Exhibit 2.1
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made
and entered into as of the 18th day of July, 2003, by and among X-Net Services
Corp., a Nevada corporation ("X-Net"); X-Net Merger, Co., a wholly owned
subsidiary of X-Net formed or to be formed under the laws of Nevada ("Merger
Co"); and Third Millennium Industries, Inc., a Nevada corporation
("Millennium"); based on the following:
Recitals
The parties desire to enter into this agreement to set forth the terms
and conditions of the corporate reorganization pursuant to which Merger Co. will
be merged with and into Millennium, Millennium will be the surviving entity, and
the issued and outstanding shares of capital stock of Millennium will be
converted into shares of X-Net Common Stock. The merger of Merger Co. with and
into Millennium and the issuance of X-Net Common Stock are for the purpose of
effecting a tax-free reorganization pursuant to Section 368(a)(2)(E) of the
Internal Revenue Code of 1986, as amended (the "Code").
Agreement
NOW, THEREFORE, in consideration of the mutual covenants to be
performed and benefits to received under this Agreement and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by the parties hereto, X-Net, Merger Co. and Millennium agree as
follows:
ARTICLE I
MERGER
1.01 The Merger. At the Effective Time (as defined herein) and subject
to and upon the terms and conditions of this Agreement and in accordance with
the Nevada Revised Statutes, Merger Co. shall be merged with and into Millennium
and the separate corporate existence of Merger Co. shall cease. Millennium shall
continue as the surviving corporation (sometimes referred to herein as the
"Surviving Corporation ") in the Merger, and as of the Effective Time shall be a
wholly owned subsidiary of X-Net. In connection with the Merger, the issued and
outstanding shares of Millennium Common Stock shall be converted into shares of
X-Net Common Stock in the manner provided herein.
1.02. The Closing; Effective Time.
(a) The closing of the Merger (the "Closing ") shall take
place (i) at a mutually agreeable time and place within five business
days following the date on which the last to be satisfied or waived of
the conditions set forth in Articles IV and V (other than those
conditions that by their nature are to be satisfied at the Closing)
shall be satisfied or waived in accordance with this Agreement (the
"Closing Date ").
(b) On the Closing Date, X-Net, Merger Co. and Millennium
shall cause articles of merger with respect to the Merger to be
properly executed, and filed with the Secretary of State of the State
of Nevada. The Merger shall become effective at such time as the
articles of merger shall be duly filed with the Secretary of State of
Nevada, or at such later time reflected in such articles of merger as
shall be agreed upon by X-Net and Millennium (the time that the Merger
becomes effective, the "Effective Time ").
1.03. Subsequent Actions. If, at any time after the Effective Time, the
Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to continue in, vest, perfect or confirm of record or otherwise the
Surviving Corporation's right, title or interest in, to or under any of the
rights, properties, privileges, franchises or assets of either of its
constituent corporations acquired or to be acquired by the Surviving Corporation
as a result of, or in connection with, the Merger, or otherwise to carry out the
intent of this Agreement, the officers and directors of the Surviving
Corporation shall be authorized to execute and deliver, in the name and on
behalf of either of the constituent corporations of the Merger, all such deeds,
bills of sale, assignments and assurances and to take and do, in the name and on
behalf of each of such corporations or otherwise, all such other actions and
things as may be necessary or desirable to vest, perfect or confirm any and all
right, title and interest in, to and under such rights, properties, privileges,
franchises or assets in the Surviving Corporation or otherwise to carry out the
intent of this Agreement.
1.04. Articles of Incorporation; Bylaws; Directors and Officers of the
Surviving Corporation. Unless otherwise agreed to by X-Net and Millennium prior
to the Closing, at the Effective Time:
(a) The Articles of Incorporation of Millennium (the
"Millennium Articles of Incorporation") as in effect immediately prior
to the Effective Time shall be at and after the Effective Time (until
amended as provided by law and by such Articles of Incorporation) the
articles of incorporation of the Surviving Corporation.
(b) The Bylaws of Millennium as in effect immediately prior to
the Effective Time shall be at and after the Effective Time (until
amended as provided by law, its Articles of Incorporation and its
Bylaws, as applicable) the Bylaws of the Surviving Corporation;
(c) The officers of Millennium immediately prior to the
Effective Time shall continue to serve in their respective offices of
the Surviving Corporation from and after the Effective Time, until
their successors are elected or appointed and qualified or until their
resignation or removal; and
(d) The directors of Millennium immediately prior to the
Effective Time shall be the directors of the Surviving Corporation from
and after the Effective Time, until their successors are elected or
appointed and qualified or until their resignation or removal.
1.05. Manner and Basis of Converting Stock. The manner and basis of
converting the shares of capital stock of Millennium and Merger Co., by virtue
of the Merger and without any action on the part of any holder thereof, shall be
as set forth in this Section 1.05.
(a) Subject to the terms and conditions of this Agreement,
each share of Millennium Common Stock issued and outstanding
immediately prior to the Effective Time and all rights in respect
thereof, shall at the Effective Time, without any action on the part of
any holder thereof, forthwith cease to exist and be converted into the
right to receive one (1) share of X-Net Common Stock, par value $0.001,
for an aggregate of Ten Million Two Hundred Thousand (10,200,000) X-Net
Shares being issued to the Millennium shareholders as a result of the
Merger; provided, that any "Dissenting Shares" of Millennium shall
receive payment from Millennium in lieu of such shares of X-Net Common
Stock in accordance with the provisions of the Nevada Revised Statutes.
Dissenting Shares means any shares of Millennium for which the holder
thereof has exercised his or her dissenter's rights under the Nevada
Revised Statutes.
(b) Except as otherwise provided herein, commencing
immediately after the Effective Time, each certificate which,
immediately prior to the Effective Time, represented issued and
outstanding shares of Millennium Common Stock shall evidence the right
to receive the number of whole shares of X-Net Common Stock on the
basis set forth in subparagraph (a) above. Upon the surrender by the
holders of Millennium Common Stock to X-Net's transfer agent and
registrar of their Millennium stock certificates, together with the
investment representation letter described in Section 6.05(a) and all
other documents and materials reasonably required by such transfer
agent to be delivered in connection therewith, the holders of the
Millennium Common Stock shall be entitled to receive a certificate or
certificates representing the number of whole shares of X-Net Common
Stock to which they are entitled. No scrip or fractional share
certificates for X-Net Common Stock will be issued and any fractional
shares shall be rounded to the nearest whole share.
(c) At the Effective Time, each share of common stock of
Merger Co. issued and outstanding immediately prior to the Effective
Time, and all rights in respect thereof, shall, without any action on
the part of X-Net, forthwith cease to exist and be converted into one
validly issued, fully paid and nonassessable share of Millennium Common
Stock.
(d) If between the date of this Agreement and the Effective
Time, the outstanding shares of X-Net Common Stock or Millennium Common
Stock shall be changed into a different number of shares by reason of
any stock split, combination of shares, or if any dividend payable in
stock shall be declared thereon with a record date within such period,
the exchange ratio shall be appropriately adjusted to provide the
holders of Millennium Shares the same economic effect as contemplated
by this Agreement prior to such event.
1.06 Closing Events.
(a) X-Net Deliveries. Subject to fulfillment or waiver of the
conditions set forth in Article V, X-Net shall deliver to Millennium at Closing
all the following:
(i) Certificates of good standing from the Nevada
Secretary of State, issued as of a date within five days prior
to the Closing Date, certifying that X-Net and Merger Co. are
each in good standing as corporations in the State of Nevada;
(ii) Incumbency and specimen signature certificates
dated the Closing Date with respect to the officers of X-Net
executing this Agreement and any other document delivered
pursuant hereto on behalf of X-Net;
(iii) Copies of the resolutions of X-Net's board of
directors authorizing the execution and performance of this
Agreement and the contemplated transactions, certified by the
secretary or an assistant secretary of X-Net as of the Closing
Date;
(iv) The certificate contemplated by Section 4.01,
duly executed by the president of X-Net;
(v) The certificate contemplated by Section 4.02,
dated the Closing Date, duly executed by the president of
X-Net;
(vi) Certificates for the X-Net Shares registered in
the names of the Millennium Shareholders or, in lieu thereof,
irrevocable transfer instructions to X-Net's transfer agent
and registrar irrevocably instructing it to issue the X-Net
Shares to the Millennium Shareholders; and
(vii) Bank signature cards, duly executed by the
officers of X-Net, giving the new president and secretary of
X-Net full authority to manage all bank accounts of X-Net,
including the right to sign checks drawn on such accounts.
In addition to the above deliveries, X-Net shall take all steps and
actions as Millennium may reasonably request or as may otherwise be
reasonably necessary to consummate the transactions contemplated hereby.
