[CAPTION]
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
General Form for Registration of Securities
of Small Business Issuers
Under Section 12(b) or (g) of
the Securities Exchange Act of 1934
TXON INTERNATIONAL DEVELOPMENT CORPORATION
(Name of Small Business Issuer)
Nevada 87-0629754
(State or Other I.R.S. Employer
Jurisdiction of Identification
Incorporation or Number
Organization)
3672 Cove Point Drive, Salt Lake City, UT 84109
(Address of Principal Executive Offices including Zip Code)
(801) 557-5785
(Issuer's Telephone Number)
Securities to be Registered Under Section 12(b) of the Act:
None
Securities to be Registered Under Section 12(g) of the Act:
Common Stock, $.001 Par Value
ITEM 1. DESCRIPTION OF BUSINESS. (Item 101 of Regulation S-B)
Txon International Development Corporation(the "Company"), was
incorporated on January 29, 1998 under the laws of the State of Nevada to
engage in any lawful corporate undertaking, including, but not limited to
construction and development services for corporate global expansion. The
Company has been in the development stage since inception and has very
limited operations to date due to a lack of capital.
The Company has been formed to address what management believes is an
unmet demand for a single entity with the ability to provide an extensive
array of commercial real estate development and facility expansion services
to major U.S. and multinational corporations. Management believes that the
growing need of large corporations to establish facilities throughout the
United States and the world from which to expand into the global economy has
created demand for employee housing, ex-patriot compounds, office space,
manufacturing and related production facilities. Txon believes development,
construction and management capabilities on a world-wide basis can be met
most efficiently by a single provider.
The company intends to offer services in real estate finance,
development, construction, planning, design, furnishings and engineering.
The company does not have any significant assets. Its belief that it
will be able to provide marketable services is based solely on the skill,
experience and contacts of the individuals who are affiliated with the
Company. At the present time the Company has five full time employees who
have received sporadic compensation due to the Company's minimal financial
situation. They have also received founder's shares of the Company. (See
"Directors, Executive Officers, Promoters and Control Persons"). The company
anticipates that its first projects will involve provision of development
services to companies who will themselves fund the acquisition, development
and construction of the real estate facilities they require. Depending on the
level of service provided, the Company will seek to surrender cash payments in
exchange for equity positions in some projects. The company will also seek
opportunities to joint venture real estate projects and other business ventures.
No assurances can be given that the Company will be successful in locating or
reaching agreements with businesses willing to engage the Company's services
or enter into equity compensation or joint ventures with it to develop, build
ormanage real estate projects, or that it will be able to find financing sources
sufficient to permit the Company to build such projects itself.
As a result of their long term employment as real property development
professionals for Exxon and many other Texas companies, members of the
Company's management have formed friendships and associations with experts
in many of the areas in which Txon seeks to provide real estate related
services to large national and international corporations seeking to build a
variety of physical facilities worldwide. Management believes these
relationships will permit Txon to obtain assistance from knowledgeable experts
through independent consulting agreements, joint ventures agreements,
subcontracts, and otherwise, from persons and organizations who will be
willing to assist the Company in addressing local construction customs or
requirements and address particular development and construction problems
wherever they may occur. It is hoped that these relationships, coupled with the
skill of Txon's inside management, will help to establish it as a leader in the
field of large-scale development and facility expansion services.
The Company intends to operate through four main operating divisions
including (1) fee development and construction services, (2) development
related financial services (3)co-investments of development projects and
acquisition of related real estate companies, and (4)property ownership or
equity and operations management.
In more detail the Development and Construction Services Division is
intended to include site acquisition services, procurement of approvals and
permits, design and engineering coordination, construction bidding and
management, tenant finish coordination, general contracting and complete
project advisory services. These services are fee based for third party clients.
The Development Financial Services Division will be designed to assist clients
in connection with the arrangement of short and long term financing of office,
industrial, housing, and retail space. The Company's Co-investment and
Acquisition Division will attempt to identify and pursue opportunities for the
Company to grow through outside related project and business purchases or
investments, on a national and global basis, but only as they are specifically
related to the Company's core expertise.
Finally, the long term Property Ownership and Operations Management division
will seek to locate projects in which the Company can obtain an equity interest
or participate as a percentage of profits in exchange for services rendered
ex-patriate, specialize in running the business operations of such company
owned hotels, expatriot housing compounds, leased out corporate facilities, and
resort conference centers as the Company may be able to acquire.
It is anticipated that approximately 90% of the Company's projects and
clients will be based in Europe, Russia and other locations other than Utah,
where the Company's executive offices are located. Officers and employees of
the Company have established long term personal relationships with individuals
and companies involved in the planning, development, design and construction of
commercial real estate projects in Europe and Russia who have expressed a
willingness to work with the Company on a contract basis to build develop and
build projects in Europe and Russia.
Management believes the broad geographic service area the Company will be
able to cover through these relationships will lead to economies in the
cost of materials and labor. The ability to operate in numerous countries may
also serve to limit exposure to an economic downturn in any single market.
The Company believes that its key competitive advantage will lie in the
experience and quality of its management team, its long term relationships and
client or professional alliances, and its complete full service approach to
meeting corporate expansion needs. Stephanie Harnicher and Robert Carter
both worked in real estate development at Exxon for many years. Seymour
Tater, an architect and project planner, is Ms. Harnicher's father, and Jay
Shapiro, who is intended to be involved in administration, is her brother-in-law
These people have enjoyed long-term personal relationships.
The Company's internal culture is rooted in the long-standing belief on its
management in promoting talented individuals from within the organization based
on closely measured performance criteria. The Company believes that its
growth strategy, incentive-based compensation and the high level of ownership
by Company insiders will provide further motivation to achieve exceptionally
high performances.
Members of the Company's management have successfully developed
properties in many all segments of the commercial real estate industry. While
at Exxon Ms Harnicher was involved in development of the Greenspointe
Shopping Cernter and office complex outside Houston, Texas and planned
communities built by Exxon at Kingswood and Clear Lake, Texas.
Though the Company believes that the experience and skill of its
management may permit it to operate in the large-scale development services
industry despite the fact that it does not presently have assets with which to
fund any portion of its business plan except the offering of real estate
development services, through its existing management.
MARKETING. The Company intends to market its services through
personal contact by members of Management with persons and organizations
known to have real property expansion needs, through the formation of initial
client relationships on a limited nature and seeking to expand the range of
services the Company may be able to provide through providing exemplary
services and developing an understanding of the client's development needs, and
through referrals or prior client relationships. In order to insure that it
provides services of a quality which will support extended customer
relationships, Management intends to limit the services the Company offers to
industries and project types in which it has particular expertise.
Txon has already been approached by several landowners to assist them in
feasibility studies and joint development of properties. Most of these contacts
have come by way of contacts developed by the Company's management prior
to their association with the Company while they were engaged in commercial
real estate development, architecture, construction, and engineering while
employed by others. Some contacts have evolved from the involvement of
management in civic, philanthropic and professional associations. Specifically,
management has approached developers who have pending plans for the
construction of resorts and related facilities in Park City, Utah, Korea and
Tinian in the Marianna Islands on the Pacific Rim with a view to participating
in the planning and construction of the facilities either on a contract basis,
or as a joint venturer if funding can be developed. No assurance can be given
that any participation by the Company in these projects will be forthcoming.
GENERAL BUSINESS PLAN
Txon International Development Corporation intends to operate as an
international land and facilities developer with projects throughout the
world.
The company has brought together highly successful design, financial,
business,project management, and construction experts with the credibility and
experience to become a full-service development organization. Txon's
Management believes it has the know-how and strategic relationships in
numerous disciplines to get things done on time with quality, and within
budget.
ACQUISITION. Txon has signed an agreement dated April 26,1999 to
acquire a Utah based General Contracting firm, Furst Construction. Furst
Construction has a similar business philosophy as Txon and is believed to share
Txon's intent to provide quality development and construction services on a
timely basis while maintaining high standards of ethics and integrity.
Completion of this acquisition would permit the Company jhto capitalize on
Furst's 18 years of experience by continuing Furst's existing business and by
marketing Txon's wider range of services to Furst's existing client base. A
sizeable percentage of Furst Construction's business is from repeat customers
substantiating Furst's strong reputation for service and quality. The contract
will permit the Company to acquire Furst Construction for a maximum price of $20
million cash and $2 million (at market) of the Company's shares, subject to
adjustments based on contract revenues. A copy of the acquisition agreement
is attached as an Exhibit hereto. The Commpany plans to fund this acquisition
by engaging in one or more offerings of its common shares. If underwritings of
the Company's shares cannot be effected, this acquisition will fail. No
assurance can be given that the Company will be able to engage in any successful
underwriting of its shares.
While the Company intends to make every effort to complete the Furst
Acquisition, it ability to acquire the financing necessary to meet its cash
obligations under the agreement is so speculative that management does not
presently believe there is a substantial probability that it will be able to
complete the acquisition.
Additionally, Txon has entered into negotiations for a joint venture
affiliation with an established Irish International Architectural/Engineering
and Construction management firm, Murray O'Laoire International (MOLI) with
whom Robert Carter had established a long relationship during his tenures with
Exxon and Carter Corbett and Associates. Though there is no written agreement
in place, the parties to this prospective agreement have agreed to jointly fund
the opening of a joint venture office either in Europe or the former Soviet
Union atan estimated cost of approximately $200,000. Once this office has been
established, of which no assurance can be given due to the need for financing
which is not in place, Txon and MOLI, acting jointly, hope to be in a position
to review and bid on several projects in Eastern and Western Europe and the
newly independent states of the former U.S.S.R. MOLI clients include an
extensive list of large western corporations, including Nestle, AT&T, Exxon and
the International Monetary Fund. Principals of Txon and the Irish firm have
already met with Russian officials in Moscow regarding several potential
projects, but without sufficient funds with which to travel and remain in Europe
for considerable periods, the Company will be unable to take advantage of its
relationship with MOLI to participate in either bidding particular jobs or
otherwise serving what management perceives as considerable pent up demand
for infrastruction in the former constituents of the Soviet Union.
COMPETITION
Recent economic conditions have led to increased competition among
commercial real estate service companies. Some of the Company's competitors
and potential competitors have vastly greater financial and marketing
resources than the Company. There can be no assurance that the Company will
not encounter increased competition in the future which could limit its ability
to maintain or increase its market share and could adversely affect the
Company's financial results.
There are many well established concerns which have vastly greater
financial and personnel resources than the Company. In view of the
Company's extremely limited financial resources and limited management
availability, the company expects to be at a competitive disadvantage compared
to the Company's competitors. Management believes the Company's
competitive posture will be significantly improved by the Furst Construction
Company acquisition.
GOVERNMENT APPROVAL
The Company must obtain certain government approvals and meet many
licensing requirements in order to provide the services it proposes to offer
in many States and foreign countries. The Company believes its existing
management and project affiliates will be able to meet the licensing and
project approval requirements in most states. Mr. Robert Carter-the Executive
Vice President will act as the interface with the appropriate oversight bodies
regarding regulations to maintain compliance. His experience as a two term
president of the Construction Industry Council, has familiarized him with DOC,
DOE, OSHA, HHS, DOI and DOL regulations and the requirements of the
Uniform Building Code adopted by many states. Most approvals are granted
pursuant to evaluation criteria which are generally consistent among the
majority of states. Though the Company's management has many years of
experience in dealing with local, state, federal and international government
regulations and approval processes, no assurance can be given that the
Company's experience and financial capabilities will be sufficient to meet the
requirements of the jurisdictions in which it intends to operate.
EFFECTS OF GOVERNMENTAL REGULATIONS; COMPLIANCE
WITH ENVIRONMENTAL LAWS
The construction and development industry is highly regulated. The
Company will be required to comply with a variety of federal, state and local
laws relating to its proposed building activities, the building materials it
uses, and the designs of its construction projects. These requirements vary
widely,depending on the location. While the Company believes it will be able to
remain in material compliance with all such laws, if it should be determined
that the Company is not in compliance with the law, the Company could become
subject to cease and desist orders, injunctive proceedings, civil fines and
other penalties.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
During the eleven-month period ended December 31, 1998, the Company's
activities were primarily directed to the development of the Company's business
plan, organizational structure, negotiations related to the Furst acquisition
and potential MOLI joint venture, financing, project evaluations and
relationship building. The Furst acquisition is important because Furst has
completed work valued at approximately $32 million during the last fiscal year,
has an additional $27 in work underway, and an additional $29 million in
contracts to be completed in future years. The Company will realize nothing
from the prospective Furst acquisition unless it can arrange financing to meet
its $20 million cash requirement under the acquisition agreement. The Company
also has also devoted attention to developing its marketing strategy. To this
point the Company has realized no sales or revenues.
Since inception the Company has incurred expenses of approximately
$350,000. These expenses related to personnel, overhead, office equipment,
legal and accounting, and expenses incurred in formulating the Company's
business plan, developing its marketing strategy, and initiating sales efforts.
The Company has financed its activities primarily from the sale of its common
stock. During the eleven-month period ended December 31,1998 the Company raised
its initial start-up capital of $200,000 through the sale of common stock to
its founding principals. The Company raised an additional $150,000 through the
sale of common stock to investors.
