Exhibit 2.1
SECURITIES PURCHASE AGREEMENT
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AND PLAN OF REORGANIZATION
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THIS SECURITIES PURCHASE AGREEMENT AND PLAN OF REORGANIZATION ("Agreement")
is entered into on August 6, 1999 by and among G.P. PROPERTIES, INC., a Nevada
corporation ("Company"), and the stockholders of KWIK WEB, INC., a California
corporation ("Kwik Web"), listed on the list of selling stockholders ("List of
Selling Stockholders") attached as Exhibit "A" hereto and who have executed this
Agreement ("Selling Stockholders").
R E C I T A L S
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A. The Company has authorized capital stock consisting of 25,000,000
shares of common stock ("Common Stock"), $.001 par value, of which 3,510,000
shares of Common Stock are issued and outstanding.
B. Kwik Web has authorized capital stock consisting of 2,000 shares of
common stock, no par value, of which 100 shares ("Kwik Web Shares") are issued
and outstanding and held by the Selling Shareholders.
C. The Selling Stockholders wish to sell, and the Company wishes to
acquire, all of the Kwik Web Shares on the Closing Date (as defined below), in
exchange for the Company's issuance to the Selling Stockholders of an aggregate
of 6,000,000 shares (" Company Shares") of Common Stock, subject to and upon the
terms and conditions hereinafter set forth.
A G R E E M E N T
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It is agreed as follows:
1. SECURITIES PURCHASE AND REORGANIZATION.
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1.1 Agreement to Exchange Securities. Subject to the terms and
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upon the conditions set forth herein, each Selling Stockholder agrees to sell,
assign, transfer and deliver to the Company, and the Company agrees to purchase
from each Selling Stockholder, at the Closing (as defined below), the Kwik Web
Shares owned by the respective Selling Stockholder as set forth on the List of
Selling Stockholders, in exchange for the transfer, at the Closing, by the
Company to each Selling Stockholder of a pro rata share of the Company Shares. A
Selling Stockholder's pro rata share of the Company Shares shall be determined
by multiplying the total number of the Company Shares (i.e., 6,000,000 shares of
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Common Stock) by a fraction, the numerator of which is the total number of Kwik
Web Shares owned by the Selling Stockholder at the Closing and the denominator
of which is the total number of Kwik Web Shares issued and outstanding at the
Closing.
1.2 Instruments of Transfer.
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(a) Kwik Web Shares. Each Selling Stockholder shall deliver
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to the Company original certificates evidencing the Kwik Web Shares along with
executed stock powers, in form and substance satisfactory to the Company for
purposes of assigning and transferring all of their right, title and interest in
and to the Kwik Web Shares. From time to time after the Closing Date, and
without further consideration, the Selling Stockholders will execute and deliver
such other instruments of transfer and take such other actions as the Company
may reasonably request in order to more effectively transfer to the Company the
securities intended to be transferred hereunder.
(b) The Company Shares. The Company shall deliver to the
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Selling Stockholders on the Closing Date original certificates evidencing the
Company Shares, in form and substance satisfactory to the Selling Stockholders,
in order to effectively vest in the Selling Stockholders all right, title and
interest in and to the Company Shares. From time to time after the Closing Date,
and without further consideration, the Company will execute and deliver such
other instruments and take such other actions as the Selling Stockholders may
reasonably request in order to more effectively issue to them the Company
Shares.
1.3 Closing. The closing ("Closing") of the exchange of the Kwik Web
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Shares and the Company Shares shall take place at the offices of Kwik Web, at
10:00 a.m., local time, on August 6, 1999, or at such other time and place as
may be agreed to by the Selling Shareholders and the Company ("Closing Date").
1.4 Tax Free Reorganization. The parties intend that the transaction
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under this Agreement qualify as a tax free reorganization under Section 368
(a)(1)(B) of the Internal Revenue Code of 1986, as amended.
2. DELIVERIES AT CLOSING.
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2.1 Company's Deliveries at Closing. At the Closing, the Company
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shall deliver or cause to be delivered to the Selling Stockholders all of the
following:
(a) certificates representing the Company Shares, registered in
the names of the Selling Stockholders;
(b) Officer's Certificates signed by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇
▇▇▇▇▇▇ in the form attached hereto as Exhibit "B";
(c) certified resolutions of the Board of Directors of the
Company authorizing consummation of the transactions contemplated by this
Agreement; and
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(d) a certified list of the record holders of the Common Stock
evidencing that the Company has 3,510,000 shares of Common Stock issued and
outstanding; and
(f) such other documents and instruments as shall be reasonably
necessary to effect the transactions contemplated hereby.
2.2 Selling Stockholders' Deliveries at Closing. At the Closing, the
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Selling Stockholders shall deliver or cause to be delivered to the Company all
of the following:
(a) original certificates representing the Kwik Web Shares,
along with duly executed stock powers, in form and substance satisfactory to the
Company; and
(b) such other documents and instruments as shall be reasonably
necessary to effect the transactions contemplated hereby.
3. REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDERS. Each
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Selling Stockholder severally represents, warrants and covenants to and with the
Company with respect to himself, as follows:
3.1 Power and Authority. The Selling Stockholder has all requisite
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individual power and authority to enter into and to carry out all of the terms
of this Agreement and all other documents executed and delivered in connection
herewith (collectively, the "Documents"). All individual action on the part of
the Selling Stockholder necessary for the authorization, execution, delivery and
performance of the Documents by the Selling Stockholder has been taken and no
further authorization on the part of the Selling Stockholder is required to
consummate the transactions provided for in the Documents. When executed and
delivered by the Selling Stockholder, the Documents shall constitute the valid
and legally binding obligation of the Selling Stockholder enforceable in
accordance with their respective terms.
3.2 Ownership of and Title to Securities. The Selling Stockholder
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represents that the Selling Shareholders are the sole owners of all of the
issued and outstanding shares of capital stock of Kwik Web and that there are no
warrants, options, subscriptions, calls, or other similar rights of any kind for
the issuance or purchase of any securities of Kwik Web held by the Selling
Stockholder or any other persons. The Selling Stockholder represents that the
Selling Stockholder has and will transfer to the Company good and marketable
title to the Kwik Web Shares which he owns, free and clear of all pledges,
security interests, mortgages, liens, claims, charges, restrictions or
encumbrances.
3.3 Investment and Related Representations. The Selling Stockholder
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is aware that neither the Company Shares nor the offer or sale thereof to the
Selling Stockholder has been registered under the Securities Act of 1933, as
amended ("Securities Act"), or under any state securities law. The Selling
Stockholder understands that the Company Shares will be characterized as
"restricted" securities under federal securities laws inasmuch as they are being
acquired in a transaction not involving a public offering and that under such
laws and applicable
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regulations such securities may be resold without registration under the
Securities Act only in certain limited circumstances. The Selling Stockholder
agrees that the Selling Stockholder will not sell all or any portion of the
Company Shares except pursuant to registration under the Securities Act or
pursuant to an available exemption from registration under the Securities Act.
The Selling Stockholder understands that each certificate for the Company Shares
issued to the Selling Stockholder or to any subsequent transferee shall be
stamped or otherwise imprinted with an appropriate legend summarizing the
restrictions described in this Section 3.3 and that the Company shall refuse to
transfer the Company Shares except in accordance with such restrictions.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY. The Company
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represents, warrants and covenants to and with each of the Selling Stockholders
as follows:
4.1 Organization and Good Standing. The Company is a corporation
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duly organized, validly existing, and in good standing under the laws of the
State of Nevada and has full corporate power and authority to enter into and
perform its obligations under this Agreement.
4.2 Capitalization. The authorized capital stock of the Company
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consists of 25,000,000 shares of Common Stock, $.001 par value, of which
3,510,000 shares of Common Stock issued and outstanding. All outstanding shares
of Common Stock have been duly authorized and validly issued, and are fully
paid, nonassessable, and free of any preemptive rights. There are no warrants,
options, subscriptions, calls, other similar rights to purchase any of the
Company's authorized and unissued Common Stock, and there are no voting, pooling
or voting trust agreements, arrangements or contracts by and among the Company,
its shareholders, or any of them.
4.3 No Subsidiaries. The Company does not control, or have any
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interest in, directly or indirectly, any corporation, partnership, business
trust, association or other business entity.
4.4 Validity of Transactions. This Agreement, and each document
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executed and delivered by the Company in connection with the transactions
contemplated by this Agreement, and the performance of the transactions
contemplated therein have been duly authorized by the directors and shareholders
of the Company, have been duly executed and delivered by the Company and is each
the valid and legally binding obligation of the Company, enforceable in
accordance with its terms, except as limited by applicable bankruptcy,
insolvency reorganization and moratorium laws and other laws affecting
enforcement of creditor's rights generally and by general principles of equity.
The Company Shares issuable hereunder, when issued in accordance with the terms
of this Agreement, will be duly authorized, validly issued, fully paid and
nonassessable. The Company Shares will be free of any liens or encumbrances,
except for any restrictions imposed by federal or state securities laws.
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4.5 Approvals and Consents. There are no permits, consents, mandates
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or approvals of public authorities, either federal, state or local, or of any
third party necessary for the Company's consummation of the transactions
contemplated hereby.
4.6 SEC Reports. The Company has delivered to the Selling
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Stockholders its registration statement on Form 10-SB, as amended to date, and
all quarterly reports on Form 10-QSB subsequently filed with the Securities and
Exchange Commission (collectively, the "SEC Reports"). The information in the
SEC Reports, taken as a whole, is true and correct in all material respects and
does not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
4.7 Litigation. There are no suits or proceedings (including without
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limitation, proceedings by or before any arbitrator, government commission,
board, bureau or other administrative agency) pending or, to the knowledge of
the Company, threatened against or affecting the Company which, if adversely
determined, would have a material adverse effect on the financial condition,
results of operations, prospects or business of the Company, or which questions
the validity of this Agreement or any action to be taken in connection
therewith, and the Company is subject to or in default with respect to any
order, writ, injunction or decree of any federal, state, local or other
governmental department. The Company has not commenced nor currently intends to
commence any legal proceedings against any other person or entity.
4.8 Disclaimer of Warranty. The Company is acquiring the Kwik Web
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Shares "AS-IS", "WHERE-IS" and "WITH ALL FAULTS" and subject to any conditions
which may exist, without any representations or warranties by the Selling
Stockholders except as expressly provided herein. The Company acknowledges that
it is relying solely upon its own inspections, examinations and evaluations of
the Kwik Web Shares and Kwik Web and is accepting assignment of the Kwik Web
Shares without the standard representations, warranties or covenants customarily
provided to the purchaser of a business.
