Agreement and Plan of Reorganization
by and between
Southern Group International, Inc.
a Florida corporation
and
National Coal Corp.
a Tennessee corporation
dated: April 11, 2003
AGREEMENT AND PLAN OF REORGANIZATION
Southern Group International, Inc.
and
National Coal Corp.
This Agreement and Plan of Reorganization ("Agreement"), dated as of
April 11, 2003, among Southern Group International, Inc. (SGI), a Florida Corp-
oration, National Coal Corp. ("NCC"), a Tennessee Corporation, and the subscrib-
ing shareholders of National Coal Corp. ("NCC Shareholders") who will join this
Agreement by execution.
W I T N E S S E T H:
A. WHEREAS, NCC and SGI are corporations duly organized under the laws
of the State of Tennessee and Florida, respectively.
B. Plan of Reorganization. The subscribing NCC Shareholders are the
owners of at least 100%of the issued and outstanding common stock of NCC. It is
the intention that 100% of the issued and outstanding stock of NCC shall be
acquired by SGI in exchange solely for its voting stock. For federal income tax
purposes it is intended that this exchange shall qualify as a reorganization
within the meaning of SEC 368 (a)(1)(B) of the Internal Revenue Code of 1986, as
amended (the "Code").
C. Exchange of Shares. SGI and the subscribing NCC Shareholders agree
that 100% of the 17,100,000 common shares issued and outstanding of NCC shall be
exchanged with SGI for 34,200,000 shares of the common stock of SGI. The SGI
shares, on the closing date, shall be delivered ratably divided to the individ-
ual subscribing shareholders of NCC in exchange for their NCC shares as herein-
after set forth.
D. WHEREAS, the parties hereto wish to enter into this Agreement, pur-
suant to the provisions of the Florida Business Corporation Act.
NOW, THEREFORE, it is agreed among the parties as follows:
ARTICLE I
The Consideration
1.1 Subject to the conditions set forth herein on the "Effective Date"
(as herein defined), the subscribing Shareholders of NCC shall exchange all of
their shares of NCC (constituting at least 100% of the issued and outstanding
common stock of NCC) for
34,200,000 common shares of SGI common stock. The transactions contemplated by
this Agreement shall be completed at a closing ("Closing") on a closing date
("Closing Date") which shall be as soon as practicable after joinder in this
exchange by NCC Shareholders holding 100% of the outstanding NCC common shares,
except that such transaction must be completed on or before May 31, 2003 or this
Agreement shall expire unless extended in writing.
On the Closing Date, all of the documents to be furnished to SGI and
NCC, including the documents to be furnished pursuant to Article VII of this
Agreement, shall be delivered to M.A. ▇▇▇▇▇▇▇, to be held in escrow until the
Effective Date or the date of termination of this Agreement, whichever first
occurs, and thereafter shall be promptly distributed to the parties as their
interests may appear.
1.2 At the Effective Date, NCC shall become a wholly owned subsidiary
of SGI. Shareholders shall receive pro rata shares of voting common stock as
follows:
SGI shall issue 34,200,000 of its shares of common stock for
100% of the outstanding common shares of NCC to the
subscribing shareholders of NCC, ratably according to their
interests.
1.3 If this Agreement is duly executed by the holders of 100% of the
outstanding common stock of NCC, subject to the other provisions hereof, it
shall become effective, and such date of final execution shall be the effective
date of this Agreement.
ARTICLE II
Issuance and Exchange of Shares
2.1 The shares of $.001 par value common stock of SGI shall be issued
by it to the subscribing NCC shareholders at Closing.
2.2 SGI represents that no outstanding options or warrants for its
unissued shares exist.
2.3 The stock transfer books of NCC shall be closed on the Effective
Date, and thereafter no transfers of the stock of NCC shall be made. NCC shall
appoint an exchange agent ("Exchange Agent"), to accept surrender of the
certificates representing the common shares of NCC, and to deliver in exchange
for such surrendered certificates, shares of common stock of SGI. The
authorization of the Exchange Agent may be terminated by SGI after six months
following the Effective Date. Upon termination of such authorization, any shares
of NCC and any funds held by the Exchange Agent for payment to NCC shareholders
pursuant to this Agreement shall be transferred to SGI or its designated agent
who shall thereafter perform the obligations of the Exchange Agent. If
outstanding certificates for shares of NCC are not surrendered or the payment
for them not claimed prior to such date on which such payments would otherwise
escheat to or become the property of any governmental unit or agency, the
unclaimed items shall, to the extent permitted by abandoned property and other
applicable law, become the property of SGI (and to the extent not in its
possession shall be paid over to it), free and clear of all claims or interest
of any persons previously entitled to such items. Notwithstanding the foregoing,
neither the Exchange Agent nor any party to this Agreement shall be liable to
any holder of NCC shares for any amount paid to any governmental unit or agency
having jurisdiction of such unclaimed item pursuant to the abandoned property or
other applicable law of such jurisdiction.
