AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made
this 6th day of October, 1999, among Amalgamated Entertainment, Inc., a
Delaware corporation ("Amalgamated"); MegaMedia Networks, Inc., a Nevada
corporation ("MegaMedia"); and the MegaMedia stockholders, all of whom are
listed on Exhibit A hereto and who execute and deliver a copy of the Agreement
(the "MegaMedia Stockholders").
W I T N E S S E T H:
RECITALS
WHEREAS, the respective Boards of Directors of Amalgamated and
MegaMedia have adopted resolutions pursuant to which Amalgamated shall
acquire and the MegaMedia Stockholders shall exchange 100% of the outstanding
common stock of MegaMedia; and
WHEREAS, the sole consideration for 100% interest in MegaMedia shall
be the exchange of $0.01 par value common stock of Amalgamated (which shares
are all "restricted securities" as defined in Rule 144 of the Securities and
Exchange Commission) as outlined in Exhibit A; and
WHEREAS, the MegaMedia Stockholders shall acquire in exchange the
"restricted securities" of Amalgamated in a reorganization within the meaning
of Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended;
NOW, THEREFORE, in consideration of the mutual covenants and
promises contained herein, it is agreed:
Section 1
Exchange of Stock
1.1 Number of Shares. The MegaMedia Stockholders agree
to transfer to Amalgamated at the closing (the "Closing") 100% of the
outstanding securities of MegaMedia, listed in Exhibit A, which is attached
hereto and incorporated herein by reference (the "MegaMedia Shares"), in
exchange for 10,461,367 shares of common stock of Amalgamated, pro rata, as
outlined in Exhibit A. Taking into account the current outstanding shares of
Amalgamated's common stock, amounting to approximately 2,538,633 shares, there
will be approximately 13,000,000 outstanding shares of the reorganized
Amalgamated on the Closing.
1.2 Delivery of Certificates by MegaMedia Stockholders.
The transfer of the MegaMedia Shares by the MegaMedia Stockholders shall be
effected by the delivery to Amalgamated at the Closing of stock certificate or
certificates representing the transferred shares duly endorsed in blank or
accompanied by stock powers executed in blank with all signatures witnessed or
guaranteed to the satisfaction of Amalgamated and with all necessary transfer
taxes and other revenue stamps affixed and acquired at the MegaMedia
Stockholders' expense.
1.3 Further Assurances. At the Closing and from time to
time thereafter, the MegaMedia Stockholders shall execute such additional
instruments and take such other action as Amalgamated may request in order to
exchange and transfer clear title and ownership in the MegaMedia Shares to
Amalgamated.
1.4 Resignations of Present Directors and Executive
Officers and Designation of New Directors and Executive Officers. On Closing,
the present directors and executive officers of Amalgamated shall designate
the directors and executive officers nominated by MegaMedia to serve in their
place and stead, until the next respective annual meetings of the stockholders
and the Board of Directors of Amalgamated, and until their respective
successors shall be elected and qualified or until their respective prior
resignations or terminations, who shall be: Xxxxxxx X. Xxxxxx, Xx., Director,
President, Secretary and Treasurer; and then, the current directors and
executive officers shall resign, in seriatim.
1.5 Change of Name. Following the Closing of this
Agreement, a Proxy Statement or Information Statement shall be prepared and
mailed to stockholders of the Company to amend the Articles of Incorporation
of the Company to change its name to "MegaMedia Network, Inc."
1.6 Assets and Liabilities of Amalgamated at Closing.
Amalgamated shall have no material assets and no liabilities at Closing, and
all costs incurred by Amalgamated incident to the Agreement shall have been
paid or satisfied.
1.7 Closing. The Agreement will be deemed to be
completed on receipt of the signatures of MegaMedia Stockholders collectively
owning not less than 80% of the outstanding MegaMedia Shares; and the
remainder of the MegaMedia Shares shall be acquired under and pursuant to the
terms and provisions of the Agreement as soon as practicable.
Section 2
Closing
The Closing contemplated by Section 1 shall be held at the offices
of Xxxxxxx X. Xxxxxxxxxx, Esq., Suite 205 Hermes Building, 000 Xxxx 000 Xxxxx,
Xxxx Xxxx Xxxx, Xxxx 00000, on or before ten days following the execution and
delivery of this Agreement, unless another place or time is agreed upon in
writing by the parties. The Closing may be accomplished by wire, express mail
or other courier service, conference telephone communications or as otherwise
agreed by the respective parties or their duly authorized representatives.
Section 3
Representations and Warranties of Amalgamated
Amalgamated represents and warrants to, and covenants with, the
MegaMedia Stockholders and MegaMedia as follows:
3.1 Corporate Status. Amalgamated is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Delaware and is licensed or qualified as a foreign corporation in all
states in which the nature of its business or the character or ownership of
its properties makes such licensing or qualification necessary (Delaware
only). Amalgamated is a publicly held company, having previously and lawfully
offered and sold a portion of its securities in accordance with applicable
federal and state securities laws, rules and regulations.
3.2 Capitalization. The current pre-Agreement authorized
capital stock of Amalgamated consists of 25,000,000 shares of $0.01 par value
common voting stock, of which approximately 2,538,632 shares are issued and
outstanding, all fully paid and non-assessable; and 1,000,000 shares of $0.01
par value preferred stock, none of which are issued and outstanding. Except
as otherwise provided herein, there are no outstanding options, warrants or
calls pursuant to which any person has the right to purchase any authorized
and unissued common or preferred stock of Amalgamated.
