Exhibit 10.1

 
 
AGREEMENT AND PLAN OF MERGER
 
by and among
 
X-FACTOR COMMUNICATIONS, LLC,
ORGANIC SPICE IMPORTS, INC.
and
X-FACTOR ACQUISITION CORP.
 

 
 
March 5, 2012
 
 
 
 
 
 

 

 
 

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AGREEMENT AND PLAN OF MERGER

This Agreement and Plan of Merger (this “Agreement”) is entered into as of March
5, 2012, by and among Organic Spice Imports, Inc., a Delaware corporation
(“ORSI”), X-Factor Acquisition Corp., a Delaware corporation and wholly-owned
subsidiary of ORSI (“MergerCo”), and X-Factor Communications, LLC, a New York
limited liability company (“X-Factor”).

W I T N E S S E T H

WHEREAS, the Boards of Directors of ORSI, X-Factor and MergerCo (collectively,
the “Parties”) have determined that it is in the best interests of such
corporations and their respective stockholders and members to consummate the
merger of MergerCo with and into X-Factor with X-Factor as the surviving
corporation (the “Merger”);

WHEREAS, upon the closing of the Merger, among other things, the outstanding
membership interests of X-Factor shall be converted into the Merger
Consideration (as hereinafter defined) upon the Effective Time (as hereinafter
defined);

WHEREAS, the Exchange Ratio (as hereinafter defined) is predicated on an
outstanding share capitalization of ORSI that assumes a total of $4,705,000 (the
"Maximum Offering Amount") will be raised in the Private Placement (as defined
herein);

WHEREAS, if less than the Maximum Offering Amount is raised in the Private
Placement, then after the Closing of the Merger, the Merger Consideration will
be adjusted as provided herein;

WHEREAS, the parties to this Agreement intend that the Merger, taken together
with the subsequent merger of X-Factor with and into ORSI, qualify as a
“reorganization” within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the “Code”), and that ORSI, MergerCo and X-Factor will
each be a “party to a reorganization” within the meaning of Section 368(b) of
the Code.

NOW, THEREFORE, in consideration of the representations, warranties and
covenants contained herein, the parties hereto agree as follows:

ARTICLE I
DEFINITIONS

As used herein, the following terms shall have the following meanings (such
meaning to be equally applicable to both the singular and plural forms of the
terms defined):

“Affiliate” has the meaning as defined in Rule 12b-2 promulgated under the
Exchange Act, as such regulation is in effect on the date hereof.

“Amended Operating Agreement” shall mean the Third Amended and Restated
Operating Agreement of X-Factor.

"Cancellation Agreement" shall have the meaning ascribed thereto in Section 6.8.

“Certificate of Merger of Delaware” shall mean the certificate of merger in
substantially the form attached hereto as Exhibit A.
 
 
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“Certificate of Merger of New York” shall mean the certificate of merger in
substantially the form attached hereto as Exhibit B.

“Closing” shall have the meaning as set forth in Section 2.1(c) hereof.

“Closing Date” shall have the meaning as set forth in Section 2.1(c) hereof.

“Code” shall mean Internal Revenue Code of 1986, as amended (the “Code”).

 “Convertible Securities” shall have the meaning as set forth in Section 2.2(d)
hereof.

“Delaware General Corporation Law” or “DGCL” shall mean Title 8, Chapter 1 of
the Delaware Code, as amended.

“Dissenting Membership Interests” shall have the meaning as set forth in Section
2.5 hereof.

“Effective Date” shall have the meaning ascribed thereto in Section 2.1(c)
hereof.

“Effective Time” shall have the meaning ascribed thereto in Section 2.1(c)
hereof.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
or any successor law and the rules and regulations promulgated thereunder.

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended,
including the rules and regulations promulgated thereunder.

“Exchange Ratio” shall mean approximately 5.286767 shares of ORSI Common Stock
for each X-Factor Membership Interest issued and outstanding immediately prior
to the Effective Time.

“GAAP” shall mean United States generally accepted accounting principles as in
effect from time to time.

“Knowledge” means, with respect to an individual, that such individual is
actually aware of a particular fact or other matter, with no obligation to
conduct any inquiry or other investigation to determine the accuracy of such
fact or other matter. A Person other than an individual shall be deemed to have
Knowledge of a particular fact or other matter if the officers, directors or
other management personnel of such Person had Knowledge of such fact or other
matter.

“Material Adverse Effect” shall, with respect to an entity, mean a material
adverse effect on the business, operations, results of operations or financial
condition of such entity on a consolidated basis.

 “Merger” shall have the meaning ascribed thereto in the recitals of this
Agreement.

“Merger Consideration” means the shares of ORSI Common Stock issuable in
exchange for X-Factor Membership Interests in connection with the Merger in
accordance with the Exchange Ratio and the Preferred Consideration Amount, as
applicable, and options, warrants and convertible debt securities of ORSI
issuable in exchange for options, warrants and convertible debt securities of
X-Factor as provided herein.

"NY LLC Law" shall have the meaning set forth in the preamble of this Agreement.

“ORSI Common Stock” shall mean the common stock, par value $0.0001 per share, of
ORSI.
 
 
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“ORSI Insiders” shall have the meaning ascribed thereto in Section 4.11.

“ORSI Latest Balance Sheet” shall have the meaning ascribed thereto in Section
4.17.

“ORSI Preferred Stock” shall mean the preferred stock, par value $0.0001 per
share, of ORSI.

“ORSI Returns” shall have the meaning ascribed thereto in Section 4.9(a).

“ORSI SEC Filings” shall have the meaning ascribed thereto in Section 4.5.

“ORSI Stockholders” shall have the meaning ascribed thereto in Section 6.8.

“Options” shall have the meaning as set forth in Section 2.2(f) hereof.

“Person” means any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, governmental
authority or other entity.

“Preferred Consideration Amount” means approximately 1.190229 shares of ORSI
Common Stock for each $1.00 of the purchase price paid by a holder of Preferred
Membership Interests in the purchase of such Preferred Membership Interests,
rounded to the nearest whole share.

"Private Placement" shall have the meaning ascribed thereto in Section 7.3(e).

 “SEC” shall mean the United States Securities and Exchange Commission.

“Securities Act” shall mean the Securities Act of 1933, as amended, including
the rules and regulations promulgated thereunder.

“Stock Option Plan” shall have the meaning as set forth in Section 2.2(f)
hereof.

“Subsidiary” shall, with respect to any Person, mean (i) each corporation in
which such Person owns directly or indirectly fifty percent (50%) or more of the
voting securities of such corporation and (ii) any other Person in which such
Person owns at least a majority voting interest, and shall, in each case, unless
otherwise indicated, be deemed to refer to both direct and indirect subsidiaries
of such Person.

“Surviving Company” shall have the meaning ascribed thereto in Article II.

“Tax” or “Taxes” shall mean any federal, state, local or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, property or windfall profits taxes, environmental taxes, customs
duties, capital stock, franchise, employees’ income withholding, foreign or
domestic withholding, social security, unemployment, disability, workers’
compensation, employment-related insurance, real property, personal property,
sales, use, transfer, value added, alternative or add-on minimum or other
governmental tax, fee, assessment or charge of any kind whatsoever including any
interest, penalties or additions to any Tax or additional amounts in respect of
the foregoing.

“Warrants” shall have the meaning as set forth in Section 2.2(e) hereof.

“X-Factor Common Membership Interests” means the issued and outstanding common
membership units of X-Factor.
 
 
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"X-Factor Member(s)" shall mean the holder(s) of X-Factor Membership Interests.

"X-Factor Membership Interests" shall mean the X-Factor Common Membership
Interests and the X-Factor Preferred Membership Interests.

“X-Factor Preferred Membership Interests” means the issued and outstanding
preferred membership units of X-Factor.
 
ARTICLE II
MERGER

Subject to the satisfaction or waiver of the conditions set forth in
Article VII, at the Effective Time, (i) MergerCo will merge with and into
X-Factor, and (ii) X-Factor will become a wholly-owned subsidiary of ORSI. The
term “Surviving Company” as used herein shall mean X-Factor, as a wholly-owned
subsidiary of ORSI after giving effect to the Merger. The Merger will be
effected pursuant to the Certificate of Merger in accordance with the provisions
of, and with the effect provided in, Article 10, Section 1002 of the NY LLC Law.
 
2.1           Effects of Merger.

(a)       From and after the Effective Time and until further amended in
accordance with applicable law, (i) the Articles of Organization of X-Factor as
in effect immediately prior to the Effective Time shall be the Articles of
Organization of the Surviving Company, and (ii) the Amended Operating Agreement
of X-Factor shall be the Operating Agreement of the Surviving Company.

