<PAGE> 1
EXHIBIT 10
ORDER LIFTING SECTION 5.0 SUSPENSION
<PAGE> 2
[STATE SEAL]
[STATE SECURITIES BOARD LETTERHEAD]
SSB DOCKET NO. 00-014
IN THE MATTER OF )
TBX RESOURCES, INC. AND ) Order No. SSO-1401
TIMOTHY PAUL BURROUGHS )
TO: Timothy Paul Burroughs TBX Resources, Inc.
TBX Resources, Inc. 12300 Ford Road, Suite 265
12300 Ford Road, Suite 265 Dallas, Texas 75234-7273
Dallas, Texas 75234-7273
ORDER LIFTING SECTION 5.0 SUSPENSION
On July 27, 2000, TBX Resources, Inc. ("TBX") and Timothy Paul
Burroughs ("Burroughs"), as a condition to the Securities Commissioner of the
State of Texas ("Securities Commissioner") lifting the ORDER OF SUSPENSION OF
EXEMPTION previously issued on May 17, 2000 in SSB Docket No. 00-014, Order No.
SUS-1395, styled "IN THE MATTER OF TBX RESOURCES, INC. AND TIMOTHY PAUL
BURROUGHS," filed an Undertaking with the Securities Commissioner, wherein they
agreed to comply with certain conditions described therein. A copy of this
Undertaking is attached hereto and incorporated herein by reference as Exhibit
A.
It is therefore ORDERED that the above-referenced ORDER OF SUSPENSION
OF EXEMPTION is hereby LIFTED and is no longer in force and effect.
It is further ORDERED that TBX and Burroughs SHALL COMPLY with the
terms of the attached Undertaking.
SIGNED AND ENTERED BY THE SECURITIES COMMISSIONER this 31st day of
July, 2000.
/s/ DENISE VOIGT CRAWFORD
DENISE VOIGT CRAWFORD
Securities Commissioner
ORDER LIFTING SECTION 5.O ORDER / IN THE MATTER OF TBX RESOURCES, INC., et
al. / PAGE 1
<PAGE> 3
EXHIBIT A
UNDERTAKING FILED WITH THE
SECURITIES COMMISSIONER
OF THE STATE OF TEXAS
<PAGE> 4
[STATE SECURITIES BOARD LETTERHEAD]
--------------------------------
IN THE MATTER OF
TBX RESOURCES, INC. AND
TIMOTHY PAUL BURROUGHS
--------------------------------
TO: Timothy Paul Burroughs
TBX Resources, Inc.
12300 Ford Road, Suite 265
Dallas, Texas 75234-7273
TBX Resources, Inc.
12300 Ford Road, Suite 265
Dallas, Texas 75234-7273
UNDERTAKING FILED WITH
THE SECURITIES COMMISSIONER OF THE STATE OF TEXAS
Comes Now, TBX Resources, Inc. ("TBX"), by and through its President,
Timothy Paul Burroughs, and Timothy Paul Burroughs, ("Burroughs"),
individually, who, as a condition to the Securities Commissioner of the State
of Texas ("Securities Commissioner") lifting the Section 5.0 Order of
Suspension previously issued on May 17, 2000 in SSB Docket No. 00-014, Order No
SUS-1395, styled "IN THE MATTER OF TBX RESOURCES, INC. AND TIMOTHY PAUL
BURROUGHS", make the following representations to the Securities Commissioner:
1. On July 27, 2000, TBX entered into a Lock-up Agreement with Burroughs and
the Burroughs Family Trust (together, the "Shareholders"), wherein the
Shareholders agreed not to sell their stock in TBX for a reasonable period
of time, in order to facilitate development of an orderly secondary market
for TBX's securities, to prevent their stock from being sold in any pattern
of trading that might have the appearance of improper trading activity, and
to avoid the appearance that the Shareholders are profiting from their
investment in TBX at the expense of other shareholders. A copy of this
Agreement is attached hereto and incorporated herein by reference as
Exhibit 1. TBX, Burroughs, and the Burroughs Family Trust hereby
<PAGE> 5
agree that they will abide by the provisions of the attached Lock-up
Agreement for a period of 180 days from the effective date of this
Undertaking.
