AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION is made as of the 11th day of October,
2004
AMONG:
MAXIM MORTGAGE CORPORATION, a corporation formed pursuant to the laws
of the State of Delaware and having an office for business located at
0000 Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx 00000
("MXMO")
AND:
XXXXXX EQUIPMENT 2004, INC., a corporation formed pursuant to the laws
of Canada and having an office for business located at 00 Xxxxxxx Xx.,
Xxxxxxxxxxx, Xxx Xxxxxxxxx X0X 0X0.
("TE2004")
AND:
XXXXXX VENTURES, INC., a corporation formed pursuant to the laws of
Delaware and having an office for business located at 0000 Xxxxx Xxxx,
Xxxxxxx Xxxxx, XX 00000
("Ventures", and together with TE2004, "TEQ")
AND:
The common stockholders of TE2004 set forth on the signature page
(the "TE2004 Stockholders")
AND:
The common shareholders of Ventures as set forth on the signature page
(the "Ventures Shareholders" and together with the TE2004
Stockholders, the "TEQ Stockholders")
WHEREAS:
A. TE2004 is a Canadian corporation formed to purchase and operate the Canadian
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assets of Xxxxxx Equipment, Ltd. and Ventures is a Delaware corporation formed
to purchase the US assets of Xxxxxx Equipment, Ltd., which acquisitions shall be
deemed to occur immediately prior to the completion of the transactions
contemplated by this Agreement;
B. MXMO is a reporting company under Section 15(d) of the Securities Exchange
Act of 1934, whose common stock is quoted on the NASD "Bulletin Board" and which
is not presently engaged in any business;
C. The respective Boards of Directors of MXMO and TEQ and the TEQ Stockholders
deem it advisable and in the best interests of MXMO and TEQ that all of the
outstanding common shares of TEQ be acquired by MXMO (the "Reorganization"),
pursuant to this Agreement; and
D. It is intended that the Reorganization shall qualify for United States
federal income tax purposes as a reorganization within the meaning of Section
368(b) of the Internal Revenue Code of 1986, as amended.
NOW THEREFORE THIS AGREEMENT WITNESSETH THAT in consideration of the premises
and the mutual covenants, agreements, representations and warranties contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
Definitions
1.1 In this Agreement the following terms will have the following meanings:
(a) "Acquisition Shares" means 17,020,000 MXMO Common Shares to be issued
by the board of directors of MXMO to the TEQ Stockholders at Closing
pursuant to the terms of the Reorganization and to be allocated among
the TEQ Stockholders as set forth in Schedule "S" hereto;
(b) "Agreement" means this agreement and plan of reorganization among
MXMO, and TEQ;
(c) "MXMO Accounts Payable and Liabilities" means all accounts payable and
liabilities of MXMO, on a consolidated basis, due and owing or
otherwise constituting a binding obligation of MXMO and its
subsidiaries (other than a MXMO Material Contract) as of June 30,
2004, as set forth is Schedule "B" hereto;
(d) "MXMO Accounts Receivable" means all accounts receivable and other
debts owing to MXMO, on a consolidated basis, as of June 30, 2004, as
set forth in Schedule "C" hereto;
(e) "MXMO Assets" means the undertaking and all the property and assets of
the MXMO Business of every kind and description wheresoever situated
including, without limitation, MXMO Equipment, MXMO Inventory, MXMO
Material Contracts, MXMO Accounts Receivable, MXMO Cash, MXMO
Intangible Assets and MXMO Goodwill, and all credit cards, charge
cards and banking cards issued to MXMO;
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(f) "MXMO Bank Accounts" means all of the bank accounts, lock boxes and
safety deposit boxes of MXMO and its subsidiaries or relating to the
MXMO Business as set forth in Schedule "D" hereto;
(g) "MXMO Business" means all aspects of any business conducted by MXMO
and its subsidiaries;
(h) "MXMO Cash" means all cash on hand or on deposit to the credit of MXMO
and its subsidiaries on the Closing Date;
(i) "MXMO Common Shares" means the shares of common stock in the capital
of MXMO;
(j) "MXMO Debt to Related Parties" means the debts owed by MXMO and its
subsidiaries to any affiliate, director or officer of MXMO as
described in Schedule "E" hereto;
(k) "MXMO Equipment" means all machinery, equipment, furniture, and
furnishings used in the MXMO Business, including, without limitation,
the items more particularly described in Schedule "F" hereto;
(l) "MXMO Financial Statements" means, collectively, the audited
consolidated financial statements of MXMO for the fiscal year ended
December 31, 2003, and the unaudited consolidated financial statements
of MXMO for the six month period ended June 30, 2004, true copies of
which are attached as Schedule "A" hereto;
(m) "MXMO Goodwill" means the goodwill of the MXMO Business including the
right to all corporate, operating and trade names associated with the
MXMO Business, or any variations of such names as part of or in
connection with the MXMO Business, all books and records and other
information relating to the MXMO Business, all necessary licenses and
authorizations and any other rights used in connection with the MXMO
Business;
(n) "MXMO Insurance Policies" means the public liability insurance and
insurance against loss or damage to the MXMO Assets and the MXMO
Business as described in Schedule "G" hereto;
(o) "MXMO Intangible Assets" means all of the intangible assets of MXMO
and its subsidiaries, including, without limitation, MXMO Goodwill,
all trademarks, logos, copyrights, designs, and other intellectual and
industrial property of MXMO and its subsidiaries;
(p) "MXMO Inventory" means all inventory and supplies of the MXMO Business
as of June 30, 2004, as set forth in Schedule "H" hereto;
(q) "MXMO Material Contracts" means the burden and benefit of and the
right, title and interest of MXMO and its subsidiaries in, to and
under all trade and non-trade contracts, engagements or commitments,
whether written or oral, to which MXMO or its subsidiaries are
entitled whereunder MXMO or its subsidiaries are obligated to pay or
entitled to receive the sum of $10,000 or more including, without
limitation, any pension plans, profit sharing plans, bonus plans, loan
agreements, security agreements, indemnities and guarantees, any
agreements with employees, lessees, licensees, managers, accountants,
suppliers, agents, distributors, officers, directors, attorneys or
others which cannot be terminated without liability on not more than
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one month's notice, and those contracts listed in Schedule "I" hereto;
(r) "Canadian Law" means the Business Corporations Act of Canada;
(s) "Closing" means the completion, on the Closing Date, of the
transactions contemplated hereby in accordance with Article 9 hereof;
(t) "Closing Date" means the day on which all conditions precedent to the
completion of the transaction as contemplated hereby have been
satisfied or waived;
(u) "Place of Closing" means the offices of Sichenzia Xxxx Xxxxxxxx
Xxxxxxx LLP, or such other place as MXMO and TEQ may mutually agree
upon;
(v) "Reorganization" means the acquisition of the TEQ Common Shares
pursuant to this Agreement and Plan of Reorganization;
(w) "Reorganization Consideration" means the Acquisition Shares;
(x) "State Corporation Law" means the General Corporation Law of the State
of Delaware
(y) "TEQ Accounts Payable and Liabilities" means all accounts payable and
liabilities of TEQ, due and owing or otherwise constituting a binding
obligation of TEQ (other than a TEQ Material Contract) as of October
1, 2004 as set forth in Schedule "K" hereto;
(z) "TEQ Accounts Receivable" means all accounts receivable and other
debts owing to TEQ, as of October 1, 2004 as set forth in Schedule "L"
hereto;
(aa) "TEQ Assets" means the undertaking and all the property and assets of
the TEQ Business of every kind and description wheresoever situated
including, without limitation, TEQ Equipment, TEQ Inventory, TEQ
Material Contracts, TEQ Accounts Receivable, TEQ Cash, TEQ Intangible
Assets and TEQ Goodwill, and all credit cards, charge cards and
banking cards issued to TEQ, together with the right to acquire the
assets of Xxxxxx Equipment, Ltd.;
(bb) "TEQ Bank Accounts" means all of the bank accounts, lock boxes and
safety deposit boxes of TEQ or relating to the TEQ Business as set
forth in Schedule "M" hereto;
(cc) "TEQ Business" means all aspects of the business conducted by TEQ;
(dd) "TEQ Cash" means all cash on hand or on deposit to the credit of TEQ
on the Closing Date;
(ee) "TEQ Common Shares" means all of the issued and outstanding shares of
TE2004 and Ventures common stock.
