REORGANIZATION AND STOCK PURCHASE AGREEMENT
by and between
Xelex Corp.
a Florida corporation,
on the one hand
and
Kenwick Industries, Inc.
a Florida corporation
and
Automax USA, Inc.
a Florida corporation
and
Automax International, Inc.
a Florida corporation
and
Automax USA Finance, Inc.
a Florida corporation
and
Automax of America, Inc.
a Florida corporation
on the other hand
REORGANIZATION AND STOCK PURCHASE AGREEMENT
REORGANIZATION AND STOCK PURCHASE AGREEMENT ("Agreement"), dated February
2, 2001, by and among XELEX CORP., a Florida corporation ("Xelex"), on the one
hand, KENWICK INDUSTRIES, INC., a Florida corporation ("Kenwick"), AUTOMAX USA,
INC., a Florida corporation ("Automax USA"), AUTOMAX INTERNATIONAL, INC., a
Florida corporation ("Automax International"), AUTOMAX USA FINANCE, INC., a
Florida corporation ("Automax Finance"), and AUTOMAX OF AMERICA, INC., a
Florida corporation ("Automax America"), on the other hand. Each of Automax
USA, Automax International, Automax Finance, and Automax America shall be
collectively referred to as "Automax," and each of Xelex, Kenwick, and Automax
shall be referred to herein as a "Party" and collectively as the "Parties."
W I T N E S S E T H
WHEREAS, Kenwick owns 100% of the issued and outstanding common stock of
Automax as set forth on Exhibit A attached hereto (the "Automax Shares");
WHEREAS, Kenwick desires to sell and Xelex desires to purchase all of the
Automax Shares in accordance with the terms set forth herein;
WHEREAS, the Parties desire and intend that the transactions contemplated
by this Agreement will be a tax free reorganization under Section 368(a)(1)(A)
of the Internal Revenue Code of 1986, as amended.
NOW THEREFORE, in consideration of the premises and respective mutual
agreements, covenants, representations and warranties herein contained, it is
agreed between the parties hereto as follows:
ARTICLE 1
SALE AND PURCHASE OF THE AUTOMAX SHARES
1.1 Sale of the Automax Shares. At the Closing, subject to the terms
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and conditions herein set forth, and on the basis of the representations,
warranties and agreements herein contained, Kenwick shall sell to Xelex and
Xelex shall purchase from Kenwick, the Automax Shares. Xelex shall pay to
Kenwick, or its assigns, as consideration for the receipt of the Automax Shares,
Fourteen Million (14,000,000) post-split shares of Xelex common stock (the
"Xelex Shares"). The Xelex Shares shall constitute over ninety nine percent
(99%) of the issued and outstanding common stock of Xelex as of the Closing
(after giving effect to the cancellation of an aggregate of 40,000,000 shares of
Xelex common stock and the 1-for-100 reverse stock split discussed in Section
3.2 below, but before the issuance of 2,300,000 shares as a consulting fee as
set forth in Section 6.8 below).
1.2 Position and Title. Effective as of the Closing, the entire Board of
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Directors and all of the officers of Xelex and its subsidiary, 1250332 Ontario
Corporation ("Ontario") shall resign, and Kenwick shall appoint the individuals
identified on EXHIBIT B attached hereto as the officers and directors of Xelex
and Ontario.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of Kenwick and Automax. To induce
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Xelex to enter into this Agreement and to consummate the transactions
contemplated hereby, Kenwick and Automax represent and warrant, as of the date
hereof and as of the Closing, as follows:
2.1.1 Kenwick and Automax have the full right, power and authority to
enter into this Agreement and to carry out and consummate the transactions
contemplated herein. This Agreement constitutes the legal, valid and binding
obligation of Kenwick and Automax. Kenwick hereby expressly represents and
warrants that the approval of the shareholders of Kenwick is not required in
order for Kenwick to consummate the transactions contemplated herein or that it
shall obtain such approval as is required prior to the Closing.
2.1.2 Corporate Existence and Authority of Kenwick. Kenwick is a
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corporation duly organized, validly existing and in good standing under the laws
of the State of Florida. It has all requisite corporate power, franchises,
licenses, permits and authority to own its properties and assets and to carry on
its business as it has been and is being conducted. It is in good standing in
each state, nation or other jurisdiction wherein the character of the business
transacted by it makes such qualification necessary.
2.1.3 Corporate Existence and Authority of Automax USA. Automax USA is
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a corporation duly organized, validly existing and in good standing under the
laws of the State of Florida. It has all requisite corporate power, franchises,
licenses, permits and authority to own its properties and assets and to carry on
its business as it has been and is being conducted. It is in good standing in
each state, nation or other jurisdiction wherein the character of the business
transacted by it makes such qualification necessary.
2.1.4 Capitalization of Automax USA. The authorized equity securities
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of Automax USA consists of 1,000 shares of common stock, par value $0 .01, of
which 1,000 shares are issued and outstanding as set forth on EXHIBIT A attached
hereto. Except as set forth on SCHEDULE 2.1.4, (i) no other shares of capital
stock of Automax USA are issued and outstanding; (ii) all of the issued and
outstanding shares have been duly and validly issued in accordance and
compliance with all applicable laws, rules and regulations and are fully paid
and nonassessable; (iii) there are no options, warrants, rights, calls,
commitments, plans, contracts or other agreements of any character granted or
issued by Automax USA which provide for the purchase, issuance or transfer of
any shares of the capital stock of Automax USA nor are there any outstanding
securities granted or issued by Automax USA that are convertible into any shares
of the equity securities of Automax USA, and none is authorized; (iv) Automax
USA is not obligated or committed to purchase, redeem or otherwise acquire any
of its equity; (v) all presently exercisable voting rights in Automax USA are
vested exclusively in its outstanding shares of common stock, each share of
which is entitled to one vote on every matter to come before it's shareholders;
and (vi) other than as may be contemplated by this Agreement, there are no
voting trusts or other voting arrangements with respect to any of Automax USA's
equity securities.
2.1.5 Corporate Existence and Authority of Automax International.
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Automax International is a corporation duly organized, validly existing and in
good standing under the laws of the State of Florida. It has all requisite
corporate power, franchises, licenses, permits and authority to own its
properties and assets and to carry on its business as it has been and is being
conducted. It is in good standing in each state, nation or other jurisdiction
wherein the character of the business transacted by it makes such qualification
necessary.
2.1.6 Capitalization of Automax International. The authorized equity
-----------------------------------------
securities of Automax International consists of 1,000 shares of common stock,
par value $0.01, of which 1,000 shares are issued and outstanding as set forth
on EXHIBIT A attached hereto. Except as set forth on SCHEDULE 2.1.6, (i) no
other shares of capital stock of Automax International are issued and
outstanding; (ii) all of the issued and outstanding shares have been duly and
validly issued in accordance and compliance with all applicable laws, rules and
regulations and are fully paid and nonassessable; (iii) there are no options,
warrants, rights, calls, commitments, plans, contracts or other agreements of
any character granted or issued by Automax International which provide for the
purchase, issuance or transfer of any shares of the capital stock of Automax
International nor are there any outstanding securities granted or issued by
Automax International that are convertible into any shares of the equity
securities of Automax International, and none is authorized; (iv) Automax
International is not obligated or committed to purchase, redeem or otherwise
acquire any of its equity; (v) all presently exercisable voting rights in
Automax International are vested exclusively in its outstanding shares of common
stock, each share of which is entitled to one vote on every matter to come
before it's shareholders; and (vi) other than as may be contemplated by this
Agreement, there are no voting trusts or other voting arrangements with respect
to any of Automax International's equity securities.
2.1.7 Corporate Existence and Authority of Automax Finance. Automax
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Finance is a corporation duly organized, validly existing and in good standing
under the laws of the State of Florida. It has all requisite corporate power,
franchises, licenses, permits and authority to own its properties and assets and
to carry on its business as it has been and is being conducted. It is in good
standing in each state, nation or other jurisdiction wherein the character of
the business transacted by it makes such qualification necessary.
