BUSINESS SALES AGREEMENT
THIS BUSINESS SALES AGREEMENT (this "Agreement") is made this
26th day of April 1999, by and among Txon International
Development Corporation, a Nevada corporation ("Txon"), Xxxxx
Enterprises, Inc-, a Utah corporation ("Xxxxx"), and Xxxxxx X.
Xxxxxxxxx, an individual ("Xxxxxxxxx").
Recitals
a) Txon is in the business of development and
construction of commercial, residential, resort and
expatriate facilities.
b) Txon is interested in expanding its operation to include
"in house" construction capabilities;
c) Xxxxx owns all the stock of Xxxxx Construction
Company, Inc. which engages in commercial construction
projects in the State of Utah and elsewhere; and
d) Txon and Xxxxx have negotiated the following terms
and conditions for Txon's acquisition of Xxxxx.
Agreement
Based on the foregoing Recitals, which are incorporated herein
by reference, and for and in consideration of the mutual
covenants and agreements hereafter set forth, the MUTUAL
benefits to the parties to be derived therefrom and other good
and valuable consideration, the adequacy of which arc hereby
acknowledged, it is hereby agreed as follows:
ARTICLE I
PURCHASE OF XXXXX
1.01 Exchange of shares. On the terms and subject to the
condition set forth in this Agreement, on the Closing Date (as
defined in Section 1.05 hereof). Xxxxxxxxx shall assign,
transfer, and deliver to Txon, free and clear of all lines,
pledges, encumbrances, charges, restrictions, or claims of any
kind, nature or description, all issued and outstanding shares
of stock of Xxxxx (the "Xxxxx Shares"). The transfer of Xxxxx
Shares by Xxxxxxxxx shall be effected by the delivery to Txon
at the closing (as set forth in Section 1.05 hereof) of
certificates representing the transferred shares endorsed to
Txon with signatures medallion guaranteed. At the closing and
from time to time thereafter, Xxxxxxxxx shall execute such
additional instruments and take such other action as Txon may
reasonably request, without cost to Xxxxxxxxx in order to more
effectively sell, transfer and assign clear titled and
ownership in the Xxxxx Shares to Txon. After giving effect to
the transaction contemplated hereby the parties intend that
Txon will own all the issued and outstanding shares of Xxxxx
and Xxxxx will be a wholly owned subsidiary of Txon.
1.02 Payment for Xxxxx Shares. In return for the transfer of
Xxxxx Shares, Txon shall: (a) pay Xxxxxxxxx Twenty Million
Dollars ($20,000,000) on the Closing Date in accordance with
the terms set forth below; and (b) issue to Xxxxxxxxx on the
Closing Date Two Million Dollars ($2,000,000) worth of Txon's
common stock, pay value $0.0012 per share ("Txon Common
Stock") with such worth, solely for the purpose of this
Agreement, determined by the lower of the (i) ten day average
trading price for the Txon common stock, or such shorter
period as the shares of Txon Common Stock have been listed on
a securities exchange or the National Association of
Securities Dealer's Automatic Quotation System; or (ii) the
initial public offering price of the Txon Common Stock. Txon
shall pay Xxxxxxxxx the Twenty Million Dollars ($20,000,000)
on the Closing Date by: (a) paying Xxxxxxxxx in certified
funds so much of the Twenty Million ($20,000,000) as Txon
shall determine is appropriate given the amount of money Txon
has available to it and considering Txon's operating needs,
but in any event no less than Fourteen Million
Dollars($14,000,000); and (b) by executing and delivering to
Xxxxxxxxx on the Closing Date a Promissory Note identical in
form to Exhibit "A" attached hereto for the difference between
Twenty Million Dollars ($20,000,000) and the amount paid to
Xxxxxxxxx in certified funds.
1.03 Transfer of Txon Common Stock to be Tax Neutral. In
addition tot he foregoing Txon will loan Xxxxxxxxx any and all
amounts necessary to pay taxes he incurs as a result of
receipt of the Two Million Dollars ($2,000,000) worth of Txon
Common Stock shall be taxed at the highest marginal tax rate
applicable to Xxxxxxxxx in the year he incurs liability for
such taxes. To secure payment of said taxes, on the Closing
Date Txon shall place in an interest bearing account on which
both Xxxxxxxxx and Txon are joint signatories and at an
institution acceptable to Xxxxxxxxx certified funds in an
amount sufficient to pay the estimated additional tax
liability Xxxxxxxxx will incur as a result of receiving such
stock, but in no event less that Six hundred thousand dollars
($600,000). Upon payment of said taxes, any amounts remaining
in escrow will be disbursed to Txon. In the event that the
escrowed funds are insufficient to pay such taxes, Txon will
pay the balance to Xxxxxxxxx immediately on demand. At such
time as Xxxxxxxxx sells all or any part of the Txon Common
Stock issued to Xxxxxxxxx on the Closing Date, Xxxxxxxxx will
reimburse Txon for any tax payment Txon has made on
Xxxxxxxxx'x behalf pursuant to this section from the net
proceeds of such sale until Txon has been fully repaid with
interest at the then prevailing imputed interest rate set
forth by the Internal Revenue Service. For purposes of this
section, the net proceeds from any sale by Xxxxxxxxx of such
stock shall be: (a) the sales price of such stock; less (b)
the amount of any commission, brokerage or other transaction
fee; less (c) Xxxxxxxxx'x unpaid tax liability for any income
received by Xxxxxxxxx as a result of the sale. In the event
that such sales of the stock do not generate sufficient net
proceeds to fully reimburse Txon for any tax payment made by
Txon pursuant to this section, Xxxxxxxxx'x reimbursement
obligation to Txon will be canceled and Xxxxxxxxx shall have
no further obligation to reimburse Txon for taxes Txon has
paid on Xxxxxxxxx'x behalf.
1.04 Basis for Purchase Price. The purchase price for
acquisition of the Xxxxx Shares set forth above is based upon
Xxxxx'x financial condition as of the date of this Agreement
and notupon any projected increase in revenues or business.
Xxxxx shall be
considered to have adequate value to support the purchase
price if on the
Closing Date it has:
(a) signed contracts for future work or work in progress having a minimum
contract balance of Fifteen Million Dollars ($15,000,000);
(b) operating capital of at least Five Hundred Thousand
Dollars ($500,000); and
(c) operating capital plus receivables in excess of payables.
1.05 Closing and Parties. The closing contemplated hereby shall be held
at a mutually agreed upon place on May 1, 2000, or on an earlier date to be
agreed to in writing by the parties (the "Closing Date"). Time is of the
essence as it pertains to the Closing Date. Unless the closing occurs by the
Closing Date, this Agreement shall be null and void and of no force or
effect. The closing may occur at any time following approval by a majority of
the shareholders of Txon Common Stock as set forth in Section 4.01 hereof and
the approval of Xxxxx as set forth in Section 5.01. The closing may be
accomplished by wire, express mail, overnight courier, conference telephone
call or as otherwise agreed to by the respective parties or their duly
authorized representatives.
1.06 Closing Events.
(a) Txon Deliveries. Subject to fulfillment or waiver of the conditions
set forth in Article IV, Txon shall deliver to Xxxxx at closing all of the
following:
(i)A certificate of good standing from the State of Nevada, issued as
of a date within five days prior to the Closing Date, certifying that Txon
is in good standing as a corporation;
(ii) A certificate from the State of Utah certify- that
Txon is qualified to do business in the State of Utah;
(iii) Incumbency and specimen signature certificates dated the
Closing Date with respect to the officers of Txon executing this Agreement
and any other document delivered pursuant hereto on behalf of Txon;
(iv) Copies of the resolutions of Txon's board of directors and consent
of shareholders authorizing the execution and performance of this
Agreement and the contemplated transactions, certified by the secretary or
an assistant secretary of Txon as of the Closing Date;
(v) The certificate contemplated by Section 4.03, duly
executed by the chief executive officer of Txon;
(vi) The certificate contemplated by Section 4.04, dated
the Closing Date, signed by the chief executive officer of Txon;
(vii) Certificates for Two Million Dollars ($2,000,000) worth of Txon
Common Stock issued in the name of Xxxxxxxxx or his designee
as described in Section 1.02;
(viii) A Promissory Note identical in form to Exhibit "A" for the
amount of Twenty Million Dollars ($20,000,000) less the amount paid to
Xxxxxxxxx or his designee in certified funds pursuant to (x) above;
(ix) Employment Agreements identical in form to Exhibits
"B" and "C" duly executed by Txon;
(x) A Voting Trust Agreement identical in form to Exhibit "D" signed by
all parties thereto except Xxxxxxxxx; and
(xi) A minimum of Fourteen Million Dollars ($14,000,000) in certified
funds payable to Xxxxxxxxx or his designees.
In addition to the above deliveries, Txon shall take all steps and actions
as Xxxxx and Xxxxxxxxx may reasonably request or as may otherwise be reasonably
necessary to consummate the transactions contemplated hereby.
