STOCK PURCHASE AND SHARE EXCHANGE AGREEMENT by and among FAMILY HEALTHCARE SOLUTIONS, INC., a Nevada Corporation, THE SHAREHOLDERS OF FAMILY HEALTHCARE SOLUTIONS, INC. LISTED ON SCHEDULE 3.3, MEGA MEDIA GROUP, INC. a New York Corporation, and THE...
by
and
among
FAMILY
HEALTHCARE SOLUTIONS, INC.,
a
Nevada
Corporation,
THE
SHAREHOLDERS OF FAMILY HEALTHCARE SOLUTIONS, INC. LISTED ON SCHEDULE
3.3,
MEGA
MEDIA GROUP, INC.
a
New
York Corporation,
and
THE
SHAREHOLDERS AND NOTE HOLDERS OF MEGA MEDIA GROUP, INC. LISTED ON SCHEDULE
3.2
effective
as of May 2, 2007
Table
of Contents
ARTICLE
I
|
1
|
|
REPRESENTATIONS,
COVENANTS AND WARRANTIES OF FHCS
|
1
|
|
Section
1.1
|
Organization.
|
1
|
Section
1.2
|
Capitalization.
|
2
|
Section
1.3
|
Subsidiaries.
|
2
|
Section
1.4
|
Tax
Matters; Books and Records.
|
2
|
Section
1.5
|
Litigation
and Proceedings.
|
2
|
Section
1.6
|
Material
Contract Defaults.
|
2
|
Section
1.7
|
Information.
|
3
|
Section
1.8
|
Title
and Related Matters.
|
3
|
Section
1.9
|
Contracts.
|
3
|
Section
1.10
|
Compliance
with Laws and Regulations.
|
3
|
Section
1.11
|
Approval
of Agreement.
|
4
|
Section
1.12
|
Material
Transactions or Affiliations.
|
4
|
Section
1.13
|
No
Conflict With Other Instruments.
|
4
|
Section
1.14
|
Governmental
Authorizations.
|
4
|
Section
1.15
|
SEC
Reporting and Compliance.
|
4
|
Section
1.16
|
Financial
Statements.
|
5
|
Section
1.17
|
No
General Solicitation or Advertising.
|
5
|
Section
1.18
|
Questionable
Payments and Off-Balance Sheet Arrangements.
|
6
|
Section
1.19
|
Indebtedness.
|
6
|
Section
1.20
|
Absence
of Certain Developments.
|
6
|
ARTICLE
II
|
7
|
|
REPRESENTATIONS,
COVENANTS AND WARRANTIES OF MEGA MEDIA
|
7
|
|
Section
2.1
|
Organization.
|
7
|
Section
2.2
|
Capitalization.
|
8
|
Section
2.3
|
Subsidiaries.
|
8
|
Section
2.4
|
Tax
Matters; Books and Records.
|
8
|
Section
2.5
|
Information.
|
8
|
Section
2.6
|
Title
and Related Matters.
|
8
|
Section
2.7
|
Litigation
and Proceedings.
|
9
|
Section
2.8
|
Contracts.
|
i
Section
2.9
|
No
Conflict With Other Instruments.
|
9
|
Section
2.10
|
Material
Contract Defaults.
|
10
|
Section
2.11
|
Governmental
Authorizations.
|
10
|
Section
2.12
|
Compliance
with Laws and Regulations.
|
10
|
Section
2.13
|
Insurance.
|
10
|
Section
2.14
|
Approval
of Agreement.
|
10
|
Section
2.15
|
Material
Transactions or Affiliations.
|
10
|
ARTICLE
III
|
10
|
|
EXCHANGE
PROCEDURE AND OTHER CONSIDERATION
|
10
|
|
Section
3.1
|
Share
Exchange/Delivery of Mega Media Securities.
|
10
|
Section
3.2
|
Issuance
of FHCS Shares.
|
11
|
Section
3.3
|
Additional
Consideration.
|
11
|
Section
3.4
|
Present
Liabilities of FHCS.
|
11
|
Section
3.5
|
Events
Prior to Closing.
|
11
|
Section
3.6
|
Closing.
|
11
|
Section
3.7
|
Termination.
|
12
|
Section
3.8
|
Directors
of FHCS After Acquisition.
|
12
|
Section
3.9
|
Officers
of FHCS.
|
13
|
ARTICLE
IV
|
13
|
|
SPECIAL
COVENANTS
|
13
|
|
Section
4.1
|
Access
to Properties and Records.
|
13
|
Section
4.2
|
Availability
of Rule 144.
|
13
|
Section
4.3
|
Special
Covenants and Representations Regarding the FHCS Common Shares
to be
Issued in the Exchange.
|
13
|
Section
4.4
|
Third
Party Consents.
|
13
|
Section
4.5
|
Actions
Prior to and Subsequent to Closing.
|
14
|
Section
4.6
|
Indemnification.
|
14
|
ARTICLE
V
|
15
|
|
CONDITIONS
PRECEDENT TO OBLIGATIONS OF FHCS
|
15
|
|
Section
5.1
|
Accuracy
of Representations.
|
15
|
Section
5.2
|
Director
Approval.
|
15
|
Section
5.3
|
Officer's
Certificate.
|
15
|
Section
5.4
|
No
Material Adverse Change.
|
ii
Section
5.5
|
Other
Items.
|
15
|
ARTICLE
VI
|
15
|
|
CONDITIONS
PRECEDENT TO OBLIGATIONS OF MEGA MEDIA
|
15
|
|
Section
6.1
|
Accuracy
of Representations.
|
16
|
Section
6.2
|
Director
Approval.
|
16
|
Section
6.3
|
Officer's
Certificate.
|
16
|
Section
6.4
|
No
Material Adverse Change.
|
16
|
Section
6.5
|
1934
Exchange Act Compliance.
|
16
|
ARTICLE
VII
|
16
|
|
MISCELLANEOUS
|
16
|
|
Section
7.1
|
Brokers
and Finders.
|
16
|
Section
7.2
|
Law,
Forum and Jurisdiction.
|
17
|
Section
7.3
|
Notices.
|
17
|
Section
7.4
|
Attorneys'
Fees.
|
17
|
Section
7.5
|
Confidentiality.
|
17
|
Section
7.6
|
Schedules;
Knowledge.
|
17
|
Section
7.7
|
Third
Party Beneficiaries.
|
18
|
Section
7.8
|
Survival;
Termination.
|
18
|
Section
7.9
|
Counterparts.
|
18
|
Section
7.10
|
Amendment
or Waiver.
|
18
|
Section
7.11
|
Expenses.
|
18
|
Section
7.12
|
Headings;
Context.
|
18
|
Section
7.13
|
Benefit.
|
18
|
Section
7.14
|
Public
Announcements.
|
18
|
Section
7.15
|
Severability.
|
18
|
Section
7.16
|
Failure
of Conditions; Termination.
|
18
|
Section
7.17
|
No
Strict Construction.
|
19
|
Section
7.18
|
Execution
Knowing and Voluntary.
|
19
|
Section
7.19
|
Amendment.
|
19
|
Section
7.20
|
Entire
Agreement.
|
19
|
iii
THIS
STOCK PURCHASE AND SHARE
EXCHANGEAGREEMENT (the “Agreement”),
is made and entered into this 2nd day of
May 2007,
by and among Family Healthcare Solutions, Inc., a Nevada corporation with its
principal place of business located at Via Xxxxx Xxxxxxx Edificio El Congrejo,
Officina 22, Panama 0818-0031 (“FHCS"); the FHCS shareholders listed on Schedule
3.3 attached hereto and made a part hereof (“FHCS Shareholders”); Mega Media
Group, Inc., a New York Corporation with its principal places of business
located at 000 Xxxxxxxx, 0xx Xxxxx, Xxx Xxxx, XX 00000 and 0000 Xxxxx Xxxxxx
Xxxxxx, Xxxxx 000, Xxxxxxxx, Xxx Xxxx 00000 ("Mega Media”) and the Mega Media
shareholders and note holders listed on Schedule 3.2 attached hereto and made
a
part hereof (separately, “MM Shareholders” or “MM Note Holders”) (collectively,
Mega Media, the MM Shareholders and MM Note Holders shall be known as the “MM
Group”).
Premises
A. This
Agreement provides for the acquisition of 100% of the issued and outstanding
capital stock of Mega Media owned by the MM Shareholders, making Mega Media
a
wholly owned subsidiary of FHCS, in exchange for the issuance by FHCS to the
MM
Shareholders and MM Note Holders of 49,990,406 shares of FHCS common stock,
par
value $.001 per share, which shall constitute 68.50% of FHCS’s issued and
outstanding fully diluted common stock after the transaction is
closed.
B. The
boards of directors of FHCS and Mega Media have determined, subject to the
terms
and conditions set forth in this Agreement, that the transaction contemplated
hereby is desirable and in the best interests of their stockholders,
respectively. This Agreement is being entered into for the purpose of
setting forth the terms and conditions of the proposed acquisition.
C. The
parties desire that the exchange qualify as a tax free exchange meeting the
requirements of Article 368(a)(1)(B) of the Internal Revenue Code of 1986,
as
amended.
