EXHIBIT 2.1
Agreement and Plan of Merger
by and among
MMAX MEDIA, INC.
a Nevada corporation
HYPERLOCAL MARKETING LLC
a Florida limited liability company
and
HLM PAYMEON, INC.
a Florida corporation
February 17, 2011
TABLE OF CONTENTS
ARTICLE I. THE MERGER 1
ARTICLE II. CONVERSION OF SECURITIES 3
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF MMAX AND 4
HLM PAYMEON
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF HP 8
ARTICLE V. COVENANTS OF MMAX AND HP 14
ARTICLE VI. CONDITIONS TO THE OBLIGATIONS OF MMAX 16
ARTICLE VII. CONDITIONS TO THE OBLIGATIONS OF HP 18
ARTICLE VIII. TERMINATION OF AGREEMENT 20
ARTICLE IX. OMITTED 21
ARTICLE X. MISCELLANEOUS 21
EXHIBIT A: HP Financial Statements
SCHEDULES:
SCHEDULE 1.05 Directors and Executive Officers of MMAX
Following the Closing
SCHEDULE 2.01 Conversion Shares
SCHEDULE 3.02 Subsidiaries of MMAX
SCHEDULE 3.03 Capitalization of MMAX
SCHEDULE 3.11 MMAX Absence of Certain Changes
SCHEDULE 3.16 MMAX Taxes
SCHEDULE 3.17 MMAX Intellectual Property
SCHEDULE 4.01 HP Qualifications
SCHEDULE 4.02 HP Subsidiaries
SCHEDULE 4.06 HP Related Party Contracts
SCHEDULE 4.10 Liabilities; Claims
SCHEDULE 4.11 HP Compensation
SCHEDULE 4.12 HP Absence of Certain Changes
SCHEDULE 4.18(a) HP Intellectual Property
SCHEDULE 4.18(b) HP Intellectual Property - Pending Claims
SCHEDULE 4.20 HP Adverse Officer and Director Information
SCHEDULE 4.21 HP Material Contracts
ii
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (the "Agreement") is made this 17th
day of February 2011, by and among MMAX Media, Inc., a Nevada
corporation ("MMAX"), HLM Paymeon, Inc., a Florida corporation and
wholly owned subsidiary of MMAX ("HLM Paymeon") and Hyperlocal
Marketing LLC, a Florida limited liability company ("HP").
RECITALS
A. HP has issued and outstanding 290.42 Membership Interests (the
"HP Units") and are owned by the HP Unitholders. The outstanding HP
Membership Interests are referred to as the "HP Units" or "Membership
Interests".
HP develops and operates mobile marketing applications and platforms.
B. MMAX is authorized to issue 195,000,000 shares of common stock,
par value $.001 per share (the "MMAX Common Stock" or "MMAX Common
Shares"). There are 12,398,374 shares of common stock issued and
outstanding. MMAX is authorized to issue 5,000,000 shares of preferred
stock, par value $.001 per share and 638,602 shares of preferred stock
are issued and outstanding. There are no outstanding options and
warrants to purchase shares of MMAX Common Stock.
C. HLM Paymeon is a wholly owned subsidiary of MMAX and is
authorized to issue 1,000 shares of common stock par value $0.001 ("HLM
Paymeon Shares") all of which are owned by MMAX.
D. The respective Boards of Directors of MMAX and HLM Paymeon and
the Managers of HP ("the "Constituent Companies") deem it advisable and
in the best interests of each of the Constituent Companies and their
respective stockholders and members, to effect a merger transaction in
which HP will merge with and into HLM Paymeon, with HLM Paymeon
remaining as the surviving corporation and a wholly-owned subsidiary of
MMAX (the "Merger"). In exchange for Membership Interests of HP,
holders of HP Units will be entitled to receive such number of shares
of MMAX Common Stock representing approximately 50.1% of the
outstanding MMAX Common Stock on a fully diluted basis after giving
effect to the Merger, the conversion of the outstanding preferred stock
and the raise of a minimum of $250,000 (the "$250K Raise").
E. The Merger, for Federal income tax purposes, shall be intended to
be a tax-free reorganization as described in the Internal Revenue Code
of 1986, as amended (the "Code").
NOW, THEREFORE, for good and valuable consideration, the sufficiency of
which is hereby acknowledged, the Constituent Companies hereby make,
adopt and approve this Agreement and prescribe the terms and conditions
of the Merger of HP with and into HLM Paymeon and the mode of carrying
the Merger into effect as follows:
ARTICLE I.
THE MERGER
Section 1.01 The Merger
Subject to the terms and conditions of this Agreement, and in
accordance with the Florida Business Corporation Act ("FBCA") and
Florida Limited Liability Company Act ("FLLCA"), HP will be merged with
and into HLM Paymeon. HLM Paymeon shall be the surviving company
(hereinafter referred to as HLM Paymeon or the "Surviving Company").
The separate existence and corporate organization of HP, except insofar
as it may be continued by statute, shall cease and HLM Paymeon shall
remain a wholly owned subsidiary of MMAX.
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Section 1.02 Closing Date
Subject to the provisions of Articles V, VI, VII, and VIII, the closing
of the Merger (the "Closing") shall take place no later than the second
business day after the date on which each of the conditions set forth
in Articles V, VI and VII (other than those conditions that by their
nature are to be satisfied at the Closing but subject to such
conditions) have been satisfied or waived, in writing, by the party or
parties entitled to the benefit of such conditions; or at such other
place, at such other time, or on such other date as the Constituent
Companies may, in writing, mutually agree. The date on which the
Closing actually occurs is herein referred to as the "Closing Date."
Section 1.03 Effective Date
Subject to the terms and conditions of this Agreement, the Merger shall
become effective upon the filing of a Certificate of Merger with the
Florida Secretary of State (the "Effective Date").
Section 1.04 Articles of Incorporation and Bylaws of Surviving
Corporation
The Articles of Incorporation of HLM Paymeon, as in effect immediately
prior to the Effective Date, shall constitute and shall continue in
full force and effect as the Articles of Incorporation of the Surviving
Company unless and until amended in accordance with the FBCA. The
Bylaws of HLM Paymeon, as in effect immediately prior to the Effective
Date, shall constitute and shall continue to be the Bylaws of the
Surviving Company unless and until altered, amended or repealed in the
manner provided by the FBCA, the Articles of Incorporation or said
Bylaws.
Section 1.05 Directors and Officers of Surviving Corporation
The executive officers and directors of the Surviving Corporation shall
be as set forth on Schedule 1.05 and will hold office from and after
the Effective Date until their respective successors are duly elected
or appointed and qualified in the manner provided in the Articles of
Incorporation and Bylaws of the Surviving Corporation or as otherwise
provided by law or until their earlier resignation or removal. Each of
the MMAX officers and directors shall resign at or before the Closing.
Section 1.06 Rights and Liabilities of Surviving Corporation in
Merger
On and after the Effective Date, HLM Paymeon, as the surviving
corporation of the Merger, shall succeed to and possess, without
further act or deed, all of the rights, and all of the property, real,
personal, and mixed, of HP; and all debts, liabilities and duties of HP
shall thenceforth attach to HLM Paymeon and may be enforced against it
to the same extent as if such debts, liabilities and duties had been
incurred or contracted by it.
Section 1.07 Further Assurances
If, at any time after the Effective Date, the Surviving Corporation
shall consider or be advised that any deeds, bills of sale,
assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the
Surviving Corporation its right, title or interest in, to or under any
of the rights, properties or assets of HP acquired as a result of the
Merger, the officers and directors of the Surviving Corporation shall
be authorized to execute and deliver, in the name and on behalf of HP,
all such deeds, bills of sale, assignments and assurances and to take
and do, in the name and on behalf of HP, all such other actions and
things as may be necessary or desirable to vest, perfect or confirm any
and all right, title and interest in, to and under such rights,
properties or assets in the Surviving Corporation.
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ARTICLE II.
CONVERSION OF SECURITIES
Section 2.01 Treatment of the HP Units
On the Effective Date, the HP Units shall be converted into and
exchangeable for shares of MMAX Common Stock which in the aggregate
shall constitute 50.1% of the MMAX common stock on a fully diluted
basis giving effect to the Merger, the conversion of the preferred
stock and the $250K Raise on the Effective Date (collectively, the
"Conversion Shares") as set forth on Schedule 2.01. The Conversion
Shares shall be fully paid and non-assessable and contain a legend
restricting the transfer thereof in accordance with applicable
securities laws. All HP Units shall then be canceled and retired, and
each certificate representing HP Units shall thereafter (i) represent
only the right to receive Conversion Shares issuable in exchange for
such HP Units upon the surrender of such certificates; and (ii) entitle
the holder thereof to vote with respect to, and receive dividends, if
any, on such number of shares of Conversion Shares which such holder is
entitled to receive in exchange for such certificates, provided that
dividends, if any, shall be paid to such holder, without interest, only
upon surrender of certificates.
