounts or other
accounts maintained by the Company at financial institutions.
Section 4.03 Third Party Consents and Certificates. The Company and
---------------------------------------
Integrated agree to cooperate with each other in order to obtain any required
third party consents to this Agreement and the transactions herein contemplated.
Section 4.04 Consent of Integrated Shareholders. Integrated shall use
----------------------------------
its best efforts to obtain the consent of all Integrated Shareholders to
participate in the Exchange.
Section 4.05 Exclusive Dealing Rights. Until 5:00 P.M. Eastern
--------------------------
Daylight Time on May 31, 2004.
(a) In recognition of the substantial time and effort which the
Company has spent and will continue to spend in investigating Integrated and its
business and in addressing the matters related to the transactions contemplated
herein, each of which may preempt or delay other management activities, neither
Integrated, nor any of its officers, employees, representatives or agents will
directly or indirectly solicit or initiate any discussions or negotiations with,
or, except where required by fiduciary obligations under applicable law as
advised by counsel, participate in any negotiations with or provide any
information to or otherwise cooperate in any other way with, or facilitate or
encourage any effort or attempt by, any corporation, partnership, person or
other entity or group (other than the Company and its directors, officers,
employees, representatives and agents) concerning any merger, sale of
substantial assets, sale of shares of capital stock, (including without
limitation, any public or private offering of the common stock of Integrated) or
similar transactions involving Integrated (all such transactions being referred
to as " Integrated Acquisition Transactions"). If Integrated receives any
proposal with respect to a Integrated Acquisition Transaction, it will
immediately communicate to the Company the fact that it has received such
proposal and the principal terms thereof.
(b) In recognition of the substantial time and effort which Integrated
has spent and will continue to spend in investigating the Company and its
business and in addressing the matters related to the transactions contemplated
herein, each of which may preempt or delay other management activities, neither
the Company, nor any of its officers, employees, representatives, shareholders
or agents will directly or indirectly solicit or initiate any discussions or
negotiations with, or, except where required by fiduciary obligations under
applicable law as advised by counsel, participate in any negotiations with or
provide any information to or otherwise cooperate in any other way with, or
facilitate or encourage any effort or attempt by, any corporation, partnership,
person or other entity or group (other than Integrated and its directors,
officers, employees, representatives and agents) concerning any merger, sale of
substantial assets, sale of shares of capital stock, (including without
limitation, any public or private offering of the Common Stock of the Company or
similar transactions involving the Company (all such transactions being referred
to as "Company Acquisition Transactions"). If the Company receives any proposal
with respect to a Company Acquisition Transaction, it will immediately
communicate to Integrated the fact that it has received such proposal and the
principal terms thereof.
Section 4.06 Actions Prior to Closing.
---------------------------
(a) From and after the date of this Agreement until the Closing Date
and except as set forth in the Company Schedules or Integrated Schedules or as
permitted or contemplated by this Agreement, the Company and Integrated
respectively (subject to paragraph (b) below), will each:
(i) carry on its business in substantially the same manner as it has
heretofore;
(ii) maintain and keep its properties in states of good repair and
condition as at present, except for depreciation due to ordinary wear and
tear and damage due to casualty;
(iii) maintain in full force and effect insurance comparable in amount
and in scope of coverage to that now maintained by it;
(iv) perform in all material respects all of its obligations under
material contracts, leases, and instruments relating to or affecting its
assets, properties, and business;
(v) use its best efforts to maintain and preserve its business
organization intact, to retain its key employees, and to maintain its
relationship with its material suppliers and customers; and
(vi) fully comply with and perform in all material respects all
obligations and duties imposed on it by all federal and state laws and all
rules, regulations, and orders imposed by federal or state governmental
authorities.
(b) From and after the date of this Agreement until the Closing Date,
neither the Company nor Integrated will:
(i) make any changes in their Articles of Incorporation or Bylaws,
except as otherwise provided in this Agreement;
(ii) take any action described in Section 1.07 in the case of
Integrated, or in Section 2.07, in the case of the Company (all except as
permitted therein or as disclosed in the applicable party's schedules);
(iii) enter into or amend any contract, agreement, or other instrument
of any of the types described in such party's schedules, except that a
party may enter into or amend any contract, agreement, or other instrument
in the ordinary course of business involving the sale of goods or services;
or
(iv) sell any assets or discontinue any operations, sell any shares of
capital stock or conduct any similar transactions other than in the
ordinary course of business.
