EXHIBIT 10.1
PLAN AND AGREEMENT OF MERGER
PLAN AND AGREEMENT OF MERGER
Relating to the Merger of
MILITARY RESALE GROUP, INC.
Into
BACTROL TECHNOLOGIES, INC.
Dated: October 15, 1999
PLAN AND AGREEMENT OF MERGER
This PLAN AND AGREEMENT OF MERGER ("Agreement") entered into this 15th day
of October, 1999, by and among MILITARY RESALE GROUP, INC., a Maryland
corporation ("MRG") and BACTROL TECHNOLOGIES, INC., a New York corporation
("BTI"). (MRG and BTI are sometimes collectively referred to herein as the
"Constituent Corporations").
BACKGROUND OF AGREEMENT
WHEREAS, MRG is a corporation organized under the laws of the State of
Maryland. MRG has authorized capital of 10,000,000 shares of common stock, par
value $0.01 per share, of which approximately 5,360,000 shares are issued and
outstanding.
WHEREAS, BTI is a corporation organized under the laws of the State of New
York. The authorized stock of BTI consists of shares of common stock, with a par
value of $0.0001 per share, of which approximately 12,700,000 shares are validly
issued and outstanding.
WHEREAS, MRG proposes to merge into BTI, with shareholders of MRG
(sometimes hereinafter referred to as "Shareholders") surrendering their MRG
stock in exchange for common stock of BTI.
WHEREAS, the Boards of Directors of MRG and BTI have determined that a
merger of MRG into BTI is in the best interests of MRG and BTI, and such
companies desire to set forth in this Agreement their entire agreement
respecting such merger (sometimes hereinafter "Merger").
WHEREAS, the parties intend that the Merger qualify as a tax-free
reorganization within the meaning of the provisions of Section 368 of the
Internal Revenue Code of 1986, as amended from time to time (the "Code").
Whereas, BTI shall complete prior to closing the following: filed with and
obtained the approval of the Securities and Exchange Commission ("SEC") re Form
10; be in full compliance with all SEC requirements; completed the 20 for 1
reverse split with less than 640,000 shares issued and outstanding; registered
with the State of New York and/or any other appropriate regulator to sell up to
2,000,000 freely tradable shares of its stock; sold a minimum of 500,000 shares
of stock and have in escrow at least $220,000 after offering expenses; and filed
with the NASDAQ the Farm 15c-2-11 and taken any other steps so that its stock is
trading on the NASDAQ-OTC-BB.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto, intending to be legally bound hereby,
agree as follows:
ARTICLE I
MERGER OF MRG AND BTI
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Section 1.1 Closing.
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The closing of the transaction contemplated by this Agreement shall take
place no later than five (5) business days after all conditions necessary to
consummate the Merger, as provided in this Agreement, have been complied with
and the approvals described in Section 4.1 and 4.2 have been obtained
("Closing") at the offices of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esquire, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ or such other place or date
as the parties hereto may agree to in writing, at which time the documents
referred to in Articles IX and X will be exchanged and, immediately thereafter,
the filing of a Certificate of Merger and Articles of Merger (as described in
Section 4.3) will be performed.
Section 1.2 Merger.
------
MRG and BTI shall be merged on the Effective Date, as defined in Section
4.4 into a single corporation in accordance with the applicable provisions of
the Maryland Corporation Code, by MRG merging into BTI, the surviving
corporation. (BTI shall sometimes hereinafter be referred to as the "Surviving
Corporation"). The separate existence of MRG shall cease upon the Effective
Date, and BTI shall thereafter possess all of the rights, privileges,
immunities, powers, licenses, permits and franchises, both of public and private
nature, and all the property, real, personal and mixed, all debts due on any
account and all chooses in action belonging to or inuring to either of the
Constituent Corporations, and shall be subject to all the restrictions,
disabilities and duties of each of the Constituent Corporations. Any claim
existing or action or proceeding pending by or against either of the Constituent
Corporations may be prosecuted as if the Merger had not taken place or BTI may
be substituted in its place. Neither the rights of creditors nor any liens upon
the property of either of the Constituent Corporations shall be impaired by the
Merger.
ARTICLE II
ARTICLES, BYLAWS, DIRECTORS AND OFFICERS
--------------------------------------------
Section 2.1 BTI Articles and Bylaws.
--------------------------
The Articles of Incorporation and Bylaws of BTI as in effect on the
Effective Date shall continue in full force and effect, unless and until
subsequently amended, as the articles of incorporation and bylaws of the
Surviving Corporation. However, BTI shall change its place of domicile from the
State of New York to the State of Delaware and shall change its corporate name
to Military Resale Group, Inc., on or before the Closing hereunder.
Section 2.2 BTI's Directors and Officers.
-------------------------------
The directors and officers of BTI in office on the Effective Date shall resign
as the directors and officers of the Surviving Corporation upon the Closing
hereunder and their successors shall be duly elected and qualified pursuant to
Section 2.3 below.
Section 2.3 MRG Representation on BTI Board.
-----------------------------------
Upon Closing hereunder and consummation of the Merger, MRG representatives
designated by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ shall be entitled to nominate the individuals who
shall serve as the Board of Directors of BTI in accordance with the Bylaws of
the Surviving Corporation.
Section 2.4 ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ shall be appointed as Chairman of the Board of Directors
and ▇▇▇▇▇ ▇. ▇▇▇▇▇ shall be appointed as President of BTI as soon as reasonably
practicable following consummation of the Merger.
ARTICLE III
CONVERSION, EXCHANGE AND CANCELLATION OF SHARES
----------------------------------------------------
Section 3.1 BTI Capital Stock.
