Exhibit 10.1
 
AGREEMENT AND PLAN OF MERGER, dated as of August 20, 2007 (the “Agreement”),
among Feris International, Inc. a Nevada Corporation (“Feris”), Feris Merger
Sub, Inc., a California corporation and wholly owned subsidiary of Feris
(“Merger Sub”), and Patty Linson, an individual (“Shareholder”), on the one
hand; and Pro Sports & Entertainment, Inc., a California corporation (the
“Company), on the other hand. Feris, Shareholder, Merger Sub and the Company are
collectively referred to herein as the “Parties”. Feris, Shareholder and Merger
Sub are sometimes referred to herein collectively as the Feris Parties.
 
RECITALS
 
WHEREAS, the respective boards of directors of each of Feris, Merger Sub and the
Company have approved the merger of Merger Sub with and into the Company (the
“Merger”) upon the terms, and subject to the conditions, set forth in this
Agreement;
 
WHEREAS, Shareholder beneficially owns or controls an aggregate of 124,000
shares of the outstanding capital stock of Feris, representing a majority of the
outstanding shares of Feris and will benefit from the transactions contemplated
herein.
 
WHEREAS, it is intended that, for federal income tax purposes, the Merger shall
qualify as a reorganization under the provisions of Section 368(a) of the
Internal Revenue Code of 1986, as amended, and the rules and regulations
promulgated there under (the “Code”); and
 
WHEREAS, Feris, Merger Sub, Shareholder and the Company desire to make certain
representations, warranties, covenants and agreements in connection with this
Agreement.
 
NOW, THEREFORE, in consideration of the premises and mutual promises herein
made, and in consideration of the representations, warranties, covenants and
agreements herein contained, and intending to be legally bound hereby, the
Parties agree as follows:
 
ARTICLE I
DEFINITIONS
 
1.1 Certain Definitions. The following terms shall, when used in this Agreement,
have the following meanings:
 
“Acquisition” means the acquisition by a Person of any businesses, assets or
property other than in the ordinary course, whether by way of the purchase of
assets or stock, by merger, consolidation or otherwise.
 
“Affiliate” means, with respect to any Person: (i) any Person directly or
indirectly owning, controlling or holding with power to vote ten percent (10%)
or more of the outstanding voting securities of such other Person (other than
passive or institutional investors); (ii) any Person ten percent (10%) or more
of whose outstanding voting securities are directly or indirectly owned,
controlled or held with power to vote, by such other Person; (iii) any Person
directly or indirectly controlling, controlled by or under common control with
such other Person; and (iv) any officer, director or partner of such other
Person. “Control” for the foregoing purposes shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting securities or
voting interests, by contract or otherwise.
 
 
 

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“Business Day” means any day other than Saturday, Sunday or a day on which
banking institutions in Los Angeles, California, are required or authorized to
be closed.
 
“Code” means the United States Internal Revenue Code of 1986, as amended.
 
“Collateral Documents” mean the Exhibits and any other documents, instruments
and certificates to be executed and delivered by the Parties hereunder or there
under.
 
“Commission” means the Securities and Exchange Commission or any Regulatory
Authority that succeeds to its functions.
 
“Company Assets” mean all properties, assets, privileges, powers, rights,
interests and claims of every type and description that are owned, leased, held,
used or useful in the Company Business and in which the Company has any right,
title or interest or in which the Company acquires any right, title or interest
on or before the Closing Date, wherever located, whether known or unknown, and
whether or not now or on the Closing Date on the books and records of the
Company, but excluding any of the foregoing, if any, transferred prior to the
Closing pursuant to this Agreement or any Collateral Documents.
 
“Company Business” means the acquisition and operating of sports and
entertainment events.
 
“Company Common Stock” means the common shares of the Company.
 
“Company Shareholders” means, as of any particular date, the holders of Company
Common Stock on that date.
 
“Encumbrance” means any material mortgage, pledge, lien, encumbrance, charge,
security interest, security agreement, conditional sale or other title retention
agreement, limitation, option, assessment, restrictive agreement, restriction,
adverse interest, restriction on transfer or exception to or material defect in
title or other ownership interest (including restrictive covenants, leases and
licenses).
 
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
 
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations there under.
 
“GAAP” means United States generally accepted accounting principles as in effect
from time to time.
 
“Legal Requirement” means any statute, ordinance, law, rule, regulation, code,
injunction, judgment, order, decree, ruling, or other requirement enacted,
adopted or applied by any Regulatory Authority, including judicial decisions
applying common law or interpreting any other Legal Requirement.
 
 
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“Losses” shall mean all damages, awards, judgments, assessments, fines,
sanctions, penalties, charges, costs, expenses, payments, diminutions in value
and other losses, however suffered or characterized, all interest thereon, all
costs and expenses of investigating any claim, lawsuit or arbitration and any
appeal there from, all actual attorneys’, accountants’ investment bankers’ and
expert witness’ fees incurred in connection therewith, whether or not such
claim, lawsuit or arbitration is ultimately defeated and, subject to Section
9.4, all amounts paid incident to any compromise or settlement of any such
claim, lawsuit or arbitration.
 
“Liability” means any liability or obligation (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
 
“Material Adverse Effect” means a material adverse effect on (i) the assets,
Liabilities, properties or business of the Parties, (ii) the validity, binding
effect or enforceability of this Agreement or the Collateral Documents or (iii)
the ability of any Party to perform its obligations under this Agreement and the
Collateral Documents; provided, however, that none of the following shall
constitute a Material Adverse Effect on the Company: (i) the filing, initiation
and subsequent prosecution, by or on behalf of shareholders of any Party, of
litigation that challenges or otherwise seeks damages with respect to the
Merger, this Agreement and/or transactions contemplated thereby or hereby, (ii)
occurrences due to a disruption of a Party’s business as a result of the
announcement of the execution of this Agreement or changes caused by the taking
of action required by this Agreement, (iii) general economic conditions, or (iv)
any changes generally affecting the industries in which a Party operates.
 
“Merger Shares” means the shares of Feris Common Stock deliverable by Feris in
exchange for Company Common Stock pursuant to Section 2.6.
 
“Feris Assets” mean all properties, assets, privileges, powers, rights,
interests and claims of every type and description that are owned, leased, held,
used or useful in the Feris Business and in which Feris or any of its
Subsidiaries has any right, title or interest or in which Feris or any of its
Subsidiaries acquires any right, title or interest on or before the Closing
Date, wherever located, whether known or unknown, and whether or not now or on
the Closing Date on the books and records of Feris or any of its Subsidiaries.
 
“Feris Business” means the business conducted by Feris.
 
“Feris Common Stock” means the common shares of Feris.
 
“Permit” means any license, permit, consent, approval, registration,
authorization, qualification or similar right granted by a Regulatory Authority.
 
“Permitted Liens” means (i) liens for Taxes not yet due and payable or being
contested in good faith by appropriate proceedings; (ii) rights reserved to any
Regulatory Authority to regulate the affected property; (iii) statutory liens of
banks and rights of set off; (iv) as to leased assets, interests of the lessors
and sublessors thereof and liens affecting the interests of the lessors and
sublessors thereof; (v) inchoate materialmen’s, mechanics’, workmen’s,
repairmen’s or other like liens arising in the ordinary course of business; (vi)
liens incurred or deposits made in the ordinary course in connection with
workers’ compensation and other types of social security; (vii) licenses of
trademarks or other intellectual property rights granted by the Company or
Feris, as the case may be, in the ordinary course and not interfering in any
material respect with the ordinary course of the business of the Company or
Feris, as the case may be; and (viii) as to real property, any encumbrance,
adverse interest, constructive or other trust, claim, attachment, exception to
or defect in title or other ownership interest (including, but not limited to,
reservations, rights of entry, rights of first refusal, possibilities of
reverter, encroachments, easement, rights of way, restrictive covenants, leases,
and licenses) of any kind, which otherwise constitutes an interest in or claim
against property, whether arising pursuant to any Legal Requirement, under any
contract or otherwise, that do not, individually or in the aggregate, materially
and adversely affect or impair the value or use thereof as it is currently being
used in the ordinary course.
 
 
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“Person” means any natural person, corporation, partnership, trust,
unincorporated organization, association, limited liability company, Regulatory
Authority or other entity.
 
“Proposed Acquisition” means any of the following transactions (other than the
transactions contemplated by this Agreement): (i) a merger, consolidation,
business combination, recapitalization, liquidation, dissolution or similar
transaction involving the Company pursuant to which the shareholders of the
Company immediately preceding such transaction hold less than fifty percent
(50%) of the aggregate equity interests in the surviving or resulting entity of
such transaction, (ii) a sale or other disposition by the Company of assets
representing in excess of fifty percent (50%) of the aggregate fair market value
of the Company Business immediately prior to such sale or (iii) the acquisition
by any person or group (including by way of a tender offer or an exchange offer
or issuance by the Company), directly or indirectly, of beneficial ownership or
a right to acquire beneficial ownership of shares representing in excess of
fifty percent (50%) of the voting power of the then outstanding shares of
capital stock of the Company.
 
“Regulatory Authority” means: (i) the United States of America; (ii) any state,
commonwealth, territory or possession of the United States of America and any
political subdivision thereof (including counties, municipalities and the like);
(iii) Canada and any other foreign (as to the United States of America)
sovereign entity and any political subdivision thereof; or (iv) any agency,
authority or instrumentality of any of the foregoing, including any court,
tribunal, department, bureau, commission or board.
 
“Representative” means any director, officer, employee, agent, consultant,
advisor or other representative of a Person, including legal counsel,
accountants and financial advisors.
 
“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations there under.
 
