STOCK EXCHANGE AGREEMENT
PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made and
entered into as of the 25th day of April, 2000, by and between DYNAMIC IMAGING
DIGI, INC., ("DIGI"), a Florida corporation, and XXXXXX XXXXX, XXXX XXXX, XXXX
XXXXXXX, XXXXXX XXXXXXX, XXXXXX XXXXX (individually "SHAREHOLDER" and
W I T N E S S E T H:
WHEREAS, SHAREHOLDERS collectively own 100% of the issued and
outstanding stock of PEERLESS SOLUTIONS, INC., a Florida corporation
("PEERLESS") as follows:
SHAREHOLDER NO. OF SHARES
XXXXXX XXXXX 50,000
XXXX XXXX 25,000
XXXX XXXXXXX 10,000
XXXXXX XXXXXXX 10,000
XXXXXX XXXXX 5,000
WHEREAS, the SHAREHOLDERS have agreed to transfer all of their stock in
PEERLESS to DIGI solely in exchange for stock of DIGI in a transaction intended
to qualify as a reorganization described in Section 368(a)(1)(B) of the Internal
Revenue Code of 1986, as amended, all in accordance with the terms and
conditions herein provided.
NOW, THEREFORE, in consideration of mutual covenants herein provided,
and for other good and valuable consideration, the receipt and sufficient of
which is hereby acknowledged, the parties, intending to be legally bound, hereby
agree as follows:
RECITALS, EXHIBITS, SCHEDULES, DEFINITIONS
The foregoing recitals are true and correct and, together with the
Schedules referred to herein, are hereby incorporated into this Agreement and
made a part hereof. Capitalized words used herein and not otherwise defined in
the text hereof shall have the meanings set forth in Article VII.
2.1 Exchange. SHAREHOLDERS shall transfer each share of their stock in
PEERLESS to DIGI and, in exchange therefor, DIGI shall transfer to SHAREHOLDERS
the Initial Shares as described in Section 2.2 and the Contingent Shares as
described in Section 2.3, which shall be validly issued, fully paid and
nonassessable shares of common stock of DIGI.
2.2 Initial Shares. At Closing, DIGI shall transfer to the SHAREHOLDERS
the following number of shares of common stock to SHAREHOLDERS. Said shares
shall bear a restrictive Rule 144 legend pertaining to any sales or disposition
of the sales according to the Securities Act of 1933.
SHAREHOLDER TO BE RECEIVED
XXXXXX XXXXX 175,000
XXXX XXXX 87,500
XXXX XXXXXXX 35,000
XXXXXX XXXXXXX 35,000
XXXXXX XXXXX 17,500
In the event the DIGI stock is not publicly trading within 1 year (12
months) from the signing of this Agreement, DIGI agrees to pay the SHAREHOLDERS
of PEERLESS $2.00 per share in cash for all of the shares outlined above. Said
option may be exercised at any time during the Ninety (90) day period commencing
on the first anniversary of this Agreement by delivering written notice of such
exercise to DIGI.
2.3 Contingent Shares. In addition to the Initial Shares of DIGI stock
which each SHAREHOLDER is entitled to receive at Closing pursuant to Section 2.2
above, each SHAREHOLDER shall receive from DIGI no later than June 30, 2003, his
or her Proportionate Share of the Contingent Shares. Said shares shall bear a
restrictive Rule 144 legend pertaining to any sales or disposition of the sales
according to the Securities Act of 1933. The number of Contingent Shares is
determined by dividing the Contingent Sum by the Stipulated Value. The
Contingent Sum is equal to Five (5) times the average annual Net Earnings of
PEERLESS determined for each of the following thirteen (13) and twelve (12)
May 1, 2000, through May 31, 2001;
June 1, 2001, through May 31, 2002; and
June 1, 2002, through May 31, 2003.