3.3 Financial Statements. The financial statements of
Amalgamated furnished to the MegaMedia Stockholders and MegaMedia, consisting
of audited financial statements for the years ended December 31, 1998 and
1997, and the period ended June 30, 1999, attached hereto as Exhibit B and
incorporated herein by reference, are correct and fairly present the financial
condition of Amalgamated at such dates and for the periods involved; such
statements were prepared in accordance with generally accepted accounting
principles consistently applied, and no material change has occurred in the
matters disclosed therein, except as indicated in Exhibit C, which is attached
hereto and incorporated herein by reference. Such financial statements do not
contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading.
3.4 Undisclosed Liabilities. Amalgamated has no
liabilities of any nature except to the extent reflected or reserved against
in its balance sheets, whether accrued, absolute, contingent or otherwise,
including, without limitation, tax liabilities and interest due or to become
due, except as set forth in Exhibit C.
3.5 Interim Changes. Since the date of its balance
sheets, except as set forth in Exhibit C, there have been no (1) changes in
financial condition, assets, liabilities or business of Amalgamated which, in
the aggregate, have been materially adverse; (2) damages, destruction or
losses of or to property of Amalgamated, payments of any dividend or other
distribution in respect of any class of stock of Amalgamated, or any direct or
indirect redemption, purchase or other acquisition of any class of any such
stock; or (3) increases paid or agreed to in the compensation, retirement
benefits or other commitments to its employees.
3.6 Title to Property. Amalgamated has good and
marketable title to all properties and assets, real and personal, reflected in
its balance sheets, and the properties and assets of Amalgamated are subject
to no mortgage, pledge, lien or encumbrance, except for liens shown therein or
in Exhibit C, with respect to which no default exists.
3.7 Litigation. There is no litigation or proceeding
pending, or to the knowledge of Amalgamated, threatened, against or relating
to Amalgamated, its properties or business, except as set forth in Exhibit C.
Further, no officer, director or person who may be deemed to be an "affiliate"
of Amalgamated is party to any material legal proceeding which could have an
adverse effect on Amalgamated (financial or otherwise), and none is party to
any action or proceeding wherein any has an interest adverse to Amalgamated.
3.8 Books and Records. From the date of this Agreement
to the Closing, Amalgamated will (1) give to the MegaMedia Stockholders and
MegaMedia or their respective representatives full access during normal
business hours to all of Amalgamated's offices, books, records, contracts and
other corporate documents and properties so that the MegaMedia Stockholders
and MegaMedia or their respective representatives may inspect and audit them;
and (2) furnish such information concerning the properties and affairs of
Amalgamated as the MegaMedia Stockholders and MegaMedia or their respective
representatives may reasonably request.
3.9 Tax Returns. Amalgamated has filed all federal and
state income or franchise tax returns required to be filed or has received
currently effective extensions of the required filing dates.
3.10 Confidentiality. Until the Closing (and thereafter
if there is no Closing), Amalgamated and its representatives will keep
confidential any information which they obtain from the MegaMedia Stockholders
or from MegaMedia concerning the properties, assets and business of MegaMedia.
If the transactions contemplated by this Agreement are not consummated by
October 15, 1999, Amalgamated will return to MegaMedia all written matter with
respect to MegaMedia obtained by Amalgamated in connection with the
negotiation or consummation of this Agreement.
3.11 Corporate Authority. Amalgamated has full corporate
power and authority to enter into this Agreement and to carry out its
obligations hereunder and will deliver to the MegaMedia Stockholders and
MegaMedia or their respective representatives at the Closing a certified copy
of resolutions of its Board of Directors authorizing execution of this
Agreement by Amalgamated's officers and performance thereunder, and that the
directors adopting and delivering such resolutions are the duly elected and
incumbent directors of Amalgamated.
3.12 Due Authorization. Execution of this Agreement and
performance by Amalgamated hereunder have been duly authorized by all
requisite corporate action on the part of Amalgamated, and this Agreement
constitutes a valid and binding obligation of Amalgamated and performance
hereunder will not violate any provision of the Articles of Incorporation,
Bylaws, agreements, mortgages or other commitments of Amalgamated.
3.13 Environmental Matters. Amalgamated has no knowledge
of any assertion by any governmental agency or other regulatory authority of
any environmental lien, action or proceeding, or of any cause for any such
lien, action or proceeding related to the business operations of Amalgamated
or Amalgamated' predecessors. In addition, to the best knowledge of
Amalgamated, there are no substances or conditions which may support a claim
or cause of action against Amalgamated or any of Amalgamated' current or
former officers, directors, agents or employees, whether by a governmental
agency or body, private party or individual, under any Hazardous Materials
Regulations. "Hazardous Materials" means any oil or petrochemical products,
PCB's, asbestos, urea formaldehyde, flammable explosives, radioactive
materials, solid or hazardous wastes, chemicals, toxic substances or related
materials, including, without limitation, any substances defined as or
included in the definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," or "toxic substances" under any applicable federal or
state laws or regulations. "Hazardous Materials Regulations" means any
regulations governing the use, generation, handling, storage, treatment,
disposal or release of hazardous materials, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act, the
Resource Conservation and Recovery Act and the Federal Water Pollution Control
Act.
3.14 Access to Information Regarding MegaMedia.
Amalgamated acknowledges that it has been delivered copies of what has been
represented to be documentation containing all material information respecting
MegaMedia and MegaMedia's present and contemplated business operations,
potential acquisitions, management and other factors; that it has had a
reasonable opportunity to review such documentation and discuss it, to the
extent desired, with its legal counsel, directors and executive officers; that
it has had, to the extent desired, the opportunity to ask questions of and
receive responses from the directors and executive officers of MegaMedia, and
with the legal and accounting firms of MegaMedia, with respect to such
documentation; and that to the extent requested, all questions raised have
been answered to Amalgamated's complete satisfaction.
