Agreement and Plan of Merger

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

 

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.

 

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.

 

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 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 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.

 

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 Sarbanes- Oxley Act of 2002 (the "Sarbanes-Oxley Act"), and at the time of filing or submission of each such certification, such certification was true and accurate and materially complied with the Sarbanes-Oxley 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:

(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 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 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