ACQUISITION OF CARBON CAPTURE TECHNOLOGIES, INC. by CSMG TECHNOLOGIES, INC.

ACQUISITION OF CARBON CAPTURE TECHNOLOGIES, INC. by CSMG TECHNOLOGIES, INC.

 

(j)  Liabilities of CCTI. CCTI has no assets, no liabilities or obligations of any kind, character or description except those listed on the attached schedules and exhibits.

 

(k)  Financial Statements. The unaudited financial statements of CCTI, including a balance sheet, attached as Exhibit B and made a part of this Agreement, are, in all respects, complete and correct and present fairly CCTI’s financial position and the results of its operations on the dates and for the periods shown in this Agreement; provided, however, that interim financial statements are subject to customary year-end adjustments and accruals that, in the aggregate, will not have a material adverse effect on the overall financial condition or results of its operations. CCTI has not engaged in any business not reflected in its financial statements. There have been no material adverse changes in the nature of its business, prospects, the value of assets or the financial condition since the date of its financial statements. There are no, and on the Closing Date there will be no, outstanding obligations or liabilities of CCTI except as specifically set forth in the financial statements and the other attached schedules and exhibits. There is no information known to CCTI or UTEK that would prevent the financial statements of CCTI from being audited in accordance with generally accepted accounting principles.

 

(l)  Taxes. All returns, reports, statements and other similar filings required to be filed by CCTI with respect to any federal, state, local or foreign taxes, assessments, interests, penalties, deficiencies, fees and other governmental charges or impositions have been timely filed with the appropriate governmental agencies in all jurisdictions in which such tax returns and other related filings are required to be filed; all such tax returns properly reflect all liabilities of CCTI for taxes for the periods, property or events covered by this Agreement; and all taxes, whether or not reflected on those tax returns, and all taxes claimed to be due from CCTI by any taxing authority, have been properly paid, except to the extent reflected on CCTI’s financial statements, where CCTI has contested in good faith by appropriate proceedings and reserves have been established on its financial statements to the full extent if the contest is adversely decided against it. CCTI has not received any notice of assessment or proposed assessment in connection with any tax returns, nor is CCTI a party to or to the best of its knowledge, expected to become a party to any pending or threatened action or proceeding, assessment or collection of taxes. CCTI has not extended or waived the application of any statute of limitations of any jurisdiction regarding the assessment or collection of any taxes. There are no tax liens (other than any lien which arises by operation of law for current taxes not yet due and payable) on any of its assets. There is no basis for any additional assessment of taxes, interest or penalties. CCTI has made all deposits required by law to be made with respect to employees’ withholding and other employment taxes, including without limitation the portion of such deposits relating to taxes imposed upon CCTI. CCTI is not and has never been a party to any tax sharing agreements with any other person or entity.

 

(m)  Absence of Certain Changes or Events. From the date of the latest balance sheet of CCTI provided to CTGI until the Closing Date, CCTI has not, and without the written consent of CTGI, it will not have:

 

(1)  Sold, encumbered, assigned, let lapsed or transferred any of its material assets, including without limitation the Intellectual Property, the License Agreement or any other material asset;

 

 

(2)  Amended or terminated the License Agreement or other material agreement or done any act or omitted to do any act which would cause the breach of the License Agreement or any other material agreement;

 

(3)  Suffered any damage, destruction or loss whether or not in control of CCTI;

 

(4)  Made any commitments or agreements for capital expenditures or otherwise;

 

(5)  Entered into any transaction or made any commitment not disclosed to CTGI in writing;

 

(6)  Incurred any obligation or liability for borrowed money;

 

(7)  Suffered any other event of any character, which is reasonable to expect, would adversely affect the future condition (financial or otherwise) of the assets or liabilities or business of CCTI; or

 

(8)  Taken any action, which could reasonably be foreseen to make any of the representations or warranties made by CCTI or UTEK untrue as of the date of this Agreement or as of the Closing Date.

