EXCHANGE AGREEMENT
Between
CARBON FIBER PRODUCTS, INC.,
CYNTECH TECHNOLOGIES, INC.
And
THE SHAREHOLDERS OF CYNTECH TECHNOLOGIES, INC.
Dated November 30, 1998
As Amended on
December 22, 1998
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TABLE OF CONTENTS
Articles Page
ARTICLE I REPRESENTATIONS, COVENANTS, AND
WARRANTIES OF CYNTECH TECHNOLOGIES, INC.
1.01 Organization.......................................1
1.02 Capitalization.....................................2
1.03 Subsidiaries and Predecessor Corporations..........2
1.04 Financial Statements...............................2
1.05 Information........................................2
1.06 Options and Warrants...............................3
1.07 Absence of Certain Changes or Events...............3
1.08 Title and Related Matters..........................4
1.09 Litigation and Proceedings.........................4
1.10 Contracts..........................................4
1.11 Material Contract Defaults.........................5
1.12 No Conflict With Other Instruments.................5
1.13 Governmental Authorizations........................5
1.14 Compliance With Laws and Regulations...............5
1.15 Insurance..........................................5
1.16 Approval of Agreement..............................5
1.17 Material Transactions or Affiliations..............6
1.18 Labor Relations....................................6
1.19 Cyntech Schedules..................................6
ARTICLE II REPRESENTATIONS, COVENANTS AND WARRANTIES
OF CYNTECH SHAREHOLDERS
2.01 Ownership of Cyntech Shares........................7
2.02 Knowledge of Representations.......................8
ARTICLE III REPRESENTATIONS. COVENANTS, AND
WARRANTIES OF CARBON FIBER PRODUCTS, INC.
3.01 Organization ......................................8
3.02 Capitalization.....................................8
3.03 Subsidiaries.......................................8
3.04 Financial Statements...............................8
3.05 Information........................................9
3.06 Options and Warrants...............................9
3.07 Absence of Certain Changes or Events...............9
3.08 Title and Related Matters.........................10
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Articles Page
3.09 Litigation and Proceedings........................11
3.10 Contracts.........................................11
3.11 Material Contract Defaults........................11
3.11 No Conflict With Other Instruments................11
3.12 Governmental Authorizations.......................12
3.13 Compliance With Laws and Regulations..............12
3.14 Insurance.........................................12
3.15 Approval of Agreement.............................12
3.16 Continuity of Business Enterprises................12
3.17 Material Transactions or Affiliations.............12
3.18 Employment Matters................................12
3.19 Carbon Fiber Schedules............................12
ARTICLE IV PLAN OF EXCHANGE
4.01 The Exchange......................................14
4.02 Anti-Dilution.....................................14
4.03 Appointment of New Directors......................14
4.04 Closing...........................................14
4.05 Closing Events....................................15
4.06 Termination.......................................15
ARTICLE V SPECIAL COVENANTS AND REPRESENTATIONS
5.01 Stockholder Meeting of Carbon Fiber ..............16
5.02 Additional Covenants and Representations of CTI...16
5.03 Access to Properties and Records..................17
5.04 Delivery of Books and Records.....................17
5.05 Special Covenants and Representations
Regarding the Exchanged Carbon Fiber Stock........17
5.06 Third Party Consents and Certificates.............17
5.07 Actions Prior to Closing..........................17
5.08 Sales Under Rules 144 or 145, If Applicable.......18
5.09 Indemnification...................................19
ARTICLE VI CONDITIONS PRECEDENT TO OBLIGATIONS
OF CARBON FIBER PRODUCTS. INC.
6.01 Accuracy of Representations.......................19
6.02 Officer's Certificates............................20
6.03 No Material Adverse Change........................20
6.04 Good Standing.....................................20
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Articles Page
6.05 Officer and Director Questionnaires...............20
6.06 Other Items.......................................20
ARTICLE VII CONDITIONS PRECEDENT TO OBLIGATIONS OF
CYNTECH AND THE CYNTECH SHAREHOLDERS
7.01 Accuracy of Representation........................21
7.02 Stockholder Approval..............................21
7.03 Officer's Certificate.............................21
7.04 No Material Adverse Change........................21
7.05 Good Standing.....................................21
7.06 Other Items.......................................21
ARTICLE VIII MISCELLANEOUS
8.01 GoverningLaw......................................22
8.02 Notices...........................................22
8.03 Attomeys'Fees.....................................22
8.04 Confidentiality...................................22
8.05 Schedules;Knowledge...............................23
8.06 Third Party Beneficiaries.........................23
8.07 Entire Agreement..................................23
8.08 Survival;Termination..............................23
8.09 Counterparts......................................23
8.10 Amendment or Waiver...............................23
EXHIBITS
Exhibit "A" Letter of Representation
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EXCHANGE AGREENIENT
THIS EXCHANGE AGREEMENT (hereinafter referred to as this "Agreement'),
is entered into as of this 30th day of November, 1998, by and among Carbon Fiber
Products, Inc., a Utah corporation (hereinafter referred to as "CFP"), Cyntech
Technologies, Inc., a Nevada corporation (hereinafter referred to as "CTI"), and
those persons identified on Schedule A attached hereto, who are all of the
shareholders of CTI (hereinafter referred to as the "CTI Shareholders"), upon
the following premises:
Premises
This Agreement provides for the acquisition by CFP of all of the issued
and outstanding shares of CTI solely in exchange for voting shares of CFP, on
the terms and conditions hereinafter provided, all for the purpose of effecting
a so-called `tax-free' reorganization pursuant to Sections 368(a)(l)(B) of the
Internal Revenue Code of 1954, as amended.
Agreement
NOW THEREFORE, on the stated premises and for and in consideration of
the mutual covenants and agreements hereinafter set forth and the mutual
benefits to the parties to be derived herefrom. it is hereby agreed as follows:
ARTICLE I
REPRESENTATIONS. COVENANTS, AND WARRANTIES OF CTI
As an inducement to, and to obtain the reliance of, CFP, CTI makes the
following representations and warranties, as modified by the CTI Schedules (as
hereinafter defined), which CTI represents as accurate and complete:
Section 1.01 Organization. CTI is a corporation duly organized, validly
existing and in goodstanding under the laws of the state of Nevada. CTI has the
corporate power and is duly authorized, qualified, franchise, and licensed under
all applicable laws, regulations, ordinances, and orders of public authorities
to own all of its properties and assets and to carry on its business in all
material respects as it is now being conducted, including qualification to do
business as a foreign corporation in the states in which the character and
location of the assets owned by it or the nature of the business transacted by
it requires qualification. Included in the CTI Schedules are complete and
correct copies of the articles of incorporation, as amended, and bylaws of CTI
as in effect on the date hereof The execution and delivery of this Agreement
does not, and the consummation of the transactions contemplated by this
Agreement in accordance with the terms hereof will not, violate any provision of
CTI's articles of incorporation or bylaws. CTI has taken all action required by
laws, its articles of Incorporation, its bylaws, or otherwise to authorize the
execution and delivery of this Agreement. CTI has full power, authority, and
legal right and has taken all action required by law, its certificate of
incorporation, bylaws, and otherwise to consummate the transactions herein
contemplated.
Section 1.02 . Capitalization. The authorized capitalization of CTI
consists of 50.000,000. shares of Voting Class Common Stock, par value $0.001
per share, of which a total of 47,334,210 shares are issued and outstanding: and
25,000,000 shares of Voting Class B Common Stock, par value $0.001 per share of
which 20,000,000 shares are issued and outstanding. All issued and outstanding
shares are legally issued, fully paid, and non-assemble and not issued in
violation of the pre-emptive or other rights of any person.
Section 1.03 Subsidiaries and Predecessor Corporations. CTI has one
subsidiary, Cyntech of ▇▇▇▇▇▇▇▇ County, Inc., a Texas corporation ("CCCI"). CCCI
is owned 100% by CTI. Except for CCCI, CTI does not have any subsidiaries and
does not own, beneficially or of record, any shares of any other corporation.
Section 1.04 Financial Statements.
(a) Included in the CTI Schedules are the following financial
statements (the "financial statements"):
Unaudited balance sheet as of August 31, 1998, together with an
unaudited income statement for the period from inception through August 31,
1998.
(b) All such financial statements have been prepared in accordance with
generally accepted accounting. principles. The CTI balance sheet presents
fairly as of its date the financial condition of CTI. CTI did not have, as
of the date of such balance sheet, except as and to the extent reflected
or reserved against therein, any liabilities or obligations (absolute or
contingent) which should be reflected in a balance sheet or the notes
thereto, prepared in accordance with generally accepted accounting
principles, and all assets reflected therein are properly reported and
present fairly the value of the assets of CTI in accordance with generally
accepted accounting principles. The financial statements reflect fairly
the information required to be set forth therein by generally accepted
accounting principles.
