AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT
AND PLAN OF REORGANIZATION
THIS
AGREEMENT AND PLAN OF REORGANIZATION (this “Agreement”) is made this 22nd day of
November, 2006, by and among MVP Network, Inc., a Nevada corporation (“MVP”),
MVP Merger Corp., a Nevada corporation (“Merger Co.”); and MVP Network Online
Games, Inc., a Nevada corporation (“Online Games”); based on the
following:
RECITALS
The
parties desire to enter into this agreement to set forth the terms and
conditions of the corporate reorganization (the “Merger”) pursuant to which
Merger Co. will be merged with and into Online Games, with Online Games being
the surviving entity, and the issued and outstanding shares of capital stock
of
Online Games will be converted into shares of MVP common stock. The Merger
of
Merger Co. with and into Online Games and the issuance of MVP common stock
are
for the purpose of effecting a tax-free reorganization pursuant to Sections
368(a)(1)(A) and 368(a)(2)(D) of the Internal Revenue Code of 1986, as amended
(the “Code”). This supersedes and replaces any prior Agreement and Plan of
Reorganization entered into by the parties.
AGREEMENT
Based
on
the stated premises, which are incorporated herein by reference, and for and
in
consideration of the mutual covenants and agreements hereinafter set forth,
the
mutual benefits to the parties to be derived herefrom, and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, it is hereby agreed as follows:
ARTICLE
I
MERGER
1.01 The
Merger. Merger
Co. will be merged with and into Online Games, and Online Games shall survive
the Merger as the surviving corporation (the “Surviving Corporation”). The
issued and outstanding shares of Online Games (the “Online Games Shares”) shall
be converted into post-split shares of MVP common stock, par value $0.05 per
share, after giving effect to the forward stock split described in Section
4.01
(the “MVP Shares”), as follows:
(a) Each
Online Games Share outstanding on the Effective Date of the merger shall be
converted into four (4) MVP Shares (the “Exchange Ratio”) for an aggregate of
three hundred eighty million five hundred seventy four thousand five hundred
forty four (380,574,544) MVP Shares being issued collectively to the Online
Games shareholders on the effective date of the Merger; except that, holders
of
any “Dissenting Shares” of Online Games shall receive payment from Online Games,
upon the completion of the Merger, in accordance with the provisions of the
Nevada Revised Statutes (the “Nevada Statutes”). Dissenting Shares means any
shares of Online Games common stock for which the holder thereof has exercised
his or her appraisal rights under the Nevada Statutes, and a holder of
Dissenting Shares shall be referred to herein as a “Dissenting
Shareholder”.
(b) MVP
shall
not issue any fractional shares or interests in connection with the Merger.
If
any holder of Online Games Shares would otherwise be entitled to a fractional
share upon exchange thereof, MVP shall round up the number of MVP Shares to
be
issued to such holder to the nearest whole share.
(c) After
the
Effective Date of the Merger (as such term is defined in Section 1.08), each
holder of Online Games Shares shall, upon the surrender of the certificates
representing Online Games Shares to the registrar and transfer agent of MVP,
be
entitled to receive a certificate or certificates evidencing shares of the
MVP
Common Stock as provided herein. On the Effective Date of the Merger, all Online
Games Shares shall be canceled and all rights in respect thereof shall
cease.
(d) Each
share of common stock of Merger Co. issued and outstanding on the Effective
Date, and all rights in respect thereof, shall, without any action on the part
of MVP or Merger Co., forthwith cease to exist and be converted into one validly
issued, fully paid and nonassessable share of common stock of the Surviving
Corporation.
1.02 Adjustments
to Exchange Ratio.
For all
relevant purposes of the Merger of Online Games into Merger Co., the number
of
shares of MVP Common Stock to be issued and delivered pursuant to this Agreement
shall be appropriately adjusted to take into account any stock split (other
than
the proposed forward stock split described in Section 4.01), stock dividend,
reverse stock split, recapitalization, or similar change in the MVP Common
Stock
which may occur (with the prior written consent of Online Games) between the
date of the execution of this Agreement and the date of delivery of such shares
to provide the holders of Online Games Shares the same economic effect as
contemplated by this Agreement prior to such event.
1.03 Manner
and Basis of Converting Stock.
The
manner and basis of converting the shares of common stock of Online Games and
Merger Co., by virtue of the Merger and without any action on the part of any
holder thereof, shall be as set forth in this Section 1.03.
(a) Subject
to the terms and conditions of this Agreement, each Online Games Share issued
and outstanding immediately prior to the Effective DateExcluded
Shares,
and all
rights in respect thereof, shall at the Effective Date, without any action
on
the part of any holder thereof, forthwith cease to exist and be converted into
the right to receive four (4) post-split MVP Shares. In other words, for each
one (1) share of Online Games common stock, MVP shall issue four (4) post-split
MVP Shares for an exchange ratio of 1-to-4 (the “Exchange Ratio”).
(b) Except
as
otherwise provided herein, commencing immediately after the Effective Date,
each
certificate which, immediately prior to the Effective Date, represented issued
and outstanding Online Games Shares shall evidence the right to receive MVP
Shares on the basis set forth in paragraph (a) above. Upon the surrender by
the
holders of Online Games Shares to the transfer agent and registrar of MVP of
the
stock certificate or certificates of Online Games
endorsed
in blank or accompanied by stock powers executed in blank, and with all
necessary transfer taxes and other revenue stamps affixed and
acquired,
together with the investment representation letter and all other documents
and
materials reasonably required by such transfer agent to be delivered in
connection therewith, the holders of the Online Games Shares shall be entitled
to receive a certificate or certificates representing the number of whole MVP
Shares to which they are entitled.
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1.04 Articles
of Incorporation; Bylaws; Directors and Officers of the Surviving
Corporation.
Unless
otherwise agreed by MVP and Online Games prior to the Closing, at the Effective
Date:
(a) The
Articles of Incorporation of Online Games (the “Articles of Incorporation”)
Certificate
of Incorporation!
as in
effect immediately prior to the Effective Date shall be at and after the
Effective Date (until amended as provided by law and by such Articles of
Incorporation) the articles of incorporation of the Surviving
Corporation.
(b) The
Bylaws of Online Games as in effect immediately prior to the Effective Date
shall be at and after the Effective Date (until amended as provided by law,
its
Articles of Incorporation and its Bylaws, as applicable) the Bylaws of the
Surviving Corporation;
(c) The
officers of Online Games immediately prior to the Effective Date shall continue
to serve in their respective offices of the Surviving Corporation from and
after
the Effective Date, until their successors are elected or appointed and
qualified or until their resignation or removal; and
(d) The
directors of Online Games immediately prior to the Effective Date shall be
the
directors of the Surviving Corporation from and after the Effective Date, until
their successors are elected or appointed and qualified or until their
resignation or removal.
1.05 Subsequent
Actions.
If, at
any time after the Effective Date, the Surviving CorporationSurviving
Corporation
shall
consider or be advised that any deeds, bills of sale, assignments, assurances
or
any other actions or things are necessary or desirable to continue in, vest,
perfect or confirm of record or otherwise the Surviving Corporation’s right,
title or interest in, to or under any of the rights, properties, privileges,
franchises or assets of either of its constituent corporations acquired or
to be
acquired by the Surviving Corporation as a result of, or in connection with,
the
Merger, or otherwise to carry out the intent of this Agreement, the officers
and
directors of the Surviving Corporation shall be authorized to execute and
deliver, in the name and on behalf of either of the constituent corporations
of
the Merger, all such deeds, bills of sale, assignments and assurances and to
take and do, in the name and on behalf of each of such corporations or
otherwise, all such other actions and things as may be necessary or desirable
to
vest, perfect or confirm any and all right, title and interest in, to and under
such rights, properties, privileges, franchises or assets in the Surviving
Corporation or otherwise to carry out the intent of this Agreement.
1.06 Closing
and Parties.
The
Closing contemplated hereby shall be held at a mutually agreed upon time and
place on February 28, 2006, or
as
soon thereafter as reasonably practicable, or on such other date as may be
mutually agreed to in writing by the parties (the “Closing Date”). The Agreement
may be closed at any time following approval by a majority of the shareholders
of MVP Common Stock as set forth in Section 4.02 hereof and the Online Games
Shareholders as set forth in Section 5.01 hereof, and the successful
registration of MVP Shares to be issued to the Online Games Shareholders in
the
Merger. The Closing may be accomplished by wire, express mail, overnight
courier, conference telephone call or as otherwise agreed to by the respective
parties or their duly authorized representatives.
1.07 Closing
Events.
(a) MVP
Deliveries.
