EXHIBIT 2
AGREEMENT AND PLAN OF EXCHANGE
This Agreement and Plan of Exchange ("Agreement") between Global
Diversified Industries, Inc., a Nevada corporation ("Global") and
Modular Modernization, Inc., a California corporation ("MMI" or
"Acquired Corporation"), the two corporations acting by their
respective boards of directors and sometimes collectively referred to
as the "Constituent Corporations," is entered into this 27th day of
February 2003, hereinafter "Effective Date".
WHEREAS, Global is a corporation organized and existing under
the laws of the State of Nevada, having been originally incorporated
on September 14, 1990, with its principal business office located at
0000 Xxxxxxx Xxxx, Xxxxxxxxxx, XX 00000;
WHEREAS, the authorized capital stock of Global consists of Four
Hundred Million (400,000,000) shares of common stock, par value of
$0.001 per share, of which One Hundred Nine Million Four Hundred
Forty Three Thousand Eight Hundred Ninety One (109,443,891) shares
are presently issued and outstanding.
WHEREAS, Nevada Revised Statutes 92A.110 confers upon Global the
power to acquire all of the outstanding owner's interests of one or
more classes or series of another entity not already owned by it, and
Nevada Revised Statutes 92A.250 confers upon Global the right to
issue its own shares in exchange for shares of another corporation;
WHEREAS, MMI is a corporation organized and existing under the
laws of the State of California, with currently issued and
outstanding, Fifty-Five Thousand (55,000) shares of common stock, no
par value;
WHEREAS, MMI is a corporation that seeks to become a wholly-
owned subsidiary of a publicly-traded Over-the-Counter Bulletin Board
Company;
WHEREAS, the respective boards of directors of Global and MMI
deem it desirable and in the best interests of the corporations and
their stockholders that the corporations enter into this Agreement
pursuant to the terms and conditions contained herein; and
WHEREAS, in order to consummate this exchange and in
consideration of the mutual benefits to be derived and the mutual
agreements contained herein, Global and MMI approve and adopt this
Agreement.
NOW, THEREFORE, in consideration of the promises and mutual
agreements, provisions and covenants herein contained, it is agreed
by and between the parties that, in accordance with the provisions of
the laws of the State of Nevada, there shall be an exchange of
interest between Global and MMI as of the Effective Date with MMI
being a wholly-owned subsidiary of Global, all on the terms and
conditions set forth as follows:
ARTICLE I
EXCHANGE OF INTEREST
1. Shareholder Approval by MMI.
This Agreement has been submitted to the shareholders of MMI as
provided for in accordance with the Nevada Revised Statutes and has
been adopted by receiving the affirmative vote of the holders of a
majority of the common stock of MMI. As for Global, it has been
determined by the Board of Directors in accordance with the NRS that
shareholder approval is not necessary for Global to approve the
acquisition of MMI. As this Agreement has been so approved and
adopted, Global and MMI shall immediately proceed to effectuate the
acquisition of MMI by Global.
ARTICLE II
NAME AND CONTINUED CORPORATE EXISTENCE
OF ACQUIRED CORPORATION
The corporate name of MMI, the acquired corporation, whose
corporate existence will survive this exchange as a wholly-owned
subsidiary of Global and continue thereafter, and its identity,
existence, purposes, powers, objects, franchises, rights and
immunities shall continue unaffected and unimpaired by the exchange
of interest.
ARTICLE III
DIRECTORS AND OFFICERS
OF ACQUIRED CORPORATION
1. Officers/Directors.
The current Board of Directors and Officers of MMI Construction,
Inc. shall resign upon the Effective Date. The following individuals
shall be Officers and/or Directors of MMI:
Xxxx XxXxxx
ARTICLE IV
CAPITAL STOCK OF SURVIVING CORPORATION
The capitalization of the Acquired Corporation upon the
Effective Date shall be as set forth in the certificate of
incorporation of MMI.
ARTICLE V
EXCHANGE OF SHARES/ ISSUANCE OF NOTE PAYABLE/ADJUSTMENT OF PAYMENT
UPON ISSUANCE OF FAIRNESS OPINION
Global shall issue to the MMI shareholders a total of Two
Million Six Hundred Sixty Six Thousand Six Hundred Sixty Six
(2,666,666) shares of preferred stock. The conversion option will
expire within three years from the Effective Date. Global agrees to
file a Registration Agreement for MMI after conversion from Preferred
to Common Shares.