(b) Xxxxx Deliveries. Subject to fulfillment or waiver of
the conditions set forth
in Article V, Xxxxx and/or Xxxxxxxxx shall deliver to Txon at
closing all of the
following:
(i) A certificate of good standing from the secretary of
State of Utah, issued
as of a date within five days prior to the Closing Date
certifying that Xxxxx is in
good standing as a corporation in the State of Utah;
(ii) Incumbency and specimen signature certificates dated
the Closing Date
with respect to the officers of Xxxxx executing this Agreement
and any other
document delivered pursuant hereto on behalf of Xxxxx;
(iii) Copies of resolutions of the board of directors and sahreholders
of Xxxxx authorizing the execution and performance of this Agreement and
contemplated transactions, certified by the secretary or an assistant
secretary of Xxxxx as of the Closing Date;
(iv) The certificate contemplated by Section 5.03, executed by the chief
operating officer of Xxxxx;
(v) The certificate contemplated by Section 5.05, dated the Closing Date,
signed by the chief operating officer of Xxxxx;
(vi) An Employment Agreement identical in form to Exhibit "B" duly executed
by Xxxxxxxxx; and
(vii) A Voting Trust Agreement identical in form to Exhibit
"D" signed by Xxxxxxxxx.
In addition to the above deliveries, Xxxxx shall take all steps and actions
as Txon may reasonably request or as may otherwise be reasonably necessary
to consummate the transactions contemplated hereby.
1.07. Termination
(a) This Agreement may be terminated by the board of
directors of either
Txon or Xxxxx at any time prior to the Closing Date if.
(i) There shall be any actual or threatened action or proceeding before
any court or any governmental body which shall seek to restrain,
prohibit, or invalidate the transactions contemplated by this Agreement and
which, in the reasonable judgment of such board of directors, made in good
faith and based upon the advice of its legal counsel, makes it inadvisable
to proceed with the transactions contemplated by this Agreement; or
(ii) Any of the transactions contemplated hereby are
disapproved by any
regulatory authority whose approval is required to consummate
such transactions
or in the reasonable judgment of such board of directors, made
in good faith and
based on the advice of counsel, there is substantial
likelihood that any such
approval will not be obtained or will be obtained only on a
condition or
conditions which would be unduly burdensome, making it
inadvisable to proceed
with the exchange.
In the event of termination pursuant to this paragraph (a) of
Section 1.07, no
obligation, right, or liability shall arise hereunder, and
each party shall bear all of
the expenses incurred by it in connection with the
negotiation, preparation, and
execution of this Agreement and the transactions contemplated
hereby.
(b) This Agreement may be terminated at any time prior to
the closing by
action of the board of directors of Txon if (i) Xxxxx shall
fail to substantially
comply in any material respect with any of its covenants or
agreements contained
in this Agreement or if any of the representations or
warranties of Xxxxx
contained herein shall be inaccurate material respect, or (ii)
Txon determines that
there has been or is likely to be any material adverse change
in the legal
condition of Xxxxx; (iii) Xxxxx cannot satisfy the financial
criteria set forth in
Section 1.04 on the Closing Date; or (iv) Txon is unable to
raise the fourteen
million dollars ($14,000,000) payable to Xxxxxxxxx plus two
million five hundred
thousand dollars ($2,500,000) in additional operating capital
for Txon and Xxxxx
and to fund the account contemplated in Section 1.03 by the
Closing Date as set
forth in Section 5.03.
In the event of termination pursuant to this paragraph (b) of
this Section
1.07, no obligation, right, remedy, or liability shall arise
hereunder. All
parties shall bear their own costs incurred in connection with
the
negotiation, preparation, and execution of this Agreement and
the transactions
contemplated hereby.
(c) This Agreement may be terminated at any time
prior to the closing
by Xxxxxxxxx or action of the board of directors of Xxxxx if.
(i) Txon shall
fail to substantially comply in any material respect with any
of its covenants
or agreements contained in this Agreement or if any of the
representations or
warranties of Txon contained herein shall be inaccurate in any
material
respect, (ii) Xxxxx or Xxxxxxxxx determines that there has
been or is likely
to be any adverse change in the financial or legal condition
of Txon, or (iii)
Txon is unable to raise the fourteen million dollars
($14,000,000) payable to
Xxxxxxxxx plus two million five hundred thousand dollars
($2,500,000) in
additional operating capital for Txon and Xxxxx and to fund
the account
contemplated by Section 1.03 by the Closing Date as set forth
in Section 5.04.
In the event of termination pursuant to this paragraph (c) of
this section
1.07, no obligation, right, remedy, or liability shall arise
hereunder. All
parties shall each bear their own costs incurred in connection
with the
negotiation, preparation, and execution of this Agreement and
the transactions
contemplated hereby.
ARTICLE 11
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF TXON
As an inducement to, and to obtain the reliance of Xxxxx, Txon
represents and
warrants as follows:
2.01 Organization. Txon is, and will be on the Closing
Date, a corporation
duly organized, validly existing, and in good standing under
the laws of the State
of Nevada and has the corporate power and is and will be duly
authorized,
qualified, franchised, and licensed under all applicable laws,
regulations,
ordinances, and orders of public authorities to own all of
its properties and
assets and to carry on its business in all material respects
as it is now being
conducted, and there are no other jurisdictions in which it is
not so qualified in
which the character and location of the assets owned by it or
the nature of the
material business transacted by it requires qualification,
except where failure to
do so would not have a material adverse effect on its
business, operations,
properties, assets or condition. The execution and delivery
of this Agreement
does not, and the consummation of the transactions
contemplated by this
Agreement in accordance with the terms hereof will not,
violate any provision of
Txon's articles of incorporation or bylaws, or other agreement
to which it is a
party or by which it is bound.
2.02 Approval of Agreement. Txon has full power,
authority, and legal right
and has taken, or will take, all action required by law, its
articles of
incorporation, bylaws, and otherwise to execute and deliver
this Agreement and
to consummate the transactions herein contemplated. The board
of directors of
Txon has authorized and approved the execution, delivery, and
performance of
this Agreement and the transactions contemplated hereby;
subject to the
approval of the Txon stockholders and compliance with state
and federal
corporate and securities laws.
2.03 Capitalization. The authorized capitalization of
Txon consists of
50,000,000 shares of common stock, $0.001 par value, of which
5,000,000
shares are issued and outstanding and 5,000,000 shares of
preferred stock
having a par value of $0.001 per share, none of which have
been issued or are
outstanding. All issued and outstanding shares of Txon are
legally issued,
fully paid, and nonassessable and not issued in violation of
the preemptive or
other right of any person. There are no dividends or other
amounts due or
payable with respect to any of the shares of capital stock of
Txon. Txon
represents that there is no other authorized, issued or
outstanding stock in
Txon.
2.04. Financial Statements.
(a) Included in Schedule 2.04 are the unaudited balance
sheets of Txon as of
December 31, 1998 and the related statements of operations,
stockholders'
equity (deficit), and cash flows ending December 31, 1998
from inception
through December 31, 1998, including the notes thereto.
Prior to the Closing
Date, Txon shall deliver the compiled balance sheet of Txon
as of the close of
the prior quarter, and the related statements of operations,
stockholders' equity
(deficit), and cash flows for the same period., together with
the notes thereto
and representations by the principal accounting, and
financial officer of Txon to
the effect that such financial statements contain all
adjustments (all of which are
normal recurring adjustments) necessary to present fairly the
results of
operations and financial position for the periods and as of
the dates indicated.
(b) The financial statements of Txon delivered pursuant to
Section 2.04(a)
have been prepared substantially in accordance with generally
accepted
accounting principles consistently applied throughout the
periods involved as
explained in the notes to such financial statements. The Txon
financial statements
present fairly, in all material respects, as of their
respective dates, the financial
position of Txon. Txon did not have, as of the date of any
such financial
statements, except as and to the extent reflected or reserved
against therein, any
liabilities or obligations (absolute or contingent) which
should be reflected therein
in accordance with generally accepted accounting, principles,
and all assets
reflected therein presently fairly the assets of Txon in
accordance with generally
accepted accounting principles
(c) Txon has filed or will file as of the Closing Date all
tax returns required to
be filed by it from inception to the Closing Date. All such
returns and reports
are accurate and correct in all material respect. Txon has no
material liabilities
with respect to the payment of any federal, state, county,
local, or other taxes
(including any deficiencies, interest, or penalties) accrued
for or applicable to
the period ended on the date of the most recent balance sheet
of Txon, except
to the extent reflected on such balance sheet and all such
dates and years and
periods prior thereto and for which Txon may at said date have
been liable in its
own right or as transferee of the assets of, or as successor
to, any other
corporation or entity, except for taxes accrued but not yet
due and payable, and
to the best knowledge of Txon, no deficiency assessment or
proposed
adjustment of any such tax return is pending, proposed or
contemplated. To the
best knowledge of Txon, none of such income tax returns has
been examined or
is currently being examined by the Internal Revenue Service
and no deficiency
assessment or proposed adjustment of any such return is
pending, proposed or
contemplated. Txon has not made any election pursuant to the
provisions of any
applicable tax laws (other than elections that relate solely
to methods of
accounting, depreciation, or amortization) that would have a
material adverse
affect on Txon, its financial condition, its business as
presently conducted or
proposed to be conducted, or any of its respective properties
or material assets.