(ff) "TEQ Debt to Related Parties" means the debts owed by TEQ and its
subsidiaries to the TEQ Shareholder or to any family member thereof,
or to any affiliate, director or officer of TEQ or the TEQ Shareholder
as described in Schedule "N";
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(gg) "TEQ Equipment" means all machinery, equipment, furniture, and
furnishings used in the TEQ Business, including, without limitation,
the items more particularly described in Schedule "O" hereto;
(hh) "TEQ Financial Statements" means collectively, the consolidated
balance sheet of TEQ as of October 1, 2004, with substantially no
assets or liabilities, true copies of which are attached as Schedule
"J" hereto, together with the audited consolidated financial
statements of TEQ for the period ended October 31, 2004, which will
disclose consolidated total assets of at least $25,000,000 and
consolidated net worth of at least $9,000,000. Subject to the consent
of MXMO, unaudited financial statements for the same period shall be
acceptable;
(ii) "TEQ Goodwill" means the goodwill of the TEQ Business together with
the exclusive right of MXMO to represent itself as carrying on the TEQ
Business in succession of TEQ subject to the terms hereof, and the
right to use any words indicating that the TEQ Business is so carried
on including the right to use the name "TEQ" or "TEQ International" or
any variation thereof as part of the name of or in connection with the
TEQ Business or any part thereof carried on or to be carried on by
TEQ, the right to all corporate, operating and trade names associated
with the TEQ Business, or any variations of such names as part of or
in connection with the TEQ Business, all telephone listings and
telephone advertising contracts, all lists of customers, books and
records and other information relating to the TEQ Business, all
necessary licenses and authorizations and any other rights used in
connection with the TEQ Business;
(jj) "TEQ Insurance Policies" means the public liability insurance and
insurance against loss or damage to TEQ Assets and the TEQ Business as
described in Schedule "P" hereto;
(kk) "TEQ Intangible Assets" means all of the intangible assets of TEQ,
including, without limitation, TEQ Goodwill, all trademarks, logos,
copyrights, designs, and other intellectual and industrial property of
TEQ and its subsidiaries;
(ll) "TEQ Inventory" means all inventory and supplies of the TEQ Business
as of October 1, 2004 as set forth in Schedule "Q" hereto;
(mm) "TEQ Material Contracts" means the burden and benefit of and the
right, title and interest of TEQ in, to and under all trade and
non-trade contracts, engagements or commitments, whether written or
oral, to which TEQ is entitled in connection with the TEQ Business
whereunder TEQ is obligated to pay or entitled to receive the sum of
$10,000 or more including, without limitation, any pension plans,
profit sharing plans, bonus plans, loan agreements, security
agreements, indemnities and guarantees, any agreements with employees,
lessees, licensees, managers, accountants, suppliers, agents,
distributors, officers, directors, attorneys or others which cannot be
terminated without liability on not more than one month's notice, and
those contracts listed in Schedule "R" hereto;
(nn) "TEQ Preference Shares" means the 1,000 outstanding shares of TEQ
preferred Stock; and
Any other terms defined within the text of this Agreement will have the meanings
so ascribed to them.
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Captions and Section Numbers
1.2 The headings and section references in this Agreement are for convenience of
reference only and do not form a part of this Agreement and are not intended to
interpret, define or limit the scope, extent or intent of this Agreement or any
provision thereof.
Section References and Schedules
1.3 Any reference to a particular "Article", "section", "paragraph", "clause" or
other subdivision is to the particular Article, section, clause or other
subdivision of this Agreement and any reference to a Schedule by letter will
mean the appropriate Schedule attached to this Agreement and by such reference
the appropriate Schedule is incorporated into and made part of this Agreement.
The Schedules to this Agreement are as follows:
Information concerning MXMO
Schedule "A" MXMO Financial Statements
Schedule "B" MXMO Accounts Payable and Liabilities
Schedule "C" MXMO Accounts Receivable
Schedule "D" MXMO Bank Accounts
Schedule "E" MXMO Debts to Related Parties
Schedule "F" MXMO Equipment
Schedule "G" MXMO Insurance Policies
Schedule "H" MXMO Inventory
Schedule "I" MXMO Material Contracts
Information concerning TEQ
Schedule "J" TEQ Financial Statements
Schedule "K" TEQ Accounts Payable and Liabilities
Schedule "L" TEQ Accounts Receivable
Schedule "M" TEQ Bank Accounts
Schedule "N" TEQ Debts to Related Parties
Schedule "O" TEQ Equipment
Schedule "P" TEQ Insurance Policies
Schedule "Q" TEQ Inventory
Schedule "R" TEQ Material Contracts
Schedule "S" TEQ Stockholder Allocations
Severability of Clauses
1.4 If any part of this Agreement is declared or held to be invalid for any
reason, such invalidity will not affect the validity of the remainder which will
continue in full force and effect and be construed as if this Agreement had been
executed without the invalid portion, and it is hereby declared the intention of
the parties that this Agreement would have been executed without reference to
any portion which may, for any reason, be hereafter declared or held to be
invalid.
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ARTICLE 2
THE REORGANIZATION
The Reorganization
2.1 At Closing, MXMO shall acquire the TEQ Common Shares pursuant to this
Agreement.
Articles of Incorporation; Bylaws; Directors and Officers
2.2 The Articles of Incorporation of TEQ from and after the Closing shall be the
Articles of Incorporation of TEQ until thereafter amended in accordance with the
provisions therein and as provided by the applicable provisions of Canadian Law
and State Corporation Law. The Bylaws of TEQ from and after the Closing shall be
the Bylaws of TEQ as in effect immediately prior to the Closing, continuing
until thereafter amended in accordance with their terms, and as provided by
Canadian Law and State Corporation Law. The officers and directors of the MXMO
at the time of the Closing shall resign and be replaced by representatives of
TEQ as nominated by the board of directors of TEQ.