Subject
to fulfillment or waiver of the conditions set forth in Article IV, MVP shall
deliver to Online Games at Closing all the following:
(i) A
certificate of good standing from the secretary of State of Nevada, issued
as of
a date within thirty days prior to the Closing Date, certifying that MVP is
in
good standing as a corporation in the State of Nevada;
(ii) Incumbency
and specimen signature certificates dated as of the Closing Date with respect
to
the officers of MVP executing this Agreement and any other document delivered
pursuant hereto on behalf of MVP;
(iii) Copies
of
the resolutions of MVP’s board of directors and shareholder minutes or consents
authorizing the execution and performance of this Agreement and the contemplated
transactions, certified by the secretary or an assistant secretary of MVP as
of
the Closing Date;
(iv) The
certificates contemplated by Section 4.04, duly executed by the chief executive
officer or president of MVP;
(v) The
certificates contemplated by Section 4.05, dated the Closing Date, signed by
the
chief executive officer or president of MVP; and
(vi) Stock
certificates representing three hundred eighty million five hundred seventy
four
thousand five hundred forty four (380,574,544) post-split MVP Shares (less
any
MVP Shares not issued to Dissenting Shareholders) in the names of the persons
holding shares of Online Games common stock (the “Online Games Shareholders”) at
the Effective Date of the Merger (as defined in Section 1.08).
In
addition to the above deliveries, MVP shall take all steps and actions as Online
Games and the Online Games Shareholders may reasonably request or as may
otherwise be reasonably necessary to consummate the transactions contemplated
hereby.
(b) Online
Games Deliveries.
Subject
to fulfillment or waiver of the conditions set forth in Article V, Online Games
shall deliver to MVP at Closing all the following:
(i) A
certificate of good standing from the secretary of State of Nevada, issued
as of
a date within thirty days prior to the Closing Date certifying that Online
Games
is in good standing as a corporation in the State of Nevada;
(ii) Incumbency
and specimen signature certificates dated the Closing Date with respect to
the
officers of Online Games executing this Agreement and any other document
delivered pursuant hereto on behalf of Online Games;
(iii) Copies
of
the resolutions of Online Games’ board of directors and shareholder minutes or
consents authorizing the execution and performance of this Agreement and the
contemplated transactions, certified by the secretary or an assistant secretary
of Online Games as of the Closing Date;
(iv) The
certificates contemplated by Section 5.02, executed by the chief executive
officer or president of Online Games; and
(v) The
certificates contemplated by Section 5.03, dated the Closing Date, signed by
the
chief executive officer or president of Online Games.
In
addition to the above deliveries, Online Games shall take all steps and actions
as MVP may reasonably request or as may otherwise be reasonably necessary to
consummate the transactions contemplated hereby.
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1.08 Effective
Date.
As soon
as practicable following consummation of the transactions contemplated hereby
on
the Closing Date, Articles of Merger setting forth such matters as required
by
the provisions of the corporate statutes of the State of Nevada to complete
the
merger of Online Games and Merger Co. shall be filed with the Secretary of
State
of Nevada. The “Effective Date” of the Merger shall be the date the filing of
such Articles of Merger shall become effective.
1.09 Effect
of Merger.
On the
Effective Date of the Merger, Online Games and Merger Co. shall cease to exist
separately, and Merger Co. shall be merged with and into Online Games, the
Surviving Corporation, in accordance with the provisions of this Agreement
and
the Articles of Merger, and in accordance with the provisions of and with the
effect provided in the corporation laws of the State of Nevada. Online Games,
as
the Surviving Corporation, shall possess all the rights, privileges, franchises,
and trust and fiduciary duties, powers, and obligations, of a private as well
as
of a public nature, and be subject to all the restrictions, obligations, and
duties of each of Online Games and Merger Co.; all property, real, personal,
and
mixed, and all debts due to either Online Games or Merger Co. on whatever
account, and all other things belonging to each of Online Games and Merger
Co.
shall be vested in Online Games, all property, rights, privileges, powers,
and
franchises, and all and every other interest shall be thereafter the property
of
Online Games as they were of Online Games and Merger Co.; the title to any
real
estate, whether vested by deed or otherwise, in either Online Games or Merger
Co. shall not revert or be in any way impaired by reason of the Merger;
provided, however, that all rights of creditors and all liens on any property
of
either Online Games or Merger Co. shall be preserved unimpaired, and all debts,
liabilities, and duties of Online Games and Merger Co. shall thenceforth attach
to Online Games and may be enforced against it to the same extent as if such
debts, liabilities, and duties had been incurred or contracted by Online
Games.
1.10 Termination
(a) This
Agreement may be terminated by the board of directors of either MVP or Online
Games at any time prior to the Closing Date if:
(i) There
shall be any actual or threatened action or proceeding before any court or
any
governmental body which shall seek to restrain, prohibit, or invalidate the
transactions contemplated by this Agreement and which, in the reasonable
judgment of such board of directors, made in good faith and based upon the
advice of its legal counsel, makes it inadvisable to proceed with the
transactions 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 or in the reasonable
judgment of such board of directors, made in good faith and based on the advice
of counsel, there is substantial likelihood that any such approval will not
be
obtained or will be obtained only on a condition or conditions which would
be
unduly burdensome, making it inadvisable to proceed with the
exchange;
or
(iii) Online
Games Shareholders who collectively hold more than three percent (3.0%) of
all
issued and outstanding shares of Online Games common stock perfect their
dissenter rights under the Nevada Statutes and demand to be paid for their
Dissenting Shares.
In
the
event of termination pursuant to this paragraph (a) of Section 1.10, and except
as provided for in Section 1.10(a)(iii), 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, preparation, and execution of this
Agreement and the transactions contemplated hereby.
(b) This
Agreement may be terminated at any time prior to the Closing Date by action
of
the board of directors of MVP if (i) less than 50% of the shareholders of Online
Games vote in favor of this Agreement and the transactions contemplated
hereby,
(ii)
Online Games 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 Online Games contained herein shall be
inaccurate in any material respect, (iii) there has been any material adverse
change in the business or financial condition of Online Games, or (iv)
shareholders of Online Games owning more than five percent (5.0%). of the issued
and outstanding shares of Online Games capital stock perfect their dissenter’s
rights with respect to the approval of this Agreement and the transactions
contemplated hereby. In the event of termination pursuant to this paragraph
(b)
of this Section
1.10, no obligation, right, remedy, or liability shall arise hereunder. All
parties shall bear their own costs incurred in connection with the negotiation,
preparation, and execution of this Agreement and the transactions contemplated
hereby.
(c) This
Agreement may be terminated at any time prior to the Closing Date by action
of
the board of directors of Online Games if (i) less than 50% of the Shareholders
of MVP vote in favor of this Agreement and the transactions contemplated
hereby,
(ii) MVP
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 MVP contained herein shall be inaccurate in any material respect,
or (iii) there has been any adverse change in the business or financial
condition of MVP. In the event of termination pursuant to this paragraph (c)
of
this Section
1.10, no obligation, right, remedy, or liability shall arise hereunder. All
parties shall each bear their own costs incurred in connection with the
negotiation, preparation, and execution of this Agreement and the transactions
contemplated hereby.
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ARTICLE
II
REPRESENTATIONS,
COVENANTS, AND WARRANTIES OF MVP
As
an
inducement to, and to obtain the reliance of Online Games, MVP and Merger Co.
represent and warrant as follows:
| 2.01 |
Organization.
|
(a) MVP
is,
and will be on the Closing Date, a corporation duly organized, validly existing,
and in good standing under the laws of the State of Nevada and has the corporate
power and is and will be 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, and there are no other
jurisdictions in which it is not so qualified in which the character and
location of the assets owned by it or the nature of the material business
transacted by it requires qualification, except where failure to do so would
not
have a material adverse effect on its business, operations, properties, assets
or condition. 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 MVP’s articles of
incorporation or bylaws, or other agreement to which it is a party or by which
it is bound.
(b) Merger
Co. is, and will be on the Closing Date, a corporation duly organized, validly
existing, and in good standing under the laws of the State of Nevada and has
the
corporate power and is and will be 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, and there are
no
other jurisdictions in which it is not so qualified in which the character
and
location of the assets owned by it or the nature of the material business
transacted by it requires qualification, except where failure to do so would
not
have a material adverse effect on its business, operations, properties, assets
or condition. 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 Merger Co.’s articles
of incorporation or bylaws, or other agreement to which it is a party or by
which it is bound.
2.02 Approval
of Agreement.
MVP
and Merger Co. have full power, authority, and legal right and have taken,
or
will take, all action required by law, their articles of incorporation, bylaws,
and otherwise to execute and deliver this Agreement and to consummate the
transactions herein contemplated. The board of directors of MVP and Merger
Co.
have authorized and approved the execution, delivery, and performance of this
Agreement and the transactions contemplated hereby; subject to the approval
of
the MVP shareholders and compliance with state and federal corporate and
securities laws.
