SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(MARK ONE)
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period ended August 31, 1998.
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the transition period FROM TO . ------------ --------------
Commission file number:33-2128-D
KELLY'S COFFEE GROUP, INC.
--------------------------
(EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)
COLORADO 84-1062062
-------- ----------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
268 WEST 400 SOUTH, SALT LAKE CITY, UTAH 84101
---------------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE) (ZIP CODE)
(801) 575-8073
--------------
(ISSUER'S TELEPHONE NUMBER)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
YES XX NO
The number of outstanding shares of the issuer's common stock, $0.001
par value (the only class of voting stock), as of August 31, 1999 was 43,555,736
1
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TABLE OF CONTENTS
PART I-FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS..................................................3
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS..................................4
PART II-OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.....................................................5
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.............................5
ITEM 5. OTHER INFORMATION.....................................................5
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K......................................5
SIGNATURES.....................................................................6
INDEX TO EXHIBITS..............................................................7
[THIS SPACE HAS BEEN INTENTIONALLY LEFT BLANK]
2
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ITEM 1. FINANCIAL STATEMENTS
As used herein, the term "Company" refers to Kelly's Coffee Group,
Inc., a Colorado corporation, and its predecessors unless otherwise indicated.
The unaudited, condensed interim financial statements including a balance sheet
for the Company as of the quarter ended August 31, 1998 and statements of
operations, and statements of cash flows for the interim period up to the date
of such balance sheet and the comparable period of the preceding year are
attached hereto as Pages F-1 through F-9 and are incorporated herein by this
reference.
[THIS SPACE HAS BEEN LEFT BLANK INTENTIONALLY.]
3
<PAGE>
ITEM 1. FINANCIAL STATEMENTS
INDEX TO FINANCIAL STATEMENTS
PAGE
Balance Sheet................................................................F-2
Statement of Operations......................................................F-3
Statement of Cash Flows......................................................F-5
Statement of Shareholders' Equity...........................................F-6
Notes to Unaudited Financial Statements......................................F-7
F-1
<PAGE>
KELLY'S COFFEE GROUP, INC.
UNAUDITED CONDENSED BALANCE SHEET
AUGUST 31, 1998
August 31,
1998
-------------------
ASSETS
Current Assets -
Marketable securities - available for
SALE (NOTE 1) 304,942
-------------------
TOTAL CURRENT ASSETS $ 304,942
-------------------
TOTAL ASSETS $ 304,942
-------------------
-------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Net Liabilities of
discontinued operations $ 2,310,870
----------------
Total Current Liabilities 2,310,870
----------------
TOTAL LIABILITIES 2,310,870
----------------
COMMITMENTS AND CONTINGENCIES (Note 2)
SHAREHOLDERS' EQUITY
Preferred stock, $0.001 par value, 50,000
shares authorized, none issued and
outstanding -
Common stock, $0.001 par value,
100,000,000 shares authorized, 43,555,736
shares issued and outstanding 43,556
Additional paid-in capital 2,823,630
Accumulated deficit (4,522,886)
Accumulated deficit from inception of
development stage on March 1, 1998 (350,228)
----------------
Total Stockholders' equity (deficit) (2,005,928)
----------------
TOTAL LIABILITIES AND
SHAREHOLDERS EQUITY $ 304,942
----------------
SEE NOTES TO FINANCIAL STATEMENTS
F-2
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<TABLE>
<CAPTION>
KELLY'S COFFEE GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
UNAUDITED STATEMENT OF OPERATIONS
From
inception of
Development
Stage on
For the Three Months For the Six Months March 1,
Ended Ended 1998 through
August 31 August 31 August 31,
1998 1997 1998 1997 1998
------------- ------------- ------------- -------------- -----------------
<S> <C> <C> <C> <C> <C>
Sales $ - $ 349,023 $ - $ 843,724 $ -
Cost of Sales - 216,623 - 443,701 -
------------- ------------- ------------- -------------- -----------------
Gross Margin 132,400 400,023
Operating Expenses
General and
Administrative 314,108 141,537 350,228 328,480 350,228
Depreciation and
Amortization - 17,496 - 34,992 -
Rent - 48,797 - 78,801 -
------------- ------------- ------------- -------------- -----------------
Total Operating Expenses 314,108 207,830 350,228 442,273 350,228
------------- ------------- ------------- -------------- -----------------
Income (Loss) From
Operations (314,108) (75,430) (350,228) (42,250) (350,228)
------------- ------------- ------------- -------------- -----------------
Other Income (Expense)
Other Income
(Expense) - - - 352 -
Interest Expense - - - - -
--------------
Total Other Income
(Expense) - - - 352 -
--------------
Income (Loss) Before
Discontinued Operations and
Minority Interest
(314,108) (75,430) (350,228) (41,898) (350,228)
------------- ------------- ------------- -------------- -----------------
Discontinued Operations
(Note 5)
Loss from discontinued
Operations
Loss from disposal of assets - - - - -
------------- ------------- ------------- -------------- -----------------
Income (Loss) From
Discontinued Operations - - - - -
------------- ------------- ------------- -------------- -----------------
Minority Interest in (Gain) Loss - 11,315 - 6,285 -
------------- ------------- ------------- -------------- -----------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
F-3
<PAGE>
<TABLE>
<CAPTION>
KELLY'S COFFEE GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
UNAUDITED STATEMENTS OF OPERATIONS (CONTINUED)
From
inception of
Development
Stage on
For the Three Months March 1,
Ended For the Six Months Ended 1998 through
August 31 August 31 August 31,
1998 1997 1998 1997 1998
-------------- -------------- -------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Income (Loss) per share
LOSS FROM OPERATIONS $ (0.01) $ (0.01) $ (0.01) $ 0.00 -
Loss from
discontinued
operations - - - -
-------------- -------------- -------------- --------------- -----------------
BASIC LOSS PER SHARE $ (0.01) $ (0.01) $ (0.01) $ 0.00 -
============== ============== ============== =============== =================
Weighted average shares
outstanding 30,722,292 12,000,666 25,784,458 12,000,666 -
-------------- -------------- -------------- --------------- ---------------
</TABLE>
F-4
<PAGE>
<TABLE>
<CAPTION>
KELLY'S COFFEE GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
UNAUDITED STATEMENT OF CASH FLOWS
From inception of
Development Stage
on March 1, 1998
For the six months ended Through
August 31, August 31,
1998 1997 1998
-------------- ---------------- -----------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
NET LOSS $ (350,228) $ (35,613) $ (350,228)
Adjustments to reconcile net loss TO
NET CASH USED IN OPERATING ACTIVITIES:
DEPRECIATION AND AMORTIZATION - 34,992 -
Loss on disposition of assets - -
Common stock issued for services 350,228 350,228
Minority interest in gain (loss) - (6,285) -
CHANGES IN OPERATING ASSETS AND LIABILITIES:
(Increase) decrease in accounts receivable - (88,422) -
(Increase) decrease in inventory - 12,408 -
(Increase) decrease in prepaids - - -
Increase (decrease) in cash overdraft - 5,987 -
Increase (decrease) in related party
payables - 41,120 -
Increase (decrease) in accounts payable
and Accrued expenses - 105,243 -
Increase (decrease) in arbitration
Award payable - (36,284) -
Increase (decrease) in net liabilities of
Discontinued operations - - -
-------------- ---------------- -----------------------
NET CASH PROVIDED (USED IN) OPERATING
ACTIVITIES - 33,146 -
-------------- ---------------- -----------------------
Cash flow from Investing Activities:
Purchase of fixed assets - -
-------------- ---------------- -----------------------
Net Cash used in Investing Activities - - -
-------------- ---------------- -----------------------
Net Cash (Used) by Financing Activities
Repayment of notes payable (33,146)
Proceeds from notes payable - -
Contributed capital - - -
Net Cash provided by Financing Activities - (33,146) -
Net Increase (Decrease) in Cash - - -
Cash at Beginning of Period - - -
-------------- ---------------- -----------------------
Cash at End of Period $ - $ - $ -
-------------- ---------------- -----------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
F-5
<PAGE>
<TABLE>
<CAPTION>
KELLY'S COFFEE GROUP, INC.
UNAUDITED STATEMENT OF SHAREHOLDER'S EQUITY
AUGUST 31, 1998
AUGUST 31, 1998
PREFERRED STOCK COMMON STOCK ADDITIONAL
----------------------- ------------------------- PAID-IN
SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT
----------- ---------- ----------- ------------ ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, FEBRUARY 28, 1998 - $ - 21,716,736 $ 21,717 $ 2,190,299 $ (4,522,886)
COMMON STOCK ISSUED FOR SERVICES AT - -
$0.03 PER SHARE 11,450,000 11,450 357,108
COMMON STOCK ISSUED FOR MARKETABLE
SECURITIES AT $ 0.03 PER SHARE - - 11,000,000 11,000 293,942
COMMON STOCK RETURNED TO TREASURY AT
$0.03 PER SHARE FOR SERVICES NOT PERFORMED - - (611,000) (611) (17,719)
NET LOSS FOR THE SIX MONTHS ENDED AUGUST 31, 1998 - - - - - (350,228)
----------- ----------- ----------- ---------- ------------- ------------
BALANCE, AUGUST 31, 1998 - $ - 43,555,736 $ 43,556 $ 2,823,630 $ (4,873,114)
========== =========== =========== ========= ============= =============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
F-6
<PAGE>
KELLY'S COFFEE GROUP, INC.
(A Development Stage Company)
Notes to the Unaudited Financial Statements
August 31, 1998
NOTE 1 - SUMMARY OF ACCOUNTING POLICIES
A. ORGANIZATION
The financial statements for 1997 include those of Kelly's Coffee
Group, Inc. and its 85% owned subsidiary Kelly - Berg Corporation of
Colorado, Inc. (Kelly - Berg) collectively, they are referred to herein
as "the Company". All intercompany accounts and transactions have been
eliminated. The Company discontinued operations of its Subsidiary on
February 28, 1998. (See Note 3)
The Company was reclassified as a development stage company on March 1,
1998, as a result of the dissolution of Kelly-Berg.
B. BASIC LOSS PER SHARE
Basic loss per share has been calculated based on the weighted average
number of shares of common stock outstanding during the period.
C. INCOME TAXES
As of August 31, 1998, the Company had a net operating loss
carryforward for federal income tax purposes of approximately
$4,500,000 that may be used in future years to offset taxable income.
The net operating loss carryforward will begin to expire in 2014. The
tax benefit of the cumulative carryforwards has been offset by a
valuation allowance of the same amount.
D. CONCENTRATIONS OF CREDIT RISK
The Company has no significant concentrations of credit risk other than
in the normal course of business.
E. ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
F. PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the
Company and its 85% owned subsidiary. All material intercompany
accounts and transactions have been eliminated in consolidation.
