[TYPE] 8-K
[DESCRIPTION]FORM 8-K
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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): June 26, 1998
INTERNATIONAL META SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Delaware 000-17945 33-0146747
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation
or organization)
7718 Wood Hollow Drive, Suite 150
Austin, Texas 78731
(Address of principal executive office)
Issuer's telephone number: 512-795-8825
Item 5 Other Events
International Meta Systems, Inc., is filing herewith the Plan of
Reorganization for International Meta Systems, Inc., ("IMS") Filed Jointly by
IPIQ Corporation ("IPIQ") and IMS, which was filed with the United States
Bankruptcy for the Western District of Texas, Austin Division (the
"Bankruptcy Court"), on June 26, 1998, in connection with the Company's
ongoing proceeding under chapter 11 of the U.S. Bankruptcy Code (Case No.
98-10782FM).
The Plan would authorize IMS to sell the majority of its assets,
including its semiconductor intellectual property design library and
integrated circuit design process, current operations, contracts, customers
and personnel to IPIQ, a newly created corporation which is privately held,
in exchange for IPIQ Class B Common Shares and assumption by IPIQ of
specified trade and other indebtedness. Copies of the Plan and Disclosure
Statement are on file with the Bankruptcy Court in Austin. If the Disclosure
Statement is approved by the Bankruptcy Court, the Plan and Disclosure
Statement will be distributed to all IMS creditors for approval of the Plan.
Confirmation of the Plan generally requires approval by the holders of a
majority in number and two-thirds in dollar amount
<PAGE> 2
of each class of creditors impaired by the Plan. It is too early to predict
whether the Bankruptcy Court will approve distribution of the Disclosure
Statement or whether the Plan will be confirmed as proposed.
At the time of filing the bankruptcy case, IMS liabilities
substantially exceeded its assets and it was unable to sustain its
operations. IMS has determined that the best prospect to pay the claims of
claimants in the bankruptcy case is the sale of substantially all of its
assets to IPIQ.
Because the current debts of IMS substantially exceed the estimated
realizable value of the assets in the bankruptcy case, under the proposed
Plan equity interests would receive no distributions from any proceeds of the
sale of IMS assets. However, IMS emerge debt free and would retain certain
assets, including a tax net operating loss carry forward and the rights to
exploit partially completed designs of intellectual property including
x86-compatible microprocessors which IMS had developed, which may have value for
IMS's stockholders. IMS' ability to exploit those assets and designs will
be dependent on its ability to finance post-reorganization and recruit new
technical personnel. At present, IMS has no means of obtaining the
necessary financing and personnel to take advantage of any such
opportunities.
IPIQ was recently formed for the purpose of acquiring certain assets of
IMS, subject to Bankruptcy Court approval, in order to continue the principal
business of the IMS. IMS previously entered into a marketing consulting and
teaming agreement (the "Marketing Consulting Agreement") with IPIQ, which was
approved by the Bankruptcy Court on June 22, 1998. Under that agreement,
IPIQ will provide sales and marketing assistance, and will, in certain
appropriate cases, serve customers directly with IMS as a subcontractor when
those customers are reluctant to do business with IMS.
This Report contains forward-looking statements that involve risks and
uncertainties. Actual results, events and performance could differ
materially from those contemplated by these forward-looking statements.
Among the factors that could cause actual results, events and performance to
differ materially are risks and uncertainties discussed in the preceding
paragraphs and those detailed from time to time in the Company's filings with
the Securities and Exchange Commission, including the Company's annual report
on Form 10-KSB for the fiscal year ended December 31, 1996, and the Company's
quarterly report on Form 10-QSB for the quarterly periods ended March 31,
June 30, and September 30, 1997, and in the Company's other public reports
and statements. This Report is not a solicitation of the acceptance of the
plan of reorganization filed by IMS and IPIQ. The information provided is for
the purpose of informing the public of the status of the IMS bankruptcy
proceeding only.