Section 2.02 Intentionally Left Blank
Section 2.03 Intentionally Left Blank
Section 2.04 Ownership/Voting Rights of HP Units
(a) On and after the Effective Date and until surrendered for
exchange, each outstanding certificate that immediately prior to the
Effective Date represented HP Units shall be deemed for all purposes,
to evidence ownership of and represent the number of whole Conversion
Shares into which such HP Units are convertible pursuant to Section
2.01 above. The record holder of each such outstanding certificate
representing HP Units shall, after the Effective Date, be entitled to
vote the MMAX Shares into which such HP Units shall have been converted
or are convertible on any matters on which the holders of record of the
Conversion Shares, as of any date subsequent to the Effective Date,
shall be entitled to vote. In any matters related to such certificates
of HP Units, MMAX may conclusively rely upon the record of stockholders
maintained by MMAX containing the names and addresses of the holders of
record of HP Units on the Effective Date.
(b) All HP Unitholders shall be furnished information concerning MMAX
which is set forth in the MMAX SEC reports.
Section 2.05 Intentionally Left Blank
Section 2.06 Exchange Procedures
(a) MMAX shall authorize its transfer agent, or other party as agreed
to by the Parties, to act as exchange agent hereunder (the "Exchange
Agent") for the purposes of exchanging certificates representing HP
Units for Conversion Shares.
(b) Promptly after the Effective Date, the Exchange Agent shall mail
or cause to be mailed to each record holder of HP Units, as of the
Effective Date, a letter of transmittal and instructions for use in
effecting the surrender of the certificates representing said HP Units
(the "Certificates") for exchange therefor.
(c) Upon surrender to the Exchange Agent of a Certificate, together
with such letter of transmittal duly executed, the holder of such
Certificate shall be entitled to receive in exchange therefor that
number of MMAX Conversion Shares which such holder has the right to
receive under Section 2.04 and such Certificate shall forthwith be
canceled. If any such shares are to be issued to a person other than
the person in whose name the Certificate surrendered in exchange
therefor is registered, it shall be a condition of exchange that the
Certificate so surrendered shall be properly endorsed or otherwise in
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proper form for transfer and that the person requesting such exchange
shall pay any transfer or other taxes required by reason of the
exchange to a person other than the registered holder of the
Certificate surrendered or such person shall establish to the
satisfaction of the Surviving Corporation that such tax has been paid
or is not applicable.
(d) Any portion of the Conversion Shares made available to the
Exchange Agent pursuant to this Section 2.06 that remains unclaimed by
the holders of HP Units 12 months after the date on which Certificates
representing such HP Units were deposited with the Exchange Agent shall
be returned to MMAX, upon demand, and any such holder who has not
exchanged his, her or its HP Units in accordance with this Section 2.06
prior to that time shall thereafter look only to MMAX for his, her or
its claim for MMAX Common Stock, any cash in lieu of fractional shares
and certain dividends or other distributions. Neither MMAX nor HP
shall be liable to any holder of HP Units with respect to any
Conversion Shares delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
(e) If any Certificate representing HP Units shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by
the person claiming such Certificate to be lost, stolen or destroyed
and, if required by MMAX, the posting by such person of a bond in such
reasonable amount as MMAX may direct as indemnity against any claim
that may be made against it with respect to such Certificate, the
Exchange Agent shall issue in exchange for such lost, stolen or
destroyed Certificate the consideration payable under Section 2.04
taking account for any stock dividend, stock split or other such action
relating to the Conversion Shares.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF MMAX AND HLM PAYMEON
MMAX and HLM Paymeon represent, warrant and covenant as follows, except
to the extent set forth on the corresponding sections of the Schedule
of exceptions attached hereto and made a part hereof. Reference to
MMAX will include HLM Paymeon unless otherwise provided.
Section 3.01 Organization
MMAX is a corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada and HLM Paymeon is a
corporation organized, validly existing and in good standing under the
laws of the State of Florida. MMAX owns all of the HLM Paymeon
outstanding shares of stock. Each of MMAX and HLM Paymeon has all
requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted. Each
of MMAX and HLM Paymeon is duly qualified or licensed and in good
standing to do business in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted
by it makes such qualifications or licenses necessary, except in such
jurisdictions where the failure to be so duly qualified or licensed and
in good standing would not individually or in the aggregate have a
material adverse effect on the business, operations, assets, prospects,
financial condition or results of operations of MMAX and would not
delay or prevent the consummation of the transactions contemplated
hereby (a "MMAX Material Adverse Effect"). MMAX previously has
delivered, or provided access to HP, accurate and complete copies of
its Articles of Incorporation and Bylaws, as currently in effect.
Neither MMAX nor HLM Paymeon is in violation of any terms of its
Articles of Incorporation or Bylaws.
Section 3.02 Subsidiaries
Except as shown on Schedule 3.02, MMAX has, and on the Closing Date
will have, no subsidiaries, nor does it own any direct or indirect
interest in any other business entity except as noted on Schedule 3.02.
Section 3.03 Capitalization
MMAX is authorized to issue 195,000,000 shares of common stock of which
there are 12,403,374 common shares issued and outstanding and 5,000,000
shares of preferred stock authorized, of which 638,602 shares of are
issued and outstanding. The shareholders, as set forth on Schedule
3.03, to the best of the Company's knowledge, constitute all of the
shareholders of the Company beneficially owning and controlling in
excess of 5% of the
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Company's outstanding common stock. The outstanding shares of preferred
stock are beneficially owned and controlled by the shareholders set
forth on Schedule 3.03 and shall convert into an aggregate of 6,386,020
shares of MMAX common stock as set forth on Schedule 3.03. On the
Closing Date, there will be issued and outstanding no more than
12,403,374 shares of MMAX Common Stock, all of which will be validly
issued, fully paid and nonassessable. Except as contemplated by this
Agreement or on Schedule 3.03, on the Closing Date there will be no
issued or outstanding securities and no issued or outstanding options,
warrants or other rights, or commitments or agreements of any kind,
contingent or otherwise, to purchase or otherwise acquire MMAX Common
Shares or any issued or outstanding securities of any nature
convertible into MMAX Common Shares. There is no proxy or any other
agreement, arrangement or understanding of any kind authorized,
effective or outstanding, which restricts, limits or otherwise affects
the right to vote any MMAX Common Shares.
The authorized capital stock of HLM Paymeon consists of 1,000 shares of
common stock all of which are issued and outstanding, fully paid and
nonassessable. All such shares are issued to MMAX. As of the date
hereof, there are no outstanding HLM Paymeon stock options or warrants
or any other rights entitling any purchase of capital stock of HLM
Paymeon.
Section 3.04 Authority
MMAX has full corporate power and authority to execute and deliver this
Agreement and, subject to the requisite approval of the stockholders of
MMAX, to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized
and approved by the Board of Directors of MMAX and no other corporate
proceedings on the part of MMAX is necessary to authorize this
Agreement or to consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by MMAX and,
assuming this Agreement constitutes a legal, valid and binding
agreement of HP, constitutes a legal, valid and binding agreement of
MMAX, enforceable against each of them in accordance with its terms,
except as the enforceability may be affected by applicable bankruptcy,
reorganization, insolvency, moratorium or other similar laws affecting
the enforcement of creditors' rights generally and the possible
unavailability of certain equitable remedies, including the remedy of
specific performance.
Section 3.05 No Violations: Consents and Approvals
(a) MMAX Stockholders. No vote of the stockholders of MMAX is
required by Law, the Articles of Incorporation or Bylaws of MMAX or
otherwise in order for MMAX to consummate the Merger and the
transactions contemplated hereby.
(b) Contracts and Material Agreements. Neither the execution and
delivery of this Agreement nor the consummation of the transactions
contemplated hereby nor compliance by MMAX and HLM Paymeon with any of
the provisions hereof conflicts with, violates or results in any breach
of (i) any contract, agreement, instrument or understanding to which
MMAX or HLM Paymeon is a party or by which MMAX or HLM Paymeon or any
of their respective assets or properties is bound; or (ii) any law,
judgment, decree, order, statute, rule or regulation of any
jurisdiction or governmental authority (a "Law") applicable to MMAX or
any of its respective assets or properties, excluding from the
foregoing clauses conflicts, violations or breaches which, either
individually or in the aggregate, would not have a MMAX Material
Adverse Effect or materially impair MMAX's ability to consummate the
transactions contemplated hereby or for which MMAX or HLM Paymeon has
received or, prior to the Merger, shall have received appropriate
consents or waivers.