F-7
<PAGE>
KELLY'S COFFEE GROUP, INC.
(A Development Stage Company)
Notes to the Unaudited Financial Statements
August 31, 1998
NOTE 1 - SUMMARY OF ACCOUNTING POLICIES (Continued)
G. MARKETABLE SECURITIES - AVAILABLE FOR SALE
The Company has classified its marketable securities as
"available-for-sale" securities. Trading securities are stated at fair
value. Unrealized gains and losses are reported as a separate component
of equity.
NOTE 2 - BASIS OF PRESENTATION - GOING CONCERN
The accompanying financial statements have been prepared in conformity
with generally accepted accounting principles, which contemplates
continuation of the Company as a going concern. However, the Company
has sustained operating losses since its inception and has a net
capital deficiency. In the interim, shareholders of the Company have
committed to meeting its minimal operating expenses.
NOTE 3 - DISCONTINUED OPERATIONS
On February 28, 1998, the Board of Directors of the Company decided to
discontinue the manufacturing and distribution of store fixtures and
merchandise showcases due to a lack of funding and increased losses.
The following is a summary of the loss from discontinued operations.
FOR THE YEAR ENDED FEBRUARY 28, 1998
------------------------------------
NET SALES $ 1,209,148
COST OF PRODUCTS SOLD 415,150
GROSS PROFIT 793,998
EXPENSES
General and administrative 581,037
Salaries and wages 827,455
Depreciation and amortization 67,061
Bad debt expense 43,497
LOSS ON DISPOSAL OF ASSETS 572,015
-----------
F-8
<PAGE>
KELLY'S COFFEE GROUP, INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
August 31, 1998
NOTE 3 - DISCONTINUED OPERATIONS (CONTINUED)
TOTAL EXPENSES 2,091,065
LOSS BEFORE INCOME TAXES (1,297,067)
INCOME TAX EXPENSE -
-----------
NET LOSS $ (1,297,067)
-----------
BASIC LOSS PER SHARE OF COMMON STOCK $ (0.07)
===========
The Company had liabilities of $2,310,870 which are associated with the
discontinued operations. No income tax benefit has been attributed to
the loss from discontinued operations.
NOTE 4 - BASIS OF REPRESENTATION
The accompanying consolidated unaudited condensed financial statements
have been prepared by management in accordance with the instructions in
Form 10-QSB and, therefore, do not include all information and
footnotes required by generally accepted accounting principles and
should, therefore, be read in conjunction with the Company's Annual
Report to Shareholders on Form 10-KSB for the fiscal year ended
February 28, 1999. These statements do include all normal recurring
adjustments which the Company believes necessary for a fair
presentation of the statements. The interim operations results are not
necessarily indicative of the results for the full year ended February
28, 1999.
[Remainder of this page intentionally left blank]
F-9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
This Quarterly Report contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended, which are intended to be
covered by the safe harbors created thereby. Investors are cautioned that all
forward-looking statements involve risks and uncertainty, including without
limitation, the ability of the Company to continue its expansion strategy,
changes in costs of raw materials, labor, and employee benefits, as well as
general market conditions, competition and pricing. Although the Company
believes that the assumptions underlying the forward-looking statements
contained herein are reasonable, any of the assumptions could be inaccurate, and
therefore, there can be no assurance that the forward-looking statements
included in this Quarterly Report will prove to be accurate. In light of the
significant uncertainties inherent in the forward-looking statements including
herein, the inclusion of such information should not be regarded as are
presentation by the Company or any other person that the objectives and plans of
the Company will be achieved.
As used herein the term "Company" refers to Kelly's Coffee Group, Inc., a
Colorado corporation and its predecessors, unless the context indicates
otherwise. The Company discontinued its operations on February 28, 1998. The
Company is currently a shell company whose purpose will be to acquire operations
through an acquisition, merger or begin its own start-up business.
The Company is in the process of attempting to identify and acquire a favorable
business opportunity. The Company has reviewed and evaluated a number of
business ventures for possible acquisition or participation by the Company. The
Company has not entered into any agreement, nor does it have any commitment or
understanding to enter into or become engaged in a transaction as of the date of
this filing. The Company continues to investigate, review, and evaluate business
opportunities as they become available and will seek to acquire or become
engaged in business opportunities at such time as specific opportunities
warrant.
RESULTS OF OPERATIONS
Sales revenues for the three and six months ended August 31, 1998 were $0 and $0
compared to $349,023 and $843,724 for the same periods in 1997. The Company had
no sales in for the six months ended August 31, 1998 because it ceased
operations as of February 28, 1998, as a result of reoccurring losses.
Costs of sales revenues for the three and six months ended August 31, 1998, were
$0 and $0 compared to $216,623 and $443,701 for the same periods in 1997. The
Company had no cost of sales for the six months ended August 31, 1998, it ceased
operations as of February 28, 1998.
General and administrative expenses were $314,108 and $350,228 for the three and
six months ended August 31, 1998, compared to $141,537 and $328,480 for the same
periods in 1997. The general and administrative expenses increased in 1998 as a
result of the Company's decision hire consultants through the issuance of its
common stock to settle debt in search for business opportunities.
The Company recorded net losses of $314,108 and $350,228 for the three and six
months ended August 31, 1998 compared to net losses of $64,115 and $35,613 for
the same periods in 1997. The losses in 1998 were primarily attributable to the
discontinuation of operations and fees paid to consultants.
CAPITAL RESOURCES AND LIQUIDITY
At August 31, 1998, the Company had current assets of $304,942 and total assets
of $304,942 as compared to $0 and $0 , respectively at February 28, 1998. The
Company had a net working capital deficit of $ 2,005,928 at August 31, 1998
compared to a working capital deficit of $2,310,870 at February 28, 1998.
Net stockholders' deficit in the company was $2,005,928 as of August 31, 1998,
compared to $1,648,943 as of August 31, 1997.
4
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PART II-OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There were no material developments concerning the Company's legal proceedings
during the quarter ended August 31, 1998. For more information on the Company's
legal proceedings, please see Part I Item 3. Legal Proceedings of the Company's
February 28, 1998 Form 10KSB.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On June 18, 1998, the Company entered into a Stock Purchase Agreement with
AmeriResource Technologies, Inc. (ARET) pursuant to which the Company in a
private transaction not involving a public offering exchanged 2,000,000 shares
of its commons stock pursuant to Section 4(2) of Securities Act of 1933 in
exchange for 2,678,571 shares of ARET's common stock.
On June 18, 1998, the Company entered into a Stock Purchase Agreement with
Flexweight Corporation nka Oasis Resorts International, Inc. (OAIS) pursuant to
which the Company in a private transaction not involving a public offering
exchanged 2,000,000 shares of its commons stock pursuant to Section 4(2) of
Securities Act of 1933 in exchange for 25,000 shares of OAIS' common stock.
On August 7, 1998, the Company entered into a Stock Purchase Agreement with
AmeriResource Technologies, Inc. (ARET) pursuant to which the Company in a
private transaction not involving a public offering exchanged 5,000,000 shares
of its commons stock pursuant to Section 4(2) of Securities Act of 1933 in
exchange for 15,384,615 shares of ARET's common stock.
On August 7, 1998, the Company entered into a Stock Purchase Agreement with
Flexweight Corporation nka Oasis Resorts International, Inc. (OAIS) pursuant to
which the Company in a private transaction not involving a public offering
exchanged 2,500,000 shares of its commons stock pursuant to Section 4(2) of
Securities Act of 1933 in exchange for 10,526 shares of OAIS' common stock.
On August 24, 1998, the Company in a private transaction not involving a public
offering issued 1,100,000 shares of its commons stock pursuant to Section 4(2)
of Securities Act of 1933 for consulting services rendered by Hudson Consulting
Group, Inc.
The Company also issued a total of 7,535,000 shares its common stock to various
consultants for services rendered. The Company issued the shares in a series of
private transactions not involving a public offering pursuant to Section 4(2) of
the Securities Act of 1933.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS Exhibits required to be attached by Item 601 of Regulation S-B
are listed in the Index to Exhibits on page 9 of this Form 10-QSB, and
are incorporated herein by this reference.
(B) REPORTS ON FORM 8-K. No reports on Form 8-K were filed during the period
covered by this Form 10QSB.
5
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized, this 2nd day of December 1999.
KELLY'S COFFEE GROUP, INC.
/s/
- --------------------
Richard D. Surber December 2, 1999
President and Director
/s/ December 2, 1999
- --------------------
Wayne Newton
Controller
6
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INDEX TO EXHIBITS
EXHIBIT PAGE
NO. NO. DESCRIPTION
3(i) * Articles of Incorporation of the Company
(incorporated herein by reference from Exhibit No.
3(i) to the Company's Form S-18 as filed with the
Securities and Exchange Commission on September 16,
1988 ).
3(ii) * Bylaws of the Company, as amended (incorporated
herein by reference from Exhibit 3(ii) of the
Company's Form S-18 as filed with the Securities
and Exchange Commission on September 16, 1988).
4(a) * Form of certificate evidencing shares of "Common
Stock" in the Company (incorporated from Exhibit
4(a) to the Company's Form S-18 as filed with the
Securities and Exchange Commission on September 16,
1988 ).
MATERIAL AGREEMENTS
10(i) (a) 8 Stock Purchase Agreement with AmeriResource Tech-
nologies, Inc. dated June 18, 1998
10(i)(b) 14 Stock Purchase Agreement with Flexweight Corp-
oration, nka, Oasis Resorts International, Inc.,
dated June 18, 1998
10(i)(c) 20 Stock Purchase Agreement with Flexweight Corp-0
oration, nka, Oasis Resorts International, Inc.,
dated August 7, 1998.
10(i)(d) 26 Stock Purchase Agreement with AmeriResource Techn-
ologies, Inc. dated August 7, 1998
27 32 Financial Data Schedule "CE"
7
EXHIBIT 10(I)(A)
STOCK EXCHANGE AGREEMENT
THIS STOCK EXCHANGE AGREEMENT ("AGREEMENT") IS ENTERED INTO THIS day of
June, 1998 by and between Kelly's Coffee Group, Inc., ("Kelly's") a Colorado
corporation with principal offices located at 647 Seventeenth Avenue, Longmont,
Colorado 80502-1539, and Ameriresource Technologies, Inc. ("Ameriresource") a
Delaware corporation with principal offices located at 8815 E. Long Street,
Lenexa, Kansas 66215.
WHEREAS, Kelly's desires to acquire from Ameriresource approximately
Two Million Six Hundred Seventy Eight Thousand Five Hundred Seventy One
(2,678,571) restricted shares of the common stock of Ameriresource, in exchange
for One Million Five Hundred Thousand (1,500,000) restricted shares of the
common stock of Kelly's.