(c) CTI has filed all state, federal, and local income tax returns
required to be filed by it from inception to the date hereof. Included in
the CTI Schedules are true and correct copies of the federal income tax
returns of CTI filed in the past three fiscal years. None of such federal
income tax returns have been examined by the Internal Revenue Service.
Each of such income tax returns reflects the taxes due for the period
covered thereby, except for amounts which, in the aggregate, are
immaterial.
(d) CTI does not owe any unpaid federal, state, county, local. or other
taxes (including any deficiencies, interest, or penalties) through August
31. 1998, for which CTI may be liable in its own right or as a transferee
of the assets of or as a successor to, any other corporation or entity.
Furthermore, except as accruing in the normal course of business, CTI does
not own any accrued and unpaid taxes to date of this Agreement.
(e) The books and records, financial and otherwise, of CTI are in all
material respects complete and correct and have been maintained in
accordance with good business and accounting practices.
(f) CTI has good and marketable title to its assets and, except as set
forth in the CTI Schedules or the financial statements of CTI or the notes
thereto, has no material contingent liabilities, direct or indirect,
matured or unmatured.
Section 1.05 Information. The information concerning CTI set forth in
this Agreement and in the CTI Schedules is complete and accurate in all material
respects and does not contain any untrue statement of a material fact or omit to
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state a material fact required it to make the statements made, in light of the
circumstances under which they were made, not misleading.
Section 1.06 Options or Warrants. Except as set forth in the CTI
Schedules, there are no existing options, warrants, calls, or commitments of any
character relating to the authorized and] unissued CTI common stock, except
options, warrants, calls or commitments, if any, to which CTI is not a party and
by which it is not bound.
Section 1.07 Absence of Certain Changes or Events. Except as set forth
in this Agreement or the CTI Schedules, Since August 31, 1998:
(a) there has not been (i) any material adverse change in the business,
operations, properties, assets, or condition of CTI; or (ii) any damage,
destruction, or loss to CTI (whether or not covered by insurance)
materially and adversely affecting the business, operations, properties,
assets, or condition of CTI, (except as set forth in the CTI schedules);
(b) Except as set forth in the CTI Schedules, CTI has not (i) amended
its certificate of incorporation or bylaws; (ii) declared or made, or
agreed to declare or make, any payment of dividends or distributions of
any assets of any kind whatsoever to stockholders or purchased or
redeemed, or agreed to purchase or redeem, any of its capital stock; (iii)
waived any rights of value which in the aggregate are extraordinary or
material considering the business of CTI; (iv) made any material change in
its method of management, operation, or accounting; (v) entered into any
other material transaction; (vi) made any accrual or arrangement for
payment of bonuses or special compensation of any kind or any severance or
termination pay to any present or former officer or employee; (vii)
increased the rate of compensation payable or to become payable by it to
any of its officers or directors or any of its employees whose monthly
compensation exceeds $1,000; or (viii) made any increase in any profit
sharing, bonus, deferred compensation, insurance, pension, retirement, or
other employee benefit plan, payment or arrangement made to, for, or with
its officers, directors, or employees:
(c) Except as set forth in the CTI Schedules. CTI has not (i) borrowed
or agreed to borrow any funds or incurred, or become subject to, any
material obligation or liability (absolute or contingent) except
liabilities incurred in the ordinary course of business: (ii) paid any
material obligation or liability (absolute or contingent) other than
current liabilities reflected in or shown on the most recent CTI balance
sheet, and current liabilities incurred since that date in the ordinary
course of business: (iii) sold or transferred, or agreed to sell or
transfer, any of its assets, properties, or rights (except assets,
properties, or rights not used or useful in it's business which, in the
aggregate have a value of less than $1,000), or cancelled, or agreed to
cancel, any debts or claims (except debts or claims which in the aggregate
are of a value of less than $1,000); (iv) made or permitted any amendment
or termination of any contract, agreement, or license to which it is a
party if such amendment or termination is material, considering the
business of CTI; or (v) issued, delivered, or agreed to issue or deliver
any stock, bonds or other corporate securities including debentures
(whether authorized and unissued or held as treasury stock); and
(d) to the best knowledge of CTI, CTI has not become subject to any law
or regulation which materially and adversely affects, or in the future may
adversely affect, the business, operations, properties, assets, or
condition of CTI.
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Section 1.08 Title and Related Matters. Except as set forth in the CTI
schedules, CTI has good and marketable title to all of its properties,
inventory, interests in properties, and assets, real and personal, which are
reflected in the most recent CTI balance sheet or acquired after that date
(except properties, interests in properties, and assets sold or otherwise
disposed of since such date in the ordinary course of business), free and clear
of all liens, pledges, charges, or encumbrances except (a) statutory liens or
claims not yet delinquent; (b) such imperfections of title and easements as do
not and will not materially detract from or interfere with the present or
proposed use of the properties subject thereto or affected thereby or otherwise
materially impair present business operations on such properties; and (c) as
described in the CTI Schedules. Except as set forth in the CTI Schedules, CTI
owns free and clear of any liens, claims, encumbrances, royalty interests, or
other restrictions or limitations of any nature whatsoever, any and all products
it is currently manufacturing, including the underlying technology and data, and
all procedures, techniques, marketing plans, business plans, methods of
management, or other information utilized in connection with CTI's business.
Except as set forth in the CTI Schedules, no third party has any right to, and
CTI has not received any notice of infringement of or conflict with asserted
rights of others with respect to any product, technology, data, trade secrets,
know-how, proprietary techniques, trademarks, service marks, trade names, or
copyrights which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling, or finding, would have a materially adverse affect on the
business, operations, financial condition, income, or business prospects of CTI
or any material portion of its properties, assets, or rights.
Section 1.09 Litigation and Proceedings. Except as set forth in the CTI
Schedules, there are no actions, suits, proceedings, or investigations pending
or, to the knowledge of CTI after reasonable investigation, threatened by or
against CTI or affecting CTI or its properties, at law or in equity, before any
court or other governmental agency or instrumentality, domestic or foreign, or
before any arbitrator of any kind. CTI does not have any knowledge of any
default on its part with respect to any judgment, order, writ, injunction,
decree, award, rule, or regulation of any court, arbitrator, or governmental
agency or instrumentality or of any circumstances which, after reasonable
investigation, would result in the discovery of such a default.
Section 1.10 Contracts.
(a) Except as included or described in the CTI Schedules, there are no,
material contracts, agreements, franchises, license agreements, or other
commitments to which CTI is a party or by which it or any of its assets,
products, technology, or properties are bound:
(b) All contracts, agreements, franchises, license agreements, and
other commitments to which CTI is a party or by which its properties are
bound and which are material to the operations of CTI taken as a whole are
valid and enforceable by CTI in all respects, except as limited by
bankruptcy and insolvency laws and by other laws affecting the rights of
creditors generally:
(c) CTI is not a party to or bound by. and the properties of CTI are
not subject to, any contract, agreement, other commitment or instrument:
any charter or other corporate restriction; or any judgment, order, writ,
injunction, decree, or award which materially and adversely affects, or in
the future may (as far as CTI can now foresee) materially and adversely
affect, the business, operations, properties, assets, or condition of CTI:
and
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(d) Except as included or described in the CTI Schedules or reflected
in the most recent CTI balance sheet, CTI is not a Party to any oral or
written (i) contract for the employment of any-officer or employee which
is not terminable on 30 days or less notice: (ii) profit sharing. bonus,
deferred compensation, stock option, severance pay, pension benefit or
retirement plan, agreement, or arrangement covered by Title IV of the
Employee Retirement Income Security Act, as amended; (iii) agreement,
contract, or indenture relating to the borrowing of money; (iv) guaranty
of any obligation, other than one on which CTI is a primary obligor, for
the borrowing of money or otherwise, excluding endorsements made for
collection and other guaranties of obligations, which. in the aggregate do
not exceed more than one year or providing for payments in excess of
$1,000 in the aggregate; (vi) collective bargaining agreement; (vii)
agreement with any present or former officer or director of CTI; or (viii)
contract, agreement, or other commitment involving payments by it of more
than $1,000 in the aggregate.
Section 1.11 Material Contract Defaults. CTI is not in default in any
material respect under the terms of any outstanding contract, agreement, lease,
or other commitment which is material to the business, operations, properties,
assets, or condition of CTI and there is no event of default in any material
respect under any such contract, agreement, lease, or other commitment in
respect of which CTI has not taken adequate steps to prevent such a default from
occurring.