Section 4
Representations, Warranties and Covenants of MegaMedia
and the MegaMedia Stockholders
MegaMedia and the MegaMedia Stockholders represent and warrant to,
and covenant with, Amalgamated as follows:
4.1 Ownership. MegaMedia Stockholders own the MegaMedia
Shares, free and clear of any liens or encumbrances of any type or nature
whatsoever, and each has full right, power and authority to convey the
MegaMedia Shares owned without qualification.
4.2 Corporate Status. MegaMedia is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Nevada and is licensed or qualified as a foreign corporation in all states
or foreign countries and provinces in which the nature of MegaMedia's business
or the character or ownership of MegaMedia properties makes such licensing or
qualification necessary.
4.3 Capitalization. The authorized capital stock of
MegaMedia consists of 10,000 shares of common stock, $0.01 par value per
share, of which 7,500 shares are issued and outstanding, all fully paid and
non-assessable. Except as otherwise provided herein, there are no
outstanding options, warrants or calls pursuant to which any person has the
right to purchase any authorized and unissued common stock of Amalgamated.
4.4 Financial Statements. The financial statements of
MegaMedia furnished to Amalgamated, consisting of unaudited financial
statements for the period ended September 30, 1999, attached hereto as Exhibit
D and incorporated herein by reference, are correct and fairly present the
financial condition of MegaMedia as of these dates and for the periods
involved, and such statements were prepared by management in good faith from
the books and records of MegaMedia, and no material change has occurred in the
matters disclosed therein, except as indicated in Exhibit E, which is attached
hereto and incorporated herein by reference. These financial statements do
not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading.
4.5 Undisclosed Liabilities. MegaMedia has no material
liabilities of any nature except to the extent reflected or reserved against
in the trial balance sheet, whether accrued, absolute, contingent or
otherwise, including, without limitation, tax liabilities and interest due or
to become due, except as set forth in Exhibit E attached hereto and
incorporated herein by reference.
4.6 Interim Changes. Since the date of the trial balance
sheet, except as set forth in Exhibit E, there have been no (1) changes in the
financial condition, assets, liabilities or business of MegaMedia, in the
aggregate, have been materially adverse; (2) damages, destruction or loss of
or to the property of MegaMedia, payment of any dividend or other distribution
in respect of the capital stock of MegaMedia, or any direct or indirect
redemption, purchase or other acquisition of any such stock; or (3) increases
paid or agreed to in the compensation, retirement benefits or other
commitments to their employees.
4.7 Title to Property. MegaMedia has good and marketable
title to all properties and assets, real and personal, proprietary or
otherwise, reflected in the trial balance sheet, and the properties and assets
of MegaMedia are subject to no mortgage, pledge, lien or encumbrance, except
as reflected in the balance sheet or in Exhibit E, with respect to which no
default exists.
4.8 Litigation. There is no litigation or proceeding
pending, or to the knowledge of MegaMedia, threatened, against or relating to
MegaMedia or its properties or business, except as set forth in Exhibit E.
Further, no officer, director or person who may be deemed to be an affiliate
of MegaMedia is party to any material legal proceeding which could have an
adverse effect on MegaMedia (financial or otherwise), and none is party to any
action or proceeding wherein any has an interest adverse to MegaMedia.
4.9 Books and Records. From the date of this Agreement
to the Closing, the MegaMedia Stockholders will cause MegaMedia to (1) give to
Amalgamated and its representatives full access during normal business hours
to all of its offices, books, records, contracts and other corporate documents
and properties so that Amalgamated may inspect and audit them; and (2) furnish
such information concerning the properties and affairs of MegaMedia as
Amalgamated may reasonably request.
4.10 Tax Returns. MegaMedia has filed all federal and
state income or franchise tax returns required to be filed or has received
currently effective extensions of the required filing dates.
4.11 Confidentiality. Until the Closing (and continuously
if there is no Closing), MegaMedia, the MegaMedia Stockholders and their
representatives will keep confidential any information which they obtain from
Amalgamated concerning its properties, assets and business. If the
transactions contemplated by this Agreement are not consummated by October 15,
1999, MegaMedia and the MegaMedia Stockholders will return to Amalgamated all
written matter with respect to Amalgamated obtained by them in connection with
the negotiation or consummation of this Agreement.
4.12 Investment Intent. The MegaMedia Stockholders are
acquiring the shares to be exchanged and delivered to them under this
Agreement for investment and not with a view to the sale or distribution
thereof, and the MegaMedia Stockholders have no commitment or present
intention to liquidate the Company or to sell or otherwise dispose of the
Amalgamated shares. The MegaMedia Stockholders shall execute and deliver to
Amalgamated on the Closing an Investment Letter attached hereto as Exhibit F
and incorporated herein by reference, acknowledging the "unregistered" and
"restricted" nature of the shares of Amalgamated being received under the
Agreement in exchange for the MegaMedia Shares; receipt of certain material
information regarding Amalgamated; and whereby each is compromising and/or
waiving any claims each has or may have against MegaMedia by reason of the
purchase of any securities of MegaMedia by each or any of them prior to the
Closing of the Agreement.
4.13 Corporate Authority. MegaMedia has full corporate
power and authority to enter into this Agreement and to carry out its
obligations hereunder and will deliver to Amalgamated or its representative at
the Closing a certified copy of resolutions of its Board of Directors
authorizing execution of this Agreement by its officers and performance
thereunder.
4.14 Due Authorization. Execution of this Agreement and
performance by MegaMedia hereunder have been duly authorized by all requisite
corporate action on the part of MegaMedia, and this Agreement constitutes a
valid and binding obligation of MegaMedia and performance hereunder will not
violate any provision of the Articles of Incorporation, Bylaws, agreements,
mortgages or other commitments of MegaMedia.