NOW, THEREFORE with the above being incorporated into and made a part
hereof for the mutual consideration set out herein and, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. EXCHANGE. Kelly's will, in a tax free exchange, acquire from Ameriresource,
Two Million Six Hundred Seventy Eight Thousand Five Hundred Seventy One
(2,678,571) restricted shares of the common stock of Ameriresource, valued as of
June 18, 1998 at $.028 per share, in a tax free exchange wherein Ameriresource
shall acquire One Million Five Hundred Thousand (1,500,000) restricted shares of
Kelly's common stock, valued as of June 18, 1998 at $.05 per share.
2. EXCHANGE OF SHARES. On or before the closing date, set herein to be June 30,
1998, the above-mentioned shares are to be exchanged.
3. TERMINATION. This Agreement may be terminated at any time prior to the
Closing Date:
A. BY KELLY'S OR AMERIRESOURCE:
(1) If there shall be any actual or threatened action or
proceeding by or before any court or any other governmental
body which shall seek to restrain, prohibit, or invalidate the
transactions contemplated by this Agreement and which, in
judgement of such Board of Directors made in good faith and
based upon the advice of legal counsel, makes it inadvisable
to proceed with the transactions contemplated by this
Agreement; or
(2) If the Closing shall have not occurred prior to June 30,
1998, or such later date as shall have been approved by
parties hereto, other than for reasons set forth herein.
B. BY AMERIRESOURCE:
(1) If Kelly's shall fail to comply in any material respect
with any of its or their covenants or agreements contained in
this Agreement or if any of the representation or warranties
of Kelly's contained herein shall be inaccurate in any
material respect; or
C. BY KELLY'S:
(1) If Ameriresource shall fail to comply in any material
respect with any of its covenants or agreements contained in
this Agreement of if any of the representation or warranties
of Ameriresource contained herein shall be inaccurate in any
material respect;
In the event this Agreement is terminated pursuant to this Paragraph,
this Agreement shall be of no further force or effect, no obligation, right, or
liability shall arise hereunder, and each party shall bear its own costs as well
as the legal, accounting, printing, and other costs incurred in connection with
negotiation, preparation and execution of the Agreement and the transactions
herein contemplated.
8
<PAGE>
4. REPRESENTATIONS AND WARRANTIES OF AMERIRESOURCE. Ameriresource hereby
represents and warrants that effective this date and the Closing Date, the
following representations are true and correct:
A. CORPORATE AUTHORITY. Ameriresource has the full corporate
power and authority to enter this Agreement and to carry out
the transactions contemplated by this Agreement. The Board of
Directors of Ameriresource has duly authorized the execution,
delivery and performance of this Agreement.
B. FINANCIAL STATEMENTS. The latest 10-Q report ("Ameriresource
Financials") has been given to Kelly's prior to closing.
C. NO CONFLICT WITH OTHER INSTRUMENTS. The execution of this
Agreement will not violate or breach any document, instrument,
agreement, contract, or commitment material to the business of
Ameriresource to which Ameriresource is a party and has been
duly authorized by all appropriated and necessary action.
D. INFORMATION. The information concerning Ameriresource as set
forth in this Agreement and in the Ameriresource Financials is
complete and accurate in all material respects and does not
contain any untrue statement of a material fact or omit to
state a material fact required to make the statements made in
light of the circumstances under which they were made not
misleading.
E. DELIVERANCE OF SHARES. As of the Closing Date, the
Ameriresource Shares to be delivered to Kelly's will be
restricted and constitute valid and legally issued shares of
Ameriresource, fully paid and non-assessable and equivalent in
all respects to all other issued and outstanding shares of
Ameriresource restricted stock.
F. NO CONFLICT WITH OTHER INSTRUMENT. The execution of this
agreement will not violate or breach any document, instrument,
agreement, contract or commitment material to Ameriresource.
G. INFORMATION. The information concerning Ameriresource and set
forth in this Agreement, is complete and accurate in all
material respects and does not contain any untrue statement of
a material fact or omit to state a material fact required to
make the statements made, in light of the circumstances under
which they were made, not misleading.
H. RESTRICTED SHARES. The shares of Kelly's common stock which
are being acquired for Ameriresource's own account and for
investment and not with a view to the public resale or
distribution thereof. Ameriresource will not sell, transfer or
otherwise dispose of the Kelly's Shares except in compliance
with the Securities Act of 1933, as amended (the "Act"), and
is aware the Kelly's Shares are "restricted securities" as
that term is defined in Rule 144 of the General Rules and
Regulations under the Act ("Rule 144").
Ameriresource acknowledges and understands that the Kelly's
Shares are unregistered in reliance of Section 4(2) of the Act
and must be held indefinitely unless they are subsequently
registered under the Act or an exemption from such
registration is available.
Ameriresource is fully aware of the applicable limitation on
the resale of the Kelly's Shares. These restrictions for the
most part are set forth in Rule 144. Rule 144 permits sales of
"restricted securities" upon compliance with the requirements
of such rule. If Rule 144 is available to Ameriresource,
Ameriresource may make only routine sales of securities in
limited amounts, in accordance with the terms and conditions
of that Rule.
5. REPRESENTATIONS AND WARRANTIES OF KELLY'S.
Kelly's hereby represents and warrants that, effective this date and the
Closing Date, the representations and warranties listed below are true and
correct.
9
<PAGE>
A. CORPORATE AUTHORITY. Kelly's has the full corporate power and
authority to enter this Agreement and to carry out the
transactions contemplated by this Agreement. The Board of
Directors of Kelly's has duly authorized the execution,
delivery, and performance of this Agreement.
B. FINANCIAL STATEMENTS. The latest 10-Q report ("Kelly's
Financials") has been given to Ameriresource prior to closing.
C. NO CONFLICT WITH OTHER INSTRUMENTS. The execution of this
Agreement will not violate or breach any document, instrument,
agreement, contract, or commitment material to the business of
Kelly's to which Kelly's is a party and has been duly
authorized by all appropriated and necessary action.
D. INFORMATION. The information concerning Kelly's as set forth
in this Agreement and in the Kelly's Financials is complete
and accurate in all material respects and does not contain any
untrue statement of a material fact or omit to state a
material fact required to make the statements made in light of
the circumstances under which they were made not misleading.
E. DELIVERANCE OF SHARES. As of the Closing Date, the Kelly's
Shares to be delivered to Ameriresource will be restricted and
constitute valid and legally issued shares of Kelly's fully
paid and non-assessable and equivalent in all respects to all
other issued and outstanding shares of Kelly's restricted
stock.
F. NO CONFLICT WITH OTHER INSTRUMENT. The execution of this
agreement will not violate or breach any document, instrument,
agreement, contract or commitment material to Kelly's.
G. INFORMATION. The information concerning Kelly's and set forth
in this Agreement, is complete and accurate in all material
respects and does not contain any untrue statement of a
material fact or omit to state a material fact required to
make the statements made, in light of the circumstances under
which they were made, not misleading.
H. RESTRICTED SHARES. The shares of Ameriresource common stock
which are being acquired for Kelly's own account and for
investment and not with a view to the public resale or
distribution thereof. Kelly's will not sell, transfer or
otherwise dispose of the Ameriresource Shares except in
compliance with the Securities Act of 1933, as amended (the
"Act"), and is aware the Ameriresource Shares are "restricted
securities" as that term is defined in Rule 144 of the General
Rules and Regulations under the Act ("Rule 144")
Kelly's acknowledges and understands that the Shares are
unregistered in reliance of Section 4(2) of the Act and must
be held indefinitely unless they are subsequently registered
under the Act or an exemption from such registration is
available.
Kelly's is fully aware of the applicable limitation on the
resale of the Kelly's Shares. These restrictions for the most
part are set forth in Rule 144. Rule 144 permits sales of
"restricted securities" upon compliance with the requirements
of such rule. If Rule 144 is available to Kelly's, Kelly's may
make only routine sales of securities in limited amounts, in
accordance with the terms and conditions of that Rule.
6. CLOSING. The Closing as herein referred to shall occur upon such
date as the parties hereto may mutually agree upon, but is expected to be on or
before June 30, 1998.
At closing Kelly's will deliver the Kelly's Shares to Ameriresource,
and Ameriresource shall deliver the Ameriresource Shares to Kelly's.
7. CONDITIONS PRECEDENT OF AMERIRESOURCE TO EFFECT CLOSING. All obligations
10
<PAGE>
of Ameriresource under this Agreement are subject to fulfillment prior to or as
of the Closing Date, of each of the following conditions:
A. The representations and warranties by or on behalf of Kelly's
contained in this Agreement or in any certificate or documents
delivered to Ameriresource pursuant to the provisions hereof shall be
true in all material respects at end as of the time of Closing as
though such representations and warranties were made at and as of such
time.
B. Kelly's shall have performed and complied with all covenants,
agreements and conditions required by this Agreement to be performed or
complied with by it prior to or at the Closing.
C. All instruments and documents delivered to Ameriresource pursuant to
the provisions hereof shall be reasonably satisfactory to
Ameriresource' legal counsel.
8. CONDITIONS PRECEDENT OF KELLY'S TO EFFECT CLOSING. All obligations of Kelly's
under this Agreement are subject to fulfillment prior to or as of the date of
Closing, of each of the following conditions:
A. The representations and warranties by or on behalf of Ameriresource
contained in this Agreement or in any certificate or documents
delivered to Kelly's pursuant to the provisions hereof shall be true in
all material respects at end as of the time of Closing as though such
representations and warranties were made at and as of such time.
B. Ameriresource shall have performed and complied with all covenants,
agreements and conditions required by this Agreement to be performed or
complied with by it prior to or at the Closing.
C. All instruments and documents delivered to Kelly's pursuant to the
provisions hereof shall be reasonably satisfactory to Kelly's legal
counsel.
9. DAMAGES AND LIMIT OF LIABILITY. Each party shall be liable, for any material
breach of the representations, warranties, and covenants contained herein which
results in a failure to perform any obligation under this Agreement, only to the
extent of the expenses incurred in connection with such breach or failure to
perform Agreement.
10. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations,
warranties and covenants made by any party in this Agreement shall survive the
Closing hereunder. All of the parties hereto are executing and carrying out the
provisions of this Agreement in reliance solely on the representations,
warranties and covenants and agreements contained in this Agreement or at the
Closing of the transactions herein provided for and not upon any investigation
upon which it might have made or any representations, warranty, agreement,
promise, or information, written or oral, made by the other party or any other
person other than as specifically set forth herein.