2.03 Capitalization. The
authorized capitalization of MVP consists of 50,000,000 shares of common stock,
$0.05 par value, of which approximately 25,539,267 shares are issued and
outstanding as of November 22, 2006, and 150,000 shares of preferred stock,
$1.00 par value, of which 0 shares are issued and outstanding as of November
22,
2006. The authorized capitalization of Merger Co. consists of 50,000 shares,
$0.001 par value, of which 100 shares are issued and outstanding as of November
22, 2006. All issued and outstanding shares of MVP and Merger Co. are legally
issued, fully paid, and nonassessable and not issued in violation of the
preemptive or other right of any person and have been issued in compliance
with
all applicable federal and state securities laws. There are no dividends or
other amounts due or payable with respect to any of the shares of capital stock
of MVP or Merger Co.
2.04. SEC
Reports; Financial Statements.
(a) MVP
has
filed all forms, reports and documents (including all Exhibits, Schedules and
Annexes thereto) required to be filed by it with the SEC during the past three
(3) years, including any amendments or supplements thereto (collectively,
including any such forms, reports and documents filed after the date hereof,
the
“MVP SEC ReportsAbacus
SEC Reports”),
and,
with respect to the MVP SEC Reports filed by MVP after the date hereof and
prior
to the Closing Date, will deliver or make available, to Online Games all of
its
MVP SEC Reports in the form filed with the SEC. The MVP SEC Reports
(i) were (and any MVP SEC Reports filed after the date hereof will be) in
all material respects in accordance with the requirements of the Securities
Act
or the Exchange Act, as the case may be, and the rules and regulations
promulgated thereunder, and (ii) as of their respective filing dates, did
not (and any MVP SEC Reports filed after the date hereof will not) contain
any
untrue statement of a material fact or omit to state a material fact required
to
be stated therein or necessary in order to make the statements therein, in
the
light of the circumstances under which they were made, not misleading. On the
Closing Date, MVP shall be current in the filing of the MVP SEC
Reports.
(b) Included
in Schedule 2.04 are (i) the audited balance sheets of MVP as of December 31,
2005, 2004 and 2003 and the related statements of operations, stockholders’
equity (deficit), and cash flows for the fiscal years ended December 31, 2005,
2004 and 2003 including the notes thereto, and the accompanying report of Xxxxxx
& Associates, CPA’s, Inc., independent certified public accountants; and
(ii) the unaudited balance sheet of MVP as of September 30, 2006, and the
related statements of operations, stockholders’ equity (deficit), and cash flows
for the nine months ended September 30, 2006, together with the notes thereto
and representations by the principal accounting and financial officer of MVP
to
the effect that such financial statements contain all adjustments (all of which
are normal recurring adjustments) necessary to present fairly the results of
operations and financial position for the periods and as of the dates indicated
and such financial statements shall not reflect any material changes since
December 31, 2005.
(c) The
financial statements of MVP delivered pursuant to Section 2.04(b) have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved. The MVP financial
statements present fairly, in all material respects, as of their respective
dates, the financial position of MVP. MVP did not have, as of the date of any
such financial statements, except as and to the extent reflected or reserved
against therein, any liabilities or obligations (absolute or contingent) which
should be reflected in any financial statements or the notes thereto prepared
in
accordance with generally accepted accounting principles, and all assets
reflected therein presently fairly the assets of MVP, in accordance with
generally accepted accounting principles. The statements of revenues and
expenses and cash flows present fairly the financial position and result of
operations of MVP as of their respective dates and for the respective periods
covered thereby.
(d) MVP
has
filed or will file as the Closing Date all tax returns required to be filed
by
it from inception to the Closing Date. All such returns and reports are accurate
and correct in all material respects. MVP has no material liabilities with
respect to the payment of any federal, state, county, local, or other taxes
(including any deficiencies, interest, or penalties) accrued for or applicable
to the period ended on the date of the most recent balance sheet of MVP, except
to the extent reflected on such balance sheet and adequately provided for which
are not yet due and payable, and all such dates and years and periods prior
thereto and for which MVP may at said date have been liable in its own right
or
as transferee of the assets of, or as successor to, any other corporation or
entity, except for taxes accrued but not yet due and payable, and no deficiency
assessment or proposed adjustment of any such tax return is pending, proposed
or
contemplated. None of such income tax returns has been examined or is currently
being examined by the Internal Revenue Service and no deficiency assessment
or
proposed adjustment of any such return is pending, proposed or contemplated.
MVP
has not made any election pursuant to the provisions of any applicable tax
laws
(other than elections that relate solely to methods of accounting, depreciation,
or amortization) that would have an adverse affect on MVP, its financial
condition, its business as presently conducted or proposed to be conducted,
or
any of its respective properties or assets. There are no outstanding agreements
or waivers extending the statutory period of limitation applicable to any tax
return of MVP.
(e) The
books
and records, financial and otherwise, of MVP and Merger Co. are in all material
respects complete and correct and have been maintained in accordance with sound
business and bookkeeping practices so as to accurately and fairly reflect,
in
reasonable detail, the transactions and dispositions of the assets of MVP and
Merger Co., and MVP and Merger Co. have maintained a system of internal
accounting controls sufficient to provide reasonable assurances that (i)
transactions have been and are executed in accordance with management’s general
or specific authorization; (ii) transactions are recorded as necessary to permit
the preparation of financial statements in conformity with generally accepted
accounting principles or any other criteria applicable to such statements and
to
maintain accountability for assets; (iii) access to assets is permitted only
in
accordance with management’s general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals, and appropriate action is taken with respect to any
differences.
-4-
2.05 Outstanding
Warrants and Options.
Except
as set forth in schedule 2.05, MVP and Merger Co. have no existing warrants,
options, calls, or commitments of any nature relating to the authorized and
unissued shares of MVP or Merger Co. capital stock.
2.06 Information.
The
information concerning MVP and Merger Co. set forth in this Agreement and the
schedules delivered by MVP pursuant hereto 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. MVP and Merger Co.
shall cause the schedules delivered by them pursuant hereto and the instruments
delivered to Online Games hereunder to be updated after the date hereof up
to
and including the Closing Date.
2.07 Absence
of Certain Changes or Events.
Except
as set forth in this Agreement or the schedules hereto, since the date of the
most recent MVP balance sheet described in Section 2.04 and included in the
information referred to in Section 2.06:
(a) There
has
not been (i) any material adverse change in the business, operations,
properties, level of inventory, assets, or condition of MVP or (ii) any damage,
destruction, or loss to MVP (whether or not covered by insurance) materially
and
adversely affecting the business, operations, properties, assets, or condition
of MVP;
(b) MVP
has
not (i) amended its articles of incorporation or bylaws; (ii) declared or made,
or agreed to declare or make, any payment of dividends or distributions of
any
assets of any kind whatsoever to stockholders or purchased or redeemed, or
agreed to purchase or redeem, any of its capital stock; (iii) waived any rights
of value which in the aggregate are extraordinary or material considering the
business of MVP; (iv) made any material change in its method of management,
operation, or accounting; (v) entered into any other material transactions
other
than those contemplated by this Agreement; (vi) made any accrual or arrangement
for or payment of bonuses or special compensation of any kind or any severance
or termination pay to any present or former officer or employee; (vii) increased
the rate of compensation payable or to become payable by it to any of its
officers or directors or any of its employees whose monthly compensation exceeds
$1,000; or (viii) made any increase in any profit-sharing, bonus, deferred
compensation, insurance, pension, retirement, or other employee benefit plan,
payment, or arrangement made to, for, or with its officers, directors, or
employees;
(c) MVP
has
not (i) granted or agreed to grant any options, warrants, or other rights for
its stocks, bonds, or other corporate securities calling for the issuance
thereof except as set forth in Schedule 2.05; (ii) borrowed or agreed to borrow
any funds or incurred, or become subject to, any material obligation or
liability (absolute or contingent) except liabilities incurred in the ordinary
course of business; (iii) paid any material obligation or liability (absolute
or
contingent) other than current liabilities reflected in or shown on the most
recent MVP balance sheet and current liabilities incurred since that date in
the
ordinary course of business; (iv) sold or transferred, or agreed to sell or
transfer, any of its material assets, properties, or rights, canceled, or agreed
to cancel, any material debts or claims; (v) made or permitted any amendment
or
termination of any contract, agreement, or license to which it is a party if
such amendment or termination is material, considering the business of MVP;
or
(vi) issued, delivered, or agreed to issue or deliver any stock, bonds, or
other
corporate securities including debentures (whether authorized and unissued
or
held as treasury stock); and
(d) MVP
has
not become subject to any law or regulation which materially and adversely
affects, or in the future would be reasonably expected to adversely affect,
the
business, operations, properties, assets, or condition of MVP.