Section 1.12 No Conflict With Other Instruments. The execution of this
Agreement and the consummation of the transactions contemplated by this
Agreement will not result in, the breach of any term or provision of, or
constitute an event of default under, any material indenture, mortgage, deed of
trust, or other material contract, agreement, or instrument to which CTI is a
party or to which any of its properties or operations ire subject.
Section 1.13 Governmental Authorizations. Except as set forth in the
CTI Schedules, CTI has all licenses, franchises, permits, and other governmental
authorizations that are legally required to enable it to conduct its business in
all material respects as conducted on the date hereof. Except for compliance
with federal and state securities and corporation laws, as hereinafter provided,
no authorization, approval, consent, or order of. or registration, declaration,
or filing with, any court or other governmental body is required in connection
with the execution and delivery by CTI of this Agreement and the consummation by
CTI of the transactions contemplated hereby.
Section 1.14 Compliance with Laws and Regulations. Except as set forth
in the CTI Schedules, CTI has complied with all applicable statutes and
regulations of any federal, state, or other governmental entity or agency
thereof, except to the extent that noncompliance would not materially and affect
the business, operations, properties, assets, or condition of CTI or except to
the extent that noncompliance would not result in the incurrence of any material
liability for CTI.
Section 1.15 Insurance. All the insurable properties of CTI are insured
in their full replacement value against all risks customarily insured against by
persons operating similar properties in localities where such properties are
located and under valid and enforceable policies by insurers of recognized
responsibility. Such policy or policies containing substantially equivalent
coverage will be outstanding on the date of consummation (if the transactions
contemplated by this Agreement.
Section 1. 16 Approval of Agreement. The board of directors of CTI has
authorized the execution and delivery of this Agreement by CTI has approved the
transactions contemplated hereby, and approved the submission of this Agreement
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and the transactions contemplated hereby to the shareholders of CTI for their
approval with the recommendation that the reorganization be accepted.
Section 1.17 Material Transactions or Affiliations. Set forth in the
CTI Schedules is a description of every material contract, agreement, or
arrangement between CTI and any predecessor and any person who was at the time
of such contract, agreement, or arrangement an officer, director, or person
owning of record, or known by CTI to own beneficially, 10% or more of the issued
and outstanding common stock of CTI and which is to be performed in whole or in
part after the date hereof or which was entered into not more than three years
prior to the date hereof. In all of such transactions, the amount paid or
received, whether in cash, in services, or in kind, is, had been during the full
term thereof, and is required to be during the unexpired portion of the term
thereof, no less favorable to CTI than terms available from otherwise unrelated
parties in arm's length transactions. Except as disclosed in the CTI Schedules
or otherwise disclosed herein, no officer, director, or 10%o shareholder of CTI
has, or has had since inception of CTI, any interest, direct or indirect, in any
material transaction with CTI. There are no commitments by CTI, whether written
or oral, to lend any funds to, borrow any money from, or enter into any other
material transaction with, any such affiliated person.
Section 1.18 Labor Relations. CTI has not had a work stoppage resulting
from labor problems. To the knowledge of CTI. no union or other collective
bargaining organization is organizing or attempting to organize any employee of
CTI.
Section 1.19 CTI Schedules. CTI has delivered to CFP, or will deliver
within five (5) business days from the date of execution of this Agreement, the
following schedules, which are collectively referred to as the "CTI Schedules"
and which consist of separate schedules dated as of the date of execution of
this Agreement and instruments and data as of such date, all certified by the
chief executive officer of CTI as complete, true, and correct:
(a) a schedule containing complete and correct copies of the
certificate of incorporation, as amended, and bylaws of CTI in effect as
of the date of this Agreement;
(b) a schedule containing the financial statements of CTI identified in
paragraph 1.04(c);
(c) a schedule containing the federal income tax returns of CTI
identified in paragraph 1.04(c):
(d) a schedule containing a list indicating the name and address of
each shareholder of CTI together with the number of shares owned by him or
her;
(e) a schedule containing a description of all real property owned by
CTI, together with a description of every mortgage, deed of trust, pledge,
lien, agreement, encumbrance, claim, or equity interest of any nature
whatsoever in such real property:
(f) a schedule containing true and correct copies of all contracts,
agreements, or other instruments to which CTI is a party or by which it or
its properties are bound, together with a description of all contracts
leases, agreements, and other instruments, whether or not deemed material,
including oral agreements, to which CTI is a party or by which it or its
6
properties are bound, specifically including all contracts, agreements, or
arrangements referred to in section 1.17;
(g) copies of all licenses, permits, and other governmental
authorizations (or requests or applications therefor) pursuant to which
CTI carries on or proposes to carry on its business (except those which,
in the aggregate, are immaterial to the present or proposed business of
CTI):
(h) a schedule listing the accounts receivable and notes and other
obligations receivable of CTI as of October I, 1998, or that arose
thereafter other than in the ordinary course of business of CTI,
indicating the debtor and amount, and classifying the accounts to show in
reasonable detail the length of time, if any, overdue, and stating the
nature and amount of any refunds, set offs, reimbursements, discounts, or
other adjustments which are in the aggregate material and due to or
claimed by such creditor;
(i) a schedule listing the accounts payable and notes and other
obligations payable of CTI as of October 31. 1998, or that arose
thereafter other than in the ordinary course of the business of CTI,
indicating the creditor and amount, classifying the accounts to show in
reasonable detail the length of time, if any, overdue, and stating the
nature arid amount of any refunds, setoffs, reimbursements, discounts, or
other adjustments, which in the aggregate are material and due or payable
to CTI respecting such obligations;
(j) a schedule setting forth a description of any material adverse
change in the business, operations, property, inventory, assets, or
condition of CTI since October 31, 1998, required to be provided pursuant
to section 1.07 hereof;
(k) a schedule containing a copy of the board of directors' and
shareholders' minutes of CTI since inception: and
(1) a schedule setting forth any other information, together with any
required copies of documents, required to be disclosed in the CTI
Schedules by sections l.0l through 1.18.
CTI shall cause the CTI Schedules and the instruments and data
delivered to CFP hereunder to be updated after the date hereof up to and
including the Closing Date.
ARTICLE 11
REPRESENTATIONS, COVENANTS. AND WARRANTIES
OF CTI SHAREHOLDERS
As in inducement to, and to obtain reliance of CFP, the CTI
Shareholders represent and warrant as follows:
Section 2.01 Ownership of CTI Shares. Each CTI shareholder hereby
represents and warrants with respect to itself that it is the legal and
beneficial owner of the number of CTI shares set forth opposite its name at the
foot of this agreement, free and clear of any claims, charges, equities, liens,
security interests, and encumbrances whatsoever, and each such shareholder has
full right, power, and authority to transfer, assign, convey, and deliver its
7
CTI shares; and delivery of such shares tit the closing will convey to CFP good
and marketable title to such shares free and clear of an claims, charges,
equities, liens, security interests, and encumbrances whatsoever.
Section 2.02 Knowledge of Representations. To their best knowledge and
belief, the representations of CTI in Article 1, above, are true, accurate and
complete.
ARTICLE III
REPRESENTATIOLNS. COVENANTS, AND WARRANTIES OF CFP
As an inducement to, and to obtain the reliance of CTI and the CTI
Shareholders, CFP represents and warrants as follows:
Section 3.01 Organization. CFP is a corporation duly organized, validly
existing, and in good standing under the laws of the state of Utah, and has the
corporate power and is duly authorized, qualified, franchised, and licensed
under all applicable laws, regulations, ordinances, and orders of public
authorities to own all of its properties and assets and to carry on its business
in all material respects as it is now being conducted, and there is no
jurisdiction in which it is not qualified in which the character and location of
the assets owned by it or the nature of the business transacted by it requires
qualification. Included in the CFP Schedules (as hereinafter defined) are
complete and correct copies of the articles of incorporation and bylaws of CFP
as in effect on the date hereof. The execution and delivery of this Agreement
does not, and the consummation of the transactions contemplated hereby will not,
violate any provision of CFP's articles of incorporation or bylaws. Except as
set forth in Section 5.01 below, CFP has taken all action required by law, its
articles of incorporation, its bylaws, or otherwise to authorize the execution
and delivery of this Agreement, and CFP has full power, authority, and legal
right and has taken all action required by law, its articles of incorporation,
bylaws, or otherwise to consummate the transactions hereby contemplated.
