AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Plan") is made
this 16th day of April, 1999, among Tecon, Inc., a Utah corporation ("Tecon");
Xxxxx.xxx, Inc., a California corporation ("Xxxxx.xxx"); the initial Xxxxx.xxx
stockholders (the "Xxxxx.xxx Stockholders"); and the Xxxxx.xxx subscribers
(the "Xxxxx.xxx Subscribers") of common stock of Xxxxx.xxx; all of whom are
listed on Exhibit A hereto and who execute and deliver a copy of the Plan
(sometimes, collectively, the "Xxxxx.xxx Stockholders").
W I T N E S S E T H:
RECITALS
WHEREAS, the respective Boards of Directors of Tecon and Xxxxx.xxx
and the Xxxxx.xxx Stockholders have adopted resolutions pursuant to which
Tecon shall acquire and the Xxxxx.xxx Stockholders shall exchange 100% of the
outstanding common stock and subscriptions to purchase common stock of
Xxxxx.xxx; and
WHEREAS, the sole consideration for 100% interest in Xxxxx.xxx
shall be the exchange of $0.001 par value common stock of Tecon (which shares
are all "restricted securities" as defined in Rule 144 of the Securities and
Exchange Commission) as outlined in Exhibit A; and
WHEREAS, the Xxxxx.xxx Stockholders shall acquire in exchange the
"restricted securities" of Tecon in a reorganization within the meaning of
Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended;
NOW, THEREFORE, in consideration of the mutual covenants and
promises contained herein, it is agreed:
Section 1
Exchange of Stock
1.1 Number of Shares. The Xxxxx.xxx Stockholders and the
Xxxxx.xxx Subscribers respectively agree to transfer to Tecon at the closing
(the "Closing") 100% of the outstanding securities and subscriptions to
purchase securities of Xxxxx.xxx, listed in Exhibit A, which is attached
hereto and incorporated herein by reference (the "Xxxxx.xxx Shares"), in
exchange, respectively, for 8,500,000 shares of common stock of Tecon (for the
outstanding securities of Xxxxx.xxx), and 257,666 shares of common stock of
Tecon (for the outstanding subscriptions in the approximate amount of
$386,499). Taking into account (i) these shares (collectively, 8,757,666
shares), (ii) the current outstanding shares of Tecon (1,199,962 shares),
(iii) 600,000 shares of common stock of Tecon registered with the Securities
and Exchange Commission for issuance on Form S-8 to certain consultants,
subject to the Closing of this Plan, and (iv) the 1,621,621 shares to be
issued in consideration of the sum of $590,000 and $10,000 credit for a prior
loan to Xxxxx.xxx at or simultaneous with the Closing as outlined in Section
1.5 hereof, there will be 12,179,249 outstanding shares on the completion of
the Plan. The exchange shall be on a basis of one share of Tecon for each of
the Xxxxx.xxx Shares; and the subscriptions of the Xxxxx.xxx Subscribers shall
be for the number of shares subscribed, as each subscription is subject to the
acceptance of Tecon.
1.2 Delivery of Certificates by Xxxxx.xxx Stockholders.
The transfer of the Xxxxx.xxx Shares by the Xxxxx.xxx Stockholders shall be
effected by the delivery to Tecon at the Closing of stock certificate or
certificates representing the transferred shares duly endorsed in blank or
accompanied by stock powers executed in blank, with all signatures witnessed
or guaranteed to the satisfaction of Tecon and with all necessary transfer
taxes and other revenue stamps affixed and acquired at the Xxxxx.xxx
Stockholders' expense. Since Xxxxx.xxx Shares have not been issued to the
Xxxxx.xxx Subscribers, who subscribed with the understanding that the Plan
would be completed and each would receive the number of shares subscribed for
in the reorganized Tecon, the signed Counterpart Signature Page to the Plan of
the Xxxxx.xxx Subscribers, together with Tecon's acceptance thereof at the
Closing, shall be sufficient to transfer the equity interest in Xxxxx.xxx of
the Xxxxx.xxx Subscribers to Tecon.
1.3 Further Assurances. At the Closing and from time to
time thereafter, the Xxxxx.xxx Stockholders and the Xxxxx.xxx Subscribers
shall execute such additional instruments and take such other action as Tecon
may request in order to exchange and transfer clear title and ownership in the
Xxxxx.xxx Shares to Tecon.
1.4 Resignations of Present Directors and Executive
Officers and Designation of New Directors and Executive Officers. On Closing,
the present directors and executive officers of Tecon shall designate the
directors and executive officers nominated by Xxxxx.xxx to serve in their
place and stead, until the next respective annual meetings of the stockholders
and the Board of Directors of Tecon, and until their respective successors
shall be elected and qualified or until their respective prior resignations or
terminations, who shall be: Xxxxxx Xxxx, President, Secretary and a director;
Xxxxx X. Xxxxxx, Chairman, CEO and a director; and Xxxxx Xxxxx Xxxxx, III,
Vice President and a director; and then, they shall resign, in seriatim.
1.5 Subscriptions Simultaneous with Closing. Tecon shall
have received subscriptions in the form satisfactory to Tecon for the purchase
of 1,621,621 shares of its "restricted securities" (common stock) at price of
approximately $0.37 per share, for an aggregate total of $600,000 ($10,000 of
which shall be a credit for a loan made to Xxxxx.xxx), at or simultaneous with
the Closing. In further consideration of these subscriptions, Tecon and
Xxxxx.xxx agree that (i) Tecon shall continue to file reports with the
Securities Exchange Commission under Sections 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, for so long as these subscribers own the
shares subscribed for, or for a period of two years from the Closing,
whichever is earlier; and (ii) that no stock option, incentive, bonus, pension
or other compensatory plan of any type or nature whatsoever shall be
considered by the Board of Directors of Tecon or Xxxxx.xxx for a period of
ninety (90) days from the date of the Closing of the Plan, and none will be
adopted from and after such ninety (90) day period until the expiration of one
year from the date of the Closing, without the prior written consent of 95% of
these subscribers.
1.6 Change of Name. Simultaneous with the Closing of this
Plan, the Board of Directors of Tecon, with the written consent of its
majority stockholders, shall have adopted the resolutions necessary to amend
Tecon's Articles of Incorporation to change its name to "Xxxxx.xxx, Inc."
1.7 Assets and Liabilities of Tecon at Closing. Tecon
shall have no material assets and no liabilities at Closing, and all costs
incurred by Tecon incident to the Plan shall have been paid or satisfied.
1.8 Limitation on Reverse Splits. Without the prior
written consent of the current members of the Board of Directors of Tecon, no
reverse split of the outstanding voting securities of Tecon shall be effected
following the Closing, for a period of not less than 12 months.
1.9 Closing. The Plan will be deemed to be closed on
receipt of the signatures of the Xxxxx.xxx Stockholders or the Xxxxx.xxx
Subscribers collectively owning or having rights to acquire not less that 80%
of the Xxxxx.xxx Shares; and Tecon and Xxxxx.xxx will use their "best efforts"
to acquire the remaining Xxxxx.xxx Shares under the Plan as soon as is
practicable.
1.10 Xxxxx.xxx 1999 Stock Option Plan. Effective on the
Closing, the 1999 Stock Option Plan of Xxxxx.xxx shall be declared void and of
no effect.
Section 2
Closing
The Closing contemplated by Section 1 shall be held at the offices
of Xxxxxxx X. Xxxxxxxxxx, Esq., Suite 205 Hermes Building, 000 Xxxx 000 Xxxxx,
Xxxx Xxxx Xxxx, Xxxx 00000, on or before ten days following the execution and
delivery of this Plan, unless another place or time is agreed upon in writing
by the parties. The Closing may be accomplished by wire, express mail or
other courier service, conference telephone communications or as otherwise
agreed by the respective parties or their duly authorized representatives.
Section 3
Representations and Warranties of Tecon
Tecon represents and warrants to, and covenants with, the
Xxxxx.xxx Stockholders, the Xxxxx.xxx Subscribers and Xxxxx.xxx as follows:
3.1 Corporate Status. Tecon is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Utah and is licensed or qualified as a foreign corporation in all states in
which the nature of its business or the character or ownership of its
properties makes such licensing or qualification necessary (Utah only.) Tecon
is a publicly held company, having previously and lawfully offered and sold a
portion of its securities in accordance with applicable federal and state
securities laws, rules and regulations; it voluntarily files reports with the
Securities and Exchange Commission under Section 15(d) of the Securities
Exchange Act of 1934, as amended, and such reports which have been filed since
Tecon recommenced its developmental stage, are true and accurate in every
material respect.