11. INDEMNIFICATION PROCEDURES. If any claim is made by a party which would give
rise to a right of indemnification under this paragraph, the party seeking
indemnification (Indemnified Party) will promptly cause notice thereof to be
delivered to the party from whom is sought (Indemnifying Party). The Indemnified
Party will permit the Indemnifying Party to assume the defense of any such claim
or any litigation resulting from the claims. Counsel for the Indemnifying Party
which will conduct the defense must be approved by the Indemnified Party (whose
approval will not be unreasonable withheld), and the Indemnified Party may
participate in such defense at the expense of the Indemnified Party. The
indemnifying Party will not in the defense of any such claim or litigation,
consent to entry of any judgement or enter into any settlement without the
written consent of the Indemnified Party (which consent will not be unreasonably
withheld). The Indemnified Party will not, in connection with any such claim or
litigation, consent to entry of any judgement or enter into any settlement
without the written consent of the Indemnifying Party (which consent will not be
unreasonable withheld). The Indemnified Party will cooperate fully with the
Indemnifying Party and make available to the Indemnifying Party all pertinent
information under its control relating to any such claim or litigation. If the
Indemnifying Party refuses or fails to conduct the defense as required in this
Section, then the Indemnified Party may conduct such defense at the expense of
the Indemnifying Party and the approval of the Indemnifying Party will not be
required for any settlement or consent or entry of judgement.
N
11
<PAGE>
12. DEFAULT AT CLOSING. Notwithstanding the provisions hereof, if Ameriresource
shall fail or refuse to deliver any of the Ameriresource Shares, or shall fail
or refuse to consummate the transaction described in this Agreement prior to the
Closing Date, such failure or refusal shall constitute a default by
Ameriresource and Kelly's at its option and without prejudice to its rights
against such defaulting party, may either (a) invoke any equitable remedies to
enforce performance hereunder including, without limitation, an action or suit
for specific performance, or (b) terminate all of its obligations hereunder with
respect to Ameriresource.
13. COSTS AND EXPENSES. Ameriresource and Kelly's shall bear their own costs and
expenses in the proposed exchange and transfer described in this Agreement.
Ameriresource and Kelly's have been represented by their own attorney in this
transaction, and shall pay the fees of its attorney, except as may be expressly
set forth herein to the contrary.
14. NOTICES. Any notice under this Agreement shall be deemed to have been
sufficiently given if sent by registered or certified mail, postage prepaid,
addressed as follows:
To Kelly's:
Kelly's Coffee Group, Inc.
647 Seventeenth Avenue
Longmont, Colorado 80502-1539
To Ameriresource:
Ameriresource Technologies. Inc.
P.O. Box 14748
Shawnee Mission, Kansas 66285-4748
15. MISCELLANEOUS.
A. FURTHER ASSURANCES. At any time and from time to time, after the
effective date, each party will execute such additional instruments and take
such as may be reasonably requested by the other party to confirm or perfect
title to any property transferred hereunder or otherwise to carry out the intent
and purposes of this Agreement.
B. WAIVER. Any failure on the part of any party hereto to comply with any
of its obligations, agreements, or conditions hereunder may be waived in writing
by the party to whom such compliance is owed.
C. BROKERS. Neither party has employed any brokers or finders with regard
to this Agreement no disclosed herein.
D. HEADINGS. The section and subsection headings in this Agreement are
inserted for convenience only
and shall not affect in any way the meaning or interpretation of this Agreement.
E. COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
F. GOVERNING LAW. This Agreement was negotiated and is being contracted for
in the State of Utah, and shall be governed by the laws of the State of Utah,
notwithstanding any conflict-of-law provision to the contrary. Any suit, action
or legal proceeding arising from or related to this Agreement shall be submitted
for binding arbitration resolution to the American Arbitration Association, in
Salt Lake City, Utah, pursuant to their Rules of Procedure or any other mutually
agreed upon arbitrator. The parties agree to abide by decisions rendered as
final and binding, and each party irrevocably and unconditionally consents to
the jurisdiction of such Courts in such suit, action or legal proceeding and
waives any objection to the laying of venue in, or the jurisdiction of, said
Courts.
G. BINDING EFFECT. This Agreement shall be binding upon the parties hereto
and inure to the benefit of the parties their respective heirs, administrators,
executors, successors, and assigns.
12
<PAGE>
H. ENTIRE AGREEMENT. The Agreement contains the entire agreement between
the parties hereto and supersedes any and all prior agreements, arrangements or
understandings between the parties relating to the subject matter hereof. No
oral understandings, statements, promises or inducements contrary to the terms
of this Agreement exist. No representations, warranties covenants, or conditions
express or implied, other than is set forth here, have been made by any party.
I. SEVERABILITY. If any part of this Agreement is deemed to be
unenforceable, the balance of the
Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and year
first above written.
Kelly's Coffee Group, Inc.
By:_/s/ Terrence Buttler_______
Ameriresource Technologies, Inc.
By:_/s/ Delmar Janovec_________
13
EXHIBIT 10(I)(B)
STOCK EXCHANGE AGREEMENT
THIS STOCK EXCHANGE AGREEMENT ("AGREEMENT") IS ENTERED INTO THIS day of
June, 1998 by and between Flexweight Corporation, ("Flexweight") a Kansas
corporation with principal offices located at 1946 Plateau Way Wendover, Nevada
89883, and Kelly's Coffee Group, Inc. ("Kelly's") a Colorado corporation with
principal offices located at 647 Seventeenth Avenue, Longmont, Colorado
80502-1539.
WHEREAS, Flexweight desires to acquire from Kelly's approximately Two
Million (2,000,000) restricted shares of the common stock of Kelly's, in
exchange for Twenty Five Thousand (25,000) restricted shares of the common stock
of Flexweight.
NOW, THEREFORE with the above being incorporated into and made a part
hereof for the mutual consideration set out herein and, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. EXCHANGE. Flexweight will, in a tax free exchange, acquire from Kelly's, Two
Million (2,000,000) restricted shares of the common stock of Kelly's, valued as
of June 18, 1998 at $.05 per share, in a tax free exchange wherein Kelly's shall
acquire Twenty Five Thousand (25,000) restricted shares of Flexweight common
stock, valued as of June 18, 1998 at $4.00 per share.
2. EXCHANGE OF SHARES. On or before the closing date, set herein to be June 30,
1998, the above-mentioned shares are to be exchanged.
3. TERMINATION. This Agreement may be terminated at any time prior to the
Closing Date:
A. BY FLEXWEIGHT OR KELLY'S:
(1) If there shall be any actual or threatened action or
proceeding by or before any court or any other governmental
body which shall seek to restrain, prohibit, or invalidate the
transactions contemplated by this Agreement and which, in
judgement of such Board of Directors made in good faith and
based upon the advice of legal counsel, makes it inadvisable
to proceed with the transactions contemplated by the
Agreement; or
(2) If the Closing shall have not occurred prior to June 30,
1998, or such later date as shall have been approved by
parties hereto, other than for reasons set forth herein.
B. BY KELLY'S:
(1) If Flexweight shall fail to comply in any material respect
with any of its or their covenants or agreements contained in
this Agreement or if any of the representation or warranties
of Flexweight contained herein shall be inaccurate in any
material respect; or
C. BY FLEXWEIGHT:
(1) If Kelly's shall fail to comply in any material respect
with any of its covenants or agreements contained in this
Agreement of if any of the representation or warranties of
Kelly's contained herein shall be inaccurate in any material
respect;
In the event this Agreement is terminated pursuant to this Paragraph,
this Agreement shall be of no further force or effect, no obligation, right, or
liability shall arise hereunder, and each party shall bear its own costs as well
as the legal, accounting, printing, and other costs incurred in connection with
negotiation, preparation and execution of the Agreement and the transactions
herein contemplated.
4. REPRESENTATIONS AND WARRANTIES OF KELLY'S. Kelly's hereby represents and
warrants that effective this date and
N:\Master\Clients\Kellys Coffee\SECDOCS\10QSB\KCG8.98.10Q.wpd
14
<PAGE>
the Closing Date, the following representations are true and correct:
A. CORPORATE AUTHORITY. Kelly's has the full corporate power and
authority to enter this Agreement and to carry out the
transactions contemplated by this Agreement. The Board of
Directors of Kelly's has duly authorized the execution, delivery
and performance of this Agreement.
B. FINANCIAL STATEMENTS. The latest 10-Q report ("Kelly's
Financials") has been given to Flexweight
prior to closing.
C. NO CONFLICT WITH OTHER INSTRUMENTS. The execution of this
Agreement will not violate or breach any document, instrument,
agreement, contract, or commitment material to the business of
Kelly's to which Kelly's is a party and has been duly authorized
by all appropriated and necessary action.
D. INFORMATION. The information concerning Kelly's as set forth
in this Agreement and in the Kelly's Financials is complete
and accurate in all material respects and does not contain any
untrue statement of a material fact or omit to state a
material fact required to make the statements made in light of
the circumstances under which they were made not misleading.
E. DELIVERANCE OF SHARES. As of the Closing Date, the Kelly's Shares
to be delivered to Flexweight will be restricted and constitute
valid and legally issued shares of Kelly's, fully paid and
non-assessable and equivalent in all respects to all other issued
and outstanding shares of Kelly's restricted stock.
F. NO CONFLICT WITH OTHER INSTRUMENT. The execution of this
agreement will not violate or breach any document, instrument,
agreement, contract or commitment material to Kelly's.
G. INFORMATION. The information concerning Kelly's and set forth
in this Agreement, is complete and accurate in all material
respects and does not contain any untrue statement of a
material fact or omit to state a material fact required to
make the statements made, in light of the circumstances under
which they were made, not misleading.
H. RESTRICTED SHARES. The shares of Flexweight common stock which
are being acquired for Kelly's own account and for investment and
not with a view to the public resale or distribution thereof.
Kelly's will not sell, transfer or otherwise dispose of the
Flexweight Shares except in compliance with the Securities Act of
1933, as amended (the "Act"), and is aware the Flexweight Shares
are "restricted securities" as that term is defined in Rule 144
of the General Rules and Regulations under the Act ("Rule 144").
Kelly's acknowledges and understands that the Flexweight Shares
are unregistered in reliance of Section 4(2) of the Act and must
be held indefinitely unless they are subsequently registered
under the Act or an exemption from such registration is
available.
Kelly's is fully aware of the applicable limitation on the resale
of the Flexweight Shares. These restrictions for the most part
are set forth in Rule 144. Rule 144 permits sales of "restricted
securities" upon compliance with the requirements of such rule.
If Rule 144 is available to Kelly's, Kelly's may make only
routine sales of securities in limited amounts, in accordance
with the terms and conditions of that Rule.
5. REPRESENTATIONS AND WARRANTIES OF FLEXWEIGHT.
Flexweight hereby represents and warrants that, effective this date and
the Closing Date, the representations and warranties listed below are true and
correct.
