EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT (hereinafter referred to as this "Agreement") is
entered into as of this 30th day of December, 2002, by and between BLUESTAR
LEASING, INC., a Nevada corporation (hereinafter referred to as "Parent"),
STERLING FBO HOLDINGS, INC., a Nevada corporation (hereinafter referred to as
"Sterling"), and the shareholders, whose names appear on the signature page
hereof (hereinafter referred to as "Shareholders"), of FORT WORTH JET CENTER,
INC., a Texas corporation (hereinafter referred to as "Jet Center"), upon the
following premises:
Premises
WHEREAS, Parent is a publicly held corporation organized under the laws of
the State of Nevada and Sterling is a wholly-owned subsidiary of Parent;
WHEREAS, Shareholders are the owners of 100% of the issued and outstanding
stock of Jet Center;
WHEREAS, management of the constituent corporations, and the Shareholders,
entered into discussions pursuant to which Sterling has agreed in principal to
acquire 100% of the issued and outstanding stock of Jet Center in exchange for
the issuance of certain shares of Parent (the "Exchange") on the terms described
herein and in a transaction intended to qualify as a tax-free reorganization
pursuant to Section 368(a)(1)(B) of the Internal Revenue Code; and
WHEREAS, Parent, Sterling and the Shareholders desire to set forth the
terms of the Exchange.
Agreement
NOW THEREFORE, on the stated premises and for and in consideration of the
mutual covenants and agreements hereinafter set forth and the mutual benefits to
the parties to be derived herefrom, it is hereby agreed as follows:
ARTICLE I
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF SHAREHOLDERS
As an inducement to, and to obtain the reliance of Parent and Sterling, the
Shareholders represent and warrant as follows:
Section 1.01 Organization. Jet Center is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Texas and
has the corporate power and is duly authorized, qualified, franchised, and
licensed under all applicable laws, regulations, ordinances, and orders of
public authorities to own all of its properties and assets and to carry on its
business in all material respects as it is now being conducted, including
qualification to do business as a foreign corporation in the states or countries
in which the character and location of the assets owned by it or the nature of
the business transacted by it requires qualification, except where failure to be
so qualified would not have a material adverse effect on its business.
Shareholders have provided to Parent and Sterling complete and correct copies
of the articles of incorporation, and bylaws of Jet Center as in effect on the
date hereof. The execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated hereby will not, violate any
provision of Jet Center's articles of incorporation or bylaws. Jet Center has
taken all actions required by law, its articles of incorporation, or otherwise
to authorize the execution and delivery of this Agreement. Jet Center has full
power, authority, and legal right and has taken all action required by law, its
articles of incorporation, and otherwise to consummate the transactions herein
contemplated.
Section 1.02 Capitalization. The authorized capitalization of Jet Center
consists of (a) 1,000,000 shares of common stock, $1.00 par value, of which
1,000 shares are currently issued and outstanding and (b) -0- shares of
preferred stock, $N/A par value, of which -0- shares (the "Preferred Stock") are
currently issued and outstanding. All issued and outstanding shares are legally
issued, fully paid, and non-assessable and not issued in violation of the
preemptive or other rights of any person.
Section 1.03 Subsidiaries and Predecessor Corporations. Jet Center does
not have any predecessor corporation(s) or subsidiaries, and does not own,
beneficially or of record, any shares of any other corporation, except as
disclosed in Schedule 1.03. For purposes hereinafter, the term "Jet Center"
also includes those subsidiaries, if any, set forth on Schedule 1.03.
Section 1.04 Financial Statements.
(a) The Shareholders have provided to Parent and Sterling the unaudited
balance sheets and the related statements of operations of Jet Center as of and
for (i) the quarter ended __________, 200__, and (ii) the year ended December
31, 2001.
(b) All such financial statements have been prepared in accordance with
generally accepted accounting principles. The Jet Center balance sheets present
a true and fair view as of the dates of such balance sheets of the financial
condition of Jet Center. Jet Center did not have, as of the dates of such
balance sheets, except as and to the extent reflected or reserved against
therein, any liabilities or obligations (absolute or contingent) which should be
reflected in the balance sheets or the notes thereto, prepared in accordance
with generally accepted accounting principles, and all assets reflected therein
are properly reported and present fairly the value of the assets of Jet Center
in accordance with generally accepted accounting principles.
(c) Jet Center has no liabilities with respect to the payment of any
federal, state, county, local or other taxes (including any deficiencies,
interest or penalties), except for taxes accrued but not yet due and payable.