(b)       ORSI,  X-Factor and MergerCo, respectively, shall each use its best
efforts to take all such action as may be necessary or appropriate to effectuate
the Merger in accordance with the DGCL and the NY LLC Law at the Effective Time.
If at any time after the Effective Time, any further action is necessary or
desirable to carry out the purposes of this Agreement and to vest the Surviving
Company with full right, title and possession to all properties, rights,
privileges, immunities, powers and franchises of either X-Factor or MergerCo,
the officers of the Surviving Company are fully authorized in the name of
X-Factor and MergerCo or otherwise to take, and shall take, all such lawful and
necessary action.
 
(c)       Subject to the provisions of Article VII and Article VIII hereof, the
closing (the “Closing”) of the transactions contemplated hereby shall take place
at such  time and place as X-Factor and ORSI mutually agree at the earliest
practicable time after the satisfaction or waiver of the conditions in
Article VII, but in no event later than ten (10) business days after all such
conditions have been satisfied or waived, or on such other date as may be
mutually agreed by the parties hereto (the "Closing Date"). On the Closing Date,
or as soon thereafter as practicable, to effect the Merger, the parties hereto
will cause the Certificate of Merger of New York to be filed with the New York
Secretary of State in accordance with the NY LLC Law.  The Merger shall be
effective when the Certificate of Merger of New York is filed with the New York
Secretary of State (the “Effective Time”). As used herein, the term “Effective
Date” shall mean the date on which the Certificate of Merger is filed with the
New York Secretary of State.
 
2.2           Effect on X-Factor Membership Interests and MergerCo Capital
Stock. To effectuate the Merger, and subject to the terms and conditions of this
Agreement, at the Effective Time:
 
(a)       Each X-Factor Membership Interest issued and outstanding immediately
prior to the Effective Time shall automatically be converted into and
exchangeable for such number of shares of fully paid and nonassessable shares of
ORSI Common Stock equal to one multiplied by the Exchange Ratio, rounded to the
nearest whole share.
 
 
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(b)      Each holder of X-Factor Preferred Membership Interests shall receive
the Preferred Consideration Amount at the Closing.

(c)      All shares of common stock, $0.0001 par value per share, of MergerCo
issued and outstanding immediately prior to the Effective Time will be converted
into and become one validly issued, fully paid and nonassessable X-Factor Common
Membership Interest of the Surviving Company.
 
 (d)      At the Effective Date, ORSI shall assume the rights and obligations
under all outstanding convertible debt securities (the “Convertible
Securities”), if any, issued by X-Factor which are convertible into X-Factor
Membership Interests. The Convertible Debt Securities shall be assumed in
accordance with their terms and conditions. Each Convertible Security shall,
from and after the Effective Time, evidence the right to receive, upon
conversion, a number of shares of ORSI Common Stock (in either event, rounded to
the nearest whole share) equal to the number of X-Factor Membership Interests
into which such Convertible Security is convertible immediately prior to the
Effective Date multiplied by the Exchange Ratio. The new conversion price
applicable to each such Convertible Security shall be determined by dividing the
conversion price immediately prior to the Effective Date by the Exchange Ratio.
All references in the Convertible Debt Securities to X-Factor or X-Factor
Membership Interests shall be deemed to be references to ORSI and ORSI Common
Stock, respectively, after giving effect to the adjustments pursuant to this
Section.
 
(e)      At the Effective Time, ORSI shall assume the rights and obligations
under X-Factor’s outstanding warrants (the “Warrants”), if any, to purchase
X-Factor Membership Interests. The Warrants shall be assumed in accordance with
their terms and conditions. Each Warrant shall, from and after the Effective
Time, evidence the right to purchase a number of shares of ORSI Common Stock
(rounded to the nearest whole share) equal to the number of X-Factor Membership
Interests into which such Warrant is exercisable immediately prior to the
Effective Date multiplied by Exchange Ratio. The new exercise price of the
Warrants shall be determined by dividing the exercise price of the Warrants
immediately prior to the Effective Date by Exchange Ratio. All references in the
Warrants to X-Factor and X-Factor Membership Interests shall be deemed to be
references to ORSI and ORSI Common Stock, respectively, after giving effect to
the adjustments pursuant to this Section.  In addition to the foregoing, the one
holder of a warrant to purchase X-Factor Preferred Membership Interests will
receive at the Effective Time an additional warrant to purchase, for a period of
10 years from the Closing Date, a number of shares of ORSI Common Stock equal to
the aggregate exercise price of such preferred warrant, which is
$125,137, multiplied by the Preferred Consideration Amount, provided that such
additional warrant shall be for the purchase of no less than the number of
shares of ORSI Common Stock equal to 27,500 multiplied by the Exchange Ratio,
and the exercise price of such additional warrant shall be the quotient of the
exercise price of such preferred warrant, which is $4.33 per X-Factor Preferred
Membership Interest, divided by the Exchange Ratio.

 
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(f)       At the Effective Date, ORSI shall assume all of X-Factor’s rights and
obligations under the options to purchase X-Factor Membership Interests,
pursuant to X-Factor’s 2006 Long-Term Equity Incentive Plan and 2010 Long Term
Incentive Plan (the “Stock Option Plans”), that are outstanding immediately
prior to the Effective Time, which stock options are disclosed in Schedule
2.2(f) hereto and have not prior to the Effective Date been exercised, cancelled
or terminated nor expired (collectively the “Options”). The Options shall be
assumed in accordance with the terms and conditions of the Stock Option Plans
pursuant to which such Options were originally granted, except that, from and
after the Effective Time: (i) all actions to be taken under the Stock Option
Plans or the Options by the X-Factor Members shall be taken by the Board of
Directors of ORSI or a committee thereof, (ii) each Option shall evidence the
right to purchase a number of shares of ORSI Common Stock (rounded to the
nearest whole share) equal to the number of X-Factor Common Membership Interests
into which such Options are exercisable immediately prior to the Effective Time
multiplied by the Exchange Ratio, (iii) the new option price for each share of
ORSI Common Stock issuable upon exercise of an Option shall be determined by
dividing the option exercise price immediately prior to the Effective Time by
the Exchange Ratio (rounded to the nearest cent) and (iv) all references in the
Options and the Stock Option Plans to X-Factor and X-Factor Membership Interests
shall be deemed to be references to ORSI and ORSI Common Stock, respectively,
after giving effect to the adjustments pursuant to clauses (ii) and (iii).
Notwithstanding the provisions set forth in clause (iii) above, with respect to
each Option intended to be an “incentive stock option” under Section 422 of the
Code, if the new option price calculated pursuant to clause (iii) would cause
any such Option not to satisfy the requirements of Section 424(a) of the Code
and Treasury Regulation §1.425-1(a)(1)(i), the new exercise price with respect
to that Option will be increased to the minimum price that it could be and still
satisfy the requirements of that regulation. ORSI agrees to use its best efforts
to take such other steps as are necessary to ensure that those Options which are
deemed “incentive stock options” under Section 422 of the Code remain “incentive
stock options.”
 
2.3           Rights of Holders of X-Factor Membership Interests.
    

On and after the Effective Date and until surrendered for exchange, each
outstanding certificate that immediately prior to the Effective Time represented
X-Factor Membership Interests (except Dissenting Membership Interests) shall be
deemed for all purposes, to evidence ownership of and to represent the number of
whole shares of ORSI Common Stock into which such shares of ORSI Common Stock
shall have been converted pursuant to Section 2.2 above. The record holder of
each such outstanding certificate representing X-Factor Membership Interests,
shall, after the Effective Time, be entitled to vote the shares of  ORSI Common
Stock into which such X-Factor Membership Interests shall have been converted on
any matters on which the holders of record of ORSI Common Stock, as of any date
subsequent to the Effective Date, shall be entitled to vote. In any matters
relating to such certificates of X-Factor Membership Interests, X-Factor may
rely conclusively upon the record of X-Factor Members maintained by X-Factor
containing the names and addresses of the holders of record of X-Factor
Membership Interests on the Effective Date. 
 
