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