2. TBX's Board of Directors will be expanded to three (3) persons. Within
five (5) days from the effective date of this Undertaking, Burroughs,
as the sole current Board member, will nominate and elect John O.
Clayton and Joe A. Ayers ("initial independent directors") to fill the
other two Board positions. The Board will elect one of the two new
Board members to be Chairman of the Board.
3. Within ten (10) days from the effective date of this Undertaking, the
by-laws of TBX shall be amended to provide that a majority of the
Board of Directors shall be independent directors. TBX and Burroughs
represent that they shall contemporaneously submit such amended
by-laws to the Texas State Securities Board.
4. On July 24, 2000, TBX and Burroughs filed a Form 8-K with the
Securities and Exchange Commission, wherein TBX and Burroughs
disclosed the issuance of the above-referenced Section 5.0 Order of
Suspension by the Securities Commissioner, and the execution of a
search warrant on the offices of TBX by the Federal Bureau of
Investigation on May 17, 2000. A copy of this Form is attached hereto
and incorporated herein by reference as Exhibit 2.
5. TBX and Burroughs represent to the Securities Commissioner that within
fourteen (14) days from the effective date of this Undertaking, the
Form 10-SB filing which was filed with the Securities and Exchange
Commission to register shares of TBX's common stock pursuant to the
provisions of the Securities and Exchange Act of 1934 ("Exchange Act")
and became effective on July 8, 2000, shall be amended to disclose
this Undertaking, the exhibits thereto, and the Order Lifting Section
5.0 Suspension.
6. TBX and Burroughs further represent to the Securities Commissioner
that, for a period of two years from the effective date of this
Undertaking, they shall disclose any material, non-confidential
information of which they are advised in writing arising from any
ongoing governmental investigations or inquiries regarding TBX or its
principals, or any other material information, in a letter to
shareholders of record and by such other means as TBX may deem
appropriate, and shall contemporaneously submit such letter or other
means of disclosure to the Texas State Securities Board.
UNDERTAKING/IN THE MATTER OF TBX RESOURCES, INC. AND TIMOTHY PAUL
BURROUGHS/PAGE 2
<PAGE> 6
TBX Resources, Inc.
By: /s/ TIMOTHY PAUL BURROUGHS
---------------------------------
Timothy Paul Burroughs, President
Date: July 27, 2000
--------------------------------
/s/ TIMOTHY PAUL BURROUGHS
-------------------------------------
Timothy Paul Burroughs, Individually
July 27, 2000
-------------------------------------
Date
UNDERTAKING/IN THE MATTER OF TBX RESOURCES, INC. AND TIMOTHY PAUL BURROUGHS/
PAGE 3
<PAGE> 7
ACKNOWLEDGMENT
On the 27th day of July, 2000, Timothy Paul Burroughs personally appeared
before me and voluntarily executed the foregoing Undertaking for the purposes
stated therein.
[CHRISTINE COLEY] /s/ CHRISTINE COLEY
[Notary Public, State of Texas] ------------------------
[My Commission Expires 12-29-01] Notary Public in and for
the State of Texas
[affix notary seal here]
My commission expires on 12-29-01
ACKNOWLEDGMENT
On the 27th day of July, 2000, TBX Resources, Inc., by and through its
President, Timothy Paul Burroughs, personally appeared before me and
voluntarily executed the foregoing Undertaking for the purposes stated therein,
and Timothy Paul Burroughs did duly acknowledge to me that he was authorized to
execute the same on behalf of TBX Resources, Inc.
[CHRISTINE COLEY] /s/ CHRISTINE COLEY
[Notary Public, State of Texas] ------------------------
[My Commission Expires 12-29-01] Notary Public in and for
the State of Texas
[affix notary seal here]
My commission expires on 12-29-01
UNDERTAKING/IN THE MATTER OF TBX RESOURCES, INC. AND TIMOTHY PAUL
BURROUGHS/PAGE 4
<PAGE> 8
EXHIBIT 1
LOCK-UP AGREEMENT
<PAGE> 9
LOCK-UP AGREEMENT
This AGREEMENT is entered on July 27, 2000, between TBX Resources,
Inc. ("the Company") and Timothy Burroughs and the Burroughs Family Trust
(together, the "Shareholders").