2.4           Procedure for Exchange of X-Factor Membership Interests.

(a)      After the Effective Time, holders of certificates theretofore
evidencing outstanding X-Factor Membership Interests (except Dissenting
Membership Interests), upon surrender of such certificates to the Secretary of
ORSI, shall be entitled to receive certificates representing the number of
shares of ORSI Common Stock into which X-Factor Membership Interests theretofore
represented by the certificates so surrendered are exchangeable as provided in
Section 2.2(a) hereof. ORSI shall not be obligated to deliver any such shares of
ORSI Common Stock to which any former holder of X-Factor Membership Interests is
entitled until such holder surrenders the certificate or certificates
representing such Membership Interests. Upon surrender, each certificate
evidencing X-Factor Membership Interests shall be canceled. If there has been a
transfer of ownership of any X-Factor Membership Interest that has not been
recorded in the transfer records of X-Factor, a certificate representing the
proper number of shares of ORSI Common Stock may be issued to a person other
than the person in whose name the certificate so surrendered is registered if:
(x) upon presentation to the Secretary of ORSI, such certificate shall be
properly endorsed or otherwise be in proper form for transfer, (y) the person
requesting such issuance shall pay any transfer or other taxes required by
reason of the issuance of shares of ORSI Common Stock to a person other than the
registered holder of such X-Factor Membership Interest or establish to the
reasonable satisfaction of ORSI that such tax has been paid or is not
applicable, and (z) the issuance of such ORSI Common Stock shall not, in the
sole discretion of ORSI, violate the requirements of the Regulation D or
Regulation S “safe harbor” of the Securities Act with respect to the private
placement of ORSI Common Stock that will result from the Merger.
 
 
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(b)      All shares of ORSI Common Stock issued upon the surrender for exchange
of X-Factor Membership Interests in accordance with the above terms and
conditions shall be deemed to have been issued and paid in full satisfaction of
all rights pertaining to such X-Factor Membership Interests.

(c)      Any shares of ORSI Common Stock issued in the Merger will not be
transferable except (1) pursuant to an effective registration statement under
the Securities Act or (2) upon receipt by ORSI of a written opinion of counsel
for the holder reasonably satisfactory to ORSI to the effect that the proposed
transfer is exempt from the registration requirements of the Securities Act and
relevant state securities laws. Restrictive legends shall be placed on all
certificates representing shares of ORSI Common Stock issued in the Merger,
substantially as follows:

“NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY BE MADE EXCEPT (A) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND THE RULES AND REGULATIONS IN EFFECT THEREUNDER AND ALL APPLICABLE
STATE SECURITIES OR “BLUE SKY” LAWS (SUCH FEDERAL AND STATE LAWS, THE
“SECURITIES LAWS”) OR (B) IF THE CORPORATION HAS BEEN FURNISHED WITH AN OPINION
OF COUNSEL FOR THE HOLDER, WHICH OPINION AND COUNSEL SHALL BE REASONABLY
SATISFACTORY TO THE CORPORATION, TO THE EFFECT THAT SUCH TRANSFER, SALE,
ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION IS EXEMPT FROM THE
PROVISIONS OF THE SECURITIES LAWS.

and, if applicable in accordance with Regulation S:

“THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER THIS SECURITY, PRIOR TO THE DATE WHICH IS SIX MONTHS AFTER
THE ISSUE DATE HEREOF ONLY (A) TO SUCH ISSUER, (B) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT OF 1933
(THE “SECURITIES ACT”), (C) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS
THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULES 904 AND 905 UNDER THE SECURITIES
ACT, OR (D) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO SUCH ISSUER’S RIGHT PRIOR TO ANY
OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (C)  OR (D) TO REQUIRE THE DELIVERY
OF AN OPINION OF COUNSEL, CERTIFICATES, AND/OR OTHER INFORMATION REASONABLY
SATISFACTORY TO SUCH ISSUER.  HEDGING TRANSACTIONS INVOLVING THESE SECURITIES
MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.”

(d)      In the event any certificate for X-Factor Membership Interests or any
certificate or similar instrument evidencing Warrants or Convertible Securities
shall have been lost, stolen or destroyed, ORSI shall issue and pay in exchange
for such lost, stolen or destroyed certificate, promptly following its receipt
of an affidavit of that fact by the holder thereof, such shares of ORSI Common
Stock as may be required pursuant to this Agreement; provided, however, that
ORSI, in its discretion and as a condition precedent to the issuance and payment
thereof, may require the owner of such lost, stolen or destroyed certificate to
deliver a bond in such sum as it may direct as indemnity against any claim that
may be made against ORSI or any other party with respect to the certificate
alleged to have been lost, stolen or destroyed.
 
 
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2.5           Dissenting Shares. X-Factor Membership Interests held by X-Factor
Members who have properly demanded payment with respect to those membership
interests in accordance with Article 10, Section 1002 of the NY LLC Law
(“Dissenting Membership Interests”) shall not be converted into or represent a
right to receive shares of ORSI Common Stock pursuant to Section 2.2 above, but
the holders thereof shall be entitled only to such rights as are granted by
Article 10, Section 1002 and Section 1005 of the NY LLC Law. Each holder of
Dissenting Membership Interests who becomes entitled to payment for such
membership interests pursuant to Article 10, Section 1005 of the NY LLC Law
shall receive payment therefore from the Surviving Company in accordance with
such laws; provided, however, that if any such holder of Dissenting Membership
Interests shall have effectively withdrawn such holder’s demand for payment for
such membership interests or lost such holder’s right to payment of such
membership interests  under Article 10, Section 1005 of the NY LLC Law, such
holder or holders (as the case may be) shall forfeit the right to payment for
such membership interests and each membership interest shall thereupon be deemed
to have been canceled, extinguished and exchanged, as of the Effective Time,
into and represent the right to receive from ORSI shares of ORSI Common Stock as
provided in Section 2.2 above. Any payments in respect of Dissenting Membership
Interests will be deemed made by the Surviving Company.
 
2.6           Directors and Officers of the Surviving Corporation. From and
after the Effective Time, ORSI shall be the managing member of X-Factor, subject
to the provisions contained in the Articles of Organization and Operating
Agreement of the Surviving Company and applicable law.
 
2.7           Directors and Officers of ORSI. At the Closing, the Board of
Directors of ORSI shall take the following action, to be effective upon the
Effective Time: (i) increase the size of the Board of Directors of ORSI to three
(3) persons; (ii) elect to the Board of Directors of ORSI the persons set forth
on Schedule A hereto (iii) appoint as the officers of ORSI, the persons set
forth on Schedule A hereto. Subject to applicable law, ORSI shall take all
action reasonably requested by X-Factor, but consistent with the Certificate of
Incorporation and Bylaws of ORSI, that is reasonably necessary to effect any
such election or appointment of the designees of X-Factor to ORSI’s Board of
Directors.  The provisions of this Section 2.7 are in addition to and shall not
limit any rights which X-Factor or any of its Affiliates may have as a holder or
beneficial owner of shares of capital stock of ORSI as a matter of law with
respect to the election of directors or otherwise. The newly-appointed directors
and officers of ORSI shall hold office for the term specified in, and subject to
the provisions contained in, the Certificate of Incorporation and Bylaws of ORSI
and applicable law.

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF X-FACTOR

X-Factor hereby represents and warrants to ORSI and MergerCo as follows:
 
3.1           Organization and Qualification. X-Factor is, and on the Effective
Date will be, a limited liability company duly organized, validly existing and
in good standing under the laws of the State of New York, and has the requisite
corporate power to carry on its business as now conducted.

3.2           Authority Relative to this Agreement; Non-Contravention. The
execution and delivery of this Agreement by X-Factor and the consummation by
X-Factor of the transactions contemplated hereby have been duly authorized by
the Board of Directors and members of X-Factor and, except for approval of this
Agreement and the Merger by the affirmative vote of a majority of votes that
holders of X-Factor Membership Interests are entitled to cast, which will be
obtained prior to Closing, no other corporate proceedings on the part of
X-Factor are necessary to authorize the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby. This Agreement has
been duly executed and delivered by X-Factor and, assuming it is a valid and
binding obligation of ORSI and MergerCo, constitutes a valid and binding
obligation of X-Factor enforceable in accordance with its terms except as
enforcement may be limited by general principles of equity whether applied in a
court of law or a court of equity and by bankruptcy, insolvency and similar laws
affecting creditors’ rights and remedies generally. Except for (w) approvals
under applicable Blue Sky laws and filing of Form D with the Securities and
Exchange Commission; (x) the filing of a Certificate of Merger of Delaware with
the Secretary of State of Delaware; (y) the filing of a Certificate of Merger of
New York with the Secretary of State of New York and (z) the consents set forth
on Schedule 3.2, no authorization, consent or approval of, or filing with, any
public body, court or authority is necessary on the part of X-Factor for the
consummation by X-Factor of the transactions contemplated by this Agreement,
except for such authorizations, consents, approvals and filings as to which the
failure to obtain or make the same would not, in the aggregate, reasonably be
expected to have a Material Adverse Effect on X-Factor or the Surviving Company
or adversely affect the consummation of the transactions contemplated hereby.
 
