8-K
EXHIBIT -1
SHARE EXCHANGE AGREEMENT
THIS AGREEMENT & PLAN FOR MERGER ("Agreement") is made and executed by and
between COMPOSITE SOLUTIONS, INC., a Florida corporation, (herein referred to as
"CSI") and the persons signing below as the "SHAREHOLDERS OF TRANS-SCIENCE
CORPORATION", a California corporation, (herein respectively referred to as TSC
Shareholders and that corporation as "TSC").
ARTICLE I
EXCHANGE OF STOCK
1.0.1 CONVEYANCE OF STOCK OF TSC: At the closing of this Agreement, the TSC
Shareholders shall cause to be duly endorsed and delivered to CSI certificates
for One Hundred Percent of the issued and outstanding shares of stock of TSC as
legally held by all shareholders of TSC. Those assignments shall effect total,
complete, absolute and unconditional conveyance of those shares in its own name,
free and clear of any liens, encumbrances, assessments, restrictions, covenants
or obligations whatsoever.
1.0.2 ISSUANCE OF CSI STOCK: Upon that closing, CSI shall issue and deliver
to the current shareholders certificates for a total of 953,371 shares of CSI
common stock. Those shares shall be issued so that for each share of stock of
TSC which the transferring TSC shareholder now holds and is transferring to CSI,
that respective TSC shareholder shall receive 437.929 shares of CSI common stock
represented by those certificates shall be deemed as fully paid and
nonassessable and shall be free and clear of any liens, encumbrances and
assessments and, except only as specifically provided in Section 2.02 below,
shall be free from any restrictions, covenants or other obligations whatsoever.
ARTICLE II
NATURE OF THE CSI SHARES
2.0.1 NATURE OF STOCK: The parties hereto acknowledge that the shares of
CSI stock to be issued under Section 1.0.2 have not been, and upon issuance will
not be, registered with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, (the "Securities Act") nor will that stock
be registered with the securities agency of any state of the United States.
Instead, that stock shall be issued under an appropriate exemption from
registration under the Securities Act as well as from qualification under
California Corporate Securities Law.
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2.0.2 LEGENDS TO APPEAR ON CERTIFICATES: Each certificate for those
newly issued shares of CSI stock will be issued under an appropriate
exemption from that Regulation D of the Rules & Regulations of the Securities
& Exchange Commission and Section 25102(f) of the California Corporate
Securities Law will contain the following legend stamped prominently upon
that certificate:
The shares of stock represented by this certificate have not been
registered under the Securities Act of 1933, as amended and may not be sold or
otherwise transferred unless a compliance with the registration provisions of
such Act has been made or unless availability of an exemption from such
registration provisions has been established, or unless sold pursuant to Rule
144 under the Securities Act of 1933. In any event, the shares cannot be sold or
transferred prior to June 23, 2001.
It is unlawful to consummate a sale or transfer of these securities, or any
interest therein, or to receive any consideration therefore, without the prior
written consent of the commissioner of corporation of the state of California,
except as permitted in the commissioner's rules.
2.0.3 ACKNOWLEDGEMENTS UNDER REGULATION D: At the time of closing of this
agreement and as a condition precedent to the delivery of the CSI stock
certificates under Sections 1.0.2, each of those persons or entities to receive
their respective certificate will be required to acknowledge and represent as
follows:
A. That the person or entity is acquiring those shares for investment
purposes only and is not acquiring or receiving that stock with a view
or intent or for the purpose of the sale or alienation thereof except
as provided and permitted by applicable state and federal securities
laws, rules and regulations and particularly the Securities Act and
the rules and regulations promulgated thereunder.
B. That the person or entity understands that those shares are not being
registered under the Securities Act of 1933, as amended, or any state
securities law.
C. That the shareholder specifically acknowledges that those securities
have not been registered under the U.S. Securities Act of 1933, as
amended, or under the securities laws of Florida, California or any
other state and that, as unregistered securities, the Common Stock
acquired hereunder cannot be resold inside the United States except
when Registered with the Securities & Exchange Commission or done in
compliance with the provisions of Rule 144 of the Rules & Regulations
of the United States Securities & Exchange Commission.