2.08 Title
and Related Matters.
Except
as provided herein or disclosed in the MVP balance sheet and the notes thereto,
MVP has good and marketable title to all of its properties, inventory, interests
in properties, technology, whether patented or un-patented, and assets, which
are reflected in the most recent MVP balance sheet or acquired after that date
(except properties, interests in properties, and assets sold or otherwise
disposed of since such date in the ordinary course of business), free and clear
of all mortgages, liens, pledges, charges, or encumbrances, except (i) statutory
liens or claims not yet delinquent; and (ii) such imperfections of title and
easements as do not, and will not, materially detract from, or interfere with,
the present or proposed use of the properties subject thereto or affected
thereby or otherwise materially impair present business operations on such
properties. To the best knowledge of MVP, its technology does not infringe
on
the copyright, patent, trade secret, know-how, or other proprietary right of
any
other person or entity and comprises all such rights necessary to permit the
operation of the business of MVP as now being conducted or as contemplated.
Schedule 2.08 contains a description of all intellectual property owned or
licensed by MVP.
2.09 Litigation
and Proceedings.
Except
as set forth in Schedule 2.09, there are no actions, suits, or administrative
or
other proceedings pending or, threatened by or against MVP or adversely
affecting MVP 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. There is no 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.
-5-
2.10 Compliance
With Laws and Regulations.
MVP 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 (i) could not adversely affect the business, operations,
properties, assets, or condition of MVP or (ii) could not result in the
occurrence of any liability for MVP. The consummation of this transaction will
comply, in all material respects, with all applicable statutes and regulations,
subject to the preparation and filing of any forms required by state and federal
securities laws.
2.11 Contracts.
Except
as included or described in Schedule 2.11:
(a) There
are
no material contracts, agreements, franchises, license agreements, or other
commitments to which MVP is a party by which it or any of the properties of
MVP
are bound;
(b) All
contracts, agreements, franchises, license agreements, and other commitments
to
which MVP is a party or by which its properties are bound and which are material
to the operations or financial condition of MVP are valid and enforceable by
MVP
in all material respects;
(c) MVP
is
not a party to or bound by, and its properties are not subject to, any material
contract, agreement, other commitment or instrument; any charter or other
corporate restriction; or any judgment, order, writ, injunction, decree, or
award which materially and adversely affects, or in the future may (as far
as
MVP can now foresee) materially and adversely affect, the business, operations,
properties, assets, or condition of MVP; and
(d) MVP
is
not a party to any oral or written (i) contract for the employment of any
officer, director, or employee which is not terminable on 30 days (or less)
notice; (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)
guarantee of any obligation, other than one on which MVP is a primary obligor,
for the borrowing of money or otherwise, excluding endorsements made for
collection and other guarantees of obligations, which, in the aggregate do
not
exceed $1,000; (v) consulting or other similar contract with an unexpired term
of more than one year or providing for payments in excess of $1,000 in the
aggregate; (vi) collective bargaining agreement; (vii) agreement with any
present or former officer or director of MVP or any subsidiary; or (viii)
contract, agreement, or other commitment involving payments by it of more than
$1,000 in the aggregate.
2.12 Material
Contract Defaults.
MVP 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 MVP, and there is
no
event of default or other event which, with notice or lapse of time or both,
would constitute a default in any material respect under any such contract,
agreement, lease, or other commitment in respect of which MVP has not taken
adequate steps to prevent such a default from occurring.
2.13 No
Conflict With Other Instruments.
The
execution of this Agreement and the consummation of the transactions
contemplated by this Agreement will not result in the breach of any term or
provision of, or constitute an event of default under, any indenture, mortgage,
deed of trust, or other contract, agreement, or instrument to which MVP is
a
party or to which any of its properties or operations are subject.
2.14 Subsidiaries.
MVP
does not own, beneficially or of record, any equity securities in any other
entity except for Merger Co., which is a wholly owned subsidiary formed for
the
sole purpose of completing the transactions set forth herein.
2.15 Employee
Relations.
MVP has
complied in respect of its business in all material respects with all applicable
laws, rules, and regulations, specifically title VII of the Civil Rights Act
of
1963 and the Fair Labor Standard Act of 1938, that relate to prices, wages,
hours, harassment, disabled access, and discrimination in employment and
collective bargaining and to the operation of its business and is not liable
for
any arrears of wages or any taxes or penalties for failure to comply with any
of
the foregoing. MVP believes that its relationship with its employees is
satisfactory. Schedule 2.15 includes the names and positions of all MVP
employees and their salaries as well as whether they have employment
contracts.
2.16 Environmental,
Health and Safety Matters.
MVP has
not received any written notice, report or other information regarding any
actual or alleged violation of environmental, health, and/or safety laws, rules
or regulations, or any liabilities or potential material liabilities (whether
accrued, absolute, contingent, unliquidated or otherwise), including any
investigatory, remedial or corrective obligations, relating to MVP or its past
or present operations. To the best of MVP’s knowledge, MVP has no such
liabilities.
2.17 MVP
Debts.
The
unaudited balance sheet of MVP prepared as of September 30, 2006, and delivered
to Online Games as part of Schedule 2.04 correctly states the total amount
of
liabilities of MVP as of that date. It is anticipated that MVP will incur
additional liabilities after September 30, 2006 in the ordinary course of
business and in connection with the Merger. It is anticipated that at the
Effective Date of the Merger, the total amount of all MVP liabilities shall
not
exceed $20,000.
2.18 MVP
Schedules.
MVP has
delivered to Online Games the following schedules, which are collectively
referred to as the “MVP Schedules” and which consist of the following separate
schedules dated as of the date of execution of this Agreement, all certified
by
a duly authorized officer of MVP as complete, true, and accurate:
(a) A
schedule including copies of the articles of incorporation and bylaws of MVP
in
effect as of the date of this Agreement;
(b) A
schedule containing copies of resolutions adopted by the board of directors
of
MVP approving this Agreement and the transactions herein
contemplated;
(c) A
schedule setting forth a description of any material adverse change in the
business, operations, property, inventory, assets, or condition of MVP since
the
most recent MVP balance sheet, required to be provided pursuant to Section
2.04
hereof;
(d) A
schedule setting forth the financial statements required pursuant to Section
2.04(a) hereof; and
(e) A
schedule setting forth any other information, together with any required copies
of documents, required to be disclosed in the MVP Schedules by Sections 2.01
through 2.18.
MVP
shall
cause the MVP Schedules and the instruments delivered to Online Games hereunder
to be updated after the date hereof up to and including a specified date not
more than three business days prior to the Closing Date. Such updated MVP
Schedules, certified in the same manner as the original MVP Schedules, shall
be
delivered prior to and as a condition precedent to the obligation of Online
Games to close.
-6-
ARTICLE
III
REPRESENTATIONS,
COVENANTS, AND WARRANTIES OF ONLINE GAMES
As
an
inducement to, and to obtain the reliance of, MVP and Merger Co., Online Games
represents and warrants as follows:
3.01 Organization.
Online
Games is, and will be on the Closing Date, a corporation duly organized, validly
existing, and in good standing under the laws of the State of Nevada and has
the
corporate power and is and will be 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, and there are
no
other jurisdictions in which it is not so qualified in which the character
and
location of the assets owned by it or the nature of the material business
transacted by it requires qualification, except where failure to do so would
not
have a material adverse effect on its business, operations, properties, assets
or condition. 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 Online Games’ articles
of organization or operating agreement, or other material agreement to which
it
is a party or by which it is bound.
3.02 Approval
of Agreement.
Online
Games has full power, authority, and legal right and has taken, or will take,
all action required by law and its articles of organization, by-laws, or
otherwise to execute and deliver this Agreement and to consummate the
transactions herein contemplated. The board of directors of Online Games have
authorized and approved the execution, delivery, and performance of this
Agreement and the transactions contemplated hereby; subject to the approval
of
the Online Games Shareholders and compliance with state and federal corporate
and securities laws.
3.03 Capitalization.
The
authorized capitalization of Online Games consists of 100,000,000 shares of
common stock, $0.001 par value, of which 95,143,636 shares are issued and
outstanding as of the date hereof. All issued and outstanding shares of Online
Games are legally issued, fully paid, and nonassessable and not issued in
violation of the preemptive or other right of any person and have been issued
in
compliance with all applicable federal and state securities laws. There are
no
dividends or other amounts due or payable with respect to any of the shares
of
Online Games.
3.04 Financial
Statements.