3.2 Capitalization. The current pre-Plan authorized
capital stock of Tecon consists of 305,000,000 shares of $0.001 par value
capital stock, divided into 300,000,000 shares of common stock and 5,000,000
shares of preferred stock. There are 1,199,962 shares of common stock issued
and outstanding, all fully paid and non-assessable; no preferred stock is
outstanding. Except as otherwise provided herein, and except for 600,000
shares of common stock of Tecon registered with the Securities and Exchange
Commission for issuance on Form S-8 to certain consultants, subject to the
Closing of this Plan, there are no outstanding options, warrants or calls
pursuant to which any person has the right to purchase any authorized and
unissued common stock of Tecon.
3.3 Financial Statements. The financial statements of
Tecon furnished to the Xxxxx.xxx Stockholders and Xxxxx.xxx, consisting of
audited financial statements for the years ended March 31, 1998 and 1997, and
the period ended December 31, 1998, attached hereto as Exhibit B and
incorporated herein by reference, are correct and fairly present the financial
condition of Tecon at such dates and for the periods involved; such statements
were prepared in accordance with generally accepted accounting principles
consistently applied, and no material change has occurred in the matters
disclosed therein, except as indicated in Exhibit C, which is attached hereto
and incorporated herein by reference. Such financial statements do not
contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading.
3.4 Undisclosed Liabilities. Tecon has no liabilities of
any nature except to the extent reflected or reserved against in its balance
sheets, whether accrued, absolute, contingent or otherwise, including, without
limitation, tax liabilities and interest due or to become due, except as set
forth in Exhibit C.
3.5 Interim Changes. Since the date of its balance
sheets, except as set forth in Exhibit C, there have been no (1) changes in
financial condition, assets, liabilities or business of Tecon which, in the
aggregate, have been materially adverse; (2) damages, destruction or losses of
or to property of Tecon, payments of any dividend or other distribution in
respect of any class of stock of Tecon, or any direct or indirect redemption,
purchase or other acquisition of any class of any such stock; or (3) increases
paid or agreed to in the compensation, retirement benefits or other
commitments to its employees.
3.6 Title to Property. Tecon has good and marketable
title to all properties and assets, real and personal, reflected in Tecon
balance sheets, and the properties and assets of Tecon are subject to no
mortgage, pledge, lien or encumbrance, except for liens shown therein or in
Exhibit C, with respect to which no default exists.
3.7 Litigation. There is no litigation or proceeding
pending, or to the knowledge of Tecon, threatened, against or relating to
Tecon, its properties or business, except as set forth in Exhibit C. Further,
no officer, director or person who may be deemed to be an affiliate of Tecon
is party to any material legal proceeding which could have an adverse effect
on Tecon (financial or otherwise), and none is party to any action or
proceeding wherein any has an interest adverse to Tecon.
3.8 Books and Records. From the date of this Plan to the
Closing, Tecon will (1) give to the Xxxxx.xxx Stockholders and Xxxxx.xxx or
their respective representatives full access during normal business hours to
all of Tecon offices, books, records, contracts and other corporate documents
and properties so that the Xxxxx.xxx Stockholders and Xxxxx.xxx or their
respective representatives may inspect and audit them; and (2) furnish such
information concerning the properties and affairs of Tecon as the Xxxxx.xxx
Stockholders and Xxxxx.xxx or their respective representatives may reasonably
request.
3.9 Tax Returns. Tecon has filed all federal and state
income or franchise tax returns required to be filed or has received currently
effective extensions of the required filing dates.
3.10 Confidentiality. Until the Closing (and thereafter
if there is no Closing), Tecon and its representatives will keep confidential
any information which they obtain from the Xxxxx.xxx Stockholders or from
Xxxxx.xxx concerning the properties, assets and business of Xxxxx.xxx. If the
transactions contemplated by this Plan are not consummated by April 21, 1999,
Tecon will return to Xxxxx.xxx all written matter with respect to Xxxxx.xxx
obtained by Tecon in connection with the negotiation or consummation of this
Plan.
3.11 Corporate Authority. Tecon has full corporate power
and authority to enter into this Plan and to carry out its obligations
hereunder and will deliver to the Xxxxx.xxx Stockholders and Xxxxx.xxx or
their respective representatives at the Closing a certified copy of
resolutions of its Board of Directors authorizing execution of this Plan by
Tecon's officers and performance thereunder, and that the directors adopting
and delivering such resolutions are the duly elected and incumbent directors
of Tecon.
3.12 Due Authorization. Execution of this Plan and
performance by Tecon hereunder have been duly authorized by all requisite
corporate action on the part of Tecon, and this Plan constitutes a valid and
binding obligation of Tecon and performance hereunder will not violate any
provision of the Articles of Incorporation, Bylaws, agreements, mortgages or
other commitments of Tecon.
3.13 Environmental Matters. Tecon has no knowledge of any
assertion by any governmental agency or other regulatory authority of any
environmental lien, action or proceeding, or of any cause for any such lien,
action or proceeding related to the business operations of Tecon or Tecon'
predecessors. In addition, to the best knowledge of Tecon, there are no
substances or conditions which may support a claim or cause of action against
Tecon or any of Tecon' current or former officers, directors, agents or
employees, whether by a governmental agency or body, private party or
individual, under any Hazardous Materials Regulations. "Hazardous Materials"
means any oil or petrochemical products, PCB's, asbestos, urea formaldehyde,
flammable explosives, radioactive materials, solid or hazardous wastes,
chemicals, toxic substances or related materials, including, without
limitation, any substances defined as or included in the definition of
"hazardous substances," "hazardous wastes," "hazardous materials," or "toxic
substances" under any applicable federal or state laws or regulations.
"Hazardous Materials Regulations" means any regulations governing the use,
generation, handling, storage, treatment, disposal or release of hazardous
materials, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act, the Resource Conservation and
Recovery Act and the Federal Water Pollution Control Act.
3.14 Access to Information Regarding Xxxxx.xxx. Tecon
acknowledges that it has been delivered copies of what has been represented to
be documentation containing all material information respecting Xxxxx.xxx and
Xxxxx.xxx's present and contemplated business operations, potential
acquisitions, management and other factors; that it has had a reasonable
opportunity to review such documentation and discuss it, to the extent
desired, with its legal counsel, directors and executive officers; that it has
had, to the extent desired, the opportunity to ask questions of and receive
responses from the directors and executive officers of Xxxxx.xxx, and with the
legal and accounting firms of Xxxxx.xxx, with respect to such documentation;
and that to the extent requested, all questions raised have been answered to
Tecon's complete satisfaction.
Section 4
Representations, Warranties and Covenants of Xxxxx.xxx
and the Xxxxx.xxx Stockholders
Xxxxx.xxx and the Xxxxx.xxx Stockholders (Sections 4.1, 4.11,
4.12, 4.15 and 4.16 are the only representations of the xxxxxxxx.xxx
Stockholders) severally and not jointly, represent and warrant to, and
covenant with, Tecon as follows:
4.1 Ownership. Xxxxx.xxx Stockholders own the Xxxxx.xxx
Shares, free and clear of any liens or encumbrances of any type or nature
whatsoever, and each has full right, power and authority to convey the
Xxxxx.xxx Shares owned without qualification.
4.2 Corporate Status. Xxxxx.xxx is a corporation duly
organized, validly existing and in good standing under the laws of the State
of California and is licensed or qualified as a foreign corporation in all
states or foreign countries and provinces in which the nature of Xxxxx.xxx's
business or the character or ownership of Xxxxx.xxx properties makes such
licensing or qualification necessary.
4.3 Capitalization. The current pre-Plan authorized
capital stock of Xxxxx.xxx consists of 50,000,000 shares of no par value
capital stock, divided into 40,000,000 shares of common stock and 10,000,000
shares of preferred stock. There are 8,500,000 shares of common stock issued
and outstanding, all fully paid and non-assessable; no preferred stock is
outstanding. Except for the subscriptions of the Xxxxx.xxx Subscribers
referred to elsewhere herein, and except for 2,810,000 shares of common stock
underlying options granted by Xxxxx.xxx under the Xxxxx.xxx 1999 Stock Option
Plan, which shall be declared void on the Closing as provided in Section 1.10
hereof, there are no outstanding options, warrants or calls pursuant to which
any person has the right to purchase any other securities of Xxxxx.xxx.
