AGREEMENT AND PLAN OF EXCHANGE
AGREEMENT AND PLAN OF EXCHANGE (the "Agreement"), dated as of January ___,
2002, between Diversified Resources Group, Inc., a Utah corporation ("DRGR"),
Tampa Bay Financial, Inc.. a Florida corporation ("TBF"), and Aero Group
International Corporation, a Nevada corporation (the "Company" or "AGI") and all
of the Shareholders and affiliates of the Company whose names appear on Exhibit
"A" hereto (the "Shareholders").
Witnesseth:
WHEREAS, the Shareholders are the legal and beneficial owners of all of the
outstanding shares of stock of the Company.
WHEREAS, the Shareholders desire to exchange one hundred percent (100%)
of the capital stock of the Company for shares of Common Stock of DRGR, and DRGR
desires to effect such exchange and purchase, all on the terms and conditions
hereinafter set forth, in such a manner that the exchange will constitute a
tax-free reorganization pursuant to the provisions of Section 368(1)(B) of the
Internal Revenue Code of 1986, as amended.
NOW THEREFORE, in consideration of the premises and the mutual agreements
and undertakings hereinafter set forth, the parties do hereby adopt said
Agreement, and, in order to consummate said plan, do hereby agree as follows:
1. Delivery of Shares of the Company. The Shareholders agree to transfer
and deliver to DRGR, and DRGR agrees to acquire shares of the capital stock of
the Company from the Shareholders as set forth in Exhibit "A" attached hereto
and by this reference made a part hereof.
Consideration for Transfer of Shares.
At Closing, DRGR shall issue 50,500,000 shares of its common stock to the
Shareholders of AGI, which shall be released to the shareholders at closing.
DRGR shall also agree to release an additional 349,500,000 shares based on the
achievement of the attached forecasted levels on a generally accepted accounting
principles basis (the "performance conditions") to be released upon the
compliance with the conditions precedent, subject to action of the shareholders
increasing the number of shares authorized to $750,000,000, for which
500,000,000 will be issued and 250,000,000 will remain in the treasury of the
Company, until further action of the Board. Shares shall be released as follows:
1
102,000,000 shares to be released upon the transfer of ownership of five (5) A-4
Skyhawks as contemplated in the attached forecasted projections.
100,000,000 shares to be released upon the transfer of ownership of four (4)
MIG-21s as contemplated in the attached forecasted projections.
100,000,000 shares to be released upon the transfer of ownership of two (2)
Hawker Hunters as contemplated in the attached forecasted projections.
17,500,000 shares to be released upon the achievement of $300,000 in gross
pre-tax profit, for which the ability to earn these shares shall not exceed
three years.
15,000,000 shares to be released upon the achievement of $1,500,000 of gross
pre-tax profit, for which the ability to earn these shares shall not exceed
three years.
15,000,000 shares to be released upon the achievement of $2,500,000 of gross
pre-tax profit, for which the ability to earn these shares shall not exceed
three years.
In addition, TBF shall pay $100,000.00 to DRGR/AGI on or before closing and
issue a Note Payable to the Corporation for $250,000, of which $150,000.00
shall be payable 10 days after closing, as part of a settlement of TBF's
liability to DRGR as more fully described in the attached Funding and Stock
Subscription Agreement, which is incorporated herein by reference.
Furthermore, TBF, DRGR, Company and Affiliates shall forgive any all
amounts outstanding and owing amongst the parties. TBF will pay or settle
all existing liabilities of DRGR no later than 60 days post-closing.
DRGR shall issue no more than 23,112,522 shares of its common stock under
form S-8 to TBF in settlement of all service obligations outstanding prior
and subsequent to closing.
2. Miscellaneous Provisions Relating to Delivery of DRGR's Common Stock.
No fractional shares of Common Stock of DRGR will be delivered, and the number of
shares to be issued to any Shareholder of the Company will be rounded up to the
nearest whole share if the Shareholder is entitled to receive one-half or more
of a share, and rounded down to the nearest whole share if the Shareholder is
entitled to receive less than one-half of a share.
3. Access to Books and Records. Except as hereinafter provided, DRGR and
its officers, employees and agents, shall have full access at all reasonable
times from and after the date hereof to the plants, facilities, books and
records of the Company, and the Company and the Shareholders shall cooperate
fully with DRGR to the end that it may become familiar with the properties and
business of the Company. DRGR agrees to treat any information which is disclosed
to DRGR by the Company and is proprietary or confidential to the Company as
2
confidential information, and in the event the Closing does not take place, all
documents will be returned to the Company, and DRGR will not make or retain
copies of any documents or make use of any confidential information disclosed to
it in the conduct of its business, nor disclose said information to any third
parties under any circumstances.
4. Operation as a Wholly-Owned Subsidiary. After giving effect to the
transaction contemplated hereby, DRGR will own all the issued and outstanding
shares of the Company, and the Company will be a wholly-owned subsidiary of DRGR
operating under such name as is selected by the management of the Company. All
operational and management control of DRGR will be turned over to AGI as of the
date of the Closing. Contemporaneously with the closing of this transaction, all
present officers and directors of DRGR will resign, except Xxxx Xxxxx, and any
necessary corporate minutes and/or changes to the by-laws will be completed. The
Shareholders shall elect all of the new directors and officers post-closing.