2.4 Closing. Closing of the exchange shall occur at the principal
offices of DIGI in Ft. Lauderdale, Florida, at 10:00 a.m. on April 25, 2000, or
at some other time and location as the parties shall mutually agree, but not
later than May 16, 2000. At Closing, the SHAREHOLDERS shall endorse in blank and
deliver to DIGI stock certificates representing all of the issued and
outstanding shares of PEERLESS, and DIGI shall issue stock certificates to the
SHAREHOLDERS representing the number of Initial Shares in DIGI each such
SHAREHOLDER is to receive as set forth in Section 2.2.
2.5 Effect of Exchange. As the result of the exchange, PEERLESS will
become a wholly owned subsidiary of DIGI. DIGI agrees to retain PEERLESS as a
wholly owned subsidiary and to continue to conduct its operations in
substantially the same manner as they are conducted as of the date of this
Agreement until May 1, 2005, unless otherwise agreed by each of the SHAREHOLDERS
SHAREHOLDERS' REPRESENTATIONS AND WARRANTIES
SHAREHOLDERS hereby make the following representations and warranties
to DIGI, each of which SHAREHOLDERS jointly and severally represent to be true
and correct on the date hereof and shall be deemed made again as of the date of
Closing and represented by SHAREHOLDERS to be true and correct on the date of
3.1 Organization. PEERLESS is a corporation duly organized, validly
existing and in good standing under the laws of the State of Florida. PEERLESS
has the full power and authority to own all its Assets and to conduct its
business. PEERLESS does not have any subsidiary or equity interest in any
Person. Accurate, current and complete copies of the Articles of Incorporation
and Bylaws of PEERLESS have been previously provided to DIGI.
3.2 Ownership. All the issued and outstanding shares of capital stock
of PEERLESS are duly authorized, validly issued, fully paid and nonassessable.
SHAREHOLDERS own 100% of the issued and outstanding shares of PEERLESS free and
clear of any Encumbrances. The shares to be transferred by SHAREHOLDERS to DIGI
hereunder will constitute 100% of the issued and outstanding shares of PEERLESS.
3.3 Authority and Approval of Agreement.
(a) SHAREHOLDERS have the power and authority to execute
and deliver this Agreement and to perform all of their obligations hereunder.
(b) This Agreement and each of the other documents,
instruments and agreements executed by SHAREHOLDERS in connection herewith
constitute the valid and legally binding agreements of SHAREHOLDERS, enforceable
against SHAREHOLDERS in accordance with its terms, except that: (i)
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws of general application affecting the
enforcement of the rights and remedies of creditors; and (ii) the availability
of equitable remedies may be limited by equitable principles.
3.4 No Violations. Neither the execution, delivery or performance of
this Agreement or any other documents, instruments or agreements executed by
SHAREHOLDERS in connection herewith, nor the performance or consummation or
occurrence of the transactions or other matters contemplated by any of the
foregoing: (i) constitutes a violation of or default under (either immediately,
upon notice or upon lapse of time) the Articles of Incorporation or Bylaws of
PEERLESS, any provision of any Contract to which SHAREHOLDERS, PEERLESS or its
Assets may be bound, any Judgment or any Law; or (ii) will or could result in
the creation or imposition of any Encumbrance upon, or give to any third person
any interest in or right to, the existing or future Assets of PEERLESS; or (iii)
will or could result in the loss or adverse modification of, or the imposition
of any fine or penalty with respect to, any license, permit or franchise granted
or issued to, or otherwise held by or for the use of, PEERLESS.
3.5 Assets; Title. Schedule "A" sets forth a complete and accurate
legal description of all Assets owned by PEERLESS. PEERLESS has, and as of the
date of Closing will have, good and marketable title to all Assets described in
Schedule "A", free and clear of all Encumbrances.
3.6 Liabilities. PEERLESS has no Liabilities to any third party
except as disclosed in Schedule "B".