During the coming year, Management plans to shift its focus to sales,
marketing and initiating active project operations. Management anticipates
cash requirements of $1,000,000 during the next twelve months. The Company
has recently entered into a contract for the acquisition of Furst Construction
Company, but due to lack of funds with which to complete the Furst acquisition,
no assurance can be given that any revenues anticipated from that acquisition
will actually materialize to the benefit of the Company. Txon and Furst
Construction Company have offered their combined services to several large,
international corporations and may be able to enter into contracts with them
which will produce revenues, though no assurance can be given that this will be
the case.
In order to meet anticipated expenses over the next twelve months, the
Company intends to seek additional risk capital through the sale of common
shares. No underwriter, agent or other person has agreed to assist the
Company in distributing any of its common shares, and no actions have been
taken to ascertain whether to register such shares under the Securities Act of
1933 or rely on exemptions from registration to distribute such shares. No
assurance can be given that the Company will be able to sell securities to
meet its operating needs, or that if available, such sales could be effected
on terms acceptable to the Company. If the Company is not able to sell
additional securities to meet its operating expenses, it is doubtful that the
Company will be able to continue as a going concern.
ITEM 3. DESCRIPTION OF PROPERTY
The Company has no properties and at this time has no agreements to
acquire any properties. The Company has moved out of the leased premises
from which it operated since the beginning of 1999 and has not yet found
another premise to lease. Management has provided for a significant portion
of the Company's office equipment needs without cost.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth, as of December 31, 1998, each person
known by the Company to be the beneficial owner of five percent or
more of the Company's Common Stock, all directors individually and all
directors and officers of the Company as a group.
Name and Address Amount of Beneficial Percentage
of Beneficial Owner Ownership of Class
- ------------------- -------------------- ----------
John Chris Kirch 1,100,000 20%
3672 Cove Point Dr.
Salt Lake City, UT 84109
Stephanie Harnicher 1,100,000 20%
5632 East Pioneer Fork Road
Salt Lake City, UT 84108
Robert E. Carter 900,000 16%
3739 Palmetto Creek
Kingwood, TX 77339
Seymour Tatar 600,000 11%
1023 Nantucket
Houston, TX 77057
Jay Schapiro 300,000 5%
12 Ruby Field Court
Baltimore, MD 21209
All Executive Officers
and Directors as a
Group (5 Person) 4,000,000 72%
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
The Company has five Directors and Officers as follows:
Name Age Positions/Offices Held
- ------ --- ----------------------
John Chris Kirch 42 Chairman, Director
Stephanie Harnicher 41 President, CEO, Director
Robert E. Carter 58 Executive V.P., Director
Seymour Tatar 67 V.P. of Design, Director
Jay Schapiro 39 Secretary, Treasurer,
V.P.
of Admin., Director
There are no agreements or understandings for any officer of director to
resign at the request of another person and the above-named officers and
directors are not acting on behalf of, nor will they act at the direction of
any other person.
Set forth below are summaries of the business experience of the Directors
and Officers of the Company for at least the last five years:
John Chris Kirch, Chairman of the Board, Director & Head of Corporate
Development.
Mr. Kirch Age 42, has been a director of the Company since its inception
in January of 1998. His main role is to facilitate the company's funding needs
and promotional requirements. Beginning in January of 1997, Mr. Kirch began
preliminary work with Westin Hotels and Properties, Inc., and from May of
1997 through May of 1998, Mr. Kirch was Vice Chairman and Director of
Corporate Development for that corporation which operated as a Hotel
operating company. While in the hotel business Mr. Kirch was involved in the
areas of business planning and the development of funding to expand this Hotel
Chain. From April of 1994 to December of 1996 Mr. Kirch was a cofounder
and director of planning for PharmaPrint, Inc., f/k/a ABT Global Pharmaceutical
Corporation, out of the University of Southern California School of Medicine.
His specific role in this start up and development stage company was to prepare
its initial business plan and arrange for start-up funding for the corporation.
Mr. Kirch specializes in arranging private placement funding, preparing and
placing public offerings, while developing multi-media news, advertising and
marketing support.
Stephanie Harnicher, President, Chief Executive Officer & Director.
Ms. Harnicher Age 41, has been President, Chief Executive Officer and a
director of the Company since its inception in January of 1998. Her main role
is to oversee all operations and administrative controls of the company. Ms.
Harnicher has over 20 years experience in real estate development, construction
management, and real estate financial services. In January 1995 Ms. Harnicher
formed Entrepreneurs Mortgage Source, Inc., and from then through the present
she has acted as President of that corporation whose business is providing
funding for residential and commercial real estate projects. She quit devoting
substantial time to this company in January of 1998 when Txon was formed; but
continues as an officer and director thereof. From October, 1981 through
March 1992 Ms. Harnicher worked in several positions at Exxon Corporation
or its subsidiaries for ten years, where she was active in strategy, investment
analysis, financing, real estate development and marketing of commercial and
residential real estate projects. Ms. Harnicher was a key person in the
development and marketing for Exxon of many shopping centers, office
complexes and land development projects. During her 10 year tenure at Exxon,
Ms. Harnicher managed various leasing, sales and administrative personnel to
fully coordinated all aspects of construction, design, legal and property
management functions. Prior to Exxon she has also served as a financial
consultant to Westinghouse, McDonald Douglas, Gould and the U.S. Navy, as
well as an instructor of Finance at the University of Houston. Ms. Harnicher
has strong community ties and is a member of several business, civic, and
community groups, including the National Association of Women Business
Owners, the Utah Professional Women's Association, and the Beta Gamma
Sigma Honorary Business Fraternity. Past associations include The National
Mortgage Bankers Association, Rotary, Park City and Salt Lake City
Chambers of Commerce, Executive Womans' Association and has served as
President of her College Association for 10 years.
Ms. Harnicher received her undergraduate degree from Goucher College and
her Masters of Business Administration concentrating in finance and investments
from the George Washington University, Washington, D.C. She graduated with
top honors and was invited to join the Beta Gamma Sigma honorary Business
Fraternity. Her business and professional history includes almost two decades of
multifaceted management experience in finance, marketing, and real estate
development.
Robert E. Carter, Executive Vice President, Head of Worldwide Project
Management, & Director.
Mr. Carter, age 58, has been Executive Vice President, and a director of
the Company since its inception in January of 1998. Mr. Carter's multi-
disciplined professional expertise stems from his career as a managing engineer
in the building, development, and energy industry for over 25 years. For Txon
he is responsible for project construction administration for complex and
large-scale real estate projects worldwide, he has built an impressive record of
accomplishments. Mr. Carter speaks English, Russian, and Spanish. He has
been able to adapt to different cultures effectively working as a corporate
team player and/or leader to manage and complete assignments on time and within
budget in difficult foreign locations. His diversified experience ranges from
complex renovations of aerospace testing and laboratory environments, to
hospitals and medical support facilities, from multimillion dollar premier
office buildings, hotels and retail centers to large secure expatriate private
housing communities. From January 1995 through January 1998 Mr. Carter worked
as an independent contract manager uinder the auspices of Carter, Corbett and
Associates, where he facilitated the start-up marketing, accounting, financial
reporting and daily operation of an entrepreneurial business, which has
provided project development/ management services in Russia, Ukraine,
Nigeria, Egypt, England, Germany, France and Belgium for several multinational
companies, defining missions or providing feasibility studies, project funding,
planning and/or implementation. From January 1992 through December 1994
Mr. Carter worked for Exxon's Houston development company as senior
international project manager for twelve years. He provided management
services for local and overseas corporate ventures, while developing foreign
networks to expedite contract demands. Mr. Carter analyzed and provided
feasibility studies with long-term investment planning for capital projects,
as well as responsibility for stewardship of schedules, budgets, and reporting.
At Exxon he constructed and managed 230,000 square meters of Class A office
buildings and hotels, 10,000 square meters of commercial retail space, and
served as a key person for three (3) planned residential communities with
supporting infrastructure, including schools, religious facilities and municipal
buildings.
Seymour M. Tatar, Vice President of Design & Project Planning.
Mr. Tatar, age 67, has been Vice President, and a director of the Company
since its inception in January of 1998. Prior to joining Txon Mr. Tatar has
been an independent architect for over 25 years with a highly successful
professional career completing over 300 projects in architecture, urban design,
site planning, contracting, construction management, and real estate
development. Mr. Tatar's responsibilities for Txon include comprehensive
services that included site landscape and project design, programming, space
planning, feasibility, urban renewal, city planning, civic and tax increment
district design, engineering and specialized consultant coordination,
educational and library behavioral research, on-site construction management.
Mr. Tatar's tasks also include bringing together teams of specialized
professional consultants, directing them to accomplish specific complex tasks in
a comprehensive manner. He is also to analyze cost control, site selection,
lighting, acoustics, environmental assessments, real estate appraisal, traffic,
food handling, asbestos removal, marketing, legal, business and economic
feasibility - all in response to an assignment's special needs.
Mr. Tatar has been professionally registered in fourteen states, is currently
accredited by the National Council of Architectural Registration Board, and
participates in several professional and civic associations.
Jay Schapiro, Vice President of Administration, Director and Secretary.
Mr. Schapiro, age 39, has been an officer and director of the company
since August 1998. Mr. Schapiro's duties include managing daily office and
financial administration of the company, along with maintaining all books and
records as the corporate secretary. From October 1997 he acted as a securities
trader for his own account. From January 1995 to September 1997 he served as
Mid Atlantic Market manager for MCI Cellular where he oversaw the build out of
twelve facilities, concurrently with managing and marketing programs, the
staffing and providing profit/loss reports for the region. From March 1993 to
April 1995 Mr. Schapiro served as a development manager for Petstuff, Inc., a
chain of large format pet supply stores, coordinating the opening of opening
the initial five locations.
Directors and officers of the Company have serve in their respective
capacities since January 28, 1998 and will serve for periods of one year or
until their successors have been elected and accepted their positions.
At the present time, all of the officers and directors of the Company are
devoting essentially full time to the business of the Company despite the
inability of the Company to compensate them. Without funding, of which no
assurance can be given, management will not be able to continue to serve without
pay indefinitely.
ITEM 6. EXECUTIVE COMPENSATION.
The following table sets forth the cash compensation paid or accrued for
services rendered in all capacities to the Company in 1999, to the Officers
and Directors of the Company (the "Named Executives").
SUMMARY COMPENSATION TABLE SUMMARY COMPENSATION TABLE
FISCAL 1999 ANNUAL COMPENSATION
Executives of the Company were paid the following cash consideration
during the fiscal year ended June 30, 1999.
Salary Bonus Other
Name & Principal Annual Long Term
Position Compensation Compensation
Awards
John Chris Kirch $5,538.38 --- --- ---
Chairman
Stephanie Harnicher $20,000 --- --- ---
President, CEO, & Director
Jay Schapiro $31,000 --- ---
Vice President, & Director
There are no employment agreements in effect as of this time. The Company
is considering implementing employment agreements which would be in effect for
an initial term of two years and then renew automatically for successive
one-year terms unless terminated earlier according to the terms therein.
The Company currently has no obligations to compensate any other of its
executive officers or directors at this time but retains the right to do so as
it sees fit. The Company is considering instituting an incentive stock option
or stock bonus plan for its executive officers, but currently has no such plan
in place.
No retirement, pension, profit sharing, stock option or insurance
programs or other similar programs have been adopted by the Company for
the benefit of its employees to date.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
On February 25, 1999 the Company issued a total of 4,000,000 shares of
Common Stock of the company to the five founders and officers and directors
for total of $200,000.00 in cash ($.05 per share):
NAME NUMBER OF TOTAL SHARES CONSIDERATION
- ----- ---------------------- ------------
John Chris Kirch 1,100,000 $55,000
Stephanie Harnicher 1,100,000 $55,000
Robert E. Carter 900,000 $45,000
Seymour Tatar 600,000 $30,000
Jay Schapiro 300,000 $15,000
$200,000
Between March 1, 1999 and March 28, 1999 the company sold an
aggregate of 1,500,000 shares of its common stock to a total of 31 investors at
a sales price of $.10 per share pursuant to an exemption from registration
provided by Regulation D of Rule 504 promulgated under the Securities Act of
1933 as to which Notice of Sale on Form D was filed with the Securities and
Exchange Commission on March 8, 1999. These securities were sold for cash.
The increase from $.05 paid for common shares by founders and the $.10
purchase price for which shares were sold to outisde investors is attributable
to (1) the amount of capital the Company needed to raise to continue its
operations, (2) the price which prospective investors indicated they would be
willing to pay for shares, and (3) the fact that an agreement in principle had
been reached related to the Furst acquisition, an agreement which management
believes had the potential to significantly increase the long term worth of the
Company's shares. There were no underwriting discounts or commissions
involved in the sale of these securities.
ITEM 8. DESCRIPTION OF SECURITIES.
The authorized capital stock of the Company consists of 50,000,000
shares of Common Stock, par value $.001 per share, and 10,000,000 shares of
Preferred Stock, par value $.001 per share. The following statements
relating to the capital stock are summaries. Reference is made to the more
detailed provisions of, and such statements are qualified in their entirety by
the Certificate of Incorporation and the By-laws of the Corporation, copies of
which are filed as exhibits to this registration statement.
COMMON STOCK
Holders of shares of common stock are entitled to one vote for each share
on all matters to be voted on by the stockholders. Holders of common stock
do not have cumulative voting rights. Holders of common stock are entitled to
share proratably in dividends, if any, as may be declared from time to time
by the Board of Directors in its discretion from funds legally available
therefor.