Global will sign a note payable to MMI for One Hundred Thousand
Dollars ($100,000.00) payable monthly over a twelve (12) month
period, with a five (5) percent interest rate.
This transaction between Global and MMI is a related party
transaction as the majority owner of MMI, Xxxxxxx Xxxxxxxx, is also
an affiliate of Global, and as such, Global has undertaken and agreed
to the following: At the time of this transaction, Global did not
have the funds available to allocate to receiving a fairness opinion
on this transaction. In the absence of a fairness opinion, there can
be no assurance that the consummation of the acquisition is fair and
reasonable to Global and its shareholders. However, both Global and
MMI have agreed to obtain a fairness opinion within the next ninety
days and adjust the terms of this acquisition appropriately. It
shall be at the option of Global rather to increase or decrease the
amount and correspondingly the term of the Note, or whether to
increase or decrease the number of Preferred Shares issued to MMI.
It is further agreed that the 2,666,666 Preferred Shares will held in
escrow until such time as the fairness opinion is delivered and any
subsequent adjustment is made.
ARTICLE VI
ASSETS AND LIABILITIES
On the Effective Date, all property, real, personal and mixed,
and all debts due to either of the Constituent Corporations on
whatever account, as well for stock subscriptions as all other choses
in action, and all and every other interest of or belonging to either
of Constituent Corporations shall remain with each of the Constituent
Corporations, and the title to any real estate or any interest,
whether vested by deed or otherwise, in either of the Constituent
Corporations shall not revert or be in any way impaired by reason of
the exchange; provided, however, that all rights of creditors and all
liens upon the property of either of the Constituent Corporations
shall be preserved unimpaired, and any debts, liabilities,
obligations and duties of the respective Constituent Corporations
shall remain with each of them. The parties respectively agree that
from time to time, when requested by either party or by its
successors or assigns, they will execute and deliver or cause to be
executed and delivered all deeds and instruments, and will take or
cause to be taken all further or other action, as either party may
deem necessary or desirable in order to vest in and confirm to each
of the respective parties or its successors or assigns title to and
possession of all the property and rights and otherwise carry out the
intent and purposes of this Agreement.
ARTICLE VII
CONDUCT OF BUSINESS BY CONSTITUENT CORPORATIONS
Prior to the Effective Date, MMI shall conduct its business in
its usual and ordinary manner, and shall not enter into any
transaction other than in the usual and ordinary course of such
business except as provided. Without limiting the generality of the
above, MMI shall not, except as otherwise consented to in writing by
Global or as otherwise provided in this Agreement:
1. Issue or sell any shares of its capital stock in addition to
those outstanding on this date, except shares issued pursuant to
rights or options outstanding at that date;
2. Issue rights to subscribe to or options to purchase any shares
of its stock in addition to those outstanding on this date;
3. Amend its certificate of incorporation or its bylaws;
4. Issue or contract to issue funded debt;
5. Declare or pay any dividend or make any other distribution upon
or with respect to its capital stock.
6. Repurchase any of its outstanding stock or by any other means
transfer any of its funds to its shareholders either selectively or
rateably, in return for value or otherwise, except as salary or other
compensation in the ordinary or normal course of business;
7. Undertake or incur any obligations or liabilities except current
obligations or liabilities in the ordinary course of business and
except for liabilities for fees and expenses in connection with the
negotiation and consummation of the merger in amounts to be
determined after the Effective Date;
8. Mortgage, pledge, subject to lien or otherwise encumber any
realty or any tangible or intangible personal property;
9. Sell, assign or otherwise transfer any tangible assets of
whatever kind, or cancel any claims, except in the ordinary course of
business;
10. Sell, assign, or otherwise transfer any trademark, trade name,
patent or other intangible asset;
11. Default in performance of any material provision of any material
contract or other obligation;
12. Waive any right of any substantial value; or
13. Purchase or otherwise acquire any equity or debt security of
another corporation except to realize on an otherwise worthless debt.