3.7 Tax Returns. PEERLESS duly and timely filed with the appropriate
governmental agencies all tax and other returns and reports required by any Law
to be filed by it and all such returns and reports have been accurately prepared
and properly completed. All such Tax returns properly reflect all material
liabilities of PEERLESS for Taxes for the periods, property or events covered
3.8 Proceedings. PEERLESS is not a party to, the subject of, or
threatened with any Proceeding, nor, to the best of SHAREHOLDERS' knowledge, is
there any basis for any Proceeding. PEERLESS is not contemplating the
institution of any Proceeding.
3.9 Other Liabilities. As of Closing, there is no claim of breach of
contract, tort, product liability or other claim (whether arising from PEERLESS'
business operations or otherwise), contingent or otherwise, that has been
asserted or threatened against PEERLESS or, to the best of PEERLESS' knowledge,
is capable of being asserted by any employee, creditor, claimant or other Person
against PEERLESS. No state of facts exists or has existed, nor has any event
occurred, which could give rise to the assertion of any such claim by any Person
that could survive Closing.
3.10 Judgments. There is no outstanding Judgment against PEERLESS
or against or affecting any of its Assets.
3.11 Labor Matters. PEERLESS has no Obligation with respect to: (i) any
profit sharing, pension, retirement, deferred compensation, bonus, stock option,
stock purchase, retainer, consulting, health, welfare or incentive plan or
agreement or other employee benefit plan, whether legally binding or not; or
(ii) any plan providing for "fringe benefits" to its employees, including, but
not limited to, vacation, disability, sick leave, medical, hospitalization and
life insurance and other insurance plans, or related benefits; or (iii) any
employment agreement. To the best of SHAREHOLDERS' knowledge and belief, no
former or present employee of PEERLESS has any claim against PEERLESS (whether
under federal or state law, any employment agreement or otherwise) on account of
or for: (i) overtime pay; (ii) wages or salary for any period; (iii) vacation,
time off or pay in lieu of vacation or time off; or (iv) any violation of any
statute, ordinance or regulation relating to minimum wages or maximum hours of
work. To the best of PEERLESS' knowledge and belief, no person or party
(including, but not limited to, governmental agencies of any kind) has any claim
or basis for any Proceeding against PEERLESS arising out of any statute,
ordinance or regulation relating to discrimination in employment or to
employment practices, sexual harassment or occupational safety and health
3.12 Compliance with Laws. PEERLESS and its business are in full
compliance with all applicable Laws that would have a material impact on
PEERLESS or its Assets.
3.13 Full Disclosure. To the best of SHAREHOLDERS' knowledge, all the
representations and warranties made herein or in any Schedule hereto, and all of
the statements, documents or other information pertaining to the transaction
contemplated herein made or given by SHAREHOLDERS, its agents or representatives
are true and complete, and do not omit any information required to make the
statements and information provided, in light of the transactions contemplated
herein, true, complete and non-misleading.
DIGI'S REPRESENTATIONS AND WARRANTIES
DIGI hereby makes the following representations and warranties to
SHAREHOLDERS, each of which DIGI represents to be true and correct on the date
hereof and shall be deemed made again as of the Closing Date and represented by
DIGI to be true and correct on the Closing Date.
4.1 Organization. DIGI is a corporation duly organized, validly
existing and in good standing under the Laws of the State of Florida. DIGI has
the full power and authority to enter into this transaction.
4.2 Ownership. All the issued and outstanding shares of capital stock
of DIGI are duly authorized, validly issued, fully paid and nonassessable. All
of the shares of DIGI stock to be transferred to SHAREHOLDERS hereunder will be
free and clear of Encumbrances.
4.3 Authority and Approval of Agreement.
(a) The execution and delivery of this Agreement by DIGI, and
DIGI'S performance of its obligations hereunder have been duly authorized and
approved by all requisite corporate action on the part of DIGI pursuant to
applicable Law. DIGI has the power and authority to execute and deliver this
Agreement and to perform all of its obligations hereunder.