Additionally, such shareholder will be required to make such acknowledgement as
CSI management shall deem appropriate with respect to the securities laws, rules
and regulations of the state within which such shareholder resides and/or such
stock is offered and delivered.
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ARTICLE III
REPRESENTATION AND WARRANTIES BY CSI
To induce TSC to enter into this Agreement, CSI hereby represents and
warrants to the Shareholders of TSC as follows:
3.01 ORGANIZATION: CSI is a corporation duly incorporated, validly existing
and in good standing under the laws of the state of Florida. It has the
corporate power and authority to carry on its business as now being conducted
and as contemplated to be conducted upon the acquisition of controlling interest
in TSC.
3.02 MINUTE BOOKS: The minute book of CSI contains complete and accurate
records of all meetings and other corporate actions of the shareholders and the
Board of Directors (including any committees of the Board) or any committee
created pursuant to any employee benefit plan of CSI. CSI's files which
accompany those books and records and contain all proxies filed at any meeting
of shareholders and copies of notice and, when required, proof of service of
such notices as required by applicable corporate law and CSI's own By-Laws.
3.03 CAPITALIZATION: The authorized capital stock of CSI consists of
50,000,000 shares of a common stock having a par value of $0.0001 and 10,000,000
shares of preferred stock having a par value of $0.0001. At the time of closing
and after a forward split of the stock, there are 10,868,333 shares common stock
issued and outstanding. CSI has no preferred shares issued or outstanding nor
has it ever authorized the issuance of any such shares. Neither does CSI have
any of its shares held by its treasury.
3.04 THE SHARES: All of CSI's issued and outstanding shares of capital
stock have been duly authorized, are validly issued and outstanding, are fully
paid and non-assessable, and have no liability attached to the shareholders
thereof. Those Company shares are legally and equitably owned by the persons set
forth on CSI's Shareholder List as those appear in the offices of Interwest
Transfer Co., 1981 East Xxxxxx Xxxxxxx Xxxx , Xxxxx 000, Xxxx Xxxx Xxxx, Xxxx
00000, which is CSI's duly appointed stock registrar and transfer agent. Except
for restrictions required by applicable securities laws, all such shares are
free and clear of any and all restrictions, liens, claims, covenants or
encumbrances or rights or rights of third parties of any nature whatsoever.
3.05 NO WARRANTS, OPTIONS OR RIGHTS: Since its incorporation, CSI has not
issued, delivered, or agreed to issue or deliver to any person any shares of
stock (except as set forth in the foregoing paragraph 3.03 of this Agreement),
bonds or other corporate securities (whether authorized but unissued or held in
treasury) or granted to any person or entity any options, warrants or other
rights calling for the issuance thereof.
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3.06 CALLS OR COMMITMENTS REGARDING SHARES: There are no existing options,
warrants, calls or commitments on the part of CSI or its shareholders of any
character relating to CSI's common or preferred shares except those reserved for
under the CSI Employee Stock Option plan totaling 115,000. No voting agreements
or restrictions of any kind affect the rights of any of CSI shares or the
holders thereof. Except as herein specifically provided, no consent or approval
is necessary for the assignment and transfer of those shares and the conveyance
thereof.
3.07 SECURITIES LAWS: All issuances of CSI's shares were made in full
compliance with applicable federal and state securities laws, codes, rules and
regulations and all required filings were timely filed with the Securities &
Exchange Commission and applicable state securities commissions and agencies.
CSI has also filed with the Securities and Exchange Commission a Form 10-SB, on
July 14, 1998, which filing became effective on September 16, 1998. The comment
period on that filing was completed on December 14, 1998. All Form 10-QSB
Filings, as well as the annual 10-KSB filings have been timely filed, contain
information which is true, complete and accurate in every material respect and
contained no material omissions.
3.08 FINANCIAL STATEMENTS: CSI's financial statement appearing in its most
recent Form 10QSB filing, together with the notes thereto, (i) are in accordance
with CSI's true books and records: (ii) present fairly the financial position of
CSI as of such dates, and its results of operations and changes in financial
position for the respective periods indicated; and (iii) have been prepared in
conformity with generally accepted accounting principles applied on a consistent
basis, except as might be specifically indicated therein.