4.15 Environmental Matters. MegaMedia and the MegaMedia
Stockholders have no knowledge of any assertion by any governmental agency or
other regulatory authority of any environmental lien, action or proceeding, or
of any cause for any such lien, action or proceeding related to the business
operations of MegaMedia or its predecessors. In addition, to the best
knowledge of MegaMedia, there are no substances or conditions which may
support a claim or cause of action against MegaMedia or any of its current or
former officers, directors, agents, employees or predecessors, whether by a
governmental agency or body, private party or individual, under any Hazardous
Materials Regulations. "Hazardous Materials" means any oil or petrochemical
products, PCB's, asbestos, urea formaldehyde, flammable explosives,
radioactive materials, solid or hazardous wastes, chemicals, toxic substances
or related materials, including, without limitation, any substances defined as
or included in the definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," or "toxic substances" under any applicable federal or
state laws or regulations. "Hazardous Materials Regulations" means any
regulations governing the use, generation, handling, storage, treatment,
disposal or release of hazardous materials, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act, the
Resource Conservation and Recovery Act and the Federal Water Pollution Control
Act.
4.16 Access to Information Regarding Amalgamated. MegaMedia and the
MegaMedia Stockholders acknowledge that they have been delivered copies of
what has been represented to be documentation containing all material
information respecting Amalgamated and its present and contemplated business
operations, potential acquisitions, management and other factors; that they
have had a reasonable opportunity to review such documentation and discuss it,
to the extent desired, with their legal counsel, directors and executive
officers; that they have had, to the extent desired, the opportunity to ask
questions of and receive responses from the directors and executive officers
of Amalgamated, and with the legal and accounting firms of Amalgamated, with
respect to such documentation; and that to the extent requested, all questions
raised have been answered to their complete satisfaction.
Section 5
Conditions Precedent to Obligations of MegaMedia
and the MegaMedia Stockholders
All obligations of MegaMedia and the MegaMedia Stockholders under
this Agreement are subject, at their option, to the fulfillment, before or at
the Closing, of each of the following conditions:
5.1 Representations and Warranties True at Closing. The
representations and warranties of Amalgamated contained in this Agreement
shall be deemed to have been made again at and as of the Closing and shall
then be true in all material respects and shall survive the Closing.
5.2 Due Performance. Amalgamated shall have performed
and complied with all of the terms and conditions required by this Agreement
to be performed or complied with by it before the Closing.
5.3 Officers' Certificate. MegaMedia and the MegaMedia
Stockholders shall have been furnished with a certificate signed by the
President of Amalgamated, in such capacity, attached hereto as Exhibit G and
incorporated herein by reference, dated as of the Closing, certifying (1) that
all representations and warranties of Amalgamated contained herein are true
and correct; and (2) that since the date of the financial statements (Exhibit
B hereto), there has been no material adverse change in the financial
condition, business or properties of Amalgamated, taken as a whole.
5.4 Opinion of Counsel of Amalgamated. MegaMedia and the
MegaMedia Stockholders shall have received an opinion of counsel for
Amalgamated, dated as of the Closing, to the effect that (1) the
representations of Sections 3.1, 3.2 and 3.11 are correct; (2) except as
specified in the opinion, counsel knows of no inaccuracy in the
representations in 3.5, 3.6 or 3.7; and (3) the shares of Amalgamated to be
issued to the MegaMedia Stockholders under this Agreement will, when so
issued, be validly issued, fully paid and non-assessable.
5.5 Assets and Liabilities of Amalgamated. Unless
otherwise agreed, Amalgamated shall have no assets and no liabilities at
Closing, and all costs, expenses and fees incident to the Agreement shall have
been paid.
5.6 Resignation of Directors and Executive Officers and
Designation of New Directors and Executive Officers. The present directors
and executive officers of Amalgamated shall resign, and shall have designated
nominees of MegaMedia as outlined in Section 1.4 hereof as directors and
executive officers of Amalgamated to serve in their place and stead, until the
next respective annual meetings of the stockholders and Board of Directors of
Amalgamated, and until their respective successors shall be elected and
qualified or until their respective prior resignations or terminations; and
then, such directors and executive officers shall resign, in seriatim.
5.7 Name Change. Prior to or simultaneous with the
Closing of this Agreement, (i) Amalgamated and its majority stockholder shall
have adopted such resolutions as are necessary for the purpose of amending its
Articles of Incorporation to change the name of Amalgamated to "MegaMedia
Network, Inc."
5.8 Stockholders' Consent. Persons owing not less than
80% of the outstanding MegaMedia Shares shall have executed and delivered the
Agreement.
Section 6
Conditions Precedent to Obligations of Amalgamated
All obligations of Amalgamated under this Agreement are subject, at
Amalgamated's option, to the fulfillment, before or at the Closing, of each of
the following conditions:
6.1 Representations and Warranties True at Closing. The
representations and warranties of MegaMedia and the MegaMedia Stockholders
contained in this Agreement shall be deemed to have been made again at and as
of the Closing and shall then be true in all material respects and shall
survive the Closing.
6.2 Due Performance. MegaMedia and the MegaMedia
Stockholders shall have performed and complied with all of the terms and
conditions required by this Agreement to be performed or complied with by them
before the Closing.
6.3 Officers' Certificate. Amalgamated shall have been
furnished with a certificate signed by the President of MegaMedia, in such
capacity, attached hereto as Exhibit H and incorporated herein by reference,
dated as of the Closing, certifying (1) that all representations and
warranties of MegaMedia and the MegaMedia Stockholders contained herein are
true and correct; and (2) that since the date of the financial statements
(Exhibit D), there has been no material adverse change in the financial
condition, business or properties of MegaMedia, taken as a whole.