4.9 Taxes. All federal income tax returns and state and local
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income tax returns for the Company have been filed as required by law. All taxes
as shown on such returns or on any assessment received subsequent to the filing
of such returns have been paid, and there are no pending assessments or
adjustments or any income tax payable for which reserves, which are reasonably
believed by the Company to be adequate for the payment of any additional taxes
that may come due, have not been established. All other taxes imposed by any
government authority on the Company have been paid and any reports or returns
due in connection therewith have been filed. No outstanding claim for assessment
or collection of taxes has been asserted against the Company and there are no
pending, or to the knowledge of the Company, threatened tax audits, examinations
or claims.
4.10 No Defaults. No material default (or event which, with the
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passage of time or the giving of notice, or both, would become a material
default) exists or is alleged to exist with respect to the performance of any
obligation either of the Company under the terms of any indenture, license,
mortgage, deed of trust, lease, note, guaranty, joint venture agreement,
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operating agreement, partnership agreement, or other contract or instrument to
which the Company is a party or any of its assets are subject, or by which it is
otherwise bound, and, to the best knowledge of the Company, no such default or
event exists or is alleged to exist with respect to the performance of any
obligation of any party thereto.
4.11 Corporate Documents. The Company has furnished to the Selling
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Stockholders true and complete copies of the Articles of Incorporation and
Bylaws of the Company certified by its secretary and copies of the resolutions
adopted by the Company's Board of Directors authorizing and approving this
Agreement and the transactions contemplated hereby. The Company has made
available to the Selling Stockholders and their representatives all corporate
minute books of the Company, and such minute books contain complete and accurate
records of the proceedings of the Company's shareholders and directors.
4.12 Contracts and Other Commitments. The Company does not have and
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is not bound by any contract, agreement, lease, commitment or proposed
transaction, judgment, order, writ or decree, written or oral, absolute or
contingent.
4.13 Compliance with Laws. The Company has complied in all material
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respects with all laws, regulations and orders affecting its business and
operations and is not in default under or in violation of any provision of any
federal, state or local rule, regulation or law, including without limitation,
any applicable statute, law or regulation relating to the environment or
occupational health and safety, and no material expenditures are or will be
required in order to comply with any such existing statute, law or regulation.
4.14 No Assets or Liabilities. The Company represents and warrants
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that it does not have any assets, liabilities or operations.
4.15 Brokers and Finders. The Company has not incurred, nor shall it
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incur, directly or indirectly, any liability for any brokerage or finders' fees,
agent commissions or any similar charges in connection with this Agreement or
any transaction contemplated hereby.
4.16 SEC Registration. On or about the end of May 1999, the Company
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received oral confirmation from the Division of Corporate Finance of the
Securities and Exchange Commission ("SEC") that the SEC would not have any
further comments regarding the Company's Form 10-SB Registration Statement,
including the amendments thereto.
5. Registration Rights.
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5.1 Definitions. As used in this Section 7, the following terms
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have the meanings indicated:
(a) "Demand Registration" has the meaning assigned such term in
Section 5.3(a).
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(b) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(c) "Inspector" has the meaning assigned such term in Section
5.5(a)(viii).
(d) "Holders" means the Selling Stockholders and any Person to
whom Registrable Securities are transferred by any of them other than a
transferee to whom such securities have been transferred pursuant to a
registration statement under the 1933 Act or Rule 144 (as defined below).
(e) "NASD" has the meaning assigned such term in Section
5.5(a)(xiv).
(f) "Person" shall mean any individual, firm, corporation,
partnership, trust, incorporated or unincorporated association, joint venture,
joint stock company, limited liability company, government (or an agency or
political subdivision thereof) or other entity of any kind, and shall include
any successor (by merger or otherwise) of such entity.
(g) "Registrable Securities" mean each of the following: (a) for
each of the Selling Stockholders, ten percent (10%) of the Company Shares issued
to the Selling Stockholder, and (b) any shares of Common Stock issued or
issuable to the Holders of the shares of Common Stock considered by subparts (a)
by way of stock dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other reorganization or
otherwise and shares of Common Stock issuable upon conversion, exercise or
exchange thereof.
(h) "Registration Expenses" has the meaning assigned to such
term in Section 5.5(d).
(i) "Rule 144" means Rule 144 as promulgated by the SEC under
the 1933 Act, as such Rule may be amended from time to time, or any similar
successor rule that may be promulgated by the SEC.
(j) "SEC" means the Securities and Exchange Commission.
(k) "Underwriter" has the meaning assigned such term in Section
5.3(e).
5.2 Securities Subject to this Agreement.
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(a) Registrable Securities. For the purposes of this Agreement,
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Registrable Securities will cease to be Registrable Securities when a
registration statement covering such Registrable Securities has been declared
effective under the 1933 Act by the SEC
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and such Registrable Securities have been disposed of pursuant to such effective
registration statement.
(b) Holders of Registrable Securities. A Person is deemed to
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be a holder of Registrable Securities whenever such Person owns of record
Registrable Securities, or holds an option to purchase, or a security
convertible into or exercisable or exchangeable for, Registrable Securities
whether or not such acquisition or conversion has actually been effected and
disregarding any legal restrictions upon the exercise of such rights. If the
Company receives conflicting instructions, notices or elections from two or more
persons with respect to the same Registrable Securities, the Company may act
upon the basis of the instructions, notice or election received from the
registered owner of such Registrable Securities. Registrable Securities issuable
upon exercise of an option or upon conversion of another security shall be
deemed outstanding for the purposes of this Agreement.