3.09 LITIGATION-CLAIMS: There are no claims, litigation, actions, suits,
investigations or proceedings pending or, to the knowledge of CSI's officers and
directors, threatened against or affecting CSI or its future properties or
business, at law or in equity, or before or by any government department,
commission, board, bureau, agency or instrumentality, domestic or foreign order,
decree, ruling or directive.
3.10 ABSENCE OF CERTAIN PAYMENTS: Neither CSI nor any of its current or
past officers, agents, directors, employees or other persons associated with or
acting on behalf of any of it, has used any funds of CSI for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to
political activities, or made any direct or indirect unlawful payment to
government officials or employees (foreign or domestic) from corporate funds, or
established or maintained any unlawful or unreported funds.
3.11 COMPLIANCE WITH LAWS: CSI has complied with, and is not in violation
of any federal, state, local or foreign statute, law, code, rule or regulation
with respect to the conduct of its business, the ownership or operation of its
properties, or the sale or purchase of its securities or disclosure to
shareholders which violation might have a materially adverse effect on the
business, financial condition or earnings of CSI.
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3.12 ACCURACY AT CLOSING: All representations and warranties of CSI herein
made will be true and correct as of the closing date as though such
representations and warranties were then made in exactly the same language by
CSI at that time.
ARTICLE IV
REPRESENTATION AND WARRANTIES BY TSC
To induce CSI to execute this Plan and Agreement, the Shareholders of TSC,
acting both jointly and severally, hereby represent and warrant unto CSI as
follows:
4.01 ORGANIZATION: TSC is a company duly organized, validly existing and in
good standing under the laws of the State of California, has no restriction on
its corporate power and authority to own or lease its properties and to carry on
its business as contemplated in the further development and commercial
distribution of the TSC and related technologies.
4.02 CAPITALIZATION: TSC has issued and outstanding a total of 2,177 shares
of its stock, all of which are duly authorized, validly issued, fully paid and
nonassessable, and no liability attaches to the holders thereof. Those shares
are held by those shareholders in such amounts as are set forth in the
attachment to this Agreement. There are no restrictions contained in the
Articles of Incorporation or By-Laws of TSC upon the rights of its shareholders
to sell or otherwise alienate their shares as herein contemplated. All of TSC's
issued and outstanding shares of capital stock have been duly authorized, are
validly issued and outstanding, are fully paid and non-assessable, and no
liability attached to the holders thereof. There are no other existing shares,
options, warrants or rights granted or authorized for TSC common or preferred
shares and there are no commitments to authorize or issue any options, warrants
or rights to such stock.
4.03 MINUTE BOOKS: The minute book of TSC contains complete and accurate
records of meetings and other corporate actions of the shareholdings and the
Board of Directors.
4.04 FINANCIAL STATEMENTS: A copy of the unaudited financial statement of
TSC for the period ending May 31, 2000, consists of TSC's balance sheet,
statement of income and shareholder's equity for the period then ended. All such
financial statements, together with the notes thereto, (i) are in accordance
with TSC's true books and records; (ii) present fairly the financial position of
TSC as of such dates, and its results of operations and changes in financial
position for the respective periods indicated; and (iii) have been prepared in
conformity with generally accepted accounting principles applied on a consistent
basis, except as might be specifically indicated therein.
4.05 ABSENCE OF UNDISCLOSED LIABILITIES: TSC has no material liabilities or
obligations, either accrued, absolute, contingent or otherwise, including,
without limitation, liabilities for local or foreign taxes or custom duties,
except as reflected on the TSC balance sheet, including the notes hereto. TSC
does not know, nor has any
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reasonable grounds to know, of any basis for the assertion against TSC of any
claim of any nature or amount not fully reflected or reserved against in the
balance sheet of TSC referred to above as the balance sheet date.