Section 3.02 Capitalization. CFP's authorized capitalization of
100,000,000 shares of common stock, par value $.001, of which a total of
51,312,153 shares are either issued, or will be issued at Closing: and 5,000,000
shares of preferred stock, par value $0.001, none of which are outstanding.
Immediately following a reverse split described in Section 5.01, CFP will have a
total of 3,100.000 shares issued and outstanding immediately prior to the
reorganization. All issued and outstanding shares at Closing, will be, legally
issued, fully paid, and non-assessable and not issued in violation of the
pre-emptive or other rights of any person.
Section 3.03 Subsidiaries. CFP has one wholly-owned subsidiary, Novus
Cart Company ("Novus"), a Utah corporation. Prior to the closing. shares of
Novus will be transferred for good and valuable consideration to a third party.
Except for Novus, CFP does not have any subsidiaries and does not own,
beneficially or of record, any shares of any other corporation.
Section 3.04 Financial Statements.
(a) Included in the CFP Schedules are the following financial
statements (the "financial statements"):
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Unaudited balance sheets as of July 31, 1998 and September 30, 1998,
and unaudited income statements for the period from August 1, 1997 through
July 31, 1998, and the two months ended September 30, 1998, and an
unaudited pro forma balance sheet as of the Closing Date.
(b) All such financial statements have been prepared in accordance with
generally accepted accounting principles consistently applied throughout
the periods involved. The CFP balance sheets present fairly as of their
respective dates the financial condition of CFP. CFP did not have as of
the date of any such CFP balance sheet, except as and to the extent
reflected or reserved against therein, any liabilities or obligations
(absolute or contingent) which should be reflected in a balance sheet or
the notes thereto prepared in accordance with generally accepted
accounting principles, and all assets reflected therein are properly
reported anti present fairly the value of the assets of CFP, in accordance
with generally accepted accounting principles. The financial statements
reflect fairly the information required to be set forth therein by
generally accepted accounting principles.
(c) Except as set forth in the CFP schedules, CFP has no liabilities
with respect to the payment of any federal, state, county, local, or other
taxes (including any deficiencies, interest, or penalties), except for
taxes accrued but not yet due and payable.
(d) Except as set forth in the CFP schedules, CFP has filed all state,
federal, of local income tax returns required to be filed by it from
inception to the date hereof. Included in the CFP Schedules are true and
correct copies of the federal income tax returns of for the past three
fiscal years. None of such federal income tax returns have been examined
by the Internal Revenue Service. Each of such income tax returns reflects
the taxes due for the period covered Thereby, except for amounts which in
the aggregate, are immaterial.
(e) Except as set forth in the CFP schedules, the books and records,
financial and otherwise, of CFP are in all material respects complete and
correct and have been maintained in accordance with good business and
accounting practices.
(f) Except as set forth in the CFP schedules, CFP has good and
marketable title to its assets and, except as set forth in the CFP
Schedules or the Financial Statements of CFP or the notes thereto, has no
material contingent liabilities, direct or indirect, matured or unmatured.
Section 3.05 Information. The information concerning CFP set forth in
this Agreement and the CFP Schedules is complete and accurate in all material
respects and does not contain any untrue statement of a material fact or omit to
state a material fact required to make the statements made, in light of the
circumstances under which they were made, not misleading.
Section 3.06 Options or Warrants. There are no existing options,
warrants, calls, or commitments of any character relating to authorized and
unissued stock of CFP, except options, warrants, calls, or commitments, if any,
to which CFP is not a party and by which it is not bound.
Section 3.07 Absence or Certain Changes or Events. Except as described
herein or in the CFP Schedules, since the date of the most recent CFP balance
sheet:
9
(a) there has not been (i) any material adverse change in the business,
operations, properties, assets, or condition of CFP (whether or not
covered by insurance) materially and adversely affecting the business,
operations, properties, assets, or condition of CFP (except as set forth
in the CFP schedules);
(b) Except as set forth in the CFP schedules, CFP has not (i) amended
its articles of incorporation or bylaws; (ii) declared or made, or agreed
to declare or make any payment of dividends or distributions of any assets
of any kind whatsoever to stockholder, or purchased or redeemed, or agreed
to purchase or redeem, any of its-capital stock; (iii) waived any rights
of value which in the aggregate are extraordinary or material considering
the business of CFP; (iv) made any material change in its method of
management, operation, or accounting: (v) entered into any other material
transactions; (vi) made any accrual or arrangement for or payment of
bonuses or special compensation of any kind or any severance or
termination pay to any present or former officer or employee; (vii)
increased the rate of compensation payable or to become payable by it to
any of its officers or directors or any of its employees whose monthly
compensation exceeds $1,000; or (viii) made any increase in any profit
sharing, bonus, deferred compensation, insurance, pension, retirement, or
other employee benefit plan, payment, or arrangement, made to, for, or
with its officers, directors, or employees.
(c) Except as set forth in the CFP schedules, CFP has not (i) granted
or agreed to grant any options, warrants, or other rights for its stocks,
bonds, or other corporate securities calling for the issuance thereof:
(ii) borrowed or agreed to borrow any funds or incurred, or become subject
to, any material obligation or liability (absolute or contingent) except
liabilities incurred in the ordinary course of business: (iii) paid or
agreed to pay any material obligation or liability (absolute or
contingent) other than current liabilities reflected in or shown on the
most recent CFP balance sheet and current liabilities incurred since that
date in the ordinary course of business and professional and other fees
and expenses incurred in connection with the preparation of this,
Agreement and the consummation of the transactions contemplated hereby;
(iv) sold or transferred or agreed to sell or transfer any of its assets,
property or rights (except assets property or rights not used or useful in
its business which, in the aggregate have a value of less than $ 1,000),
or cancelled, or agreed to cancel, any debts or claims (except debts or
claims which in the aggregate are of a value of less than $1.000): (v)
made or permitted any amendment or termination of any contract agreement
or license to which it is a party if such amendment or termination is
material, considering the business of CFP, or (vi) issued, delivered, or
agreed to, issue or deliver any stock, bonds, or other corporate
securities including debentures (whether authorized and unissued or held
as treasury stock), except in connection with this Agreement; and
(d) to the best knowledge of CFP, it has not become subject to any law
or regulation which materially and adversely affects, or in the future may
adversely affect, the business, operations, properties, assets, or
condition of CFP.
Section 3.08 Title and Related Matters. Except as set forth in the CFP
schedules, CFP has good and marketable title to all of its properties, interest
in properties, and assets, real and personal, which are reflected in the CFP
balance sheet or acquired after that date (except properties, interest in
properties, and assets sold or otherwise disposed of since such date in the
ordinary course of business), free and clear of all liens, pledges, charges, or
encumbrances except (a) statutory liens or claims not yet delinquent: (b) such
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imperfections of title and casements as do not and will not materially detract
from or interfere with the present or proposed use of the properties subject
thereto or affected thereby or otherwise materially impair present business
operations on such properties; and (c) as described in the CFP Schedules.
Section 3.09 Litigation and Proceedings. There am no actions, suits, or
proceedings pending or, to the knowledge of CFP, threatened by or against or
affecting CFP, at law or in equity, before any court or other governmental
agency or instrumentality, domestic or foreign, or before any arbitrator of any
kind. CFP does not have any knowledge of any default on its part with respect to
any judgment, order, writs, injunction, decree, award, rule, or regulation of
any court, arbitrator, or Governmental agency or instrumentality.
Section 3.10 Contracts.
(a) Except as included or described in the CFP Schedules, there are no
material contracts, agreements, franchises, license agreements, or other
commitments to which CTI is a party or by which it or any of its assets,
products, technology, or Properties are bound;
(b) All contracts, agreements, franchises, license agreements, and
other commitments to which CFP is a party or by which its properties are
bound and which are material to the operations of CFP taken as a whole are
valid and enforceable by CFP in all respects, except as limited by
bankruptcy and insolvency laws and by other laws affecting the rights of
creditors generally:
(c) CFP is not a party to or bound by, and the properties of CFP are
not subject to, any contract, agreement, other commitment or instrument;
any charter or other corporate restriction, or any judgment, order, writ,
injunction, decree, or award which materially and adversely affects, or in
the future may (as far as CFP can now foresee) materially and adversely
affect, the business, operations, properties, assets, or condition of CFP;
and
(d) Except as included or described in the CFP Schedules or reflected
in the most recent CFP balance sheet. CFP is not a party to any oral or
written (i) contract for the employment of any officer or employee which
is not terminable on 30 days or less notice; (ii) profit sharing, bonus,
deferred compensation, stock option, severance pay, pension benefit or
retirement plan, agreement, or arrangement covered by Title IV of the
Employee Retirement Income Security Act, as amended; (iii) agreement,
contract, or indenture relating to the borrowing of money: (iv) guaranty
of any obligation, other than one on which CFP is a primary obligor, for
the borrowing of money or otherwise, excluding endorsements made for
collection and other guaranties of obligations, which, in the aggregate do
not exceed more than one year or providing for payments in excess of $
1,000 in the aggregate: (vi) collective bargaining agreement; (vii)
agreement with any present or former officer or director of CFP: or (viii)
contracts agreement, or other commitment involving payments by it of more
than $1,000 in the aggregate.
