EXHIBIT 99.(a)
PLAN AND AGREEMENT OF REORGANIZATION
THIS PLAN AND AGREEMENT OF REORGANIZATION (hereinafter referred to as
the "Agreement") is entered into as of this 29th day of April, 2002, by and
between BYCOM MEDIA INC. (hereinafter referred to as "BYCOM"), DISCOVERY
INVESTMENTS, INC. (hereinafter referred to as "DCIV") and C. PHILIP YEANDLE
(hereinafter referred to as "Shareholder").
WITNESSETH
WHEREAS, BYCOM MEDIA INC. is an Ontario, Canada corporation with
authorized capital stock of unlimited common shares, of which 100 shares were
issued and outstanding as of March 31, 2002 (hereinafter "BYCOM Shares") and a
second class designated is Class A, Class B and/or Class C preferred shares, of
which none have been issued;
WHEREAS, DCIV is a Nevada corporation with authorized capital stock of
25,000,000 shares of $0.001 par value Common Stock, of which 2,199,881 shares
were issued and outstanding as of March 31, 2002.
WHEREAS, DCIV desires to purchase from Shareholder all of the issued and
outstanding shares of BYCOM owned by Shareholder in exchange, solely for DCIV
shares of common stock ("Stock"); and
WHEREAS, it is the intention of Shareholder to exchange the BYCOM Shares
held by it for Stock of DCIV, on the terms and conditions set forth herein; and
WHEREAS, it is the intention of DCIV, BYCOM and Shareholder that the
transactions contemplated hereby constitute a tax-free "reorganization" as
defined in the Internal Revenue Code of 1986, as amended, and that all the terms
and provisions of this Agreement be interpreted, construed and enforced to
effectuate this intent.
NOW THEREFORE in consideration of the foregoing and the mutual
covenants, promises, representations and warranties contained herein, the
parties hereto agree as follows:
Article I
EXCHANGE
1.1 Exchange of Stock of BYCOM. At the Closing Date (as defined in
Article VIII hereof), in accordance with the provisions of this Agreement and
applicable law, Shareholder shall transfer and DCIV shall acquire all of the
BYCOM Shares owned by Shareholder.
Article II
CONSIDERATION
2.1 Exchange. Shareholder and DCIV agree that all of the BYCOM Shares
owned by Shareholder shall be exchanged with DCIV for 4,800,000 shares of Common
Stock. Such Stock shall be issued in certificates of such denominations, amounts
and names as may be requested by Shareholder.
2.2 Investment Intent. Shareholder represents and warrants that he is
acquiring said shares for investment purposes only and not with a view towards
resale or redistribution in violation of state and federal securities laws.
Shareholder agrees to deliver to DCIV at the closing, a letter setting forth an
agreement that said shares are being acquired for investment purposes only and
will not be sold except in compliance with the Securities Act of 1933, as
amended, and the Rules and Regulations promulgated thereunder.
2.3 Delivery. At said closing, Shareholder shall deliver certificates
for the shares of BYCOM, duly endorsed in negotiable form, with signatures
guaranteed, free and clear from all claims and encumbrances.
Article III
REPRESENTATIONS AND WARRANTIES OF DCIV
DCIV represents and warrants to Shareholder as follows:
3.1 Organization. DCIV is a corporation duly incorporated, validly
existing and, at the closing, in good
standing under the laws of the State of Nevada and has the corporate power and
authority to own or lease its properties and to carry on business as now being
conducted.
3.2 Capitalization. As of the closing date, the authorized capital stock
of DCIV shall consist of 25,000,000 shares of $0.001 par value common stock, of
which 2,199,881 are currently issued and outstanding. All said shares are
validly issued, fully paid and non-assessable.
3.3 Financial Statements. DCIV has furnished to Shareholder audited
financial statements as of December 31, 2001 and audited financial statement as
of January 31, 2002. said financial statements contain the Balance Sheet,
Statements of Income, Statements of Stockholders' Equity, Statement of Cash Flow
and Notes of DCIV. All of said financial statements, (i) are in accordance with
DCIV's books and records, (ii) present fairly and financial position of DCIV as
of such dates, and its results of operations and changes in financial position
for the respective periods indicated, (iii) have been prepared in conformity
with generally accepted accounting principles applied on a consistent basis, and
(iv) consistent with prior business practice, contain adequate reserves for all
known or contingent liabilities, losses and refunds with respect to services or
products already rendered or sold.