In the event of a liquidation, dissolution or winding up of the Company,
the holders of common stock are entitled to share pro rata all assets remaining
after payment in full of all liabilities. All of the outstanding shares of
common stock are, fully paid and non-assessable.
Holders of common stock have no preemptive rights to purchase the
Company's common stock. There are no conversion or redemption rights
or sinking fund provisions with respect to the common stock.
PREFERRED STOCK
The Company's Certificate of Incorporation authorizes the issuance
of 10,000,000 shares of preferred stock, $.001 par value per share, of which
no shares have been issued. The Board of Directors is authorized to provide
for the issuance of shares of preferred stock in series and, by filing a
certificate pursuant to the applicable law of Nevada, to establish from time
to time the number of shares to be included in each such series, and to fix
the designation, powers, preferences and rights of the shares of each
such series and the qualifications, limitations or restrictions thereof
without any further vote or action by the shareholders. Any shares of
preferred stock so issued would have priority over the common stock with
respect to dividend or liquidation rights.
Any future issuance of preferred stock may have the effect of delaying,
deferring or preventing a change in control of the Company without
further action by the shareholders and may adversely affect the voting and
other rights of the holders of common stock. At present, the Company has no
plans to issue any preferred stock nor adopt any series, preferences or other
classification of preferred stock.
Under certain circumstances, the issuance of Preferred Stock could
adversely affect the voting power of the holders of the Common Stock. The
Company has no present plans to issue any Preferred Stock.
The Company does not expect to pay dividends. Dividends, if any, will be
contingent upon the Company's revenues and earnings, if any, capital
requirements and financial conditions. The payment of dividends, if any, will
be within the discretion of the Company's Board of Directors. The Company
presently intends to retain all earnings, if any, for use in its business
operations and accordingly, the Board of Directors does not anticipate
declaring any dividends in the foreseeable future.
PART II
ITEM 1. MARKET PRICE FOR COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
There is no trading market for the Company's Common Stock at present
and there has been no trading market to date. There is no assurance that a
trading market will ever develop or, if such a market does develop,
that it will continue.
(a) Market Price. The Company's Common Stock is not quoted at the
present time.
(b) Holders. There are presently 36 holders of the Company's Common
Stock, five of whom are officers and/or directors of the Company. The balance
are independent investors.
(c) There are no outstanding warrants or options giving any person the
right to acquire any shares of the Company, and none of its outstanding common
shares are eligible to be sold under Rule 144. The Company intends to publicly
offer common shares to raise investment capital, but no details of any such
proposal have been agreed upon. There are no employee benefit or dividend
reinvestment plans which could have a material effect on the market price, if
any, of the Company's common shares.
(d) Dividends. There are no restrictions that limit the ability to pay
dividends on the Company's common stock. However, the Company has not
paid any dividends to date, and has no plans to do so in the foreseeable
future.
ITEM 2. LEGAL PROCEEDINGS.
There is no litigation pending or threatened by or against the Company.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
The Company has not changed accountants since its formation and there
are no disagreements with the Company's accountants.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
During the past Twelve months, the Company has sold securities which were
not registered as follows:
NAME NUMBER OF CONSIDERATION
SHARES
John Chris Kirch (1) 1,100,000 $55,000
Stephanie Harnicher (2) 1,100,000 $55,000
Robert E. Carter (3) 900,000 $45,000
Seymour Tatar (4) 600,000 $30,000
Jay Schapiro (5) 300,000 $15,000
(1) Mr. Kirch is an officer and director of the Company and the beneficial
owner of such shares.
(2) Ms. Harnicher is an officer and director of the Company and the beneficial
owner of such shares.
(3) Mr. Carter is an officer and director of the Company and the beneficial
owner of such shares.
(4) Mr. Tatar is an officer and director of the Company and the beneficial
owner of such shares.
(5) Mr. Schapiro is an officer and director of the Company and the beneficial
owner of such shares.
Additionally since January 1, 1999 the Company has sold 1,500,000 of its
common shares to 31 persons without registration under the Securities Act of
1933 in reliance on the exemption from registration provided by section 3(b) of
the Securities Act of 1933 and Rule 504 of Regulation D thereunder. The
Company received total gross proceeds of $150,000 from these sales.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The General Corporation Law of the State of Nevada provides that
a Nevada corporation has the power, under specified circumstances, to
indemnify its directors, officers, employees and agents, against expenses
incurred in any action, suit or proceeding. That law provides that a certificate
of incorporation may contain a provision eliminating the personal liability
of a director to the corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director provided that such provision shall not
eliminate or limit the liability of a director (i)for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) relating to liability for unauthorized
acquisitions or redemptions of, or dividends on, capital stock) of the General
Corporation Law of the State of Nevada, or (iv) for any transaction from
which the director derived an improper personal benefit. The Company's
Certificate of Incorporation contains such a provision which provides for the
indemnification of officers and directors of the Company to the full extent
permissible under Nevada law.
PART F/S
TXON INTERNATIONAL DEVELOPMENT CORPORATION
(A Development Stage Company)
FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
AND
MARCH 31, 1999 (UNAUDITED)
<PAGE>
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Txon International Development Corporation
Salt Lake City, Utah
Board Members:
We have audited the accompanying balance sheet of Txon International
Development Corporation (a development Stage Company) as of September
30, 1998, and the related statements of operations, changes in stockholders'
equity, and cash flows for the period January 29, 1998 (inception)to September
30, 1998 then ended. 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 audits.
We conducted our audits 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 Txon International
Development Corporation (a development Stage Company), as of September
30, 1998 and the results of its operations, and its cash flows for the period
January 29, 1998 (inception) to September 30, 1998 then ended in conformity
with generally accepted accounting principles.
Respectfully submitted,
/S/ Robinson Hill & Company
Certified Public Accountants
Salt Lake City, Utah
January 16 , 1999
<PAGE>
TXON INTERNATIONAL DEVELOPMENT CORPORATION
(A Development Stage Company)
BALANCE SHEET
(Unaudited)
March 31, September 30,
1999 1998
ASSETS
Cash in bank $ 6,881 $ 83,468
Investments 6,000 6,000
Total Assets $ 12,881 $ 89,468
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 6,714 $ 12,251
Accrued expenses 19,500 6,031
Accounts payable - officers 65,615 16,200
Total Liabilities 91,829 34,482
Stockholders' Equity
Preferred stock (par value $0.001),
10,000,000 shares authorized, no
shares issued at September 30, 1998 -- --
Common stock to be issued 200,000 110,000
Common stock (par value $0.001),
50,000,000 shares authorized, no
shares issued at September 30, 1998 -- --
Capital in excess of par value -- --
Deficit accumulated during development
stage (278,948) (55,014)
Total Stockholders' Equity ( 78,948) 54,986
Total Liabilities and
Stockholders' Equity $ 12,881 $ 89,468
The accompanying notes are an integral part of these financial
statements.
<PAGE>
TXON INTERNATIONAL DEVELOPMENT CORPORATION
(A Development Stage Company)
STATEMENT OF OPERATIONS
(Unaudited)
Cumulative
For the Six For the Period Since
Months Ended Ended
Inception of
March 31, September 30,
Development
1999 1998 Stage
Revenues $ - $ - $ -
Expenses
Selling, general and
administrative expenses 223,934 55,014 278,948
Operating Loss (223,934) (55,014) (278,948)
Other income (expense):
Interest expense - - -
Loss before taxes (223,934) (55,014) (278,948)
Income taxes - - -
Net Loss $(223,934) $(55,014) $(278,948)
Basic per Share Amounts
Net Income (Loss) $ (0.06) $ (0.06)
Weighted Average Shares
Outstanding 3,460,000 854,144
The accompanying notes are an integral part of these financial
statements.
<PAGE>
TXON INTERNATIONAL DEVELOPMENT CORPORATION
(A Development Stage Company)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Deficit
Accumulated
Common Stock During
Preferred To be Issued Common Excess of Development
Stock Shares Amount Shares Amount Par value Stage
Stock to be
issued in
exchange
for cash - 2,200,000 $110,000 - - - $ -
Net Loss - - - - - - (55,014)
Balance
September 30,
1998 - 2,200,000 110,000 - - - (55,014)
Stock to be
issued in
exchange for
cash - 1,800,000 90,000 - - - -
Net Loss - - - - - - (223,934)
Balance March
31, 1999
(Unaudited) - 4,000,000 $200,000 - - - $(278,948)
The accompanying notes are an integral part of these financial
statements.
<PAGE>
TXON INTERNATIONAL DEVELOPMENT CORPORATION
(A Development Stage Company)
STATEMENT OF CASH FLOWS
(Unaudited) Cumulative
For the Six For the Since
Months Ended Period Ended Inception of
March 31, September 30, Development
1999 1998 Stage
Cash Flows from Operating Activities:
Cash paid to suppliers and employees $166,587 $ 20,532 $187,119
Net cash used in
operating activities (166,587) (20,532) (187,119)
Cash Flows from Investing Activities:
Investment in deferred
development costs - ( 6,000) ( 6,000)
Net cash used by
investing activities - ( 6,000) ( 6,000)
Cash Flows from Financing Activities:
Proceeds from common stock
to be issued 90,000 110,000 200,000
Net cash provided by
financing activities 90,000 110,000 200,000
Net change in cash and cash equivalents (76,587) 83,468 6,881
Cash and cash equivalents at
beginning of year 83,468 - -
Cash and cash equivalents at end of year $6,881 $83,468 $ 6,881
Reconciliation of Net Loss to Net Cash
Used in Operating Activities:
Net loss $(223,934) (55,014) $(278,948)
Adjustments used to reconcile net
loss to Net cash used in operating
activities:
Increase in accounts payable (5,537) 12,251 6,714
Increase accrued expenses 13,469 6,031 19,500
Increase in accounts payable - officers 49,415 16,200 65,615
Net cash used in operating activities $(166,587) $(20,532) $(187,119)
The accompanying notes are an integral part of these financial
statements.
<PAGE>
TXON INTERNATIONAL DEVELOPMENT CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
(References to March 31, 1999 are Unaudited)
NOTE 1 - ORGANIZATION AND SUMMARY OF ACCOUNTING
POLICIES
This summary of accounting policies for Txon International Development
Corporation is presented to assist in understanding the Company' financial
statements. The accounting policies conform to generally accepted accounting
principles and have been consistently applied in the preparation of the
financial statements.
The unaudited financial statements as of March 31, 1998 and for the six
months then ended reflect, in the opinion of management, all adjustments
(which include only normal recurring adjustments) necessary to fairly state
the financial position and results of operations for the six months. Operating
results for interim periods are not necessarily indicative of the results
which can be expected for full years.
Organization and Basis of Presentation
The Company was incorporated under the laws of the state of Nevada on
January 29, 1998 as Weston International Development Corporation. On July
28, 1998 the name of the Company was changed to Txon International
Development Corporation. The primary business of the Company is the
acquisition, development, construction and operation of real properties. The
Company is in the development stage since January 29, 1998 (inception) and
has not commenced planned principal operations.
Nature of Business
The Company intends to acquire interests in various business opportunities,
which in the opinion of management will provide a profit to the company.
Cash Equivalents
For the purpose of reporting cash flows, the Company considers all
highly liquid debt instruments purchased with maturity of three months or less
to be cash equivalents to the extent the funds are not being held for investment
purposes.
Pervasiveness of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles required 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
<PAGE>
TXON INTERNATIONAL DEVELOPMENT CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
(Continued)
(References to March 31, 1999 are Unaudited)
NOTE 1 - ORGANIZATION AND SUMMARY OF ACCOUNTING
POLICIES (continued)
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Concentration of Credit Risk
The Company has no significant off-balance-sheet concentrations of credit
risk such as foreign exchange contracts, options contracts or other foreign
hedging arrangements. The Company maintains the majority of its cash
balances with one financial institution, in the form of demand deposits.
Net Loss per Common Share
There are no outstanding common stock equivalents for 1998 and are thus
not considered.
The reconciliations of the numerators and denominators of the basic EPS
computations are as follows:
For the Six Months Ended March 31, 1999 (Unaudited)
Number
of
Loss Shares Loss Per
(numerator) (denominator) Share
Loss to Common Shareholders $(223,934) 3,460,000 $(0.06)
For the Period Ended September 30, 1998
Number
of
Loss Shares Loss Per
(numerator) (denominator) Share
Loss to Common Shareholders $(55,014) 854,144 $(0.06)
TXON INTERNATIONAL DEVELOPMENT CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
(Continued)
(References to March 31, 1999 are Unaudited)
NOTE 2 - INCOME TAXES
The Company has accumulated tax losses estimated at $275,000 and
$53,000, as of March 31, 1999 and September 30, 1998 respectively, expiring
in 2013. Current tax laws limit the amount of loss available to be offset
against future taxable income when a substantial change in ownership occurs. The
amount of net operating loss carryforward available to offset future taxable
income will be limited if there is a substantial change in ownership.
NOTE 3 - DEVELOPMENT STAGE
The Company has not begun principal operations and as is common with a
development stage company, the Company has had recurring losses during its
development stage.
NOTE 4 - COMMITMENTS
As of March 31, 1999 and September 30, 1998 all activities of the
Company have been conducted by corporate officers from either their homes or
business offices. Currently, there are no outstanding debts owed by the
company for the use of these facilities and there are no commitments for
future use of the facilities.