RECITALS
A. The Shareholders together own 6,700,000 shares of the Company's common
stock. The Company has 100,000,000 shares of common stock authorized
and 15,776,804 common shares outstanding on the date of this
Agreement.
B. Each of the Shareholders are willing to agree not to sell their
Company stock for a reasonable period of time, in order to facilitate
development of an orderly secondary market for the Company's
securities, to prevent their stock from being sold in any pattern of
trading that might have the appearance of improper trading activity,
and to avoid the appearance that the Shareholders are profiting from
their investment in the Company at other shareholders' expense.
NOW THEREFORE, the parties agree as follows:
1. Restriction on Sale of Stock: The Shareholders will not, for a period
ending 180 days from the effective date of the Undertaking filed with
the Securities Commissioner of the State of Texas on July 27, 2000,
offer, sell, assign, transfer, encumber, contract to sell, grant an
option to purchase, or otherwise sell or dispose of any shares of the
Company's stock, any options or warrant to purchase any shares of the
Company's stock, or any securities convertible into or exchangeable
for shares of the Company's stock, owned directly by the Shareholders
or with respect to which the Shareholders have the power of
disposition, otherwise than in a Permitted Transfer, as defined in
Section 2. The Shareholders agree and consent to the entry of stop
transfer instructions with the Company's transfer agent against the
transfer of shares of the Company's stock held by the Shareholders
except in compliance with the foregoing restrictions.
2. Permitted Transfers: A "Permitted Transfer" shall mean: (i) a gift
made by a Shareholder to his or her spouse, natural or adoptive
children or stepchildren, and/or one or more charitable, educational
or religious organizations, each of whom agrees in writing to be bound
by this agreement; [or] (ii) a transfer made by a Shareholder to a
trust established for the benefit of the spouse and/or natural or
adoptive children or stepchildren of a Shareholder, which agrees in
writing to be bound by this Agreement.
3. After Acquired Shares: The restrictions on transfer contained in
Section 1 apply, until their expiration, to all shares and securities
convertible into shares of the Company which are owned or controlled
by the Shareholders, including shares and
<PAGE> 10
convertible securities that the Shareholders may acquire after the
execution of this Agreement.
4. Expiration on Occurrence of Certain Events: Notwithstanding any
provision in this Agreement to the contrary, the restrictions on
transfer contained in this Agreement shall expire and be of no further
force and effect, and the Company shall withdraw or cancel any stop
transfer instructions respecting the Shareholders' stock upon:
a. the Company's executing an agreement concerning the sale of
all or substantially all of its assets to an unaffiliated
purchaser; [or]
b. a decision by the Company to terminate its business and
liquidate its assets.
5. Statement on Certificates: The Company and the Shareholders agree that
all certificates representing the Shareholders' shares of the Company
which at any time are subject to the provisions of this Agreement
shall be endorsed with the following legend:
"The Shares represented by this Certificate are subject to
certain restrictions against transfer under the terms of a
Lock-Up Agreement entered into by this Company and the
Shareholder, effective as of July 27, 2000, a copy of which
is on file at the Company's principal place of business or
registered office. A copy of such Agreement will be furnished
to the holder hereof without charge upon written request to
the Company at its principal place of business or registered
office."
Under no circumstances shall any sale or other transfer of any Shares
subject to this Agreement be valid until the proposed transferee
thereof shall have executed and become a party to this Agreement and
thereby shall have become subject to all of the provisions hereof.
6. Miscellaneous:
a. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas, applicable to
agreements made and to be performed in Texas.
b. This Agreement contains a complete statement of all the
arrangements between the Company and the Shareholders with
respect to its subject matter, supersedes all previous
agreements, written or oral, among them relating to its
subject matter and cannot be modified, amended or terminated
orally. Amendments may be made to this Agreement at any time
if mutually agreed upon in writing, provided, that no
amendment which has the effect of reducing the Restrictions
contained in Section 1 shall be effective unless the
Securities Commissioner of the State of Texas consents in
writing to such amendment.