-------------------
Prior to Closing hereunder, in accordance with BTI's Board of Directors
action on October 4, 1999, BTI shall effectuate a reverse split of each share of
common stock of BTI which shall be issued and outstanding immediately prior to
the date hereof, and without any additional action required to be taken by the
holder thereof, with the BTI Stock outstanding converted automatically into one
(1) share of BTI common stock for each twenty (20) shares of common stock of BTI
("BTI Stock") as held immediately prior thereto. Thus as of Closing hereunder,
there shall be a total of 640,000 shares of BTI currently outstanding stock
before issuance of stock to holders of MRG common stock as a result of the
subject Merger. It is understood that upon execution of this Agreement, MRG and
BTI agree and shall facilitate the sale of a minimum of 500,000 shares of BTI
stock to raise the funds required to effectuate the subject merger transaction,
in which case the total shares of BTI stock outstanding at closing may be
1,140,000 shares.
In addition, upon the Effective Date, each share of common stock of MRG
which shall be issued and outstanding immediately prior thereto, other than
Dissenting Shares as defined in Section 3.5, by reason of the Merger shall be
converted automatically into the right to receive one (1) share of BTI common
stock for each one (1) share of common stock of MRG held immediately prior
thereto. The BTI Stock shall be registered in the name of, and in each case
delivered to, the holder of such MRG common stock on the Effective Date or
thereafter (as provided in Section 3.3 hereof) upon surrender of their share
certificate(s) of MRG stock (MRG Certificate) in proper form endorsed in blank,
or such lost certificate affidavits and bonds as are deemed appropriate by BTI's
officers.
Section 3.2 Treasury Shares.
----------------
Each share of MRG common stock, if any, held in the treasury of MRG shall,
by virtue of the Merger, be canceled and cease to exist, and no payment shall
be made with respect to such stock.
Section 3.3 Exchange of Shares.
--------------------
(a) Deposit of Stock. On the Effective Date, or promptly thereafter,
BTI shall make available, by transferring to the Surviving Corporation or the
Exchange Agent shares of BTI stock issuable in exchange for outstanding shares
of common stock of MRG.
(b) Surrender and Exchange of Certificates. On the 'Effective Date or
as soon as practicable thereafter, the Surviving Corporation or, at MRG's
election, a bank or trust company selected by MRG acting as Exchange Agent for
the exchange of MRG Stock (the "Exchange Agent") shall mail to each holder of
record of MRG Certificates (I) a form letter of transmittal, and (ii)
instructions for the surrender of the MRG Certificate in exchange for
certificates representing BTI Stock. Upon surrender of the MRG Certificate to
the Surviving Corporation for cancellation or, if an Exchange Agent has been
This document produced using designated, to the Exchange Agent or to another
agent or agents selected by MRG, together with the letter of transmittal, duly
executed and completed, the holder of the MRG Certificate shall be entitled to
receive, in exchange, a certificate representing that number of shares of BIT
Stock into which the shares of MRG Stock represented by the surrendered
certificates were converted under the provisions of this Article III, and the
surrendered MRG Certificate shall forthwith be canceled.
(c) Dividends. No dividends or other distributions in respect of
BIT Stock declared after the Effective Date for BTI Stock and payable to
holders of record after the Effective Date shall be paid to the holder of any
unsurrendered MRG Certificate for the shares of BIT Stock until the
holder of record surrenders the MRG Certificate. Subject to the effect, if
any, of applicable law, after the subsequent surrender and exchange of a
MRG Certificate, the holder shall be entitled to receive any dividends or
other distributions, without interest, which previously became payable for
shares of BIT Stock represented by the MRG Certificate.
(d) Share Transfers Prior to Exchange. If any certificate representing
shares of BTI Stock is to be issued in a name, other than that in which the MRG
Certificate surrendered is registered, it shall be a condition of such
registration that the surrendered MRG Certificate shall be properly endorsed or
otherwise in proper form for transfer. In addition, the person requesting such
registration shall pay any transfer or other taxes required by reason of the
payment to a person other than the registered holder of the surrendered MRG
Certificate or establish to the satisfaction of the Surviving Corporation that
the tax has been paid or is not applicable.
(e) Effect of Share Exchange. All shares of BIT Stock for which shares
of common stock of MRG are exchanged shall be deemed to have been issued in full
satisfaction of all rights pertaining to the exchanged shares of common stock of
MRG.
(f) Fractional Shares. No fractional shares of BTI Stock will be issued
in connection with the exchange, and no certificate for a fractional share of
BTI Stock will be issued. Each holder of a MRG certificate shall receive the
number of whole shares to which the holder is entitled under Section 3.1 of this
Agreement, rounded up to the next greatest whole number. Each holder of an MRG
Certificate shall receive at least one share of BIT Stock.
(g) Company Stock Transfer Books. After the Effective Date, there shall
be no further registration of transfers on the stock transfer books of the
Surviving Corporation of the shares of common stock of MRG which were
outstanding immediately prior to the Effective Date. If, after the Effective
Date, MRG Certificates representing MRG common stock shares are presented to the
Surviving Corporation, they shall be canceled and exchanged for BIT Stock as
provided in this Article III.
Section 3.4 Adjustments.
-----------
If, between the date of this Agreement and the Effective Date the
outstanding shares of common stock of MRG (5,360,000 shares) or the BIT Stock
(12,700,000 shares, subject to the reverse split described above with 640,000
shares [or, upon the sale of an additional 500,000 shares of BIT stock, up to
1,140,000 shares] being outstanding as of the Effective Date without
adjustment), as the case may be, change into a different number of shares or -
different class by reason of any issuance or cancellation of shares or any
reclassification, recapitalization, split-up, combination, exchange of shares or
readjustment, or due to a stock dividend declared with a record date within said
time period other than the contemplated reverse split of BTI Stock ("Adjustment
Event"), then the number and class of shares of BIT Stock to be issued and
delivered in the Merger in exchange for each outstanding share of common stock
of MRG shall be appropriately adjusted upon the Adjustment Event.