NOTE 5 - RELATED PARTY TRANSACTIONS
During 1999 and 1998 the Company borrowed $46,000 and $40,000,
respectively from an officer and shareholder to pay administrative expenses.
The loan is payable on demand. As of March 31, 1999 and September 30,
1998, the principal owing is $65,615 and $16,200, respectively.
During 1998 the Company paid $3,000 to an officer for rent of office
space.
PART III
Exhibits
3.(i) Articles of Incorporation
3.(ii) By-Laws
10 Business Sales Agreement
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the Registrant caused this registration statement to be signed on its behalf
by the undersigned thereunto duly authorized.
TXON INTERNATIONAL DEVELOPMENT
CORPORATION.
By: /s/ Stephanie Harnicher
Stephanie Harnicher, President
EXHIBIT 3
Articles of Incorporation
of
TXON
INTERNATIONAL DEVELOPMENT CORPORATION
Txon International Development Corporation. filed its original
Certificate of Incorporation with the Nevada Secretary of State on January 28,
1998. This Certificate of Incorporation as contained herein has been duly
adopted in accordance with the General Corporation Law of Nevada.
ARTICLE I
Name
The name of this corporation is Txon International Development
Corporation. (the "Corporation").
ARTICLE II
Registered Office and Agent
The street address of the registered office and agent of the Corporation
in the State of Nevada is 3230 East Flamingo Road Suite #156, Las Vegas, NV
89121.
The name of the registered agent of the Corporation at that address is
Gateway Enterprises.
ARTICLE III
Mailing Address
The mailing address of the Corporation is 6322 South 300 East, Suite
320, Salt Lake City, UT 84121.
ARTICLE IV
Duration
This Corporation shall exist perpetually.
ARTICLE V
Purpose
The purpose or purposes of the Corporation are:
(1) To conduct any lawful business, to exercise any lawful purpose
andpower, and to engage in any lawful act or activity for which corporations
may be organized under the General Corporation Laws of Nevada; and
(2) In general, to possess and exercise all the powers and privileges
granted by the General Corporation Law of Nevada or any other law of
Nevada or by this Certificate of Incorporation together with any power
incidental thereto, so far as such powers and privileges are necessary or
convenient to the conduct, promotion or attainment of the business or purposes
of the Corporation.
ARTICLE VI
Capital Stock
The maximum number of shares of capital stock which this Corporation
shall have authority to issue is Sixty Million (60,000,000), Consisting of Fifty
Million (50,000,000) shares of Common Stock, $.001 par value, and Ten
Million (10,000,000) shares of Preferred Stock at $.001 par value. The
preferences, qualifications, limitations, restrictions and the special or
relative rights in respect of the shares of each class are as follows:
SECTION 1. Preferred Stock. The Preferred Stock may be issued from
time to time in one or more series. All shares of Preferred Stock shall be of
equal rank and shall be identical, except in respect of the matters that may
be fixed and determined by the Board of Directors as hereinafter provided, and
each share of each series shall be identical with all other shares of such
series, except as to the date from which dividends are cumulative. The
preferred stock shall have voting rights of 100 to 1 per share over the voting
rights of common stock. The Board of Directors hereby is authorized to cause
such shares to be issued in one or more classes or series and with respect to
each such class or series to fix and determine the designation, powers,
preferences and rights of the shares of each such series and the qualifications,
imitations or restrictions thereof.
The authority of the Board of Directors with respect to each series
shall include, but not be limited to, determination of the following:
(1) the number of shares constituting a series, the distinctive
designation of a series and the stated value of a series, if different from the
par value;
(2) whether the shares or a series are entitled to any fixed or
determinable dividends, the dividend rate (if any) on such shares, whether the
dividends are cumulative and the relative rights or priority of dividends on
shares of that series;
(3) whether a series has voting rights in addition to the voting rights
provided by law and the terms and conditions of such voting rights; including
100 to 1 voting rights per share over the voting rights of common stock.
(4) whether a series will have or receive conversion or exchange
privileges and the terms and conditions of such conversion or exchange
privileges;
(5) whether the shares of a series are redeemable and the terms and
conditions of such redemption, including the manner of selecting shares for
redemption if less than all shares are to he redeemed, the date or dates on or
after which the shares in the series will be redeemable and the amount payable
in case of redemption;
(6) whether a series will have a sinking fund for the redemption or
purchase of the shares in the series and the terms and the amount of such
sinking fund;
(7) the right of a series to the benefit of conditions and restrictions
on the creation of indebtedness of the Corporation or any subsidiary, on the
issuance of any additional capital stock (including additional shares of such
series or any other series), on the payment of dividends or the making of other
distributions on any outstanding stock of the Corporation and the purchase,
redemption or other acquisition by the Corporation, or any subsidiary, of any
outstanding stock of the Corporation;
(8) the rights of a series in the event of voluntary or involuntary
liquidation, dissolution or winding up of the Corporation and the relative
rights of priority of payment of a series; and
(9) any other relative, participating, optional or other special rights,
qualifications, limitations or restrictions of such series.
Dividends on outstanding shares of Preferred Stock shall be paid or
set apart for payment before any dividends shall be paid or declared or set
apart for payment on the Common Stock with respect to the same dividend
period.
If upon any voluntary or involuntary liquidation, dissolution or winding
up of the Corporation the assets available for distribution to holders of shares
of Preferred Stock of all series shall be insufficient to pay such holders the
full preferential amount to which they are entitled, then such assets shall be
distributed ratably among the shares of all series in accordance with the
respective preferential amounts (including unpaid cumulative dividends, if
any, payable with respect thereto).
SECTION 2. Common Stock - General Provisions. The Common Stock
shall be subject to the express terms of the Preferred Stock and any series
thereof. Each share of Common Stock shall be equal to every other share of
Common Stock, except as otherwise provided herein or required by law.
Shares of Common Stock authorized hereby shall not be subject to
preemptive rights. The holders of shares of Common Stock now or hereafter
outstanding shall have no preemptive right to purchase or have offered to them
for purchase any of such authorized but unissued shares, or any shares of
Preferred Stock, Common Stock or other equity securities issued or to be
issued by the Company.
Subject to the preferential and other dividend rights applicable to
Preferred Stock, the holders of shares of Common Stock shall be entitled to
receive such dividends (payable in cash, stock or otherwise) as may be declared
on the Common Stock by the Board of Directors at any time or from time to time
out of any funds legally available therefor.
In the event of any voluntary or involuntary liquidation, distribution or
winding up of the Corporation, after distribution in full of the preferential
or other amounts to be distributed to the holders of shares of Preferred Stock,
the holders of shares of Common Stock shall be entitled to receive all of the
remaining assets of the Corporation available for distribution to its
stockholders, ratably in proportion to the number of shares of Common Stock held
by them.
SECTION 3. Common Stock - Other Provisions.
(a) Voting Rights. The shares of Common Stock shall have the following
voting rights:
(1) Each share of Common Stock shall entitle the holder thereof to one
vote upon all matters upon which stockholders have the right to vote.
Except as otherwise required by applicable law, the holders of shares
of Common Stock shall vote together as one class on all matters submitted to a
vote of stockholders of the Corporation (or, if any holders of shares of
Preferred Stock are entitled to vote together with the holders of Common Stock,
as a single class with such holders of shares of Preferred Stock).
(b) Dividends and Distributions. Except as otherwise provided in this
Certificate of Incorporation, holders of Common Stock shall be entitled to such
dividends and other distributions in cash, stock or property of the Corporation
as may be declared thereon by the Board of Directors from time to time out of
assets or funds of the Corporation legally available therefor; provided, however
that in no event may the rate of any dividend payable on outstanding shares of
any class of Common Stock be greater than the dividend rate payable on
outstanding shares of the other class of Common Stock. All dividends and
distributions on the Common Stock payable in stock of the Corporation shall be
made in shares of Common Stock. In no event will shares of Common Stock
be split, divided or combined unless the outstanding shares of the Common
Stock shall be proportionately split, divided or combined.
(c) Options, Rights or Warrants. The Corporation may make offerings
of options, rights or warrants to subscribe for shares of capital stock to all
holders of Common Stock if an identical offering is made simultaneously to all
the holders of stock. All such offerings of options, rights or warrants shall
offer the respective holders of Common Stock the right to subscribe at the
same rate per share.
ARTICLE VII
Board of Directors
SECTION 1. Number and Terms. The number of directors which shall
constitute the whole Board of Directors shall be determined in the manner
provided in the Bylaws of the Corporation. The Board of Directors shall be
as nearly equal in number as possible. The initial directors shall hold office
for a term expiring at the next succeeding annual meeting of stockholders and
until election of their respective successors.
SECTION 2. Vacancies. Any vacancy on the Board of Directors,
whether arising through death, resignation or removal of a director or through
an increase in the number of directors of any class, shall be filled by a
majority vote of all remaining directors. The term of office of any director
elected to fill such a vacancy shall expire at the expiration of the term of
office of directors in which the vacancy occurred.
SECTION 3. Other Provisions. Notwithstanding any other provision of
this Article VII, and except as otherwise required by law, whenever the holders
of any one or more series of Preferred Stock or other securities of the
Corporation shall have the right, voting separately as a class, to elect one or
more directors of the Corporation, the term of office, the filling of vacancies
and other features of such directorships shall be governed by the terms of this
Certificate of Incorporation applicable thereto, and unless the terms of this
Certificate of Incorporation expressly provide otherwise, such directorship
shall be in addition to the number of directors provided in the Bylaws and such
directors shall not be classified. Elections of directors need not be by written
ballot unless the Bylaws of the Corporation shall so provide.
ARTICLE VIII
Bylaws
The power to adopt, alter, amend or repeal the Bylaws of the Corporation
shall be vested in the Board of Directors. The stockholders of the Corporation
may adopt, amend or repeal the Bylaws of the Corporation only by the
affirmative vote of holders of at least 66 2/3% of the combined voting power of
the then outstanding shares of stock of all classes and series of the
Corporation entitled to vote generally on matters requiring the approval of
stockholders (the "Voting Stock").
ARTICLE IX
Stockholder Meetings
Any action required or permitted to be taken by the stockholders of the
Corporation must be taken at a duly called and noticed meeting of stockholders
and may not be taken by consent in writing, unless such action requiring or
permitting stockholder approval is approved by a majority of the directors then
in office. An action required or permitted to be taken by the stockholders
which has been approved by a majority of the directors may be taken by consent
in writing if the consent is signed by the record holders of no less than the
Voting Stock that would otherwise be required for approval of such action.
ARTICLE X
Amendments
The provisions set forth in Articles VI, VII, VIII and IX and in this
Article X may not he repealed, rescinded, altered or amended, and no other
provision may be adopted which is inconsistent therewith or impairs in any way
the operation or effect thereof, except by the affirmative vote of holders of
not less than 66 2/3% of the Voting Stock.
Consistent with the preceding sentence, the corporation reserves the
right to adopt, repeal, rescind, alter or amend in any respect any provision
contained in this Certificate of Incorporation as prescribed by applicable law.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Incorporation to be executed in its corporate name this 28th day of January,
1998.
As approved and adopted by the Board of Directors as of January
28, 1998.
BY-LAWS
of
TXON
INTERNATIONAL DEVELOPMENT CORPORATION
ARTICLE I
Meetings of Shareholders
SECTION 1. Annual Meeting. The annual meeting of the shareholders of
this Corporation for the election of directors and for the transaction of any
proper business shall be held at the time and place designated by the Board of
Directors (the "Board") of the Corporation. The annual meeting shall be held
within 4 months after the close of the Corporation's fiscal year.
SECTION 2. Special Meetings. Special meetings of the shareholders
shall be held when called by the Chief Executive Officer or by a majority of the
Board of Directors. Special meetings may not be called by any other person.
Written notice of a special meeting pursuant to Section 4 herein shall be given
to all stock holders entitled to vote at such meeting not less than 10 nor more
than 60 days before the date of the meeting. Each such special meeting shall be
held at such date and time as requested by the person or persons calling the
meeting within the limits fixed by law. Business transacted at any special
meeting of shareholders shall be limited to the purposes stated in the notice.
SECTION 3. Place. Meetings of shareholders may be held in the State
of Nevada or outside the State of Nevada.
SECTION 4. Notice. Written notice stating the place, date and time of
the meeting and, in the case of a special meeting, the purpose or purposes for
which the meeting is called, shall be delivered not less than 10 nor more than
60 days before the meeting, either personally or by first class mail, by or at
the direction of the President, the Secretary, or the officer or persons calling
the meeting to each shareholder of record entitled to vote at such meeting. If
mailed, such notice shall be effective when deposited in the United States mail
addressed to the shareholder at his address as it appears on the Corporation's
current record of shareholders.
SECTION 5. Notice of Adjourned Meetings. When a meeting is
adjourned to another time or place, it shall not be necessary to give any notice
of the adjourned meeting if the time and place to which the meeting is adjourned
are announced at the meeting at which the adjournment is taken, and at the
adjourned meeting any business may be transacted that might have been
transacted on the original date of the meeting. If, however, the adjournment
is for more than 30 days, or if, after the adjournment, the Board of Directors
fixes a new record date for the adjourned meeting, a notice of the adjourned
meeting shall be given as provided in Section 4 herein to each shareholder of
record on the new record date entitled to vote at such meeting.