 

(n)  Material Agreements. Exhibit A attached contains a true and complete list of all contemplated and executed agreements between CCTI and a third party. A complete and accurate copy of all material agreements, contracts and commitments of the following types, whether written or oral to which it is a party or is bound (Contracts), has been provided to CTGI and such agreements are or will be at the Closing Date, in full force and effect without modifications or amendment and constitute the legally valid and binding obligations of CCTI in accordance with their respective terms and will continue to be valid and enforceable following the Acquisition. CCTI is not in default of any of the Contracts. In addition:

 

(1)  There are no outstanding unpaid promissory notes, mortgages, indentures, deed of trust, security agreements and other agreements and instruments relating to the borrowing of money by or any extension of credit to CCTI; and

 

(2)  There are no outstanding operating agreements, lease agreements or similar agreements by which CCTI is bound; and

 

(3)  The complete final License Agreement will be provided to CTGI; and

 

(4)  Except as set forth in (3) above, there are no outstanding licenses to or from others of any intellectual property and trade names; and

 

(5)  There are no outstanding agreements or commitments to sell, lease or otherwise dispose of any of CCTI’s property; and

 

(6)  There are no breaches of any agreement to which CCTI is a party.

 

(o)  Compliance with Laws. CCTI is in compliance with all applicable laws, rules, regulations and orders promulgated by any federal, state or local government body or agency relating to its business and operations.

 

(p)  Litigation. There is no suit, action or any arbitration, administrative, legal or other proceeding of any kind or character, or any governmental investigation pending or to the best knowledge of CCTI or UTEK, threatened against CCTI, the Technology, or License Agreement, affecting its assets or business (financial or otherwise), and neither CCTI nor UTEK is in violation of or in default with respect to any judgment, order, decree or other finding of any court or government authority relating to the assets, business or properties of CCTI or the transactions contemplated hereby. There are no pending or threatened actions or proceedings before any court, arbitrator or administrative agency, which would, if adversely determined, individually or in the aggregate, materially and adversely affect the assets or business of CCTI or the transactions contemplated.

 

 

(q)  Employees. CCTI has no and never had any employees. CCTI is not a party to or bound by any employment agreement or any collective bargaining agreement with respect to any employees. CCTI is not in violation of any law, regulation relating to employment of employees.

 

(r)  Adverse Effect. Neither CCTI nor UTEK has any knowledge of any or threatened existing occurrence, action or development that could cause a material adverse effect on CCTI or its business, assets or condition (financial or otherwise) or prospects.

 

(s)  Employee Benefit Plans. CCTI states that there are no and have never been any employee benefit plans, and there are no commitments to create any, including without limitation as such term is defined in the Employee Retirement Income Security Act of 1974, as amended, in effect, and there are no outstanding or un-funded liabilities nor will the execution of this Agreement and the actions contemplated in this Agreement result in any obligation or liability to any present or former employee.

 

(t)  Books and Records. The books and records of CCTI are complete and accurate in all material respects, fairly present its business and operations, have been maintained in accordance with good business practices, and applicable legal requirements, and accurately reflect in all material respects its business, financial condition and liabilities.

 

(u)  No Broker’s Fees. Neither UTEK nor CCTI has incurred any investment banking, advisory or other similar fees or obligations in connection with this Agreement or the transactions contemplated by this Agreement.

 

(v)  Full Disclosure. All representations or warranties of UTEK and CCTI are true, correct and complete in all material respects to the best of our knowledge on the date of this Agreement and shall be true, correct and complete in all material respects as of the Closing Date as if they were made on such date. No statement made by them in this Agreement or in the exhibits to this Agreement or any document delivered by them or on their behalf pursuant to this Agreement contains an untrue statement of material fact or omits to state all material facts necessary to make the statements in this Agreement not misleading in any material respect in light of the circumstances in which they were made.

 

(a)  Organization. CTGI is a corporation duly organized, validly existing and in good standing under the laws of Texas, is qualified to do business as a foreign corporation in other jurisdictions in which the conduct of its business or the ownership of its properties require such qualification, and have all requisite power and authority to conduct its business and operate properties.