(b) Millennium's Deliveries. Subject to fulfillment or waiver
of the conditions set forth in Article IV, Millennium shall deliver to
X-Net at Closing all the following:
(i) A certificate of good standing from the secretary
of state of Nevada, issued as of a date within five days prior
to the Closing Date certifying that Millennium is in good
standing as a corporation in the State of Nevada;
(ii) Certificates of good standing from the
appropriate authorities certifying that Campers World, Inc.,
Twister Trailers, Inc., and Clear Lake Trailers, Inc. are in
good standing as corporations in their respective states of
incorporation;
(iii) Incumbency and specimen signature certificates
dated the Closing Date with respect to the officers of
Millennium executing this Agreement and any other document
delivered pursuant hereto on behalf of Millennium;
(iv) Copies of the resolutions of Millennium's board
of directors and shareholders authorizing the execution and
performance of this Agreement and the contemplated
transactions, certified by the secretary or an assistant
secretary of Millennium as of the Closing Date;
(iv) The certificate contemplated by Section 5.01,
signed by the president of Millennium; and
(v) The certificate contemplated by Section 5.02,
dated the Closing Date, and signed by the president of
Millennium.
In addition to the above deliveries, Millennium shall take all steps and actions
as X-Net may reasonably request or as may otherwise be reasonably necessary to
consummate the transactions contemplated hereby.
1.07 Effect of Merger. On the Effective Date of the merger, Millennium
and Merger Co. shall cease to exist separately, and Merger Co. shall be merged
with and into Millennium, the Surviving Corporation, in accordance with the
provisions of this Agreement and the Articles of Merger, and in accordance with
the provisions of and with the effect provided in the corporation laws of the
State of Nevada. Millennium, as the Surviving Corporation, shall possess all the
rights, privileges, franchises, and trust and fiduciary duties, powers, and
obligations, of a private as well as of a public nature, and be subject to all
the restrictions, obligations, and duties of each of
Millennium and Merger Co.; all property, real, personal, and mixed, and all
debts due to either Millennium or Merger Co. on whatever account, and all other
things belonging to each of Millennium and Merger Co. shall be vested in
Millennium; all property, rights, privileges, powers, and franchises, and all
and every other interest shall be thereafter the property of Millennium as they
were of Millennium and Merger Co.; the title to any real estate, whether vested
by deed or otherwise, in either Millennium or Merger Co. shall not revert or be
in any way impaired by reason of the merger; provided, however, that all rights
of creditors and all liens on any property of either Millennium or Merger Co.
shall be preserved unimpaired, and all debts, liabilities, and duties of
Millennium and Merger Co. shall thenceforth attach to Millennium and may be
enforced against it to the same extent as if such debts, liabilities, and duties
had been incurred or contracted by Millennium.
1.08 Termination
(a) This Agreement may be terminated by the board of directors
of either X-Net or Millennium at any time prior to the Closing Date if:
(i) There shall be any actual or threatened action or
proceeding before any court or any governmental body which
shall seek to restrain, prohibit, or invalidate the
transactions contemplated by this Agreement and which, in the
reasonable judgment of such board of directors, made in good
faith and based upon the advice of its legal counsel, makes it
inadvisable to proceed with the transactions contemplated by
this Agreement;
(ii) Any of the transactions contemplated hereby are
disapproved by any regulatory authority whose approval is
required to consummate such transactions or in the reasonable
judgment of such board of directors, made in good faith and
based on the advice of counsel, there is substantial
likelihood that any such approval will not be obtained or will
be obtained only on a condition or conditions which would be
unduly burdensome, making it inadvisable to proceed with the
exchange; or
(iii) If the Effective Time shall not have occurred
by the close of business on July 31, 2003 (the "Termination
Date"); provided, however, that the right to terminate this
Agreement under this Section 1.08(a)(iii) shall not be
available to any Party whose failure to fulfill any obligation
under this Agreement has been the cause of, or resulted in,
the failure of the Effective Time to occur on or before the
Termination Date.
In the event of termination pursuant to this paragraph (a) of Section
1.08, no obligation, right, or liability shall arise hereunder, and
each party shall bear all of the expenses incurred by it in connection
with the negotiation, preparation, and execution of this Agreement and
the transactions contemplated hereby.
(b) This Agreement may be terminated at any time prior to the
Closing Date by action of the board of directors of X-Net if (i)
Millennium shall fail to comply in any material respect with any of its
covenants or agreements contained in this Agreement or if any of the
representations or warranties of Millennium contained herein shall be
inaccurate in any material respect, or (ii) there has been any material
adverse change in the business or financial condition of Millennium or
the Millennium Subsidiaries (as defined herein). In the event of
termination pursuant to this paragraph (b) of this section 1.08, no
obligation, right, remedy, or liability shall arise hereunder, except
that Millennium shall reimburse X-Net for all costs and expenses
actually incurred by it in connection with this Agreement, which were
incurred from and after the date hereof.
(c) This Agreement may be terminated at any time prior to the
Closing Date by action of the board of directors of Millennium if (i)
X-Net shall fail to comply in any material respect with any of its
covenants or agreements contained in this Agreement or if any of the
representations or warranties of X-Net contained herein shall be
inaccurate in any material respect, or (ii) there has been any material
adverse change in the business or financial condition of X-Net. In the
event of termination pursuant to this paragraph (c) of this section
1.08, no obligation, right, remedy, or liability shall arise hereunder
except that X-Net shall reimburse Millennium for all costs and expenses
actually incurred by it in connection with this Agreement, which were
incurred from and after the date hereof.
ARTICLE II
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF X-NET
As an inducement to, and to obtain the reliance of Millennium, X-Net
and Merger Co. represent and warrant as follows:
2.01 Organization.
(a) X-Net is, and will be on the Closing Date, a corporation
duly organized, validly existing, and in good standing under the laws
of the State of Nevada and has and will have the corporate power and is
and will be duly authorized, qualified, franchised, and licensed under
all applicable laws, regulations, ordinances, and orders of public
authorities to own all of its properties and assets and to carry on its
business in all material respects as it is now being conducted, and
there are no other jurisdictions in which it is not so qualified in
which the character and location of the assets owned by it or the
nature of the business transacted by it requires qualification, except
where failure to do so would not have a material adverse effect on its
business, operations, properties, assets or condition. The execution
and delivery of this Agreement does not, and the consummation of the
transactions contemplated by this Agreement in accordance with the
terms hereof will not, violate any provision of X-Net's articles of
incorporation or bylaws, or other agreement to which it is a party or
by which it is bound.
(b) Merger Co. will be on the Closing Date, a corporation duly
organized, validly existing, and in good standing under the laws of the
State of Nevada and will have the corporate power and will be duly
authorized, qualified, franchised, and licensed under all applicable
laws, regulations, ordinances, and orders of public authorities to own
all of its properties and assets and to carry on its business in all
material respects as it is now being conducted, and there are no other
jurisdictions in which it is not so qualified in which the character
and location of the assets owned by it or the nature of the business
transacted by it requires qualification, except where failure to do so
would not have a material adverse effect on its business, operations,
properties, assets or condition. The execution and delivery of this
Agreement does not, and the consummation of the transactions
contemplated by this Agreement in accordance with the terms hereof will
not, violate any provision of Merger Co.'s articles of incorporation or
bylaws, or other agreement to which it is a party or by which it is
bound.
2.02 Approval of Agreement. X-Net and Merger Co. have full power,
authority, and legal right and have taken, or will take, all action required by
law, their articles of incorporation, bylaws, and otherwise to execute and
deliver this Agreement and to consummate the transactions herein contemplated.
The board of directors and shareholders, where required, of X-Net and Merger Co.
have authorized and approved the execution, delivery, and performance of this
Agreement and the transactions contemplated hereby; subject to compliance with
state and federal corporate and securities laws.
2.03 Capitalization. The authorized capitalization of X-Net consists of
25,000,000 shares of common stock, $0.001 par value, of which 1,500,000 shares
are issued and outstanding. The authorized capitalization of Merger Co. consists
of 10,000 shares, $0.001 par value, of which 100 shares are issued and
outstanding. All issued and outstanding shares of X-Net and Merger Co. are
legally issued, fully paid, and nonassessable and not issued in violation of the
preemptive or other right of any person. There are no dividends or other
distributions due or payable with respect to any of the shares of capital stock
of X-Net or Merger Co.
2.04. SEC Reports; Financial Statements.
(a) X-Net has filed all forms, reports and documents
(including all Exhibits, Schedules and Annexes thereto) required to be
filed by it with the SEC since it became subject to the reporting
requirements of section 13 or 15(d) of the Exchange Act, including any
amendments or supplements thereto (collectively, including any such
forms, reports and documents filed after the date hereof, the "X-Net
SEC Reports "), and, with respect to the X-Net SEC Reports filed by
X-Net after the date hereof and prior to the Closing Date, will deliver
or make available to Millennium all of its X-Net SEC Reports in the
form filed with the SEC. The X-Net SEC Reports (i) were (and any X-Net
SEC Reports filed after the date hereof will be) in all material
respects prepared in accordance with the requirements of the Securities
Act or the Exchange Act, as the case
may be, and the rules and regulations promulgated thereunder, and (ii)
as of their respective filing dates, did not (and any X-Net SEC Reports
filed after the date hereof will not) contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
On the Closing Date, X-Net shall be current in the filing of the X-Net
SEC Reports.