Exchange of Securities
2.3 At the time of the Closing, by virtue of the Reorganization and without any
action on the part of MXMO or TEQ, each of the TEQ Common Shares shall be
exchanged for the Acquisition Shares, and shall be allocated among the TEQ
Stockholders as set forth in Schedule "S" hereto.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
OF MXMO AND XXXX XXXXXXXX
Representations and Warranties
3.1 MXMO and Xxxx Xxxxxxxx joint and severally represent and warrant in all
material respects to TEQ and the TEQ Shareholders, with the intent that TEQ and
the TEQ Shareholders will rely thereon in entering into this Agreement and in
approving and completing the transactions contemplated hereby, that:
MXMO - Corporate Status and Capacity
(a) Incorporation. MXMO is a corporation duly incorporated and
validly subsisting under the laws of the State of Delaware, and
is in good standing with the office of the Secretary of State for
the State of Delaware;
(b) Carrying on Business. MXMO does not currently conduct business,
except for the actual operations of the corporation which are
carried on in Georgia and does not carry on any other material
business activity in any other jurisdictions. MXMO is duly
authorized to carry on such business in Georgia. The nature of
the MXMO Business does not require MXMO to register or otherwise
be qualified to carry on business in any other jurisdictions;
(c) Corporate Capacity. MXMO has the corporate power, capacity and
authority to own the MXMO Assets and to enter into and complete
this Agreement;
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(d) Reporting Status; Listing. MXMO is required to file current
reports with the Securities and Exchange Commission pursuant to
section 15(d) of the Securities Exchange Act of 1934 (the
"Exchange Act"), MXMO Common Shares are quoted on the NASD
"Bulletin Board". MXMO has filed all reports required to be filed
by it under the Exchange Act, including pursuant to Section 13(a)
or 15(d) thereof, for the three years preceding the date hereof
(or such shorter period as the MXMO was required by law to file
such material) (the foregoing materials being collectively
referred to herein as the "SEC Documents") and, while not having
filed all such SEC Documents prior to the expiration of any
extension(s), is nevertheless current with respect to its
Exchange Act filing requirements. As of their respective dates,
the SEC Documents complied in all material respects with the
requirements of the Securities Act and the Exchange Act and the
rules and regulations of the Commission promulgated thereunder,
and none of the SEC Documents, when filed, contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the
statement therein, in light of the circumstances under which they
were made, not misleading. All material agreements to which MXMO
is a party or to which the property or assets of MXMO are subject
have been appropriately filed as exhibits to the SEC Documents as
and to the extent required under the Exchange Act. The financial
statements of MXMO included in the SEC Documents comply in all
material respects with applicable accounting requirement and the
rules and regulations of the Commission with respect thereto as
in effect at the time of filing, were prepared in accordance with
GAAP applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto, or, in the case
of unaudited statements as permitted by Form 10-Q of the
Commission), and fairly present in all material respects (subject
in the case of unaudited statements, to normal, recurring audit
adjustments) the financial position of MXMO as at the dates
thereof and the results of its operations and cash flows for the
periods then ended. MXMO's Common Stock is listed on the OTC
Bulletin Board, and MXMO is not aware of any facts which would
make MXMO's Common Stock ineligible for quotation on the OTC
Bulletin Board;
MXMO - Capitalization
(e) Authorized Capital. The authorized capital of MXMO consists of
200,000,000 MXMO Common Shares, $0.0001 par value and 5,000,000
shares of preferred stock. $0.0001 par value, of which 39,811,638
MXMO Common Shares, and 0 shares of Preferred Stock are presently
issued and outstanding;
(f) No Option. Other than securities to be issued at or about the
time of Closing to Laurus Master Fund, Ltd. or affiliates
thereof, no person, firm or corporation has any agreement,
warrant or option or any right capable of becoming an agreement
or option for the acquisition of MXMO Common Shares or for the
purchase, subscription or issuance of any of the unissued shares
in the capital of MXMO, except for warrants to purchase up to
910,000 MXMO Common Shares at prices from $0.05-0.15 per share;
(g) Capacity. MXMO has the full right, power and authority to enter
into this Agreement on the terms and conditions contained herein;
MXMO - Records and Financial Statements
(h) Charter Documents. The charter documents of MXMO have not been
8
altered since the incorporation of each, respectively, except as
filed in the record books of MXMO;
(i) Corporate Minute Books. The corporate minute books of MXMO and
its subsidiaries are complete and each of the minutes contained
therein accurately reflect the actions that were taken at a duly
called and held meeting or by consent without a meeting. All
actions by MXMO and its subsidiaries which required director or
shareholder approval are reflected on the corporate minute books
of MXMO and its subsidiaries. MXMO and its subsidiaries are not
in violation or breach of, or in default with respect to, any
term of their respective Certificates of Incorporation (or other
charter documents) or by-laws.
(j) MXMO Financial Statements. The MXMO Financial Statements present
fairly, in all material respects, the assets and liabilities
(whether accrued, absolute, contingent or otherwise) of MXMO, on
a consolidated basis, as of the respective dates thereof, and the
sales and earnings of the MXMO Business during the periods
covered thereby, in all material respects and have been prepared
in substantial accordance with generally accepted accounting
principles consistently applied;
(k) MXMO Accounts Payable and Liabilities. There are no material
liabilities, contingent or otherwise, of MXMO or its subsidiaries
which are not disclosed in Schedule "B" hereto or reflected in
the MXMO Financial Statements except those incurred in the
ordinary course of business since the date of the said schedule
and the MXMO Financial Statements, and neither MXMO nor its
subsidiaries have guaranteed or agreed to guarantee any debt,
liability or other obligation of any person, firm or corporation.
Without limiting the generality of the foregoing, all accounts
payable and liabilities of MXMO and its subsidiaries as of June
30, 2004 are described in Schedule "B" hereto;
(l) MXMO Accounts Receivable. All the MXMO Accounts Receivable result
from bona fide business transactions and services actually
rendered without, to the knowledge and belief of MXMO, any claim
by the obligor for set-off or counterclaim;
(m) MXMO Bank Accounts. All of the MXMO Bank Accounts, their
location, numbers and the authorized signatories thereto are as
set forth in Schedule "D" hereto;
(n) No Debt to Related Parties. Except as disclosed in Schedule "E"
hereto, neither MXMO nor its subsidiaries are, and on Closing
will not be, materially indebted to any affiliate, director or
officer of MXMO except accounts payable on account of bona fide
business transactions of MXMO incurred in normal course of the
MXMO Business, including employment agreements, none of which are
more than 30 days in arrears;
(o) No Related Party Debt to MXMO. No director or officer or
affiliate of MXMO is now indebted to or under any financial
obligation to MXMO or its subsidiaries on any account whatsoever,
except for advances on account of travel and other expenses not
exceeding $5,000 in total;
(p) No Dividends. No dividends or other distributions on any shares
in the capital of MXMO have been made, declared or authorized
since the date of MXMO Financial Statements;
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(q) No Payments. Except for the repayment to Xxxx Xxxxxxxx of
outstanding debt in the amount of $18,936, no payments of any
kind have been made or authorized since the date of the MXMO
Financial Statements to or on behalf of officers, directors,
shareholders or employees of MXMO or its subsidiaries or under
any management agreements with MXMO or its subsidiaries, except
payments made in the ordinary course of business and at the
regular rates of salary or other remuneration payable to them;
(r) No Pension Plans. There are no pension, profit sharing, group
insurance or similar plans or other deferred compensation plans
affecting MXMO or its subsidiaries;
(s) No Adverse Events. Since the date of the MXMO Financial
Statements
(i) there has not been any material adverse change in the
financial position or condition of MXMO, its subsidiaries,
its liabilities or the MXMO Assets or any damage, loss or
other change in circumstances materially affecting MXMO, the
MXMO Business or the MXMO Assets or MXMO's right to carry on
the MXMO Business, other than changes in the ordinary course
of business,
(ii) there has not been any damage, destruction, loss or other
event (whether or not covered by insurance) materially and
adversely affecting MXMO, its subsidiaries, the MXMO
Business or the MXMO Assets,
(iii)there has not been any material increase in the
compensation payable or to become payable by MXMO to any of
MXMO's officers, employees or agents or any bonus, payment
or arrangement made to or with any of them,
(iv) the MXMO Business has been and continues to be carried on in
the ordinary course,
(v) MXMO has not waived or surrendered any right of material
value,
(vi) Neither MXMO nor its subsidiaries have discharged or
satisfied or paid any lien or encumbrance or obligation or
liability other than current liabilities in the ordinary
course of business, and
(vii)no capital expenditures in excess of $10,000 individually
or $30,000 in total have been authorized or made.