 

(b)  Authorization. The execution of this Agreement and the consummation of the Acquisition and the other transactions contemplated by this Agreement have been duly authorized by the board of directors of CTGI; no other corporate action on their respective parts is necessary in order to execute, deliver, consummate and perform their obligations hereunder; and they have all requisite corporate and other authority to execute and deliver this Agreement and consummate the transactions contemplated by this Agreement.

 

(c)  Capitalization. The authorized capital of CTGI consists of 80,000,000 shares authorized and 39,124,638 and 38,717,238 issued and outstanding, respectively of Common stock, par value $0.001 per share (CTGI Common Shares). On the Effective Date of the Acquisition, 39,495,868 CTGI Common Shares (which will include the 371,020 CTGI Common Shares to be issued at the Closing of the Acquisition) will be issued and outstanding. The CTGI Common Shares outstanding have been duly and validly issued and are fully paid and non-assessable shares and have not been issued in violation of any preemptive or other rights of any other person or any applicable laws.

 

 

(d)  Anti Dilution Adjustments. UTEK currently owns zero (0) CTGI Common Shares, and will be acquiring 371,020 unregistered CTGI Common Shares; and based on a total of (39,495,868) issued CTGI Common Shares (on an as converted basis) this total will represent a 0.94% ownership position in CTGI Common shares as of June 24, 2008 on an “as if converted basis”. For a period of six months from the Effective Date of this Agreement, the aggregate number of CTGI Common Shares that UTEK has received shall be adjusted proportionately by the Board of Directors of CTGI for any increase in the number of outstanding CTGI Common Shares resulting from the issuance of any additional equity securities by the Company to any of its current list of management and directors as of the Effective Date, other than for previously agreed to disbursements prior to the Effective Date of this agreement.  

 

(e)  Binding Effect. The execution, delivery, performance and consummation of the Acquisition and the transactions contemplated by this Agreement will not violate any obligation to which CTGI is a party and will not create a default hereunder, and this Agreement constitutes a legal, valid and binding obligation of CTGI, enforceable in accordance with its terms, except as the enforcement may be limited by bankruptcy, insolvency, moratorium, or similar laws affecting creditor’s rights generally and by the availability of injunctive relief, specific performance or other equitable remedies.

 

(f)  Litigation Relating to this Agreement. There are no suits, actions or proceedings pending or to its knowledge threatened which seek to enjoin the Acquisition or the transactions contemplated by this Agreement or which, if adversely decided, would have a materially adverse effect on its business, results of operations, assets, prospects or the results of its operations of CTGI.

 

(g)  No Conflicting Agreements. Neither the execution and delivery of this Agreement nor the fulfillment of or compliance by CTGI with the terms or provisions of this Agreement will result in a breach of the terms, conditions or provisions of, or constitute default under, or result in a violation of CTGI’s corporate charter or bylaws, or any agreement, contract, instrument, order, judgment or decree to which it is a party or by which it or any of its assets are bound, or violate any provision of any applicable law, rule or regulation or any order, decree, writ or injunction of any court or governmental entity which materially affects its assets or business.

 

(h)  Consents. Assuming the correctness of UTEK and CCTI’s representations, no consent from or approval of any court, governmental entity or any other person is necessary in connection with its execution and delivery of this Agreement; and the consummation of the transactions contemplated by this Agreement will not require the approval of any entity or person in order to prevent the termination of any material right, privilege, license or agreement relating to CTGI or its assets or business.

 

(i)  Financial Statements. The financial statements of CTGI included in its reports available on the EDGAR Website of the Securities and Exchange Commission on Form 10-QSB filed on May 20, 2008 for the fiscal quarter ended March 31, 2008, together with all subsequent filings made with the Commission available at the EDGAR website (hereinafter referred to collectively as the Reports) contain all material information relating to CTGI and its operations and financial condition as of their respective dates which information is required to be disclosed therein.  Since the date of the financial statements included in the Reports, and except as modified in the Schedules hereto, there has been no material adverse changes relating to CTGI’s business, financial condition or affairs not disclosed in the Reports. The Reports do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, taken as a whole, not misleading in light of the circumstances when made.