Section 3.11 Material Contract Defaults. CFP is not in default in any
material respect under the terms of any outstanding contract, agreement, lease,
or other commitment which is material to the business, operations, properties,
assets, or condition of CF and there is no event of default in any material
11
respect under any such contract, agreement, lease, or other commitment in
respect of which CFP has not taken adequate steps to prevent such a default from
occurring.
Section 3.12 No Conflict With Other Instruments. The consummation of
the transactions contemplated by this Agreement will not result in the breach of
any term or provision of, or constitute a default under, any indenture,
mortgage, deed of trust, or other material agreement or instrument to which CFP
is a party or to which it or any of its assets or operations are subject.
Section 3. 13 Governmental Authorizations. CFP has all licenses,
franchises, permits, and other government authorizations, that are legally
required to enable it to conduct its business operations in all material
respects as conducted on the date hereof. Except for compliance with federal and
state securities or corporation laws, as hereinafter provided, no authorization,
approval, consent, or order of, or registration, declaration, or filing with,
any court or other governmental body is required in connection with the
execution and delivery by CFP of this Agreement and the consummation by CFP of
the transactions contemplated hereby.
Section 3.14 Compliance With Laws and Regulations. To the best of its
knowledge, CFP has complied with all applicable statutes and regulations of any
federal, state, or other applicable governmental entity or agency thereof,
except to the extent that noncompliance would not materially and adversely
affect the business operations, properties, assets, or conditions of CFP or
except to the extent that noncompliance would not result in the incurrence of
any material liability.
Section 3.15 Insurance. CFP owns no insurable properties and carries no
casualty or liability insurance.
Section 3.16 Approval of Agreement. The board of directors of CFP has
authorized the execution and delivery of this Agreement by CFP and has approved
this Agreement and the transactions contemplated hereby.
Section 3.17 Continuity of Business Enterprises. CFP has no commitment
or present intention to liquidate CTI or sell or otherwise dispose of a material
portion of CTI's business or assets following the consummation of the
transactions contemplated hereby.
Section 3.18 Material Transactions of Affiliations. Except as disclosed
herein and in the CFP Schedules, there exists no material contract, agreement,
or arrangement between CFP and any person who was at the time of such contract,
agreement, or arrangement an officer, director, or person owning of record or
known by CFP to own beneficially, 10% or more of the issued and outstanding
common stock of CFP and which is to be performed in whole or in part after the
date hereof or was entered into not more than three years prior to the date
hereof. Neither any officer, director, nor 10% shareholder of CFP has, or has
had during the last preceding full fiscal year, any known interest in any
material transaction with CFP which was material to the business of CFP. CFP has
no commitment, whether written or oral, to lend any funds to, borrow any money
from, or enter into any other material transaction with any such affiliated
person.
Section 3.19 Employment Matters. CFP currently has five (5) employees
other than its Executive officiers.
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Section 3.20 CFP Schedules. CFP has delivered to CTI, or will deliver
within five (5) business days from the date of execution of this Agreement, the
following schedules, which are collectively referred to as the "CFP Schedules,"
which are dated the date of this Agreement, all certified by an officer to be
complete, true, and accurate:
(a) a schedule containing complete and correct copies of the
certificate of incorporation, as amended, and bylaws of CFP in effect as
of the date of this Agreement;
(b) a schedule containing the financial statements of CFP identified in
paragraph 3.04(c):
(c) a schedule containing the federal income tax returns of CFP
identified in paragraph 3.04(c);
(d) a schedule containing a list indicating the name and address of
each shareholder of CFP together with the number of shares owned by him or
her;
(e) a schedule containing a description of all real property owned by
CFP, together with a description of every mortgage, deed of trust, pledge,
lien, agreement, encumbrance, claim, or equity interest of any nature
whatsoever in such real property;
(f) a schedule containing true and correct copies of all contracts,
agreements, or other instruments to which CFP is a party or by which it or
its properties are bound, together with a description of all contracts,
leases, agreements, and other instruments, whether or not deemed material,
including oral agreements, to which CFP is a party or by which it or its
properties are bound, specifically including all contracts, agreements, or
arrangements referred to in section 1.17;
(g) copies of all licenses, permits, and other governmental
authorizations (or requests or applications therefor) pursuant to which
CFP carries on or proposes to carry on its business (except those which,
in the aggregate, are immaterial to the present or proposed business of
CFP).
(h) a schedule listing the accounts receivable and notes and other
obligations receivable of CFP as of October 31. 1998, or that arose
thereafter other than in the ordinary course of business of CFP,
indicating the debtor and amount, and classifying the accounts to show in
reasonable detail the length of time, if any, overdue, and stating the
nature and amount of any refunds, set offs, reimbursements, discounts, or
other adjustments which are in the aggregate material and due to or
claimed by such creditor;
(i) a schedule listing the accounts payable and notes and other
obligations payable of CFP as of October 31, 1998, or that arose
thereafter other than in the ordinary course of the business of CFP,
indicating the creditor and amount, classifying the accounts to show in
reasonable detail the length of time, if any, overdue, and stating the
nature and amount of any refunds, setoffs, reimbursements, discounts, or
other adjustments, which in the aggregate are material and due or payable
to CFP respecting such obligations;
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(j) a schedule setting forth a description of any material adverse
change in the business, operations, property, inventory, assets, or
condition of CFP since September 30, 1998, required to be provided
pursuant to section 1.07 hereof;
(k) a schedule containing a copy of the board of directors' and
shareholders' minutes of CFP since inception; and
(1) a schedule setting forth any other information, together with any
required copies of documents, required to be disclosed in the CFP
Schedules by sections 3.01 through 3.18.
CFP shall cause the CFP Schedules and the instruments and data
delivered to CTI hereunder to be updated after the date hereof up to and
including the Closing Date.
ARTICLE IV
PLAN OF EXCHANGE
Section 4.01 The Exchange. On the terms and subject to the conditions
set forth in this Agreement, on the Closing Date (as defined in Section 4.04),
each of the CT1 Shareholders hereby agrees to assign, transfer, and deliver to
CFP, free and cleat of all liens, pledges, encumbrances, charges, restrictions,
or known claims of any kind, nature, or description, the number of shares of
common stock of CTI set after his signature at the foot of this Agreement, in
the aggregate constituting all of the issued and outstanding shares of common
stock of CTI, and CFP agrees to acquire such shares on such date by issuing and
delivering in exchange therefor solely shares of CFP restricted common stock,
par value $0.001, in the amount of .3346424 post-split shares of CFP for each
outstanding shareof CTI, or an aggregate amount of 25,900,000 shares of CFP
common stock, or approximately 89.31% of the 25,900,000 shares of CFP common
stock to be issued and outstanding on the Closing Elate (the "Exchanged CFP
Stock.") At the Closing. each of the CTI Shareholders shall, on surrender of his
certificate or certificates representing such CTI shares to the registrar and
transfer agent, be entitled to receive a certificate or certificates evidencing
shares of the Exchanged CFP Stock as provided herein Upon the consummation of
the transaction contemplated herein, all shares of capital stock of CTI shall be
held by CFP.
Section 4.02 Anti-Dilution. The number of shares of Exchanged CFP Stock
shall be appropriately adjusted to take into account any other stock split,
stock dividend, reverse stock split, recapitalization, or similar change in the
CFP common stock, par value $0.001, which may occur between the date of the
execution of this Agreement and the date of delivery of such shares. In
addition, the shares of common stock to be held by the CFP shareholders shall
not be diluted more than provided in Section 5.02(c).
Section 4.03 Appointment or New Directors. In connection with the
Closing of the transactions contemplated by this Agreement, the existing
directors of CFP shall resign, seriatim, and shall appoint R. ▇▇▇▇▇ ▇▇▇▇▇ and
the other designees of CTI as directors to fill the vacancies created thereby,
to serve until the next annual stockholders' meeting of CFP and their successors
shall have been elected and qualified.
