ACQUISITION AGREEMENT
This agreement (this "Agreement") is entered into by and between Wilon
Energy Group, a Delaware corporation (hereinafter the "Purchaser"), and the
equity owners ("the Shareholders") of Wilon Resources, Inc., a Tennessee
corporation, (hereinafter "the Company"). The parties to this Agreement are
hereinafter referred to as the "Parties" and a party to this Agreement as a
"Party.")
WITNESSETH:
WHEREAS, the Purchaser wishes to acquire, and the Shareholders are willing
to sell, all of the outstanding equity ownership of the Company in exchange for
common stock of the Purchaser;
NOW, THEREFORE, in consideration of the mutual terms and covenants set
forth herein, the Purchaser and the Shareholders approve and adopt this
Acquisition Agreement and mutually covenant and agree with each other as
follows:
ARTICLE I
SHARES TO BE TRANSFERRED AND SHARES TO BE ISSUED
1. a. On the closing date the Shareholders shall transfer to the Purchaser
certificates representing the equity of the Company described in Schedule "A" ,
attached hereto ("Schedule A)and incorporated herein, which in the aggregate
shall represent all of the issued and outstanding shares of the Company (the
"Shares". Such certificates shall be duly endorsed in blank by Shareholders or
accompanied by duly executed certificate powers in blank with signatures
guaranteed. Alternatively, the Shareholders may as sign their rights to the
Shares if the Shares have not been physically issued in the form of
certificates.
b. In exchange for the transfer of the equity of the Company pursuant to
sub-section 1.a. hereof, the Purchaser shall on the closing date and
contemporaneously with such transfer of the equity of the Company to it by the
Shareholders, or rights thereto, issue and deliver to the Shareholders
12,279,000 Shares of the Purchaser.
2. The Parties intend that this acquisition and exchange of equity is to be
an exchange/transaction pursuant to Section 368(a)(1)(b) of the Internal Revenue
Code of the United States.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
2.01 Ownership of Equity.
The Shareholders are the record owners and holders of the number of fully
paid and non-assessable Shares of the Company listed in Schedule A as of the
date hereof and will continue to own such Shares of the Company until the
delivery thereof to the Purchaser on the closing date and all the Shares are or
will be on the closing date owned free and clear of all liens, encumbrances,
charges and assessments of every nature and subject to no restrictions with
respect to transferability. The Shareholders have full power and authority to
assign and transfer the Shares in accordance with the terms hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND ITS SHAREHOLDERS
3.01 Capitalization
Except for this Agreement, there are no outstanding options, contracts,
calls, commitments, agreements or demands of any character relating to the
Shares.
3.02 Organization and Authority
(a) The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Tennessee with all
requisite corporate power and authority to own, operate and lease its
properties and to carry on its business as now being conducted, is
duly qualified and in good standing in every jurisdiction in which the
property owned, leased or operated by it, or the nature of the
business conducted by it, makes such qualification necessary to avoid
material liability or material interference in its business
operations, and is not subject to any agreement, commitment or
understanding which restricts or may restrict the conduct of its
business in any jurisdiction or location.
(b) The Shares are legally and validly issued, fully paid and
non-assessable.
(c) The Company has no subsidiaries.
(d) The minute book of the Company made available to the Purchaser
contains complete and accurate records of all meetings and other
corporate actions of the Company.
(e) The execution and delivery of this Agreement does not, and the
consummation of the transaction contemplated hereby will not, violate
any provision of the certificate/articles of incorporation or bylaws
of the Company, or any provisions thereof, or result in the
acceleration of any obligation under, any mortgage, lien, lease,
agreement, instrument, court order, arbitration award, judgment or
decree to which the Company is a party, or by which it is bound, and
will not violate any other restriction of any kind or character to
which it is subject.
(f) The authorized capital of the Company is 50,000,000 shares of common
stock, of which 12,279,000 shares shall be outstanding at the time of
the acquisition and 10,000,000 shares of preferred stock of which no
shares shall be outstanding at the time of the acquisition
2
3.03 Financials.
(a) Financial statements of the Company have been delivered by Company to
the Purchaser. Said financial statements are true and correct in all
material respects and present an accurate and complete disclosure of
the financial condition of the Company as of its date and for the
periods covered.
(b) All accounts receivable, if any, (net of reserves for doubtful
accounts) of the Company shown on the books of account on the
statement date and as incurred in the normal course of business since
that date, are collectible in the normal course of business.