SECTION 6. Notice of Shareholder Business and Nominations. Except
as may otherwise be provided herein, or in the Certificate of Incorporation in
connection with rights to electing directors under specific circumstances which
may be granted to the holders of any series of Preferred Stock, nominations for
the election of directors and the proposal of business to be considered by the
shareholders may be made by the Board or any shareholder of record entitled to
vote at the meeting and who complies with the notice procedures set forth in
this by-law.
For nominations or other business to be properly brought before an annual
meeting by a shareholder, the shareholder must have given timely notice thereof
in writing to the Secretary of the Corporation and such other business must
otherwise be a proper matter for shareholder action. Except as otherwise
provided by applicable law, to be timely, a shareholder's notice must be
delivered to the Secretary of the Corporation at the Corporation's principal
executive offices not later than the close of business on the 60th day, nor
earlier than the close of business on the 90th day, prior to the first
anniversary of the preceding year's annual meeting; provided, however, that in
the event that the date of the annual meeting is more than 30 days before or 60
days after such anniversary date, notice by the shareholder must he so delivered
not earlier than the close of business on the later of the 60th day prior to
such meeting or the 10th day following the day on which public announcement of
the date of such meeting is made by the Corporation. In no event shall public
announcement of an adjournment of an annual meeting commence a new time period
for giving of a shareholder's notice as described above.
Such shareholder's notice shall set forth (a) as to each person whom the
shareholder proposes to nominate for election to the Board of Directors, all
information relative to such person required to be disclosed in solicitation of
proxies for election of directors pursuant to Regulation 14A under the
Securities Exchange Act of 1934 (including such person's written consent to
being named in the proxy statements as a nominee and to serving as a director if
elected); (b) as to any other business that the shareholder proposes to bring
before the meeting, a brief description of the business desired to be brought
before the meeting, the reasons for conducting such business at the meeting and
any material interest in such business of such shareholder and the beneficial
owner, if any, on whose behalf the nomination or proposal is made; and (c) as
to the shareholder giving notice and the beneficial owner, if any, on whose
behalf the nomination or proposal is made (i) the name and address of such
shareholder, as they appear on the Corporation's books and of such beneficial
owned and (ii) the class and number of shares of the Corporation which are owned
beneficially and of record by such shareholder and beneficial owner. Notice of
nominations which are proposed by the Board shall be given by the Chairman, the
President or the Secretary of the Corporation on behalf of the Board.
The chairperson of the meeting may, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with the
foregoing procedure, and if he or she should so determine, he or she shall
so declare to the meeting and the defective nomination shall be disregarded.
SECTION 7. Fixing Record Date. For the purpose of determining
shareholders entitled to notice of or to vote at any meeting of shareholders
or any adjournment thereof, or entitled to receive payment of any distribution,
or in order to make a determination of shareholders for any other purpose, the
Board of Directors may fix in advance a date as the record date for any
determination of shareholders, such date in any case to be not more than 60
days and, in case of a meeting of shareholders, not less than 10 days prior to
the date on which the particular action requiring such determination of
shareholders is to be taken.
If the stock transfer books are not closed and no record date is fixed
for the determination of shareholders entitled to notice or to vote at an
annual or special meeting of shareholders, or shareholders entitled to receive
payment of a distribution, the date on which notice of the meeting is mailed
or the date on which the resolution of the Board of Directors declaring such
distribution is adopted, as the case may be, shall be the record date for such
determination of shareholders.
When a determination of shareholders entitled to vote at any meeting
of shareholders has been made as provided in this section, such determination
shall apply to any adjournment thereof, unless the Board of Directors fixes a
new record date for the adjourned meeting. A new record date must be fixed if
the meeting is adjourned to a date more than 120 days after the date fixed for
the original meeting.
SECTION 8. Voting Record. The officers or agent having charge of the
stock transfer books for shares of the Corporation shall make, at least 10
days before each meeting of shareholders, a complete alphabetical list of the
shareholders entitled to vote at such meeting or any adjournment thereof,
arranged by voting group with the address of and the number and class and
series, any, of shares held by each. The list, for a period of 10 days prior
to such meeting, shall be available for inspection at the principal office of
the Corporation, or at the office of the transfer agent or registrar of the
Corporation or at a place identified in the meeting notice in the city where the
meeting will be held. Upon written demand to the Corporation, any shareholder
or his agent or attorney shall be entitled to inspect the list at any time
during usual business hours. The list shall also be produced and kept open at
the time and place of the meeting and shall be subject to the inspection of any
shareholder or his agent or attorney at any time during the meeting.
If the requirements of this section have not been substantially complied
with, the meeting, on demand of any shareholder in person or by proxy, shall be
adjourned until the requirements are complied with. If no such demand is made,
failure to comply with the requirements of this section shall not affect the
validity of any action taken at such meeting.
SECTION 9. Shareholder Quorum and Voting. A majority of all then
outstanding shares of voting stock entitled to vote, represented in person or
by proxy, shall constitute a Quorum at a meeting of shareholders. When a
specified item of business is required to be voted on by a class or series of
stock, a majority of the shares of such class or series shall constitute a
quorum for the transaction of such item of business by that class or series.
If a quorum is present, the affirmative vote of the majority of the
shares represented at the meeting and entitled to vote on the subject matter
shall be the act of the shareholders unless otherwise provided by law or by the
Certificate of Incorporation.
After a quorum has been established at a shareholders' meeting, the
subsequent withdrawal of shareholders, so as to reduce the number of
shareholders entitled to vote at the meeting below the number required for a
quorum, shall not affect the validity of any action taken at the meeting or any
adjournment thereof.
SECTION 10. Voting of Shares. Each outstanding share of Common
Stock shall be entitled to one vote on each matter submitted to a vote at a
meeting of shareholders. Holders of Common Stock shall be entitled to vote
for the election of directors or on any matter presented to the shareholders.
Shares of stock of this Corporation owned directly or indirectly by
another corporation the majority of the voting stock of which is owned, directly
or indirectly, by this Corporation are not entitled to vote, and shall not be
counted in determining the total number of outstanding shares at any given time.
A shareholder or the shareholder's attorney in fact may vote either in
person or by proxy executed in writing by the shareholder or his duly
authorized attorney-in-fact.
At each election for directors every shareholder entitled to vote at
such election shall have the right to vote, in person or by proxy, the number of
votes represented by the shares owned by him for as many persons as there are
directors to be elected at that time and for whose election he has a right to
vote.
Shares standing in the name of another corporation, domestic or foreign,
may be voted by the officer, agent, or proxy designated by the by-laws of the
corporate shareholder; or, in the absence of any applicable by-law, by such
person as the board of directors of the corporate shareholder may designate.
Proof of such designation may be made by presentation of a certified copy of the
by-laws or other instrument of the corporate shareholder. In the absence of any
such designation, or in case of conflicting designation by the corporate
shareholder, the chairman of the board, president, any vice president, secretary
and treasurer of the corporate shareholder shall be presumed to possess, in that
order, authority to vote such shares.
Shares held by an administrator, executor, guardian, personal
representative, or conservator may be voted by him, either in person or by
proxy, without a transfer of such shares into his name. Shares standing in the
name of a trustee may be voted by him, either in person or by proxy, but no
trustee shall be entitled to vote shares held by him without a transfer of such
shares into his name or the name of his nominee.
Shares held by or under the control of a receiver, trustee in bankruptcy
proceedings or an assignee for the benefit of creditors, may be voted by such
receiver, trustee or assignee, without the transfer thereof into the name of
such receiver, trustee or assignee.
A shareholder whose shares are Pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee,
and thereafter the pledgee or his nominee shall be entitled to vote the shares
so transferred.
On and after the date on which written notice of redemption of
redeemable shares has been mailed to the holders thereof and a sum sufficient
to redeem such shares has been deposited with a bank, trust company or other
financial institution, with irrevocable instruction and authority to pay the
redemption price to the holders thereof upon surrender of certificates therefor,
such shares shall not be entitled to vote on any matter and shall not be deemed
to be outstanding shares.
SECTION 11. Written Consent of Shareholders. Any action required or
permitted to be taken by the shareholders of the Corporation must be effected
at a duly called annual or special meeting of the shareholders, unless such
action is approved by a majority of the Board of Directors. In the event of
such approval, such action may be taken without a meeting, without prior
notice and without a vote if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding shares having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting of shareholders at which all shares entitled to vote thereon
were present and voted, provided that all requirements of law and the
Certificate of Incorporation have been satisfied. To be effective, the executed
written consent of the shareholders must be delivered to the Corporation within
60 days of the date the earliest written consent is received by the Corporation.
If any class of shares is entitled to vote thereon as a class, such written
consent shall be required of the holders of a majority of the shares of each
class of shares entitled to vote thereon.
After obtaining such authorization by written consent, notice shall
promptly be given to those shareholders who have not consented in writing or who
are not entitled to vote on the action. The notice shall fairly summarize the
material features of the authorized action and, if the action be a merger,
consolidation or sale or exchange of assets for which dissenters rights are
provided by law, the notice shall contain a clear statement of the right of
shareholders dissention there from to be paid the fair value of their shares
upon compliance with further provisions of the law regarding the rights of
dissenting shareholders.
SECTION 12. Waiver of Notice of meetings of Shareholders. Notice of
a meeting of the shareholders need not be given to any shareholder who signs a
Waiver of Notice either before or after the meeting. Attendance of a
shareholder at a meeting shall constitute a waiver of notice of such meeting
and waiver of any and all objections to the place of the meeting, the time of
the meeting, the manner in which it has been called or convened, or the matters
considered at a meeting, except when a shareholder states, at the beginning of
the meeting, any objection to the transaction of business because the meeting is
not lawfully called or convened, or except when a shareholder objects to
considering a particular matter that is not within the purposes described in
the meeting notice.
Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the shareholders need be specified in any written
Waiver of Notice of such meeting.
ARTICLE II
Directors
SECTION 1. Function. All corporate powers shall he exercised by or
under the authority of, and the business and affairs of the Corporation shall
be managed under the direction of the Board of Directors.
SECTION 2. Qualification. Directors must be natural persons who are
18 years of age or older, but need not be residents of this state or
shareholders of this Corporation.
SECTION 3. Compensation. The Board of Directors shall have
authority to fix the compensation of directors.
SECTION 4. Duties of Directors. A director shall perform his duties
as a director, including his duties as a member of any committee of the board
upon which he may serve, in good faith, in a manner he reasonably believes to
be in the best interests of the Corporation, and with such care as an
ordinarily prudent person in a like position would use under similar
circumstances.
In performing his duties, a director shall be entitled to rely on
information, opinions, reports or statements, including financial statements
and other financial data, in each case prepared or presented by:
(a) one or more officers or employees of the Corporation whom the
director reasonably believes to be reliable and competent in the matters
presented;
(b) counsel, public accountants or other persons as to matters which
the director reasonably believes to be within such person's professional or
expert competence; or
(c) a committee of the Board upon which he does not serve, duly
designated in accordance with a provision of the Certificate of Incorporation
or the By-laws, as to matters within its designated authority, which committee
the director reasonably believes to merit confidence.
A director shall not be considered to be acting in good faith if he has
knowledge concerning the matter in question that would cause such reliance
described above to be unwarranted.
In discharging his duties, a director may consider such factors as the
director deems relevant, including the long term prospects and interests of
the Corporation and its shareholders, and the social, economic, legal, or other
effects of any action on the employees, suppliers, customers of the Corporation
or its subsidiaries, the communities and society inn which the Corporation or
its subsidiaries operate, and the economy of the state and the nation.
A person who performs his duties in compliance with this section shall
have no liability by reason of being or having been a director of the
Corporation.
SECTION 5. Presumption of Assent. A director of the Corporation who
is present at a meeting of its Board of Directors or a committee of the Board
of Directors at which action on any corporate matter is taken shall be presumed
to have assented to the action taken unless (a) he objects at the beginning of
the meeting (or promptly upon his arrival) to holding it or transacting
specified business at the Meeting; or (b) he votes against such action or
abstains from voting in respect thereto.
SECTION 6. Number. Except as may otherwise be provided pursuant to
the Certificate of Incorporation in connection with rights to elect directors
which may be granted to the holders of any series of Preferred Stock, the number
of directors which shall constitute the whole Board shall be fixed from time to
time exclusively pursuant to a resolution adopted by a majority of the Board of
Directors. At each annual meeting of shareholders, commencing with the 1997
annual meeting, (I) directors elected to succeed those directors whose terms
shall expire shall be elected for a term of office to expire at the succeeding
annual meeting of shareholders after their election, each director to hold
office until his or her successor shall have been duly elected and qualified,
and (ii) if authorized by a resolution of the Board of Directors, directors may
be elected to fill any vacancy on the Board of Directors, regardless of how such
vacancy shall have been created.
SECTION 7. Election of Directors. Except as may otherwise be
provided pursuant to the Certificate of Incorporation in connection with the
rights to elect directors under specified circumstances which may be granted to
the holders of any series of Preferred Stock, and except as otherwise provided
pursuant to Section 8 of this Article II, directors shall be elected by
shareholders of the Corporation. Except as otherwise provided by applicable
law, at each election the persons receiving the greatest number of votes, up to
the number of directors then to be elected, shall be the persons then elected.
Each director shall serve until his or her successor is elected and qualified or
until his or her death, resignation or removal. The election of directors is
subject to any provisions relating thereto contained in the Certificate of
Incorporation.