For purposes of this Section 3.4, the term "Adjustment Event" shall not
include the contemplated 1 for 20 reverse split of the BTI Stock or any
subsequent issuance of securities by BTI, agreed to by MRG in a transaction
negotiated in good faith, in connection with any investment in, capital
contribution to, acquisition of any interest in or assets or properties of, or
any merger with, any person, firm, entity, corporation or enterprise.
Section 3.5 Dissenting Shares.
------------------
Notwithstanding anything in this Agreement to the contrary, except as
otherwise provided by applicable law, shares of common stock of MRG that are
outstanding immediately prior to the Effective Date and that are held by
stockholders who, prior to the taking of the vote of the stockholders of MRG on
the Merger, have filed with MRG a written objection to the Merger, who have not
voted the shares in favor of the Merger, and who, after the taking of the vote,
properly demanded payment for the shares in accordance with the Maryland
Corporation Code (the "Dissenting Shares") shall not be exchangeable for the
right to receive the consideration provided in Section 3.1 of this Agreement.
The holders of Dissenting Shares shall be entitled to payment for the shares
under the applicable provision of the Maryland Corporation Code. However, if:
(a) any holder of Dissenting Shares subsequently delivers a written
withdrawal of the holder's demand for appraisal of the shares (with the written
approval of BTI, if the withdrawal is not tendered within 60 days after the
taking of the vote), or
(b) any holder fails to establish the holder's entitlement to appraisal
rights as provided in the Maryland Corporation Code, or
(c) neither any holder of Dissenting Shares nor the Surviving
Corporation has filed a petition demanding a determination of the value of all
Dissenting Shares within the time provided in the Maryland Corporation Code, the
holder or holders (as the case may be) shall forfeit the right to appraisal of
the shares and the shares shall then be deemed converted into, and to have been
exchanged for, as of the Effective Date, BTI Shares as provided in Section 3.1
of this Agreement, without interest, upon surrender of the MRG certificate
representing the Dissenting Shares.
ARTICLE IV
MERGER PROCEDURE
-----------------
Section 4.1 Approval by MRG Shareholders.
----------------------------
This Agreement shall be submitted to the MRG Shareholders for their
approval at a meeting to be held as soon as practicable after all disclosure
filings and other legal procedures required to be done, held, performed or
accomplished prior thereto have been properly and lawfully done, held, performed
or accomplished.
Section 4.2 Approval by BTI Shareholders.
-------------------------------
This Agreement is hereby approved by BTI and ▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇,
as the majority shareholders of BTI. BTI shall take all steps necessary to
provide any disclosures, filings and other legal procedures required to be done,
held, performed and accomplished prior to the Effective Date and shall see same
have been properly and lawfully done, held, performed or accomplished.
Section 4.3 Filing of Articles of Merger.
----------------------------------
Forthwith upon the approval of this Agreement by the Shareholders of BTI
and MRG as provided in Sections 4.1 and 4.2 hereof and the completion of the
reverse split of stock by BTI as contemplated in Section 3.1 and change of BTI's
domicile and corporate name as provided in Section 2.1, if the Agreement has not
then been terminated pursuant to Article XI hereof, then Articles of Merger
shall be filed by MRG and recorded in accordance with the General and Business
Corporation Law of Maryland. Such documents, duly executed by the proper
officers of the Constituent Corporations, shall be held in the interim by a law
firm selected by MRG for dating and filing by that firm, without further
instructions, upon being advised that the approvals referred to in Sections 4.1
and 4.2 have been obtained. The function of such law firm shall be purely
ministerial and each party hereto shall indemnify and hold such firm harmless
from any conduct consistent herewith.
Section 4.4 Effective Date.
---------------
The Merger contemplated hereunder shall become effective at 5:00 p.m.,
Eastern Standard Time, on the date on which both the Certificate of Merger has
been filed with the Secretary of State of Maryland and the Articles of Merger
have been filed with the Secretary of State of Maryland ("Effective Date").
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF MRG
-----------------------------------------
In order to induce BTI to enter into this Agreement and to consummate the
transactions contemplated hereby, MRG makes the following representations and
warranties to BTI:
Section 5.1 Organization and Good Standing.
----------------------------------
MRG is a corporation, duly organized, validly existing and in good standing
under the laws of the State of Maryland. MRG has no subsidiary or affiliated
companies. MRG has the power to carry on its business as and where conducted and
is entitled to own, lease or operate its business assets. MRG has delivered to
BTI complete and correct copies of its Articles of Incorporation, as amended,
and Bylaws, as amended, and in effect on the date of this Agreement. As of the
Effective Date the entire issued and outstanding capital stock of MRG shall
consist of the shares of common stock referred to in Schedule 5.1 held by the
Shareholders, and MRG shall not, as of such date, have any outstanding stock
options, warrants, or other obligations to issue its capital stock, except as
listed on Schedule 5.1.
Section 5.2 Authorization of Agreement.
----------------------------
This Agreement and all other agreements and instruments to be executed in
connection herewith have been authorized by all requisite corporate action on
the part of MRG, have been duly executed and delivered by MRG and, upon approval
by the Shareholders, shall constitute the legal, valid and binding obligation of
MRG enforceable in accordance with their respective terms.
Section 5.3 Ownership of Shares.