(a) Included
in Schedule 3.04 are (i) the audited balance sheets of Online Games as of
December 31, 2005, 2004, and 2003 and the related statements of operations,
stockholders’ equity (deficit), and cash flows for the fiscal years ended
December 31, 2005, 2004 and 2003, including the notes thereto, and the
accompanying report of Xxxxxx & Associates, CPA’s, Inc., independent
certified public accountants, and (ii) the unaudited balance sheet of Online
Games as of September 30, 2006, and the related statements of operations,
stockholders’ equity (deficit), and cash flows for the nine months ended
September 30, 2006, together with the notes thereto and representations by
the
principal accounting and financial officer of Online Games to the effect that
such financial statements contain all adjustments (all of which are normal
recurring adjustments) necessary to present fairly the results of operations
and
financial position for the periods and as of the dates indicated and such
financial statements shall not reflect any material changes since December
31,
2005.
(b) The
financial statements of Online Games delivered pursuant to Section 3.04(a)
have
been prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved. The Online Games financial
statements present fairly in all material aspects, as of their respective dates,
the financial position of Online Games. Online Games did not have, as of the
date of any such financial statements, except as and to the extent reflected
or
reserved against therein, any liabilities or obligations (absolute or
contingent) which should be reflected in any financial statements or the notes
thereto prepared in accordance with generally accepted accounting principles,
and all assets reflected therein present fairly the assets of Online Games,
in
accordance with generally accepted accounting principles. The statements of
revenue and expenses and cash flows present fairly the financial position and
result of operations of Online Games as of their respective dates and for the
respective periods covered thereby.
(c) Online
Games has filed or will have filed as of the Closing Date all tax returns
required to be filed by it from inception to the Closing Date. All such returns
and reports are accurate and correct in all material respects. Online Games
has
no material liabilities with respect to the payment of any federal, state,
county, local, or other taxes (including any deficiencies, interest, or
penalties) accrued for or applicable to the period ended on the date of the
most
recent balance sheet of Online Games, except to the extent reflected on such
balance sheet and adequately provided for which are not yet due and payable,
and
all such dates and years and periods prior thereto and for which Online Games
may at said date have been liable in its own right or as transferee of the
assets of, or as successor to, any other corporation or entity, except for
taxes
accrued but not yet due and payable, and no deficiency assessment or proposed
adjustment of any such tax return is pending, proposed or contemplated. Proper
and accurate amounts of taxes have been withheld by or on behalf of Online
Games
with respect to all material compensation paid to employees of Online Games
for
all periods ending on or before the date hereof, and all deposits required
with
respect to compensation paid to such employees have been made, in complete
compliance with the provisions of all applicable federal, state, and local
tax
and other laws. To Online Games’ best knowledge, none of such income tax returns
has been examined or is currently being examined by the Internal Revenue
Service, and no deficiency assessment or proposed adjustment of any such return
is pending, proposed, or contemplated. Online Games has not made any election
pursuant to the provisions of any applicable tax laws (other than elections
that
relate solely to methods of accounting, depreciation, or amortization) that
would have a material adverse affect on Online Games, its financial condition,
its business as presently conducted or proposed to be conducted, or any of
its
properties or material assets. There are no tax liens upon any of the assets
of
Online Games. There are no outstanding agreements or waivers extending the
statutory period of limitation applicable to any tax return of Online
Games.
(d) The
books
and records, financial and otherwise, of Online Games are in all material
respects complete and correct and have been maintained in accordance with sound
business and bookkeeping practices so as to accurately and fairly reflect,
in
reasonable detail, the transactions and dispositions of the assets of Online
Games. Online Games has maintained a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions have been
and
are executed in accordance with management’s general or specific authorization;
(ii) transactions are recorded as necessary to permit the preparation of
financial statements in conformity with generally accepted accounting principles
or any other criteria applicable to such statements and to maintain
accountability for assets; (iii) access to assets is permitted only in
accordance with management’s general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals, and appropriate action is taken with respect to any
differences.
3.05 Outstanding
Warrants and Options.
Except
as set forth on schedule 3.05, Online Games has no outstanding options, warrants
or calls of any nature relating to the authorized and unissued shares of Online
Games capital stock.
3.06 Information.
The
information concerning Online Games set forth in this Agreement and in the
schedules delivered by Online Games pursuant hereto 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. Online
Games shall cause the schedules delivered by Online Games pursuant hereto to
MVP
hereunder to be updated after the date hereof up to and including the Closing
Date.
-7-
3.07 Absence
of Certain Changes or Events.
Except
as set forth in schedule 3.07 hereto, since the date of the most recent Online
Games balance sheet described in Section 3.04 and included in the information
referred to in Section 3.06:
(a) There
has
not been (i) any material adverse change in the business, operations,
properties, level of inventory, assets, or condition of Online Games or (ii)
any
damage, destruction, or loss to Online Games (whether or not covered by
insurance) materially and adversely affecting the business, operations,
properties, assets, or condition of Online Games.
(b) Online
Games has not (i) amended its articles of incorporation or bylaws; (ii) declared
or made, or agreed to declare or make, any payment of dividends or distributions
of any assets of any kind whatsoever to shareholders or purchased or redeemed,
or agreed to purchase or redeem, any of its capital stock; (iii) waived any
rights of value which in the aggregate are extraordinary and material
considering the business of Online Games; (iv) made any material change in
its
method of management, operation or accounting; (v) entered into any other
material transactions other than those contemplated by this Agreement; (vi)
made
any accrual or material arrangement for or payment of bonuses or special
compensation of any kind or any severance or termination pay to any present
or
former officer or employee; (vii) increased the rate of compensation payable
or
to become payable by it to any of its officers or directors or any of its
employees whose monthly compensation exceeds $1,000; or (viii) made any increase
in any profit-sharing, bonus, deferred compensation, insurance, pension,
retirement, or other employee benefit plan, payment, or arrangement made to,
for, or with their officers, directors, or employees;
(c) Online
Games has not (i) granted or agreed to grant any options, warrants, or other
rights for its Shares, bonds, or other securities calling for the issuance
thereof, except as set forth in Schedule 3.05; (ii) borrowed or agreed to borrow
any funds or incurred, or become subject to, any material obligation or
liability (absolute or contingent) except liabilities incurred in the ordinary
course of business; (iii) paid any material obligation or liability (absolute
or
contingent) other than current liabilities reflected in or shown on the most
recent Online Games balance sheet and current liabilities incurred since that
date in the ordinary course of business; (iv) sold or transferred, or agreed
to
sell or transfer, any of its material assets, properties, or rights, or
cancelled or agreed to cancel, any material debts or claims; (v) made or
permitted any amendment or termination of any contract, agreement, or license
to
which it is a party if such amendment or termination is material, considering
the business of Online Games; or (vi) issued, delivered, or agreed to issue
or
deliver any Shares, bonds, or other company securities including debentures
(whether authorized and unissued or held as treasury shares); and
(d) Online
Games has not become subject to any law or regulation which materially and
adversely affects, or in the future would be reasonably expected to adversely
affect, the business, operations, properties, assets, or condition of Online
Games.
3.08 Title
and Related Matters.
Except
as provided herein or disclosed in the Online Games balance sheet and the notes
thereto, Online Games has good and marketable title to all of its properties,
inventory, interests in properties, technology, whether patented or un-patented,
and assets, which are reflected in the most recent Online Games balance sheet
or
acquired after that date (except properties, interests in properties, and assets
sold or otherwise disposed of since such date in the ordinary course of
business), free and clear of all mortgages, liens, pledges, charges, or
encumbrances, except (i) statutory liens or claims not yet delinquent; and
(ii)
such imperfections of title and easements as do not, and will not, materially
detract from, or interfere with, the present or proposed use of the properties
subject thereto or affected thereby or otherwise materially impair present
business operations on such properties. To the best knowledge of Online Games,
its technology does not infringe on the copyright, patent, trade secret,
know-how, or other proprietary right of any other person or entity and comprises
all such rights necessary to permit the operation of the business of Online
Games as now being conducted or as contemplated. Schedule 3.08 contains a
description of all intellectual property owned or licensed by Online
Games.
3.09 Litigation
and Proceedings.
Except
as set forth in Schedule 3.09, there are no actions, suits, or administrative
or
other proceedings pending or, threatened by or against Online Games or adversely
affecting Online Games 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. There is no 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.
3.10 Compliance
With Laws and Regulations.
Online
Games 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 (i) could not adversely affect the business, operations,
properties, assets, or condition of Online Games or (ii) could not result in
the
occurrence of any liability for Online Games. The consummation of this
transaction will comply, in all material respects, with all applicable statutes
and regulations, subject to the preparation and filing of any forms required
by
state and federal securities laws.
