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Exhibit 2.1 Agreement and Plan of Reorganization
AGREEMENT AND PLAN OF REORGANIZATION
This
Agreement and Plan of Reorganization (the
“Agreement”), dated as of the 27th day of May
2008, by and between CMG Holdings, Inc., a Nevada corporation
(“CMG”), and Creative Management Group, Inc., a
Delaware corporation (“Creative Management”), with
reference to the following:
A.
CMG
is a Nevada corporation organized in July 2004. CMG
has authorized capital stock of 150,000,000 shares of Common
Stock, $0.001 par value per share (“CMG Common
Stock”). Of such shares, 42,400,000 shares of
CMG Common Stock are issued and outstanding.
B.
Creative
Management is a privately held corporation organized under the
laws of Delaware on August 13, 2002. Creative
Management has authorized capital stock of 100,000,000 shares
of Common Stock, $0.001 par value per share (“Creative
Management Common Stock”). Of such shares,
22,135,148 shares of Creative Management Common Stock are
issued and outstanding.
C.
The
respective Boards of Directors of CMG and Creative Management
have deemed it advisable and in the best interests of CMG and
Creative Management and their respective shareholders that,
contingent upon approval by shareholders holding 100% of the
outstanding stock of Creative Management, all currently
outstanding shares of Creative Management be acquired by CMG,
pursuant to the terms and conditions set forth in this
Agreement
D.
CMG
and Creative Management propose to enter into this Agreement
which provides, among other things, that all of the
outstanding shares of Creative Management Common Stock be
acquired by CMG, in exchange for 22,135,148 shares of CMG
Common Stock currently owned by Creative Management and such
additional items as more fully described in the
Agreement.
NOW,
THEREFORE, the parties hereto agree as follows:
ARTICLE
1
THE
ACQUISITION
1.01
At
the Effective Time (as defined in Section 2.01), subject to
the terms and conditions herein, all of the shares of Creative
Management Common Stock issued and outstanding immediately
prior to the Effective Time shall be acquired by CMG in
exchange for 22,135,148 fully paid and nonassessable shares of
CMG Common Stock currently owned by Creative Management (the
exchange of all shares of Creative Management Common Stock for
CMG Common Stock shall constitute the
“Exchange”). The CMG Common Stock shall
be issued to the shareholders of Creative Management and/or
their nominees in the amounts set forth on a list provided by
Creative Management to CMG.
1.02
As
of the Effective Time, each outstanding stock certificate that
immediately prior to the Effective Time represents shares of
Creative Management Common Stock shall be deemed for all
purposes to evidence ownership and to represent the number of
shares of CMG Common Stock for which such shares of Creative
Management Common Stock have been exchanged pursuant to
Section 1.01. The record holder of each outstanding
certificate representing shares of Creative Management Common
Stock shall, after the Effective Time, be entitled to vote the
CMG Common Stock for which such shares of Creative Management
Common Stock have been exchanged on any matters on which the
holders of the CMG Common Stock are entitled to
vote. After the Effective Time, the holders of
certificates evidencing outstanding shares of Creative
Management Common Stock immediately prior to the Effective
Time shall deliver such certificates of Creative Management
Common Stock, duly endorsed so as to make CMG the sole holder
thereof, free and clear of all claims, and encumbrances and
CMG shall deliver a transmittal letter to the transfer agent
of CMG directing the issuance of the CMG Common Stock to the
shareholders of Creative Management and/or their
nominees. Any shares of CMG Common Stock issued
pursuant to this Agreement will not be transferable except (a)
pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the “Act”), or
(b) upon receipt by CMG of a written opinion of counsel for
the holder reasonably satisfactory to CMG to the effect that
the proposed transfer is exempt from the registration
requirements of the Act, and relevant state securities laws.
Restrictive legends shall be placed on all certificates
representing CMG Common Stock issued pursuant to this
Agreement, and the shares of CMG Common Stock into which they
may be converted, as set forth in Section 11.02.
In
the event any certificate for Creative Management Common Stock
has been lost, stolen or destroyed, CMG shall issue and pay in
exchange for such lost, stolen or destroyed certificate,
promptly following its receipt of an affidavit of that fact by
the holder thereof, such shares of CMG Common Stock as may be
required pursuant to this Agreement.