(d) Jet Center has filed all state, federal or local income and/or
franchise tax returns required to be filed by it from inception to the date
hereof. Each of such income tax returns reflects the taxes due for the period
covered thereby, except for amounts which, in the aggregate, are immaterial.
(e) The books and records, financial and otherwise, of Jet Center are in
all material respects complete and correct and have been maintained in
accordance with good business and accounting practices.
(f) All of Jet Center's assets are reflected on its financial statements,
and, except as set forth in the financial statements of Jet Center or the notes
thereto, Jet Center has no material liabilities, direct or indirect, matured or
unmatured, contingent or otherwise.
Section 1.05 Information. The information concerning Jet Center set forth
in this Agreement and in the materials provided to Parent and Sterling by the
Shareholders is complete and accurate in all material respects and does not
contain any untrue statement of a material fact or omit to state a material fact
required to make the statements made, in light of the circumstances under which
they were made, not misleading. In addition, Jet Center has fully disclosed in
writing to Parent and Sterling all information relating to matters involving Jet
Center or its assets or its present or past operations or activities which (i)
indicated or may indicate, in the aggregate, the existence of a greater than
$5,000 liability or diminution in value, (ii) have led or may lead to a
competitive disadvantage on the part of Jet Center or (iii) either alone or in
aggregation with other information covered by this Section, otherwise have led
or may lead to a material adverse effect on the transactions contemplated herein
or on Jet Center, its assets, or its operations or activities as presently
conducted or as contemplated to be conducted after the Closing Date, including,
but not limited to, information relating to governmental, employee,
environmental, litigation and securities matters and transactions with
affiliates.
Section 1.06 Options or Warrants. There are no existing options, warrants,
calls, or commitments of any character relating to the authorized and unissued
Jet Center common stock.
Section 1.07 Absence of Certain Changes or Events. Except as set forth in
this Agreement, since September 30, 2002:
(a) there has not been (i) any material adverse change in the business,
operations, properties, assets, or condition of Jet Center or (ii) any damage,
destruction, or loss to Jet Center (whether or not covered by insurance)
materially and adversely affecting the business, operations, properties, assets,
or condition of Jet Center;
(b) Jet Center has not (i) amended its articles of incorporation or
bylaws; (ii) declared or made, or agreed to declare or make, any payment of
dividends or distributions of any assets of any kind whatsoever to stockholders
or purchased or redeemed, or agreed to purchase or redeem, any of its capital
stock; (iii) waived any rights of value which in the aggregate are outside of
the ordinary course of business or material considering the business of Jet
Center; (iv) made any material change in its method of management, operation or
accounting; (v) entered into any other material transaction other than sales in
the ordinary course of its business; (vi) made any accrual or arrangement for
payment of bonuses or special compensation of any kind or any severance or
termination pay to any present or former officer or employee; (vii) increased
the rate of compensation payable or to become payable by it to any of its
officers or directors or any of its salaried employees whose monthly
compensation exceeds $1,000; or (viii) made any increase in any profit sharing,
bonus, deferred compensation, insurance, pension, retirement, or other employee
benefit plan, payment, or arrangement made to, for, or with its officers,
directors, or employees;
(c) Jet Center has not (i) borrowed or agreed to borrow any funds or
incurred, or become subject to, any material obligation or liability (absolute
or contingent) except as disclosed herein and except liabilities incurred in the
ordinary course of business; (ii) paid or agreed to pay any material obligations
or liability (absolute or contingent) other than current liabilities reflected
in or shown on the most recent Jet Center balance sheet, and current liabilities
incurred since that date in the ordinary course of business and professional and
other fees and expenses in connection with the preparation of this Agreement and
the consummation of the transactions contemplated hereby; (iii) sold or
transferred, or agreed to sell or transfer, any of its assets, properties, or
rights (except assets, properties, or rights not used or useful in its business
which, in the aggregate have a value of less than $1,000), or canceled, or
agreed to cancel, any debts or claims (except debts or claims which in the
aggregate are of a value of less than $1,000); (iv) made or permitted any
amendment or termination of any contract, agreement, or license to which it is a
party if such amendment or termination is material, considering the business of
Jet Center; or (v) issued, delivered, or agreed to issue or deliver any stock,
bonds or other corporate securities including debentures (whether authorized and
unissued or held as treasury stock); and
(d) to the best knowledge of the Shareholders, Jet Center has not become
subject to any law or regulation which materially and adversely affects, or in
the future may adversely affect the business, operations, properties, assets, or
condition of Jet Center.