Xxxxx.xxx has received subscriptions in the total amount of approximately
$386,499, representing the agreement to purchase 257,666 post-Plan shares of
common stock of Tecon, which subscriptions are subject to the acceptance by
Tecon.
4.4 Financial Statements. There are no financial
statements of Xxxxx.xxx being furnished to Tecon, and Exhibit D attached
hereto and incorporated herein by reference is a copy of the only asset of
Xxxxx.xxx, being an Assignment of certain proprietary rights by Xxxxx Xxxxxx
to Xxxxx.xxx; except as set forth in Exhibit E attached hereto and
incorporated herein by reference, Xxxxx.xxx has no material liabilities other
than those incurred in the ordinary course of its business, and no debts of
any kind or nature whatsoever to any director, executive officer or
stockholder, excluding compensation due from employment arrangements.
4.5 Undisclosed Liabilities. Xxxxx.xxx has no material
liabilities of any nature except to the extent reflected or reserved against
in Exhibit E, whether accrued, absolute, contingent or otherwise, including,
without limitation, tax liabilities and interest due or to become due.
4.6 Interim Changes. Since its inception and as of the
Closing, except as set forth in Exhibit E, there have been no (1) changes in
the financial condition, assets, liabilities or business of Xxxxx.xxx, in the
aggregate, have been materially adverse; (2) damages, destruction or loss of
or to the property of Xxxxx.xxx, payment of any dividend or other distribution
in respect of the capital stock of Xxxxx.xxx, or any direct or indirect
redemption, purchase or other acquisition of any such stock; or (3) increases
paid or agreed to in the compensation, retirement benefits or other
commitments to their employees.
4.7 Title to Property. Xxxxx.xxx has good and marketable
title to all properties and assets, real and personal, proprietary or
otherwise, reflected in Exhibit D, and the properties and assets of Xxxxx.xxx
are subject to no mortgage, pledge, lien or encumbrance, except as reflected
in the balance sheet or in Exhibit E, with respect to which no default exists.
4.8 Litigation. There is no litigation or proceeding
pending, or to the knowledge of Xxxxx.xxx, threatened, against or relating to
Xxxxx.xxx or its properties or business, except as set forth in Exhibit E.
Further, no officer, director or person who may be deemed to be an affiliate
of Xxxxx.xxx is party to any material legal proceeding which could have an
adverse effect on Xxxxx.xxx (financial or otherwise), and none is party to any
action or proceeding wherein any has an interest adverse to Xxxxx.xxx.
4.9 Books and Records. From the date of this Plan to the
Closing, the Xxxxx.xxx Stockholders will cause Xxxxx.xxx to (1) give to Tecon
and its representatives full access during normal business hours to all of its
offices, books, records, contracts and other corporate documents and
properties so that Tecon may inspect and audit them; and (2) furnish such
information concerning the properties and affairs of Xxxxx.xxx as Tecon may
reasonably request.
4.10 Tax Returns. Xxxxx.xxx has filed all federal and
state income or franchise tax returns required to be filed or has received
currently effective extensions of the required filing dates.
4.11 Confidentiality. Until the Closing (and continuously
if there is no Closing), Xxxxx.xxx, the Xxxxx.xxx Stockholders and their
representatives will keep confidential any information which they obtain from
Tecon concerning its properties, assets and business. If the transactions
contemplated by this Plan are not consummated by April 21, 1999, Xxxxx.xxx and
the Xxxxx.xxx Stockholders will return to Tecon all written matter with
respect to Tecon obtained by them in connection with the negotiation or
consummation of this Plan.
4.12 Investment Intent. The Xxxxx.xxx Stockholders are
acquiring the shares to be exchanged and delivered to them under this Plan for
investment and not with a view to the sale or distribution thereof, and the
Xxxxx.xxx Stockholders have no commitment or present intention to liquidate
the Company or to sell or otherwise dispose of the Tecon shares. The
Xxxxx.xxx Stockholders shall execute and deliver to Tecon on the Closing an
Investment Letter attached hereto as Exhibit F and incorporated herein by
reference, (i) acknowledging the "unregistered" and "restricted" nature of the
shares of Tecon being received under the Plan in exchange for the Xxxxx.xxx
Shares, (ii) the receipt of certain material information regarding Tecon (its
annual and quarterly reports filed with the Securities and Exchange Commission
during the past 12 months and (iii) compromising any claims of any type or
nature whatsoever each may have against Xxxxx.xxx respecting the purchase of
any of the securities of Xxxxx.xxx or based upon any violation by Xxxxx.xxx of
any federal, state or foreign securities laws, rules or regulations up to and
including the date of the Closing.
4.13 Corporate Authority. Xxxxx.xxx has full corporate
power and authority to enter into this Plan and to carry out its obligations
hereunder and will deliver to Tecon or its representative at the Closing a
certified copy of resolutions of its Board of Directors authorizing execution
of this Plan by its officers and performance thereunder.
4.14 Due Authorization. Execution of this Plan and
performance by Xxxxx.xxx hereunder have been duly authorized by all requisite
corporate action on the part of Xxxxx.xxx, and this Plan constitutes a valid
and binding obligation of Xxxxx.xxx and performance hereunder will not violate
any provision of the Articles of Incorporation, Bylaws, agreements, mortgages
or other commitments of Xxxxx.xxx.
4.15 Environmental Matters. Xxxxx.xxx and the Xxxxx.xxx
Stockholders have no knowledge of any assertion by any governmental agency or
other regulatory authority of any environmental lien, action or proceeding, or
of any cause for any such lien, action or proceeding related to the business
operations of Xxxxx.xxx or its predecessors. In addition, to the best
knowledge of Xxxxx.xxx, there are no substances or conditions which may
support a claim or cause of action against Xxxxx.xxx or any of its current or
former officers, directors, agents, employees or predecessors, whether by a
governmental agency or body, private party or individual, under any Hazardous
Materials Regulations. "Hazardous Materials" means any oil or petrochemical
products, PCB's, asbestos, urea formaldehyde, flammable explosives,
radioactive materials, solid or hazardous wastes, chemicals, toxic substances
or related materials, including, without limitation, any substances defined as
or included in the definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," or "toxic substances" under any applicable federal or
state laws or regulations. "Hazardous Materials Regulations" means any
regulations governing the use, generation, handling, storage, treatment,
disposal or release of hazardous materials, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act, the
Resource Conservation and Recovery Act and the Federal Water Pollution Control
Act.
4.16 Access to Information Regarding Tecon. Xxxxx.xxx and the
Xxxxx.xxx Stockholders acknowledge that they have been delivered copies of
what has been represented to be documentation containing all material
information respecting Tecon and its present and contemplated business
operations, potential acquisitions, management and other factors; that they
have had a reasonable opportunity to review such documentation and discuss it,
to the extent desired, with their legal counsel, directors and executive
officers; that they have had, to the extent desired, the opportunity to ask
questions of and receive responses from the directors and executive officers
of Tecon, and with the legal and accounting firms of Tecon, with respect to
such documentation; and that to the extent requested, all questions raised
have been answered to their complete satisfaction.
Section 5
Conditions Precedent to Obligations of Xxxxx.xxx
and the Xxxxx.xxx Stockholders
All obligations of Xxxxx.xxx and the Xxxxx.xxx Stockholders under
this Plan are subject, at their option, to the fulfillment, before or at the
Closing, of each of the following conditions:
5.1 Representations and Warranties True at Closing. The
representations and warranties of Tecon contained in this Plan shall be deemed
to have been made again at and as of the Closing and shall then be true in all
material respects and shall survive the Closing.
5.2 Due Performance. Tecon shall have performed and
complied with all of the terms and conditions required by this Plan to be
performed or complied with by it before the Closing.
5.3 Officers' Certificate. Xxxxx.xxx and the Xxxxx.xxx
Stockholders shall have been furnished with a certificate signed by the
President of Tecon, in such capacity, attached hereto as Exhibit G and
incorporated herein by reference, dated as of the Closing, certifying (1) that
all representations and warranties of Tecon contained herein are true and
correct; and (2) that since the date of the financial statements (Exhibit B
hereto), there has been no material adverse change in the financial condition,
business or properties of Tecon, taken as a whole.
5.4 Opinion of Counsel of Tecon. Xxxxx.xxx and the
Xxxxx.xxx Stockholders shall have received an opinion of counsel for Tecon,
dated as of the Closing, to the effect that (1) the representations of
Sections 3.1, 3.2 and 3.11 are correct; (2) except as specified in the
opinion, counsel knows of no inaccuracy in the representations in 3.5, 3.6 or
3.7; and (3) the shares of Tecon to be issued to the Xxxxx.xxx Stockholders
under this Plan will, when so issued, be validly issued, fully paid and
non-assessable.