(c) The Company has good and marketable title to all of its assets,
business and properties including, without limitation, all such
properties reflected in the balance sheet as of the statement date
except as disposed of in the normal course of business, free and clear
of any mortgage, lien, pledge, charge, claim or encumbrance, except as
shown on said balance sheet as of the statement date and, in the case
of real properties except for rights-of- way and easements which do
not adversely affect the use of such property.
(d) All currently used property and assets of the Company, or in which it
has an interest, or which it has in possession, are in good operating
condition and repair subject only to ordinary wear and tear.
3.04 Changes Since the Statement Date
Since the financial statement date, except as disclosed in the Disclosure
Statement, there will not have been any material negative change in the
financial position or assets of the Company.
3.05 Liabilities
There are no material liabilities of the Company, whether accrued,
absolute, contingent or otherwise, which arose or relate to any transaction of
the Company, its agents or servants occurring prior to the statement date, which
are not disclosed by or reflected in said financial statements, except as
disclosed in the Disclosure Statement. There are no such liabilities of the
Company which have arisen or relate to any transaction of the Company, its
agents or servants, occurring since the statement date, other than normal
liabilities incurred in the normal conduct of the business of the Company, and
none of which have a material adverse effect on the business or financial
condition of the Company, except as disclosed in the Disclosure Statement. As of
the date hereof, there are no known circumstances, conditions, happenings,
events or arrangements, contractual or otherwise, which may hereafter give rise
to liabilities, except in the normal course of business of the Company, except
as disclosed in the Disclosure Statement.
3
3.06 Taxes
All federal, county and local income, ad valorem, excise, profits,
franchise, occupation, property, sales, use gross receipts and other taxes
(including any interest or penalties relating thereto) and assessments which are
due and payable have been duly reported, fully paid and discharged as reported
by the Company, and there are no unpaid taxes which are, or could become a lien
on the properties and assets of the Company, except as provided for in the
financial statements of their date, or have been incurred in the normal course
of business of the Company since that date. All tax returns of any kind required
to be filed have been filed and the taxes paid or accrued.
3.07 Accuracy of All Statements Made by The Company
No representation or warranty by the Company and Shareholders in this
Agreement, nor any statement, certificate, schedule or exhibit hereto furnished
or to be furnished by or on behalf of the Shareholders pursuant to this
Agreement, nor any document or certificate delivered to the Purchaser pursuant
to this Agreement or in connection with actions contemplated hereby, contains or
shall contain any untrue statement of material fact or omits or shall omit a
material fact necessary to make the statement contained therein not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants as follows:
4.01 Organization and Authority
The Purchaser is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware with full power and authority
to enter into and perform the transactions contemplated by this Agreement, and
with all requisite corporate power and authority to own, operate and lease its
properties and to carry on its business as now being conducted, is duly
qualified and in good standing in every jurisdiction in which the property
owned, leased or operated by it, or the nature of the business conducted by it,
makes such qualification necessary to avoid material liability or material
interference in its business operations, and is not subject to any agreement,
commitment or understanding which restricts or may restrict the conduct of its
business in any jurisdiction or location.
(a) There are no outstanding shares of common stock of the Purchaser.
(b) The minute book of the Purchaser made available to the Company and
Shareholders contains complete and accurate records of all meetings
and other corporate actions of the shareholders and the Board of
Directors (and any committee thereof) of the Purchaser.
(c) The execution and delivery of this Agreement does not, and the
consummation of the transaction contemplated hereby will not violate
any provision of the certificate/articles of incorporation or bylaws
of the Purchaser, or any provisions thereof, or result in the
acceleration of any obligation under, any mortgage, lien, lease,
agreement, instrument, court order, arbitration award, judgment or
decree to which the Purchaser is a party, or by which it is bound, and
will not violate any other restriction of any kind or character to
which it is subject.
4
(d) The authorized capital stock of the Purchaser is 50,000,000) shares of
common stock, $.001 par value, of which no shares of such stock will
be issued and outstanding at the time of closing (exclusive of the
shares issued pursuant to the acquisition) and 10,000,000 shares of
preferred stock of which no shares of such stock will be issued and
outstanding at the time or closing.
4.02 Performance of This Agreement
The execution and performance of this Agreement and the issuance of stock
contemplated hereby have been authorized by the board of directors of the
Purchaser.
4.03 Financials.
(a) True copies of the financial statements of the Purchaser have been
completed and delivered by the Purchaser to the Company. Said
financial statements are true and correct in all material respects and
present an accurate and complete disclosure of the financial condition
and earnings of the Purchaser for the periods covered, in accordance
with generally accepted accounting principles applied on a consistent
basis.
(b) All accounts receivable, if any, (net of reserves for doubtful
accounts) of the Purchaser shown on financial statement, and as
incurred in the normal course of business since that date, are
collectible in the normal course of business.
