EX-10.1
8
exhibit_10-1.
htm
AGREEMENT AND PLAN OF REORGANIZATION, DATED AS OF DECEMBER 15, 1998, BY AND AMONG HHH ENTERTAINMENT, INC. AND EARTH SPORTS PRODUCTS, INC.
EXHIBIT
10.1
AGREEMENT
AND PLAN OF REORGANIZATION
THIS
AGREEMENT AND PLAN OF REORGANIZATION dated this 15th day of December, 1998 (the
"Agreement") is by and among HHH Entertainment, Inc., a
Nevada corporation
("HHH") and Earth Sports Products, Inc., a Washington corporation
("ESP").
RECITALS:
A. The Board of
Directors of HHH deems it advisable and in the best interest of HHH to acquire
the ESP Shares in exchange for the issuance by HHH of its Common Stock in
accordance with the applicable provisions of the Washington Business Corporation
Act and the terms and conditions set forth herein.
In
consideration of the mutual promises, representations and conditions hereinafter
set: forth, the parties hereto, hereby agree as follows:
ARTICLE
I
Definitions
As used
in this Agreement, the following terms shall have the following
meanings:
A. "Reorganization"
shall mean the acquisition by HHH of the ESP Shares in exchange for the HHH
Shares as further defined herein.
B. "Closing Date"
shall mean the date upon which the reorganization shall have occurred in
accordance with the terms and conditions set forth herein.
C. "ESP
Shareholders" shall mean all the shareholders of ESP which shareholders are
offering all of their shares of ESP Common Stock for exchange
hereunder.
D. "HHH
Shares" shall mean the Common Stock, $.001 par value per share, of HHH, issued
to the ESP Shareholders in accordance with the terms and conditions set forth
herein.
ARTICLE
II
Reorganization
2.01 Plan and Agreement of Reorganization. A
plan of reorganization
is hereby adopted to as follows:
A. Subject to
the terms and conditions hereinafter set forth, on
the Closing Date, and in the manner hereinafter proved, (i) the
ESP shareholders shall exchange the ESP Shares for the HHH Shares in the
amounts set forth herein; (ii) ESP shall become a wholly-owned subsidiary of
HHH; and (iii) the business of ESP shall be continued.
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B. HHH and the
ESP Shareholders, respectively, shall take, or
cause to be taken, such action as may be necessary or appropriate in order to
effectuate the transactions contemplated hereby such action shall include,
but not be limited to the filing of Articles of Merger or Exchange with the
Nevada and Washington Secretarys of State. In the event that after the Closing
Date, any further action is necessary or desirable to carry out the purposes of
this Agreement and to vest HHH or ESP with full title to the securities to be
exchanged hereby, the officers and directors of HRH or ESP, as the case may
be, shall take all such necessary action.
2.02 Effective Date of the
Reorganization for Accounting Purposes. The
transactions contemplated by this Agreement shall be effective as of December
31, 1998 for accounting purposes and for all other purposes to the extent
permissible by law.
2.03 Consideration and Basis of Exchange of Shares. The
manner
and basis of exchanging the ESP Shares for the Common Shares of HHH shall be as
follows:
A. On the
Closing Date, ESP shall deliver to HHH certificates aggregating 100% of the
issued and outstanding ESP Shares, less the shares belonging to those ESP
Shareholders who exercise their dissenters' rights. The ESP Shareholders shall
be issued in exchange for the ESP Shares held of record on the Closing Date,
five (5) HHH Shares for each share of ESP they own. The number of ESP shares to
be delivered will be no less than the legally required number to approve the
reorganization and this Agreement, as provided by Washington law.
The ESP
Shareholders and HHH agree that the ESP Shares and the HHH Shares exchanged
hereby shall be “restricted securities" as that term is defined in Rule 144
under the Securities Act of 1931, as amended (the "1933 Act") and all
certificates issued under this Agreement shall bear an appropriate legend to
such effect.
2.04 Closing. Closing of
this Agreement shall be held at a date to be mutually agreed upon by the parties
at the offices of HHH, or such other place as the parties may mutually agree.
The parties shall exchange such other documents and take such other actions as
may be necessary or appropriate for completing the transactions contemplated by
the Agreement.