“Subsidiary” of a specified Person means (a) any Person if securities having
ordinary voting power (at the time in question and without regard to the
happening of any contingency) to elect a majority of the directors, trustees,
managers or other governing body of such Person are held or controlled by the
specified Person or a Subsidiary of the specified Person; (b) any Person in
which the specified Person and its subsidiaries collectively hold a fifty
percent (50%) or greater equity interest; (c) any partnership or similar
organization in which the specified Person or subsidiary of the specified Person
is a general partner; or (d) any Person the management of which is directly or
indirectly controlled by the specified Person and its Subsidiaries through the
exercise of voting power, by contract or otherwise.
 
 
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“Tax” means any U.S. or non U.S. federal, state, provincial, local or foreign
income, gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental, customs duties, capital,
franchise, profits, withholding, social security (or similar), unemployment,
disability, real property, personal property, intangible property, recording,
occupancy, sales, use, transfer, registration, value added minimum, estimated or
other tax of any kind whatsoever, including any interest, additions to tax,
penalties, fees, deficiencies, assessments, additions or other charges of any
nature with respect thereto, whether disputed or not.
 
“Tax Return” means any return, declaration, report, claim for refund or credit
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
 
“Treasury Regulations” means regulations promulgated by the U.S. Treasury
Department under the Code.
 
1.2 Other Definitions. The following terms shall, when used in this Agreement,
have the meanings assigned to such terms in the Sections indicated.
 
Term
 
Schedule
“Agreement”
 
Preamble
“Bridge Financing
 
8.12
“CCC”
 
2.1
“Certificate of Merger”
 
2.5
“Closing”.
 
2.12
“Closing Date”
 
2.12
“Company Common Stock”
 
2.7(a)
“Company Certificates”
 
2.7(a)
“Company Financial Statements”
 
3.8
“Company Intellectual Property Rights”
 
3.6
“Company Option”
 
2.6(b)
“Conversion”
 
2.6(a)(ii)
“Current Market Price”
 
2.7(a)
“Dissenting Shares”
 
2.9
“Effective Time”
 
2.5
“Excluded Shares”
 
2.6(a)
“Material Company Contract”
 
3.4
“Material Feris Contract”
 
4.4
“Merger”
 
2.1
“Options”
 
3.2(b)
“Parties”
 
Preamble
“Preferred Shares”
 
2.6(a)(ii)
“Share Cancellation”
 
6.10
“Share Increase Authorization”
 
6.9
“Shareholder Meeting”
 
5.6
“Surviving Corporation”
 
2.1

 
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ARTICLE II
THE MERGER
 
2.1 Merger; Surviving Corporation. In accordance with and subject to the
provisions of this Agreement and the California Corporations Code (“CCC”), at
the Effective Time, Merger Sub shall be merged with and into the Company (the
“Merger”), and the Company shall be the surviving corporation in the Merger
(hereinafter sometimes called the “Surviving Corporation”) and shall continue
its corporate existence under the laws of the State of California, and shall
immediately effect a name change. At the Effective Time, the separate existence
of the Company shall cease. All properties, franchises and rights belonging to
the Company and Feris, by virtue of the Merger and without further act or deed,
shall be vested in the Surviving Corporation, which shall thenceforth be
responsible for all the liabilities and obligations of each of Feris and the
Company. For avoidance of doubt, upon the Effective Time, the Company will
become a wholly owned subsidiary of Feris.
 
2.2 Articles of Incorporation. The Company’s articles of incorporation, as in
effect at the Effective Time, shall continue in full force and effect as the
articles of incorporation of the Surviving Corporation until altered or amended
as provided therein or by law.
 
2.3 By Laws. The Company’s by laws, as in effect at the Effective Time, shall be
the by laws of the Surviving Corporation until altered, amended or repealed as
provided therein or by law.
 
2.4 (Intentionally deleted)
 
2.5 Effective Time. The Merger shall become effective at the time and date that
the certificate of merger of each of the Merger Sub and the Company (the
“Certificate of Merger”), in form and substance acceptable to the Parties, is
accepted for filing by the Secretary of State of the State of California in
accordance with the provisions related thereto. The Certificate of Merger shall
be executed by Merger Sub and the Company and delivered to the Secretary of
State of the State of California for filing on the Closing Date. The date and
time when the Merger becomes effective are referred to herein as the “Effective
Time.”
 
2.6 Merger Shares; Conversion and Cancellation of Securities.
 
(a) Conversion of Company Common Stock. At the Effective Time, all shares of
Company Common Stock outstanding immediately before the Effective Time, other
than shares described in Section 2.6(c) and other than Dissenting Shares (as
defined in Section 2.9 below), collectively, the “Excluded Shares”, shall be
converted, by virtue of the Merger, into 36,000,000 shares of Feris Common Stock
(the “Merger Shares”) so that the holders of Company Common Stock will upon
conversion of the Merger Shares own approximately 85.22% of Feris’ issued and
outstanding capital stock (on a fully diluted basis) as of the Effective Date
after giving effect to the Merger and any shares issuable upon a possible
conversion of the Convertible Note referred to in Section 8.7 below if such Note
is converted after the Closing, subject to the following:
 
(i) The allocation of the Merger Shares among the Company Shareholders excluding
the holders of Dissenting Shares shall be delivered to Feris at least one
business day prior to the Closing;
 
 
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At the Effective Time, all Company Shares shall no longer be outstanding and
shall be cancelled and retired and shall cease to exist, and each certificate
formerly representing any Company Common Stock (other than Excluded Shares)
shall thereafter represent only the right to the Merger Shares and any
distribution or dividend pursuant to Section .
 
(b) Stock Options. At the Effective Time, each outstanding option to purchase
Company Common Stock (a “Company Option”), whether vested or unvested, shall be
deemed to constitute an option to acquire, on the same terms and conditions as
were applicable under such Company Option, the same number of shares of Feris
Common Stock as the holder of such Company Option would have been entitled to
receive pursuant to the Merger had such holder exercised such option in full
immediately prior to the Effective Time (rounded up to the nearest whole
number), at a price per share (rounded up to the nearest whole cent) equal to
(i) the aggregate exercise price for the Company Common Stock otherwise
purchasable pursuant to such Company Option divided by (ii) the number of full
shares of Feris Common Stock deemed purchasable pursuant to such Company Option
in accordance with the foregoing. At or prior to the Effective Time, Feris shall
take all corporate action necessary to reserve for issuance a sufficient number
of Feris Common Stock for delivery upon exercise of Company Options assumed by
it in accordance with this Section.
 
(c) Treasury Shares, Etc. Each share of Company Common Stock held in the
treasury of the Company and (each share of Company Common Stock, if any, held by
Feris or of the Company immediately before the Effective Time) shall be
cancelled and extinguished, and nothing shall be issued or paid in respect
thereof.
 
(d) Fractional Shares. No certificates or scrip evidencing fractional shares of
Feris Preferred Stock shall be issued in exchange for Company Common Stock. All
fractional share amounts shall be rounded up to the nearest whole share.
 
2.7 Surrender of Company Certificates.
 
(a) Exchange Procedures. Promptly after the Effective Time, Feris or its
appointed designee shall mail to each holder of a certificate or certificates of
Company Common Stock (“Company Certificates”) whose shares are converted into
the right to receive the Merger Shares, (i) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Company Certificates shall pass to Feris, only upon delivery of the Company
Certificates to Feris and which shall be in such form and have such other
provisions as Feris may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Company Certificates in exchange for the Merger
Shares and any dividends or other distributions pursuant to Section. Upon
surrender of Company Certificates for cancellation to Feris, together with such
letter of transmittal, duly completed and validly executed in accordance with
the instructions thereto, the holders of such Company Certificates shall be
entitled to receive the Merger Shares in exchange therefore and the Company
Certificates so surrendered shall forthwith be canceled. Notwithstanding the
foregoing, if any Company Certificate is lost, stolen, destroyed or mutilated,
such holder shall provide evidence reasonably satisfactory to Feris as to such
loss, theft, destruction or mutilation and an affidavit in form and substance
satisfactory to Feris, and, thereupon, such holder shall be entitled to receive
the Merger Shares in exchange therefore and the Company Certificates so
surrendered shall forthwith be canceled.
 
 
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(b) Required Withholding. In connection with any payment to any holder or former
holder of the Company Common Stock, each of Feris and the Surviving Corporation
shall be entitled to deduct and withhold from any consideration payable or
otherwise deliverable pursuant to this Agreement to any holder or former holder
of the Company Common Stock such amounts as may be required to be deducted or
withheld there from under the Code or under any provision of state, local or
foreign tax law or under any other applicable laws. To the extent such amounts
are so deducted or withheld, such amounts shall be treated for all purposes
under this Agreement as having been paid to the person to whom such amounts
would otherwise have been paid.
 
(c) No Liability. Notwithstanding anything to the contrary in this Section 2.7,
neither Feris, the Surviving Corporation nor any party hereto shall be liable to
any Person for any amount properly paid to a public official pursuant to any
applicable abandoned property, escheat or similar law. If any Company
Certificate shall not have been surrendered prior to the date immediately prior
to the date on which such property would otherwise escheat to or become the
property of any Governmental or Regulatory Authority, any such property, to the
extent permitted by applicable law, shall become the property of the Surviving
Corporation, free and clear of all claims or interest of any person previously
entitled thereto.
 
(d) Termination. Any holders of the Company Certificates who have not complied
with this ARTICLE II shall look only to Feris or the Surviving Corporation for,
and Feris and the Surviving Corporation shall remain liable for, payment of
their claim for Merger Shares and any dividends or distributions with respect to
Feris Common Stock, without interest thereon.
 
2.8 Stock Transfer Books. At the Effective Time, the stock transfer books of the
Company shall be closed, and there shall be no further registration of transfers
of shares of Company Common Stock thereafter on the records of the Company.
 