Item 7 Financial Statements and Exhibits
(c) Exhibits
99.1 Plan of Reorganization for International Meta Systems, Inc. Filed
Jointly by IPIQ
<PAGE> 3
Corporation and International Meta Systems, Inc
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
INTERNATIONAL META SYSTEMS, INC.
Date: 7/22/98 /s/ Lee Hoevel
--------------- ----------------------------------
Lee Hoevel, President
<PAGE>
UNITED STATES BANKRUPTCY COURT
FOR THE WESTERN DISTRICT OF TEXAS
AUSTIN DIVISION
In re: )
)
INTERNATIONAL META SYSTEMS, INC. )
7718 Woodhollow Drive, Suite 150 ) Case No. 98-10782-FM
Austin, Texas 78731 )
Tax I.D. No. 33-01-46-747 )
)
Debtor. )
PLAN OF REORGANIZATION FOR
INTERNATIONAL META SYSTEMS, INC.
FILED JOINTLY BY IPIQ CORPORATION AND
INTERNATIONAL META SYSTEMS, INC.
Eric J. Taube
HOHMANN & TAUBE, L.L.P.
100 Congress Avenue, Suite 1600
Austin, Texas 78701
Telephone: (512) 472-5997
Facsimile: (512) 472-5248
ATTORNEYS FOR INTERNATIONAL META
SYSTEMS, INC.
Glover Roberts
Patricia B. Tomasco
Mark Farha
SHEINFELD, MALEY & KAY
A Professional Corporation
1700 Pacific Ave., Ste. 4400
Dallas, Texas 75201
Telephone: (214) 953-0700
Facsimile: (214) 953-1189
-and-
301 Congress Avenue, Ste. 1400
Austin, Texas 78701
Telephone: (512) 474-8881
Facsimile: (512) 474-2337
ATTORNEYS FOR IPIQ CORPORATION
DATED:
--------------
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TABLE OF CONTENTS
ARTICLE IDEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE IICLASSIFICATION AND IMPAIRMENT OF CLAIMS AND EQUITY INTERESTS . . . 9
2.1 Classification.. . . . . . . . . . . . . . . . . . . . . . . . . . 9
Class 1: All Allowed Administrative Claims, other than the
IPIQ Administrative Claim. . . . . . . . . . . . . . . . 9
Class 3: Allowed Priority Claims. . . . . . . . . . . . . . . . . 9
Class 3A: Non-Terminated Personnel Claims. . . . . . . . . . . . . 9
Class 3B: Terminated Personnel Claims. . . . . . . . . . . . . . . 9
Class 3C: Other Priority Claims. . . . . . . . . . . . . . . . . . 9
Class 4: Trade Claims.. . . . . . . . . . . . . . . . . . . . . . 9
Class 5: Amerscan/Promissory Notes/Subscriber Debt Claims.. . . . 9
Class 6: Allowed Equity Interests represented by ownership of
the Debtor's stock.. . . . . . . . . . . . . . . . . . . 9
2.2 Unimpaired Classes.. . . . . . . . . . . . . . . . . . . . . . . .10
2.3 Impaired Classes.. . . . . . . . . . . . . . . . . . . . . . . . .10
ARTICLE IIIPROVISIONS FOR PAYMENT OF ADMINISTRATIVE CLAIMS (CLASS 1) . . . .10
3.1 Treatment of Class 1 Allowed Administrative Claims.. . . . . . . .10
3.2 Time For Filing Administrative Claims. . . . . . . . . . . . . . .10
3.3 Allowance of Administrative Claims.. . . . . . . . . . . . . . . .11
3.4 Post Confirmation Date Fee Claims. . . . . . . . . . . . . . . . .11
3.5 Status of Class 1. . . . . . . . . . . . . . . . . . . . . . . . .11
ARTICLE IV PROVISIONS FOR PAYMENT OF IPIQ CLAIMS (CLASS 2). . . . . . . . .11
4.1 Treatment of Class 2 IPIQ Claims.. . . . . . . . . . . . . . . . .11
4.2 Status of Class 2. . . . . . . . . . . . . . . . . . . . . . . . .11