1.03
Following
the Effective Time, there will be a total of 42,400,000 shares
of CMG Common Stock issued and outstanding.
1.04
Following
the Effective Time, Creative Management will be a wholly owned
subsidiary of CMG.
ARTICLE
2
THE
CLOSING
2.01
Subject
to the terms and conditions herein, the consummation of the
transactions contemplated by this Agreement (the
“Closing”) shall take place at the Law Offices of
SEC Attorneys LLC, 980 Post Road East, Westport, Connecticut
06880 on or before June 6, 2008 (the “Closing
Date”) or at such other place or date and time as may be
agreed to in writing by the parties hereto at the earliest
practicable time after satisfaction or waiver of the
conditions hereof, but in no event later than eighteen (18)
days after such conditions have been satisfied or waived (the
“Effective Time” or “Effective
Date”).
2.02
The
following conditions are a part of this Agreement and must be
completed on or as of the Closing Date, or such other date
specified by the parties:
(a)
Prior
to Closing, CMG shall have obtained board and shareholder
approval to the extent necessary to (i) consummate the share
exchange contemplated by this Agreement, (ii) create an option
pool of 5,000,000 shares of Common Stock, and (iii) complete,
following Closing, in a manner which is reasonably acceptable
to Creative Management, the sale, spin-off or other
disposition of its pre-Closing operations, including all
assets and liabilities.
(b)
Creative
Management shall have obtained the written approval of a
majority of its shareholders to the terms of this Agreement
and to the completion of the share exchange transaction
described herein.
(c)
Creative
Management shall have delivered to CMG its financial
statements for the period December 31, 2007, which shall have
been audited in substantial compliance with generally accepted
accounting principles (“GAAP”), and financial
statements for the period March 31, 2008,which shall be
capable of being audited in accordance with GAAP.
ARTICLE
3
REPRESENTATIONS
AND WARRANTIES OF CMG
CMG
hereby represents and warrants to Creative Management as
follows:
3.01
Organization, Standing and Power . CMG is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Nevada, has all requisite power and
authority to own, lease and operate its properties and to carry on
its business as now being conducted, and is duly qualified and in
good standing to do business in each jurisdiction in which the
nature of its business or the ownership or leasing of its
properties makes such qualification necessary.
3.02
Capital Structure . As of the date of execution
of this Agreement, the authorized capital stock of CMG consists of
150,000,000 shares of Common Stock with a par value of USD $0.001
per share, of which 42,400,000 shares are currently issued and
outstanding. The Exchange Shares to be issued pursuant to this
Agreement shall be, when issued pursuant to the terms of the
resolution of the Board of Directors of CMG approving such
issuance, validly issued, fully paid and nonassessable and not
subject to preemptive rights. Except as otherwise
specified herein, as of the date of execution of this Agreement,
there are no other options, warrants, calls, agreements or other
rights to purchase or otherwise acquire from CMG at any time, or
upon the happening of any stated event, any shares of the capital
stock of CMG whether or not presently issued or
outstanding.
3.03
Certificate of Incorporation, Bylaws, and Minute Books
. The copies of the Articles of Incorporation and of the
Bylaws of CMG which have been delivered to Creative Management are
true, correct and complete copies thereof. The minute book of
CMG, which has been made available for inspection, contains
accurate minutes of all meetings and accurate consents in lieu of
meetings of the Board of Directors (and any committee thereof) and
of the shareholders of CMG since the date of incorporation and
accurately reflects all transactions referred to in such minutes
and consents in lieu of meetings.
3.04
Authority . CMG has all requisite power and
authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery
of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by the Board of
Directors of CMG. No other corporate or shareholder
proceedings on the part of CMG are necessary to authorize the
Exchange, or the other transactions contemplated
hereby.