5. Closing. The Closing of the exchange provided for herein will take place
at the law offices of Xxxxx X. Xxxxxx, P.A., 0000 Xxxx Xxxxx Xxxxx Xxxx, Xxxxx
0000, Xxxx Xxxx Xxxxx, XX 00000 on January 30, 2002, such date being herein
referred to as the "Closing Date". At the Closing, the Company and the
Shareholders shall deliver to DRGR all certificates, assignments, and other
instruments which may be necessary, desirable, or appropriate in order to
transfer to DRGR all of the outstanding shares of capital stock of the Company,
all in form and substance reasonably satisfactory to counsel for DRGR. At such
Closing, DRGR shall deliver to the Company certificates evidencing the shares of
Common Stock of DRGR to be delivered to the Shareholders pursuant hereto,
together with such other instruments as may be necessary, desirable, or
appropriate to accomplish such transfers all in form and substance satisfactory
to counsel for the Shareholders and DRGR.
6. Representations and Warranties of the Company and the Shareholders.
The Company and the Shareholders, jointly and severally, represent and warrant to
DRGR as follows:
(a) Organization and Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada, with full corporate power to carry on its business as now being conducted
and to own and operate the property and assets now owned and operated by it, and
is duly qualified to transact business and in good standing in each jurisdiction
where the ownership of its properties or the conduct of its business requires it
to be licensed or qualified to do business. The Company has delivered to DRGR a
copy of its Articles of Incorporation and all amendments thereto, certified by
the Secretary of State of the State of Nevada, and a copy of its By-Laws as
amended, certified by its Secretary, which documents are complete and correct as
of the date of this Agreement.
3
(b) Subsidiaries, Etc. The Company has no subsidiaries and is not
party to any partnership, joint venture or similar agreement, that has not been
previously disclosed.
(c) Capital Stock. The authorized capital stock of Aero Group
International Corporation consists of 50,000,000 shares of Common Stock, of which
10,000 shares are issued and outstanding. All of said outstanding shares of the
Company have been duly authorized and validly issued, and are fully paid and
non-assessable. There are no options, warrants or other agreements or
commitments which are now or may in the future obligate the Company to issue or
purchase any shares of its capital stock or other securities.
(d) Financial Statements. The Company has delivered to DRGR a balance
sheet (the "Balance Sheet") of the Company as of December 31, 2001 (the "Balance
Sheet Date") and an income statement and statement of retained earnings from inception
to such date. Such statements have been audited by an independent certified
public accounting firm, and initialed by officers of the Company and DRGR for
identification. All of such financial statements are complete and fairly present
the financial position of the Company on the indicated dates and the results of
its operations for the indicated periods. All of such statements have been
prepared in accordance with generally accepted accounting principles, applied on
a consistent basis. The Company has no liabilities, whether absolute, accrued,
contingent or otherwise, other than (i) liabilities disclosed on the Balance
Sheet, or (ii) liabilities incurred in "arms-length" transactions in the
ordinary course of business since the Balance Sheet Date.
(e) Breaches of Contracts, Etc. Neither the execution nor the delivery
of this Agreement by the Company, nor the performance of any of its obligations
hereunder, will result in a breach or violation of any term or provision of or
constitute a default under any indenture, mortgage or other agreement or
instrument to which the Company is a party.
(f) Conflict of Interests. Neither the Company nor any of its
affiliates (as this term is defined in the Securities Act of 1933 [the "1933 Act"]
and in the rules and regulations promulgated by the Securities and Exchange Commission
["SEC"] thereunder) has, either directly or indirectly, (i) an interest in any
corporation, partnership, proprietorship, association or other person or entity
that produces or sells those products and services that are produced or sold by
the Company, or (ii) a beneficial interest in any contract or agreement to which
the Company is a party or by which the Company may be bound (except for
commissions payable under the Company's commission fee arrangement with its
employees). For the purpose of this subparagraph, there shall be disregarded any
interest which arises solely from the ownership of less than a five percent (5%)
equity interest in a corporation which has a class of securities regularly
traded on any securities exchange or in the over-the-counter market, or quoted
on any inter dealer quotation system.
4
(g) Disclosure. No representations or warranties in this Agreement
and no statement contained in any document (including, without limitation, financial
statements and schedules), certificate, or other writing furnished or to be
furnished to DRGR or any of its representatives pursuant to the provisions
hereof or in connection with the contemplated transactions, contains or will
contain any untrue statement of material fact or omits or will omit to state a
material fact necessary to make the statements contained herein or therein not
misleading. Documents delivered or to be delivered to DRGR pursuant to this
Agreement are or will be true and complete copies of what they purport to be.