ARTICLE VPROVISIONS FOR PAYMENT OF ALLOWED PRIORITY CLAIMS (CLASS 3) . . . .12
5.1 Treatment of Class 3 Allowed Priority Claims . . . . . . . . . . .12
5.1.1 Class 3A - Non-Terminated Personnel Claims . . . . . . .12
5.1.2 Class 3B - Terminated Personnel Claims . . . . . . . . .12
5.1.3 Class 3C - Other Priority Claims . . . . . . . . . . . .12
5.2 Status of Classes 3A, 3B and 3C. . . . . . . . . . . . . . . . . .12
<PAGE>
ARTICLE VIPROVISIONS FOR TREATMENT OF TRADE CLAIMS (CLASS 4) . . . . . . . .12
6.1 Treatment of Trade Claims. . . . . . . . . . . . . . . . . . . . .12
6.2 Status of Class 4. . . . . . . . . . . . . . . . . . . . . . . . .12
ARTICLE VIIPROVISIONS FOR TREATMENT OF UNSECURED CLAIMS (CLASS 5). . . . . .13
7.1 Treatment of Class 5 Allowed Unsecured Claims (the
Amerscan/Promissory Notes/Subscriber Debt Claims). . . . . . . . .13
7.2 Status of Class 5. . . . . . . . . . . . . . . . . . . . . . . . .13
ARTICLE VIIIPROVISIONS FOR TREATMENT OF ALLOWEDINTERESTS OF HOLDERS OF COMMON
STOCK (CLASS 6)13
8.1 Treatment of Class 6 Allowed Common Shareholders.. . . . . . . . .13
8.2 Status of Class 6. . . . . . . . . . . . . . . . . . . . . . . . .14
ARTICLE IXACCEPTANCE OR REJECTION OF THE PLAN. . . . . . . . . . . . . . . .14
9.1 Impaired Claims and Interests Entitled to Vote.. . . . . . . . . .14
9.2 Unimpaired Classes.. . . . . . . . . . . . . . . . . . . . . . . .14
ARTICLE XIMPLEMENTATION AND CONSUMMATION OF THE PLAN . . . . . . . . . . . .14
10.1 Conveyance of Assets to IPIQ Free and Clear . . . . . . . . .14
10.2 Prohibition of Actions. . . . . . . . . . . . . . . . . . . .16
10.3 Revesting and Assignment of Avoidance Causes of Action. . . .16
10.4 Revesting and Assignment of Other Causes of Action. . . . . .17
ARTICLE XIPROVISIONS GOVERNING DISTRIBUTIONS . . . . . . . . . . . . . . . .18
11.1 Provisions for Distributions. . . . . . . . . . . . . . . . .18
11.2 Books and Records.. . . . . . . . . . . . . . . . . . . . . .18
11.3 Limitation of Recourse to Distributions.. . . . . . . . . . .18
11.4 No Bond . . . . . . . . . . . . . . . . . . . . . . . . . . .18
11.5 Provisions Covering Notice and Distributions. . . . . . . . .18
11.5.1 Method of Payment. . . . . . . . . . . . . . . . . . . .18
11.5.2 Cash Payment to be Made by the Debtor or IPIQ. . . . . .18
11.5.3 Delivery of Notices and Distributions. . . . . . . . . .19
11.5.4 Time Bar to Cash Payments. . . . . . . . . . . . . . . .19
11.6 Fractional Shares.. . . . . . . . . . . . . . . . . . . . . .20
<PAGE>
ARTICLE XIITREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES . . . . . .20
12.1 Rejected if Not Assumed.. . . . . . . . . . . . . . . . . . .20
12.2 Bar to Rejection Damages. . . . . . . . . . . . . . . . . . .20
12.3 Cadence Design Systems. . . . . . . . . . . . . . . . . . . . . .20
12.4 QuickTurn Design Systems.. . . . . . . . . . . . . . . . . . . . .20
12.5 Synopsis . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
ARTICLE XIIIPROCEDURES FOR RESOLVINGDISPUTED CLAIMS UNDER THE PLAN . . . . .21
13.1 Bar Date for Objections to Claims.. . . . . . . . . . . . . .21