2.4 No fractional shares of SGI stock shall be issued as a result of
the Agreement. Shares issued in exchange shall be rounded up to nearest whole
share.
2.5 At the Effective Date, each holder of a certificate or certificates
representing common shares of NCC, upon presentation and surrender of such
certificate or certificates to the Exchange Agent, shall be entitled to receive
the consideration set forth herein, except that holders of those shares as to
which dissenters' rights shall have been validly asserted and perfected pursuant
to Tennessee law shall not be converted into shares of SGI common stock, but
shall represent only such dissenters' rights. Upon such presentation, surrender,
and exchange as provided in this Section 2.5, certificates representing shares
of NCC previously held shall be canceled. Until so presented and surrendered,
each certificate or certificates which represented issued and outstanding shares
of NCC at the Effective Date shall be deemed for all purposes to evidence the
right to receive the consideration set forth in Section 1.2 of this Agreement.
If the certificates representing shares of NCC have been lost, stolen, mutilated
or destroyed, the Exchange Agent shall require the submission of an indemnity
agreement and may require the submission of a bond in lieu of such certificate.
ARTICLE III
Representations, Warranties
and Covenants of National Coal Corp.
No representations or warranties are made by any director, officer,
employee or shareholder of NCC as individuals, except as and to the extent
stated in this Agreement or in a separate written statement (the "NCC Disclosure
Statement"), if any. NCC hereby represents, warrants and covenants to SGI except
as stated in the NCC Disclosure Statement, as follows:
3.1 NCC is a corporation duly organized, validly existing and in good
standing under the laws of the State of Tennessee, and has the corporate power
and authority to own or lease its properties and to carry on its business as it
is now being conducted. The Certificate of Incorporation and Bylaws of NCC are
complete and accurate, and the minute books of NCC contain a record, which is
complete and accurate in all material respects, of all meetings, and all
corporate actions of the shareholders and board of directors of NCC.
3.2 The aggregate number of shares which NCC is authorized to issue is
20,000,000 shares of common stock of which 17,100,000 shares are issued and
outstanding.
3.3 NCC has complete and unrestricted power to enter into and, upon the
appropriate approvals as required by law, to consummate the transactions
contemplated by this Agreement.
3.4 Neither the making of nor the compliance with the terms and
provisions of this Agreement and consummation of the transactions contemplated
herein by NCC will conflict with or result in a breach or violation of the
Articles of Incorporation or Bylaws of NCC.
3.5 The execution, delivery and performance of this Agreement has been
duly authorized and approved by NCC's Board of Directors.
3.6 There are no legal proceedings or regulatory proceedings involving
material claims pending, or to the knowledge of the executive officers of NCC,
threatened against NCC or affecting any of its assets or properties, and to the
knowledge of NCC' officers, NCC is not in any material breach or violation of or
default under any contract or instrument to which NCC is a party, or under its
respective Articles of Incorporation or Bylaws, nor is there any court or
regulatory order pending, applicable to NCC.
3.7 The representations and warranties of NCC shall be true and correct
as of the date hereof and as of the Effective Date.
3.8 No representation or warranty by NCC in this Agreement, the NCC
Disclosure Statement or any certificate delivered pursuant hereto contains any
untrue statement of a material fact or omits to state any material fact
necessary to make such representation or warranty not misleading.
ARTICLE IV
Representations, Warranties and Covenants of
Southern Group International, Inc..
No representations or warranties are made by any director, officer,
employee or shareholder of SGI as individuals, except as and to the extent
stated in this Agreement or in a separate written statement.
SGI hereby represents, warrants and covenants to NCC and its
shareholders, except as stated in the SGI Disclosure Statement, as follows:
4.1 SGI is a corporation duly organized, validly existing and in good
standing under the laws of the State of Florida, and has the corporate power and
authority to own or lease its properties and to carry on its business as it is
now being conducted. The Articles of Incorporation and Bylaws of SGI, copies of
which have been delivered to NCC, are complete and accurate, and the minute
books of SGI contain a record, which is complete and accurate in all material
respects, of all meetings, and all corporate actions of the shareholders and
Board of Directors of SGI.