2.9 Dissenting Shares. Shares of Company Common Stock which are issued and
outstanding immediately prior to the Effective Time and which are held by
persons who have properly exercised, and not withdrawn or waived, appraisal
rights with respect thereto in accordance with the CCC (the “Dissenting
Shares”), will not be converted into the right to receive the Merger Shares, and
holders of such shares of Company Common Stock will be entitled, in lieu
thereof, to receive payment of the appraised value of such shares of Company
Common Stock in accordance with the provisions of the CCC unless and until such
holders fail to perfect or effectively withdraw or lose their rights to
appraisal and payment under the CCC. If, after the Effective Time, any such
holder fails to perfect or effectively withdraws or loses such right, such
shares of Company Common Stock will thereupon be treated as if they had been
converted at the Effective Time into the right to receive the Merger Shares,
without any interest thereon. The Company will give Feris prompt notice of any
demands received by the Company for appraisal of shares of Company Common Stock.
Prior to the Effective Time, the Company will not, except with the prior written
consent of Feris make any payment with respect to, or settle or offer to settle,
any such demands.
 
 
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2.10 Restriction on Transfer. The Merger Shares may not be sold, transferred, or
otherwise disposed of without registration under the Act or an exemption there
from, and that in the absence of an effective registration statement covering
the Merger Shares or any available exemption from registration under the Act,
the Merger Shares must be held indefinitely. The Company Shareholders are aware
that the Merger Shares may not be sold pursuant to Rule 144 promulgated under
the Act unless all of the conditions of that Rule are met. Among the conditions
for use of Rule 144 may be the availability of current information to the public
about Feris.
 
2.11 Restrictive Legend. All certificates representing the Merger Shares shall
contain the following legend:
 
“THE SECURITIES REPRESENTED BY THIS CERTIFICATE, ARE SUBJECT TO THE TERMS OF AN
AGREEMENT AND PLAN OF MERGER, DATED AS OF AUGUST 8, 2007, BETWEEN FERIS
INTERNATIONAL, INC., FERIS MERGER SUB, INC., PETER BERNEY AND PRO SPORTS &
ENTERTAINMENT, INC., A COPY OF WHICH IS ON FILE IN THE PRINCIPAL OFFICE OF THE
ISSUER. FURTHER, THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,
TRANSFERRED, OR OTHERWISE DISPOSED OF WITHOUT REGISTRATION UNDER THE ACT OR AN
EXEMPTION THEREFROM.”
 
2.12 Closing. The closing of the transactions contemplated by this Agreement and
the Collateral Documents (the “Closing”) shall take place at the offices of Troy
& Gould, 1801 Century Park East, Sixteenth Floor, Los Angeles, California 90067,
or at such other location as the parties may agree at 11:00 a.m., Pacific Time
on the agreed date, which, shall be within sixty (60) days of the signing hereof
(the “Closing Date”).
 
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
 
The Company represents and warrants to Feris that the statements contained in
this ARTICLE III are correct and complete as of the date of this Agreement and,
except as provided in Section 7.1, will be correct and complete as of the
Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this ARTICLE III, except
in the case of representations and warranties stated to be made as of the date
of this Agreement or as of another date and except for changes contemplated or
permitted by this Agreement).
 
 
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3.1 Organization and Qualification. The Company is a corporation duly organized,
validly existing and in good standing under the laws of its respective
jurisdiction of organization. The Company has all requisite power and authority
to own, lease and use its assets as they are currently owned, leased and used
and to conduct its business as it is currently conducted. The Company is duly
qualified or licensed to do business in and is in good standing in each
jurisdiction in which the character of the properties owned, leased or used by
it or the nature of the activities conducted by it make such qualification
necessary, except any such jurisdiction where the failure to be so qualified or
licensed would not have a Material Adverse Effect on the Company or a material
adverse effect on the validity, binding effect or enforceability of this
Agreement or the Collateral Documents or the ability of the Company to perform
its obligations under this Agreement or any of the Collateral Documents.
 
3.2 Capitalization.
 
(a) The authorized capital stock and other ownership interests of the Company
consist of 45,000,000 shares of common stock, of which thirteen million three
hundred and eighty four thousand three hundred and fifty nine (13,575,541)
shares were issued and outstanding as of the date hereof, and 0 shares of
Preferred Stock, none of which are outstanding. All of the outstanding Company
Common Stock have been duly authorized and are validly issued, fully paid and
nonassessable. It is anticipated that the number of shares of Company Common
Stock will increase as a result of private placements to be conducted after the
date hereof.
 
(b) Schedule 3.2(b)(i) lists all outstanding or authorized options, warrants,
purchase rights, preemptive rights or other contracts or commitments that could
require the Company to issue, sell, or otherwise cause to become outstanding any
of its capital stock or other ownership interests (collectively “Options”).
 
(c) All of the issued and outstanding shares of Company Common Stock have been
duly authorized and are validly issued and outstanding, fully paid and
nonassessable and have been issued in compliance with applicable securities laws
and other applicable Legal Requirements or transfer restrictions under
applicable securities laws.
 
3.3 Authority and Validity. The Company has all requisite corporate power to
execute and deliver, to perform its obligations under, and to consummate the
transactions contemplated by, this Agreement (subject to the approval of the
Company Shareholders as contemplated by Section 5.4 and to receipt of any
consents, approvals, authorizations or other matters referred to in Section
5.4). The execution and delivery by the Company of, the performance by the
Company of its obligations under, and the consummation by the Company of the
transactions contemplated by, this Agreement have been duly authorized by all
requisite action of the Company (subject to the approval of the Company
Shareholders as contemplated by Section 5.4). This Agreement has been duly
executed and delivered by the Company and (assuming due execution and delivery
by the Feris Parties and approval by the Company Shareholders) is the legal,
valid, and binding obligation of the Company, enforceable against it in
accordance with its terms, except that such enforcement may be subject to (i)
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting or relating to enforcement of creditors’ rights generally and (ii)
general equitable principles. Upon the execution and delivery of the Collateral
Documents by each Person (other than by the Feris Parties) that is required by
this Agreement to execute, or that does execute, this Agreement or any of the
Collateral Documents, and assuming due execution and delivery thereof by the
Feris Parties, the Collateral Documents will be the legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms, except that such enforcement may be subject to (i)
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting or relating to enforcement of creditors’ rights generally and (ii)
general equitable principles.
 
 
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3.4 No Breach or Violation. Subject to obtaining the consents, approvals,
authorizations, and orders of and making the registrations or filings with or
giving notices to Regulatory Authorities and Persons identified herein, the
execution, delivery and performance by the Company of this Agreement and the
Collateral Documents to which it is a party, and the consummation of the
transactions contemplated hereby and thereby in accordance with the terms and
conditions hereof and thereof, do not and will not conflict with, constitute a
violation or breach of, constitute a default or give rise to any right of
termination or acceleration of any right or obligation of the Company under, or
result in the creation or imposition of any Encumbrance upon the Company, the
Company Assets, the Company Business or the Company Common Stock by reason of
the terms of (i) the articles of incorporation, by laws or other charter or
organizational document of the Company or any Subsidiary of the Company, (ii)
any material contract, agreement, lease, indenture or other instrument to which
the Company is a party or by or to which the Company, or the Assets may be bound
or subject and a violation of which would result in a Material Adverse Effect on
the Company, (iii) any order, judgment, injunction, award or decree of any
arbitrator or Regulatory Authority or any statute, law, rule or regulation
applicable to the Company or (iv) any Permit of the Company, which in the case
of (ii), (iii) or (iv) above would have a Material Adverse Effect on the Company
or a material adverse effect on the validity, binding effect or enforceability
of this Agreement or the Collateral Documents or the ability of the Company to
perform its obligations under this Agreement or any of the Collateral Documents.
 
3.5 Consents and Approvals. No consent, approval, authorization or order of,
registration or filing with, or notice to, any Regulatory Authority or any other
Person is necessary to be obtained, made or given by the Company in connection
with the execution, delivery and performance by the Company of this Agreement or
any Collateral Document or for the consummation by the Company of the
transactions contemplated hereby or thereby, except to the extent the failure to
obtain any such consent, approval, authorization or order or to make any such
registration or filing would not have a Material Adverse Effect on the Company
or a material adverse effect on the validity, binding effect or enforceability
of this Agreement or the Collateral Documents or the ability of the Company to
perform its obligations under this Agreement or any of the Collateral Documents.
 
3.6 Intellectual Property. To the knowledge of the Company, the Company has good
title to or the right to use all material company intellectual property rights
and all material inventions, processes, designs, formulae, trade secrets and
know how necessary for the operation of the Company Business without the payment
of any royalty or similar payment.
 
 
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3.7 Compliance with Legal Requirements. The Company has operated the Company
Business in compliance with all Legal Requirements applicable to the Company
except to the extent the failure to operate in compliance with all material
Legal Requirements would not have a Material Adverse Effect on the Company or
Material Adverse Effect on the validity, binding effect or enforceability of
this Agreement or the Collateral Documents.
 
3.8 Financial Statements. Prior to the Closing Date, the Company shall provide
Feris with audited balance sheets of the Company as of December 31, 2005 and
December 31, 2006 and statements of operations, stockholders’ equity and cash
flows for the years then ended,. Such financial statements (“Company Financial
Statements”) have or will have been prepared in accordance with U.S. generally
accepted accounting principles (“GAAP”) applied on a basis consistent throughout
all periods presented, present fairly in all material respects the financial
condition of the Company and its results of operations as of the date and for
the periods indicated.
 
3.9 Litigation. Except as set forth on Item 3.9 of the Disclosure Schedule,
there are no outstanding judgments or orders against or otherwise affecting or
related to the Company, the Company Business or the Company Assets and there is
no action, suit, complaint, proceeding or investigation, judicial,
administrative or otherwise, that is pending or, to the Company’s knowledge,
threatened that, if adversely determined, would have a Material Adverse Effect
on the Company or a material adverse effect on the validity, binding effect or
enforceability of this Agreement or the Collateral Documents, except as noted in
the audited Company Financial Statements or documented by the Company to Feris.
 