---------------------
The capitalization of MRG is set forth on Schedule 5.1. The Shareholders
listed on Schedule 5.1 are the lawful owners of all issued and outstanding
shares of capital stock of MRG in the denominations therein set forth, and have
full power and authority to approve this Agreement. Each issued share is validly
issued, fully paid, nonassessable and each outstanding share is entitled to one
vote. No shares were issued in violation of pre-emptive rights. Such shares are
owned free and clear of all liens, mortgages, pledges, security interests,
restrictions, prior assignments, spouses' rights, encumbrances and claims of any
kind or nature whatsoever, except as set forth on Schedule 5.1. As of the
Effective Date, MRG shall not have any outstanding stock options, warrants, or
other obligations to issue its capital stock.
Section 5.4 Financial Statements.
----------------------
MRG has delivered to BTI the following audited financial statements for the
years ending December 31, 1997 and December 31, 1998;
(a) Balance Sheet
(b) Statement of Operations
(c) Statement of Shareholders' Equity
All such financial reports are true and complete as of their respective
dates, and have been prepared in accordance with generally accepted accounting
principles and practices consistently applied, except as otherwise indicated in
the footnotes thereto. Each such report sets forth fairly and accurately as of
its date MRG's financial condition, results in operations and assets and
liabilities for the period then ended. Except as set forth on Schedule 5.4, on
the date hereof and as of the Effective Date, there is and will have been no
material adverse change in the condition of MRG since December 31, 1998.
Section 5.5 Litigation.
----------
Except as listed on Schedule 5.5, there is no claim, action, investigation,
suit or proceeding of any nature pending before any court or governmental
agency, authority or body and, to the best of the knowledge of MRG, there is no
such claim, action, investigation, suit or proceeding threatened or contemplated
by any third party which, if it were to result in a decision adverse to MRG,
would materially and adversely affect the business operations, properties,
assets or conditions of MRG. Neither MRG nor its business and assets are subject
to or directly affected by any order, judgment, decree or ruling of any court or
governmental agency, except any of the foregoing as they may be of general
application to businesses similar to that conducted by MRG.
Section 5.6 No Conflict With Other Instruments.
--------------------------------------
As of the Effective Date, the consummation of the transactions contemplated
by this Agreement will not result in the breach of any term or provision of or
constitute a default under any indenture, mortgage, deed of trust, or other
material agreement or instrument to which BTI is a party.
Section 5.7 Insurance.
---------
MRG shall obtain and maintain in full force and effect valid policies of
fire and extended coverage casualty insurance with respect to its assets, as
well as valid policies of public liability and unemployment compensation with
respect to its business.
Section 5.8 Licenses and Permits; Governmental Authorizations.
-----------------------------------------------------
MRG has all licenses, franchises, permits, approvals and other governmental
authorizations necessary for the conduct of its business operations.
ARTICLE VI
ADDITIONAL COVENANTS AND AGREEMENTS OF MRG
-----------------------------------------------
MRG hereby covenants and agrees to the following, the fulfillment of each
of which shall constitute, at and as of the Effective Date, a condition
precedent to the obligations of BTI hereunder:
Section 6.1 Existence, Rights and Franchises.
-----------------------------------
From and after the date of this Agreement and until the Effective Date, MRG
shall comply with all applicable laws and regulations, take all necessary
actions to keep in full force and effect its existence, rights and franchises,
and shall not amend its articles of incorporation or bylaws except as may be
necessary to carry out the provisions of this Agreement.
Section 6.2 Conduct of Business Before the Closing.
-------------------------------------------
From and after the date of this Agreement and until the Effective Date:
(a) Diligent Conduct. Except as consented to by BTI, MRG shall conduct
its business diligently in the ordinary course. MRG shall use its best efforts
to preserve its business organization intact, to keep available to BTI the
services of MRG's present officers and to preserve for the benefit of BTI the
goodwill of MRG's suppliers, customers and others having business relations with
MRG.
(b) Properties and Assets. MRG shall not, without the prior written
consent of BTI, sell or transfer any of its assets, other than in the ordinary
course of business or subject any of its assets to any mortgage, pledge, lien,
charge or encumbrance of any kind.
(c) Contracts; Liabilities. MRG shall not, without the prior written
consent of BTI: (I) amend, alter or terminate any contract to which it is a part
except in the ordinary course of business, (ii) enter into or become a party to
any plan, contract or agreement except in the ordinary course of business; (iii)
borrow or agree to borrow any funds, or otherwise become subject to, by way of
guarantee or otherwise, any obligations or liability except in the ordinary
course of business and consistent with past practice; or (iv) pay or discharge
any claim, liability or obligation, except in the ordinary course of business
and consistent with past practice.
(d) Insurance. MRG shall continue in force its existing insurance
policies as set forth on Schedule 6.2(d), subject only to variations in coverage
amounts required by the ordinary operation of its business.
(e) Distributions. Except as set forth on Schedule 6.2(e) hereto, MRG
shall not make any distributions with respect to or in redemption or partial
redemption of any of its shares of capital stock, or any payment of any
indebtedness to shareholders or any bonus or other increases in compensation to
employees, including without limitation employees who are shareholders, except
compensation in the ordinary course of business.
Section 6.3 Access and Information.
-------------------------
MRG will afford to BTI and its counsel, accountants and other
representatives reasonable access to the books, records and assets of MRG and
shall furnish to BTI and its counsel, accountants and other representatives all
information which BTI may reasonably request.
Section 6.4 Shareholder Approval.