Agreement
NOW,
THEREFORE, on the stated premises
and for and in consideration of the mutual covenants and agreements hereinafter
set forth and the mutual benefits to the parties to be derived here from, it
is
hereby agreed as follows:
ARTICLE
I
REPRESENTATIONS,
COVENANTS AND WARRANTIES OF FHCS
As
an inducement to and to obtain the
reliance of Mega Media, FHCS represents and warrants as follows:
1
Section
1.1 Organization. FHCS
is a corporation duly organized, validly existing, and in good standing under
the laws of Nevada and has the corporate power and is duly authorized,
qualified, franchised and licensed under all applicable laws, regulations,
ordinances and orders of public authorities to own all of its properties and
assets and to carry on its business in all material respects as it is now being
conducted, including qualification to do business as a foreign corporation
in
the jurisdiction in which the character and location of the assets owned by
it
or the nature of the business transacted by it requires
qualification. Included in the Schedules attached hereto (hereinafter
defined) are complete and correct copies of the articles of incorporation,
bylaws and amendments thereto as in effect on the date hereof. The
execution and delivery of this Agreement does not and the consummation of the
transactions contemplated by this Agreement in accordance with the terms hereof
will not violate any provision of FHCS's articles of incorporation or
bylaws. FHCS has full power, authority and legal right and has taken
all action required by law, its articles of incorporation, its bylaws or
otherwise to authorize the execution and delivery of this
Agreement.
Section
1.2 Capitalization. The
authorized capitalization of FHCS consists of 100,000,000 shares of common
stock, par value $.001 per share, and no preferred stock. As of the
date hereof, FHCS has 33,959,961 common shares issued and
outstanding. All issued and outstanding shares are legally issued,
fully paid and nonassessable and are not issued in violation of the preemptive
or other rights of any person. FHCS has no other securities,
warrants, options or any rights to acquire securities of FHCS, as applicable,
authorized or issued, and FHCS is not a party to any agreement, arrangement
or
understanding pursuant to which FHCS has agreed to issue securities, warrants,
options or rights to acquire securities of FHCS, as applicable.
Section
1.3 Subsidiaries.
FHCS has no subsidiaries.
Section
1.4 Tax
Matters; Books and Records.
(a) The
books
and records, financial and others, of FHCS are in all material respects complete
and correct and have been maintained in accordance with good business accounting
practices; and
(b) FHCS
has
no liabilities with respect to the payment of any country, federal, state,
county, or local taxes (including any deficiencies, interest or
penalties).
(c) FHCS
shall pay all outstanding liabilities of FHCS prior to the Closing as set forth
in Schedule 1.4.
Section
1.5 Litigation
and Proceedings. There are no actions, suits, proceedings or
investigations pending or threatened by or against or affecting FHCS or its
properties, at law or in equity, before any court or other governmental agency
or instrumentality, domestic or foreign or before any arbitrator of any kind
that would have a material adverse affect on the business, operations, financial
condition or income of FHCS. FHCS is not in default with respect to
any judgment, order, writ, injunction, decree, award, rule or regulation of
any
court, arbitrator or governmental agency or instrumentality or of any
circumstances which, after reasonable investigation, would result in the
discovery of such a default.
2
Section
1.6 Material
Contract Defaults. FHCS is not in default in any
material respect under the terms of any outstanding contract, agreement, lease
or other commitment which has, individually or in the aggregate, a material
adverse effect on the business, operations, properties, assets, financial
condition or operating results of FHCS, and there is no event of default in
any
material respect under any such contract, agreement, lease or other commitment
which has, individually or in the aggregate, a material adverse effect on the
business, operations, properties, assets, financial condition or operating
results of FHCS in respect of which FHCS has not taken adequate steps to prevent
such a default from occurring.
Section
1.7 Information. The
information concerning FHCS as set forth in this Agreement and in the attached
Schedules is complete and accurate in all material respects and does not contain
any untrue statement of a material fact or omit to state a material fact
required to make the statements made in light of the circumstances under which
they were made, not misleading.
Section
1.8 Title
and Related Matters. FHCS has good and marketable
title to and is the sole and exclusive owner of all of its properties,
inventory, interest in properties and assets, real and personal (collectively,
the “Assets”) free and clear of all liens, pledges, charges or
encumbrances. FHCS owns free and clear of any liens, claims,
encumbrances, royalty interests or other restrictions or limitations of any
nature whatsoever and all procedures, techniques, marketing plans, business
plans, methods of management or other information utilized in connection with
FHCS’s business. No third party has any right to, and FHCS has
not received any notice of infringement of or conflict with asserted rights
of
other with respect to any product, technology, data, trade secrets, know-how,
proprietary techniques, trademarks, service marks, trade names or copyrights
which, singly on in the aggregate, if the subject of an unfavorable decision
ruling or finding, would have a materially adverse affect on the business,
operations, financial conditions or income of FHCS or any material portion
of
its properties, assets or rights.
Section
1.9 Contracts. On
the closing date:
(a) There
are
no material contracts, agreements, franchises, license agreements, or other
commitments to which FHCS is a party or by which it or any of its properties
are
bound;
(b) FHCS
is
not a party to any contract, agreement, commitment or instrument or subject
to
any charter or other corporate restriction or any judgment, order, writ,
injunction, decree or award materially and adversely affects, or in the future
may (as far as FHCS can now foresee) materially and adversely affect, the
business, operations, properties, assets or conditions of FHCS; and
(c) FHCS
is
not a party to any material oral or written: (I) contract for the employment
of
any officer or employee; (ii) profit sharing, bonus, deferred compensation,
stock option, severance pay, pension benefit or retirement plan, agreement
or
arrangement covered by Title IV of the Employee Retirement Income Security
Act,
as amended; (iii) agreement, contract or indenture relating to the
borrowing of money; (iv) guaranty of any obligation for the borrowing of money
or otherwise, excluding endorsements made for collection and other guaranties,
of obligations, which, in the aggregate exceeds $1,000; (v) consulting or other
contract with an unexpired term of more than one year or providing for payments
in excess of $10,000 in the aggregate; (vi) collective bargaining agreement;
and
(vii) contract, agreement or other commitment involving payments by it for
more
than $10,000 in the aggregate.
3
Section
1.10 Compliance
with Laws and Regulations. To the best of FHCS’s
knowledge and belief, FHCS has complied with all applicable statutes and
regulations of any federal, state or other governmental entity or agency
thereof, except to the extent that noncompliance would not materially and
adversely affect the business, operations, properties, assets or condition
of
FHCS or would not result in FHCS incurring material liability.
Section
1.11 Approval
of Agreement. The directors of FHCS have
authorized the execution and delivery of this Agreement and have approved the
transactions contemplated.
Section
1.12 Material
Transactions or Affiliations. There are no material
contracts or agreements of arrangement between FHCS and any person, who was
at
the time of such contract, agreement or arrangement an officer, director or
person owning of record, or known to beneficially own ten percent (10%) or
more
of the issued and outstanding Common Shares of FHCS and which is to be performed
in whole or in part after the date hereof. FHCS has no commitment,
whether written or oral, to lend any funds to, borrow any money from or enter
into material transactions with any such affiliated person.
Section
1.13 No
Conflict With Other Instruments. The execution, delivery and
performance of this Agreement, and any other agreement, documents and
instruments related to the transactions contemplated herein by FHCS does not
and
will not (i) violate any provision of the Charter Documents of FHCS, (ii)
conflict with, or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give to others any rights
of
termination, amendment, acceleration or cancellation of, any agreement,
mortgage, deed of trust, indenture, note, bond, license, lease agreement,
instrument or obligation that FHCS is a party or by which FHCS or any of its
properties or assets are bound, (iii) create or impose a lien, mortgage,
security interest, charge or encumbrance of any nature on any property of FHCS
under any agreement or any commitment to which FHCS is a party or by which
FHCS
is bound or by which any of their respective properties or assets are bound,
or
(iv) result in a violation of any federal, state, local or foreign statute,
rule, regulation, order, judgment or decree (including federal and state
securities laws and regulations) applicable to FHCS or any FHCS shareholder,
or
by which any property or asset of FHCS or any of its subsidiaries, if
applicable, are bound or affected, except, in all cases other than violations
pursuant to clauses (i) and (iv) above, for such conflicts, defaults,
terminations, amendments, accelerations, cancellations and violations as would
not, individually or in the aggregate, have a material adverse
effect. The business of FHCS is not being conducted in violation of
any laws, ordinances or regulations of any governmental entity, except for
possible violations which singularly or in the aggregate do not and will not
have a Material Adverse Effect.
Section
1.14 Governmental
Authorizations. FHCS has all licenses,
franchises, permits or other governmental authorizations legally required to
enable it to conduct its business in all material respects as conducted on
the
date hereof. Except for compliance with federal and state securities
and corporation laws, as hereinafter provided, no authorization, approval,
consent or order of, or registration, declaration or filing with, any court
or
other governmental body is required in connection with the execution and
delivery by FHCS of this Agreement and the consummation of the transactions
contemplated hereby.
4
Section
1.15 SEC
Reporting and Compliance.
(a) FHCS
represents and warrants that it filed a registration statement under the
Exchange Act on Form 10-SB (File No. 000-28881) which became
effective. For the previous five years, FHCS has filed with the SEC
all registration statements, proxy statements, information statements and
reports required to be filed pursuant to the Exchange Act (collectively, the
“FHCS SEC Documents”). FHCS has not filed with the SEC a certificate
on Form 15 pursuant to Rule 12h-3 of the Exchange Act.
(b) None
of the FHCS SEC Documents, as of their respective dates, contained any untrue
statement of a material fact or omitted to state a material fact necessary
in
order to make the statements contained therein not misleading.