4.2 The aggregate number of shares which SGI is authorized to issue is
80,000,000 shares of common stock and 10 million shares of preferred stock, of
which 1,728,931 shares of such common stock are issued and outstanding, fully
paid and non-assessable, at the Closing under this Agreement. SGI will have, on
the Closing Date, no outstanding options, warrants or other rights to purchase,
or subscribe to, or securities convertible into or exchangeable for any shares
of capital stock. No preferred stock of SGI is outstanding.
4.3 SGI has complete and unrestricted power to enter into and, upon the
appropriate approvals as required by law, to consummate the transactions
contemplated by this Agreement.
4.4 Neither the making of nor the compliance with the terms and
provisions of this Agreement and consummation of the transactions contemplated
herein by SGI will conflict with or result in a breach or violation of the
Articles of Incorporation or Bylaws of SGI.
4.5 The execution of this Agreement has been duly authorized and
approved by the Board of Directors of SGI.
4.6 SGI has delivered to NCC audited financial statements of SGI dated
December 31, 2002. Such statements, herein sometimes called "SGI Financial
Statements," are (and will be) complete and correct in all material respects
and, together with the notes to these financial statements, present fairly the
financial position and results of operations of SGI for the periods indicated.
All statements of SGI will have been prepared in accordance with generally
accepted accounting principles.
4.7 Since the dates of the SGI Financial Statements, there have not
been any material adverse changes in the business or condition, financial or
otherwise, of SGI. SGI does not have any material liabilities or obligations,
secured or unsecured except as shown on the updated SGI dated December 31, 2002
(whether accrued, absolute, contingent or otherwise).
4.8 There are no legal proceedings or regulatory proceedings involving
material claims pending, or, to the knowledge of the officers of SGI, threatened
against SGI or affecting any of its assets or properties, and SGI is not in any
material breach or violation of or default under any contract or instrument to
which SGI is a party, and no event has occurred which with the lapse of time or
action by a third party could result in a material breach or violation of or
default by SGI under any contract or other instrument to which SGI is a party or
by which they or any of their respective properties may be bound or affected, or
under their respective Articles of Incorporation or Bylaws, nor is there any
court or regulatory order pending, applicable to SGI. There are, however,
several judgments which have been disclosed to NCC, and are listed on the
disclosure schedule 4.9 attached hereto and made a part hereof.
4.9 SGI shall not enter into or consummate any transactions prior to
the Effective Date other than in the ordinary course of business and will pay no
dividend, or increase the compensation of officers and will not enter into any
agreement or transaction which would adversely affect its financial condition
except pursuant to the proposed minutes of the Board of Directors of SGI
presented herewith for approval by NCC.
4.10 The representations and warranties of SGI shall be true and
correct as of the date hereof and as of the Effective Date.
4.11 SGI corporate books and records are true records of its actions.
SGI will also deliver to NCC on or before the Closing Date any reports relating
to the financial and business condition of SGI which occur after the date of
this Agreement and any other reports sent generally to its shareholders after
the date of this Agreement.
4.12 SGI has no employee benefit plan in effect at this time, except
ESOP and officers and Directors but no options are outstanding.
4.13 SGI is current in its filing obligations under the federal
securities laws. No report filed by SGI with the Securities and Exchange
Commission contains any untrue statement of a material fact or omits to state
any material fact necessary to make such representation or warranty not
misleading, and all such reports comply as to form and substance in all material
respects with all applicable ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇. .
▇.▇▇ ▇▇▇ agrees that all rights to indemnification now existing in
favor of the employees, agents, directors or officers of NCC and its
subsidiaries, as provided in the Articles of Incorporation or Bylaws or
otherwise in effect on the date hereof shall survive the transactions
contemplated hereby in accordance with their terms, and SGI expressly assumes
such indemnification obligations of NCC.
ARTICLE V
Obligations of the Parties Pending the Effective Date
5.1 At all times prior to the Effective Date during regular business
hours, each party will permit the other to examine its books and records and the
books and records of its subsidiaries and will furnish copies thereof on
request. It is recognized that, during the performance of this Agreement, each
party may provide the other parties with information which is confidential or
proprietary information. The recipient of such information shall at all times
protect such information from disclosure, other than disclosure required by
rule, regulation, or law, other than to members of its own or affiliated
organizations and its professional advisers, in the same manner as it protects
its own confidential or proprietary information from unauthorized disclosure,
and not use such information to the competitive detriment of the disclosing
party. In addition, if this Agreement is terminated for any reason, each party
shall promptly return or cause to be returned all documents or other written
records of such confidential or proprietary information, together with all
copies of such writings and, in addition, shall either furnish or cause to be
furnished, or shall destroy, or shall maintain with such standard of care as is
exercised with respect to its own confidential or proprietary information, all
copies of all documents or other written records developed or prepared by such
party on the basis of such confidential or proprietary information. No
information shall be considered confidential or proprietary if it is (a)
information already in the possession of the party to whom disclosure is made,
(b) information acquired by the party to whom the disclosure is made from other
sources, or (c) information in the public domain or generally available to
interested persons or which at a later date passes into the public domain or
becomes available to the party to whom disclosure is made without any wrongdoing
by the party to whom the disclosure is made.