5.5 Assets and Liabilities of Tecon. Unless otherwise
agreed, Tecon shall have no assets and no liabilities at Closing, and all
costs, expenses and fees incident to the Plan shall have been paid.
5.6 Resignation of Directors and Executive Officers and
Designation of New Directors and Executive Officers. The present directors
and executive officers of Tecon shall resign, and shall have designated
nominees of Xxxxx.xxx as outlined in Section 1.4 hereof as directors and
executive officers of Tecon to serve in their place and stead, until the next
respective annual meetings of the stockholders and Board of Directors of
Tecon, and until their respective successors shall be elected and qualified or
until their respective prior resignations or terminations.
5.7 Name Change of Tecon and Issuance of Subscribed and
Compensation Shares. Simultaneous with the Closing of this Plan, (i) Tecon
and its majority stockholders shall have adopted such resolutions as are
necessary for the purpose of amending its Articles of Incorporation to change
the name of Tecon to "Xxxxx.xxx, Inc."; (ii) and to cause the shares of
common stock outlined in Section 1.5 hereof, to be issued as fully paid and
non-assessable shares.
5.8 Xxxxx.xxx Stockholders' Approval. Persons
collectively owning or having rights to acquire not less that 80% of the
Xxxxx.xxx Shares shall have adopted, executed and delivered the Plan.
Section 6
Conditions Precedent to Obligations of Tecon
All obligations of Tecon under this Plan are subject, at Tecon's
option, to the fulfillment, before or at the Closing, of each of the following
conditions:
6.1 Representations and Warranties True at Closing. The
representations and warranties of Xxxxx.xxx and the Xxxxx.xxx Stockholders
contained in this Plan shall be deemed to have been made again at and as of
the Closing and shall then be true in all material respects and shall survive
the Closing.
6.2 Due Performance. Xxxxx.xxx and the Xxxxx.xxx
Stockholders shall have performed and complied with all of the terms and
conditions required by this Plan to be performed or complied with by them
before the Closing.
6.3 Officers' Certificate. Tecon shall have been
furnished with a certificate signed by the President of Xxxxx.xxx, in such
capacity, and personally, attached hereto as Exhibit H and incorporated herein
by reference, dated as of the Closing, certifying (1) that all representations
and warranties of Xxxxx.xxx and the Xxxxx.xxx Stockholders contained herein
are true and correct; and (2) that since the date of the financial statements
(Exhibit D), there has been no material adverse change in the financial
condition, business or properties of Xxxxx.xxx, taken as a whole.
6.4 Stockholders' Approval. Persons collectively owning
or having rights to acquire not less that 80% of the Xxxxx.xxx Shares shall
have adopted, executed and delivered the Plan.
6.5 Subscriptions. The Subscription Documents covering
the subscriptions provided in Section 1.5 hereof shall have been delivered and
accepted by Tecon, subject only to the release of funds being held in escrow
for the payment of these subscriptions by the firm of Xxxxxx, Xxxxxxxxxx &
Xxxxxxxx, LLP, of New York, New York.
6.6 Books and Records. The Xxxxx.xxx Stockholders or the
Board of Directors of Xxxxx.xxx shall have caused Xxxxx.xxx to make available
all books and records of Xxxxx.xxx, including minute books and stock transfer
records; provided, however, only to the extent requested in writing by Tecon
at Closing.
Section 7
Termination
Prior to Closing, this Plan may be terminated (1) by mutual
consent in writing; (2) by either the directors of Tecon or Xxxxx.xxx and the
Xxxxx.xxx Stockholders if there has been a material misrepresentation or
material breach of any warranty or covenant by the other party; or (3) by
either the directors of Tecon or Xxxxx.xxx and the Xxxxx.xxx Stockholders if
the Closing shall not have taken place, unless adjourned to a later date by
mutual consent in writing, by the date fixed in Section 2.
Section 8
General Provisions
8.1 Further Assurances. At any time, and from time to
time, after the Closing, each party will execute such additional instruments
and take such action 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 Plan.
8.2 Waiver. Any failure on the part of any party hereto
to comply with any of Tecon obligations, agreements or conditions hereunder
may be waived in writing by the party to whom such compliance is owed.
8.3 Brokers. Each party represents to the other parties
hereunder that no broker or finder has acted for it in connection with this
Plan, and agrees to indemnify and hold harmless the other parties against any
fee, loss or expense arising out of claims by brokers or finders employed or
alleged to have been employed by he/she/it.
8.4 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed to have been given if
delivered in person or sent by prepaid first-class registered or certified
mail, return receipt requested, as follows:
If to Tecon: Suite 205, Hermes Building
000 Xxxx 000 Xxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
With a copy to: Xxxxxxx X. Xxxxxxxxxx, Esq.
455 East 000 Xxxxx, #000
Xxxx Xxxx Xxxx, Xxxx 00000
If to Xxxxx.xxx: 0000 Xxx Xxxxxx, Xxxxx 000
Xxxxxx Xxx Xxx, Xxxxxxxxxx 00000
With a copy to: Xxxx Xxxxxxxx, Esq.
Eighth Floor, East Tower
0000 Xxxxxxxx Xxxx.
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Stockholders: To the addresses listed on Exhibit A
8.5 Entire Agreement. This Plan constitutes the entire
agreement between the parties and supersedes and cancels any other agreement,
representation, or communication, whether oral or written, between the parties
hereto relating to the transactions contemplated herein or the subject matter
hereof.
8.6 Headings. The section and subsection headings in
this Plan are inserted for convenience only and shall not affect in any way
the meaning or interpretation of this Plan.
8.7 Governing Law. This Plan shall be governed by and
construed and enforced in accordance with the laws of the State of Utah,
except to the extent pre-empted by federal law, in which event (and to that
extent only), federal law shall govern.
8.8 Assignment. This Plan shall inure to the benefit of,
and be binding upon, the parties hereto and their successors and assigns.
8.9 Counterparts. This Plan 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.
8.10 Default. In the event of any default hereunder, the
prevailing party in any action to enforce the terms and provisions hereof
shall be entitled to recover reasonable attorney's fees and related costs.
IN WITNESS WHEREOF, the parties have executed this Agreement
and Plan of Reorganization effective the day and year first above written.
TECON, INC.
Date: 4/14/99 By /s/Xxxxxx Xxxx, President
XXXXX.XXX, INC.
Date: 4/15/99 By /s/Xxxxxx Xxxx, President
XXXXX.XXX, INC.
STOCKHOLDERS
Date: 4/15/99 /s/ Xxxx Xxxxxx
Date: 4/16/99 /s/ Xxxxxxx X. Xxxxx
Date: 4/15/909 /s/ Xxxxx X. Xxxxxx
Date: 4/15/99 /s/ Xxxxxx Xxxx
Date: 4/15/99 /s/ Xxxxxx Xxxx
Date: 4/15/99 /s/ Xxxxx Xxxxx
Date: 4/15/99 /s/ Xxxx X. Xxxxxxxxx
EXHIBIT A
STOCKHOLDERS OF XXXXX.XXX, INC.