3.05
Conflict with Other Agreements; Approvals . The
execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated hereby will not
result in any violation of, or default (with or without notice or
lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or the
loss of a material benefit under, or the creation of a lien,
pledge, security interest or other encumbrance on assets (any such
conflict, violation, default, right of termination, cancellation or
acceleration, loss or creation, a “violation”) pursuant
to any provision of the Articles of Incorporation or Bylaws or any
organizational document of CMG or, result in any violation of any
loan or credit agreement, note, mortgage, indenture, lease, benefit
plan or other agreement, obligation, instrument, permit,
concession, franchise, license, judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to CMG which
violation would have a material adverse effect on CMG taken as a
whole. No consent, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative
agency or commission or other governmental authority or
instrumentality, domestic or foreign (a “Governmental
Entity”) is required by or with respect to CMG in connection
with the execution and delivery of this Agreement by CMG or the
consummation by CMG of the transactions contemplated
hereby.
3.06
Books and Records . CMG has made and will make
available for inspection by Creative Management upon reasonable
request all the books of CMG relating to the business of CMG. Such
books of CMG have been maintained in the ordinary course of
business. All documents furnished or caused to be
furnished to Creative Management by CMG are true and correct
copies, and there are no amendments or modifications thereto except
as set forth in such documents.
3.07
Compliance with Laws . CMG is and has been in
compliance in all material respects with all laws, regulations,
rules, orders, judgments, decrees and other requirements and
policies imposed by any Governmental Entity applicable to it, its
properties or the operation of its businesses.
3.08
SEC Filings .
CMG
filed a Form 10-KSB on February 20, 2008 and filed Form 10-Q
on May 7, 2008. As of the date hereof, CMG is
current in its filing obligations.
3.09
Financial Statements . Copies of CMG’s
audited financial statements for the fiscal year ended December 31,
2007 have been delivered to Creative Management.
3.10
Banks . CMG will deliver to Creative Management a
true and complete list (in all material respects), as of the date
of this Agreement, showing (1) the name of each bank in which CMG
has an account or safe deposit box, and (2) the names and addresses
of all signatories.
3.11
Litigation . There is no suit, action or
proceeding pending, or, to the knowledge of CMG, threatened against
or affecting CMG which is reasonably likely to have a material
adverse effect on CMG, nor is there any judgment, decree,
injunction, rule or order of any Governmental Entity or arbitrator
outstanding against CMG having, or which, insofar as reasonably can
be foreseen, in the future could have, any such
effect.
3.12
Employees . CMG has no employees or consultant
contracts and is not in the process of acquiring any employees or
consultant contracts.
3.13
Liens, Leases and Contracts . CMG has no liens,
encumbrances, easements, security interests or similar interests in
or on any of its assets. CMG has no leases (whether of
real or personal property) contracts, promissory notes, mortgages,
licenses, franchises, or other written agreement to which CMG is a
party which involves or can reasonably be expected to involve
aggregate future payments or receipts by CMG (whether by the terms
of such lease, contract, promissory note, license, franchise or
other written agreement or as a result of a guarantee of the
payment of or indemnity against the failure to pay same) except any
of said instruments which terminate or are cancelable without
penalty.
3.14
Absence of Undisclosed Liabilities . CMG has no
liabilities of any nature, whether fixed, absolute, contingent or
accrued. As of the Effective Time, CMG shall have no assets or
liabilities other than those resulting from the acquisition of
Creative Management.
3.15
Absence of Changes . Since March 31, 2008 there has
not been any material adverse change in the condition (financial or
otherwise), assets, liabilities, earnings or business of
CMG.
3.16
Tax Matters . All taxes and other assessments and
levies which CMG is required by law to withhold or to collect have
been duly withheld and collected, and have been paid over to the
proper government authorities or are held by CMG in separate bank
accounts for such payment or are represented by depository
receipts, and all such withholdings and collections and all other
payments due in connection therewith (including, without
limitation, employment taxes, both the employee’s and
employer’s share) have been paid over to the government or
placed in a separate and segregated bank account for such
purpose. There are no known deficiencies in income taxes
for any periods and all returns, declarations, reports, estimates
and statements required have been filed. There are no
liens or taxes upon any assets of CMG, except taxes not yet
due. Further, the representations and warranties as to
absence of undisclosed liabilities contained in Section 3.14
includes any and all tax liabilities of whatsoever kind or nature
(including, without limitation, all federal, state, local and
foreign income, profit, franchise, sales, use and property taxes)
due or to become due, incurred in respect of or measured by CMG
income or business prior to the Effective Date. Copies
of CMG’s tax returns for years ending December 31, 2006, and
2007 have been delivered to Creative Management.