(c) Governmental Entities. No filing or registration with,
notification to, or authorization, consent or approval of, any
governmental entity is required by MMAX or HLM Paymeon in connection
with the execution and delivery of the Agreement or the consummation by
MMAX or HLM Paymeon of the transactions contemplated hereby, except (i)
in connection, or in compliance, with the provisions of the Securities
Act of 1933, as amended (the "Securities Act"), and the Securities
Exchange Act of 1934, as amended (the "Exchange Act"); and (ii) such
consents, approvals, orders, authorizations, registrations,
declarations and filings, the failure of which to be obtained or made
would not, individually or in the aggregate, have a MMAX Material
Adverse Effect, or materially impair the ability of MMAX or HLM Paymeon
to perform its obligations hereunder.
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Section 3.06 Related Party Transactions
Except as set forth in the SEC Reports (defined below) and as
contemplated by this Agreement, as of Closing there are no loans,
leases, commitments, arrangements of any kind or nature outstanding
between MMAX and any officer or director of MMAX, or any Person related
to or affiliated with any officer or director of MMAX.
Section 3.07 SEC Reports; Financial Statements
MMAX has filed all reports required to be filed by it under the
Securities Act and the Exchange Act, including pursuant to Section
13(a) or 15(d) thereof, since December 31, 2008 (together "SEC
Reports"). As of their respective dates, the SEC Reports complied in
all material respects with the requirements of the Securities Act and
the Exchange Act and the rules and regulations of the SEC promulgated
thereunder, and none of the SEC Reports, when filed, contained any
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading. The financial statements of MMAX included in the
SEC Reports ("MMAX Financial Statements") complied in all material
respects with applicable accounting requirements and the rules and
regulations of the SEC with respect thereto as in effect at the time of
filing. Such financial statements were prepared in accordance with
GAAP, except as may be otherwise specified in such financial statements
or the notes thereto, and fairly present in all material respects the
financial position of the MMAX as of and for the dates thereof and the
results of operations and cash flows for the periods then ended,
subject, in the case of unaudited statements, to normal, immaterial,
year-end audit adjustments. There has been no change in MMAX
accounting policies since September 30, 2010, except as described in
the notes to MMAX Financial Statements. Each required form, report and
document containing financial statements has been filed with or
submitted to the SEC since December 31, 2008 was accompanied by the
certifications required to be filed or submitted by MMAX's chief
executive officer and chief financial officer pursuant to the Xxxxxxxx-
Xxxxx Act of 2002 (the "Xxxxxxxx-Xxxxx Act"), and at the time of filing
or submission of each such certification, such certification was true
and accurate and materially complied with the Xxxxxxxx-Xxxxx Act and
the rules and regulations promulgated thereunder.
Section 3.08 Title to Assets
MMAX was, on the date of its most recent MMAX Financial Statements, the
owner of its plant and equipment as set forth in such MMAX Financial
Statements and has good and marketable title thereto.
Section 3.09 Accounts Receivable
The accounts receivable ("Accounts Receivable") set forth in the MMAX
Financial Statements represent amounts due for goods sold or services
rendered by MMAX in the ordinary course of business and, except as
reserved for in the MMAX Financial Statements, MMAX believes are
collectable in the ordinary course of business, without any claims by
the obligor for set-off, deductions or counterclaims.
Section 3.10 Liabilities; Claims
Except as and to the extent set forth in the latest MMAX SEC Reports,
neither MMAX nor any of its subsidiaries had at the date of the latest
balance sheet filed with the SEC any liabilities required by generally
accepted accounting principles to be reflected on a consolidated
balance sheet of MMAX and its subsidiaries. Except as and to the
extent set forth in such MMAX SEC Reports, since such date neither MMAX
nor any of its subsidiaries has incurred any liabilities material to
the business, operations or financial condition of MMAX and its
subsidiaries taken as a whole, except liabilities incurred in the
ordinary and usual course of business and consistent with past practice
and liabilities incurred in connection with this Agreement.
Section 3.11 Absence of Certain Changes
Since December 31, 2010, MMAX has been operated only in the ordinary
course, consistent with past practice, and there has not been any
adverse change, or any event, fact or circumstance which might
reasonably be expected to result in an adverse change, in either event
that would have a MMAX Material Adverse Effect. Without limiting the
generality of the foregoing, except as set forth on Schedule 3.11 or in
the MMAX SEC Documents, since December 31, 2010, there has not been
with respect to MMAX any:
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(a) sale or disposition of any material asset other than inventory in
the ordinary course;
(b) payment of any dividend, distribution or other payment to any
stockholder of MMAX or to any relative of any such stockholder other
than payments of salary and expense reimbursements made in the ordinary
course of business, consistent with past practice, for employment
services actually rendered or expenses actually incurred;
(c) incurrence or commitment to incur any liability individually or
in the aggregate material to MMAX, except such liabilities under MMAX's
existing credit facilities and liabilities incurred in connection with
the Merger;
(d) waiver, release, cancellation or compromise of any indebtedness
owed to MMAX or claims or rights against others, exceeding $5,000 in
the aggregate;
(e) any change in any accounting method, principle or practice except
as required or permitted by generally accepted accounting principles;
or
(f) unusual or novel method of transacting business engaged in by
MMAX or any change in MMAX's accounting procedures or practices or its
financial or equity structure.
Section 3.12 Finder's Fees
Neither MMAX nor any of MMAX's affiliates or their respective officers,
directors or agents has employed any broker, finder or financial
advisor or incurred any liability for any broker's fees, commissions,
or financial advisory or finder's fees in connection with any of the
transactions contemplated by this Agreement.
Section 3.13 Compliance With Laws
MMAX is not conducting or has not conducted its business in violation
of any Law, including without limitation, any law pertaining to
environmental protection, occupational health or safety, or employment
practices, except any law the violation of which would not have a MMAX
Material Adverse Effect.
Section 3.14 Legal Proceedings
Except as set forth in the MMAX SEC Documents, there is no claim,
litigation, investigation or proceeding by any person or governmental
authority pending or, to MMAX's knowledge threatened, against MMAX
which would have a MMAX Material Adverse Effect. There are no pending
or, to MMAX's knowledge, threatened controversies or disputes with, or
grievances or claims by, any employees or former employees of MMAX or
any of their respective predecessors of any nature whatsoever,
including, without limitation, any controversies, disputes, grievances
or claims with respect to their employment, compensation, benefits or
working conditions, except for such litigation which would not have a
MMAX Material Adverse Effect.
Section 3.15 Employee Benefits
MMAX has not authorized any employee welfare plans or any equity
compensation plans, nor has its Board of Directors authorized the
reservation or issuance of any securities under any equity compensation
plan.
Section 3.16 Taxes
Except as set forth on Schedule 3.16, all federal, state, county and
local income, excise, property or other tax returns required to be
filed by MMAX have been timely filed and all required taxes, fees and
assessments have been paid or an adequate reserve therefor has been
provided for in the MMAX Financial Statements. The federal income tax
returns and state and foreign income tax returns of MMAX have not been
audited by the Internal Revenue Service ("IRS") or any other taxing
authority within the past five years. Neither the IRS nor any state,
local or other taxing authority has proposed any additional taxes,
interest or penalties with respect to MMAX or any of its operations or
businesses. There are no pending, or to the knowledge of MMAX
threatened, tax claims or assessments, and there are no pending, or to
the knowledge of MMAX threatened, tax examinations by any taxing
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authorities. MMAX has not given any waivers of rights (which are
currently in effect) under applicable statutes of limitations with
respect to the federal income tax returns of MMAX for any year.
Section 3.17 Intellectual Property
Except as set forth on Schedule 3.17 or in the SEC Reports, MMAX has no
patents, patent applications, trademarks, trademark registrations,
trade names, copyrights, copyright registrations or applications
therefore. MMAX has no knowledge of any infringements by MMAX of any
third party's intellectual property.
Section 3.18 Absence of Certain Business Practice
Neither MMAX nor any directors, officers, agents or employees of MMAX
(in their capacities as such) has (i) used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses relating
to political activity, (ii) made any unlawful payment to foreign or
domestic government officials or employees or to foreign or domestic
political parties or campaigns or violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended, or (iii) made any other
unlawful payment.
Section 3.19 Issuances of Securities
Except as set forth in the SEC Reports, neither MMAX nor HLM Paymeon
has issued or committed itself to issue, and prior to the Closing Date
will not issue or commit itself to issue, any MMAX or HLM Paymeon
Shares or any options, rights, warrants or other securities convertible
into MMAX or HLM Paymeon Shares, except as contemplated by this
Agreement.
Section 3.20 Officer and Director Information
The information about the MMAX officers and directors set forth in the
MMAX SEC Reports complied in all material respects with the
requirements of the Securities Act and the Exchange Act and the rules
and regulations of the SEC promulgated thereunder.