6.4 Books and Records. The MegaMedia Stockholders or the
Board of Directors of MegaMedia shall have caused MegaMedia to make available
all books and records of MegaMedia, including minute books and stock transfer
records; provided, however, only to the extent requested in writing by
Amalgamated at Closing.
6.5 Stockholders' Consent. Persons owing not less than
80% of the outstanding MegaMedia Shares shall have executed and delivered the
Agreement.
Section 7
Termination
Prior to Closing, this Agreement may be terminated (1) by mutual
consent in writing; (2) by either the directors of Amalgamated or MegaMedia
and the MegaMedia Stockholders if there has been a material misrepresentation
or material breach of any warranty or covenant by the other party; or (3) by
either the directors of Amalgamated or MegaMedia and the MegaMedia
Stockholders if the Closing shall not have taken place, unless adjourned to a
later date by mutual consent in writing, by the date fixed in Section 2.
Section 8
General Provisions
8.1 Further Assurances. At any time, and from time to
time, after the Closing, each party will execute such additional instruments
and take such action as may be reasonably requested by the other party to
confirm or perfect title to any property transferred hereunder or otherwise to
carry out the intent and purposes of this Agreement.
8.2 Waiver. Any failure on the part of any party hereto
to comply with any of Amalgamated obligations, agreements or conditions
hereunder may be waived in writing by the party to whom such compliance is
owed.
8.3 Brokers. Each party represents to the other parties
hereunder that no broker or finder has acted for it in connection with this
Agreement, and agrees to indemnify and hold harmless the other parties against
any fee, loss or expense arising out of claims by brokers or finders employed
or alleged to have been employed by he/she/it.
8.4 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed to have been given if
delivered in person or sent by prepaid first-class registered or certified
mail, return receipt requested, as follows:
If to Amalgamated: 0000 Xxxxx 000 Xxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
With a copy to: Xxxxxxx X. Xxxxxxxxxx, Esq.
455 East 000 Xxxxx, #000
Xxxx Xxxx Xxxx, Xxxx 00000
If to MegaMedia: Xxxxxxx X. Xxxxxx, President
00 Xxxx Xxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
With a copy to: Xxxx X. Xxxxx, P.A.
000 Xxxx Xxxxxx, Xxxxx X
Xxxxx, Xxxxxxx 00000
If to the MegaMedia To the addresses listed on
Stockholders: Exhibit A
8.5 Entire Agreement. This Agreement constitutes the
entire agreement between the parties and supersedes and cancels any other
agreement, representation or communication, whether oral or written, between
the parties hereto relating to the transactions contemplated herein or the
subject matter hereof.
8.6 Headings. The section and subsection headings in
this Agreement are inserted for convenience only and shall not affect in any
way the meaning or interpretation of this Agreement.
8.7 Governing Law. This Agreement shall be governed by
and construed and enforced in accordance with the laws of the State of
Delaware, except to the extent pre-empted by federal law, in which event (and
to that extent only), federal law shall govern.
8.8 Assignment. This Agreement shall inure to the
benefit of, and be binding upon, the parties hereto and their successors and
assigns.
8.9 Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
8.10 Default. In the event of any default hereunder, the
prevailing party in any action to enforce the terms and provisions hereof
shall be entitled to recover reasonable attorney's fees and related costs.
IN WITNESS WHEREOF, the parties have executed this Agreement and Plan
of Reorganization effective the day and year first above written.
AMALGAMATED ENTERTAINMENT, INC.
Date: 10/6/99 /s/ Xxxxx X. Xxxxxx, President
MEGAMEDIA NETWORK, INC.
Date: 10/6/99 /s/ Xxxxxxx X. Xxxxxx, President
CAPITAL ACCESS MANAGEMENT GROUP, INC.
Date: 9/24/99 /s/ Xxxxxxx Xxxxxx
Date: 9/24/99 /s/ Xxxxxxx X. Xxxxxx
Date: 9/24/99 /s/ Xxxxx X. Xxxxxxxxx
Date: 9/24/99 /s/ Xxxx X. Xxxxx
INTERNET ONLINE SERVICES
Date: 9/24/99 /s/ Xxxxxxx Xxxxxx, President
EXHIBIT A
Number of Shares of
Number of Shares Amalgamated
Owned of to be
Name MegaMedia Received in Exchange
Internet Online 2,500 3,487,122
Services, Inc.
0000 Xxxx Xxxxxxx Xxxx.,
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Xxxxxxx X. Xxxxxx, Xx. 1,875 2,615,341
000 Xxxxxxx Xxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Xxxxx X. Xxxxxxxxx 500 697,424
000 Xxxx Xxxxxxx Xxxxxx,
00xx Xxxxx
Xxxxx, XX 00000
Xxxx X. Xxxxx 125 174,356
00 Xxxx Xxxxxx, Xxxxx X
Xxxxx, Xxxxxxx 00000
Capital Access Management 2,500 3,487,122
Group, Inc.
x/x Xxxxxxxxxxx Xxxxxxxx, Xxx.
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxxxxx, XX 00000
EXHIBIT B
AMALGAMATED ENTERTAINMENT, INC.
FINANCIAL STATEMENTS
FOR THE YEAR ENDED
DECEMBER 31, 1998
AND
JUNE 30, 1999
(See the Registrant's 10-SB Registration Statement filed
with the Securities and Exchange Commission on or about
July 23, 1999)
EXHIBIT C
None.
EXHIBIT D
MEGAMEDIA NETWORKS, INC.
UNAUDITED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 1999
XXXXXX & XXXXXXXX, P.A. [letterhead]
The Board of Directors
MegaMedia Networks, Inc.