There are no outstanding agreements or waivers extending the
statutory period
of limitation applicable to any tax return of Txon.
2.05 Outstanding Warrants and Options. Txon has no existing
warrants or
options, calls, or commitments of any nature relating to the
authorized and
unissued Txon Common Stock.
2.06 Information. The information concerning Txon 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. Txon shall cause
the schedules
delivered by it pursuant hereto and the instruments delivered
to Xxxxx
hereunder to be updated after the date hereof up to and
including the Closing
Date.
2.07 Absence of Certain Changes or Events. Except as set
forth in this
Agreement or the schedules hereto,.since the date of the most
recent Txon
balance sheet described in Section 2.04 and included in the
information
refer-red to in Section 2.06:
(a) There has not been (i) any material adverse change in
the business,
operations, properties, level of inventory, assets, or
condition of Txon or (ii) any
damage, destruction, or loss to Txon (whether or not covered
by insurance)
materially and adversely affecting the business, operations,
properties, assets, or
conditions of Txon;
(b) Txon has not (i) amended its articles of incorporation
or bylaws;
(ii) declared or made, or agreed to declare or make, any
payment of dividends
or distributions of any assets of any kind whatsoever to
stockholders or
purchased or redeemed, or agreed to purchase or redeem, any of
its capital
stock; (iii) waived any rights of value which in the aggregate
are extraordinary or
material considering the business of Txon; (iv) made any
material chance in its
method of management, operation, or accounting; (v) entered
into any other
material transactions; (vi) made any accrual or arrangement
for or payment of
bonuses special compensation of any kind or any severance or
termination to
any present or former officer or employee; (vii) increased the
rate of
compensation payable or to become payable by it to any of its
officers or
directors or any of its employees whose monthly compensation
exceeds
$1,000; or (viii) made any increase in any profit-sharing,
bonus, deferred
compensation, insurance, pension, retirement, or other
employee benefit plan,
payment, or arrangement made to, for, or with its officers,
directors, or
employees;
(c) Txon has not (i) granted or agreed to grant any
options, warrants, or
other rights for its stocks, bonds, or other corporate
securities calling for the
issuance thereof; (ii) borrowed or agreed to borrow any funds
or incurred, or
become subject to, any material obligation or liability
(absolute or contingent)
except liabilities incurred in the ordinary course of
business; (iii) paid any
material obligation or liability (absolute or contingent)
other than current liabilities
reflected in or shown on the most recent Txon balance sheet
and current
liabilities incurred since that date in the ordinary course of
business; (iv) sold or
transferred, or agreed to sell or transfer, any of its
material assets, properties, or
rights (except assets, properties, or rights not used or
useful in its business
which, in the aggregate have a value of less than $5,000 or
canceled, or agreed
to cancel, any debts or claims (except debts and claims which
in the aggregate
are of a value of less than $5,000); (v) made or permitted any
amendment or
termination of any contract, agreement, or license to which it
is a party if such
amendment or termination is material, considering the business
of Txon; or (vi)
issued, delivered, or agreed to issue or deliver any stock,
bonds, or other
corporate securities including debentures (whether authorized
and unissued or
held as treasury stock); and
(d) To the best knowledge of Txon, it has not become
subject to any law or
regulation which materially and adversely affects, or in the
future would be
reasonably expected to adversely affect, the bus.-ness,
operations, properties,
assets, or condition of Txon.
2.08 Litigation and Proceedings. There are no material
actions, suits, or
administrative or other proceedings pending or, to the
knowledge of Txon,
threatened by or against Txon or adversely affecting Txon or
its properties,
at law or in equity, before any court or other governmental
agency or
instrumentality, domestic or foreign, or before any arbitrator
of any kind.
Txon does not have any knowledge of any default on its part
with respect to
any judgment, order, writ, injunction, decree, award, rule, or
regulation of
any court, arbitrator, or governmental agency or instrumentality.
2.09 Compliance With Laws and Regulations. Txon has
complied with all
applicable statutes and regulations of any federal, state, or
other.
governmental entity or agency thereof, except to the extent
that noncompliance
(i) could not materially and adversely affect the business,
operations,
properties, assets, or condition of Txon or (ii) could not
result in the
occurrence of any material liability for Txon. To the best
knowledge of Txon,
the consummation of this transaction will comply with all
applicable statutes
and regulations. subject to the preparation and filing of any
forms required
by state and federal securities laws,
2.10 Material Contract Defaults. Txon is not in default
in any material respect
under the terms of any outstanding contract, agreement, lease,
or other
commitment which is material to the business, operations,
properties, assets, or
condition of Txon, and there is no event of default or other
event which, with
notice or lapse of time or both, would constitute a default in
any material respect
under any such contract, agreement, lease, or other commitment
in respect of
which Txon has not taken adequate steps to prevent such a
default from
occurring.
2.11 No Conflict With Other Instruments. The execution of
this Agreement
and the consummation of the transactions contemplated by this
Agreement will
not result in the breach of any term or provision of, or
constitute an event
of default under, any material indenture, mortgage, deed of
trust, or other
material contract, agreement, or instrument to which Txon is a
party or to
which any of its properties or operations are subject.
2.12 Subsidiary. Txon does not own, beneficially or of
record, any equity
securities in any other entity.
2.13 Txon Schedules. Txon has delivered to Xxxxx the
following schedules,
which are collectively referred to as the "Txon Schedules" and
which consist
of the following separate schedules dated as of the date of
execution of this
Agreement, all certified by a duly authorized officer of Txon
as complete,
true, and accurate:
(a) A schedule including copies of the articles of
incorporation and
bylaws of Txon in effect as of the date of this Agreement;
(b) A schedule containing copies of resolutions adopted by
the board of
directors of Txon approving this Agreement and the
transactions herein
contemplated;
(c) A schedule setting forth a description of any material
adverse change in the
business, operations, property, inventory, assets, or
condition of Txon since the
most recent Txon balance sheet, required to be provided
pursuant to Section
2.04 hereof,
(d) A schedule setting forth the financial statements
required pursuant to
Section 2.04(a) hereof, and
(e) A schedule setting forth any other information,
togther with any required
copies of documents, required to be disclosed in the Txon
Schedules by
Sections 2.01 through 2.12.
Txon shall cause the Txon Schedules and the instruments
delivered to Xxxxx
hereunder to be updated after the date hereof up to and
including a specified
date not more than three business days prior to the Closing
Date. Such updated
Txon Schedules, certified in the same manner as the original
Txon Schedules,
shall be delivered prior to and as a condition precedent to
the obligation of Xxxxx
to close.
ARTICLE III
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF XXXXX
As an inducement to, and to obtain the reliance of Txon, Xxxxx
represents and
warrants as follows:
3.01 Organization. Xxxxx is, and will be on the Closing
Date, a corporation
duly organized, validly existing, and in good standing under
the laws of the State
of Utah and has the corporate power and is and will be duly
authorized,
qualified, franchised, and licensed under all applicable laws,
regulations,
ordinances, and orders of public authorities to own all of its
properties and
assets and to carry on its business in all material respects
as it is now being
conducted, and there are no other jurisdictions in which it is
not so qualified in
which the character and location of the assets owned by it or
the nature of the
material business transacted by it requires qualification,
except where failure to
do so would not have a material adverse effect on its
business, operations,
properties, assets or condition of Xxxxx.
The execution and delivery of this Agreement does not, and the
consummation
of the transactions contemplated by this Agreement in
accordance with the terms
hereof will not, violate any provision of Xxxxx'x articles of
incorporation or
bylaws, or other material agreement to which it is a party or
by which it is
bound.
3.02 Approval of Agreement. Xxxxx has full power,
authority, and legal right
and has taken, or will take, all action required by law, its
articles of
incorporation, bylaws, or otherwise to execute and deliver
this Agreement and
to consummate the transactions herein contemplated. The board
of directors of
Xxxxx have authorized and approved the execution, delivery,
and performance of
this Agreement and the transactions contemplated hereby;
subject to the
approval of Xxxxxxxxx and compliance with state and federal
corporate and
securities laws.
3.03 Capitalization. The authorized capitalization of
Xxxxx consists of 50,000
shares of common stock of which 3,255.1 shares are issued and
outstanding.
All issued and outstanding shares of Xxxxx are legally issued,
fully paid, and
nonassessable and not issued in violation of the preemptive or
other right of any
person. There are no dividends or other amounts due or
payable with respect to
any of the shares of capital stock of Xxxxx.
3.04 Financial Statements.
(a) included in Schedule 3.04 are the audited balance
sheet of Xxxxx as of
December 31, 1998, and the related statements of operations,
cash flows, and
stockholders' equity for the period from inception to December
31, 1998,
including the notes thereto, and the accompanying report of
Leverich,
Rasmuson, Xxxxxxx, independent certified public accountants.