A. CORPORATE AUTHORITY. Flexweight has the full corporate power and
authority to enter this Agreement and to carry out the
transactions contemplated by this Agreement. The Board of
15
<PAGE>
Directors of Flexweight has duly authorized the execution,
delivery, and performance of this Agreement.
B. FINANCIAL STATEMENTS. The latest 10-Q report ("Flexweight
Financials") has been given to Kelly's prior to closing.
C. NO CONFLICT WITH OTHER INSTRUMENTS. The execution of this
Agreement will not violate or breach any document, instrument,
agreement, contract, or commitment material to the business of
Flexweight to which Flexweight is a party and has been duly
authorized by all appropriated and necessary action.
D. INFORMATION. The information concerning Flexweight as set
forth in this Agreement and in the Flexweight Financials is
complete and accurate in all material respects and does not
contain any untrue statement of a material fact or omit to state
a material fact required to make the statements made in light of
the circumstances under which they were made not misleading.
E. DELIVERANCE OF SHARES. As of the Closing Date, the Flexweight
Shares to be delivered to Kelly's will be restricted and
constitute valid and legally issued shares of Flexweight fully
paid and non-assessable and equivalent in all respects to all
other issued and outstanding shares of Flexweight restricted
stock.
F. NO CONFLICT WITH OTHER INSTRUMENT. The execution of this
agreement will not violate or breach any document, instrument,
agreement, contract or commitment material to Flexweight.
G. INFORMATION. The information concerning Flexweight and set forth
in this Agreement, is complete and accurate in all material
respects and does not contain any untrue statement of a material
fact or omit to state a material fact required to make the
statements made, in light of the circumstances under which they
were made, not misleading.
H. RESTRICTED SHARES. The shares of Kelly's common stock which are
being acquired for Flexweight's own account and for investment
and not with a view to the public resale or distribution thereof.
Flexweight will not sell, transfer or otherwise dispose of the
Kelly's Shares except in compliance with the Securities Act of
1933, as amended (the "Act"), and is aware the Kelly's Shares are
"restricted securities" as that term is defined in Rule 144 of
the General Rules and Regulations under the Act ("Rule 144")
Flexweight acknowledges and understands that the Shares are
unregistered in reliance of Section 4(2) of the Act and must be
held indefinitely unless they are subsequently registered under
the Act or an exemption from such registration is available.
Flexweight is fully aware of the applicable limitation on the
resale of the Flexweight Shares. These restrictions for the most
part are set forth in Rule 144. Rule 144 permits sales of
"restricted securities" upon compliance with the requirements of
such rule. If Rule 144 is available to Flexweight, Flexweight may
make only routine sales of securities in limited amounts, in
accordance with the terms and conditions of that Rule.
6. CLOSING. The Closing as herein referred to shall occur upon such
date as the parties hereto may mutually agree upon, but is expected to be on or
before June 30, 1998.
At closing Flexweight will deliver the Flexweight Shares to Kelly's,
and Kelly's shall deliver the Kelly's Shares to Flexweight.
7. CONDITIONS PRECEDENT OF KELLY'S TO EFFECT CLOSING. All obligations of Kelly's
under this Agreement are subject to fulfillment prior to or as of the Closing
Date, of each of the following conditions:
A. The representations and warranties by or on behalf of Flexweight
contained in this Agreement or in any certificate or documents
delivered to Kelly's pursuant to the provisions hereof shall be
16
<PAGE>
true in all material respects at end as of the time of Closing as
though such representations and warranties were made at and as of
such time.
B. Flexweight shall have performed and complied with all covenants,
agreements and conditions required by this Agreement to be
performed or complied with by it prior to or at the Closing.
C. All instruments and documents delivered to Kelly's pursuant to
the provisions hereof shall be reasonably satisfactory to
Kelly's' legal counsel.
8. CONDITIONS PRECEDENT OF FLEXWEIGHT TO EFFECT CLOSING. All obligations of
Flexweight under this Agreement are subject to fulfillment prior to or as of the
date of Closing, of each of the following conditions:
A. The representations and warranties by or on behalf of Kelly's
contained in this Agreement or in any certificate or documents
delivered to Flexweight pursuant to the provisions hereof shall
be true in all material respects at end as of the time of Closing
as though such representations and warranties were made at and as
of such time.
B. Kelly's shall have performed and complied with all covenants,
agreements and conditions required by this Agreement to be
performed or complied with by it prior to or at the Closing.
C. All instruments and documents delivered to Flexweight pursuant to
the provisions hereof shall be reasonably satisfactory to
Flexweight's legal counsel.
9. DAMAGES AND LIMIT OF LIABILITY. Each party shall be liable, for any material
breach of the representations, warranties, and covenants contained herein which
results in a failure to perform any obligation under this Agreement, only to the
extent of the expenses incurred in connection with such breach or failure to
perform Agreement.
10. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations,
warranties and covenants made by any party in this Agreement shall survive the
Closing hereunder. All of the parties hereto are executing and carrying out the
provisions of this Agreement in reliance solely on the representations,
warranties and covenants and agreements contained in this Agreement or at the
Closing of the transactions herein provided for and not upon any investigation
upon which it might have made or any representations, warranty, agreement,
promise, or information, written or oral, made by the other party or any other
person other than as specifically set forth herein.
11. INDEMNIFICATION PROCEDURES. If any claim is made by a party which would give
rise to a right of indemnification under this paragraph, the party seeking
indemnification (Indemnified Party) will promptly cause notice thereof to be
delivered to the party from whom is sought (Indemnifying Party). The Indemnified
Party will permit the Indemnifying Party to assume the defense of any such claim
or any litigation resulting from the claims. Counsel for the Indemnifying Party
which will conduct the defense must be approved by the Indemnified Party (whose
approval will not be unreasonable withheld), and the Indemnified Party may
participate in such defense at the expense of the Indemnified Party. The
indemnifying Party will not in the defense of any such claim or litigation,
consent to entry of any judgement or enter into any settlement without the
written consent of the Indemnified Party (which consent will not be unreasonably
withheld). The Indemnified Party will not, in connection with any such claim or
litigation, consent to entry of any judgement or enter into any settlement
without the written consent of the Indemnifying Party (which consent will not be
unreasonable withheld). The Indemnified Party will cooperate fully with the
Indemnifying Party and make available to the Indemnifying Party all pertinent
information under its control relating to any such claim or litigation. If the
Indemnifying Party refuses or fails to conduct the defense as required in this
Section, then the Indemnified Party may conduct such defense at the expense of
the Indemnifying Party and the approval of the Indemnifying Party will not be
required for any settlement or consent or entry of judgement.
12. DEFAULT AT CLOSING. Notwithstanding the provisions hereof, if Kelly's shall
fail or refuse to deliver any of the Kelly's Shares, or shall fail or refuse to
consummate the transaction described in this Agreement prior to the Closing
Date, such failure or refusal shall constitute a default by Kelly's and
Flexweight at its option and without prejudice to its rights against such
defaulting party, may either (a) invoke any equitable remedies to enforce
17
<PAGE>
performance hereunder including, without limitation, an action or suit for
specific performance, or (b) terminate all of its obligations hereunder with
respect to Kelly's.
13. COSTS AND EXPENSES. Kelly's and Flexweight shall bear their own costs and
expenses in the proposed exchange and transfer described in this Agreement.
Kelly's and Flexweight have been represented by their own attorney in this
transaction, and shall pay the fees of its attorney, except as may be expressly
set forth herein to the contrary.
14. NOTICES. Any notice under this Agreement shall be deemed to have been
sufficiently given if sent by registered or certified mail, postage prepaid,
addressed as follows:
To Flexweight:
Flexweight Corporation
1946 Plateau Way
Wendover, Nevada 89883
To Kelly's:
Kelly's Coffee Group, Inc.
647 Seventeenth Avenue
Longmont, Colorado 80502-1539
15. MISCELLANEOUS.
A. FURTHER ASSURANCES. At any time and from time to time, after the
effective date, each party will execute such additional instruments and take
such as may be reasonably requested by the other party to confirm or perfect
title to any property transferred hereunder or otherwise to carry out the intent
and purposes of this Agreement.
B. WAIVER. Any failure on the part of any party hereto to comply
with any of its obligations, agreements, or conditions hereunder may be waived
in writing by the party to whom such compliance is owed.
C. BROKERS. Neither party has employed any brokers or finders
with regard to this Agreement no disclosed herein.
D. HEADINGS. The section and subsection headings in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
E. COUNTERPARTS. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
F. GOVERNING LAW. This Agreement was negotiated and is being contracted
for in the State of Utah, and shall be governed by the laws of the State of
Utah, notwithstanding any conflict-of-law provision to the contrary. Any suit,
action or legal proceeding arising from or related to this Agreement shall be
submitted for binding arbitration resolution to the American Arbitration
Association, in Salt Lake City, Utah, pursuant to their Rules of Procedure or
any other mutually agreed upon arbitrator. The parties agree to abide by
decisions rendered as final and binding, and each party irrevocably and
unconditionally consents to the jurisdiction of such Courts in such suit, action
or legal proceeding and waives any objection to the laying of venue in, or the
jurisdiction of, said Courts.
G. BINDING EFFECT. This Agreement shall be binding upon the parties
hereto and inure to the benefit of the parties their respective heirs,
administrators, executors, successors, and assigns.
H. ENTIRE AGREEMENT. The Agreement contains the entire agreement
between the parties hereto and supersedes any and all prior agreements,
arrangements or understandings between the parties relating to the subject
matter hereof. No oral understandings, statements, promises or inducements
contrary to the terms of this Agreement exist. No representations, warranties
covenants, or conditions express or implied, other than is set forth here, have
18
<PAGE>
been made by any party.
I. SEVERABILITY. If any part of this Agreement is deemed to be
unenforceable the balance of the Agreement shall remain in full force and
effect.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and year
first above written.
Flexweight Corporation
By:_/s/Walter G Sanders______
Kelly's Coffee Group, Inc.
By:_/s/ Terrence Buttler_____
19
EXHIBIT 10(I)(C)
STOCK EXCHANGE AGREEMENT
THIS STOCK EXCHANGE AGREEMENT ("AGREEMENT") IS ENTERED INTO THIS 7TH
day of August, 1998 by and between Flexweight Corporation, ("Flexweight") a
Kansas corporation with principal offices located at 1946 Plateau Way Wendover,
Nevada 89883, and Kelly's Coffee Group, Inc. ("Kelly's") a Colorado corporation
with principal offices located at 647 Seventeenth Avenue, Longmont, Colorado
80502-1539.
WHEREAS, Flexweight desires to acquire from Kelly's approximately Two
Million Five Hundred Thousand (2,500,000) restricted shares of the common stock
of Kelly's, in exchange for Ten Thousand Five Hundred Twenty Six (10,526)
restricted shares of the common stock of Flexweight.