SECTION 8. Vacancies. Except as may otherwise be provided pursuant to
the Certificate of Incorporation in connection with rights to elect additional
directors under specified circumstances which may be granted to the holders of
any series of Preferred Stock, newly created directorships resulting from any
increase in the number of directors, or any vacancies on the Board of Directors
resulting from death, resignation, removal or other causes, shall be filled
solely by the affirmative vote of a majority of the remaining directors then in
office, even though less than a quorum of the Board of Directors. Any director
elected in accordance with the preceding sentence shall hold office until such
director's successor shall have been elected and qualified or until such
director's death, resignation or removal, whichever first occurs. No decrease
in the number of directors constituting the Board shall shorten the term of any
incumbent director.
SECTION 9. Resignation of Directors. Any director of the Corporation
may resign at any time by giving written notice to the Chairman of the Board
or to the Secretary of the Corporation. The resignation of any director shall
take effect at the time specified therein; and, unless otherwise specified
therein, the acceptance of such resignation shall not be necessary to make it
effective.
SECTION 10. Removal of Directors. Subject to the right to elect
directors under specified circumstances which may be granted pursuant to the
Certificate of Incorporation to the holders of any series of Preferred Stock
and unless otherwise provided by law, any director may be removed from office
without cause only by the affirmative vote of the holders of at least 66 2/3%
of the voting power of the then outstanding shares of voting stock, voting
together as a single class.
SECTION 11. Quorum and Voting. A majority of the number of directors
fixed by these By-laws or by resolution of the Board of Directors shall
constitute a quorum for the transaction of business. The act of the majority
of the directors present at a meeting at which a quorum is present shall be
the act of the Board of Directors.
SECTION 12. Director Conflicts of Interest. No contract or other
transaction between this Corporation and one or more of its directors or any
other corporation, firm, association or entity in which one or more of the
directors are directors or officers or are financially interested, shall be
either void or voidable because of such relationship or interest or because
such director or directors are present at the meeting of the Board of Directors
or a committee thereof which authorizes, approves or ratifies such contract or
transaction or because his or her votes are counted for such purpose, if:
(a) the fact of such relationship or interest is disclosed or known to
the Board of Directors or committee which authorizes, approves or ratifies the
contract or transaction by a vote or consent sufficient for the purpose without
counting the votes or consents of such interested directors; or
(b) the fact of such relationship or interest is disclosed or known to
the shareholders entitled to vote and they authorize, approve or ratify such
contract or transaction by vote or written consent; or
(c) the contract or transaction is fair and reasonable as to the
Corporation at the time it is authorized by the Board, a committee or the
shareholders.
Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors of a committee
thereof which authorizes, approves or ratifies such contract or transaction.
SECTION 13. Executive and Other Committees. The Board of
Directors, by resolution adopted by a majority of the full Board of Directors,
may designate from among its members an executive committee and one or
more other committees each of which, to the extent provided in such resolution,
shall have and may exercise all the authority of the Board of Directors, except
that no committee shall have the authority to:
(a) approve or recommend to shareholders actions or proposals required
by law to be approved by shareholders;
(b) designate candidates for the office of director, for purposes of
proxy solicitation or otherwise;
(c) fill vacancies on the Board of Directors or any committee thereof;
(d) adopt, amend or repeal these By-laws or the Certificate of
Incorporation;
(e) authorize or approve the reacquisition of shares unless pursuant
to a general formula or method specified by the Board of Directors;
(f) adopt an agreement of merger or consolidation; or
(g) authorize or approve the issuance or sale of, or any contract to
issue or sell, shares or designate the terms of a series of a class of shares,
except that the Board of Directors, having acted regarding general authorization
for the issuance or sale of shares, or any contract therefor, and, in the case
of a series, the designation thereof, may, pursuant to a general formula or
method specified by the Board of Directors, by resolution or by adoption of a
stock option or other plan, authorize a committee to fix the terms of any
contract for the sale of the shares and to fix the terms upon which such shares
may be issued or sold, including the price, the rate or manner of payment of
dividends, provisions for redemption, sinking fund, conversion, voting or
preferential rights, and provisions for other features of a class of shares,
or a series of a class of shares, with full power in such committee to adopt any
final resolution setting forth all the terms thereof and to authorize the
statement of the terms of a series for filing with the office of the Secretary
of State.
The Board of Directors, by resolution adopted in accordance with this
section, may designate one or more directors as alternate members of any such
committee, who may act in the place and stead of any absent member or
members at any meeting of such committee.
SECTION 14. Changes in Committees; Resignations, Removals and
Vacancies. The Board of Directors shall have power at any time to change or
remove the members of, to fill vacancies in, and to discharge any committee
created pursuant to these By-laws, either with or without cause. Any member
of any such committee may resign at any time by giving written notice to the
Board or the Chairman of the Board or the Secretary. Such resignation shall
take effect upon receipt of such notice or at any later time specified therein;
and unless otherwise specified therein, acceptance of such resignation shall not
be necessary to make it effective. Any vacancy in any committee, whether arising
from death, resignation, an increase in the number of committee members or any
other cause, shall be filled by the Board of Directors in the manner prescribed
in these By-laws for the original appointment of the members of such committee.
SECTION 15. Place of Meetings. Regular and special meetings by the
Board of Directors may be held within or without the State of Nevada.
SECTION 16. Time, Notice and Call of Meetings. Regular meetings of
the Board of Directors shall be held at times and places specified by the
Board of Directors without notice of the date, time, place or purpose of the
meeting. Written notice of the date, time and place of special meetings of the
Board of Directors shall be given to each director at least 2 days before the
meeting. The notice need not describe the purpose of the special meeting. In
addition to any other regular meetings, a regular meeting of the Board of
Directors shall be held, without other notice than this by-law, immediately
after and at the same place as the annual meeting of shareholders.
Notice of a meeting of the Board of Directors need not be given to any
director who signs a waiver of notice either before or after the meeting.
Attendance of a director at a meeting shall constitute a waiver of notice of
such meeting and waiver of any and all objections to the place of the meeting,
the time of the meeting, or the manner in which it has been called or convened,
except when a director states, at the beginning of the meeting, any objection
to the transaction of business because the meeting is not lawfully called or
convened.
Neither the business to be transacted at, nor the purpose of any regular
or special meeting of the Board of Directors need be specified in the notice or
waiver of notice of such meeting.
A majority of the directors present, whether or not a quorum
exists, may adjourn any meeting of the Board of Directors to another time
and place. Notice of any such adjourned meeting shall be given to the directors
who were not present at the time of the adjournment and, unless the time and
place of the adjourned meeting is announced at the time of the adjournment,
to the other directors.
Meetings of the Board of Directors may be called by the Chairman of
the Board, by the President of the Corporation, or by any two directors.
Members of the Board of Directors may participate in meeting of such
board by means of a conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other at the same time. Participation by such means shall constitute
presence in person at a meeting.
SECTION 17. Action Without a Meeting. Any action required to be
taken at a meeting of the directors of the Corporation, or any action which
may be taken at a meeting of the directors or a committee thereof, may be
taken without a meeting if a consent in writing, setting forth the action to
be taken, signed by all of the directors, or all the members of the committee,
as the case may be, is filed in the minutes of the proceedings of the Board
or of the committee. Such consent shall have the same effect as a unanimous
vote and may be described as such in any document.
SECTION 18. Advisory Directors. The Board of Directors shall have
the authority to elect a board of outside directors consisting of multiple
members, which number can be increased or decreased by a vote of the
shareholders. The outside directors shall not be shareholders or officers of
the Corporation, and shall not have voting powers, but rather are to act in
the capacity of consulting and advising the Board of Directors at their
invitation.
ARTICLE III
Officers
SECTION 1. Officers. The officers of this Corporation shall consist
of a President, Chairman of the Board, a Secretary and a Treasurer, each of
whom shall be elected by the Board of Directors, and shall serve until their
successors are chosen and qualify. Such other officers and assistant officers
and agents as may be deemed necessary may be elected or appointed by the
Board of Directors from time to time.
Any two or more offices may be held by the same person. The failure
to elect a President, Chairman of the Board, Secretary or Treasurer shall not
affect the existence of this Corporation.
SECTION 2. Duties. The officers of this Corporation shall have the
following duties:
The Chairman shall be the chief executive of the Corporation overseeing
all management and directors and shall preside at all meetings of the
shareholders, unless a Chairman of the Board of Directors has been elected and
is present, and shall preside at all meetings of the Board of Directors. The
President shall be the chief operating officer of the Corporation and shall have
general and active management of the business and affairs of the Corporation
subject to the directions of the Board of Directors, The Chairman of the Board
of Directors shall preside at all meetings of the Board of Directors.
The Secretary shall have custody of, and maintain, all the corporate
records except the financial records. He or she shall have the authority to
execute any and all documents in connection with intellectual property matters,
including, but not limited to, Powers of Attorney, Appointment of Resident
Agent forms and any other documents which are required in connection
with the intellectual property matters of the Corporation, and shall prepare
the minutes of all meetings of the shareholders and Board of Directors, shall
authenticate records of the Corporation; shall send all notices of meetings
out, and shall perform such other duties as may be prescribed by the Board of
Directors or the President.
The Treasurer shall have custody of all corporate funds and financial
records, shall keep full and accurate accounts of receipts and disbursements
and render accounts thereof at the annual meetings of shareholders and
whenever else required by the Board of Directors or the President, and shall
perform such other duties as may be prescribed by the Board of Directors or
the President.
SECTION 3. Removal of officers. Any Officer or agent elected or
appointed by the Board of Directors may be removed by the Board at any time
with or without cause.
Removal of any officer shall be without prejudice to the contract
rights, if any, of the person so removed; however, election or appointment of
an officer or agent shall not of itself create contract rights.
SECTION 4. Resignation of Officers. An officer may resign at any time
by delivering notice to the Corporation. A resignation is effective when the
notice is delivered unless the notice specifies a later effective date. If a
resignation is made effective at a later date and the Corporation accepts the
future effective date, the Board of Directors may fill the pending vacancy
before the effective date if the Board of Directors provides that the successor
does not take office until the effective date.
ARTICLE IV
Stock Certificates
SECTION 1. Issuance. Every holder of shares in this Corporation shall
be entitled to have a certificate, representing all shares to which he is
entitled. The Board of Directors may authorize shares to be issued for
consideration consisting of any tangible or intangible property or benefit to
the Corporation, including cash, promissory notes, services performed, promises
to perform services evidenced by a written contract, or other securities of the
Corporation.
Before the Corporation issues shares, the Board of Directors must
determine that the consideration received for shares to be issued is
adequate.
The determination by the Board of Directors is conclusive insofar as the
adequacy of consideration for the issuance of shares relates to whether the
shares are validly issued, fully paid and nonassessable. When it cannot be
determined that outstanding shares are fully paid and nonassessable, there
shall be a conclusive presumption that such shares are fully paid and
nonassessable if the Board of Directors makes a good faith determination that
there is no substantial evidence that the full consideration for such shares
has not been paid.
When the Corporation receives the consideration for which the Board of
Directors authorized the issuance of shares, the shares issued therefor are
fully paid and nonassessable. Consideration in the form of a promise to pay
money or a promise to perform services is received by the Corporation at the
time of the making of the promise unless the agreement specifically provides
otherwise.
SECTION 2. Form. Certificates representing shares in this Corporation
shall be signed by the President or any vice president and the Secretary or
any assistant secretary and may be sealed with the seal of this Corporation or
a facsimile thereof . The signatures of the President or any vice president
and the Secretary or any assistant secretary may be facsimiles if the
certificate is manually signed on behalf of a transfer agent or registrar other
than the Corporation itself or an employee of the Corporation. In case any
officer who signed or whose facsimile signature has been placed upon such
certificate shall have ceased to be such officer before such certificate is
issued, it may be issued by the Corporation with the same effect as if he were
such officer at the date of its issuance.
If this Corporation is authorized to issue shares of more than one class
or more than one series of any class, every certificate representing shares
issued by this Corporation shall set forth or fairly summarize upon the face or
back of the certificate, or shall state that the Corporation will furnish any
shareholder upon request and without charge a full statement of the designations
preferences, limitations and relative rights of the shares of each class or
series authorized to be issued, and the variations in the relative rights and
preferences between the shares of each series so far as the same have been fixed
and determined, and the authority of the Board of Directors to fix and determine
relative rights and preferences of subsequent series.
Every certificate representing shares which are restricted as to the sale,
disposition or other transfer of such shares shall state that such shares are
restricted as to transfer and shall set forth or fairly summarize upon the
certificate, shall state that the Corporation will furnish to any shareholder
upon request and without charge a full statement of, such restrictions.
Each certificate representing shares shall state upon the face thereof:
the name of the Corporation; that the Corporation is organized under the laws of
the State of Nevada, the name of the person or persons to whom issued; the
number and class of shares; and the designation of the series, if any, which
such certificate represents.
SECTION 3. Transfer of Stock. Transfer of shares of the Corporation
shall be made only on the stock transfer books of the Corporation by the holder
of record thereof or by his legal representative, who shall furnish proper
evidence of authority to transfer, or by his attorney thereunto authorized by
power of attorney duly executed and filed with the Secretary of the Corporation,
and on surrender for cancellation of the certificate of such shares. The person
in whose name shares stand on the books of the Corporation shall be deemed by
the Corporation to be the owner thereof for all purposes.
