AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made this
9th day of January 2002, between Dynamic Imaging Group, Inc a Florida
corporation ("Digi"); Hi Tech Expos LTD, Twenty First Century Promotions, an
Arizona corporation ("TFCP"); and the shareholders of TFCP listed in Exhibit A
hereof (the "Stockholders").
Digi desires to acquire all of the issued and outstanding stock of TFCP in
exchange for common stock of Digi in a transaction qualifying as a tax-free
reorganization under Section 368 of the Internal Revenue Code of 1986, as
amended, and, concurrent with the acquisition of the outstanding stock of TFCP.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, IT IS AGREED:
SECTION 1
REORGANIZATION
1.1 EXCHANGE OF SHARES. The Stockholders agree to transfer to Digi at the
close of escrow, 100% of the outstanding shares, and any subscriptions to
purchase shares, of TFCP listed in Exhibit A hereto and incorporated herein by
this reference (the "TFCP Shares") in exchange for 4,941,175 Rule 144
"restricted" shares of common stock of Digi (the "Digi Shares") to be issued to
the Stockholders on a pro rata basis.
1.2 DELIVERY OF CERTIFICATES. The exchange of shares shall be effected at
close of escrow by the delivery to Digi, of the certificates representing the
Stockholders' shares endorsed in blank or accompanied by stock powers executed
in blank, with all signatures witnessed or guaranteed to the satisfaction of
Digi; and by the delivery to Stockholders of the certificates representing the
Digi Shares issued on a pro rata basis to the Stockholders.
1.3 FURTHER ASSURANCES. At Closing and from time to time thereafter, the
Stockholders shall execute such additional instruments and take such other
action as Digi may request in order to exchange and transfer clear title and
ownership in the TFCP Stock to Digi.
1.4 PRESENT DIRECTORS AND EXECUTIVE OFFICERS OF DIGI. At Closing, the
present directors and officers of Digi shall remain the same, and designate a
director of TFCP to serve as a director , of Digi until the next respective
annual meeting of the stockholders and board of directors of Digi, and until
their respective successors shall be elected and qualified or until their
respective prior resignations or terminations.
1.5 ASSETS AND LIABILITIES OF TFCP AT CLOSING. TFCP shall provide Digi
with a copy of its completed, audited financial statements with accompanying
notes thereto, prepared as of 60 days of Closing in accord with Regulation S-X,
and represents and warrants that TFCP's financial condition as reflected in the
audited financial statements shall be substantially identical to its financial
condition as represented at Closing.
SECTION 2
CLOSING
2.1 EXECUTION OF AGREEMENT. The Closing of this Agreement shall occur at
the offices of Digi on February 15, 2002 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.
2.2 ESCROW OF SHARE CERTIFICATES. Immediately following Closing, or as
soon thereafter as reasonably possible, the respective parties shall deposit in
escrow with an agent to be mutually appointed as escrow agent for the purposes
of this Agreement (the "Escrow Agent"), the share certificates representing the
shares to be exchanged hereunder. The Escrow Agent shall be provided
instructions to hold said certificates pursuant to this Agreement.
2.2.a CLOSE OF ESCROW. Upon mutually agreed level of Equity Capital
within 30 days of Closing, or as extended by the written, mutual
agreement of the parties (hereinafter, the "Funding Period"), the
Escrow Agent shall forward to Digi, the share certificates
representing the TFCP Shares, and shall forward to the Stockholders,
the share certificates representing 4,941,175 shares of Digi to be
issued to the Stockholders on a pro rata basis (TFCP will maintain
15% of the outstanding shares of DIGI (approx. additional 5,558,825)
expected to be 70,000,000 shares upon the planned merger of Xxxxx
Media Group Inc).
SECTION 3
REPRESENTATIONS AND WARRANTIES OF TFCP AND STOCKHOLDERS
TFCP and Stockholders represent and warrant to, and covenant with Digi as
follows:
3.1 CORPORATE STATUS. TFCP is a corporation duly organized, validly
existing and in good standing under the laws of the state of Arizona 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.
3.2 TFCP SHARES. The Stockholders are the record and beneficial owners of
the TFCP Shares, free and clear of adverse claims of third parties; and Exhibit
A hereto correctly sets forth the names, addresses and number of shares of TFCP
owned by each of the Stockholders.
3.3 CAPITALIZATION. The authorized capital stock of TFCP consists of
20,000 shares of common voting stock, $0.001 par value, and 0 shares of
preferred stock, $0.001 par value, of which 2,000 shares of common stock are
issued and outstanding, and zero (0) shares of preferred stock are issued and
outstanding. All shares of issued and outstanding common and preferred stock are
fully paid and non-assessable.
3.4 FINANCIAL STATEMENTS. The financial statements of TFCP furnished to
Digi, attached hereto as Exhibit B and incorporated herein by reference, are
correct and fairly present the financial condition of TFCP 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 B.