NOW, THEREFORE with the above being incorporated into and made a part
hereof for the mutual consideration set out herein and, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. EXCHANGE. Flexweight will, in a tax free exchange, acquire from Kelly's, Two
Million Five Hundred Thousand (2,500,000) restricted shares of the common stock
of Kelly's, valued as of August 7, 1998 at $.04 per share, in a tax free
exchange wherein Kelly's shall acquire Ten Thousand Five Hundred Twenty Six
(10,526) restricted shares of Flexweight common stock, valued as of August 7,
1998 at $9.50 per share.
2. EXCHANGE OF SHARES. On or before the closing date, set herein to be August
21, 1998, the above-mentioned shares are to be exchanged.
3. TERMINATION. This Agreement may be terminated at any time prior to the
Closing Date:
A. BY FLEXWEIGHT OR KELLY'S:
(1) If there shall be any actual or threatened action or
proceeding by or before any court or any other governmental
body which shall seek to restrain, prohibit, or invalidate the
transactions contemplated by this Agreement and which, in
judgement of such Board of Directors made in good faith and
based upon the advice of legal counsel, makes it inadvisable
to proceed with the transactions contemplated by this
Agreement; or
(2) If the Closing shall have not occurred prior to August 21,
1998, or such later date as shall have been approved by
parties hereto, other than for reasons set forth herein.
B. BY KELLY'S:
(1) If Flexweight shall fail to comply in any material respect
with any of its or their covenants or agreements contained in
this Agreement or if any of the representation or warranties
of Flexweight contained herein shall be inaccurate in any
material respect; or
C. BY FLEXWEIGHT:
(1) If Kelly's shall fail to comply in any material respect
with any of its covenants or agreements contained in this
Agreement of if any of the representation or warranties of
Kelly's contained herein shall be inaccurate in any material
respect;
In the event this Agreement is terminated pursuant to this Paragraph,
this Agreement shall be of no further force or effect, no obligation, right, or
liability shall arise hereunder, and each party shall bear its own costs as well
as the legal, accounting, printing, and other costs incurred in connection with
negotiation, preparation and execution of the Agreement and the transactions
herein contemplated.
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<PAGE>
4. REPRESENTATIONS AND WARRANTIES OF KELLY'S. Kelly's hereby represents and
warrants that effective this date and the Closing Date, the following
representations are true and correct:
A. CORPORATE AUTHORITY. Kelly's has the full corporate power and
authority to enter this Agreement and to carry out the
transactions contemplated by this Agreement. The Board of
Directors of Kelly's has duly authorized the execution,
delivery and performance of this Agreement.
B. FINANCIAL STATEMENTS. The latest 10-Q report ("Kelly's
Financials") has been given to Flexweight prior to closing.
C. NO CONFLICT WITH OTHER INSTRUMENTS. The execution of this
Agreement will not violate or breach any document, instrument,
agreement, contract, or commitment material to the business of
Kelly's to which Kelly's is a party and has been duly
authorized by all appropriated and necessary action.
D. INFORMATION. The information concerning Kelly's as set forth
in this Agreement and in the Kelly's Financials is complete
and accurate in all material respects and does not contain any
untrue statement of a material fact or omit to state a
material fact required to make the statements made in light of
the circumstances under which they were made not misleading.
E. DELIVERANCE OF SHARES. As of the Closing Date, the Kelly's
Shares to be delivered to Flexweight will be restricted and
constitute valid and legally issued shares of Kelly's, fully
paid and non-assessable and equivalent in all respects to all
other issued and outstanding shares of Kelly's restricted
stock.
F. NO CONFLICT WITH OTHER INSTRUMENT. The execution of this
agreement will not violate or breach any document, instrument,
agreement, contract or commitment material to Kelly's.
G. INFORMATION. The information concerning Kelly's and set forth
in this Agreement, is complete and accurate in all material
respects and does not contain any untrue statement of a
material fact or omit to state a material fact required to
make the statements made, in light of the circumstances under
which they were made, not misleading.
H. RESTRICTED SHARES. The shares of Flexweight common stock which
are being acquired for Kelly's own account and for investment
and not with a view to the public resale or distribution
thereof. Kelly's will not sell, transfer or otherwise dispose
of the Flexweight Shares except in compliance with the
Securities Act of 1933, as amended (the "Act"), and is aware
the Flexweight Shares are "restricted securities" as that term
is defined in Rule 144 of the General Rules and Regulations
under the Act ("Rule 144").
Kelly's acknowledges and understands that the Flexweight
Shares are unregistered in reliance of Section 4(2) of the Act
and must be held indefinitely unless they are subsequently
registered under the Act or an exemption from such
registration is available.
Kelly's is fully aware of the applicable limitation on the
resale of the Flexweight Shares. These restrictions for the
most part are set forth in Rule 144. Rule 144 permits sales of
"restricted securities" upon compliance with the requirements
of such rule. If Rule 144 is available to Kelly's, Kelly's may
make only routine sales of securities in limited amounts, in
accordance with the terms and conditions of that Rule.
5. REPRESENTATIONS AND WARRANTIES OF FLEXWEIGHT.
Flexweight hereby represents and warrants that, effective this date and
the Closing Date, the representations and warranties listed below are true and
correct.
A. CORPORATE AUTHORITY. Flexweight has the full corporate power
and authority to enter this Agreement and to carry out the
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<PAGE>
transactions contemplated by this Agreement. The Board of
Directors of Flexweight has duly authorized the execution,
delivery, and performance of this Agreement.
B. FINANCIAL STATEMENTS. The latest 10-Q report ("Flexweight
Financials") has been given to Kelly's prior to closing.
C. NO CONFLICT WITH OTHER INSTRUMENTS. The execution of this
Agreement will not violate or breach any document, instrument,
agreement, contract, or commitment material to the business of
Flexweight to which Flexweight is a party and has been duly
authorized by all appropriated and necessary action.
D. INFORMATION. The information concerning Flexweight as set
forth in this Agreement and in the Flexweight Financials is
complete and accurate in all material respects and does not
contain any untrue statement of a material fact or omit to
state a material fact required to make the statements made in
light of the circumstances under which they were made not
misleading.
E. DELIVERANCE OF SHARES. As of the Closing Date, the Flexweight
Shares to be delivered to Kelly's will be restricted and
constitute valid and legally issued shares of Flexweight fully
paid and non-assessable and equivalent in all respects to all
other issued and outstanding shares of Flexweight restricted
stock.
F. NO CONFLICT WITH OTHER INSTRUMENT. The execution of this
agreement will not violate or breach any document, instrument,
agreement, contract or commitment material to Flexweight.
G. INFORMATION. The information concerning Flexweight and set
forth in this Agreement, is complete and accurate in all
material respects and does not contain any untrue statement of
a material fact or omit to state a material fact required to
make the statements made, in light of the circumstances under
which they were made, not misleading.
H. RESTRICTED SHARES. The shares of Kelly's common stock which
are being acquired for Flexweight's own account and for
investment and not with a view to the public resale or
distribution thereof. Flexweight will not sell, transfer or
otherwise dispose of the Kelly's Shares except in compliance
with the Securities Act of 1933, as amended (the "Act"), and
is aware the Kelly's Shares are "restricted securities" as
that term is defined in Rule 144 of the General Rules and
Regulations under the Act ("Rule 144")
Flexweight acknowledges and understands that the Shares are
unregistered in reliance of Section 4(2) of the Act and must
be held indefinitely unless they are subsequently registered
under the Act or an exemption from such registration is
available.
Flexweight is fully aware of the applicable limitation on the
resale of the Flexweight Shares. These restrictions for the
most part are set forth in Rule 144. Rule 144 permits sales of
"restricted securities" upon compliance with the requirements
of such rule. If Rule 144 is available to Flexweight,
Flexweight may make only routine sales of securities in
limited amounts, in accordance with the terms and conditions
of that Rule.
6. CLOSING. The Closing as herein referred to shall occur upon such
date as the parties hereto may mutually agree upon, but is expected to be on or
before August 21, 1998.
At closing Flexweight will deliver the Flexweight Shares to Kelly's,
and Kelly's shall deliver the Kelly's Shares to Flexweight.
7. CONDITIONS PRECEDENT OF KELLY'S TO EFFECT CLOSING. All obligations of Kelly's
under this Agreement are subject to fulfillment prior to or as of the Closing
Date, of each of the following conditions:
A. The representations and warranties by or on behalf of Flexweight
contained in this Agreement or in any certificate or documents delivered
to Kelly's pursuant to the provisions hereof shall be true in all
:
22
<PAGE>
material respects at end as of the time of Closing as though
such representations and warranties were made at and as of such time.
B. Flexweight shall have performed and complied with all covenants,
agreements and conditions required by this Agreement to be performed or
complied with by it prior to or at the Closing.
C. All instruments and documents delivered to Kelly's pursuant to the
provisions hereof shall be reasonably satisfactory to Kelly's legal
counsel.
8. CONDITIONS PRECEDENT OF FLEXWEIGHT TO EFFECT CLOSING. All obligations of
Flexweight under this Agreement are subject to fulfillment prior to or as of the
date of Closing, of each of the following conditions:
A. The representations and warranties by or on behalf of Kelly's
contained in this Agreement or in any certificate or documents
delivered to Flexweight pursuant to the provisions hereof shall be true
in all material respects at end as of the time of Closing as though
such representations and warranties were made at and as of such time.
B. Kelly's shall have performed and complied with all covenants,
agreements and conditions required by this Agreement to be performed or
complied with by it prior to or at the Closing.
C. All instruments and documents delivered to Flexweight pursuant to
the provisions hereof shall be reasonably satisfactory to Flexweight's
legal counsel.
9. DAMAGES AND LIMIT OF LIABILITY. Each party shall be liable, for any material
breach of the representations, warranties, and covenants contained herein which
results in a failure to perform any obligation under this Agreement, only to the
extent of the expenses incurred in connection with such breach or failure to
perform Agreement.
10. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations,
warranties and covenants made by any party in this Agreement shall survive the
Closing hereunder. All of the parties hereto are executing and carrying out the
provisions of this Agreement in reliance solely on the representations,
warranties and covenants and agreements contained in this Agreement or at the
Closing of the transactions herein provided for and not upon any investigation
upon which it might have made or any representations, warranty, agreement,
promise, or information, written or oral, made by the other party or any other
person other than as specifically set forth herein.
