AGREEMENT PROVIDING FOR THE
EXCHANGE OF CAPITAL STOCK
THIS AGREEMENT PROVIDING FOR THE EXCHANGE OF CAPITAL STOCK (the
"Agreement") is made as of the 25th day of January, 2002 by and between the
following entities and natural persons:
Agreement Party and Reference General Description of Agreement Party
----------------------------- --------------------------------------
MONOGRAM PICTURES, INC. A Nevada corporation presently
("Acquiror") having its principal office in
Clearwater, Florida
MED-TECH LABS, INC. ("Acquiree") A Florida corporation having its
principal office in Clearwater,
Florida
Other signatories to this Agreement The record and beneficial holders
who are holders of outstanding of all of the outstanding Common
common stock of the Acquiree. Stock of Acquiree, $1 par value
The foregoing-described entities and natural persons are sometimes de-
scribed herein collectively as the "Agreement Parties".
BACKGROUND
------------
Acquiror is a Nevada corporation which is authorized to conduct busi-
ness in Florida. At a time contemporaneous to the execution and delivery
of this Agreement, the Acquiror conducts its business through two subsidi-
aries. One such subsidiary is General Personnel Management, Inc. ("GPM")
which is a professional employment organization having its principal of-
fices in San Diego, California. The Acquiror is in the process of selling
all of its interest in GPM. The other subsidiary of the Acquiror is Medi-
cal Discounts, Ltd. ("MDL") which is a Florida corporation offering medical
and related services to the public on a membership basis. The Acquiror in-
tends to divest itself of substantially all of its interest in MDL as here-
inafter provided in this Agreement. The Acquiror is publicly held and is
presently subject to the periodic and annual reporting requirements of the
Securities Exchange Act of 1934, as amended (the "'34 Act"). The Acquiror
is also subject to the proxy solication rules of the United States Securi-
ties and Exchange Commission (the "Commission") as have been adopted under
the '34 Act. The Acquiror is current with respect to its obligations to
file periodic and annual reports under the '34 Act. The Acquiror desires
to acquire from the Holders all of the outstanding voting common stock, $1
par value of the Acquiree, which consists of 7,500 shares which are owned
of record and beneficially by the Holders and no others. The identity of
the record and beneficial Holders and the number of shares of the out-
standing Common Stock of the Acquiree owned by each of such has been dis-
closed to the Acquiror.
The Acquiree is a party to this Agreement with respect to the making of
certain representations, warranties and undertakings, all as is set forth
herein.
The Acquiree is a Florida corporation which was formed in January 2000.
The Acquiree maintains its principal offices and facilities in Clearwater,
Florida. As of a time contemporaneous to the execution and delivery of
this Agreement, the Acquiree is closely held and its outstanding common
stock, $1 par value, is held of record and beneficially by ____ Holders.
The outstanding common stock, $1 par value, of the Acquiree is hereinafter
referred to in this Agreement as the "Acquiree Shares". The Acquiree pres-
ently operates a medical testing facility utilizing the laboratory main-
tained at its business premises. The Acquiree, through such laboratory
facilities, provides testing services to hospitals, clinics and health care
providers. The Holders desire that the Acquiree become a publicly held en-
tity and in order to accomplish such event, intend to effect the exchange
transaction provided for in this Agreement.
The respective managements of the Acquiror and the Acquiree have deter-
mined that the business combination provided for herein and which will oc-
cur as a result of the consummation of the exchange transaction, will ac-
complish, among others, the business purposes of (i) permitting the Ac-
quiror to continue the business activity of the Acquiree, which business
activity will constitute, on and after the Closing Date, the primary core
business activity of the Acquiror; and (ii) result in the Acquiree becom-
ing, in effect, publicly held which is anticipated to enhance the future
business activities of the Acquiror and the Acquiree as combined, includ-
ing, without limitation, the acquisition capability of the Acquiror and the
Acquiree as combined.
Accordingly, the Acquiror, the Acquiree and the Holders wish to provide
by means of this Agreement for the terms and conditions whereby the Holders
will exchange all of their Acquiree Shares for that number of newly issued
shares of the Common Stock, $.001 par value, of the Acquiror, which, when
issued to the Holders on the Closing Date, shall constitute 95% of the
shares of Common Stock, $.001 par value, of the Acquiror then outstanding.
The shares of the Common Stock, $.001 par value, of the Acquiror are subse-
quently referred to in this Agreement as the "Acquiror Shares". It is an-
ticipated that upon the consummation of the exchange transaction herein
provided for, the Acquiror will have outstanding 9,900,000 Acquiror Shares,
9,500,000 of which are anticipated to be owned of record and beneficially
by the Holders. The Acquiror shall change its corporate name to a name to
be designated by the Holders, which is anticipated to be a corporate name
which relates to the present business activities of the Acquiree and, if so
determined by the Board of Directors of the Acquiror as constituted on and
after the Closing Date, shall become a corporation domesticated under and
subject to the Florida Business Corporation Act and as such, shall continue
the business previously conducted by the Acquiree and the affiliated enti-
ties of the Acquiree now consolidated with and into the Acquiree.
This Agreement relates to a transaction which is contemplated by a cer-
tain Letter of Intent entered into by the Acquiror and a consulting entity
known as A.S.K. Consulting, Inc. as of the 19th day of November 2001 (here-
inafter referred to as the "Letter of Intent" and "ASK", respectively).
ASK is a signatory to this Agreement with respect to certain matters.
NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth herein and for other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the Agreement Parties
agree as follows:
ARTICLE I
Exchange of Common Stock
------------------------
Effective as of the Closing Date (which consummation of the transac-
tions on the Closing Date shall be deemed to have occurred for accounting
purposes on January 1, 2002), as established subsequently in this Agree-
ment, the following exchange transaction involving Acquiror Shares and Ac-
quiree Shares shall be consummated in conformance to the terms, conditions
and provisions of this Agreement.
1.1 The Exchange Transaction. On the Closing Date, as established
subsequently in this Agreement, the Acquiror will acquire all of the issued
and outstanding Acquiree Shares anticipated on the Closing Date to be 7,500
Acquiree Shares, $1 par value. Such Acquiree Shares shall be acquired by
the Acquiror from the Holders in exchange for that number of shares identi-
fied and set forth in the Agreement section captioned BACKGROUND and an-
ticipated to be 9,500,000 Acquiror Shares, which, upon consummation of the
exchange and other transactions contemplated by the Agreement Parties with
respect to the Acquiror, shall constitute not less than 95% of Acquiror
Shares outstanding subsequent to the exchange transaction and the contem-
plated transactions. The Acquiror Shares delivered at the Closing in ex-
change for the shares of Acquiree Shares shall constitute Restricted Secu-
rities as that term is defined in Rule 144 promulgated under the Securities
Act of 1933, as amended (the "Act"). It is intended that the exchange
transaction, as provided for in this Agreement, will constitute a transac-
tion exempt from the registration requirements of the Act and any state se-
curities statute, including, without limitation, the securities statutes of
Florida and Nevada, by reason of the provisions of Rule 506 as contained in
Regulation D and any other applicable Rules of such Regulation and to the
extent not pre-empted by section 18 of the Act, pursuant to the provisions
of any state securities statute and regulations and rules promulgated
thereunder.
1.2 Reclassification of Acquiror Shares. In addition to effecting a
change of its corporate name from its present name to a name determined and
designated by the Board of Directors of the Acquiror as constituted on and
subsequent to the Closing Date and its domestication under the Florida
Business Corporation Act, the Acquiror shall initiate, conduct and conclude
the requisite action required by Nevada and/or Florida law in order to ef-
fect the reclassification of its outstanding common stock, $.001 par value
in the manner and as determined by the present Board of Directors of the
Acquiree, all of which members shall become members of the Board of Direc-
tors of the Acquiror on and subsequent to the Closing Date (herein referred
to as the "Stock Reclassification"). The Acquiror Shares anticipated to
be issued in the exchange transaction between the Acquiror and the Holders
reflect such Stock Reclassification.