3.4 Changes in Financial Condition. Except as it relates to the
transactions contemplated by this Agreement, from the date of the Financial
Statements to the Closing Date, there has been no material change in the
properties, assets, liabilities, financial condition, business, operations,
affairs or prospects of DCIV from that set forth or reflected in the Financial
Statements, other than changes in the ordinary course of business, none of which
have been, either in any case or in the aggregate, materially adverse.
3.5 Authorization. DCIV has the power to enter into this Agreement, and
this Agreement, when duly executed and delivered, will constitute the valid and
binding obligation of DCIV. Other than approval by the Board of Directors and/or
shareholders of DCIV, no proceedings are necessary to authorize this Agreement
or the transactions completed hereby. This Agreement constitutes the legal,
valid and binding obligation of DCIV enforceable in accordance with its terms.
3.6 Effect of Agreement. The execution and delivery by DCIV of this
Agreement and the consummation of the transactions herein contemplated, (i) will
not conflict with, or result in a breach of the terms of, or constitute any
default under or violation of, any law or regulation of any governmental
authority, or the Articles of Incorporation or By-Laws of DCIV, or any material
agreement or instrument to which DCIV is a party or by which it is bound or is
subject; (ii) nor will it give to others any interest or rights, including
rights of termination, acceleration or cancellation, in or with respect to any
of the properties, assets, agreements, leases, or business of DCIV.
3.7 Minutes Book. The records of meetings and other corporate actions of
DCIV (including any committees of the Board) which are contained in the Minute
books of DCIV contain complete and accurate records of the matters reflected in
such minutes.
3.8 Litigation; Claims. DCIV is not a party to, and there are not any
claims, actions, suits, investigations or proceedings pending or threatened
against DCIV or its business, at law or in equity, or before or by any
governmental department, commission, board, bureau, agency, or instrumentality,
domestic or foreign, which if determined adversely would have a material effect
on the business or financial condition of DCIV or the ability of DCIV to carry
on its business. The consummation of the transactions herein contemplated will
not conflict with or result in the breach or violation of any judgment, order,
writ, injunction or decree of any court or governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign.
3.9 Taxes and Reports. At the Closing Date, DCIV (i) will have filed all
tax returns required to be filed by any jurisdiction, domestic or foreign, to
which it is or has been subject, (ii) has either paid in full all taxes due and
taxes claimed to be due by each jurisdiction, and any interest and penalties
with respect thereto, and (iii) has adequately reflected as liabilities on its
books, all taxes that have accrued for any period to and including the Closing
Date.
3.10 Compliance with Laws and Regulations. To the best of DCIV's
knowledge DCIV has complied with, and are not in violation of any federal,
state, local or foreign
statute, law, rule or regulation with respect to the conduct of DCIV's
businesses.
3.11 Finders. DCIV is not obligated, absolutely or contingently, to any
person for financial advice, a finder's fee, brokerage commission, or other
similar payment in connection with the transactions contemplated by this
Agreement.
3.12 Nature of Representations. DCIV has taken reasonable care to ensure
that all disclosures and facts are true and accurate, and that there are no
other material facts, the omission of which would make misleading any statement
herein. Further, to the best of DCIV's knowledge, no representation, warranty or
agreement made by DCIV in this agreement or any of the Schedules or any other
Exhibits hereto and no statement made in the Schedules or any such Exhibit,
list, certificate or schedule or other instrument or disclosure furnished by
them in connection with the transactions herein contemplated contains, or will
contain, any untrue statement of a material fact necessary to make any
statement, representation, warranty or agreement not misleading.
Article IV
REPRESENTATIONS AND WARRANTIES OF BYCOM AND SHAREHOLDER
BYCOM and Shareholder, and each of them, represent and warrant to DCIV
as follows:
4.1 Organization. BYCOM is a corporation duly incorporated, validly
existing and, at the closing, in good standing under the laws of the Province of
Ontario, Canada, has the corporate power and authority to own or lease its
properties and to carry on business as now being conducted.