3.10 Taxes. The Company has duly and timely filed in proper form all Tax Returns
for all Taxes required to be filed with the appropriate Regulatory Authority,
and has paid all taxes required to be paid in respect thereof except where such
failure would not have a Material Adverse Effect on the Company, except where,
if not filed or paid, the exception(s) have been documented by the Company to
Feris.
 
3.11 Books and Records. The books and records of the Company accurately and
fairly represent the Company Business and its results of operations in all
material respects.
 
3.12 Brokers or Finders. Except as set forth on Item 3.12 of the Disclosure
Schedule, all negotiations relative to this Agreement and the transactions
contemplated hereby have been carried out by the Company or any of its
Affiliates in connection with the transactions contemplated by this Agreement,
and with the exception of certain Investment Banking fees, for which the Company
is obligated, neither the Company, nor any of its Affiliates has incurred any
obligation to pay any brokerage or finder’s fee or other commission in
connection with the transaction contemplated by this Agreement.
 
3.13 Proxies. Company management holds, or prior to the Closing will hold,
irrevocable proxies from the Company Shareholders adequate to ensure Company
Shareholder approval of the Merger as required by applicable law.
 
 
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3.14 Disclosure. No representation or warranty of the Company in this Agreement
or in the Collateral Documents and no statement in any certificate furnished or
to be furnished by the Company pursuant to this Agreement contained, contains or
will contain on the date such agreement or certificate was or is delivered, or
on the Closing Date, any untrue statement of a material fact, or omitted, omits
or will omit on such date to state any material fact necessary in order to make
the statements made, in light of the circumstances under which they were made,
not misleading.
 
3.15 No Undisclosed Liabilities. The Company is not subject to any material
liability (including unasserted claims), absolute or contingent, which is not
shown or which is in excess of amounts shown or reserved for in the audited
balance sheet as of December 31, 2006, other than liabilities of the same nature
as those set forth in the Company Financial Statements and reasonably incurred
in the ordinary course of its business after December 31, 2006.
 
3.16 Absence of Certain Changes. Except as set forth as Item 3.16 of the
Company’s Disclosure Schedule hereto, since December 31, 2006, the Company has
not: (a) suffered any material adverse change in its financial condition,
assets, liabilities or business; (b) contracted for or paid any capital
expenditures; (c) incurred any indebtedness or borrowed money, issued or sold
any debt or equity securities, declared any dividends or discharged or incurred
any liabilities or obligations except in the ordinary course of business as
heretofore conducted; (d) mortgaged, pledged or subjected to any lien, lease,
security interest or other charge or encumbrance any of its properties or
assets; (e) paid any material amount on any indebtedness prior to the due date,
forgiven or cancelled any material amount on any indebtedness prior to the due
date, forgiven or cancelled any material debts or claims or released or waived
any material rights or claims; (f) suffered any damage or destruction to or loss
of any assets (whether or not covered by insurance); (g) acquired or disposed of
any assets or incurred any liabilities or obligations; (h) made any payments to
its affiliates or associates or loaned any money to any person or entity; (i)
formed or acquired or disposed of any interest in any corporation, partnership,
limited liability company, joint venture or other entity; (j) entered into any
employment, compensation, consulting or collective bargaining agreement or any
other agreement of any kind or nature with any person. or group, or modified or
amended in any respect the terms of any such existing agreement; (k) entered
into any other commitment or transaction or experience any other event that
relates to or affect in any way this Agreement or to the transactions
contemplated hereby, or that has affected, or may adversely affect the Company’s
business, operations, assets, liabilities or financial condition; or (1) amended
its Articles of Organization or By-laws, except as otherwise contemplated
herein.
 
3.17 Contracts. Item 3.17 of the Company’s Disclosure Schedule is a true and
complete list of all contracts, agreements, leases, commitments or other
understandings or arrangements, written or oral, express or implied, to which
the Company is a party or by which it or any of its property is bound or
affected requiring payments to or from, or incurring of liabilities by, the
Company in excess of $100,000 (the “Contracts”). Except as set forth as Item
3.17 of the Company’s Disclosure Schedule, the Company has complied with and
performed, in all material respects, all of its obligations required to be
performed under and is not in default with respect to any of the Contracts, as
of the date hereof, nor bas any event occurred which has not been cured which,
with or without the giving of notice, lapse of time, or both, would constitute a
default in any respect there under. To the best knowledge of the Company, no
other party has failed to comply with or perform, in all material respects, any
of its obligations required to be performed under or is in material default with
respect to any such Contracts, as of the date hereof, nor has any event occurred
which, with or without the giving of notice, lapse of time or both, would
constitute a material default in any respect by such party there under. Except
as set forth as Item 3.17 of the Company’s Disclosure Schedule, the Company
knows of and has no reason to believe that there are any facts or circumstances
which would make a material default by any party to any contract or obligation
likely to occur subsequent to the date hereof.
 
 
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3.18 Permits and Licenses. The Company has all certificates of occupancy,
rights, permits, certificates, licenses, franchises, approvals and other
authorizations as are reasonably necessary to conduct its business and to own,
lease, use, operate and occupy its assets, at the places and in the manner now
conducted and operated, except those the absence of which would not materially
adversely affect its business. The Company has not received any written or oral
notice or claim pertaining to the failure to obtain any material permit,
certificate, license, approval or other authorization required by any federal,
state or local agency or other regulatory body, the failure of which to obtain
would materially and adversely affect its business.
 
3.19 Assets Necessary to Business. The Company owns or leases all properties and
assets, real, personal, and mixed, tangible and intangible, and is a party to
all licenses, permits and other agreements necessary to permit it to carry on
its business as presently conducted.
 
3.20 Labor Agreements and Labor Relations. The Company has no collective
bargaining or union contracts or agreements. The Company is in compliance with
all applicable laws respecting employment and employment practices, terms and
conditions of employment and wages and hours, and is not engaged in any unfair
labor practices; there are no charges of discrimination or unfair labor practice
charges” or complaints against the Company pending or threatened before any
governmental or regulatory agency or authority; and, there is no labor strike,
dispute, slowdown or stoppage actually pending or threatened against or
affecting the Company.
 
3.21 Employment Arrangements. Except as set forth as Item 3.21 of the Company’s
Disclosure Schedule hereto, the Company has no employment or consulting
agreements or arrangements, written or oral, which are not terminable at the
will of the Company, or any pension, profit-sharing, option, other incentive
plan, or any other type of employment benefit plan as defined in ERISA or
otherwise, or any obligation to or customary arrangement with employees for
bonuses, incentive compensation, vacations, severance pay, insurance or other
benefits. No employee of the Company is in violation of any employment agreement
or restrictive covenant.
 
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE Feris PARTIES
 
Each of the Feris Parties, jointly and severally, represents and warrants to the
Company that the statements contained in this ARTICLE IV are correct and
complete as of the date of this Agreement and, except as provided in Section
8.1, will be correct and complete as of the Closing Date (as though made then
and as though the Closing Date were substituted for the date of this Agreement
throughout this ARTICLE IV, except in the case of representations and warranties
stated to be made as of the date of this Agreement or as of another date and
except for changes contemplated or permitted by the Agreement).
 
 
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4.1 Organization and Qualification. Each of Feris and Merger Sub is a
corporation duly organized, validly existing and in good standing under the laws
of Nevada and California, respectively. Each of Feris and Merger Sub has all
requisite power and authority to own, lease and use its assets as they are
currently owned, leased and used and to conduct its business as it is currently
conducted. Feris is duly qualified or licensed to do business in and are each in
good standing in each jurisdiction in which the character of the properties
owned, leased or used by it or the nature of the activities conducted by it
makes such qualification necessary, except any such jurisdiction where the
failure to be so qualified or licensed and in good standing would not have a
Material Adverse Effect on Feris or a Material Adverse Effect on the validity,
binding effect or enforceability of this Agreement or the Collateral Documents
or the ability of the Company or Feris to perform its obligations under this
Agreement or any of the Collateral Documents.
 
4.2 Capitalization.
 
(a) The authorized capital stock of Feris consists of 200,000,000 shares of
Common Stock of which there are 240,474 shares issued and outstanding. The
shares of Feris Common Stock included in the Merger Shares, when issued in
accordance with this Agreement, will have been duly authorized, validly issued
and outstanding and will be fully paid and non-assessable. Immediately upon
execution hereon.
 
(b) Schedule 4.2(b) lists all outstanding or authorized options, warrants,
purchase rights, preemptive rights or other contracts or commitments that could
require Feris or any of its Subsidiaries to issue, sell, or otherwise cause to
become outstanding any of its capital stock or other ownership interests.
 
(c) All of the issued and outstanding shares of Feris Capital Stock have been
duly authorized and are validly issued and outstanding, fully paid and
nonassessable (with respect to Subsidiaries that are corporations) and have been
issued in compliance with applicable securities laws and other applicable Legal
Requirements.
 
4.3 Authority and Validity. Each Feris Party has all requisite power to execute
and deliver, to perform its obligations under, and to consummate the
transactions contemplated by, this Agreement and the Collateral Documents. The
execution and delivery by each Feris Party of the performance by each Feris
Party of its obligations under, and the consummation by each Feris Party of the
transactions contemplated by, this Agreement and the Collateral Documents have
been duly authorized by all requisite action of each Feris Party. This Agreement
has been duly executed and delivered by each of the Feris Parties and (assuming
due execution and delivery by the Company) is the legal, valid and binding
obligation of each Feris Party, enforceable in accordance with its terms except
that such enforcement may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting or relating to
enforcement of creditors’ rights generally and (ii) general equitable
principles. Upon the execution and delivery by each of the Feris Parties of the
Collateral Documents to which each of them is a party, and assuming due
execution and delivery thereof by the other parties thereto, the Collateral
Documents will be the legal, valid and binding obligations of each such Person,
as the case may be, enforceable against each of them in accordance with their
respective terms except that such enforcement may be subject to (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting or
relating to enforcement of creditors’ rights generally and (ii) general
equitable principles.
 