LOCK-UP AGREEMENT/IN THE MATTER OF TBX RESOURCES, INC. AND TIMOTHY PAUL
BURROUGHS/PAGE 2
<PAGE> 11
c. Any amendment, notice or other communication under this Agreement
shall be in writing and shall be considered given when received and
shall be delivered personally or mailed by Certified Mail, Return
Receipt Requested, to the parties at their respective addresses set
forth below (or at such other address as a party may specify by notice
to the other):
TBX Resources, Inc. Timothy Burroughs
12300 Ford Road, #265 12300 Ford Road, #265
Dallas, Texas 75234 Dallas, Texas 75234
Burroughs Family Trust
12300 Ford Road, #265
Dallas, Texas 75234
d. The failure of a party to insist upon strict adherence to any term of
this Agreement on any occasion shall not be considered a waiver or
deprive that party of the right thereafter to insist upon strict
adherence to that term or any other term of this Agreement. Any waiver
must be in writing.
e. Any controversy or claim arising out of or relating to this Agreement,
or the breach thereof, shall be settled by binding arbitration
administered by J-A-M-S/Endispute under its arbitration rules, and
judgment on the award rendered by the arbitrator(s) may be entered in
any court having jurisdiction thereof. In the event any arbitration
proceeding is initiated hereunder or with respect to rights arising
out of the Agreement, each party shall be responsible for its own
attorneys fees regardless of which party prevails.
f. Subject to Subsection 6.e, each of the parties irrevocably submits to
the exclusive jurisdiction of any court of the State of Texas sitting
in Dallas County over any action, suit or proceeding relating to or
arising out of this Agreement and the transactions contemplated
hereby. Each party hereby irrevocably waives any objection, including,
without limitation, any objection to the laying of venue or based on
the grounds of forum non conveniens which such party may now or
hereafter have to the bringing of any such action, suit or proceeding
in any such court and irrevocably agrees that process in any such
action, suit or proceeding may be served upon that party personally or
by Certified or Registered Mail, Return Receipt Requested.
g. The invalidity or unenforceability of any term or provision of this
Agreement shall not affect the validity or enforceability of the
remaining terms or provisions of this Agreement which shall remain in
full force and effect and any such invalid or unenforceable term or
provision shall be given full effect as far as possible. If any term
or provision of this Agreement is invalid or
LOCK-UP AGREEMENT/IN THE MATTER OF TBX RESOURCES, INC. AND TIMOTHY PAUL
BURROUGHS/PAGE 3
<PAGE> 12
unenforceable in one jurisdiction, it shall not affect the validity or
enforceability of that term or provision in any other jurisdiction.
h. This Agreement is not assignable by either party except that it shall
inure to the benefit of and be binding upon any successor to the
Company by merger or consolidation or the acquisition of all or
substantially all of the Company's assets, provided such successor
assumes all of the obligations of the Company, and shall inure to the
benefit of the heirs and legal representatives of the Shareholders.
i. This Agreement may be signed in multiple counterparts, which together
shall constitute one original document.
j. The titles and subtitles used in this Agreement are used for
convenience only and are not to be considered in construing or
interpreting this agreement.
The foregoing Agreement is hereby executed effective as of the date first set
forth above.
TBX Resources, Inc. Timothy Burroughs
TBX RESOURCES, INC.
By: /s/ TIMOTHY BURROUGHS /s/ TIMOTHY BURROUGHS
---------------------------- ----------------------------
Title: President
---------------------------
Burroughs Family Trust
BURROUGHS FAMILY TRUST
By: /s/ J.O. BONNER III TRUSTEE
----------------------------
Title: Trustee
---------------------------
LOCK-UP AGREEMENT/IN THE MATTER OF TBX RESOURCES, INC. AND TIMOTHY PAUL
BURROUGHS/PAGE 4
<PAGE> 13
EXHIBIT 2
FORM 8-K
<PAGE> 14
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report July 21, 2000
COMMISSION FILE NO. 0-30746
TBX RESOURCES, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
TEXAS 75-2592165
----------------------------- ------------------------------------
(State or other jurisdiction (I.R.S. Employer Identification No.)
incorporation or organization)
12300 Ford Road, Suite 265, Dallas, TX
------------------------------------------------------
(Address of principal executive offices)
(972) 243-2610
------------------------------------------------------
(Registrant's telephone number, including area code)
Check whether the registrant: (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes [X] No [ ]
Exhibit Index is on Page 5.
1
<PAGE> 15
TBX RESOURCES, INC.