3.11 Contracts.
Except
as set forth in Schedule 3.11:
(a) All
contracts, agreements, franchises, license agreements, and other commitments
to
which Online Games is a party or by which its properties are bound and which
are
material to the operations or financial condition of Online Games are valid
and
enforceable by Online Games in all material respects;
(b) Online
Games is not a party to or bound by, and its properties are not subject to,
any
material contract, agreement, other commitment or instrument; any charter or
other corporate restriction; or any judgment, order, writ, injunction, decree,
or award which materially and adversely affects, or in the future may (as far
as
Online Games can now foresee) materially and adversely affect, the business,
operations, properties, assets, or condition of Online Games; and
(c) Except
as
reflected in the most recent balance sheets included in Schedule 3.04, Online
Games is not a party to any oral or written (i) contract for the employment
of
any officer, director, or employee which is not terminable on 30 days (or less)
notice; (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)
guarantee of any obligation, other than one on which Online Games is a primary
obligor, for the borrowing of money or otherwise, excluding endorsements made
for collection and other guarantees of obligations, which, in the aggregate
do
not exceed $1,000; (v) consulting or other similar contract with an unexpired
term of more than one year or providing for payment sin excess of $1,000 in
the
aggregate; (vi) collective bargaining agreement; (vii) agreement with any
present or former officer or director of Online Games or any subsidiary; or
(viii) contract, agreement, or other commitment involving payments by it of
more
than $1,000 in the aggregate.
-8-
3.12 Material
Contract Defaults.
Online
Games 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 Online Games,
and
there is no event of default or other event which, with notice or lapse of
time
or both, would constitute a default in any material respect under any such
contract, agreement, lease, or other commitment in respect of which Online
Games
has not taken adequate steps to prevent such a default from
occurring.
3.13 No
Conflict With Other Instruments.
The
execution of this Agreement and the consummation of the transactions
contemplated by this Agreement will not result in the breach of any term or
provision of, or constitute an event of default under, any material indenture,
mortgage, deed of trust, or other material contract, agreement, or instrument
to
which Online Games is a party or to which any of its properties or operations
are subject.
3.14 Governmental
Authorizations.
Online
Games has all licenses, franchises, permits, and other governmental
authorizations that are legally required to enable it to conduct its business
in
all material respects as conducted on the date of this Agreement. 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 Online Games of
this Agreement and the consummation by Online Games of the transactions
contemplated hereby.
3.15 Subsidiaries.
Online
Games does not own, beneficially or of record, any equity securities in any
other entities other than Online Exchange, Inc. and its subsidiary The MVP
Network, L.L.C.
3.16 Insurance.
Online
Games has insurance on the insurable properties as set forth on Schedule 3.16
in
an amount which is sufficient to replace such properties. Such policy or
policies containing substantially equivalent coverage will be outstanding and
in
full force at the Closing Date, as hereinafter defined.
3.17 Employee
Relations.
Online
Games has complied in respect of its business in all material respects with
all
applicable laws, rules, and regulations that relate to prices, wages, hours,
harassment, disabled access, and discrimination in employment and collective
bargaining and to the operation of its business and is not liable for any
arrears of wages or any taxes or penalties for failure to comply with any of
the
foregoing. Online Games believes that its relationship with its employees is
satisfactory. Schedule 3.17 includes the names and positions of all Online
Games
employees and their salaries, as well as whether they have employment
contracts.
3.18 Environmental,
Health and Safety Matters.
Online
Games has not received any written notice, report or other information regarding
any actual or alleged violation of environmental, health, and/or safety laws,
rules or regulations, or any liabilities or potential material liabilities
(whether accrued, absolute, contingent, unliquidated or otherwise), including
any investigatory, remedial or corrective obligations, relating to Online Games
or its past or present operations. To the best of Online Games’ knowledge,
Online Games has no such liabilities.
3.19 Online
Games Schedules.
Online
Games has delivered to MVP the following schedules, which are collectively
referred to as the “Online Games Schedules” and which consist of the following
separate schedules dated as of the date of execution of this Agreement, and
instruments and MVP as of such date, all certified by the chief executive
officer of Online Games as complete, true, and accurate:
(a) A
schedule including copies of its articles of incorporation and bylaws and all
amendments thereto in effect as of the date of this Agreement;
(b) A
schedule containing copies of resolutions adopted by the directors of Online
Games approving this Agreement and the transactions herein contemplated as
referred to in Section 3.02;
(c) A
schedule setting forth a description of any material adverse change in the
business, operations, property, inventory, assets, or condition of Online Games
since the most recent Online Games balance sheet, required to be provided
pursuant to Section 3.04 hereof;
(d) A
schedule setting forth the financial statements required pursuant to Section
3.04 (a) hereof; and
(e) A
schedule setting forth any other information, together with any required copies
of documents, required to be disclosed in the Online Games Schedules by Sections
3.01 through 3.19.
Online
Games shall cause the Online Games Schedules and the instruments delivered
to
MVP hereunder to be updated after the date hereof up to and including a
specified date not more than three business days prior to the Closing Date.
Such
updated Online Games Schedules, certified in the same manner as the original
Online Games Schedules, shall be delivered prior to and as a condition precedent
to the obligation of MVP to close.
-9-
ARTICLE
IV
CONDITIONS
PRECEDENT TO OBLIGATIONS OF ONLINE GAMES
Online
Games shall be bound by the terms and conditions of this Agreement provided
the
following conditions are complied with and satisfied by MVP at or before the
Closing Date:
4.01. Forward
Stock Split.
After
MVP obtains clearance from the U.S. Securities and Exchange Commission of a
related Information Statement, MVP shall implement a 4.177 to 1 forward stock
split of its issued and outstanding Common Stock, which shall be implemented
at
or prior to the Closing of the transactions contemplated in this Agreement.
As a
result of the forward split, the approximately 25,539,267 shares of MVP common
stock issued and outstanding as
of
November 22, 2006 shall be forward split to approximately 106,677,520 shares.
4.02 Shareholder
Approval; SEC Approval.
After
MVP obtains clearance from the U.S. Securities and Exchange Commission of a
related Joint Information Statement, MVP shall implement written shareholder
consent approvals, to (i) approve the transactions contemplated by this
Agreement, (ii) amend MVP’s articles of incorporation to increase MVP’s
authorized capitalization to 5,000,000,000 authorized shares of common stock
with a par value of $0.001, and 20,000,000 shares of preferred stock with a
par
value of $0.001 and to provide for those other changes that are believed to
be
in the best interest of the MVP shareholders and that are mutually agreed to
by
the board of directors of MVP and Online Games; (iii) approve and implement
the
forward stock split contemplated in Section 4.01 hereof. In addition, this
Agreement and the transactions contemplated hereby shall have been approved
by
the shareholders of Online Games in the manner required by the applicable laws
of the State of Nevada.
4.03 Registration
Statement.
MVP
shall prepare and file a registration statement with the U.S. Securities and
Exchange Commission for the purpose of registering a maximum of 380,574,544
shares of MVP common stock for issuance to the Online Games shareholders
pursuant to the Merger as described in Sections 1.01 and 1.03, and the
registration statement shall have been declared effective by the U.S. Securities
and Exchange Commission.
4.04 Accuracy
of Representations.
The
representations and warranties made by MVP in this Agreement were true when
made
and shall be true at the Closing Date with the same force and effect as if
such
representations and warranties were made at and as of the Closing Date (except
for changes therein permitted by this Agreement), and MVP shall have performed
or complied with all covenants and conditions required by this Agreement to
be
performed or complied with by MVP prior to or at the Closing. Online Games
shall
be furnished with certificates, signed by a duly authorized officer of MVP
and
dated the Closing Date, to the foregoing effect.
4.05 Officer’s
Certificates.
Online
Games shall have been furnished with certificates dated the Closing Date and
signed by the duly authorized chief executive officer of MVP to the effect
that
no litigation, proceeding, investigation, or inquiry is pending or, to the
best
knowledge of MVP threatened, which might result in an action to enjoin or
prevent the consummation of the transactions contemplated by this Agreement.
Furthermore, based on certificates of good standing, representations of
government agencies, and MVP’s own documents and information, the certificate
shall represent, to the best knowledge of the officer, that:
(a) This
Agreement has been duly approved by MVP’s board of directors and shareholders
and has been duly executed and delivered in the name and on behalf of MVP by
its
duly authorized officers pursuant to, and in compliance with, authority granted
by the board of directors of MVP;
(b) There
have been no material adverse changes in MVP from the date of the most recent
balance sheet described in section 2.04(a) up to and including the date of
the
certificate;
(c) All
conditions required to be performed by MVP pursuant to this Agreement have
been
met, satisfied, or performed by MVP;
(d) All
authorizations, consents, approvals, registrations, and/or filings with any
governmental body, agency, or court required in connection with the execution
and delivery of the documents by MVP have been obtained and are in full force
and effect or, if not required to have been obtained, will be in full force
and
effect by such time as may be required; and
(e) There
is
no material action, suit, proceeding, inquiry, or investigation at law or in
equity by any public board or body pending or threatened against MVP, wherein
an
unfavorable decision, ruling, or finding could have an adverse effect on the
financial condition of MVP, the operation of MVP, or the acquisition and
reorganization contemplated herein, or any agreement or instrument by which
MVP
is bound or in any way contests the existence of MVP.