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ARTICLE
III
Investment
Representations
3.01 Representations of ESP
shareholders. As a condition to the issuance by HHH to each ESP
Shareholder of certificates for the HHH shares, ESP, on behalf of its
shareholders, hereby represent to HHH as follows:
A. The ESP
Shareholders are acquiring the HHH shares hereunder for their own account and
for the purposes of investment, and not with a view to, or for sale in
connection with, any distribution thereof.
B. The ESP
Shareholders (i) have such knowledge and experience
in financial and business matters that they are capable of evaluating the merits
and risks of their proposed investment in the HHH Shares, or (ii) they have been
advised by attorneys, accountants or other representatives having such knowledge
and experience. They acknowledge that their attorneys, accountants and other
representatives had, prior to his/her action the opportunity to ask questions
of, and to receive answers from HHH concerning HHH, its affiliates and business
and financial condition.
C. The
ESP Shareholders understand and acknowledge that all of the HHH Shares to be
delivered to him/her pursuant to the provisions of this Agreement, will be
"restricted securities" within the meaning of the 1933 Act, and agrees that the
certificate shall bear the following legend:
|
THE SECURITIES
EVIDENCED BY THIS CERTIFICATE HAVE REEN ACQUIRED FOR INVESTMENT AND HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“ACT"), OR ANY STATE SECURITIES LAW AND MAY NOT BE SOLD OR TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT
AND ANY APPLICABLE STATE SECURITIES
LAW
|
D. The
ESP Shareholders understand and acknowledge that the HHH Shares to be delivered
pursuant to the provisions of this Agreement will not be registered under the
1933 Act and, accordingly, they recognize that they will be required to bear the
economic risk of their investment until such securities are registered, if at
all. They agree on behalf of themselves, their heirs, executors, successors and
assigns, that they will only sell, transfer, pledge or hypothecate any of the
HHH Shares to be acquired by them pursuant to the provisions of this Agreement
pursuant to an effective Registration Statement under the 1933 Act or in a
transaction wherein registration of the securities is not required.
ESP Shareholders understand that HHH has no obligation to register the HHH
Shares under the 1933 Act.
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E. ESP and its
shareholders shall indemnify and hold harmless
HHH, each person who controls HHH within the meaning of the 1933 Act, and each
officer and director of HHH, against losses, claims, damages or liabilities,
joint or several, to which HHH, such controlling person, or any such officer or
director may become subject under the 1933 Act or otherwise, insofar as such
losses, claims damages or liabilities or actions with respect thereof) arise out
of or are based upon any breach or violation of their representations and
Agreements contained in this Agreement and shall reimburse HHH, such controlling persons and
such officers and directors for any legal and any other expenses reasonably
incurred by them in connection with, investigating or defending any such loss,
claim, damage or liability or any action. The rights to indemnification provided
for in this Section 3.01 shall be in addition to and not in substitution of any
other rights or remedies to which HHH, such controlling person or such officer
or director may be entitled under this Agreement or at law, in equity or
otherwise.
3.02 Disclosure Materials.
HHH has distributed to the ESP Shareholders and ESP hereby represents and
warrants to HHH that it has had the opportunity to review, prior to its action
in closing under this Agreement:
A. The
Audited Financial Statements of HHH dated December
31, 1997; and
B. Such
other data in the possession of HHH regarding the business and/or finances of
HHH and its affiliates as ESP Shareholders have reasonably
requested.
ARTICLE
IV
General
Representations
4.01 Representations of ESP. ESP
hereby represents and warrants,
on behalf of its shareholders, as follows:
A. Each
ESP Share delivered to HHH for exchange hereunder
shall be delivered free and clear of any lien, encumbrance or security interest
thereon, and the ESP shares delivered hereunder by the ESP Shareholders
constitute no less than the legally required amount to approve this
transaction.
B. No ESP
Shares issued and delivered to HHH for exchange
hereunder shall be subject to any option, warrant or other right to purchase
such shares, or any voting trust or other arrangement relating to the
voting of such shares.
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C. The
ESP Shares delivered to HHH for exchange hereunder shall constitute the amount
legally required by the State of Washington.
D. There is no
firm, corporation, agency or other person that is entitled to a finder's fee or
any type of brokerage commission in relation to or in connection with the
transactions contemplated by this Agreement as a result of any Agreement or
understanding with such ESP Shareholder or such ESP Shareholder's affiliates or
shareholders.
E. ESP
has received or otherwise has knowledge of any and all
liabilities of HHH as of the date of closing and hereby confirm its acceptance
of same.