Section 1.08 Title and Related Matters. Jet Center has good and
marketable title to all of its properties, inventory, interests in properties,
and assets, real and personal, which are reflected in the most recent Jet Center
balance sheet or acquired after that date (except properties, inventory,
interests in properties, and assets sold or otherwise disposed of since such
date in the ordinary course of business) free and clear of all liens, pledges,
charges, or encumbrances except (a) statutory liens or claims not yet
delinquent; and (b) such imperfections of title and easements as do not and will
not materially detract from or interfere with the present or proposed use of the
properties subject thereto or affected thereby or otherwise materially impair
present business operations on such properties. Jet Center owns, free and clear
of any liens, claims, encumbrances, royalty interests, or other restrictions or
limitations of any nature whatsoever, any and all procedures, techniques,
marketing plans, business plans, methods of management, or other information
utilized in connection with Jet Center's business. No third party has any right
to any assets or properties of Jet Center which, individually or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, would
have a materially adverse effect on the business, operations, financial
condition, income, or business prospects of Jet Center or any material portion
of its properties, assets, or rights.
Section 1.09 Litigation and Proceedings. There are no actions, suits,
proceedings, or investigations pending or, to the knowledge of the Shareholders
after reasonable investigation, threatened by or against Jet Center or affecting
Jet Center or its properties, at law or in equity, before any court or other
Governmental agency or instrumentality, domestic or foreign, or before any
arbitrator of any kind. The Shareholders have no knowledge of any material
default on the part of Jet Center with respect to any judgment, order,
injunction, decree, award, rule, or regulation of any court, arbitrator, or
governmental agency or instrumentality or of any circumstances which, after
reasonable investigation, would result in the discovery of such a default.
Section 1.10 Contracts.
(a) All contracts, agreements, franchises, license agreements, and other
commitments to which Jet Center is a party or by which its properties are bound
and which are material to the operations of Jet Center taken as a whole are
valid and enforceable by Jet Center in all respects, except as limited by
bankruptcy and insolvency laws and by other laws affecting the rights of
creditors generally;
(b) Jet Center is not a party to or bound by, and the properties of Jet
Center are not subject to any contract, agreement, other commitment or
instrument; any charter or other corporate restriction; or any judgment, order,
writ, injunction, decree, or award which materially and adversely affects, the
business operations, properties, assets, or condition of Jet Center.
Section 1.11 Material Contract Defaults. Jet Center is not in default in
Any material respect under the terms of any outstanding contract, agreement,
lease, or other commitment which is material to the business, operations,
properties, assets or condition of Jet Center and there is no event of default
in any material respect under any such contract, agreement, lease, or other
commitment in respect of which Jet Center has not taken adequate steps to
prevent such a default from occurring.
Section 1.12 No Conflict With Other Instruments. The execution of this
Agreement and the consummation of the transactions contemplated by this
Agreement will not result in the breach of any term or provision of, constitute
an event of default under, or terminate, accelerate or modify the terms of any
material indenture, mortgage, deed of trust, or other material contract,
agreement, or instrument to which either the Shareholders or Jet Center is a
party or to which any of their properties or operations are subject.
Section 1.13 Governmental Authorizations. Jet Center has all licenses,
franchises, permits, and other governmental authorizations that are legally
required to enable it to conduct its business in all material respects as
conducted on the date hereof. Except for compliance with federal and state
securities and corporation laws, as hereinafter provided, no authorization,
approval, consent, or order of, or registration, declaration, or filing with,
any court or other governmental body is required in connection with the
execution and delivery by the Shareholders of this Agreement and the
consummation by the Shareholders of the transactions contemplated hereby.
Section 1.14 Compliance With Laws and Regulations. To the best of the
Shareholders' knowledge Jet Center has complied with all applicable statutes and
regulations of any federal, state, or other governmental entity or agency
thereof, except to the extent that noncompliance would not materially and
adversely affect the business, operations, properties, assets, or condition of
Jet Center or except to the extent that noncompliance would not result in the
occurrence of any material liability for Jet Center.
Section 1.15 Insurance. All of the properties of Jet Center are fully
insured for their full replacement cost.
Section 1.16 Shares. The Shareholders have good and marketable title and
ownership of the number of shares of common stock of Jet Center set out on the
signature page hereof (the "Shares") and the right and power to convey the
Shares free and clear of any lien, claim, encumbrance or option and the Shares
constitute 100% of the issued and outstanding capital stock of Jet Center.
Section 1.17 Valid Obligation. This Agreement and all agreements and
other documents executed by the Shareholders in connection herewith constitute
the valid and binding obligation of the Shareholders, enforceable in accordance
with its or their terms, except as may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and subject to the qualification that the availability of equitable
remedies is subject to the discretion of the court before which any proceeding
therefor may be brought.