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Section 4.04 Closing. The closing (`Closing') of the transactions
contemplated by this Agreement shall be on a date and at such time as the
parties may agree ("Closing Date"), within the ten-day period commencing with
the last to occur of the following: the CFP shareholders' meeting or such date
as may be prescribed by any federal or state regulatory agency or authority
prior to which the transactions contemplated hereby may not be effectuated. Such
Closing shall lake place at a mutually agreeable time and place.
Section 4.05 Closing Events. At the Closing. each of the respective
parties hereto shall execute. Acknowledge, and deliver (or shall cause to be
executed. acknowledged, and delivered) any and all certificates, opinions,
financial statements, schedules, agreements, resolutions, rulings, or other
instruments required by this Agreement to be so delivered at or prior to the
Closing, together with such other items as may be reasonably requested by the
parties hereto and their respective legal counsel in order to effectuate or
evidence the transactions contemplated hereby.
Section 4.06 Termination.
(a) This Agreement may be terminated by the board of directors of
either CFP or CTI at any time prior to the Closing Date if:
(i) there shall be any actual or threatened action or proceeding before
any court or any governmental body which shall seek to restrain, prohibit,
or invalidate the transactions contemplated by this Agreement and which,
in the judgment of such board of directors, made in good faith and based
on the advice of its legal counsel, makes it inadvisable to proceed with
the exchange contemplated by this Agreement;
(ii ) any of the transactions contemplated hereby are disapproved by
any regulatory authority whose approval is required to consummate such
transactions or in the judgment of such board of directors, made in good
faith and based on the advice of counsel, there is substantial likelihood
that any such approval will not be obtained or will be obtained only on a
condition or conditions which would be unduly burdensome, making it
inadvisable to proceed with the exchange; or
(iii) there shall have been any change after the date of the latest
balance sheets of CFP and CTI respectively, in the assets, properties
business, or financial condition of CFP or CTI, which could have a
materially adverse affect on the value of the business of CFP or CTI
respectively, except any changes disclosed in the CFP or CTI Schedules, as
the case may be, and the transactions herein contemplated.
In the event of termination pursuant to this paragraph (a) of section 4.06, no
obligation, right, or liability shall arise hereunder, and each party shall bear
all of the expenses incurred by it in connection with the negotiation, drafting,
and execution of this Agreement and the transactions herein contemplated.
(b) This Agreement may be terminated at any time prior to the Closing
by action of the board of directors of CFP if CTI shall fail to comply in
any material respect with any of its covenants or agreements contained in
this Agreement or if any of the representations or warranties of CTI
contained herein shall be inaccurate in any material respect. If this
Agreement is terminated pursuant to this paragraph (b) of section 4.06
15
this Agreement shall be of no further force or effect, and no obligation,
right, or liability shall arise hereunder, except that CTI shall bear its
own costs as well as the costs incurred by CFP in connection with the
negotiation, preparation, and execution of this Agreement.
(c) This Agreement and the Plan of Exchange may be terminated at any
time prior to the Closing by action of the board of directors of CTI if
CFP shall fail to comply in any material respect with any of its covenants
or agreements contained in this Agreement or if any of the representations
or warranties of CFP contained herein shall be inaccurate in any material
respect. If this Agreement is terminated pursuant to this paragraph (c) of
section 4.06, this Agreement shall be of no further force or effect, and
no obligation, right, or liability shall arise hereunder, except that CFP
shall bear its own costs as well as the costs of CTI incurred in
connection with the negotiation, preparation, and execution of this
Agreement.
ARTICLE V
SPECLAL COVENANTS AND REPRESENTATIONS
Section 5.01 Stockholder Meeting of CFP. As soon as practicable
following the execution of this Agreement, and prior to the Closing, CFP shall
call a special meeting of its shareholders to approve the following proposals:
(a) the authorization and approval of this Agreement and the
transactions contemplated thereby.
(b) the election of R. ▇▇▇▇▇ ▇▇▇▇▇ and the designees of CTI, as
directors of CFP;
(c) the amendment to the articles of incorporation of CFP to change its
name to "Cyntech Technologies. Inc." or such name as may be deemed
appropriate;
(d) the recapitalization or reverse split of the issued and outstanding
shares of CFP, so that the 51,312,153 shares issued and outstanding as of
the Closing Date, will be consolidated, or reverse split on a 1for
16.552307 basis, resulting in a total of 3,100,000 shares issued and
outstanding; and
(e) to take such other actions as the directors may determine are
appropriate.
Section 5.02 Additional Covenants and Representations of CTI.
(a) CTI represents and warrants that it has received a loan commitment
from CorpFinance, a Canadian banking firm, to provide to CTI, or its
successor corporation, $43 million in financing necessary to build,
establish and operate CTI's proposed recovery plant, as described in CTI's
business plan as of the end of August 1998. CTI acknowledges and
understands that CFP has relied on CTI's representations that such loan
commitment is in place.
(b) CTI represents and warrants that it has received a performance
guarantee from KTI Fish, an engineering firm that will be engaged to
design and build the recovery plant, pursuant to a letter from KTI fish
dated October 18. 1998. CTI represents and warrants that it will be able
to design, build and establish the recovery plant at the cost and in the
16
timeframe set forth in CTI's business plan, and consistent with the
referenced letter from KTI Fish.
(c) CTI represents and warrants that immediately upon closing, CTI (or
its successor company) will initiate efforts to complete necessary
documents to immediately undertake a private placement of the securities
of the successor company in compliance with applicable exemptions from the
registration requirements under state and federal securities laws. CTI
intends to raise up to $10 million dollars in the private offering, but
will, in no event raise less than $5 million. CTI further represents that
$5 million is sufficient capital to secure the financing referenced in
subparagraph (a) above. CTI hereby covenants that for a period of thirty
(30) months from the date of closing. CTI will not issue shares of common
stock which will result in dilution to the current CFP shareholders and
the CTI and other shareholders, on a pro rata basis, of more than 20%
(i.e., the surviving corporation will not issue any more than 6,000,000
shares and the interest held by current CFP shareholders will not be
reduced below 8.333%.) Any dilution to CFP shareholders shall be pro rata
in proportion to the interest held by any such CFP stockholder. CTI
covenants and agrees that (i) the failure to raise a minimum of $5 million
in equity capital consistent with the terms set forth above; or (ii) any
dilution which exceeds the above provision, shall constitute a material
breach of this Agreement, and that such action shall be appropriate for
injunctive relief by the CFP shareholders (as other remedies will probably
be inadequate).
Section 5.03 Access to Properties and Records. CFP and CTI will each
afford to the officers and authorized representatives of the other full access
to the properties, books, and records of CFP or CTI as the case may be, in order
that each may have full opportunity to make such reasonable investigation as it
shall desire to make of the affairs of the other, and each will furnish the
other with such additional financial and operating data and other information as
to the business and properties of CFP or CTI, as the case may be, as the other
shall from time to time reasonably request.
Section 5.04 Delivery of Books and Records. At the Closing. CFP shall
deliver to CTI the originals of the corporate minute books, books of account,
contracts, records, and all other- books or documents of CFP now in the
possession of CFP or its representatives.
Section 5.05 Special Covenants and Representations Regarding the
Exchanged CFP Stock. The consummation of this Agreement and the transactions
herein contemplated, including the issuance of the Exchanged Stock to the
shareholders of CTI as contemplated hereby, constitutes the offer, and sale of
securities under the Securities Act and applicable state statutes. Such
transaction shall be consummated in reliance on exemptions from the registration
and prospectus delivery requirements of such statutes which depend, inter alia,
upon the circumstances under which the CTI shareholders acquire such securities.
In connection with reliance upon exemptions from the registration and prospectus
delivery requirements for such transactions, at the Closing. CTI shall cause to
be delivered, and the shareholders shall deliver to CFP, letters of
representation in the form attached hereto as Exhibit `A."
Section 5.06 Third Party Consents and Certificates. CFP and CTI agree
to cooperate with each other in order to obtain any required third party
consents to this Agreement and the transactions herein and therein contemplated.
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Section 5.07 Actions Prior to Closing.
(a) From and after the date of this Agreement until the Closing Date
and except as set forth in the CFP or CTI Schedules or as permitted or
contemplated by this Agreement, CFP and CTI respectively, will each:
(i) carry on its business in substantially the same manner as it has
heretofore:
(ii) maintain and keep its properties in states of good repair and
condition as at present, except for depreciation due to ordinary wear and tear
and damage due to casualty;
(iii) maintain in full force and effect insurance comparable in amount
and it; scope of coverage to that now maintained by it;
(iv) perform in all material respects all of its obligation under
material contracts, leases, and instruments relating to or affecting its assets,
properties, and business.