Orlando, Florida
INDEPENDENT ACCOUNTANTS' COMPILATION REPORT
We have compiled the accompanying balance sheet of MegaMedia Networks, Inc. (a
development stage company, the "Company") as of September 30,1999, and the
related statements of operations and stockholders' deficit and cash flows for
the period from May 27, 1999 (date of inception) to September 30, 1999, in
accordance with statements on Standards for Accounting and Review Services
issued by the American Institute of Certified Public Accountants.
A compilation is limited to presenting in the form of financial statements
information that is the representation of management. We have not audited or
reviewed the accompanying financial statements and, accordingly, do not
express an opinion or any form of assurance on them.
/s/Xxxxxx & Xxxxxxxx
XXXXXX & XXXXXXXX, P.A.
October 5, 1999
MEGAMEDIA NETWORKS, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
September 30, 1999
ASSETS
CURRENT ASSETS
Cash $ 40,942
Prepaid expenses 85,196
Total current assets 126,138
PREPAID EXPENSES 145,834
EQUIPMENT, net of accumulated depreciation 108,346
DEPOSITS 8,642
Total assets $388,960
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable $ 32,283
Convertible debt 425,000
Total current liabilities 457,283
STOCKHOLDERS' DEFICIT:
Common stock, $.01 par value, 10,000 shares authorized,
7,500 shares issued and outstanding 75
Paid-in capital 749,925
Deficit accumulated during the development stage (818,323
Total stockholders' deficit (68,323)
Total liabilities and stockholders' deficit $ 388,960
See the Accompanying Independent Accountants' Compilation
Report and Notes To The Financial Statements
MEGAMEDIA NETWORKS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
Period From May 27, 1999 (Date of Inception), To September 30, 1999
REVENUES $ 0
EXPENSES:
Advertising 1,508
Automobile 1,419
Depreciation 1,527
Dues and subscriptions 1,454
Employee leasing 140,850
Equipment rentals 6,892
Insurance 6,406
Licenses and permits 2,900
Marketing 3,984
Miscellaneous 4,521
Office 7,443
Parking and tolls 3,085
Postage 683
Professional development 16,154
Professional fees 528,996
Rent 23,520
Repairs and maintenance 7,139
Supplies 9,803
Telephone 11,951
Travel 36,703
Utilities 1,385
Total expenses 818,323
LOSS BEFORE INCOME TAXES (818,323)
INCOME TAXES 0
NET LOSS $(818,323)
See the Accompanying Independent Accountants' Compilation
Report and Notes To The Financial Statements
MEGAMEDIA NETWORKS INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' DEFICIT
Period From May 27, 1999 (Date of Inception), To September 30, 1999
Deficit
Accumulated
During the Total
Common Paid-in Development Stockholders'
Stock Capital Stage Deficit
BALANCE - May 27,1999 $ - $ - $ - $ -
Issuance of common stock 75 749,925 - 750,000
Net loss - - (818,323) (818,323)
BALANCE - September 30, 1999 75 $749,925 $(818,323) $ (68,323)
See the Accompanying Independent Accountants' Compilation
Report and Notes To The Financial Statements
MEGAMEDIA NETWORKS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
Period From May 27, 1999 (Date of Inception), To September 30, 1999
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash paid to suppliers $(265,543)
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of equipment (109,873)
Payments of security deposits (8,642)
Net cash flows from investing activities (118,515)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of convertible debt 425,000
Net cash flows from financing activities 425,000
NET CHANGE IN CASH AND CASH EQUIVALENTS 40,942
CASH AND CASH EQUIVALENTS - Beginning of period -
CASH AND CASH EQUIVALENTS - End of period $ 40,942
RECONCILIATION OF NET LOSS TO NET CASH FLOWS
FROM OPERATING ACTIVITIES:
Net loss $(818,323)
Adjustments to reconcile net loss to net cash flows
from operating activities:
Depreciation 1,527
Noncash professional fees 750,000
Change in prepaid expenses (231,030)
Change in accounts payable 32,283
NET CASH FLOWS FROM OPERATING ACTIVITIES $(265,543)
NONCASH FINANCING ACTIVITIES:
During the period from May 27, 1999 (date of inception) to September 30,1999,
the Company issued 7,500 shares of common stock in exchange for professional
services received valued at $750,000.
See the Accompanying Independent Accountants' Compilation
Report and Notes To The Financial Statements
MEGAMEDIA NETWORKS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
September 30, 1999
NOTE A - NATURE OF OPERATIONS
MegaMedia Networks, Inc. is a Nevada corporation headquartered in Orlando,
Florida. The Company provides users of the internet with an online environment
for purchasing specialized on-demand or live pay-per-view events, music,
videos, concerts and services.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Development stage operations: The Company was incorporated May 27, 1999.
Operations to date have been devoted primarily to raising capital, obtaining
financing, establishing supplier affiliations and strategic alliance
arrangements, establishing the corporate headquarters, and administrative
functions. The Company also expects to merge with an
existing public company before November 1, 1999.
Cash and cash equivalents: For purposes of the statement of cash flows, the
Company considers all highly liquid investments purchased with original
maturities of three months or less to be cash equivalents.
Equipment: Equipment is stated at cost. Depreciation is computed using the
straight-line method over the estimated useful lives of the related assets.
Deferred income taxes: Deferred income taxes result from the tax effects of
net operating loss carry-forwards. A valuation allowance of $278,230 has been
provided for the deferred tax asset balance based on the Company's assessment
of the likelihood of realization.
Use of estimates: Management uses estimates and assumptions in preparing
financial statements. Those estimates and assumptions affect the reported
amounts of assets and liabilities, the disclosure of contingent assets and
liabilities, and reported revenues and expenses.