(b) Included in Schedule 2.04 are (i) the audited balance
sheets of X-Net as of December 31, 2002 and 2001, and the related
statements of operations, changes in stockholders' equity (deficit),
and cash flows for the fiscal years ended December 31, 2002 and 2001,
including the notes thereto, and the accompanying report of Ted A.
Madsen, independent certified public accountant; and (ii) the unaudited
balance sheet of X-Net as of March 31, 2003, and the related unaudited
statements of operations, changes in stockholders' equity (deficit),
and cash flows for the three month period ended March 31, 2003.
(c) The financial statements of X-Net delivered pursuant to
Section 2.04(b) have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the
periods involved as explained in the notes to such financial
statements. The X-Net financial statements present fairly, in all
material respects, as of their respective dates, the financial
condition of X-Net. X-Net did not have, as of the date of any such
financial statements, except as and to the extent reflected or reserved
against therein, any liabilities or obligations (absolute or
contingent) which should be reflected in any financial statement or the
notes thereto prepared in accordance with generally accepted accounting
principles, and all assets reflected therein present fairly the assets
of X-Net in accordance with generally accepted accounting principles.
The statements of operations and cash flows present fairly the
financial position and results of operations of X-Net as of their
respective dates and for the respective periods covered thereby.
(d) X-Net has filed all tax returns required to be filed by it
from inception to the Closing Date. X-Net has no material liabilities
with respect to the payment of any federal, state, county, local, or
other taxes (including any deficiencies, interest, or penalties)
accrued for or applicable to the period ended on the date of the most
recent balance sheet of X-Net, except to the extent reflected on such
balance sheet and adequately provided for therein, which are not yet
due and payable. X-Net has not made any election pursuant to the
provisions of any applicable tax laws (other than elections that relate
solely to methods of accounting, depreciation, or amortization) that
would have a material adverse affect on X-Net, its financial condition,
its business as presently conducted or proposed to be conducted, or any
of its properties or material assets. None of such income tax returns
has been examined or is currently being examined by the Internal
Revenue Service and no deficiency assessment or proposed adjustment of
any such return is pending, proposed or
contemplated. There are no tax liens upon any of the assets of X-Net.
There are no outstanding agreements or waivers extending the statutory
period of limitation applicable to any tax return of X-Net.
(e) The books and records, financial and otherwise, of X-Net
and Merger Co. are in all material respects complete and correct and
have been maintained in accordance with sound business and bookkeeping
practices so as to accurately and fairly reflect, in reasonable detail,
the transactions and dispositions of the assets of X-Net and Merger
Co., and X-Net and Merger Co. have maintained a system of internal
accounting controls sufficient to provide reasonable assurances that
(i) transactions have been and are executed in accordance with
management's general or specific authorization; (ii) transactions are
recorded as necessary to permit the preparation of financial statements
in conformity with generally accepted accounting principles or any
other criteria applicable to such statements and to maintain
accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and
(iv) the recorded accountability for assets is compared with the
existing assets at reasonable intervals, and appropriate action is
taken with respect to any differences.
2.05 Outstanding Warrants and Options. X-Net and Merger Co. have no
existing warrants, options, calls, or commitments of any nature relating to the
authorized and unissued shares of X-Net or Merger Co. Common Stock.
2.06 Information. The information concerning X-Net and Merger Co. set
forth in this Agreement and the schedules delivered by X-Net pursuant hereto is
complete and accurate in all material respects and does not contain any untrue
statement of a material fact or omit to state a material fact required to make
the statements made, in light of the circumstances under which they were made,
not misleading. X-Net and Merger Co. shall cause the schedules delivered by them
pursuant hereto and the instruments delivered to Millennium hereunder to be
updated after the date hereof up to and including the Closing Date.
2.07 Absence of Certain Changes or Events. Except as set forth in this
Agreement or the schedules hereto, since March 31, 2003:
(a) There has not been (i) any adverse change in the business,
operations, properties, level of inventory, assets, or condition of
X-Net or (ii) any damage, destruction, or loss to X-Net (whether or not
covered by insurance) adversely affecting the business, operations,
properties, assets, or condition of X-Net;
(b) X-Net has not (i) amended its articles of incorporation or
bylaws; (ii) declared or made, or agreed to declare or make, any
payment of dividends or distributions of any assets of any kind
whatsoever to stockholders or purchased or redeemed, or agreed to
purchase or redeem, any of its capital stock; (iii) waived any rights
of value which in the aggregate are extraordinary or material
considering the business of X-Net; (iv) made
any change in its method of management, operation, or accounting; (v)
entered into any other transactions; (vi) made any accrual or
arrangement for or payment of bonuses or special compensation of any
kind or any severance or termination payment to any present or former
officer or employee; (vii) increased the rate of compensation payable
or to become payable by it to any of its officers or directors or any
of its employees; or (viii) established any profit-sharing, bonus,
deferred compensation, insurance, pension, retirement, or other
employee benefit plan, payment, or arrangement made to, for, or with
its officers, directors, or employees;
(c) X-Net has not (i) granted or agreed to grant any options,
warrants, or other rights for its stocks, bonds, or other corporate
securities calling for the issuance thereof; (ii) borrowed or agreed to
borrow any funds or incurred, or become subject to, any material
obligation or liability (absolute or contingent) except liabilities
incurred in the ordinary course of business; (iii) paid any material
obligation or liability (absolute or contingent) other than current
liabilities reflected in or shown on the most recent X-Net balance
sheet and current liabilities incurred since that date in the ordinary
course of business; (iv) sold or transferred, or agreed to sell or
transfer, any of its assets, properties, or rights or canceled, or
agreed to cancel, any debts or claims; (v) made or permitted any
amendment or termination of any contract, agreement, or license to
which it is a party if such amendment or termination is material,
considering the business of X-Net; or (vi) issued, delivered, or agreed
to issue or deliver any stock, bonds, or other corporate securities
including debentures (whether authorized and unissued or held as
treasury stock); and
(d) To the best knowledge of X-Net, it has not become subject
to any law or regulation which materially and adversely affects, or in
the future would be reasonably expected to adversely affect, the
business, operations, properties, assets, or condition of X-Net.
2.08 Title and Related Matters. Except as provided herein or disclosed
in the X-Net balance sheet and the notes thereto, X-Net has good and marketable
title to all of its properties, inventory, interests in properties, and assets,
which are reflected in the most recent X-Net balance sheet or acquired after
that date (except properties, interests in properties, and assets sold or
otherwise disposed of since such date in the ordinary course of business), free
and clear of all mortgages, liens, pledges, charges, or encumbrances, except (i)
statutory liens or claims not yet delinquent; and (ii) such imperfections of
title and easements as do not, and will not, materially detract from, or
interfere with, the present or proposed use of the properties subject thereto or
affected thereby or otherwise materially impair present business operations on
such properties.
2.09 Litigation and Proceedings. There are no actions, suits, or
administrative or other proceedings pending or threatened by or against X-Net or
adversely affecting X-Net or its properties, at law or in equity, before any
court or other governmental agency or instrumentality,
domestic or foreign, or before any arbitrator of any kind. There is no default
on its part with respect to any judgment, order, writ, injunction, decree,
award, rule, or regulation of any court, arbitrator, or governmental agency or
instrumentality.
2.10 Contracts. Except as included or described in Schedule 2.10:
(a) There are no material contracts, agreements, franchises,
license agreements, or other commitments to which X-Net is a party by
which it or any of the properties of X-Net are bound;
(b) All contracts, agreements, franchises, license agreements,
and other commitments to which X-Net is a party or by which its
properties are bound and which are material to the operations or
financial condition of X-Net are valid and enforceable by X-Net in all
material respects;
(c) X-Net is not a party to or bound by, and its properties
are not subject to, any material contract, agreement, other commitment
or instrument; any charter or other corporate restriction; or any
judgment, order, writ, injunction, decree, or award which materially
and adversely affects, or in the future may (as far as X-Net can now
foresee) materially and adversely affect, the business, operations,
properties, assets, or condition of X-Net; and
(d) X-Net is not a party to any oral or written (i) contract
for the employment of any officer, director, or employee which is not
terminable on 30 days (or less) notice; (ii) profit-sharing, bonus,
deferred compensation, stock option, severance pay, pension benefit or
retirement plan, agreement, or arrangement covered by Title IV of the
Employee Retirement Income Security Act, as amended; (iii) agreement,
contract, or indenture relating to the borrowing of money; (iv)
guarantee of any obligation, other than one on which X-Net is a primary
obligor, for the borrowing of money or otherwise, excluding
endorsements made for collection and other guarantees of obligations,
which, in the aggregate do not exceed $1,000; (v) consulting or other
similar contract with an unexpired term of more than one year or
providing for payments in excess of $1,000 in the aggregate; (vi)
collective bargaining agreement; (vii) agreement with any present or
former officer or director of X-Net or any subsidiary; or (viii)
contract, agreement, or other commitment involving payments by it of
more than $1,000 in the aggregate.
2.11 Material Contract Defaults. X-Net is not in default in any
material respect under the terms of any outstanding contract, agreement, lease,
or other commitment which is material to the business, operations, properties,
assets, or condition of X-Net, and there is no event of default or other event
which, with notice or lapse of time or both, would constitute a default in any
material respect under any such contract, agreement, lease, or other commitment
in respect of which X-Net has not taken adequate steps to prevent such a default
from occurring.