1.3 Issuance of Additional Acquiror Securities. The Agreement Par-
ties acknowledge that the Acquiror may on and subsequent to the Closing
Date and by virtue of action taken by the Board of Directors of the Ac-
quiror, as such Board of Directors of the Acquiror is constituted on after
the Closing Date, engage in one or more transactions relating to the pri-
vate and/or public offer and sale of the securities of the Acquiror, in-
cluding Acquiror Shares. The percentage of ownership with respect to the
Acquiror Shares to be vested in the Holders and all present holders of Ac-
quiror Shares on and after the Closing Date shall be diluted by virtue of
any such action and sale of Acquiror Shares.
ARTICLE II
Action Prior to Closing Date
------------------------------
2.1 Corporate Action of Acquiror. From the date of this Agreement to
the Closing Date, the Acquiror shall undertake and complete all requisite
action, including all action required pursuant to the Nevada Corporation
Act, the Florida Business Corporation Act, the '33 Act, the '34 Act and ap-
plicable state securities statutes, including, without limitation, the se-
curities laws of Florida and Nevada in order to permit the Acquiror to pre-
pare for and to consummate the action and transactions called for by this
Agreement.
2.2 Corporate Action of Acquiree. From the date of this Agreement to
the Closing Date, the Acquiree shall undertake and complete all requisite
action, including all action required pursuant to the corporate law of
Florida, the '33 Act, the '34 Act and applicable state securities statutes
including, without limitation, the securities laws of Florida, in order to
permit the Acquiree and the Acquiror to consummate the transactions called
for by this Agreement.
2.3 Action by Holders. From the date of this Agreement to the Closing
Date, the Holders, with the assistance of the Acquiree, shall undertake all
action as may be required under applicable law, including the laws of the
State of Florida, in order to permit Acquiree and the Holders to consummate
the transactions called for by this Agreement including, without limita-
tion, the exchange transaction involving the Acquiror Shares and the Ac-
quiree Shares.
2.4 Acquiror Informational Filings. In addition to the action de-
scribed and required by Section 2.1 of this Article II, the Acquiror, on
and before the Closing Date, shall effect such filings with the Commission
as are appropriate and necessary and required by the '34 Act. Such filings
shall include, but shall not be necessarily limited to, an event report
timely filed with the Commission on Form 8-K, which event report shall re-
late to the exchange transaction governed by this Agreement. In connection
therewith, the Acquiror shall cause to be completed its audited financial
statements for the fiscal year ended December 31, 2001. Such financial
statements will be prepared in accordance with generally accepted account-
ing principles consistently applied and will meet, or with minimal modifi-
cation will meet, Commission financial reporting requirements as set forth
in Commission Regulation S-B and/or S-X.. Such financial statements shall
be provided to the Acquiree and the Holders immediately upon the availabil-
ity thereof as shall each of the informational filings made with the Com-
mission under the Exchange Act. In all events, the providing of such de-
scribed filings and financial statements shall occur on or before the Clos-
ing Date and the receipt thereof by the Acquiree and the Holders shall be a
condition precedent to the consummation of the exchange transaction herein
provided for.
2.5 Financial Statements of Acquiree. As soon as practically possible,
the Acquiree shall provide to the Acquiror its unaudited financial state-
ments for the fiscal year ended December 31, 2001. Prior to the Closing
Date, the Acquiree shall provide to the Acquiror its financial statements
for the fiscal years as required by Commission Regulation S-B or S-X which
shall be prepared in accordance with generally accepted accounting princi-
ples consistently applied and will be examined by the independent certified
public accountants of the Acquiree (the "Acquiree Financial Statements").
Such Acquiree Financial Statements are anticipated to be included in one or
more filings made by the Acquiror with the Commission on and subsequent to
the Closing Date. The providing of such Acquiree Financial Statements
shall also be a condition precedent to the consummation of the transactions
provided for in this Agreement.
2.6 Action re Acquiror Subsidiary.
(a) As is acknowledged in the Agreement section captioned
"BACKGROUND", the Acquiror presently has a wholly-owned subsidiary known as
Medical Discounts, Ltd. ("MDL"). Prior to or contemporaneous to the Clos-
ing Date, the Acquiror and MDL will take all necessary steps and action to
permit the distribution to the Holders of the outstanding Acquiror Shares
as of the date specified below of all of the outstanding voting common
stock of MDL (the "MDL Shares") owned by the Acquiror proportionately to
such present shareholders, subject to the provisions of subpart (b) below.
In such procedure, the Acquiror shall cause to be prepared, filed and proc-
essed to effectiveness such Registration Statement and other filings as are
necessary in order to effect the distribution of the MDL common stock to
the then present holders of the outstanding Acquiror Shares (excluding the
Holders) with the Commission and such other regulatory authorities having
jurisdiction over the Acquiror, MDL and the distribution procedure. In
connection with any such filings made with the Commission and other regula-
tory authorities, the Acquiror, on behalf of MDL, shall use such service
providers (attorneys, certified public accountants, etc.) as are satisfac-
tory to the Acquiree. At the conclusion of the distribution contemplated
by this Section 2.6(a), the outstanding common stock of MDL will be held by
the approximate 1,400 record holders of the presently outstanding Acquiror
Shares and who are of record on the close of business on November 19, 2001
and in accordance with subpart (b) hereof by the Acquiror. On and subse-
quent to the time of the completion of such distribution, MDL shall con-
tinue to conduct its business in the ordinary course and in such a manner
as is determined by the present management of MDL. The Board of Directors
of MDL, on and after the Closing Date shall be the present members of the
Board of Directors of MDL, as such membership is modified in accordance
with Section 2.6(b) below.
(b) In connection with the action described in subpart (a) above, the
Acquiree and the Holders will facilitate the purchase by the Acquiror of
that number of shares equal to five percent (5%) of the number of shares of
common stock of MDL to be outstanding at the conclusion of the distribution
contemplated by subpart (a) above. The number of shares of common stock of
MDL anticipated to be involved in such purchase by the Acquiror is 50,000
shares. The purchase price for such shares of common stock of MDL to be
paid by the Acquiror shall be an aggregate $135,000. It is anticipated
that MDL will use such proceeds in connection with the conduct of its busi-
ness activities, to defray the legal fees and related costs incidental to
the distribution contemplated by subpart (a) above (for which MDL shall be
responsible in an amount not to exceed $20,000) and that action which fa-
cilitates the listing of the outstanding shares of MDL common stock (which
have been the subject of the Registration Statement described above) pursu-
ant to the NASDAQ Bulletin Board and the after-market trading thereof. MDL
shall also be responsible for any filing fees with the Commission and any
other regulatory authority, as well as the cost of the printing of any pro-
spectus which is contained as a part of such Registration Statement. The
Acquiree shall be responsible for the fees of the independent certified
public accountants utilized by MDL in connection with the contemplated Reg-
istration Statement and other required filings described in subpart (a)
above. Upon the full execution and delivery of this Agreement by the par-
ties hereto, the Board of Directors of the Acquiror shall be entitled to
elect one director to the Board of Directors of MDL.
(c) The Acquiror acknowledges receipt of approximately $60,000 from
ASK. An additional approximate $75,000 shall be made available to the Ac-
quiror as a result of the efforts of the Acquiree and its present officers
and directors, as well as other persons acting in a consulting capacity to
the Acquiror. The Acquiror and the Acquiree acknowledge that the balance
of such $135,000 amount in the amount of approximately $75,000 shall be
made available to the Acquiror in one or more installments on or before
March 31, 2002, subject to a 15 day grace period calculated from March 31,
2002. Of such remaining balance in the amount of approximately $75,000,
the Acquiror acknowledges that $20,000 of such amount will be paid to legal
counsel selected to prepare the Registration Statement described in subpart
(a) above and will not be received by the Acquiror. The Acquiror acknowl-
edges that the obligation to provide such aggregate $135,000 amount was set
forth as an obligation of ASK in the Letter of Intent. Upon the execution
of this Agreement by the Acquiror, the Acquiree and the Holders, the obli-
gation of ASK with respect to such undertaking shall be extinguished and
such obligation shall be solely that of the Acquiree. ASK shall acknowl-
edge the release of its obligation under the Letter of Intent by executing
a counterpart of this Agreement.