 
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3.3           No Conflicts. X-Factor is not subject to, or obligated under, any
provision of (a) its Articles of Organization or Operating Agreement, (b) any
agreement, arrangement or understanding, (c) any license, franchise or permit or
(d) subject to obtaining the approvals referred to in the next sentence, any
law, regulation, order, judgment or decree, which would conflict with, be
breached or violated, or in respect of which a right of termination or
acceleration or any security interest, charge or encumbrance on any of its
assets would be created, by the execution, delivery or performance of this
Agreement, or the consummation of the transactions contemplated hereby, other
than any such conflicts, breaches, violations, rights of termination or
acceleration or security interests, charges or encumbrances which, in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect on X-Factor or the Surviving Company.

3.4          Litigation. There are no actions, suits, proceedings, orders or
investigations pending or, to the Knowledge of X-Factor, threatened against
X-Factor or its officers, directors, employees or Affiliates, or the nominees
for officer or director of ORSI after the Effective Time, individually or in the
aggregate, at law or in equity, or before or by any federal, state or other
governmental department, court, commission, board, bureau, agency or
instrumentality, domestic or foreign, and to the Knowledge of X-Factor, there is
no reasonable basis for any proceeding, claim, action or governmental
investigation directly or indirectly involving X-Factor or its managing member,
officers, employees or affiliates, individually or in the aggregate. X-Factor is
not a party to any order, judgment or decree issued by any federal, state or
other governmental department, court, commission, board, bureau, agency or
instrumentality, domestic or foreign.
 
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ORSI AND MERGERCO

ORSI and MergerCo hereby represent and warrant to X-Factor as follows:
 
4.1           Organization and Qualification.  ORSI and MergerCo each are, and
on the Effective Date will be, corporations duly organized, validly existing and
in good standing under the laws of the State of Delaware, and each has, and on
the Effective Date will have, the requisite corporate power to carry on their
respective businesses as now conducted. The copies of the Certificate of
Incorporation and Bylaws of ORSI and MergerCo that have been made available to
X-Factor on or prior to the date of this Agreement are correct and complete
copies of such documents as in effect as of the date hereof, and shall be in
effect on the Effective Date. ORSI and MergerCo are, and on the Effective Date
each will be, licensed or qualified to do business in every jurisdiction which
the nature of their respective businesses or their respective ownership of
properties require each to be licensed or qualified, except where the failure to
be so licensed or qualified would not have a Material Adverse Effect on ORSI or
MergerCo, respectively.
 
 
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4.2           Authority Relative to this Agreement; Non-Contravention. Each of
ORSI and MergerCo has the requisite corporate power and authority to enter into
this Agreement, and to carry out its obligations hereunder. The execution and
delivery of this Agreement by ORSI and MergerCo, and the consummation by ORSI
and MergerCo of the transactions contemplated hereby have been duly authorized
by the Boards of Directors of ORSI and MergerCo. No further corporate
proceedings on the part of ORSI or MergerCo are necessary to authorize the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby or will otherwise be sought by ORSI. This
Agreement has been duly executed and delivered by ORSI and MergerCo and,
assuming it is a valid and binding obligation of X-Factor, constitutes a valid
and binding obligation of ORSI and MergerCo enforceable in accordance with its
terms except as enforcement may be limited by general principles of equity
whether applied in a court of law or a court of equity and by bankruptcy,
insolvency and similar laws affecting creditors’ rights and remedies generally.
Except for (x) approvals under applicable Blue Sky laws and the filing of Form D
with the Securities and Exchange Commission and (y) the filing of the
Certificate of Merger with the Delaware Secretary of State, no authorization,
consent or approval of, or filing with, any public body, court or authority is
necessary on the part of ORSI or MergerCo for the consummation by ORSI or
MergerCo of the transactions contemplated by this Agreement, except for such
authorizations, consents, approvals and filings as to which the failure to
obtain or make the same would not, in the aggregate, reasonably be expected to
have a Material Adverse Effect on ORSI or MergerCo, or adversely affect the
consummation of the transactions contemplated hereby.
 
4.3           No Conflicts. Neither ORSI nor MergerCo is subject to, or
obligated under, any provision of (a) their respective Certificates of
Incorporation or Bylaws, (b) any agreement, arrangement or understanding, (c)
any license, franchise or permit, nor (d) subject to obtaining the approvals
referred to in the next sentence, any law, regulation, order, judgment or
decree, which would conflict with, be breached or violated, or in respect of
which a right of termination or acceleration or any security interest, charge or
encumbrance on any of their respective assets would be created, by the
execution, delivery or performance of this Agreement or the consummation of the
transactions contemplated hereby, other than any such conflicts, breaches,
violations, rights of termination or acceleration or security interests, charges
or encumbrances which, in the aggregate, could not reasonably be expected to
have a Material Adverse Effect on ORSI or MergerCo.

4.4           Capitalization.
 
(a)      As of the date hereof, ORSI is, and on the Effective Date will be,
authorized to issue 100,000,000 shares of common stock, par value $0.0001 per
share, and 20,000,000 shares of preferred stock, par value $0.0001 per share, of
which 11,180,000 shares of common stock and no shares of preferred stock are
currently issued and outstanding, excluding the shares of Common Stock to be
issued in connection with the Private Placement. The issued and outstanding
shares of capital stock of ORSI are, and on the Effective Date will be, duly
authorized, validly issued, fully paid and nonassessable and not issued in
violation of any preemptive rights and, to ORSI’s Knowledge, free from any
restrictions on transfer (other than restrictions under the Securities Act or
state securities laws) or any option, lien, pledge, security interest,
encumbrance or charge of any kind. ORSI has, and on the Effective Date will
have, no other equity securities or securities containing any equity features
authorized, issued or outstanding. As of the Effective Date, there are no
agreements or other rights or arrangements existing which provide for the sale
or issuance of capital stock by ORSI and there are no rights, subscriptions,
warrants, options, conversion rights or agreements of any kind outstanding to
purchase or otherwise acquire from ORSI any shares of capital stock or other
securities of ORSI of any kind, and there will not be any such agreements prior
to or on the Effective Date. There are, and on the Effective Date there will be,
no agreements or other obligations (contingent or otherwise) which may require
ORSI to repurchase or otherwise acquire any shares of its capital stock other
than the Cancellation Agreement. 
 
(b)      ORSI is not a party to, and, to ORSI’s Knowledge, there do not exist,
any voting trusts, proxies, or other contracts with respect to the voting of
shares of capital stock of ORSI.
 
 
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(c)      The authorized capital of MergerCo consists of 1,000 shares of common
stock, par value $0.0001 per share, all of which are, and on the Effective Date
will be, issued and outstanding and held of record by ORSI. The issued and
outstanding shares of capital stock of MergerCo are, and on the Effective Date
will be, duly authorized, validly issued, fully paid and nonassessable and have
not been issued in violation of any preemptive rights, and, to ORSI’s Knowledge,
free from any restrictions on transfer (other than restrictions under the
Securities Act or state securities laws) or any option, lien, pledge, security
interest, encumbrance or charge of any kind. There are no rights, subscriptions,
warrants, options, conversion rights or agreements of any kind outstanding to
purchase or otherwise acquire from MergerCo any shares of capital stock or other
securities of MergerCo of any kind, and there will not be any such agreements
prior to or on the Effective Date. There are, and on the Effective Date there
will be, no agreements or other obligations (contingent or otherwise) which may
require MergerCo to repurchase or otherwise acquire any shares of its capital
stock.

4.5           Intentionally Omitted.
 
4.6           Litigation. There are no actions, suits, proceedings, orders or
investigations pending or, to the Knowledge of ORSI, threatened against ORSI,
MergerCo, or ORSI’s officers, directors, employees or Affiliates, individually
or in the aggregate, at law or in equity, or before or by any federal, state or
other governmental department, court, commission, board, bureau, agency or
instrumentality, domestic or foreign, and to the Knowledge of ORSI, there is no
reasonable basis for any proceeding, claim, action or governmental investigation
directly or indirectly involving ORSI, MergerCo, or ORSI’s officers, directors,
employees or affiliates, individually or in the aggregate. Neither ORSI nor
MergerCo are a party to any order, judgment or decree issued by any federal,
state or other governmental department, court, commission, board, bureau, agency
or instrumentality, domestic or foreign.
 
4.7          Subsidiaries.  ORSI does not own, directly or indirectly, any
capital stock or equity interest in any corporation or other form of business
organization other than MergerCo and X-Factor Communications Holdings, Inc.
 
4.8           No Brokers or Finders. None of ORSI or any of its officers,
directors, employees or Affiliates has employed any broker, finder, investment
banker or investment advisor or Person performing a similar function, or
incurred any liability for brokerage commissions, finders’ fees, investment
advisory fees or similar compensation in connection with the transactions
contemplated by this Agreement.
  
4.9           Validity of the ORSI Common Stock. The shares of ORSI Common Stock
to be issued to holders of X-Factor Membership Units pursuant to this Agreement
will be, when issued, duly authorized, validly issued, fully paid and
nonassessable.
 