 

 

(j)  Full Disclosure. All representations or warranties of CTGI are true, correct and complete in all material respects on the date of this Agreement and shall be true, correct and complete in all material respects as of the Closing Date as if they were made on such date. No statement made by them in this Agreement or in the exhibits to this Agreement or any document delivered by them or on their behalf pursuant to this Agreement contains an untrue statement of material fact or omits to state all material facts necessary to make the statements in this Agreement not misleading in any material respect in light of the circumstances in which they were made.

 

(k)  Compliance with Laws. CTGI is in compliance in all material respects with all applicable laws, rules, regulations and orders promulgated by any federal, state or local government body or agency relating to its business and operations.

 

(l)  Litigation. There is no suit, action or any arbitration, administrative, legal or other proceeding of any kind or character, or any governmental investigation pending or, to the best knowledge of CTGI, threatened against CTGI materially affecting its assets or business (financial or otherwise), and CTGI is not in violation of or in default with respect to any judgment, order, decree or other finding of any court or government authority. There are no pending or, to CTGI’s knowledge, threatened actions or proceedings before any court, arbitrator or administrative agency, which would, if adversely determined, individually or in the aggregate, materially and adversely affect its assets or business. Except as disclosed in its Reports, CTGI has no knowledge of any existing or threatened occurrence, action or development that could cause a material adverse affect on CTGI or its business, assets or condition (financial or otherwise) or prospects.

 

(m)  Development. CTGI agrees and warrants that it has the expertise necessary to and has had the opportunity to independently evaluate the inventions of the Licensed Technology and has the expertise necessary to develop same for the market.

 

(n)  Investment Company Status CTGI is not an investment company, either registered or unregistered.

 

(a)  General. It has such knowledge and experience in financial and business matters as to be capable of evaluating the risks and merits of an investment in CTGI Common Shares pursuant to the Acquisition. It is able to bear the economic risk of the investment in CTGI Common Shares, including the risk of a total loss of the investment in CTGI Common Shares. The acquisition of CTGI Common Shares is for its own account and is for investment and not with a view to the distribution of this Agreement. Except a permitted by law, it has a no present intention of selling, transferring or otherwise disposing in any way of all or any portion of the shares at the present time. All information that it has supplied to CTGI is true and correct. It has conducted all investigations and due diligence concerning CTGI to evaluate the risks inherent in accepting and holding the shares which it deems appropriate, and it has found all such information obtained fully acceptable. It has had an opportunity to ask questions of the officer and directors of CTGI concerning CTGI Common Shares and the business and financial condition of and prospects for CTGI, and the officers and directors of CTGI have adequately answered all questions asked and made all relevant information available to them. UTEK is an accredited investor, as the term is defined in Regulation D, promulgated under the Securities Act of 1933, as amended, and the rules and regulations thereunder.

 

 

(b)  Stock Transfer Restrictions. UTEK acknowledges that the CTGI Common Shares will not be registered and UTEK will not be permitted to sell or otherwise transfer the CTGI Common Shares in any transaction in contravention of the following legend, which will be imprinted in substantially the following form on the stock certificate representing CTGI Common Shares:

 

(c)  Legend.  Subject to Rule 144 restrictions, 6 months following the stock acquisition described herein, CTGI agrees to and shall direct its transfer agent to remove the above legend upon the issuance by UTEK's legal counsel that the above legend can be removed from UTEK's CTGI Common Shares.  CTGI agrees to and promptly shall provide any information requested by UTEK or UTEK's counsel and to make further direction to its transfer agent as necessary for such issuance of an opinion regarding removal of the legend or the sale of such restricted shares under Rule 144 or other available exemption from registration.

 

(d)  Wrongful Delay. In the event that CTGI wrongfully fails to direct its transfer agent to remove the legend within fifteen (15) days of request by UTEK, CTGI shall be liable to an additional fee of ten percent (10%) of the current value of the shares held by UTEK, determined based on the closing price of the shares on the fifteenth day after the request is deemed received by CTGI, as well as any and all attorney fees and costs that UTEK may incur as a result of CTGI failing to comply in this request.