SECTION 4. Lost, Stolen, or Destroyed Certificates. The Corporation
shall issue a new stock certificate in the place of any certificate previously
issued if the holder of record of the certificate (a) makes proof in affidavit
form that it has been lost, destroyed or wrongfully taken; (b)requests the issue
of a new certificate before the Corporation has notice that the certificate has
been acquired by a purchaser for value in good faith and without notice of any
adverse claim; (c) gives bond in such form as the Corporation may direct to
indemnify the Corporation, the transfer agent and registrar against any claim
that may be made on account of the alleged loss, destruction or theft of a
certificate; and (d) satisfies any other reasonable requirements imposed by the
Corporation.
ARTICLE V
Contracts, Loans, Checks and Deposits
SECTION 1. Contracts. The Board of Directors may authorize any
officer or officers, agent or agents, to enter into any contract or execute
and deliver any instrument in the name of and on behalf of the Corporation,
and such authority may be general or confined to specific instances.
SECTION 2. Loans. No loans shall be contracted on behalf of the
Corporation and no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the Board of Directors. Such authority may be
general or confined to specific instances.
SECTION 3. Checks, Drafts, etc. All checks, drafts or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the Corporation shall be signed by such officer or officers, agent or
agents, of the Corporation and in such manner as shall from time to time be
determined by resolution of the Board of Directors.
SECTION 4. Deposits. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the Corporation
in such banks, trust companies or other depositories as the Board of Directors
may select.
ARTICLE VI
Books and Records
SECTION 1. Books and Records. The Corporation shall keep as
permanent records, in accordance with applicable law, minutes of all meetings
of its shareholders and Board of Directors, a record of all actions taken by the
shareholders or Board of Directors without a meeting, a record of all actions
taken by a committee of the Board of Directors in place of the Board of
Directors on behalf of the Corporation, and such books or records and accounts
as may be necessary for the proper conduct of the business of the Corporation.
SECTION 2. Inspection of Books and Records. The Board of Directors
and, unless otherwise specified by the Board, the Chairman of the Board and
the President shall, subject to applicable law, have the sole power to determine
from time to time whether and to what extent and at what times and places and
under what conditions and regulations the accounts, books and records of the
Corporation, or any of them, shall be open to the inspection of the shareholders
and, except as specifically conferred by law, no shareholder shall have, any
right to inspect any account, book, record or document of the Corporation,
unless and until authorized to do so by the Board or, unless otherwise specified
by the Board, by order of the Chairman of the Board or by the President.
ARTICLE VII
Distributions, Share Dividends and Share Options
SECTION 1. Distributions. The Board of Directors of this Corporation
may, from time to time, authorize and the Corporation may pay distributions to
the shareholders. A distribution is a direct or indirect transfer of money or
other property (except the Corporation's own shares) or incurrence of
indebtedness by the Corporation to or for the benefit of the shareholders in
respect of any of its shares. A distribution may be in the form of a declaration
or payment of a dividend; a purchase, redemption, or other acquisition of
shares; a distribution of indebtedness; or otherwise.
No distribution may be made if, after giving it effect:
(a) the Corporation would not be able to pay its debts as they become
due in the usual course of business; or
(b) the Corporation's total assets would be less than the sum of its
total liabilities plus the amount that would be needed, if the Corporation
were to be dissolved at the time of the distribution, to satisfy the
preferential rights upon dissolution of shareholders whose preferential rights
are superior to those receiving the distribution.
If the Board of Directors does not fix the record date for determining
shareholders entitled to a distribution (other than one involving a purchase,
redemption, or other acquisition of the Corporation's shares), it is the date
the Board of Directors authorizes the distribution.
The Board of Directors may base a determination that a distribution is
not prohibited either on financial statements prepared on the basis of
accounting practices and principles that are reasonable in the circumstances or
on a fair valuation or other method that is reasonable in the circumstances. In
the case of any distribution based upon such a valuation, each such
distribution shall be identified as a distribution based upon current valuation
of assets, and the amount per share paid on the basis of such valuation shall be
disclosed to the shareholders concurrent with their receipt of the distribution.
SECTION 2. Share Dividends. Unless the Certificate of Incorporation
provides otherwise, shares may be issued pro rata and without consideration to
the Corporation's shareholders or to the shareholders of one or more classes
or series. An issuance of shares under this section is a share dividend.
Shares of one class or series may not be issued as a share dividend in
respect of shares if another class or series unless:
(a) the Certificate of Incorporation so authorizes;
(b) a majority of the votes entitled to be cast the class or series
to be issued approves the issue; or
(c) there are no outstanding shares of the class or series to be
issued.
If the Board of Directors does not fix the record date for determining
shareholders entitled to a share dividend, it is the date the Board of Directors
authorizes the share dividend.
SECTION 3. Share Options. Unless the Certificate of Incorporation
provides otherwise, the Corporation may issue rights, options or warrants for
the purchase of its shares. The Board of Directors shall determine the terms
upon which the rights, options or warrants are issued, their form and content,
and the consideration for which the shares are to be issued.
The terms and conditions of stock rights and options which are created
and issued by the Corporation, or its successor, and which entitle the holders
thereof to purchase from the Corporation shares of any class or classes,
whether authorized but unissued shares, treasury shares or shares to be
purchased or acquired by the Corporation, may include restrictions or conditions
that preclude or limit the exercise, transfer, receipt or holding of such rights
or options by any person or persons, including any person or persons owning or
offering to acquire a specified number or percentage of the outstanding common
shares or other securities of the Corporation, or any transferee or transferees
of any such person or persons, or that invalidate or void such rights or options
held by any such person or persons or any such transferee or transferees.
ARTICLE VIII
Corporate Seal
The Board of Directors shall provide a corporate seal which shall have
inscribed thereon the name of the Corporation and such other words and figures
and in such design as may be prescribed by the Board of Directors, and may be
facsimile, engraved, printed or an impression, or other type seal.
ARTICLE IX
Fiscal Year
The fiscal year of the Corporation shall, by resolution, be determined
by the Board of Directors.
ARTICLE X
Indemnification of Directors, Officers, Employees and Agents
SECTION 1. Action Against Party Because of Corporate Position. The
Corporation may indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed claim, action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of the Corporation) by reason of the fact that he
is or was a director, officer, employee or agent of the Corporation, or is or
was serving at the request of the Corporation as a director, partner, officer,
employee or agent of another Corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees inclusive of any
appeal), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such claim, action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Corporation, and with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct unlawful. The termination of any claim, action, suit or proceeding by
judgment, order, settlement, conviction or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his
conduct was unlawful.
SECTION 2. Action by or in the Right of Corporation. The Corporation
may indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed claim, action or suit by or in the
right of the Corporation to procure a judgment in its favor by reason of the
fact that he is or was a director, officer, employee or agent of the Corporation
or is or was serving at the request of the Corporation as a director, partner,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise against expenses (including attorneys' fees inclusive
of any appeal) actually and reasonably incurred by him in connection with the
defense or settlement of such claim, action or suit if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of the Corporation and except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable for negligence or misconduct in the performance of his
duty to the Corporation unless and only to the extent that a court of competent
jurisdiction (the "Court") in which such claim, action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court shall deem proper
SECTION 3. Reimbursement if Successful. To the extent that a director,
officer, employee or agent of the Corporation has been successful on the merits
or otherwise in defense of any claim, action, suit or proceeding referred to in
Sections 1 or 2 of this Article X, or in defense of any claims, issue or matter
therein, he shall be indemnified against expenses (including attorneys fees
inclusive of any appeal) actually and reasonably incurred by him in connection
therewith, notwithstanding that he has not been successful (on the merits or
otherwise ) on any other claim, issue or matter in any such claim, action,
suit or proceeding.
SECTION 4. Authorization. Any indemnification under Sections 1 and 2
of this Article X (unless ordered by a court) shall be made by the Corporation
only as authorized in the specific case upon a determination that indemnificatio
of the director, officer, employee or agent is proper in the circumstances
because he has met the applicable standard of conduct set forth in Sections 1
and 2. Such determination shall be made (a) by the Board of Directors by a
majority vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding, or (b) if such a quorum is not obtainable, or, even
if obtainable, a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion, or (c) by the shareholders.
SECTION 5. Advanced Reimbursement. Expenses incurred in defending a
civil or criminal action, suit or proceeding may be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding as
authorized by the Board of Directors in the specific case upon receipt of an
undertaking by or on behalf of the director, officer, employee or agent to repay
such amount unless it shall ultimately be determined that he is entitled to be
indemnified by the Corporation as authorized in this Article.
SECTION 6. Indemnification Not Exclusive. The indemnification provided
by this Article shall be deemed exclusive of any other rights to which those
indemnified may be entitled under any statute, rule of law, provision of the
Certificate of Incorporation, by-law, agreement, vote of shareholders or
disinterested directors, or otherwise, both as to action in his official
capacity and as to action in another capacity, while holding such office, and
shall continue as to a person who has ceased to be a director, officer, employee
or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person. Where such other provision provides broader
rights of indemnification than these by-laws, said other provision shall control
SECTION 7. Insurance. The Corporation shall have power to purchase
and maintain insurance on behalf of any person who is or was a director, officer
employee or agent of the Corporation, or is or was serving at the request of
the Corporation as a director, partner, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the Corporation would have the
power to indemnify him against such liability under the provisions of this
Article.
ARTICLE XI
Amendment
Except as otherwise provided herein, these By-laws may be altered,
amended or repealed or new by-laws may be adopted by the shareholders or
by the Board of Directors at any regular meeting of the shareholders or of the
Board of Directors or at any special meeting of the shareholders or of the
Board of Directors if notice of such alteration, amendment, repeal or adoption
of new By-laws be contained in the notice of such special meeting; provided,
however, that in the case of amendments by shareholders, notwithstanding any
other provisions of those By-laws or any other provision of law which might
otherwise permit a lesser vote or no vote, but in addition to any affirmative
vote of the holders of any particular class or series of the capital stock
required by law, the Certificate of Incorporation or these By-laws, the
affirmative vote of the holders of at least 66 2/3% of all then outstanding
shares of voting stock of the Corporation, voting together as a single class,
shall be required to alter, amend or repeal any provision of these By-laws.
ARTICLE XII
Emergency By-laws
SECTION 1. Emergency By-laws. The Board of Directors may adopt
by-laws to be effective only in an emergency. An emergency for the purposes of
this section if a quorum of the Corporation's directors cannot readily be
assembled because of some catastrophic event. The emergency by-laws, which
are subject to amendment or repeal by the shareholders may make all
provisions necessary for managing the Corporation during an emergency,
including:
(a)procedures for calling a meeting of the Board of Directors;
(b)quorum requirements for the meeting; and
(c)designation of additional or substitute directors.
SECTION 2. Line of Succession. The Board of Directors, either before,
or during such emergency, may provide, and from time to time modify, lines of
succession in the event that during such emergency any or all officers or agents
of the Corporation are for any reason rendered incapable of discharging
their duties.
SECTION 3. Governing By-laws. All provisions of these By-laws
consistent with the emergency by-laws remain effective during the emergency.
The emergency by-laws are not effective after the emergency ends.
SECTION 4. Effect of Corporation Action. Corporate action taken in
good faith in accordance with the emergency are subject to amendment or
repeal by the shareholders, may make all provisions necessary for managing the
Corporation during an emergency, including:
(a) procedures for calling a meeting of the Board of Directors;
(b) quorum requirements for the meeting; and
(c) designation of additional or substitute directors.
SECTION 2. Line of Succession. The Board of Directors, either before
or during such emergency, may provide, and from time to time modify, lines of
succession in the event that during such emergency any or all officers or agents
of the Corporation are for any reason rendered incapable of discharging their
duties.
SECTION 3. Governing By-laws. All provisions of these By-laws
consistent with the emergency by-laws remain effective during the emergency.
The emergency by-laws are not effective after the emergency ends
SECTION 4. Effect of Corporate Action. Corporate action taken in
good faith in accordance with the emergency by-laws;
(a) binds the Corporation; and
(b) may not be used to impose liability on a corporate director,
officer, employee or agent.
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"), Furst
Enterprises, Inc-, a Utah corporation ("Furst"), and Robert A.
Furstenau, an individual ("Furstenau").
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) Furst owns all the stock of Furst Construction
Company, Inc. which engages in commercial construction
projects in the State of Utah and elsewhere; and
d) Txon and Furst have negotiated the following terms
and conditions for Txon's acquisition of Furst.
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 FURST
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). Furstenau 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 Furst (the "Furst Shares"). The transfer of Furst
Shares by Furstenau 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, Furstenau shall execute such
additional instruments and take such other action as Txon may
reasonably request, without cost to Furstenau in order to more
effectively sell, transfer and assign clear titled and
ownership in the Furst 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 Furst
and Furst will be a wholly owned subsidiary of Txon.
1.02 Payment for Furst Shares. In return for the transfer of
Furst Shares, Txon shall: (a) pay Furstenau Twenty Million
Dollars ($20,000,000) on the Closing Date in accordance with
the terms set forth below; and (b) issue to Furstenau 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 Furstenau the Twenty Million Dollars ($20,000,000)
on the Closing Date by: (a) paying Furstenau 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
Furstenau 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
Furstenau in certified funds.