4.10         Real Property. ORSI does not own or lease any real property.
 
4.11         Insurance. ORSI does not own or maintain any insurance policies.
 
4.12         Employee Benefit Plans.

(a) ORSI does not have any (i) “employee benefit plans,” within the meaning of
Section 3(3) of ERISA, (ii) bonus, stock option, stock purchase, stock
appreciation right, incentive, deferred compensation, supplemental retirement,
severance, and fringe benefit plans, programs, policies or arrangements, or
(iii) employment or consulting agreements, for the benefit of, or relating to,
any current or former employee (or any beneficiary thereof) of ORSI, in the case
of a plan described in (i) or (ii) above, that is currently maintained by ORSI
or with respect to which ORSI has an obligation to contribute, and in the case
of an agreement described in (iii) above, that is currently in effect.
 
(b) No director, officer, or employee of ORSI will become entitled to
retirement, severance or similar benefits or to enhanced or accelerated benefits
(including any acceleration of vesting or lapsing of restrictions with respect
to equity-based awards) solely as a result of consummation of the transactions
contemplated by this Agreement.
 
 
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4.13         Employees. Except as disclosed in the ORSI SEC Filings, ORSI has no
employees.
  
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER

5.1           Conduct of Business by ORSI and MergerCo. From the date of this
Agreement to the Effective Date, unless X-Factor shall otherwise agree in
writing or as otherwise expressly contemplated or permitted by other provisions
of this Agreement, including but not limited to this Section 5.1, neither ORSI
nor MergerCo shall, directly or indirectly, (a) amend its Certificate of
Incorporation or Bylaws, (b) split, combine or reclassify any outstanding shares
of capital stock of ORSI , (c) declare, set aside, make or pay any dividend or
distribution in cash, stock, property or otherwise with respect to the capital
stock of ORSI , (d) default in its obligations under any material debt, contract
or commitment which default results in the acceleration of obligations due
thereunder, except for such defaults arising out of ORSI ’s entry into this
Agreement for which consents, waivers or modifications are required to be
obtained, (e) conduct its business other than in the ordinary course on an
arms-length basis and in accordance in all material respects with all applicable
laws, rules and regulations and ORSI ’s past custom and practice, (f) issue or
sell any additional shares of, or options, warrants, conversions, privileges or
rights of any kind to acquire any shares of, any of its capital stock, except in
connection with the exercise or conversion of ORSI securities outstanding on the
date of this Agreement or payment of stock dividends, (g) acquire (by merger,
exchange, consolidation, acquisition of stock or assets or otherwise) any
corporation, partnership, joint venture or other business organization or
division or material assets thereof or (h) make or change any material tax
elections, settle or compromise any material tax liability or file any amended
tax return.
 
ARTICLE VI
ADDITIONAL COVENANTS AND AGREEMENTS
 
6.1           Governmental Filings. Subject to the terms and conditions herein
provided, each party will use all reasonable efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary, proper
or advisable to consummate and make effective as promptly as practicable the
transactions contemplated by this Agreement. Each party will use all reasonable
efforts and will cooperate with the other party in the preparation and filing,
as soon as practicable, of all filings, applications or other documents required
under applicable laws, including, but not limited to, the Exchange Act, to
consummate the transactions contemplated by this Agreement. Prior to submitting
each filing, application, or other document with the applicable regulatory
authority, each party will, to the extent practicable, provide the other party
with an opportunity to review and comment on each such filing, application, or
other document to the extent permitted by applicable law. Each party will use
all reasonable efforts and will cooperate with the other party in taking any
other actions necessary to obtain such regulatory or other approvals and
consents at the earliest practicable time, including participating in any
required hearings or proceedings.
 
6.2           Expenses. Except as otherwise provided in this Agreement, all
costs and expenses incurred in connection with this Agreement, and the
transactions contemplated hereby, shall be paid by X-Factor.
 
6.3           Press Releases. X-Factor and ORSI shall agree with each other as
to the form and substance of any press release or public announcement related to
this Agreement or the transactions contemplated hereby; provided, however, that
nothing contained herein shall prohibit either party, following notification to
the other party, from making any disclosure which is required by law or
regulation. If any such press release or public announcement is so required, the
party making such disclosure shall consult with the other party prior to making
such disclosure, and the parties shall use all reasonable efforts, acting in
good faith, to agree upon a text for such disclosure which is satisfactory to
both parties.
 
 
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6.4           Securities Reports. ORSI shall file with the SEC all reports and
other documents required to be filed under the Securities Act or Exchange Act.
All such reports and documents (i) shall not, as of the date of such filing,
contain any untrue statement of material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, and (ii)
shall comply as to form, in all material respects, with the applicable rules and
regulations of the SEC.
  
6.5           X-Factor Members' Approval; Materials to Members.  The Parties
shall, in accordance with the Amended Operating Agreement, obtain X-Factor
Member approval as promptly as practicable after the date hereof for the purpose
of considering and taking action upon this Agreement and the Merger.
 
6.6           Failure to Fulfill Conditions. In the event that either of the
parties hereto determines that a condition to its respective obligations to
consummate the transactions contemplated hereby cannot be fulfilled on or prior
to the termination of this Agreement, it will promptly notify the other party.
 
6.7           Notification of Certain Matters. On or prior to the Effective
Date, each party shall give prompt notice to the other party of (i) the
occurrence or failure to occur of any event or the discovery of any information,
which occurrence, failure or discovery would be likely to cause any
representation or warranty on its part contained in this Agreement to be untrue,
inaccurate or incomplete after the date hereof in any material respect or, in
the case of any representation or warranty given as of a specific date, would be
likely to cause any such representation or warranty on its part contained in
this Agreement to be untrue, inaccurate or incomplete in any material respect as
of such specific date, and (ii) any material failure of such party to comply
with or satisfy any covenant or agreement to be complied with or satisfied by it
hereunder.

6.8           Cancellation of ORSI Shares and Warrants. Prior to the Effective
Date, ORSI and each of the persons set forth on Schedule 6.8 hereto holding
shares of ORSI Common Stock on the date hereof (the “ORSI Stockholders”) shall
have entered into an agreement in substantially the form attached hereto as
Exhibit C (the “Cancellation Agreement”) pursuant to which ORSI will cancel all
shares of ORSI Common Stock set forth on Schedule 6.8 and all warrants to
purchase shares of ORSI Common Stock (the “ORSI Warrants”) held by the ORSI
Stockholders. The cancellation such shares and warrants shall become effective
immediately prior to the Effective Time.

6.9           Adjustments to Merger Consideration.  If, upon final completion or
termination of the Private Placement, the Private Placement has yielded gross
proceeds less than the Maximum Offering Amount, then after the Closing the
Exchange Ratio shall be adjusted to the extent necessary to be consistent in all
material respects with the disclosures set forth in X-Factor's Confidential
Private Placement Memorandum delivered in connection with the Private Placement,
as supplemented or amended, under the heading "Capitalization".  In such case,
the number of shares underlying options, warrants and convertible securities
included within the Merger Consideration, and the exercise or conversion prices
thereof, as applicable, shall be adjusted in accordance with such adjusted
Exchange Ratio.
 
 
 
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ARTICLE VII
CONDITIONS
 
7.1           Conditions to Obligations of Each Party. The respective
obligations of each party to effect the transactions contemplated hereby are
subject to the fulfillment or waiver at or prior to the Effective Date of the
following conditions:

(a)      No Prohibitive Change of Law. There shall have been no law, statute,
rule or regulation, domestic or foreign, enacted or promulgated which would
prohibit or make illegal the consummation of the transactions contemplated
hereby.
 
(b)      Requisite Approvals. This Agreement and the Merger shall have been
approved by the X-Factor Members, the Boards of Directors of ORSI and MergerCo. 

(c)      Adverse Proceedings. There shall not be threatened, instituted or
pending any action or proceeding before any court or governmental authority or
agency (i) challenging or seeking to make illegal, or to delay or otherwise
directly or indirectly restrain or prohibit, the consummation of the
transactions contemplated hereby or seeking to obtain material damages in
connection with such transactions, (ii) seeking to prohibit direct or indirect
ownership or operation by ORSI or MergerCo of all or a material portion of the
business or assets of X-Factor, or to compel ORSI or MergerCo or X-Factor to
dispose of or to hold separately all or a material portion of the business or
assets of ORSI or MergerCo or of X-Factor, as a result of the transactions
contemplated hereby; (iii) seeking to invalidate or render unenforceable any
material provision of this Agreement or any of the other agreements attached as
exhibits hereto or contemplated hereby, or (iv) otherwise relating to and
materially adversely affecting the transactions contemplated hereby. 