5.3 Demand Registration.
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(a) Request for Demand Registration. At any time commencing
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six (6) months from the Closing, the Holders of a majority of the outstanding
Registrable Securities may make a written request for registration (such Holders
making such request being deemed to be "Initiating Holders") of Registrable
Securities under the 1933 Act, and under the securities or blue sky laws of any
jurisdiction reasonably designated by such Holder or Holders (a "Demand
Registration"); provided, the Company will not be required to effect more than
one (1) Demand Registration at the request of the Holders pursuant to this
Section 5.3. Such request for a Demand Registration shall specify the amount of
the Registrable Securities proposed to be sold, the intended method of
disposition thereof and the jurisdictions in which registration is desired. Upon
a request for a Demand Registration, the Company shall promptly take such steps
as are necessary or appropriate to prepare for the registration of the
Registrable Securities to be registered. Within 15 days after the receipt of
such request, the Company shall give written notice thereof to all other Holders
holding Registrable Securities (the "Non-Initiating Holders") and include in
such registration all Registrable Securities held by a Holder with respect to
which the Company has received written requests for inclusion therein within 15
days of the receipt by such Holder of such written notice. Each such request
shall specify the number of Registrable Securities to be registered, the
intended method of disposition thereof and the jurisdictions in which
registration is desired.
(b) Effective Demand Registration. A registration shall not
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constitute a Demand Registration until it has become effective and remains
continuously effective until the earlier of (i) the date of sale of all
Registrable Securities registered thereunder or (ii) 60 days from the effective
date. The Company shall use its best efforts to cause any such Demand
Registration to become effective not later than 60 days after it receives a
request under Section 5.3(a) hereof.
(c) Expenses. The Company shall pay all Registration Expenses
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(other than underwriting discounts and commissions) in connection therewith,
whether or not such
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Demand Registration becomes effective; provided, however, that each Holder
participating in such Demand Registration shall bear the costs of its own legal
counsel.
(d) Underwriting Procedures. If Initiating Holders holding a
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majority of the Registrable Securities held by all such Initiating Holders so
elect, the offering of such Registrable Securities pursuant to such Demand
Registration shall be in the form of a firm commitment underwritten offering and
the managing underwriter or underwriters selected for such offering shall be the
Underwriter selected in accordance with Section 5.3(e). In such event, if the
Underwriter advises the Company in writing that in its opinion the aggregate
amount of such Registrable Securities requested to be included in such offering
is sufficiently large to have a material adverse affect on the success of such
offering, the Company shall include in such registration only the aggregate
amount of Registrable Securities that in the opinion of the Underwriter may be
sold without any such material adverse affect and shall reduce, first as to any
stockholders who are the Non-Initiating Holders as a group and then as to the
Initiating Holders as a group, pro rata within each group based on the number of
Registrable Securities included in the request for Demand Registration, the
amount of Registrable Securities to be included by each Holder in such
registration.
(e) Selection of Underwriters. If any Demand Registration of
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Registrable Securities is in the form of an underwritten offering, the
Initiating Holders holding a majority of the Registrable Securities held by all
such Initiating Holders shall, in their discretion, select and obtain an
investment banking firm to act as the managing underwriter of the offering (the
"Underwriter"), subject to approval by the Company which shall not be
unreasonably withheld.
5.4 Holdback Agreements and Termination.
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(a) Delay of Rights Under Special Circumstances. Upon receipt
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by the Company of a request for Demand Registration pursuant to Section 5.3(a)
hereof, the Company shall have the right, in the event that the Company is then
engaged in business negotiations which would be materially adversely affected by
a Demand Registration, to delay the effectiveness of such request by the
Initiating Holders for a period of up to 30 days. The Company shall exercise the
foregoing delay right by delivering to the Initiating Holders, within 5 days
after the receipt of such request, a written notice attesting to the necessity
of such a delay.
(b) Restrictions on Demands by Holders and Termination of
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Demand Rights. Subject to the provision of Section 5.6 hereof, each Holder of
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Registrable Securities agrees that the right to request a Demand Registration
shall be suspended for a period of up to 180 days commencing upon the date the
Company executes a letter of intent with an underwriter for a firm commitment
underwritten public offering of its securities having an aggregate offering
price of not less than $10,000,000, provided that a registration statement with
respect to such offering is filed by the Company with the SEC within 45 days
from the date of execution of such letter of intent. The foregoing suspension of
the rights of the Holders will cease if such registration statement is not
declared effective by the SEC within 60 days of the filing thereof.
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5.5 Registration Procedures.