(d) The Acquiror and MDL agree to use their collective best efforts to
accomplish the preparation, filing and effectiveness of the Registration
Statement described in subpart (a) above, but acknowledge that such Regis-
tration Statement once filed with the Commission will be subject to review
by the Commission staff and most likely will be the subject of one or more
letters of comment requiring one or more amendments to the Registration
Statement, a process requiring an amount of time which is largely beyond
the control of the Agreement Parties and MDL. The responsibility for the
preparation, filing and processing to effectiveness of the Registration
Statement described in subpart (a) above shall be solely that of the Ac-
quiror and MDL.
2.7 Redemption of Outstanding Preferred Stock. The Acquiror and the
Acquiree acknowledge that there are outstanding 47,500 shares of Preferred
stock of the Acquiror. Commencing at the time of the full execution and
delivery of this Agreement and to the Closing Date provided for herein, the
Acquiror shall take all necessary steps to effect the redemption or cancel-
lation of all of such 47,500 shares of Preferred Stock. The Acquiror shall
hold the Acquiree and the Holders harmless with respect to such redemption
action relating to the Preferred Stock and shall indemnify the Acquiree and
the Holders with respect to any loss or damage sustained by the Acquiree
and/or the Holders or any Holder as a result of such redemption.
2.8 Certain Capital Formation Activities. The Acquiree and the Ac-
quiree acknowledge that the Letter of Intent provided for certain capital
formation activities which were intended to be carried out on behalf of the
Acquiror and MDL by ASK and consultants to ASK and the Acquiror. Such
capital formation activities are described in Section 5 of the Letter of
Intent. Effective upon the execution and delivery of this Agreement, the
responsibility of ASK with respect to such capital formation activity shall
extinguish and such capital formation activity as hereinafter set forth
shall be carried out by the Acquiree, certain officers of the Acquiree, and
the Acquiror. The Agreement Parties may utilize the services of such other
persons in such capital formation activities as is determined appropriate.
Such capital formation activities to be carried out under the auspices of
this Agreement shall involve authorized but unissued Acquiror Shares or Ac-
quiror Shares which are issued and outstanding and which are freely trade-
able or which become freely tradeable by virtue of appropriate action of
the Acquiror and/or the holders of any such Acquiror Shares. To the extent
that such capital formation activities involve authorized but unissued
shares of the Acquiror, such Acquiror Shares shall only be sold, absent an
effective registration statement covering such Acquiror Shares, in transac-
tions which are exempt from the registration requirements of the '33 Act.
The Acquiror, its present officers and directors, shall cooperate with the
Acquiree and certain of the Holders with respect to such capital formation
plans and such cooperation shall include the Stock Reclassification earlier
provided for in this Agreement. The Acquiror and the Acquiree acknowledge
that the proceeds realized as a result of the carrying out of the capital
formation activities herein described are intended to be the source of
funds utilized to permit the purchase by the Acquiror of the shares of com-
mon stock of MDL as contemplated in Section 2.6(b) above, such proceeds
utilization being in the amount of $135,000. Such capital formation ac-
tivities shall involve minimum proceeds of $135,000 and maximum proceeds of
$1 million (the "Minimum Amount" and the "Maximum Amount" respectively).
Proceeds received in excess of the Minimum Amount shall be utilized in a
manner determined by the Board of Directors of the Acquiror, as such Board
of Directors is constituted on and after the Closing Date. It is acknowl-
edged by the Acquiror and the Acquiree that the Minimum Amount must be re-
ceived as a result of the conduct of such capital formation activities as
of the close of business on March 31, 2002 and if such Minimum Amount has
not been received, then the obligation of the Agreement Parties as estab-
lished by this Agreement shall extinguish.
2.9 Allocation and Responsibility of Transaction Costs and Expenses.
Unless otherwise agreed by the Agreement Parties, the Agreement Parties
shall bear their respective costs and expenses in connection with the
preparation for the consummation of the transactions provided for in this
Agreement.
2.10 Cooperation of Agreement Parties. The Agreement Parties acknowl-
edge and agree that the consummation of the transactions called for by this
Agreement shall be subject and conditioned upon the completion of the con-
duct of such due diligence procedures as determined necessary by the Agree-
ment Parties and their respective legal counsel. In that regard, the
Agreement Parties agree to cooperate with each other with respect to the
conduct of such due diligence activities from the date of this Agreement to
the Closing Date and to promptly furnish, upon request, such documents, re-
cords, corporate paraphernalia and other materials as may be requested by
the Acquiror or the Acquiree. The Acquiror and the Acquiree also agree to
make their respective executive officers available to respective legal
counsel or other representatives of the Acquiror or the Acquiree for infor-
mation gathering and due diligence purposes.
2.11 Surrender of Certain Acquiror Shares. The Agreement Parties ac-
knowledge that at the time of the signing of the Letter of Intent, certain
directors resigned their positions from the Board of Directors of the Ac-
quiror and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ were appointed to serve as
successor directors of the Acquiror. As compensation for such director
service and other services to be rendered by Messrs. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇
were each issued 4,000,000 Acquiror Shares. Also, 2,000,000 Acquiror
Shares were issued to ▇▇▇▇▇ ▇▇▇▇▇▇, a consultant to ASK. Such aggregate
10,000,000 Acquiror Shares have been made the subject of a Registration
Statement prepared on Form S-8 and filed with the Commission. Such Regis-
tration Statement is believed to have become effective under the '33 Act
and Messrs. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ and Salmon may, from the time of the execu-
tion and delivery of this Agreement to the Closing Date, sell Acquiror
Shares under the auspices of such Registration Statement. By becoming sig-
natories to this Agreement in their individual capacities, Messrs. ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ and Salmon agree to surrender any Acquiror Shares held by them
of record and beneficially immediately prior to the Closing Date and which
are unsold. Such Acquiror Shares surrendered shall be treated as Treasury
stock by the Acquiror or, upon appropriate action of the Board of Directors
of the Acquiror, shall be restored to the status of authorized but unissued
Acquiror Shares.
2.12 Composition of the Board of Directors of the Acquiror. Upon the
full execution and delivery of this Agreement as between the Agreement Par-
ties and the other signatories hereto, the Board of Directors of the Ac-
quiror shall take such appropriate action, including further resignations
of members of the Board of Directors of the Acquiror, in order that the
Board of Directors of the Acquiror be constituted by the following members:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇.
ARTICLE III
Representations of Acquiree
---------------------------
The Acquiree represents to the Acquiror and all persons deemed to be in
a control relationship with the Acquiror, as such term is utilized in the
Act:
3.1 Corporate Status. As of the date of this Agreement and on the
Closing Date, the Acquiree is and will be a validly existing corporation
organized pursuant to the laws of the State of Florida and has and will
have all legal corporate authority and power to conduct its business ac-
tivities, to own its properties and possesses all necessary permits, li-
censes and other documents or authorities required in connection with its
business activities and, assuming that the requisite corporate action con-
templated by this Agreement has been accomplished prior to the Closing
Date, the consummation of the transactions provided for by this Agreement
will not constitute a violation of any applicable law, including, without
limitation, the Florida Business Corporation Act or the securities statutes
of Florida or a breach or event of default under the terms of any contract
or agreement to which the Acquiree is a party or pursuant to which the Ac-
quiree is bound or pursuant to which its assets are subject or be in ▇▇▇▇▇-
tion of its Articles of Incorporation as amended to date or its Bylaws.