4.2 Capitalization. The authorized capital stock of BYCOM consists of
one class of shares of stocks, the total number of shares which BYCOM is
authorized to issue is unlimited shares, of which 100 shares are presently
issued and outstanding as of March 31, 2002 and a second designated is Class A,
Class B and/or Class C preferred shares, of which none have been issued. All
said shares are validly issued, fully paid and non-assessable. There are no
outstanding options, warrants, rights, commitments or agreements of any kind
relating to the issuance of any shares of Common Stock or other equity or
convertible security of BYCOM to any person. None of the shares of Common Stock
of BYCOM is reserved for any purpose. BYCOM is not subject to any obligation
(contingent or otherwise), nor does it have any option to repurchase or
otherwise acquire or retire any shares of its Common Stock.
4.3 Authority. BYCOM and Shareholder have the full power and authority
to enter into this Agreement and to carry out its obligations hereunder. Other
than approval by the Board of Directors and/or shareholders of Shareholder, no
proceedings on the part of Shareholder are necessary to authorize this Agreement
or the transactions completed hereby. This Agreement constitutes the legal,
valid and binding obligation of BYCOM and Shareholder enforceable in accordance
with its terms.
4.4 Financial Statements. BYCOM has furnished to DCIV audited financial
statements as of January 31, 2002 (the "Financial Statements"). Said Financial
Statements contain the Balance Sheet, Statements of Income, Statements of
Stockholders' Equity, Statements of Cash Flow and Notes of BYCOM. All of said
Financial Statements, (i) are in accordance with BYCOM's books and records, (ii)
present
fairly and financial position of BYCOM as of such dates, and its results of
operations and changes in financial position for the respective periods
indicated, (iii) have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis, and (iv) consistent with
prior business practice, contain adequate reserves for all known or contingent
liabilities, losses and refunds with respect to services or products already
rendered or sold.
4.5 Changes in Financial Condition. From the date of the Financial
Statements to the Closing Date, there has been no material change in the
properties, assets, liabilities, financial condition, business, operations,
affairs or prospects of BYCOM from that set forth or reflected in the Financial
Statements, other than changes in the ordinary course of business, none of which
have been, either in any case or in the aggregate, materially adverse. BYCOM is
not subject to any debt, liability or obligation (contingent or otherwise).
4.6 Title to Assets. BYCOM has and on the Closing date will have good
record and marketable title to all its assets. Such assets are subject to no
mortgage, pledge, lien, conditional sales agreement, lease, encumbrance or
charge whatsoever.
4.7 All Patent/License Rights. To the best of its knowledge, BYCOM owns
or possesses the requisite licenses or other rights to use all licenses,
patents, trademarks, service marks, service names and trade names presently
used. There is no claim or action by any person, or proceeding pending, or
threatened which challenges the exclusive rights of BYCOM with respect to said
rights used, or contemplated to be used, in BYCOM's business. Nothing herein
contained have or shall be deemed to constitute a representation or warranty
that such licenses, patents, trademarks, or trade names may not be utilized or
challenged in the future, and that they will be upheld if challenged.
4.8 Contracts/Other Rights. Prior to the closing, BYCOM will furnish
DCIV with a true and complete list and description of all material contracts and
licenses entered into by BYCOM (the "Contracts"), including any contracts,
licenses by and between BYCOM and Shareholder, between them and with others.
Each of the agreements, contract, commitments, leases, plans and other
instruments, documents
and undertakings to be supplied is valid and enforceable in accordance with its
terms. BYCOM is not in default of the performance, observance or fulfillment of
any material obligations, covenant or condition contained therein; and no event
has occurred which with or without the giving of notice or lapse of time, or
both, would constitute a default thereunder; furthermore, except as may be
disclosed in writing at the time of delivery, no such agreement, contract,
commitment, lease, plan or other instrument, document or undertaking, in the
reasonable opinion of BYCOM, contains any contractual requirement with which
there is a likelihood BYCOM will be unable to comply.
4.9 Competition. Except as set forth in the Contracts described in 4.8
above, neither BYCOM, nor any officer or director or Shareholder of BYCOM has
any material direct or indirect financial or economic interest in any related
industry entity or in any competition or customer of BYCOM.