----------------------
MRG covenants to (I) comply with the provisions of Section 4.1 hereof; (ii)
use its best efforts to take all corporate action and obtain all waivers and
consents necessary to effectuate the provisions of this Agreement; (iii) use its
best efforts to insure that the Shareholders approve the Merger provided for
herein; and (iv) insure that each member of its Board of Directors votes his
shares of MRG, and encourage all other Shareholders to vote their shares, in
favor of such Merger.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF BTI
-----------------------------------------
In order to induce MRG to enter into this Agreement and to consummate the
transactions contemplated hereby, BTI makes the following representations and
warranties to MRG:
Section 7.1 Organization and Good Standing; Capital.
--------------------------------------------
BTI is a corporation duly organized and validly existing and in good
standing under the laws of the State of New York. BTI has no subsidiary or
affiliated companies. BTI has the power to carry on its business as and where
conducted, and is entitled to own, lease or operate its business assets. BTI has
delivered to MRG complete and correct copies of the articles of incorporation,
as amended, and bylaws of BTI as in effect on the date of this Agreement. As of
the Effective Date, the entire issued and outstanding capital stock of BTI shall
consist of the shares of common stock referred to in Schedule 7.3 held by the
Shareholders, and BTI shall not, as of such date, have any outstanding stock
options, warrants or other obligations to issue its capital stock except as
listed on Schedule 7.3.
Section 7.2 Authorization of Agreement.
-----------------------------
This Agreement and all other agreements and instruments to be executed in
connection herewith have been duly authorized by all requisite corporate action
on the part of BTI, have been duly executed and delivered by BTI and shall
constitute the legal, valid and binding obligations of BTI enforceable in
accordance with their respective terms.
Section 7.3 Issuance of BTI Stock.
-------------------------
BTI has full power and authority to issue the BTI Stock to the Shareholders
under this Agreement. When issued, the BTI Common Stock will be fully paid,
nonassessable, each share entitled to one (1) vote, free and clear of all liens,
mortgages, pledges, security interests, restrictions, prior assignments,
encumbrances and claims of any kind or nature whatsoever, except as otherwise
se t forth on Schedule 7.3 and each share shall be registered and fully
transferable in the public market in compliance with all securities laws and
regulations.
Section 7.4 Financial Statements.
----------------------
BTI has delivered to MRG the following audited financial statements for
years ending December 31, 1997 and through June 30, 1998:
(a) Balance Sheet
(b) Statement of Income
(c) Statement of Shareholders' Equity
All such financial reports are true and complete as of their respective
dates, and have been prepared in accordance with generally accepted accounting
principles and practices consistently applied, except as otherwise indicated in
the notes thereto. Each such report sets forth fairly and accurately as of its
date BTI's financial condition, results of operations and assets and liabilities
for the period then ended. Except as set forth on Schedule 7.4, on the date
hereof and as of the Effective Date there is and will have been no material
adverse change in the condition of BTI since June 30, 1998.
Section 7.5 Litigation.
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Except as set forth on Schedule 7.5, as of the Effective Date there are no
claims, actions, investigations, suits or proceedings pending before any court
or governmental agency, authority or body and, to the best of the knowledge of
BTI, there are no such actions, suits or proceedings threatened or contemplated
by any third party which would materially and adversely affect the business
operations, properties, assets or conditions of BTI. Neither BTI nor its
business and assets are subject to or directly affected by any order, judgment,
decree or ruling of any court or governmental agency, except any of the
foregoing as they may be of general application to businesses similar to that
conducted by BTI.
Section 7.6 No Conflict With Other Instruments.
---------------------------------------
As of the Effective Date, the consummation of the transactions contemplated
by this Agreement will not result in the breach of any term or provision of or
constitute a default under any indenture, mortgage, deed of trust, or other
material agreement or instrument to which BTI is a party.
Section 7.7 Employee Relations.
--------------------
Except as set forth in Schedule 7.7, BTI has no written employment
agreements, collective bargaining agreements, retirement, welfare, pension,
profit sharing, compensation, bonus, hospitalization, vacation or other
Employee benefit plan, practice, agreement or undertaking, and no oral
employment contracts obligating BTI beyond the minimum requirements imposed on
an employer under applicable state or federal law. Except as set forth on
Schedule 7.7, BTI has not ceased operation at any facility or withdrawn from or
terminated any pension plan or other employee benefit plan in a manner which
could subject it to liability under the Employee Retirement Income Security Act
of 1974, as amended ("ERISA").
Section 7.8 Liabilities and Contractual Commitments.
-------------------------------------------
Except as reflected on the financial statements listed in Section 7.4 or in
any other schedule or exhibit to, or provisions of this Agreement, and other
than open purchase orders and other obligations entered into in the ordinary
course of business, BTI has no undisclosed liabilities or contractual
commitments, whether accrued, absolute, contingent or otherwise, to any third
party or any shareholder, director or employee of BTI, other than those set
forth on Schedule 7.8.
Section 7.9 Tax Payments.
-------------
BTI has timely filed all federal, state and local tax Returns required to
be filed as of the date of this Agreement and shall timely file all of such
returns as of the Effective Date, and has fully paid or shall pay all taxes,
penalties and interest reflect on such returns or otherwise owing for the period
covered thereby, except as set forth in Schedule 7.9. At the Effective Date
there shall be no federal, state or local taxes due and payable with respect to
the business and assets of BTI with respect to any tax reporting period ending
on or before the Effective Date. Adequate accruals shall have been established
on the books of BTI prior to the Effective Date for all federal, state and local
taxes (including taxes, if any, incurred by BTI in connection with the
transactions contemplated in this Plan and Agreement of Merger) accrued prior to
the Effective Date but unpaid. No extension of time for the assessment of taxes
by any taxing authority having jurisdiction over BTI is in effect, and BTI has
no knowledge of any unassessed tax deficiency proposed or threatened against it.