5.2 SGI and NCC shall promptly provide each other with information as
to any significant developments in the performance of this Agreement, and shall
promptly notify the other if it discovers that any of its representations,
warranties and covenants contained in this Agreement or in any document
delivered in connection with this Agreement was not true and correct in all
material respects or became untrue or incorrect in any material respect.
5.3 All parties to this Agreement shall take all such action as may be
reasonably necessary and appropriate and shall use their best efforts in order
to consummate the transactions contemplated hereby as promptly as practicable.
ARTICLE VI
Procedure For Exchange
6.1 At the Closing Date, the exchange shall be effected within 4
business days after receipt by M. A. ▇▇▇▇▇▇▇, as attorney for SGI, of the NCC
common stock certificates representing 100% of the issued and outstanding common
stock of NCC, together with the signed Exchange Agreements, containing the
information necessary to issue the SGI shares to the exchanging shareholders of
NCC, by instructing the transfer agent of SGI to issue the new certificates and
sending the certificates of SGI by Federal Express to the exchanging
shareholders.
ARTICLE VII
Conditions Precedent to the
Consummation of the Exchange
The following are conditions precedent to the consummation of the
Agreement on or before the Effective Date:
7.1 NCC and SGI shall have performed and complied with all of its
respective obligations hereunder which are to be complied with or performed on
or before the Effective Date and SGI and NCC shall provide one another at the
Closing with a certificate to the effect that such party has performed each of
the acts and undertakings required to be performed by it on or before the
Closing Date pursuant to the terms of this Agreement.
7.2 This Agreement, the transactions contemplated herein shall have
been duly and validly authorized, approved and adopted, at meetings of the
shareholders of NCC duly and properly called for such purpose in accordance with
the applicable laws.
7.3 No action, suit or proceeding shall have been instituted or shall
have been threatened before any court or other governmental body or by any
public authority to restrain, enjoin or prohibit the transactions contemplated
herein, or which might subject any of the parties hereto or their directors or
officers to any material liability, fine, forfeiture or penalty on the grounds
that the transactions contemplated hereby, the parties hereto or their directors
or officers, have violated any applicable law or regulation or have otherwise
acted improperly in connection with the transactions contemplated hereby, and
the parties hereto have been advised by counsel that, in the opinion of such
counsel, such action, suit or proceeding raises substantial questions of law or
fact which could reasonably be decided adversely to any party hereto or its
directors or officers.
7.4 All actions, proceedings, instruments and documents required to
carry out this Agreement and the transactions contemplated hereby and the form
and substance of all legal proceedings and related matters shall have been
approved by counsel for NCC and SGI.
7.5 The representations and warranties made by NCC and SGI in this
Agreement shall be true as though such representations and warranties had been
made or given on and as of the Closing Date.
7.6 Securities Laws Compliance. Each shareholder of NCC shall sign an
Exchange Agreement as contained on Schedule A.
7.7 SGI shall furnish NCC with a certified copy of a resolution or
resolutions duly adopted by the Board of Directors of SGI, approving this
Agreement and the transactions contemplated by it.
7.8 It is anticipated that the following SEC filings will need to be
made as a result of the Plan and Agreement and the exchange: Forms 8-K, 8K12(g)
3, 13d and 13g, and appropriate amendments to the forms 8-k as may be necessary
to include pro forma financials and consolidated financials.
7.9 All debts of SGI shown on the books of SGI, or not disclosed, shall
have been paid and released on or before closing hereunder.
ARTICLE VIII
Termination and Abandonment
8.1 Anything contained in this Agreement to the contrary
notwithstanding, the Agreement may be terminated and abandoned at any time prior
to the Effective Date:
(a) By mutual consent of NCC and SGI;
(b) By NCC, or SGI, if any condition set forth in Article VII
relating to the other party has not been met by the effective date or has not
been waived in writing by the other party;
(c) By NCC, or SGI, if any suit, action or other proceeding
shall be pending or threatened by the federal or a state government before any
court or governmental agency, in which it is sought to restrain, prohibit or
otherwise affect the consummation of the transactions contemplated hereby;
(d) By any party, if there is discovered any material error,
misstatement or omission in the representations and warranties of another party;
(e) By any party if the Agreement Effective Date is not within
30 days from the date hereof, or if the Closing Date passes without performance.