3.5 UNDISCLOSED LIABILITIES. TFCP has no material liabilities of any
nature except to the extent reflected or reserved against in the 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 C attached hereto and incorporated herein by reference.
3.6 INDEMNIFICATION FOR UNDISCLOSED LIABILITIES. The Stockholders agree to
indemnify Digi and hold harmless Digi from any judgments or undisclosed
liabilities arising from this acquisition.
3.7 INTERIM CHANGES. Since the date of its balance sheet, except as set
forth in Exhibit F, there have been no (1) changes in the financial condition,
assets, liabilities or business of TFCP which, in the aggregate, have been
materially adverse; (2) damages, destruction or loss of or to the property of
TFCP, payment of any dividend or other distribution in respect of the capital
stock of TFCP, 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 employees.
3.8 TITLE TO PROPERTY. TFCP has good and marketable title to all
properties and assets, real and personal, proprietary or otherwise, reflected in
its balance sheet, and the properties and assets of TFCP are subject to no
mortgage, pledge, lien or encumbrance, except for liens shown therein or in
Exhibit G, with respect to which no default exists.
3.9 LITIGATION. There is no litigation or proceeding pending or to the
knowledge of TFCP, threatened, against or relating to TFCP, its properties or
business except as set forth in Exhibit H. Further, no officer, director or
person who may be deemed to be an affiliate of TFCP is party to any material
legal proceeding which could have an adverse effect on TFCP (financial or
otherwise), and none is party to any action or proceeding wherein any has an
interest adverse to TFCP.
3.10 BOOKS AND RECORDS. From the date of this Agreement to the closing,
the Stockholders will cause TFCP to (1) give to Digi 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 Digi may inspect
and audit them; and (2) furnish such information concerning the properties and
affairs of TFCP as Digi may reasonably request.
3.11 TAX RETURNS. TFCP has filed, or will promptly file, all federal and
state income or franchise tax returns required to be filed, or has received
currently effective extensions of the required filing dates.
3.12 CONFIDENTIALITY. Until the Closing (and continuously if there is no
Closing), the Stockholders and their representatives will keep confidential any
information which they obtain from Digi concerning its properties, assets and
business. If the transactions contemplated by this Agreement are not
consummated, the Stockholders will return to Digi all written matter with
respect to Digi obtained by them in connection with the negotiation or
consummation of this Agreement.
3.13 INVESTMENT INTENT. The Stockholders are acquiring the Digi Shares for
investment, and not with a view to the sale or distribution thereof, and the
Stockholders have no commitment or present intention to liquidate Digi or to
sell or otherwise dispose of the Digi Shares. The Stockholders shall execute and
deliver to Digi an Investment Letter attached hereto as Exhibit I and
incorporated herein by reference, acknowledging the "unregistered" and
"restricted" nature of the securities of Digi being received under the Agreement
in exchange for the TFCP Shares, and receipt of certain material information
regarding Digi, including, but not limited to the reports of Digi filed with the
Securities and Exchange Commission (the "Commission") during the past twelve
months and a copy of this Agreement and all Exhibits hereto.
3.14 CORPORATE AUTHORITY. TFCP has all corporate power and authority to
enter into this Agreement and to carry out its obligations hereunder and will
deliver to Digi 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.
3.15 DUE AUTHORIZATION. Execution of this Agreement and performance by
TFCP hereunder has been duly authorized by all requisite corporate action on the
part of TFCP, and this Agreement constitutes a valid and binding obligation of
TFCP and performance hereunder will not violate any provision of the Articles of
Incorporation, Bylaws, agreements, mortgages or other commitments of TFCP.
3.16 COMMITMENT TO HONOR PRIOR OBLIGATIONS OF DIGI. TFCP and the
Stockholders agree to ratify, honor and be bound by the prior obligations of
Digi to its current officers and directors.
3.17 ENVIRONMENTAL MATTERS. TFCP has no knowledge of any assertion by
any governmental agency or other regulatory authority of any environmental
lien or action, or of any cause for any such lien or action.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF DIGI
Digi represents and warrants to, and covenants with TFCP and the
Stockholders as follows:
4.1 CORPORATE STATUS. Digi is a corporation duly organized, validly
existing and in good standing under the laws of the state of Florida 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. Digi is a publicly held company and is
current in the filing
of all reports required to be filed by it with the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended, copies of
which have been provided to TFCP and the Stockholders; such reports are true and
correct in every material respect; and the securities of Digi are currently
listed on the OTC Bulletin Board(R) system of the National Association of
Securities Dealers, Inc. under the symbol, "DYIG."