FORM 8-K
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
Item 1. Changes in Control of Registrant - None
Item 2. Acquisition or Disposition of Assets - None
Item 3. Bankruptcy or Receivership - None
Item 4. Changes in Registrant's Certifying Accountant - None
Item 5. Other Events................................................... Page 3
Item 6. Resignations of Registrant's Directors......................... Page 3
Item 7. Financial Statements and Exhibits.............................. Page 5
Signatures.............................................................. Page 4
</TABLE>
2
<PAGE> 16
ITEM 5. Other Events
On May 17, 2000, the Texas Securities Commissioner ordered that the
exemption provided under Section 5.O of the Texas Securities Act in connection
with the offer for sale and sale of the common stock of our company was
suspended, meaning that no securities dealer shall offer for sale or sell our
common stock in the State of Texas while this suspension is in effect. A copy of
the order issued by the Texas Securities Commissioner has been filed as an
exhibit to this current report on Form 8-K.
Mr. Burroughs and our company have hired counsel to represent them in
this matter. Mr. Burroughs and our company are taking steps to have this order
lifted as soon as possible, with such steps including adding 2 outside directors
to our board of directors and placing restrictions on the transferability of Mr.
Burroughs' common stock. However, there can be no assurance that the Texas
Securities Board will determine that the steps we propose to take will be
sufficient to remove the suspension of trading in our common stock in the State
of Texas.
On or about May 17, 2000, a search warrant was executed on our company
by agents of the Federal Bureau of Investigation.
ITEM 6. Resignations of Registrant's Directors
Effective July 7, 2000, Christine Coley resigned from our Board of
Directors. As discussed, in Item 5 above, we expect to add 2 outside directors
to our Board of Directors. At the time of this report, our sole Director is Tim
Burroughs.
Item 7. Financial Statements and Exhibits
Exhibits
Order dated May 17, 2000, from the Texas Securities Commissioner.
3
<PAGE> 17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned herein duly authorized.
TBX RESOURCES, INC.
(Signature) /s/ Tim Burroughs
----------------------------------
Tim Burroughs
(Title): President and Director
(Date): July 21, 2000
4
<PAGE> 18
FORM 8-K
CURRENT REPORT
EXHIBIT INDEX
<TABLE>
<CAPTION>
Item/Exhibit No. Document Page
<S> <C> <C>
Item 5 Order dated May 17, 2000
from the Texas Securities Commissioner................ 6
</TABLE>
5
<PAGE> 19
[SEAL OF THE STATE OF TEXAS]
[STATE SECURITIES BOARD LETTERHEAD]
SSB DOCKET NO. 00-014
IN THE MATTER OF )
TBX RESOURCES, INC. AND ) Order No. SUS-1395
TIMOTHY PAUL BURROUGHS )
TO: Timothy Paul Burroughs
TBX Resources, Inc.
12300 Ford Road, Suite 265
Dallas, Texas 75234-7273
TBX Resources, Inc.
12300 Ford Road, Suite 265
Dallas, Texas 75234-7273
ORDER OF SUSPENSION OF EXEMPTION
This is your OFFICIAL NOTICE of the issuance by the Securities Commission of
the State of Texas ("Securities Commissioner") of an ORDER SUSPENDING THE
EXEMPTION OF SECURITIES, pursuant to Section 5.0 of the Texas Securities Act,
TEX. REV. CIV. STAT. ANN. art. 581-1 et seq. (Vernon 1964 & Supp. 2000) ("Texas
Securities Act").
1. The Staff of the Enforcement Division of the Texas State Securities Board
("Staff") has presented evidence sufficient for the Securities Commissioner
to find that the sale of outstanding securities issued by TBX Resources,
Inc. ("Respondent TBX") would tend to work a fraud or deceit upon any
purchaser or purchasers thereof.
2. The Staff has presented evidence sufficient for the Securities
Commissioner to find that there are approximately 225 shareholders of
outstanding shares of common stock issued by Respondent which are currently
quoted in the "pink sheets" maintained by the National Quotation Bureau
under the ticker symbol TBXR:
3. The Staff has presented evidence sufficient for the Securities
Commissioner to find that Timothy Paul Burroughs ("Respondent Burroughs")
is the President, Chairman of the Board, and founder of Respondent TBX and
that Respondent Burroughs has held these positions since the company's
inception in 1995.