(c) Except
as set forth on Schedule 1.16, FHCS has not filed, and nothing has occurred
with
respect to which FHCS would be required to file, any report on Form 8-K since
April 23, 2007 and Form 10-KSB or 10-QSB since February 14,
2007. Prior to and until the Closing, FHCS will provide to ASI copies
of any and all amendments or supplements to the FHCS SEC Documents filed with
the Commission since April 23, 2007 and all subsequent registration statements
and reports filed by FHCS subsequent to the filing of the FHCS SEC Documents
with the Commission and any and all subsequent information statements, proxy
statements, reports or notices filed by the FHCS with the Commission or
delivered to the stockholders of FHCS.
(d) FHCS
is not an investment company within the meaning of Section 3 of the Investment
Company Act.
(e) The
shares of FHCS common stock are quoted on the Over-the-Counter (OTC) Bulletin
Board under the symbol “FHCS” and FHCS is in compliance in all material respects
with all rules and regulations of the OTC Bulletin Board applicable to it and
the FHCS stock.
(f) Between
the date hereof and the Closing Date, FHCS shall continue to timely satisfy
the
filing requirements of the Exchange Act and all other requirements of applicable
securities laws and the OTC Bulletin Board including, but not limited to the
timely filing of notices required by Rule 10b-17 under the Securities
Act.
(g) To
the best knowledge of FHCS, FHCS has otherwise complied with the Securities
Act,
Exchange Act and all other applicable federal and state securities
laws.
(h) FHCS
is not a “blank check company” subject to the requirements of Rule 419 of the
Securities Act.
Section
1.16 Financial
Statements. The balance sheets, and statements of
income, changes in financial position and stockholders’ equity contained in the
FHCS SEC Documents (the “FHCS Financial Statements”) (i) have been prepared in
accordance with GAAP applied on a basis consistent with prior periods (and,
in
the case of unaudited financial information, on a basis consistent with year-end
audits), (ii) are in accordance with the books and records of the FHCS, and
(iii) present fairly in all material respects the financial condition of the
FHCS at the dates therein specified and the results of its operations and
changes in financial position for the periods therein specified.
5
The
financial statements included in the Annual Report on Form 10-KSB for the fiscal
years ended September 30, 2006, 2005 and 2004, are as audited by, and include
the related opinions of FHCS’s independent certified public
accountants. The financial information included in the Quarterly
Reports on Form 10-QSB for the quarter ended December 31, 2006 is unaudited,
but
reflects all adjustments (including normally recurring accounts) that FHCS
considers necessary for a fair presentation of such information and has been
prepared in accordance with generally accepted accounting principles,
consistently applied.
Section
1.17 No
General Solicitation or Advertising. In issuing
FHCS common stock under this Agreement, neither FHCS nor anyone acting on its
behalf has offered to sell the FHCS common stock by any form of general
solicitation or advertising.
Section
1.18 Questionable
Payments and Off-Balance Sheet
Arrangements. Neither FHCS nor any director,
officer or, to the best knowledge of FHCS, agent, employee or other person
associated with or acting on behalf of FHCS, has used any corporate funds for
unlawful contributions, gifts, entertainment or other unlawful expenses relating
to political activity; made any direct or indirect unlawful payments to
government officials or employees from corporate funds; established or
maintained any unlawful or unrecorded fund of corporate monies or other assets;
made any false or fictitious entries on the books of record of any such
corporations; made any off-balance sheet arrangements, financings, or other
relationships with unconsolidated entities or other persons, also known as
“special purpose entities” (SPEs).; or made any bribe, rebate, payoff, influence
payment, kickback or other unlawful payment.
Section
1.19 Indebtedness. The
Financial Statements set forth as of the dates and periods indicated on such
form and financial statements, all outstanding secured and unsecured
Indebtedness of FHCS, as applicable, or for which FHCS, as applicable, has
commitments. For the purposes of this Agreement, “Indebtedness” shall
mean (a) any liabilities for borrowed money or amounts owed in excess of $5,000
(other than trade accounts payable incurred in the ordinary course of business),
(b) all guaranties, endorsements and other contingent obligations in respect
of
Indebtedness of others, whether or not the same are or should be reflected
in
FHCS’s balance sheet (or the notes thereto), except guaranties by endorsement of
negotiable instruments for deposit or collection or similar transactions in
the
ordinary course of business; and (c) the present value of any lease payments
in
excess of $5,000 due under leases required to be capitalized in accordance
with
GAAP. Except as set forth on Schedule 1.19, FHCS is not in default
with respect to any Indebtedness.
Section
1.20 Absence
of Certain
Developments. Except
as may be disclosed in the
Schedules, FHCS has not:
(a) issued
any stock, bonds or other corporate securities or any rights, options or
warrants with respect thereto;
(b) borrowed
any amount or incurred or become subject to any liabilities (absolute or
contingent) except current liabilities incurred in the ordinary course of
business which are comparable in nature and amount to the current liabilities
incurred in the ordinary course of business during the comparable portion of
its
prior fiscal year, as adjusted to reflect the current nature and volume of
FHCS’s business;
6
(c) made
capital expenditures or commitments therefor that aggregate in excess of
$10,000;
(d) discharged
or satisfied any lien or encumbrance or paid any obligation or liability
(absolute or contingent), other than current liabilities paid in the ordinary
course of business;
(e) declared
or made any payment or distribution of cash or other property to stockholders
with respect to its stock, or purchased or redeemed, or made any agreements
so
to purchase or redeem, any shares of its capital stock;
(f) sold,
assigned or transferred any other tangible assets, or canceled any debts or
claims, except in the ordinary course of business;
(g) sold,
assigned or transferred any patent rights, trademarks, trade names, copyrights,
trade secrets or other intangible assets or intellectual property rights, or
disclosed any proprietary confidential information to any person except to
customers in the ordinary course of business or to PCLP or its
representatives;
(h) suffered
any substantial losses or waived any rights of material value, whether or not
in
the ordinary course of business, or suffered the loss of any material amount
of
prospective business;
(i) made
any
changes in employee compensation except in the ordinary course of business
and
consistent with past practices;
(j) made
capital expenditures or commitments therefor that aggregate in excess of
$10,000;
(k) entered
into any other transaction other than in the ordinary course of business, or
entered into any other material transaction, whether or not in the ordinary
course of business;
(l) made
charitable contributions or pledges in excess of $10,000;
(m) suffered
any material damage, destruction or casualty loss, whether or not covered by
insurance;
(n) experienced
any material problems with labor or management in connection with the terms
and
conditions of their employment;
(o) effected
any two or more events of the foregoing kind which in the aggregate would be
material to the FHCS; or
(p) entered
into an agreement, written or otherwise, to take any of the foregoing
actions.
7
ARTICLE
II
REPRESENTATIONS,
COVENANTS AND WARRANTIES OF MEGA MEDIA
As
an inducement to, and to obtain the
reliance of FHCS, Mega Media represents and warrants as follows:
Section
2.1 Organization. Mega
Media is a corporation duly organized, validly existing and in good standing
under the laws of New York and has the corporate power and is duly authorized,
qualified, franchised and licensed under all applicable laws, regulations,
ordinances and orders of public authorities to own all of its properties and
assets and to carry on its business in all material respects as it is now being
conducted, including qualification to do business as a foreign entity in the
country or states in which the character and location of the assets owned by
it
or the nature of the business transacted by it requires
qualification. Included in the attached Schedules are complete and
correct copies of the articles of incorporation, bylaws and amendments thereto
as in effect on the date hereof. The execution and delivery of this
Agreement does not and the consummation of the transactions contemplated by
this
Agreement in accordance with the terms hereof will not, violate any provision
of
Mega Media's certificate of incorporation or bylaws. Mega Media has
full power, authority and legal right and has taken all action required by
law,
its articles of incorporation, bylaws or otherwise to authorize the execution
and delivery of this Agreement.
Section
2.2 Capitalization. Mega
Media’s authorized capitalization consists of 90,000,000 shares, consisting of
(a) 70,000,000 shares of common stock, par value $.001 per share, of which
5,327,446 are issued and outstanding as of the date hereof, and (b) 20,000,000
shares of preferred stock, $.001 par value per share, of which 14,492,000 are
issued and outstanding as of the date hereof. All issued and
outstanding common and preferred shares have been legally issued, fully paid,
are nonassessable and not issued in violation of the preemptive rights of any
other person. Except as disclosed on Schedule 2.2, Mega Media has no
other securities, warrants or options authorized or issued.
Section
2.3 Subsidiaries. Mega
Media has the following subsidiaries:
§
|
Mega
Media Studios, Inc.
|
§
|
Mega
Media Records, Inc. d/b/a Skeleton Key
Media
|
§
|
Mega
Media Film, Inc.
|
§
|
Mega
Media Sports Entertainment, Inc.
|
§
|
VSE
Magazine, Inc.
|
§
|
Echo
Broadcasting Group, Inc.
|
Section
2.4 Tax
Matters; Books and Records.
(a) Mega
Media’s books and records, financial and others are in all material respects
complete and correct and have been maintained in accordance with good business
accounting practices;
(b) Except
as
disclosed in Schedule 2.4, Mega Media has no liabilities with respect to the
payment of any country, federal, state, county, local or other taxes (including
any deficiencies, interest or penalties); and
8
(c) Mega
Media shall remain responsible for all debts incurred prior to the
closing.