MXMO - Income Tax Matters
(t) Tax Returns. All tax returns and reports of MXMO and its
subsidiaries required by law to be filed have been filed and are
true, complete and correct, and any taxes payable in accordance
with any return filed by MXMO and its subsidiaries or in
accordance with any notice of assessment or reassessment issued
by any taxing authority have been so paid;
(u) Current Taxes. Adequate provisions have been made for taxes
payable for the current period for which tax returns are not yet
required to be filed and there are no agreements, waivers, or
other arrangements providing for an extension of time with
respect to the filing of any tax return by, or payment of, any
tax, governmental charge or deficiency by MXMO or its
subsidiaries. MXMO is not aware of any contingent tax liabilities
or any grounds which would prompt a reassessment including
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aggressive treatment of income and expenses in filing earlier tax
returns;
MXMO - Applicable Laws and Legal Matters
(v) Licenses. MXMO and its subsidiaries hold all licenses and permits
as may be requisite for carrying on the MXMO Business in the
manner in which it has heretofore been carried on, which licenses
and permits have been maintained and continue to be in good
standing except where the failure to obtain or maintain such
licenses or permits would not have a material adverse effect on
the MXMO Business;
(w) Applicable Laws. Neither MXMO nor its subsidiaries have been
charged with or received notice of breach of any laws,
ordinances, statutes, regulations, by-laws, orders or decrees to
which they are subject or which apply to them the violation of
which would have a material adverse effect on the MXMO Business
(greater than $2,500), and to MXMO's knowledge, neither MXMO nor
its subsidiaries are in breach of any laws, ordinances, statutes,
regulations, bylaws, orders or decrees the contravention of which
would result in a material adverse impact on the MXMO Business;
(x) Pending or Threatened Litigation. There is no material (greater
than $2,500) litigation or administrative or governmental
proceeding pending or threatened against or relating to MXMO, its
subsidiaries, the MXMO Business, or any of the MXMO Assets nor
does MXMO have any knowledge of any deliberate act or omission of
MXMO or its subsidiaries that would form any material basis for
any such action or proceeding;
(y) No Bankruptcy. Neither MXMO nor its subsidiaries have made any
voluntary assignment or proposal under applicable laws relating
to insolvency and bankruptcy and no bankruptcy petition has been
filed or presented against MXMO or its subsidiaries and no order
has been made or a resolution passed for the winding-up,
dissolution or liquidation of MXMO or its subsidiaries;
(z) Labor Matters. Neither MXMO nor its subsidiaries are party to any
collective agreement relating to the MXMO Business with any labor
union or other association of employees and no part of the MXMO
Business has been certified as a unit appropriate for collective
bargaining or, to the knowledge of MXMO, has made any attempt in
that regard;
(aa)Finder's Fees. Neither MXMO nor its subsidiaries are party to any
agreement which provides for the payment of finder's fees,
brokerage fees, commissions or other fees or amounts which are or
may become payable to any third party in connection with the
execution and delivery of this Agreement and the transactions
contemplated herein;
Execution and Performance of Agreement
(bb)Authorization and Enforceability. The execution and delivery of
this Agreement, and the completion of the transactions
contemplated hereby, have been duly and validly authorized by all
necessary corporate action on the part of MXMO;
(cc)No Violation or Breach. The execution and performance of this
Agreement will not:
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(i) violate the charter documents of MXMO or result in any
breach of, or default under, any loan agreement, mortgage,
deed of trust, or any other agreement to which MXMO or its
subsidiaries are party,
(ii) give any person any right to terminate or cancel any
agreement including, without limitation, the MXMO Material
Contracts, or any right or rights enjoyed by MXMO or its
subsidiaries,
(iii)result in any alteration of MXMO's or its subsidiaries'
obligations under any agreement to which MXMO or its
subsidiaries are party including, without limitation, the
MXMO Material Contracts,
(iv) result in the creation or imposition of any lien,
encumbrance or restriction of any nature whatsoever in favor
of a third party upon or against the MXMO Assets,
(v) result in the imposition of any tax liability to MXMO or its
subsidiaries relating to the MXMO Assets, or
(vi) violate any court order or decree to which either MXMO or
its subsidiaries are subject;
The MXMO Assets - Ownership and Condition
(dd)Business Assets. The MXMO Assets comprise all of the property and
assets of the MXMO Business, and no other person, firm or
corporation owns any assets used by MXMO or its subsidiaries in
operating the MXMO Business, whether under a lease, rental
agreement or other arrangement, other than as disclosed in
Schedules "F" or "I" hereto;
(ee)Title. MXMO or its subsidiaries are the legal and beneficial
owner of the MXMO Assets, free and clear of all mortgages, liens,
charges, pledges, security interests, encumbrances or other
claims whatsoever, save and except as disclosed in Schedules "F"
or "I" hereto;
(ff)No Option. No person, firm or corporation has any agreement or
option or a right capable of becoming an agreement for the
purchase of any of the MXMO Assets;
(gg)MXMO Insurance Policies. MXMO and its subsidiaries maintain the
public liability insurance and insurance against loss or damage
to the MXMO Assets and the MXMO Business as described in Schedule
"G" hereto;
(hh)MXMO Material Contracts. The MXMO Material Contracts listed in
Schedule "I" constitute all of the material contracts of MXMO and
its subsidiaries;
(ii)No Default. There has not been any default in any material
obligation of MXMO or any other party to be performed under any
of the MXMO Material Contracts, each of which is in good standing
and in full force and effect and unamended (except as disclosed
in Schedule "I" hereto), and MXMO is not aware of any default in
the obligations of any other party to any of the MXMO Material
Contracts;
(jj)No Compensation on Termination. There are no agreements,
commitments or understandings relating to severance pay or
separation allowances on termination of employment of any
employee of MXMO or its subsidiaries. Neither MXMO nor its
12
subsidiaries are obliged to pay benefits or share profits with
any employee after termination of employment except as required
by law;
MXMO Assets - MXMO Equipment
(kk)MXMO Equipment. The MXMO Equipment has been maintained in a
manner consistent with that of a reasonably prudent owner and
such equipment is in good working condition;
MXMO Assets - MXMO Goodwill and Other Assets
(ll)MXMO Goodwill. MXMO and its subsidiaries do not carry on the MXMO
Business under any other business or trade names. MXMO does not
have any knowledge of any infringement by MXMO or its
subsidiaries of any patent, trademarks, copyright or trade
secret;
The MXMO Business
(mm)Maintenance of Business. Since the date of the MXMO Financial
Statements, MXMO and its subsidiaries have not entered into any
material agreement or commitment except in the ordinary course
and except as disclosed herein;
(nn)Subsidiaries. MXMO does not own any subsidiaries and does not
otherwise own, directly or indirectly, any shares or interest in
any other corporation, partnership, joint venture or firm; and
MXMO - Acquisition Shares
(oo)Acquisition Shares. The Acquisition Shares when delivered to the
holders of TEQ Common Shares pursuant to the Reorganization shall
be validly issued and outstanding as fully paid and
non-assessable shares and the Acquisition Shares shall be
transferable upon the books of MXMO, in all cases subject to the
provisions and restrictions of all applicable securities laws.
Non-Reorganization and Survival
3.2 The representations and warranties of MXMO and Xxxx Xxxxxxxx contained
herein will be true at and as of Closing in all material respects as though such
representations and warranties were made as of such time. Notwithstanding the
completion of the transactions contemplated hereby, the waiver of any condition
contained herein (unless such waiver expressly releases a party from any such
representation or warranty) or any investigation made by TEQ, the
representations and warranties of MXMO and Xxxx Xxxxxxxx shall survive the
Closing.
Indemnity
3.3 MXMO and Xxxx Xxxxxxxx agree to indemnify and save harmless TEQ and the TEQ
Stockholders from and against any and all claims, demands, actions, suits,
proceedings, assessments, judgments, damages, costs, losses and expenses,
including any payment made in good faith in settlement of any claim (subject to
the right of MXMO to defend any such claim), resulting from the breach by it of
any representation or warranty made under this Agreement or from any
misrepresentation in or omission from any certificate or other instrument
furnished or to be furnished by MXMO to TEQ hereunder.
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ARTICLE 4
COVENANTS OF MXMO
Covenants
4.1 MXMO covenants and agrees with TEQ and the TEQ Stockholders that it will:
(a) Conduct of Business. Until the Closing, conduct its business
diligently and in the ordinary course consistent with the manner in
which it generally has been operated up to the date of execution of
this Agreement;
(b) Preservation of Business. Until the Closing, use its best efforts to
preserve the MXMO Business and the MXMO Assets and, without
limitation, preserve for TEQ, MXMO's relationships with any third
party having business relations with them;
(c) Access. Until the Closing, give TEQ and its representatives full
access to all of the properties, books, contracts, commitments and
records of MXMO, and furnish to TEQ and its representatives all such
information as they may reasonably request;
(d) Procure Consents. Until the Closing, take all reasonable steps
required to obtain, prior to Closing, any and all third party consents
required to permit the Reorganization and to preserve and maintain the
MXMO Assets notwithstanding the change in control of TEQ arising from
the Reorganization; and
(e) Name Change. Forthwith take such steps are required to change the name
of MXMO to "Xxxxxx Equipment, Inc." or such similar name as may be
acceptable to the board of directors of TEQ.
(f) Reverse Stock Split. Prior to the Closing, MXMO will effect a
one-for-40 reverse split of its outstanding shares of common stock.
Such reverse stock split shall also be applicable to all outstanding
options or warrants for the purchase of MXMO Common Stock.