4.06 LITIGATIONS - CLAIMS: There are no claims, litigation, actions, suits,
investigations or proceedings pending or, to the knowledge of the TSC,
threatened against or affecting TSC or its properties or business, at law or in
equity, or before or by any governmental department, commission, board, bureau,
agency, or instrumentality, domestic or foreign, which if determined adversely
would have a material adverse effect on the business or financial conditions of
TSC, or the ability of TSC to carry on its business as contemplated by this
transaction.
4.07 ACCURACY AT CLOSING: All representations and warranties of TSC herein
made will be true and correct as of the closing date as though such
representations and warranties were then made in exactly the same language by
TSC. As of the closing date, TSC will have performed and complied with all
covenants and conditions required to be performed or complied with by it at or
before such time by this Agreement.
ARTICLE V
ACTIONS PENDING CLOSING TERMINATION
5.01 ACCESS TO INFORMATION: From the date of execution hereof until
closing, each party shall provide to the other sufficient and reasonable access
to any and all records, books, documents, instruments, financial accounts and
records, bank accounts, customer accounts, tax records, title documents and all
other information whatsoever, necessary to verify the representations and
warranties herein made. If requested, a certificate of authenticity of these
documents will be provided by the secretary or president of the respective
parties.
5.02 AUDITS AND EXAMINATIONS: Each party shall have the right, at its own
expense, to make all additional audits and examinations of any records of the
other party as it deems proper, reasonable, and necessary to determine or verify
the conditions of the other and warranties and representations herein made.
5.03 DUE DILIGENCE PERIOD: CSI shall have a period of up to 15 days from
the date of this Agreement to perform such additional examination of TSC as it
deems necessary to determine whether that entity is in compliance with the
representations herein made and (b) to obtain the necessary shareholder
approvals which it deems appropriate or necessary. Should it determine, at any
time within that period, that it does not choose to go forward with this
agreement, then it may notify TSC in writing of its decision to cancel this
agreement, in which event this agreement shall be null and void and neither
party shall have any further liability or obligation to the other, except for
the provisions of Section 5.04 hereof.
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5.04 CONFIDENTIALITY: Each party to this agreement, together with their
respective attorneys, accountants, consultants and representatives throughout
the negotiations, investigations, execution and closing of this Agreement, and
continuing indefinitely into the future, shall treat as confidential and will
disclose to no one other than those persons who are a party to this Agreement
all information received about the other party to this Agreement, and have not
and will not use or knowingly permit others to use such information in a manner
detrimental to the other, provided, however, that the foregoing shall not apply
to information from the time that such information becomes a matter of public
knowledge to is printed in any publication for public distribution or
information which is provided to the Securities and Exchange Commission or to
the public as required by law as it relates to a publicly registered or traded
entity.
5.05 CONDUCT OF BUSINESS: Except as specifically contemplated or permitted
in the Agreement, from and after the executions and delivery of this Agreement
and until the closing date or the termination of this Agreement, whichever shall
first occur, neither party will engage in any activities or transactions which
shall be outside the ordinary course of its business without prior written
consent of the other, which consent shall not be unreasonably withheld.
5.06 AFFIRMATIVE ACTIONS OF EACH PARTY: Pending closing of this Agreement,
each party will take all actions reasonable and necessary to render accurate as
of the closing date the respective representations and warranties of each
contained herein, and each shall refrain from any action which would render
inaccurate as of the closing date any such representations and warranties.
5.07 FAILURE OF EITHER PARTY TO COMPLY: Should either party determine that
the other party has failed to comply with any of the terms of this Agreement,
that party shall give notice to the other party in writing of that failure. The
responsible party shall then take immediate steps to rectify that defect prior
to closing of this Agreement, provided, however that party shall be provided
sufficient time (but not more than 10 days for the date of the notice) to do so.
If such party fails to comply within that time, the other party shall have the
election to either declare this agreement to be null and void or, in the
alternative, to bring an action to force such compliance or for damages. Should
either party proceed to close this Agreement without a specific written
acknowledgment of obligation to complete any remedial actions, all requirements
of the opposite party not then fulfilled shall be considered as waived.
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ARTICLE VI
CHANGE OF MANAGEMENT
6.01 RESIGNATION OF CURRENT MANAGEMENT: At closing, all present officers
and directors of TSC shall submit to TSC their resignation, effective upon such
closing.