Number of Shares of
Number of Shares Tecon's
Owned of to be
Name and Address Xxxxx.xxx, Inc. Received in Exchange
Xxxx Xxxxxx 300,000 300,000
831 Venezia
Xxxxxx, XX 00000
Xxxxx Xxxxxxx 40,000 40,000
X.X. Xxx 000000
Xxxxxxx, XX 00000
Xxxxx Xxxxxx 16,667 16,667
00000 X. Xxxxxxx #0000
Xxx Xxxxxxx, XX 00000
Xxxx Xxxxxxxxx 100,000 100,000
0000 Xxx Xxxxxx #000
Xxxxxx Xxx Xxx, XX 00000
Xxxx Xxxxxxxxxxx 33,333 33,333
C/O Xxxxx Xxxxxx
0000 Xxx Xxxxxx #000
Xxxxxx Xxx Xxx, XX 00000
Xxxxx Xxxxx 1,000,000 1,000,000
0000 Xxx Xxxxxx #000
Xxxxxx Xxx Xxx, XX 00000
Xxxxx & Xxxxxxx Xxxxx 25,000 25,000
000 Xxxxxxxx Xxxxx
Xxxxx XX 00000
Xxxxx Xxxxxx & Xxxxxxxx Xxxxx 50,000 50,000
000 X. Xxxxxx Xxxxxx #000
Xxxxxxxx Xxxxx, XX 00000
Xxxxxxxxxxx Xxxxx 25,000 25,000
(c/o Xxxxx Xxxxx)
000 Xxxxxxxx Xxxxx
Xxxxx, XX 00000
Xxxxx & Xxxxxxx Xxxxx 10,000 10,000
0000 Xxxxxxxx Xxx.
Xxxxxxxx Xxxxx, XX 00000
Xxxxxx & Xxxxxxx Xxxxxxxx 10,000 10,000
2604 Boush Qtr
Xxxxxxxx Xxxxx, XX 00000
Xxxxxxxx Xxxxxx 10,000 10,000
0000 Xxxxxxxxxxx Xx.
Xxxxxxx, XX 00000-0000
Xxxxxx & Xxxxx Xxxxxxxxx 10,000 10,000
(c/o Xxxxx Xxxxx
0000 Xxxxxxxx Xxx
Xxxxxxxx Xxxxx, XX 00000
Xxxxxxxx Xxxxxx 50,000 50,000
000 Xxxxx Xxxxxx, #0
Xxxxxxx Xxxxx, XX 00000
Xxxxxx & Xxxxxx Xxxxxxxx 10,000 10,000
0000 Xxxxxx Xxxxxx
Xxxxx XX 00000
Xxxxxxx X. Xxxxx 1,000,000 1,000,000
0000 Xxx Xxxxxx #000
Xxxxxx Xxx Xxx, XX 00000
Xxxxxx X. Xxxxx 100,000 100,000
0000 Xxxxx Xxxxx XX
Xxxxx Xxxxxx, XX 00000
Xxxxxxx X. Xxxxx 100,000 100,000
000 Xxxxx Xxxxx
Xxxx Xxxxxxxxx
Xxxxxxxxx Xxxx, XX 00000
Xxxxx X. Xxxxxx 3,705,000 3,705,000
0000 Xxx Xxxxxx #000
Xxxxxx Xxx Xxx, XX 00000
Xxxxxx Xxxx 270,000 270,000
x/x Xxxxxx & Xx.
000 Xxxxxx
Xxxxxx XX0X XXX
Xxxxxxx
Xxxxxxx Xxxxxx 100,000 100,000
0000 00xx Xxxxxx #0
Xxxxxxxxx Xxxxx, XX 00000
Xxxxxxx Xxxxxx 25,000 25,000
0000 Xxx Xxxxxx #000
Xxxxxx Xxx Xxx, XX 00000
Xxxx Xxxxxxx 10,000 10,000
00000 Xxxxxx Xxxx, Xxxx X
Xxx Xxxxxxx, XX 00000
Xxxxxx Xxxx 500,000 500,000
00 Xxxx Xxxxxx
Xxxx Xxxxxx, XX 00000
Communication Technology 1,000,000 1,000,000
Investments Ltd.
P. O. Box 860
11 Bath Street
St. Helier, Jersey AE4 0YZ
Channel Islands, U.K.
Total: 8,500,000 8,500,000
SUBSCRIBERS OF XXXXX.XXX, INC.
Number of Subscribed Shares
of Tecon to be
Received
Subscriber in Exchange
Xxx Xxxxx Xxx 1,000
0000 X. Xxxx Xxxxxx
Xxxxxxxx, XX 00000
Xxxxxxxxxxx X. Xxxxxx 10,000
00000 Xxxxx Xxxxxx, Xxxxx #0
Xxx Xxxxxxx, XX 00000
Xxxxx Xxxxxxx 3,333
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Alaka Kapoor 6,667
000 X. Xxxxxxx Xxxxxx #000
Xxxxxxxx, XX 00000
Xxxxxx Xxxx 1,333
00 Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Xxxxx X. Xxxxxxxx 1,700
00000 Xxxx Xxxxx Xxxxxx
Xxx Xxxxx, XX 00000
Xxxxxx Xxxxxxx 333
000 Xxxxxx Xxxxxx
Xxxxxx Xxx Xxx, XX 00000
Xxxxxxx Xxxxxxx 666
0000 Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Arjun Xxxxxx 5,333
c/o Coutts & Co.
000 Xxxxxx
Xxxxxx XX0X 0XX Xxxxxxx
Avinash & Xxxxx Xxxxxxxx 10,000
0 Xxxxxxxx Xxxx
Xxxxxx XX00 Xxxxxxx
Xxxxx & Xxxxx Xxxxxx 3,000
P. O. Xxx 0000
Xxxxxx Xxx, XX 00000
Xxxxxxx Xxxxxxx 1,000
000 0xx Xxxxxx
Xxxxxxxxx Xxxxx, XX 00000
Xxxx Xxxxxxxxx 2,500
000 X. Xxxxx Xxxx #000
Xxx Xxxxxxx, XX 00000
Xxxxxxxxx Xxxxxxxx 2,000
0 Xxxxx Xxxx Xxxxx
Xxxxxxxxx Xxxxx, XX 00000
Xxxxxxx Xxxx 1,000
0000 Xxxxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Xxxxxxx XxXxxxx & Xxxxxx 1,000
000 Xxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Couldip Lala 10,000
Xxxxx Investments, Ltd.