Authorization
4.2 MXMO hereby agrees to authorize and direct any and all federal, state,
municipal, foreign and international governments and regulatory authorities
having jurisdiction respecting MXMO and its subsidiaries to release any and all
information in their possession respecting MXMO and its subsidiaries to TEQ.
MXMO shall promptly execute and deliver to TEQ any and all consents to the
release of information and specific authorizations which TEQ reasonably requires
to gain access to any and all such information.
Survival
4.3 The covenants set forth in this Article shall survive the Closing for the
benefit of TEQ.
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF TEQ AND THE TEQ SHAREHOLDERS
Representations and Warranties
5.1 TEQ and each of the TEQ Shareholders, jointly and severally represent and
warrants in all material respects to MXMO, with the intent that it will rely
thereon in entering into this Agreement and in approving and completing the
transactions contemplated hereby, that:
TEQ - Corporate Status and Capacity
(a) Incorporation. TE2004 is a corporation duly incorporated and validly
subsisting under the laws of Canada, and is in good standing
therewith. Ventures is a corporation duly incorporated and validly
subsisting under the laws of the State of Delaware and is in good
standing with the office of the Secretary of State of Delaware;
(b) Carrying on Business. TE2004 does not carry on any material business
activity in any jurisdiction. TE2004 has an office in New Brunswick
and in no other locations. The nature of the TE2004 Business does not
require TE2004 to register or otherwise be qualified to carry on
business in any other jurisdiction. Ventures does not carry on any
material business activity in any jurisdiction. The nature of the
Ventures Business does not require TEQ to register or otherwise be
qualified to carry on business in any other jurisdiction;
(c) Corporate Capacity. TEQ has the corporate power, capacity and
authority to own TEQ Assets, to carry on the Business of TEQ and to
enter into and complete this Agreement;
TEQ - Capitalization
(d) Authorized Capital. The authorized capital of TE2004 consists of an
unlimited number of common shares and 1,000 preference shares, of
which 13,020,000 common shares and no preference shares will be issued
and outstanding as of the Closing Date. Ventures has an authorized
capital of 20,000,000 shares of common stock, of which 4,000,000
shares will be issued and outstanding as of the Closing Date;
(e) No Option. No person, firm or corporation has any agreement, option,
warrant, preemptive right or any other right capable of becoming an
agreement or option for the purchase, subscription or issuance of any
of the unissued shares in the capital of TEQ;
(f) No Restrictions. There are no restrictions on the transfer, sale or
other disposition of TEQ Common Shares contained in the charter
documents of TEQ or under any agreement which would prevent the sale
of such shares to MXMO;
(g) No Liens. The outstanding TEQ Common Shares are free of all liens,
charges or encumbrances of any kind or nature.
15
TEQ - Records and Financial Statements
(h) Charter Documents. The charter documents of TEQ have not been altered
since its incorporation date, except as filed in the record books of
TEQ;
(i) Corporate Minute Books. The corporate minute books of TEQ are complete
and each of the minutes contained therein accurately reflect the
actions that were taken at a duly called and held meeting or by
consent without a meeting. All actions by TEQ which required director
or shareholder approval are reflected on the corporate minute books of
TEQ. TEQ is not in violation or breach of, or in default with respect
to, any term of its Certificates of Incorporation (or other charter
documents) or by-laws.
(j) TEQ Financial Statements. The TEQ Financial Statements present fairly,
in all material respects, the assets and liabilities (whether accrued,
absolute, contingent or otherwise) of TEQ, on consolidated basis, as
of the respective dates thereof, and the sales and earnings of the TEQ
Business during the periods covered thereby, in all material respects,
and have been prepared in substantial accordance with generally
accepted accounting principles consistently applied;
(k) TEQ Accounts Payable and Liabilities. There are no material
liabilities, contingent or otherwise, of TEQ which are not disclosed
in Schedule "K" hereto or reflected in the TEQ Financial Statements
except those incurred in the ordinary course of business since the
date of the said schedule and the TEQ Financial Statements, and TEQ
has not guaranteed or agreed to guarantee any debt, liability or other
obligation of any person, firm or corporation. Without limiting the
generality of the foregoing, all accounts payable and liabilities of
TEQ as of October 1, 2004] are described in Schedule "K" hereto;
(l) TEQ Accounts Receivable. All TEQ Accounts Receivable result from bona
fide business transactions and services actually rendered without, to
the knowledge and belief of TEQ, any claim by the obligor for set-off
or counterclaim;
(m) TEQ Bank Accounts. All of the TEQ Bank Accounts, their location,
numbers and the authorized signatories thereto are as set forth in
Schedule "M" hereto;
(n) No Debt to Related Parties. Except as disclosed in Schedule "N"
hereto, TEQ is not, and on Closing will not be, materially indebted to
any affiliate, director or officer of TEQ except accounts payable on
account of bona fide business transactions of TEQ incurred in normal
course of TEQ Business, including employment agreements, none of which
are more than 30 days in arrears;
(o) No Related Party Debt to TEQ. No director, officer or affiliate of TEQ
are now indebted to or under any financial obligation to TEQ on any
account whatsoever, except for advances on account of travel and other
expenses not exceeding $5,000 in total;
(p) No Dividends. No dividends or other distributions on any shares in the
capital of TEQ have been made, declared or authorized since the date
of the TEQ Financial Statements;
(q) No Payments. No payments of any kind have been made or authorized
since the date of the TEQ Financial Statements to or on behalf of
officers, directors, shareholders or employees of TEQ or under any
management agreements with TEQ, except payments made in the ordinary
16
course of business and at the regular rates of salary or other
remuneration payable to them;
(r) No Pension Plans. There are no pension, profit sharing, group
insurance or similar plans or other deferred compensation plans
affecting TEQ;
(s) No Adverse Events. Since the date of the TEQ Financial Statements:
(i) there has not been any material adverse change in the
consolidated financial position or condition of TEQ, its
liabilities or the TEQ Assets or any damage, loss or other change
in circumstances materially affecting TEQ, the TEQ Business or
the TEQ Assets or TEQ's right to carry on the TEQ Business, other
than changes in the ordinary course of business,
(ii) there has not been any damage, destruction, loss or other event
(whether or not covered by insurance) materially and adversely
affecting TEQ, the TEQ Business or the TEQ Assets,
(iii)there has not been any material increase in the compensation
payable or to become payable by TEQ to any of TEQ's officers,
employees or agents or any bonus, payment or arrangement made to
or with any of them,
(iv) the TEQ Business has been and continues to be carried on in the
ordinary course,
(v) TEQ has not waived or surrendered any right of material value,
(vi) TEQ has not discharged or satisfied or paid any lien or
encumbrance or obligation or liability other than current
liabilities in the ordinary course of business, and
(vii)no capital expenditures in excess of $10,000 individually or
$30,000 in total have been authorized or made;
TEQ - Income Tax Matters
(t) Tax Returns. All tax returns and reports of TEQ required by law to be
filed have been filed and are true, complete and correct, and any
taxes payable in accordance with any return filed by TEQ or in
accordance with any notice of assessment or reassessment issued by any
taxing authority have been so paid;
(u) Current Taxes. Adequate provisions have been made for taxes payable
for the current period for which tax returns are not yet required to
be filed and there are no agreements, waivers, or other arrangements
providing for an extension of time with respect to the filing of any
tax return by, or payment of, any tax, governmental charge or
deficiency by TEQ. TEQ is not aware of any contingent tax liabilities
or any grounds which would prompt a reassessment including aggressive
treatment of income and expenses in filing earlier tax returns;
TEQ - Applicable Laws and Legal Matters
(v) Licenses. TEQ holds all licenses and permits as may be requisite for
carrying on the TEQ Business in the manner in which it has heretofore
been carried on, which licenses and permits have been maintained and
continue to be in good standing except where the failure to obtain or
maintain such licenses or permits would not have a material adverse
effect on the TEQ Business;
17
(w) Applicable Laws. TEQ has not been charged with or received notice of
breach of any laws, ordinances, statutes, regulations, by-laws, orders
or decrees to which it is subject or which applies to it the violation
of which would have a material adverse effect on the TEQ Business,
and, to TEQ's knowledge, TEQ is not in breach of any laws, ordinances,
statutes, regulations, by-laws, orders or decrees the contravention of
which would result in a material adverse impact on the TEQ Business;
(x) Pending or Threatened Litigation. There is no material litigation or
administrative or governmental proceeding pending or threatened
against or relating to TEQ, the TEQ Business, or any of the TEQ
Assets, nor does TEQ have any knowledge of any deliberate act or
omission of TEQ that would form any material basis for any such action
or proceeding;
(y) No Bankruptcy. TEQ has not made any voluntary assignment or proposal
under applicable laws relating to insolvency and bankruptcy and no
bankruptcy petition has been filed or presented against TEQ and no
order has been made or a resolution passed for the winding-up,
dissolution or liquidation of TEQ;
(z) Labor Matters. TEQ is not a party to any collective agreement relating
to the TEQ Business with any labor union or other association of
employees and no part of the TEQ Business has been certified as a unit
appropriate for collective bargaining or, to the knowledge of TEQ, has
made any attempt in that regard and TEQ has no reason to believe that
any current employees will leave TEQ's employ as a result of this
Reorganization.