(b) This Agreement and each of the other documents,
instruments and agreements executed by DIGI in connection herewith constitute
the valid and legally binding agreements of DIGI, enforceable against DIGI in
accordance with its terms, except that: (i) enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws of
general application affecting the enforcement of the rights and remedies of
creditors; and (ii) the availability of equitable remedies may be limited by
4.4 No Violations. Neither the execution, delivery or performance of
this Agreement or any other documents, instruments or agreements executed by
DIGI in connection herewith, nor the performance or consummation or occurrence
of the transactions or other matters contemplated by any of the foregoing: (i)
constitutes a violation of or default under (either immediately, upon notice or
upon lapse of time) the Charter or Bylaws of DIGI, any provision of any Contract
to which DIGI or its Assets may be bound, any Judgment to which DIGI is bound;
or (ii) will or could result in the creation or imposition of any Encumbrance
upon, or give to any third person any interest in or right to, the existing or
future Assets of DIGI.
4.5 Consents. The execution, delivery and performance by DIGI of this
Agreement and the consummation by DIGI of the transactions contemplated herein
do not require any Consent that has not been received as of the date hereof,
including the approval of its shareholders and directors in accordance with
4.6 Compliance with Laws. DIGI and its business are in full compliance
with all applicable Laws that would have a material impact on DIGI or its
Assets. Without limiting the generality of the foregoing, DIGI specifically
represents that it is in full compliance with all reporting requirements to
which it is subject under the Securities Exchange Act of 1934, and that all
reports it filed with the Securities Exchange Commission are accurate and
complete and do not omit any information required to make the reports true,
complete and non-misleading.
4.7 Full Disclosure. To the best of DIGI'S knowledge, all the
representations and warranties made by the DIGI herein or in any Schedule
hereto, and all of the statements, documents or other information pertaining to
the transaction contemplated herein made or given by DIGI, its agents or
representatives are true and complete, and do not omit any information required
to make the statements and information provided, in light of the transactions
contemplated herein, true, complete and non-misleading.
4.8 Investigation. DIGI represents that SHAREHOLDERS have permitted
DIGI and/or its authorized representatives and agents, unlimited access to
PEERLESS' books and records and permitted DIGI and/or its authorized
representatives and agents to (i) audit, examine and copy all of PEERLESS'
files, books and records, and other documents and papers, (ii) observe and
investigate the business and the Assets of PEERLESS, and (iii) meet with
PEERLESS' officers, agents and directors. DIGI has determined the scope of its
own due diligence and conducted that due diligence to its satisfaction.
INTERPRETATION AND SURVIVAL OF
REPRESENTATIONS AND WARRANTIES
5.1 Interpretation. Each warranty and representation made by a party to
this Agreement or pursuant hereto is independent of all other warranties and
representations made by the same party to this Agreement or pursuant hereto
(whether or not covering identical, related or similar matters) and must be
independently and separately satisfied. Exceptions or qualifications to any such
warranty or representation shall not be construed as exceptions or
qualifications to any other warranty or representation.
5.2 Survival. All representations and warranties of the parties
made in this Agreement or pursuant hereto shall survive Closing.
6.1 Conduct of PEERLESS Pending Closing. During the period from the
date hereof until the Closing, except with the express prior written consent of
DIGI, SHAREHOLDERS shall cause PEERLESS to:
(a) maintain its existence in good standing in the State of
(b) duly and timely file all returns and reports required by
any Law to be filed by PEERLESS, promptly pay when due all Taxes assessed
against PEERLESS or any of its Assets, and conform to and fully comply with all
the Laws pertaining to the business;
(c) conduct its business in a good and diligent manner
consistent with past practices, not make any change in its business practices
and in good faith use its best efforts to preserve the business intact, keeping
available the services of its current officers, employees, salesmen, agents, and
representatives, and maintain the goodwill of its suppliers, customers and other
Persons having business relations with PEERLESS;
(d) conform to and fully comply with all terms and conditions
pursuant to which any such Assets are held.