Section 7.10 Insurance; Claims.
------------------
BTI has maintained and now maintains in full force and effect valid
policies of fire and extended coverage casualty insurance with respect to its
assets, as well as valid policies of public liability and unemployment
compensation insurance with respect to its business, in the amounts as is
usually carried by companies engaged in similar businesses and owning or
operating similar properties, all such policies being set forth on Schedule
7.10. All claims filed by BTI under any such policies, including without
limitation workers' compensation, automobile, and general and product liability
claims, are set forth on Schedule 7.10.
Section 7.11 Equipment Leases; Title to Properties.
------------------------------------------
BTI has and on the Effective Date will have leases for all personal
property of which it is the lessee. All such personal property leases are listed
on Schedule 7.11. Furthermore, BTI has and on the Effective Date will have to
the best of its knowledge good and marketable title to all of the equipment,
merchandise, inventory, materials, supplies, assets and other property of every
kind, tangible or intangible, used in its business and/or contained in its
offices, plants and other facilities or shown as assets in its records and books
of account, free and clear of all material liens, encumbrances and charges
except as set forth on Schedule 7.11
Section 7.12 Real Property; Leases and Contingent Obligations.
-----------------------------------------------------
As of the Effective Date, BTI does not own (and, except as set forth on
Schedule 7.12, never has owned) any land or buildings, and is not subject to any
liens, claims or encumbrances with regard to any land or buildings. BTI has
no leases under which it is entitled to occupy and use in its business. All real
property leases and contracts to which BTI is a party or by which it is bound
are set forth on Schedule 7.12.
Section 7.13 Licenses and Permits; Government Approvals.
-----------------------------------------------
To the extent required by the laws, rules and regulations of any applicable
jurisdiction with which it is required to comply in connection with its business
operations, BTI has or will have as of the Effective Date all governmental
licenses, permits, approvals and permissions, necessary to conduct such business
operations as they are now conducted or will be conducted under this Agreement.
All such licenses, permits, approvals and permissions are listed on Schedule
7.13. BTI has no knowledge of any violations of law, governmental rules or
regulations, applicable to the operation or BTI business, and has not received
any notice that the licenses, permits and approvals under which it operates its
business are insufficient to permit such business to continue after the
Effective Date in the same manner and form as it operates on the Effective Date.
Section 7.14 Hazardous Substances and Hazardous Wastes.
---------------------------------------------
Except as set forth on Schedule 7.14:
(a) Hazardous Materials Disposal or Release. BTI does not have
knowledge of any presence, disposal, releases, or threatened releases of any
hazardous or toxic substance, material or waste which is regulated by any local,
state or federal governmental authority (collectively, "Hazardous Materials")
on, from or under any of the leased properties of BTI in violation of any
applicable law. The terms "disposal", "release" and "threatened release" shall
have the definitions assigned to them by the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, 42 U.S.C., Section 9601, et
seq., as amended.
(b) Hazardous Materials Use or Storage. During th e time that BTI has
leased its properties, to the best of BTI's knowledge, neither BTI nor any third
party has used, generated, manufactured, or stored on, under, or about, the
properties or transported to or from such properties, any Hazardous Materials in
violation of any applicable law or regulation.
Section 7.15 Brokerage and Finder's Fees.
-------------------------------
There is no broker, investment banker or finder involved on behalf of or by
BTI or any of its officers or directors, in connection with the transaction
contemplated under this Agreement. To the extent of any such claims contrary to
this representation, BTI shall be responsible for same.
ARTICLE VIII
COVENANTS AND AGREEMENTS OF BTI
-----------------------------------
BTI hereby covenants and agrees to the following, the fulfillment of each
of which shall constitute a condition precedent to the obligations of MRG
hereunder.
Section 8.1 Corporate Existence, Rights and Franchises.
-----------------------------------------------
Between the date hereof and the Effective Date, BTI shall take all
necessary actions to keep in full force and effect its corporate existence,
rights and franchises. BTI shall by the Effective Date have changed its name
from "Bactrol Technologies, Inc." to "Military Resale Group, Inc." and shall
change its domicile from the State of New York to the State of Delaware.
Section 8.2 Access and Information.
-------------------------
BTI will afford to MRG, its counsel, accountants and other representatives
reasonable access to the books, records, and assets of BTI and shall furnish to
MRG and its counsel, accountants, and other representatives all information
which MRG may reasonably request.
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF BTI
-----------------------------------------------
The Closing shall not take place unless all of the following conditions not
waived by BTI have been fulfilled before, or will be fulfilled on, the Effective
Date.
Section 9.1 Correctness of Representations and Warranties.
--------------------------------------------------
All the representations and warranties of MRG contained in this Agreement
shall be true and accurate in all material respects on the Effective Date with
the same material effect as if made on the Effective Date, and BTI shall have
received a certificate to that effect dated the Effect4ve Date and executed by
the President of MRG.
Section 9.2 Performance of Covenants and Agreements.
-------------------------------------------
All of the covenants and agreements of MRG contained in this Agreement and
required to be performed before the Effective Date shall have been performed in
all material respects, and BTI shall have received a certificate to that effect
dated the Effective Date executed by the President of MRG.
Section 9.3 Approvals.
---------
(a) Shareholders. This Plan and Agreement of Merger shall have been
duly approved by the vote of the Shareholders in accordance with applicable law
and the Articles of Incorporation and Bylaws of MRG.
(b) Third Parties; Regulatory Bodies. All notices to, declarations of
filing with and authorizations, consents, orders, registrations, or approvals
("Approvals") from, third parties and governmental agencies (copies of which
shall be provided to the other parties) required to complete the transactions
contemplated or planned pursuant to this Agreement or necessary to maintain in
full force and effect all agreements under which MRG operates or is bound shall
have been delivered, made or obtained.
