AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization ("the Agreement"), dated
as of the 28th day of January, 2000, by and between Multi Media Industries
Corporation, a Utah corporation ("MMIC") and Eccount, Inc, a California
corporation ("Eccount") and the shareholders of Eccount("Shareholders"),
with reference to the following:
A. MMIC is a Utah corporation organized in 1981. MMIC has authorized
capital stock of 100,000,000 shares, $.001 par value, of which 73,927,532
shares are currently issued and outstanding.
B. Eccount, Inc. is a privately held corporation organized under the
laws of the State of California on February 3, 1999.
C. The respective Boards of Directors of MMIC and Eccount have deemed
it advisable and in the best interests of MMIC and Eccount that Eccount be
acquired by MMIC, pursuant to the terms and conditions set forth in this
Agreement.
D. MMIC and Eccount propose to enter into this Agreement which provides
among other things that all of the outstanding shares of Eccount be acquired
by MMIC, in exchange for shares of MMIC and such additional items as more fully
described in the Agreement.
E. The parties desire the transaction to qualify as a tax-free
reorganization under Section 368 (a)(1)(B) of the Internal Revenue Code of
1986, as amended.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
THE ACQUISITION
1.01 At the Closing, a total of 10,000 common shares, which represents
all of the outstanding shares of Eccount shall be acquired by MMIC in exchange
for 12,000,000 restricted post- split common shares of MMIC. The shares of
MMIC to be issued in this transaction shall be issued as set forth in Exhibit
A to this Agreement.
1.02 At the Closing, the Eccount shareholders will deliver certificates
for the outstanding shares of Eccount , duly endorsed so as to make MMIC the
sole holder thereof, free and clear of all claims and encumbrances and MMIC
shall deliver a transmittal letter directed to the transfer agent of MMIC
directing the issuance of shares to the shareholders of Eccount as set
forth on Exhibit A of this Agreement.
1.03 Following the reorganization, the reverse split, and the acquisition
as set forth in section D of this Agreement, there will be a total of
18,118,128 shares, $.001 par value, issued and outstanding in MMIC.
1.04 Following the reorganization, Eccount will be a wholly owned
subsidiary of MMIC.
ARTICLE 2
THE CLOSING
2.01 The consummation of the transactions contemplated by this Agreement
(the "Closing") shall take place at 000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000-X, Xxxx
Xxxx Xxxx, XX 00000 on or before January 31, 2000, (the "Closing Date") or at
such other place or date and time as may be agreed to in writing by the
parties hereto.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF MMIC
MMIC hereby represents and warrants to Eccount as follows:
3.01 MMIC shall deliver to Eccount, on or before Closing, each of the
following:
(a) Financial Statements. Audited financial statements of MMIC
including, but not limited to, balance sheets and profit and loss statements
from fiscal year end 1998, and unaudited financial statements of September 30,
1999 prepared in accordance with generally accepted accounting principles and
which fairly present the financial condition of MMIC at the dates thereof.
(Schedule A)
(b) Property. An accurate list and description of all property,
real or personal, owned by MMIC of a value equal to or greater than $1,000.00.
(Schedule B.)
(c) Liens and Liabilities. A complete and accurate list of all
material liens,encumbrances, easements, security interests or similar interests
in or on any of the assets listed on Schedule A. (Schedule C.) A complete and
accurate list of all debts, liabilities and obligations of MMIC incurred or
owing as of the date of this Agreement. (Schedule C.1.)
(d) Leases and Contracts. A complete and accurate list describing
all material terms of each lease (whether of real or personal property) and
each contract, promissory note, mortgage, license, franchise, or other written
agreement to which MMIC is a party which involves or can reasonably be expected
to involve aggregate future payments or receipts by MMIC (whether by the terms
of such lease, contract, promissory note, license, franchise or other written
agreement or as a result of a guarantee of the payment of or indemnity against
the failure to pay same)of $1,000.00 or more annually during the twelve-month
period ended December 31, 1999, or any consecutive twelve-month period
thereafter, except any of said instruments which terminate or are cancelable
without penalty during such twelve-month period. (Schedule D.)
(e) Loan Agreements. Complete and accurate copies of all loan
agreements and other documents with respect to obligations of MMIC for the
repayment of borrowed money. (Schedule E.)
(f) Consents Required. A complete list of all agreements wherein
consent to the transaction herein contemplated is required to avoid a default
thereunder; or where notice of such transaction is required at or subsequent
to closing, or where consent to an acquisition, consolidation, or sale of all
or substantially all of the assets is required to avoid a default thereunder.
(Schedule F.)
(g) Articles and Bylaws. Complete and accurate copies of the
Certificate and Articles of Incorporation and Bylaws of MMIC together with
all amendments thereto to the date hereof. (Schedule G.)
(h) Shareholders. A complete list of all persons or entities
holding capital stock of MMIC or any rights to subscribe for, acquire, or
receive shares of the capital stock of MMIC (whether warrants, calls,
options, or conversion rights), including copies of all stock option
plans whether qualified or nonqualified, and other similar agreements.
(Schedule H.)
(i) Officers and Directors. A complete and current list of all
Officers and Directors of MMIC. (Schedule I.)
(j) Salary Schedule. A complete and accurate list (in all
material respects) of the names and the current salary rate for each
present employee of MMIC who received $1,000.00 or more in aggregate
compensation from MMIC whether in salary, bonus or otherwise, during
the year 1999, or who is presently scheduled to receive from MMIC a
salary in excess of $1,000.00 during the year ending December 1999,
including in each case the amount of compensation received or scheduled
to be received, and a schedule of the hourly rates of all other employees
listed according to departments. (Schedule J.)
(k) Litigation. A complete and accurate list (in all material
respects) of all material civil, criminal, administrative, arbitration or
other such proceedings or investigations (including without limitations
unfair labor practice matters, labor organization activities,environmental
matters and civil rights violations) pending or, to theknowledge of MMIC
threatened, which may materially and adversely affect MMIC. (ScheduleK.)