4.10 Effect of Agreement. The execution and delivery by BYCOM and
Shareholder of this Agreement and the consummation of the transactions herein
contemplated, (i) will not conflict with, or result in a breach of the terms of,
or constitute a default under or violation of, any law or regulation of any
governmental authority, or the Articles of Incorporation or By-Laws of BYCOM, or
any material agreement or instrument to which BYCOM or Shareholder is give to
rise to any interests or rights, including rights of termination, acceleration
or cancellation, in or with respect to any of the properties, assets,
agreements, leases, or business of BYCOM.
4.11 Personal Property. All of the property, assets and equipment owned
by or used by BYCOM is in good repair, well maintained, and in good and
satisfactory operating condition consistent with their age, free from any known
defects, except such minor defects as to not substantially interfere with the
continued use thereof in the conduct of normal operations and such property,
assets, and equipment which is owned by BYCOM is valued on the Financial
Statements at original purchase price less reasonable depreciation consistently
applied in accordance with generally accepted accounting principles.
4.12 Minutes Book. The records of meetings and other
corporate actions of Shareholder and the Board of Directors (including any
committees of the Board) of Shareholder and BYCOM which are contained in the
Minute books of Shareholder and BYCOM contain complete and accurate records of
the matters reflected in such minutes.
4.13 Litigation; Claims. Neither Shareholder nor BYCOM is a party to,
and there are not any claims, actions, suits, investigations or proceedings
pending or threatened against BYCOM or its business, at law or in equity, or
before or by any governmental department, commission, board, bureau, agency, or
instrumentality, domestic or foreign, which if determined adversely would have a
material effect on the business or financial condition of BYCOM or the ability
of BYCOM to carry on its business. The consummation of the transactions herein
contemplated will not conflict with or result in the breach or violation of any
judgment, order, writ, injunction or decree of any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign.
4.14 Taxes and Reports. At the Closing Date, BYCOM (i) will have filed
all tax returns required to be filed by any jurisdiction, federal and
provincial, to which it is or has been subject, (ii) has either paid in full all
taxes due and taxes claimed to be due by each jurisdiction, and any interest and
penalties with respect thereto, and (iii) has adequately reflected as
liabilities on its books, all taxes that have accrued for any period to and
including the Closing Date. No state of facts exists or has existed which would
constitute grounds for the assessment of any taxes with respect to the periods
which have not been audited by the Canada Customs and Revenue Agency or any
other federal or provincial taxing authority. There are no outstanding tax
elections, or agreements or waivers extending the statutory period of
limitation, applicable to any federal or province return for taxes of BYCOM for
any period.
4.15 Personnel. Included in the corporate records described, in part, in
4.12, is a true and correct list of all directors, officers and employees of
BYCOM. There are no bonuses, commissions or other compensation of any kind due
to, or expected by, present or former employees, except regular compensation for
the current payroll period; BYCOM is not aware that any officer or employee has
any intention to terminate his or her employment with BYCOM; and BYCOM is not a
party to or bound by any employment agreement, or
collective bargaining or other labor agreement.
4.16 Compliance with Laws and Regulations. To the best of their
knowledge, BYCOM and Shareholder have complied with, and are not in violation of
any federal, state, local or province statute, law, rule or regulation with
respect to the conduct of BYCOM's businesses, which violation might have a
material adverse effect on the business, financial condition or earnings of
BYCOM.
4.17 Finders. BYCOM and Shareholder, and each of them, are not
obligated, absolutely or contingently, to any person for financial advice, a
finder's fee, brokerage commission, or other similar payment in connection with
the transactions contemplated by this Agreement.
4.18 Leases. Prior to the closing, BYCOM will furnish DCIV with true and
complete list and description of all leases of real property and equipment by
and between BYCOM and the lessees. Each of said leases are valid and enforceable
in accordance with its terms.
4.19 Nature of Representation. BYCOM and Shareholder have taken
reasonable care to ensure that all disclosures and facts are true and accurate
and that there are no other material facts, the omission of which would make
misleading any statement herein. Further, no representation, warranty or
agreement made by BYCOM and Shareholder in this Agreement or any of the
Schedules or any other Exhibits hereto and no statement made in the Schedules or
any such Exhibit, list, certificate or schedule or other instrument or
disclosure furnished by them in connection with the transactions herein
contemplated contains, or will contain, any untrue statement of a material fact
necessary to make any statement, representation, warranty or agreement not
misleading.