ARTICLE VIII
WARRANTIES OF THE CONSTITUENT CORPORATIONS
1. Representations and Warranties of MMI.
MMI covenants, represents and warrants to Global that:
a. It is on the date of this Agreement, and will be on the
Effective Date, (a) a corporation duly organized and existing and in
good standing under the laws of the jurisdiction of the State of
California, (b) duly authorized under its articles, and under
applicable laws, to engage in the business carried on by it, and (c)
it is fully qualified to do business in the State of California;
b. Its Board of Directors and its stockholders have authorized and
approved the execution and delivery of this Agreement, and the
performance of the transactions contemplated by this Agreement.
c. It has complied with, and is not in violation of any applicable
Federal, State, or local statutes, laws, and regulations affecting
its properties or the operation of its business.
d. The execution and delivery of this Agreement and its performance
in the time and manner contemplated will not cause, constitute, or
conflict with, or result in any of the following: (1) a breach or
violation of any provisions of or constitute a default under any
license, indenture, mortgage instrument, article of incorporation,
bylaw, other agreement or instrument to which the company is a party,
or by which it may be bound, nor will any consents or authorizations
of any party other than those required or (2) any event that would
permit any party to any agreement or instrument to terminate it or to
accelerate the maturity of any indebtedness or other obligation of
the company.
e. It will use its best efforts to collect the accounts receivable
owned by it and will follow its past practices in connection with the
extension of any credit prior to the Effective Date; and
f. All fixed assets owned by it and employed in its business are of
the type, kind and condition appropriate for its business and will be
operated in the ordinary course of business until the Effective Date.
2. Representations and Warranties of Global.
Global covenants, represents and warrants to MMI that:
a. It is on the date of this Agreement, and will be on the
Effective Date, (a) a corporation duly organized and existing and in
good standing under the laws of the jurisdiction of the State of
Nevada, (b) duly authorized under its articles, and under applicable
laws, to engage in the business carried on by it, and (c) it is fully
qualified to do business in the State of California;
b. Its Board of Directors have authorized and approved the
execution and delivery of this Agreement, and the performance of the
transactions contemplated by this Agreement, and is a legal, valid,
and binding obligation of the company, and is enforceable in
accordance with its terms and conditions.
c. It has complied with, and is not in violation of any applicable
Federal, State, or local statutes, laws, and regulations affecting
its properties or the operation of its business.
d. The execution and delivery of this Agreement and its performance
in the time and manner contemplated will not cause, constitute, or
conflict with, or result in any of the following: (1) a breach or
violation of any provisions of or constitute a default under any
license, indenture, mortgage instrument, article of incorporation,
bylaw, other agreement or instrument to which the company is a party,
or by which it may be bound, nor will any consents or authorizations
of any party other than those required or (2) any event that would
permit any party to any agreement or instrument to terminate it or to
accelerate the maturity of any indebtedness or other obligation of
the company.
e. It will use its best efforts to collect the accounts receivable
owned by it and will follow its past practices in connection with the
extension of any credit prior to the Effective Date; and
f. All fixed assets owned by it and employed in its business are of
the type, kind and condition appropriate for its business and will be
operated in the ordinary course of business until the Effective Date.
ARTICLE IX
CONSUMMATION OF EXCHANGE
If the exchange contemplated is completed, all expenses incurred
in consummating the plan of exchange shall, except as otherwise
agreed in writing between the Constituent Corporations, be borne by
Global. If the merger is not completed, each of the Constituent
Corporations shall be liable for, and shall pay, the expenses
incurred by it.
To the extent provided below, the merger may be abandoned:
1. At the election of the Board of Directors of either Constituent
Corporation if:
a. The warranties and representations of the other Constituent
Corporation contained in this Agreement shall not be substantially
accurate in all material respects on and as of the date of election;
or the covenants contained of the other Constituent Corporation shall
not have been performed or satisfied in all material respects; or
b. Prior to the merger (1) there shall have been filed in any court
or agency having jurisdiction a complaint or other proceeding seeking
to restrain or enjoin the merger contemplated hereby.
ARTICLE X
POST EXECUTION, PRE EXCHANGE
It is understood that upon execution of this Agreement, nothing
shall cause this Agreement to be void, voidable or invalid.
ARTICLE XI
MISCELLANEOUS
1. Access to Books and Records.
The Constituent Corporations shall afford to the officers and
authorized representatives of each of the Constituent Corporations
free and full access to the plants, properties, books and records of
each of the Constituent Corporations, with financial and operating
data and other information as to the business and properties as each
shall from time to time reasonably request. Unless and until the
merger contemplated by this Agreement has been consummated, each of
the Constituent Corporations and their officers and representatives
will hold in strict confidence all data and information obtained from
one another as long as it is not in the public domain, and if the
merger provided for is not consummated as contemplated will each
return to the other party all data as the other party may reasonably
request.