4.02 Representations of
HHH. HHH hereby
represents and warrants
to ESP as follows:
A. Organization and
Good
Standing. HHH is a corporation duly organized, validly existing and in
good standing under the laws of the State of
Nevada. HHH has full corporate
power and authority to conduct its business as now conducted and to own or lease
and operate the assets and property now owned or leased or operated by it. HHH
is qualified to transact business in those jurisdictions wherein its business
requires such action.
B. Disclosure Statement.
HHH has made available to the ESP Shareholders true, accurate and complete
copies of its financial statements.
C. Absence of Certain
Events. Except as disclosed in the materials referred to herein,
there has not been any change in the financial condition or in the nature
of the business or operation of HHH which has had a materially adverse
affect on its business, operations, assets, properties or prospects since
December 31, 1998. Except as disclosed in the materials referred to herein,
HHH knows of no development, except general economic conditions effecting
business generally, of a nature that is materially adverse to the business,
operations, assets, properties or prospects of HHH.
D. Authority and
Compliance. HHH has full
corporate power and lawful authority to execute and deliver this Agreement. The
consummation and performance by HHH of the transactions contemplated by this
Agreement have been duly and validly authorized by all necessary corporate and
other proceedings. This Agreement has been duly and validly executed and
delivered on behalf of
HHH and constitutes a valid obligation of HHH, enforceable in accordance with
its terms. No consent, authorization
or approval of, exemption by, or filing with any domestic governmental or
administrative authority, or any court, is required to be obtained or made by
HHH in connection with the execution, delivery and performance of this Agreement
or the consummation of the transactions contemplated hereby. The execution,
delivery, consummation and performance of this Agreement by HHH will not
conflict with or result in the breach or violation of any term or provision of,
or constitute a default under, any statute, indenture, mortgage, deed of trust,
note or other material agreement or instrument to which HHH is a party or by
which it is bound, or any law, order, writ, injunction, rule or regulation or
any court or governmental agency or body.
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E. Shares of HHH. The HHH Shares
to be issued pursuant to this Agreement will be issued from the authorized and
previously unissued Common Shares of HHH and, upon issuance and delivery to the
ESP Shareholders, will be duly authorized and validly issued, fully paid and
nonassessable,
F. Full Disclosure. No
representation or warranty by HHH in this Agreement or any document to be
delivered by HHH pursuant hereto, and no statement, list, certificate or
instrument furnished or to be furnished to the ESP Shareholders pursuant hereto
or in connection with the negotiation, execution or performance of this
Agreement contains or will contain any untrue statement of material fact or
omits or will omit to state any fact necessary to make any statement herein or
therein not misleading or necessary to complete and correct the presentation of
all material aspects of the business of HHH.
G. Finder. There is no
firm corporation, agency or other person that is entitled to a finder's fee or
any type of brokerage commission in relation to or in connection with the
transactions contemplated by this Agreement as a result of any agreement or
understanding with HHH or any of HHH's affiliates or shareholders.
4.03 Representations of ESP. ESP hereby
represents and warrants
to HHH as follows:
A. Organization and Good
Standing. ESP is a
corporation duly
organized, validly existing and in good standing under the laws of the State of
Washington. ESP has full corporate power and authority to conduct its business
as now conducted and to own or lease and operate the assets and property now
owned or leased or operated by it. ESP is qualified to transact business in
those jurisdictions wherein its business requires such action.
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B. Absence of Certain Events.
Except as disclosed in the materials referred to herein, there has not been any
change in the financial condition or in the nature of the business or operation
of ESP which has had a materially adverse affect on its business,
operations, assets, properties or prospects since December, 1998. Except as
disclosed in the disclosure materials referred to herein, ESP knows of no
development, except general economic conditions effecting business generally, of
a nature that is materially adverse to the business, operations, assets,
properties or prospects of ESP.
C. Authority and Compliance. ESP has
full corporate power and lawful authority to execute and deliver this Agreement.
The consummation and performance by ESP of the transactions contemplated by this
Agreement have been duly and validly authorized by all necessary corporate and
other proceedings. This Agreement has been duly and validly executed and
delivered on behalf of ESP and constitutes a valid obligation of ESP,
enforceable in accordance with its terms: No consent, authorization
or approval of, exemption by, or filing with any domestic governmental or
administrative authority, or any court, is required to be obtained or made by
ESP in connection with the execution, delivery and performance of this Agreement
or the consummation of the transactions contemplated hereby. The execution,
delivery, consummation and performance of this Agreement by ESP will not
conflict with or result in the breach or violation of any term or provision of,
or constitute a default under, any statute, indenture, mortgage, deed of trust,
note or other material agreement or instrument to which ESP is a party or by
which it is bound, or any law, order, writ, injunction, rule or regulation
or any court or governmental agency or body.
