Agreement and Plan of Merger and Reorganization

among

Clear System Recycling, Inc.,

Clear System Merger Sub, Inc.

and

Experience Art & Design, Inc.

 

 January 16, 2013

 

 

                                                                                                                                                                                                                 

 

 

 

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

 
 

 

TABLE OF CONTENTS

ARTICLE 1 THE MERGER.. 1

ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY.. 6

ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB.. 15

ARTICLE 4 ADDITIONAL AGREEMENTS. 23

ARTICLE 5 CLOSING; DELIVERIES. 25

ARTICLE 6 DEFINITIONS. 30

ARTICLE 7 MISCELLANEOUS. 34

 

 

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

 
 

 

LIST OF EXHIBITS AND DISCLOSURE SCHEDULES

Exhibits

A                     Articles of Incorporation of Merger Sub

B                     By-laws of Merger Sub

C                     Form of Opinion of Synergy Law Group, LLC

D                     Form of Opinion of Pearlman & Schneider, LLP

 

Company Disclosure Schedules (To be provided at Closing)

2.1                   Subsidiaries

2.4                   Indebtedness

2.5                   Company Stockholders and Shares; Allocation of Parent
Common Stock

2.7                   Compliance with Laws

2.11                 Adverse Officer and Director Information

2.12                 Absence of Certain Changes

2.13(a)             Schedule of Real and Personal Property

2.13(b)             Material Agreements

2.13(c)             Schedule of Insurance

2.13(d)            Schedule of Patents and Other Intangible Assets

2.14                 Employees and Employment Agreements

2.15                 Ownership of Intellectual Property

2.16                 Schedule of Employee Benefit Plans

2.18                 Product Liability Claims

2.19                 Litigation

2.21                 Interested Party Transactions

2.25                 Obligations to or by Stockholders

2.27                 Broker’s and Finder’s Fees

Parent Disclosure Schedules (To be provided at Closing)

3.1(c)               Parent Board of Directors, Committees and Officers

3.2(a)               Subsidiaries of Parent

3.2(c)               Subsidiary Board of Directors, Committees and Officers

3.10                 SEC Reporting

3.16                 Compliance with Laws

3.20                 Obligations to or by Stockholders

3.23                 Interested Party Transactions

3.25                 Bank Accounts and Safe Deposit Boxes

3.26                 Intellectual Property

 

ii

 

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

 
 

 

Agreement and Plan of Merger and Reorganization

THIS AGREEMENT AND PLAN OF MERGER AND REORGANIZATION (the “Agreement”) is made
and entered into on January 16, 2013, by and among Clear System Recycling, Inc.,
a Nevada corporation (“Parent”), Clear System Merger Sub, Inc. (“Merger Sub”), a
Nevada corporation and wholly-owned subsidiary of Parent, and Experience Art &
Design, Inc. f/k/a CI Holdings, Inc., an Oregon corporation (“Company”).

W I T N E S S E T H: 

WHEREAS, the Board of Directors of each of the Parent, the Merger Sub and the
Company have each determined that it is in the best interests of their
respective entities and the stockholders thereof to enter into a business
combination transaction pursuant to which the Company will merge with and into
the Merger Sub (the “Merger”), with the Merger Sub continuing after the Merger
as the surviving corporation and wholly-owned subsidiary of the Parent;

WHEREAS, pursuant to the Merger, (i) outstanding shares of common stock of the
Company (“Company Common Stock”) will, in accordance with this Agreement, be
converted into the right to receive shares of common stock, $0.001 par value per
share, of the Parent (“Parent Common Stock”) and (ii) the Parent shall assume
certain indebtedness (the “Assumed Indebtedness”) of the Company as provided in
Schedule 2.4 hereto;

WHEREAS, the Board of Directors of Parent, the Board of Directors of the Merger
Sub and the Board of Directors of the Company have each approved this Agreement
and transactions contemplated hereby;