(d)      Governmental Action. There shall not be any action taken, or any
statute, rule, regulation, judgment, order or injunction proposed, enacted,
entered, enforced, promulgated, issued or deemed applicable to the transactions
contemplated hereby, by any federal, state or other court, government or
governmental authority or agency, that would reasonably be expected to result,
directly or indirectly, in any of the consequences referred to in Section
7.1(d).
 
7.2           Additional Conditions to Obligation of ORSI and MergerCo. The
obligation of ORSI and MergerCo to consummate the transactions contemplated
hereby in accordance with the terms of this Agreement is also subject to the
fulfillment or waiver of the following conditions:
 
(a)       Representations and Compliance. The representations of X-Factor
contained in this Agreement were accurate as of the date of this Agreement and
are accurate as of the Closing Date, in all respects (in the case of any
representation containing any materiality qualification) or in all material
respects (in the case of any representation without any materiality
qualification), except for representations and warranties made as of a specific
date, which shall be accurate as of such date. X-Factor shall in all material
respects have performed each obligation and agreement and complied with each
covenant to be performed and complied with by it hereunder at or prior to the
Closing Date.

(b)      Consents and Approvals. X-Factor shall have obtained all consents and
approvals necessary to consummate the transactions contemplated by this
Agreement, including those consents and approvals set forth on Schedule 7.2(b),
in order that the transactions contemplated herein do not constitute a breach or
violation of, or result in a right of termination or acceleration of, or
creation of any encumbrance on any of X-Factor’s assets pursuant to the
provisions of, any agreement, arrangement or undertaking of or affecting
X-Factor or any license, franchise or permit of or affecting X-Factor.

(c)       Merger Certificates. X-Factor shall have executed a copy of the
Certificate of Merger of Delaware and the Certificate of Merger of New York.
 
 
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(d)       Accredited Investors.  ORSI shall be reasonably satisfied that the
X-Factor Members and holders of the Convertible Debt Securities and the Warrants
do not collectively include more than 35 persons who are not accredited
investors, as that term is defined under Regulation D of the Securities Act;
provided that ORSI may proceed with the Closing before it is so satisfied on the
condition that it may withhold delivery of Merger Consideration to any U.S.
person who fails to satisfy ORSI as to his, her or its accredited status, and
provided further that if ORSI fails to deliver such Merger Consideration to any
U.S. person within 120 days following the Closing as a result of such failure to
reasonably satisfy ORSI as to such person's accredited status, then ORSI shall
have the right to deem the person(s) to whom such Merger Consideration is
otherwise owing as Dissenting Members having the right to receive payment as
provided in Section 2.5 hereof in lieu of Merger Consideration, and in such case
the amount of Merger Consideration otherwise owing to such person(s) shall be
forever cancelled on the books and records of ORSI.

7.3           Additional Conditions to Obligation of X-Factor. The obligation of
X-Factor to consummate the transactions contemplated hereby in accordance with
the terms of this Agreement is also subject to the fulfillment or waiver of the
following conditions:
 
(a)      Representations And Compliance. The representations of ORSI and
MergerCo contained in this Agreement were accurate as of the date of this
Agreement and are accurate as of the Effective Time, in all respects (in the
case of any representation containing any materiality qualification) or in all
material respects (in the case of any representation without any materiality
qualification), except for representations and warranties made as of a specific
date, which shall be accurate as of such date. ORSI and MergerCo, respectively,
shall in all material respects have performed each obligation and agreement and
complied with each covenant to be performed and complied with by them hereunder
at or prior to the Effective Date.

(b)      Secretary’s Certificate. ORSI shall have furnished to X-Factor (i)
copies of the text of the resolutions by which the corporate action on the part
of ORSI necessary to approve this Agreement and the Certificate of Merger, the
election of the officers and directors of ORSI to serve following the Closing
Date and the transactions contemplated hereby and thereby were taken, which
shall be accompanied by a certificate of the corporate secretary or assistant
corporation secretary of ORSI dated as of the Closing Date certifying to
X-Factor that such copies are true, correct and complete copies of such
resolutions and that such resolutions were duly adopted and have not been
amended or rescinded, (ii) an incumbency certificate dated as of the Closing
Date executed on behalf of ORSI by its corporate secretary or one of its
assistant corporate secretaries certifying the signature and office of each
officer of ORSI executing this Agreement, the Certificates of Merger or any
other agreement, certificate or other instrument executed pursuant hereto, and
(iii) a copy of the Certificate of Incorporation of ORSI , certified by the
Secretary of State of Delaware, and certificates from the Secretary of State of
Delaware evidencing the good standing of ORSI in such jurisdiction as of a day
within five (5) business days prior to the Closing Date.

(c)      Consents and Approvals. ORSI and MergerCo shall have obtained all
consents and approvals necessary to consummate the transactions contemplated by
this Agreement in order that the transactions contemplated herein not constitute
a breach or violation of, or result in a right of termination or acceleration
of, or creation of any encumbrance on any of ORSI’s or MergerCo’s assets
pursuant to the provisions of, any agreement, arrangement or undertaking of or
affecting ORSI or any license, franchise or permit of or affecting ORSI .

(d)      ORSI Cancellation of Outstanding Shares and Warrants. ORSI shall have
entered into the Cancellation Agreement with all of the ORSI Stockholders and
the transactions contemplated thereby shall have been consummated.
 
 
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(e)       Offering.  The receipt of subscriptions for a minimum amount of
$1,500,000 of ORSI Common Stock in connection with a private placement offering
of up to 6,666,667 shares ($5,000,000) of ORSI Common Stock including an
over-allotment option (the "Private Placement"), which minimum amount shall
include the $295,000 paid by the purchasers signatory to that certain Amended
and Restated Agreement for the Purchase of Common Stock and Warrants, dated
January 13, 2012 and amended on January 20, 2012, as described under Item 5.01
of the Form 8-K filed by ORSI on February 16, 2012 (the "Shell Purchase
Agreement").

(f)       New Jersey Economic Development Authority (NJEDA) Consent. The NJEDA
shall have provided written consent and approval for the consummation of the
transactions contemplated by this Agreement.

(g)      Regulation D; Information Delivery.  ORSI have delivered to the
X-Factor Members who are U.S. persons (within the meaning of Regulation S under
the Securities Act) but who are not accredited investors (within the meaning of
Regulation D under the Securities Act) the information required to be delivered
to non-accredited investors pursuant to Rule 502 of Regulation D.

(h)      Transfer of ORSI Common Stock to Wynston Hill Capital.  At the Closing,
the purchasers signatory to the Shell Purchase Agreement shall have executed
such documentation as may be required by ORSI's stock transfer agent in order to
effect the transfer to X-Factor's placement agent, Wynston Hill Capital, LLC, an
aggregate of 656,667 of the unrestricted shares purchased thereunder.

ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
 
8.1           Termination. This Agreement may be terminated prior to the
Effective Date:

(a)      by mutual consent of X-Factor and ORSI;

(b)      by ORSI, if any representation of X-Factor set forth in this Agreement
was inaccurate when made or becomes inaccurate such that the condition set forth
in Section 7.2(a) could not be satisfied;

(c)      by X-Factor, if any representation of ORSI set forth in this Agreement
was inaccurate when made or becomes inaccurate such that the condition set forth
in Section 7.3(a) could not be satisfied;

(d)      by ORSI, if X-Factor fails to perform or comply with any of the
obligations that it is required to perform or to comply with under this
Agreement such that the conditions set forth in Section 7.2(a) could not be
satisfied;

(e)      by X-Factor, if ORSI fails to perform or comply with any of the
obligations that it is required to perform or to comply with under this
Agreement such that the conditions set forth in Section 7.3(a) could not be
satisfied;

(f)       by X-Factor, if, the Merger and this Agreement are not duly approved
by the X-Factor Members, by vote or written consent;
 
Any party desiring to terminate this Agreement shall give prior written notice
of such termination and the reasons therefore to the other party.
 
 
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ARTICLE IX
GENERAL PROVISIONS
 
9.1           Notices. All notices and other communications hereunder shall be
in writing and shall be sufficiently given if made by hand delivery, by
telecopier, by overnight delivery service for next business day delivery, or by
registered or certified mail (return receipt requested), in each case with
delivery charges prepaid, to the parties at the following addresses (or at such
other address for a party as shall be specified by it by like notice):
 
If to X-Factor:
X-Factor Communications, LLC
3 Empire Blvd - 5th Floor
South Hackensack, NJ 07606
Attn: Charles Saracino, Chief Executive Officer
   
With copies to:
Richardson & Patel LLP
750 Third Avenue, 9th Floor
New York, New York 10017
Facsimile: (917) 591-6898
Attn: Kevin Friedmann
   
If to ORSI
or MergerCo:
Organic Spice Imports, Inc.
7910 Ivanhoe Avenue #414
La Jolla, CA 92037
Facsimile: 858-459-1133
Attn: Charles Saracino, President

 
All such notices and other communications shall be deemed to have been duly
given as follows: when delivered by hand, if personally delivered, when
received; (i) if delivered by registered or certified mail (return receipt
requested), when receipt acknowledged; or (ii) if telecopied, on the day of
transmission or, if that day is not a business day, on the next business day;
and the next business day delivery after being timely delivered to a recognized
overnight delivery service.
 