(aa)Finder's Fees. TEQ is not a party to any agreement which provides for
the payment of finder's fees, brokerage fees, commissions or other
fees or amounts which are or may become payable to any third party in
connection with the execution and delivery of this Agreement and the
transactions contemplated herein;
Execution and Performance of Agreement
(bb)Authorization and Enforceability. The execution and delivery of this
Agreement, and the completion of the transactions contemplated hereby,
have been duly and validly authorized by all necessary corporate
action on the part of TEQ;
(cc)No Violation or Breach. The execution and performance of this
Agreement will not
(i) violate the charter documents of TEQ or result in any breach of,
or default under, any loan agreement, mortgage, deed of trust, or
any other agreement to which TEQ is a party,
(ii) give any person any right to terminate or cancel any agreement
including, without limitation, TEQ Material Contracts, or any
right or rights enjoyed by TEQ,
(iii)result in any alteration of TEQ's obligations under any
agreement to which TEQ is a party including, without limitation,
the TEQ Material Contracts,
(iv) result in the creation or imposition of any lien, encumbrance or
restriction of any nature whatsoever in favor of a third party
upon or against the TEQ Assets,
18
(v) result in the imposition of any tax liability to TEQ relating to
TEQ Assets or the TEQ Common Shares, or
(vi) violate any court order or decree to which either TEQ is subject;
TEQ Assets - Ownership and Condition
(dd) Business Assets. The TEQ Assets comprise all of the property and
assets of the TEQ Business, and no other person, firm or corporation
owns any assets used by TEQ in operating the TEQ Business, whether
under a lease, rental agreement or other arrangement, other than as
disclosed in Schedules "O" or "R" hereto;
(ee) Title. TEQ is the legal and beneficial owner of the TEQ Assets, free
and clear of all mortgages, liens, charges, pledges, security
interests, encumbrances or other claims whatsoever, save and except as
disclosed in Schedules "O" or "R" hereto;
(ff) No Option. No person, firm or corporation has any agreement or option
or a right capable of becoming an agreement for the purchase of any of
the TEQ Assets;
(gg) TEQ Insurance Policies. TEQ maintains the public liability insurance
and insurance against loss or damage to the TEQ Assets and the TEQ
Business as described in Schedule "P" hereto;
(hh) TEQ Material Contracts. The TEQ Material Contracts listed in Schedule
"R" constitute all of the material contracts of TEQ;
(ii) No Default. There has not been any default in any material obligation
of TEQ or any other party to be performed under any of TEQ Material
Contracts, each of which is in good standing and in full force and
effect and unamended (except as disclosed in Schedule "R"), and TEQ is
not aware of any default in the obligations of any other party to any
of the TEQ Material Contracts;
(jj) No Compensation on Termination. There are no agreements, commitments
or understandings relating to severance pay or separation allowances
on termination of employment of any employee of TEQ. TEQ is not
obliged to pay benefits or share profits with any employee after
termination of employment except as required by law;
TEQ Assets - TEQ Equipment
(kk) TEQ Equipment. The TEQ Equipment has been maintained in a manner
consistent with that of a reasonably prudent owner and such equipment
is in good working condition;
TEQ Assets - TEQ Goodwill and Other Assets
(ll) TEQ Goodwill. TEQ carries on the TEQ Business only under the name
"Xxxxxx Equipment 2004" and "Xxxxxx Ventures" and variations thereof
and under no other business or trade names. TEQ does not have any
knowledge of any infringement by TEQ of any patent, trademark,
copyright or trade secret;
The Business of TEQ
19
(mm) Maintenance of Business. Since the date of the TEQ Financial
Statements, the TEQ Business has been carried on in the ordinary
course and TEQ has not entered into any material agreement or
commitment except in the ordinary course; and
(nn) Subsidiaries. TEQ does not own any subsidiaries and does not otherwise
own, directly or indirectly, any shares or interest in any other
corporation, partnership, joint venture or firm and TEQ does not own
any subsidiary and does not otherwise own, directly or indirectly, any
shares or interest in any other corporation, partnership, joint
venture or firm.
Non-Reorganization and Survival
5.2 The representations and warranties of TEQ and the TEQ Shareholders contained
herein will be true at and as of Closing in all material respects as though such
representations and warranties were made as of such time. Notwithstanding the
completion of the transactions contemplated hereby, the waiver of any condition
contained herein (unless such waiver expressly releases a party from any such
representation or warranty) or any investigation made by MXMO, the
representations and warranties of TEQ and the TEQ Shareholders shall survive the
Closing.
Indemnity
5.3 TEQ and the TEQ Shareholders jointly and severally agree to indemnify and
save harmless MXMO from and against any and all claims, demands, actions, suits,
proceedings, assessments, judgments, damages, costs, losses and expenses,
including any payment made in good faith in settlement of any claim (subject to
the right of TEQ to defend any such claim), resulting from the breach by any of
them of any representation or warranty of such party made under this Agreement
or from any misrepresentation in or omission from any certificate or other
instrument furnished or to be furnished by TEQ to MXMO hereunder.
ARTICLE 6
COVENANTS OF TEQ
Covenants
6.1 TEQ covenants and agrees with MXMO that it will:
(a) Conduct of Business. Until the Closing, conduct the TEQ Business
diligently and in the ordinary course consistent with the manner in
which the TEQ Business generally has been operated up to the date of
execution of this Agreement;
(b) Preservation of Business. Until the Closing, use its best efforts to
preserve the TEQ Business and the TEQ Assets and, without limitation,
preserve for MXMO TEQ's relationships with their suppliers, customers
and others having business relations with them;
(c) Access. Until the Closing, give MXMO and its representatives full
access to all of the properties, books, contracts, commitments and
records of TEQ relating to TEQ, the TEQ Business and the TEQ Assets,
and furnish to MXMO and its representatives all such information as
they may reasonably request;
(d) Procure Consents. Until the Closing, take all reasonable steps
required to obtain, prior to Closing, any and all third party consents
required to permit the Reorganization and to preserve and maintain the
20
TEQ Assets, including the TEQ Material Contracts, notwithstanding the
change in control of TEQ arising from the Reorganization;
(e) Reporting and Internal Controls. From and after the Closing Date, the
board of directors of TEQ shall forthwith take all required actions to
implement internal controls on the business of TEQ to ensure that TEQ
and MXMO comply with Section 13(b)(2) of the Securities and Exchange
Act of 1934;
(f) Audited Financial Statements. Immediately upon execution of this
Agreement, cause to be prepared audited financial statements of TEQ in
compliance with the requirements of Regulation SB as promulgated by
the Securities and Exchange Commission, such audited financial
statements to be provided no later than 74 days after the Closing
Date; and
(g) Name Change. Forthwith take such steps are required to change the name
of MXMO to "Xxxxxx Equipment, Inc." or such similar name as may be
acceptable to the board of directors of TEQ.