7. Representations and Warranties of DRGR. DRGR represents and warrants to
and agrees with the Company and the Shareholders as follows:
(a) Organization and Standing. DRGR is a corporation duly organized,
validly existing and in good standing under the laws of the State of Utah, with
full corporate power to carry on its business as now being conducted and to own
and operate the property and assets now owned and operated by it, and is duly
qualified to transact business and in good standing in each jurisdiction where
the ownership of its properties or the conduct of its business requires it to be
licensed or qualified to do business.
(b) Capital Stock. The authorized capital stock of DRGR consists
of one hundred million (100,000,000) shares of Common Stock, $0.005 par value, of
which 26,387,478 shares are currently issued and outstanding and 23,112,522 shares
are contemplated to be issued for past services under form S-8. All of said
outstanding shares are validly issued, fully paid and non-assessable.
Post-closing, TBF and shareholders agree to vote their shares in an action by
shareholders without a meeting to increase the authorized common shares of the
Company to a minimum of 750,000,000, of which 250,000,000 shares shall remain in
the treasury until further action by the Board, and change the name of the
Company to Aero Group International Corporation. DRGR does not have outstanding
and has not agreed, orally or in writing, to issue any stock or securities
convertible or exchangeable for any shares of its stock, nor does it have
outstanding nor has it agreed, orally or in writing, to issue any options,
warrants, or rights to purchase or otherwise acquire its stock. DRGR is not
subject to any obligation (contingent or otherwise) to repurchase or otherwise
acquire or retire any shares of its stock.
(c) Validity of Shares. The shares of Common Stock to be delivered
by DRGR pursuant to this Agreement will, when so delivered, be validly issued and
outstanding, fully paid and non-assessable. The Shareholders will have, and upon
exchange thereof pursuant to the terms of this Agreement, good and marketable
title to the Shares, free and clear of all security interests, liens,
encumbrances, or other restrictions or claims, subject only to restrictions as
to marketability imposed by securities laws.
5
(d) Changes, Dividends, Etc. Prior to the Closing hereunder, DRGR
will not split, combine or otherwise change or reclassify its outstanding Common
Stock or declare or distribute any cash or stock dividend upon such Common Stock.
(e) Authorization of Agreement. The execution, delivery and performance
of this Agreement by DRGR has been duly authorized by DRGR's Board of Directors,
and will not result in any breach of or violate or constitute a default under
its Articles of Incorporation or By-Laws or any indenture, mortgage or other
agreement or instrument to which it is a party.
(f) No Violation of Law, Etc. Neither the execution, nor the delivery
of this Agreement by DRGR, nor the performance of any of its obligations hereunder
will result in a breach or violation of any law, order, rule, regulation, writ,
injunction or decree of any governmental instrumentality or court having
jurisdiction over DRGR or any of its assets or rights, or result in the creation
or imposition of any lien, charge or encumbrance of any kind whatever on any of
such assets or rights. DRGR has not violated any applicable securities laws or
regulations in connection with the offer or sale of its securities other than
violations that have been or, before the closing and exchange contemplated
herein, will be corrected by post-issuance filings. Furthermore, it is
acknowledged that DRGR was de-listed from the OTC-BB in or about 1998, and will
file all necessary forms required by the NASD to be listed on the OTC-BB no
later than May 1, 2002. There is no pending litigation, suits, claims,
administrative proceedings, SEC violations, and there have been no notices of
late filings by the SEC. DRGR has complied with all applicable SEC reporting
requirements. Unless instructed to the contrary by the Board of DRGR, at no
additional cost to DRGR or AGI, TBF shall maintain full compliance with all SEC
rules, regulations and laws and shall file all necessary forms and documents to
maintain full SEC compliance and assure DRGR is a fully compliant and trading
company until such time as it is listed on the OTC-BB.
(g) Financial Statements. DRGR has delivered to the Company its
annual reports for the past year which contains a consolidated balance sheet as of
December 31, 2000 and the related statement of consolidated income for the year
then ended and quarterly reports as of September 30, 2001. Such financial
statements have been initialed by officers of DRGR and the Company for
identification. Such financial statements are true, accurate and complete, have
been prepared in accordance with generally accepted accounting principles
consistently applied and fairly present the consolidated financial position of
DRGR at such date, and the results of its operations for the period therein
specified. Except as set forth in such financial statements, DRGR has no
liabilities whether contingent or otherwise, whether or not required to be
disclosed on the financial statements.
6
(h) No Material Changes. Since September 30, 2001, there has been
no material change in the condition (financial or otherwise), assets, liabilities,
capitalization or business of DRGR, which have not been disclosed to the
Company.
8. Conditions to the Obligations of DRGR. The obligations of DRGR under
this Agreement are subject to the following conditions precedent:
(a) All representations and warranties of the Company and the Share-
holders contained herein and in any certificate or other instrument delivered pursuant
to the provisions hereof, or in connection with the transactions contemplated
hereby, shall be true on the Closing Date with the same force and effect as
though such representations and warranties had been made on the Closing Date.
(b) The Company shall have performed and complied with all of the
terms, covenants and conditions of this Agreement to be performed or complied with
by them, respectively, on or before the Closing Date.