(l) Tax Returns. Accurate copies of all Federal and State tax
returns for MMIC for the last fiscal year. (Schedule L.)
(m) Agency Reports. Copies of all material reports or filings
(and a list of the categories of reports or filings made on a regular basis)
made by MMIC under ERISA, EEOC, FDA and all other governmental agencies
(federal, state or local) during the last fiscal year. (Schedule M.)
(n) Banks. A true and complete list (in all material respects),
as of the date of this Agreement, showing (1) the name of each bank in which
MMIC has an account or safe deposit box, and (2) the names and addresses of
all signatories. (Schedule N.)
(o) Jurisdictions Where Qualified. A list of all jurisdictions
wherein MMIC is qualified to do business and is in good standing.
(Schedule O.)
(p) Subsidiaries. A complete list of all subsidiaries of MMIC.
(Schedule P.) The term "Subsidiary" or "Subsidiaries" shall include
corporations, unincorporated associations, partnerships, joint ventures,
or similar entities in which MMIC has an interest, direct or indirect.
(q) Union Matters. An accurate list and description (in all
material respects) of all union contracts and collective bargaining
agreements of MMIC, if any. (Schedule Q.)
(r) Employee and Consultant Contracts. A complete and accurate
list of all employee and consultant contracts which MMIC may have, other
than those listed in the schedule on Union Matters. (Schedule R.)
(s) Employee Benefit Plans. Complete and accurate copies of all
salary, stock options, bonus, incentive compensation, deferred compensation,
profit sharing, retirement, pension, group insurance, disability, death
benefit or other benefit plans, trust agreements or arrangements of MMIC in
effect on the date hereof or to become effective after the date thereof,
together with copies of any determination letters issued by the Internal
Revenue Service with respect thereto. (Schedule S.)
(t) Insurance Policies. A complete and accurate list (in all
material respects) and a description of all material insurance policies
naming MMIC as an insured or beneficiary or as a loss payable payee or
for which MMIC has paid all or part of the premium in force on the date
hereof, specifying any notice or other information possessed by
MMIC regarding possible claims thereunder, cancellation thereof or premium
increases thereon, including any policies now in effect naming MMIC as
beneficiary covering the business activities of MMIC. (Schedule T.)
(u) Customers. A complete and accurate list (in all material
respects) of the customers of MMIC, including presently effective contracts
of MMIC to beassigned to MMIC, accounting for the principle revenues of MMIC,
indicating the dollar amounts of gross income of each such customer for the
period ended December 31, 1998. (Schedule U.)
(v) Licenses and Permits. A complete list of all licenses, permits
and other authorizations of MMIC. (Schedule V.)
3.02 Organization, Standing and Power. MMIC is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Utah with all requisite corporate power to own or lease its properties
and carry on its businesses as are now being conducted.
3.03 Qualification. MMIC is duly qualified and is licensed as a foreign
corporation authorized to do business in each jurisdiction wherein it conducts
its business operations. Such jurisdictions, which are the only jurisdictions
in which MMIC is duly qualified and licensed as a foreign corporation, are shown
in Schedule O.
3.04 Capitalization of MMIC. The authorized capital stock of MMIC
consists of 100,000,000 shares of Common Stock, $.001 par value, of which
the only shares issued and outstanding will be 6,118,128, which shares were
or will be duly authorized,validly issued and fully paid and nonassessable.
There are no preemptive rights with respect to the MMIC stock.
3.05 Authority. The execution and delivery of this Agreement and
consummation of the transactions contemplated herein have been duly
authorized by all necessary corporate actions, including but not
limited to duly and validly authorized action and approval by the Board of
Directors, on the part of MMIC. This Agreement constitutes the valid and
binding obligation of MMIC enforceable against it in accordance with its terms,
subject to the principles of equity applicable to the availability of the
remedy of specific performance. ThisAgreement has been duly executed by
MMIC and the execution and delivery of this Agreement and the consummation
of the transactions contemplated by this Agreement shall not result in any
breach of any terms or provisions of MMIC's Certificate and Articles of
Incorporation or Bylaws or of any other agreement, court order or instrument
to which MMIC is a party or bound by.
3.06 Absence of Undisclosed Liabilities. MMIC has no material
liabilities of any nature, whether fixed, absolute, contingent or
accrued, which were not reflected on the financial statements set forth in
Schedule A or otherwise disclosed in this Agreement or any of the Schedules
or Exhibits attached hereto. As of the Closing, MMIC shall have no assets
or liabilities other than those resulting from the acquisition of Eccount
and those resulting from the acquisitions identified in Paragraph B of this
Agreement.
3.07 Absence of Changes. Since September 30, 1999 there has not been
any material adverse change in the condition (financial or otherwise), assets,
liabilities, earnings or business of MMIC, except for changes resulting from
completion of those transactions described in Section 5.01.
3.08 Tax Matters. All taxes and other assessments and levies which MMIC
is required by law to withhold or to collect have been duly withheld and
collected, and have been paid over to the proper government authorities or
are held by MMIC in separate bank accounts for such payment or are
represented by depository receipts, and all such withholdings and collections
and all other
payments due in connection therewith (including, without
limitation, employment taxes, both the employee's and employer's share) have
been paid over to the government or placed in a separate and segregated
bank account for such purpose. There are no known deficiencies in income
taxes for any periods and further, the representations and warranties as to
absence of undisclosed liabilities contained in Section 3.06 includes any
and all tax liabilities of whatsoever kind or nature (including, without
limitation, all federal, state, local and foreign income, profit, franchise,
sales, use and property taxes) due or to become due, incurred in respect of or
measured by MMIC income or business prior to the Closing Date.
3.09 Options, Warrants, etc. Except as otherwise described in Schedule
H, there are no outstanding options, warrants, calls, commitments or agreements
of any character to which MMIC or its shareholders are a party or by which
MMIC or its shareholders are bound, or are a party, calling for the issuance
of shares of capital stock of MMIC or any securities representing the right
to purchase or otherwise receive any such capital stock of MMIC.