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(a) Obligations of the Company. Whenever registration of
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Registrable Securities has been requested pursuant to Section 5 of this
Agreement, the Company shall use its best efforts to effect the registration and
sale of such Registrable Securities in accordance with the intended method of
distribution thereof as quickly as practicable, and in connection with any such
request, the Company shall, as expeditiously as possible:
(i) diligently use its best efforts to prepare and file
with the SEC a registration statement on any form for which the Company then
qualifies of which counsel for the Company shall deem appropriate and which form
shall be available for the sale of such Registrable Securities in accordance
with the intended method of distribution thereof, and use its best efforts to
cause such registration statement to become effective; provided, however, that
before filing a registration statement or prospectus or any amendments or
supplements thereto, the Company shall (A) provide counsel selected by the
Holders holding a majority of the Registrable Securities being registered in
such registration ("Holders' Counsel") and any other Inspector (as hereinafter
defined) with an adequate and appropriate opportunity to participate in the
preparation of such registration statement and each prospectus included therein
(and each amendment or supplement thereto) to be filed with the SEC, which
documents shall be subject to the review of Holders' Counsel, and (B) notify the
Holders' Counsel and each seller of Registrable Securities of any stop order
issued or threatened by the SEC and take all reasonable action required to
prevent the entry of such stop order or to remove it if entered;
(ii) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective for
a period of not less than 60 days, or such shorter period which will terminate
when all Registrable Securities covered by such registration statement have been
sold, and comply with the provisions of the 1933 Act with respect to the
disposition of all securities covered by such registration statement during such
period in accordance with the intended methods of disposition by the sellers
thereof set forth in such registration statement;
(iii) as soon as reasonably possible, furnish to each
seller of Registrable Securities, prior to filing a registration statement,
copies of such registration statement as is proposed to be filed, and thereafter
such number of copies of such registration statement, each amendment and
supplement thereto (in each case including all exhibits thereto), the prospectus
included in such registration statement (including each preliminary prospectus)
and such other documents as each such seller may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such seller;
(iv) use its best efforts to register or qualify such
Registrable Securities under such other securities or blue sky laws of such
jurisdictions as any seller of Registrable Securities reasonably requests, and
to continue such qualification in effect in such jurisdiction for as long as is
permissible pursuant to the laws of such jurisdiction, or for as long as any
such seller requests or until all of such Registrable Securities are sold,
whichever is
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shortest, and do any and all other acts and things which may be reasonably
necessary or advisable to enable any such seller to consummate the disposition
in such jurisdictions of the Registrable Securities owned by such seller;
provided, however, that the Company shall not be required to (A) qualify
generally to do business in any jurisdiction where it would not otherwise be
required to qualify but for this Section 5.5(a)(iv), (B) subject itself to
taxation in any such jurisdiction or (C) consent to general service of process
in any such jurisdiction;
(v) use its best efforts to cause the Registrable
Securities covered by such registration statement to be registered with or
approved by such other governmental agencies or authorities as may be necessary
by virtue of the business and operations of the Company to enable the seller or
sellers of Registrable Securities to consummate the disposition of such
Registrable Securities;
(vi) notify each seller of Registrable Securities at any
time when a prospectus relating thereto is required to be delivered under the
1933 Act, upon discovery that, or upon the happening of any event as a result of
which, the prospectus included in such registration statement contains an untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances under which they were made, and the Company shall
promptly prepare a supplement or amendment to such prospectus and furnish to
each seller a reasonable number of copies of a supplement to or an amendment of
such prospectus as may be necessary so that, after delivery to the purchasers of
such Registrable Securities, such prospectus shall not contain an untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances under which they were made;
(vii) enter into and perform customary agreements
(including an underwriting agreement in customary form with the Underwriter, if
any, selected as provided in Section 5.3) and take such other actions as are
prudent and reasonably required in order to expedite or facilitate the
disposition of such Registrable Securities;
(viii) make available for inspection by any seller of
Registrable Securities, any managing underwriter participating in any
disposition pursuant to such registration statement, Holders' Counsel and any
attorney, accountant or other agent retained by any such seller or any managing
underwriter (each, an "Inspector" and collectively, the "Inspectors"), all
financial and other records, pertinent corporate documents and properties of the
Company and its subsidiaries (collectively, the "Records") as shall be
reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's and its subsidiaries, officers,
directors and employees, and the independent public accountants of the Company,
to supply all information reasonably requested by any such Inspector in
connection with such registration statement. Records that the Company
determines, in good faith, to be confidential and which it notifies the
Inspectors are confidential shall not be disclosed by the Inspectors unless (A)
the disclosure of such Records is necessary to avoid or correct a misstatement
or omission in the registration statement, (B) the release of such Records is
ordered pursuant to a subpoena or other order from a court of competent
jurisdiction, or (C) the
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information in such records has been made generally available to the public
other than through a breach of the confidentiality requirement set forth above.