Section 3.21 Over-the-Counter Bulletin Board Quotation
MMAX Common Stock is currently quoted on the Over-the-Counter Bulletin
Board ("OTC BB") under the symbol "MMAX". There is no action or
proceeding pending or, to MMAX's knowledge, threatened against MMAX by
Nasdaq or Financial Industry Regulation Authority, Inc. ("FINRA") with
respect to any intention by such entities to prohibit quotation of MMAX
Common Stock on the OTC BB.
Section 3.22 Full Disclosure
To the knowledge of MMAX, none of the information supplied or to be
supplied by or about MMAX to HP concerning the Merger contains any
untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are
made, not misleading.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF HP
HP represents, warrants and covenants to MMAX and HLM Paymeon to the
statements contained in this Article IV, except to the extent set forth
on the corresponding sections of the Schedule of exceptions attached
hereto and made a part hereof.
Section 4.01 Organization and Business
(a) HP is a limited liability company, duly organized, validly
existing and in good standing under the laws of the State of Florida,
and has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as now being
conducted. HP is duly qualified or licensed and in good standing to do
business in each jurisdiction in which the property owned, leased or
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operated by it or the nature of the business conducted by it makes such
qualifications or licenses necessary, as indicated on Schedule 4.01,
except in such jurisdictions where the failure to be so duly qualified
or licensed and in good standing would not individually or in the
aggregate have a material adverse effect on the business, operations,
assets, prospects, financial condition or results of operations of HP
and would not delay or prevent the consummation of the transactions
contemplated hereby (a "HP Material Adverse Effect").
(b) HP previously has delivered or provided access to MMAX accurate
and complete copies of HP's Operating Agreement, each as currently in
effect. The minute books of HP are complete and correct and the
minutes and consents contained therein accurately reflect actions taken
at a duly called and held meeting or by sufficient consent without a
meeting. All actions by HP, which required Unitholder approval, are
reflected on the minute books of HP. HP is not in violation or breach
of, or in default with respect to, any term of its Operating Agreement
(or other charter documents).
Section 4.02 Subsidiaries
(a) Schedule 4.02 sets forth the names of each of the HP's
subsidiaries ("Subsidiaries") and shows for each such Subsidiary: (i)
its jurisdiction of organization and each other jurisdiction in which
it is qualified to do business; (ii) the authorized and outstanding
capital stock or other ownership interests of each Subsidiary; and
(iii) the identity of and number of shares of such capital stock or
other ownership interests owned of record by each holder thereof.
Except as set forth on Schedule 4.02, (i) the HP has no Subsidiaries
and (ii) the HP does not own any capital stock or other securities of
any other corporation, limited liability company, general or limited
partnership, firm, association or business organization, entity or
enterprise.
(b) Each Subsidiary is duly organized, validly existing and in good
standing in its jurisdiction of organization, with all requisite
corporate, partnership, membership or limited liability company power,
as the case may be, to own, lease and operate its property and to carry
on its business as now being conducted.
(c) There are no issued or outstanding shares of capital stock of any
Subsidiary, (i) no shares of capital stock of any Subsidiary are held
in treasury and (ii) there are no subscriptions, options, "phantom"
stock rights, stock appreciation rights, warrants or other rights
entitling any Person to acquire or otherwise receive from any
Subsidiary any shares of capital stock or securities of such Subsidiary
convertible into or exchangeable for capital stock of such Subsidiary
(collectively, the "Subsidiary Securities"). There are no contracts,
agreements, or arrangements relating to the grant, issuance,
repurchase, redemption or other acquisition by any Subsidiary of any
Subsidiary Securities.
Section 4.03 Capitalization
(a) HP has issued 290.81 membership interests which are issued and
outstanding. The HP Units are held by the HP Unitholders.
(b) At the Closing Date, there will not be any existing options,
warrants, calls, subscriptions, or other rights or other agreements or
commitments obligating HP to issue, transfer or sell any shares of
capital stock of HP or any other securities convertible into or
evidencing the right to subscribe for any such shares. HP is not
subject to any obligation to repurchase or otherwise acquire any shares
of its capital stock or other similar interest. All issued and
outstanding HP Units are, and all HP Units issued and outstanding at
the Closing Date shall be, duly authorized and validly issued, fully
paid and non-assessable and subject to the terms of this Agreement free
from all liens, charges, claims, preemptive or similar rights and
encumbrances. All issued and outstanding HP Units have not been issued
in violation of any applicable federal or state securities or blue-sky
laws. No Person has any right of first refusal, right of
participation, or any similar right with respect to disposition of the
HP Units.
Section 4.04 Authority
HP has full corporate power and authority to execute and deliver this
Agreement and, subject to the requisite approval of the Merger and the
adoption of this Agreement by the HP Unitholders, to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the
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transactions contemplated hereby have been duly and validly authorized
by HP's Managers and the Unitholders and, except for the requisite
approval of the Merger and the adoption of this Agreement by the HP
Unitholders, no other corporate proceedings on the part of HP are
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. HP's Managers has determined that the
transactions contemplated by this Agreement, including the Merger, are
in the best interests of HP and its Unitholders and have determined to
recommend to such Unitholders that they vote in favor of this Agreement
and the consummation of the transactions contemplated hereby, including
the Merger. This Agreement has been duly and validly executed and
delivered by HP and, assuming this Agreement constitutes a legal, valid
and binding agreement of MMAX, constitutes a legal, valid and binding
agreement of HP, enforceable against it in accordance with its terms,
except as the enforceability may be affected by applicable bankruptcy,
reorganization, insolvency, moratorium or other similar laws affecting
the enforcement of creditors' rights generally and the possible
unavailability of certain equitable remedies, including the remedy of
specific performance.
Section 4.05 No Violations; Consents and Approvals
(a) HP Unitsholders. The consent of the HP Unitholders is required
to approve the Merger. No other vote of the Unitholders of HP is
required by Law, the Operating Agreement or otherwise in order for HP
to consummate the Merger and the transactions contemplated hereby. A
majority of the HP Unitholders have consented to the Merger.
(b) Contracts and Material Agreements. Neither the execution and
delivery of this Agreement nor the consummation of the transactions
contemplated hereby nor compliance by HP with any of the provisions
hereof conflicts with, violates or results in any breach of (i) any
contract, agreement, instrument or understanding to which HP is a
party, or by which HP or any of its assets or properties is bound; or
(ii) subject to the requisite approval of HP's Unitholders, any Law
applicable to HP or any of its respective assets or properties,
excluding from the foregoing clauses conflicts, violations or breaches
which, either individually or in the aggregate, would not have a HP
Material Adverse Effect or materially impair HP's ability to consummate
the transactions contemplated hereby.
(c) Governmental Entities. No filing or registration with,
notification to, or authorization, consent or approval of, any
governmental entity is required by HP in connection with the execution
and delivery of the Agreement or the consummation by HP of the
transactions contemplated hereby, except (i) the filing of the
appropriate documents with the Secretary of State of Florida and, if
required, the State of Nevada; and (ii) such consents, approvals,
orders, authorizations, registrations, declarations and filings, the
failure of which to be obtained or made would not, individually or in
the aggregate, have a HP Material Adverse Effect, or materially impair
the ability of HP to perform its obligations hereunder.
(d) HP will take all corporate and other action and use its best
efforts to obtain in writing as promptly as possible all approvals and
consents required to be obtained in order to effectuate the
consummation of the transactions contemplated by this Agreement.
Section 4.06 Related Party Contracts
Except as set forth on Schedule 4.06, there are, and on the Closing
Date there will be, no loans, leases, agreements, arrangements
understandings or HP Contracts outstanding between HP and any of its
officers, directors or affiliates or any Person related to or
affiliated with any such officers or directors.
Section 4.07 Financial Statements
At or prior to Closing, HP has furnished MMAX the balance sheets of HP
as of September 30, 2010 attached as Exhibit A ("HP Financial
Statements"). The HP Financial Statements fairly present in all
material respects the financial position, results of operations and
other information purported to be shown thereon of HP. HP will furnish
MMAX a true and complete copy of the audited balance sheets of HP as of
December 31, 2010 and the related consolidated audit statements of
income and statements of cash flow of HP for the period ended December
31,2010 ("HP Audits"). The HP Audit will be audited by Xxxx & Co. and
(i) will be accompanied by the Xxxx & Co. unqualified audit report,
except as to "Going Concern"; (ii) will be prepared in conformity with
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United States generally accepted accounting principles consistently
applied throughout the periods involved ("GAAP"); and (iii) will be
adjusted for all normal and recurring accruals.
Section 4.08 Title to Assets
HP, has, and on the Closing Date will have, good and marketable title
to all of its furniture, fixtures, equipment, inventory and other
assets owned by HP, and such assets are owned free and clear of all
security interests, pledges, liens, restrictions and encumbrances of
every kind and nature.
Section 4.09 Accounts Receivable
The accounts receivable set forth in the HP financial statements
represents amounts due for goods sold or services rendered by HP in the
ordinary course of business, and except as reserved for in their HP
financial statements, HP believes are collectable in the ordinary
course of business without any claims by the obligor for set-off or
counterclaim.