(c) The Company shall have delivered to DRGR true and complete copies,
certified by the Secretary, of Resolutions of its Board of Directors and
shareholders evidencing approval of the execution, delivery and performance of
this Agreement.
(d) No action or proceeding by any governmental body or agency shall
have been threatened, asserted or instituted to restrain or prohibit the carrying
out of the transactions contemplated by this Agreement.
(e) The Company shall own, or be licensed or otherwise have the
right to use, all patents, trademarks, trade names, copyrights, technology, know-how,
processes, names and likenesses used in or necessary for the conduct of its
business as heretofore conducted.
(f) All corporate and other proceedings and actions taken in connection
with the transactions contemplated hereby and all certificates, opinions,
agreements, instruments and documents mentioned in this Paragraph 9 or incident
to any such transaction shall be reasonably satisfactory in form and substance
to DRGR and its counsel.
(g) DRGR shall have determined in its reasonable discretion that
the financial statements of the Company (i) have been audited by a firm of
independent certified public accountants that is a member of the SEC Practice
Section of the AICPA, and (ii) contain the financial information required to be
filed by DRGR under applicable rules and regulations of the SEC.
The conditions contained in this Paragraph 9 are included herein for the benefit
of DRGR and, without constituting a waiver of any of its other rights hereunder,
may be waived, in whole or in part, by DRGR.
7
9. Conditions and Obligations of the Company and the Shareholders. The
obligations of the Company and the Shareholders under this Agreement are subject
to the fulfillment, on or before the Closing Date, of the following conditions:
(a) All representations and warranties of DRGR contained herein and
in any certificate or other instrument delivered pursuant to the provisions hereof,
or in connection with the transactions contemplated hereby, shall be true on the
Closing Date with the same force and effect as though such representations and
warranties had been made on the Closing Date.
(b) DRGR shall have performed and complied with all of the terms,
covenants and conditions of this Agreement to be performed or complied with by it
on or before the Closing Date.
(c) DRGR shall have delivered to the Company a certificate of its
Chief Executive Officer or a Vice Chief Executive Officer and its Secretary or an
Assistant Secretary, dated at the Closing Date, certifying in such detail as the
Company may reasonably request to the fulfillment of the conditions specified in
this Agreement.
(d) The Board of Directors of DRGR shall have taken all necessary
action to authorize the execution and performance of this Agreement, including the
delivery of shares of Common Stock of DRGR to the Company in accordance with
this Agreement, and DRGR shall have delivered to the Company true and complete
copies certified by its Secretary or Assistant Secretary, of Resolutions of its
Board of Directors evidencing such action.
(e) No action or proceeding by any governmental body or agency shall
have been threatened, asserted or instituted to restrain or prohibit the carrying
out of the transactions contemplated by this Agreement.
(f) All corporate and other proceedings and actions taken in connection
with the transactions contemplated hereby and all certificates, opinions,
agreements, instruments and documents mentioned in this Paragraph 10 or incident
to any such transaction shall be reasonably satisfactory in form and substance
to the Company and its counsel.
The conditions contained in this Paragraph 10 are included herein for the
benefit of the Company and its Shareholders who are parties hereto and, without
constituting a waiver of any of its rights hereunder, may be waived, in whole or
in part, by the Company.
10. Certain Covenants Prior to Closing.
8
(a) The Company will use its best efforts, and take such other
action as may be necessary, to fulfill all of the conditions contained herein and to
authorize and consummate, and cause its officers to authorize and consummate,
all of the transactions herein contemplated.
(b) DRGR will use its best efforts, and take such other action as
may be necessary, to fulfill all of the conditions contained herein and to authorize
and consummate all of the transactions herein contemplated.
(c) Between the date of this Agreement and the Closing Date, the
Company shall (a) give DRGR and its authorized representatives full access to all
offices, warehouses and other facilities and properties of the Company and to
the books and records of the Company (and permit DRGR to make copies thereof),
(b) permit DRGR to make inspections thereof, and (c) cause its officers and its
advisors (including, without limitation, its auditors, attorneys, financial
advisors and other consultants, agents and advisors) to furnish DRGR with such
financial and operating data and other information with respect to the business
and properties of the Company, and to discuss with DRGR and its authorized
representatives the affairs of the Company, all as DRGR may from time to time
reasonably request, subject to the confidentiality and non-disclosure provisions
of paragraph #3 above.
(d) Between the date of this Agreement and the Closing Date, the
parties shall give notice to each other promptly upon becoming aware of (a) any
inaccuracy of a representation or warranty set forth in any schedule or (b) any
event or state of facts that, if it had occurred or existed on or prior to the
date of this Agreement, would have caused any such representation and warranty
to be inaccurate, any such notice to describe such inaccuracy, event or state of
facts in reasonable detail.
(e) Between the date of this Agreement and the Closing Date, the
Company shall cause (a) copies of all reports and other documents given to the members
of the Board of Directors (or any committee thereof) of the Company to be
delivered to DRGR at the same time and (b) copies of the minutes of all meetings
of, and actions taken without a meeting by, the Board of Directors (or any
committee thereof) of the Company to be delivered to DRGR promptly after the
preparation thereof. Between the date of this Agreement and the Closing, the
Company shall give DRGR at least three (3) days prior notice of any meeting of
or action to be taken without a meeting by, the Board of Directors or committee
thereof, of the Company and shall cause the Company to permit one individual
designated by DRGR to attend each such meeting as an observer.