6.02 ELECTION OF NEW DIRECTORS: Prior to such resignation, the present
board of directors of TSC shall have elected Xxxxxxx X. Xxxxxxxx as successor
director.
ARTICLE VII
CLOSING OF PLAN
7.01 DATE OF CLOSING: The parties hereto agree that this Agreement shall be
closed at the earliest convenient date mutually agreeable to the parties, but
unless some other time is mutually agreed, this closing date shall occur at
10:00 AM local time on July 7, 2000.
7.02 PLACE OF CLOSING: Unless otherwise mutually agreed, this Agreement
shall be closed at the Board Room at 0000 Xxxxx Xxxxx, Xxxxx 000, Xxx Xxxxx, XX
00000.
7.03 ACTIONS BY TSC AT CLOSING: At closing, TSC shall cause to be delivered
to CSI the following:
A. TSC share certificates for 100% of the issued and outstanding shares
of the TSC stock as set forth in Sec. 1.02 hereof certificates shall
be duly endorsed by the respective persons in whose name each such
certificate is issued.
B. Letters of representation by each of the TSC Shareholders who is to
receive CSI stock under Section 1.02 hereof which letters shall
contain those acknowledgments and representations required under 2.03.
C. A certificate of a resolution duly electing those members to the board
of TSC as required under Section 6.02.
D. The written resignations of each of the present officers and directors
of TSC, as required under Section 6.01 above.
E. All of the books, records, and other documents and other assets of
TSC.
7.04 ACTIONS OF CSI AT CLOSING: At closing, CSI shall cause to be delivered
to TSC the following:
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A. Duly executed stock certificates for a total of 953,371 shares of CSI
common stock in such amounts and such names as set forth in the
attachment to this Agreement.
ARTICLE VII
TAX FREE REORGANIZATION
8.01 INTENT OF AGREEMENT: Both parties hereto stipulate and acknowledge
that it is their mutual intent that this transaction for the exchange of stock
between the parties be a tax free reorganization within the meaning of Section
368(a)(1)(B) of the Internal Revenue Code of 1954.
8.02 RESTATEMENT: Should either party, prior to closing hereof, receive a
reliable opinion of a qualified tax counsel that, for any reason, that this
Agreement or the manner of closing contemplated herein will not result in a tax
free exchange as intended, then this Agreement will be renegotiated between the
parties to effect such tax result.
ARTICLE IX
GENERAL
9.01 COOPERATION: In addition to the actions and documents specifically
discussed herein, each party agrees to execute, acknowledgment and deliver any
and all documents and do any and all other acts necessary, expedient, reasonable
and appropriate requested by the other party to more fully carry out the full
intents and purposes of this Agreement.
9.02 HEADINGS: The headings of the several sections of this Agreement are
inserted for convenience of reference only and are not intended to affect the
meaning or interpretation of this Agreement.
9.03 AMENDMENTS AND MODIFICATIONS: This Agreement may be modified, amended,
or canceled only by a document signed by each of the parties to this Agreement.
9.04 BINDING EFFECT: The various terms and provisions hereof shall inure to
the benefit of, and the same shall be binding upon, the successors and assign of
the respective parties.
9.05 GOVERNING LAW: This Agreement and its enforcement shall be governed
according to the Laws of the State of California.
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WITNESS the execution hereof on the 23rd day of June, 2000.
COMPOSITE SOLUTIONS, INC.
a Florida Corporation
By /s/ XXXX XXXXX
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Xxxx Xxxxx, Director
By /s/ XXXXXX XXXXXXXXX
--------------------------------------
Xxxxxx Xxxxxxxxx, Director
SHAREHOLDERS OF TRANS-SCIENCE CORP.
By: /s/ XXXXXXX X. XXXXXXXX 1217 Shares Held
----------------------------------------
Xxxxxxx X. Xxxxxxxx, Shareholder of TSC
By: /s/ XXXXXXX XXXX 960 Shares Held
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Xxxxxxx Xxxx, Xxxxxxxxxxx xx XXX
00