6.2 Public Offering of DIGI Stock. The parties acknowledge that DIGI
has represented to SHAREHOLDERS that DIGI will register its stock under the
Securities Act of 1933 and diligently pursue a public offering of its stock with
the goal of making a public market for the DIGI stock. The parties also
acknowledge that such representation is a material inducement to SHAREHOLDERS
entering into this Agreement. DIGI agrees to diligently pursue that goal and to
comply with each of its reporting requirements under the Law, including, but not
limited to, the Securities Exchange Act of 1934.
6.3 Employment Agreements. DIGI and each of the SHAREHOLDERS
agree to enter into Employment Agreements effective as of the date of Closing in
the Forms attached as composite Schedule "C".
All defined terms used in this Agreement and not specifically defined
in context are as defined in this Exhibit A.
"Agreement" means this Agreement and Plan of Reorganization.
"Asset" means the properties disclosed in Schedule "A", which
constitute all of the properties owned by PEERLESS as of the date of this
Agreement and which will be owned by PEERLESS as of the date of Closing.
"Closing" means the consummation of the reorganization contemplated in
Section 2.4 of this Agreement.
"Consent" means any consent, approval, order or authorization of, or
any declaration, filing or registration with, or any application or report to,
or any waiver by, or any other action (whether similar or dissimilar to any of
the foregoing) of, by or with, any person, which is necessary in order to take a
specified action or actions, in a specified manner and/or to achieve a specific
"Contingent Shares" means the shares of DIGI stock to be transferred to
the SHAREHOLDERS, if any, pursuant to Section 2.3.
"Encumbrance" means any lien, security interest, pledge, mortgage,
easement, leasehold, assessment, covenant, restriction, reservation, conditional
sale, prior assignment, license, or any other encumbrance, claim, burden or
charge of any nature whatsoever.
"Initial Shares" means the shares of DIGI stock to be transferred to
the SHAREHOLDERS at Closing pursuant to Section 2.2.
"Judgment" means any order, writ, injunction, fine, citation, award,
decree, or any other judgment of any nature whatsoever of any foreign, federal,
state or local court, any governmental, administrative or regulatory authority,
or any arbitration tribunal.
"Law" means any provision of any law, statute, ordinance, constitution,
charter, treaty, rule or regulation of any foreign, federal, state or local
governmental, administrative or regulatory authority.
"Liabilities" means any debt, liability or obligation of any nature
whatsoever, whether secured, unsecured, recourse, nonrecourse, liquidated,
unliquidated, accrued, absolute, fixed, contingent, ascertained, unascertained,
known, unknown or obligations under executory contracts.
"Net Earnings" means the taxable income of PEERLESS determined for
federal income tax purposes without regard to any (i) allocation of overhead,
general administrative or interest expenses of DIGI or (ii) amortization of
intangibles under Section 197.
"Person" means any individual, sole proprietorship, joint venture,
partnership, corporation, association, cooperation, trust, estate, government
(or any branch, subdivision or agency thereof), governmental, administrative or
regulatory authority, or any other entity of any nature whatsoever.
"Proceeding" means any demand, claim, suit, action, litigation,
investigation, arbitration, administrative hearing, or any other proceeding of
any nature whatsoever.
"Proportionate Share" means the percentage of the outstanding stock of
PEERLESS which is owned by a SHAREHOLDER as follows:
SHAREHOLDER PROPORTIONATE SHARE
XXXXXX XXXXX 50%
XXXX XXXX 25%
XXXX XXXXXXX 10%
XXXXXX XXXXXXX 10%
XXXXXX XXXXX 5%
"Stipulated Value" means the value of the DIGI stock for purposes of
Section 2.3, which the parties have stipulated to be market value (the average
of the Bid and Ask on the day of commencement of trading).