3.10 Title to Assets. Except for liens set forth in Schedule C, MMIC
is the sole unconditional owner of, with good and marketable title to, all
assets listed in the schedules as owned by it and all other property and
assets are free and clear of all mortgages, liens, pledges, charges or
encumbrances of any nature whatsoever.
3.11 Agreements in Force and Effect. Except as set forth in Schedules
D and E, all material contracts, agreements, plans, promissory notes, mort-
gages, leases, policies, licenses, franchises or similar instruments to which
MMIC is a party are valid and in full force and effect on the date hereof, and
MMIC has not breached any material provision of, and is not in default in
any material respect under the terms of, any such contract, agreement, plan,
promissory note, mortgage, lease, policy, license, franchise or similar
instrument which breach or default would have a material adverse effect
upon the business, operations or financial condition of MMIC.
3.12 Legal Proceedings, Etc. Except as set forth in Schedule K, there
are no civil, criminal, administrative, arbitration or other such proceedings
or investigations pending or, to the knowledge of either MMIC or the
shareholders thereof, threatened, in which, individually or in the aggregate,
an adverse determination would materially and adversely affect the assets,
properties, business or income of MMIC. MMIC has substantially complied
with, and is not in default in any material respect under, any laws, ordi-
nances, requirements, regulations or orders applicable to its businesses.
3.13 Governmental Regulation. To the knowledge of MMIC and except as
set forth in Schedule K, MMIC is not in violation of or in default with
respect to any applicable law or any applicable rule, regulation, order,
writ or decree of any court or any governmental commission, board, bureau,
agency or instrumentality, or delinquent with respect to any report required
to be filed with any governmental commission, board, bureau, agency or
instrumentality which violation or default could have a material adverse
effect upon the business, operations or financial condition of MMIC.
3.14 Brokers and Finders. MMIC shall be solely responsible for
payment to any broker or finder retained by MMIC for any brokerage fees,
commissions or finders' fees in connection with the transactions
contemplated herein.
3.15 Accuracy of Information. No representation or warranty by MMIC
contained in this Agreement and no statement contained in any certificate
or other instrument delivered or to be delivered to Eccount pursuant
hereto or in connection with the transactions contemplated hereby (including
without limitation all Schedules and exhibits hereto) contains or will
contain any untrue statement of material fact or omits or will omit to state
any material fact necessary in order to make the statements contained herein
or therein not misleading.
3.16 Subsidiaries. Except as listed in Schedule P, MMIC does not have
any other subsidiaries or own capital stock representing ten percent (10%)
or more of the issued and outstanding stock of any other corporation.
3.17 Consents. Except as listed in Schedule F, no consent or approval
of, or registration, qualification or filing with, any governmental authority
or other person is required to be obtained or accomplished by MMIC or any
shareholder thereof in connection with the consummation of the transactions
contemplated hereby.
3.18 Improper Payments. Neither MMIC, nor any person acting on behalf
of MMIC has made any payment or otherwise transmitted anything of value,
directly or indirectly, to (a) any official or any government or agency or
political subdivision thereof for the purpose of influencing any decision
affecting the business of MMIC (b) any customer, supplier or competitor of
MMIC or employee of such customer, supplier or competitor, for the purpose
of obtaining, retaining or directing business for MMIC or (c) any political
party or any candidate for elective political office nor has any fund or
other asset of MMIC been maintained that was not fully and accurately
recorded on the books of account of MMIC.
3.19 Copies of Documents. MMIC has made available for inspection and
copying by Eccount and its duly authorized representatives, and will
continue to do so at all times, true and correct copies of all documents
which it has filed with the Securities and Exchange Commission and all
other governmental agencies which are material to the terms and conditions
contained in this Agreement. Furthermore, all filings by MMIC with the
Securities and Exchange Commission, and all other governmental agencies,
including but not limited to the Internal Revenue Service, have contained
information which is true and correct, to the best knowledge of the Board
of Directors of MMIC, in all material respects and did not contain any
untrue statement of a material fact or omit to state any material fact
necessary to make the statements made therein not misleading or which
could have any material adverse effect upon the financial condition or
operations of MMIC or adversely effect the objectives of this Agreement
with respect to Eccount including, but not limited to, the issuance and
subsequent trading of the shares of common stock of MMIC to be received
hereby, subject to compliance by the shareholders of Eccount with applicable
law.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF
ECCOUNT, INC.
Eccount hereby represents and warrants to MMIC as follows:
4.01 Eccount shall deliver to MMIC, on or before Closing, the following:
(a) Financial Statements. Audited balance sheet of Eccount as of
its inception, through a current date. (Schedule AA)
(b) Property. An accurate list and description of all property,
real or personal owned by Eccount of a value equal to or greater than
$1,000.00. (Schedule BB)
(c) Liens and Liabilities. A complete and accurate list of all
material liens, encumbrances, easements, security interests or similar
interests in or on any of the assets listed on Schedule AA. (Schedule CC.)
A complete and accurate list of all debts, liabilities and obligations of
Eccount incurred or owing as of the date of this Agreement. (ScheduleCC.1.)
(d) Leases and Contracts. A complete and accurate list describing
all material terms of material leases (whether of real or personal property)
and each contract, promissory note, mortgage, license, franchise, or other
written agreement to which Eccount is a party which involves or can
reasonably be expected to involve aggregate future payments or receipts by
Eccount (whether by the terms of such lease, contract, promissory note,
license, franchise or other written agreement or as a result of
a guarantee of the payment of or indemnity against the failure to pay
same) of $1,000.00 or more annually during the twelve-month period ended
December 31, 1999 or any consecutive twelve-month period thereafter, except
any of said instruments which terminate or are cancelable without penalty
during such twelve-month period. (Schedule DD.)
(e) Loan Agreements. Complete and accurate copies of all loan
agreements and other documents with respect to obligations of Eccount
for the repayment of borrowed money. (Schedule EE.)
(f) Consents Required. A complete list of all agreements
wherein consent to the transaction herein contemplated is required to
avoid a default thereunder; or where notice of such transaction is
required at or subsequent to closing, or where consent to an acquisition,
consolidation, or sale of all or substantially all of the assets is
required to avoid a default thereunder. (Schedule FF.)