11. INDEMNIFICATION PROCEDURES. If any claim is made by a party which would give
rise to a right of indemnification under this paragraph, the party seeking
indemnification (Indemnified Party) will promptly cause notice thereof to be
delivered to the party from whom is sought (Indemnifying Party). The Indemnified
Party will permit the Indemnifying Party to assume the defense of any such claim
or any litigation resulting from the claims. Counsel for the Indemnifying Party
which will conduct the defense must be approved by the Indemnified Party (whose
approval will not be unreasonable withheld), and the Indemnified Party may
participate in such defense at the expense of the Indemnified Party. The
indemnifying Party will not in the defense of any such claim or litigation,
consent to entry of any judgement or enter into any settlement without the
written consent of the Indemnified Party (which consent will not be unreasonably
withheld). The Indemnified Party will not, in connection with any such claim or
litigation, consent to entry of any judgement or enter into any settlement
without the written consent of the Indemnifying Party (which consent will not be
unreasonable withheld). The Indemnified Party will cooperate fully with the
Indemnifying Party and make available to the Indemnifying Party all pertinent
information under its control relating to any such claim or litigation. If the
Indemnifying Party refuses or fails to conduct the defense as required in this
Section, then the Indemnified Party may conduct such defense at the expense of
the Indemnifying Party and the approval of the Indemnifying Party will not be
required for any settlement or consent or entry of judgement.
12. DEFAULT AT CLOSING. Notwithstanding the provisions hereof, if Kelly's shall
fail or refuse to deliver any of the Kelly's Shares, or shall fail or refuse to
consummate the transaction described in this Agreement prior to the Closing
Date, such failure or refusal shall constitute a default by Kelly's and
Flexweight at its option and without prejudice to its rights against such
defaulting party, may either (a) invoke any equitable remedies to enforce
performance hereunder
23
<PAGE>
including, without limitation, an action or suit for specific performance, or
(b) terminate all of its obligations hereunder with respect to Kelly's.
13. COSTS AND EXPENSES. Kelly's and Flexweight shall bear their own costs and
expenses in the proposed exchange and transfer described in this Agreement.
Kelly's and Flexweight have been represented by their own attorney in this
transaction, and shall pay the fees of its attorney, except as may be expressly
set forth herein to the contrary.
14. NOTICES. Any notice under this Agreement shall be deemed to have been
sufficiently given if sent by registered or certified mail, postage prepaid,
addressed as follows:
To Flexweight:
Flexweight Corporation
1946 Plateau Way
Wendover, Nevada 89883
To Kelly's:
Kelly's Coffee Group. Inc.
647 Seventeenth Avenue
Longmont, Colorado 80502-1539
15. MISCELLANEOUS.
A. FURTHER ASSURANCES. At any time and from time to time, after the
effective date, each party will execute such additional instruments and
take such as may be reasonably requested by the other party to confirm
or perfect title to any property transferred hereunder or otherwise to
carry out the intent and purposes of this Agreement.
B. WAIVER. Any failure on the part of any party hereto to comply
with any of its obligations, agreements, or conditions hereunder may be
waived in writing by the party to whom such compliance is owed.
C. BROKERS. Neither party has employed any brokers or finders
with regard to this Agreement no disclosed herein.
D. HEADINGS. The section and subsection headings in this
Agreement are inserted for convenience only and shall not affect in any
way the meaning or interpretation of this Agreement.
E. COUNTERPARTS. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.
F. GOVERNING LAW. This Agreement was negotiated and is being contracted
for in the State of Utah, and shall be governed by the laws of the
State of Utah, notwithstanding any conflict-of-law provision to the
contrary. Any suit, action or legal proceeding arising from or related
to this Agreement shall be submitted for binding arbitration resolution
to the American Arbitration Association, in Salt Lake City, Utah,
pursuant to their Rules of Procedure or any other mutually agreed upon
arbitrator. The parties agree to abide by decisions rendered as final
and binding, and each party irrevocably and unconditionally consents to
the jurisdiction of such Courts in such suit, action or legal
proceeding and waives any objection to the laying of venue in, or the
jurisdiction of, said Courts.
G. BINDING EFFECT. This Agreement shall be binding upon the parties
hereto and inure to the benefit of the parties their respective heirs,
administrators, executors, successors, and assigns.
H. ENTIRE AGREEMENT. The Agreement contains the entire agreement
24
<PAGE>
between the parties hereto and supersedes any and all prior
agreements, arrangements or understandings between the parties
relating to the subject matter hereof. No oral understandings,
statements, promises or inducements contrary to the terms of this
Agreement exist. No representations, warranties covenants, or
conditions express or implied, other than is set forth here, have been
made by any party.
I. SEVERABILITY. If any part of this Agreement is deemed to be
unenforceable the balance of the Agreement shall remain in full force
and effect.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and year
first above written.
Flexweight Corporation
By:___/s/ Walter Sanders___
Its:_President_____________
Kelly's Coffee Group, Inc.
By:__/s/ Terrence Buttler___
Its:_______________________
25
EXHIBIT 10(I)(D)
STOCK EXCHANGE AGREEMENT
THIS STOCK EXCHANGE AGREEMENT ("AGREEMENT") IS ENTERED INTO THIS 7TH
day of August, 1998 by and between Kelly's Coffee Group, Inc., ("Kelly's") a
Colorado corporation with principal offices located at 647 Seventeenth Avenue,
Longmont, Colorado 80502-1539, and AmeriResource Technologies, Inc.
("AmeriResource") a Delaware corporation with principal offices located at 8815
E. Long Street, Lenexa, Kansas 66215.
WHEREAS, Kelly's desires to acquire from AmeriResource approximately
Fifteen Million Three Hundred Eighty Four Thousand Six Hundred Fifteen
(15,384,615) restricted shares of the common stock of AmeriResource, in exchange
for Five Million (5,000,000) restricted shares of the common stock of Kelly's.
NOW, THEREFORE with the above being incorporated into and made a part
hereof for the mutual consideration set out herein and, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. EXCHANGE. Kelly's will, in a tax free exchange, acquire from AmeriResource,
Fifteen Million Three Hundred Eighty Four Thousand Six Hundred Fifteen
(15,384,615) restricted shares of the common stock of AmeriResource, valued as
of August 7, 1998 at $.013 per share, in a tax free exchange wherein
AmeriResource shall acquire Five Million (5,000,000) restricted shares of
Kelly's common stock, valued as of August 7, 1998 at $.04 per share.
2. EXCHANGE OF SHARES. On or before the closing date, set herein to be August
21, 1998, the above-mentioned shares are to be exchanged.
3. TERMINATION. This Agreement may be terminated at any time prior to the
Closing Date:
A. BY KELLY'S OR AMERIRESOURCE:
(1) If there shall be any actual or threatened action or
proceeding by or before any court or any other governmental
body which shall seek to restrain, prohibit, or invalidate the
transactions contemplated by this Agreement and which, in
judgement of such Board of Directors made in good faith and
based upon the advice of legal counsel, makes it inadvisable
to proceed with the transactions contemplated by this
Agreement; or
(2) If the Closing shall have not occurred prior to August 7,
1998, or such later date as shall have been approved by
parties hereto, other than for reasons set forth herein.
B. BY AMERIRESOURCE:
(1) If Kelly's shall fail to comply in any material respect
with any of its or their covenants or agreements contained in
this Agreement or if any of the representation or warranties
of Kelly's contained herein shall be inaccurate in any
material respect; or
C. BY KELLY'S:
(1) If AmeriResource shall fail to comply in any material
respect with any of its covenants or agreements contained in
this Agreement of if any of the representation or warranties
of AmeriResource contained herein shall be inaccurate in any
material respect;
In the event this Agreement is terminated pursuant to this Paragraph,
this Agreement shall be of no further force or effect, no obligation, right, or
liability shall arise hereunder, and each party shall bear its own costs as well
as the legal, accounting, printing, and other costs incurred in connection with
negotiation, preparation and execution of the Agreement and the transactions
herein contemplated.
26
<PAGE>
4. REPRESENTATIONS AND WARRANTIES OF AMERIRESOURCE. AmeriResource hereby
represents and warrants that effective this date and the Closing Date, the
following representations are true and correct:
A. CORPORATE AUTHORITY. AmeriResource has the full corporate power
and authority to enter this Agreement and to carry out the
transactions contemplated by this Agreement. The Board of
Directors of AmeriResource has duly authorized the execution,
delivery and performance of this Agreement.
B. FINANCIAL STATEMENTS. The latest 10-Q report ("AmeriResource
Financials") has been given to Kelly's prior to closing.
C. NO CONFLICT WITH OTHER INSTRUMENTS. The execution of this
Agreement will not violate or breach any document, instrument,
agreement, contract, or commitment material to the business of
AmeriResource to which AmeriResource is a party and has been duly
authorized by all appropriated and necessary action.
D. INFORMATION. The information concerning AmeriResource as set
forth in this Agreement and in the AmeriResource Financials is
complete and accurate in all material respects and does not
contain any untrue statement of a material fact or omit to state
a material fact required to make the statements made in light of
the circumstances under which they were made not misleading.
E. DELIVERANCE OF SHARES. As of the Closing Date, the AmeriResource
Shares to be delivered to Kelly's will be restricted and
constitute valid and legally issued shares of AmeriResource,
fully paid and non-assessable and equivalent in all respects to
all other issued and outstanding shares of AmeriResource
restricted stock.
F. NO CONFLICT WITH OTHER INSTRUMENT. The execution of this
agreement will not violate or breach any document, instrument,
agreement, contract or commitment material to AmeriResource.
G. INFORMATION. The information concerning AmeriResource and set
forth in this Agreement, is complete and accurate in all material
respects and does not contain any untrue statement of a material
fact or omit to state a material fact required to make the
statements made, in light of the circumstances under which they
were made, not misleading.
H. RESTRICTED SHARES. The shares of Kelly's common stock which are
being acquired for AmeriResource's own account and for investment
and not with a view to the public resale or distribution thereof.
AmeriResource will not sell, transfer or otherwise dispose of the
Kelly's Shares except in compliance with the Securities Act of
1933, as amended (the "Act"), and is aware the Kelly's Shares are
"restricted securities" as that term is defined in Rule 144 of
the General Rules and Regulations under the Act ("Rule 144").
AmeriResource acknowledges and understands that the Kelly's
Shares are unregistered in reliance of Section 4(2) of the Act
and must be held indefinitely unless they are subsequently
registered under the Act or an exemption from such registration
is available.
AmeriResource is fully aware of the applicable limitation on the
resale of the Kelly's Shares. These restrictions for the most
part are set forth in Rule 144. Rule 144 permits sales of
"restricted securities" upon compliance with the requirements of
such rule. If Rule 144 is available to AmeriResource,
AmeriResource may make only routine sales of securities in
limited amounts, in accordance with the terms and conditions of
that Rule.
5. REPRESENTATIONS AND WARRANTIES OF KELLY'S.
Kelly's hereby represents and warrants that, effective this date and
the Closing Date, the representations and warranties listed below are true and
correct.