Section 4.10 Liabilities; Claims
Except as set forth on Schedule 4.10, there are, and on the Closing
Date will be, no liabilities (including, but not limited to, tax
liabilities) or claims against HP (whether such liabilities or claims
are contingent or absolute, direct or indirect, matured or unmatured)
not appearing on the HP Financial Statements, other than (i)
liabilities incurred in the ordinary course of business since September
30, 2010; (ii) taxes accrued on earnings since September 30, 2010 which
are not yet due or payable; or (iii) other liabilities which do not
exceed $10,000 in the aggregate.
Section 4.11 Compensation; Loans and Distributions
Except as set forth on Schedule 4.11, since September 30, 2010, there
have been, and through the Closing Date there will be (i) no bonuses or
extraordinary compensation to any of the officers, members of executive
management or directors of HP; (ii) no loans made to or any other
transactions with any of the officers, members of executive management
or directors of HP or their families or affiliates; and (iii) no
dividends or other distributions declared or paid by HP to any officer,
member of executive management, director or their families or
affiliates.
Section 4.12 Absence of Certain Changes
Since December 31, 2010, and except as set forth on Schedule 4.12, HP
and its Subsidiaries have been operated only in the ordinary course,
consistent with past practice, and there has not been any adverse
change, or any event, fact or circumstance which might reasonably be
expected to result in an adverse change, in either event that would
have an HP Material Adverse Effect.
Section 4.13 Finder's Fees
Neither HP nor any of HP's affiliates or their respective officers,
directors or agents has employed any broker, finder or financial
advisor or incurred any liability for any broker's fees, commissions,
or financial advisory or finder's fees in connection with any of the
transactions contemplated by this Agreement.
Section 4.14 Compliance With Laws
HP is in possession of all franchises, grants, authorizations,
licenses, establishment registrations, product listings, permits,
easements, variances, exceptions, consents, certificates,
identification and registration numbers, approvals and orders of any
governmental entity necessary for HP to own, lease and operate its
properties or otherwise to carry on its business as it is now being
conducted (collectively the "HP Permits"), except where the failure to
be in possession of any such HP Permit would not have a HP Material
Adverse Effect. As of the date of this Agreement, none of the HP
Permits have been suspended or canceled nor is any such suspension or
cancellation pending or, to the knowledge of HP, threatened, nor has HP
received from any governmental entity any written notification with
respect to possible conflicts, defaults or violations of laws in
respect of such HP Permits, except in each case, where it would not
have a HP Material Adverse Effect. HP is not in conflict with, or in
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default or violation of (i) any law applicable to HP or by which any
property or asset of HP is bound or affected except where any such
conflict, default or violation would not have a HP Material Adverse
Effect; or (ii) any HP Permits except where any such conflict, default
or violation would not have an HP Material Adverse Effect.
Section 4.15 Legal Proceedings
There are, and on the Closing Date there will be, no legal,
administrative, arbitral or other proceedings, claims, actions or
governmental investigations of any nature pending, or to HP's
knowledge, threatened, directly or indirectly involving HP, its
subsidiaries, or its officer, directors, employees or affiliates,
individually or in the aggregate, in which an unfavorable determination
could result in suspension or termination of HP's business or authority
to conduct such business in any jurisdiction or could result in the
payment by HP of more than $5,000, or challenging the validity or
propriety of the transactions contemplated by this Agreement. HP is
not a Party to any order, judgment or decree, which will, or might
reasonably be expected to, materially adversely affect the business,
operations, properties, assets or financial condition of HP.
Section 4.16 Employee Benefits
HP has not authorized any employee welfare plans or any equity
compensation plans, nor has its Board of Directors authorized the
reservation or issuance of any securities under any equity compensation
plan.
Section 4.17 Taxes
All federal, state, county and local income, excise, property and other
tax returns required to be filed by HP and its Subsidiaries are true
and correct in all material respects and have been timely filed, and
all required taxes, fees or assessments have been paid or an adequate
reserve therefor has been established in the HP Financial Statements.
The federal income tax returns and state and foreign income tax returns
of HP have not been audited by the IRS or any other taxing authority
within the past five years. Neither the IRS nor any state, local or
other taxing authority has proposed any additional taxes, interest or
penalties with respect to HP or any of its operations or businesses.
There are no pending, or to the knowledge of HP, threatened, tax claims
or assessments, and there are no pending, or to the knowledge of HP,
threatened, tax examinations by any taxing authorities. HP has not
given any waivers of rights (which are currently in effect) under
applicable statutes of limitations with respect to the federal income
tax returns of HP for any year.
Section 4.18 Intellectual Property
(a) Set forth on Schedule 4.18(a) is a true and complete list of all
material proprietary technology, patents, trademarks, trade names,
service marks and registered copyrights (and all pending applications
or current registrations for any of the foregoing), and all licenses
granted to HP by third Parties of patent rights, trademark rights,
trade name rights and service xxxx rights, used by HP in the conduct of
its business, together with trade secrets and know how used in the
conduct of its business ("HP Intellectual Property Rights"). HP owns,
or has validly licensed or otherwise has the right to use or exploit,
as currently used or exploited, and as contemplated to be used and
exploited in the future, all of the HP Intellectual Property Rights,
free of any lien or any obligation to make any payment (whether of a
royalty, license fee, compensation or otherwise).
(b) Except as set forth on Schedule 4.18(b), no claims are pending or
threatened against HP that HP is infringing or otherwise violating the
rights of any Person with regard to any HP Intellectual Property Right
or that any HP Intellectual Property Right is invalid or unenforceable.
No Person is infringing the rights of HP with respect to any HP
Intellectual Property Right nor, to the knowledge of HP, has any Person
threatened to do so.
Section 4.19 Absence of Certain Business Practices
Neither HP, nor any directors, officers, agents or employees of HP (in
their capacities as such) has (i) used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses relating
to political activity, (ii) made any unlawful payment to foreign or
domestic government officials or employees or to foreign or domestic
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political parties or campaigns or violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended, or (iii) made any other
unlawful payment.
Section 4.20 Adverse Officer and Director Information
Except as set forth on Schedule 4.20, during the past five year period
neither HP, nor, to its knowledge, any of its executive officers,
members of executive management or managers, nor any Person intended
upon consummation of the Merger to be nominated by HP to become an
officer, member of executive management or director of the Surviving
Company or any successor entity or subsidiary, has been the subject of:
(a) a petition under the federal bankruptcy laws or any other
insolvency or moratorium law or has a receiver, fiscal agent or similar
officer been appointed by a court for the business or property of HP or
such Person, or any partnership in which HP or any such Person was a
general partner at or within two years before the time of such filing,
or any corporation or business association of which HP or any such
Person was an executive officer at or within two years before the time
of such filing;
(b) a conviction in a criminal proceeding or a named subject of a
pending criminal proceeding (excluding traffic violations which do not
relate to driving while intoxicated or driving under the influence);
(c) any order, judgment or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining HP or any such Person from, or
otherwise limiting (i) acting as a futures commission merchant,
introducing broker, commodity trading advisor, commodity pool operator,
floor broker, leverage transaction merchant, any other Person regulated
by the United States Commodity Futures Trading Commission or the SEC or
an associated Person of any of the foregoing, or as an investment
adviser, underwriter, broker or dealer in securities, or as an
affiliated Person, director or employee of any investment company,
bank, savings and loan association or insurance company, or engaging in
or continuing any conduct or practice in connection with such activity;
(ii) engaging in any type of business practice; or (iii) engaging in
any activity in connection with the purchase or sale of any security or
commodity or in connection with any violation of federal, state or
other securities laws or commodities laws;
(d) any order, judgment or decree, not subsequently reversed,
suspended or vacated, of any federal, state or local authority barring,
suspending or otherwise limiting for more than 60 days the right of HP
or any such Person to engage in any activity described in the preceding
sub-paragraph, or to be associated with persons engaged in any such
activity;
(e) a finding by a court of competent jurisdiction in a civil action
or by the SEC to have violated any securities law, regulation or decree
and the judgment in such civil action or finding by the Commission has
not been subsequently reversed, suspended or vacated; or
(f) a finding by a court of competent jurisdiction in a civil action
or by the United States Commodity Futures Trading Commission to have
violated any federal commodities law, and the judgment in such civil
action or finding has not been subsequently reversed, suspended or
vacated.
Section 4.21 Material Contracts
Copies of all agreements, letters of intent, arrangements,
understandings and commitments, whether written or oral, to which HP
and its Subsidiaries is or on the Closing Date will be, a Party, or
from which HP will receive substantial benefits and which are material
to HP, have been delivered or made available to MMAX or its counsel and
are listed hereto on Schedule 4.21 ("HP Contracts"). Any HP Contracts
entered into between the date hereof and the Closing Date will be
delivered to MMAX or its counsel prior to Closing. The validity and
enforceability of, and rights of HP contained in, each such HP Contract
shall not be adversely effected by the Merger or the transactions
contemplated hereby or any actions taken in furtherance hereof. HP is
not, and on the Closing Date will not be, in material default under any
HP Contract.