(c) The Purchaser has good and marketable title to all of its assets,
business and properties including, without limitation, all such
properties reflected in the aforementioned balance sheet, except as
disposed of in the normal course of business, free and clear of any
mortgage, lien, pledge, charge, claim or encumbrance, except as shown
on said balance sheet, and, in the case of real properties, except for
rights-of-way and easements which do not adversely affect the use of
such property.
4.04 Changes Since Financial Statement Date.
Since the date of the financial statements, except as disclosed in writing,
there has not been any material change in the financial position or assets of
the Purchaser.
4.05 Accuracy of All Statements Made by the Purchaser
No representation or warranty by the Purchaser in this Agreement, nor any
statement, certificate, schedule or exhibit hereto furnished or to be furnished
by the Purchaser pursuant to this Agreement, nor any document or certificate
delivered to the Company or the Shareholders pursuant to this Agreement or in
connection with actions contemplated hereby, contains or shall contain any
untrue statement of material fact or omits or shall omit a material fact
necessary to make the statement contained therein not misleading.
4.06 Legality of Shares to be Issued
The shares of common stock of the Purchaser to be delivered pursuant to
this Agreement, when so delivered, will have been duly and validly authorized
and issued by the Purchaser and will be fully paid and nonassessable.
5
4.07 No Covenant as to Tax Consequences
It is expressly understood and agreed that neither the Purchaser nor its
officers or agents has made any warranty or agreement, expressed or implied, as
to the tax consequences of the transactions contemplated by this Agreement or
the tax consequences of any action pursuant to or growing out of this Agreement.
4.08 Securities Matters
The Purchaser is not aware of any formal or informal investigation of the
Purchaser or its securities by any governmental or non-governmental regulatory
agency.
ARTICLE V
COVENANTS OF SHAREHOLDERS
5.01 Access to Information
The Purchaser and its authorized representatives shall have full access
during normal business hours to all properties, books, records, contracts and
documents of the Company, and the Company shall furnish or cause to be furnished
to the Purchaser and its authorized representative all information with respect
to its affairs and business of the Company as the Purchaser may reasonably
request.
6
5.02 Actions Prior to Closing
From and after the date of this Agreement and until the closing date, the
Company shall not materially alter its business.
ARTICLE VI
CONDITIONS PRECEDENT TO THE PURCHASER'S OBLIGATIONS
Each and every obligation of the Purchaser to be performed on the closing
date shall be subject to the satisfaction of the Purchaser of the following
conditions:
6.01 Truth of Representations and Warranties
The representations and warranties made by the Company and Shareholders in
this Agreement or given on its behalf hereunder shall be substantially accurate
in all material respects on and as of the closing date with thesame effect as
though such representations and warranties had been made or given on and as of
the closing date.
6.02 Compliance with Covenants.
Shareholders shall have performed and
complied with all obligations under this Agreement which are to be performed or
complied with by them prior to or on the closing date, including the delivery
of the closing documents specified hereafter.
6.03 Absence of Suit.
No action, suit or proceedings before any court or any governmental or
regulatory authority shall have been commenced or threatened and, no
investigation by any governmental or regulatory authority shall have been
commenced, against the Shareholders, the Company or any of the affiliates,
associates, officers or directors of any of them, seeking to restrain, prevent
or change the transactions contemplated hereby, or questioning the validity or
legality of any such transactions, or seeking damages in connection with any of
such transactions.
6.04 Receipt of Approvals, Etc.
All approvals, consents and/or waivers that are necessary to effect the
transactions contemplated hereby shall have been received.
6.05 No Material Adverse Change.
As of the closing date there shall not have occurred any material adverse
change which materially impairs the ability of the Company to conduct its
business or the earning power thereof on the same basis as in the past.
6.06 Accuracy of Financial Statement.
The Purchaser and its representatives shall be satisfied as to the accuracy
of all balance sheets, statements of income and other financial statements of
the Company furnished to the Purchaser herewith.
7
6.07 Proceedings and Instruments Satisfactory; Certificates.
All proceedings, corporate or otherwise, to be taken in connection with the
transactions contemplated by this Agreement shall have occurred and all
appropriate documents incident thereto as the Purchaser may request shall have
been delivered to the Purchaser. The Company and the Shareholders shall have
delivered certificates in such detail as the Purchaser may request as to
compliance with the conditions set forth in this Article.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS
OF THE COMPANY AND SHAREHOLDERS
Each and every obligation of the Company and Shareholders to be performed
on the closing date shall be subject to the satisfaction prior thereto of the
following conditions:
7.01 Truth of Representations and Warranties
The representations and warranties of the Purchaser contained in this
Agreement shall be true at and as of the closing date as though such
representations and warranties were made at and as of the transfer date.