2.1.8 Capitalization of Automax Finance. The authorized equity
------------------------------------
securities of Automax Finance consists 1,000 shares of common stock, par value
$0.01, of which 1,000 shares are issued and outstanding as set forth on EXHIBIT
A attached hereto. Except as set forth on SCHEDULE 2.1.8, (i) no other shares
of capital stock of Automax Finance are issued and outstanding; (ii) all of the
issued and outstanding shares have been duly and validly issued in accordance
and compliance with all applicable laws, rules and regulations and are fully
paid and nonassessable; (iii) there are no options, warrants, rights, calls,
commitments, plans, contracts or other agreements of any character granted or
issued by Automax Finance which provide for the purchase, issuance or transfer
of any shares of the capital stock of Automax Finance nor are there any
outstanding securities granted or issued by Automax Finance that are convertible
into any shares of the equity securities of Automax Finance, and none is
authorized; (iv) Automax Finance is not obligated or committed to purchase,
redeem or otherwise acquire any of its equity; (v) all presently exercisable
voting rights in Automax Finance are vested exclusively in its outstanding
shares of common stock, each share of which is entitled to one vote on every
matter to come before it's shareholders; and (vi) other than as may be
contemplated by this Agreement, there are no voting trusts or other voting
arrangements with respect to any of Automax Finance's equity securities.
2.1.9 Corporate Existence and Authority of Automax America. Automax
-------------------------------------------------------
America is a corporation duly organized, validly existing and in good standing
under the laws of the State of Florida. It has all requisite corporate power,
franchises, licenses, permits and authority to own its properties and assets and
to carry on its business as it has been and is being conducted. It is in good
standing in each state, nation or other jurisdiction wherein the character of
the business transacted by it makes such qualification necessary.
2.1.10 Capitalization of Automax America. The authorized equity
------------------------------------
securities of Automax America consists 1,000 shares of common stock, par value
$0.01, of which 1,000 shares are issued and outstanding as set forth on EXHIBIT
A attached hereto. Except as set forth on SCHEDULE 2.1.10, (i) no other shares
of capital stock of Automax America are issued and outstanding; (ii) all of the
issued and outstanding shares have been duly and validly issued in accordance
and compliance with all applicable laws, rules and regulations and are fully
paid and nonassessable; (iii) there are no options, warrants, rights, calls,
commitments, plans, contracts or other agreements of any character granted or
issued by Automax America which provide for the purchase, issuance or transfer
of any shares of the capital stock of Automax America nor are there any
outstanding securities granted or issued by Automax America that are convertible
into any shares of the equity securities of Automax America, and none is
authorized; (iv) Automax America is not obligated or committed to purchase,
redeem or otherwise acquire any of its equity; (v) all presently exercisable
voting rights in Automax America are vested exclusively in its outstanding
shares of common stock, each share of which is entitled to one vote on every
matter to come before it's shareholders; and (vi) other than as may be
contemplated by this Agreement, there are no voting trusts or other voting
arrangements with respect to any of Automax America's equity securities.
2.1.11 Subsidiaries. "Subsidiary" or "Subsidiaries" means all
------------
corporations, trusts, partnerships, associations, joint ventures or other
Persons, as defined below, of which a corporation or any other Subsidiary of
such corporation owns not less than twenty percent (20%) of the voting
securities or other equity or of which such corporation or any other Subsidiary
of such corporation possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies, whether through ownership of
voting shares, management contracts or otherwise. "Person" means any
individual, corporation, trust, association, partnership, proprietorship, joint
venture or other entity. Automax USA is a subsidiary of Kenwick, and Automax
International, Automax Finance, and Automax America are subsidiaries of Automax
USA. Other than as set forth above, there are no other subsidiaries of Automax.
2.1.12 Execution of Agreement. Except as set forth on SCHEDULE 2.1.12,
----------------------
the execution and delivery of this Agreement does not, and the consummation of
the transactions contemplated hereby will not: (a) violate, conflict with,
modify or cause any default under or acceleration of (or give any party any
right to declare any default or acceleration upon notice or passage of time or
both), in whole or in part, any charter, article of incorporation, bylaw,
mortgage, lien, deed of trust, indenture, lease, agreement, instrument, order,
injunction, decree, judgment, law or any other restriction of any kind to which
either Kenwick or Automax are a party or by which either of them or any of their
properties are bound; (b) result in the creation of any security interest, lien,
encumbrance, adverse claim, proscription or restriction on any property or asset
(whether real, personal, mixed, tangible or intangible), right, contract,
agreement or business of Kenwick or Automax; (c) violate any law, rule or
regulation of any federal or state regulatory agency; or (d) permit any federal
or state regulatory agency to impose any restrictions or limitations of any
nature on Kenwick or Automax or any of their respective actions.
2.1.13 Taxes.
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2.1.13.1 Except as set forth on SCHEDULE 2.1.13, or as shown on the
Automax Financial Statements as of September 30, 2000 and for the nine months
then ended, a copy of which is attached hereto as EXHIBIT C, all taxes,
assessments, fees, penalties, interest and other governmental charges with
respect to Automax which have become due and payable on the date hereof have
been paid in full or adequately reserved against by Automax, (including without
limitation, income, property, sales, use, franchise, capital stock, excise,
added value, employees' income withholding, social security and unemployment
taxes), and all interest and penalties thereon with respect to the periods then
ended and for all periods thereto;
2.1.13.2 Except as set forth on SCHEDULE 2.1.13, there are no
agreements, waivers or other arrangements providing for an extension of time
with respect to the assessment of any tax or deficiency against Automax, nor are
there any actions, suits, proceedings, investigations or claims now pending
against Automax, nor are there any actions, suits, proceedings, investigations
or claims now pending against Automax in respect of any tax or assessment, or
any matters under discussion with any federal, state, local or foreign authority
relating to any taxes or assessments, or any claims for additional taxes or
assessments asserted by any such authority, and there is no basis for the
assertion of any additional taxes or assessments against Automax, and
2.1.13.3 Except as set forth on SCHEDULE 2.1.13, the consummation of
the transactions contemplated by this Agreement will not result in the
imposition of any additional taxes on or assessments against Automax.
2.1.14 Disputes and Litigation. Except for those matters set forth on
------------------------
SCHEDULE 2.1.14 (a) there is no material suit, action, litigation, proceeding,
investigation, claim, complaint, or accusation pending, threatened against or
affecting Automax or any of its properties, assets or business or to which
Automax is a party, in any court or before any arbitrator of any kind or before
or by any governmental agency (including, without limitation, any federal,
state, local, foreign or other governmental department, commission, board,
bureau, agency or instrumentality), and there is no basis for such suit, action,
litigation, proceeding, investigation, claim, complaint, or accusation; (b)
there is no pending or threatened change in any environmental, zoning or
building laws, regulations or ordinances which affect or could affect Automax or
any of its properties, assets or businesses; and (c) there is no outstanding
order, writ, injunction, decree, judgment or award by any court, arbitrator or
governmental body against or affecting Automax or any of its properties, assets
or business. There is no litigation, proceeding, investigation, claim,
complaint or accusation, formal or informal, or arbitration pending, or any of
the aforesaid threatened, or any contingent liability which would give rise to
any right of indemnification or similar right on the part of any director or
officer of Automax or any such person's heirs, executors or administrators as
against Automax.
2.1.15 Compliance with laws. Except as set forth in SCHEDULE 2.1.15,
----------------------
Automax has at all times been, and presently is, in full compliance with, and
has not received notice of any claimed violation of, any applicable federal,
state, local, foreign and other laws, rules and regulations. Automax has filed
all returns, reports and other documents and furnished all information required
or requested by any federal, state, local or foreign governmental agency, and
all such returns, reports, documents and information are true and complete in
all respects. All permits, licenses, orders, franchises and approvals of all
federal, state, local or foreign governmental or regulatory bodies required of
Automax for the conduct of its business have been obtained, no violations are or
have been recorded in respect of any such permits, licenses, orders, franchises
and approvals, and there is no litigation, proceeding, investigation,
arbitration, claim, complaint or accusation, formal or informal, pending or
threatened, which may revoke, limit, or question the validity, sufficiency or
continuance of any such permit, license, order, franchise or approval. Such
permits, licenses, orders, franchises and approvals are valid and sufficient for
all activities presently carried on by Automax.
2.1.16 Guaranties. Except as set forth in SCHEDULE 2.1.16, Automax has
-----------
not guaranteed any dividend, obligation or indebtedness of any Person; nor has
any Person guaranteed any dividend, obligation or indebtedness of Automax.
2.1.17 Financial Statements. Attached hereto as EXHIBIT C are the
---------------------
unaudited balance sheet of Automax as of September 30, 2000 (the "Automax
Financial Statements Date"), and the related statements of income and cash flows
for the nine months then ended. Such financial statements of Automax
(collectively, the "Automax Financial Statements") have been prepared in
accordance with generally accepted accounting principles, applied on a
consistent basis throughout the periods covered thereby and, subject to year-end
adjustments, present fairly the financial condition of Automax as of such dates
and the results of operations of Automax for such periods, are correct and
complete, and are consistent with the books and records of Automax (which books
and records are or will be correct and complete). There are no liabilities of
Automax as of the Closing Date except as expressed on the Automax Financial
Statements.