The consummation of the transactions contemplated and called for by this
Agreement will not invalidate any required permit, license or other docu-
ment issued or to be issued to the Acquiree and necessary for the conduct
of its business activities as currently conducted or as such business is
contemplated to be conducted during the future time. Upon consummation of
the exchange transaction provided for in this Agreement, the authority
vested in the Acquiree by any of such licenses or permits shall be trans-
ferrable or otherwise vested in the Acquiror, or the Acquiror, directly or
indirectly, and utilizing the facilities of the Acquiree, may avail itself
of such licenses and permits in the continuation of the conduct of the
business of the Acquiree. As used in this Article III, the term "Acquiree"
shall include all predecessor and affiliated entities and persons of the
Acquiree.
3.2 Corporate Action. Prior to the Closing Date, the Acquiree will
undertake and complete all required corporate action which may be required
in order to permit the consummation of the transactions called for by this
Agreement.
3.3 Subsidiaries. Except as indicated in Schedule I hereto, the Ac-
quiree has no corporate subsidiaries.
3.4 Financial Condition. The financial statements of the Acquiree
furnished to the Acquiror pursuant to the terms of this Agreement or which
may be furnished to the Acquiror in accordance with the terms of this
Agreement or for utilization or inclusion in any Registration Statement or
informational filing to be filed by the Acquiror with the Commission pursu-
ant to the provisions of the '34 Act or the '33 Act and this Agreement at
and for the fiscal years indicated or for such other periods indicated,
fairly present or will fairly present in all material respects the ▇▇▇▇▇-
cial condition of the Acquiree as of the date of such financial statements
(whether audited or unaudited), all to the best of the knowledge of the Ac-
quiree in accordance with generally accepted accounting principles consis-
tently applied except as may be indicated in such financial statements, the
related notes thereto and other information relating thereto. Except as
set forth in Schedule II hereto, the Acquiree has no liabilities or obliga-
tions of any nature which, in accordance with generally accepted accounting
principles, must be set forth in the described financial statements except
those liabilities which are incurred as a result of the ordinary course of
business of the Acquiree after the date of the most recent financial state-
ments furnished or to be furnished (which liabilities will be reflected in
an amendment to Schedule II on the Closing Date) or which are incurred by
the Acquiree in connection with the preparation undertaken by the Acquiree
to consummate the transaction provided for herein.
3.5 Capitalization of the Acquiree. The capitalization of the Ac-
quiree is as set forth in its Articles of Incorporation (as amended to
date) and its most recent balance sheet delivered to the Acquireor as of
the date of this Agreement and as such is contemplated to exist on the
Closing Date. The Acquiree Shares outstanding as of the date of this
Agreement and on the Closing Date constitute the one class of voting secu-
rities of the Acquiree outstanding and to be outstanding on the Closing
Date.
3.6 Title to Properties. Except as indicated in the financial state-
ments described in Section 3.4 above, or in Schedule III to this Agreement,
the Acquiree has good and valid title to the assets reflected in the ▇▇▇▇▇-
cial statements of the Acquiree at the periods indicated therein.
3.7 Business Activities of the Acquiree. The business activities of
the Acquiree are and have been constituted by those business activities de-
scribed in the information providing documents which have been provided by
the Acquiree to the Acquiror prior to or as of the date of this Agreement
and as such may be provided to the Acquiror prior to the Closing Date.
3.8 Taxes and Tax Returns. Except as set forth in Schedule IV to this
Agreement, the Acquiree has filed in a timely fashion all federal, state,
county and local tax returns relative to any taxes required to be paid by
the Acquiree and has timely paid any such taxes due pursuant to such re-
turns, if any, as of the date of this Agreement and on the Closing Date, is
not and will not be involved in any asserted contest with respect to any
tax.
3.9 Litigation. Except as described on Schedule V hereto, the Ac-
quiree and the members of the Board of Directors of the Acquiree are not,
as of the date of this Agreement, involved as a party to, nor are its as-
sets the subject of, any judicial or administrative proceedings before any
court, governmental agency or other tribunal. Except as set forth and de-
scribed in such Schedule V, the Acquiree is not aware of any factual cir-
cumstances or situations which might reasonably be expected to result in
the assertion of any claim by way of litigation or administrative proceed-
ing at any time on and subsequent to the date of this Agreement and as of
the Closing Date.
3.10 Material Contracts. Except as set forth in Schedule VI to this
Agreement, the Acquiree is not, with the exception of this Agreement, a
party to any material contract. The term "material contract" means any
contract which involves the future payment or receipt of a consideration by
the Acquiree in an amount in excess of $10,000 and a term of performance
concluding 12 or more months from the date of this Agreement. The Agree-
ment Parties acknowledge that the Acquiree has or is expected to enter into
one or more material contracts which will govern and relate to the conduct
of its laboratory and medical testing and related service business as de-
scribed in the Agreement section captioned BACKGROUND, which activity shall
be assumed and continued by the Acquiror and that such material contracts
are not required to be scheduled.
3.11 Environmental Matters. Except as indicated on Schedule VII
hereto, the Acquiree is not in material violation of any governmental
guidelines, laws or ordinances relating to hazardous materials as of the
date of this Agreement and such shall be the case on the Closing Date. Ex-
cept as indicated in Schedule VII hereto, the Acquiree is not subject to
any governmental guidelines, laws or ordinances relating to hazardous mate-
rials as of the date of this Agreement.
3.12 Sale of Acquiree Securities. All securities of the Acquiree in-
cluding, without limitation, Acquiree Shares and options and warrants pro-
viding for the issuance of Acquiree Shares, if any, which have been pri-
vately offered and sold prior to the date of this Agreement, have been of-
fered and sold under circumstances which, to the best of the knowledge of
the Acquiree and based upon the receipt by the Acquiree of advice believed
expert by the Acquiree, have constituted or will constitute transactions
exempt from the Registration requirements of the Act and any state securi-
ties statute.
3.13 Accuracy of Provided Information. No representation or warranty
given or made by the Acquiree pursuant to this Agreement or any Statement,
certificate or other document required to be furnished by the Acquiree to
the Acquiror pursuant to the terms of this Agreement contains or will con-
tain any untrue Statement of a material fact or omits or will omit to state
a material fact necessary to make the statements contained therein not mis-
leading.
ARTICLE IV
Representations of the Acquiror
-------------------------------
The Acquiror represents to the Acquiree and the Holders as follows:
4.1 Corporate Status. As of the date of this Agreement and on the
Closing Date, the Acquiror is and will be a validly existing corporation
organized pursuant to the laws of the State of Nevada and has and will have
all legal corporate authority and power to conduct its business activities,
to own its properties and possesses all necessary permits, licenses and
other documents or authorities required in connection with its business ac-
tivities and, assuming that the requisite corporate action contemplated by
this Agreement has been accomplished prior to the Closing Date, the consum-
mation of the transactions provided for by this Agreement will not consti-
tute a breach or event of default under the terms of any contract or agree-
ment to which the Acquiror is a party or pursuant to which the Acquiror is
bound or by which its assets are subject or be in violation of its Articles
of Incorporation as amended to date and its Bylaws. The consummation of
the transactions contemplated and called for by this Agreement will not in-
validate any required permit, license or other document issued or to be is-
sued to the Acquiror and necessary for the conduct of its business activi-
ties as currently conducted or as such business is contemplated to be con-
ducted during the future time.
4.2 Corporate Action. Prior to the Closing Date, the Acquiror will
undertake and complete all required corporate and other action which may be
required in order to permit the consummation of the transactions called for
by this Agreement.
4.3 Subsidiaries. The Acquiror has no corporate subsidiaries, other
than those subsidiaries identified in the Agreement section captioned
BACKGROUND..