Prior to the
Closing Date, Xxxxx shall deliver the compiled balance sheet
of Xxxxx as of
the close of the prior quarter, and the related statements of
operations,
stockholders' equity (deficit), and cash flows for the same
period, together with
the notes thereto and representations by the chief operating
officer of Xxxxx to
the effect that such financial statements contain all
adjustments (all of which are
normal recurring adjustments) necessary to present fairly the
results of
operations and financial position for the periods and as of
the dates indicated.
(b) The audited financial statements delivered pursuant to
Section 3,04(a)
have been prepared substantially in accordance with generally
accepted
accounting principles consistently applied throughout the
periods involved. The
financial statements of Xxxxx present fairly, as of their
respective dates, the
financial position of Xxxxx. Xxxxx did not have, as of the
date of any such balance
sheets ' except as and to the extent reflected or reserved
against therein, any
liabilities or obligations (absolute or contingent) which
should be reflected in any
financial statements or the notes thereto prepared in
accordance with generally
accepted accounting principles, and all assets reflected
therein present fairly the
assets of Xxxxx as of the date thereof, in accordance with
generally accepted
accounting principles. The statements of revenue and expenses
and cash flows
present fairly the financial position and result of operations
of Xxxxx as of their
respective dates and for the respective periods covered thereby.
(c) Xxxxx has filed or will have filed as of the Closing
Date all tax returns
required to be filed by it from inception to the Closing Date.
All such returns
and reports are accurate and correct in all material respects.
Xxxxx has no
material liabilities with respect to the payment of any
federal, state, county, local,
or other taxes (including any deficiencies, interest, or
penalties) accrued for or
applicable to the period ended on the date of the most recent
unaudited balance
sheet of Xxxxx, except to the extent reflected on such balance
sheet and
adequately provided for, and all such dates and years and
periods prior thereto
and for which Xxxxx may at said date have been liable in its
own right or as
transferee of the assets of, or as successor to, any other
corporation or entity,
except for taxes accrued but not yet due and payable, and to
Xxxxx'x knowledge
no deficiency assessment or proposed adjustment of any such
tax return is
pending, proposed or contemplated. Proper and accurate
amounts of taxes
have been withheld by or on behalf of Xxxxx with respect to
all material
compensation paid to employees of Xxxxx for all periods ending
on or before the
date hereof, and all deposits required with respect to
compensation paid to such
employees have been made, in complete compliance with the
provisions of all
applicable federal, state, and local tax and other laws. To
Xxxxx'x knowledge,
none of such income tax returns has been examined or is
currently being
examined by the Internal Revenue Service, and no deficiency
assessment or
proposed adjustment of any such return is pending, proposed,
or contemplated.
Xxxxx has not made any election pursuant to the provisions of
any applicable tax
laws (other than elections that relate solely to methods of
accounting,
depreciation, or amortization) that would have a material
adverse affect on Xxxxx,
its financial condition, its business as presently conducted
or proposed to be
conducted, or any of its properties or material assets. There
are no tax liens
upon any of the assets of Xxxxx. There are no outstanding
agreements or waivers
extending the Statutory period of limitation applicable to any
tax return of Xxxxx.
3.05 Outstanding Warrants and Options. Xxxxx has no
issued warrants or
options, calls, or commitments of any nature relating to
the authorized and
unissued Xxxxx Stock.
3.06 Disclosure. No representation or warranty by Xxxxx
in this Agreement
and no statement contained in the schedules delivered by Xxxxx
pursuant hereto
contains any untrue or misleading statement of a material fact
or omits any fact
necessary to make them not misleading. Xxxxx shall cause the
schedules
delivered by Xxxxx pursuant hereto to Txon hereunder to be
updated after the
date hereof up to and including the Closing Date.
3.07 Absence of Certain Changes or Events. Except as set
forth in this
Agreement or the schedules hereto as update to the time of
closing, since the
date of the most recent Xxxxx balance sheet described in
Section 3.04:
(a) There has not been (i) any material adverse chancre in
the business,
operations, properties, level of inventory, assets, or
condition of Xxxxx or (ii) any
damage, destruction, or loss to Xxxxx materially and adversely
affecting the
business, operations, properties, assets, or conditions of
Xxxxx. (b) Xxxxx has
not (i) amended its articles of incorporation or bylaws; (ii)
declared or made, or
agreed to declare or make, any payment of dividends or
distributions of any
assets of any kind whatsoever to stockholders or purchased or
redeemed, or
agreed to purchase or redeem, any of its capital stock; or
(iii) waived any rights
of value which in the aggregate are extraordinary and material
considering the
business of Xxxxx; (iv) made any material change in its method
of accounting.
(c) Xxxxx has not (i) granted or agreed to grant any
options, warrants, or other
rights for its stocks, bonds, or other corporate securities
calling for the issuance
thereof, (ii) borrowed or agreed to borrow any funds or
incurred, or become
subject to, any material obligation or liability (absolute or
contingent) except
liabilities incurred in the ordinary course of business; (iii)
paid any material
obligation or liability (absolute or contingent) other than
current liabilities
reflected in or shown on the most recent Xxxxx balance sheet
and current
liabilities incurred since that date in the ordinary course of
business except
payments made in the ordinary course of business; (iv) sold or
transferred, or
agreed to sell or transfer, any of its material assets,
properties, or rights, or
agreed to cancel, any material debts or claims except in the
ordinary course of
business; (v) made or permitted any amendment or termination
of any contract,
agreement, or license to which it is a party if such amendment
or termination is
material, considering The business of Xxxxx, except in the
ordinary course of
business; or (vi) issued, delivered, or agreed to issue or
deliver any stock,
bonds, or other corporate securities including debentures
(whether authorized
and unissued or held as treasury stock); and
(d) To the best knowledge of Xxxxx, it has not become
subject to any law
or regulation which materially and adversely affects, or in
the future would
be reasonably expected to adversely affect, the business,
operations,
properties, assets, or condition of Xxxxx.
3.08 Title and Related Matters. Except as provided herein
or disclosed in
the most recent Xxxxx balance sheet and the notes thereto,
Xxxxx has good and
marketable title to all of its properties, inventory,
interests in properties,
technology, whether patented or unpatented, and assets, which
are reflected
in the most recent Xxxxx balance sheet or acquired after that
date (except
properties, interests in properties, and assets sold or
otherwise disposed of
since such date in the ordinary course of business), free and
clear of all
mortgages, liens, pledges, charges, or encumbrances, except
(i) statutory
liens or claims not yet delinquent; and (ii) such
imperfections of title and
easements as do not, and will not, materially detract from, or
interfere with,
the present or proposed use of the properties subject thereto
or affected
thereby or otherwise materially impair present business
operations on such
properties. To the best knowledge of Xxxxx its technology
does not infringe
on the copyright, patent, trade secret, knowhow, or other
proprietary right of
any other person or entity and comprises all such rights
necessary to permit the
operation of the business of Xxxxx as now being conducted or
as contemplated.
3.09 Litigation and Proceedings. Except as otherwise
disclosed in
schedule 3.09, there are no material actions, suits, or
proceedings pending
or, to the knowledge of Xxxxx, threatened by or against Xxxxx
or adversely
affecting Xxxxx, at law or in equity, before any court or
other governmental
agency or instrumentality, domestic or foreign, or before any
arbitrator of
any kind. Xxxxx does not have any knowledge of any default on
its part with
respect to any judgment, order, writ, injunction, decree,
award, rule, or
regulation of any court, arbitrator, or governmental agency or
instrumentality.
3.10 Material Contract Defaults. Except as may be
determined in the actions
or claims set forth in Schedule 3.09, Xxxxx is not in default
in any material respect
under the terms of any outstanding contract, agreement, lease,
or other
commitment which is material to the business, operations,
properties, assets, or
condition of Xxxxx, and there is no event of default or other
event which, with
notice or lapse of time or both, would constitute a default in
any material respect
under any such contract, agreement, lease, or other commitment
in respect of
which Xxxxx has not taken adequate steps to prevent such a
default from
occurring.
3.11 No Conflict With Other Instruments. The execution of
this Agreement
and the consummation of the transactions contemplated by this
Agreement will
not result in the breach of any term or provision of, or
constitute an event of
default under, any material indenture, mortgage, deed of
trust, or other material
contract, agreement, or instrument to which Xxxxx is a party
or to which any of its
properties or operations are subject.
3.12 Governmental Authorizations. Xxxxx has all licenses,
franchises, permits,
and other governmental authorizations that are legally
required to enable it to
conduct its business in all material respects as conducted on
the date of this
Agreement. Except for compliance with federal and state
securities and
corporation laws, as hereinafter provided, no authorization,
approval, consent,
or order of, or registration, declaration, or filing with, any
court or other
governmental body is required in connection with the
execution and delivery by
Xxxxx of this Agreement and the consummation by Xxxxx of the
transactions
contemplated hereby.