Section
2.5 Information. The
information concerning Mega Media as set forth in this Agreement and in the
attached Schedules is complete and accurate in all material respects and does
not contain any untrue statement of a material fact or omit a material fact
required to make the statements made, in light of the circumstances under which
they were made, not misleading.
Section
2.6 Title
and Related Matters. Mega Media has good and marketable
title to and is the sole and exclusive owner of all of its properties,
inventory, interests in properties and assets, real and personal (collectively,
the "Assets") free and clear of all liens, pledges, charges or
encumbrances. Except as set forth in the attached Schedules, Mega
Media owns free and clear of any liens, claims, encumbrances, royalty interests
or other restrictions or limitations of any nature whatsoever and all
procedures, techniques, marketing plans, business plans, methods of management
or other information utilized in connection with Mega Media's
business. Except as set forth in the attached Schedules, no third
party has any right to, and Mega Media has not received any notice of
infringement of or conflict with asserted rights of others with respect to
any
product, technology, data, trade secrets, know-how, proprietary techniques,
trademarks, service marks, trade names or copyrights which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, would
have a materially adverse affect on the business, operations, financial
conditions or income of Mega Media or any material portion of its properties,
assets or rights.
Section
2.7 Litigation
and Proceedings. There are no actions, suits or proceedings
pending or threatened by or against or affecting Mega Media, at law or in
equity, before any court or other governmental agency or instrumentality,
domestic or foreign or before any arbitrator of any kind that would have a
material adverse effect on the business, operations, financial condition, income
or business prospects of Mega Media. Mega Media does not have any
knowledge of any default on its part with respect to any judgment, order, writ,
injunction, decree, award, rule or regulation of any court, arbitrator or
governmental agency or instrumentality.
Section
2.8 Contracts. On
the Closing Date:
(a) Except
as
disclosed on Schedule 2.8, there are no material contracts, agreements,
franchises, license agreements, or other commitments to which Mega Media is
a
party to or by which it or any of its subsidiaries or properties are
bound;
(b) Except
as
disclosed on Schedule 2.8, Mega Media is not a party to any contract, agreement,
commitment or instrument or subject to any charter or other corporate
restriction or any judgment, order, writ, injunction, decree or award which
materially and adversely affects, or in the future may (as far as Mega Media
can
now foresee) materially and adversely affect, the business, operations,
properties, assets or conditions of Mega Media; and
(c) Except
as
disclosed on Schedule 2.8, Mega Media is not a party to any material oral or
written: (i) contract for the employment of any officer or employee; (ii) profit
sharing, bonus, deferred compensation, stock option, severance pay, pension,
benefit or retirement plan, agreement or arrangement covered by Title IV of
the
Employee Retirement Income Security Act, as amended; (iii) agreement, contract
or indenture relating to the borrowing of money; (iv) guaranty of any obligation
for the borrowing of money or otherwise, excluding endorsements made for
collection and other guaranties of obligations, which, in the aggregate exceeds
$1,000; (v) consulting or other contract with an unexpired term of more than
one
year or providing for payments in excess of $10,000 in the aggregate; (vi)
collective bargaining agreement; and (vii) contract, agreement, or other
commitment involving payments by it for more than $10,000 in the
aggregate.
9
Section
2.9 No
Conflict With Other Instruments. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated by this Agreement will not result in the breach of any term or
provision of, or constitute an event of default under, any material indenture,
mortgage, deed of trust or other material contract, agreement or instrument
to
which Mega Media is a party or to which any of its properties or operations
are
subject.
Section
2.10 Material
Contract Defaults. To the best of Mega Media's knowledge and
belief, it is not in default in any material respect under the terms of any
outstanding contract, agreement, lease or other commitment which is material
to
the business, operations, properties, assets or condition of Mega Media, and
there is no event of default in any material respect under any such contract,
agreement, lease or other commitment in respect of which Mega Media has not
taken adequate steps to prevent such a default from occurring.
Section
2.11 Governmental
Authorizations. To the best of Mega Media’s
knowledge, Mega Media has all licenses, franchises, permits and other
governmental authorizations that are legally required to enable it to conduct
its business operations in all material respects as conducted on the date
hereof. Except for compliance with federal and state securities or
corporation laws, no authorization, approval, consent or order of, or
registration, declaration or filing with, any court or other governmental body
is required in connection with the execution and delivery by Mega Media of
the
transactions contemplated hereby.
Section
2.12 Compliance
with Laws and Regulations. To the best of Mega Media's
knowledge and belief, Mega Media has complied with all applicable statutes
and
regulations of any federal, state or other governmental entity or agency
thereof, except to the extent that noncompliance would not materially and
adversely affect the business, operations, properties, assets or condition
of
Mega Media or would not result in Mega Media's incurring any material
liability.
Section
2.13 Insurance. All
of Mega Media’s insurable properties are insured for Mega Media‘s benefit under
valid and enforceable policy or policies containing substantially equivalent
coverage and will be outstanding and in full force at the Closing
Date.
Section
2.14 Approval
of Agreement. The directors of Mega Media have authorized
the execution and delivery of this Agreement and have approved the transactions
contemplated hereby.
Section
2.15 Material
Transactions or Affiliations. As of the Closing Date, there
will exist no material contract, agreement or arrangement between Mega Media
and
any person who was at the time of such contract, agreement or arrangement an
officer, director or person owning of record, or known by Mega Media to own
beneficially, ten percent (10%) or more of the issued and outstanding Common
Shares of Mega Media and which is to be performed in whole or in part after
the
date hereof except with regard to an agreement with the Mega Media shareholders
providing for the distribution of cash to provide for payment of federal and
state taxes on Subchapter S income. Mega Media has no commitment,
whether written or oral, to lend any funds to, borrow any money from or enter
into any other material transactions with, any such affiliated
person.
10
ARTICLE
III
EXCHANGE
PROCEDURE AND OTHER
CONSIDERATION
Section
3.1 Share
Exchange/Delivery of Mega Media Securities. On the Closing
Date, as set forth on Schedule 3.2, the holders of all of the Mega Media (i)
common shares, consisting of 5,327,446 shares of common stock, par value $.001
per share; (ii) preferred shares, consisting of 14,417,000 shares of preferred
stock, par value $.001 per share; and (iii) convertible notes in the sum of
$877,000, shall deliver to FHCS certificates or other documents evidencing
all
of the issued and outstanding Mega Media common and preferred shares, endorsed
in blank or with executed power attached thereto in transferable form, and
conversion notices evidencing full satisfaction of the notes. On the
Closing Date, all previously issued and outstanding common and preferred shares
and convertible notes of Mega Media shall be transferred to FHCS, so that Mega
Media shall become a wholly-owned subsidiary of FHCS.
Section
3.2 Issuance
of FHCS Shares. In exchange for all of the Mega Media common
and preferred shares and convertible notes tendered pursuant to Section 3.1,
FHCS shall issue to the MM Shareholders set forth on Schedule 3.2 a total of
49,990,406 newly issued shares of FHCS’s common stock, par value $.001 per
share, which shall constitute an aggregate of 68.50% of FHCS’s issued and
outstanding fully diluted common stock after the transaction is closed, as
follows:
(a) Each
share of Mega Media common stock (5,327,446 shares in the aggregate) converts
into 3.386064 newly issued shares of FHCS common stock for an aggregate of
18,039,073 shares of FHCS common stock;
(b) Each
share of Mega Media preferred stock (14,417,000 shares in the aggregate)
converts into 2 newly issued shares of FHCS common stock for an aggregate of
28,834,000 shares of FHCS common stock; and
(c) The
convertible notes in the sum of $877,000 will be converted into an aggregate
of
3,117,333 shares of FHCS common stock based on the conversion price set forth
in
the notes and on Schedule 3.2.
To
avoid
the issuance of fractional shares of common stock, FHCS will issue an additional
share to all holders of a fractional share .50 or greater and no additional
shares shall be issued to a holder of a fractional share less than
.50. All of the above shares are restricted in accordance with Rule
144 of the 1933 Securities Act.
Section
3.3 Additional
Consideration. At Closing and as a condition to
Closing, the FHCS shareholders set forth on Schedule 3.3 agree to cancel an
aggregate of 13,161,033 shares of FHCS common stock issued and
outstanding.
Section
3.4 Present
Liabilities of FHCS. Subsequent to closing, the liabilities
and obligations of FHCS set forth on Schedule 3.4 shall remain liabilities
of
FHCS. In addition, the present officers and directors of FHCS shall
be released from any and all liabilities related thereto.
11
Section
3.5 Events
Prior to Closing. Upon execution hereof or as soon
thereafter as practical, management of FHCS and Mega Media shall execute,
acknowledge and deliver (or shall cause to be executed, acknowledged and
delivered) any and all certificates, opinions, financial statements, schedules,
agreements, resolutions rulings or other instruments required by this Agreement
to be so delivered, together with such other items as may be reasonably
requested by the parties hereto and their respective legal counsel in order
to
effectuate or evidence the transactions contemplated hereby, subject only to
the
conditions to Closing referenced herein below.
Section
3.6 Closing. The
closing of the transactions contemplated by this Agreement shall be on the
date
and at the time the exchange documents are filed with the New York and Nevada
Secretary’s of State in accordance with applicable laws ("Closing" or “Closing
Date”).