Section 4.07 Indemnification.
---------------
(a) The Company hereby agrees to indemnify Integrated and each of the
officers, agents, and directors of Integrated and each of the Integrated
Shareholders as of the date of execution of this Agreement against any loss,
liability, claim, damage, or expense (including, but not limited to, any and all
expense whatsoever reasonably incurred in investigating, preparing, or defending
against any litigation, commenced or threatened, or any claim whatsoever), to
which it or they may become subject arising out of or based on any inaccuracy
appearing in or misrepresentation made by the Company under this Agreement. The
indemnification provided for in this paragraph shall survive the Closing and
consummation of the transactions contemplated hereby and termination of this
Agreement.
Section 4.08 Limitation of Subsequent Corporate Actions.
----------------------------------------------
It is expressly understood and agreed that the Company, the shareholders of
Integrated, and their affiliates will take all steps necessary to ensure that:
(1) The Company will not enact a reverse split of its Common Stock for a period
of twelve (12) months after execution of this Agreement;
(2) The assets of Integrated, if any, shall remain in the Company as part of
its business operations;
(3) The Company will not issue more than an aggregate of ten percent (10%) of
the outstanding stock for a period of one (1) year following May , 2004,
unless the Company has obtained the prior written consent of such person
(or group) that provides financing to the Company in connection with the
Exchange. Any shares of the Company's common stock issued pursuant to this
Section 4.08(3) must be issued for a price that is at least 50% of the
average bid and ask price of the Company's common stock as reported on the
NASDAQ Electronic Bulletin Board as of the date of such issuance;
(4) No shares of the Company's common stock shall be registered on a
registration statement pursuant to the Securities Act of 1933 (including an
S-8 registration statement) for a period of one (1) year following the date
of execution of this Agreement;
(5) The Company will not switch transfer agents for a period of twelve (12)
months following the date of execution of this Agreement;
(6) David M. Loev, Attorney at Law, or such other firm as David M. Loev may
become associated with, will serve as corporate counsel for a period of at
least one (1) year following the date of execution of this Agreement.
Notwithstanding items (1), (2), (3), (4), (5) and (6), the Company may waive
such conditions stated above with the prior written approval of such person (or
group) that provides financing to the Company in connection with the Exchange.
Other than (1), (2), (3), (4), (5) and (6),of this Section, there are no
restrictions upon the Company to inhibit, prevent, limit or restrict the Company
from issuing additional securities of any class, preference or type after the
date of the Closing.
Section 4.09 Indemnification of Subsequent Corporate Actions.
---------------------------------------------------
(1) No officer, director, controlling shareholder, agent or representative of
the Company, or any other person currently affiliated with the Company, has
offered or agreed to assist in the promotion, market making, development,
enhancement, or support of the Company's business, capital raising, or
securities market.
(2) Integrated hereby represents and warrants that it will indemnify and hold
harmless any officer, director, controlling shareholder, agent or
representative of the Company, or any other person affiliated with the
Company, from any decisions, activities, or conduct of the Company
contemporaneous with, or subsequent to this Agreement.
Section 4.10 Audited Financial Statements. The Company shall file
------------------------------
audited financial statements of Integrated as required by the Securities and
Exchange Commission within seventy-five (75) days from the date of Closing.
Section 4.11 Blue Sky Manual Exemption. The Company shall file with
----------------------------
Standard & Poors or Moody's within one hundred twenty (120) days from the date
of Closing.
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY
The obligations of the Company under this Agreement are subject to the
satisfaction, at or before the Closing Date, of the following conditions:
Section 5.01 Accuracy of Representations and Performance of Covenants.
--------------------------------------------------------
The representations and warranties made by Integrated in this Agreement were
true when made and shall be true at the Closing Date with the same force and
effect as if such representations and warranties were made at and as of the
Closing Date (except for changes therein permitted by this Agreement).
Integrated shall have performed or complied with all covenants and conditions
required by this Agreement to be performed or complied with by Integrated prior
to or at the Closing. The Company shall be furnished with a certificate, signed
by a duly authorized executive officer of Integrated and dated the Closing Date,
to the foregoing effect.