3.13 Compliance With Laws and Regulations. Xxxxx has
complied with all
applicable statutes and regulations of any federal, state, or
other governmental
entity or agency thereof, except to the extent that
noncompliance would not
materially and adversely affect the business, operations,
properties, assets, or
condition of Xxxxx or except to the extent that noncompliance
would not result in
the occurrence of any material liability for Xxxxx. To the
best knowledge of
Xxxxx, the consummation of this transaction will comply with
all applicable
statutes and regulations, subject to the preparation and
filing of any forms
required by state and federal security laws.
3.14 Subsidiary. Xxxxx owns all stock of Xxxxx
Construction Co., Inc. which
in turn owns all stock in precision Steel, Inc., both Utah
corporations.
3.15 Xxxxx Schedules. Xxxxx has delivered to Txon the
following schedules,
which are collectively referred to as the "Xxxxx Schedules"
and which consist of
the following separate schedules dated as of the date of
execution of this
Agreement, and instruments and Txon as of such date, all
certified by the chief
executive officer of Xxxxx as complete, true, and accurate:
(a) A schedule including copies of the articles of
incorporation and bylaws of
Xxxxx and all amendments thereto in effect as of the date of
this Agreement;
(b) A schedule containing copies of resolutions adopted by
the board of
directors of Xxxxx approving this Agreement and the
transactions herein
contemplated as referred to in Section 3.02;
(c) A schedule setting forth a description of any material
adverse change in the
business, operations, property, inventory, assets, or
condition of Xxxxx since the
most recent Xxxxx balance sheet, required to be provided
pursuant to Section
3.04 hereof,
(d) A schedule setting forth the financial statements
required pursuant to
Section 3.04 (a) hereof, and
(e) A schedule setting forth any other information, to
ether with any required
copies of documents, required to be disclosed in the Xxxxx
Schedules by
Sections 3.01 through 3.14.
Xxxxx shall cause the Xxxxx Schedules and the instruments
delivered to Txon
hereunder lo be updated after the date hereof up to and
including a specified
date not more than three business days prior to the Closing
Date. Such
updated Xxxxx Schedules, certified in the same manner as the
original Xxxxx
Schedules, shall be delivered prior to and as a condition
precedent to the
obligation of Txon to close.
3.16 Limited Representation and Warranties. Neither Xxxxx
nor Xxxxxxxxx
have made any representations and warranties of any kind
except those
contained in this Agreement.
ARTICLE IV
CONDITIONS PRECEDENT TO OBLIGATIONS OF XXXXX
The obligations of Xxxxx and Xxxxxxxxx under this Agreement
are subject to the
satisfaction, at or before the Closing Date, of the following
conditions:
4.01 Shareholder Approval. Txon shall call and hold a
meeting of its
stockholders, or obtain the written consent of a majority of
its stockholders, to
approve the transactions contemplated by this agreement.
4.02 Accuracy of Representations. The representations and
warranties made
by Txon in this Agreement were true when made and shall be
true at the Closing
Date with the same force and affect as if such representations
and warranties
were made at and as of the Closing Date and Txon shall have
performed or
complied with all covenants and conditions required by this
Agreement to be
performed or complied with by Txon prior to or at the closing.
Xxxxx shall be
furnished with certificates, signed by duly authorized
officers of Txon and dated
the Closing Date, to the foregoing effect.
4.03 Officer's Certificates. Xxxxx shall have been
finished with certificates
dated the Closing Date and signed by the duly authorized chief
executive officer
of Txon to the effect that to such officer's best knowledge
no litigation,
proceeding, investigation, or inquiry is pending or, to the
best knowledge of
Txon threatened, which might result in an action to enjoin or
prevent the
consummation of the transactions contemplated by this
Agreement. Furthermore,
based on certificates of good standing, representations of
government agencies,
and Txon's own documents and information, the certificate
shall represent, to the
best knowledge of the officer, that:
(a) This Agreement, the Promissory Note attached as
Exhibit "A", the
Employment Agreements attached as Exhibits " B" and "C" and
the Voting Trust
Agreement attached as Exhibit "D" have been duly approved by
Txon's board of
directors and stockholders and have been duly executed and
delivered in the
name and on behalf of Txon by its duly authorized officers
pursuant to, and in
compliance with, authority granted by the board of directors
of Txon pursuant
to a unanimous consent;
(b) There have been no material adverse changes in Txon up
to and including,
the date of the certificate;
(c) All conditions required by this Agreement have been
met, satisfied, or
performed by Txon;
(d) All authorizations, consents, approvals, registrations,
and/or filings with any
governmental body, agency, or court required in connection
with the execution
and delivery of the documents by Txon have been obtained and
are in full force
and effect or, if not required to have been obtained, will be
in full force and
effect by such time as may be required; and
(e) There is no material action, suit, proceeding,
inquiry, or investigation at law
in rein an or in equity by any public board or body pending or
threatened against
Txon, when unfavorable decision, ruling, or finding could have
an adverse effect
on the financial condition of Txon, the operation of Txon, or
the acquisition and
reorganization contemplated herein, or any agreement or
instrument by which
Txon is bound or in any way contests the existence of Txon.
4.04 No Material Adverse Change. Prior to the Closing
Date, there shall not
have occurred any material adverse change in the financial
condition, business
or operations of Txon, nor shall any event have occurred
which, with the lapse
of time or the giving of notice, may cause or create any
material adverse change
in the financial condition, business, or operations of Txon.
4.05 Good Standings. Xxxxx shall have received a
certificate of good standing
from the secretary of the State of Nevada, dated as of the
date within five days
prior to the Closing Date, certifying that Txon is in good
standing as a
corporation and a certificate from the State of Utah
certifying that Txon is
qualified to do business in the State of Utah.
4.06 Other Items. Xxxxx shall have received such further
documents,
certificates, or instruments relating to the transactions
contemplated hereby
as Xxxxx may reasonably request.
4.07 Raising CAPITAL. Txon shall have raised a minimum of
Sixteen
Million Five Hundred Thousand Dollars ($16,500,000) to acquire
Xxxxx and
obtain operating capital for Xxxxx and Txon and fund the
account contemplated
by Section 1.03
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS OF TXON
The obligations of Txon under this Agreement are subject to
the satisfaction, at
or before the Closing Date, of the following conditions:
5.01. Shareholder Approval. Xxxxx shall call and hold a
meeting of its
stockholders, or obtain through a majority written consent of
its stockholders,
whereby the stockholders of Xxxxx authorize and approve this
Agreement and
the transactions contemplated hereby.
5.02 Xxxxx Stockholders. Holders of all of the issued
anc, outstanding Xxxxx
Shares shall agree to the exchange of shares contemplated by
this Agreement.
5.03 Raising Capital. Txon shall have raised sixteen
million fivehundred
thousand dollars ($16,500,000) to acquire Xxxxx and obtain
operating capital
for Xxxxx and Txon and to find the account contemplated by
Section 1.03.
5.04 Accuracy of Representations. Any representations and
warranties
made by Xxxxx in this Agreement were true when made and shall
be true at the
Closing Date with the same force and affect as if such
representations and
warranties were made at and as of the Closing Date (except for
changes therein
permitted by this Agreement), and Xxxxx shall have performed
or complied with
all covenants and conditions required by this Agreement to be
performed or
complied with by Xxxxx prior to or at the closing. Txon shall
be furnished with a
certificate, singed by a duly authorized officer of Xxxxx and
dated the Closing
Date, to the foregoing effect.
5.05 Officer's Certificates. Txon shall have been
furnished with certificates
dated the Closing Date and singed by the duly authorized chief
operating officer
of Xxxxx to the effect that no litigation, proceeding,
investigation, or inquiry is
pending or, to the best knowledge of Xxxxx, threatened, which
might result in an
action to enjoin or prevent the consummation of the
transactions contemplated
by this Agreement. Furthermore, based on certificates of good
standing,
representations of government agencies, and Xxxxx'x own
documents, the
certificate shall represent, to the best knowledge of the
officer, that:
(a) This agreement has been duly approved by Xxxxx'x board
of directors and
stockholders and has been duly executed and delivered in the
name and on
behalf of Xxxxx by its duly authorized officers pursuant to,
and in compliance
with, authority granted by the board of directors of Xxxxx
pursuant to a
unanimous consent of its board of directors and a majority
vote of its
stockholders;
(b) Except as provided or permitted herein, there have
been no material
adverse changes in Xxxxx up to and including the date of the
certificate which
would prevent it from satisfying the financial criteria set
forth in Section 1.04;
(c) All authorizations, consents, approvals,
registrations, and/or filing with any
governmental body, agency, or court required in connection
with the execution
and delivery of the documents by Xxxxx have been obtained and
are in full force
and effect or, if not required to have been obtained will be
in full force and effect
by such time as may be required; and
(d) Except as otherwise disclosed in Schedule 3.09, there
is no material
action, suit, proceeding, inquiry, or investigation at law or
in equity by any public
board or body pending or threatened against Xxxxx, wherein an
unfavorable
decision, ruling, or finding would have an adverse affect on
the financial condition
of Xxxxx, the operation of Xxxxx, or the acquisition and
reorganization
contemplated herein, or any material agreement or instrument
by which Xxxxx is
bound or would in any way contest the existence of Xxxxx.