Section
3.7 Termination.
(a) This
Agreement may be terminated by the board of directors or majority interest
of
Shareholders of either FHCS or Mega Media, respectively, at any time prior
to
the Closing Date if:
(i)
|
there
shall be any action or proceeding before any court or any governmental
body which shall seek to restrain, prohibit or invalidate the transactions
contemplated by this Agreement and which, in the judgment of such
board of
directors, made in good faith and based on the advice of its legal
counsel, makes it inadvisable to proceed with the exchange contemplated
by
this Agreement; or
|
(ii)
|
any
of the transactions contemplated hereby are disapproved by any regulatory
authority whose approval is required to consummate such
transactions.
|
In
the event of termination pursuant to
Paragraph (a) of this Section 3.5, no obligation, right, or liability shall
arise hereunder and each party shall bear all of the expenses incurred by it
in
connection with the negotiation, drafting and execution of this Agreement and
the transactions herein contemplated.
(b) This
Agreement may be terminated at any time prior to the Closing Date by action
of
the board of directors of FHCS if Mega Media shall fail to comply in any
material respect with any of its covenants or agreements contained in this
Agreement or if any of the representations or warranties of Mega Media contained
herein shall be inaccurate in any material respect, which noncompliance or
inaccuracy is not cured after 20 days written notice thereof is given to Mega
Media. If this Agreement is terminated pursuant to Paragraph (b) of
this Section 3.5, this Agreement shall be of no further force or effect and
no
obligation, right or liability shall arise hereunder.
12
(c) This
Agreement may be terminated at any time prior to the Closing Date by action
of
the board of directors of Mega Media if FHCS shall fail to comply in any
material respect with any of its covenants or agreements contained in this
Agreement or if any of the representations or warranties of FHCS contained
herein shall be inaccurate in any material respect, which noncompliance or
inaccuracy is not cured after 20 days written notice thereof is given to
FHCS. If this Agreement is terminated pursuant to Paragraph (c) of
this Section 3.5, this Agreement shall be of no further force or effect and
no
obligation, right or liability shall arise hereunder.
In
the event of termination pursuant to
paragraph (b) and (c) of Section 3.5, the breaching party shall bear all of
the
expenses incurred by the other party in connection with the negotiation,
drafting and execution of this Agreement and the transactions herein
contemplated.
Section
3.8 Directors
of FHCS After Acquisition. Upon execution of this Agreement,
in the form of Schedule 3.8, Xxxxxxx X. Xxxxxx shall deliver to FHCS his
resignation from the Board of Directors of FHCS which is effective on a date
that is 10 calendar days after FHCS mails an Information Statement prepared
pursuant to Rule 14f-1 relating to this Agreement and the following people
shall
be appointed to the Board of Directors of FHCS: Xxxxxxxxx Xxxxxxx (Chairman),
Xx. Xxx Paukman, Xxxxx Xxxxxxx, Xxxx Xxxxxxxx and Xxxx Xxxxxxx. Each
director shall hold office until his successor has been duly elected and has
qualified or until his death, resignation or removal.
Section
3.9 Officers
of FHCS. Upon the Closing, the following people
shall be appointed as officers of FHCS:
Name
|
Office
|
|
Xxxxxxxxx
Xxxxxxx
|
Chief
Executive Officer
|
|
Xxxxx
Xxxxxxx
|
Acting
President and Chief Operating Officer
|
|
Xxxxxxx
Xxxxxxxxxx
|
Chief
Financial Officer and Treasurer
|
|
Xxxx
Xxxxxxxx
|
Vice
President
|
ARTICLE
IV
SPECIAL
COVENANTS
Section
4.1 Access
to Properties and Records. Prior to Closing, FHCS and Mega
Media will each afford to the officers and authorized representatives of the
other full access to the properties, books and records of each other, so that
each may have full opportunity to make such reasonable investigation as it
shall
desire to make of the affairs of the other and each will furnish the other
with
such additional financial and operating data and other information as to the
business and properties of each other, as the other shall from time to time
reasonably request.
Section
4.2 Availability
of Rule 144. FHCS and MM Shareholders holding "restricted
securities", as that term is defined in Rule 144 of the 1933 Securities Act
will
remain as “restricted securities”. FHCS is under no obligation to
register such shares under the Securities Act, or otherwise. The stockholders
of
FHCS and Mega Media holding restricted securities of FHCS and Mega Media as
of
the date of this Agreement and their respective heirs, administrators, personal
representatives, successors and assigns, are intended third party beneficiaries
of the provisions set forth herein.
13
The
covenants set forth in this Section 4.2 shall survive the Closing and the
consummation of the transactions herein contemplated.
Section
4.3 Special
Covenants and Representations Regarding the FHCS Common Shares to be Issued
in
the Exchange. The consummation of this Agreement, including
the issuance of the FHCS Common Shares to the Shareholders of Mega Media as
contemplated hereby, constitutes the offer and sale of securities under the
Securities Act, and applicable state statutes. Such transaction shall
be consummated in reliance on exemptions from the registration and prospectus
delivery requirements of such statutes which depend, inter alia, upon
the circumstances under which the Mega Media Shareholders acquire such
securities.
Section
4.4 Third
Party Consents. FHCS and Mega Media agree to cooperate with
each other in order to obtain any required third party consents to this
Agreement and the transactions herein contemplated.
Section
4.5 Actions
Prior to and Subsequent to Closing.
(a) From
and
after the date of this Agreement until the Closing Date, except as permitted
or
contemplated by this Agreement, FHCS and Mega Media will each use its best
efforts to:
(i)
|
maintain
and keep its properties in states of good repair and condition as
at
present, except for depreciation due to ordinary wear and tear and
damage
due to casualty;
|
(ii)
|
maintain
in full force and effect insurance comparable in amount and in scope
of
coverage to that now maintained by it;
and
|
(iii)
|
perform
in all material respects all of its obligations under material contracts,
leases and instruments relating to or affecting its assets, properties
and
business.
|
(b) From
and
after the date of this Agreement until the Closing Date, FHCS will not, without
the prior consent of Mega Media:
(i)
|
except
as otherwise specifically set forth herein, make any change in its
articles of incorporation or
bylaws;
|
(ii)
|
declare
or pay any dividend on its outstanding Common Shares, except as may
otherwise be required by law, or effect any stock split or otherwise
change its capitalization, except as provided
herein;
|
(iii)
|
enter
into or amend any employment, severance or agreements or arrangements
with
any directors or officers;
|
(iv)
|
grant,
confer or award any options, warrants, conversion rights or other
rights
not existing on the date hereof to acquire any Common Shares;
or
|
(v)
|
purchase
or redeem any Common Shares.
|
14
Section
4.6 Indemnification.
(a) FHCS
hereby agrees to indemnify Mega Media, each of the officers, agents and
directors and current shareholders of Mega Media as of the Closing Date against
any loss, liability, claim, damage or expense (including, but not limited to,
any and all expense whatsoever reasonably incurred in investigating, preparing
or defending against any litigation, commenced or threatened or any claim
whatsoever), to which it or they may become subject to or rising out of or
based
on any inaccuracy appearing in or misrepresentation made in this
Agreement. The indemnification provided for in this paragraph shall
survive the Closing and consummation of the transactions contemplated hereby
and
termination of this Agreement; and
(b) Mega
Media hereby agrees to indemnify FHCS, each of the officers, agents, directors
and current shareholders of FHCS as of the Closing Date against any loss,
liability, claim, damage or expense (including, but not limited to, any and
all
expense whatsoever reasonably incurred in investigating, preparing or defending
against any litigation, commenced or threatened or any claim whatsoever), to
which it or they may become subject arising out of or based on any inaccuracy
appearing in or misrepresentation made in this Agreement. The indemnification
provided for in this paragraph shall survive the Closing and consummation of
the
transactions contemplated hereby and termination of this Agreement.
ARTICLE
V
CONDITIONS
PRECEDENT TO OBLIGATIONS OF
FHCS
The
obligations of FHCS under this
Agreement are subject to the satisfaction, at or before the Closing Date, of
the
following conditions:
Section
5.1 Accuracy
of Representations. The representations and warranties made
by Mega Media in this Agreement were true when made and shall be true at the
Closing Date with the same force and effect as if such representations and
warranties were made at the Closing Date (except for changes therein permitted
by this Agreement), and Mega Media shall have performed or compiled with all
covenants and conditions required by this Agreement to be performed or complied
with by Mega Media prior to or at the Closing. FHCS shall be
furnished with a certificate, signed by a duly authorized officer of Mega Media
and dated the Closing Date, to the foregoing effect.
Section
5.2 Director
Approval. The Board of Directors of FHCS shall have approved
this Agreement and the transactions contemplated herein.
Section
5.3 Officer's
Certificate. FHCS shall have been furnished with a
certificate dated the Closing Date and signed by a duly authorized officer
of
Mega Media to the effect that: (a) the representations and warranties of Mega
Media set forth in the Agreement and in all Exhibits, Schedules and other
documents furnished in connection herewith are in all material respects true
and
correct as if made on the Effective Date; (b) Mega Media has performed all
covenants, satisfied all conditions, and complied with all other terms and
provisions of this Agreement to be performed, satisfied or complied with by
it
as of the Effective Date; (c) since such date and other than as previously
disclosed to Mega Media on the attached Schedules, Mega Media has not entered
into any material transaction other than transactions which are usual and in
the
ordinary course if its business; and (d) no litigation, proceeding,
investigation or inquiry is pending or, to the best knowledge of Mega Media,
threatened, which might result in an action to enjoin or prevent the
consummation of the transactions contemplated by this Agreement or, to the
extent not disclosed in the Mega Media Schedules, by or against Mega Media
which
might result in any material adverse change in any of the assets, properties,
business or operations of Mega Media.