(f) After the Closing Date, DRGR and the Company shall discuss and
coordinate with respect to any public filing or announcement concerning any of
the contemplated transactions and events associated with DRGR and AGI. TBF shall
be responsible for issuing all appropriate press releases and announcements, as
9
well as assist in the implementation of a strategic plan for public relations
and dissemination of promotional materials and to create visibility and public
awareness for DRGR/AGI post-closing, unless such obligations are withdrawn by
the Company and/or voluntarily undertaken by the Company.
11. Survival of Representations and Warranties; Indemnification. All
representations, warranties and agreements contained in this Agreement shall
survive the Closing for a period of six (6) months, notwithstanding any
investigation conducted with respect thereto; however, a party shall have no
liability with respect to a representation and warranty, or an agreement to be
performed or complied with prior to the Closing Date, to the extent that the
inaccuracy of such representation and warranty or the failure to perform and
comply with such agreement was not intentional and was disclosed in a schedule
delivered pursuant to this Agreement. Both the Company and DRGR agree to hold
each other harmless on any act either performs other than acts of gross
negligence, malfeasance, fraud, theft in their efforts to perform under this
Agreement. DRGR and its Chairman/Chief Executive Officer asserts and indemnifies
that DRGR has no pending litigation or disputes of any kind that could
ultimately result in litigation. Furthermore, each of the respective parties
have conducted, or will conduct, and are relying solely on their own independent
research, investigation and due diligence of each other, the Company, DRGR, and
the merits of the proposed transaction set forth herein. All the parties hereto,
and their individual representatives, agents, and officers release and hold
harmless Xxxxx X. Xxxxxx, P.A. and Xxxxx X. Xxxxxx, Esquire, and acknowledge
that he and his firm have provided no advice or legal opinions to either side
regarding the merits of the transaction, or legal issues involving securities or
transactional law. The parties herein have been advised of the recommendation to
hire respective securities counsel to properly advise them of their rights,
responsibilities, obligations, and ramifications pursuant to the transaction
contemplated within this Agreement.
12. Post Closing Covenants. The Company and the Shareholders under this
Agreement shall, following the Closing Date, obligated perform the following
covenants upon request for a period of 1 year after closing:
(a) The Company shall supplementally deliver to DRGR post closing,
at the request of DRGR, a schedule, listing all promissory notes payable by the
Company, all agreements of the Company to borrow money from others, and all
commitments by others to lend money to the Company. As to each note, obligation
to borrow and loan commitment, such schedule accurately sets forth the interest
rate, terms of payment of principal and interest, identity of security (if any)
and any other material terms of such indebtedness. The Company, to the best of
its knowledge, as of the date of such Schedule will not be in default in any
respect under, and is not otherwise, in violation or contravention of, any of
the terms or provisions of any note, loan agreement, agreement to borrow money
from others or any commitment by others to lend money.
10
(b) The Company shall supplementally deliver to DRGR post closing,
at the request of DRGR, a complete and accurate schedule, listing and briefly
describing all Material Contracts. For this purpose, the term "Material
Contracts" shall be defined to mean (i) all contracts and commitments out of the
ordinary course of business; (ii) all contracts and commitments involving an
obligation which cannot or, in reasonable probability, will not be performed or
terminated within sixty (60) days from the date hereof; (iii) all bonus,
incentive compensation, pension, group insurance or employee welfare plans of
any nature whatsoever; (iv) all collective bargaining agreements or other
contracts or commitments to or with any labor unions or other employee
representatives or groups of employees; (v) employment contracts and other
contracts, agreements or commitments to or with individual employees, agents or
consultants extending for a period of more than three (3) months from the date
hereof or providing for earlier termination only upon the payment of a penalty
or equivalent thereof; or (vi) all other contracts or commitments providing for
payments based in any manner upon the sales, purchases or profits of the
Company. As of the date of such schedule, there will not be any material
default, of which the Company is aware, in any obligation to be performed by the
Company under any material contract listed on the said schedule.
(c) Except as identified in a complete and accurate schedule to be
supplementally delivered to DRGR post closing, at the request of DRGR, the
Company, as of the date of such schedule will not be engaged in or threatened
with any legal action or other proceeding before any court or administrative
agency. The Company, as of the date of such schedule, will not have violated any
laws, regulations or order applicable to its business or activities, and the
conduct of the present business of the Company at the present location is in
conformity with all zoning and building code requirements.