The Parties hereby acknowledge that there may be substantial year-end
adjustments to the Automax Financial Statements and that, due to the lack of
funding, revenues and earnings for the years 1999 and 2000 could be
substantially impaired and may show a loss from operations.
2.1.18 Assets of Company. Except as set forth on SCHEDULE 2.1.18,
-------------------
Automax has acquired, or prior to the Closing Date will have acquired, all of
the tangible and intangible property and assets necessary to conduct its
business as now conducted and as proposed to be conducted (the "Automax
Assets"). Except as set forth on SCHEDULE 2.1.18, Automax owns all of its
property and assets free and clear of all mortgages, liens, loans, and
encumbrances, except such encumbrances and liens which arise in the ordinary
course of business and do not materially impair Automax's ownership or use of
such property or assets. With respect to the property and assets it leases,
Automax is in compliance with such leases and, to the best of its knowledge,
holds a valid leasehold interest free of any liens, claims, or encumbrances.
2.1.19 Valid Issuance of Securities. The Automax Shares that are being
----------------------------
sold to Xelex hereunder, when sold, and delivered in accordance with the terms
hereof for the consideration expressed herein, will be duly and validly issued,
fully paid, and nonassessable. Additionally, the Automax Shares shall be free
and clear of all liens, encumbrances or claims of any kind.
2.1.20 Title to Automax Assets and Related Matters. Except as set
-------------------------------------------------
forth in SCHEDULE 2.1.20, Automax has good and marketable title to, or valid
leasehold interests in, all of the Automax Assets, free from any Encumbrances
except those specified in SCHEDULE 2.1.18. The use of the Automax Assets is not
subject to any Encumbrances (other than those specified in the preceding
sentence), and such use does not materially encroach on the property or rights
of anyone else. All Real Property and tangible personal property of Automax are
suitable for the purposes for which they are used, in good working condition and
reasonable repair, free from any known defects, except such minor defects that
would not in the aggregate exceed $10,000.
2.1.21 Real Property. SCHEDULE 2.1.21 describes all real estate used
--------------
in the operation of the Automax business as well as any other real estate that
is in the possession of or leased by Automax and the improvements (including
buildings and other structures) located on such real estate (collectively, the
"Real Property"), and lists any leases under which any such Real Property is
possessed (the "Real Estate Leases"). Automax is not currently in Default under
any of the Real Estate Leases. Excepted as listed on SCHEDULE 2.1.21, Automax
does not have an ownership interest in any Real Property.
2.1.22 Certain Personal Property. Except as set forth on SCHEDULE
---------------------------
2.1.22, there are no items of tangible personal property that were not included
in the Automax Financial Statements, including cash on hand. Since the Automax
Financial Statements Date, Automax has not acquired or disposed of any items of
tangible personal property that have, in each case, a carrying value in excess
of $10,000. All of Automax's tangible personal property is in good operating
condition, reasonable wear and tear excepted.
2.1.23 Non-Real Estate Leases. Automax is not currently in default
------------------------
under any Non-Real Estate Leases, and Automax is not aware of any default by any
of the lessors there under. "Non-Real Estate Leases" refers to any and all
leases that relate to an asset or property (other than Real Property) used in
the operation of the Automax business or otherwise possessed by Automax,
including but not limited to all trucks, automobiles, machinery, equipment,
furniture and computers.
2.1.24 Sales Deposits. Except as set forth on SCHEDULE 2.1.24, there
---------------
are no events to be performed after the Closing Date for which sales deposits
have been received.
2.1.25 Inventory. All inventory of Automax consists of items of
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quality and quantity saleable in the ordinary course of business at regular
sales prices of Automax in the ordinary course of its business.
2.1.26 Outstanding Debt. Other than as listed on the Automax Financial
----------------
Statements or SCHEDULE 2.1.26, Automax has no outstanding indebtedness or
borrowed money and is not a guarantor or otherwise contingently liable for any
indebtedness for borrowed money (including, without limitation, liability by way
of agreement, contingent or otherwise, to purchase, provide funds for payment,
supply finds or otherwise invest in any debtor or otherwise to insure any
creditor against loss).
2.1.27 Outstanding Accounts Receivable. Automax represents and
---------------------------------
warrants to Xelex that as of September 30, 2000, Automax had $5,604,284 in
outstanding Accounts Receivable. Automax represents and warrants to Xelex that,
except as set forth on SCHEDULE 2.1.27, between September 30, 2000 and the
Closing Date there have been no changes to the Accounts Receivable which, when
taken together, result in a change of more than 15%.
2.1.28 Intellectual Property. Except for those items listed on
----------------------
SCHEDULE 2.1.28, Automax does not have any reason to believe that Automax does
not have sufficient title and ownership of, or hold a valid license to use, all
patents, trademarks, service marks, trade names, copyrights, trade secrets,
domain names, URL's, information, proprietary rights and processes necessary for
its business as now conducted and as proposed to be conducted without any
conflict with or infringement of the rights of others. There are no outstanding
options, licenses or agreements of any kind relating to the foregoing, nor is
Automax bound by or a party to any options, licenses, or agreements of any kind
with respect to the patents, trademarks, service marks, trade names, copyrights,
trade secrets, licenses, information, proprietary rights and processes of any
other person or entity. Automax has not received any communications alleging
that Automax has violated, or by conducting its business, would violate any of
the patents, trademarks, service marks, trade names, copyrights, trade secrets,
or other proprietary rights or processes of any other person or entity. Automax
is not aware that any of its employees is obligated under any contract
(including licenses, covenants, or commitments of any nature) or other
agreement, or subject to any judgment, decree, or order of any court or
administrative agency, that would interfere with the use of his best efforts to
promote the interests of Automax or that would conflict with Automax's business
as proposed to be conducted. Neither the execution nor delivery of this
Agreement, nor the carrying on of Automax's business by the employees of
Automax, nor the conduct of Automax's business will conflict with or result in a
breach of the terms, conditions, or provisions of, or constitute a default
under, any contract, covenant, or instrument under which any of such employees
is now obligated.
2.1.29 Employment Relationships. Except for those employees listed on
-------------------------
SCHEDULE 2.1.29, Automax is not aware that any officer or key employee, or that
any group of key employees, intends to terminate their employment with Automax,
nor does Automax have a present intention to terminate the employment of any of
the foregoing. To the best of Automax's knowledge and belief, no employee or
advisor of Automax is, or is now expected to be, in violation of any term of any
employment contract or any other common law obligation to a former employer
relating to the right of any such employee to be employed by Automax because of
the nature of the business conducted or to be conducted by Automax or to the use
of trade secrets or proprietary information of others, and the employment of
Automax's employees does not subject Automax or Xelex to any liability. There
is neither pending nor, to Automax's knowledge and belief, threatened, any
actions, suits, proceedings, or claims, or to its knowledge any basis therefore
or threat thereof, with respect to any contract, agreement, covenant or
obligation referred to in the preceding sentence. Automax does not have any
collective bargaining agreement covering any of its employees.
2.1.30 Incentive Compensation Arrangements. Except as disclosed on
-------------------------------------
SCHEDULE 2.1.30, there are no deferred compensation, incentive, bonus or other
plans, programs or arrangements that provide incentive, bonus, or other similar
emoluments in connection with the employment of Automax's employees.
2.1.31 Absence of Certain Changes. Since the Automax Balance Financial
---------------------------
Statment Date, Automax has conducted the Automax business in the ordinary course
and there has not been:
(a) any material adverse change in the Automax business or its liabilities,
except as set forth in Section 2.1.17;
(b) any distribution or payment declared or made in respect of its capital
stock by way of dividends, purchase or redemption of shares or otherwise;
(c) except as disclosed in SCHEDULE 2.1.31, any increase in the compensation
payable or to become payable to any director, officer, employee or agent, except
for merit and seniority increases for non-officer employees made in the ordinary
course of business, nor any other change in any employment or consulting
arrangement;
(d) any sale, assignment or transfer of the Automax Assets, or any additions
to or transactions involving any Automax Assets, other than those made in the
ordinary course of business;
(e) other than in the ordinary course of business, any waiver or release of
any claim or right or cancellation of any debt held; or
(f) any payments to any Affiliate of Automax, except as specified in
SCHEDULE 2.1.31.