 
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4.4 No Breach or Violation. Subject to obtaining the consents, approvals,
authorizations, and orders of and making the registrations or filings with or
giving notices to Regulatory Authorities and Persons identified herein, the
execution, delivery and performance by the Feris Parties of this Agreement and
the Collateral Documents to which each is a party and the consummation of the
transactions contemplated hereby and thereby in accordance with the terms and
conditions hereof and thereof, do not and will not conflict with, constitute a
violation or breach of, constitute a default or give rise to any right of
termination or acceleration of any right or obligation of any Feris Party under,
or result in the creation or imposition of any Encumbrance upon the property of
any Feris Party by reason of the terms of (i) the articles of incorporation, by
laws or other charter or organizational document of any Feris Party, (ii) any
contract, agreement, lease, indenture or other instrument to which any Feris
Party is a party or by or to which any Feris Party or its property may be bound
or subject and a violation of which would result in a Material Adverse Effect on
Feris taken as a whole, (iii) any order, judgment, injunction, award or decree
of any arbitrator or Regulatory Authority or any statute, law, rule or
regulation applicable to any Feris Party or (iv) any Permit of Feris or Merger
Sub, which in the case of (ii), (iii) or (iv) above would have a Material
Adverse Effect on Feris or a material adverse effect on the validity, binding
effect or enforceability of this Agreement or the Collateral Documents or the
ability of any Feris Party to perform its obligations hereunder or there under.
 
4.5 Consents and Approvals. Except for requirements under applicable United
States or state securities laws, no consent, approval, authorization or order
of, registration or filing with, or notice to, any Regulatory Authority or any
other Person is necessary to be obtained, made or given by any Feris Party in
connection with the execution, delivery and performance by them of this
Agreement or any Collateral Documents or for the consummation by them of the
transactions contemplated hereby or thereby, except to the extent the failure to
obtain such consent, approval, authorization or order or to make such
registration or filings or to give such notice would not have a Material Adverse
Effect on Feris or a material adverse effect on the validity, binding effect or
enforceability of this Agreement or the Collateral Documents or the ability of
the Company or Feris to perform its obligations under this Agreement or any of
the Collateral Documents.
 
4.6 Compliance with Legal Requirements. Feris has operated the Feris Business in
compliance with all material Legal Requirements including, without limitation,
the Exchange Act and the Securities Act applicable to Feris, except to the
extent the failure to operate in compliance with all material Legal
Requirements, would not have a Material Adverse Effect on Feris or a Material
Adverse Effect on the validity, binding effect or enforceability of this
Agreement or the Collateral Documents.
 
4.7 Litigation. There are no outstanding judgments or orders against or
otherwise affecting or related to Feris, or their business or assets; and there
is no action, suit, complaint, proceeding or investigation, judicial,
administrative or otherwise, that is pending or, to the best knowledge of Feris,
threatened that, if adversely determined, would have a Material Adverse Effect
on Feris or a material adverse effect on the validity, binding effect or
enforceability of this Agreement or the Collateral Documents.
 
 
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4.8 Ordinary Course. Since the date of the balance sheet included in the most
recent Feris Securities Filings filed through the date hereof, there has not
been any occurrence, event, incident, action, failure to act or transaction
involving Feris which is reasonably likely, individually or in the aggregate, to
have a Material Adverse Effect on Feris.
 
4.9 Assets and Liabilities. As of the date of this Agreement, neither Feris nor
any of its Subsidiaries has any Assets or Liability, except for the (i) Assets
and Liabilities disclosed in the balance sheet included in the most recent Feris
Securities Filings filed through the date hereof or disclosed on Schedule 4.9
and (ii) Liabilities incurred in connection with this Agreement.
 
4.10 Taxes. Feris has, and each of its Subsidiaries has, duly and timely filed
in proper form all Tax Returns for all Taxes required to be filed with the
appropriate Governmental Authority, except where such failure to file would not
have a Material Adverse Effect on Feris.
 
4.11 Books and Records. The books and records of Feris and its Subsidiaries
accurately and fairly represent the Feris Business and its results of operations
in all material respects. All accounts receivable and inventory of the Feris
Business are reflected properly on such books and records in all material
respects.
 
4.12 Financial and Other Information.
 
For at least the past five full fiscal years, Feris has not conducted any
business, generated any revenues or incurred any liabilities except for
liabilities not to exceed $85,000 for maintaining the corporate books and
records which liabilities are evidenced by a convertible note (the “Convertible
Note”).
 
4.13 Brokers or Finders. Except as set forth in Item 4.13 of the Disclosure
Schedule, no broker or finder has acted directly or indirectly for Feris in
connection with the transactions contemplated by this Agreement, and Feris has
not incurred any obligation to pay any brokerage or finder’s fee or other
commission in connection with the transaction contemplated by this Agreement.
 
4.14 Disclosure. No representation or warranty of Feris in this Agreement or in
the Collateral Documents and no statement in any certificate furnished or to be
furnished by Feris pursuant to this Agreement contained, contains or will
contain on the date such agreement or certificate was or is delivered, or on the
Closing Date, any untrue statement of a material fact, or omitted, omits or will
omit on such date to state any material fact necessary in order to make the
statements made, in light of the circumstances under which they were made, not
misleading.
 
4.15 Conduct of Business. Prior to the Closing Date, Feris shall conduct its
business in the normal course, and shall not sell, pledge, or assign any assets,
without the prior written approval of the Company, except in the regular course
of business. Except as otherwise provided herein, Feris shall not amend its
Articles of Incorporation or By-Laws, declare dividends, redeem or sell stock or
other securities, acquire or dispose of fixed assets, change employment terms,
enter into any material or long-term contract, guarantee obligations of any
third party, settle or discharge any material balance sheet receivable for less
than its stated amount, pay more on any liability than its stated amount or
enter into any other transaction other than in the regular course of business.
 
 
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ARTICLE V
COVENANTS OF THE COMPANY
 
Between the date of this Agreement and the Closing Date:
 
5.1 Additional Information. The Company shall provide to Feris and its
Representatives such financial, operating and other documents, data and
information relating to the Company, the Company Business and the Company Assets
and Liabilities of the Company, as Feris or its Representatives may reasonably
request. In addition, the Company shall take all action necessary to enable
Feris and its Representatives to review, inspect and audit the Company Assets,
the Company Business and Liabilities of the Company and discuss them with the
Company’s officers, employees, independent accountants, customers, licensees,
and counsel. Notwithstanding any investigation that Feris may conduct of the
Company, the Company Business, the Company Assets and the Liabilities of the
Company, Feris may fully rely on the Company’s warranties, covenants and
indemnities set forth in this Agreement.
 
5.2 Consents and Approvals. As soon as practicable after execution of this
Agreement, the Company shall use commercially reasonable efforts to obtain any
necessary consent, approval, authorization or order of, make any registration or
filing with or give any notice to, any Regulatory Authority or Person as is
required to be obtained, made or given by the Company to consummate the
transactions contemplated by this Agreement and the Collateral Documents.
 
5.3 Non-circumvention. It is understood that in connection with the transactions
contemplated hereby, Feris has been and will be seeking to find investors
willing to provide loans and/or capital investments to finance business plans.
In connection therewith, the Company will not, and it will cause its directors,
officers, employees, agents and representatives not to attempt, directly or
indirectly, (i) to contact any party introduced to it by Feris, or (ii) deal
with, or otherwise become involved in any transaction with any party which has
been introduced to it by Feris, without the express written permission of the
introducing party and without having entered into a commission agreement with
the introducing party. Any violation of the covenant shall be deemed an attempt
to circumvent Feris, and the party so violating this covenant shall be liable
for damages in favor of the circumvented party.
 
5.4 No Solicitations. From and after the date of this Agreement until the
Effective Time or termination of this Agreement pursuant to ARTICLE X, the
Company will not nor will it authorize or permit any of its officers, directors,
affiliates or employees or any investment banker, attorney or other advisor or
representative retained by it, directly or indirectly, (i) solicit or initiate
the making, submission or announcement of any other acquisition proposal, (ii)
participate in any discussions or negotiations regarding, or furnish to any
person any non public information with respect to any other acquisition
proposal, (iii) engage in discussions with any Person with respect to any other
acquisition proposal, except as to the existence of these provisions, (iv)
approve, endorse or recommend any other acquisition proposal or (v) enter into
any letter of intent or similar document or any contract agreement or commitment
contemplating or otherwise relating to any other acquisition proposal.
 
 
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5.5 Notification of Adverse Change. The Company shall promptly notify Feris of
any material adverse change in the condition (financial or otherwise) of the
Company.
 
5.6 Meeting of the Company Shareholders. Promptly after the date hereof, if
required under applicable law, the Company will take all action necessary in
accordance with its articles of incorporation and by-laws to convene a meeting
of the Company’s shareholders to consider the adoption and approval of this
Agreement and approval of the Merger to be held as promptly as practicable. The
Company will use its reasonable efforts to solicit from its shareholders proxies
in favor of the adoption and approval of this Agreement and the approval of the
Merger and will take all other action necessary or advisable to secure the vote
or consent of its shareholders required by the CCC to obtain such approvals. In
lieu of such meeting, the adoption and approval of this Agreement and the Merger
may be approved by shareholder consent.
 