4.4 Financial Condition. The financial statements reflecting the fi-
nancial condition and results of operations of the Acquiror, together with
its subsidiaries, as furnished to the Acquiree under the terms of this
Agreement and as have been incorporated in periodic and annual filings made
with the Commission (which financial statements are audited and unaudited)
fairly present and will fairly present in all material respects the ▇▇▇▇▇-
cial condition of the Acquiror and its subsidiaries as of the date of such
financial statements or for the period reflected in such financial state-
ments and such financial statements prepared and to be prepared will be in
accordance with generally accepted accounting principles consistently ap-
plied except as may be indicated in such financial statements, the related
notes thereto and other information relating thereto. Except as set forth
in Schedule VIII hereto, the Acquiror has no liabilities or obligations of
any nature which, in accordance with generally accepted accounting princi-
ples, must be set forth in the described financial statements except those
liabilities which are incurred as a result of the ordinary course of busi-
ness of the Acquiror after the date of the most recent financial statements
(which liabilities will be reflected in an amendment to Schedule VIII on
the Closing Date), which are incurred by the Acquiror in connection with
the preparation and filing of the annual and periodic reports to be filed
by the Acquiror under the '34 Act or prepared for inclusion in any Regis-
tration Statement prepared and filed by the Acquiror on its behalf or on
behalf of MDL as contemplated by this Agreement, which are incurred in con-
nection with the preparation of the Acquiror for the consummation of the
transaction provided for herein, or are liabilities which would not either
singularly or in the aggregate have a material adverse affect on the Ac-
quiror. Without the express written consent of the Acquiree, the Acquiror
shall not incur any liability or obligation not contemplated or permitted
by this Agreement in excess of $20,000 from the date of this Agreement to
the Closing Date.
4.5 Capitalization of the Acquiror. The capitalization of the Ac-
quiror is as set forth in its Articles of Incorporation (as amended to
date) and its most recent balance sheet delivered to the Acquiree as of the
date of this Agreement and as such is contemplated to exist on the Closing
Date. Schedule IX contains further information relative to the capitaliza-
tion of the Acquiror as of the date of this Agreement and as of the Closing
Date indicating the number of shares which to the best of the knowledge of
the Acquiror are freely tradeable from the standpoint of the '34 Act and
the '33 Act. Schedule IX also identifies as of the date of this Agreement
and shall identify as of the Closing Date the identities of any market mak-
ers to the best of the knowledge of the Acquiror.
4.6 Title to Properties. Except as indicated in the financial state-
ments described in Section 4.4 above, or in Schedule X to this Agreement,
the Acquiror has good and valid title to the assets reflected in the ▇▇▇▇▇-
cial statements of the Acquiror at the periods indicated therein.
4.7 Taxes and Tax Returns. Except as set forth in Schedule XI to this
Agreement, the Acquiror has filed in a timely fashion all federal, state,
county and local tax returns relative to any taxes required to be paid by
the Acquiror and has timely paid any such taxes due pursuant to such re-
turns. The Acquiror, as of the date of this Agreement and on the Closing
Date, is not and will not be involved in any asserted contest with respect
to any tax.
4.8 Litigation. Except as described on Schedule XII hereto, the Ac-
quiror and the members of the Board of Directors of the Acquiror are not,
as of the time of the execution and delivery of this Agreement by the
Agreement Parties, involved as a party to, nor are its assets the subject
of, any judicial or administrative proceedings before any court or govern-
mental agency. Except as set forth and described in such Schedule XII, the
Acquiror is not aware of any factual circumstances or situations which
might reasonably be expected to result in the assertion of any claim by way
of litigation or administrative proceeding at any time on and subsequent to
the date of this Agreement and as of the Closing Date. To the best of the
knowledge of the Acquiror, the information set forth in any periodic or an-
nual report filed by the Acquiror with the Commission, including any au-
dited or unaudited financial statements contained therein, did not contain
as of the date thereof any misstatement of a material fact or information
or failed to provide any material information necessary to be provided in
order that the information set forth in such documents be not misleading.
Such is also the case with respect to any prospectus or other offering
document relating to the sale of any of the outstanding securities of the
Acquiror, including, without limitation, any prospectus contained as a part
of an effective registration statement filed under the '33 Act.
4.9 Material Contracts. Except as set forth in Schedule XIII to this
Agreement, the Acquiror is not, with the exception of this Agreement, a
party to any material contract. The term "material contract" means any
contract which involves the future payment or receipt of a consideration by
the Acquiror in an amount in excess of $5,000 and a term of performance
concluding 12 or more months from the date of this Agreement. Other than
those contracts described in Schedule XIII hereto, any material contract
intended to be created and of which the Acquiror shall be a party shall be
subject to the approval of the Acquiree.
4.10 Environmental Matters. Except as described in Schedule XIV, the
Acquiror is not subject to any governmental guidelines, laws or ordinances
relating to hazardous materials as of the date of this Agreement.
4.11 Current Shareholders - Transfer Agent. The list of the share-
holders of the Acquiror, as prepared by the Transfer Agent for the out-
standing Acquiror Shares, Corporate Stock Transfer, Denver, Colorado, which
list of shareholders shall be within ten days of the Closing Date, is accu-
rate and complete.
ARTICLE V
Pre-Closing Covenants of the Acquiree
-------------------------------------
5.1 No Change in Business. The Acquiree shall not materially modify
or change the operations or business as conducted by the Acquiree as of the
date hereof except as such changes are presently contemplated in the ordi-
nary course of business of the Acquiree and as is described in the Agree-
ment section captioned BACKGROUND and such other information documents as
may be provided by the Acquiree to the Acquiror.
5.2 No Contracts. Except as contemplated and described herein or any
Schedule hereto, the Acquiree shall not enter into any material agreement
or contract or make any material modifications to existing contracts or
agreements.
5.3 Issuance of Additional Securities. From the date of this Agree-
ment to the Closing Date, the Acquiree shall not undertake any action which
will cause the issuance of additional equity or debt securities of the Ac-
quiree.
5.4 In General. Except as otherwise provided for in this Agreement:
a. No change will be made in the basic documents which provide for the
formation and existence of the Acquiree;
b. No distributions shall be effected by the Acquiree except as may be
contemplated by this Agreement and as is set forth in a Schedule hereto;
and
c. The Acquiree shall use its best efforts to preserve intact the
business organization of the Acquiree, its business and goodwill, as well
as the availability to it of its executive management and other key employ-
ees and the goodwill of persons having business relations with the Ac-
quiree.
ARTICLE VI
Pre-Closing Covenants of the Acquiror
-------------------------------------
6.1 Basic Documents. The Acquiror, by action of its Board of Direc-
tors and shareholders, shall not effect any amendments to the Acquiror's
Articles of Incorporation or Bylaws from the date of this Agreement to the
Closing Date without the express written consent of the Acquiree except
with respect to the Stock Reclassification provided for earlier in this
Agreement and such amendments as are appropriate to (a) domestic the Ac-
quiror as a corporation subject to the Florida Business Corporation Act and
(b) change the corporate name of the Acquiror to a name selected by the Ac-
quiree.
6.2 No Contracts. With the exception of this Agreement and those con-
tractual arrangements which must be established in order to facilitate and
consummate the transactions provided for in this Agreement, the Acquiror
shall not enter into any material contract as the term "material contract"
is described elsewhere in this Agreement. Excepted from this Section 6.2
will be any contractual arrangements existing between the Acquiror and Wil-
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, P.A. with respect to legal representation and services
provided in connection with the preparation by the Acquiror to consummate
the transactions provided for in this Agreement (and primarily relating to
the preparation and filing and processing to effectiveness of the Registra-
tion Statement relating to the outstanding common stock of MDL) and other
related professional services.
6.3 Directors and Officers of Acquiror. From the date of this Agree-
ment to the Closing Date or until their resignations are accepted by the
Board of Directors of the Acquiror as constituted on and subsequent to the
Closing Date, those persons serving as members of the Board of Directors of
the Acquiror and as executive officers of the Acquiror shall remain in ser-
vice and shall use their best diligent efforts to facilitate the consumma-
tion of the transactions provided for in this Agreement. No increase in
any rate of compensation shall occur with respect to the amount of director
fees or officer compensation presently being paid, if any, shall occur from
the date of this Agreement to the Closing Date except upon receipt of the
express written consent of the Acquiree.