2.12 No Conflict With Other Instruments. The execution of this
Agreement and the consummation of the transactions contemplated by this
Agreement will not result in the breach of any term or provision of, or
constitute an event of default under, any indenture, mortgage, deed of trust, or
other contract, agreement, or instrument to which X-Net is a party or to which
any of its properties or operations are subject.
2.13 Compliance With Laws and Regulations. X-Net has complied with all
applicable statutes and regulations of any federal, state, or other governmental
entity or agency thereof, except to the extent that noncompliance would not
materially and adversely affect the business, operations, properties, assets, or
condition of X-Net or except to the extent that noncompliance would not result
in the occurrence of any material liability for X-Net. To the best knowledge of
X-Net, the consummation of the transactions contemplated by this Agreement will
comply with all applicable statutes and regulations, subject to the preparation
and filing of any forms required by state and federal securities laws.
2.14 Governmental Authorizations. X-Net has all licenses, franchises,
permits, and other governmental authorizations that are legally required to
enable it to conduct its business in all material respects as conducted on the
date of this Agreement. Except for compliance with federal and state securities
and corporation laws, as hereinafter provided, no authorization, approval,
consent, or order of, or registration, declaration, or filing with, any court or
other governmental body is required in connection with the execution and
delivery by X-Net of this Agreement and the consummation by X-Net of the
transactions contemplated hereby.
2.15 Subsidiaries and Predecessors. X-Net does not own, beneficially or
of record, any equity securities in any other entity except for Merger Co. which
is a wholly owned subsidiary formed for the sole purpose of completing the
transactions set forth herein. X-Net does not have a predecessor as that term is
defined under generally accepted accounting principles or Regulation S-X
promulgated by the Securities and Exchange Commission.
2.16 Insurance. X-Net currently has no significant insurable properties
and does not carry insurance on such properties.
2.17 Employee Relations. X-Net has complied in respect of its business
in all material respects with all applicable laws, rules, and regulations that
relate to prices, wages, hours, harassment, disabled access, and discrimination
in employment and collective bargaining and to the operation of its business and
is not liable for any arrears of wages or any taxes or penalties for failure to
comply with any of the foregoing. X-Net has no outstanding liabilities or
obligations with respect to any employee benefit or retirement plan. X-Net
believes that its relationship with its employees is satisfactory.
2.18 X-Net Schedules. X-Net has delivered to Millennium the following
schedules, which are collectively referred to as the "X-Net Schedules" and which
consist of the following separate schedules dated as of the date of execution of
this Agreement, all certified by a duly authorized officer of X-Net as complete,
true, and accurate:
(a) A schedule including copies of the articles of
incorporation and bylaws of X-Net in effect as of the date of this
Agreement;
(b) A schedule containing copies of resolutions adopted by the
board of directors and shareholders of X-Net and Merger Co., where
required, approving this Agreement and the transactions herein
contemplated;
(c) A schedule setting forth X-Net's annual reports on Form
10-KSB for the years ended December 31, 2002 and 2001 and its quarterly
reports on Form 10-QSB for the first three fiscal quarters of 2002 and
the first fiscal quarter of 2003, which reports include the financial
statements required pursuant to Section 2.04(b) hereof; and
(d) A schedule setting forth a description of any material
adverse change in the business, operations, property, inventory,
assets, or condition of X-Net since the most recent X-Net balance
sheet, required to be provided pursuant to Section 2.07 hereof;
(e) A schedule setting forth any material contracts required
to be provided or matters to be disclosed pursuant to Section 2.10
hereof; and
(f) A schedule setting forth any other information, together
with any required copies of documents, required to be disclosed in the
X-Net Schedules by Sections 2.01 through 2.17.
X-Net shall cause the X-Net Schedules and the instruments delivered to
Millennium hereunder to be updated after the date hereof up to and including the
Closing Date. Such updated X-Net Schedules, certified in the same manner as the
original X-Net Schedules, shall be delivered prior to and as a condition
precedent to the obligation of Millennium to close the transactions contemplated
by this Agreement.
ARTICLE III
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF MILLENNIUM
As an inducement to, and to obtain the reliance of, X-Net and Merger
Co., Millennium represents and warrants as follows. Prior to the Closing Date,
Millennium will acquire all issued and outstanding shares of Camper's World,
Inc., Twister Trailer, Inc., and Clear Lake Trailer, Inc., which are referred to
collectively in this Agreement as the "Millennium Subsidiaries."
3.01 Organization.
(a) Millennium is, and will be on the Closing Date, a
corporation duly organized, validly existing, and in good standing
under the laws of the State of Nevada and has and will have the
corporate power and is and will be duly authorized, qualified,
franchised, and licensed under all applicable laws, regulations,
ordinances, and orders of public authorities to own all of its
properties and assets and to carry on its business in all material
respects as it is now being conducted, and there are no other
jurisdictions in which it is not so qualified in which the character
and location of the assets owned by it or the nature of the business
transacted by it requires qualification, except where failure to do so
would not have a material adverse effect on its business, operations,
properties, assets or condition. The execution and delivery of this
Agreement does not, and the consummation of the transactions
contemplated by this Agreement in accordance with the terms hereof will
not, violate any provision of Millennium's articles of incorporation or
bylaws, or other material agreement to which it is a party or by which
it is bound.
(b) On the Closing Date, each of the Millennium Subsidiaries
will be a corporation duly organized, validly existing, and in good
standing under the laws of its respective state of incorporation and
will have the corporate power and will be duly authorized, qualified,
franchised, and licensed under all applicable laws, regulations,
ordinances, and orders of public authorities to own all of its
properties and assets and to carry on its business in all material
respects as it is now being conducted, and there will be no other
jurisdictions in which it is not so qualified in which the character
and location of the assets owned by it or the nature of the business
transacted by it requires qualification, except where failure to do so
would not have a material adverse effect on the business, operations,
properties, assets or condition of such Millennium Subsidiary. The
consummation of the transactions contemplated by this Agreement in
accordance with the terms hereof will not, violate any provision of any
of the Millennium Subsidiaries' articles of incorporation or bylaws, or
other material agreement to which they are parties or by which they are
bound.
3.02 Approval of Agreement. Millennium has full power, authority, and
legal right and has taken, or will take, all action required by law, its
articles of incorporation, bylaw, and otherwise to execute and deliver this
Agreement and to consummate the transactions herein contemplated, subject to
approval by the Millennium Shareholders. The board of directors of Millennium
has authorized and approved the execution, delivery, and performance of this
Agreement and the transactions contemplated hereby; subject to compliance with
state and federal corporate and securities laws.
3.03 Capitalization. The authorized capitalization of Millennium
consists of 50,000,000 shares of common stock, par value $0.001, of which
10,200,000 shares are issued and outstanding. All issued and outstanding shares
of Millennium are legally issued, fully paid, and nonassessable and not issued
in violation of the preemptive or other right of any person. There are no
dividends or
other payments or distributions due or payable with respect to any of the shares
of capital stock of Millennium. On the Closing Date, Millennium shall have a
total of 10,200,000 shares of common stock issued and outstanding, which
includes the shares of Millennium common stock that will be issued to acquire
the Millennium Subsidiaries.
3.04 Financial Statements.
(a) Included in Schedule 3.04 are: (i) the audited balance
sheet of Millennium as of December 31, 2002, and the related audited
statements of operations, stockholders' equity, and cash flows for the
period from inception on February 11, 2002 through December 31, 2002,
together with the notes thereto and the report of Murrell, Hall,
McIntosh & Co., PLLP, with respect thereto; (ii) the audited financial
statements of each of the Millennium Subsidiaries for the years ended
December 31, 2002 and 2001; and (iii) the unaudited financial
statements of Millennium and each of the Millennium Subsidiaries for
the quarter ended March 31, 2003. As provided in Section 6.09 herein,
prior to Closing Millennium shall deliver to X-Net unaudited financial
statements of Millennium and each of the Millennium Subsidiaries for
the fiscal quarter ended June 30, 2003, and unaudited pro forma
combined financial statements of Millennium and the Millennium
Subsidiaries.
(b) The financial statements of Millennium delivered pursuant
to Section 3.04(a), and to be delivered pursuant to Section 6.09, have
and will have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods
involved. The financial statements of Millennium present fairly in all
material aspects, as of their respective dates, the financial condition
of Millennium. Millennium did not, as of the date of any such balance
sheets, except as and to the extent reflected or reserved against
therein, any liabilities or obligations (absolute or contingent) which
should be reflected in any financial statements or the notes thereto
prepared in accordance with generally accepted accounting principles,
and all assets reflected therein present fairly the assets of
Millennium, in accordance with generally accepted accounting
principles. The statements of revenue and expenses and cash flows
present fairly the financial position and results of operations of
Millennium as of their respective dates and for the respective periods
covered thereby.