13.2 Prosecution of Objections to Claims.. . . . . . . . . . . . .21
13.3 No Distributions Until Claim Allowed. . . . . . . . . . . . .22
13.4 Allocated Distributions.. . . . . . . . . . . . . . . . . . .22
13.5 Voting Rights.. . . . . . . . . . . . . . . . . . . . . . . .22
13.6 Estimation for Distribution.. . . . . . . . . . . . . . . . .22
ARTICLE XIVSECURITIES ISSUED UNDER PLAN. . . . . . . . . . . . . . . . . . .23
ARTICLE XVPROVISIONS FOR RETENTION OFJURISDICTION BY THE BANKRUPTCY COURT. .23
ARTICLE XVIEVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . .24
ARTICLE XVIIMISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . .25
17.1 Discharge of Debtor and Injunction. . . . . . . . . . . . . .25
17.2 Discharge/Release of Certain Representatives. . . . . . . . .26
17.3 Vesting of Assets.. . . . . . . . . . . . . . . . . . . . . .26
17.4 Setoffs.. . . . . . . . . . . . . . . . . . . . . . . . . . .26
17.5 Surrender of Instruments and Release of Liens.. . . . . . . .26
17.6 Interpretation. . . . . . . . . . . . . . . . . . . . . . . .27
17.7 GOVERNING LAW.. . . . . . . . . . . . . . . . . . . . . . . .27
ARTICLE XVIIIMODIFICATIONS AND INTERPRETATIONOF THE PLAN; GENERAL PROVISIONS27
18.1 Modification of Plan. . . . . . . . . . . . . . . . . . . . .27
<PAGE>
18.2 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . .27
18.3 Severability. . . . . . . . . . . . . . . . . . . . . . . . .28
18.4 Successors and Assigns; Transferability.. . . . . . . . . . .28
18.5 Petition for Final Decree.. . . . . . . . . . . . . . . . . .28
18.6 Preservation of Rights Under Bankruptcy Rule 2004.. . . . . .28
18.7 Revocation of Plan and Conversions. . . . . . . . . . . . . .28
18.8 Admissions Against Interest/Waiver. . . . . . . . . . . . . .29
18.9 Notices.. . . . . . . . . . . . . . . . . . . . . . . . . . .29
<PAGE>
PLAN OF REORGANIZATION FOR
INTERNATIONAL META SYSTEMS, INC.
FILED JOINTLY BY IPIQ CORPORATION AND
INTERNATIONAL META SYSTEMS, INC.
International Meta Systems, Inc. ("Debtor") and IPIQ Corporation ("IPIQ")
file their Plan of Reorganization for International Meta Systems,
Inc. pursuant to 11 U.S.C. Section 1101 et seq. as follows:
ARTICLE I
DEFINITIONS
As used in this Plan, the following terms shall have the following
meanings when used in initially capitalized form with such meanings to be
equally applicable to the singular and plural of the terms defined.
1.1 "Acquired Assets" shall mean those assets of the Debtor to be
acquired by IPIQ pursuant to the Asset Purchase Agreement.
1.2 "Administrative Claim" shall mean any Claim for payment of an
administrative expense of a kind specified in Section 503(b) of the
Bankruptcy Code and referred to in Section 507(a)(1) of the
Bankruptcy Code, including, without limitation, Fee Claims. The
obligations incurred by Debtor to IPIQ under the Marketing
Consulting Agreement shall not be included in the definition of
Administrative Claim.
1.3 "Allowed Administrative Claim" shall mean an Administrative Claim to
the extent that it is or has become an Allowed Claim.