15
Section
5.4 No
Material Adverse Change. Prior to the Closing Date, there
shall not have occurred any material adverse change in the financial condition,
business or operations of nor shall any event have occurred which, with the
lapse of time or the giving of notice, may cause or create any material adverse
change in the financial condition, business or operations of Mega
Media.
Section
5.5 Other
Items. FHCS shall have received such further documents,
certificates or instruments relating to the transactions contemplated hereby
as
FHCS may reasonably request.
ARTICLE
VI
CONDITIONS
PRECEDENT TO OBLIGATIONS OF
MEGA MEDIA
The
obligations of Mega Media under
this Agreement are subject to the satisfaction, at or before the Closing Date
(unless otherwise indicated herein), of the following conditions:
Section
6.1 Accuracy
of Representations. The representations and warranties made
by Mega Media in this Agreement were true when made and shall be true as of
the
Closing Date (except for changes therein permitted by this Agreement) with
the
same force and effect as if such representations and warranties were made at
and
as of the Closing Date, and FHCS shall have performed and complied with all
covenants and conditions required by this Agreement to be performed or complied
with by FHCS prior to or at the Closing. Mega Media shall have been
furnished with a certificate, signed by a duly authorized executive officer
of
FHCS and dated the Closing Date, to the foregoing effect.
Section
6.2 Director Approval. The
Board of Directors of Mega Media shall have approved this Agreement and the
transactions contemplated herein.
Section
6.3 Officer's
Certificate. Mega Media shall be furnished with a certificate
dated the Closing Date and signed by a duly authorized officer of FHCS to the
effect that: (a) the representations and warranties of FHCS set forth
in the Agreement and in all Exhibits, Schedules and other documents furnished
in
connection herewith are in all material respects true and correct as if made
on
the Effective Date; and (b) FHCS has performed all covenants, satisfied all
conditions, and complied with all other terms and provisions of the Agreement
to
be performed, satisfied or complied with by it as of the Effective
Date.
Section
6.4 No
Material Adverse Change. Prior to the Closing Date, there
shall not have occurred any material adverse change in the financial condition,
business or operations of nor shall any event have occurred which, with the
lapse of time or the giving of notice, may cause or create any material adverse
change in the financial condition, business or operations of FHCS.
Section
6.5 1934
Exchange Act Compliance. Prior to the Closing Date, FHCS
shall file its quarterly report on Form 10-QSB for the fiscal quarter ended
March 31, 2007.
16
Section
6.6 Cancellation
of Outstanding Options, Warrants, Rights, Etc. Prior to the
Closing Date, as applicable, FHCS shall cancel all outstanding stock options,
rights or commitments to issue shares of FHCS common or preferred stock,
warrants and convertible notes, and warrants that there shall be no other common
or preferred stock or equity securities or any options, warrants, rights or
other agreements or instruments convertible, exchangeable or exercisable into
common or preferred stock or other equity securities issued or outstanding
unless they are controlled by the MM Group.
Section
6.7 Cancellation
of Voting Trusts. Prior to the Closing Date, as applicable,
FHCS shall cancel all voting trusts, agreements or arrangements among any of
the
beneficial holders of FHCS common or preferred stock affecting the nomination
or
election of directors or the exercise of the voting rights of FHCS common or
preferred stock.
ARTICLE
VII
MISCELLANEOUS
Section
7.1 Brokers
and Finders. Each party to this Agreement represents and
warrants that it is under no obligation, express or implied, to pay certain
finders in connection with the bringing of the parties together in the
negotiation, execution, or consummation of this Agreement. The parties each
agree to indemnify the other against any claim by any third person for any
commission, brokerage or finder's fee or other payment with respect to this
Agreement or the transactions contemplated hereby based on any alleged agreement
or understanding between the indemnifying party and such third person, whether
express or implied from the actions of the indemnifying party.
Section
7.2 Law,
Forum and Jurisdiction. This Agreement shall be construed
and interpreted in accordance with the laws of the State of New York, United
States of America.
Section
7.3 Notices. Any
notices or other communications required or permitted hereunder shall be
sufficiently given if personally delivered to it or sent by registered mail
or
certified mail, postage prepaid, or by prepaid telegram addressed as
follows:
If
to FHCS:
|
Family
Healthcare Solutions, Inc.
Attn.
Xxxxxxx X. Xxxxxx, CEO
Via
Xxxxx Xxxxxxx Edificio El Congrejo, Officina 22, Panama
0000-0000
Telephone:
Fax:
|
With
a Copy to:
|
Telephone:
Fax:
|
If
to Mega Media:
|
Mega
Media Group, Inc.
Attn.
Xxxxxxxxx Xxxxxxx, CEO
000
Xxxxxxxx, 0xx Xxxxx
Xxx
Xxxx, XX 00000
Telephone:
Fax:
|
With
a Copy to:
|
Xxxxxxx
X. Xxxxxx
Xxxxxx
& Xxxxxx, LLP
000
Xxxxx 0 Xxxxx
Xxxxxxxxx,
XX 00000
Telephone:
(000) 000-0000
Fax:
(000) 000-0000
|
17
To
an
FHCS Shareholder, MM Shareholder or MM Note Holder: the address set forth
below
or
such
other addresses as shall be furnished in writing by any party in the manner
for
giving notices hereunder, and any such notice or communication shall be deemed
to have been given as of the date so delivered, mailed or
telegraphed.
Section
7.4 Attorneys'
Fees. In the event that any party institutes any action or
suit to enforce this Agreement or to secure relief from any default hereunder
or
breach hereof, the breaching party or parties shall reimburse the non-breaching
party or parties for all costs, including reasonable attorneys' fees, incurred
in connection therewith and in enforcing or collecting any judgment rendered
therein.
Section
7.5 Confidentiality. Each
party hereto agrees with the other party that, unless and until the transactions
contemplated by this Agreement have been consummated, they and their
representatives will hold in strict confidence all data and information obtained
with respect to another party or any subsidiary thereof from any representative,
officer, director or employee, or from any books or records or from personal
inspection, of such other party, and shall not use such data or information
or
disclose the same to others, except: (i) to the extent
such data is a matter of public knowledge or is required by law to be published;
and (ii) to the extent that such data or information must be used or
disclosed in order to consummate the transactions contemplated by this
Agreement.
Section
7.6 Schedules;
Knowledge. Each party is presumed to have full
knowledge of all information set forth in the other party's schedules delivered
pursuant to this Agreement.
Section
7.7 Third
Party Beneficiaries. This contract is solely between FHCS
and Mega Media and except as specifically provided, no director, officer,
stockholder, employee, agent, independent contractor or any other person or
entity shall be deemed to be a third party beneficiary of this
Agreement.
Section
7.8 Survival;
Termination. The representations, warranties and covenants
of the respective parties shall survive the Closing Date and the consummation
of
the transactions herein contemplated for 18 months.
Section
7.9 Counterparts. This
Agreement may be executed by fax signature and in multiple counterparts, each
of
which shall be deemed an original and all of which taken together shall be
deemed a single instrument.
Section
7.10
Amendment or Waiver. Every right and remedy
provided herein shall be cumulative with every other right and remedy, whether
conferred herein, at law or in equity, and may be enforced concurrently
herewith, and no waiver by any party of the performance of any obligation by
the
other shall be construed as a waiver of the same or any other default then,
theretofore, or thereafter occurring or existing. At any time prior
to the Closing Date, this Agreement may be amended by a written consent by
all
parties hereto, with respect to any of the terms contained herein, and any
term
or condition of this Agreement may be waived or the time for performance hereof
may be extended by a written consent by the party or parties for whose benefit
the provision is intended.
Section
7.11 Expenses. Each
party herein shall bear all of their respective costs and expenses incurred
in
connection with the negotiation of this Agreement and in the consummation of
the
transactions provided for herein and the preparation thereof.
18
Section
7.12 Headings;
Context. The headings of the sections and paragraphs
contained in this Agreement are for convenience of reference only and do not
form a part hereof and in no way modify, interpret or construe the meaning
of
this Agreement.
Section
7.13 Benefit. This
Agreement shall be binding upon and shall inure only to the benefit of the
parties hereto, and their permitted assigns hereunder. This Agreement
shall not be assigned by any party without the prior written consent of the
other party.
Section
7.14 Public
Announcements. Except as may be required by law, neither
party shall make any public announcement or filing with respect to the
transactions provided for herein without the prior consent of the other party
hereto.
Section
7.15 Severability. In
the event that any particular provision or provisions of this Agreement or
the
other agreements contained herein shall for any reason hereafter be determined
to be unenforceable, or in violation of any law, governmental order or
regulation, such unenforceability or violation shall not affect the remaining
provisions of such agreements, which shall continue in full force and effect
and
be binding upon the respective parties hereto.
Section
7.16 Failure
of Conditions; Termination. In the event of any of the
conditions specified in this Agreement shall not be fulfilled on or before
the
Closing Date, either of the parties have the right either to proceed or, upon
prompt written notice to the other, to terminate and rescind this
Agreement. In such event, the party that has failed to fulfill the
conditions specified in this Agreement will be liable for the other party’s
legal fees. The election to proceed shall not affect the right of
such electing party reasonably to require the other party to continue to use
its
efforts to fulfill the unmet conditions.