"Tax" means (a) any foreign, federal, state or local income, profits,
gross receipts, franchise, sales, use, occupancy, general property, real
property, personal property, intangible property, transfer, fuel, excise,
accumulated earnings, personal holding company, unemployment compensation,
social security, withholding taxes, payroll taxes, or any other tax of any
nature whatsoever, (b) any foreign, federal, state or local organization fee,
qualification fee, annual report fee, filing fee, occupation fee, assessment,
rent, or any other fee or charge of any nature whatsoever, or (c) any
deficiency, interest or penalty imposed with respect to any of the foregoing.
8.1 Notices. Any notice required or permitted to be delivered to any
party to this Agreement shall be deemed to have been duly delivered (a) upon
hand delivery thereof, (b) upon telefax and written confirmation of
transmission, (c) upon receipt of any overnight deliveries, or (d) on the third
(3rd) business day after mailing United States registered or certified mail,
return receipt requested, postage prepaid, addressed to each party as set forth
below, or at such other address, or to such other person and at such address for
that person, as any party shall designate in writing to the other party in the
manner hereinabove set forth.
If to DIGI: Dynamic Imaging Group, Inc.
0000 X. Xxxxx Xxxx.
Xx. Xxxxxxxxxx, XX 00000
If to SHAREHOLDERS: Peerless Solutions, Inc.
Attn: Xxxxxx Xxxxx
00000 Xxx Xxxxxx Xxxxx
Xxxx Xxxxx, XX 00000
8.2 Entire Agreement. This Agreement, including the Schedules attached
hereto, sets forth all the promises, covenants, agreements, conditions and
understandings between the parties hereto with respect to the subject matter
hereof, and supersedes and abrogates all prior and contemporaneous agreements,
understandings, inducements or conditions, expressed or implied, oral or
written, except as herein contained. No changes of or modifications or additions
to this Agreement shall be valid unless the same shall be in writing and signed
by the parties hereto.
8.3 Binding Effect; Assignment. This Agreement shall be binding upon
the parties hereto, their beneficiaries, successors, and assigns. No party may
assign, pledge, hypothecate or otherwise transfer its interests herein, or
delegate its duties hereunder, without the prior written consent of the other
8.4 Amendment. The parties hereby irrevocably agree that no attempted
amendment, modification, or change (collectively, "Amendment") of this Agreement
shall be valid and effective, unless the parties shall unanimously agree in
writing to such Amendment.
8.5 No Waiver. No waiver of any provision of this Agreement shall be
effective, unless it is in writing and signed by the party against whom it is
asserted, and any such written waiver shall only be applicable to the specific
instance to which it relates and shall not be deemed to be a continuing or
8.6 Gender and Use of Singular and Plural. All pronouns shall be deemed
to refer to the masculine, feminine, neuter, singular or plural, as the identity
of the party or parties or their successors and assigns may require.
8.7 Counterparts. This Agreement and any amendments may be executed in
one or more counterparts, each of which shall be deemed an original and all of
which together will constitute one and the same instrument.
8.8 Headings. The article and section headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of the Agreement.
8.9 Governing Law; Venue. This Agreement shall be construed and
enforced in accordance with the laws of the State of Florida and this Agreement
shall not be construed more strictly against one party than against the other
merely by virtue of the fact that this Agreement may have been prepared by
counsel for one of the parties, it being recognized that each of the parties
have contributed substantially and materially to the preparation of this
Agreement. The parties agree that Broward County, Florida, shall be the venue
for any proceeding arising from this Agreement.
8.10 Further Assurances. The parties hereto will execute and deliver
such further instruments and do such further acts and things as may be
reasonably required to carry out the intent and purposes of this Agreement.
8.11 Arbitration. All disputes shall be resolved through arbitration/
8.12 Severability. If any one clause or clauses of this Agreement shall
be deemed illegal or unenforceable for whatever reason, the remaining portion of
this Agreement shall continue to be binding on the undersigned.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date and year set forth above.
DYNAMIC IMAGING GROUP, INC.,
a Florida corporation