5.06 No Material Adverse Change. Prior to the Closing
Date, there shall not
have occurred any material adverse change in the financial
condition, business or
operations of Xxxxx, nor shall any, event have occurred which,
with the lapse of
time or the giving of notice, may preclude Xxxxx from
satisfying the financial
criteria set forth in Section 1.04.
5.07 Good Standing. Txon shall have received a certificate of
good standing
from the appropriate authority in the State of Utah, dated as
of a date with five
days prior to the Closing Date, certifying that Xxxxx is in
good standing as a
corporation in the State of Utah.
5.08 Other Items. Txon shall have received such further
documents
certificates, or instruments relating to the transactions
contemplated hereby as
Txon may reasonably request.
ARTICLE VI
SPECIAL COVENANTS
6.01 Activities of Txon and Xxxxx
(a) From and after the date of this Agreement until the
Closing Date and
except as set forth in the respective schedules to be
delivered by Txon and
Xxxxx pursuant hereto or as permitted or contemplated by this
Agreement, Txon
and Xxxxx will each:
(i) Carry on its business in substantially the same manner
as it has heretofore;
(ii) Maintain in full force and effect insurance
comparable in amount and in
scope of coverage to that now maintained by it;
(iii) Perform in all material respects all of its
obligations under material
contracts, leases, and instruments relating to or affecting
its assets, properties,
and business;
(iv) Use its best efforts to maintain and preserve it
business organization
intact, to retain its key employees, and to maintain its
relationships with its
material suppliers and customers;
(v) Duly and timely file for all taxable periods ending on
or prior to the Closing
Date all federal, state, county, and local tax returns
required to be filed by or on
behalf of such entity pr for which such entity may be held
responsible and shall
pay, or cause to pay, all taxes required to be shown as due
and payable on such
returns, as well as all installments of tax due and payable
during the period
commencing on the date of this Agreement and ending, on the
Closing Date.;
and
(vi) Fully comply with and perform in all material
respects all obligations and
duties imposed on it by all federal and state 'laws and all
rules, regulations, and
orders imposed by federal or state governmental authorities.
(b) From and after the date of this Agreement and except
as provided herein
until the Closing Date, Txon and Xxxxx will not:
(i) Make any change in its articles of incorporation or
bylaws;
(ii) Enter into or amend any material contract, agreement,
or other instrument
of any of the types described in such party's schedules,
except that a party may
enter into or amend any contract, agreement, or other
instrument in the ordinary
course of business; and
(iii) Enter into any agreement for the sale of Xxxxx or
Txon securities without
the prior approval of the other party.
(c) Nothing contained herein shall be construed to
prohibit Xxxxx Construction
Company from entering into construction contracts of any size,
from paying out
any or all of its earnings to its shareholders or to its
employees by way of bonus
or otherwise from the date hereof through closing. Such
payments are not
limited to and may be greater than the amounts of historical
payments of earnings
or bonuses so long as the amounts paid reasonably take into
account the
operating needs of the Company.
6.02 Access to Properties and Records. Until the Closing
Date, Xxxxx and
Txon will afford to the other party's officers and authorized
representatives full
access to the properties, books, and records of the other
party in order that
each party may have full opportunity to make such reasonable
investigation as it
shall desire to make of the affairs of Xxxxx or Txon and will
finish the other party
with such additional financial and other information as to the
business and
properties of Xxxxx or Txon as each party shall from time to
time reasonably
request.
6.03 Indemnification by Xxxxx. Subject to the other
provisions in this
Agreement, Xxxxx will indemnify, defend, and hold harmless
Txon and its
directors and officers from and against any and all claims,
losses, damages,
expenses, and liabilities arising out of or incurred with
respect to any breach of
any representation or warranty of Xxxxx contained in this
Agreement.
6.04. Indemnification by Txon. Since Txon is solely
responsible for all
securities compliance and the raising of money referenced in
this Agreement,
Txon acknowledges that Furstenau, Furst, and Xxxxx'x officers
and directors,
have no obligations or liabilities in connection with those
transactions. Txon will
indemnify and hold harmless Furstenau, Furst, the Xxxxx
Stockholders, Xxxxx'x
directors and officers, and each person, if any, who controls
Xxxxx within the
meaning of the Securities Act, from and against any and all
losses, claims,
damages, expenses, liabilities, or actions to which any of
them may become
subject under applicable law (including the Securities Act and
the Securities
Exchange Act) and will reimburse them for any legal or other
expenses
reasonably incurred by them in connection with investigating
or defending any
claims or actions, whether or not resulting in liability,
insofar as such losses,
claims, damages expenses, liabilities, or actions arise out of
or are based upon
any untrue statement or alleged untrue statement of a material
fact contained in
any application or statement filed with a governmental body,
or arise out of or
are based upon the omission or alleged omission to state
therein a material fact
required to be stated therein, or necessary in order to make
the statements
therein not misleading, but only insofar as any such statement
or omission was
made in reliance upon and in conformity worth information
furnished in writing by
Txon expressly for use therein. Txon also agrees to indemnify
and hold
Furstenau, Furst, their officers, agents and employees
harmless any and all
claims arising from statements by Txon to third parties
regarding Txon, Xxxxx or
their assets and operations. The indemnity agreement
contained in this Section
6.04 shall remain operative and in full force and effect,
regardless of any
investigation made by or on behalf of Xxxxxxxxx or Xxxxx and
shall survive the
consummation of the transactions contemplated by this or
termination of this
Agreement.
6.05 Notification. Each party will promptly notify the
other of the existence
or occurrence of any facts or events which give rise to the
assertion of any claim
under the provisions of Section 6.03 and Section 6.04. The
indemnifying party
shall promptly and diligently take such action as may be
reasonably required to
defend or settle such claim and shall keep the indemnified
party advised of the
current status thereof. The indemnified party shall, at the
indemniting party's
expense, reasonably cooperate with the indemnifying party's
defense and the
indemnifying party shall reasonably consider the indemnified
party's advice.
6.06 The Acquisition of Txon Common Stock. Txon and Xxxxx
understand
and agree that the consummation of this Agreement including
the issuance of the
Txon Common Stock to Xxxxx in exchange for the Xxxxx Shares as
contemplated
hereby, constitutes the offer and sale of securities under the
Securities Act and
applicable state statutes. Txon and Xxxxx agree that such
transactions shall be
consummated in reliance on exemptions from the registration
and prospectus
delivery requirements of such statutes which depend, among
other items, on the
circumstances under which such securities are acquired.
(a) In order to provide documentation for reliance upon
exemptions from the
registration and prospectus delivery requirements for such
transactions, the
signing of this Agreement and the delivery of appropriate
separate
representations shall constitute the parties acceptance of,
and concurrence in,
the following representations and warranties:
(i) The Xxxxx Stockholders acknowledge that neither the
SEC nor the
securities commission of any state or other federal agency has
made any
determination as to the merits of acquiring Txon Common Stock,
and that this
transaction involves certain risks.
(ii) The Xxxxx Stockholders have received and read the
Agreement and
understand the risks related to the consummation of the
transactions herein
contemplated.
(iii) Xxxxx Stockholders have such knowledge and
experience in business and
financial matters that they are capable of evaluating each
business.
(iv) The Xxxxx Stockholders have been provided with copies
of all materials
and information requested by them or their representatives,
including any
information requested to verify any information furnished (to
the extent such
information is available or can be obtained without
unreasonable effort or
expense), and the parties have been provided the opportunity
for direct
communication regarding the transactions contemplated hereby.
(v) All information which the Xxxxx Stockholders have
provided to Txon or
their representatives concerning their suitability and intent
to hold shares in Txon
following the transactions contemplated hereby is complete,
accurate, and
correct.
(vi) The Xxxxx Stockholders have not offered or sold any
securities of Txon or
interest in this Agreement and have no present intention of
dividing the Txon
Common Stock or Xxxxx Shares to be received or the rights
under this
Agreement with others or of reselling or otherwise disposing
of any portion of
such stock or rights, either currently or after the passage of
a fixed or
determinable period of time or on the occurrence or
nonoccurrence of any
predetermined event or circumstance.
(vii) The Xxxxx Stockholders understand that the Txon
Common Stock has
not been registered, but is being acquired by reason of a
specific exemption
under the Securities Act as well as under certain state
statutes for transactions
not involving any public offering and that any disposition of
the subject Txon
Common Stock may, under certain circumstances, be inconsistent
with this
exemption and may make Xxxxx or Txon an "underwriter", within
the meaning of
the Securities Act. It is understood that the definition of
"underwriter" focuses
upon the concept of "distribution" and that any subsequent
disposition of the
subject Txon Common Stock can only be effected in transactions
which are not
considered distributions. Generally, the term "distribution"
is considered
synonymous with "public offering" or any other offer or sale
involving general
solicitation or general advertising. Under present law, in
determining whether a
distribution occurs when securities are sold into the public
market, under certain
circumstances one must consider the availability of public
information regarding
the issuer, a holding period for the securities sufficient to
assure that the persons
desiring to sell the securities without registration first
bear the economic risk of
their investment, and a limitation on the number of securities
which the
stockholders is permitted to sell and on the manner of sale,
thereby reducing
the potential impact of the sale on the trading markets.