0xx Xxxxx, Xxx Xxxxxxxx
Xxxx Xxxxx, Xxxxxxxxx
Xxxxx Xxxxx 10,000
P. O. Xxx 0000
Xx Xxxxx, XX 00000
Xxxxx Xxxxxxxxx 16,667
00000 Xxxxxx Xxxxx Xxxxxx
Xxxxxxx, XX
Xxxxxxx Xxxxxxxxxx Xxxx 1,335
00 Xxxxxxxxx Xxxx
Xxxx Xxxxxx, XX 00000
Xxxxx Xxxxxx 667
00 Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Xxxxx Xx Xxxxxx 500
0000 Xxxxx Xxxxx Xxxx
Xxxx Xxx Xxx, XX 00000
Xxxxx Xxxxx 333
000 X. Xxxxxxxxxx #000
Xxx Xxxxxxx, XX 00000
Xxxx Xxxxxx 1,000
0000 X. Xxxxxx Xxxxx
Xxx Xxxxxxx, XX 00000
Xxxxxx Xxxxxxx & Xxxxxx X. Xxxxxxx 6,667
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Xxxx X. Xxxxxx 6,667
000 Xxxxxx Xxxxx
Xxxxxx, XX 00000
Xxxxxx Xx Xxxx 1,000
0000 X. Xxxxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Xxxx Xxxxxxxx 2,000
000 Xxxxxxxx Xxxx., #000
Xxxxx Xxxxxx, XX 00000
Xxxxx & Xxxxxxx Xxxxxxxx 200
0000 Xxxxxx Xxxxxx
Xxxxx Xxxxxxxxx, XX 00000
Xxxxxxxx Xxxxxxx 500
0000 Xxxxxxx Xxxxxx
Xxxxxxx Xxxx, Xx 00000
Xxxxx X. Ring, Jr. 1,000
0000 Xxxxxx Xxxx
Xxx Xxxxxxx, XX 00000
Xxxxx Xxxxxx 2,000
0000 Xxxxxxxx Xxxxxx
Xxxxxx Xxxx, XX 00000
Xxx Xxxxxxxx 3,333
0000 Xxxxxxx Xxxxx
Xxxxxx, XX 00000
Xxxxxx Enterprise 12,250
0000 Xxxxxxxx
Xxxxx Xxxxxx, XX 00000
Xxxx Xxxxxxxx 200
0000 Xxxxxx #0
Xxx Xxxx, XX 00000
Xxxx & Xxxxxx Xxxxx 1,000
00000 Xxxxxxxx Xxxxxx #0
Xxxxxxx Xxxx, XX 00000
Xxxx Xxxxxxx 1,000
0000 X. Xxxxxxxxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Josi Mariposa 5,000
000 0/0 Xxxxx X'Xxxxx
Xxxxxx, XX 00000
Xxxx & Xxxxxx Xxxxxxxxx 3,000
00 Xxxx Xxxxx Xxxx
Xxxxxxxxx, XX 00000
Xxxxxxxxx Xxxxxxxx 2,000
0000 00xx Xxxxxx
Xxxxx Xxxxxx, XX 00000
Xxxxxxx XxXxxxx 600
00000 Xxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Xxxxx & Xxxx Xxxxx 666
000 Xxxxx Xxxxxx
Xxxxx Xxxx, XX 00000
Xxx Xxxx 1,000
000 X. Xxxxxxxxx #000
Xxxxxxxxx Xxxxx, XX 00000
Xxxxxxx Xxxx 2,000
000 Xxxxxx Xxxxxx
Xxxxx Xxxxxx, XX 00000
Xxxxx Xxxxxxxx 670
00000 Xxxxxxxxx Xxxxx Xxxx
Xxxxxx, XX 00000
Xxxxxxx Xxxxxxx 400
000 Xxxxxxxx Xxxxxx
Xxxxx Xxxxxxxx, XX 00000
Xxxx Xxxxxxx 000
000 Xxxxx Xxxx.
Xxxxxx, XX 00000
Xxxxxx Xxxxxxxx 3,000
000 Xxxxxxxx Xxxxx
Xxxxxxxx Xxxx, XX 00000
Xxxx Xxxxx 1,000
0000 Xxx Xxxxx #000
Xxxxxx Xxx Xxx, XX 00000
Xxxx Xxxxxxxx 1,333
000 Xxxxxxxx Xxxxxx
Xx Xxxxxxx, XX 00000
Xxxxx Xxxxxxx 3,500
0000 Xxxxxxx X Xxxx
Xxxxxxx Xxxx, XX 00000
Xxxxxxx X. Nondaraske 5,000
00000 X. Xxxxxxx Xxxx. #0000
Xxxx Xxx Xxxxxxx, XX 00000
Xxxxxxx Xxxxxxx 2,000
00 Xxxxxx Xxxx
Xxxxx Xxxxxxxxx, XX 00000
Xxxxxxx Xxxxxxx 5,000
00000 Xxxxxxxxxx Xxxx
Xxx Xxxxxxx, XX 00000
Xxxxxxxx Xxxxxx 10,000
00000 X. Xxxxxxx #0000
Xxx Xxxxxxx, XX 00000
Xxxxx Xxxxx 667
0000 Xxxxxx Xxxxx
Xxxx Xxxxx, XX 00000
Xxxx & Xxx Xxxxxxxx 300
2616182nd Place
Xxxxxxx Xxxxx, XX 00000
Xxxxx & Xxxxxx Xxxxx 5,000
00 Xxxx Xxxxxx
Xxxx Xxxxxx, XX 00000
Xxxx Xxx Khan 8,000
P. O. Xxx 000
Xxxxxxxx Xxxxx, XX 00000
Xxxxxx Xxxxxxx 8,000
00000 Xxxxxxxx Xxxx. #000
Xxx Xxxxxxx, XX 00000
Xxx Xxxxxx 500
0000 X 00xx Xxxxxx
Xxxxx Xxx Xxx, XX 00000
Xxxx & Xxxx Xxxxxxxxx 2,000
0000 Xxxxxx Xxxxxx
Xxxxxx Xxxx, XX 00000
Xxxxx Xxxxxxx 667
000 Xxxxxxx Xxxxx
Xxxxxx, XX 00000
Phil Canazzaro 1,000
0000 Xxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Xxxxxxx Xxxxxxxx 200
0000 Xxxxxxx Xxxxxx #0
Xxx Xxxx, XX 00000
Xxxxxxx X. Xxxxxxx 5,000
000 Xx Xxxxxxxxxx #000
Xxx Xxxxxxx, XX 00000
Xxxxxxx Xxxxxx 2,000
00000 XxXxxxxxxx Xx.
Xxxxxxx Xxxx, XX 00000
Xxxxxx X. XxXxxx 1,000
0000 Xxxxxx Xxxx
Xxx Xxxxxxx, XX 00000
Xxxxxx Xxxxx Xxxx 1,000
0000 Xxxxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Xxxxxxx Xxxxxxx 1,700
00000 Xxxxxxx Xxxx. #0000
Xxx Xxxxxxx, XX 00000
Xxxxxx & Xxx Xxxxxxxx 1,000
0000 Xxxxx Xxxxxx
Xxxxxxx Xxxxxxx, XX 00000
Xxxxx Xxxx 1,000
0000 Xxxxxxxxx Xxxxxx
Xxxxxxxxx Xxxxx, XX 00000
X.X. Xxxxxxxxxx 200
0000 Xxxxxxxxx #0
Xxx Xxxxxxx, XX 00000
Xxxxx Xxxxxx 700
428 Xxxxxx Xxxxx
Xxxxxx, XX 00000
Xxxx X. Xxxxxx 300
000 X Xxxxx Xxxxxx X.
Xxxx Xxxxx, XX 00000
Xxxxxxx Xxxx 2,000
000 Xxxxxx
Xxxxx Xxxxxx, XX 00000
Xxxxxxx Xxxxxxx 10,000
000 00xx Xxxxxx
Xxxxxxxxx Xxxxx, XX 00000
Xxxxxxx Xxxxxxxx 5,000
Xxxxxxxx Family Trust
0000 Xxxxxxx Xxxxxx
Xxxxxx Xxx Xxx, XX 00000
Xxxxxxx Xxxxx 5,000
000 0xx Xxxxxx, #000
Xxxxxxx Xxxxx, XX 00000
Xxxxx Xxxxxx 667
00000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Xxxxx Xxxxxxx 1,000
0000 Xxxxxxxxxx #0
Xxxxx Xxxxxx, XX 00000
Xxxxxxx Xxxxxx 700
00000 Xxxxxxxx Xxx #000
Xxxxxx Xxx Xxx, XX 00000
Xxxxxx Xxxxxx 2,000
000 Xxxxxxxx
Xxxx Xxxxxxx, XX
Xxx Xxxxxx 2,000
0000 X. Xxxxxx Xxxxx
Xxx Xxxxxxx, XX 00000
Xxxx Xxxxx 000
000 Xxxxxxx
Xxxxxx, XX 00000
Xxxxxx Xxxxxxx 2,000
0000 Xxxx Xxxxxx
Xxxxxx, XX 00000
Xxxxx Xxxx 1,000
00000 Xxxxxxx Xxxxx
Xxxxxx Xxxxx, XX 00000
Xxxxx Xxxxxxx 10,000
P. O. Xxx 0000
Xxxxxxxx, XX 00000
EXHIBIT B
TECON, INC.
AUDITED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 1998 AND 1997
AND THE PERIOD ENDED DECEMBER 31, 1998
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Tecon, Inc.[a development stage company]
We have audited the accompanying balance sheet of Tecon, Inc. [a development
stage company] as of March 31, 1998, and the related statements of operations,
stockholders' deficit, and cash flows for the years ended March 31, 1998 and
1997, and from the Period of Reactivation [January 18, 1994] through March 31,
1998. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Tecon, Inc. [a development
stage company] as of March 31, 1998, and the results of operations and cash
flows for the years ended March 31, 1998 and 1997, in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
consolidated financial statements, the Company has accumulated losses from
operations, has no assets, and has a net working capital deficiency that raise
substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 2.
The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
/s/ Xxxxxxx, XxXxxxxxxx and Associates
Salt Lake City, Utah
July 15, 0000
Xxxxx,Xxx.
[A Development Stage Company]
Balance Sheet
March 31,1998
ASSETS
Assets $ -0-
Total Assets $ -0-
LIABILITIES AND STOCKHOLDERS' DEFICIT
Liabilities:
Current Liabilities:
Payable to Stockholders - NOTE 8 1,962
Total Liabilities 1,962
Stockholders' Deficit:
Capital Stock -- 300,000,000 shares authorized having a
par value of $.001 per share; 1,199,962 shares issued
and outstanding - NOTE 9 1,200
Additional Paid-in Capital 2,114,138
Accumulated Deficit (2,117,300)
Total Stockholders' Deficit (1,962)
Total Liabilities and Stockholders' Deficit $ -0-
See accompanying notes to financial statements.
Tecon,lnc.
[A Development Stage Company]
Statements of Operations
For the Years Ended March 31, 1998 and 1997
Reactivation
through
March 31,
1998 1997 1998
Revenues $ -0- $ -0- $ -0-
General & Administrative Expenses 2,286 276 10,862
Operating Loss (2,286) (276) (10,862)
Net Loss Before Income Taxes (2,286) (276) (10,862)
Current Year Provision for Income Taxes -0- -0- -0-
Net Loss $2,286) $(276) $(10,862)
Loss Per Share $ (.01) $ (.01) $ (.01)
Weighted Average Shares Outstanding 799,962 599,962 483,711
See accompanying note to financial statements.
Tecon,lnc.