(d) The Company shall supplementally deliver to DRGR post closing,
at the request of DRGR, a complete and accurate schedule listing all domestic and
foreign patents, patent applications, licenses, formulae, trademarks, trade
names and copyrights owned or held by the Company as of the date of such
schedule, and a summary of the terms of all agreements relating to technology,
know-how or processes which the Company is licensed or authorized to use by
others. Except as set forth in this schedule, as of the date of such schedule,
the Company has the sole and exclusive right to use the patents, trademarks,
trade names, copyright, technology, know-how, processes, names and likenesses
referred to therein, and the consummation of the contemplated transactions does
not alter or impair any such rights as of the date of such schedule; no claims
have been asserted by any person to the use of any such patents, trademarks,
trade names, copyrights, technology, know-how, processes, names and likenesses
or challenging or questioning the validity or effectiveness of any such licenses
or agreements, and there is no valid basis for any such claim and the use of
such patents, trademarks, trade names, copyrights, technology, know-how,
processes, names and likenesses by the Company does not infringe on the rights
of any person.
11
(e) The Company shall supplementally deliver to DRGR post closing,
at the request of DRGR, complete and accurate schedules, listing each salaried employee
of the Company as of the date of such schedule, together with each employee who
is paid on an hourly basis and showing their respective rates of compensation
(including bonuses, if any) and fringe benefits (including vacation time accrued
to the Balance Sheet Date). As of the date of such schedule, the Company will
have paid in full to its employees all wages, salaries, commissions, bonuses and
other direct compensation for all services employed by them, other than amounts
that have not yet become payable in accordance with the Company's customary
practices. Except as set forth in the schedule, the Company is not liable for
any severance pay or other payments on account of termination of any former
employee except as listed in this schedule, is in compliance with all applicable
laws respecting employment and employment practices, and terms and conditions of
employment and wages and hours as of the date of such schedule.
(f) Except as identified in a complete and accurate schedule, to
be supplementally delivered to DRGR post closing, at the request of DRGR, the
Company does not have, none of its employees are covered by, and the Company
does not have any present obligation, as of the date of such schedule, with
respect to, any bonus, deferred compensation, other than to the existing
corporate officers and professionals, pension, profit-sharing, retirement,
insurance, stock purchase, stock option, or other fringe benefit plan,
arrangement or practice, or any other employee benefit plan (as defined in
subparagraph (1), whether formal or informal (collectively "Plans"). The
schedule contains an accurate and complete description of, and sets forth the
annual amount payable pursuant to, each of those Plans, and the Balance Sheet
reflects in the aggregate an accrual of all amounts accrued but unpaid under
such Plans as of their respective dates. The Company has performed and complied
with all of its obligations under or with respect to such Plans, as of the date
of such schedule, and such Plans have operated in accordance with their terms.
The Company has no commitment, whether formal or informal and whether legally
binding or not, to create any additional Plans as of the date of such schedule.
(g) The Company shall supplementally deliver to DRGR post closing,
at the request of DRGR, complete and accurate schedules of all accounts receivable
at the time of such schedules. All accounts receivable of the Company, whether or
not reflected in the Balance Sheet, represent sales actually made in the
ordinary course of business, and are current and collectible net of any reserves
shown on the Balance Sheet (which reserves are adequate and were calculated
consistent with past practice). Subject to such reserves, each of the accounts
receivable has been collected in full or will be collected in full, without any
set-off, within ninety (90) days after the day on which it first becomes due and
payable.
12
(h) The Company shall supplementally deliver to DRGR post closing,
at the request of DRGR, complete and accurate schedules of all inventories. All
inventory of the Company, whether or not reflected in the Balance Sheet, will
consist of a quality and quantity usable and salable in the ordinary course of
business at the time of such schedule, except for obsolete items and items of
below-standard quality, all of which have been written off or written down to
net realizable value in the Balance Sheet. All inventories not written off at
the time of such schedule have been recorded at the lower of average cost or
market. The quantities of each type of inventory (whether raw materials,
work-in-process, or finished goods) are not excessive, but are reasonable and
warranted in the circumstances of the Company at the time of such schedule. All
work in process and finished goods inventory is free from any defect or other
deficiency at the time of such schedule.
(i) The Company shall supplementally deliver to DRGR post closing,
at the request of DRGR, a list of any purchase commitments entered into by the Company.
No purchase commitment of the Company will be in excess of normal, ordinary and
usual requirements of its business, or will be made at any price in excess of
the then current market price, or will contain terms and conditions more onerous
than those usually and customary in the industry at the time of such schedule.
In the aggregate, the outstanding bids, sales proposals, contracts or unfilled
orders of the Company at the time of such schedule (i) will not (based on costs
at the time of such schedule and reasonably foreseeable increases in such costs)
require the Company to supply goods or services at cost to the Company in excess
of the revenues to be received therefrom, and (ii) quote prices which include a
xxxx-up over reasonably estimated costs consistent with past xxxx-ups on similar
business.
(j) Except as supplementally disclosed at closing, in a schedule
provided at the request of DRGR, at the time of such schedule, there has been no
material adverse change in the condition (financial or otherwise), physical assets,
capitalization or business of the Company, no dividend or other distribution
declared, paid or made on any of the shares of the Company's capital stock, no
direct or indirect redemption, purchase or other acquisition by the Company of
any shares of its capital stock, no damage, destruction or loss (whether or not
covered by insurance) adversely affecting the properties, business or prospects
of the Company, no increase in the rate of compensation payable or to become
payable to any officer or other employee of the Company (except as disclosed in
the schedules of this Paragraph or in the ordinary course of business, no
significant labor disturbances, and no other event or condition which materially
and adversely affects the business of the Company since the Balance Sheet Date.