Each Seller of Registrable Securities agrees that it shall, upon learning that
disclosure of such Records is required by any court of competent jurisdiction,
give notice to the Company and allow the Company, at the Company's expense, to
undertake appropriate action to prevent disclosure of the Records deemed
confidential;
(ix) if such sale is pursuant to an underwritten offering,
use its best efforts to obtain a "cold comfort" letter from the Company's
independent public accountants in customary form and covering such matters of
the type customarily covered by "cold comfort" letters as Holders' Counsel or
the managing underwriter reasonably request;
(x) use its best efforts to furnish, at the request of
any seller of Registrable Securities on the date such securities are delivered
to the underwriters for sale pursuant to such registration or, if such
securities are not being sold through underwriters, on the date the registration
statement with respect to such securities becomes effective, an opinion, dated
such date, of counsel representing the Company for the purposes of such
registration, addressed to the underwriters, if any, and to the seller making
such request, covering such legal matters with respect to the registration in
respect of which such opinion is being given as such seller may reasonably
request and are customarily included in such opinions;
(xi) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make available to its security
holders, as soon as reasonably practicable but no later than 15 months after the
effective date of the registration statement, an earnings statement covering a
period of 12 months beginning after the effective date of the registration
statement, in a manner which satisfies the provisions of Section 5.10(a) of the
1933 Act;
(xii) cause all such Registrable Securities to be listed on
each securities exchange on which similar securities issued by the Company are
then listed, provided, that the applicable listing requirements are satisfied;
(xiii) keep each seller of Registrable Securities advised
in writing as to the initiation and progress of any registration hereunder;
(xiv) cooperate with each seller of Registrable Securities
and each underwriter participating in the disposition of such Registrable
Securities and their respective counsel in connection with any filings required
to be made with the National Association of Securities Dealers, Inc. (the
"NASD"); and
(xv) use best efforts to take all other steps necessary to
effect the registration of the Registrable Securities contemplated hereby.
(b) Seller Information The Company may require each seller of
------------------
Registrable Securities as to which any registration is being effected to furnish
to the Company
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such information regarding the seller and the distribution of such securities as
the Company may from time to time reasonably request in writing.
(c) Notice to Discontinue. Each Holder of Registrable
---------------------
Securities agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 5.5(a)(vi), such Holder
shall forthwith discontinue disposition of Registrable Securities pursuant to
the registration statement covering such Registrable Securities until such
Holder's receipt of the copies of the supplemented or amended prospectus
contemplated by Section 5.5(a)(vi) and, if so directed by the Company, such
Holder shall deliver to the Company (at the Company's expense) all copies, other
than permanent file copies then in such Holder's possession, of the prospectus
covering such Registrable Securities which is current at the time of receipt of
such notice. If the Company shall give any such notice, the Company shall extend
the period during which such registration statement shall be maintained
effective pursuant to this Agreement (including without limitation the period
referred to in Section 5.5(a)(ii)) by the number of days during the period from
and including the date of the giving of such notice pursuant to Section
5.5(a)(vi) to and including the date when the Holder shall have received the
copies of the supplemented or amended prospectus contemplated by and meeting the
requirements of Section 5.5(a)(vi).
(d) Registration Expenses. The Company shall pay all expenses
---------------------
(other than as set forth in Section 5.3(c)) arising from or incident to the
performance of, or compliance with, the terms of Section 5 of this Agreement,
including without limitation, (i) SEC, stock exchange and NASD registration and
filing fees, (ii) all fees and expenses incurred in complying with securities or
blue sky laws (including reasonable fees, charges and disbursements of counsel
in connection with blue sky qualifications of the Registrable Securities), (iii)
all printing, messenger and delivery expenses, (iv) the fees, charges and
disbursements of counsel to the Company and of its independent public
accountants and any other accounting and legal fees, charges and expenses
incurred by the Company (including without limitation any expenses arising from
any special audits incident to or required by any registration or
qualification), and (v) any liability insurance or other premiums for insurance
obtained (which insurance the Company agrees to use its best efforts to obtain
upon the reasonable request of any seller of Registrable Securities) retained in
connection with any Demand Registration pursuant to the terms of this Agreement,
regardless of whether such registration statement is declared effective. All of
the expenses described in this Section 5.5(d) are referred to herein as
"Registration Expenses."
5.6 Piggy-Back Registration. If the Company proposes to file a
-----------------------
registration statement under the Act, other than pursuant to Section 5.3 hereof,
with respect to an offering by the Company for its own account of any class of
security (other than a registration statement on Form S-4 or S-8 or any
successor or other forms not available for registering capital stock for sale to
the public), then the Company shall give written notice of such proposed filing
to each of the Holders of Registrable Securities at least 30 days before the
anticipated filing date, and such notice shall describe in detail the proposed
registration and distribution (including those jurisdictions where registration
under the securities or blue sky laws is intended) and offer such Holders the
opportunity to register the number of Registrable Securities as each such Holder
may
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request. The Company shall use its best efforts (within ten days of the notice
provided for in the preceding sentence) to cause the managing underwriter or
underwriters of a proposed underwritten offering (the "Company Underwriter") to
permit the Holders of Registrable Securities who have requested to participate
in the registration for such offering to include such Registrable Securities in
such offering on the same terms and conditions as the securities of the Company
included therein. Notwithstanding the foregoing, if the Company Underwriter
delivers a written opinion to the Holders of Registrable Securities that the
total amount or kind of securities which they, the Company and any other persons
or entities intend to include in such offering (the "Total Securities") is
sufficiently large so as to have a material adverse effect on the distribution
of the Total Securities, then the amount or kind of securities to be offered for
the account of such Holders and such other persons or entities (other than the
Company) shall be reduced pro rata to the extent necessary to reduce the Total
Securities to the amount recommended by the Company Underwriter, provided that
the Holders shall have first priority to participate in the registration over
all other holders of registration rights. Unless waived by a Holder in writing,
each Holder shall have the right to participate pro rata based upon the
proportion of the Registrable Securities held by them bears to all Registrable
Securities.