5.7 Notification of Certain Matters. The Company shall promptly notify Feris of
any fact, event, circumstance or action known to it that is reasonably likely to
cause the Company to be unable to perform any of its covenants contained herein
or any condition precedent in ARTICLE VII not to be satisfied, or that, if known
on the date of this Agreement, would have been required to be disclosed to Feris
pursuant to this Agreement or the existence or occurrence of which would cause
any of the Company’s representations or warranties under this Agreement not to
be correct and/or complete. The Company shall give prompt written notice to
Feris of any adverse development causing a breach of any of the representations
and warranties in ARTICLE III as of the date made.
 
5.8 Company Disclosure Schedule. The Company shall, from time to time prior to
Closing, supplement the Company Disclosure Statement with additional information
that, if existing or known to it on the date of delivery to Feris, would have
been required to be included therein. For purposes of determining the
satisfaction of any of the conditions to the obligations of Feris in ARTICLE
VII, the Company Disclosure Statement shall be deemed to include only (a) the
information contained therein on the date of this Agreement and (b) information
added to the Company Disclosure Statement by written supplements delivered prior
to Closing by the Company that (i) are accepted in writing by Feris, or (ii)
reflect actions taken or events occurring after the date hereof prior to
Closing.
 
5.9 State Statutes. The Company and its Board of Directors shall, if any state
takeover statute or similar law is or becomes applicable to the Merger, this
Agreement or any of the transactions contemplated by this Agreement, use all
reasonable efforts to ensure that the Merger and the other transactions
contemplated by this Agreement may be consummated as promptly as practicable on
the terms contemplated by this Agreement and otherwise to minimize the effect of
such statute or regulation on the Merger, this Agreement and the transactions
contemplated hereby.
 
 
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5.10 Conduct of Business. Prior to the Closing Date, the Company shall conduct
its business in the normal course, and shall not sell, pledge, or assign any
assets, without the prior written approval of Feris, except in the regular
course of business. Except as otherwise provided herein, the Company shall not
amend its Articles of Incorporation or Bylaws, declare dividends, redeem or sell
stock or other securities, acquire or dispose of fixed assets, change employment
terms, enter into any material or long-term contract, guarantee obligations of
any third party, settle or discharge any material balance sheet receivable for
less than its stated amount, pay more on any liability than its stated amount,
or enter into any other transaction other than in the regular course of
business.
 
ARTICLE VI
COVENANTS OF FERIS
 
Between the date of this Agreement and the Closing Date,
 
6.1 Additional Information. Feris shall provide to the Company and its
Representatives such financial, operating and other documents, data and
information relating to Feris,, the Feris Business and the Feris Assets and the
Liabilities of Feris and its Subsidiaries, as the Company or its Representatives
may reasonably request. In addition, the Company shall take all action necessary
to enable the Company and its Representatives to review and inspect the Feris
Assets, the Feris Business and the Liabilities of Feris and discuss them with
the Company’s officers, employees, independent accountants and counsel.
Notwithstanding any investigation that the Company may conduct of Feris, the
Feris Business, the Feris Assets and the Liabilities of Feris, the Company may
fully rely on Feris’s warranties, covenants and indemnities set forth in this
Agreement.
 
6.2 No Solicitations. From and after the date of this Agreement until the
Effective Time or termination of this Agreement pursuant to ARTICLE X, Feris
will not nor will it authorize or permit any of its officers, directors,
affiliates or employees or any investment banker, attorney or other advisor or
representative retained by it, directly or indirectly, (i) solicit or initiate
the making, submission or announcement of any other acquisition proposal, (ii)
participate in any discussions or negotiations regarding, or furnish to any
person any non public information with respect to any other acquisition
proposal, (iii) engage in discussions with any Person with respect to any other
acquisition proposal, except as to the existence of these provisions, (iv)
approve, endorse or recommend any other acquisition proposal or (v) enter into
any letter of intent or similar document or any contract agreement or commitment
contemplating or otherwise relating to any other acquisition proposal.
 
6.3 Notification of Adverse Change. Feris shall promptly notify the Company of
any material adverse change in the condition (financial or otherwise) of Feris.
 
6.4 Consents and Approvals. As soon as practicable after execution of this
Agreement, Feris shall use its commercially reasonable efforts to obtain any
necessary consent, approval, authorization or order of, make any registration or
filing with or give notice to, any Regulatory Authority or Person as is required
to be obtained, made or given by Feris to consummate the transactions
contemplated by this Agreement and the Collateral Documents.
 
 
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6.5 Notification of Certain Matters. Feris shall promptly notify the Company of
any fact, event, circumstance or action known to it that is reasonably likely to
cause Feris to be unable to perform any of its covenants contained herein or any
condition precedent not to be satisfied, or that, if known on the date of this
Agreement, would have been required to be disclosed to the Company pursuant to
this Agreement or the existence or occurrence of which would cause Feris’s
representations or warranties under this Agreement not to be correct and/or
complete. Feris shall give prompt written notice to the Company of any adverse
development causing a breach of any of the representations and warranties in
ARTICLE IV.
 
6.6 Feris Disclosure Schedule. Feris shall, from time to time prior to Closing,
supplement the Feris Disclosure Statement with additional information that, if
existing or known to it on the date of this Agreement, would have been required
to be included therein. For purposes of determining the satisfaction of any of
the conditions to the obligations of the Company in Article VII, the Feris
Disclosure Statement shall be deemed to include only (a) the information
contained therein on the date of delivery to the Company and (b) information
added to the Feris Disclosure Statement by written supplements delivered prior
to Closing by Feris that (i) are accepted in writing by the Company or (ii)
reflect actions taken or events occurring after the date hereof and prior to
Closing.
 
6.7 Securities Filings. Feris will timely file all reports and other documents
relating to the operation of Feris required to be filed with the Securities and
Exchange Commission, which reports and other documents do not and will not
contain any misstatement of a material fact, and do not and will not omit any
material fact necessary to make the statements therein not misleading.
 
6.8 Election to Feris’s Board of Directors. At the Effective Time of the Merger,
Feris shall take all steps necessary so that there will be a one (1) continuing
director (the “Feris Director”) and the remaining directors designated by the
Company.
 
6.9 Meeting of the Feris Shareholders. Promptly after the date hereof, if
required under applicable law, Feris will take all action necessary in
accordance with its articles of incorporation and by-laws to convene a meeting
of Feris’s shareholders to consider the adoption and approval of this Agreement,
approval of the Merger and a name change to a name as designated by the Company
(the “Merger Authorization”) to be held as promptly as practicable. Feris will
use its reasonable efforts to solicit from its shareholders proxies in favor of
the adoption and approval of this Agreement, the approval of the Merger
Authorization and will take all other action necessary or advisable to secure
the vote or consent of its shareholders required by the Nevada law to obtain
such approvals. In lieu of such meeting, the adoption and approval of this
Agreement, the Merger Authorization may be approved by shareholder consent.
 
6.10 Reporting Obligations. Feris shall take all steps necessary to bring its
reporting obligations current as of the Closing.
 
 
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ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE FERIS PARTIES
 
All obligations of the Feris Parties under this Agreement shall be subject to
the fulfillment at or prior to Closing of each of the following conditions, it
being understood that the Feris Parties may, in their sole discretion, to the
extent permitted by applicable Legal Requirements, waive any or all of such
conditions in whole or in part.
 
7.1 Accuracy of Representations. All representations and warranties of the
Company contained in this Agreement, the Collateral Documents and any
certificate delivered by any of the Company at or prior to Closing shall be, if
specifically qualified by materiality, true in all respects and, if not so
qualified, shall be true in all material respects, in each case on and as of the
Closing Date with the same effect as if made on and as of the Closing Date,
except for representations and warranties expressly stated to be made as of the
date of this Agreement or as of another date other than the Closing Date and
except for changes contemplated or permitted by this Agreement. The Company
shall have delivered to Feris a certificate dated the Closing Date to the
foregoing effect.
 
7.2 Covenants. The Company shall, in all material respects, have performed and
complied with each of the covenants, obligations and agreements contained in
this Agreement and the Collateral Documents that are to be performed or complied
with by them at or prior to Closing. The Company shall have delivered to Feris a
certificate dated the Closing Date to the foregoing effect.
 
7.3 Consents and Approvals. All consents, approvals, permits, authorizations and
orders required to be obtained from, and all registrations, filings and notices
required to be made with or given to, any Regulatory Authority or Person as
provided herein.
 
7.4 Delivery of Documents. The Company shall have delivered, or caused to be
delivered, to Feris the following documents:
 
(i) Certified copies of the Company articles of incorporation and by laws and
certified resolutions of the board of directors and Shareholders of the Company
authorizing the execution of this Agreement and the Collateral Documents to
which it is a party and the consummation of the transactions contemplated hereby
and thereby.
 
(ii) Such other documents and instruments as Feris may reasonably request: (A)
to evidence the accuracy of the Company’s representations and warranties under
this Agreement, the Collateral Documents and any documents, instruments or
certificates required to be delivered hereunder; (B) to evidence the performance
by the Company of, or the compliance by the Company with, any covenant,
obligation, condition and agreement to be performed or complied with by the
Company under this Agreement and the Collateral Documents; or (C) to otherwise
facilitate the consummation or performance of any of the transactions
contemplated by this Agreement and the Collateral Documents.
 
7.5 No Material Adverse Change. Since the date hereof, there shall have been no
material adverse change in the Company Assets, the Company Business or the
financial condition or operations of the Company, taken as a whole.
 
 
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ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY
 
All obligations of the Company under this Agreement shall be subject to the
fulfillment at or prior to Closing of the following conditions, it being
understood that the Company may, in its sole discretion, to the extent permitted
by applicable Legal Requirements, waive any or all of such conditions in whole
or in part.
 