Since the Balance Sheet Date, the business of the Company has been conducted
diligently and in the ordinary course; the Company has not sold or transferred
any of its property or assets except in the ordinary course of business, and no
contracts have been entered into by the Company except in the ordinary course of
business.
13
(k) At the time an applicable schedule is prepared, if requested
by DRGR, the Company will have filed on a timely basis all tax returns that are or
were required to be filed pursuant to the laws, regulations or administrative
requirements of each governmental body with taxing power of it or its assets.
The Company shall deliver to DRGR post closing, at the request of DRGR, all such
Tax Returns filed since the Company's inception. At the time of such schedule,
the Company paid, all Taxes that have or may have become due pursuant to those
Tax Returns will have, or otherwise, or pursuant to any assessment received by
the Company, except such Taxes, if any, as are set forth in a schedule and are
being contested in good faith and as to which adequate reserves (determined in
accordance with generally accepted accounting principles consistently applied)
have been provided for in the Balance Sheet.
(l) The Company shall supplementally deliver to DRGR, post closing
at the request of DRGR, a complete and accurate schedule, containing (i) a complete
legal description of all real property owned, leased or otherwise used or
occupied by the Company at the time of such schedule, (ii) a list of all banks
and other institutions in which the Company has any account or safe deposit
showing the identifying numbers and names of the persons authorized to draw
thereon or have access thereto at the time of such schedule, and (iii) a list of
all capitalized machinery, tools, equipment owned, leased or otherwise used by
the Company at the time of such schedule.
(m) The Company shall supplementally deliver to DRGR, post closing
at the request of DRGR, a complete and accurate schedule, identified by reference
to this subparagraph, listing and briefly describing all policies of fire,
liability, life, workmen's compensation and other insurance maintained by the
Company at the time of such schedule. The schedule provided by the Company shall
identify all risks that have been designated as being self-insured at the time
of such schedule. The schedule shall state whether any insurance carrier has
refused to insure any operations or property assets of the Company, nor has any
insurance carrier, which has carried, or received any application for, any such
insurance limited the coverage during the last three (3) years up until the time
of such schedule.
(n) For a period of one year after execution of this Agreement,
there shall be no reverse split of DRGR shares of any kind.
13. Investment Representation. Each of the Shareholders acknowledges its
understanding that the shares of DRGR's Common Stock to be delivered pursuant to
this Agreement will not be registered pursuant to the 1933 Act. Each of the
Shareholders further represents to and agrees with DRGR as follows:
(a) He/She is acquiring the shares of DRGR's Common Stock pursuant
to this Agreement for his/her own private personal investment account and with no
present intention of reselling or distributing such shares of any portion
thereof to others, except as otherwise set forth in a separate schedule.
14
(b) He/she fully comprehends that in connection with the issuance
of shares of DRGR's Common Stock pursuant to this Agreement, DRGR is relying to a
material degree on the representations, warranties and covenants contained herein,
and with such realization he/she authorizes DRGR to act as it may see fit in full
reliance hereon.
(c) He/she agrees that none of such shares will be transferred or
distributed unless (i) they are covered by an effective Registration Statement
prepared in accordance with the 1933 Act and are distributed in a manner
complying with the 1933 Act and with the Rules and Regulations promulgated
thereunder; or (ii) they may be transferred in accordance with Rule 144 of the
Rules and Regulations pursuant to the 1933 Act (or such similar Rule as may be
applicable to such shares at the time of transfer) so long as such transfer
strictly complies with said Rule 144 and with such procedures as DRGR may
reasonably establish in connection therewith; or (iii) there is first delivered
to DRGR the written legal opinion of legal counsel in form and substance
reasonably satisfactory to DRGR's legal counsel or a "no action letter" from SEC
indicating that the sale may be completed without violation of any of the
provisions of the 1933 Act and the Rules and Regulations promulgated thereunder.
In the event such legal opinion is based upon the exemption now contained in
Section 4(2) of the 1933 Act, the person acquiring shares or some portion
thereof shall execute and deliver to DRGR a letter agreement complying with the
1933 Act and the Rules and Regulations promulgated thereunder.
(d) He/she hereby agrees that the certificate(s) representing such
shares may bear a legend setting forth the restrictions upon transfer which are
contained in the foregoing subparagraph (c) and that DRGR may deliver to its
transfer agents a "stop transfer order" directing the transfer agents not to
effect any transfer of such shares without having received the permission of
DRGR and evidence of compliance with applicable provisions of the 1933 Act and
the terms of this Agreement.
(e) He/she is an accredited investor as such term is defined in Rule
501 promulgated by the SEC under the 1933 Act.
(f) He/she hereby agrees to indemnify DRGR against and hold it
harmless from all losses, liabilities, costs and expenses (including reasonable
attorneys' fees) which shall arise as a result of a sale or distribution by
him/her of such shares or any portion thereof in violation of the 1933 Act or
the terms of this Agreement.