D. Full Disclosure. No
representation or warranty by ESP in this Agreement or any document to be
delivered by ESP pursuant hereto, and no statement, list, certificate or
instrument furnished or to be furnished to the ESP Shareholders pursuant hereto
or in connection with the negotiation, execution or performance of this
Agreement contains or will contain any untrue statement of material fact or
omits or will omit to state any fact necessary to make any statement herein or
therein not misleading or necessary to complete and correct the presentation of
all material aspects of the business of ESP.
E. Tender of All Shares. The Shares
tendered by the ESP. Shareholders for exchange hereunder constitute 100% of the
issued and outstanding shares of ESP as of the Closing Date.
F. Finder. There is no
firm, corporation, agency or other person that is entitled to a finder's fee or
any type of brokerage
commission in relation to or in connection with the transactions
contemplated by this Agreement as a result of any agreement or
understanding with ESP or any of ESP's affiliates
or shareholders.
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ARTICLE
V
Additional
Agreements
HHH and
ESP hereby further agree as follows:
5.01 Access and
Information. HHH hereby agrees to give ESP and the ESP Shareholders and
their respective accountants, attorneys and representatives, full access during
normal business hours through the period prior to the Closing Date to all of its
properties, books, contracts, commitments and records, and HHH will furnish to
ESP and the ESP Shareholders during such period all such information concerning
its affairs that ESP and the ESP Shareholders may reasonably request. The ESP
Shareholders hereby agree that each will give to HHH and its accountants,
attorneys and representatives full access during normal business hours through
the period prior to the Closing Date to such information as may be reasonably
necessary in order to confirm the representations and warranties of the ESP
Shareholders set forth herein. In the event of the termination of this
Agreement, each party will return to the other all documents, work papers and
other materials obtained from the other relating to the transactions
contemplated hereby, whether so obtained before or after the execution hereof,
and will use best efforts to have any information so obtained and not heretofore
made public, kept confidential.
5.02 Expenses. Upon
termination of this Agreement as provided
herein, each party will pay all costs and expenses of its performance of and
compliance with all agreements and conditions contained herein to be performed
or complied with, including fees, expenses and disbursements of its accountants
and attorneys.
5.03 Further Assurances.
If at any time, any party to this Agreement shall consider or be advised that
any further action or assurance is necessary or desirable to vest the title to
any securities exchanged hereby, the officer and directors of HHH, or the
ESP Shareholders, as the case may be, shall deliver such documents or take such
other action as may be necessary or proper to perfect or confirm title to such
securities and otherwise carry out the purposes of this Agreement.
ARTICLE
VI
Conditions
Precedent
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6.01 Conditions Precedent to
Obligations of ESP Shareholders.
The obligations of the ESP shareholders to effect the transaction contemplated
herein shall be subject to the following conditions (which may be waived in
writing by the ESP Shareholders):
A. The
representations and warranties of HHH herein, shall be
true and accurate as of and at the Closing Date with the same effect as though
made at such time HHH shall have performed all obligations and complied
with all covenants required by this Agreement
to be performed or complied with by it prior to the Closing Date;
and
B. No material
change in the corporate status, business, operations or financial condition of
HHH shall have occurred since December 31, 1998 other than changes in the
ordinary course of business, none of which has been materially adverse in
relation to HHH, and no other event or condition of any character shall have
occurred or arisen since that date which shall have materially or adversely
effected the corporate status, business, operations or financial condition of
HHH.
6.02 Conditions Precedent to the
Obligations of ESP. The
obligation
of ESP to effect the transaction contemplated hereby shall be subject to the
conditions (which may be waived in writing by ESP that the representations and
warranties of HHH contained herein shall be true and accurate as of and at the
Closing Date with the same effect as though made at such time; and that
HHH shall have performed all obligations and complied with all covenants
required by this Agreement to be performed or complied with by them prior to the
Closing Date.