8.1 Accuracy of Representations. All representations and warranties of Feris
contained in this Agreement and the Collateral Documents and any other document,
instrument or certificate delivered by any of Feris at or prior to the Closing
shall be, if specifically qualified by materiality, true and correct in all
respects and, if not so qualified, shall be true and correct in all material
respects, in each case on and as of the Closing Date with the same effect as if
made on and as of the Closing Date, except for representations and warranties
expressly stated to be made as of the date of this Agreement or as of another
date other than the Closing Date and except for changes contemplated or
permitted by this Agreement. Feris shall have delivered to the Company a
certificate dated the Closing Date to the foregoing effect.
 
8.2 Covenants. Feris shall, in all material respects, have performed and
complied with each obligation, agreement, covenant and condition contained in
this Agreement and the Collateral Documents and required by this Agreement and
the Collateral Documents to be performed or complied with by Feris at or prior
to Closing. Feris shall have delivered to the Company a certificate dated the
Closing Date to the foregoing effect.
 
8.3 Consents and Approvals. All consents; approvals, authorizations and orders
required to be obtained from, and all registrations, filings and notices
required to be made with or given to, any Regulatory Authority or Person as
provided herein.
 
8.4 Delivery of Documents. Feris, as applicable, shall have executed and
delivered, or caused to be executed and delivered, to the Company the following
documents:
 
(i) Certified copies of the articles of incorporation and by laws of Feris and
certified resolutions by the board of directors authorizing the execution of
this Agreement and the Collateral Documents and the consummation of the
transactions contemplated hereby.
 
(ii) Such other documents and instruments as the Company may reasonably request:
(A) to evidence the accuracy of the representations and warranties of Feris
under this Agreement and the Collateral Documents and any documents, instruments
or certificates required to be delivered hereunder; (B) to evidence the
performance by Feris of, or the compliance by Feris with, any covenant,
obligation, condition and agreement to be performed or complied with by Feris
under this Agreement and the Collateral Documents; or (C) to otherwise
facilitate the consummation or performance of any of the transactions
contemplated by this Agreement and the Collateral Documents, including:
 
(iii) Letters of resignation from Feris’s current officers and, as provided in
Section 6.8,directors to be effective upon the Closing.
 
 
23

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(iv) Board resolutions from Feris’s current directors appointing the designees
of the Company to Feris’s board of directors.
 
8.5 No Material Adverse Change. There shall have been no material adverse change
in the business, financial condition or operations of Feris and its Subsidiaries
taken as a whole.
 
8.6 No Litigation. No action, suit or proceeding shall be pending or threatened
by or before any Regulatory Authority and no Legal Requirement shall have been
enacted, promulgated or issued or deemed applicable to any of the transactions
contemplated by this Agreement and the Collateral Documents that would: (i)
prevent consummation of any of the transactions contemplated by this Agreement
and the Collateral Documents; (ii) cause any of the transactions contemplated by
this Agreement and the Collateral Documents to be rescinded following
consummation; or (iii) have a Material Adverse Effect on Feris.
 
8.7 No Assets & Liabilities. Feris shall have no assets nor liabilities except
for the Convertible Note which Note may be convertible into 6,000,000 shares of
the Common Stock of Feris.
 
8.8 Exchange Act Requirements. Feris shall have complied with the provisions of
Rule 14f-1 of the Exchange Act, if necessary and shall be current in all of its
securities filings.
 
8.9 Dissenters’ Rights. Not more than $25,000 in claims shall have been asserted
in connection with dissenters’ approval rights under the CCC in connection with
the Merger.
 
8.10 Leakage Agreement. The holders of the shares of Ferris Common Stock which
may be issued if the Convertible Note is converted shall have entered into a
Leakage Agreement on terms acceptable to the Company.
 
8.11 Feris Shareholder Approval. All shareholder approval shall have been
obtained to approve the transactions contemplated hereunder including the
approval of the Merger Agreement.
 
ARTICLE IX
INDEMNIFICATION
 
9.1 Indemnification by the Company. The Company shall indemnify, defend and hold
harmless (i) Feris, (ii) each of Feris’s assigns and successors in interest to
the Company Shares, and (iii) each of their respective shareholders, members,
partners, directors, officers, managers, employees, agents, attorneys and
representatives, from and against any and all Losses which may be incurred or
suffered by any such party and which may arise out of or result from any breach
of any material representation, warranty, covenant or agreement of the Company
contained in this Agreement. All claims to be assorted hereunder must be made
for the first anniversary of the Closing.
 
9.2 Indemnification by the Feris Parties. The Feris Parties shall indemnify,
defend and hold harmless the Company and each of the Company Shareholders from
and against any and all Losses which may be incurred or suffered by any such
party hereto and which may arise out of or result from any breach of any
material representation, warranty, covenant or agreement of the Feris Parties
contained in this Agreement. All claims to be assorted hereunder must be made
for the first anniversary of the Closing.
 
 
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9.3 Notice to Indemnifying Party. If any party (the “Indemnified Party”)
receives notice of any claim or other commencement of any action or proceeding
with respect to which any other party (or parties) (the “Indemnifying Party”) is
obligated to provide indemnification pursuant to Sections 9.1 or 9.2, the
Indemnified Party shall promptly give the Indemnifying Party written notice
thereof, which notice shall specify in reasonable detail, if known, the amount
or an estimate of the amount of the liability arising here from and the basis of
the claim. Such notice shall be a condition precedent to any liability of the
Indemnifying Party for indemnification hereunder, but the failure of the
Indemnified Party to give prompt notice of a claim shall not adversely affect
the Indemnified Party’s right to indemnification hereunder unless the defense of
that claim is materially prejudiced by such failure. The Indemnified Party shall
not settle or compromise any claim by a third party for which it is entitled to
indemnification hereunder without the prior written consent of the Indemnifying
Party (which shall not be unreasonably withheld or delayed) unless suit shall
have been instituted against it and the Indemnifying Party shall not have taken
control of such suit after notification thereof as provided in Section 9.4.
 
9.4 Defense by Indemnifying Party. In connection with any claim giving rise to
indemnity hereunder resulting from or arising out of any claim or legal
proceeding by a Person who is not a party to this Agreement, the Indemnifying
Party at its sole cost and expense may, upon written notice to the Indemnified
Party, assume the defense of any such claim or legal proceeding (i) if it
acknowledges to the Indemnified Party in writing its obligations to indemnify
the Indemnified Party with respect to all elements of such claim (subject to any
limitations on such liability contained in this Agreement) and (ii) if it
provides assurances, reasonably satisfactory to the Indemnified Party, that it
will be financially able to satisfy such claims in full if the same are decided
adversely. If the Indemnifying Party assumes the defense of any such claim or
legal proceeding, it may use counsel of its choice to prosecute such defense,
subject to the approval of such counsel by the Indemnified Party, which approval
shall not be unreasonably withheld or delayed. In this regard, Troy & Gould LLP
is hereby approved by Feris as counsel to the Company (in its capacity as the
Indemnifying Party). The Indemnified Party shall be entitled to participate in
(but not control) the defense of any such action, with its counsel and at its
own expense; provided, however, that if the Indemnified Party, in its sole
discretion, determines that there exists a conflict of interest between the
Indemnifying Party (or any constituent party thereof) and the Indemnified Party,
the Indemnified Party (or any constituent party thereof) shall have the right to
engage separate counsel, the reasonable costs and expenses of which shall be
paid by the Indemnified Party. If the Indemnifying Party assumes the defense of
any such claim or legal proceeding, the Indemnifying Party shall take all steps
necessary to pursue the resolution thereof in a prompt and diligent manner. The
Indemnifying Party shall be entitled to consent to a settlement of, or the
stipulation of any judgment arising from, any such claim or legal proceeding,
with the consent of the Indemnified Party, which consent shall not be
unreasonably withheld or delayed; provided, however, that no such consent shall
be required from the Indemnified Party if (i) the Indemnifying Party pays or
causes to be paid all Losses arising out of such settlement or judgment
concurrently with the effectiveness thereof (as well as all other Losses
theretofore incurred by the Indemnified Party which then remain unpaid or
unreimbursed), (ii) in the case of a settlement, the settlement is conditioned
upon a complete release by the claimant of the Indemnified Party and (iii) such
settlement or judgment does not require the encumbrance of any asset of the
Indemnified Party or impose any restriction upon its conduct of business.
 
 
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ARTICLE X
TERMINATION
 
10.1 Termination. This Agreement may be terminated, and the transactions
contemplated hereby may be abandoned, at any time prior to the Effective Time.
 
(a) by mutual written agreement of Feris and the Company hereto duly authorized
by action taken by or on behalf of their respective Boards of Directors; or
 
(b) by either the Company or Feris upon notification to the non terminating
party by the terminating party:
 
(i) if the terminating party is not in material breach of its obligations under
this Agreement and there has been a material breach of any representation,
warranty, covenant or agreement on the part of the non terminating party set
forth in this Agreement such that the conditions in Sections 7.1, 7.2, 8.1 or
8.2 will not be satisfied; provided, however, that if such breach is curable by
the non terminating party and such cure is reasonably likely to be completed
prior to the date specified in Section 10.1(b)(i), then, for so long as the non
terminating party continues to use commercially reasonable efforts to effect and
cure, the terminating party may not terminate pursuant to this Section
10.1(b)(i);
 
(ii) if the Closing has not transpired on or before September 30, 2007.
 
(iii) if any court of competent jurisdiction or other competent Governmental or
Regulatory Authority shall have issued an order making illegal or otherwise
permanently restricting, preventing or otherwise prohibiting the Merger and such
order shall have become final; or
 
10.2 Effect of Termination. If this Agreement is validly terminated by either
the Company or Feris pursuant to Section 10.1, this Agreement will forthwith
become null and void and there will be no liability or obligation on the part of
the parties hereto, except that nothing contained herein shall relieve any party
hereto from liability for willful breach of its representations, warranties,
covenants or agreements contained in this Agreement.
 