(c) Prior to the Closing Date, Millennium will file all tax
returns required to be filed by it for the period from inception in
February 2002 through December 31, 2002. Millennium has no material
liabilities with respect to the payment of any federal, state, county,
local, or other taxes (including any deficiencies, interest, or
penalties) accrued for or applicable to the period ended on the date of
the balance sheets of Millennium, except to the extent reflected on
such balance sheet and adequately provided for therein, which are not
yet due and payable. Millennium has not made any election pursuant to
the provisions of any applicable tax laws (other than elections that
relate solely to methods of accounting, depreciation, or amortization)
that would have a material adverse affect on Millennium, its financial
condition, business as presently conducted or proposed to be conducted,
or any of
its properties or material assets. No income tax returns of Millennium
has been examined or is currently being examined by the Internal
Revenue Service and no deficiency assessment or proposed adjustment of
any such return is pending, proposed or contemplated. There are no tax
liens upon any of the assets of Millennium. There are no outstanding
agreements or waivers extending the statutory period of limitation
applicable to any tax return of Millennium.
(d) The books and records, financial and otherwise, of Millennium are
in all material respects complete and correct and are maintained in
accordance with sound business and bookkeeping practices so as to
accurately and fairly reflect, in reasonable detail, the transactions
and dispositions of the assets of Millennium. Millennium maintains a
system of internal accounting controls sufficient to provide reasonable
assurances that (i) transactions have been and are executed in
accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit the preparation of
financial statements in conformity with generally accepted accounting
principles or any other criteria applicable to such statements and to
maintain accountability for assets; (iii) access to assets is permitted
only in accordance with management's general or specific authorization;
and (iv) the recorded accountability for assets is compared with the
existing assets at reasonable intervals, and appropriate action is taken
with respect to any differences.
3.05 Outstanding Warrants and Options. Included in the Millennium
Schedules is a list of outstanding stock options of Millennium setting for the
name of the option holder, the term of the option, the number of shares subject
to the option and the exercise price. Except as set forth in the Millennium
Schedules, Millennium does not have and will not have at Closing, any
outstanding options, warrants, calls or awards of any nature relating to the
authorized and unissued Millennium Shares.
3.06 Information. The information concerning Millennium and the
Millennium Subsidiaries set forth in this Agreement and in the schedules
delivered by Millennium pursuant hereto is complete and accurate in all material
respects and does not contain any untrue statement of a material fact or omit to
state a material fact required to make the statements made, in light of the
circumstances under which they were made, not misleading. Millennium shall cause
the schedules delivered by Millennium pursuant hereto to X-Net hereunder to be
updated after the date hereof up to and including the Closing Date.
3.07 Absence of Certain Changes or Events. Except as set forth in this
Agreement and the Millennium Schedules, since December 31, 2002:
(a) There has not been (i) any adverse change in the business,
operations, properties, level of inventory, assets, or condition of
Millennium or (ii) any damage, destruction, or loss to Millennium
(whether or not covered by insurance) adversely affecting the business,
operations, properties, assets, or condition of Millennium;
(b) Millennium has not (i) amended its articles of
incorporation or bylaws; (ii) declared or made, or agreed to declare or
make, any payment of dividends or distributions of any assets of any
kind whatsoever to its stockholders or purchased or redeemed, or agreed
to purchase or redeem, any of its capital stock; (iii) waived any
rights of value which in the aggregate are extraordinary and material
considering the business of Millennium; (iv) made any material change
in its method of accounting; (v) entered into any other material
transactions other than those contemplated by this Agreement; (vi) made
any material accrual or material arrangement for or payment of bonuses
or special compensation of any kind or any severance or termination pay
to any present or former officer or employee; (vii) increased the rate
of compensation payable or to become payable by it to any of its
officers or directors or any of its employees; or (viii) established
any profit-sharing, bonus, deferred compensation, insurance, pension,
retirement, or other employee benefit plan, payment, or arrangement
made to, for, or with its officers, directors, or employees;
(c) Except for actions taken in connection with Millennium's
acquisition of the Millennium Subsidiaries, which are set forth in the
Millennium Schedules, Millennium has not (i) granted or agreed to grant
any options, warrants, or other rights for its Shares, bonds, or other
securities calling for the issuance thereof; (ii) borrowed or agreed to
borrow any funds or incurred, or become subject to, any material
obligation or liability (absolute or contingent) except liabilities
incurred in the ordinary course of business; (iii) paid any material
obligation or liability (absolute or contingent) other than current
liabilities reflected in or shown on the most recent Millennium balance
sheet and current liabilities incurred since that date in the ordinary
course of business; (iv) sold or transferred, or agreed to sell or
transfer, any of its material assets, properties, or rights, or agreed
to cancel, any material debts or claims; (v) made or permitted any
amendment or termination of any contract, agreement, or license to
which it is a party if such amendment or termination is material,
considering the business of Millennium; or (vi) issued, delivered, or
agreed to issue or deliver any stock, bonds, or other company
securities including debentures (whether authorized and unissued or
held as treasury shares); and
(d) To the best knowledge of Millennium, it has not become
subject to any law or regulation which materially and adversely
affects, or in the future would be reasonably expected to adversely
affect, the business, operations, properties, assets, or condition of
Millennium.
3.08 Title and Related Matters. Except as provided herein or disclosed
in the Millennium balance sheet and the notes thereto, Millennium has good and
marketable title to all of its properties, inventory, interests in properties,
and assets, which are reflected in the most recent Millennium balance sheet or
acquired after that date (except properties, interests in properties, and assets
sold or otherwise disposed of since such date in the ordinary course of
business), free and
clear of all mortgages, liens, pledges, charges, or encumbrances, except (i)
statutory liens or claims not yet delinquent; and (ii) such imperfections of
title and easements as do not, and will not, materially detract from, or
interfere with, the present or proposed use of the properties subject thereto or
affected thereby or otherwise materially impair present business operations on
such properties.
3.09 Litigation and Proceedings. There are no material actions, suits,
or proceedings pending or, to the knowledge of Millennium, threatened by or
against Millennium or adversely affecting Millennium or its properties, at law
or in equity, before any court or other governmental agency or instrumentality,
domestic or foreign, or before any arbitrator of any kind. There is no default
on its part with respect to any judgment, order, writ, injunction, decree,
award, rule, or regulation of any court, arbitrator, or governmental agency or
instrumentality.
3.10 Contracts. Except as included or described in Schedule 3.10 or the
other Millennium Schedules:
(a) There are no material contracts, agreements, franchises,
license agreements, or other commitments to which Millennium is a party
by which it or any of the properties of Millennium are bound;
(b) All contracts, agreements, franchises, license agreements,
and other commitments to which Millennium is a party or by which its
properties are bound and which are material to the operations or
financial condition of Millennium are valid and enforceable by
Millennium in all material respects;
(c) Millennium is not a party to or bound by, and its
properties are not subject to, any material contract, agreement, other
commitment or instrument; any charter or other corporate restriction;
or any judgment, order, writ, injunction, decree, or award which
materially and adversely affects, or in the future may (as far as
Millennium can now foresee) materially and adversely affect, the
business, operations, properties, assets, or condition of Millennium;
and
(d) Millennium is not a party to any oral or written (i)
contract for the employment of any officer, director, or employee which
is not terminable on 30 days (or less) notice; (ii) profit-sharing,
bonus, deferred compensation, stock option, severance pay, pension
benefit or retirement plan, agreement, or arrangement covered by Title
IV of the Employee Retirement Income Security Act, as amended; (iii)
agreement, contract, or indenture relating to the borrowing of money;
(iv) guarantee of any obligation, other than one on which Millennium is
a primary obligor, for the borrowing of money or otherwise, excluding
endorsements made for collection and other guarantees of obligations,
which, in the aggregate do not exceed $1,000; (v) consulting or other
similar contract with an
unexpired term of more than one year or providing for payments in
excess of $1,000 in the aggregate; (vi) collective bargaining
agreement; (vii) agreement with any present or former officer or
director of Millennium or any subsidiary; or (viii) contract,
agreement, or other commitment involving payments by it of more than
$1,000 in the aggregate.
3.11 Material Contract Defaults. Except as described in the Millennium
Schedules, Millennium is not in default in any material respect under the terms
of any outstanding contract, agreement, lease, or other commitment which is
material to the business, operations, properties, assets, or condition of
Millennium, and there is no event of default or other event which, with notice
or lapse of time or both, would constitute a default in any material respect
under any such contract, agreement, lease, or other commitment in respect of
which Millennium has not taken adequate steps to prevent such a default from
occurring.
3.12 No Conflict With Other Instruments. Except as set forth in the
Millennium Schedules, the execution of this Agreement and the consummation of
the transactions contemplated by this Agreement will not result in the breach of
any term or provision of, or constitute an event of default under, any material
indenture, mortgage, deed of trust, or other material contract, agreement, or
instrument to which Millennium is a party or to which any of its properties or
operations are subject.
3.13 Compliance With Laws and Regulations. Millennium has complied with
all applicable statutes and regulations of any federal, state, or other
governmental entity or agency thereof, except to the extent that noncompliance
would not materially and adversely affect the business, operations, properties,
assets, or condition of Millennium or except to the extent that noncompliance
would not result in the occurrence of any material liability for Millennium. To
the best knowledge of Millennium, the consummation of the transactions
contemplated by this Agreement will comply with all applicable statutes and
regulations, subject to the preparation and filing of any forms required by
state and federal securities laws.