2. Rights Cumulative; Waivers.
The rights of each of the parties under this Agreement are
cumulative. The rights of each of the parties hereunder shall not be
capable of being waived or varied other than by an express waiver or
variation in writing. Any failure to exercise or any delay in
exercising any of such rights shall not operate as a waiver or
variation of that or any other such right. Any defective or partial
exercise of any of such rights shall not preclude any other or
further exercise of that or any other such right. No act or course
of conduct or negotiation on the part of any party shall in any way
preclude such party from exercising any such right or constitute a
suspension or any variation of any such right.
3. Benefit; Successors Bound.
This Agreement and the terms, covenants, conditions, provisions,
obligations, undertakings, rights, and benefits hereof, shall be
binding upon, and shall inure to the benefit of, the undersigned
parties and their heirs, executors, administrators, representatives,
successors, and permitted assigns.
4. Entire Agreement.
This Agreement contains the entire agreement between the parties
with respect to the subject matter hereof. There are no promises,
agreements, conditions, undertakings, understandings, warranties,
covenants or representations, oral or written, express or implied,
between them with respect to this Agreement or the matters described
in this Agreement, except as set forth in this Agreement. Any such
negotiations, promises, or understandings shall not be used to
interpret or constitute this Agreement.
5. Assignment.
Neither this Agreement nor any other benefit to accrue hereunder
shall be assigned or transferred by either party, either in whole or
in part, without the written consent of the other party, and any
purported assignment in violation hereof shall be void.
6. Amendment.
This Agreement may be amended only by an instrument in writing
executed by all the parties hereto.
7. Severability.
Each part of this Agreement is intended to be severable. In the
event that any provision of this Agreement is found by any court or
other authority of competent jurisdiction to be illegal or
unenforceable, such provision shall be severed or modified to the
extent necessary to render it enforceable and as so severed or
modified, this Agreement shall continue in full force and effect.
8. Section Headings.
The Section headings in this Agreement are for reference
purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
9. Construction.
Unless the context otherwise requires, when used herein, the
singular shall be deemed to include the plural, the plural shall be
deemed to include each of the singular, and pronouns of one or no
gender shall be deemed to include the equivalent pronoun of the other
or no gender.
10. Further Assurances.
In addition to the instruments and documents to be made,
executed and delivered pursuant to this Agreement, the parties hereto
agree to make, execute and deliver or cause to be made, executed and
delivered, to the requesting party such other instruments and to take
such other actions as the requesting party may reasonably require to
carry out the terms of this Agreement and the transactions
contemplated hereby.
11. Notices.
Any notice which is required or desired under this Agreement shall be
given in writing and may be sent by personal delivery or either
United States mail, postage prepaid, or Federal Express or similar
generally recognized overnight carrier.
12. Arbitration; Venue; Governing Law.
This agreement shall be deemed to be made, governed by,
interpreted under and construed in all respects in accordance with
the commercial rules of Judicial Arbitration and Mediation Service
("JAMS"). This chosen jurisdiction is irrespective of the country or
place of domicile or residence of either party. In the event of
controversy arising out of the interpretation, construction,
performance or breach of this agreement, the parties hereby consent
to adjudication under the commercial rules of JAMS. Said venue of
the arbitration shall be in Stanislaus County, California. Judgment
on the award rendered by the arbitrator may be entered in any federal
or state court in Stanislaus County, California. This Agreement shall
be construed and enforced under, in accordance with, and governed by,
the laws of the State of Nevada.
13. Consents.
The person signing this Agreement on behalf of each party hereby
represents and warrants that he has the necessary power, consent and
authority to execute and deliver this Agreement on behalf of such party.
14. Termination of Agreement.
This Agreement shall terminate on the Effective Date unless all
actions required under this Agreement have not been fully performed.
15. Survival of Provisions.
The representations and warranties contained in Article VIII of
this Agreement and any liability of one Constituent Corporation to
the other for any default under the provisions of Articles IX of this
Agreement, shall expire with, and be terminated and extinguished by,
the merger under this Agreement on the Effective Date.
16. Execution in Counterparts.
This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original and all of which together
shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered as of the date first above written.
Global Diversified Industries, Inc.
By: /s/ Xxxxxx X. Xxxxxxxx
Xxxxxxx X Xxxxxxxx, Chairman & CEO
Modular Modernization, Inc.
By: /s/ Xxxxxxx Xxxxxxxx
Xxxxxxx Xxxxxxxx, President & CEO