6.03 Conditions Precedent to Obligations of HHH. The
obligations
of HHH to effect the transaction contemplated herein shall be subject to the
following conditions (which may be waived in writing by HHH):
C. The
representations and warranties of ESP and the ESP Shareholders herein shall be
true and accurate as of and at the Closing Date with the same effect as though
made at such time; ESP and the ESP Shareholders shall have performed all
obligations and complied with all covenants required by this Agreement to be
performed or complied with by it prior to the Closing Date; and
B. No material
change in the corporate status, business, operations or financial condition of
ESP shall have occurred since December 31, 1998, other than changes in the
ordinary course of business, none of which has been materially adverse in
relation to ESP, and no other event or condition of any character shall have
occurred or arisen since that date which shall have materially or adversely
effected the corporate status, business, operations or financial
condition of ESP.
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ARTICLE
VII
Termination
and Abandonment
Anything
herein or elsewhere to the contrary notwithstanding, this Agreement may be
terminated and abandoned at any time before or after the Closing Date under any
one or more of the following circumstances:
A. By the mutual
consent of the Board of Directors of ESP and the Board of Directors of
HHH;
B. By HHH, if
prior to the Closing Date, the conditions set forth in section 6.03 have not
been met;
C. By
ESP, if prior to the closing the conditions set forth in Section 6.02 have not
been met;
D. By the ESP
Shareholders, if prior to the Closing Date, the
conditions set forth in section 6.01 have not been made;
E. By any party,
if any action or proceeding before any court or governmental body or agency
shall have been instituted or threatened to restrain or prohibit the transaction
contemplated hereby and the ESP Shareholders and HHH deem it advisable not to
proceed with the transaction.
Upon
termination and abandonment, no party shall have any liability or obligation to
any other party to this Agreement.
ARTICLE
VIII
General
Provisions
8.01 Survival of Representations, Warranties and Agreements. The
representations, warranties and agreements contained in this Agreement shall
survive the Closing Date.
8.02 Assignability and Amendments. This
Agreement shall not be altered or otherwise amended except pursuant to an
instrument in writing signed by each of the parties. No assignment of any of its
obligations by any party shall relieve such party from primary liability for any
of its obligations hereunder. This Agreement shall be binding upon, and subject
to the terms of the foregoing sentence, shall inure to the benefit of the
parties, their successors, legal representatives and assigns.
8.03 Notices. Any
notice, request, instruction or other document
to be given hereunder by any part to any of the other parties shall be in
writing and shall be deemed to have been duly given when delivered personally or
five days after dispatch by registered or certified mail, postage
prepaid, return receipt requested, to the party to whom the same is given or
made, at the addressee of each party or at such other address as any party shall
specify to the others in writing.
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8.04 Expenses. Whether or not
the transactions contemplated by this Agreement, each party hereto shall
bear the expenses incurred by it in connection with the transactions
contemplated hereby.
8.05 Entire Agreement. This
Agreement, and other writings and agreements specifically identified herein,
contain the entire agreement between the parties with respect to the
transactions contemplated herein and supersede all previous written or oral
negotiations, commitments or understandings.
8.06 Waivers and Remedies. Any
waiver must be in writing. A waiver of any breach or failure to perform any of
the terms or conditions of this Agreement shall not in any way effect, limit or
waiver a party's right at any time to enforce strict compliance thereafter with
every other term or condition of this Agreement. All remedies under this
Agreement shall be cumulative, but not alternative.
8.07 Counterparts and
Headings. This Agreement may be executed
in counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument. All headings (including,
without limitation, article headings and section titles, are inserted for
convenience of reference only and shall not effect the meaning or interpretation
of any terms of this Agreement. References to masculine, feminine or neuter
shall each include the other, as the circumstances may require,
8.08 Severability. If
to the extent that any court of competent
jurisdiction holds any provision (or any part thereof) of this
Agreement to be invalid or unenforceable, such holdings shall in no way
effect the validity of the remainder of this Agreement.
8.09 Governing Law. This Agreement
shall be governed by, and construed in accordance with, the laws of the State of
Nevada.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day
and year first above written
| | HHH ENTERTAINMENT,
INC. | |
| | | | |
|
|
By:
| /s/
Xxxxx X.
Xxxxxxxxx
12/15/98 | |
| | | Xxxxx
Xxxxxxxxx, President | |
| | | | |
| | EARTH SPORTS PRODUCTS,
INC. | |
| | | | |
|
|
By:
| /s/
Xxxxxxx X. Xxxxxxx | |
| | | 15
Dec, 1998 | |
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