7.02 The Purchaser's Compliance with Covenants
The Purchaser shall have performed and complied with its obligations under
this Agreement which are to be performed or complied with by it prior to or on
the closing date.
7.03 Absence of Suit
No action, suit or proceedings before any court or any governmental or
regulatory authority shall have been commenced or threatened and, no
investigation by any governmental or regulatory authority shall have been
commenced against the Purchaser, or any of the affiliates, associates, officers
or directors of the Purchaser seeking to restrain, prevent or change the
transactions contemplated hereby, or questioning the validity or legality of any
such transactions, or seeking damages in connection with any of such
transactions.
7.04 Receipt of Approvals, Etc.
All approvals, consents and/or waivers that are necessary to effect the
transactions contemplated hereby shall have been received.
7.05 No Material Adverse Change
As of the closing date there shall not have occurred any material adverse
change which materially impairs the ability of the Purchaser to conduct its
business or the earning power thereof on the same basis as in the past.
7.06 Accuracy of Financial Statements
The Company and the Shareholders shall be satisfied as to the accuracy of
all balance sheets, statements of income and other financial statements of the
Purchaser furnished to the Company herewith.
8
7.07 Proceedings and Instruments Satisfactory; Certificates
All proceedings, corporate or otherwise, to be taken in connection with the
transactions contemplated by this Agreement shall have occurred and all
appropriate documents incident thereto as the Company may request shall have
been delivered to the Company. The Purchaser shall have delivered certificates
in such detail as the Shareholders may request as to compliance with the
conditions set forth in this Article.
ARTICLE VIII
INDEMNIFICATIONS
The Company shall indemnify the Purchaser for any loss, cost, expense or
other damage suffered by the Purchaser resulting from, arising out of, or
incurred with respect to the falsity or the breach of any representation,
warranty or covenant made by the Company herein, and any claims arising from the
operations of the Company prior to the closing date. The Purchaser shall
indemnify and hold the Company and Shareholders harmless from and against any
loss, cost, expense or other damage (including, without limitation, attorneys'
fees and expenses) resulting from, arising out of, or incurred with respect to,
or alleged to result from, arise out of or have been incurred with respect to,
the falsity or the breach of any representation, covenant, warranty or agreement
made by the Purchaser.
ARTICLE IX
CLOSING
9.01 Time
The closing of this transaction ("closing") shall be effective May 12,
2003. Such date is referred to in this agreement as the "closing date" provided,
however, that additional documents necessary to complete the transaction may be
executed and provided subsequent to the closing date.
9.02 Documents To Be Delivered by Shareholders At the closing
Shareholders shall deliver to the Purchaser the following documents:
(a) Certificates or assignments for the Shares.
(b) A certificate signed by the President of the Company that the
representations and warranties made by the Company in this Agreement
are true and correct on and as of the closing date with the same
effect as though such representations and warranties had been made on
or given on and as of the closing date and that Shareholders have
performed and complied with all of their obligations under this
Agreement which are to be performed or complied with by or prior to or
on the closing date.
(c) A copy of the bylaws of the Company certified by its secretary and a
copy of the articles of incorporation of the Company certified by the
secretary of state.
(d) Such other documents of transfer, certificates of authority and other
documents as the Purchaser may reasonably request.
9
9.03 Documents To Be Delivered by the Purchaser
At the closing the Purchaser shall deliver to Shareholders the following
documents:
(a) Certificates for the number of shares of common stock of the Purchaser
as determined in Article 1 hereof.
(b) A certified copy of the duly adopted resolutions of the Board of
Directors of the Purchaser authorizing or ratifying the execution and
performance of this Agreement and authorizing or ratifying the acts of
its officers and employees in carrying out the terms and provisions
thereof.
ARTICLE X
TERMINATION AND ABANDONMENT
This Agreement may be terminated and the transaction provided for by this
Agreement may be abandoned without liability on the part of any part to any
other, at any time before the closing date, or on a post closing basis as
provided previously herein:
(a) By mutual consent of the Purchaser, the Company and the Shareholders;
(b) By the Purchaser if any of the conditions provided for in Article 6 of
this Agreement have not been met and have not been waived in writing
by the Purchaser.
(c) By the Company if any of the conditions provided for in Article 7 of
this Agreement have not been met and have not been waived in writing
by the Company.
In the event of termination and abandonment by any Party as above provided
in this Article, written notice shall forthwith be given to the other Party, and
each Party shall pay its own expenses incident to preparation for the
consummation of this Agreement and the transactions contemplated hereunder.