2.1.32 Previous Sales; Warranties. To the best knowledge of Automax,
----------------------------
all goods sold or distributed and services performed by Automax were of
merchantable and satisfactory quality, and Automax has not breached any express
or implied warranties in connection with the sale or distribution of such goods
and performances of such services.
2.1.33 Events Prior to Closing. Except as set forth in on SCHEDULE
--------------------------
2.1.33, since September 30, 2000 there has not been any material adverse change
in the business, condition (financial or otherwise), operations, results of
operations or, to Automax's knowledge, future prospects of Automax. Automax has
not taken any action since September 30, 2000 outside the ordinary course of
business. Automax is not aware of any customer or group of customers, which
together constitute more than ten percent (10%) of Automax's total net sales,
that has cancelled, or contemplates canceling, any business with Automax.
2.1.34 Finder's Fees. No Person retained by Automax is or will be
--------------
entitled to any commission or finders or similar fee in connection with the
transactions contemplated by this Agreement. The parties acknowledge and agree
that International Investment Banking, Inc. will be issued an aggregate of Two
Million Three Hundred Thousand (2,300,000) shares of common stock (after giving
effect to the 1-for-100 reverse stock split described in Section 3.2 below),
restricted in accordance with Rule 144, as a consulting fee in connection with
the transactions contemplated by this Agreement.
2.1.35 Disclosure. Kenwick and Automax warrants that to the best of
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its knowledge it has fully provided Xelex with all the information which Xelex
has requested for deciding whether to acquire the Automax Shares. This
Agreement, the Schedules and the Exhibits hereto as well as any other document,
certificate, schedule, financial, business or other statement furnished to Xelex
by or on behalf of Kenwick and Automax in connection with the transactions
contemplated hereby, do not contain any untrue statement of a material fact and
do not omit to state a material fact necessary in order to make the statements
contained herein or therein not misleading.
2.1.36 Certain Business Relationships. Other than as disclosed herein
-------------------------------
none of the directors or shareholders of Kenwick or Automax has been involved in
any business arrangements or relationship with Automax, and except as set forth
on SCHEDULE 2.1.36, none of the directors or shareholders owns any asset,
tangible or intangible, which is used in the Business.
2.1.37 Kenwick acknowledges that all of the Xelex Shares will be
"restricted securities" (as such term is defined in Rule 144 promulgated under
the Securities Act of 1933, as amended ("Rule 144")), and will include the
restrictive legend set forth in Section 3.2 hereof, and, except as otherwise set
forth in this Agreement, that the shares cannot be sold for a period of one year
from the date of issuance unless registered with the United States Securities
and Exchange Commission ("SEC") and qualified by appropriate state securities
regulators, or unless Kenwick obtains written consent from Xelex and otherwise
complies with an exemption from such registration and qualification (including,
without limitation, compliance with Rule 144).
2.2 Representations and Warranties of Xelex. To induce Kenwick and
-------------------------------------------
Automax to enter into this Agreement and to consummate the transactions
contemplated hereby, Xelex represents and warrants, as of the date hereof and as
of the Closing, as follows:
2.2.1 Corporate Existence and Authority of Xelex. Xelex is a
-----------------------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the State of Florida. It has all requisite corporate power, franchises,
licenses, permits and authority to own its properties and assets and to carry on
its business as it has been and is being conducted. It is in good standing in
each state, nation or other jurisdiction in each state, nation or other
jurisdiction wherein the character of the business transacted by it makes such
qualification necessary.
2.2.2 Capitalization of Xelex. The authorized equity securities of
--------------------------
Xelex consists of 50,000,000 shares of common stock, par value $0.001, of which
43,921,449 shares are issued and outstanding as of the date hereof (before
giving effect to the cancellation of an aggregate of 40,000,000 shares of Xelex
common stock and the 1-for-100 reverse stock split discussed in Section 3.2
below, but before the issuance of 2,300,000 shares as a consulting fee as set
forth in Section 6.8 below). Of said 43,921,449 shares, 40,000,000 are
restricted shares pursuant to Rule 144 and are held by ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, and ▇▇▇ ▇▇▇▇▇▇▇▇ (collectively the "Officers") and 3,921,449 shares are
free trading shares held by non-affiliated shareholders. The Officers' shares
will be cancelled in accordance with Section 3.2 below. No other shares of
capital stock of Xelex are issued and outstanding. All of the issued and
outstanding shares have been duly and validly issued in accordance and
compliance with all applicable laws, rules and regulations and are fully paid
and nonassessable. All presently exercisable voting rights in Xelex are vested
exclusively in its outstanding shares of common stock, each share of which is
entitled to one vote on every matter to come before it's shareholders, and other
than as may be contemplated by this Agreement, there are no voting trusts or
other voting arrangements with respect to any of Xelex' equity securities.
2.2.3 Subsidiaries. Xelex currently has one wholly-owned subsidiary,
-------------
namely 1250332 Ontario Corporation, an Ontario corporation.
2.2.3.1 Corporate Existence and Authority of 1250332 Ontario
----------------------------------------------------------
Corporation. 1250332 Ontario Corporation is a corporation duly organized,
-
validly existing and in good standing under the laws of Ontario, Canada. It has
all requisite corporate power, franchises, licenses, permits and authority to
own its properties and assets and to carry on its business as it has been and is
being conducted. It is in good standing in each state, nation or other
jurisdiction wherein the character of the business transacted by it makes such
qualification necessary.
2.2.3.2 Capitalization of 1250332 Ontario Corporation. The authorized
----------------------------------------------
equity securities of 1250332 Ontario Corporation consists of an unlimited number
of shares of common stock, of which 6 shares are issued and outstanding as set
forth on EXHIBIT D attached hereto. Except as set forth on SCHEDULE 2.2.3, (i)
no other shares of capital stock of 1250332 Ontario Corporation are issued and
outstanding; (ii) all of the issued and outstanding shares have been duly and
validly issued in accordance and compliance with all applicable laws, rules and
regulations and are fully paid and nonassessable; (iii) there are no options,
warrants, rights, calls, commitments, plans, contracts or other agreements of
any character granted or issued by 1250332 Ontario Corporation which provide for
the purchase, issuance or transfer of any shares of the capital stock of 1250332
Ontario Corporation nor are there any outstanding securities granted or issued
by 1250332 Ontario Corporation that are convertible into any shares of the
equity securities of 1250332 Ontario Corporation, and none is authorized; (iv)
1250332 Ontario Corporation is not obligated or committed to purchase, redeem or
otherwise acquire any of its equity; (v) all presently exercisable voting rights
in 1250332 Ontario Corporation are vested exclusively in its outstanding shares
of common stock, each share of which is entitled to one vote on every matter to
come before it's shareholders; and (vi) other than as may be contemplated by
this Agreement, there are no voting trusts or other voting arrangements with
respect to any of 1250332 Ontario Corporation's equity securities.
2.2.3.3 Adoption of Representations. All of the representations of Xelex as
-----------------------------
to itself, as set forth in paragraph 2.2 hereof, are remade as to Ontario. In
addition, Xelex represents that there are no liabilities of the Ontario of any
kind whatsoever, whether accrued, contingent, absolute, determined, determinable
or otherwise, and there is no existing condition, situation or set of
circumstances which could reasonably be expected to result any liability to
Xelex or Kenwick as a result of this transaction
2.2.4 Execution of Agreement. The execution and delivery of this
-------------------------
Agreement does not, and the consummation of the transactions contemplated hereby
will not: (a) violate, conflict with, modify or cause any default under or
acceleration of (or give any party any right to declare any default or
acceleration upon notice or passage of time or both), in whole or in part, any
charter, article of incorporation, bylaw, mortgage, lien, deed of trust,
indenture, lease, agreement, instrument, order, injunction, decree, judgment,
law or any other restriction of any kind to which Xelex is a party or by which
it or any of its properties are bound; (b) result in the creation of any
security interest, lien, encumbrance, adverse claim, proscription or restriction
on any property or asset (whether real, personal, mixed, tangible or
intangible), right, contract, agreement or business of Xelex; (c) violate any
law, rule or regulation of any federal or state regulatory agency; or (d) permit
any federal or state regulatory agency to impose any restrictions or limitations
of any nature on Xelex or any of its actions.