Article V
ACCESS TO INFORMATION
5.1 Access to Information. BYCOM and Shareholder shall afford
representatives of DCIV reasonable access to officers, personnel, and
professional representatives of BYCOM and such of the financial, contractual and
corporate records of BYCOM as shall be reasonably necessary for DCIV's
investigations and appraisal of BYCOM.
5.2 Effect of Investigations. Any such investigation by DCIV of BYCOM
shall not affect any of the representations and warranties hereunder and shall
not be conducted in such manner as to interfere unreasonably with the operation
of the business of BYCOM.
Article VI
CONDITIONS TO OBLIGATIONS OF DCIV
The obligations of DCIV under this Agreement are, at the option of DCIV,
subject to the satisfaction, at and prior to the Closing Date, of the following
conditions:
6.1 Fulfillment of Covenants. All the terms, covenants and conditions of
this Agreement to be complied with and performed by BYCOM at or before the
Closing Date shall have been duly complied with and performed.
6.2 Accuracy of Representations and Warranties; Other, Documents. All of
the representations and warranties made by all parties to this Agreement shall
be true as of the Closing Date.
6.3 No Litigation. There shall be no action, proceeding, investigation
or pending or actual litigation the purpose of which is to enjoin or may be to
enjoin the transactions contemplated by this Agreement or which would have the
effect, if successful, of imposing a material liability upon BYCOM, or any of
the officers or directors thereof, because of this consummation of the
transactions contemplated by this Agreement.
Article VII
CONDITIONS TO OBLIGATIONS OF SHAREHOLDER
The obligations of Shareholder under this Agreement are, at the option
of Shareholder, subject to the satisfaction, at and prior to the Closing Date,
of the following conditions:
7.1 Fulfillment of Covenants. All the terms, covenants and conditions of
this Agreement to be complied with and performed by BYCOM at or before the
Closing Date shall have been duly complied with and performed.
7.2 Accuracy of Representations and Warranties; Other Documents. All of
the representations and warranties made by all parties to this Agreement shall
be true as of the Closing Date.
7.3 No Litigation. There shall be no action, proceeding, investigation
or pending or actual litigation the purpose of which is to enjoin or may be to
enjoin the transactions contemplated by this Agreement or which would have the
effect, if successful, of imposing a material liability upon BYCOM, or any of
the officers or directors thereof, because of the consummation of the
transactions contemplated by this Agreement.
Article VIII
CLOSING
8.1 Closing Date. The consummation of the exchange shall take place on
May 5, 2002, 1:45 p.m., at the offices of Ronald J. Stauber, 1880 Century Park
East, Suite 300, Los Angeles, California 90067, or such other time or place as
shall be mutually agreed upon by the parties to this Agreement.
8.2 Actions to be Taken by Parties on the Closing Date. On the Closing
Date, each party shall deliver to the other all documents or agreements provided
or herein to be delivered on the Closing Date.
8.3 Other. Between the date hereof and the Closing Date, DCIV will take
no actions, other than those reasonably required to consummate a closing,
without the prior written consent of BYCOM.
Article IX
INDEMNIFICATION AND ARBITRATION
9.1 Indemnification. Each of the parties agree to indemnify and hold
harmless the other against any and all damages, claims, losses, expenses,
obligations and liabilities (including reasonable attorney's fees) resulting
from or related to any breach of, or failure by each of the parties to perform
any of their representations, warranties, covenants, conditions or agreements in
this Agreement or in any schedule, certificate, exhibit or other document
furnished, or to be furnished under this Agreement.
9.2 Claims of Indemnification. Any claim for indemnification pursuant to
this Agreement, unless otherwise received by means of direct negotiation among
the parties upon reasonable oral notification by the party seeking
indemnification to all other parties, shall be made by writing of the nature and
amount of the claim to the other.
Article X
PAYMENT OF EXPENSES
10.1 Expenses Budget. Each party shall bear its own expenses relating to
this transaction.