4.06 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 MVP, 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 MVP.
4.07 Good
Standings.
Online
Games shall have received a certificate of good standing from the secretary
of
State of Nevada, dated as of the date within five days prior to the Closing
Date, certifying that MVP is in good standing as a corporation in the State
of
Nevada.
4.08 Other
Items.
Online
Games shall have received such further documents, certificates, or instruments
relating to the transactions contemplated hereby as Online Games may reasonably
request.
-10-
ARTICLE
V
CONDITIONS
PRECEDENT TO OBLIGATIONS OF MVP
The
obligations of MVP under this Agreement are subject to the satisfaction, at
or
before the Closing Date, of the following conditions:
5.01
Cancellation
of Shares.
Xxxx X.
Xxxxxxxxx must agree to cancel 39,576,168 of the post-split MVP shares that
he
is to receive in exchange for some of his Online Games Shares immediately upon
the consummation of the Merger.
5.02 Shareholder
Approval; SEC Approval.
After
MVP obtains clearance from the U.S. Securities and Exchange Commission of a
related Joint Information Statement, Online Games shall implement written
shareholder consent approvals to approve the transactions contemplated by this
Agreement. In addition, this Agreement and the transactions contemplated hereby
shall have been approved by the shareholders of MVP in the manner required
by
the applicable laws of the State of Nevada.
5.03 Accuracy
of Representations.
The
representations and warranties made by Online Games in this Agreement were
true
when made and shall be true at the Closing Date with the same force and effect
as if such representations and warranties were made at and as of the Closing
Date (except for changes therein permitted by this Agreement), and Online Games
shall have performed or complied with all covenants and conditions required
by
this Agreement to be performed or complied with by Online Games prior to or
at
the Closing. MVP shall be furnished with a certificate, signed by a duly
authorized officer of Online Games and dated the Closing Date, to the foregoing
effect.
5.04 Officer’s
Certificates.
MVP
shall have been furnished with certificates dated the Closing Date and signed
by
the duly authorized chief executive officer of Online Games to the effect that
no litigation, proceeding, investigation, or inquiry is pending or, to the
best
knowledge of Online Games, threatened, which might result in an action to enjoin
or prevent the consummation of the transactions contemplated by this Agreement.
Furthermore, based on certificates of good standing, representations of
government agencies, and Online Games’ own documents, the certificate shall
represent, to the best knowledge of the officer, that:
(a) This
agreement has been duly approved by Online Games’ board of directors and
shareholders and has been duly executed and delivered in the name and on behalf
of Online Games by its duly authorized officers pursuant to, and in compliance
with, authority granted by the board of directors of Online Games;
(b) There
have been no material adverse changes in Online Games from the date of the
most
recent balance sheet described in section 3.04(a) up to and including the date
of the certificate;
(c) All
conditions required to be performed by Online Games pursuant to this Agreement
have been met, satisfied or performed by Online Games;
(d) All
authorizations, consents, approvals, registrations, and/or filing with any
governmental body, agency, or court required in connection with the execution
and delivery of the documents by Online Games have been obtained and are in
full
force and effect or, if not required to have been obtained will be in full
force
and effect by such time as may be required; and
(e) There
is
no material action, suit, proceeding, inquiry, or investigation at law or in
equity by any public board or body pending or threatened against Online Games,
wherein an unfavorable decision, ruling, or finding would have an adverse affect
on the financial condition of Online Games, the operation of Online Games,
or
the acquisition and reorganization contemplated herein, or any material
agreement or instrument by which Online Games is bound or would in any way
contest the existence of Online Games.
5.05 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 Online Games, nor shall
any event have occurred which, with the lapse of time or the giving of notice,
may cause of create any material adverse change in the financial condition,
business, or operations of Online Games.
5.06 Good
Standing.
MVP
shall have received a certificate of good standing from the Secretary of State
of Nevada, dated as of a date with five days prior to the Closing Date,
certifying that Online Games is in good standing as a corporation in the State
of Nevada.
5.07 Other
Items.
MVP
shall have received such further documents certificates, or instruments relating
to the transactions contemplated hereby as MVP may reasonably
request.
-11-
ARTICLE
VI
SPECIAL
COVENANTS
6.01 Activities
of MVP and Online Games
(a) From
and
after the date of this Agreement until the Closing Date and except as set forth
in the respective schedules to be delivered by MVP and Online Games pursuant
hereto or as permitted or contemplated by this Agreement, MVP and Online Games
will each:
(i) Carry
on
its business in substantially the same manner as it has heretofore;
(ii) Maintain
in full force and effect insurance comparable in amount and in scope of coverage
to that now maintained by it;
(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;
(iv) Use
its
best efforts to maintain and preserve its business organization intact, to
retain its key employees, and to maintain its relationships with its material
suppliers and customers;
(v) Duly
and
timely file for all taxable periods ending on or prior to the Closing Date
all
federal, state, county, and local tax returns required to be filed by or on
behalf of such entity or for which such entity may be held responsible and
shall
pay, or cause to pay, all taxes required to be shown as due and payable on
such
returns, as well as all installments of tax due and payable during the period
commencing on the date of this Agreement and ending on the Closing Date.;
and
(vi) Fully
comply with and perform in all material respects all obligations and duties
imposed on it by all federal and state laws and all rules, regulations, and
orders imposed by federal or state governmental authorities.
(b) From
and
after the date of this Agreement and except as provided herein until the Closing
Date, MVP and Online Games will not:
(i) Make
any
change in its articles of incorporation or bylaws or effect any
recapitalization;
(ii) Enter
into or amend any material contract, agreement, or other instrument of any
of
the types described in such party’s schedules, except that a party may enter
into or amend any contract, agreement, or other instrument in the ordinary
course of business; and
(iii) Enter
into any agreement for the sale of Online Games or MVP securities without the
prior approval of the other party.
6.02 Access
to Properties and Records.
Until
the Closing Date, Online Games and MVP will afford to the other party’s officers
and authorized representatives full access to the properties, books, and records
of the other party in order that each party may have full opportunity to make
such reasonable investigation as it shall desire to make of the affairs of
Online Games or MVP and will furnish the other party with such additional
financial and other information as to the business and properties of Online
Games or MVP as each party shall from time to time reasonably
request.
6.03 Indemnification
by Online Games.
Online
Games will indemnify and hold harmless MVP and its directors and officers,
and
each person, if any, who controls MVP within the meaning of the Securities
Act,
from and against any and all losses, claims, damages, expenses, liabilities,
or
actions to which any of them may become subject (i) under applicable law
(including the Securities Act and the Securities Exchange Act) and will
reimburse them for any legal or other expenses reasonably incurred by them
in
connection with investigating or defending any claims or actions, whether or
not
resulting in liability, insofar as such losses, claims, damages, expenses,
liabilities, or actions arise out of or are based upon any untrue statement
or
alleged untrue statement of material fact contained in any application or
statement filed with a governmental body or arising out of or are based upon
the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary in order to make the statements therein not
misleading, but only insofar as any such statement or omission was made in
reliance upon and in conformity with information furnished in writing by Online
Games expressly for use therein; (ii) as a result of any breach of or inaccuracy
in any representation or warranty made by Online Games in this Agreement; or
(iii) any breach of any of Online Games’ agreements or covenants in this
Agreement to be performed by Online Games prior to the Closing Date; provided,
however, there shall be no recovery under this Section 6.03 unless and until
the
aggregate amount of all claims exceeds $25,000, after which the indemnified
party shall be entitled to recover only claims in excess of $25,000. The
indemnity agreement contained in this Section 6.03 shall remain operative and
in
full force and effect, regardless of any investigation made by or on behalf
of
MVP and shall survive the consummation of the transactions contemplated by
this
Agreement for a period of six months.
-12-
6.04. Indemnification
by MVP.
MVP
will indemnify and hold harmless Online Games, Online Games’ directors and
officers, and each person, if any, who controls Online Games within the meaning
of the Securities Act, from and against any and all losses, claims, damages,
expenses, liabilities, or actions to which any of them may become subject (i)
under applicable law (including the Securities Act and the Securities Exchange
Act) and will reimburse them for any legal or other expenses reasonably incurred
by them in connection with investigating or defending any claims or actions,
whether or not resulting in liability, insofar as such losses, claims, damages,
expenses, liabilities, or actions arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in any
application or statement filed with a governmental body or arise out of or
are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein, or necessary in order to make the statements
therein not misleading, but only insofar as any such statement or omission
was
made in reliance upon and in conformity with information furnished in writing
by
MVP expressly for use therein; (ii) as a result of any breach of or inaccuracy
in any representation or warranty made by MVP in this Agreement; or (iii) any
breach of any of MVP’s agreements or covenants in this Agreement to be performed
by MVP prior to the Closing Date; provided, however, there shall be no recover
under this Section 6.04 unless and until the aggregate amount of all claims
exceeds $25,000, after which the indemnified party shall be entitled to recover
only claims in excess of $25,000. The indemnity agreement contained in this
Section 6.04 shall remain operative and in full force and effect, regardless
of
any investigation made by or on behalf of Online Games and shall survive the
consummation of the transactions contemplated by this Agreement for a period
of
six months.