(g) Articles and Bylaws. Complete and accurate copies of the Articles
of Incorporation and Bylaws of Eccount, together with all amendments
thereto to the date hereof. (Schedule GG.)
(h) Shareholders. A complete list of all persons or entities holding
capital stock of Eccount or any rights to subscribe for, acquire, or receive
shares of the capital stock of Eccount (whether warrants, calls, options,
or conversion rights), including copies of all stock option plans whether
qualified or nonqualified, and other similar agreements. (Schedule HH.)
(i) Officers and Directors. A complete and current list of all
officers and Directors of Eccount. (Schedule II.)
(j) Salary Schedule. A complete and accurate list (in all material
respects) of the names and the current salary rate or each present employee
of Eccount who received $1,000 or more in aggregate compensation from
Eccount whether in salary, bonus or otherwise, during the year 1999, or who
is presently scheduled to receive from Eccount a salary in excess of
$1,000.00 during the year ending December 31, 2000, including in each case
the amount of compensation received or scheduled to be received, and a
schedule of the hourly rates of all other employees listed according to
departments. (Schedule JJ.)
(k) Litigation. A complete and accurate list (in all material
respects) of all material civil, riminal, administrative, arbitration
or other such proceedings or investigations (including without imitations
unfair abor practice matters, labor organization activities, environmental
matters and civil rights violations) pending or, to the knowledge of Eccount
threatened, which may materially and adversely affect Eccount.
(Schedule KK.)
(l) Tax Returns. Accurate copies of all Federal and State tax
returns for Eccount, if any. (Schedule LL.)
(m) Agency Reports. Copies of all material reports or filings
(and a list of the categories of reports or filings made on a regular
basis) made by Eccount under ERISA, EEOC, FDA and all other governmental
agencies (federal, state or local). (Schedule MM.)
(n) A true and complete list (in all material respects), as of the
date of this Agreement, showing (1) the name of each bank in which Eccount
has an account or safe deposit box, and (2) the names and addresses of all
signatories. (Schedule NN.)
(o) Jurisdictions Where Qualified. A list of all jurisdictions
wherein Eccount is qualified to do business and is in good standing.
(Schedule OO.)
(p) Subsidiaries. A complete list of all subsidiaries of Eccount.
(Schedule PP.) The term "Subsidiary" or "Subsidiaries" shall include
corporations, unincorporated associations, partnerships, joint ventures,
or similar entities in which Eccount has an interest, direct or indirect.
(q) Union Matters. An accurate list and description (in all
material respects of union contracts and collective bargaining agreements
of Eccount, if any. (Schedule QQ.)
(r) Employee and Consultant Contracts. A complete and accurate
list of all employee and consultant contracts which Eccount may have,
other than those listed in the schedule on Union Matters. (Schedule RR.)
(s) Employee Benefit Plans. Complete and accurate copies of
all salary, stock option, bonus, incentive compensation, deferred
compensation, profit sharing, retirement, pension, group insurance,
disability, death benefit or other benefit plans, trust agreements
or arrangements of Eccount in effect on the date hereof or to become
effective after the date thereof, together with copies of any determin-
ation letters issued by the Internal Revenue Service with respect thereto.
(Schedule SS.)
(t) Insurance Policies. A complete and accurate list (in all
material respects) and description of all material insurance policies
naming Eccount as an insured or beneficiary or as a loss payable payee or
for which Eccount has paid all or part of the premium in force
on the date hereof, specifying any notice or other information possessed
by Eccount regarding possible claims thereunder, cancellation thereof or
premium increases thereon, including any policies now in effect naming
Eccount as beneficiary covering the business activities of Eccount.
(Schedule TT.)
(u) Customers. A complete and accurate list (in all material
respects) of the customers of Eccount, including all presently effective
contracts of Eccount to be assigned to Eccount, accounting for the
principle revenues of Eccount, indicating the dollar amounts of gross
revenues of each such customer for the period ended December 31, 1999.
(Schedule UU.)
(v) Licenses and Permits. A complete list of all licenses,
permits and other authorizations of Eccount. (Schedule VV.)
4.02 Organization, Standing and Power. Eccount is a corporation
duly organized, validly existing and in good standing under the laws of the
State of California with all requisite corporate power to own or lease its
properties and carry on its business as is now being conducted.
4.03 Qualification. Eccount is duly qualified and licensed as a foreign
corporation authorized to do business in each jurisdiction wherein it conducts
business operations. Such jurisdictions, which are the only jurisdictions
in which Eccount is duly qualified and licensed as a foreign corporation,
is shown in Schedule OO.
4.04 Capitalization of Eccount. The authorized capital stock of
Eccount consists of 100,000 shares of Common Stock, of which the only
shares issued and outstanding are 10,000 shares issued to the shareholders
listed on Schedule HH, which shares were duly authorized, validly issued
and fully paid and nonassessable. There are no preemptive rights with
respect to the Eccount stock.
4.05 Authority. The execution and delivery of this Agreement and
consummation of the transactions contemplated herein have been duly
authorized by all necessary corporate action, including but not limited to
duly and validly authorized action and approval by the Board of Directors,
on the part of Eccount. This Agreement constitutes the valid and binding
obligation of Eccount, enforceable against it in accordance with its terms,
subject to the principles of equity applicable to the availability of the
remedy of specific performance. This Agreement has been duly executed by\
Eccount and the execution and delivery of this Agreement and the
consummation of the transactions contemplated by this Agreement shall not
result in any breach of any terms or provisions of Eccount 's Articles of
Incorporation or Bylaws or of any other agreement, court order or
instrument to which Eccount is a party or bound.
4.06 Absence of Undisclosed Liabilities. Eccount has no material
liabilities of any nature, whether fixed, absolute, contingent or accrued,
which were not reflected on the financial statements set forth in Schedule
AA or otherwise disclosed in this Agreement or any of the Schedules or
Exhibits attached hereto.