Article XI
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
11.1 Survival. All statements contained in the Schedules, any Exhibit or
other instrument delivered by or on behalf of the parties hereto or in
connection with the transactions contemplated by this Agreement shall be deemed
to be representations made by or on behalf of the parties to this Agreement, all
representations, warranties and agreements made by the parties to this Agreement
or pursuant hereto shall survive.
Article XII
General
12.1 Partial Invalidity. If any term or provision of this Agreement or
the application thereof to any person or circumstances shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement or the application of
such term or provision to persons or circumstances other than those to which it
is held invalid or unenforceable, shall not be affected thereby, and each such
term and provision of this Agreement shall be valid and be enforced to the
fullest extent permitted by law.
12.2 Waiver. No waiver of any breach of any covenant or provision herein
contained shall be deemed a waiver of any preceding or succeeding breach
thereof, or of any other covenant or provision herein contained. No extension of
time for performance of any obligation or act shall be deemed and extension of
the time for performance of any other obligation or act.
12.3 Notices. All notices or other communications required or permitted
hereunder shall be in writing, and shall be sent by registered or certified
mail, postage prepaid, return receipt requested, and shall be deemed received
upon mailing thereof.
To: BYCOM MEDIA INC.
35 Church Street, Suite 206
Toronto, Ontario, Canada
M5E 1T3
To: Discovery Investments, Inc.
6767 West Tropicana Avenue
Suite 207
Las Vegas, Nevada 89103
cc: Ronald J. Stauber, Esq.
1880 Century Park East
Suite 300
Los Angeles, California 90067
Notice of change of address shall be given by written notice in the
manner detailed in this subparagraph 12.3.
12.4 Successors and Assigns. This Agreement shall be
6
binding upon and shall inure to the benefit of the permitted successors and
assigns of the parties hereto.
12.5 Professional Fees. In the event of the bringing of any action or
suit by a party hereto against another party hereunder by reason of any breach
of any of the covenants, agreements or provisions on the part of the other party
arising out of this Agreement, then in that event the prevailing party shall be
entitled to have and recover of and from the other party all costs and expenses
of the action or suit, including actual attorney's fees, accounting fees, and
other professional fees resulting therefrom.
12.6 Entire Agreement. This Agreement is the final expression of, and
contains the entire agreement between, the parties with respect to the subject
matter hereof and supersedes all prior understandings with respect thereto. This
Agreement may not be modified, changed, supplemented or terminated, nor may any
obligations hereunder be waived, except by written instrument signed by the
party to be charged or by his agent duly authorized in writing or as otherwise
expressly permitted herein. The parties do not intend to confer any benefit
hereunder on any person, firm or corporation other than the parties hereto.
12.7 Time of Essence. The parties hereby acknowledge and agree that time
is strictly of the essence with respect to each and every term, condition,
obligation and provision hereof and that failure to timely perform any of the
terms, conditions, obligations or provisions hereof by either party shall
constitute a material breach of and non-curable (but waivable) default under
this Agreement by the party so failing to perform.
12.8 Construction. Headings at the beginning of each paragraph and
subparagraph are solely for the convenience of the parties and are not a part of
the Agreement. Whenever required by the context of this Agreement, the singular
shall include the plural and the masculine shall include the feminine. This
Agreement shall not be construed as if it had been prepared by one of the
parties, but rather as if both parties had prepared the same. Unless otherwise
indicated, all references to paragraphs and subparagraphs are to this Agreement.
In the event the date on which any party is required to take any action under
the terms of this Agreement is not a business day, the action shall be taken on
the next succeeding day.
12.9 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be an original and all of which taken together
shall constitute one instrument.
12.10 Governing Law. The parties hereto expressly agree that this
Agreement shall be governed by, interpreted under, and construed and enforced in
accordance with the laws of the State of Nevada.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement in
California.
DATED: April 29, 2002 DISCOVERY INVESTMENTS, INC.
By: /s/ Donald Bell
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Donald Bell
DATED: April 29, 2002 BYCOM MEDIA INC.
By: /s/ C. Philip Yeandle
------------------------------------
C. Philip Yeandle, President
DATED: April 29, 2002 SHAREHOLDER
C. Philip Yeandle
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C. Philip Yeandle