Section 5.02 Officer's Certificate. The Company shall have been
----------------------
furnished with a certificate dated the Closing Date and signed by a duly
authorized officer of Integrated to the effect that no litigation, proceeding,
investigation, or inquiry is pending, or to the best knowledge of Integrated
threatened, which might result in an action to enjoin or prevent the
consummation of the transactions contemplated by this Agreement, or, to the
extent not disclosed in the Integrated Schedules, by or against Integrated,
which might result in any material adverse change in any of the assets,
properties, business, or operations of Integrated.
Section 5.03 No Material Adverse Change. Prior to the Closing Date,
----------------------------
there shall not have occurred any material change in the financial condition,
business, or operations of Integrated nor shall any event have occurred which,
with the lapse of time or the giving of notice, is determined to be unacceptable
using the criteria set forth in Section 1.17.
Section 5.04 Approval by Integrated Shareholders. The Exchange shall
----------------------- ------------
have been approved, and shares delivered in accordance with Section 3.01, by the
holders of not less than eighty percent (80%) of the outstanding common stock of
Integrated.
Section 5.05 No Governmental Prohibition. No order, statute, rule,
-----------------------------
regulation, executive order, injunction, stay, decree, judgment or restraining
order shall have been enacted, entered, promulgated or enforced by any court or
governmental or regulatory authority or instrumentality which prohibits the
consummation of the transactions contemplated hereby.
Section 5.06 Consents. All consents, approvals, waivers or amendments
--------
pursuant to all contracts, licenses, permits, trademarks and other intangibles
in connection with the transactions contemplated herein, or for the continued
operation of the Company and Integrated after the Closing Date on the basis as
presently operated shall have been obtained.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF Integrated
AND THE INTEGRATED SHAREHOLDERS
The obligations of Integrated and the Integrated Shareholders under this
Agreement are subject to the satisfaction, at or before the Closing Date, of the
following conditions:
Section 6.01 Accuracy of Representations and Performance of Covenants.
--------------------------------------------------------
The representations and warranties made by the Company in this Agreement were
true when made and shall be true as of the Closing Date (except for changes
therein permitted by this Agreement) with the same force and effect as if such
representations and warranties were made at and as of the Closing Date.
Additionally, the Company shall have performed and complied with all covenants
and conditions required by this Agreement to be performed or complied with by
the Company and shall have satisfied all conditions set forth herein prior to or
at the Closing. Integrated shall have been furnished with certificates, signed
by duly authorized executive officers of the Company and dated the Closing Date,
to the foregoing effect.
Section 6.02 Officer's Certificate. Integrated shall have been
----------------------
furnished with certificates dated the Closing Date and signed by the duly
authorized executive officer of the Company, to the effect that no litigation,
proceeding, investigation or inquiry is pending, or to the best knowledge of the
Company threatened, which might result in an action to enjoin or prevent the
consummation of the transactions contemplated by this Agreement or, to the
extent not disclosed in the Company Schedules, by or against the Company, which
might result in any material adverse change in any of the assets, properties or
operations of the Company.
Section 6.03 No Material Adverse Change. Prior to the Closing Date,
----------------------------
there shall not have occurred any change in the financial condition, business or
operations of the Company nor shall any event have occurred which, with the
lapse of time or the giving of notice, is determined to be unacceptable using
the criteria set forth in Section 2.17.
Section 6.04 No Governmental Prohibition. No order, statute, rule,
-----------------------------
regulation, executive order, injunction, stay, decree, judgment or restraining
order shall have been enacted, entered, promulgated or enforced by any court or
governmental or regulatory authority or instrumentality which prohibits the
consummation of the transactions contemplated hereby.
Section 6.05 Consents. All consents, approvals, waivers or amendments
--------
pursuant to all contracts, licenses, permits, trademarks and other intangibles
in connection with the transactions contemplated herein, or for the continued
operation of the Company and Integrated after the Closing Date on the basis as
presently operated shall have been obtained.
Section 6.06 Other Items. Integrated shall have received further
------------
opinions, documents, certificates, or instruments relating to the transactions
contemplated hereby as Integrated may reasonably request.