4.07 Absence of Changes. Since the date of inception, there has not
been any material adverse change in the condition (financial or otherwise),
assets, liabilities, earnings or business of Eccount, except for changes
resulting from completion of those transactions described in Section
5.02.
4.08 Tax Matters. All taxes and other assessments and levies
which Eccount is required by law to withhold or to collect have been
duly withheld and collected, and have been paid over to the proper
government authorities or are held by Eccount in separate bank accounts
for such payment or are represented by depository receipts, and all such
withholdings and collections and all other payments due in connection
therewith (including, without limitation, employmenttaxes, both the employee's
and employer's share) have been paid over to the government or placed
in a separate and segregated bank account for such purpose. There
are no known deficiencies in income taxes for any periods and
further, the representations and warranties as to absence of undisclosed
liabilities contained in Section 4.06 includes any and all tax liabilities
of whatsoever kind or nature (including, without limitation, all federal,
state, local and foreign income, profit, franchise, sales, use and property
taxes) due or to become due, incurred in respect of or measured by
Eccount income or business prior to the Closing Date.
4.09 Options, Warrants, etc. Except as otherwise described in
Schedule HH, there are no outstanding options, warrants, calls,
commitments or agreements of anycharacter to which Eccount or its
shareholders are a party or by which Eccount or its shareholders are
bound, or are a party, calling for the issuance of shares of capital
stock of Eccount or any securities representing the right to purchase
or otherwise receive any such capital stock of Eccount.
4.10 Title to Assets. Except for liens set forth in Schedule
CC, Eccount is the sole and unconditional owner of, with good and
marketable title to, all the assets and patents listed in the schedules
as owned by them and all other property and assets are free and clear
of all mortgages, liens, pledges, charges or encumbrances of any nature
whatsoever.
4.11 Agreements in Force and Effect. Except as set forth in
Schedules DD and EE, all material contracts, agreements, plans,
promissory notes, mortgages, leases, policies, licenses, franchises or
similar instruments to which Eccount is a party are valid and in full
force and effect on the date hereof, and Eccount has not breached any
material provision of, and is not in default in any material respect under
the terms of, any such contract, agreement, plan, promissory note,
mortgage, lease, policy, license, franchise or similar instrument which
breach or default would have a material adverse effect upon the business,
operations or financial condition of Eccount.
4.12 Legal Proceedings, Etc. Except as set forth in Schedule KK,
there are no civil, criminal, administrative, arbitration or other such
proceedings or investigations pending or, to the knowledge of Eccount ,
threatened, in which, individually or in the aggregate, an adverse
determination would materially and adversely affect the assets, properties,
business or income of Eccount . Eccount has substantially complied
with, and is not in default in any material respect under, any laws,
ordinances, requirements, regulations or orders applicable to its businesses.
4.13 Governmental Regulation. To the knowledge of Eccount and except
as set forth in Schedule KK, Eccount is not in violation of or in default
with respect to any applicable law or any applicable rule, regulation,
order, writ or decree of any court or any governmental commission, board,
bureau, agency or instrumentality, or delinquent with respect to any
report required to be filed with any governmental commission, board,
bureau, agency or instrumentality which violation or default could have
a material adverse effect upon the business, operations or financial
condition of Eccount.
4.14 Broker and Finders. Eccount shall be solely responsible for
payment to any broker or finder retained by Eccount for any brokerage fees,
commissions or finders' fees in connection with the transactions contemplated
herein.
4.15 Accuracy of Information. No representation or warranty by
Eccount contained in this Agreement and no statement contained in any
certificate or other instrument delivered or to be delivered to MMIC
pursuant hereto or in connection with the transactions contemplated hereby
(including without limitation all Schedules and Exhibits hereto) contains
or will contain any untrue statement of a material fact or omits or will
omit to state any material fact necessary in order to make the statements
contained herein or therein not misleading.
4.16 Subsidiaries. Except as listed in Schedule PP, Eccount does
not have any other subsidiaries or own capital stock representing
ten percent (10%) or more of the issued and outstanding stock of any
other corporation.
4.17 Consents. Except as listed in Schedule FF, no consent or
approval of, or registration, qualification or filing with, any other
governmental authority or other person is required to be obtained or
accomplished by Eccount or any shareholder thereof, in connection with the
consummation of the transactions contemplated hereby.
4.18 Improper Payments. No person acting on behalf of Eccount has made
any payment or otherwise transmitted anything of value, directly or
indirectly, to (a) any official or any government or agency or political
subdivision thereof for the purpose of influencing any decision affecting
the business of Eccount , or (b) any political party or any candidate for
elective political office, nor has any fund or other asset of Eccount been
maintained that was not fully and accurately recorded on the books of
account of Eccount.
4.19 Copies of Documents. Eccount has made available for inspection
and copying by MMIC and its duly authorized representatives, and will
continue to do so at all times, true and correct copies of all documents
which it has filed with any governmental agencies which are material to
the terms and conditions contained in this Agreement. Furthermore, all
filings by Eccount with governmental agencies, including but not limited
to the Internal Revenue Service, have contained information which is true
and correct in all material respects and did not contain any untrue statement
of a material fact or omit to state any material fact necessary to make the
statements made therein not misleading or which could have any material
adverse effect upon the financial condition or operations of Eccount or
adversely affect the objectives of this Agreement.
4.20 Investment Intent of Shareholders. Each shareholder of Eccount
represents and warrants to MMIC that the shares of MMIC being acquired
pursuant to this Agreement are being acquired for his own account and for
investment and not with a view to the public resale or distribution of
such shares and further acknowledges that the shares being issued
have not been registered under the Securities Act and are
"restricted securities" as that term is defined in Rule 144 promulgated
under the Securities Act and must be held indefinitely unless they are
subsequently registered under the Securities Act or an exemption from such
registration is available.