Authorization
6.2 TEQ hereby agrees to authorize and direct any and all federal, state,
municipal, foreign and international governments and regulatory authorities
having jurisdiction respecting TEQ to release any and all information in their
possession respecting TEQ to MXMO. TEQ shall promptly execute and deliver to
MXMO any and all consents to the release of information and specific
authorizations which MXMO reasonably require to gain access to any and all such
information.
Survival
6.3 The covenants set forth in this Article shall survive the Closing for the
benefit of MXMO.
ARTICLE 7
CONDITIONS PRECEDENT
Conditions Precedent in favor of MXMO
7.1 MXMO's obligations to carry out the transactions contemplated hereby are
subject to the fulfillment of each of the following conditions precedent on or
before the Closing:
(a) all documents or copies of documents required to be executed and
delivered to MXMO hereunder will have been so executed and delivered;
(b) all of the terms, covenants and conditions of this Agreement to be
complied with or performed by TEQ at or prior to the Closing will have
been complied with or performed;
(c) MXMO shall have completed its review and inspection of the books and
records of TEQ and shall be satisfied with same in all material
respects;
(d) the TEQ Assets and TEQ Common Shares will be free and clear of all
mortgages, liens, charges, pledges, security interests, encumbrances
or other claims whatsoever, save and except as disclosed herein;
21
(e) subject to Article 8 hereof, there will not have occurred
(i) any material adverse change in the financial position or
condition of TEQ, its liabilities or the TEQ Assets or any
damage, loss or other change in circumstances materially and
adversely affecting the TEQ Business or the TEQ Assets or TEQ's
right to carry on the TEQ Business, other than changes in the
ordinary course of business, none of which has been materially
adverse, or
(ii) any damage, destruction, loss or other event, including changes
to any laws or statutes applicable to TEQ or the TEQ Business
(whether or not covered by insurance) materially and adversely
affecting TEQ, the TEQ Business or the TEQ Assets;
(f) MXMO will have issued 188,362 restricted shares to MXMO's officers and
directors, either in exchange for debt or services rendered (prior to
a reverse stock split on a one-for-40 basis);
(g) The Business Plan of TEQ previously presented to MXMO shall be
materially true and accurate as of the Closing Date;
(h) the transactions contemplated hereby shall have been approved by all
other regulatory authorities having jurisdiction over the subject
matter hereof, if any;
(i) the closing of the reverse stock split by MXMO of the 40,000,000
shares that are issued and outstanding on a one-for-40 basis such that
MXMO will have issued and outstanding no more than 1,000,000 common
shares and no preferred shares; and
(j) TEQ shall have provided to MXMO on the Closing Date a certificate
signed by its President containing appropriate representations and
warranties concerning, among other things, the absence of existing and
potential litigation or governmental proceedings, in form and content
reasonably acceptable to MXMO and its counsel
Waiver by MXMO
7.2 The conditions precedent set out in the preceding section are inserted for
the exclusive benefit of MXMO and any such condition may be waived in whole or
in part by MXMO at or prior to Closing by delivering to TEQ a written waiver to
that effect signed by MXMO. In the event that the conditions precedent set out
in the preceding section are not satisfied on or before the Closing, MXMO shall
be released from all obligations under this Agreement.
Conditions Precedent in Favor of TEQ
7.3 The obligation of TEQ to carry out the transactions contemplated hereby is
subject to the fulfillment of each of the following conditions precedent on or
before the Closing:
(a) all documents or copies of documents required to be executed and
delivered to TEQ hereunder will have been so executed and delivered;
(b) all of the terms, covenants and conditions of this Agreement to be
complied with or performed by MXMO at or prior to the Closing will
have been complied with or performed;
22
(c) TEQ shall have completed its review and inspection of the books and
records of MXMO and its subsidiaries and shall be satisfied with same
in all material respects;
(d) MXMO will have delivered the Acquisition Shares to be issued pursuant
to the terms of the Reorganization to TEQ at the Closing and the
Acquisition Shares will be registered on the books of MXMO in the name
of the holder of TEQ Common Shares at the Closing;
(e) title to the Acquisition Shares will be free and clear of all
mortgages, liens, charges, pledges, security interests, encumbrances
or other claims whatsoever;
(f) subject to Article 8 hereof, there will not have occurred
(i) any material adverse change in the financial position or
condition of MXMO, its subsidiaries, their liabilities or the
MXMO Assets or any damage, loss or other change in circumstances
materially and adversely affecting MXMO, the MXMO Business or the
MXMO Assets or MXMO' right to carry on the MXMO Business, other
than changes in the ordinary course of business, none of which
has been materially adverse, or
(ii) any damage, destruction, loss or other event, including changes
to any laws or statutes applicable to MXMO or the MXMO Business
(whether or not covered by insurance) materially and adversely
affecting MXMO, its subsidiaries, the MXMO Business or the MXMO
Assets;
(h) MXMO's issued and outstanding common share capital shall be reduced to
1,000,000 MXMO Common Shares in connection with a one-for-40 stock
split and the outstanding options and warrants shall also be subject
to such split;
(i) the transactions contemplated hereby shall have been approved by all
other regulatory authorities having jurisdiction over the subject
matter hereof, if any;
(j) the satisfaction of all liabilities of MXMO on or prior to the Closing
Date;
(k) MXMO shall be current in its filing obligations with the SEC;
(l) TEQ will have hired an experienced financial public relations firm to
act as MXMO's financial public relations representative after the
Closing;
(m) MXMO's President, Xxxx Xxxxxxxx, shall have signed a lockup-leakout
agreement, whereby he agrees not to sell his shares for a period of 60
days after the Closing without the prior written consent of TEQ; and
that after such 60-day period, any shares then owned by him will not
be publicly sold in an amount totaling more than one-quarter of his
shares in any calendar month period without the prior written consent
of TEQ; and
(n) MXMO shall have provided to TEQ on the Closing Date a certificate
signed by its CEO containing appropriate representations and
warranties concerning, among other things, the absence of existing and
potential litigation or governmental proceedings, in form and content
reasonably acceptable to TEQ and its counsel.
23
Waiver by TEQ
7.4 The conditions precedent set out in the preceding section are inserted for
the exclusive benefit of TEQ and any such condition may be waived in whole or in
part by TEQ at or prior to the Closing by delivering to MXMO a written waiver to
that effect signed by TEQ. In the event that the conditions precedent set out in
the preceding section are not satisfied on or before the Closing TEQ shall be
released from all obligations under this Agreement.
Nature of Conditions Precedent
7.5 The conditions precedent set forth in this Article are conditions of
completion of the transactions contemplated by this Agreement and are not
conditions precedent to the existence of a binding agreement. Each party
acknowledges receipt of the sum of $1.00 and other good and valuable
consideration as separate and distinct consideration for agreeing to the
conditions of precedent in favor of the other party or parties set forth in this
Article.
Termination
7.6 Notwithstanding any provision herein to the contrary, if the Closing does
not occur on or before October 30, 2004, - this Agreement will be at an end and
will have no further force or effect, unless otherwise agreed upon by the
parties in writing.
Confidentiality
7.7 Notwithstanding any provision herein to the contrary, the parties hereto
agree that the existence and terms of this Agreement are confidential and that
if this Agreement is terminated pursuant to the preceding section the parties
agree to return to one another any and all financial, technical and business
documents delivered to the other party or parties in connection with the
negotiation and execution of this Agreement and shall keep the terms of this
Agreement and all information and documents received from TEQ and MXMO and the
contents thereof confidential and not utilize nor reveal or release same,
provided, however, that MXMO will be required to issue news releases regarding
the execution and consummation of this Agreement and file a Current Report on
Form 8-K with the Securities and Exchange Commission respecting the proposed
Reorganization contemplated hereby together with such other documents as are
required to maintain the currency of MXMO's filings with the Securities and
Exchange Commission, subject to the review and approval of TEQ of any and all
copy and/or documents drafted by MXMO.
EXPENSES
7.8 Each party hereto shall bear its own costs and expenses in connection with
this Agreement.