2.2.5 Taxes.
-----
2.2.5.1 Except as set forth on SCHEDULE 2.2.5, all taxes, assessments,
fees, penalties, interest and other governmental charges with respect to Xelex
which have become due and payable on the date hereof have been paid in full or
adequately reserved against by Xelex, (including without limitation, income,
property, sales, use, franchise, capital stock, excise, added value, employees'
income withholding, social security and unemployment taxes), and all interest
and penalties thereon with respect to the periods then ended and for all periods
thereto;
2.2.5.2 Except as set forth on SCHEDULE 2.2.5 there are no
agreements, waivers or other arrangements providing for an extension of time
with respect to the assessment of any tax or deficiency against Xelex, nor are
there any actions, suits, proceedings, investigations or claims now pending
against Xelex, nor are there any actions, suits, proceedings, investigations or
claims now pending against Xelex in respect of any tax or assessment, or any
matters under discussion with any federal, state, local or foreign authority
relating to any taxes or assessments, or any claims for additional taxes or
assessments asserted by any such authority, and there is no basis for the
assertion of any additional taxes or assessments against Xelex, and
2.2.5.3 Except as set forth on SCHEDULE 2.2.5, the consummation of the
transactions contemplated by this Agreement will not result in the imposition of
any additional taxes on or assessments against Xelex.
2.2.6 Disputes and Litigation. Except for those matters set forth on
-------------------------
SCHEDULE 2.2.6, there is no suit, action, litigation, proceeding, investigation,
claim, complaint, or accusation pending, threatened against or affecting Xelex
or any of its properties, assets or business or to which Xelex is a party, in
any court or before any arbitrator of any kind or before or by any governmental
agency (including, without limitation, any federal, state, local, foreign or
other governmental department, commission, board, bureau, agency or
instrumentality), and there is no basis for such suit, action, litigation,
proceeding, investigation, claim, complaint, or accusation; (b) there is no
pending or threatened change in any environmental, zoning or building laws,
regulations or ordinances which affect or could affect Xelex or any of its
properties, assets or businesses; and (c) there is no outstanding order, writ,
injunction, decree, judgment or award by any court, arbitrator or governmental
body against or affecting Xelex or any of its properties, assets or business.
There is no litigation, proceeding, investigation, claim, complaint or
accusation, formal or informal, or arbitration pending, or any of the aforesaid
threatened, or any contingent liability which would give rise to any right of
indemnification or similar right on the part of any director or officer of Xelex
or any such person's heirs, executors or administrators as against Xelex.
2.2.7 Compliance with laws. Except as set forth in SCHEDULE 2.2.7,
----------------------
Xelex has at all times been, and presently is, in full compliance with, and has
not received notice of any claimed violation of, any applicable federal, state,
local, foreign and other laws, rules and regulations. Xelex has filed all
returns, reports and other documents and furnished all information required or
requested by any federal, state, local or foreign governmental agency and all
such returns, reports, documents and information are true and complete in all
respects. All permits, licenses, orders, franchises and approvals of all
federal, state, local or foreign governmental or regulatory bodies required of
Xelex for the conduct of its business have been obtained, no violations are or
have been recorded in respect of any such permits, licenses, orders, franchises
and approvals, and there is no litigation, proceeding, investigation,
arbitration, claim, complaint or accusation, formal or informal, pending or
threatened, which may revoke, limit, or question the validity, sufficiency or
continuance of any such permit, license, order, franchise or approval. Such
permits, licenses, orders, franchises and approvals are valid and sufficient for
all activities presently carried on by Xelex.
2.2.8 Guaranties. Except as set forth in SCHEDULE 2.2.8, Xelex has not
-----------
guaranteed any dividend, obligation or indebtedness of any Person; nor has any
Person guaranteed any dividend, obligation or indebtedness of Xelex.
2.2.9 Financial Statements. On or before the Closing Date, Xelex shall
--------------------
have delivered to Kenwick the unaudited balance sheet of Xelex and Ontario as of
December 31, 2000 (the "Xelex Financial Statements Date"), and the related
statements of income and cash flows for the year then ended. Such financial
statements of Xelex and Ontario (collectively, the "Xelex Financial Statements")
have been or will be prepared in accordance with generally accepted accounting
principles, applied on a consistent basis throughout the periods covered
thereby, have or will present fairly the financial condition of Xelex and
Ontario as of such dates and the results of operations of Xelex and Ontario for
such periods, are or will be correct and complete, and are or will be consistent
with the books and records of Xelex and Ontario(which books and records are or
will be correct and complete). There are no liabilities except as expressed on
the Xelex Financial Statements as of the Closing Date, a true and correct copy
of which are attached to this Agreement as EXHIBIT E and Xelex represents that
during the period from the date of the Xelex Financial Statements to the date
hereof, and to the date of Closing, Xelex and Ontario have not and will not
engage in any activity other than the minimum required to maintain their
corporate status.
2.2.10 Assets of Company. Xelex has acquired, or prior to the
-------------------
Closing Date will have acquired, all of the tangible and intangible property and
assets necessary to conduct its business as now conducted and as proposed to be
conducted (the "Xelex Assets"). Xelex owns all of its property and assets free
and clear of all mortgages, liens, loans, and encumbrances, except such
encumbrances and liens which arise in the ordinary course of business and do not
materially impair Xelex's ownership or use of such property or assets. With
respect to the property and assets it leases, Xelex is in compliance with such
leases and, to the best of its knowledge, holds a valid leasehold interest free
of any liens, claims, or encumbrances.
2.2.11 Valid Issuance of Securities. The Xelex Shares that are being
------------------------------
sold to Automax hereunder, when sold, and delivered in accordance with the terms
hereof for the consideration expressed herein, will be duly and validly issued,
fully paid, and nonassessable. Additionally, the Xelex Shares shall be free and
clear of all liens, encumbrances or claims of any kind.
2.2.12 Title to Xelex Assets and Related Matters. Except as set forth
-------------------------------------------
in SCHEDULE 2.2.12, Xelex has good and marketable title to, or valid leasehold
interests in, all of the Xelex Assets, free from any Encumbrances. The use of
the Xelex Assets is not subject to any Encumbrances (other than those specified
in the preceding sentence), and such use does not materially encroach on the
property or rights of anyone else. All Real Property and tangible personal
property of Xelex are suitable for the purposes for which they are used, in good
working condition and reasonable repair, free from any known defects, except
such minor defects that would not in the aggregate exceed $10,000.
2.2.13 Real Property. SCHEDULE 2.2.13 describes all real estate used
--------------
in the operation of the Xelex business as well as any other real estate that is
in the possession of or leased by Xelex and the improvements (including
buildings and other structures) located on such real estate (collectively, the
"Real Property"), and lists any leases under which any such Real Property is
possessed (the "Real Estate Leases"). Xelex is not currently in Default under
any of the Real Estate Leases. Excepted as listed on SCHEDULE 2.2.13, Xelex
does not have an ownership interest in any Real Property.
2.2.14 Certain Personal Property. Except as set forth on SCHEDULE
---------------------------
2.2.14, there are no items of tangible personal property that were not included
in the Xelex Financial Statements, including cash on hand. Since the Xelex
Financial Statements Date, Xelex has not acquired or disposed of any items of
tangible personal property that have, in each case, a carrying value in excess
of $10,000. All of Xelex's tangible personal property is in good operating
condition, reasonable wear and tear excepted.
2.2.15 Non-Real Estate Leases. Xelex is not currently in default under
----------------------
any Non-Real Estate Leases, and Xelex is not aware of any default by any of the
lessors there under. "Non-Real Estate Leases" refers to any and all leases that
relate to an asset or property (other than Real Property) used in the operation
of the Xelex business or otherwise possessed by Xelex, including but not limited
to all trucks, automobiles, machinery, equipment, furniture and computers.
2.2.16 Sales Deposits. Except as set forth in SCHEDULE 2.2.16, there
---------------
are no events to be performed after the Closing Date for which sales deposits
have been received as of the date hereof.
2.2.17 Inventory. All inventory of Xelex consists of items of quality
---------
and quantity saleable in the ordinary course of business at regular sales prices
of Xelex in the ordinary course of its business.
2.2.18 Outstanding Debt. Xelex has no outstanding indebtedness or
-----------------
borrowed money and is not a guarantor or otherwise contingently liable for any
indebtedness for borrowed money (including, without limitation, liability by way
of agreement, contingent or otherwise, to purchase, provide funds for payment,
supply finds or otherwise invest in any debtor or otherwise to insure any
creditor against loss), except as set forth in the Xelex Financial Statements.