3.14 Governmental Authorizations. Millennium has all licenses,
franchises, permits, and other governmental authorizations that are legally
required to enable it to conduct its business in all material respects as
conducted on the date of this Agreement. Except for compliance with federal and
state securities and corporation laws, as hereinafter provided, no
authorization, approval, consent, or order of, or registration, declaration, or
filing with, any court or other governmental body is required in connection with
the execution and delivery by Millennium of this Agreement and the consummation
by Millennium of the transactions contemplated hereby.
3.15 Subsidiaries and Predecessors.
(a) Except as set forth in Schedule 3.15, Millennium does not
own, beneficially or of record, any equity securities in any other
entity. Millennium does not have a predecessor as that term is defined
under generally accepted accounting principles or Regulation S-X
promulgated by the Securities and Exchange Commission.
(b) On the Closing Date, each of the Millennium Subsidiaries
will be a wholly owned subsidiary of Millennium. Millennium has
provided X-Net with copies of the stock purchase agreements entered
into between Millennium and each of the Millennium Subsidiaries and, to
the best knowledge of Millennium, the representations and warranties of
the Millennium Subsidiaries set forth in such agreements were true when
made and will be true on the Closing Date.
3.16 Insurance. Millennium currently has no significant insurable
properties and does not carry insurance on such properties.
3.17 Employee Relations. Millennium has complied in respect of its
business in all material respects with all applicable laws, rules, and
regulations that relate to prices, wages, hours, harassment, disabled access,
and discrimination in employment and collective bargaining and to the operation
of its business and is not liable for any arrears of wages or any taxes or
penalties for failure to comply with any of the foregoing. Millennium has no
outstanding liabilities or obligations with respect to any employee benefit or
retirement plan. Millennium believes that its relationship with its employees is
satisfactory.
3.18 Millennium Schedules. Millennium has delivered to X-Net the
following schedules, which are collectively referred to as the "Millennium
Schedules" and which consist of the following separate schedules dated as of the
date of execution of this Agreement, and instruments and X-Net as of such date,
all certified by the chief executive officer of Millennium as complete, true,
and accurate:
(a) A schedule including copies of Millennium's and the
Millennium Subsidiaries' articles of incorporation and bylaws and all
amendments thereto in effect as of the date of this Agreement;
(b) A schedule containing copies of resolutions adopted by the
directors of Millennium approving this Agreement and the transactions
herein contemplated as referred to in Section 3.02 (copies of
resolutions of adopted by the Millennium shareholders approving this
Agreement will be delivered at or prior to Closing);
(c) A schedule setting forth the financial statements required
pursuant to Section 3.04 (a) hereof;
(d) A schedule setting forth a description of each outstanding
stock option of Millennium pursuant to Section 3.05 hereof;
(e) A schedule setting forth a description of any material
adverse change in the business, operations, property, inventory,
assets, or condition of Millennium since the most recent Millennium
balance sheet, required to be provided pursuant to Section 3.07 hereof;
(f) A schedule setting forth any material contracts required
to be provided or matters to be disclosed pursuant to Section 3.10
hereof; and
(g) A schedule containing copies of the stock purchase
agreements entered into between Millennium and each of the Millennium
Subsidiaries;
(h) A schedule setting forth any other information, together
with any required copies of documents, required to be disclosed in the
Millennium Schedules by Sections 3.01 through 3.17.
Millennium shall cause the Millennium Schedules and the instruments delivered to
X-Net hereunder to be updated after the date hereof up to and including the
Closing Date. Such updated Millennium Schedules, certified in the same manner as
the original Millennium Schedules, shall be delivered prior to and as a
condition precedent to the obligation of X-Net to close the transactions
contemplated by this Agreement.
ARTICLE IV
CONDITIONS PRECEDENT TO OBLIGATIONS OF MILLENNIUM
Millennium shall be bound by the terms and conditions of this Agreement
provided the following conditions are complied with and satisfied by X-Net at or
before the Closing Date:
4.01 Accuracy of Representations. The representations and warranties
made by X-Net in this Agreement were true when made and shall be true at the
Closing Date with the same force and affect as if such representations and
warranties were made at and as of the Closing Date (except for changes therein
permitted by this Agreement), and X-Net shall have performed or complied with
all covenants and conditions required by this Agreement to be performed or
complied with by X-Net prior to or at the Closing. Millennium shall be furnished
with certificates, signed by duly authorized officers of X-Net and dated the
Closing Date, to the foregoing effect.
4.02 Officer's Certificates. Millennium shall have been furnished with
certificates dated the Closing Date and signed by the duly authorized chief
executive officer of X-Net and Merger Co. to the effect that to such officers'
best knowledge, no litigation, proceeding, investigation, or inquiry is pending
or, to the best knowledge of X-Net or Merger Co. threatened, which might result
in an action to enjoin or prevent the consummation of the transactions
contemplated by this Agreement. Furthermore, based on certificates of good
standing, representations of government agencies, and X-Net's and Merger Co.'s
own documents and information, the certificate shall represent, to the best
knowledge of the officers, that:
(a) This Agreement has been duly approved by X-Net's and
Merger Co.'s boards of directors, and by the sole shareholder of Merger
Co.; approval of this Agreement by the X-Net's shareholders is not
required; and this Agreement has been duly executed and
delivered in the name and on behalf of X-Net and Merger Co. by their
duly authorized officers pursuant to, and in compliance with, authority
granted by the boards of directors of X-Net and Merger Co. pursuant to
unanimous written consents;
(b) Except as provided or permitted herein, there have been no
material adverse changes in X-Net or Merger Co. up to and including the
date of the certificate;
(c) All conditions required by this Agreement have been met,
satisfied, or performed by X-Net and Merger Co., as appropriate;
(d) All authorizations, consents, approvals, registrations,
and/or filings with any governmental body, agency, or court required in
connection with the execution and delivery of the documents by X-Net or
Merger Co. have been obtained and are in full force and effect or, if
not required to have been obtained, will be in full force and effect by
such time as may be required; and
(e) There is no material action, suit, proceeding, inquiry, or
investigation at law or in equity by any public board or body pending
or threatened against X-Net or Merger Co., wherein an unfavorable
decision, ruling, or finding could have an adverse effect on the
financial condition of X-Net or Merger Co., the operation of X-Net or
Merger Co., or the acquisition and reorganization contemplated herein,
or any agreement or instrument by which X-Net or Merger Co. is bound or
in any way contests the existence of X-Net or Merger Co.
4.03 No Material Adverse Change. Prior to the Closing Date, there shall
not have occurred any material adverse change in the financial condition,
business, or operations of X-Net or Merger Co., nor shall any event have
occurred which, with the lapse of time or the giving of notice, may cause or
create any material adverse change in the financial condition, business, or
operations of X-Net or Merger Co.
4.04 Good Standing. Millennium shall have received a certificates of
good standing from the Nevada Secretary of State, dated as of the date within
five days prior to the Closing Date, certifying that X-Net and Merger Co. are
each in good standing as corporations in the State of Nevada.
4.05 Opinion of Legal Counsel. Millennium shall have received a legal
opinion from X-Net's legal counsel to the effect that shareholder approval by
the X-Net shareholders is not required as a condition to X-Net's execution of
this Agreement and/or the consummation of the transactions contemplated hereby.
4.06 Satisfaction of Special Covenants. All actions to be taken or
performed by X-Net pursuant to Article VI of this Agreement shall have been
completed, unless waived by Millennium.
4.07 Other Items. Millennium shall have received such further
documents, certificates, or instruments relating to the transactions
contemplated hereby as Millennium may reasonably request.
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS OF X-NET
The obligations of X-Net under this Agreement are subject to the
satisfaction, at or before the Closing Date, of the following conditions:
5.01 Accuracy of Representations. The representations and warranties
made by Millennium in this Agreement were true when made and shall be true at
the Closing Date with the same force and effect as if such representations and
warranties were made at and as of the Closing Date (except for changes therein
permitted by this Agreement), and Millennium shall have performed or complied
with all covenants and conditions required by this Agreement to be performed or
complied with by Millennium prior to or at the Closing. X-Net shall be furnished
with a certificate, signed by a duly authorized officer of Millennium and dated
the Closing Date, to the foregoing effect.