(c) Company Board of Directors. All action required to be taken by the
Board of Directors of MRG to authorize the execution, delivery and performance
of this Agreement and the completion of the transactions planned under this
Agreement have been duly and validly taken by the Board of Directors of MRG.
Section 9.4 Delivery of Documents by MRG.
--------------------------------
BTI shall have received on or prior to the Effective Date copies of all
stock books, minute books, tax returns, financial records, and all material
agreements, records and documents pertaining to the business and organization of
MRG.
Section 9.5 Adverse Changes.
-----------------
No material adverse changes shall have occurred in the financial condition,
working capital, assets, liabilities, reserves, business, sales, customer list,
operations, or prospects or MRG since the date of the financial statements
contained in Schedule 5.4.
Section 9.6 No Governmental Proceeding or Litigation.
--------------------------------------------
No suit, action, investigation, inquiry or other proceeding by any
governmental body has been instituted or threatened which questions the validity
or legality of the transactions planned under this Agreement or which, if
successfully asserted, would otherwise have a material adverse effect on the
conduct of MRG's business assets or on its properties, or would impose any
material imitation on the ability of BTI effectively to exercise full rights of
ownership of MRG or the assets or business of MRG.
ARTICLE X
CONDITIONS PRECEDENT TO OBLIGATIONS OF MRG
-----------------------------------------------
The Closing shall not take place unless all of the following conditions not
waived by MRG have been fulfilled before, or will be fulfilled on, the Effective
Date:
Section 10.1 Correctiveness of Representations and Warranties.
-----------------------------------------------------
All the representations and warranties of BTI contained in this Agreement
shall be true and accurate in all material respects on the Effective Date with
the same material effect as if made on the Effective Date, and MRG shall have
received a certificate to that effect dated the Effective Date and executed by
the President of BTI.
Section 10.2 Performance of Covenants and Agreements.
--------------------------------------------
All of the covenants and agreements of BTI contained in this Agreement and
required to be performed before the Effective Date shall have been performed in
all material respects, and MRG shall have received a certificate to that effect
dated the Effective Date executed by the President of BTI.
Section 10.3 Resolutions of BTI.
--------------------
All action required to be taken by the Board of Directors of BTI to
authorize the execution, delivery and performance of this Agreement and the
completion of the transaction planned under this Agreement have been duly and
validly taken by the Board of Directors of BTI.
Section 10.4 Approvals.
---------
The requisite approval of the Shareholders of BTI has been obtained, and
the other notices, declarations, filings, authorizations, consents, orders, and
approvals referred to in Section 9.3 (copies of which shall be provided to the
other parties) have been delivered, made or obtained.
Section 10.5 Adverse Changes.
----------------
No material adverse changes shall have occurred in the financial condition,
working capital, assets, liabilities, reserves, business, operations, or
prospects of BTI taken as a whole since the date of BTI's financial statements
listed in Schedule 7.4.
Section 10.6 No Governmental Proceeding or Litigation.
--------------------------------------------
No suit, action, investigation, inquiry or other proceeding by any
governmental body has been instituted or threatened which questions the validity
or legality of the transactions planned under this Agreement or which, if
successfully asserted, would otherwise have a material adverse effect on the
conduct of BTI's business assets or on its properties. MRG shall cooperate with
BTI in using their reasonable efforts to satisfy any such condition to
completion of the Merger.
Section 10.7 Affirmative Action By BTI.
On or prior to closing BTI shall have completed the following:
(1) Filed with and obtained the approval of the Securities and
Exchange Commission ("SEC") re Form 10;
(2) Be in full compliance with all SEC requirements;
(3) Completed the 20 for 1 reverse split with less than 600,000
shares issued and outstanding;
(4) Registered with the State of New York and/or any other
appropriate regulator to sell up to 2,000,000 freely tradable shares of its
stock; (5) Sold a minimum of 500,000 shares of stock and have in escrow at
least $220,000 after offering expenses; and (6) Filed with the NASDAQ the Form
15c-2-11 and taken any other steps so that its stock is trading on the
NASDAQ-OTC.
ARTICLE XI
TERMINATION
-----------
In the event that either BTI or MRG shall refuse to close the transactions
contemplated in this Agreement by reason of the failure of any condition
precedent to closing set forth in Articles IX and X absent waiver by the
applicable party thereunder), then this Agreement shall terminate and neither
party shall have any obligation or liability to the other hereunder by reason of
any provision hereof or any actions taken in contemplation or anticipation of
the Closing.
ARTICLE XII
INDEMNIFICATION
---------------
Section 12.1 Indemnification by BTI.
-------------------------
From and after the Closing, BTI and its successors and assigns shall
indemnify and hold MRG and its directors, officers, employees, agents, counsel,
assigns or representatives harmless from and against any and all losses,
liabilities, obligations, damages (whether actual, punitive or consequential),
deficiencies, costs or expenses (including interest, penalties and reasonable
attorney's fees and disbursements), arising from, asserted against or associated
with:
(a) a breach of any representation or warranty made by BTI herein;
(b) failure by BTI to perform any covenant, obligation or
agreement made herein; or
(c) the past, present or future operations of BTI.
Section 12.2 Indemnification by ▇▇▇ ▇▇▇▇▇▇▇▇.