ARTICLE 5
CONDUCT AND TRANSACTIONS PRIOR TO THE
EFFECTIVE TIME OF THE ACQUISITION
5.01 Conduct and Transactions of MMIC. During the period from the
date hereof to the date of Closing, MMIC shall:
(a) Conduct its operations in the ordinary course of business,
including but not limited to, paying all obligations as they mature, complying
with all applicable tax laws, filing all tax returns required to be filed
and paying all taxes due;
(b) Maintain its records and books of account in a manner
that fairly and correctly reflects its income, expenses, assets and
liabilities;
(c) Make a one for twelve reverse split of the outstanding shares
of MMIC.
MMIC shall not during such period, except in the ordinary course of
business, without the prior written consent of Eccount :
(a) Except as otherwise contemplated or required by this
Agreement, sell, dispose of or encumber any of its properties or assets;
(b) Declare or pay any dividends on shares of its capital stock
or make any other distribution of assets to the holders thereof;
(c) Except as set forth in paragraph 5.01(c) above, issue, reissue
or sell, or issue options or rights to subscribe to, or enter into any
contract or commitment to issue, reissue or sell, any shares of its
capital stock or acquire or agree to acquire any shares of its capital
stock;
(d) Except as otherwise contemplated and required by this
Agreement, amend its Articles of Incorporation or merge or consolidate
with or into any other corporation or sell all or substantially all
of its assets or change in any manner the rights of its capital stock
or other securities;
(e) Except as contemplated or required by this Agreement,
pay or incur any obligation or liability, direct or contingent, of more than
$1,000, excluding the acquisitions identified in Paragraph B of this
Agreement;
(f) Incur any indebtedness for borrowed money, assume, guarantee,
endorse or otherwise become responsible for obligations of any other party,
or make loans or advances to any other party, excluding the acquisitions
identified in Paragraph B of this Agreement;
(g) Make any material change in its insurance coverage;
(h) Increase in any manner the compensation, direct or indirect,
of any of its officers or executive employees; except in accordance with
existing employment contracts;
(i) Enter into any agreement or make any commitment to any labor
union or organization;
(j) Make any capital expenditures, excluding the acquisitions
identified in Paragraph B of this Agreement.
(k) Obtain approval of the shareholders of MMIC to change the Name
of MMIC to WorldNet Resources Group, Inc. and reverse split the outstanding
common shares of MMIC on a one share for twelve share basis.
(l) Obtain resignations from three directors of the board of
directors of MMIC and appoint three nominees of Eccount to fill the
vacancies on the board of directors of MMIC at the Closing.
5.02 Conduct and Transactions of Eccount . During the period from the
date hereof to the date of Closing, Eccount shall:
(a) Obtain an investment letter from each shareholder of Eccount in
a form substantially like that attached hereto as Exhibit B.
(b) Conduct the operations of Eccount in the ordinary course of
business.
Eccount shall not during such period, except in the ordinary
course of business, without the prior written consent of MMIC:
(a) Except as otherwise contemplated or required by this
Agreement, sell, dispose of or encumber any of the properties or
assets of Eccount;
(b) Declare or pay any dividends on shares of its capital
stock or make any other distribution of assets to the holders thereof;
(c) Issue, reissue or sell, or issue options or rights to
subscribe to, or enter into any contract or commitment to issue,
reissue or sell, any shares of its capital stock or acquire or agree
to acquire any shares of its capital stock;
(d) Except as otherwise contemplated and required by this
Agreement, amend its Articles of Incorporation or merge or consolidate
with or into any other corporation or sell all or substantially all
of its assets or change in any manner the rights of its capital stock
or other securities;
(e) Except as otherwise contemplated and required by this
Agreement, pay or incur any obligation or liability, direct or contingent,
of more than $1,000;
(f) Incur any indebtedness for borrowed money, assume, guarantee,
endorse or otherwise become responsible for obligations of any other party,
or make loans or advances to any other party;
(g) Make any material change in its insurance coverage;
(h) Increase in any manner the compensation, direct or indirect,
of any of its officers or executive employees; except in accordance with
existing employment contracts;
(i) Enter into any agreement or make any commitment to any labor
union or organization;
(j) Make any material capital expenditures.
(k) Allow any of the foregoing actions to be taken by any
subsidiary of Eccount .
ARTICLE 6
RIGHTS OF INSPECTION
6.01 During the period from the date of this Agreement to the
date of Closing of the acquisition, MMIC and Eccount agree to use their
best efforts to give theother party, including its representatives and
agents, full access to the premises, books and records of each of the
entities, and to furnish the other with such financial and operating
data and other information including, but not limited to, copies of all
legal documents and instruments referred to on any schedule or exhibit
hereto, with respect to the business and properties of MMIC or Eccount,
as the case may be, as the other shall from time to time request;
provided, however, if there are any such investigations: (1) they shall
be conducted in such manner as not to unreasonably interfere with
the operation of the business of the other parties and (2) such right of
inspection shall not affect in any way whatsoever any of the
representations or warranties given by the respective parties hereunder.
In the event of termination of this Agreement, MMIC and Eccount will each
return to the other all documents, work papers and other materials obtained
from the other party in connection with the transactions contemplated
hereby, and will take such other steps necessary to protect the
confidentiality of such material.
ARTICLE 7
CONDITIONS TO CLOSING
7.01 Conditions to Obligations of Eccount. The obligation of Eccount
to perform this Agreement is subject to the satisfaction of the following
conditions on or before the Closing unless waived in writing by Eccount .
(a) Representations and Warranties. There shall be no
information disclosed in the schedules delivered by MMIC which in
the opinion of Eccount would materially adversely
affect the proposed transaction and intent of the parties as set forth
in this Agreement. The representations and warranties of MMIC set forth
in Article 3 hereof shall be true and correct in all material respects as
of the date of this Agreement and as of the Closing as though made on and
as of the Closing, except as otherwise permitted by this Agreement.
(b) Performance of Obligations. MMIC shall have in all material
respects performed all agreements required to be performed by it under this
Agreement and shall have performed in all material respects any actions
contemplated by this Agreement prior to or on the Closing and MMIC shall
have complied in all material respects with the course of conduct required
by this Agreement.