6.4 Utilization of Net Operating Loss. The Acquiror shall use its
best efforts to preserve intact and available for utilization by the Ac-
quiror and the Acquiree as combined the net operating losses which have
been experienced by the Acquiror and the Acquiree as a result of their re-
spective business operations as conducted since inception to the Closing
Date and as have been reported by the Acquiror and the Acquiree pursuant to
the provisions of the Internal Revenue Code of 1986, as amended to date.
ARTICLE VII
Closing of Agreement Transactions
---------------------------------
7.1 Closing of Exchange Transaction. The Acquiror and the Acquiree
agree that the exchange of the Acquiror Shares and the Acquiree Shares pro-
vided for by Article I of this Agreement shall be consummated at a closing,
the time of which shall be established pursuant to Section 7.2 of this Ar-
ticle VII. With respect to the consummation of the Agreement transactions,
the Acquiror and the Acquiree agree that an escrow procedure may be util-
ized in connection with the consummation of the transaction provided for in
this Agreement and in the event that an escrow procedure is used, the ser-
vices of an escrow agent which is mutually satisfactory to the Acquiror and
the Acquiree shall be utilized. If the exchange transaction provided for
in Article I of this Agreement is unable to be consummated on the Closing
Date as established by Section 7.2 hereof, none of the transactions pro-
vided for in this Agreement shall be consummated and this Agreement shall
be null and void and have no effect, and the Agreement Parties shall be re-
leased from any further obligations hereunder. In such event, proceeds
made available as a result of the capital formation activities provided for
in this Agreement shall be retained as the sole property of the Acquiror
and MDL, as the case may be.
7.2 Time and Place of Closing. The Acquiror and the Acquiree shall
mutually determine the date, time and place of closing for the transactions
called for by this Agreement (the "Closing Date"). In no event shall the
Closing Date be established on a date subsequent to March 31, 2002 unless
this Agreement is amended by a written Addendum executed and delivered by
the Acquiror, the Acquiree and all of the Holders. The facilities of the
United States mail or other acceptable, publicly available means of deliv-
ery, may be utilized to effect the closing of the transactions called for
by this Agreement.
7.3 Deliveries at Closing.
a. On the Closing Date, the Holders shall deliver instruments of con-
veyance in form and content satisfactory to counsel for the Acquiror con-
veying to the Acquiror good and valid title to all of the outstanding Ac-
quiree Shares. The Holders shall make such additional deliveries and pro-
vide such additional documents as may be reasonably required in order to
facilitate the consummation of the transactions called for by this Agree-
ment.
b. On the Closing Date, the Acquiree shall deliver to the Acquiror all
of its records, files and corporate paraphernalia which is required in con-
nection with the entity existence and conduct of the business of the Ac-
quiree.
c. On the Closing Date, the Acquiror shall deliver in the aggregate
that number of Acquiror Shares determined in accordance with the provisions
of Article I of this Agreement in such individual share amounts and cer-
tificates as shall be instructed by the Holders immediately prior to the
Closing Date. With respect to any share certificates evidencing Acquiror
Shares delivered to the Holders, such certificates shall bear an appropri-
ate restrictive endorsement indicating the such shares have not been regis-
tered under the '33 Act or applicable state securities statutes. At the
closing, the Acquiror shall also deliver the written resignations of all of
the members of the Board of Directors of the Acquiror (with the exception
of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇▇▇▇▇▇) and all of the executive officers
of the Acquiror, together with written action dated as of the Closing Date
by the Board of Directors of the Acquiror as constituted immediately prior
to the Closing Date appointing the designees of the Acquiree as the members
of the Board of Directors of the Acquiror on and subsequent to the Closing
Date. The resignations of the directors and officers of the Acquiror shall
be effective upon the acceptance thereof by the Board of Directors of the
Acquiror as constituted on and subsequent to the Closing Date.
7.4 Record Ownership of Acquiror Shares, MDL Shares. On and subse-
quent to the consummation of the transactions provided for in this Agree-
ment, the record ownership of the then outstanding Acquiror Shares and the
then outstanding MDL Shares shall be by the group of holders and in the
percentage amounts indicated below:
Percentage Held
Identity of Group Acquiror Shares MDL Shares
------------------ ---------------- -----------
Holders of Acquiror Shares held of 5% 95%
record as of close of business on
November 19, 2001
Holders 95%
Acquiror 5%
---------- --------
100% 100%
The percentage amount attributed to the Holders above includes persons who
purchase Acquiror Shares as contemplated in Article II, Section 2.11
hereof. Additionally, the 10 million shares are not to be included in the
above percentages.
ARTICLE VIII
Conditions Precedent to Obligations of the Acquiror
---------------------------------------------------
The obligations of the Acquiror pursuant to the terms and provisions of
this Agreement and the consummation of the transactions called for by this
Agreement are subject to the following conditions:
8.1 No Adverse Development. There shall have occurred no material,
adverse change in the business, financial condition or composition of the
assets of the Acquiree since the date of this Agreement and the Acquiree
shall not have sustained since the date of this Agreement any loss on ac-
count of fire, flood, accident, strike or other calamity of such a charac-
ter as to interfere materially with the continuous operation of the Ac-
quiree's business or which materially adversely affects the financial posi-
tion or business of the Acquiree, regardless of whether any such loss shall
have been insured.
8.2 No Breach of Representations, Warranties or Covenants of the
Agreement. The representations and warranties made by the Acquiree, as set
forth in this Agreement, shall be correct and complete in all material re-
spects when made and shall be deemed to have been made again on and as of
the Closing Date and shall then be true and correct in all material re-
spects on and as of the Closing Date. Additionally, the Acquiree shall
have performed all of the obligations required to be performed by it under
this Agreement prior to and as of the Closing Date.
8.3 Treatment of Transaction. On or before the Closing Date, the Ac-
quiror shall receive the advisement of its counsel or other source of ex-
pert advice with respect to Federal income tax matters to the effect that
the exchange transaction provided for in this Agreement will satisfy the
conditions and will be eligible for the treatment afforded pursuant to Sec-
tion 351 and/or Section 368 of the Internal Revenue Code of 1986, as
amended to date.
8.4 Receipt of Acquiree Financial Statements. The Acquiror shall be
in receipt of the audited and unaudited financial statements of the Ac-
quiree which have been prepared and delivered in accordance with the re-
quirements of this Agreement, which financial statements of the Acquiree
shall be received on or before March 31, 2002.
8.5 Completion of Capital Formation Activities. The capital formation
activities to be undertaken by the Acquiree and certain Holders, as earlier
described and provided for in this Agreement, shall have been completed at
least in the Minimum Amount at the time provided in this Agreement.
ARTICLE IX
Conditions Precedent to Obligations of the Acquiree and the Holders
-------------------------------------------------------------------
The obligations of the Acquiree to consummate the transactions called
for by this Agreement and the obligation of the Holders to exchange their
Acquiree Shares for Acquiror Shares are subject to the following condi-
tions:
9.1 No Adverse Development. There shall have occurred no material,
adverse change in the status, financial condition or asset composition of
the Acquiror since the date of this Agreement except as contemplated by
this Agreement.
9.2 Time of Consummation. The transactions called for by this Agree-
ment, specifically those transactions enumerated in Article I hereof, shall
be scheduled for consummation and closing and shall be consummated and
closed no later than March 31, 2002.
9.3 No Breach of Representations, Warranties and Covenants. The rep-
resentations and warranties made by the Acquiror in this Agreement shall be
correct and complete in all material respects when made and shall be deemed
to have been made again at and as of the Closing Date and shall then be
true and correct in all material respects on and as of that date. The Ac-
quiror shall have performed in all material respects the obligations re-
quired to be performed by it under this Agreement prior to and as of the
Closing Date including, without limitation, the obligation of the Acquiror
to prepare and file all informational reports with the Commission as re-
quired by the '34 Act. The Acquiror shall have delivered to the Acquiree a
certificate to the effect contemplated by this Section 9.3 signed by the
Chief Executive Officer of the Acquiree and dated immediately prior to the
Closing Date.