ARTICLE 8
RISK
Material Change in the Business of TEQ
8.1 If any material loss or damage to the TEQ Business occurs prior to Closing
and such loss or damage, in MXMO's reasonable opinion, cannot be substantially
repaired or replaced within sixty (60) days, MXMO shall, within two (2) days
following any such loss or damage, by notice in writing to TEQ, at its option,
either:
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(a) terminate this Agreement, in which case no party will be under any
further obligation to any other party; or
(b) elect to complete the Reorganization and the other transactions
contemplated hereby, in which case the proceeds and the rights to
receive the proceeds of all insurance covering such loss or damage
will, as a condition precedent to MXMO's obligations to carry out the
transactions contemplated hereby, be vested in TEQ or otherwise
adequately secured to the satisfaction of MXMO on or before the
Closing Date.
Material Change in the MXMO Business
8.2 If any material loss or damage to the MXMO Business occurs prior to Closing
and such loss or damage, in TEQ's reasonable opinion, cannot be substantially
repaired or replaced within sixty (60) days, TEQ shall, within two (2) days
following any such loss or damage, by notice in writing to MXMO, at its option,
either:
(a) terminate this Agreement, in which case no party will be under any
further obligation to any other party; or
(b) elect to complete the Reorganization and the other transactions
contemplated hereby, in which case the proceeds and the rights to
receive the proceeds of all insurance covering such loss or damage
will, as a condition precedent to TEQ's obligations to carry out the
transactions contemplated hereby, be vested in MXMO or otherwise
adequately secured to the satisfaction of TEQ on or before the Closing
Date.
ARTICLE 9
CLOSING
Closing
9.1 The Reorganization and the other transactions contemplated by this Agreement
will be closed at the Place of Closing in accordance with the closing procedure
set out in this Article.
Documents to be Delivered by TEQ and the TEQ Stockholders
9.2 On or before the Closing, TEQ will deliver or cause to be delivered to MXMO:
(a) the original or certified copies of the charter documents of TEQ and
all corporate records documents and instruments of TEQ, the corporate
seal of TEQ and all books and accounts of ;
(b) all reasonable consents or approvals required to be obtained by TEQ
for the purposes of completing the Reorganization and preserving and
maintaining the interests of TEQ under any and all TEQ Material
Contracts and in relation to TEQ Assets;
(c) certified copies of such resolutions of the stockholders and directors
of TEQ as are required to be passed to authorize the execution,
delivery and implementation of this Agreement;
(d) an acknowledgement from TEQ of the satisfaction of the conditions
precedent set forth in section 7.3 hereof;
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(e) such other documents as MXMO may reasonably require to give effect to
the terms and intention of this Agreement; and
(f) stock certificates endorsed by TEQ Stockholders giving MXMO at least
90% ownership of TEQ Common Stock.
Documents to be Delivered by MXMO
9.3 On or before the Closing, MXMO shall deliver or cause to be delivered to
TEQ:
(a) share certificates representing the Acquisition Shares duly registered
in the names of the holders of shares of TEQ Common Stock;
(b) certified copies of such resolutions of the directors of MXMO as are
required to be passed to authorize the execution, delivery and
implementation of this Agreement;
(c) a certified copy of a resolution of the directors of MXMO dated as of
the Closing Date appointing the nominees of TEQ as officers of TEQ;
(d) an undated resolution of the directors of MXMO appointing the nominees
of the board of directors of TEQ listed below in Article 10 to the
board of directors of MXMO;
(e) resignations of all of the officers and directors of MXMO as of the
Closing Date;
(f) an acknowledgement from MXMO of the satisfaction of the conditions
precedent set forth in section 7.1 hereof; and
(g) such other documents as TEQ may reasonably require to give effect to
the terms and intention of this Agreement.
ARTICLE 10
POST-CLOSING MATTERS
Forthwith after the Closing, MXMO and TEQ agree to use all their best
efforts to:
(a) issue a news release reporting the Closing; and
(b) file a Form 8-K with the Securities and Exchange Commission disclosing
the terms of this Agreement and, not more than 71 days following the
filing of such Form 8-K, to file and amended Form 8-K which includes
audited financial statements of TEQ as well as pro forma financial
information of TEQ and MXMO as required by Regulation SB as
promulgated by the Securities and Exchange Commission.
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ARTICLE 11
GENERAL PROVISIONS
Arbitration
11.1 The parties hereto shall attempt to resolve any dispute, controversy,
difference or claim arising out of or relating to this Agreement by negotiation
in good faith. If such good negotiation fails to resolve such dispute,
controversy, difference or claim within fifteen (15) days after any party
delivers to any other party a notice of its intent to submit such matter to
arbitration, then any party to such dispute, controversy, difference or claim
may submit such matter to arbitration in the City of New York, New York.
Notice
11.2 Any notice required or permitted to be given by any party will be deemed to
be given when in writing and delivered to the address for notice of the intended
recipient by personal delivery, prepaid single certified or registered mail, or
telecopier. Any notice delivered by mail shall be deemed to have been received
on the fourth business day after and excluding the date of mailing, except in
the event of a disruption in regular postal service in which event such notice
shall be deemed to be delivered on the actual date of receipt. Any notice
delivered personally or by telecopier shall be deemed to have been received on
the actual date of delivery.
Addresses for Service
11.3 The address for service of notice of each of the parties hereto is as
follows:
(a) MXMO:
Maxim Mortgage Corporation
0000 Xxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attn: Xxxx Xxxxxxxx
Phone: (000) 000-0000
Telecopier: (000) 000-0000
(b) TEQ:
Xxxxxx Equipment 2004, Inc.
00 Xxxxxxx Xx.
Xxxxxxxxxxx, Xxx Xxxxxxxxx X0X 0X0
Attn: Xxxxxxxx X. Xxxx, P. Eng.
Phone: (000) 000-0000
Telecopier: (000) 000-0000
Xxxxxx Ventures, Inc.
0000 Xxxxx Xxxx
Xxxxxxx Xxxxx, XX 00000
Phone: (000)-000-0000
Telecopier: (000)-000-0000
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Change of Address
11.4 Any party may, by notice to the other parties change its address for notice
to some other address in North America and will so change its address for notice
whenever the existing address or notice ceases to be adequate for delivery by
hand. A post office box may not be used as an address for service.
Further Assurances
11.5 Each of the parties will execute and deliver such further and other
documents and do and perform such further and other acts as any other party may
reasonably require to carry out and give effect to the terms and intention of
this Agreement.
Time of the Essence
11.6 Time is expressly declared to be the essence of this Agreement.
Entire Agreement
11.7 The provisions contained herein constitute the entire agreement among TEQ,
the TEQ Stockholders and MXMO respecting the subject matter hereof and supersede
all previous communications, representations and agreements, whether verbal or
written, among TEQ, the TEQ Stockholders and MXMO with respect to the subject
matter hereof.
Enurement
11.8 This Agreement will enure to the benefit of and be binding upon the parties
hereto and their respective heirs, executors, administrators, successors and
permitted assigns.
Assignment
11.9 This Agreement is not assignable without the prior written consent of the
parties hereto.
Counterparts
11.10 This Agreement may be executed in counterparts, each of which when
executed by any party will be deemed to be an original and all of which
counterparts will together constitute one and the same Agreement. Delivery of
executed copies of this Agreement by telecopier will constitute proper delivery,
provided that originally executed counterparts are delivered to the parties
within a reasonable time thereafter.
Applicable Law
11.11 This Agreement is subject to the laws of the State of Delaware.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF the parties have executed this Agreement effective as of the
day and year first above written.
MAXIM MORTGAGE CORPORATION
By:/s/ XXXX XXXXXXXX
Name: Xxxx Xxxxxxxx
Title: President
XXXXXX EQUIPMENT 2004, INC.
By: /s/ XXXXXXXX X. XXXX
Name: Xxxxxxxx X. Xxxx
Title: President
XXXXXX VENTURES, INC.
By: /s/ XXXXX XXXXX
Name: Xxxxx Xxxxx
Title: Chairman
/s/ XXXX XXXXXXXX
Xxxx Xxxxxxxx,
Solely with respect to Sections 3.1, 3.2 and 3.3
XXXXXX EQUIPMENT 2004, INC. STOCKHOLDERS
--------------------------------
--------------------------------
XXXXXX VENTURES INC. STOCKHOLDERS