4.2 CAPITALIZATION. The authorized capital stock of Digi consists of
100,000,000 shares of common voting stock, $0.0001 par value, and 10,000,000
shares of preferred stock, of which 28,000,000 shares of common stock are issued
and outstanding and 6,000,000 Series A Preferred shares are issued and
outstanding. All shares of issued and outstanding common stock are fully paid
and non-assessable.
4.3 FINANCIAL STATEMENTS. The financial statements of Digi furnished to
TFCP as part of Digi' reports filed with the Commission, are correct and fairly
present the financial condition of Digi 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.
4.4 UNDISCLOSED LIABILITIES. Digi has no material liabilities of any
nature except to the extent reflected or reserved against in the 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 K attached hereto and incorporated herein by reference.
4.5 INTERIM CHANGES. Since the date of its balance sheet, except as set
forth in Exhibit L, there have been no (1) changes in the financial condition,
assets, liabilities or business of Digi which, in the aggregate, have been
materially adverse; (2) damages, destruction or loss of or to the property of
Digi, payment of any dividend or other distribution in respect of the capital
stock of Digi, 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 employees.
4.6 TITLE TO PROPERTY. Digi has good and marketable title to all
properties and assets, real and personal, proprietary or otherwise, reflected in
its balance sheet, and the properties and assets of Digi are subject to no
mortgage, pledge, lien or encumbrance, except for liens shown therein or in
Exhibit M, with respect to which no default exists.
4.7 LITIGATION. There is no litigation or proceeding pending or to the
knowledge of Digi, threatened, against or relating to Digi, its properties or
business except as set forth in Exhibit N. Further, no officer, director or
person who may be deemed to be an affiliate of Digi is party to any material
legal proceeding which could have an adverse effect on Digi (financial or
otherwise), and none is party to any action or proceeding wherein any has an
interest adverse to Digi.
4.8 BOOKS AND RECORDS. From the date of this Agreement to the Closing,
Digi will (1) give to TFCP 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 TFCP may inspect and audit them; and
(2) furnish such information concerning the properties and affairs of Digi as
TFCP may reasonably request.
4.9 TAX RETURNS. Digi has filed, or will promptly file, all federal and
state income or franchise tax returns required to be filed or has received
currently effective extensions of the required filing dates.
4.10 CONFIDENTIALITY. Until the Closing (and continuously if there is no
Closing), Digi and their representatives will keep confidential any information
which they obtain from TFCP concerning its properties, assets and business. If
the transactions contemplated by this Agreement are not consummated, Digi will
return to TFCP all written matter with respect to TFCP obtained by Digi in
connection with the negotiation or consummation of this Agreement.
4.11 INVESTMENT INTENT. Digi is acquiring the TFCP Shares to be
transferred to it under this Agreement for investment purposes and not with a
view to the sale or distribution thereof, and Digi has no commitment or present
intention to liquidate TFCP or to sell or otherwise dispose of the TFCP Shares.
4.12 CORPORATE AUTHORITY. Digi has all corporate power and authority to
enter into this Agreement and to carry out its obligations hereunder and will
deliver to TFCP 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.
4.13 DUE AUTHORIZATION. Execution of this Agreement and performance by
Digi hereunder has been duly authorized by all requisite corporate action on the
part of Digi, and this Agreement constitutes a valid and binding obligation of
Digi and performance hereunder will not violate any provision of the Articles of
Incorporation, Bylaws, agreements, mortgages or other commitments of Digi.
4.14 ENVIRONMENTAL MATTERS. Digi has no knowledge of any assertion by
any governmental agency or other regulatory authority of any environmental
lien or action, or of any cause for any such lien or action.
SECTION 5
CONDUCT OF TFCP PENDING THE CLOSE OF ESCROW
TFCP and the Stockholders agree that TFCP will conduct itself in the
following manner pending the close of escrow:
5.1 CERTIFICATE OF INCORPORATION AND BYLAWS. No change will be made
in the Certificate of Incorporation or Bylaws of TFCP.
5.2 CAPITALIZATION, ETC. TFCP will not make any change in its authorized
or issued shares of any class, declare or pay any dividend or other
distribution, or issue, encumber, purchase or otherwise acquire any of its
shares of any class.
5.3 CONDUCT OF BUSINESS. TFCP will use its best efforts to maintain and
preserve its business organization, employee relationships and good will intact,
and will not, without the written consent of Digi, enter into any material
commitments except in the ordinary course of business.
SECTION 6
CONDUCT OF DIGI PENDING THE CLOSE OF ESCROW
Digi agrees that Digi will conduct itself in the following manner pending
the close of escrow:
6.1 CERTIFICATE OF INCORPORATION AND BYLAWS. No change will be made in the
Certificate of Incorporation or Bylaws of Digi, with the exception of the name
change referenced in the opening statements of this Agreement.
6.2 CAPITALIZATION, ETC. Digi will not make any change in its authorized
or issued common voting stock, declare or pay any dividend or other
distribution, or issue, encumber, purchase or otherwise acquire any of its
common voting stock, except as contemplated by this Agreement.