5.7 Indemnification; Contribution
-----------------------------
(a) Indemnification by the Company. The Company agrees to
------------------------------
indemnify, to the fullest extent permitted by law, each Holder, its officers,
directors, partners, employees, advisors and agents and each Person who controls
(within the meaning of the 1933 Act or the Exchange Act) such Holder from and
against any and all losses, claims, damages, liabilities and expenses (including
reasonable costs of investigation or defending such claim and any amounts paid
in any settlement effected with the Company's consent) arising out of or based
upon (i) any untrue, or allegedly untrue, statement of a material fact contained
in any registration statement, prospectus or preliminary prospectus or
notification or offering circular (as amended or supplemented if the Company
shall have furnished any amendments or supplements thereto) or (ii) any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as the same are caused by or contained in any information furnished in
writing to the Company by such Holder expressly for use therein. The Company
shall also indemnify any underwriters of the Registrable Securities, their
officers, directors and employees and each Person who controls such underwriters
(within the meaning of the 1933 Act and the Exchange Act) to the same extent as
provided above with respect to the indemnification of the Holders of Registrable
Securities.
(b) Indemnification by Holders. In connection with any
--------------------------
registration statement in which a Holder is participating pursuant to this
Section 5, each such Holder shall furnish to the Company in writing such
information with respect to such Holder as the Company may reasonably request or
as may be required by law for use in connection with any such registration
statement or prospectus and each Holder agrees to indemnify, to the fullest
extent permitted by law, the Company, any underwriter retained by the Company
and their respective directors, officers, employees and each Person who controls
the Company or such underwriter (within the meaning of the 1933 Act and the
Exchange Act) to the same extent as the foregoing indemnity from the Company to
the Holders, but only with respect to any statement or alleged
-14-
statement in or omission or alleged omission from such registration statement if
such statement or omission was made in reliance upon and in conformity with
information furnished in writing by such Holder; provided, however, that the
total amount to be indemnified by such Holder pursuant to this Section 5.7(b)
shall be limited to the net proceeds received by such Holder in the offering to
which the registration statement or prospectus relates.
(c) Conduct of Indemnification Proceedings. Any Person entitled
--------------------------------------
to indemnification hereunder (the "Indemnification Party") agrees to give prompt
written notice to the indemnifying party (the "Indemnifying Party") after the
receipt by the Indemnified Party of any written notice of the commencement of
any action, suit, proceeding or investigation or threat thereof made in writing
for which the Indemnified Party intends to claim indemnification or contribution
pursuant to this Agreement; provided, that the failure to notify the
Indemnifying Party shall not relieve the Indemnifying Party of any liability
that it may have to the Indemnified Party hereunder. If notice of commencement
of any such action is given to the Indemnifying Party as above provided, the
Indemnifying Party shall be entitled to participate in and, to the extent it may
wish, jointly with any other Indemnifying Party similarly notified, to assume
the defense of such action at its own expense, with counsel chosen by it and
satisfactory to such Indemnified Party. The Indemnified Party shall have the
right to employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel (other than
reasonable costs of investigation) shall be paid by the Indemnified Party unless
(i) the Indemnifying Party agrees to pay the same, (ii) the Indemnifying Party
fails to assume the defense of such action with counsel satisfactory to the
Indemnified Party in its reasonable judgment, (iii) the named parties to any
such action (including any impleaded parties) have been advised by such counsel
that either (A) representation of such Indemnified Party and the Indemnifying
Party by the same counsel would be inappropriate under applicable standards of
professional conduct, (B) there may be one or more defenses available to it
which are different from or additional to those available to the Indemnifying
Party, or (C) in the reasonable judgment of the Indemnified Party, upon the
advice of counsel, a conflict of interest may exist between the Indemnified
Party and the Indemnifying Party. In any of such cases the Indemnifying Party
shall not have the right to assume the defense of such action on behalf of such
Indemnified Party. No Indemnifying Party shall be liable for any settlement
entered into without its written consent, which consent shall not be
unreasonably withheld.
(d) Contribution. If the indemnification provided for in this
------------
Section 5.7 from the Indemnifying Party is unavailable to an Indemnified
Party hereunder in respect of any losses, claims, damages, liabilities or
expenses referred to therein, then the Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such losses, claims, damages,
liabilities or expenses in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Party and Indemnified Party in connection
with the actions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
faults of such Indemnifying Party and Indemnified Party shall be determined by
reference to, among other things, whether any action in question, including any
untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact, has been made by, or relates to information
supplied by, such Indemnifying Party or Indemnified
-15-
Party, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such action. The amount paid or payable by a
party as a result of the losses, claims, damages, liabilities and expenses
referred to above shall be deemed to include, subject to the limitations set
forth in Sections 5.7(a), 5.7(b) and 5.7(c), any legal or other fees, charges or
expenses reasonably incurred by such party in connection with any investigation
or proceeding. The parties hereto agree that it would not be just and equitable
if contribution pursuant to this Section 5.7(d) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the ▇▇▇▇ ▇▇▇) shall be entitled to contribution from any person.
5.8 Rule 144. The Company covenants that, from and after the date
--------
that the Company has a class of equity securities registered under the Exchange
Act, it shall (i) file any reports required to be filed by it under the Exchange
Act and the rules and regulations adopted by the SEC thereunder; (ii) make and
keep public information available as those terms are understood and defined in
Rule 144; and (iii) take such further action as each Holder of Registrable
Securities may reasonably request (including providing any information necessary
to comply with Rules 144 and 144A), all to the extent required from time to time
to enable such Holder to sell Registrable Securities without registration under
the 1933 Act within the limitation of the exemptions provided by (a) Rule 144 or
Rule 144A, as such rules may be amended from time to time, or (b) any similar
rules or regulations hereafter adopted by the SEC. The Company shall, upon the
request of any Holder of Registrable Securities, deliver to such Holder a
written statement as to whether it has complied with such requirements.