5.02 Officer's Certificates. X-Net shall have been furnished with
certificates dated the Closing Date and signed by the duly authorized chief
executive officer of Millennium to the effect that no litigation, proceeding,
investigation, or inquiry is pending or, to the best knowledge of Millennium,
threatened, which might result in an action to enjoin or prevent the
consummation of the transactions contemplated by this Agreement. Furthermore,
based on certificates of good standing, representations of government agencies,
and Millennium's own documents, the certificate shall represent, to the best
knowledge of the officer, that:
(a) This agreement has been duly approved by Millennium's
board of directors and shareholders and has been duly executed and
delivered in the name and on behalf of Millennium by its duly
authorized officers pursuant to, and in compliance with, authority
granted by the board of directors of Millennium pursuant to a unanimous
consent;
(b) Except as provided or permitted herein, there have been no
material adverse changes in Millennium up to and including the date of
the certificate;
(c) All conditions required by this Agreement have been met,
satisfied, or performed by Millennium;
(d) All authorizations, consents, approvals, registrations,
and/or filing with any governmental body, agency, or court required in
connection with the execution and delivery of the documents by
Millennium have been obtained and are in full force and effect or, if
not required to have been obtained will be in full force and effect by
such time as may be required; and
(e) There is no material action, suit, proceeding, inquiry, or
investigation at law or in equity by any public board or body pending
or threatened against Millennium, wherein an unfavorable decision,
ruling, or finding would have a material adverse affect on the
financial condition of Millennium, the operation of Millennium, or the
acquisition and reorganization contemplated herein, or any material
agreement or instrument by which Millennium is bound or would in any
way contest the existence of Millennium.
5.03 No Material Adverse Change. Prior to the Closing Date, there shall
not have occurred any material adverse change in the financial condition,
business or operations of Millennium, nor shall any event have occurred which,
with the lapse of time or the giving of notice, may cause of create any material
adverse change in the financial condition, business, or operations of
Millennium.
5.04 Good Standing. X-Net shall have received a certificate of good
standing from the secretary of state of Nevada, dated as of a date with five
days prior to the Closing Date, certifying that Millennium is in good standing
as a corporation in the State of Nevada. X-Net shall have received certificates
of good standing from the appropriate authorities, dated as of dates within ten
days prior to the Closing Date, certifying that each of the Millennium
Subsidiaries is in good standing in its respective state of incorporation.
5.05 Millennium Financial Statements. X-Net shall have received the
audited financial statements, unaudited financial statements, and unaudited pro
forma financial statements of Millennium and the Millennium Subsidiaries
described in Section 6.09, which shall not indicate any adverse change from the
information contained in the unaudited financial statements described in Section
3.04(a).
5.06 Satisfaction of Special Covenants. All actions to be taken or
performed by Millennium pursuant to Article VI of this Agreement shall have been
completed, unless waived by X-Net.
5.07 Other Items. X-Net shall have received such further documents,
certificates, or instruments relating to the transactions contemplated hereby as
X-Net may reasonably request.
ARTICLE VI
SPECIAL COVENANTS
6.01 Activities of X-Net and Millennium
(a) From and after the date of this Agreement until the Closing Date
and except as set forth in the respective schedules to be delivered by X-Net and
Millennium pursuant hereto or as permitted or contemplated by this Agreement,
X-Net, Merger Co., and Millennium will each:
(i) Carry on its business in substantially the same manner as
it has heretofore;
(ii) Maintain in full force and effect insurance comparable in
amount and in scope of coverage to that now maintained by it;
(iii) Perform in all material respects all of its obligations
under material contracts, leases, and instruments relating to or
affecting its assets, properties, and business;
(iv) Use its best efforts to maintain and preserve its
business organization intact, to retain its key employees, and to
maintain its relationships with its material suppliers and customers;
(v) Duly and timely file for all taxable periods ending on or
prior to the Closing Date all federal, state, county, and local tax
returns required to be filed by or on behalf of such entity or for
which such entity may be held responsible and shall pay, or cause to be
paid, all taxes required to be shown as due and payable on such
returns, as well as all installments of tax due and payable during the
period commencing on the date of this Agreement and ending on the
Closing Date.; and
(vi) Fully comply with and perform in all material respects
all obligations and duties imposed on it by all federal and state laws
and all rules, regulations, and orders imposed by federal or state
governmental authorities.
(b) From and after the date of this Agreement and except as provided
herein until the Closing Date, each of X-Net, Merger Co., and Millennium will
not:
(i) Make any change in its articles of incorporation or bylaws
or effect any recapitalization;
(ii) Enter into or amend any material contract, agreement, or
other instrument of any of the types described in such party's
schedules, except that a party may enter into or amend any contract,
agreement, or other instrument in the ordinary course of business; and
(iii) Enter into any agreement for the sale of Millennium,
X-Net or Merger Co.'s securities without the prior written approval of
the other parties.
6.02 Access to Properties and Records. Until the Closing Date,
Millennium, X-Net, and Merger Co. will afford to the other party's officers and
authorized representatives full access to the properties, books, and records of
the other party in order that each party may have full opportunity to make such
reasonable investigation as it shall desire to make of the affairs of Millennium
or X-Net and will furnish the other party with such additional financial and
other information as to the business and properties of Millennium or X-Net as
each party shall from time to time reasonably request.
6.03 Indemnification by Millennium. Millennium will indemnify and hold
harmless X-Net, Merger Co. and their respective directors and officers, and each
person, if any, who controls X-Net or Merger Co. within the meaning of the
Securities Act, from and against any and all losses, claims, damages, expenses,
liabilities, or actions to which any of them may become subject under applicable
law (including the Securities Act and the Securities Exchange Act) and will
reimburse them for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any claims or actions, whether or not
resulting in liability, insofar as such losses, claims, damages, expenses,
liabilities, or actions arise out of or are based upon any untrue statement or
alleged untrue statement of material fact contained in any application or
statement filed with a governmental body or arising out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary in order to make the statements therein not
misleading, but only insofar as any such statement or omission was made in
reliance upon and in conformity with information furnished in writing by
Millennium expressly for use therein. The indemnity agreement contained in this
Section 6.03 shall remain operative and in full force and effect, regardless of
any investigation made by or on behalf of X-Net or Merger Co. and shall survive
the consummation of the transactions contemplated by this Agreement for a period
of one year.
6.04. Indemnification by X-Net. X-Net will indemnify and hold harmless
Millennium, and its directors and officers, and each person, if any, who
controls Millennium within the meaning of the Securities Act, from and against
any and all losses, claims, damages, expenses, liabilities, or actions to which
any of them may become subject under applicable law (including the Securities
Act and the Securities Exchange Act) and will reimburse them for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any claims or actions, whether or not resulting in liability, insofar
as such losses, claims, damages, expenses, liabilities, or actions arise out of
or are based upon any untrue statement or alleged untrue statement of a material
fact contained in any application or statement filed with a governmental body or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein, or necessary in order to make the
statements therein not misleading, but only insofar as any such statement or
omission was made in reliance upon and in conformity with information
furnished in writing by X-Net expressly for use therein. The indemnity agreement
contained in this Section 6.04 shall remain operative and in full force and
effect, regardless of any investigation made by or on behalf of Millennium and
shall survive the consummation of the transactions contemplated by this
Agreement for a period of one year.
6.05 The Acquisition of X-Net Common Stock. X-Net and Millennium
understand and agree that the consummation of this Agreement including the
issuance of the X-Net Common Stock to Millennium in exchange for the Millennium
Shares as contemplated hereby, constitutes the offer and sale of securities
under the Securities Act and applicable state statutes. X-Net and Millennium
agree that such transactions shall be consummated in reliance on exemptions from
the registration and prospectus delivery requirements of such statutes which
depend, among other items, on the circumstances under which such securities are
acquired.
(a) In order to provide documentation for reliance upon the
exemptions from the registration and prospectus delivery requirements
for such transactions, each shareholder of Millennium shall execute and
deliver to X-Net an investment representation letter in substantially
the same form as that attached hereto as Exhibit "A."
(b) In connection with the transaction contemplated by this
Agreement, Millennium and X-Net shall each file, with the assistance of
the other and their respective legal counsel, such notices,
applications, reports, or other instruments as may be deemed by them to
be necessary or appropriate in an effort to document reliance on such
exemptions, and the appropriate regulatory authority in the states
where the shareholders of Millennium reside unless an exemption
requiring no filing is available in such jurisdictions, all to the
extent and in the manner as may be deemed by such parties to be
appropriate.
(c) In order to more fully document reliance on the exemptions
as provided herein, Millennium, the shareholders of Millennium, and
X-Net shall execute and deliver to the other, at or prior to the
Closing, such further letters of representation, acknowledgment,
suitability, or the like as X-Net or Millennium and their respective
counsel may reasonably request in connection with reliance on
exemptions from registration under such securities laws.
6.06 Securities Filings. X-Net shall be responsible for the preparation
of a Form D and its filing with the Securities and Exchange Commission and
Millennium will be responsible for any and all filings in any jurisdiction where
its shareholders reside which would require a filing with a governmental agency
as a result of the transactions contemplated in this Agreement.
6.07 Sales of Securities Under Rule 144.
(a) X-Net will use its best efforts to at all times satisfy
the current public information requirements of rule 144 promulgated
under the Securities Act so that its shareholders can sell restricted
securities that have been held for one year or more or such other
restricted period as required by rule 144 as it is from time to time
amended.
(b) Upon being informed in writing by any person holding
restricted stock of X-Net as of the date of this Agreement that such
person intends to sell any shares under rule 144 promulgated under the
Securities Act (including any rule adopted in substitution or
replacement thereof), X-Net will certify in writing to such person that
it is in compliance with rule 144 current public information
requirement to enable such person to sell such person's restricted
stock under rule 144, as may be applicable under the circumstances.