9.2           No Survival. The representations and warranties and obligations
contained in this Agreement will terminate at the Effective Time or on
termination of this Agreement in accordance with Section 8.1, except that the
obligations contained in Article II and any other obligation contained in this
Agreement requiring performance or compliance after the Effective Time
(including without limitation Section 6.3(d)) will survive the Effective Time
indefinitely.

9.3           Interpretation. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. References to Sections and Articles refer to
Sections and Articles of this Agreement unless otherwise stated. Words such as
“herein,” “hereinafter,” “hereof,” “hereto,” “hereby” and “hereunder,” and words
of like import, unless the context requires otherwise, refer to this Agreement
(including the Schedules hereto). As used in this Agreement, the masculine,
feminine and neuter genders shall be deemed to include the others if the context
requires.
 
9.4           Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated, and the parties shall negotiate
in good faith to modify this Agreement and to preserve each party’s anticipated
benefits under this Agreement.
 
 
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9.5           Amendment. This Agreement may not be amended or modified except by
an instrument in writing approved by the parties to this Agreement and signed on
behalf of each of the parties hereto.
 
9.6           Waiver. At any time prior to the Effective Date, any party hereto
may (a) extend the time for the performance of any of the obligations or other
acts of the other party hereto or (b) waive compliance with any of the
agreements of the other party or with any conditions to its own obligations, in
each case only to the extent such obligations, agreements and conditions are
intended for its benefit. Any such extension or waiver shall only be effective
if made in writing and duly executed by the party giving such extension or
waiver.
 
9.7           Miscellaneous. This Agreement (together with all other documents
and instruments referred to herein): (a) constitutes the entire agreement, and
supersedes all other prior agreements and undertakings, both written and oral,
among the parties, with respect to the subject matter hereof; and (b) shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, but shall not be assignable by either party hereto
without the prior written consent of the other party hereto.
 
9.8           Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
 
9.9           Third Party Beneficiaries. Each party hereto intends that this
Agreement, except as expressly provided herein, shall not benefit or create any
right or cause of action in or on behalf of any person other than the parties
hereto.
 
9.10        Governing Law. This Agreement is governed by the internal laws of
the State of Delaware without regard to such State’s principles of conflicts of
laws that would defer to the substantive laws of another jurisdiction.
 
9.11         Jurisdiction; Service of Process. Any action or proceeding seeking
to enforce any provision of, or based on any right arising out of, this
Agreement must, to the extent such courts will accept such jurisdiction,
be brought against any of the parties in the courts of the State of New York,
or, if it has or can acquire jurisdiction, in the United States District Court
for the Southern District of New York, and each of the parties consents to the
jurisdiction of those courts (and of the appropriate appellate courts) in any
such action or proceeding and waives any objection to venue laid therein.
Process in any such action or proceeding may be served by sending or delivering
a copy of the process to the party to be served at the address and in the manner
provided for the giving of notices in Section 9.1. Nothing in this Section 9.11,
however, affects the right of any party to serve legal process in any other
manner permitted by law.

[Remainder of Page Left Intentionally Blank - Signature Page to Follow]
 
 
18

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
on the date first written above by their respective officers.
 

 
X-FACTOR COMMUNICATIONS, LLC
       
By:  
/s/ Charles Saracino
 
Name: Charles Saracino
 
Title: Chief Executive Officer

 

 
ORGANIC SPICE IMPORTS, INC.
       
By:  
/s/ Charles Saracino
 
Name: Charles Saracino
 
Title: Chief Executive Officer

 

 
X-FACTOR ACQUISITION CORP.
       
By:  
/s/ Charles Saracino
 
Name: Charles Saracino
 
Title: President

 
Signature Page
Agreement and Plan of Merger

 
 

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SCHEDULE A
 
Officers and Directors
 
Name
Title
Edwin F. Heinen
Chief Financial Officer
Ken Makow
Chief Technology Officer
Brian Watts
Chief Information Officer
Jeffrey Singman
Chief Marketing and Sales Officer
Jim Morris
Director
Louis Siracusano
Director

 

 
 

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Exhibit A

Certificate of Merger of Delaware
 

 
STATE OF DELAWARE
CERTIFICATE OF MERGER OF
DOMESTIC CORPORATION AND
FOREIGN LIMITED LIABILITY COMPANY

Pursuant to Title 8, Section 264(c) of the Delaware General Corporation Law, the
undersigned limited liability company executed the following Certificate of
Merger:

FIRST:          The name of the surviving limited liability company is X-Factor
Communications, LLC, a New York limited liability company (the “Surviving
Entity”), and the name of the corporation being merged into the Surviving Entity
is X-Factor Acquisition Corp., a Delaware Corporation (the “Merging
Corporation”).

SECOND:     The Agreement of Merger has been approved, adopted, certified,
executed and acknowledged by the Surviving Entity and the Merging Corporation.

THIRD:         The name of the Surviving Entity is X-Factor Communications, LLC.

FOURTH:     The merger is to become effective immediately upon the filing of
this certificate of merger.

FIFTH:          The executed Agreement and Plan of Merger is on file at the
office of the Surviving Entity, the address of which is 3 Empire Blvd, South
Hackensack, NJ 07606.

SIXTH:         A copy of the Agreement of Merger will be furnished by the
Surviving Entity, without cost, to any member of the Surviving Entity stock
holder of the Merging Corporation.

SEVENTH:   The Surviving Entity agrees that it may be served with process in the
State of Delaware in any proceeding for enforcement of any obligation of  any
constituent corporation of  Delaware, as well as for enforcement of any
obligation of the Surviving Entity arising from this  merger, including any suit
or other proceeding to enforce the rights of any stockholders as determined in
appraisal proceedings pursuant to the provisions of Section 262 of the Delaware
General Corporation laws, and irrevocably appoints the Secretary of State
of  Delaware as its agent to accept service of process in any such suit or
proceeding.  The Secretary of State shall mail any such process to the surviving
limited liability company at 3 Empire Blvd, South Hackensack, NJ 07606.

 
Signature page follows.

 
A-1

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IN WITNESS WHEREOF, said Limited Liability Company has caused this certificate
to be signed by an authorized person, the [__] day of March, 2012.

 

  X-FACTOR COMMUNICATIONS, LLC

By:_______________________________
     Charles Saracino
     Chief Executive Officer and President

 
 
 
A-2

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Exhibit B

Certificate of Merger of New York
 

New York State
Department of State
Division of Corporations, State Records and Uniform Commercial Code
One Commerce Plaza, 99 Washington Avenue
Albany, NY 12231
www.dos.ny.gov

CERTIFICATE OF MERGER
OF
X-FACTOR ACQUISITION CORP.
INTO
X-FACTOR COMMUNICATIONS, LLC

Under Section 1003 of the Limited Liability Company Law

FIRST: The names and jurisdictions of formation or organization of each limited
liability company or other business entity that is to merge is:

1)  
X-Factor Communications, LLC formed in New York

2)  
X-Factor Acquisition Corp. incorporated in Delaware

SECOND:  The articles of organization of X-Factor Communications, LLC were filed
with the Department of State of New York on May 31, 2005.

THIRD:  The original certificate of incorporation of X-Factor Acquisition Corp.
was filed in Delaware on March 2, 2012.  An application for authority has not
been filed with the Department of State of New York.

FOURTH: The agreement of merger has been approved and executed by each of the
constituent entities.

FIFTH: The name of the surviving domestic limited liability company is X-Factor
Communications, LLC.

SIXTH: The Secretary of State is designated as agent of the surviving limited
liability company upon whom process against it may be served.  The address
within or without this state to which the Secretary of State shall mail a copy
of any process against the limited liability  company served upon him or her is
3 Empire Blvd, South Hackensack, New Jersey 07606.

SEVENTH: The merger is permitted by the jurisdiction of incorporation of the
foreign entity and is in compliance therewith.

EIGHTH: The agreement of merger is on file at the following place of business of
the surviving domestic limited liability company: 3 Empire Blvd, South
Hackensack, New Jersey 07606.

NINTH: A copy of the agreement of merger will be furnished by the surviving
domestic limited liability company on request and without cost to any member of
any domestic limited liability company or to any person holding an interest in
any other business entity that is to merge pursuant to such agreement.
 