[A Development Stage Company]
Statements of Stockholders' Deficit
For the Years Ended March 31, 1998 and 1997
Additional Net
Common Common Paid-in Accumulated Stockholders'
Shares Stock Capital Deficit Deficit
Balance, January 18,
1994, date 7,498,701 $ 7,499 $2,098,939 $(2,106,438) $ -0-
of Reinstatement
Issued stock for cash
and services, January
20, 1994 8,000,000 8,000 8,000
Net loss for the
Year Ended March
31, 1994 (8,000) (8,000)
Balance, March 31,
1994 15,498,701 $15,499 $2,098,939 $(2,114,438) $ -0-
Net loss for the
Year Ended
March 31, 0000 -0- -0-
Xxxxxxx, March 31,
1995 15,498,701 $15,499 $2,098,939 $(2,114,438) $ -0-
Reverse split
(51.662 for 1),
November 20,1995 (15,198,739)(15,199) 15,199 -0-
Issued 300,000
shares of
common stock
to directors for
services (3/4/96) 300,000 300 300
Net loss for the
Year Ended
March 31, 1996 (300) (300)
Balance, March 31,
1996 599,962 $ 600 $2,114,138 $(2,114,738) $ -0-
Net loss for the
Year Ended
March 31, 1997 (276) (276)
Balance, March 31,
1997 599,962 600 2,114,138 (2,115,014) (276)
Issued 300,000
shares of common
stock to directors for
services (9/18/97) 300,000 300 300
Issued 300,000
shares of common
stock to directors for
services (1/14/98) 300,000 300 300
Net loss for the Year
Ended March 31, 1998 (2,286) (2,286)
Balance, March 31,
1998 1,199,962 $1,200 2,114,138 $(2,117,300) $(1,962)
See accompanying notes to financial statements.
Tecon,lnc.
[A Development Stage Company]
Statements of Cash Flows
For the Years Ended March 31, 1998 and 1997
Reactivation
through
March 31,
1998 1997 1998
Cash Flows Provided by(Used for)
Operating Activities
Net Loss $(2,286) $ (276) $ (10,862)
Adjustments to reconcile net
income to net cash provided by
operating activities:
Issued stock for director
and legal fees 600 7,400
Increase in shareholder loan 1,686 276 1,962
Net Cash Used for
Operating Activities -0- -0- (1,500)
Cash Flows Provided by Financing
Activities
Issued stock for cash 1,500
Net Increase/(Decrease)
in Cash -0- -0- -0-
Beginning Cash Balance -0- -0- -0-
Ending Cash Balance $ -0- $ -0- $ -0-
Supplemental Disclosure of
Cash Flow Information:
Cash paid during the year
for interest $ -0- $ -0- $ -0-
Cash paid during the year
for income taxes $ -0- $ -0- $ -0-
See accompanying notes to financial statements.
Tecon, Inc.
[A Development Stage Company]
Notes to Financial Statements
March 31, 1998
NOTE 1 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Organization
Tecon, Inc. [formerly known as B. U. D. Corp.] incorporated under
the laws of the State of Utah in 1985. The Company changed its
name to Tecon, Inc. after acquiring Tecon, Inc., a Washington
corporation in August 1986. The company engaged in research,
development, assembly, and sale of computer video imaging, multi-
user multi-tasking systems and computer board products. In 1992,
the Company assigned all of its assets to Precision Digital
Images, Corporation [PDI], a creditor, in partial satisfaction of
debts owed and ceased all operations. Since that time the Company
was left dormant until January 18, 1994 when it was reactivated.
The financial statements of the Company have been prepared in
accordance with generally accepted accounting principles. The
following summarizes the more significant of such policies:
(b) Income Taxes
Effective April 1, 1993, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 109 [the
Statement], Accounting for Income Taxes. The Statement requires
an asset and liability approach for financial accounting and
reporting for income taxes, and the recognition of deferred tax
assets and liabilities for the temporary differences between the
financial reporting bases and tax bases of the Company's assets
and liabilities at enacted tax rates expected to be in effect when
such amounts are realized or settled. The cumulative effect of
this change in accounting for income taxes as of March 31, 1998 is
$0 due to the valuation allowance established as described below.
(c) Net Loss Per Common Share
Net loss per common share is based on the weighted-average number
of shares outstanding.
(d) Statement of Cash Flows
For purposes of the statements of cash flows, the Company
considers cash on deposit in the bank to be cash. The Company had
$0 cash at March 31, 1998.
NOTE 1 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
[continued]
(e) Use of Estimates in Preparation of Financial Statements
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.
NOTE 2 LIQUIDITY/GOING CONCERN
The Company has accumulated losses since inception through March
31, 1998 amounting to $2,117,300, has no assets, and has a net
working capital deficiency at March 31, 1998. These factors raise
substantial doubt about the Company's ability to continue as a
going concern.
Management plans include finding a well-capitalized merger
candidate to recommence its operations. The consolidated
financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
NOTE 3 INCOME TAXES
The Company adopted the provisions of Statement of Financial
Accounting Standards No. 109 [the Statement], Accounting for
Income Taxes, as of April 1, 1993. Prior years' consolidated
financial statements have not been restated to apply the
provisions of the Statement. No provision has been made for
income taxes in the consolidated financial statements because the
Company has accumulated substantial losses since inception.
The tax effects of temporary differences that give rise to
significant portions of the deferred tax asset at March 31, 1998
have no impact on the financial position of the Company. A
valuation allowance is provided when it is more likely than not
that some portion of the deferred tax asset will not be realized.
Because of the lack of taxable earnings history, the Company has
established a valuation allowance for all future deductible
temporary differences.
NOTE 4 RELATED-PARTY TRANSACTIONS
During the fiscal years ended March 31, 1998, and 1997, a
shareholder and consultant paid general and administrative
expenses on behalf of the Company totaling $1,686 and $276,
respectively. The unsecured loan bears no interest and is due on
demand.
NOTE 5 ISSUANCE OF COMMON STOCK
For the year ended March 31, 1998, the Company issued 600,000
shares of common stock as payment for fees for its directors.
TECON, INC.
BALANCE SHEET
December 31, 1998
12/31/98
[Unaudited]
ASSETS
Total Current Assets $ 0
Total Assets $ 0
LIABILITIES & EQUITY
Current Liabilities:
Loans from stockholders $ 4,807
Total Liabilities 4,807
Stockholders' Deficit:
Capital Stock--300,000,000 shares
authorized having a par value of
$.001 per share; 1,199,962
shares issued and outstanding 1,200
Additional Paid-in Capital 2,114,138
Accumulated Deficit (2,120,145)
Total Stockholders' Deficit (4,807)
Total Liabilities and Stockholders'
Deficit 0
NOTE TO FINANCIAL STATEMENTS:
Interim financial statements reflect all adjustments which are, in the opinion
of management, necessary to a fair statement of the results for the periods.
These financial statements conform with the requirements for interim financial
statements and consequently do not include all the disclosures normally
required by generally accepted accounting principles.
TECON, INC.
STATEMENTS OF OPERATIONS
For the Three and Nine Month Periods Ended December 31, 1998 and 1997
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
12/31/98 12/31/97 12/31/98 12/31/97
[Unaudited] [Unaudited] [Unaudited] [Unaudited]
REVENUE
Revenue from
Operations $ 0 $ 0 $ 0 $ 0
Total Revenue 0 0 0 0
General and
Administrative
Expenses 493 869 2,516 1,334
Net Income
Before Taxes (493) (869) (2,516) (1,334)
Income/Franchise Taxes 149 0 149 0
Net Loss (642) (869) (2,665) (1,334)
Loss Per Share (0.01) (0.01) (0.01) (0.01)
Weighted Average
Shares Outstanding 1,199,962 899,962 1,199,962 899,962
TECON, INC.
STATEMENTS OF CASH FLOWS
For the Three and Nine Month Periods Ended December 31, 1998 and 1997
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
12/31/98 12/31/97 12/31/98 12/31/97
[Unaudited] [Unaudited] [Unaudited] [Unaudited]
Cash Flows Used For
Operating Activities
Net Loss $ (642) $ (869) $ (2,665) $ (1,334)
Adjustments to
reconcile net
loss to net cash
used in operating
activities:
Issued stock to
directors 0 300
Increase/(Decrease)
in loans from
shareholder 642 869 2,665 1,034
Net Cash Used For
Operating Activities 0 0 0 0
Cash Flows Provided by
Financing Activities 0 0 0 0
Net Increase
In Cash 0 0 0 0
Beginning
Cash Balance 0 0 0 0
Ending Cash
Balance $ 0 $ 0 $ 0 $ 0
EXHIBIT C
None.