 

(a)  Use its good faith efforts to obtain all requisite licenses, permits, consents, approvals and authorizations necessary in order to consummate the Acquisition; and

 

(b)  Notify the other parties upon the occurrence of any event which would have a materially adverse effect upon the Acquisition or the transactions contemplated by this Agreement or upon the business, assets or results of operations; and

 

 

(c)  Not modify its corporate structure, except as necessary or advisable in order to consummate the Acquisition and the transactions contemplated by this Agreement.

 

(a)  the stock certificates representing all of the currently issued and outstanding CCTI Shares, duly endorsed (or accompanied by duly executed stock powers) by UTEK for transfer of such shares to CTGI;

 

(b)  all corporate records and documentation relating to CCTI’s business, all in a form and substance satisfactory to CTGI, including its Articles of Incorporation and Bylaws;

 

(c)  such agreements, files and other data and documents pertaining to CCTI’s business as CTGI may reasonably request;

 

(d)  copies of the general ledgers and books of account of CCTI, and all federal, state and local income, franchise, property and other tax returns filed by CCTI since the inception of CCTI; 

 

(e)  certificates of (i) the Secretary of State of the State of Florida as to the legal existence and good standing, as applicable, (including tax) of CCTI in Florida;

 

 

(f)  the original corporate minute books of CCTI, including the articles of incorporation and bylaws of CCTI, and all other documents filed in this Agreement;

 

(g)  all consents, assignments or related documents of conveyance to give CTGI the benefit of the transactions contemplated hereunder;

 

(h)  such documents as may be needed to accomplish the Closing under the corporate laws of the states of incorporation of CTGI and CCTI, and

 

(i)  such other documents, instruments or certificates as CTGI, or their counsel may reasonably request.

 

 

(a)  Limitation of Liability. CTGI agrees that no Indemnified Person shall have any liability as a result of the execution and delivery of this Agreement, or other matters relating to or arising from this Agreement, other than liabilities that shall have been determined by final non-appealable order of a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of the Indemnified Person or Persons in respect of whom such liability is asserted. Without limiting the generality of the foregoing, in no event shall any Indemnified Person be liable for consequential, indirect or punitive damages, damages for lost profits or opportunities or other like damages or claims of any kind. In no event shall UTEK's liability exceed the total amount of the consideration paid to UTEK under this Agreement.

 

(b)  Limitation of Liability. UTK agrees that CTGI shall not be liable under this agreement to UTK or their respective successor’s, assigns or affiliates except where damages result directly from the gross negligence or willful misconduct of CTGI or its employees. In no event shall CTGI's liability exceed the total amount of the fees paid by CTGI under this agreement, nor shall CTGI be liable for incidental or consequential damages of any kind. UTK shall indemnify CTGI, and hold CTGI harmless against any and all claims by third parties for losses, damages or liabilities, including reasonable attorneys fees and expenses (“Losses”), arising in any manner out of or in connection with the rendering of services by CTGI under this Agreement, unless it is finally judicially determined that such Losses resulted from the gross negligence or willful misconduct of CTGI. The terms of this paragraph shall survive the termination of this agreement and shall apply to any controlling person, director, officer, employee or affiliate of CTGI.

CSMG TECHNOLOGIES, INC.	CARBON CAPTURE TECHNOLOGIES, INC.
By: /s/ Donald S. Robbins	By: /s/ Joel Edelson
Donald S. Robbins,	Joel Edelson
Chief Executive Officer	President
Address:	Address:
701 North Tower, 500 N. Shoreline	2109 East Palm Avenue
Corpus Christi, TX 78471	Tampa, Florida 33605
Date: 6/24/08	Date: 6/24/08
UTEK CORPORATION
By: /s/ Clifford M. Gross, Ph.D.
Clifford M. Gross, Ph.D.
Chief Executive Officer
Address:
2109 East Palm Avenue
Tampa, Florida 33605
Date: 6/24/08