(v) use its best efforts to maintain and preserve its business
organization intact, to retain its key employees, and to maintain its
relationship with its material suppliers and customers; and
(vi) fully comply with and perform in all material respects all
obligations and duties imposed on it by all federal and state laws and all
rules, regulations, and orders imposed by federal or state governmental
authorities.
(b) From and after the date of this Agreement until the Closing Date,
neither CFP nor CTI will:
(i) make any change in their articles of incorporation or bylaws,
except as provided herein:
(ii) take any action described in section 1.07 in the case of CTI, or
in section 3.07, in the case of CFP (all except as permitted therein or as
disclosed in the applicable party's schedules): or
(iii) enter into or amend any contract, agreement, or other instrument
of any of the types described in such party's schedules, except that a party may
enter into or amend any, contract, agreements or other instrument in the
ordinary course of business involving the sale of goods or services.
Section 5.08 Sales Under Rules 144 or 145. If Applicable.
(a) CFP will use its best efforts to at all times comply with the
reporting requirements of the Securities Exchange Act of 1934, as amended (the
18
"Exchange Act"), including timely filing all periodic reports required under the
provisions of the Exchange Act and the rules and regulations promulgated
thereunder.
(b) Upon being informed in writing by any person holding restricted
stock of CFP as of the date of this Agreement that such person intends to sell
any shares under Rule 144 or Rule 145 promulgated under the Securities Act
(including any rule adopted in substitution or replacement thereof, CFP will
certify in writing to such person that it has filed all of the reports required
to be filed by it under the Exchange Act to enable such person to sell such
person's restricted stock under Rule 144 or 145, as may be applicable in the
circumstances, or will inform such person in writing that it has not filed any
such report or reports.
(c) If any certificate representing any such restricted stock is
presented, to CFP's transfer agent for registration of transfer in connection
with any sale theretofore made under Rule 144 or 145, provided such certificate
is duly endorsed for transfer by the appropriate person(s) or accompanied by a
separate stock power duly executed by the appropriate person(s) in each case
with reasonable assurances that such endorsements are genuine and effective, and
is accompanied by an opinion of counsel satisfactory to CFP and its counsel that
such transfer has complied with the requirements of Rule 144 or 145, as the
cases may be, CFP will promptly instruct its transfer agent to register such
transfer and to issue one or more new certificates representing such shares to
the transferee and. if appropriate under the provisions of Rule 144 or 145, as
the case may be, free of any stop transfer order or restrictive legend. The
provisions of this Section 4.07 shall survive the Closing and the consummation
of the transactions contemplated by this Agreement.
Section 5.09 Indemnification.
(a) CTI hereby agrees to indemnify CFP and each of the officers. agents
and directors of CFP as of the date of execution of this Agreement against any
loss, liability, claim, damage, or expense, (including. but not limited to, any
and all expense whatsoever reasonably incurred in investigating, preparing, or
defending against any litigation, commenced or threatened, or any claim
whatsoever), to which it or they may become subject arising out of or based on
any inaccuracy appearing in or misrepresentation made under Article I of this
Agreement. The indemnification provided for in this paragraph shall survive the
Closing and consummation of the transactions contemplated hereby and termination
of this Agreement.
(b) CFP hereby agrees to indemnify CTI and each of the offices, agents
and directors of CTI as of the date of execution of this Agreement against any
loss, liability, claim, damage, or expense (including, but not limited to, any
and all expense whatsoever reasonably incurred in investigating, preparing, or
defending against any litigation, commenced or threatened, or any claim
whatsoever), to which it or they may become subject arising out of or based on
any inaccuracy appearing in or misrepresentation made under Article III, of this
Agreement. The indemnification provided for in this paragraph shall survive the
Closing and consummation of the transactions contemplated hereby and termination
of this Agreement.
19
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF CFP
The obligations of CFP under this Agreement are subject to the
satisfaction, at or before the Closing Date, of the following conditions:
Section 6.01 Accuracy of Representations. The representations and
warranties made by CTI and the CTI Shareholders in this Agreement were true when
made and shall be true at the Closing Date with the same force and effect as if
such representations and warranties were made at and as of the Closing Date
(except for changes therein permitted by this Agreement), and CTI and the CTI
Shareholders shall have performed or complied with all covenants and conditions
required by this Agreement to be performed or complied with by CTI and the CTI
Shareholders prior to or at the Closing. CFP shall be furnished with a
certificate, signed by a duly authorized officer of CTI and dated the Closing
Date, to the foregoing effect.
Section 6.02 Officer's Certificates. CFP shall have been furnished with
a certificate dated the Closing Date and signed by a duly authorized officer of
CTI to the effect that no litigation, proceeding, investigation, or inquiry is
pending or, to the best knowledge of CTI threatened, which might result in an
action to enjoin or prevent the consummation of the transactions contemplated by
this Agreement, or, to the extent not disclosed in the CTI Schedules, by or
against CTI which might result in any material adverse change in any of the
assets, properties, business, or operations of CTI.
Section 6.03 No Material Adverse Change. Prior to the Closing Date,
there shall not have occurred any material adverse change in the financial
condition, business, or operations of CTI nor shall any event have occurred
which, with the lapse of time or the giving of notice, may cause or create any
material adverse change in the financial condition, business, or operations of
CTI.
Section 6.04 Good Standing. CFP shall have received a certificate of
good standing from the Secretary of State of the state of Nevada or other
appropriate office, dated as of a date within ten days prior to the Closing Date
certifying that CTI is in good standing as a corporation in the state of Nevada
and has filed all tax returns required to have been filed by it to date and has
paid all taxes reported as due thereon.
Section 6.05 Officer and Director Questionnaires. CFP shall have
received officer and director questionnaires completed and signed by each
executive officer and director of CTI in form and substance reasonably
satisfactory to CFP and its counsel which shall contain information for use by
CFP in reporting the transaction contemplated hereby to applicable state and
federal securities regulatory agencies.
Section 6.06 Other Items.
(a) CFP shall have received uniform commercial code certificates from
the appropriate state of local authority or agency for each county and state in
which any personal property of CTI with a value in excess $1,000 is situated,
dated as of the Closing Date, to the effect that there are no liens on such
personal property, other than those disclosed in the CTI Schedules.
20
(b) CFP shall have received a shareholders list of CTI containing the
name, address, and number of shares held by each CTI shareholder as of the date
of Closing certified by an executive officer of CTI as being true, complete, and
accurate.
(c) CFP shall have received such further documents, certificates, or
instruments relating to the transact ions contemplated hereby as CFP may
reasonably request.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF CTI
AND THE CTI SHAREHOLDERS
The obligations of CTI and the CTI Shareholders under this Agreement
are subject to the satisfaction, at or before the Closing Date, of the following
conditions:
Section 7.01 Accuracy of Representations. The representations and
warranties made by CFP in this Agreement were true when made and shall be true
as of the Closing Date (except for changes therein permitted by this Agreement)
with the same force and effect as if such representations and warranties were
made at and as of the Closing Date, and CFP shall have performed and complied
with all covenants and conditions required by this Agreement to be performed or
complied with by CFP prior to or at the Closing. CTI shall have been furnished
with a certificate, signed by a duly authorized executive officer of CFP and
dated the Closing Date, to the foregoing effect.
Section 7.02 Stockholder Approval. The stockholders of CFP shall have
approved this Agreement, the transactions contemplated hereby, and the other
matters described in Section 5.01.
Section 7.03 Officer's Certificate. CTI shall have been furnished with
a certificate dated the Closing Date and signed by a duly authorized executive
officer of CFP to the effect that no litigation, Proceeding, investigation, or
inquiry is pending or, to the best knowledge of CFP threatened, which might
result in an action to enjoin or prevent the consummation of the transactions
contemplated by this Agreement.
Section 7.04 No Material Adverse Change. Prior to the Closing Date.
there shall not have occurred any material adverse change in the financial
condition, business, or operations of CFP nor shall any event have occurred
which, with the lapse of time or the giving of notice, may cause or create any
material adverse change in the financial condition, business, or operations of
CFP.
Section 7.05 Good Standing. CTI shall have received a certificate of
good standing from the Secretary of State of the state of Utah or other
appropriate office, dated as of a date within ten days prior to the Closing Date
certifying that CFP is in good standing as a corporation in the state of Utah
and has filed all tax returns required to have been filed by it to date and has
paid all taxes reported as due thereon.
Section 7.06 Other Items.