<PAGE> 20
4. The Staff has presented evidence sufficient for the
Securities Commissioner to find that Respondent
Burroughs, together with the Burroughs Family Trust,
which is controlled by Respondent Burroughs, owns 6.7
million of the outstanding shares of Respondent TBX,
which constitutes more than 5% of the common stock of
Respondent TBX.
5. The Staff has presented evidence sufficient for the
Securities Commissioner to find that since its inception
In 1995, Respondent TBX has offered and sold units in
eleven (11) joint ventures created to purchase and own
working interests in existing oil and gas walls in east
Texas and Louisiana. The joint venture agreements
represented that Respondent TBX would rework existing
wells, replace equipment, and perform other services to
enhance production.
6. The Staff has presented evidence sufficient for the
Securities Commissioner to find that Respondent TBX
remains the joint venture manager on only one of the
above referenced joint ventures, and that investors in
the other ten (10) joint ventures have exchanged their
joint venture interests in return for the common stock of
Respondent TBX.
7. The Staff has presented evidence sufficient for the
Securities Commissioner to find that, in connection with
the offer and sale of the above referenced joint venture
units, Respondent Burroughs has been doing business as
TBX Resources, Inc. (TBX); Texeast Operating Inc.
(Texeast); Gulftex Operating, Inc. (Gulftex); Petroleum
Holdings, Inc. (PHI); Sweetwater Oil & Gas, Inc. (SOGI):
Sweet Water Land & Oil Co. (SWLOC); Marketing Research
Group, Inc. (MRGI); and Marketing Research, Inc. (MRI);
all operated at 12300 Ford Road, Suite 265, Dallas, Texas
75234-7273.
8. The Staff has presented evidence sufficient for the
Securities Commissioner to find that, in connection with
the above referenced joint ventures, the wells were
operated by Texeast or Gulftex, two companies controlled
by Respondent Burroughs.
9. The Staff has presented evidence sufficient for the
Securities Commissioner to find that, in connection with
the offer for sale and sale of the above-referenced
shares of common stock, Respondents made statements that
are materially misleading or otherwise have misled or
deceived offerees and purchasers by intentionally failing
to disclose the following material facts:
a. In connection with the above referenced joint
ventures, Respondent Burroughs, Respondent TBX,
Texeast and Gulftex either did no work on the
wells or did minimal work necessary to make the
wells marginally productive;
b. In connection with the above referenced joint
ventures Respondent
ORDER OF SUSPENSION OF EXEMPTION / TBX RESOURCES, INC., ET AL. / PAGE 2
<PAGE> 21
Burroughs incorporated the following shell corporations in Wyoming on
December 28, 1995 to use as a conduit for the wrongful laundering of funds
from the joint ventures by setting up out-of-state corporations:
1. PETROLEUM HOLDINGS, INC.
Tax Identification Number (TIN) 75-265869;
2. MARKETING RESEARCH GROUP, INC.
TIN: 75-2658630; and
3. SWEETWATER LAND & OIL CO.
TIN: 75-2658631.
The records of the Wyoming Secretary of State's Office confirm that, as of
April 24, 2000, these shell corporations were active corporations having
the same address as Respondent TBX, with an address of 12300 Ford Road,
Suite 265, Dallas, Texas, 75234, and Respondent Burroughs was listed as the
president of these corporations.
c. Petroleum Holdings, Inc. was incorporated in Texas on January 7, 1998;
however, other than filing the articles of incorporation, no other filings
were made. The corporation lost its charter to do business in Texas on
December 30, 1999. Neither Marketing Research Group, Inc. nor Sweetwater
Land & Oil Co. filed articles of incorporation with the Texas Secretary of
State or registered with the Texas Secretary of State as foreign
corporations doing business in Texas. Since these three corporations listed
a Texas address as their principal place of business, they would be
required to file articles of incorporation and public information reports
with the Texas Secretary of State's Office in order to obtain the authority
to do business in Texas.
d. In connection with the above referenced shell corporations, Respondent
Burroughs directed an employee to fabricate invoices from the shell
corporations to launder money from the joint ventures for various corporate
or personal expenses. Upon Respondent Burroughs' instructions, the employee
fabricated invoices from the aforementioned shell corporations to
Respondent TBX and/or the joint venture projects, and subsequently issued
checks from Respondent TBX or the joint venture accounts to look like
legitimate expenses were being paid. These checks, payable to the shell
corporations for the non-existent expenses, were deposited into cash
management accounts at other banks in the name of the shell corporations.