Advertising costs: Advertising costs are expensed as incurred.
NOTE C - CONCENTRATION OF CREDIT RISK
The Company maintains its cash in a bank account which, at times, may exceed
federally insured limits. The Company has not experienced any losses in such
accounts and believes it is not exposed to any significant credit risk related
to cash.
NOTE D - PREPAID EXPENSES
Prepaid expenses include $229,167 of costs paid to an internet traffic
consolidator who is providing the Company with pre-qualified internet traffic.
The costs of this agreement are being amortized using the straight-line method
over 36 months, the term of this agreement.
NOTE E - EQUIPMENT
Equipment consists of the following:
Category Cost
Office furniture and equipment $ 3,231
Computer equipment 31,642
Software development in process 75,000
Total equipment 109,873
Less: Accumulated depreciation (1,527)
Net equipment 108,346
At September 30, 1999, the Company is in the process of having an outside
third party develop specialized computer software for the Company's internal
use. The software is expected to cost approximately $180,000, of which $75,000
had been paid as of September 30, 1999.
NOTE F - CONVERTIBLE DEBT
Convertible debt consists of loans payable to a corporation that are
convertible into common stock of a publicly-held corporation which acquires at
least a 51% interest in the Company. The $425,000 of loans payable will be
converted into 212,500 shares of common stock of this publicly-held
corporation. If the loans are not converted into common stock by November 1,
1999, the loans will become due December 15, 1999 with interest on the
principal amount due from the date the funds were received by the Company
until repaid at an interest rate of 8% per annum.
NOTE G - COMMITMENTS AND CONTINGENCIES
The Company is the lessee under operating lease agreements for its office
facility, other premises and for certain furniture and equipment. Total lease
expense under these leases amounted to approximately $30,400 for the period
from May 27, 1999 (date of inception), to September 30, 1999. Future minimum
lease payments under these operating leases as of September 30, 1999, are as
follows:
Year Ending
September 30,
2000 $77,115
2001 $75,143
2002 $40,799
NOTE H - SUBSEQUENT EVENT
Subsequent to the balance sheet date, the Company expects to enter into an
agreement and plan of reorganization with Amalgamated Entertainment, Inc.
("Amalgamated") a public company. Under this agreement Amalgamated shall
acquire, and the Company's stockholders shall exchange, 100% of the
outstanding common stock of the Company. The sole consideration for 100%
interest in the Company shall be the exchange of 10,461,367 shares of $0.01
par value common stock of Amalgamated. In addition, prior to or simultaneously
with the closing of this agreement, Amalgamated shall change its name to
"MegaMedia Network, Inc."
EXHIBIT E
None.
EXHIBIT F
Atlas Stock Transfer
0000 Xxxxx Xxxxx
Xxxxxx, Xxxx 00000
Amalgamated Entertainment, Inc.
0000 Xxxxx 000 Xxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
Re: Exchange of shares of MegaMedia Networks, Inc., a
Nevada corporation ("MegaMedia"), for shares of
Amalgamated Entertainment, Inc., a Delaware
corporation ("Amalgamated or "Company")
Dear Ladies and Gentlemen:
Pursuant to that certain Agreement and Plan of Reorganization (the
"Agreement") between the undersigned, MegaMedia, the other stockholders of
MegaMedia and Amalgamated, I acknowledge that I have approved this exchange;
that I am aware of all of the terms and conditions of the Agreement; that I
have received and personally reviewed a copy of any and all material documents
regarding the Company, including, but not limited to Articles of
Incorporation, Bylaws, minutes of meetings of directors and stockholders,
financial statements and the Company's 10-SB Registration Statement. I
represent and warrant that no director or officer of the Company or any
associate of either has solicited this exchange; that I am an "accredited
investor" as that term is known under the Rules and Regulations of the
Securities and Exchange Commission (see Exhibit "A" hereto); and/or, I
represent and warrant that I have sufficient knowledge and experience to
understand the nature of the exchange and am fully capable of bearing the
economic risk of the loss of my entire cost basis.
I further understand that immediately prior to the completion of the
Agreement, Amalgamated had little, if any assets, of any measurable value, and
that in actuality, the completion of the Agreement and the exchange of my
shares of MegaMedia for shares of Amalgamated results in a decrease in the
actual percentage of ownership that my shares of MegaMedia represented in
MegaMedia prior to the completion of the Agreement.
I understand that you have and will make books and records of your
Company available to me for my inspection in connection with the contemplated
exchange of my shares, and that I have been encouraged to review the
information and ask any questions I may have concerning the information of any
director or officer of the Company or of the legal and accounting firms for
the Company. I understand that the accounting firm for Amalgamated is
Xxxxxxx, XxXxxxxxxx & Associates, Certified Public Accountants, 0000 Xxxxx 000
Xxxx, Xxxxx 000, Xxxx Xxxx Xxxx, Xxxx 00000; Telephone #000-000-0000; and that
legal counsel for Amalgamated is Xxxxxxx X. Xxxxxxxxxx, Esq., 000 Xxxx 0xx
Xxxxx, Xxxxx 000, Xxxx Xxxx Xxxx, Xxxx 00000, Telephone #000-000-0000.
I also understand that I must bear the economic risk of ownership of
any of the Amalgamated shares for a long period of time, the minimum of which
will be one (1) year, as these shares are "unregistered" shares and may not be
sold unless any subsequent offer or sale is registered with the United States
Securities and Exchange Commission or otherwise exempt from the registration
requirements of the Securities Act of 1933, as amended (the "Act"), or other
applicable laws, rules and regulations.