3.17
Brokers and Finders . CMG shall be solely
responsible for payment to any broker or finder retained by CMG for
any brokerage fees, commissions or finders’ fees in
connection with the transactions contemplated herein.
3.18
Subsidiaries . CMG does not have any subsidiary,
or own an ownership interest in any other corporation.
3.19
Valid Issuance of Securities . The CMG Common
Stock, when issued, sold and delivered in accordance with the terms
of this Agreement for the consideration expressed herein, will be
duly and validly issued, fully paid and non assessable, and will be
free of restrictions on transfer other than restrictions on
transfer under this Agreement and under applicable state and
federal securities laws.
3.20
Directors, Officers and Controlling Shareholders
. No director, officer or controlling shareholder of CMG
has been subject to a criminal proceeding, bankruptcy, Securities
and Exchange Commission or NASD censure in the last five years nor
is any such individual under investigation for any of the
above.
3.21
Accuracy of Information . No representation or
warranty by CMG contained in this Agreement and no statement
contained in any certificate or other instrument delivered or to be
delivered to Creative Management pursuant hereto or in connection
with the transactions contemplated hereby (including without
limitation all Schedules and exhibits hereto) contains or will
contain any untrue statement of material fact or omits or will omit
to state any material fact necessary in order to make the
statements contained herein or therein not misleading.
3.22
Full Disclosure . The representations and
warranties of CMG contained in this Agreement (and in any schedule,
exhibit, certificate or other instrument to be delivered under this
Agreement) are true and correct in all material respects, and such
representations and warranties do not omit any material fact
necessary to make the statements contained therein, in light of the
circumstances under which they were made, not
misleading. There is no fact of which CMG has knowledge
that has not been disclosed to Creative Management pursuant to this
Agreement, including the schedules hereto, all taken together as a
whole, which has had or could reasonably be expected to have a
material adverse effect on CMG or Creative Management or materially
adversely affect the ability of CMG to consummate in a timely
manner the transactions contemplated hereby.
ARTICLE
4
REPRESENTATIONS
AND WARRANTIES OF CREATIVE MANAGEMENT GROUP,
INC.
Creative
Management hereby represents and warrants to CMG as
follows:
4.01
Organization, Standing and Power . Creative
Management is a corporation duly organized, validly existing and in
good standing under the laws of THE State of Delaware, has all
requisite power and authority to own, lease and operate its
properties and to carry on its business as now being conducted, and
is duly qualified and in good standing to do business in each
jurisdiction in which the nature of its business or the ownership
or leasing of its properties makes such qualification
necessary.
4.02
Capital Structure . The authorized capital stock
of Creative Management consists of 100,000,000 shares of Common
Stock with a par value of USD $0.001 per share, of which 22,135,148
shares are currently issued and outstanding. All outstanding
shares of Creative Management stock are validly issued, fully paid
and nonassessable and not subject to preemptive rights or other
restrictions on transfer. All of the issued and outstanding
shares of Creative Management were issued in compliance with all
applicable securities laws. Except as otherwise specified
herein, there are no options, warrants, calls, agreements or other
rights to purchase or otherwise acquire from Creative Management at
any time, or upon the happening of any stated event, any shares of
the capital stock of Creative Management.
4.03
Certificate of Incorporation, Bylaws and Minute Books
. The copies of the Articles of Incorporation and of the
other corporate documents of Creative Management which have been
delivered to CMG are true, correct and complete copies thereof.
The minute books of Creative Management which have been made
available for inspection contain accurate minutes of all meetings
and accurate consents in lieu of meetings of the Board of Directors
(and any committee thereof) and of the shareholders of Creative
Management since the date of incorporation and accurately reflect
all transactions referred to in such minutes and consents in lieu
of meetings.