14. Further Assurances.
15
(a) At the request of DRGR, and without further consideration, the
Company and Shareholders will execute and deliver such additional instruments of
transfer and will take such other action as DRGR reasonably may request in order
more effectively to transfer to DRGR full ownership and control of the Company.
(b) At the request of one or more of the Shareholders, and without
further consideration, DRGR will execute and deliver such additional instruments
and will take such other actions as Company may reasonably request in order more
effectively to carry out the transaction contemplated hereby.
15. Expenses. Each party shall bear its own expenses incident to the
preparation, negotiation and delivery of this Agreement and the performance of
its obligations hereunder through Closing. However, if there shall be a breach
of this Agreement and either side shall be required to enforce the terms herein
post-closing, then the prevailing party shall be entitled to recover all costs
and reasonable attorneys' fees.
16. Remedies. If any party fails to abide by this Agreement, the other
parties will be entitled to specific performance, including immediate issuance
of a temporary restraining order or preliminary injunction enforcing this
Agreement, and to judgment for damages caused by such breach, and to any other
remedies provided by applicable law. The parties acknowledge that the subject
matter of this Agreement (i.e., the business and assets of the Company) is
unique and that no adequate remedy of law would be available for breach of this
Agreement. Accordingly, each party agrees that the other parties will be
entitled to an appropriate decree of specific performance or other equitable
remedies to enforce this Agreement (without any bond or other security being
required) and each party waives the defense in any action or proceeding brought
to enforce this Agreement that there exists an adequate remedy at law.
17. Employees of the Company. DRGR agrees to maintain the employment of all
of AGI's employees in their present positions, with the same salary and
seniority, and maintain the existing professionals at their current level of
compensation.
18. Directors. Four seats on the Board of Directors of DRGR will be
available for the Company. A total of five Directors will make up the DRGR Board
of Directors. The Shareholders of DRGR shall issue irrevocable proxies to Aero
Group International's designated parties so that such parties may vote those
shares to guarantee that such parties maintain control of at least four/fifths
of the Board of Directors.
19. Other Matters.
(a) No Other Agreements. All terms and conditions of this Agreement
are set forth herein, and there are no warranties, agreements or understandings, express
or implied, except those expressly set forth herein.
16
(b) Amendment. This Agreement may be amended only by a written instrument
executed on behalf of DRGR and the Company.
(c) Notices. Any notice or other communication required or permitted
to be given hereunder shall be deemed properly given if personally delivered or
deposited in the United States mail, registered or certified and postage
prepaid, addressed to TBF at 000 Xxxxxxxxxx Xxxxxxxxx, Xxxxxxxx, XX 00000; AGI
at 0000 Xxxxxxx Xxxxxxxx Xxxxx, Xxxxxx 00, Xxxxxxxxx, XX 00000; Xxxxx X. Xxxxxx,
P.A., 0000 Xxxx Xxxxx Xxxxx Xxxx., Xxxxx 0000, Xxxx Xxxx Xxxxx, XX 00000, or at
such other addresses as may from time to time be designated by the respective
parties in writing.
(d) Assignment. Except as specifically permitted by the terms of
this Agreement, neither this Agreement nor any right created hereby shall be
assignable by DRGR, TBF, or AGI unless first obtaining prior written consent of
all other parties hereto, and any such attempted improper assignment shall be
void. Nothing in this agreement, expressed or implied, is intended to convert
upon any person, other than the parties hereto, any rights or remedies under or
by reason of this Agreement.
(e) Paragraphs and Other Headings. Paragraphs or other headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
(f) Choice of Law. It is the intention of the parties that the laws
of the State of Florida should govern the validity of this Agreement, the construction
of its terms and the interpretation of the rights and duties of the parties.
Venue of any legal proceedings shall be in Palm Beach County, Florida.
(g) No Waiver. The failure of any party to insist upon strict adherence
to any term of this Agreement on any occasion shall not be considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement. Any waiver must be in writing.
(h) Severability. In the event that any one or more of the provisions
contained in this Agreement shall for any reason be held to be invalid, illegal
or unenforceable, the same shall not affect any other provisions of this
Agreement, but this Agreement shall be construed as if such invalid, illegal or
unenforceable provisions had never been contained herein.
(i) Facsimile ands Counterparts. A facsimile copy of this Agreement
and any signatures thereon, shall be considered, for all purposes, as originals.
For the purposes of facilitating the proving of this Agreement, as herein provided
and for other purposes, this Agreement may be executed simultaneously in any number
of counterparts, each of which counterparts shall be deemed to be an original.
Such counterparts together shall constitute but one and the same Agreement.
17
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
Diversified Resources Group, Inc.
By:/s/ Xxxx X. Xxxxx
Xxxx X. Xxxxx, Chairman and CEO
Aero Group International Corporation
By:/s/ Xxxx Xxxxxxx
Xxxx Xxxxxxx, CEO
SHAREHOLDERS:
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
18
EXHIBIT A