Respondent Burroughs further issued checks from these accounts and
deposited them into accounts at yet other banks, also in the names of the
shell corporations. Respondent Burroughs write checks on these accounts for
personal expenses, including $60,000.00 of the initial $120,000.00.
ORDER OF SUSPENSION OF EXEMPTION / TBX RESOURCES, INC., ET AL. / PAGE 3
<PAGE> 22
raised on one joint venture, to fund the construction loan on his
current residence.
a. In connection with the offer and sale of the above referenced joint
venture units, Respondent Burroughs hired two salesmen to offer and
sell the joint venture interests to investors. One of the salesman had
been enjoined by a Dallas federal court from violating the securities
laws and had agreed to be barred from association with anyone selling
securities in a settlement with the U.S. Securities and Exchange
Commission. The other salesman was on probation for criminal conviction
and was not permitted to work in any commissioned position as a
requirement of his probation.
f. In connection with the North Quitman and J.C. Whatley Joint Ventures,
Respondent Burroughs sold some of the wells in these projects without
informing the investors of the sale. Respondent Burroughs never
forwarded any sales proceeds to the joint venture investors as required
by the joint venture agreement. Respondent Burroughs deposited the
money through the above-described shell corporations and eventually
used the money to pay off his personal credit cards.
g. In connection with the Pittman Heirs Joint Venture, Respondent
Burroughs told the joint venture investors that they were buying 50% of
the Manziel Field Joint Venture; however, he did not disclose that he
had previously sold the Manziel Field wells to other investors, and
that he had not performed his contractual obligations to those existing
investors.
h. Respondents have electronically filed Form 10-SB on or about March 10,
2000, with the U.S. Securities and Exchange Commission to register the
shares of common stock of Respondent TBX. In connection with the above
reference joint ventures, Respondents represent in this filing that:
1. "While acquiring producing properties which respond positively to
improved production practices and enhance recovery techniques, we
have built an inventory of low risk, infield development drilling
locations."
2. "...Mr. Burroughs developed his low risk strategy for building an
oil and gas production company."
3. "[t]he working interest partners enjoyed immediate cash
returns...."
4. Respondent TBX has leasehold rights in eight oil and gas fields
and 61 oil and gas wells. Respondent TBX expects to generate
sufficient
ORDER OF SUSPENSION OF EXEMPTION / TBX RESOURCES, INC., ET AL. / PAGE 4
<PAGE> 23
revenues from the sale of production to pay all costs
associated with the company for at least the next twelve
months.
The Securities Commissioner hereby FINDS and is of the opinion that
the evidence presented by the Staff shows that the sale of the common stock of
TBX Resources, Inc. would tend to work a fraud or deceit upon any purchaser or
purchasers thereof.
The Securities Commissioner hereby FINDS and is of the opinion that
the evidence presented by the Staff demonstrates sufficient proof that the
public interest and protection of investors requires the issuance of an ORDER
OF SUSPENSION OF EXEMPTION as provided by Section 5.0 of the Texas Securities
Act in connection with the offer for sale and sale of the common stock of TBX
Resources, Inc.
ORDER
It is therefore ORDERED by the Securities Commissioner, pursuant to
Section 5.0 of the Texas Securities Act, that the exemption provided by Section
5.0 of the Texas Securities Act in connection with the offer for sale and sale
of the common stock of TBX Resources, Inc. is HEREBY SUSPENDED. No securities
dealer shall offer for sale or sell the common stock of TBX Resources, Inc.
while this suspension is in force and effect.
Dated this 17th day of May, 2000.
/s/ DENISE VOIGT CRAWFORD
-------------------------------
DENISE VOIGT CRAWFORD
Securities Commissioner
ORDER OF SUSPENSION OF EXEMPTION / TBX RESOURCES, INC., ET AL. / PAGE 5