These criteria are set
forth specifically in rule 144 promulgated under the
Securities Act, and, after two
years after the date the Txon Common Stock or Xxxxx Shares is
fully paid for, as
calculated in accordance with rule 144(d), sales of securities
in reliance upon
rule 144 can only be made in limited amounts in accordance
with the terms and
conditions of that rule. After three years from the date the
securities are fully
paid for, as calculated in accordance with rule 144(d), they
can generally be sold
without meeting those conditions, provided the holder is not
(and has not been
for the preceding three months) an affiliate of the issuer.
(viii) Xxxxxxxxx acknowledges that the shares of Txon
Common Stock, must
be held and may not be sold, transferred, or otherwise
disposed of for value
unless they are subsequently registered under the Securities
Act or an
exemption from such registration is available. Txon is not
under any
obligation to register the Txon Common Stock under the
Securities Act. If
rule 144 is available after one year and prior to two years
following the date the
shares are fully paid for, only routine sales of such Txon
Common Stock in
limited amounts can be made in reliance upon rule 144 in
accordance with the
terms and conditions of that rule. Txon is not under any
obligation to make rule
144 available except as set forth in this Agreement and in the
event rule 144 is
not available, compliance with Regulation A or some other
disclosure exemption
may be required before Xxxxxxxxx can sell, transfer, or
otherwise dispose of
such Txon Common Stock without registration under the
Securities Act.
Subject to compliance with federal and state securities laws,
Txon' registrar and
transfer agent will maintain a stop transfer order against the
registration of
transfer of the Txon Common Stock held by Xxxxxxxxx and the
certificates
representing the Txon Common Stock will bear a legend in
substantially the
following form so restricting the sale of such securities:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") AND ARE "RESTRICTED
SECURITIES" WITHIN THE MEANING OF RULE 144 PROMULGATED
UNDER THE SECURITIES ACT. THE SECURITIES HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD OR
TRANSFERRED WITHOUT COMPLYING WITH RULE 144 IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION OR OTHER
COMPLIANCE UNDER THE SECURITIES ACT.
(ix) Subject to compliance with federal and state
securities laws, Txon may
refuse to register further transfers or resales of the Txon
Common Stock in the
absence of compliance with rule 144 unless Xxxxxxxxx furnish
Txon with an
opinion of counsel reasonably acceptable to Txon stating that
the transfer is
proper. Further, unless such opinion states that the shares
of Txon Common
Stock are free of any restrictions under the Securities Act,
Txon may refuse
to transfer the securities to any transferee who does not
furnish in writing to Txon
the same representations and agree to the same conditions with
respect to such
Txon Common Stock as set forth herein. Txon may also refuse
to transfer the
Txon Common Stock if any circumstances are present reasonably
indicating that
the transferee's representations are not accurate.
(b) In connection with the transaction contemplated by
this Agreement, Xxxxx
and Txon shall each file, with the assistance of the other and
their respective legal
counsel, such notices, applications, reports, or other
instruments as may be
deemed by them to be necessary or appropriate in an effort to
document
reliance on such exemptions, and the appropriate regulatory
authority in the state
where Xxxxxxxxx resides unless an exemption requiring no
filing is available in
such jurisdictions, all to the extent and in the manner as may
be deemed by such
parties to be appropriate.
(c) In order to more fully document reliance on the
exemptions as provided
herein, Furst, Furstenau, and Txon shall execute and deliver
to the other, at or
prior to the closing, such further letters of representation,
acknowledgment,
suitability, or the like as Txon or Xxxxx and their respective
counsel may
reasonably request in connection with reliance on exemptions
from registration
under such securities laws.
(d) Xxxxxxxxx acknowledges that the basis for relying on
exemptions from
registration or qualifications are factual, depending on the
conduct of the various
parties, and that no legal opinion or other assurance will be
required or given to
the effect that the transactions contemplated hereby are in
fact exempt from
registration or qualification.
6.08 Acquisition of Xxxxx Shares. In connection with the
acquisition of the
Xxxxx Shares, Txon represents, covenants, warrants and agrees
as follows:
(a) The Xxxxx Shares are investment stock and have not
been registered under
any federal or state securities law. Txon is acquiring the
Xxxxx Shares for its own
investment pursuant to exemptions under the Securities Act and
state statutes
involving transactions not involving any public offering.
(b) Txon has not offered or sold any Xxxxx Shares and has
no present
intention of dividing the Xxxxx Shares to be received with
others or of reselling or
otherwise disposing of any, portion of the Xxxxx Shares either
currently, or after
the passage of a fixed or determinable period of time or on
the occurrence or
nonoccurrence of any predetermined event or circumstance. Any
disposition of
the Xxxxx Shares may, under certain circumstances, be
inconsistent with this
exemption and may make Xxxxx or Txon an "underwriter," within
the meaning of
the Securities Act. It is understood that the definition of
"underwriter" focuses
upon the concept of "distribution" and that any subsequent
disposition of the
Xxxxx Shares can be effected only in transactions which are
not considered
distributions and which are in compliance with applicable
securities laws and
regulations.
(c) In deciding to purchase the Xxxxx Shares, Txon is
relying solely on
information and advice furnished by Txon's own legal and tax
advisors; and,
except as otherwise specifically provided in this Agreement,
neither Xxxxxxxxx
or Xxxxx have made any warranties or representations as to the
legal or tax
affects, if any, involved in Txon's purchase of the Xxxxx Shares.
(d) Txon has been provided with copies, and otherwise has
been afforded
full and complete access to, all materials and information
with respect to Xxxxx,
Xxxxx'x business activities, and Xxxxx'x financial condition,
which Txon has
deemed necessary to make an informed decision to enter into
this Agreement
according to its terms and to purchase the Xxxxx Shares.
(e) All information which Txon has provided to Xxxxx or to
its representatives
concerning its suitability and intent to hold Xxxxx Shares
following the transactions
contemplated hereby is complete, accurate and correct.
(f) Subject to compliance with federal and state
securities laws, the certificates
representing the Xxxxx Shares will bear a legend in
substantially the following
form so restricting the sale of such securities:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") AND ARE "RESTRICTED
SECURITIES" WITHIN THE MEANING OF RULE 144 PROMULGATED
UNDER THE SECURITIES ACT. THE SECURITIES HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD OR
TRANSFERRED WITHOUT COMPLYING WITH RULE 144 IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION OR OTHER
COMPLIANCE UNDER THE SECURITIES ACT.
6.09 Txon Liabilities. Immediately prior to closing, Txon
shall have $100,000
in cash or cash equivalents and no liabilities with all
expenses related to this
Agreement or otherwise having been paid.
6.10 Securities Filings. Txon shall be responsible for
the preparation of a
Form D and its filing with the Securities and Exchange
Commission and Xxxxx
will be responsible for any and all filings in any
jurisdiction where its stockholders
reside which would require a filing with a governmental agency
as a result of the
transactions contemplated in this Agreement.
6.11 Sales of Securities Under Rule 144, If Applicable.
(a) Txon will use its best efforts to at all times satisfy
the current public
information requirements of rule 144 promulgated under the
Securities Act so
that its stockholders can sell restricted securities that have
been held for one year
or more or such other restricted period as required by rule
144 as it is from time
to time amended.
(b) Upon being informed in writing by any person holding
restricted stock of
Txon as of the date of this Agreement that such person intends
to sell any shares
under rule 144 promulgated under the Securities Act (including
any rule adopted
in substitution or replacement thereof, Txon will certify in
writing to such person
that it is in compliance with rule 144 current public
information requirement to
enable such person to sell such person's restricted stock
under rule 144, as may
be applicable under the circumstances.
(c) If any certificate representing any such restricted
stock is presented to
Txon's transfer agent for registration or transfer in
connection with any sales
theretofore made under rule 144, provided such certificate
is duly endorsed
for transfer by the appropriate person(s) or accompanied by a
separate stock
power duly executed by the appropriate person(s) in each case
with reasonable
assurances that such endorsements are genuine and effective,
and is
accompanied by an opinion of counsel satisfactory to Txon and
its counsel that
such transfer has complied with the requirements of rule 144,
as the case may
be, Txon will promptly instruct its transfer agent to register
such transfer and to
issue one or more new certificates representing such shares to
the transferee
and, if appropriate under the provisions of rule 144, as the
case may be, free of
any stop transfer order or restrictive legend. The provisions
of this Section
6.08 shall survive the closing and the consummation of the
transactions
contemplated by this Agreement for a period of two years.