 

X-FACTOR ACQUISITION CORP.    X-FACTOR COMMUNICATIONS, LLC           By: 
/s/
  By:
/s/
 
Name: Charles Saracino  
   
Name:  Charles Saracino
 
Title: Chief Executive Officer and President 
   
Title: Chief Executive Officer and President

                                                                                                                                                          
 
B-1

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Exhibit C

Cancellation Agreement

 
CANCELLATION AGREEMENT
 
This Cancellation Agreement (this “Agreement”) is made as of the __ day of
_________, 2012 by and among Organic Spice Imports, Inc., a Delaware corporation
having its offices at 3 Empire Blvd., 5th Floor, South Hackensack, NJ 07606 (the
“Company”), and the individuals set forth on Schedule I hereto (the “Securities
Holders”).

W I T N E S S E T H:
 
 WHEREAS, the Company entered into an Agreement and Plan of Merger, dated as of
March 5, 2012 (the “Merger Agreement”), by and among, the Company, X-Factor
Acquisition Corp. (“MergerCo”), a Delaware corporation and wholly owned
subsidiary of the Company, and X-Factor Communications, LLC (“X-Factor”),
pursuant to which MergerCo shall merge with and into X-Factor, and X-Factor, as
the surviving entity, will become the wholly owned subsidiary of the Company
(the “Merger”); and
 
WHEREAS, simultaneous with, and as a condition to the closing (the “Closing”) of
the transactions contemplated by the Merger Agreement, the Company and the
Securities Holders have agreed to cancel (1) an aggregate of 10,000,000 shares
of common stock, par value $0.0001 per share (the “Common Stock”) of the Company
and (2) warrants to purchase 5,000,000 shares of Common Stock (the “Warrants”,
collectively with the Shares, the “Securities”) owned by the Securities Holders
as set forth on Schedule I hereto.
 
NOW, THEREFORE, the parties hereto hereby agree as follows:
 
ARTICLE I
CANCELLATION OF SECURITIES

1.1.   Cancellation of the Shares and Warrants.  As an inducement for X-Factor
to enter into the transactions contemplated by the Merger Agreement and in
reliance upon the representations, warranties, covenants and agreements
contained in this Agreement, each Securities Holder and the Company agree that
the Securities held by such Securities Holder, as set forth on Schedule I
attached hereto, shall be cancelled effective upon the Closing.
 
1.2.   Closing.  At the Closing, the Securities Holders agree to execute any and
all additional documents, including but not limited to, stock powers for the
stock certificates representing the Shares, as the Company reasonably determines
necessary to effect the cancellation of the Securities pursuant to the terms of
this Agreement.
 
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS

Each of the Securities Holders, individually and solely as to himself, hereby
makes the following representations and warranties to and covenants with the
Company, which shall be true and correct through the date of the Closing as if
made on that date:
 
2.1.   Each Securities Holder has the requisite power and authority to enter
into this Agreement and to consummate the transactions contemplated hereby and
otherwise to carry out such Securities Holder’s obligations hereunder. No
consent, approval or agreement of any individual or entity is required to be
obtained by such Securities Holder in connection with the execution and
performance by such Securities Holder of this Agreement or the execution and
performance by such Securities Holder of any agreements, instruments or other
obligations entered into in connection with this Agreement.
 
 
C-1

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2.2.   Such Securities Holder owns the Securities free and clear of any and all
liens, claims, encumbrances, preemptive rights, right of first refusal and
adverse interests of any kind. Such Securities Holder is not a party to any
agreement or understanding pursuant to which any of the Securities held by such
Securities Holder are to be transferred.
 
2.3. Such Securities Holder is an accredited investor as defined in Rule 501(a)
of Regulation D under the Securities Act of 1933.

2.4.  Such Securities Holder has had had a reasonable opportunity to ask
questions of and receive answers from a person or persons acting on behalf of
the Company concerning the cancellation of the Securities and the business,
financial condition and results of operations of the Company and all such
questions have been answered to the full satisfaction of such Securities Holder.

ARTICLE III
TERMINATION

3.1.   Termination by Mutual Agreement.  This Agreement may be terminated at any
time prior to the Closing by mutual consent of the parties hereto, provided that
such consent to terminate is in writing and is signed by each of the parties
hereto.
 
ARTICLE IV
MISCELLANEOUS

4.1.   Entire Agreement.  This Agreement constitutes the entire agreement of the
parties, superseding and terminating any and all prior or contemporaneous oral
and written agreements, understandings or letters of intent between or among the
parties with respect to the subject matter of this Agreement.  No part of this
Agreement may be modified or amended, nor may any right be waived, except by a
written instrument which expressly refers to this Agreement, states that it is a
modification or amendment of this Agreement and is signed by the parties to this
Agreement, or, in the case of waiver, by the party granting the waiver.  No
course of conduct or dealing or trade usage or custom and no course of
performance shall be relied on or referred to by any party to contradict,
explain or supplement any provision of this Agreement, it being acknowledged by
the parties to this Agreement that this Agreement is intended to be, and is, the
complete and exclusive statement of the agreement with respect to its subject
matter.  Any waiver shall be limited to the express terms thereof and shall not
be construed as a waiver of any other provisions or the same provisions at any
other time or under any other circumstances.
 
4.2.   Severability.  If any section, term or provision of this Agreement shall
to any extent be held or determined to be invalid or unenforceable, the
remaining sections, terms and provisions shall nevertheless continue in full
force and effect.
 
4.3.   Notices.  All notices provided for in this Agreement shall be in writing
signed by the party giving such notice, and delivered personally or sent by
overnight courier, mail or messenger against receipt thereof or sent by
registered or certified mail, return receipt requested, or by facsimile
transmission or similar means of communication if receipt is confirmed or if
transmission of such notice is confirmed by mail as provided in this Section
4.3.  Notices shall be deemed to have been received on the date of personal
delivery or telecopy or attempted delivery.  Notice shall be delivered to the
parties at the following addresses:
 
 
C-2

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If to the Company:               Organic Spice Imports, Inc.
3 Empire Blvd., 5th Floor
South Hackensack, NJ 07606
Attn: Charles Saracino, Chief Executive Officer

If to Securities Holders:      to the address set forth on Schedule I.

Either party may, by like notice, change the address, person or telecopier
number to which notice shall be sent.
 
4.4.   Governing Law.  This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware applicable to agreements
executed and to be performed wholly within such State, without regard to any
principles of conflicts of law.
 
4.5.   Waiver of Jury Trial.  EACH PARTY HEREBY EXPRESSLY WAIVES ANY RIGHT TO A
TRIAL BY JURY IN THE EVENT OF ANY SUIT, ACTION OR PROCEEDING TO ENFORCE THIS
AGREEMENT OR ANY OTHER ACTION OR PROCEEDING WHICH MAY ARISE OUT OF OR IN ANY WAY
BE CONNECTED WITH THIS AGREEMENT OR ANY OF THE OTHER DOCUMENTS.
 
4.6.   Successors.  This Agreement shall be binding upon the parties and their
respective heirs, executors, administrators, legal representatives, successors
and permitted assigns; provided, however, that no party may assign this
Agreement or any of its rights under this Agreement without the prior written
consent of the other parties.
 
4.7.   Further Assurances.  Each party to this Agreement agrees, without cost or
expense to any other party, to deliver or cause to be delivered such other
documents and instruments as may be reasonably requested by any other party to
this Agreement in order to carry out more fully the provisions of, and to
consummate the transaction contemplated by, this Agreement.
 
4.8.   Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
 
4.9.   No Strict Construction.  The language used in this Agreement will be
deemed to be the language chosen by the parties with the advice of counsel to
express their mutual intent, and no rules of strict construction will be applied
against any party.
 
4.10.   Headings.  The headings in the Sections of this Agreement are inserted
for convenience only and shall not constitute a part of this Agreement.
 
[Remainder of this page intentionally left blank.]

 
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.

 
 
ORGANIC SPICE IMPORTS, INC.
     
By:  ______________________________
 
         Charles Saracino
         Chief Executive Officer
 
     
SECURITIES HOLDERS
 
________________________________
Randle Kenilworth
 
___________________________________
Peter Quigley
 
___________________________________
Donald J. Wright

 
 
C-4

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SCHEDULE I

Securities Holder
No. of Shares
No. of Warrants
 
Peter Quigley
Ch. des Cuttermers
 2 Founex
Switzerland 1297
 
3,745,762
1,694,916
 
Randle Kenilworth
3 Palmerston Court
London SW8 4AJ
 
3,745,763
1,694,915
 
Donald J. Wright
Grinian House                                           
St. Leonards Rd
Forres IV36 2RE
 
3,558,475
1,610,169

 C-5

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