1.4 "Allowed Claim or Allowed Equity Interest" shall mean any Claim
against or Equity Interest in Debtor allowable under Section 502 of
the Bankruptcy Code (i) for which a proof of claim or interest was
filed on or before the Bar Date designated as the last date for
filing proofs of claim against, or equity interests in Debtor or
(ii) which has been or hereafter is listed by Debtor in its
bankruptcy schedules as liquidated in amount and not disputed or
contingent and, in case of both (i) and (ii) above, as to which no
objection to
<PAGE>
the allowance thereof has been timely filed or, if an objection has
been timely filed, such Claim is allowed by Final Order, or (iii)
which is deemed allowed by the terms of this Plan. Unless
otherwise specified in this Plan, an Allowed Claim shall not, for
the purposes of computation of distributions under this Plan,
include postpetition interest on the amount of such Claim.
1.5 "Amerscan" shall mean Amerscan Partners, III, L.P.
1.6 "Amerscan Claim" shall mean that claim evidenced by two (2)
unsecured notes, one in the amount of $1.5 million and one in the
amount of $500,000 held by Amerscan together with all other amounts
owed by Debtor to Amerscan.
1.7 "Asset Purchase Agreement" shall mean the Asset Purchase Agreement
entered into by and between Debtor and IPIQ, which is attached as
Exhibit "A" to the Disclosure Statement approved by the Court, and
incorporated herein.
1.8 "Avoidance Actions" shall mean a cause of action which may be
brought by the Debtor or its successors pursuant to Sections 542,
543, 544, 545, 546, 547, 548, 549, 550 or 553 of the Bankruptcy
Code.
1.9 "Bankruptcy Code" shall mean Title 11 of the United States Code, as
amended and codified.
1.10 "Bankruptcy Court" shall mean the unit of the United States
Bankruptcy Court for the Western District of Texas, Austin
Division, having jurisdiction over the Chapter 11 Case, or in the
event such court ceases to exercise jurisdiction over the Chapter
11 Case, such court as may have jurisdiction of the Chapter 11
Case.
1.11 "Bankruptcy Rules" shall mean the Federal Rules of Bankruptcy
Procedure, as amended, applicable to the Chapter 11 Case.
<PAGE>
1.12 "Bar Date" shall mean the final date for filing proofs of claim or
interest which will be established by the Court in this Chapter 11
Case, or such other date as may apply to a particular Claim or
interest pursuant to any Final Order.
1.13 "Chapter 11 Case" shall mean Case No. 98-10782-FM pending in the
Bankruptcy Court under Chapter 11 of the Bankruptcy Code in which
Debtor is the Debtor in Possession.
1.14 "Claim" shall mean either (a) a right to payment from the Debtor
whether or not such right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured or unsecured, or (b) any
right to an equitable remedy for breach of performance if such
breach gives rise to a right of payment from the Debtor, whether or
not such right to an equitable remedy is reduced to judgment,
fixed, contingent, matured, disputed, undisputed, secured or
unsecured.
1.15 "Claimant" shall mean the holder of a Claim.
1.16 "Class" shall mean a category of holders of Claims or Equity
Interests as classified in this Plan.
1.17 "Closing Date" shall mean the date on which the transactions
contemplated by the Plan and the Asset Purchase Agreement are
consummated, which is also to be the Effective Date.
1.18 "Common Stock" shall mean the common stock of the Debtor existing
and issued on the Effective Date.
1.19 "Confirmation" shall mean the entry of the Confirmation Order on the
docket of this Chapter 11 Case by the clerk of the Bankruptcy
Court.
1.20 "Confirmation Date" shall mean the date upon which the
Confirmation Order is entered on the docket of this Chapter 11 Case
by the clerk of the Bankruptcy Court.
1.21 "Confirmation Hearing" shall mean the hearing to be held by the
Bankruptcy Court at which the Debtor shall seek confirmation of the
Plan.
<PAGE>
1.22 "Confirmation Order" shall mean the order of the Bankruptcy Court
confirming this Plan in accordance with the provisions of Chapter
11 of the Bankruptcy Code.