6.12 Seat on Board of Directors. Upon closing of the
transactions
contemplated by this Agreement, the current board of directors
of Txon shall be
expanded by one directorship that shall be filled by
Xxxxxxxxx. Management of
Txon agree to support Xxxxxxxxx at all elections of directors
for a period of five
years following the closing of this transaction. Xxxxxxxxx
shall have the right to
resign as a director at any time.
6.13 employment Agreements. As consideration for entering
into this
Agreement, Txon and Xxxxxxxxx agree to enter into the
Employment Agreement
attached hereto as Exhibit "B." In addition, Txon agrees to
execute the
Employment Agreement with Xx. Xxxxxxxx attached hereto as
Exhibit "C" in the
event that a copy of the Employment Agreement executed by Xx.
Xxxxxxxx is
tendered at closing.
6.14 Employee Benefits. As soon as reasonably practical
following the
execution of this Agreement, Txon shall take such steps as may
be required to
implement a stock option plan for key employees of Xxxxx as
identified by
Xxxxxxxxx and any additional key employees of Txon. Txon
shall further
implement an employee stock ownership program or some other
broad based
employee benefit plan that will allow all employees to
participate in the growth of
Txon. In addition, for a period of at least five years from
the Closing Date, Txon
shall require Xxxxx to provide to its employees all employee
benefits currently
enjoyed by Xxxxx employees, including but not limited to
vacation, sick leave,
health insurance and life insurance.
ARTICLE VII
MISCELLANEOUS
7.01 No Representation Regarding Tax Treatment. No
representation or
warranty is being made by any party to any other regarding the
treatment of
this transaction for federal or state income taxation. Each
party has relied
exclusively on its own legal, accounting, and other tax
adviser regarding the
treatment of this transaction for federal and state income
taxes and on no
representation, warranty, or assurance from any other party or
such other party's
legal, accounting, or other adviser.
7.02 Governing Law. This Agreement shall be governed by,
enforced and
construed under and in accordance with the laws of the
State of Utah.
7.03 Notices. Any notices or other communications
required or permitted
hereunder shall be sufficiently given if personally delivered,
if sent by facsimile or
telecopy transmission or other electronic communication
confirmed by registered
or certified mail, postage prepaid, or if sent by prepaid
overnight courier
addressed as follows:
If to Txon, to: With
Copies to:
Xxxxxxxxx Xxxxxxxxx, President Xxxxxx X. Xxxxxxx, Esq
Txon International Development 3090 East 3300 South,
# 400
Corporation Xxxx Xxxx
Xxxx, Xxxx 00000
0000 Xxxxx 0000 Xxxx, Xxxxx 000 Fax: (000) 0000000
Xxxx Xxxx Xxxx, Xxxx 00000
Fax:(000) 0000000
If to Xxxxx, to: With
copies to:
Xxxxxx X. Xxxxxxxxx, President Xxxxx Xxxxxxxxx, Esq
Xxxxx Construction, Inc. Xxxxxx &
XxXxxxxx
515 west 2100 South 00 X. Xxxxx
Xxxxxx, Xxxxx 0000
Xxxx Xxxx Xxxx, Xxxx 00000 Xxxx Xxxx Xxxx,
Xxxx 00000
Fax: (000) 0000000 Fax: (801)
3214893
If to Xxxxxxxxx, to: With
copies to:
Xxxxxx X. Xxxxxxxxx Xxxxx
Xxxxxxxxx, Esq.
0000 Xxxx Xxxxxx Xxxxxx Xxxxxx & XxXxxxxx
Xxxx Xxxx Xxxx, Xxxx 00000 00 X. Xxxxx
Xxxxxx, Xxxxx 0000
Fax: (000) 0000000 Xxxx Xxxx
Xxxx, Xxxx 00000
Fax: (000) 0000000
or such other addresses as shall be furnished in writing by
any party in the
manner for giving notices, hereunder, and any such notice or
communication
shall be deemed to have been given as of the date so delivered
or sent by
facsimile or telecopy transmission or other electronic
communication, or one
day after the date so sent by overnight courier.
7.04 Attorney's Fees. In the event that any party
institutes any action
or suit to enforce this Agreement or to secure relief from any
default
hereunder or breach hereof, the breaching party or parties
shall reimburse the
nonbreaching party or parties for all costs, including
reasonable attorneys'
fees, incurred in connection therewith and in enforcing or
collecting any
judgment rendered therein.
7.05 Schedules, Knowledge. Whenever in any section of
this Agreement
reference is made to information set forth in the schedules
provided by Txon or
Xxxxx such reference is to information specifically set forth
in such schedules and
clearly marked to identify the section of this Agreement to
which the information
relates. Whenever any representation is made to the
"knowledge" of any party,
it shall be deemed to be a representation that no officer or
director of such party,
after reasonable investigation, has any knowledge of such
matters.
7.06 Entire Agreement. This Agreement represents the
entire agreement
between the parties relating to the subject matter hereof.
All previous
agreements between the parties, whether written or oral, have
been merged into
this Agreement. This Agreement alone fully and completely
expresses the
agreement of the parties relating to the subject matter
hereof. There are no other
courses of dealing, understandings, agreements,
representations, or warranties,
written or oral, except as set forth herein.
7.07 Survival of Representations and Warranties. Each of
the representations
and warranties made by the parties in this Agreement,
including the schedules
delivered pursuant hereto, shall survive the closing for a
period of one (1) year
and any claim based on any breach thereof must be commenced
within such one
(1) year period or it will be forever barred; provided,
however, that the
representations and warranties contained in Sections 2.01,
2.02, 2.03, 2.05,
2.11, 3.01, 3.02, 3,03, 3.05, and 3.11 shall survive the
closing and shall not be
limited by such one (1) year period.
7.08 No Third Party Beneficiaries. Nothing in this
Agreement, whether
express or implied, shall confer upon any third party any
rights or remedies of
any nature or kind under or by reason of this Agreement.
7.09 Investigation; Absence of Other Representation or
Warranties. Each
party has conducted a careful investigation of the other
party, has made its own
determination with respect to the value of the other party's
shares of stock. In
conjunction with such investigation, each party has had: (a)
access to and
reviewed the books, records, and contracts of the other party,
(b) access to and
inspected the assets of the other party, and (c) access to and
interviewed key
employees of the other party. There are no representations or
warranties except
as expressly set forth in this Agreement. Without limiting
the generality of the
foregoing, no party has made any representations or warranties
to any other
party with respect to value of the shares of stock of such
party or with respect to
projected future income of such party.
7.10 Counterparts. This Agreement may be executed in
multiple
counterparts, each of which shall be deemed an original and
all of which taken
together shall be but a single instrument.
7.11 Amendment or Waiver. Every right and remedy provided
herein shall
be cumulative with every other right and remedy, whether
conferred herein, at
law, or in equity, and such remedies may be enforced
concurrently, and no
waiver by any party of the performance of any obligation by
the other shall be
construed as a waiver of the same or any other default then,
theretofore, or
thereafter occurring or existing. At any time prior to the
Closing Date, this
Agreement may be amended by a writing signed by all parties
hereto, with
respect to any of the terms contained herein, and any term or
condition of this
Agreement may be waived or the time fore performance thereof
my be extended
by a writing signed by the party or parties for whose benefit
the provision is
intended.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement
to be executed as of the date first above written.
TXON CORPORATION XXXXX ENTERPRISES,
INC.
A Nevada Corporation A Utah
Corporation
BY: /s/ Xxxxxxxxx Xxxxxxxxx By: /s/
Xxxxxx X. Xxxxxxxxx
Xxxxxxxxx Xxxxxxxxx, President Xxxxxx X.
Xxxxxxxxx, President
/s/ Xxxxxx X. Xxxxxxxxx
Xxxxxx X. Xxxxxxxxx, Individually
STATE OF UTAH )
ss.
COUNTY OF SALT LAKE )
On this 26th day of April 1999, personally appeared before
me Xxxxxxxxx
Xxxxxxxxx, whose identity is personally known to me and who be
by me duly
sworn, did say that she is the President of Txon Corporation
and that said
document was signed by him on behalf of said corporation by
authority of its
bylaws, and said Xxxxxxxxx Xxxxxxxxx acknowledged to me that
said corporation
executed the same.
/s/ Xxxxxxx X. Xxxxxxx
Notary Public
STATE OF UTAH )
ss.
COUNTY OF SALT LAKE )
On this 26th day of April 1999, personally appeared before
me Xxxxxx X
Xxxxxxxxx, whose identify is personally known to me and who be
by me duly
sworn, did say that he is the President of Xxxxx Enterprises
and that said
document was signed by him on behalf of said corporation by
authority of its
bylaws, and said Xxxxxx X. Xxxxxxxxx acknowledged to me that said
corporation executed the same.
/s/ Xxxxxxx X. Xxxxxxx
Notary Public
STATE OF UTAH )
ss.
COUNTY OF SALT LAKE )
On this 26th day of April 1999, personally appeared before me
Xxxxxx X
Xxxxxxxxx, whose identify is personally known to me and who be
by me duly
sworn, did say that he signed the foregoing document.
/s/ Xxxxxxx X. Xxxxxxx
Notary Public