ARTICLE II
REPRESENTATIONS, COVENANTS, AND WARRANTIES
OF PARENT AND STERLING
As an inducement to, and to obtain the reliance of the Shareholders, Parent
and Sterling represent and warrant as follows:
Section 2.01 Organization. Parent and Sterling are each corporations
Duly organized, validly existing, and in good standing under the laws of the
State of Nevada and have the corporate power and are duly authorized, qualified,
franchised, and licensed under all applicable laws, regulations, ordinances, and
orders of public authorities to own all of their properties and assets, to carry
on their business in all material respects as they are now being conducted, and
except where failure to be so qualified would not have a material adverse effect
on their business, there is no jurisdiction in which they are not qualified in
which the character and location of the assets owned by them or the nature of
the business transacted by them requires qualification. The execution and
delivery of this Agreement does not, and the consummation of the transactions
contemplated hereby will not, violate any provision of the certificate of
incorporation or bylaws of either Parent or Sterling. Parent and Sterling have
taken all action required by law, their certificates of incorporation, bylaws,
or otherwise to authorize the execution and delivery of this Agreement, and each
has full power, authority, and legal right and has taken all action required by
law, its certificate of incorporation, bylaws, or otherwise to consummate the
transactions herein contemplated.
Section 2.02 No Conflict With Other Instruments. The execution of this
Agreement and the consummation of the transactions contemplated by this
Agreement will not result in the breach of any term or provision of, constitute
a default under, or terminate, accelerate or modify the terms of, any indenture,
mortgage, deed of trust, or other material agreement or instrument to which
Parent or Sterling is a party or to which any of their assets or operations are
subject.
Section 2.03 Approval of Agreement. The board of directors of Parent and
Sterling have authorized the execution and delivery of this Agreement.
Section 2.04 Exchange Shares. Upon issuance, the Exchange Shares will be
duly issued, validly paid and non-assessable.
Section 2.05 Valid Obligation. This Agreement and all agreements and
Other documents executed by Parent and Sterling in connection herewith
constitute the valid and binding obligation of each, enforceable in accordance
with its or their terms, except as may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and subject to the qualification that the availability of equitable
remedies is subject to the discretion of the court before which any proceeding
therefor may be brought.
ARTICLE III
PLAN OF EXCHANGE
Section 3.01 The Exchange. On the terms and subject to the conditions
set forth in this Agreement, on the Closing Date (as defined in Section 3.03),
each Shareholder shall assign, transfer and deliver, free and clear of all
liens, pledges, encumbrances, charges, restrictions or known claims of any kind,
nature, or description, the number of shares of common stock of Jet Center set
out on the signature page hereof, in the aggregate constituting 100% of the
issued and outstanding shares of capital stock of Jet Center held by each of
such shareholders; the objective of such Exchange being the acquisition by
Sterling of 100% of the issued and outstanding capital stock of Jet Center. In
exchange for the transfer of such securities by the Shareholders, Parent shall
issue to the Shareholders an aggregate of 8,223,953 shares of common stock of
Parent (the "Exchange Shares"). At the Closing, each Shareholder shall, on
surrender of his certificate or certificates representing such Jet Center shares
to Sterling or its registrar or transfer agent, be entitled to receive a
certificate or certificates evidencing his proportionate interest in the
Exchange Shares.
Section 3.02 Closing. The closing ("Closing") of the transactions
Contemplated by this Agreement shall be on a date and at such time as the
parties may agree ("Closing Date") but not later than December 31, 2002, subject
to the right of Parent to extend such Closing Date by up to an additional sixty
(60) days. Such Closing shall take place at a mutually agreeable time and
place.
Section 3.03 Closing Events. At the Closing, Parent and each of the
Shareholders shall execute, acknowledge, and deliver (or shall ensure to be
executed, acknowledged, and delivered) any and all certificates or other
instruments required by this Agreement to be so delivered at or prior to the
Closing, together with such other items as may be reasonably requested by the
parties hereto and their respective legal counsel in order to effectuate or
evidence the transactions contemplated hereby.
ARTICLE IV
SPECIAL COVENANTS
Section 4.01 Delivery of Books and Records. At the Closing, Shareholders
shall cause Jet Center deliver to Sterling the originals of the corporate minute
books, books of account, contracts, records, and all other books or documents of
Jet Center now in the possession of Jet Center or its representatives.
Section 4.02 Third Party Consents and Certificates. Parent, Sterling and
the Shareholders agree to cooperate with each other in order to obtain any
required third party consents to this Agreement and the transactions herein
contemplated.