2.2.19 Outstanding Accounts Receivable. A true and correct itemized
---------------------------------
list of Xelex's outstanding accounts receivable is attached hereto as SCHEDULE
2.2.19 (the "Accounts Receivable"). Xelex represents and warrants to Automax
that as of December 31, 2000, Xelex had no outstanding Accounts Receivable.
2.2.20 Intellectual Property. Except for those items listed on
----------------------
SCHEDULE 2.2.20, Xelex does not have any reason to believe that Xelex does not
have sufficient title and ownership of, or hold a valid license to use, all
patents, trademarks, service marks, trade names, copyrights, trade secrets,
domain names, URL's, information, proprietary rights and processes necessary for
its business as now conducted and as proposed to be conducted without any
conflict with or infringement of the rights of others. There are no outstanding
options, licenses or agreements of any kind relating to the foregoing, nor is
Xelex bound by or a party to any options, licenses, or agreements of any kind
with respect to the patents, trademarks, service marks, trade names, copyrights,
trade secrets, licenses, information, proprietary rights and processes of any
other person or entity. Xelex has not received any communications alleging that
Xelex has violated, or by conducting its business, would violate any of the
patents, trademarks, service marks, trade names, copyrights, trade secrets, or
other proprietary rights or processes of any other person or entity. Xelex is
not aware that any of its employees is obligated under any contract (including
licenses, covenants, or commitments of any nature) or other agreement, or
subject to any judgment, decree, or order of any court or administrative agency,
that would interfere with the use of his best efforts to promote the interests
of Xelex or that would conflict with Xelex's business as proposed to be
conducted. Neither the execution nor delivery of this Agreement, nor the
carrying on of Xelex's business by the employees of Xelex, nor the conduct of
Xelex's business will conflict with or result in a breach of the terms,
conditions, or provisions of, or constitute a default under, any contract,
covenant, or instrument under which any of such employees is now obligated.
2.2.21 Employment Relationships. Except for those employees listed on
-------------------------
SCHEDULE 2.2.21, Xelex is not aware that any officer or key employee, or that
any group of key employees, intends to terminate their employment with Xelex,
nor does Xelex have a present intention to terminate the employment of any of
the foregoing. To the best of Xelex's knowledge and belief, no employee or
advisor of Xelex is, or is now expected to be, in violation of any term of any
employment contract or any other common law obligation to a former employer
relating to the right of any such employee to be employed by Xelex because of
the nature of the business conducted or to be conducted by Xelex or to the use
of trade secrets or proprietary information of others, and the employment of
Xelex's employees does not subject Xelex or Automax to any liability. There is
neither pending nor, to Xelex's knowledge and belief, threatened, any actions,
suits, proceedings, or claims, or to its knowledge any basis therefore or threat
thereof, with respect to any contract, agreement, covenant or obligation
referred to in the preceding sentence. Xelex does not have any collective
bargaining agreement covering any of its employees.
2.2.22 Incentive Compensation Arrangements. Except as disclosed on
-------------------------------------
SCHEDULE 2.2.22, there are no deferred compensation, incentive, bonus or other
plans, programs or arrangements that provide incentive, bonus, or other similar
emoluments in connection with the employment of Xelex's employees.
2.2.23 Absence of Certain Changes. Since the Xelex Financial Statement
--------------------------
Date, Xelex has conducted the Xelex business in the ordinary course and there
has not been:
(a) any material adverse change in the Xelex business or its
liabilities;
(b) any distribution or payment declared or made in respect of its capital
stock by way of dividends, purchase or redemption of shares or otherwise;
(c) except as disclosed in SCHEDULE 2.2.23, any increase in the compensation
payable or to become payable to any director, officer, employee or agent, except
for merit and seniority increases for non-officer employees made in the ordinary
course of business, nor any other change in any employment or consulting
arrangement;
(d) any sale, assignment or transfer of the Xelex Assets, or any additions
to or transactions involving any Xelex Assets, other than those made in the
ordinary course of business;
(e) other than in the ordinary course of business, any waiver or release of
any claim or right or cancellation of any debt held; or
(f) any payments to any Affiliate of Xelex, except as specified in SCHEDULE
2.2.23.
2.2.24 Previous Sales; Warranties. To the best knowledge of Xelex, all
--------------------------
goods sold or distributed and services performed by Xelex were of merchantable
and satisfactory quality, and Xelex has not breached any express or implied
warranties in connection with the sale or distribution of such goods and
performances of such services.
2.2.25 Events Prior to Closing. Except as set forth in on SCHEDULE
--------------------------
2.2.25, since December 31, 2000 there has not been any material adverse change
in the business, condition (financial or otherwise), operations, results of
operations or, to Xelex's knowledge, future prospects of Xelex. Xelex has not
taken any action since December 31, 2000 outside the ordinary course of
business. Xelex is not aware of any customer or group of customers, which
together constitute more than ten percent (10%) of Xelex's total net sales, that
has cancelled, or contemplates canceling, any business with Xelex.
2.2.26 Disclosure. Xelex warrants that to the best of its knowledge it
----------
has fully provided Kenwick and Automax with all the information, which Automax
has requested for deciding whether to acquire the Xelex Shares. This Agreement,
the Schedules and the Exhibits hereto as well as any other document,
certificate, schedule, financial, business or other statement furnished to Xelex
by or on behalf of Xelex in connection with the transactions contemplated
hereby, do not contain any untrue statement of a material fact and do not omit
to state a material fact necessary in order to make the statements contained
herein or therein not misleading.
2.2.27 Certain Business Relationships. Other than as disclosed herein
-------------------------------
none of the directors or shareholders of Xelex has been involved in any business
arrangements or relationship with Xelex, and none of the directors or
shareholders owns any asset, tangible or intangible, which is used in the
Business, save for those matters listed on SCHEDULE 2.2.27.
2.2.28 No Governmental Action Required. The execution and delivery by
--------------------------------
Xelex of this Agreement does not and will not, and the consummation of the
transactions contemplated hereby will not, require any action by or in respect
of, or filing with, any governmental body, agency or governmental official,
including but not limited to the Securities and Exchange Commission
("Commission") and the National Association of Securities Dealers ("NASD"),
----
except such actions or filings that have been undertaken or made prior to the
date hereof and that will be in full force and effect (or as to which all
applicable waiting periods have expired) on and as of the date hereof or which
are not required to be filed on or prior to the date of Closing.
2.2.29 No Joint Venture. Xelex does not have a direct or indirect
------------------
investment in any entity (other than Ontario); nor is Xelex a party to any
partnership, management, shareholders' or joint venture or similar agreement
which would affect Xelex's performance of this Agreement or Xelex's
representations and warranties in this Agreement.
2.2.30 Not an "Investment Company". Xelex is not an "investment
-----------------------------
company" within the meaning of the Investment Company Act of 1940, as amended.
2.2.31 No Liabilities. There are no liabilities of Xelex of any kind
---------------
whatsoever, whether accrued, contingent, absolute, determined, determinable or
otherwise, which could be charged as a liability to Kenwick or Automax, and to
the best knowledge of Xelex there is no existing condition, situation or set of
circumstances which could reasonably be expected to result in such a liability.
2.2.32 Not a "Blind Pool." Xelex was not, has not been, and is not, a
-------------------
A blind pool" as that term is generally interpreted, or a "blank check company"
as that term is defined in Rule 419 of the Securities and Exchange Act of 1933.
2.2.33 Not a "Control Share Acquisition." The acquisition of the Xelex
-----------------------------------
Shares by Kenwick is not and will not be a "control share acquisition" as
defined in Section 607.0902, Title XXXVI of the Florida Business Corporations
Act ("FBCA"), and none of the provisions of Chapter 607 of the Act apply to the
transactions contemplated herein.
2.2.34 No Shareholder Approval Required. The acquisition of the Xelex
-----------------------------------
Shares by Kenwick does not require the approval of the shareholders Xelex under
the FBCA, Xelex's articles of incorporation or bylaws, or any other requirement
of law; if shareholder approval is required Xelex has or will, prior to the
Closing, obtain such approval in accordance with the requirements of the Xelex's
articles of incorporation and by-laws and the FBCA.
2.2.35 No Dissenters' Rights. The acquisition of the Xelex Shares by
-----------------------
Kenwick will not will not give rise to any dissenting shareholders' rights under
Sections 607.0902 or 607.1302 of the FBCA, Xelex's articles of incorporation or
bylaws, or otherwise.