6.05 The
Acquisition of MVP Common Stock.
MVP and
Online Games understand and agree that the consummation of this Agreement
including the issuance of the MVP Common Stock to Online Games Shareholders
in
exchange for the Online Games Shares as contemplated hereby, constitutes the
offer and sale of securities under the Securities Act and applicable state
statutes. MVP and Online Games agree that such transactions shall be consummated
in reliance on registration under the U.S. federal securities laws and on
registration or exemptions from the registration and prospectus delivery
requirements of applicable state laws.
(a) In
connection with the transaction contemplated by this Agreement, Online Games
and
MVP shall each file, with the assistance of the other and their respective
legal
counsel, such notices, applications, reports, or other instruments as may be
deemed by them to be necessary or appropriate in an effort to document reliance
on such exemptions, and the appropriate regulatory authority in the states
where
the Online Games Shareholders reside unless an exemption requiring no filing
is
available in such jurisdictions, all to the extent and in the manner as may
be
deemed by such parties to be appropriate.
(b) In
order
to more fully document reliance on the exemptions as provided herein, Online
Games, the Online Games Shareholders, and MVP shall execute and deliver to
the
other, at or prior to the Closing, such further letters of representation,
acknowledgment, suitability, or the like as MVP or Online Games and their
respective counsel may reasonably request in connection with reliance on
exemptions from registration under such securities laws.
6.06 Securities
Filings.
MVP
shall be responsible for the preparation of any filings required by the
Securities and Exchange Commission and for any and all filings in any
jurisdiction where Online Games Shareholders reside which would require a filing
with a governmental agency as a result of the transactions contemplated in
this
Agreement.
6.07 Sales
of Securities Under Rule 144, If Applicable.
Following the Closing Date:
(a) MVP
will
use its best efforts to at all times satisfy the current public information
requirements of Rule 144 promulgated under the Securities Act so that its
shareholders can sell restricted securities that have been held for one year
or
more or such other restricted period as required by Rule 144 as it is from
time
to time amended.
(b) Upon
being informed in writing by any person holding restricted stock of MVP as
of
the date of this Agreement that such person intends to sell any shares under
Rule 144 promulgated under the Securities Act (including any rule adopted in
substitution or replacement thereof), MVP will certify in writing to such person
that it is in compliance with the Rule 144 current public information
requirement to enable such person to sell such person’s restricted stock under
Rule 144, as may be applicable under the circumstances.
(c) If
any
certificate representing any such restricted stock is presented to MVP’s
transfer agent for registration or transfer in connection with any sales
theretofore made under Rule 144, provided such certificate is duly endorsed
for
transfer by the appropriate person(s) or accompanied by a separate stock power
duly executed by the appropriate person(s) in each case with reasonable
assurances that such endorsements are genuine and effective, and is accompanied
by an opinion of counsel satisfactory to MVP and its counsel that such transfer
has complied with the requirements of Rule 144, as the case may be, MVP will
promptly instruct its transfer agent to register such transfer and to issue
one
or more new certificates representing such shares to the transferee and, if
appropriate under the provisions of Rule 144, as the case may be, free of any
stop transfer order or restrictive legend. The provisions of this Section 6.07
shall survive the Closing and the consummation of the transactions contemplated
by this Agreement for a period of two years.
-13-
ARTICLE
VII
MISCELLANEOUS
7.01 Brokers.
MVP and
Online Games agree that there were no finders or brokers involved in bringing
the parties together or who were instrumental in the negotiation, execution,
or
consummation of this Agreement. Further, MVP and Online Games 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 such party and such third person, whether express or
implied, from the actions of such party.
The
covenants set forth in this section shall survive the Closing Date and the
consummation of the transactions herein contemplated.
7.02 No
Representation Regarding Tax Treatment.
No
representation or warranty is being made by any party to any other regarding
the
treatment of this transaction for federal or state income taxation. Each party
has relied exclusively on its own legal, accounting, and other tax adviser
regarding the treatment of this transaction for federal and state income taxes
and on no representation, warranty, or assurance from any other party or such
other party’s legal, accounting, or other adviser.
7.03 Governing
Law.
This
Agreement shall be governed by, enforced and construed under and in accordance
with the laws of the State of Nevada.
7.04 Notices.
Any
notices or other communications required or permitted hereunder shall be
sufficiently given if personally delivered, if sent by facsimile or telecopy
transmission or other electronic communication confirmed by registered or
certified mail, postage prepaid, or if sent by prepaid overnight courier
addressed as follows:
|
If
to MVP, to:
|
If
to Online Games, to:
|
|
Xxxxxxx
X. Xxxxx, Vice President
|
Xxxx
X.
Xxxxxxxxx, President
|
|
MVP
Network Online Games, Inc.
|
|
|
000
Xx. Xxxxxxxxx Xxx.
|
000
Xx.
Xxxxxxxxx Xxx.
|
|
Xx.
Xxxxx, XX 00000
|
Xx.
Xxxxx, XX 00000
|
|
Fax:
(000) 000-0000
|
Fax:
(000) 000-0000
|
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 or sent by facsimile or telecopy
transmission or other electronic communication, or one day after the date so
sent by overnight courier.
7.05 Attorney’s
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 nonbreaching party or parties for all
costs, including reasonable attorneys’ fees, incurred in connection therewith
and in enforcing or collecting any judgment rendered therein.
7.06 Schedules;
Knowledge.
Whenever in any section of this Agreement reference is made to information
set
forth in the schedules provided by MVP or Online Games such reference is to
information specifically set forth in such schedules and clearly marked to
identify the section of this Agreement to which the information relates.
Whenever any representation is made to the “knowledge” of any party, it shall be
deemed to be a representation that no officer or director of such party, after
reasonable investigation, has any knowledge of such matters.
7.07 Entire
Agreement.
This
Agreement represents the entire agreement between the parties relating to the
subject matter hereof. All previous agreements between the parties, whether
written or oral, have been merged into this Agreement. 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, understandings,
agreements, representations, or warranties, written or oral, except as set
forth
herein.
7.08 Survival;
Termination.
The
representations, warranties, and covenants of the respective parties shall
survive the Closing Date and the consummation of the transactions herein
contemplated for a period of one year from the Closing Date, unless otherwise
provided herein.
7.09 Counterparts.
This
Agreement may be executed in multiple counterparts, each of which shall be
deemed an original and all of which taken together shall be but a single
instrument.
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 such remedies may
be
enforced concurrently, 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 writing signed
by
all parties hereto, with respect to any of the terms contained herein, and
any
term or condition of this Agreement may be waived or the time for performance
thereof may be extended by a writing signed by the party or parties for whose
benefit the provision is intended.
IN
WITNESS WHEREOF, the corporate parties hereto have caused this Agreement to
be
executed by their respective officers, hereunto duly authorized, as of the
date
first above written.
| MVP NETWORK, INC., | ||
| |
a
Nevada
corporation |
|
| By: | /s/ Xxxx X. Xxxxxxxxx | |
|
|
||
| Chairman | ||
| MVP NETWORK ONLINE GAMES, INC., | ||
| |
a
Nevada
corporation |
|
| By: | /s/ Xxxx X. Xxxxxxxxx | |
|
|
||
| Chairman | ||
| MVP MERGER CORP., | ||
| |
a
Nevada
corporation |
|
| By: | /s/ Xxxx X. Xxxxxxxxx | |
|
|
||
| Chairman | ||
STATE
OF
MISSOURI )
ss.
COUNTY
OF
_St.
Louis )
On
this
22nd day
of
November, 2006, personally appeared before me Xxxx X. Xxxxxxxxx, whose identity
is personally known to me and who by me duly sworn, did say that he is the
Chairman of each of MVP Network, Inc., MVP Network Online Games, Inc. and MVP
Merger Corp., and that the foregoing agreement was signed by him on behalf
of
said corporations by authority of their bylaws, and said Xxxx X. Xxxxxxxxx
acknowledged to me that said corporations executed the same.
_/s/
Xxxxxxxxxx X. Tebbe___________________
NOTARY
PUBLIC
[NOTARY
SEAL]