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Section 4.22 Full Disclosure
No provision of this Article IV or any Schedule or any document or
agreement furnished by HP or the HP Unitsholders contains any untrue
statement of a material fact, or omits to state a material fact
necessary in order to make the statement contained herein, in light of
the circumstances under which such statements are made, not misleading.
ARTICLE V.
COVENANTS OF MMAX AND HP
Section 5.01 Conduct of Business of MMAX and HP
Except as contemplated by this Agreement or as expressly agreed to in
writing by the other party, during the period from the date of this
Agreement to the Closing Date, each of MMAX, HLM Paymeon and HP will
conduct its operations substantially as presently operated and only in
the ordinary course of business, in a normal manner consistent with
past practices and will use commercially reasonable efforts to preserve
intact its business organization, to keep available the services of its
officers and employees and to maintain satisfactory relationships with
suppliers, distributors, customers and others having business
relationships with it and will take no action which would adversely
affect its ability to consummate the transactions contemplated by this
Agreement.
Section 5.02 No Solicitation
All parties to this Agreement agree that, prior to the Closing Date,
except as provided below it shall not, and shall not authorize or
permit any of its directors, officers, employees, agents or
representatives to, directly or indirectly, solicit, initiate,
facilitate or encourage (including by way of furnishing or disclosing
information), or take any other action to facilitate, any inquiries or
the making of any proposal that constitutes, or may reasonably be
expected to lead to any Transaction Proposal (as defined below), or
enter into or maintain or continue discussions or negotiate with any
person or entity in furtherance of such inquiries or to obtain a
Transaction Proposal or agree to or endorse any Transaction Proposal or
authorize or permit any of its officers, directors or employees or any
investment banker, financial advisor, attorney, accountant or other
representative retained by it to take any such action. For purposes of
this Agreement, "Transaction Proposal" shall mean any of the following
(other than the transactions between HP and MMAX contemplated by this
Agreement) (i) any merger, consolidation, share exchange,
recapitalization, business combination or other similar transaction;
(ii) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition of twenty percent (20%) or more of the assets of any party;
or (iv) any public announcement of a proposal, plan or intention to do
any of the foregoing or any agreement to engage in any of the
foregoing.
Section 5.03 Confidentiality
(a) Access to Information. From the date of this Agreement until the
Closing Date, HP will provide MMAX and MMAX will provide HP, and their
respective authorized representatives (including counsel, other
consultants, accountants and auditors) full reasonable access during
normal business hours to all facilities, personnel and operations and
to all books and records of HP and MMAX, will permit the other party to
make such inspections as it may reasonably require (including without
limitation any air, water or soil testing or sampling deemed necessary)
and will cause its officers to furnish the other party with such
financial and operating data and other information with respect to its
business and properties as the other party may from time to time
reasonably request.
(b) Confidential Treatment of Information. MMAX and HP will hold and
will cause their representatives to hold in confidence, all documents
and information furnished in connection with this Agreement, other than
documents or information which (i) are available to the public; (ii)
are or become known by MMAX or HP from a source other than HP or MMAX,
as the case may be, other than by a breach of a confidentiality
obligation owed to HP or MMAX, respectively; or (iii) are required by
law to be disclosed.
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Section 5.04 Preparation of Information Statement
(a) As promptly as practicable after the execution of this Agreement,
MMAX will prepare and file with the SEC and mail to its stockholders a
notice that complies with Rule 14F-1 under the Exchange Act and will
prepare and use commercially reasonable efforts to file any other
filings required to be filed by it under the Exchange Act, the
Securities Act or any other federal, state or foreign laws relating to
the Merger and the transactions contemplated by this Agreement. MMAX
and HP shall promptly supply the other with any information, which may
be required in order to effectuate any filings pursuant to this Section
5.04.
(b) MMAX shall have obtained the resignation of all of its officers
and directors and shall have taken all necessary action for the
appointment of the persons listed on Schedule 1.05 to the positions set
forth opposite their names, all effective at and as of the Closing;
provided, however, that if the Closing shall occur less than ten (10)
days after the later of the date of (i) the filing of a Schedule 14F-1
Information Statement with the SEC, notifying stockholders of a change
in the majority of MMAX's Board of Directors (the "Schedule 14F-1") or
(ii) the mailing of the Schedule 14F-1 to MMAX's stockholders, then at
and as of the Closing only Xxxxx Xxxxxx shall remain a director of MMAX
and Xxxxxx Xxxxxxxx shall be appointed as a new director of MMAX and
the other persons listed on Schedule 1.05 to serve as directors shall
not be appointed to serve on the Board until the expiration of the
applicable ten-day period.
(c) None of the information regarding HP to be supplied by HP for
inclusion or incorporation by reference in the Schedule 14F-1 to be
filed by MMAX will, in the case of the Schedule 14F-1, at the time it
is first made available to stockholders of MMAX, contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein not misleading in light of the circumstances when
made. If at any time prior to the Effective Date any event with
respect to HP shall occur which is required to be described in the
Schedule 14F-1, such event shall be so described, and an amendment or
supplement shall be promptly filed with the SEC and, as required by law
disseminated to the stockholders of MMAX. The Schedule 14F-1 will
(with respect to HP) comply as to form in all material respects with
the provisions of the Exchange Act.
Section 5.05 Tax Treatment
None of MMAX, HLM Paymeon or HP shall knowingly take any action that
could reasonably be expected to disqualify the Merger as a
"reorganization" within the meaning of Section 368(a) of the Code.
Section 5.06 Reasonable Efforts; Other Actions
(a) HP and MMAX each shall use all commercially reasonable efforts
promptly to take, or cause to be taken, all other actions and do, or
cause to be done, all other things necessary, proper or appropriate
under applicable Law to consummate and make effective the transactions
contemplated by this Agreement, including, without limitation, (i) the
taking of any actions required to qualify the Merger treatment as a
tax-free reorganization; and (ii) the obtaining of all necessary
consents, approvals or waivers under their respective material
contracts.
(b) HP shall take all actions necessary to duly call and hold a
meeting of its members or solicit the written consent of its members as
soon as reasonably practicable, to approve the Merger. HP's Board of
Managers shall recommend that the holders of the HP Common Stock vote
or consent to approve the Merger, and shall use commercially reasonable
efforts to solicit such approval. HP shall provide its members with a
written statement in connection such meeting or consent solicitation
which shall include a statement to the effect that the Board of
Managers of HP recommends that HP's members vote to approve the Merger
and provide such other information concerning the Merger as may be
required under applicable law. All such information provided by MMAX
for use in such HP written statement will be materially true, correct
and complete and will not contain any untrue statement of a material
fact or omit to state any material fact required or necessary to make
the statements made, in light of the circumstances under which they
were made, not misleading.
(c) Each party covenants that after the Closing, it shall, execute,
acknowledge and deliver, without further consideration, all such
instruments and other documents as may be reasonably requested to
15
consummate or effectuate the transactions contemplated by this
Agreement and MMAX (the Surviving Company) agrees to undertake such
necessary actions, including but not limited to the filing of a Form 8-
K Current Report with the SEC, disclosing this Agreement.
Section 5.07 Public Announcements
Before issuing any press release or otherwise making any public
statement with respect to the Merger, MMAX and HP will consult with
each other as to its form and substance and shall not issue any such
press release or make any such public statement prior to such
consultation, except as may be required by Law (it being agreed that
the parties hereto are entitled to disclose all requisite information
concerning the transaction in any filings required with the SEC).
Section 5.08 Notification of Certain Matters
Each of HP and MMAX shall give prompt notice to the other party of (i)
any notice of, or other communication relating to, a default or event
which, with notice or lapse of time or both, would become a default,
received by it subsequent to the date of this Agreement and prior to
the Closing Date, under any contract material to the financial
condition, properties, businesses or results of operations of HP or
MMAX, as the case may be, to which it is a party or is subject; (ii)
any notice or other communication from any third party alleging that
the consent of such third party is or may be required in connection
with the transactions contemplated by this Agreement; (iii) any
material adverse change in their respective financial condition,
properties, businesses or results of operations or the occurrence of
any event which is reasonably likely to result in any such change; or
(iv) the occurrence or existence of any event which would, or could
with the passage of time or otherwise, make any representation or
warranty contained herein untrue; provided, however, that the delivery
of notice pursuant to this Section 5.08 shall not limit or otherwise
affect the remedies available hereunder to the party receiving such
notice. Each party shall use its best efforts to prevent or promptly
remedy the same.