(f) If the Share Purchase Agreement executed and dated con-
currently between ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and National Coal Corp. is not closed for any
reason.
8.2 Any of the terms or conditions of this Agreement may be waived in
writing at any time by the party which is entitled to the benefit thereof, by
action taken by its Board of Directors provided; however, that such action shall
be taken only if, in the judgment of the Board of Directors taking the action,
such waiver will not have a materially adverse effect on the benefits intended
under this Agreement to the party waiving such term or condition.
ARTICLE IX
Termination of Representation and
Warranties and Certain Agreements
9.1 The respective representations and warranties of the parties hereto
shall expire with, and be terminated and extinguished four years after the
Effective Date of the Agreement; provided, however, that the covenants and
agreements of the parties hereto shall survive in accordance with their terms.
ARTICLE X
Miscellaneous
10.1 This Agreement embodies the entire agreement between the parties,
and there have been and are no agreements, representations or warranties among
the parties other than those set forth herein or those provided for herein.
10.2 To facilitate the execution of this Agreement, any number of
counterparts hereof may be executed, and each such counterpart shall be deemed
to be an original instrument, but all such counterparts together shall
constitute but one instrument.
10.3 All parties to this Agreement agree that if it becomes necessary
or desirable to execute further instruments or to make such other assurances as
are deemed necessary, the party requested to do so will use its best efforts to
provide such executed instruments or do all things necessary or proper to carry
out the purpose of this Agreement.
10.4 This Agreement may be amended upon approval of the Board of
Directors of each party provided that the shares issuable hereunder shall not be
amended without approval of the requisite shareholders of NCC.
10.5 Any notices, requests, or other communications required or
permitted hereunder shall be delivered personally or sent by overnight courier
service, fees prepaid, addressed as follows:
To: National Coal Corp.: Attn: ▇▇▇ ▇▇▇, President
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
To: Southern Group International, Inc.:
or such other addresses as shall be furnished in writing by any party, and any
such notice or communication shall be deemed to have been given as of the date
received.
10.6 No press release or public statement will be issued relating
to the transactions contemplated by this Agreement without prior approval of NCC
and SGI. However, either NCC or SGI may issue at any time any press release or
other public statement it believes on the advice of its counsel it is obligated
toissue to avoid liability under the law relating to disclosures, but the party
issuing such press release or public statement shall make a reasonable effort to
give the other party prior notice of and opportunity to participate in such
release or statement.
10.7 The Board of Directors of SGI shall appoint the following
individuals to the Board of Directors of SGI concurrent with the closing of the
transaction contemplated in this agreement subject to Notice pursuant to Section
14f of the Securities Exchange act of 1934.
A) ▇▇▇▇▇▇▇ ▇▇▇▇
B) ▇▇▇ ▇▇▇
C) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
10.8 ▇▇. ▇▇▇ shall be appointed to the Board effective immediately and
Mssrs. Kite and ▇▇▇▇▇▇ shall become effective upon the resignation of the
current Board members and compliance with Section 14f approximately ten days
after the closing hereunder. The Parties to this agreement hereby agree as
follows: As soon after closing as possible, SGI shall take action to obtain
shareholder approval of a name change to a name to National Coal Corp.
10.9 Within ten days after the date of this Agreement, five share-
holders of NCC holding a total of 100% of the issued and outstanding shares
of NCC shall join this Agreement by execution of the signature page hereon or by
execution of an Exchange Agreement as contained on Exhibit A hereto which in-
corporates this Plan and Agreement of Reorganization. In the event this provi-
sion is not complied within the time specified, this Agreement and Plan of Re-
organization shall be null and void and all agreements terminated.
IN WITNESS WHEREOF, the parties have set their hands and seals this
11th day of April, 2003.
SOUTHERN GROUP INTERNATIONAL, INC.
By: __________________________
President
Attest:________________________
Secretary
NATIONAL COAL CORP.
By: ____________________________
President
Attest: ________________________
Secretary
National Coal Corp. SHAREHOLDERS (by signature below or pursuant to execution of
the Exchange Agreement and Representations incorporating this Agreement by
reference.)
Signatures Please Print Names
1_________________________ _____________________________
2_________________________ _____________________________
3_________________________ _____________________________
4_________________________ _____________________________
5_________________________ _____________________________