(c) If any certificate representing any such restricted stock
is presented to X-Net's transfer agent for registration or transfer in
connection with any sales theretofore made under rule 144, provided
such certificate is duly endorsed for transfer by the appropriate
person(s) or accompanied by a separate stock power duly executed by the
appropriate person(s) in each case with reasonable assurances that such
endorsements are genuine and effective, and is accompanied by an
opinion of counsel satisfactory to X-Net and its counsel that such
transfer has complied with the requirements of rule 144, as the case
may be, X-Net will promptly instruct its transfer agent to register
such transfer and to issue one or more new certificates representing
such shares to the transferee and, if appropriate under the provisions
of rule 144, as the case may be, free of any related stop transfer
order or restrictive legend. The provisions of this Section 6.08 shall
survive the Closing and the consummation of the transactions
contemplated by this Agreement for a period of two years.
6.08 New Board of Directors and Officers. Upon closing of the
transactions contemplated by this Agreement, Dennis K. DePriest shall be
appointed as a director of X-Net. Ten (10) days after such closing date, or the
earliest date permitted by Rule 14f-1 promulgated under the Exchange Act,
Stephen D. Utley shall resign from his position as a director of X-Net and a
person designated by Millennium shall be appointed as a director to fill the
vacancy created by such resignation. Upon the closing of the transactions
contemplated by this Agreement, the current officers of X-Net shall resign from
their respective positions and the persons designated by Millennium shall be
appointed to fill the vacancies created thereby, subject to the approval of the
suitability and qualifications of such nominees by X-Net's board of directors.
6.09 Millennium Financial Statements. Prior to Closing, Millennium
shall cause to be prepared and delivered to X-Net: (i) unaudited financial
statements of Millennium and each of the Millennium Subsidiaries as of June 30,
2003 and for the three-month period then ended; (iii) unaudited combined pro
forma financial statements of Millennium and the Millennium
Subsidiaries as of December 31, 2002 and June 30, 2003; and (iv) any
additional financial statements and information of Millennium and the Millennium
Subsidiaries that is required to be filed by X-Net with the SEC as a result of
its acquisition of Millennium. All such financial statements shall be prepared
in accordance with the rules and regulations of the SEC. The audited and
unaudited financial statements of Millennium and the Millennium Subsidiaries
shall not indicate any material adverse change in the financial position of
Millennium or the Millennium Subsidiaries from the information set forth in the
financial statements of such companies referred to Section 3.04(a). The audited
financial statements of Millennium and the Millennium Subsidiaries shall
indicate pro forma combined revenues for the year ended December 31, 2002 of not
less than $22 Million.
6.10 Millennium Stockholder Approval. Millennium shall have obtained
approval of this Agreement by the Millennium stockholders in accordance with the
requirements of Nevada law.
6.11 Millennium Interim Financing. Millennium shall have obtained a
commitment or commitments for additional debt or equity capital in an amount not
less than $500,000 for use in connection with its acquisition of the Acquired
Companies and to provide it with additional working capital. Any such financing
shall be on terms and conditions acceptable to X-Net; provided, that the terms
shall be deemed to be acceptable to X-Net if not more than 500,000 shares of
X-Net stock are ultimately required to be issued in connection with such interim
financing.
6.12 Millennium Investment Banking Agreement. Millennium shall have
entered into an agreement with an investment banking firm, in form and substance
satisfactory to X-Net, pursuant to which such investment banking firm agrees to
assist Millennium in conducting an equity offering, the minimum proceeds from
which will be sufficient to implement the next phase of Millennium's business
plan.
6.13 "Leak-Out" Agreements. At Closing, Millennium shall deliver to
X-Net agreements from each person who owns 20,000 shares or more of Millennium's
common stock, agreeing that unless otherwise agreed to by Millennium, during the
two year period following the Closing Date, they will not publicly sell more
than 5% of their holdings in any single calendar month, and that any purchaser
of shares from such persons in private transactions will agree to be bound by
the same restriction.
6.14 X-Net Financial Condition. On the Closing Date, X-Net shall have
cash and cash equivalents in the amount of approximately $175,000, in addition
to the $15,000 promissory note from Millennium.
ARTICLE VII
MISCELLANEOUS
7.01 Brokers. X-Net and Millennium agree that they are not obligated to
pay any finders or brokers for bringing the parties together or who were
instrumental in the negotiation, execution, or consummation of this Agreement,
except that Millennium has agreed to issue 200,000 shares of Millennium common
stock (which will be converted to 200,000 shares of X-Net common stock) to Frank
Gillen and his associates for investment banking and finders' services provided
to Millennium. Except for the foregoing, X-Net and Millennium each agree to
indemnify the other against any claim by any third person for any commission,
brokerage, or finder's fee or other payment with respect to this Agreement or
the transactions contemplated hereby based on any alleged agreement or
understanding between such party and such third person, whether express or
implied, from the actions of such party.
7.02 No Representation Regarding Tax Treatment. No representation or
warranty is being made by any party to any other regarding the treatment of this
transaction for federal or state income taxation. Each party has relied
exclusively on its own legal, accounting, and other tax adviser regarding the
treatment of this transaction for federal and state income tax purposes.
7.03 Governing Law. This Agreement shall be governed by, enforced and
construed under and in accordance with the laws of the State of Nevada.
7.04 Notices. Any notices or other communications required or permitted
hereunder shall be sufficiently given if personally delivered, if sent by
facsimile or telecopy transmission or other electronic communication confirmed
by registered or certified mail, postage prepaid, or if sent by prepaid
overnight courier addressed as follows:
If to X-Net, to: If to Millennium, to:
Stephen D. Utley Dennis K. DePriest
President President
X-Net Services Corp. Third Millennium Industries, Inc.
13537 Jackson St. 4933 HWY 60
Thornton, CO 80241 Rogersville, MO 65742
With a copy to: With a copy to:
Gary R. Henrie, Esq. Mark N. Schneider, Esq.
10616 Eagle Nest Street Mark N. Schneider, A Prof. Corp.
Las Vegas, NV 89141 265 E. 100 S., Suite 250
Salt Lake City, UT 84111
or such other addresses as shall be furnished in writing by any party in the
manner for giving notices, hereunder, and any such notice or communication shall
be deemed to have been given as of the date so delivered or sent by facsimile or
telecopy transmission or other electronic communication, or one day after the
date so sent by overnight courier.
7.05 Attorney's Fees. In the event that any party institutes any action
or suit to enforce this Agreement or to secure relief from any default hereunder
or breach hereof, the breaching party or parties shall reimburse the
nonbreaching party or parties for all costs, including reasonable attorneys'
fees, incurred in connection therewith and in enforcing or collecting any
judgment rendered therein.
7.06 Schedules; Knowledge. Whenever in any section of this Agreement
reference is made to information set forth in the schedules provided by X-Net or
Millennium such reference is to information specifically set forth in such
schedules and clearly marked to identify the section of this Agreement to which
the information relates. Whenever any representation is made to the "knowledge"
of any party, it shall be deemed to be a representation that no officer or
director of such party, after reasonable investigation, has any knowledge of
such matters.
7.07 Entire Agreement. This Agreement represents the entire agreement
between the parties relating to the subject matter hereof. All previous
agreements between the parties, whether written or oral, have been merged into
this Agreement. This Agreement alone fully and completely expresses the
agreement of the parties relating to the subject matter hereof. There are no
other courses of dealing, understandings, agreements, representations, or
warranties, written or oral, except as set forth herein.
7.08 Survival; Termination. The representations, warranties, and
covenants of the respective parties shall survive the Closing Date and the
consummation of the transactions herein contemplated for a period of one year
from the Closing Date, unless otherwise provided herein.
7.09 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which taken
together shall be but a single instrument.
7.10 Amendment or Waiver. Every right and remedy provided herein shall
be cumulative with every other right and remedy, whether conferred herein, at
law, or in equity, and such remedies may be enforced concurrently, and no waiver
by any party of the performance of any obligation by the other shall be
construed as a waiver of the same or any other default then, theretofore, or
thereafter occurring or existing. At any time prior to the Closing Date, this
Agreement may be amended by a writing signed by all parties hereto, with respect
to any of the terms contained herein, and any term or condition of this
Agreement may be waived or the time for performance thereof may be extended by a
writing signed by the party or parties for whose benefit the provision is
intended.
7.11 Public Statements. Subject to their respective legal obligations
(including requirements of stock exchanges and other similar regulatory bodies),
the Parties shall consult with one another, and use reasonable best efforts to
agree upon the text of any press release, before issuing any such press release
or otherwise making public statements with respect to the Merger and in making
any filings with any federal or state governmental or regulatory agency or with
any securities exchange with respect thereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers, hereunto duly authorized, as of the date
first above written.
X-Net Services Corp. Third Millennium Industries, Inc.
A Nevada corporation A Nevada corporation
By: /s/ Stephen D. Utley By: /s/ Dennis K. DePriest
------------------------------ --------------------------------
Stephen D. Utley, President Dennis K. DePriest, President
X-Net MERGER CO.,
a Nevada corporation
By: /s/ Stephen D. Utley
------------------------------
Stephen D. Utley, President