Section 5.09 Expenses
Except as otherwise provided herein, MMAX and HP shall bear their
respective expenses incurred in connection with the Merger, including,
without limitation, the preparation, execution and performance of this
Agreement and the transactions contemplated hereby, including all fees
and expenses of its representatives, counsel and accountants.
Section 5.10 State Antitakeover Laws
If any "fair price" or "control share acquisition" statute or other
similar antitakeover regulation shall become applicable to the
transactions contemplated hereby, MMAX and HP and their Board of
Directors and Managers, respectively, shall use their reasonable best
efforts to grant such approvals and to take such other actions as are
necessary so that the transactions contemplated hereby may be
consummated as promptly as practicable on the terms contemplated hereby
and shall otherwise use their reasonable best efforts to eliminate the
effects of any such statute or regulation on the transactions
contemplated hereby.
Section 5.11 Satisfaction of Conditions
HP agrees to use its best efforts to cause each of the conditions set
forth in Article VI to MMAX proceeding with the Closing to be satisfied
on or before the Closing Date. MMAX agrees to use its best efforts to
cause each of the conditions set forth in Article VII to HP proceeding
with the Closing to be satisfied on or before the Closing Date.
ARTICLE VI.
CONDITIONS TO THE OBLIGATIONS OF MMAX
The respective obligations of each party to effect the Merger shall be
subject to the fulfillment at or prior to the Closing of each of the
following conditions, any one or more of which may be waived in a
writing signed by MMAX and HLM Paymeon:
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Section 6.01 HP Financial Statements
At or prior to closing, HP shall furnish MMAX with audited financial
statements as provided in Section 3.07.
Section 6.02 $250,000 Raise
At or prior to Closing, MMAX shall certify that it has raised at least
$250,000 in a private placement of common stock (the "250K Raise").
Section 6.03 Representations Accurate
The representations and warranties of HP contained herein shall be true
and correct on the date of this Agreement and at and on the Closing
Date in all respects as though such representations and warranties were
made at and on such date, except those representations and warranties
that speak as of a specific date.
Section 6.04 Performance
HP shall have complied, in all material respects, with all agreements,
obligations and conditions required by this Agreement to be complied
with by it on or prior to the Closing Date.
Section 6.05 Officer's Certificate
MMAX shall have received a duly executed certificate signed by the
Manager of HP certifying as to (i) compliance with the conditions set
forth in Sections 6.03 and 6.04; (ii) the accuracy and completeness of
the Bylaws of HP and the Unitholder resolutions of HP approving this
Agreement, the Merger and the transactions contemplated hereby; and
(iii) the identity and authority of the officers and other persons
executing documents on behalf of HP.
Section 6.06 Good Standing
MMAX shall have received a certificate of good standing, or its
equivalent, dated no more than 10 days prior to the Closing Date, from
the State of incorporation of HP.
Section 6.07 Material Adverse Change
There shall have been no material adverse change in the business,
operations, assets, prospects, financial condition or results of
operations of HP.
Section 6.08 Injunction Illegality
No preliminary or permanent injunction, or other order decreed by any
federal or state court, which prevents the consummation of this
Agreement shall have been issued and remain in effect (each party
agrees to use its reasonable efforts to have any such injunction, order
or decree lifted). No governmental authority shall have enacted any
statute, rule or regulation that would prevent consummation of this
Agreement or make the Merger illegal.
Section 6.09 Compliance with Securities Laws
The issuance of the MMAX Conversion Shares to the Unitholders of HP
shall qualify as a private placement under Rule 506 of Regulation D of
the Securities Act and shall be exempt from registration under the
federal securities laws in all states and other securities laws.
Section 6.10 Consents
MMAX shall have received copies of consents of Unitholders and all
third parties necessary for HP to execute, deliver and perform this
Agreement and consummate the Merger.
17
Section 6.11 General
All required action hereunder shall have been taken by HP in connection
with the consummation of the transactions contemplated hereby, and all
certificates, opinions and other documents required to affect the
Merger and the transactions contemplated herein shall be reasonably
satisfactory in form and substance to MMAX.
ARTICLE VII.
CONDITIONS TO THE OBLIGATIONS OF HP
The obligations of HP to effect the Merger and to perform under this
Agreement is subject to the fulfillment on or before the Closing Date
of the following additional conditions, any one or more of which may be
waived, in writing, by HP:
Section 7.01 Assets, Liabilities and Obligations
At closing, (i) MMAX shall have completed the 250K Raise; (ii) MMAX
shall not have outstanding liabilities or indebtedness in excess of
$2,500; (iii) Xxxxxx Xxxxxxxx shall have been appointed interim
president of MMAX and MMAX shall have entered into an indemnification
agreement with Xxxxxx Xxxxxxxx; and (iv) Xxxxx Xxxxxx shall have
released the Company from all personal claims and liabilities, if any.
Section 7.02 Report
MMAX shall have (i) filed any required reports with SEC on a timely
basis, including but not limited to the annual report on Form 10-K for
the fiscal year ended September 30, 2010 and quarterly report on Form
10-Q for the period ended December 31, 2010; and (ii) provided a
certified shareholder list to HP as of a most current date.
Section 7.03 Resignations
MMAX's Board of Directors shall have submitted their resignation,
subject to compliance with Rule 14F-1.
Section 7.04 Schedule 14F-1
MMAX shall have filed the Schedule 14F-1 with the SEC.
Section 7.05 OTCBB
MMAX's quotation symbol shall not contain an "e".
Section 7.06 Representations Accurate
The representations and warranties of MMAX contained herein shall be
true and correct on the date of this Agreement and at and on the
Closing Date in all respects as though such representations and
warranties were made at and on such date, except those representations
and warranties that speak as of a specific date.
Section 7.07 Performance
MMAX shall have complied, in all material respects, with all
agreements, obligations and conditions required by this Agreement to be
complied with by them on or prior to the Closing Date.
Section 7.08 Compliance Certificate
HP shall have received a certificate signed by the President or
Chairman of MMAX certifying as to (i) compliance with the conditions
set forth in Sections 7.01, 7.02, 7.03, 7.04, 7.05, 7.06 and 7.07; (ii)
the accuracy and completeness of the Bylaws of MMAX and, as applicable,
the director and stockholder resolutions of MMAX approving this
Agreement, the Merger and the transactions contemplated hereby; and
(iii) the identity and authority of the officers and other persons
executing documents on behalf of MMAX.
18
Section 7.09 Certified Articles of Incorporation
HP shall have received certificates of the Secretary of State of Nevada
certifying the Articles of Incorporation of MMAX and all amendments
thereof, dated not more than 10 days prior to the Closing Date.
Section 7.10 Good Standing
HP shall have received a certificate of good standing, or its
equivalent, dated no more than 10 days prior to the Closing Date, from
the state of incorporation of MMAX and each other state in which MMAX
is qualified to do business.
Section 7.11 Material Adverse Change
There shall have been no material adverse change in the business,
operations, assets, prospects, financial condition or results of
operations of MMAX.
Section 7.12 Legal Action
There shall be no pending or threatened legal action or inquiry which
challenges the validity or legality of or seeks or could reasonably be
expected to prevent, delay or impose conditions on the consummation of
the Merger.
Section 7.13 Injunction Illegality
No preliminary or permanent injunction, or other order decreed by any
federal or state court, which prevents the consummation of this
Agreement shall have been issued and remain in effect (each party
agrees to use its reasonable efforts to have any such injunction, order
or decree lifted). No governmental authority shall have enacted any
statute, rule or regulation that would prevent consummation of this
Agreement or make the Merger illegal.
Section 7.14 Consents
HP shall have received copies of consents of all third parties
necessary for MMAX to execute, deliver and perform this Agreement and
consummate the Merger.
Section 7.15 General
All required action hereunder shall have been taken by MMAX in
connection with the consummation of the transactions contemplated
hereby, and all certificates and other documents required to affect the
Merger and the transactions contemplated herein shall be reasonably
satisfactory in form and substance to HP.
Section 7.16 Compliance with Securities Laws
There shall have been full compliance with the applicable securities or
"blue sky" laws and regulations of any state or other governmental body
having jurisdiction over the Merger.
Section 7.17 Preferred Stock
No action shall be taken or will be taken with respect to the
outstanding preferred stock except as permitted in the Lock Up
Agreement, as amended, dated April 19, 2010 as filed with SEC or
subsequent to closing as otherwise approved by counsel for MMAX.
19
ARTICLE VIII.
TERMINATION OF AGREEMENT
Section 8.01 Termination
This Agreement may be terminated at any time prior to the Closing Time,
whether before or after approval by Board of Directors, stockholders,
Board of Managers or Unitholders of HP, HLM Paymeon and MMAX,
respectively:
(a) By mutual agreement of the parties hereto at any time prior to
the Closing;
(b) By the Board of Directors of MMAX at any time prior to the
Closing, if:
(i) a condition to performance by MMAX under this Agreement or a
covenant of HP contained herein, including the $250K Raise, shall not
be fulfilled on or before the date of the Closing or at such other time
and date specified in this Agreement for the fulfillment for such
covenant or condition; or
(ii) a material default or breach of this Agreement shall be made by
HP.