6.3 CONDUCT OF BUSINESS. Digi will use its best efforts to maintain and
preserve its business organization, employee relationships and goodwill intact,
and will not, without the written consent of TFCP, enter into any material
commitments except in the ordinary course of business.
SECTION 7
CONDITIONS PRECEDENT TO OBLIGATIONS OF STOCKHOLDERS AND TFCP
All obligations of the Stockholders and TFCP under this Agreement are
subject at their option, to the fulfillment, before or at the close of escrow,
of each of the following conditions:
7.1 REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. The representations
and warranties of Digi 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.
7.2 DUE PERFORMANCE. Digi shall have performed and complied with all
the terms and conditions required by this Agreement to be performed or
complied with by it before the Closing.
7.3 OFFICERS' CERTIFICATE. The Stockholders shall have been furnished with
a certificate signed by the President and Secretary of Digi, attached hereto as
Exhibit O attached hereto and incorporated herein by reference, dated as of the
Closing, certifying (1) to the effects set out in Sections 6.1 and 6.2; and (2)
that since the date of the financial statements filed with the Commission with
Digi' most recent periodic report, there has been no material adverse change in
the financial condition, business or properties of Digi taken as a whole.
SECTION 8
CONDITIONS PRECEDENT TO OBLIGATIONS OF DIGI
All obligations of Digi under this Agreement are subject, at its option,
to the fulfillment, before or at the close of escrow, of each of the following
conditions:
8.1 REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. The Stockholders' and
TFCP's representations and warranties 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.
8.2 DUE PERFORMANCE. The Stockholders and TFCP shall have performed and
complied with all the terms and conditions required by this Agreement to be
performed or complied with by them before the Closing.
8.3 OFFICERS' AND STOCKHOLDERS' CERTIFICATE. Digi shall have been
furnished with a certificate signed by the President and Secretary of TFCP, and
all of the Stockholders who own 10% or more of the outstanding voting securities
of TFCP and who adopt, ratify and approve the Agreement or their duly authorized
representatives, attached hereto as Exhibit P and incorporated herein by
reference, dated as of the Closing, certifying (1) to the effects set out in
Sections 5.1 and 5.2; and (2) that since the date of the financial statements
(Exhibit B) there has been no material adverse change in the financial
condition, business or properties of TFCP taken as a whole.
8.4 OPINION OF COUNSEL OF TFCP. Digi shall have received an opinion of
counsel for TFCP, dated as of the Closing, to the effect that (1) the
representations of Sections 3.2, 3.3 and 3.15 are correct; (2) except as
specified in the opinion, counsel knows of no inaccuracy in the representations
in 3.7, 3.8, or 3.9; and (3) the TFCP Shares to be delivered to Digi under this
Agreement will, when so delivered, have been validly issued, fully paid and
non-assessable, and will be free and clear of any liens or encumbrances.
8.5 BOOKS AND RECORDS. The Stockholders or the Board of Directors of TFCP
shall have caused TFCP to make available all books and records of TFCP,
including minute books and stock transfer records; provided, however, only to
the extent requested in writing by Digi.
8.6 REVOCATION OF PRIOR AUTHORIZATIONS. The officers of TFCP shall have
delivered to Digi certified copies of resolutions of the Board of Directors of
TFCP revoking all prior authorizations, powers of attorney, designations and
appointments relating to the signing of checks, borrowing of funds, access to
corporate safe deposit boxes and other similar matters, to the extent requested
by Digi.
SECTION 9
GENERAL PROVISIONS
9.1 FURTHER ASSURANCES. At any time, and from time to time, after the
Closing, each party will execute such additional instruments and take such
action(s) 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.
9.2 WAIVER. Any failure on the part of any party hereto to comply with any
of its obligations, agreements or conditions hereunder may be waived in writing
by the party to whom such compliance is owed.
9.3 BROKERS. Each party 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 it.
9.4 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 Digi: Xxxxxx Xxxxxx, President
0000 Xxxxx Xxxxx Xxxxxxxxx
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
If to TFCP: Xxxx Xxxxx, President
0000 X. Xxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
If to the Stockholders: To the addresses listed on Exhibit A
10.5 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.
10.6 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.
10.7 GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Florida.
10.8. ASSIGNMENT. This Agreement shall inure to the benefit of, and be
binding upon, the parties hereto and their successors and assigns; provided
however, that any assignment by any party of its rights under this Agreement
without the prior written consent of the other parties shall be void.
10.9 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.
IN WITNESS WHEREOF, the parties have executed this Agreement and Agreement
of Reorganization effective the day and year first above written.
Dynamic Imaging Group, INC.
By
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Its
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Twenty First Century Promotions.
By
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Its
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