2.2.36 Pink Sheet Listing. Xelex is currently listed on the Pink Sheets
--------------------
with the following trading symbol: "XEXT." Xelex is not in default with respect
to any listing requirements of the Pink Sheets.
ARTICLE 3
CLOSING AND DELIVERY OF DOCUMENTS
3.1 Closing. The Closing shall be deemed to have occurred as of the
--------
date that each of the Parties hereto have executed this Agreement. Subsequent
to the Closing the following shall occur as a single integrated transaction:
3.2 Delivery by Xelex:
--------------------
(a) Xelex shall deliver to Kenwick the Xelex Shares, fully paid and
non-assessable and subject to no liens, security interests, pledges,
encumbrances, charges, restrictions, demands or claims in any other party
whatsoever, except as set forth in the legend on the certificate(s), which
legend shall provide as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF
ANY STATE, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF FOR A PERIOD OF ONE YEAR FROM THE ISSUANCE THEREOF EXCEPT
(i) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND ANY
APPLICABLE STATE LAWS OR (ii) UPON THE EXPRESS WRITTEN AGREEMENT OF THE COMPANY
AND COMPLIANCE, TO THE EXTENT APPLICABLE, WITH RULE 144 UNDER THE ACT (OR ANY
SIMILAR RULE UNDER THE ACT RELATING TO THE DISPOSITION OF SECURITIES).
(b) Xelex shall deliver to Kenwick written confirmation of the approval
of the herein described transactions by Xelex's Board of Directors as set forth
in Section 4.1 hereof, as well as the election and appointment of the officers
and directors as set forth in Section 1.2 hereof.
(c) The Officers (as defined in Section 2.2.2) shall deliver to Kenwick
an aggregate of 40,000,000 shares of Xelex common stock, along with a Medallion
Guaranteed Stock Power sufficient for cancellation of the shares.
(d) Xelex shall deliver to Kenwick an amendment to the Articles of
Incorporation of Xelex effectuating a 1-for-100 reverse stock split of the
3,921,449 shares of Xelex common stock issued and outstanding as of the Closing
Date (after giving effect to the cancellation of 40,000,000 shares as set forth
in 3.2(c) above, and further changing the name of Xelex to Automax Group, Inc.
The Amendment shall immediately be forwarded to the Florida Secretary of State
for filing.
3.3 Delivery by Kenwick:
----------------------
(a) Kenwick shall deliver to Xelex all of the Automax Shares and all
instruments of conveyance and transfer required to vest in Xelex ownership of
the Automax Shares subject to no liens, security interests, pledges,
encumbrances, charges, restrictions, demands or claims in any other party
whatsoever.
(b) Kenwick shall deliver to Xelex written confirmation of the approval
of the herein described transactions by Kenwick's Board of Directors as set
forth in Section 4.1 hereof.
ARTICLE 4
CONDITIONS, TERMINATION, AMENDMENT AND WAIVER
4.1 Conditions Precedent. This Agreement, and the transactions
---------------------
contemplated hereby, shall be subject to the approval of the Board of Directors
of Xelex and Kenwick, which shall be delivered at the Closing.
4.2 Termination. Notwithstanding anything to the contrary contained in
------------
this Agreement, this Agreement may be terminated and the transactions
contemplated hereby may be abandoned only by the mutual consent of all of the
parties.
4.3 Waiver and Amendment. Any term, provision, covenant,
-----------------------
representation, warranty or condition of this Agreement may be waived, but only
by a written instrument signed by the party entitled to the benefits thereof.
The failure or delay of any party at any time or times to require performance of
any provision hereof or to exercise its rights with respect to any provision
hereof shall in no manner operate as a waiver of or affect such party's right at
a later time to enforce the same. No waiver by any party of any condition, or
of the breach of any term, provision, covenant, representation or warranty
contained in this Agreement, in any one or more instances, shall be deemed to be
or construed as a further or continuing waiver of any such condition or breach
or waiver of any other condition or of the breach of any other term, provision,
covenant, representation or warranty. No modification or amendment of this
Agreement shall be valid and binding unless it be in writing and signed by all
parties hereto.
ARTICLE 5
COVENANTS
5.1 To induce Xelex to enter into this Agreement and to consummate the
transactions contemplated hereby, and without limiting any covenant, agreement,
representation or warranty made, Kenwick and Automax covenant and agree as
follows:
5.1.1 Notices and Approvals. Kenwick and Automax agree: (a) to give
-----------------------
all notices to third parties which may be necessary or deemed desirable by Xelex
in connection with the transactions contemplated hereby; (b) to use its best
efforts to obtain all federal and state governmental regulatory agency
approvals, consents, permit, authorizations, and orders necessary or deemed
desirable by Xelex in connection with this Agreement and the consummation of the
transaction contemplated hereby; and (c) to use its best efforts to obtain all
consents and authorizations of any other third parties necessary or deemed
desirable by Xelex in connection with this Agreement and the consummation of the
transactions contemplated hereby.
5.1.2 Information for Xelex's Statements and Applications. Kenwick and
---------------------------------------------------
Automax and their employees, accountants and attorneys shall cooperate fully
with Xelex in the preparation of any statements or applications made by Xelex to
any federal or state governmental regulatory agency in connection with this
Agreement and the transactions contemplated hereby and to furnish Xelex with all
information concerning Kenwick and Automax necessary or deemed desirable by
Xelex for inclusion in such statements and applications, including, without
limitation, all requisite financial statements and schedules.
5.1.3 Access to Information. Xelex, together with its appropriate
-----------------------
attorneys, agents and representatives, shall be permitted to make the full and
complete investigation of Kenwick and Automax and have full access to all of the
books and records of the other during reasonable business hours.
Notwithstanding the foregoing, such parties shall treat all such information as
confidential and shall not disclose such information without the prior consent
of the other.
5.2 To induce Kenwick and Automax to enter into this Agreement and to
consummate the transactions contemplated hereby, and without limiting any
covenant, agreement, representation or warranty made, Xelex covenants and agrees
as follows:
5.2.1 Access to Information. Kenwick and Automax, together with their
-----------------------
appropriate attorneys, agents and representatives, shall be permitted to make
the full and complete investigation of Xelex and have full access to all of the
books and records of the other during reasonable business hours.
Notwithstanding the foregoing, such parties shall treat all such information as
confidential and shall not disclose such information without the prior consent
of the other.
ARTICLE 6
MISCELLANEOUS
6.1 Expenses. Except as otherwise specifically provided for herein,
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whether or not the transactions contemplated hereby are consummated, each of the
parties hereto shall bear the cost of all fees and expenses relating to or
arising from its compliance with the various provisions of this Agreement and
such party's covenants to be performed hereunder, and except as otherwise
specifically provided for herein, each of the parties hereto agrees to pay all
of its own expenses (including, without limitation, attorneys and accountants'
fees and printing expenses) incurred in connection with this Agreement, the
transactions contemplated hereby, the negotiations leading to the same and the
preparations made for carrying the same into effect, and all such fees and
expenses of the parties hereto shall be paid prior to Closing.
6.2 Notices. Any notice, request, instruction or other document
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required by the terms of this Agreement, or deemed by any of the parties hereto
to be desirable, to be given to any other party hereto shall be in writing and
shall be given by prepaid telegram or delivered or mailed by registered or
certified mail, postage prepaid, with return receipt requested, to the following
addresses:
To Xelex or Ontario:
Xelex Corp.
c/o ▇▇▇▇▇▇▇ ▇▇▇▇▇ Accounting Services
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
▇▇▇▇▇▇▇▇ ▇▇▇. ▇▇▇ ▇▇▇
with a copy to:
------------------
▇▇▇▇▇▇ Law Group
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Facsimile (▇▇▇) ▇▇▇-▇▇▇▇
To Kenwick or Automax:
Kenwick Industries, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
Facsimile (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Facsimile (▇▇▇) ▇▇▇-▇▇▇▇
The persons and addresses set forth above may be changed from time to time
by a notice sent as aforesaid. If notice is given by hand delivery in
accordance with the provisions of this Section, said notice shall be
conclusively deemed given at the time of such delivery. If notice is given by
mail in accordance with the provisions of this Section, such notice shall be
conclusively deemed given forty-eight (48) hours after deposit thereof in the
United States mail. If notice is given by telegraph in accordance with the
provisions of this Section, such notice shall be conclusively deemed given at
the time that the telegraphic agency shall confirm delivery thereof to the
addressee.