6. MISCELLANEOUS.
-------------
6.1 Cumulative Remedies. Any person having any rights under any
-------------------
provision of this Agreement will be entitled to enforce such rights
specifically, to recover damages by reason of any breach of any provision of
this Agreement, and to exercise all other rights granted by law, which rights
may be exercised cumulative and not alternatively.
6.2 Successors and Assigns. Except as otherwise expressly provided
----------------------
herein, all covenants and agreements contained in this Agreement by or on behalf
of any of the parties hereto will bind and inure to the benefit of the
respective successors and assigns of the parties hereto whether so expressed or
not.
6.3 Severability. Whenever possible, each provision of this
------------
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement or the other documents.
6.4 Counterparts. This Agreement may be executed in two or more
------------
counterparts, any one of which need not contain the signatures of more than one
party, but all such counterparts when taken together will constitute one and the
same agreement.
-16-
6.5 Entire Agreement. This Agreement constitutes the entire
----------------
agreement and understanding of the parties with respect to the subject matter
thereof, and supersedes all prior and contemporaneous agreements and
understandings.
6.6 Survival of Representations. All representations, warranties and
---------------------------
agreements contained herein or made in writing by the Company and the Selling
Stockholders in connection with the transactions contemplated hereby except any
representation, warranty or agreement as to which compliance may have been
appropriately waived, shall survive the execution and delivery of this
Agreement.
6.7 Expenses and Attorney Fees. The Company and the Selling
--------------------------
Stockholders shall each pay all of their respective legal and due diligence
expenses in connection with the transactions contemplated by this Agreement,
including, without limiting the generality of the foregoing, legal and
accounting fees.
6.8 Waiver of Conditions. At any time or times during the term
--------------------
hereof, the Company may waive fulfillment of any one or more of the conditions
to its obligations in whole or in part, and the Selling Stockholders may waive
fulfillment of any one or more of the foregoing conditions to their obligation,
in whole or in part, by delivering to the other party a written waiver or
waivers of fulfillment thereof to the extent specified in such written waiver or
waivers. Any such waiver shall be validly and sufficiently authorized for the
purposes of this Agreement if, as to any party, it is authorized in writing by
an authorized representative of such party. The failure of any party hereto to
enforce at any time any provision of this Agreement shall not be construed to be
a waiver of such provision, nor in any way to affect the validity of this
Agreement or any part hereof or the right of any party thereafter to enforce
each and every such provision. No waiver of any breach of this Agreement shall
be held to constitute a waiver of any other or subsequent breach.
6.9 Partial Invalidity. If any term, covenant or condition of this
------------------
Agreement or the application thereof to any person or circumstance shall, to any
extent, be invalid or unenforceable, the remainder of this Agreement, or the
application of such term, covenant or condition to persons or circumstances
other than those as to which it is held invalid or unenforceable, shall not be
affected thereby and each term, covenant or condition of this Agreement shall be
valid and be enforced to the fullest extent permitted by law.
6.10 Successors and Assigns. The terms, covenants and conditions
----------------------
contained herein shall be binding upon and inure to the benefit of the heirs,
successors and assigns of the parties hereto.
6.11 Law Governing. This Agreement shall be construed and
-------------
interpreted in accordance with and governed and enforced in all respects by the
laws of the State of California.
6.12 Attorneys' Fees. If any action at law or in equity is
---------------
necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable
-17-
attorneys' fees, costs and disbursements in addition to any other relief to
which such party may be entitled.
[Continued on next page]
-18-
IN WITNESS WHEREOF, each of the parties to this Agreement has executed or
caused this Agreement to be executed as of the date first above written.
"Company"
G.P. PROPERTIES, INC.,
a Nevada corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, President
[Signatures of Selling Stockholders Appear on Exhibit A]
-19-
EXHIBIT A
LIST OF SELLING STOCKHOLDERS
----------------------------
Number of Kwik Web
Name and Address of Shares Owned by Selling
Selling Stockholder Signature Stockholder
------------------- --------- --------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 58
--------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇ 42
--------------------------
A-1
EXHIBIT B
OFFICER'S CERTIFICATE
---------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ hereby certifies the following to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and
▇▇▇▇ ▇▇▇▇▇▇▇▇ ("Selling Stockholders"):
1. I am the duly elected and acting President and Secretary of G.P.
Properties, Inc., a Nevada corporation ("Company").
2. This Officer's Certificate is being delivered to the Selling
Stockholders pursuant to Section 2.1(b) of the Securities Purchase Agreement And
Plan Of Reorganization ("Agreement") dated August 6, 1999 by and between the
Company and the Selling Stockholders.
3. All of the representations and warranties of the Company made in the
Agreement are true and correct in all material respects on and as of the date
hereof as though such representations and warranties had been made or given on
and as of the date hereof .
4. The Company has performed and complied in all material respects with
all of the covenants and agreements made in the Agreement to be performed by or
complied with by the Company on or prior to the date hereof.
Executed effective as of August 6, 1999.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-----------------------------------
-2-