EXHIBIT D
XXXXX.XXX, INC.
LIST OF ONLY ASSETS OF XXXXX.XXX
[Letterhead of Xxxxx Xxxxxx]
March 31, 1999
To: XxxXx.xxx, Inc.
The undersigned, Xxxxx Xxxxxx, hereby assigns to XxxXx.xxx, Inc., a California
corporation, all of his right, title and interest in and the technology
related to a system for establishing an Internet Auction Business.
Very truly yours,
/s/ Xxxxx X. Xxxxxx
EXHIBIT E
None.
EXHIBIT F
Tecon, Inc.
Xxxxx 000, 000 Xxxx 000 Xxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Re: Exchange of common stock and subscriptions to purchase
common stock of Xxxxx.xxx, Inc., a California
corporation ("Xxxxx.xxx"), for shares of Tecon, Inc.,
a Utah corporation ("Tecon" or the "Company")
Dear Ladies and Gentlemen:
Pursuant to that certain Agreement and Plan of Reorganization (the
"Plan") between the undersigned, Xxxxx.xxx, the other equity interest holders
of Xxxxx.xxx and Tecon, I acknowledge that I have approved this exchange; that
I am aware of all of the terms and conditions of the Plan; and that I have
received and personally reviewed a copy of the Plan and any and all material
documents regarding the Company, including, but not limited to its 10-KSB
Annual Report, its 10-QSB Quarterly Reports and its S-8 Registration
Statement, all filed with the Securities and Exchange Commission during the
past 12 months. I represent and warrant that I have sufficient knowledge and
experience to understand the nature of the exchange and am fully capable of
bearing the economic risk of the loss of my entire cost basis.
I further understand that immediately prior to the completion of
the Plan, Tecon had no assets and no liabilities, of any measurable value, and
that in actuality, the completion of the Plan and the exchange of my shares of
Xxxxx.xxx for shares of Tecon results in a decrease in the actual percentage
of ownership that my shares of Xxxxx.xxx represented in Xxxxx.xxx prior to the
completion of the Plan.
I understand that you have and will make books and records of your
Company available to me for my inspection in connection with the contemplated
exchange of my shares, options or warrants, and that I have been encouraged to
review the information and ask any questions I may have concerning the
information of any director or officer of the Company or of the legal and the
accounting firms for the Company.
I also understand that I must bear the economic risk of ownership
of any of the Tecon shares for a long period of time, the minimum of which
will be one (1) year, as these shares are "unregistered" shares and may not be
sold unless any subsequent offer or sale is registered with the United States
Securities and Exchange Commission or otherwise exempt from the registration
requirements of the Securities Act of 1933, as amended (the "Act"), or other
applicable laws, rules and regulations.
I intend that you rely on all of my representations made herein
and those in the personal questionnaire (if applicable) I provided to
Xxxxx.xxx for use by Tecon as they are made to induce you to issue me the
shares of Tecon under the Plan, and I further represent (of my personal
knowledge or by virtue of my reliance on one or more personal
representatives), and agree as follows, to-wit:
1. That the shares being acquired are being received for
investment purposes and not with a view toward further distribution;
2. That I have a full and complete understanding of the phrase
"for investment purposes and not with a view toward further distribution";
3. That I understand the meaning of "unregistered" shares and
know that they are not freely tradeable;
4. That any stock certificate issued by you to me in connection
with the shares being acquired shall be imprinted with a legend restricting
the sale, assignment, hypothecation or other disposition unless it can be made
in accordance with applicable laws, rules and regulations;
5. I agree that the stock transfer records of your Company
shall reflect that I have requested the Company not to effect any transfer of
any stock certificate representing any of the shares being acquired unless I
shall first have obtained an opinion of legal counsel to the effect that the
shares may be sold in accordance with applicable laws, rules and regulations,
and I understand that any opinion must be from legal counsel satisfactory to
the Company and, regardless of any opinion, I understand that the exemption
covered by any opinion must in fact be applicable to the shares;
6. That I shall not sell, offer to sell, transfer, assign,
hypothecate or make any other disposition of any interest in the shares,
options or warrants being acquired except as may be pursuant to any applicable
laws, rules and regulations;
7. I fully understand that my shares which are being exchanged
for shares of the Company are "risk capital," and I am fully capable of
bearing the economic risks attendant to this investment, without
qualification; and
8. I also understand that without approval of counsel for
Tecon, all shares of Tecon to be issued and delivered to me in exchange for my
shares of Xxxxx.xxx shall be represented by one certificate only and which
such certificate shall be imprinted with the following legend or a reasonable
facsimile thereof on the front and reverse sides thereof:
The shares, options or warrants of stock represented
by this certificate have not been registered under the
Securities Act of 1933, as amended, and may not be
sold or otherwise transferred unless compliance with
the registration provisions of such Act has been made
or unless availability of an exemption from such
registration provisions has been established, or
unless sold pursuant to Rule 144 under the Act.
Any request for more than one stock certificate must be
accompanied by a letter signed by the requesting stockholder setting forth all
relevant facts relating to the request. Tecon will attempt to accommodate any
stockholders' request where Tecon views the request is made for valid business
or personal reasons so long as in the sole discretion of Tecon, the granting
of the request will not facilitate a "public" distribution of unregistered
shares of Tecon.
You are requested and instructed to issue a stock certificate as
follows, to-wit:
Date: 4/15/99 /s/ Xxxx Xxxxxx
300,000 shares
Date: 4/16/99 /s/ Xxxxxxx X. Xxxxx
1,000,000 shares
Date: 4/15/909 /s/ Xxxxx X. Xxxxxx
3,705,000 shares
Date: 4/15/99 /s/ Xxxxxx Xxxx
500,000 shares
Date: 4/15/99 /s/ Xxxxxx Xxxx
270,000 shares
Date: 4/15/99 /s/ Xxxxx Xxxxx
1,000,000 shares
Date: 4/15/99 /s/ Xxxx X. Xxxxxxxxx
100,000 shares
EXHIBIT G
CERTIFICATE OF OFFICER PURSUANT TO
AGREEMENT AND PLAN OF REORGANIZATION
The undersigned, the President of Tecon, Inc., a Utah corporation
("Tecon"), represents and warrants the following as required by the Agreement
and Plan of Reorganization (the "Plan") between Tecon and Xxxxx.xxx, Inc., a
California corporation ("Xxxxx.xxx"), and the Xxxxx.xxx Stockholders, to-wit:
1. That the undersigned is the President of Tecon and has been
authorized and empowered by its Board of Directors to execute and deliver this
Certificate to Xxxxx.xxx and the Xxxxx.xxx Stockholders;
2. Based upon the personal knowledge, information and belief of
the undersigned and opinions of counsel for Tecon regarding the Plan:
(i) All representations and warranties of Tecon contained
within the Plan are true and correct;
(ii) Tecon has complied with all terms and provisions
required of it pursuant to the Plan; and
(iii) There have been no material adverse changes in the
financial position of Tecon as set forth in its
audited financial statements for the years ended March
31, 1998 and 1997, and the period ended December 31,
1998, except as set forth in Exhibit C to the Plan.
TECON, INC.
By /s/ Xxxxxx Xxxx, President
EXHIBIT H
CERTIFICATE OF OFFICER PURSUANT TO
AGREEMENT AND PLAN OF REORGANIZATION
The undersigned, the President of Xxxxx.xxx, Inc., a California
corporation ("Xxxxx.xxx"), represents and warrants the following as required
by the Agreement and Plan of Reorganization (the "Plan") between Xxxxx.xxx,
the Xxxxx.xxx Stockholders and Tecon, Inc., a Utah corporation ("Tecon"), to-
wit:
1. That he is the President of Xxxxx.xxx and has been
authorized and empowered by its Board of Directors to execute and deliver this
Certificate to Tecon;
2. Based on his personal knowledge, information, belief:
(i) All representations and warranties of Xxxxx.xxx
contained within the Plan are true and correct;
(ii) Xxxxx.xxx has complied with all terms and provisions
required of it pursuant to the Plan; and
(iii) There have been no material adverse changes in the
financial position of Xxxxx.xxx, which has only one
asset as described in Exhibit D, and no liabilities
except as set forth in Exhibit E to the Plan.
XXXXX.XXX, INC.
By /s/ Xxxxxx Xxxx, President
/s/ Xxxxxx Xxxx, Personally