WHEREAS, the parties hereto intend, by executing this Agreement, to adopt a plan
of reorganization within the meaning of Section 368 of the Internal Revenue Code
of 1986, as amended (the “Code”) and the regulations promulgated thereunder and
to cause the Merger to qualify as a tax-free reorganization under the provisions
of Section 368 of the Code; and

WHEREAS, the Parent Common Stock to be issued in connection with the Merger are
expected to be exempt from registration pursuant to Section 4(2) of the
Securities Act of 1933, as amended (the “Securities Act”) and Rule 506
promulgated thereunder;

NOW, THEREFORE, in consideration of the mutual agreements and covenants
hereinafter set forth, the parties hereto agree as follows:

ARTICLE 1  
 THE MERGER

1.1                       MERGER OF THE COMPANY WITH AND INTO THE MERGER SUB.
UPON THE TERMS AND SUBJECT TO THE CONDITIONS SET FORTH IN THIS AGREEMENT AND IN
ACCORDANCE WITH THE NEVADA REVISED STATUTES (“NRS”) AND THE OREGON REVISED
STATUTES (“ORS”), AT THE EFFECTIVE TIME, THE COMPANY SHALL BE MERGED WITH AND
INTO THE MERGER SUB, AND THE SEPARATE EXISTENCE OF THE COMPANY SHALL CEASE. THE
MERGER SUB WILL CHANGE ITS NAME TO “EXPERIENCE ART & DESIGN, INC.” AND CONTINUE
AS

 

 

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

 
 

 

THE SURVIVING CORPORATION (“EAD”) FOLLOWING THE MERGER. THE CLOSING OF THE
MERGER SHALL BE CONDITIONED UPON APPROVAL OF THE STOCKHOLDERS OF THE COMPANY.

1.2                       EFFECT OF THE MERGER. THE MERGER SHALL HAVE THE
EFFECTS SET FORTH IN THIS AGREEMENT AND THE APPLICABLE PROVISIONS OF THE NRS AND
THE ORS. AS A RESULT OF THE MERGER, EAD WILL BECOME A WHOLLY-OWNED SUBSIDIARY OF
THE PARENT. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, AND SUBJECT
THERETO, AT THE EFFECTIVE TIME, ALL THE PROPERTY, RIGHTS, PRIVILEGES, POWERS AND
FRANCHISES OF THE COMPANY AND MERGER SUB SHALL VEST IN EAD, AND ALL DEBTS,
LIABILITIES AND DUTIES OF THE COMPANY AND MERGER SUB SHALL BECOME THE DEBTS,
LIABILITIES AND DUTIES OF EAD.

1.3                       CLOSING; EFFECTIVE TIME.  SUBJECT TO THE TERMS AND
CONDITIONS OF THIS AGREEMENT, SIMULTANEOUS WITH THE CLOSING HEREOF, THE PARTIES
HERETO SHALL CAUSE THE MERGER TO BE CONSUMMATED BY EXECUTING AND FILING WITH THE
SECRETARY OF STATE OF THE STATE OF NEVADA AND THE SECRETARY OF STATE OF THE
STATE OF OREGON ARTICLES OF MERGER (THE “ARTICLES OF MERGER”) WITH RESPECT TO
THE MERGER, SATISFYING THE APPLICABLE REQUIREMENTS OF THE NRS AND THE ORS AND IN
A FORM REASONABLY ACCEPTABLE TO THE PARENT, THE MERGER SUB AND THE COMPANY. THE
MERGER SHALL BECOME EFFECTIVE AT THE TIME OF THE FILING OF SUCH ARTICLES OF
MERGER WITH THE SECRETARY OF STATE OF THE STATE OF NEVADA AND THE SECRETARY OF
STATE OF THE STATE OF OREGON OR AT SUCH LATER TIME AS MAY BE SPECIFIED IN SUCH
ARTICLES OF MERGER (THE TIME AS OF WHICH THE MERGER BECOMES EFFECTIVE BEING
REFERRED TO AS THE “EFFECTIVE TIME”).