ARTICLE VII
MISCELLANEOUS
Section 7.01 No Bankruptcy and No Criminal Convictions. None of the
-------------------------------------------
Parties to the Agreement, nor their officers, directors or affiliates,
promoters, beneficial shareholders or control persons, nor any predecessor
thereof have been subject to the following:
(a) Any bankruptcy petition filed by or against any business of
which such person was a general partner or executive officer within the past
five (5) years;
(b) Any conviction in a criminal proceeding or being subject to a
pending criminal proceeding (excluding traffic violations and other minor
offenses);
(c) Being 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 his involvement in any type of business, securities or
banking activities; and
(d) Being found by a court of competent jurisdiction (in a civil
action), the Securities and Exchange Commission (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 7.02 Broker/Finder's Fee. As payment of a broker/finder's fee
-------------------
in connection with Closing, the Company will issue and deliver up to 531,194 (or
5% of the total amount of the Company's shares purchased and issued as described
above in 3.01(ii) and 3.02(b), respectively) newly issued treasury shares of the
Company's Common Stock in the name of Worldwide Interactive Netlink, Inc.
("Worldwide"), or its designees pursuant to the Finder's Agreement entered into
between Worldwide and Integrated and set forth on Schedule 7.02. No broker's or
finder's fee will be paid in connection with the transaction contemplated by
this Agreement other than fees payable to persons registered as broker-dealers
pursuant to Section 15 of the Securities Exchange Act of 1934. The Company and
Integrated agree that, except as set forth herein and on Schedule 7.02 attached
hereto, there were no brokers or finders involved in bringing the parties
together or who were instrumental in the negotiation, execution or consummation
of this Agreement. The Company and Integrated each agree to indemnify the other
against any claim by any third person other than those described above for any
commission, brokerage, or finder's fee arising from the transactions
contemplated hereby based on any alleged agreement or understanding between the
indemnifying party and such third person, whether express or implied from the
actions of the indemnifying party.
Section 7.03 Governing Law and Arbitration. This Agreement shall be
-------------------------------
governed by, enforced, and construed under and in accordance with the laws of
the United States of America and, with respect to the matters of state law, with
the laws of the State of Texas without giving effect to principles of conflicts
of law thereunder. All controversies, disputes or claims arising out of or
relating to this Agreement shall be resolved by binding arbitration. The
arbitration shall be conducted in accordance with the Commercial Arbitration
Rules of the American Arbitration Association. All arbitrators shall possess
such experience in, and knowledge of, the subject area of the controversy or
claim so as to qualify as an "expert" with respect to such subject matter. The
governing law for the purposes of any arbitration arising hereunder shall be in
Texas. The prevailing party shall be entitled to receive its reasonable
attorney's fees and all costs relating to the arbitration. Any award rendered
by arbitration shall be final and binding on the parties, and judgment thereon
may be entered in any court of competent jurisdiction.
Section 7.04 Notices. Any notice or other communications required or
-------
permitted hereunder shall be in writing and shall be sufficiently given if
personally delivered to it or sent by telecopy, overnight courier or registered
mail or certified mail, postage prepaid, addressed as follows:
If to the Company, to: Iguana Ventures Ltd.
1500 West Georgia Street, Suite 1400
Vancouver, BC, Canada V6G 2Z6
If to Integrated, to: Integrated Security Technologies, Inc.
156 5th Avenue, Suite 1034
New York, New York 10010
With copies to: David M. Loev, Attorney at Law
2777 Allen Parkway
Suite 1000
Houston, Texas 77019
or such other addresses as shall be furnished in writing by any party in the
manner for giving notices hereunder, and any such notice or communication shall
be deemed to have been given (i) upon receipt, if personally delivered, (ii) on
the day after dispatch, if sent by overnight courier, (iii) upon dispatch, if
transmitted by telecopy and receipt is confirmed by telephone and (iv) three (3)
days after mailing, if sent by registered or certified mail.
Section 7.05 Attorney's Fees. In the event that either party
----------------
institutes any action or suit to enforce this Agreement or to secure relief from
any default hereunder or breach hereof, the prevailing party shall be reimbursed
by the losing party for all costs, including reasonable attorney's fees,
incurred in connection therewith and in enforcing or collecting any judgment
rendered therein.
Section 7.06 Confidentiality. Each party hereto agrees with the other
---------------
that, unless and until the transactions contemplated by this Agreement have been
consummated, it and its representatives will hold in strict confidence all data
and information obtained with respect to another party or any subsidiary thereof
from any representative, officer, director or employee, or from any books or
records or from personal inspection, of such other party, and shall not use such
data or information or disclose the same to others, except (i) to the extent
such data or information is published, is a matter of public knowledge, or is
required by law to be published; or (ii) to the extent that such data or
information must be used or disclosed in order to consummate the transactions
contemplated by this Agreement. In the event of the termination of this
Agreement, each party shall return to the other party all documents and other
materials obtained by it or on its behalf and shall destroy all copies, digests,
work papers, abstracts or other materials relating thereto, and each party will
continue to comply with the confidentiality provisions set forth herein.