Section
7.17 No
Strict Construction. The language of this
Agreement shall be construed as a whole, according to its fair meaning and
intendment, and not strictly for or against either party hereto, regardless
of
who drafted or was principally responsible for drafting the Agreement or terms
or conditions hereof.
Section
7.18 Execution
Knowing and Voluntary. In executing this Agreement, the
parties severally acknowledge and represent that each: (a) has fully
and carefully read and considered this Agreement; (b) has been or has had the
opportunity to be fully apprized by its attorneys of the legal effect and
meaning of this document and all terms and conditions hereof; (c) is executing
this Agreement voluntarily, free from any influence, coercion or duress of
any
kind.
Section
7.19 Amendment. At
any time after the Closing Date, this Agreement may be amended by a writing
signed by both parties, with respect to any of the terms contained herein,
and
any term or condition of this Agreement may be waived or the time for
performance hereof may be extended by a writing signed by the party or parties
for whose benefit the provision is intended.
19
Section
7.20 Entire
Agreement. This Agreement represents the entire
agreement between the parties relating to the subject matter
hereof. This Agreement alone fully and completely expresses the
agreement of the parties relating to the subject matter hereof. There
are no other courses of dealing, understanding, agreements, representations
or
warranties, written or oral, except as set forth herein. This
Agreement may not be amended or modified, except by a written agreement signed
by all parties hereto.
[Remainder
of Page Intentionally Blank]
[Signature
Pages Follow]
20
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective duly authorized officers or representatives and
entered into as of the date first above written.
ATTEST:
|
FAMILY
HEALTHCARE SOLUTIONS, INC.
|
|
______________________________
|
By:
|
______________________________
|
Name:
|
Xxxxxxx
X. Xxxxxx
|
|
Title:
|
Chief
Executive Officer
|
ATTEST:
|
MEGA
MEDIA GROUP, INC.
|
|
______________________________
|
By:
|
______________________________
|
Name:
|
Xxxxxxxxx
Xxxxxxx
|
|
Title:
|
Chief
Executive Officer
|
FHCS
SHAREHOLDERS:
______________________________
|
XX
XXXXXXXX & XXXXXXXX
By: ___________________________
|
|
Xxxxxxx
X. Xxxxxx
|
Name:
|
|
Address:
|
||
BRIC
|
||
By:____________________________
|
||
Name:
|
||
Address:
|
||
Mega
Media Shareholders and Note Holders:
______________________________
|
______________________________
|
|
Xxxxxxxxx
Xxxxxxx
|
Xx.
Xxx Paukman
|
|
______________________________
|
______________________________
|
|
Xxxx
Xxxxxxxxx
|
Xxxx
Xxxxxxx
|
|
______________________________
|
______________________________
|
|
Xxxxx
Xxxxxxxx
|
Xxxx
Xxxxxxxx
|
|
______________________________
|
______________________________
|
|
Xxxxx
Tantsky
|
Xxxxxxx
Xxxxxxxxxx
|
|
______________________________
|
______________________________
|
|
Xxxxx
Xxxxxxx
|
Xxxxxxx
Xxxxxx
|
|
______________________________
|
______________________________
|
|
Xxxxx
Xxxxxxx, Esq.
|
Xxxxx
Xxxxx
|
21
______________________________
|
||
Xxxxxxx
Xxxxxxx
|
||
FD
IMPORT
|
MATRIX
ALLIANCE
|
|
By:____________________________
|
By:____________________________
|
|
Name:
|
Name:
|
|
______________________________
|
______________________________
|
|
Xxxxxx
Xxxxxxxx
|
Xxxx
Paukman
|
|
______________________________
|
______________________________
|
|
Xxxxxx
Xxxxx
|
Xxxxxxx
Xxxxx
|
|
______________________________
|
______________________________
|
|
Xxxxxx
Xxxxxxxx
|
Xxxxx
Xxxxx
|
|
______________________________
|
______________________________
|
|
Xxxx
Xxxxxx
|
Xxxxxxx
Xxxxxxxx
|
|
______________________________
|
______________________________
|
|
Xxxxxxx
Buzukashvilli
|
Xxxxxx
Xxxxxxxxx
|
|
______________________________
|
______________________________
|
|
Xxxxxx
Xxxxxx
|
Xxxxxxxx
Xxxxxxx
|
|
______________________________
|
______________________________
|
|
Xxxxxxx
Xxxxxxxxx
|
Yuri
Pirag
|
|
A
& G JEWELERS INC.
|
||
By:____________________________
|
______________________________
|
|
Name:
|
Xxxxx
Xxxxxx
|
00
Schedule
2.2
Convertible
Notes
Note
Holder
|
Amount
of Note
|
Date
|
Conversion
Price
|
||||||
Xxxxx
Xxxxxxx
|
$ |
150,000
|
7/21/06
|
$ |
0.30
|
||||
Xxxxx
Xxxxxxx
|
$ |
444,455
|
10/31/06
|
$ |
0.30
|
||||
Xxxx
Xxxxxxxxx
|
$ |
100,000
|
3/2/07
|
$ |
0.25
|
||||
Xxxxxx
Xxxxxxxx
|
$ |
100,000
|
10/10/06
|
$ |
0.30
|
||||
Xxxxxx
Xxxxxxxx
|
$ |
100,000
|
1/11/07
|
$ |
0.25
|
||||
Xxxx
Paukman
|
$ |
117,000
|
2/21/07
|
$ |
0.25
|
||||
Xxxx
Paukman
|
$ |
50,000
|
8/1/06
|
$ |
0.30
|
||||
Xxxxxxx
Xxxxxxx
|
$ |
40,000
|
10/31/06
|
$ |
0.30
|
||||
Xx.
Xxx Paukman
|
$ |
50,000
|
10/31/06
|
$ |
0.30
|
||||
Xx.
Xxxx Xxxxxxx
|
$ |
74,000
|
2/22/07
|
$ |
0.25
|
||||
Xx.
Xxxx Xxxxxxx
|
$ |
56,000
|
10/24/06
|
$ |
0.30
|
||||
Xx.
Xxxx Xxxxxxx
|
$ |
30,000
|
11/16/06
|
$ |
0.30
|
||||
Total
|
$ |
1,311,455
|
NIR
Funding
On
August 18, 2006, Edulink, Inc. entered into a Securities Purchase Agreement
for a total subscription amount of $1,500,000 that included Stock Purchase
Warrants (“Warrants”) and Callable Secured Convertible Notes (“Notes”) with
AJW Capital Partners, LLC, AJW Offshore, Ltd., AJW Qualified
Partners, LLC, and New Millennium Capital Partners II, LLC (collectively, the
“Investors”). At that time, we were a subsidiary of Edulink but the
reverse merger was subsequently rescinded as if we were never associated with
Edulink. At this time, we may or may not assume the debt and warrants
as negotiations are under way to resolve the issue. We have accounted
for this as a contingent liability in our audited financial
statements.
The
initial funding of $200,000 was completed August 21, 2006 and second tranche
of
$200,000 completed November 28, 2006, of which we received net proceeds of
$400,000. On each closing date, the following parties issued Notes as
follows:
AJW Capital
Partners, LLC invested $19,400;
AJW
Offshore, Ltd. invested $118,000;
AJW
Qualified Partners, LLC invested $60,000; and
New
Millennium Capital Partners II, LLC invested $2,600.
The
Notes
are convertible into shares of our common stock at a variable conversion price
based upon the applicable percentage of the average of the lowest three (3)
trading prices for the Common Stock during the twenty (20) trading day period
prior to conversion. The “Applicable Percentage” means 50%; provided, however,
that the Applicable Percentage shall be increased to (i) 55% in the event that
a
Registration Statement is filed within thirty days of the closing; and (ii)
60%
in the event that the Registration Statement becomes effective within one
hundred and twenty (120) days from the closing.
23
Under
the
terms of the Notes and Warrants, the Notes and Warrants are exercisable by
any
holder only to the extent that the number of shares of common stock issuable
pursuant to such securities, together with the number of shares of common stock
owned by such holder and its affiliates (but not including shares of common
stock underlying unconverted shares of Notes or unexercised portions of the
Warrants) would not exceed 4.99% of the then outstanding common stock as
determined in accordance with Section 13(d) of the Exchange Act.
The
Investors received the following seven (7) year Warrants to purchase shares
of
our common stock, exercisable at $.01 per share:
AJW
Capital Partners, LLC
|
4,850,000
warrants;
|
AJW
Offshore, Ltd.
|
29,500,000
warrants;
|
AJW
Qualified Partners, LLC
|
15,000,000
warrants; and
|
New
Millennium Capital Partners II, LLC
|
650,000
warrants.
|
The
Warrants are not subject to registration rights.
24
Schedule
2.4
Tax
Matters, Books & Records
As
of
March 31, 2007, Mega Media’s unpaid payroll tax liability was
$387,812.
25
Schedule
2.8
Contractual
Obligations
We
have
certain fixed contractual obligations and commitments that include future
estimated payments. Changes in our business needs, cancellation provisions,
changing interest rates, and other factors may result in actual payments
differing from the estimates. We cannot provide certainty regarding the timing
and amounts of payments. We have presented below a summary of the most
significant assumptions used in our determination of amounts presented in the
tables, in order to assist in the review of this information within the context
of our consolidated financial position, results of operations, and cash
flows.