ARTICLE XI
MISCELLANEOUS
11.01 Notices
All notices, requests, demands and other communications hereunder shall be
deemed to have been duly given, if delivered by hand or mailed, certified or
registered mail with postage prepaid:
(a) If to the Company or its shareholders, to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Wilon
Resources, Inc., ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇ or to such other person and place as the Company and
its Shareholders shall furnish to the Purchaser in writing
(b) If to the Purchaser, to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Wilon Resources, Inc., ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ 423-877-5670, or to such
other person and place as the Purchaser shall furnish to Company in
writing.
10
11.02 Announcements.
Announcements concerning the transactions provided for in this Agreement by
either the Company or the Purchaser shall be subject to the approval of the
other in all essential respects, except that the approval of the Company shall
not be required as to any statements and other information which the Purchaser
may submit to its shareholders.
11.03 Default.
Should any Party default in any of the covenants, conditions, or promises
contained herein, the defaulting Party shall pay all costs and expenses,
including a reasonable attorney's fee, which may arise or accrue from enforcing
this Agreement, or in pursuing any remedy provided hereunder or by the statutes
of the State of Tennessee.
11.04 Assignment.
This Agreement may not be assigned in whole or in part by the Parties
without the prior written consent of the other Party or Parties, which consent
shall not be unreasonably withheld.
11.05 Successors and Assigns.
This Agreement shall be binding upon and shall inure to the benefit of the
Parties, their successors and assigns.
11.06 Holidays.
If any obligation or act required to be performed hereunder shall fall due
on a Saturday, Sunday or other day which is a legal holiday established by the
State of Tennessee, such obligation or act may be performed on the next
succeeding business day with the same effect as if it had been performed upon
the day appointed.
11.07 Computation of Time.
The time in which any obligation or act provided by this Agreement is to be
performed is computed by excluding the first day and including the last, unless
the last day is a holiday, in which event such day shall also be excluded.
11.08 Governing Law and Venue
This Agreement shall be governed by and interpreted pursuant to the laws of
the Sate of Tennessee. Any action to enforce the provisions of this Agreement
shall be brought in a court of competent jurisdiction within the State of Utah
and in no other place.
11.09 Partial Invalidity.
If any term, covenant, condition or provision of this Agreement or the
application thereof to any person or circumstance shall to any extent be invalid
or unenforceable, the remainder of this Agreement or application of such term or
provision to persons or circumstances other than those as to which it is held to
be invalid or unenforceable shall not be affected thereby and each term,
covenant, condition or provision of this Agreement shall be valid and shall be
enforceable to the fullest extent permitted by law.
11
11.10 No Other Agreements
This Agreement constitutes the entire Agreement between the Parties and
there are and will be no oral representations which will be binding upon any of
the Parties.
11.11 Rights are Cumulative
The rights and remedies granted hereunder shall be in addition to and
cumulative of any other rights or remedies provided under the laws of the State
of Tennessee.
11.12 Waiver
No delay or failure in the exercise of any power or right shall operate as
a waiver thereof or as an acquiescence in default. No single or partial exercise
of any power or right hereunder shall preclude any other or further exercise
thereof or the exercise of any other power or right.
11.13 Survival of Covenants, Etc.
All covenants, representations, and warranties made herein to any Parties
or in any statement or document delivered to any Party , shall survive the
making of this Agreement and shall remain in full force and effect until the
obligations of such Party hereunder have been fully satisfied.
11.14 Further Action.
The Parties agree to execute and deliver such additional documents and to
take such other and further action as may be required to carry out fully the
transaction(s) contemplated herein.
11.15 Amendment
This Agreement or any provision hereof may not be changed, waived,
terminated or discharged except by means of a written supplemental instrument
signed by the Party or Parties against whom enforcement of the change, waiver,
termination, or discharge is sought.
11.16 Headings
The descriptive headings of the various Sections or parts of this Agreement
are for convenience only and shall not affect the meaning or construction of any
of the provisions hereof.
11.17 Counterparts
This agreement may be executed in two or more partially or fully executed
counterparts, each of which shall be deemed an original and shall bind the
signatory, but all of which together shall constitute but one and the same
instrument, provided that the Purchaser shall have no obligations hereunder
until all Shareholders have become signatories hereto.
12
IN WITNESS WHEREOF, the Parties executed the foregoing Acquisition
Agreement effective the 7th day of May, 2003.
WILON ENERGY GROUP, INC.
By: /s/▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, President
WILON RESOURCES, INC.
for itself and on behalf of Stockholders
By: /s/▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, President
13