(c) Corporate Action. MMIC shall have furnished minutes,
certified copies of corporate resolutions and/or other documentary
evidence satisfactory to counsel for Eccount that MMIC has submitted with
this Agreement and any other documents required hereby to such parties
for approval as provided by applicable law.
(d) Consents. Execution of this Agreement by the shareholders
of Eccount and any consents necessary for or approval of any party listed
on any Schedule delivered by MMIC whose consent or approval is required
pursuant thereto shall have been obtained.
(e) Financial Statements. Eccount shall have been furnished
with audited financial statements of MMIC including, but not limited to,
balance sheets and profit and loss statements from fiscal year end 1998 and
unaudited financial statements of September 30, 1999. Such financial
statements shall have been prepared in conformity with generally accepted
accounting principles on a basis consistent with those of prior periods
and fairly present the financial position of MMIC as of the periods
stated.
(f) Statutory Requirements. All statutory requirements for the
valid consummation by MMIC of the transactions contemplated by this
Agreement shall have been fulfilled.
(g) Governmental Approval. All authorizations, consents,
approvals, permits and orders of all federal and state governmental
agencies required to be obtained by MMIC for consummation of the
transactions contemplated by this Agreement shall have been obtained.
(h) Changes in Financial Condition of MMIC. There shall not
have occurred any material adverse change in the financial condition or
in the operations of the business of MMIC, except expenditures in
furtherance of this Agreement, excluding the acquisitions identified in
Paragraph B of this Agreement.
(i) Absence of Pending Litigation. MMIC is not engaged in or
threatened with any suit, action, or legal, administrative or other
proceedings or governmental investigations pertaining to this Agreement or
the consummation of the transactions contemplated hereunder.
(j) Authorization for Issuance of Stock. Eccount shall have
received in form and substance satisfactory to counsel for Eccount a
letter instructing and authorizing the Registrar and Transfer Agent for
the shares of common stock of MMIC to issue stock certificates
representing ownership of MMIC common stock to Eccount shareholders in
accordance with the terms of this Agreement and a letter from said
Registrar and Transfer Agent acknowledging receipt of the letter of
instruction and stating to the effect that the Registrar and Transfer
Agent holds adequate supplies of stock certificates necessary to comply
with the letter of instruction and the terms and conditions of this
Agreement.
7.02 Conditions to Obligations of MMIC. The obligation of MMIC to
perform this Agreement is subject to the satisfaction of the following
conditions on or before the Closing unless waived in writing by MMIC.
(a) Representations and Warranties. There shall be no information
disclosed in the schedules delivered by Eccount, which in the opinion of
MMIC, would materially adversely affect the proposed transaction and intent
of the parties as set forth in this Agreement. The representations and
warranties of Eccount set forth in Article 4 hereof shall be true and
correct in all material respects as of the date of this Agreement
and as of the Closing as though made on and as of the Closing, except
as otherwise permitted by this Agreement.
(b) Performance of Obligations. Eccount shall have in all
material respects performed all agreements required to be performed by
it under this Agreement and shall have performed in all material respects
any actions contemplated by this Agreement prior to or on the Closing and
Eccount shall have complied in all respects with the course of conduct
required by this Agreement.
(c) Corporate Action. Eccount shall have furnished minutes,
certified copies of corporate resolutions and/or other documentary
evidence satisfactory to Counsel for MMIC that Eccount has submitted
with this Agreement and any other documents required hereby to such
parties for approval as provided by applicable law.
(d) Consents. Any consents necessary for or approval of any
party listed on any Schedule delivered by Eccount, whose consent or
approval is required pursuant thereto, shall have been obtained.
(e) Financial Statements. MMIC shall have been furnished with
audited balance sheet of Eccount as of its inception through a current date.
(f) Statutory Requirements. All statutory requirements for the
valid consummation by Eccount of the transactions contemplated by
this Agreement shall have been fulfilled.
(g) Governmental Approval. All authorizations, consents,
approvals, permits and orders of all federal and state governmental
agencies required to be obtained by Eccount for consummation of the
transactions contemplated by this Agreement shall have been obtained.
(h) Employment Agreements. Existing Eccount employment
agreements will have been delivered to counsel for MMIC.
(i) Changes in Financial Condition of Eccount . There shall
not have occurred any material adverse change in the financial condition
or in the operations of the business of Eccount, except expenditures in
furtherance of this Agreement.
(j) Absence of Pending Litigation. Eccount is not engaged
in or threatened with any suit, action, or legal, administrative or
other proceedings or governmental investigations pertaining to this
Agreement or the consummation of the transactions contemplated hereunder.
(k) Shareholder Approval. The Eccount shareholders shall have
approved the Agreement and Plan of Reorganization.
(l) Funding Commitment. MMIC shall have received from Eccount
a funding commitment from a source provided by Eccount to raise between
$1,000,000 and $5,000,000 for MMIC, with an amount of not less than
$1,000,000 to be received by MMIC on or before Closing.
ARTICLE 8
MATTERS SUBSEQUENT TO CLOSING
8.01 Covenant of Further Assurance. The parties covenant and agree
that they shall, from time to time, execute and deliver or cause to be
executed and delivered all such further instruments of conveyance,
transfer, assignments, receipts and other instruments, and shall take
or cause to be taken such further or other actions as the other party or
parties to this Agreement may reasonably deem necessary in order to carry
out the purposes and intent of this Agreement.
8.02 The parties shall use their best efforts to completed the funding
of MMIC pursuant to the funding commitment delivered to MMIC from Eccount.
8.03 The parties shall cooperate to have MMIC complete and file a Form
10-SB with the Securities and Exchange Commission to register the common
shares of MMIC under section 12(g) of the Exchange Act of 1934, as soon as
reasonably practical following the Closing.
ARTICLE 9
NATURE AND SURVIVAL OF REPRESENTATIONS
9.01 All statements contained in any written certificate, schedule,
exhibit or other written instrument delivered by MMIC or Eccount
pursuant hereto, or otherwise adopted by MMIC, by its written approval,
or by Eccount by its written approval, or in connection with the
transactions contemplated hereby, shall be deemed representations and
warranties by MMIC or Eccount as the case may be. All representations,
warranties and agreements made by either party shall survive for the period
of the applicable statute of limitations and until the discovery of any
claim, loss, liability or other matter based on fraud, if longer.