-----------------------------------
▇▇▇ ▇▇▇▇▇▇▇▇, together with BTI, jointly and severally indemnify, defend
and hold harmless MRG and its directors, officers, employees, agents, counsel,
successors and assigns from and against losses, liabilities, obligations,
damages (whether actual, punitive or consequential), deficiencies, costs or
expenses, including without limitation interest, penalties and reasonable
attorneys' fees and disbursements (the "Indemnifiable Items") of any of the
foregoing persons or entities, arising from, asserted against or associated
with:
(a) a breach of any representation or warranty made by BTI herein;
(b) failure by BTI to perform any covenant, obligation or
agreement made herein; or
(c) the past operations of BTI, including but not limited to
any property or other taxes owing by BTI due to BTI's prior operations.
Section 12.3 Termination of Indemnification.
--------------------------------
An Indemnified Party shall not be entitled to indemnification for any loss,
damage or expense unless the right to such indemnification is asserted on or
before the fifth anniversary of the date of the Closing, except that if there
then shall be pending any such assertion, dispute, claim, proceeding or action
under this Agreement, the Indemnified Party shall continue to have the right to
indemnification with respect to such pending assertion, dispute, claim,
proceeding or action.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
-------------------------
Section 13.1 Application.
-----------
This Agreement shall be construed and enforced in accordance with the laws
of the State of Maryland, except as to any technical New York requirement of
corporate merger pertaining to BTI.
Section 13.2 Notices.
-------
All notices, requests, demands and other communications called for or
contemplated hereunder shall be in writing and shall be deemed to have been duly
given when (I) hand delivered; (ii) sent by telegram, telecopier, telex or wire
following by confirmatory letter; or (iii) sent by United States certified or
registered mail, postage prepaid, addressed to the parties, their successors in
interest, or their assignees at the following addresses (or at such other
addresses as the parties may designate by like written notice):
BTI: ▇▇. ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile (▇▇▇) ▇▇▇-▇▇▇▇
MRG: Ethean Hokin, President
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile (▇▇▇) ▇▇▇-▇▇▇▇
Section 13.3 Payment of Expenses.
---------------------
Each party shall pay all fees and expenses incurred by it in connection
with the preparation, negotiation, execution, delivery and completion of this
Agreement and the transactions contemplated hereunder.
Section 13.4 Assignment.
----------
This Agreement shall not be assignable by any party without the written
consent of the other party hereto.
Section 13.5 Amendment and Waiver.
----------------------
Subject to the applicable law, this Agreement may be amended, modified, and
supplemented at any time prior to or at the closing, whether before or after the
votes of the shareholders of MRG and BTI, by written agreement approved by the
Board of Directors of BTI and MRG; provided, however, that after the votes of
shareholders of and MRG no such amendment, modification or supplement may be
made which in any way materially adversely affects the rights of any class of
shareholders without a further vote by the affected shareholders to approve such
amendment, modification or supplement.
The conditions to each of the parties' obligations to consummate the Merger
are for the sole benefit of such party and may be waived by such party in whole
or in part to the extent permitted by applicable law; provided, however, that
any waiver by a party must be in writing.
Section 13.6 Survival of Representations and Warranties.
----------------------------------------------
All representations and warranties made hereunder by the parties hereto
shall survive the Closing and any investigation at any time made by or on behalf
of the parties hereto. All representations and warranties herein which are made
to the best knowledge of a party shall require that such party make reasonable
investigation and inquiry with respect thereto to ascertain the correctness and
validity thereof.
Section 13.7 Counterparts.
------------
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
Section 13.8 Captions.
--------
Captions used herein are for convenience of reference only; such captions
are not a part hereof and shall not be used in construing this Agreement.
Section 13.9 References to Sections.
------------------------
References to articles and sections herein include all subsections
subsidiary to the sections referred to.
Section 13.10 Entire Agreement.
-----------------
This Agreement contains the entire agreement of the parties regarding the
subject matter hereof. It supersedes any and all other agreements, either oral
or in writing, between the parties hereto with respect to the subject matter of
this Agreement. Each party to this Agreement acknowledges that no
representations, inducements, promises or agreements, oral or otherwise, have
been made by any party, or anyone acting on behalf of any party, which are not
embodied herein, and that no other agreement, statement or promise with respect
to the subject matter hereof not contained in this Agreement shall be valid or
binding.
Section 13.11 Word Meanings.
--------------
Any reference herein to the singular form of a word shall include reference
to the plural form thereof, and any reference herein to the plural form of a
word shall include reference to the singular form thereof, as the context may
require. Words such as "herein", "hereinafter", "hereof", and "hereunder" refer
to this Agreement as a whole arid not merely to a subdivision in which such
words appear unless the context otherwise requires.
Section 13.12 Exhibits, Schedules and Attachments.
--------------------------------------
Each exhibit, schedule and attachment to this Agreement is incorporated
herein by reference for all purposes.
Section 13.13 Further Assurances, Documents.
--------------------------------
Each party hereto agrees to use their best efforts to perform any further
act, to cooperate with the other parties and to execute, deliver and file any
further documents and instruments that may be reasonably necessary to carry out
the provisions of this Agreement and the transactions contemplated hereby as
soon as reasonably practicable.
IN WITNESS WHEREOF, the parties have executed or caused this Agreement to
be signed by their respective duly authorized officers on the date first
mentioned above.
ATTEST: BACTROL TECHNOLOGIES, INC.
/s/ ▇▇▇▇ ▇▇▇▇▇▇
------------------------------- BY: /s/ ▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------
Secretary President
(Corporate Seal)
ATTEST: MILITARY RESALE GROUP, INC.
BY: /s/ Ethean ▇. ▇▇▇▇▇
------------------------------ ------------------------------
Secretary President
(Corporate Seal)
WITNESS:
/s/ ▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------ ------------------------------
▇▇▇ ▇▇▇▇▇▇▇▇