1.23 "Debtor" shall mean International Meta Systems, Inc., a Delaware
corporation, as Debtor in Possession.
1.24 "Debtor in Possession" shall mean Debtor as Debtor in Possession,
pursuant to Sections 1107 and 1108 of the Bankruptcy Code.
1.25 "Disallowed Claim" shall mean a Claim that (i) has been disallowed
by order of the Bankruptcy Court or (ii) is listed in the Debtor's
Schedules as disputed, contingent or unliquidated, and with respect
to which no proof of claim has been timely filed.
1.26 "Disclosure Statement" shall mean the Disclosure Statement filed
with the Bankruptcy Court by Debtor, including exhibits and any
supplements, amendments or modifications thereto, prepared pursuant
to Sections 1125(a) and 1126(b) of the Bankruptcy Code and
Bankruptcy Rule of Procedure 3018(b) for solicitation of acceptance
of this Plan.
1.27 "Disputed Claim" shall mean a Claim against or Equity Interest in
the Debtor, the allowance of which in whole or in part is the
subject of an objection timely filed by the Debtor or any other
party authorized to file an objection pursuant to this Plan, or a
Claim against, or Equity Interest in, the Debtor which has been
scheduled as disputed, contingent, or unliquidated.
1.28 "Distributions" shall mean the payment and distribution required by
the Plan to be made to the holders of Allowed Claims and/or
Interests.
1.29 "Effective Date" shall mean the thirtieth (30th) day following the
Confirmation Date, unless the Confirmation Order is stayed on
appeal by a court of competent jurisdiction, in which case the
Effective Date shall be ten (10) days after such stay is dissolved
by Final Order.
<PAGE>
1.30 "Equity Interests" shall mean any stockholder interests in Debtor
represented by duly authorized, validly issued and outstanding
shares of any form of IMS stock.
1.31 "Estate" shall mean the bankruptcy estate of the Debtor created by
Section 541 of the Bankruptcy Code.
1.32 "Excluded Assets" shall mean any asset of the Debtor which is not
being purchased by IPIQ as defined herein.
1.33 "Fee Application" shall mean any application of a Professional
Person under Bankruptcy Code Sections 330 or 503 for allowance of
compensation and reimbursement of expenses in the Chapter 11 Case.
1.34 "Fee Claim" shall mean a Claim of a Professional under Bankruptcy
Code Sections 330 or 503 for allowance of compensation and reimburse-
ment of expenses in connection with the Chapter 11 Case.
1.35 "Final Order" shall mean an order as to which the time to appeal or
to seek retrial or rehearing has expired, and as to which no appeal
or other proceedings for review or rehearing shall then be pending.
1.36 "IMS" shall mean International Meta Systems, Inc., the Debtor
herein.
1.37 "IPIQ" shall mean IPIQ Corporation, a Delaware corporation.
1.38 "IPIQ Administrative Claim" shall mean all obligations incurred by
Debtor to IPIQ under the Financing Agreement approved by this Court
and all expenses incurred pursuant to the Marketing Consulting
Agreement, all of which shall be deemed an Administrative Claim(s)
under Bankruptcy Code Section 503(b).
1.39 "IPIQ Reserved Common Stock" shall mean shares of a class of IPIQ
Common Stock, designated Class B Common Stock, to be distributed to
some defined holders of Class 3 and all Class 5 Claims in
accordance with the terms and conditions of the Plan, which shall
have the following characteristics:
<PAGE>
a. No shares of Class B Common Stock shall be issued or
authorized for issuance by IPIQ except pursuant to the terms
of this Plan.
b. All shares of Class B Common Stock shall be converted into
shares of IPIQ Class A Common Stock ("Class A Shares") on the
Conversion Date.
c. The Conversion Date shall be the first regular business day of
IPIQ occurring on or after the expiration of 120 days from the
date shares of Class B Common Stock are first issued of record
by IPIQ.