4.04
Authority . Creative Management has all requisite
power to enter into this Agreement and, subject to approval of the
proposed transaction by the holders of 100% of its issued and
outstanding shares which are entitled to vote to approve the
proposed transaction, has the requisite power and authority to
consummate the transactions contemplated hereby. Except as
specified herein, no other corporate or shareholder proceedings on
the part of Creative Management are necessary to authorize the
Exchange and the other transactions contemplated
hereby.
4.05
Conflict with Agreements; Approvals . The
execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated hereby will not,
conflict with, or result in any violation of any provision of the
Certificate of Incorporation or Bylaws of Creative Management or of
any loan or credit agreement, note, mortgage, indenture, lease,
benefit plan or other agreement, obligation, instrument, permit,
concession, franchise, license, judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to Creative
Management or its properties or assets. No consent, approval,
order or authorization of, or registration, declaration or filing
with, any Governmental Entity is required by or with respect to
Creative Management in connection with the execution and delivery
of this Agreement by Creative Management, or the consummation by
Creative Management of the transactions contemplated
hereby.
4.06
Financial Statements . Creative
Management will deliver to CMG its financial statements for
the period December 31, 2007, which shall be audited in substantial
compliance with generally accepted accounting principles
(“GAAP”), and financial statements for the period March
31, 2008,which shall be capable of being audited in accordance with
GAAP.
4.07
Books and Records . Creative Management has
made and will make available for inspection by CMG upon reasonable
request all the books of account, relating to the business of
Creative Management. Such books of account of Creative
Management have been maintained in the ordinary course of
business. All documents furnished or caused to be furnished
to CMG by Creative Management are true and correct copies, and
there are no amendments or modifications thereto except as set
forth in such documents.
4.08
Banks . Creative Management has delivered to
CMG a true and complete list (in all material respects), as of the
date of this Agreement, showing (1) the name of each bank in
which CMG has an account or safe deposit box, and (2) the
names and addresses of all signatories.
4.09
Compliance with Laws . Creative
Management is and has been in compliance in all material
respects with all laws, regulations, rules, orders, judgments,
decrees and other requirements and policies imposed by any
Governmental Entity applicable to it, its properties or the
operation of its businesses.
4.10
Liabilities and Obligations . Except as otherwise
provided herein, Creative Management has no material
liabilities or obligations (absolute, accrued, contingent or
otherwise) except (i) liabilities that are reflected and
reserved against on the Creative Management’s financial
statements that have not been paid or discharged since the date
thereof and (ii) liabilities incurred since the date of such
financial statements in the ordinary course of business consistent
with past practice and in accordance with this
Agreement.
4.11
Litigation . There is no suit, action or
proceeding pending, or, to the knowledge of Creative Management
threatened against or affecting Creative Management, which is
reasonably likely to have a material adverse effect on Creative
Management, nor is there any judgment, decree, injunction, rule or
order of any Governmental Entity or arbitrator outstanding against
Creative Management having, or which, insofar as reasonably
can be foreseen, in the future could have, any such
effect.
4.12
Taxes . Creative Management has filed or
will file within the time prescribed by law (including extension of
time approved by the appropriate taxing authority) all tax returns
and reports required to be filed with all jurisdictions where such
filing is required by law; and Creative Management has paid, or
made adequate provision for the payment of all taxes, interest,
penalties, assessments or deficiencies due and payable on, and with
respect to such periods. Creative Management knows of (i) no
other tax returns or reports which are required to be filed which
have not been so filed and (ii) no unpaid assessment for additional
taxes for any fiscal period or any basis therefore.
4.13
Licenses, Permits; Intellectual Property
. Creative Management owns or possesses in the
operation of its business all material authorizations which are
necessary for it to conduct its business as now conducted.
Neither the execution nor delivery of this Agreement nor the
consummation of the transactions contemplated hereby will require
any notice or consent under or have any material adverse effect
upon any such authorizations.
4.14
Subsidiary . Creative Management has no
subsidiaries. The term “subsidiary” shall include
corporations, unincorporated associations, partnerships, joint
ventures, or similar entities in which CREATIVE MANAGEMENT has an
interest, direct or indirect.
4.15
Broker and Finders . Creative Management shall be
solely responsible for payment to any broker or finder retained by
Creative Management for any br
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