The
following table summarizes our contractual obligations as of October 31, 2006,
and the effect these obligations are expected to have on our liquidity and
cash
flows in future periods.
1.
|
Total
|
1yr
|
1-3yrs
|
3-5yrs
|
|
Capital
Leases
|
$74,520
|
$19,440
|
$55,080
|
||
Operating
Leases
|
$11,473,898
|
$2,417,690
|
$7,779,247
|
$1,276,961
|
|
Equipment
Loans
|
$64,745
|
$14,924
|
$49,821
|
||
$11,613,163
|
$2,452,055
|
$7,884,146
|
$1,276,961
|
2.
|
On
October 4, 2006 the Company has entered into a new lease agreement
for various computer and office equipment, which expires on
September 2010.
|
3.
|
Operating
leases consist of various premises leases for our two offices and
airtime
lease with Island Broadcasting. The Company has an agreement (the
"Agreement") with Island Broadcasting Company (the "Licensee") for
airtime. Pursuant to the Agreement the Company has purchased airtime
for
the period November 1, 2005 to July 1, 2010. However, after
July 1, 2006 the Licensee may terminate the Agreement upon
90 days' notice to the Company. Per the Agreement, the airtime is
paid monthly. Airtime lease expense for 2006 was
$2,072,929.
|
4.
|
The
company has two equipment loans that carry 6.75% interest rate and
mature
in 2010 and 2011.
|
Employment
Agreements
1.
|
Xxxxx
Xxxxxxx: Contract dated January 1, 2006. The term runs from
January 1, 2006 to January 31 of 2008. Base compensation:
$150,000.
|
2.
|
Xxxxxxx
Xxxxxxxxxx: Contract dated January 1, 2006. The term runs
from January 1, 2006 to January 31 of 2008. Base compensation:
$60,000.
|
3.
|
Xxxx
Xxxxxxx : Contract dated January 1, 2006. The term runs
from January 1, 2006 to January 31 of 2008. Base compensation:
$180,000.
|
4.
|
Xxxx
Xxxxxxxx: Contract dated January 1, 2006. The term runs from
January 1, 2006 to January 31 of 2008. Base compensation:
$180,000.
|
26
Real
Property Leases
Mega
Media leases 7,000 square feet of office space for its production, studios,
and
radio broadcasting facilities located at:
0000
Xxxxx Xxxxxx Xxxxxx
|
Xxxxxx
000, 206 and 210
|
Xxxxxxxx,
XX 00000
There
are
two (2) leases:
Lease
#1:
Term: expires
June 2007
Monthly
Fee: $5,941.04
Option
to
Renew: for
an additional three (3) years (to June 2010).
Lease
#2:
Term: expires
February 28, 2009
Monthly
Fee: $6,009.98
|
Mega
Media also leases 5,500 square feet of office space located
at:
|
000
Xxxxxxxx, 0xx Xxxxx
Xxx
Xxxx,
XX 00000
There
is
one (1) lease:
Term: expires
April 18, 2016
Monthly
Fee: $15,000
27
Schedule
3.2
Mega
Media Shareholders and Note Holders
Shareholder
|
Common
Stock
|
Percent
of Class
|
Preferred
Stock
|
Percent
of Class
|
Xxxxxxxxx
Xxxxxxx
|
275,000
|
5.16%
|
4,080,000
|
28.30%
|
Xxxx
Xxxxxxxxx
|
200,000
|
3.75%
|
-
|
-
|
Xxxxxx
Xxxxx
|
-
|
-
|
50,000
|
0.35%
|
A
& G Jewelers Inc.
|
50,000
|
0.94%
|
-
|
-
|
Xxxxx
Xxxxxxxx
|
537,189
|
10.08%
|
200,000
|
1.39%
|
Xxxxx
Tantsky
|
80,000
|
1.50%
|
-
|
-
|
Xxxxxxx
Xxxxx
|
-
|
-
|
50,000
|
0.35%
|
Xxxxx
Xxxxxxx
|
100,000
|
1.88%
|
-
|
-
|
Xxxxx
Xxxxxxx
|
-
|
-
|
1,750,000
|
12.14%
|
Lev
Paukman
|
1,046,807
|
19.65%
|
2,075,000
|
14.39%
|
Xxxx
Xxxxxxx
|
1,298,450
|
24.37%
|
2,575,000
|
17.86%
|
Xxxx
Xxxxxxxx
|
275,000
|
5.16%
|
2,320,000
|
16.09%
|
FD
Import
|
300,000
|
5.63%
|
-
|
-
|
Xxxxxx
Xxxxxxxx
|
-
|
-
|
10,000
|
0.07%
|
Xxxxxxx
Xxxxxxxxxx
|
80,000
|
1.50%
|
500,000
|
3.47%
|
Xxxxx
Xxxxxxxx
|
220,000
|
4.13%
|
150,000
|
1.04%
|
Xxxxx
Xxxxx
|
-
|
-
|
10,000
|
0.07%
|
Matrix
Alliance
|
384,000
|
7.21%
|
200,000
|
1.39%
|
Xxxx
Xxxxxx
|
-
|
-
|
50,000
|
0.35%
|
Xxxxxxx
Xxxxxxx
|
106,000
|
1.99%
|
-
|
-
|
Xxxxxxx
Xxxxxxxx
|
-
|
-
|
10,000
|
0.07%
|
Xxxxxxx
Buzukashvilli
|
-
|
-
|
5,000
|
0.03%
|
Xxxxxx
Xxxxxxxxx
|
-
|
-
|
10,000
|
0.07%
|
Xxxxxxx
Xxxxxx
|
125,000
|
2.35%
|
-
|
-
|
Xxxxx
Xxxxx
|
250,000
|
4.69%
|
100,000
|
0.69%
|
Xxxxxx
Xxxxxx
|
-
|
-
|
10,000
|
0.07%
|
Xxxxxxxx
Xxxxxxx
|
-
|
-
|
10,000
|
0.07%
|
Xxxxxxx
Xxxxxxxxx
|
-
|
-
|
150,000
|
1.04%
|
Yuri
Pirag
|
-
|
-
|
100,000
|
0.69%
|
Xxxxx
Xxxxxx
|
-
|
-
|
2,000
|
0.01%
|
Total
|
5,327,446
|
100.00%
|
14,417,000
|
100.00%
|
Note
Holder
|
Amount
of Note
|
Conversion
Price
|
Conversion
Shares
|
Xxxxx
Xxxxxxx
|
$150,000.00
|
$0.30
|
500,000
|
Xxxxx
Xxxxxxx
|
$110,000.00
|
$0.30
|
366,667
|
Xxxxxx
Xxxxxxxx
|
$100,000.00
|
$0.30
|
333,333
|
Xxxxxx
Xxxxxxxx
|
$100,000.00
|
$0.25
|
400,000
|
Xxxx
Paukman
|
$117,000.00
|
$0.25
|
468,000
|
Xxxx
Paukman
|
$50,000.00
|
$0.30
|
166,667
|
Xxxxxxx
Xxxxxxx
|
$40,000.00
|
$0.30
|
133,333
|
Xx.
Xxx Paukman
|
$50,000.00
|
$0.30
|
166,667
|
Xx.
Xxxx Xxxxxxx
|
$74,000.00
|
$0.25
|
296,000
|
Xx.
Xxxx Xxxxxxx
|
$56,000.00
|
$0.30
|
186,667
|
Xx.
Xxxx Xxxxxxx
|
$30,000.00
|
$0.30
|
100,000
|
Total
|
$877,000.00
|
3,117,333
|
28
Schedule
3.3
FHCS
Shareholders
Shareholder
|
Common
Stock
|
Issuance
Date
|
FHCS
Certificate No.
|
Xxxxxxx
X. Xxxxxx
|
400,633
|
11/3/03
|
1184
|
Xxxxxxx
X. Xxxxxx
|
1,000,000
|
12/31/03
|
1185
|
Xxxxxxx
X. Xxxxxx
|
5,040,000
|
2/6/07
|
1221
|
Xx
Xxxxxxxx & Xxxxxxxx
|
2,130,400
|
2/6/07
|
1222
|
Bric
|
4,590,000
|
2/6/07
|
1223
|
Total
|
13,161,033
|
29
Schedule
3.8
Form
of Resignation
April ,
2007
Family
Healthcare Solutions, Inc.
Via
Xxxxx
Xxxxxxx Edificio El Congrejo, Officina 22
Panama
0818-0031
Re: Family
Healthcare Solutions, Inc.
Resignation
Letter
Dear
Sir/Madam:
This
letter hereby serves as my notification to Family Healthcare Solutions, Inc.
(the “Company”) of my resignation from the Company, effective as of the date
which is 10 calendar days following the mailing of an Information Statement
on
Schedule 14f-1 relating to the transaction (the “Transaction”) with the FHCS
shareholders listed on Schedule 3.3 of the Stock Purchase and Share Exchange
Agreement (the “Exchange Agreement”); Mega Media Group, Inc., a New York
Corporation, the Mega Media shareholders and note holders listed on Schedule
3.2
of the Exchange Agreement, from my positions as Sole Officer and
Director. This resignation is not due to a disagreement with the
Company on any matter relating to the Company's operations, policies or
practices and is in connection with the Transaction.
Very
truly yours,
_______________________
Xxxxxxx
X. Xxxxxx
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