6.3 Entire Agreement. This Agreement, together with the schedules and
------------------
exhibits hereto, sets forth the entire agreement and understanding of the
parties hereto with respect to the transactions contemplated hereby, and
supersedes all prior agreements, arrangements and understandings related to the
subject matter hereof. No understanding, promise, inducement, statement of
intention, representation, warranty, covenant or condition, written or oral,
express or implied, whether by statute or otherwise, has been made by any party
hereto which is not embodied in this Agreement, or exhibits hereto or the
written statements, certificates, or other documents delivered pursuant hereto
or in connection with the transactions contemplated hereby, and no party hereto
shall be bound by or liable for any alleged understanding, promise, inducement,
statement, representation, warranty, covenant or condition not so set forth.
6.4 Survival of Representations. All statements of fact (including
------------------------------
financial statements) contained in the schedules, the exhibits, the certificates
or any other instrument delivered by or on behalf of the parties hereto, or in
connection with the transactions contemplated hereby, shall be deemed
representations and warranties by the respective party hereunder. All
representations, warranties, agreements, and covenants hereunder shall survive
the Closing and remain effective regardless of any investigation or audit at any
time made by or on behalf of the parties or of any information a party may have
in respect thereto. Consummation of the transactions contemplated hereby shall
not be deemed or construed to be a waiver of any right or remedy possessed by
any party hereto, notwithstanding that such party knew or should have known at
the time of Closing that such right or remedy existed.
6.5 Incorporated by Reference. All documents (including, without
----------------------------
limitation, all financial statements) delivered as part hereof or incident
hereto are incorporated as a part of this Agreement by reference.
6.6 Remedies Cumulative. No remedy herein conferred upon and Party is
---------------------
intended to be exclusive of any other remedy and each and every such remedy
shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by statute or
otherwise.
6.7 Execution of Additional Documents. Each party hereto shall make,
------------------------------------
execute, acknowledge and deliver such other instruments and documents, and take
all such other actions as may be reasonably required in order to effectuate the
purposes of this Agreement and to consummate the transactions contemplated
hereby.
6.8 Finders' and Related Fees. Each of the parties hereto is
-----------------------------
responsible for, and shall indemnify the other against, any claim by any third
party to a fee, commission, bonus or other remuneration arising by reason of any
services alleged to have been rendered to or at the instance of said party to
this Agreement with respect to this Agreement or to any of the transactions
contemplated hereby. The parties acknowledge and agree that International
Investment Banking, Inc. will be issued an aggregate of Two Million Three
Hundred Thousand (2,300,000) shares of common stock (after giving effect to the
1-for-100 reverse stock split described in Section 3.2 above), restricted in
accordance with Rule 144, as a consulting fee in connection with the
transactions contemplated by this Agreement.
6.9 Governing Law. This Agreement has been negotiated and executed in
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the State of Florida and shall be construed and enforced in accordance with the
laws of such state.
6.10 Forum. Each of the parties hereto agrees that any action or suit
-----
which may be brought by any party hereto against any other party hereto in
connection with this Agreement or the transactions contemplated hereby may be
brought only in a federal or state court in Palm Beach County, Florida.
6.11 Attorneys' Fees. Except as otherwise provided herein, if a
----------------
dispute should arise between the parties including, but not limited to
arbitration, the prevailing party shall be reimbursed by the nonprevailing party
for all reasonable expenses incurred in resolving such dispute, including
reasonable attorneys' fees exclusive of such amount of attorneys' fees as shall
be a premium for result or for risk of loss under a contingency fee arrangement.
6.12 Binding Effect and Assignment. This Agreement shall inure to the
-------------------------------
benefit of and be binding upon the parties hereto and their respective heirs,
executors, administrators, legal representatives and assigns.
6.13 Counterparts. This Agreement may be executed in counterparts,
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each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument. In making proof of this Agreement, it
shall not be necessary to produce or account for more than one such counterpart.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, as of
the date first written hereinabove.
"XELEX" "KENWICK"
Xelex Corp. Kenwick Industries, Inc.
/s/ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
_____________________________ _____________________________
By: ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its: Secretary Its: President
"AUTOMAX"
Automax USA, Inc. Automax International, Inc.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
_____________________________ _____________________________
By: _______________________ By: _______________________
Its: _______________________ Its: _______________________
Automax USA Finance, Inc. Automax of America, Inc.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
_____________________________ _____________________________
By: _______________________ By: _______________________
Its: _______________________ Its: _______________________
EXHIBIT A
AUTOMAX SHAREHOLDERS
AUTOMAX USA, INC. SHAREHOLDERS
NO. OF XELEX SHARES
NAME NO. OF AUTOMAX SHARES TO BE RECEIVED
--------------------- --------------
Kenwick Industries, Inc. 1,000 14,000,000
------------------------ ----- ----------
Totals 1,000 14,000,000
AUTOMAX INTERNATIONAL, INC. SHAREHOLDERS
----------------------------------------
NAME NO. OF SHARES
-------------
Automax USA, Inc. 1,000
----------------- -----
Totals 1,000
----------- -----
AUTOMAX USA FINANCE, INC. SHAREHOLDERS
--------------------------------------
NAME NO. OF SHARES
-------------
Automax USA, Inc. 1,000
----------------- -----
Totals 1,000
----------- -----
AUTOMAX OF AMERICA, INC. SHAREHOLDERS
-------------------------------------
NAME NO. OF SHARES
-------------
Automax of America, Inc. 1,000
------------------------ -----
Totals 1,000
----------- -----
EXHIBIT B
DIRECTORS AND OFFICERS OF
XELEX AND ONTARIO
XELEX CORP. DIRECTORS AND OFFICERS
----------------------------------
NAME POSITION
--------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Chairman of the Board, Director, President, Secretary,
-------------------- -------------------------------------------------------
and Treasurer
--------------
ONTARIO DIRECTORS AND OFFICERS
NAME POSITION
--------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Chairman of the Board, Director, President, Secretary,
-------------------- -------------------------------------------------------
and Treasurer
--------------
EXHIBIT C
AUTOMAX FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2000
EXHIBIT D
ONTARIO SHAREHOLDERS
1250332 ONTARIO CORPORATION SHAREHOLDERS
NAME NO. OF SHARES
-------------
Xelex Corp. 6
----------- -
Totals 6
----------- -
EXHIBIT E
XELEX FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2000
SCHEDULE 2.1.4
None.
SCHEDULE 2.1.6
None.
SCHEDULE 2.1.8
None.
SCHEDULE 2.1.10
None.
SCHEDULE 2.1.12
None.
SCHEDULE 2.1.13
There is a pending investigation as to Automax by the State of Florida with
respect to unpaid sales taxes.
SCHEDULE 2.1.14
None.
SCHEDULE 2.1.15
Automax has not filed its 1999 Federal or State tax returns.
SCHEDULE 2.1.16
None.
SCHEDULE 2.1.18
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ has recorded a UCC-1 Financing Statement in connection with
a loan made by her to Automax and Kenwick.
SCHEDULE 2.1.20
None.
SCHEDULE 2.1.21
None.
SCHEDULE 2.1.22
None.
SCHEDULE 2.1.24
None.
SCHEDULE 2.1.26
None.
SCHEDULE 2.1.27
None.
SCHEDULE 2.1.28
None.
SCHEDULE 2.1.29
None.
SCHEDULE 2.1.30
None.
SCHEDULE 2.1.31
None.
SCHEDULE 2.1.33
The Parties hereby acknowledge that there may be substantial year-end
adjustments to the Automax Financial Statements and that, due to the lack of
funding, revenues and earnings for the years 1999 and 2000 could be
substantially impaired and may show a loss from operations.
SCHEDULE 2.1.36
None.
SCHEDULE 2.2.3
None.
SCHEDULE 2.2.5
Xelex has filed all required tax returns for 1999, but has not filed tax
returns for 1997 or 1998.
SCHEDULE 2.2.6
None.
SCHEDULE 2.2.7
Xelex has filed all required tax returns for 1999, but has not filed tax
returns for 1997 or 1998.
SCHEDULE 2.2.8
None.
SCHEDULE 2.2.12
None.
SCHEDULE 2.2.13
None.
SCHEDULE 2.2.14
None.
SCHEDULE 2.2.16
None.
SCHEDULE 2.2.19
None.
SCHEDULE 2.2.20
None.
SCHEDULE 2.2.21
None.
SCHEDULE 2.2.22
None.
SCHEDULE 2.2.23
None.
SCHEDULE 2.2.25
None.
SCHEDULE 2.2.27
None.