Opinion ID: 1442955
Heading Depth: 2
Heading Rank: 3

Heading: The Digital Bridge Transaction

Text: The third transaction involved the reverse merger of Digital Bridge, Inc. (Digital Bridge), a privately-owned M & A West subsidiary, into Black Stallion Management, Inc. (Black Stallion), another public shell company. This merger also utilized a two-step structure. The Reorganization and Stock Purchase Agreement was dated January 21, 2000 and set to close on January 31, 2000. This agreement provided for the issuance of 20,000,000 new shares from Black Stallion's corporate treasury to the Digital Bridge shareholders in exchange for the outstanding Digital Bridge stock. The agreement also provided for the replacement of the current Black Stallion officers and directors with Digital Bridge shareholders by the closing date. After the closing, Black Stallion changed its name to Digital Bridge. The Reorganization Agreement contained a condition subsequent clause which assumed the future closing of Stock Purchase Agreements between M & A West shareholders, including Medley, and Black Stallion shareholders, in order to effectuate the purchase of Black Stallion stock. [3] Under the clause, if the selling shareholders fail[ed] to satisfy their obligations of the stock purchase agreements, Digital Bridge and Black Stallion retained the right to unwind the Reorganization Agreement without penalty. The Stock Purchase Agreements, referenced in the condition subsequent clause, were dated January 31, 2000 and scheduled to close that same day, which was also the scheduled closing date for the Reorganization Agreement. In one agreement, Medley agreed to pay $20,000 for 160,000 previously existing shares (200,000 post-split) of Black Stallion from Ken Kurtz. [4] In an identical agreement dated the same day, Robert Bryan and/or assigns agreed to purchase another 160,000 shares (200,000 post-split) of previously issued stock from Kurtz. Medley again entered into lock-up agreements. Medley was also paid $50,000 in cash. Between February 22, 2000, and October 3, 2000, Medley sold shares of the stock to the public for a profit of approximately $1,049,875. As with the other sales in this case, no registration statement was filed.