27
<PAGE>
A. CORPORATE AUTHORITY. Kelly's has the full corporate power and
authority to enter this Agreement and to carry out the
transactions contemplated by this Agreement. The Board of
Directors of Kelly's has duly authorized the execution, delivery,
and performance of this Agreement.
B. FINANCIAL STATEMENTS. The latest 10-Q report ("Kelly's
Financials") has been given to AmeriResource prior to closing.
C. NO CONFLICT WITH OTHER INSTRUMENTS. The execution of this
Agreement will not violate or breach any document, instrument,
agreement, contract, or commitment material to the business of
Kelly's to which Kelly's is a party and has been duly authorized
by all appropriated and necessary action.
D. INFORMATION. The information concerning Kelly's as set forth in
this Agreement and in the Kelly's Financials is complete and
accurate in all material respects and does not contain any untrue
statement of a material fact or omit to state a material fact
required to make the statements made in light of the
circumstances under which they were made not misleading.
E. DELIVERANCE OF SHARES. As of the Closing Date, the Kelly's Shares
to be delivered to AmeriResource will be restricted and
constitute valid and legally issued shares of Kelly's fully paid
and non-assessable and equivalent in all respects to all other
issued and outstanding shares of Kelly's restricted stock.
F. NO CONFLICT WITH OTHER INSTRUMENT. The execution of this
agreement will not violate or breach any document, instrument,
agreement, contract or commitment material to Kelly's.
G. INFORMATION. The information concerning Kelly's and set forth in
this Agreement, is complete and accurate in all material respects
and does not contain any untrue statement of a material fact or
omit to state a material fact required to make the statements
made, in light of the circumstances under which they were made,
not misleading.
H. RESTRICTED SHARES. The shares of AmeriResource common stock which
are being acquired for Kelly's own account and for investment and
not with a view to the public resale or distribution thereof.
Kelly's will not sell, transfer or otherwise dispose of the
AmeriResource Shares except in compliance with the Securities Act
of 1933, as amended (the "Act"), and is aware the AmeriResource
Shares are "restricted securities" as that term is defined in
Rule 144 of the General Rules and Regulations under the Act
("Rule 144")
Kelly's acknowledges and understands that the Shares are
unregistered in reliance of Section 4(2) of the Act and must be
held indefinitely unless they are subsequently registered under
the Act or an exemption from such registration is available.
Kelly's is fully aware of the applicable limitation on the resale
of the Kelly's Shares. These restrictions for the most part are
set forth in Rule 144. Rule 144 permits sales of "restricted
securities" upon compliance with the requirements of such rule.
If Rule 144 is available to Kelly's, Kelly's may make only
routine sales of securities in limited amounts, in accordance
with the terms and conditions of that Rule.
6. CLOSING. The Closing as herein referred to shall occur upon such
date as the parties hereto may mutually agree upon, but is expected to be on or
before August 7, 1998.
At closing Kelly's will deliver the Kelly's Shares to AmeriResource,
and AmeriResource shall deliver the AmeriResource Shares to Kelly's.
7. CONDITIONS PRECEDENT OF AMERIRESOURCE TO EFFECT CLOSING. All obligations of
AmeriResource under this Agreement are subject to fulfillment prior to or as of
the Closing Date, of each of the following conditions:
28
<PAGE>
A. The representations and warranties by or on behalf of Kelly's
contained in this Agreement or in any certificate or documents
delivered to AmeriResource pursuant to the provisions hereof shall be
true in all material respects at end as of the time of Closing as
though such representations and warranties were made at and as of such
time.
B. Kelly's shall have performed and complied with all covenants,
agreements and conditions required by this Agreement to be performed or
complied with by it prior to or at the Closing.
C. All instruments and documents delivered to AmeriResource pursuant to
the provisions hereof shall be reasonably satisfactory to
AmeriResource' legal counsel.
8. CONDITIONS PRECEDENT OF KELLY'S TO EFFECT CLOSING. All obligations of Kelly's
under this Agreement are subject to fulfillment prior to or as of the date of
Closing, of each of the following conditions:
A. The representations and warranties by or on behalf of AmeriResource
contained in this Agreement or in any certificate or documents
delivered to Kelly's pursuant to the provisions hereof shall be true in
all material respects at end as of the time of Closing as though such
representations and warranties were made at and as of such time.
B. AmeriResource shall have performed and complied with all covenants,
agreements and conditions required by this Agreement to be performed or
complied with by it prior to or at the Closing.
C. All instruments and documents delivered to Kelly's pursuant to the
provisions hereof shall be reasonably satisfactory to Kelly's legal
counsel.
9. DAMAGES AND LIMIT OF LIABILITY. Each party shall be liable, for any material
breach of the representations, warranties, and covenants contained herein which
results in a failure to perform any obligation under this Agreement, only to the
extent of the expenses incurred in connection with such breach or failure to
perform Agreement.
10. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations,
warranties and covenants made by any party in this Agreement shall survive the
Closing hereunder. All of the parties hereto are executing and carrying out the
provisions of this Agreement in reliance solely on the representations,
warranties and covenants and agreements contained in this Agreement or at the
Closing of the transactions herein provided for and not upon any investigation
upon which it might have made or any representations, warranty, agreement,
promise, or information, written or oral, made by the other party or any other
person other than as specifically set forth herein.
11. INDEMNIFICATION PROCEDURES. If any claim is made by a party which would give
rise to a right of indemnification under this paragraph, the party seeking
indemnification (Indemnified Party) will promptly cause notice thereof to be
delivered to the party from whom is sought (Indemnifying Party). The Indemnified
Party will permit the Indemnifying Party to assume the defense of any such claim
or any litigation resulting from the claims. Counsel for the Indemnifying Party
which will conduct the defense must be approved by the Indemnified Party (whose
approval will not be unreasonable withheld), and the Indemnified Party may
participate in such defense at the expense of the Indemnified Party. The
indemnifying Party will not in the defense of any such claim or litigation,
consent to entry of any judgement or enter into any settlement without the
written consent of the Indemnified Party (which consent will not be unreasonably
withheld). The Indemnified Party will not, in connection with any such claim or
litigation, consent to entry of any judgement or enter into any settlement
without the written consent of the Indemnifying Party (which consent will not be
unreasonable withheld). The Indemnified Party will cooperate fully with the
Indemnifying Party and make available to the Indemnifying Party all pertinent
information under its control relating to any such claim or litigation. If the
Indemnifying Party refuses or fails to conduct the defense as required in this
Section, then the Indemnified Party may conduct such defense at the expense of
the Indemnifying Party and the approval of the Indemnifying Party will not be
required for any settlement or consent or entry of judgement.
12. DEFAULT AT CLOSING. Notwithstanding the provisions hereof, if AmeriResource
shall fail or refuse to deliver any of the AmeriResource Shares, or shall fail
or refuse to consummate the transaction described in this Agreement
29
<PAGE>
prior to the Closing Date, such failure or refusal shall constitute a default by
AmeriResource and Kelly's at its option and without prejudice to its rights
against such defaulting party, may either (a) invoke any equitable remedies to
enforce performance hereunder including, without limitation, an action or suit
for specific performance, or (b) terminate all of its obligations hereunder with
respect to AmeriResource.
13. COSTS AND EXPENSES. AmeriResource and Kelly's shall bear their own costs and
expenses in the proposed exchange and transfer described in this Agreement.
AmeriResource and Kelly's have been represented by their own attorney in this
transaction, and shall pay the fees of its attorney, except as may be expressly
set forth herein to the contrary.
14. NOTICES. Any notice under this Agreement shall be deemed to have been
sufficiently given if sent by registered or certified mail, postage prepaid,
addressed as follows:
To Kelly's:
Kelly's Coffee Group, Inc.
647 Seventeenth Avenue
Longmont, Colorado 80502-1539
To AmeriResource:
AmeriResource Technologies, Inc.
P.O. Box 14748
Shawnee Mission, Kansas 66285-4748
15. MISCELLANEOUS.
A. FURTHER ASSURANCES. At any time and from time to time, after the
effective date, each party will execute such additional
instruments and take such as may be reasonably requested by the
other party to confirm or perfect title to any property
transferred hereunder or otherwise to carry out the intent and
purposes of this Agreement.
B. WAIVER. Any failure on the part of any party hereto to comply
with any of its obligations, agreements, or conditions hereunder
may be waived in writing by the party to whom such compliance is
owed.
C. BROKERS. Neither party has employed any brokers or finders with
regard to this Agreement no disclosed herein.
D. HEADINGS. The section and subsection headings in this Agreement
are inserted for convenience only and shall not affect in any way
the meaning or interpretation of this Agreement.
E. COUNTERPARTS. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the
same instrument.
F. GOVERNING LAW. This Agreement was negotiated and is being
contracted for in the State of Utah, and shall be governed by the
laws of the State of Utah, notwithstanding any conflict-of-law
provision to the contrary. Any suit, action or legal proceeding
arising from or related to this Agreement shall be submitted for
binding arbitration resolution to the American Arbitration
Association, in Salt Lake City, Utah, pursuant to their Rules of
Procedure or any other mutually agreed upon arbitrator. The
parties agree to abide by decisions rendered as final and
binding, and each party irrevocably and unconditionally consents
to the jurisdiction of such Courts in such suit, action or legal
proceeding and waives any objection to the laying of venue in, or
the jurisdiction of, said Courts.
G. BINDING EFFECT. This Agreement shall be binding upon the parties
hereto and inure to the benefit of the parties their respective
heirs, administrators, executors, successors, and assigns.
d
30
<PAGE>
H. ENTIRE AGREEMENT. The Agreement contains the entire agreement
between the parties hereto and supersedes any and all prior
agreements, arrangements or understandings between the parties
relating to the subject matter hereof. No oral understandings,
statements, promises or inducements contrary to the terms of this
Agreement exist. No representations, warranties covenants, or
conditions express or implied, other than is set forth here, have
been made by any party.
I. SEVERABILITY. If any part of this Agreement is deemed to be
unenforceable, the balance of the Agreement shall remain in full
force and effect.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and year
first above written.
Kelly's Coffee Group, Inc.
By:__/s/Terrence Buttler____
Its:___President_____________
AmeriResource Technologies, Inc.
By:___/s/Delmar Janovec______
Its:___President_______________
31
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED FINANCIAL STATEMENTS FOR THE PERIOD ENDED AUGUST 31, 1998, THAT
WERE FILED WITH THE COMPANY'S REPORT ON FORM 10-QSB AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000833209
<NAME> Kelly's Coffee Group, Inc
<MULTIPLIER> 1
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-28-1999
<PERIOD-START> JUN-1-1998
<PERIOD-END> AUG-31-1998
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<SECURITIES> 304,942
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0
0
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