d. The total number of Class A Shares into which all outstanding
Class B Common Shares shall be converted shall be determined
by multiplying 0.25 by the sum of (x) the total number of
Class A Shares outstanding on the Conversion Date
("Outstanding Shares"), plus (y) the total number of Class A
Shares into which all other classes, except Class B, of IPIQ
securities (including classes of shares, warrants, and debt of
IPIQ convertible by its terms) are convertible, computed as of
the Conversion Date ("Conversion Shares"), plus (z) the total
number of Class A Shares reserved for issuance upon exercise
of compensatory stock options ("Compensatory Options") granted
to personnels, directors and consultants of IPIQ, provided
however, that the number of shares subject to Compensatory
Options used in this formula shall not exceed twenty five
percent (25%) of the sum of the total number of Outstanding
Shares and Conversion Shares on the Conversion Date.
Individual conversions shall be computed on a pro-rata basis,
rounding the conversion to the next higher whole number of
shares.
e. Ownership of Class B Common Stock and any Class A Shares into
which such Class B Common Stock is converted shall be
conditioned on the execution by the respective shareholder of
a written agreement with IPIQ, legended on each certificate
evidencing such shares, which provides that (a) no transfer of
such shares, whether by gift or succession, for value, or by
operation of law, shall take place until the earlier of ten
years from the date of first issue or one year after an
Initial Public Offering, except to persons agreeing to be
bound by such shareholders agreement, and (b) any holder of
such shares during the term of such shareholders agreement
shall agree to any restrictions imposed by an underwriter on
the resale of such shares for a period not to exceed 180 days
following an Initial Public Offering. For this purpose,
"Initial Public Offering" shall mean the offer and sale by IPIQ
of Class A Shares pursuant to an effective registration
statement under the Securities Act of 1933.
f. Each Class B Common Share shall have the same number of votes
in any matter submitted to the shareholders as the number of
Class A shares into which such Class B Share would be
convertible were the Conversion Date the same date as the
Record Date established for such vote.
<PAGE>
1.40 "Lien" shall mean an encumbrance against the Debtor's property as
defined in Section 101(37) of the Bankruptcy Code.
1.41 "Marketing Consulting Agreement" shall mean the Marketing
Consulting and Teaming Agreement entered into between Debtor and
IPIQ approved by order of this Bankruptcy Court.
1.42 "Plan" shall mean this Plan of Reorganization for Debtor under
Chapter 11 of the Bankruptcy Code, as amended or modified from time
to time.
1.43 "Person" shall mean an individual, a corporation, a partnership, an
association, a joint stock company, a joint venture, an estate, a
trust, an unincorporated organization or a government or any
particular subdivision thereof or other entity.
1.44 "Petition Date" shall mean March 2, 1998, the date of the filing of
Debtor 's petition for relief under Chapter 11 of the Bankruptcy
Code.
1.45 "Plan Ballot" shall mean the form(s) distributed to holders of
Claims and Interests impaired under the Plan, as defined in Section
1124 of the Bankruptcy Code, for purposes of voting on the Plan.
1.46 "Plan Ballot Deadline" shall mean the date by which the Plan Ballot
must be received by the Debtor, which date is set by the Bankruptcy
Court and notice of which is transmitted with the Disclosure
Statement.
1.47 "Priority Claim" shall mean any Claim entitled to priority in
payment under Sections 507(a)(2) through 507(a)(9) of the
Bankruptcy Code, but excluding all Claims for postpetition interest
and penalties, all of which interest and penalties shall be (i)
deemed disallowed and (ii) discharged on the Effective Date.
1.48 "Professional Persons" shall mean persons retained or to be
compensated pursuant 4400
Dallas, Texas 75201
Telephone: (214) 953-0700
Facsimile: (214) 953-1189
-and-
301 Congress Avenue, Ste. 1400
Austin, Texas 78701
Telephone: (512) 474-8881
Facsimile: (512) 474-2337
ATTORNEYS FOR IPIQ CORPORATION