1.03 Transfer of Txon Common Stock to be Tax Neutral. In
addition tot he foregoing Txon will loan Furstenau 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 Furstenau 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 Furstenau and Txon are joint signatories and at an
institution acceptable to Furstenau certified funds in an
amount sufficient to pay the estimated additional tax
liability Furstenau 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 Furstenau immediately on demand. At such
time as Furstenau sells all or any part of the Txon Common
Stock issued to Furstenau on the Closing Date, Furstenau will
reimburse Txon for any tax payment Txon has made on
Furstenau's 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 Furstenau 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) Furstenau's unpaid tax liability for any income
received by Furstenau 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, Furstenau's reimbursement
obligation to Txon will be canceled and Furstenau shall have
no further obligation to reimburse Txon for taxes Txon has
paid on Furstenau's behalf.
1.04 Basis for Purchase Price. The purchase price for
acquisition of the Furst Shares set forth above is based upon
Furst's financial condition as of the date of this Agreement
and notupon any projected increase in revenues or business.
Furst 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 Furst 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 Furst 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 Furstenau 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
Furstenau 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 Furstenau; and
(xi) A minimum of Fourteen Million Dollars ($14,000,000) in certified
funds payable to Furstenau or his designees.
In addition to the above deliveries, Txon shall take all steps and actions
as Furst and Furstenau may reasonably request or as may otherwise be reasonably
necessary to consummate the transactions contemplated hereby.
(b) Furst Deliveries. Subject to fulfillment or waiver of
the conditions set forth
in Article V, Furst and/or Furstenau 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 Furst 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 Furst executing this Agreement
and any other
document delivered pursuant hereto on behalf of Furst;
(iii) Copies of resolutions of the board of directors and sahreholders
of Furst authorizing the execution and performance of this Agreement and
contemplated transactions, certified by the secretary or an assistant
secretary of Furst as of the Closing Date;
(iv) The certificate contemplated by Section 5.03, executed by the chief
operating officer of Furst;
(v) The certificate contemplated by Section 5.05, dated the Closing Date,
signed by the chief operating officer of Furst;
(vi) An Employment Agreement identical in form to Exhibit "B" duly executed
by Furstenau; and
(vii) A Voting Trust Agreement identical in form to Exhibit
"D" signed by Furstenau.
In addition to the above deliveries, Furst 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 Furst 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) Furst 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 Furst
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 Furst; (iii) Furst 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 Furstenau plus two
million five hundred
thousand dollars ($2,500,000) in additional operating capital
for Txon and Furst
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 Furstenau or action of the board of directors of Furst 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) Furst or Furstenau 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
Furstenau plus two million five hundred thousand dollars
($2,500,000) in
additional operating capital for Txon and Furst 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 Furst, 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 Furst
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 Furst 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 Furst
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 Furst
to close.
ARTICLE III
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF FURST
As an inducement to, and to obtain the reliance of Txon, Furst
represents and
warrants as follows:
3.01 Organization. Furst 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 Furst.
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 Furst's 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. Furst 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
Furst have authorized and approved the execution, delivery,
and performance of
this Agreement and the transactions contemplated hereby;
subject to the
approval of Furstenau and compliance with state and federal
corporate and
securities laws.
3.03 Capitalization. The authorized capitalization of
Furst consists of 50,000
shares of common stock of which 3,255.1 shares are issued and
outstanding.
All issued and outstanding shares of Furst 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 Furst.
3.04 Financial Statements.
(a) included in Schedule 3.04 are the audited balance
sheet of Furst 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, Banyard, independent certified public accountants.
Prior to the
Closing Date, Furst shall deliver the compiled balance sheet
of Furst 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 Furst 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 Furst present fairly, as of their
respective dates, the
financial position of Furst. Furst 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 Furst 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 Furst as of their
respective dates and for the respective periods covered thereby.
(c) Furst 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.
Furst 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 Furst, 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 Furst 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
Furst's 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 Furst with respect to
all material
compensation paid to employees of Furst 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
Furst's 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.
Furst 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 Furst,
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 Furst. There are no outstanding
agreements or waivers
extending the Statutory period of limitation applicable to any
tax return of Furst.
3.05 Outstanding Warrants and Options. Furst has no
issued warrants or
options, calls, or commitments of any nature relating to
the authorized and
unissued Furst Stock.
3.06 Disclosure. No representation or warranty by Furst
in this Agreement
and no statement contained in the schedules delivered by Furst
pursuant hereto
contains any untrue or misleading statement of a material fact
or omits any fact
necessary to make them not misleading. Furst shall cause the
schedules
delivered by Furst 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 Furst 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 Furst or (ii) any
damage, destruction, or loss to Furst materially and adversely
affecting the
business, operations, properties, assets, or conditions of
Furst. (b) Furst 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 Furst; (iv) made any material change in its method
of accounting.
(c) Furst 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 Furst 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 Furst, 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 Furst, 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 Furst.
3.08 Title and Related Matters. Except as provided herein
or disclosed in
the most recent Furst balance sheet and the notes thereto,
Furst 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 Furst 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 Furst 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 Furst 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 Furst, threatened by or against Furst
or adversely
affecting Furst, at law or in equity, before any court or
other governmental
agency or instrumentality, domestic or foreign, or before any
arbitrator of
any kind. Furst 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, Furst 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 Furst, 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 Furst 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 Furst is a party
or to which any of its
properties or operations are subject.
3.12 Governmental Authorizations. Furst 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
Furst of this Agreement and the consummation by Furst of the
transactions
contemplated hereby.
3.13 Compliance With Laws and Regulations. Furst 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 Furst or except to the extent that noncompliance
would not result in
the occurrence of any material liability for Furst. To the
best knowledge of
Furst, 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. Furst owns all stock of Furst
Construction Co., Inc. which
in turn owns all stock in precision Steel, Inc., both Utah
corporations.
3.15 Furst Schedules. Furst has delivered to Txon the
following schedules,
which are collectively referred to as the "Furst 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 Furst as complete, true, and accurate:
(a) A schedule including copies of the articles of
incorporation and bylaws of
Furst 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 Furst 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 Furst since the
most recent Furst 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 Furst
Schedules by
Sections 3.01 through 3.14.
Furst shall cause the Furst 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 Furst Schedules, certified in the same manner as the
original Furst
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 Furst
nor Furstenau
have made any representations and warranties of any kind
except those
contained in this Agreement.
ARTICLE IV
CONDITIONS PRECEDENT TO OBLIGATIONS OF FURST
The obligations of Furst and Furstenau 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.
Furst 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. Furst 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. Furst 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. Furst shall have received such further
documents,
certificates, or instruments relating to the transactions
contemplated hereby
as Furst 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
Furst and
obtain operating capital for Furst 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. Furst shall call and hold a
meeting of its
stockholders, or obtain through a majority written consent of
its stockholders,
whereby the stockholders of Furst authorize and approve this
Agreement and
the transactions contemplated hereby.
5.02 Furst Stockholders. Holders of all of the issued
anc, outstanding Furst
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 Furst and obtain
operating capital
for Furst and Txon and to find the account contemplated by
Section 1.03.
5.04 Accuracy of Representations. Any representations and
warranties
made by Furst 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 Furst shall have performed
or complied with
all covenants and conditions required by this Agreement to be
performed or
complied with by Furst prior to or at the closing. Txon shall
be furnished with a
certificate, singed by a duly authorized officer of Furst 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 Furst to the effect that no litigation, proceeding,
investigation, or inquiry is
pending or, to the best knowledge of Furst, 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 Furst's own
documents, the
certificate shall represent, to the best knowledge of the
officer, that:
(a) This agreement has been duly approved by Furst's board
of directors and
stockholders and has been duly executed and delivered in the
name and on
behalf of Furst by its duly authorized officers pursuant to,
and in compliance
with, authority granted by the board of directors of Furst
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 Furst 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 Furst 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 Furst, wherein an
unfavorable
decision, ruling, or finding would have an adverse affect on
the financial condition
of Furst, the operation of Furst, or the acquisition and
reorganization
contemplated herein, or any material agreement or instrument
by which Furst is
bound or would in any way contest the existence of Furst.
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 Furst, nor shall any, event have occurred which,
with the lapse of
time or the giving of notice, may preclude Furst 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 Furst 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 Furst
(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
Furst pursuant hereto or as permitted or contemplated by this
Agreement, Txon
and Furst 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 Furst 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 Furst or
Txon securities without
the prior approval of the other party.
(c) Nothing contained herein shall be construed to
prohibit Furst 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, Furst 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 Furst or Txon and will
finish the other party
with such additional financial and other information as to the
business and
properties of Furst or Txon as each party shall from time to
time reasonably
request.
6.03 Indemnification by Furst. Subject to the other
provisions in this
Agreement, Furst 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 Furst 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 Furst's officers
and directors,
have no obligations or liabilities in connection with those
transactions. Txon will
indemnify and hold harmless Furstenau, Furst, the Furst
Stockholders, Furst's
directors and officers, and each person, if any, who controls
Furst 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, Furst 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 Furstenau or Furst 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 Furst
understand
and agree that the consummation of this Agreement including
the issuance of the
Txon Common Stock to Furst in exchange for the Furst Shares as
contemplated
hereby, constitutes the offer and sale of securities under the
Securities Act and
applicable state statutes. Txon and Furst 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 Furst 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 Furst Stockholders have received and read the
Agreement and
understand the risks related to the consummation of the
transactions herein
contemplated.
(iii) Furst Stockholders have such knowledge and
experience in business and
financial matters that they are capable of evaluating each
business.
(iv) The Furst 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 Furst 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 Furst 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 Furst 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 Furst 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 Furst 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 Furst 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) Furstenau 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 Furstenau 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 Furstenau 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 Furstenau 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, Furst
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 Furstenau 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 Furst and their respective
counsel may
reasonably request in connection with reliance on exemptions
from registration
under such securities laws.
(d) Furstenau 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 Furst Shares. In connection with the
acquisition of the
Furst Shares, Txon represents, covenants, warrants and agrees
as follows:
(a) The Furst Shares are investment stock and have not
been registered under
any federal or state securities law. Txon is acquiring the
Furst 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 Furst Shares and has
no present
intention of dividing the Furst Shares to be received with
others or of reselling or
otherwise disposing of any, portion of the Furst 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 Furst Shares may, under certain circumstances, be
inconsistent with this
exemption and may make Furst 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
Furst 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 Furst 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 Furstenau
or Furst have made any warranties or representations as to the
legal or tax
affects, if any, involved in Txon's purchase of the Furst 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 Furst,
Furst's business activities, and Furst's 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 Furst Shares.
(e) All information which Txon has provided to Furst or to
its representatives
concerning its suitability and intent to hold Furst 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 Furst 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 Furst
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
Furstenau. Management of
Txon agree to support Furstenau at all elections of directors
for a period of five
years following the closing of this transaction. Furstenau
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 Furstenau agree to enter into the
Employment Agreement
attached hereto as Exhibit "B." In addition, Txon agrees to
execute the
Employment Agreement with Mr. Johansen attached hereto as
Exhibit "C" in the
event that a copy of the Employment Agreement executed by Mr.
Johansen 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 Furst as
identified by
Furstenau 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 Furst to provide to its employees all employee
benefits currently
enjoyed by Furst 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:
Stephanie Harnicher, President Victor D. Schwarz, Esq
Txon International Development 3090 East 3300 South,
# 400
Corporation Salt Lake
City, Utah 84109
6322 South 3000 East, Suite 320 Fax: (801) 4636085
Salt Lake City, Utah 84121
Fax:(801) 7334637
If to Furst, to: With
copies to:
Robert A. Furstenau, President David Wahlquist, Esq
Furst Construction, Inc. Kirton &
McConkie
515 west 2100 South 60 E. South
Temple, Suite 1800
Salt Lake City, Utah 84111 Salt Lake City,
Utah 84111
Fax: (801) 9720390 Fax: (801)
3214893
If to Furstenau, to: With
copies to:
Robert A. Furstenau David
Wahlquist, Esq.
7579 Mary Esther Circle Kirton & McConkie
Salt Lake City, Utah 84093 60 E. South
Temple, Suite 1800
Fax: (801) 9446936 Salt Lake
City, Utah 84111
Fax: (801) 3214893
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
Furst 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 FURST ENTERPRISES,
INC.
A Nevada Corporation A Utah
Corporation
BY: /s/ Stephanie Harnicher By: /s/
Robert A. Furstenau
Stephanie Harnicher, President Robert A.
Furstenau, President
/s/ Robert A. Furstenau
Robert A. Furstenau, Individually
STATE OF UTAH )
ss.
COUNTY OF SALT LAKE )
On this 26th day of April 1999, personally appeared before
me Stephanie
Harnicher, 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 Stephanie Harnicher acknowledged to me that
said corporation
executed the same.
/s/ Colleen L. Wallace
Notary Public
STATE OF UTAH )
ss.
COUNTY OF SALT LAKE )
On this 26th day of April 1999, personally appeared before
me Robert A
Furstenau, whose identify is personally known to me and who be
by me duly
sworn, did say that he is the President of Furst Enterprises
and that said
document was signed by him on behalf of said corporation by
authority of its
bylaws, and said Robert A. Furstenau acknowledged to me that said
corporation executed the same.
/s/ Colleen L. Wallace
Notary Public
STATE OF UTAH )
ss.
COUNTY OF SALT LAKE )
On this 26th day of April 1999, personally appeared before me
Robert A
Furstenau, whose identify is personally known to me and who be
by me duly
sworn, did say that he signed the foregoing document.
/s/ Colleen L. Wallace
Notary Public