ARTICLE 10
TERMINATION OF AGREEMENT AND ABANDONMENT OF REORGANIZATION
10.01 Termination. Anything herein to the contrary notwithstanding,
this Agreement and any agreement executed as required hereunder and the
acquisition contemplated hereby may be terminated at any time before the
Closing as follows:
(a) By mutual written consent of the Boards of Directors
of MMIC and Eccount.
(b) By the Board of Directors of MMIC if any of the conditions
set forth in Section 7.02 shall not have been satisfied by the Closing
Date.
(c) By the Board of Directors of Eccount if any of the
conditions set forth in Section 7.01 shall not have been satisfied
by the Closing Date.
10.02 Termination of Obligations and Waiver of Conditions; Payment
of Expenses. In the event this Agreement and the acquisition are
terminated and abandoned pursuant to this Article 10 hereof, this
Agreement shall become void and of no force and effect and there shall be
no liability on the part of any of the parties hereto, or their
respective directors, officers, shareholders or controlling persons to
each other. Each party hereto will pay all costs and expenses
incident to its negotiation and preparation of this Agreement and
any of the documents evidencing the transactions contemplated
hereby, including fees, expenses and disbursements of counsel.
ARTICLE 11
EXCHANGE OF SHARES; FRACTIONAL SHARES
11.01 Exchange of Shares. At the Closing, MMIC shall issue a letter
to the transfer agent of MMIC with a copy of the resolution of the Board
of Directors of MMIC authorizing and directing the issuance of MMIC
shares as set forth on Exhibit A to this Agreement.
11.02 Restrictions on Shares Issued to Eccount . Due to the fact
that Eccount will receive shares of MMIC common stock in connection
with the acquisition which have not been registered under the 1933 Act
by virtue of the exemption provided in Section 4(2) of such Act, those
shares of MMIC will contain the following legend:
The shares represented by this certificate have not been
registered under the Securities Act of 1933. The shares have
been acquired for investment and may not be sold or offered for
sale in the absence of an effective Registration Statement
for the shares under the Securities Act of 1933 or an opinion
of counsel to the Corporation that such registration is
required.
ARTICLE 12
MISCELLANEOUS
12.01 Construction. This Agreement shall be construed and enforced
in accordance with the laws of the State of Utah excluding the conflicts
of laws.
12.02 Notices. All notices necessary or appropriate under this
Agreement shall be effective when personally delivered or deposited in the
United States mail, postage prepaid, certified or registered, return
receipt requested, and addressed to the parties last known address
which addresses are currently as follows:
If to "MMIC" If to "Eccount "
MMIC Corporation Eccount, Inc.
000 Xxxx 0000 Xxxxx, Xxxxx 0 00000 Xxxxxx Xxxxxxxxx, Xxxxx X
Xxxxx, Xxxx 00000 Xxx Xxxxxxx, Xxxxxxxxxx 00000
With copies to:
Xxxxxx X. Xxxxxxx, Esq.
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000-X
Xxxx Xxxx Xxxx, XX 00000
12.03 Amendment and Waiver. The parties hereby may, by mutual
agreement in writing signed by each party, amend this Agreement in any
respect. Any term or provision of this
Agreement may be waived in writing at any time by the party which is
entitled to the benefits thereof, such waiver right shall include, but
not be limited to, the right of either party to:
(a) Extend the time for the performance of any of the obligations
of the other;
(b) Waive any inaccuracies in representations by the other
contained in this Agreement or in any document delivered pursuant hereto;
(c) Waive compliance by the other with any of the covenants
contained in this Agreement, and performance of any obligations by the
other; and
(d) Waive the fulfillment of any condition that is precedent
to the performance by the party so waiving of any of its obligations under
this Agreement. Any writing on the part of a party relating to such
amendment, extension or waiver as provided in this Section 12.03 shall
be valid if authorized or ratified by the Board of Directors of such party.
12.04 Remedies not Exclusive. No remedy conferred by any of the
specific provisions of this Agreement is intended to be exclusive of any
other remedy, and each and every remedy shall be cumulative and shall be in
addition to every other remedy given hereunder or now or hereafter
existing at law or in equity or by statute or otherwise. The election of
any one or more remedies by MMIC or Eccount shall not constitute a waiver
of the right to pursue other available remedies.
12.05 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
12.06 Benefit. This Agreement shall be binding upon, and inure to
the benefit of, the respective successors and assigns of MMIC and Eccount
and its shareholders.
12.07 Entire Agreement. This Agreement and the Schedules and
Exhibits attached hereto, represent the entire agreement of the
undersigned regarding the subject matter hereof, and supersedes
all prior written or oral understandings or agreements between the parties.
12.08 Each Party to Bear its Own Expense. MMIC and Eccount shall
each bear their own respective expenses incurred in connection with
the negotiation, execution, closing, and performance of this Agreement,
including counsel fees and accountant fees.
12.09 Captions and Section Headings. Captions and section headings
used herein are for convenience only and shall not control or affect
the meaning or construction of any provision of this Agreement.
Executed as of the date first written above.
"MMIC" "Eccount "
Multi Media Industries Corporation Eccount, Inc.
a Utah corporation a California Corporation
By: /s/ Xxxxxx X. Xxxxxxxxx By: /s/ Xxxxxxx Xxxxx
Xxxxxx X. Xxxxxxxxx, Secretary/Treasurer Xxxxxxx Xxxxx, President
The undersigned hereby approves the Agreement and Plan of Reorganization
with MultiMedia Industries Corporation. The undersigned hereby represents
and warrants that the undersigned has read the Agreement and Plan of
Reorganization with Multi Media Industries Corporation and understands its
terms and conditions.
Shareholders of Eccount, Inc.
/s/ Xxxxxxx Xxxxx
Xxxxxxx Xxxxx