9.4 Treatment of Transaction. Unless waived by the Holders on or be-
fore the Closing Date, the Holders shall receive the advisement of their
counsel in form and content satisfactory to it that the transactions called
for by this Agreement will satisfy the conditions and will be eligible for
the treatment afforded pursuant to Section 351 and/or 368 of the Internal
Revenue Code of 1986, as amended to date.
9.5 Appointment to Acquiror Board of Directors. Upon the full execu-
tion of this Agreement by the Agreement Parties and the other signatories
hereto, Board of Director action of the Acquiror shall be in place appoint-
ing the designees of the Acquiror as the members of the Board of Directors
of the Acquiror. At such time, the resignations submitted by the present
members of the Board of Directors of the Acquiror and the present officers
of the Acquiror shall be deemed effective.
9.6 Assumption of Acquiree Liabilities/Contracts. On the Closing
Date, the Acquiror shall assume and agree to pay and be bound by in accor-
dance with their respective terms, all obligations and liabilities of Ac-
quiree existing on the Closing Date, including, without limitation, any em-
ployment agreement or agreements existing between the Acquiree and any ex-
ecutive officer or other employee of the Acquiree. Such undertaking of the
Acquiror shall be by written instrument in form and content satisfactory to
counsel to the Acquiree.
9.7 Distribution of MDL Stock. The Registration Statement relating to
the distribution of the common stock of MDL, as required and provided for
in this Agreement, shall have become effective and such MDL common stock
shall have been distributed in accordance with the provisions of this
Agreement.
9.8 Acquiror Preferred Stock. The outstanding Preferred Stock of the
Acquiror shall have been fully redeemed or otherwise canceled. If required
by the Acquiree, the chief executive officer of the Acquiror shall provide
a certificate to such effect, which certificate shall be dated as of the
Closing Date.
9.9 Dissenter's Rights. The Acquiree shall be in receipt of an ad-
visement by its legal counsel that rights of dissent and/or appraisal are
not afforded to the shareholders of the Acquiror in connection with the
consummation of the Agreement transactions, as such shareholders are con-
stituted immediately prior to the Closing Date under the corporate laws of
Nevada or, if such rights of dissent or appraisal are afforded under the
corporate law of Nevada, no such rights of dissent and/or appraisal have
been asserted by any holder of Acquiror Shares.
ARTICLE X
Indemnification, Survival of Representations and Warranties
-----------------------------------------------------------
10.1 Indemnification by the Acquiree. The Acquiree agrees to and does
hereby indemnify and hold the Acquiror and persons controlling the Acquiror
harmless from and against any and all liability, loss, damage, expense,
cost or injury, including, without limitation, those resulting from any and
all actions, suits, proceedings, and judgments, together with reasonable
costs and expenses, including, without imitation, reasonable legal expenses
relating thereto (collectively "Losses") arising out of resulting from any
breach of the representations, warranties and covenants made by the Ac-
quiree in this Agreement.
10.2 Indemnification by the Acquiror. The Acquiror agrees to and
does hereby indemnify and hold the Acquiree and the Holders harmless from
and against Losses arising out of or resulting from any breach of the rep-
resentations, warranties and covenants made by the Acquiror in this Agree-
ment.
10.3 Limitations Regarding Indemnification. The Acquiree shall not be
entitled to recover any Losses in respect of the representations and war-
ranties made by any Holder with respect to the sufficiency of the title
vested in any Holder and relating to such Holder's ownership of Acquiree
Shares.
10.4 Procedures for Third Party Indemnification. If any action, suit
or proceeding shall be commenced against, or any claim or demand be as-
serted against the Acquiror or its controlling persons or the Acquiree or
the Holders, as the case may be, in respect of which such party proposes to
demand indemnification under this Section 11.4, as a condition precedent
thereto, the party seeking indemnification ("Indemnitee") shall promptly
notify the other party ("Indemnitor") in writing to that effect, and with
reasonable particularity containing a reference to the provisions of this
Agreement. The Indemnitor shall have the right to assume the entire con-
trol of, including the selection of counsel, subject to the right of the
Indemnitee to participate (at its expense and with the counsel of its
choice) in the defense, compromise or settlement thereof, and in connection
therewith, the Indemnitee shall cooperate fully in all respects with the
Indemnitor in any such defense, compromise or settlement thereof, and In-
demnitee shall make available to Indemnitor all pertinent information and
documents under the control of the Indemnitee. So long as the Indemnitor
is defending in good faith any such claim or demand asserted by a third
party against the Indemnitee, the Indemnitee shall not settle or compromise
such claim or demand without the prior written consent of the Indemnitor,
which consent will not be unreasonably withheld or delayed. If the Indem-
nitor shall fail to defend any such action, suit, proceeding, claim or ▇▇-
▇▇▇▇, then the Indemnitee may defend, through counsel of its own choosing,
such action, suit, proceeding, claim or demand and (so long as Indemnitee
gives the Indemnitor at least five (5) days written notice of the terms of
the proposed settlement thereof and permits the Indemnitor to then under-
take the defense thereof if Indemnitor objects to the proposed settlement)
to settle such action, suit, proceeding, claim or demand and to recover
from the Indemnitor the amount of such losses.
10.5 Survival of Representations, Warranties and Indemnities. The
representations and warranties of this Agreement, and indemnification in
respect of the same, shall survive the Closing Date for a period of two (2)
years, after which time such representations and warranties, and indemnifi-
cation in respect thereof, shall be of no further force and effect unless
prior to such time, the party claiming a breach has served on the other
written notice of such claim or breach.
ARTICLE XI
Matters Relating to ASK
------------------------
Upon the full execution and delivery of this Agreement by and between
the Acquiror, the Acquiree and all of the Holders, ASK shall be released
and discharged from any obligation imposed upon it and arising from the
Letter of Intent.
ARTICLE XII
Outstanding Stock Purchase Options of the Acquiror
--------------------------------------------------
The Acquiror and the Acquiree acknowledge that there are outstanding
stock purchase options providing, upon full exercise thereof, for the issu-
ance of 550,000 Acquiror Shares (prior to any Stock Reclassification).
Such outstanding stock purchase options, to the extent that they are not
exercised prior to the Closing Date, shall, except as hereinafter provided,
extinguish. With respect to stock purchase options which have been granted
to ▇▇▇▇▇▇ ▇▇▇▇▇, such options shall continue to be exercisable in accor-
dance with the terms thereof, such terms only modified to reflect the Stock
Reclassification. ▇▇▇▇▇▇ ▇▇▇▇▇ acknowledges that the Acquiror Shares issu-
able upon exercise of any or all of such options constitute Restricted Se-
curities, as such term is utilized under the '33 Act and/or "control
shares", as such term is utilized under the '33 Act and the '34 Act. Stock
options of ▇▇▇▇▇▇ ▇▇▇▇▇ shall continue post closing.
ARTICLE XIII
Miscellaneous Provisions
------------------------
13.1 Notices. All notices or other communications required or permit-
▇▇▇ under this Agreement shall be in writing and shall be given by mail or
by facsimile transmission (in the event of facsimile transmission, a
conforming copy shall be mailed postage prepaid simultaneously therewith).
If notice is to be given to the Acquiror, such notice shall be deemed given
when provided in the manner provided herein to the Acquiror in care of Ste-
▇▇▇ ▇▇▇▇▇, President and Chief Executive Officer, Monogram Pictures, Inc.,
▇▇▇▇ ▇. ▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ and to the Acquiree
in care of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., CEO, Med-Tech Labs, Inc., ▇▇▇▇ ▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ with a copy to ▇▇▇▇▇▇▇ ▇. Kir-
tley, Esq., ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, P.A., ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇.
13.2 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors,
assigns, heirs and representatives.
13.3 Background Statement and Schedules. The BACKGROUND statement of
the Agreement and the Schedules shall be construed with and as an integral
part of this Agreement to the same extent as if such Background statement
and Schedules had been set forth verbatim herein.