(c) By HP at any time prior to the Closing, if:
(i) a condition to HP's performance under this Agreement or a
covenant of MMAX contained herein shall not be fulfilled on or before
the date of the Closing or at such other time and date specified in
this Agreement for the fulfillment for such covenant or condition; or
(ii) a material default or breach of this Agreement shall be made by
MMAX; or
(iii) MMAX fails to file its periodic reports with the SEC on a timely
basis.
(d) By either party if the Merger shall not have been consummated on
or prior to March 25, 2011 unless the date of closing is extended by
agreement of the parties, provided, however, that a party in breach in
any material respect of its obligations under this Agreement, which
breach shall have been the proximate cause of the failure to consummate
the Merger by such date may not terminate this Agreement under this
Section 7.01(d).
Section 8.02 Procedure for Termination
In the event of termination and abandonment of the Merger by MMAX or HP
pursuant to this Article VII, written notice shall be given to the
other party.
Section 8.03 Effect of Termination
In the event of termination of this Agreement pursuant to this Section
8, no party hereto (or any of its directors or officers) shall have any
liability or further obligation to any other party to this Agreement,
except as provided in this Section 8 and in Sections 5.03 and 5.09;
provided however, that in the case of a termination pursuant to a
willful and material breach of this Agreement by another party, the
damages which the aggrieved party or parties may recover from the
defaulting party or parties shall in no event exceed the amount of out-
of-pocket costs and expenses incurred by such aggravated party or
parties in connection with this Agreement but not greater than
$250,000, and no party to this Agreement shall be entitled to any
injunctive relief.
20
ARTICLE IX.
OMITTED
ARTICLE X.
MISCELLANEOUS
Section 10.01 Notices
All notices, requests, and other communications shall be deemed to be
duly given if sent by confirmed facsimile transmission, email or
receipted overnight courier addressed to the other party at the address
as set forth below:
If to MMAX: MMAX Media, Inc.
000 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attn: ______________
Email: _____________
With a copy to: ____________________
____________________
____________________
Attn: _______________
Email:
If to HP: Hyperlocal Marketing LLC
X.X. Xxx 00000
Xxxx Xxxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxx, Manager
Email: xxx@xxxxxxxxxx.xxx
With a copy to: Quintairos, Prieto, Wood & Xxxxx, P.A.
Xxx Xxxx Xxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxx Xxxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxx, Esq.
Email: xxxxxxxxx@xxxxxxx.xxx
If to HP Unitholders: At the address set forth on the signature page
to this Agreement.
Section 10.02 Binding Effect
Except as may be otherwise provided herein, this Agreement will be
binding upon and inure to the benefit of the Parties hereto and their
respective successors and permitted assigns, but neither this Agreement
nor any of the rights or obligations hereunder shall be assigned by any
of the Parties hereto without the prior written consent of the other
Parties. Except as otherwise specifically provided in this Agreement,
nothing in this Agreement is intended or will be construed to confer on
any person other than the Parties hereto any rights or benefits
hereunder.
Section 10.03 Headings
The headings in this Agreement are intended solely for convenience of
reference and will be given no effect in the construction or
interpretation of this Agreement.
Section 10.04 Exhibits and Schedules
The exhibits and schedules referred to in this Agreement will be deemed
to be a part of this Agreement.
21
Section 10.05 Counterparts
This Agreement may be executed in multiple counterparts, each of which
will be deemed an original, and all of which together will constitute
one and the same document. Any signature page delivered by a fax
machine, telecopy machine or electronic mail shall be binding to the
same extent as an original signature page, with regard to any agreement
subject to the terms hereof or any amendment thereto. Any party who
delivers such a signature page agrees to later deliver an original
signed counterpart to any party which requests it.
Section 10.06 Governing Law
This Agreement will be governed by the laws of the State of Florida
without regard to conflict of laws principles thereof. Each of the
parties hereto irrevocably consents to the exclusive jurisdiction of
any court located within the State of Florida in connection with any
matter based upon or arising out of this Agreement or the matters
contemplated herein, agrees that process may be served upon them in any
manner authorized by the laws of the State of Florida for such persons
and waives and covenants not to assert or plead any objection which
they might otherwise have to such jurisdiction and such process.
To the fullest extent permitted by law, and as separately bargained-for
consideration, each party hereby waives any right to trial by jury in
any action, suit, proceeding, or counterclaim of any kind arising out
of or relating to this Agreement.
Section 10.07 Waivers
Compliance with the provisions of this Agreement may be waived only by
a written instrument specifically referring to this Agreement and
signed by the party waiving compliance. No course of dealing, nor any
failure or delay in exercising any right, will be construed as a
waiver, and no single or partial exercise of a right will preclude any
other or further exercise of that or any other right.
Section 10.08 Pronouns
The use of a particular pronoun herein will not be restrictive as to
gender or number but will be interpreted in all cases as the context
may require.
Section 10.09 Joint Drafting
This Agreement shall be deemed to have been drafted jointly by the
Parties hereto, and no inference or interpretation against any Party
shall be made solely by virtue of such Party allegedly having been the
draftsperson of this Agreement.
Section 10.10 Time Periods
Any action required hereunder to be taken within a certain number of
days will be taken within that number of calendar days unless otherwise
provided; provided, however, that if the last day for taking such
action falls on a weekend or a holiday, the period during which such
action may be taken will be automatically extended to the next business
day.
Section 10.11 Modification
No supplement, modification or amendment of this Agreement will be
binding unless made in a written instrument that is signed by all of
the Parties hereto and that specifically refers to this Agreement.
Section 10.12 Severability
If any one or more of the provisions of this Agreement shall be held to
be invalid, illegal or unenforceable, the validity, legality or
enforceability of the remaining provisions of this Agreement shall not
be affected thereby. To the extent permitted by applicable law, each
party waives any provision of law, which renders any provision of this
Agreement invalid, illegal or unenforceable in any respect.
22
Section 10.13 Entire Agreement
This Agreement and the agreements and documents referred to in this
Agreement or delivered hereunder are the exclusive statement of the
agreement among the Parties concerning the subject matter hereof. All
negotiations among the Parties are merged into this Agreement, and
there are no representations, warranties, covenants, understandings, or
agreements, oral or otherwise, in relation thereto among the Parties
other than those incorporated herein and to be delivered hereunder.
[SIGNATURE PAGE TO FOLLOW]
23
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective duly authorized officers as of the date
first written.
MMAX MEDIA, INC.
a Nevada corporation
By: /s/ Xxxxx Xxxxxx
Name: Xxxxx Xxxxxx
Its: Chief Executive Officer
HYPERLOCAL PAYMEON, INC
a Florida corporation
By:
Name: _______________________
Its: _______________________
HYPERLOCAL MARKETING LLC
a Florida limited liability company
By: /s/ Xxxxxx Xxxxxxxx
Name: Xxxxxx Xxxxxxxx
Its: Chief Executive Officer
24
SCHEDULE 1.05
Directors and Executive Officers of MMAX
Following the Closing
SCHEDULE 2.01
Conversion Shares
Name of Hyperlocal Membership Number of
Marketing Members Interests MMAX Shares
------------------ ---------- -----------
TOTAL: 20,789,395
SCHEDULE 3.02
Subsidiaries of MMAX
SCHEDULE 3.03
Capitalization of MMAX
Preferred Shareholders
Number of Shares
of Common Stock
Shareholder Name Number of issuable upon
Shareholder Name Preferred Stock Automatic Conversion
---------------- --------------- --------------------
TOTAL:
Beneficial Shareholders
Number of
Shareholder Name Shares Beneficially Owned
---------------------- --------------------------------
TOTAL:
SCHEDULE 3.11
MMAX Absence of Certain Changes
SCHEDULE 3.16
MMAX Taxes
SCHEDULE 3.17
MMAX Intellectual Property
SCHEDULE 4.01
Hyperlocal Qualifications
Florida
SCHEDULE 4.02
Hyperlocal Subsidiaries
SCHEDULE 4.06
Hyperlocal Related Party Contracts
None
SCHEDULE 4.10
Liabilities; Claims
None
SCHEDULE 4.11
Hyperlocal Compensation
None
SCHEDULE 4.12
Hyperlocal Absence of Certain Changes
None
SCHEDULE 4.18(a)
Hyperlocal Intellectual Property
None
SCHEDULE 4.18(b)
Hyperlocal Intellectual Property - Pending Claims
None
SCHEDULE 4.20
Hyperlocal Adverse Officer and Director Information
None.
SCHEDULE 4.21
Hyperlocal Material Contracts
Material Contracts
Employment Agreements