Section 7.07 Public Announcements and Filings. Unless required by
-----------------------------------
applicable law or regulatory authority, none of the parties will issue any
report, statement or press release to the general public, to the trade, to the
general trade or trade press, or to any third party (other than its advisors and
representatives in connection with the transactions contemplated hereby) or file
any document, relating to this Agreement and the transactions contemplated
hereby, except as may be mutually agreed by the parties. Copies of any such
filings, public announcements or disclosures, including any announcements or
disclosures mandated by law or regulatory authorities, shall be delivered to
each party at least one (1) business day prior to the release thereof.
Section 7.08 Schedules; Knowledge. Each party is presumed to have full
---------------------
knowledge of all information set forth in the other party's schedules delivered
pursuant to this Agreement.
Section 7.09 Third Party Beneficiaries. This contract is strictly
---------------------------
between the Company and Integrated and the Integrated Shareholders, and, except
as specifically provided, no director, officer, stockholder (other than the
Integrated Shareholders), employee, agent, independent contractor or any other
person or entity shall be deemed to be a third party beneficiary of this
Agreement.
Section 7.10 Expenses. The Company and Integrated each hereto agree to
---------
pay its own costs and expenses incurred in negotiating this Agreement including
legal, accounting and professional fees, incurred in connection with the
Exchange or any of the other transactions contemplated hereby, and those costs
and expenses incurred in consummating the transactions described herein.
Section 7.11 Entire Agreement. This Agreement represents the entire
-----------------
agreement between the parties relating to the subject matter thereof and
supersedes all prior agreements, understandings and negotiations, written or
oral, with respect to such subject matter.
Section 7.12 Survival; Termination. The representations, warranties,
----------------------
and covenants of the respective parties shall survive the Closing Date and the
consummation of the transactions herein contemplated for a period of two (2)
years.
Section 7.13 Counterparts. This Agreement may be executed in multiple
------------
counterparts, each of which shall be deemed an original and all of which taken
together shall be but a single instrument.
Section 7.14 Amendment or Waiver. Every right and remedy provided
---------------------
herein shall be cumulative with every other right and remedy, whether conferred
herein, at law, or in equity, and may be enforced concurrently herewith, and no
waiver by any party of the performance of any obligation by the other shall be
construed as a waiver of the same or any other default then, theretofore, or
thereafter occurring or existing. At any time prior to the Closing Date, this
Agreement may by amended by a writing signed by all parties hereto, with respect
to any of the terms contained herein, and any term or condition of this
Agreement may be waived or the time for performance may be extended by a writing
signed by the party or parties for whose benefit the provision is intended.
Section 7.15 Best Efforts. Subject to the terms and conditions herein
------------
provided, each party shall use its best efforts to perform or fulfill all
conditions and obligations to be performed or fulfilled by it under this
Agreement so that the transactions contemplated hereby shall be consummated as
soon as practicable. Each party also agrees that it shall use its best efforts
to take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective this Agreement and the transactions contemplated
herein.
Section 7.16 Faxed Copies. For purposes of this Agreement, a
-------------
faxed signature will constitute an original signature.
Section 7.17 Severability. The invalidity or unenforceability of
------------
any term, phrase, clause, paragraph, restriction, covenant, agreement or other
provision of this Agreement shall in no way affect the validity or enforcement
of any other provision or any part thereof.
IN WITNESS WHEREOF, the corporate parties hereto have caused this Agreement to
be executed by their respective officers, hereunto duly authorized, as of the
date first-above written.
IGUANA VENTURES LTD.
BY: /s/ Michael Young
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Michael Young, Chief Executive Officer
INTEGRATED SECURITY TECHNOLOGIES, INC.
BY: /s/ James Lee
--------------------------------------------
James Lee, Chief Executive Officer
INTEGRATED SHAREHOLDERS:
James Lee 1,320 Shares
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John Choi 112.5 Shares
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Christie Hwang 67.5 Shares
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