ARTICLE XI
MISCELLANEOUS
 
11.1 Parties Obligated and Benefited. This Agreement shall be binding upon the
Parties and their respective successors by operation of law and shall inure
solely to the benefit of the Parties and their respective successors by
operation of law, and no other Person shall be entitled to any of the benefits
conferred by this Agreement, except that the Company Shareholders shall be third
party beneficiaries of this Agreement. Without the prior written consent of the
other Party, no Party may assign this Agreement or the Collateral Documents or
any of its rights or interests or delegate any of its duties under this
Agreement or the Collateral Documents.
 
 
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11.2 Publicity. The initial press release shall be a joint press release and
thereafter the Company and Feris each shall consult with each other prior to
issuing any press releases or otherwise making public announcements with respect
to the Merger and the other transactions contemplated by this Agreement and
prior to making any filings with any third party and/or any Regulatory
Authorities (including any national securities inter dealer quotation service)
with respect thereto, except as may be required by law or by obligations
pursuant to any listing agreement with or rules of any national securities inter
dealer quotation service.
 
11.3 Notices. Any notices and other communications required or permitted
hereunder shall be in writing and shall be effective upon delivery by hand or
upon receipt if sent by certified or registered mail (postage prepaid and return
receipt requested) or by a nationally recognized overnight courier service
(appropriately marked for overnight delivery) or upon transmission if sent by
telex or facsimile (with request for immediate confirmation of receipt in a
manner customary for communications of such respective type and with physical
delivery of the communication being made by one or the other means specified in
this Section as promptly as practicable thereafter). Notices shall be addressed
as follows:
 

 
If to Feris and/or the Shareholder to:
         
Patty Linson
3155 E. Patrick Lane, Suite 1
Las Vegas, NV 89120
Facsimile No: (702) 492-9413
     
If to the Company to:
       
Pro Sports & Entertainment, Inc.
811 Wilshire Boulevard
Los Angeles, California 90017
Attention: Paul Feller
President & Chief Executive Officer
Facsimile No: (213) 996-7766
         
With a copy to:
         
Troy & Gould LLC
1801 Century Park East, Suite 1600
Los Angeles, California 90067-4746
Attention: David L. Ficksman, Esq.
Facsimile No: (310) 789-1490

 
Any Party may change the address to which notices are required to be sent by
giving notice of such change in the manner provided in this Section.
 
11.4 Attorneys’ Fees. In the event of any action or suit based upon or arising
out of any alleged breach by any Party of any representation, warranty, covenant
or agreement contained in this Agreement or the Collateral Documents, the
prevailing Party shall be entitled to recover reasonable attorneys’ fees and
other costs of such action or suit from the other Party.
 
 
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11.5 Headings. The Article and Section headings of this Agreement are for
convenience only and shall not constitute a part of this Agreement or in any way
affect the meaning or interpretation thereof.
 
11.6 Choice of Law. This Agreement and the rights of the Parties under it shall
be governed by and construed in all respects in accordance with the laws of the
State of California, without giving effect to any choice of law provision or
rule (whether of the State of California or any other jurisdiction that would
cause the application of the laws of any jurisdiction other than the State of
California).
 
11.7 Rights Cumulative. All rights and remedies of each of the Parties under
this Agreement shall be cumulative, and the exercise of one or more rights or
remedies shall not preclude the exercise of any other right or remedy available
under this Agreement or applicable law.
 
11.8 Further Actions. The Parties shall execute and deliver to each other, from
time to time at or after Closing, for no additional consideration and at no
additional cost to the requesting party, such further assignments, certificates,
instruments, records, or other documents, assurances or things as may be
reasonably necessary to give full effect to this Agreement and to allow each
party fully to enjoy and exercise the rights accorded and acquired by it under
this Agreement.
 
11.9 Time of the Essence. Time is of the essence under this Agreement. If the
last day permitted for the giving of any notice or the performance of any act
required or permitted under this Agreement falls on a day which is not a
Business Day, the time for the giving of such notice or the performance of such
act shall be extended to the next succeeding Business Day.
 
11.10 Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
 
11.11 Entire Agreement. This Agreement (including the Exhibits, the Company
Disclosure Statement, the Feris Disclosure Statement and any other documents,
instruments and certificates referred to herein, which are incorporated in and
constitute a part of this Agreement) contains the entire agreement of the
Parties.
 
11.12 Survival of Representations and Covenants. Notwithstanding any right of
Feris to fully investigate the affairs of the Company and notwithstanding any
knowledge of facts determined or determinable by Feris pursuant to such
investigation or right of investigation, Feris shall have the right to rely
fully upon the representations, warranties, covenants and agreements of the
Company contained in this Agreement. Each representation, warranty, covenant and
agreement of the Company contained herein shall survive the execution and
delivery of this Agreement and the Closing and shall thereafter terminate and
expire on the first anniversary of the Closing Date unless, prior to such date,
Feris has delivered to the Company Shareholders a written notice of a claim with
respect to such representation, warranty, covenant or agreement.
 
 
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IN WITNESS WHEREOF, the Parties hereto have duly executed this Agreement as of
the day and year first above written.
 

     
Dated: August 20, 2007
Feris International, Inc.
a Nevada Corporation
 
   
   
    By:    

--------------------------------------------------------------------------------

Name:   Title: Chief Executive Officer

 

   
Dated: August 20, 2007
Feris Merger Sub, Inc.
a California Corporation
 
   
   
 
 
By:    

--------------------------------------------------------------------------------

Name:   Title: Chief Executive Officer

 

   
Dated: August 20, 2007
PRO SPORTS AND ENTERTAINMENT, INC., a California Corporation
 
   
   
 
 
By:    

--------------------------------------------------------------------------------

Name: Paul Feller  
Title: President &
  Chief Executive Officer

 

   
Dated: August 20, 2007
       

--------------------------------------------------------------------------------

Patty Linson

 
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Schedule 3.2
 
Derivative Securities
 
NONE
 
 
30

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Schedule 3.12
 
Brokers and Finders Agreements

 
NONE
 
 
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Schedule 3.9
 
Legal Proceedings
 
Legal matters
 
In connection with a settlement agreement, on or about May 27, 2005, a legal
judgment was entered in the Superior Court of the County of Los Angeles against
the Company in favor of the previous owners of the “Core Tour” event, in the
amount of $483,718. In addition, this judgment specified that the Company must
pay interest of $39,664. The dispute arose out of the Company’s asset purchase
of the “Core Tour” event from the plaintiffs. The Company has recorded the total
liability of $523,582 as of December 31, 2005, December 31, 2004 and September
30, 2006 (unaudited) and has included the acquisition cost in intangible assets.
 
On or about May 18, 2004, a plaintiff, an ex-employee, filed a complaint against
the Company, seeking damages. On or about July 14, 2005, the Labor Commissioner
for the State of California entered a judgment against the Company in favor of
this former employee for a total award amount of $9,329. The Company has
recorded the entire liability as of December 31, 2005, December 31, 2004 and
September 30, 2006 (unaudited). The Company plans to seek to set aside this
judgment, disputing that it owes the plaintiff the amount claimed.
 
On or about February 27, 2006, a plaintiff, an ex-employee, filed a complaint
against the Company, seeking $356,250 in damages. On or about June 23, 2006, the
Superior Court of the County of Los Angeles entered a default against the
Company in favor of this former employee. The Company has recorded the entire
liability as of December 31, 2005 and September 30, 2006 (unaudited). The
Company plans to seek to set aside the default, disputing that it owes the
plaintiff the amount claimed but, rather, the plaintiff was fully paid upon his
voluntary resignation from the Company.
 
On or about June 20, 2006, the plaintiff, Wells Fargo Bank, provided a notice of
entry of judgment in the amount of $78,651 against, among others, the Company,
formerly known as GMG Sports and Entertainment, Incorporated. The Company has
recorded the entire amount as of December 31, 2005 and September 30, 2006
(unaudited).
 
The Company is currently involved in disputes with the previous owners of the
“Concours on Rodeo”, “Millrose Games” and “American Snowboard Tour and American
Freeski Tour” events. Company management believes that these disputes may result
in future litigation but is unable to estimate the potential outcomes.
 
 
32

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Schedule 3.17
 
Contracts in Excess of 100,000

Playboy Mansion Site Agreement
 
$
120,000
 
Seattle Seahawks Stadium
 
$
100,000
 
Concours on Rodeo
 
$
430,043
 
Core Tour/Action Sports Tour
 
$
483,718
 
Snow & Ski Tour
 
$
240,000
 

 
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Schedule 3.21
 
Labor Contracts
 
The Company has an Employment Agreement (“Agreement”), dated January 1, 2002,
with its President and Chief Executive Officer, which requires the Company to
offer a non-qualified stock option to purchase 10% of the fully diluted shares
of the Company’s capital stock issued and outstanding on January 1, 2002, the
effective date of the Agreement. The stock option has a term of five years at an
exercise price of $0.50 per share (which was equal to the fair value) and vested
immediately on the date of the agreement. This stock option is subject to a
customary anti-dilution provision with respect to any stock splits, mergers,
reorganizations and other such events. The length of this Agreement is five
years from the effective date unless the employment is terminated for another
cause. During the duration of this Agreement, the Chief Executive Officer is
entitled to an annual salary of $240,000 and a bonus of $250,000 in the event a
Valuing Event causes the Company to be valued in excess of $100,000,000 and an
additional bonus of $500,000 in the event a Valuing Event causes the Company to
be valued in excess of $500,000,000. For the years ended December 31, 2005 and
December 31, 2004 and for the nine months ended September 30, 2006 (unaudited),
no bonuses have been paid by the Company in relation to this Agreement.
 
 
34

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Schedule 4.9
 
Assets and Liabilities

 
1. See Audit
 
 
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