I intend that you rely on all of my representations made herein and
those in the personal questionnaire (if applicable) I provided to MegaMedia
for use by Amalgamated as they are made to induce you to issue me the shares
of Amalgamated under the Agreement, and I further represent (of my personal
knowledge or by virtue of my reliance on one or more personal
representatives), and agree as follows, to-wit:
1. That the shares being acquired are being received for
investment purposes and not with a view toward further distribution;
2. That I have a full and complete understanding of the phrase
"for investment purposes and not with a view toward further distribution";
3. That I understand the meaning of "unregistered shares" and know
that they are not freely tradeable;
4. That any stock certificate issued by you to me in connection
with the shares being acquired shall be imprinted with a legend restricting
the sale, assignment, hypothecation or other disposition unless it can be made
in accordance with applicable laws, rules and regulations;
5. I agree that the stock transfer records of your Company shall
reflect that I have requested the Company not to effect any transfer of any
stock certificate representing any of the shares being acquired unless I shall
first have obtained an opinion of legal counsel to the effect that the shares
may be sold in accordance with applicable laws, rules and regulations, and I
understand that any opinion must be from legal counsel satisfactory to the
Company and, regardless of any opinion, I understand that the exemption
covered by any opinion must in fact be applicable to the shares;
6. That I shall not sell, offer to sell, transfer, assign,
hypothecate or make any other disposition of any interest in the shares being
acquired except as may be pursuant to any applicable laws, rules and
regulations;
7. I fully understand that my shares which are being exchanged for
shares of the Company are "risk capital," and I am fully capable of bearing
the economic risks attendant to this investment, without qualification; and
8. I also understand that without approval of counsel for
Amalgamated, all shares of Amalgamated to be issued and delivered to me in
exchange for my shares of MegaMedia shall be represented by one stock
certificate only and which such stock certificate shall be imprinted with the
following legend or a reasonable facsimile thereof on the front and reverse
sides thereof:
The shares of stock represented by this certificate
have not been registered under the Securities Act of
1933, as amended, and may not be sold or otherwise
transferred unless compliance with the registration
provisions of such Act has been made or unless
availability of an exemption from such registration
provisions has been established, or unless sold
pursuant to Rule 144 under the Act.
Any request for more than one stock certificate must be accompanied
by a letter signed by the requesting stockholder setting forth all relevant
facts relating to the request. Amalgamated will attempt to accommodate any
stockholders' request where Amalgamated views the request is made for valid
business or personal reasons so long as in the sole discretion of Amalgamated,
the granting of the request will not facilitate a "public" distribution of
unregistered shares of common voting stock of Amalgamated.
You are requested and instructed to issue a stock certificate as
follows, to-wit:
Capital Access Management Group, Inc.
Date: 9/29/99 By /s/ Xxxxxxx Xxxxxx
3,487,122 shares
Date: 9/28/99 /s/ Xxxxxxx X. Xxxxxx, Xx.
2,615,341 shares
Date: 9/28/99 /s/ Xxxxx X. Xxxxxxxxx
697,424 shares
Date: 9/28/99 /s/ Xxxx X. Xxxxx
174,356 shares
INTERNET ONLINE SERVICES LTD.
Date: 9/28/99 /s/ Xxxxxxx Xxxxxx, President
3,487,122 shares
EXHIBIT G
CERTIFICATE OF OFFICER PURSUANT TO
AGREEMENT AND PLAN OF REORGANIZATION
The undersigned, the President of Amalgamated Entertainment, Inc., a
Delaware corporation ("Amalgamated"), represents and warrants the following as
required by the Agreement and Plan of Reorganization (the "Agreement") between
Amalgamated and MegaMedia, Inc., a Nevada corporation ("MegaMedia"), and the
stockholders of MegaMedia (the "MegaMedia Stockholders"):
1. That he is the President of Amalgamated and has been authorized
and empowered by its Board of Directors to execute and deliver this
Certificate to MegaMedia and the MegaMedia Stockholders.
2. Based on his personal knowledge, information, belief and
opinions of counsel for Amalgamated regarding the Agreement:
(i) All representations and warranties of Amalgamated
contained within the Agreement are true and correct;
(ii) Amalgamated has complied with all terms and provisions
required of it pursuant to the Agreement; and
(iii) There have been no material adverse changes in the
financial position of Amalgamated as set forth in its
financial statements for the periods ended December
31, 1998 and 1997, and June 30, 1999, except as set
`forth in Exhibit C to the Agreement.
AMALGAMATED ENTERTAINMENT, INC.
By /s/ Xxxxx X. Xxxxxx, President
EXHIBIT H
CERTIFICATE OF OFFICER PURSUANT TO
AGREEMENT AND PLAN OF REORGANIZATION
The undersigned, the President of MegaMedia Networks, Inc., a Nevada
corporation ("MegaMedia"), represents and warrants the following as required
by the Agreement and Plan of Reorganization (the "Agreement") between
MegaMedia, its stockholders (the "MegaMedia Stockholders") and Amalgamated
Entertainment, Inc., a Delaware corporation ("Amalgamated"):
1. That he is the President of MegaMedia and has been authorized
and empowered by its Board of Directors to execute and deliver this
Certificate to Amalgamated.
2. Based on his personal knowledge, information, belief:
(i) All representations and warranties of MegaMedia
contained within the Agreement are true and correct;
(ii) MegaMedia has complied with all terms and provisions
required of it pursuant to the Agreement; and
(iii) There have been no material adverse changes in the
financial position of MegaMedia as set forth in its
unaudited financial statements as of September 30,
1999, except as set forth in Exhibit E to the
Agreement.
MEGAMEDIA NETWORKS, INC.
By /s/ Xxxxxxx X. Xxxxxx, President