(a) CTI shall have received a shareholders list of CFP, current at
least ten (10) days prior to Closing, containing the name, address and number of
shares held by each such CFP Shareholder certified by an executive officer of
CFP as being true, complete and accurate.
21
(b) CTI shall have received such further documents, certificates, or
instruments relating to the transactions contemplated hereby as CTI may
reasonably request.
ARTICLE VIII
MISCELLANEOUS
Section 8.01 Governing Law. This Agreement shall be governed by,
enforced, and construed under and in accordance with the laws of the United
States of America and, with respect to matters of state law, with the laws of
Utah.
Section 8.02 Notices. Any notices or other communications required or
permitted hereunder shall be sufficiently given if personally delivered to it or
sent by registered mail or certified mail, postage prepaid, or by prepaid
telegram addressed as follows:
If to CFP, to: Carbon Fiber Products, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
With copies to: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇▇ Law Offices
▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇, #▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
If to CTI, to: Cyntech Technologies, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇-▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
With copies to: ▇▇▇ ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, LLP
Suite 2800
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
or such other addresses as shall be furnished in writing by any party in the
manner for giving notices hereunder, and any such notice or communication shall
be deemed to have been given as of the date so delivered, mailed, or
telegraphed.
Section 8.03 Attorney's Fees. In the event that any party institutes
any action or suit to enforce this Agreement or to secure relief from any
default hereunder or breach hereof, the breaching party or parties shall
reimburse the nonbreaching party or parties for all costs, including reasonable
attorneys' fees, incurred in connection therewith and in enforcing or collecting
any judgment rendered therein.
Section 8.04 Confidentiality. Each party here to agrees with the other
parties that, unless and until the transactions contemplated by this Agreement
have been consummated, it and its representatives will hold in strict confidence
all data and information obtained with respect to another party or any
22
subsidiary thereof from any representative officer, director, or employee, or
from any books or records or from personal inspection, or such other party, and
shall not use such data or information or disclose the same to others, except
(i) to the extent such data or information is published, is a matter of public
knowledge, or is required by law to be published; and (ii) to the extent that
such data or information must be used or disclosed in order to consummate the
transactions contemplated by this Agreement.
Section 8.05 Schedules: Knowledge. Each party is presumed to have full
knowledge of all information set forth in the other party's schedules delivered
pursuant to this Agreement.
Section 8.06 Third Party Beneficiaries. This contract is solely between
CFP and CTI, and. except as specifically provided, no director, officer,
stockholder, employee, agent, independent contractor, or any other person or
entity shall be deemed to be a third party beneficiary of this Agreement.
Section 8.07 Entire Agreement. This Agreement represents the entire
agreement between the parties relating to the subject matter hereof, including
This Agreement alone fully and completely expresses the agreement of the parties
relating to the subject matter hereof. There are no other courses of dealing,
understandings, agreements, representations, or warranties, written or oral,
except as set forth herein.
Section 8.08 Survival: Termination. The representations, warranties,
and covenants of the respective parties shall survive the Closing Date and the
consummation of the transactions herein contemplated.
Section 8.09 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which taken
together shall be but a single instrument.
Section 8.10 Amendment or Waiver. Every right and remedy provided
herein shall be cumulative with every other right and remedy, whether conferred
herein, at law, or in equity, and may be enforced concurrently herewith, and no
waiver by any party of the performance of any obligation by the other shall be
construed as a waiver of the same or any other default then, theretofore, or
thereafter occurring or existing. At any time prior to the Closing Date, this
Agreement may be amended by a writing signed by all parties hereto, with respect
to any of terms contained herein, and any term or condition of this Agreement
may be waived or the time for performance hereof may be extended by a writings
signed by the party or parties for whose benefit the provision is intended.
23
IN WITNESS WHEREOF, the corporate parties hereto have caused this
Agreement to be executed by their respective officers, hereunto duly authorized,
as of the date first above written.
CARBON FIBER PRODUCTS, INC.
ATTEST
__________________________ By_____/s/ ▇. ▇. Moore____________
Secretary or Assistant Secretary ▇▇▇▇▇▇▇ ▇▇▇▇▇
CYNTECH TECHNOLOGIES, INC.
ATTEST:
___/s/____________________ By:______/s/ F. Meyers____________
Secretary or Assistant R. ▇▇▇▇▇ ▇▇▇▇▇, President
24
CYNTECH SHAREHOLDERS:
/s/ /s/
------------------------------ -------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇ & ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
JTWROS
/s/ /s/
------------------------------ -------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
JTWROS
/s/ /s/
------------------------------ -------------------------------
▇▇▇▇ ▇▇▇ & ▇▇▇▇ ▇. Sun, JTWROS ▇▇▇▇ ▇▇▇▇▇▇▇
/s/ /s/
----------------------------- -------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
/s/ /s/
------------------------------ -------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇, on behalf of self and as ▇▇▇▇ ▇▇▇▇▇▇
Custodian for ▇▇▇▇▇▇ and Barnet ▇▇▇▇▇▇▇▇
(children)
/s/ /s/
------------------------------ -------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------ -------------------------------
▇▇▇▇▇▇ ▇. Dumbie & ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇
JTWROS
/s/
------------------------------ -------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
/s/
------------------------------ -------------------------------
▇▇▇▇▇▇▇ & ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/
------------------------------
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
Cyntech Shareholders
Page 2
TexOil Chemical Limited Partnership. LP Macro Energy Services Limited
Partnership, LP
By___/s/_______________________ By_/s/_________________________
▇▇▇▇ ▇▇▇▇, Managing General Partner ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Managing General Partner
The ▇▇▇▇▇▇ Financial Trust LMCB Financial Services. Inc.
By____/s/______________________ By _/s/________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Trustee
Mission Engineering Tex-Line Limited Partnership, L.P.
By__/s/________________________ By___/s/_______________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.,
Managing General Partner
/s/
-------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
SCHEDULE A TO
EXCHANGE AGREEMENT
BETWEEN CARBON FIBER PRODUCTS, INC. AND
CYNTECH TECHNOLOGIES, INC.
CYNTECH SHAREHOLDERS
CTI Shareholder Number of CTI Converted to Number
Shares Held of Shares of CFP
----------------------------------------- --------------------------------------- ------------------------
1. TexOil Chemical Limited 57,000,000 (37,000,000 21,924,958
Partnership Class A; 20,000,000 Class B)
2. Macro Energy Services Limited 2,000,000 769,297
Partnership
3. ▇▇▇▇▇, ▇▇▇▇ ▇. & ▇▇▇▇▇▇ ▇. 400,000 153,859
4. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇. 100,000 38,465
5. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇ 20,000 7,693
6. ▇▇▇▇, ▇▇▇▇▇▇ 10,000 3,846
7. ▇▇▇, ▇▇▇▇ & Sun, Ting Y. 1,000 385
8. ▇▇▇▇▇▇▇, ▇▇▇▇ 1,500 577
9. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇ 1,000 385
10. ▇▇▇▇▇▇▇, ▇▇▇ 1,000 385
11. LMCD Financial Services 50,000 19,232
12. ▇▇▇▇▇▇▇▇, ▇▇▇▇, on behalf of self 51,500 19,809
and as custodian for ▇▇▇▇▇▇ and
Barnet ▇▇▇▇▇▇▇▇ (children)
13. Mission Engineering 500,000 192,324
14. ▇▇▇▇▇▇, ▇▇▇▇ 62,500 24,041
15. ▇▇▇▇▇▇, ▇▇▇▇▇ 24,405 9,387
16. Loner, ▇▇▇▇ ▇. 120 46
17. Tex-Line Limited Partnership, LP 1,000,000 384,648
18. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇.& 1,750 673
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
19. ▇▇▇▇▇, ▇▇▇▇▇ ▇. 1,500 577
20. ▇▇▇▇, ▇▇▇▇▇▇ ▇. 500 192
21. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇ 500 192
22. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ 30,000 11,539
23. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ 3,000 1,154
24. ▇▇▇▇▇, ▇▇▇▇▇▇▇ 87,500 33,657
25. The ▇▇▇▇▇▇ Financial 5,986,435 2,302,673
Trust/▇▇▇▇▇▇▇ ▇▇▇▇▇▇ - Trustee
Total: 67,334,210 25,900,000
CERTIFICATION
R. ▇▇▇▇▇ ▇▇▇▇▇, President of Cyntech Technologies, Inc. ("CTI"), hereby
certifies that the foregoing list of shareholders, and the conversion into
shares of Carbon Fiber Products in accordance with the Exchange Agreement, is
complete and accurate.
____/s/ R. Meyer_______
R. ▇▇▇▇▇ ▇▇▇▇▇, President