13.4 Entire Agreement. This Agreement and the referenced Schedules
constitute the entire understanding on the part of the parties hereto, and
all previous agreements and understandings are superseded by this Agree-
ment, including, without limitation, the Letter of Intent.
13.5 Publicity. No publicity, release or announcement concerning this
Agreement or the transactions contemplated hereby shall be issued without
advance approval of the form and substance thereof by the Acquiree, which
approval shall not be unreasonably withheld, provided that this restriction
shall not apply to normal communications of the Acquiror and Acquiree with
their employees. The Agreement Parties shall, as soon as such is appropri-
ate and in conformance with applicable law, issue a notice or informational
document to appropriate recipients, which shall include the holders of Ac-
quiror Shares as of the date of this Agreement, the Holders and the public.
13.6 Attorneys' Fees in Connection with Litigation. In the event of
any litigation arising out of or in connection with this Agreement, the
prevailing party shall be entitled to recover from the other its reasonable
attorney's fees and costs.
13.7 Cooperation. The Acquiror and the Acquiree agree to execute such
instruments and take such other actions as contemplated by this Agreement
to effectuate closing.
13.8 Applicable Law. This Agreement shall be governed by the laws of
the State of Florida except in those instances where the laws of Nevada are
applicable to circumstances relating to the Acquiror or, with respect to
the informational filings to be prepared and filed with the Commission by
the Acquiror with respect to which the '33 Act and the '34 Act are applica-
ble.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
The Acquiror
MONOGRAM PICTURES, INC., a Nevada Corporation
/s/▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇, President and Chief
Executive Officer
ATTEST:
/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Secretary
The Acquiree
MED-TECH LABS, INC., a Florida corporation
/s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
---------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., President
ATTEST:
----------------------------------
Secretary
The Holders
-----------
Number Acquiree of
Signatures Name and Address Shares Held
---------- ---------------- -------------------
As to Article II, Section 2.6 of this Agreement
-----------------------------------------------
MEDICAL DISCOUNTS, LTD.
By
---------------------------------
Its
---------------------------------
ATTEST:
-------------------------------------
Its
----------------------------------
As to Article II, Section 2.11 of this Agreement
-------------------------------------------------
/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, individually
/s/▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-------------------------------
▇▇▇ ▇▇▇▇▇▇▇▇▇▇, individually
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇, individually
As to Article XI of this Agreement
----------------------------------
A.S.K. CONSULTING, INC.
/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
As to Article XII of this Agreement
-----------------------------------
/s/▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------
▇▇▇▇▇▇ ▇▇▇▇▇, individually
TABLE OF CONTENTS
------------------
Page
BACKGROUND 1
ARTICLE I - Exchange of Common Stock 3
1.1 The Exchange Transaction 3
1.2 Reclassification of Acquiror Shares 3
1.3 Issuance of Additional Acquiror Securities 4
ARTICLE II - Action Prior to Closing Date 4
2.1 Corporate Action of Acquiror 4
2.2 Corporate Action of Acquiree 4
2.3 Action by Holders 4
2.4 Acquiror Informational Filings 4
2.5 Financial Statements of Acquiree 5
2.6 Action by Acquiror Subsidiary 5
2.7 Redemption of Outstanding Preferred Stock 6
2.8 Certain Capital Formation Activities 7
2.9 Allocation and Responsibility of
Transaction Costs and Expenses 7
2.10 Cooperation of Agreement Partes 7
2.11 Surrender of Certain Acquiror Shares 8
2.12 Composition of the Board of Directors of the Acquiror 8
ARTICLE III - Representations of Acquiree 8
3.1 Corporate Status 8
3.2 Corporate Action 9
3.3 Subsidiaries 9
3.4 Financial Condition 9
3.5 Capitalization of the Acquiree 9
3.6 Title to Properties 10
3.7 Business Activities of the Acquiree 10
3.8 Taxes and Tax Returns 10
3.9 Litigation 10
3.10 Material Contracts 10
3.11 Environmental Matters 10
3.12 Sale of Acquiree Securities 11
3.13 Accuracy of Provided Information 11
ARTICLE IV - Representations of the Acquiror 11
4.1 Corporate Status 11
4.2 Corporate Action 11
4.3 Subsidiaries 11
Page
4.4 Financial Condition 11
4.5 Capitalization of the Acquiror 12
4.6 Title to Properties 12
4.7 Taxes and Tax Returns 12
4.8 Litigation 12
4.9 Material Contracts 13
4.10 Environmental Matters 13
4.11 Current Shareholders - Transfer Agent 13
ARTICLE V - Pre-Closing Covenants of the Acquiree 13
5.1 No Change in Business 13
5.2 No Contracts 13
5.3 Issuance of Additional Securities 14
5.4 In General 14
ARTICLE VI - Pre-Closing Covenants of the Acquiror 14
6.1 Basic Documents 14
6.2 No Contracts 14
6.3 Directors and Officers of Acquiror 14
6.4 Utilization of Net Operating Loss 15
ARTICLE VII - Closing of Agreement Transactions 15
7.1 Closing of Exchange Transaction 15
7.2 Time and Place of Closing 15
7.3 Deliveries at Closing 15
7.4 Record Ownership of Acquiror Shares, MDL Shares 16
ARTICLE VIII - Conditions Precedent to
Obligations of the Acquiror 17
8.1 No Adverse Development 17
8.2 No Breach of Representations,
Warranties or Covenants of the Agreement 17
8.3 Treatment of Transaction 17
8.4 Receipt of Acquiree Financial Statements 17
8.5 Completion of Capital Formation Activities 17
ARTICLE IX - Conditions Precedent to
Obligation of the Acquiree and the Holders 18
9.1 No Adverse Development 18
9.2 Time of Consummation 18
9.3 No Breach of Representations, Warranties and Covenants 18
9.4 Treatment of Transaction 18
9.5 Appointment to Acquiror Board of Directors 18
9.6 Assumption of Acquiree Liabilities/Contracts 18
9.7 Distribution of MDL Stock 19
9.8 Acquiror Preferred Stock 19
9.9 Dissenter's Rights 19
ARTICLE X - Indemnification, Survival of
Representations and Warranties 19
10.1 Indemnification by the Acquiree 19
10.2 Indemnification by the Acquiror 19
10.3 Limitations Regarding Indemnification 19
10.4 Procedures for Third Party Indemnification 19
10.5 Survival of Representations, Warranties and Indemnities 20
Page
ARTICLE XI - Matters Relating to ASK 20
ARTICLE XII - Outstanding Stock Purchase Options of Acquiror 20
ARTICLE XIII - Miscellaneous Provisions 21
13.1 Notices 21
13.2 Successors and Assigns 21
13.3 Background Statement and Schedules 21
13.4 Entire Agreement 21
13.5 Publicity 21
13.6 Attorneys' Fees in Connection with Litigation 21
13.7 Cooperation 21
13.8 Applicable Law 22
AGREEMENT PROVIDING FOR THE EXCHANGE
OF CAPITAL STOCK
by and between
MONOGRAM PICTURES, INC.,
a Nevada corporation
and
MED-TECH LABS, INC.,
a Florida corporation
and other signatories to this Agreement who are
holders of the outstanding common stock of
MED-TECH LABS, INC.
dated as of January 25, 2002
LIST OF SCHEDULES:
To be completed and filed by amendment
Agreement
Schedules Section
I Subsidiaries of Acquiree 3.3
II Acquiree Liabilities 3.4
III Acquiree exception to good title to assets 3.6
IV Acquiree tax return filings 3.8
V Acquiree litigation 3.9
VI Acquiree material contracts 3.10
VII Acquiror Environmental Matters 3.11
VIII Acquiror Liabilities 4.4
IX Certain information about common stock 4.5
X Acquiror exception to good title to assets 4.6
XI Acquiror tax returns 4.7
XII Acquiror litigation 4.8
XIII Acquiror material contracts 4.9
XIV Acquiror Environmental Matters 4.10
1