ARTICLE V
MISCELLANEOUS
Section 5.01 Governing Law. This Agreement shall be governed by,
enforced, and construed under and in accordance with the laws of the United
States of America and, with respect to the matters of state law, with the laws
of the State of Texas, without giving effect to principles of conflicts of law
thereunder. Each of the parties (a) irrevocably consents and agrees that any
legal or equitable action or proceedings arising under or in connection with
this Agreement shall be brought exclusively in the federal courts of the United
States, and (b) by execution and delivery of this Agreement, irrevocably submits
to and accepts, with respect to any such action or proceeding, generally and
unconditionally, the jurisdiction of the United States District Court in
Houston, Texas, and irrevocably waives any and all rights such party may now or
hereafter have to object to such jurisdiction.
Section 5.02 Notices. Any notice or other communications required or
permitted hereunder shall be in writing and shall be sufficiently given if
personally delivered to it or sent by telecopy, overnight courier or registered
mail or certified mail, postage prepaid, addressed as follows:
If to Parent or Sterling, to: Sterling FBO Holdings, Inc.
0000 Xxxx Xxx Xxxx., Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Xxx X. Xxxxxxx
If to Shareholders, to: Address shown on signature page
or such other addresses as shall be furnished in writing by any party in the
manner for giving notices hereunder, and any such notice or communication shall
be deemed to have been given (i) upon receipt, if personally delivered, (ii) on
the day after dispatch, if sent by overnight courier, (iii) upon dispatch, if
transmitted by telecopy and receipt is confirmed by telephone and (iv) three (3)
days after mailing, if sent by registered or certified mail.
Section 5.03 Attorney's Fees. In the event that either party institutes
any action or suit to enforce this Agreement or to secure relief from any
default hereunder or breach hereof, the prevailing party shall be reimbursed by
the losing party for all costs, including reasonable attorney's fees, incurred
in connection therewith and in enforcing or collecting any judgement rendered
therein.
Section 7.04 Expenses. Subject to Section 5.03 above, whether or not the
Exchange is consummated, each of Parent, Sterling and the Shareholders will bear
their own respective expenses, including legal, accounting and professional
fees, incurred in connection with the Exchange or any of the other transactions
contemplated hereby.
Section 7.05 Entire Agreement. This Agreement represents the entire
agreement between the parties relating to the subject matter thereof and
supersedes all prior agreements, understandings and negotiations, written or
oral, with respect to such subject matter.
Section 5.06 Survival; Termination. The representations, warranties, and
covenants of the respective parties shall survive the Closing Date and the
consummation of the transactions herein contemplated for a period of two years.
Section 5.07 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which taken
together shall be but a single instrument.
Section 5.08 Amendment or Waiver. Every right and remedy provided herein
shall be cumulative with every other right and remedy, whether conferred herein,
at law, or in equity, and may be enforced concurrently herewith, and no waiver
by any party of the performance of any obligation by the other shall be
construed as a waiver of the same or any other default then, theretofore, or
thereafter occurring or existing. At any time prior to the Closing Date, this
Agreement may by amended by a writing signed by all parties hereto, with
respect to any of the terms contained herein, and any term or condition of this
Agreement may be waived or the time for performance may be extended by a writing
signed by the party or parties for whose benefit the provision is intended.
Section 5.09 Best Efforts. Subject to the terms and conditions herein
provided, each party shall use its best efforts to perform or fulfill all
conditions and obligations to be performed or fulfilled by it under this
Agreement so that the transactions contemplated hereby shall be consummated as
soon as practicable. Each party also agrees that it shall use its best efforts
to take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective this Agreement and the transactions contemplated
herein.
IN WITNESS WHEREOF, the corporate parties hereto have caused this
Agreement to be executed by their respective officers, hereunto duly authorized,
as of the date first-above written.
ATTEST: BLUESTAR LEASING, INC.
BY:
Secretary or Assistant Secretary President
ATTEST: STERLING FBO HOLDINGS, INC.
BY:
Secretary or Assistant Secretary President
SHAREHOLDERS:
Name Address Number of Shares
0000 Xxxxxxxxx Xxxxx 358
Xxxxxx Investment Partnership Xxxxxxxxxxx, XX 00000
By: Xxxxxx Xxxxxx
0000 Xxxxxxxxxx, Xxxxx 000 367
Sterling REIT, Inc Xxxxxxx, XX 00000
By: Xxx X. Xxxxxxx
0000 Xxxxxx Xxxxx 275
Geld Fund II, LLC Xxxxxxx, XX 00000
By: Xxxx Xxxxxxxxx