1.4                       ARTICLES OF INCORPORATION AND BYLAWS; DIRECTORS AND
OFFICERS.  AT THE EFFECTIVE TIME:

(A)                MERGER SUB ARTICLES OF INCORPORATION.  THE MERGER SUB
ARTICLES OF INCORPORATION, AS IN EFFECT IMMEDIATELY BEFORE THE EFFECTIVE TIME,
ATTACHED AS EXHIBIT A HERETO, SHALL BE THE ARTICLES OF INCORPORATION OF EAD
UNTIL THEREAFTER AMENDED AS PROVIDED BY THE NRS AND SUCH ARTICLES OF
INCORPORATION;

(B)               MERGER SUB BYLAWS.  THE MERGER SUB BYLAWS, AS IN EFFECT
IMMEDIATELY BEFORE THE EFFECTIVE TIME, ATTACHED AS EXHIBIT B HERETO, SHALL BE
THE BYLAWS OF EAD UNTIL THEREAFTER AMENDED AS PROVIDED BY THE NRS AND SUCH
BYLAWS;

(C)                MERGER SUB DIRECTORS.  THE DIRECTORS OF THE COMPANY
IMMEDIATELY BEFORE THE EFFECTIVE TIME SHALL BE THE DIRECTORS OF EAD, EACH TO
HOLD OFFICE IN ACCORDANCE WITH THE ARTICLES OF INCORPORATION AND BYLAWS OF EAD;
AND

(D)               MERGER SUB OFFICERS.  THE OFFICERS OF THE COMPANY IMMEDIATELY
BEFORE THE EFFECTIVE TIME SHALL BE THE OFFICERS OF EAD, IN EACH CASE UNTIL THEIR
RESPECTIVE SUCCESSORS ARE DULY ELECTED OR APPOINTED AND QUALIFIED, OR UNTIL
THEIR EARLIER DEATH, RESIGNATION OR REMOVAL.

1.5     SHARES TO BE ISSUED; EFFECT ON CAPITAL STOCK.  SUBJECT TO THE TERMS AND
CONDITIONS OF THIS AGREEMENT, AT THE EFFECTIVE TIME, BY VIRTUE OF THE MERGER,
THE FOLLOWING SHALL OCCUR:

 

 

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

 
 

 

(A)                CONVERSION OF COMPANY STOCK. SUBJECT TO THE TERMS OF SECTION
1.5(C), EACH SHARE OF COMPANY COMMON STOCK ISSUED AND OUTSTANDING IMMEDIATELY
BEFORE THE EFFECTIVE TIME WILL BE CONVERTED AUTOMATICALLY INTO THE RIGHT TO
RECEIVE: (A) THAT NUMBER OF SHARES OF PARENT COMMON STOCK EQUAL TO THE EXCHANGE
RATIO AND (B) ANY FRACTIONAL SHARE BE ROUNDED UP TO THE NEAREST WHOLE NUMBER.

(B)               CAPITAL STOCK OF MERGER SUB.  EACH STOCK CERTIFICATE OF MERGER
SUB EVIDENCING OWNERSHIP OF ANY SUCH SHARES SHALL, AS OF THE EFFECTIVE TIME,
EVIDENCE OWNERSHIP OF SUCH SHARES OF COMMON STOCK OF EAD.

(C)                NO FRACTIONAL SHARES.  NO FRACTIONAL SHARES OF PARENT COMMON
STOCK SHALL BE ISSUED IN CONNECTION WITH THE MERGER, AND NO CERTIFICATES OR
SCRIP REPRESENTING SUCH FRACTIONAL SHARES SHALL BE ISSUED.  FRACTIONAL SHARES
SHALL BE ROUNDED UP TO THE NEAREST WHOLE NUMBER. THE HOLDER OF SHARES OF COMPANY
COMMON STOCK WHO WOULD OTHERWISE BE ENTITLED TO RECEIVE A FRACTION OF A SHARE OF
PARENT COMMON STOCK (AFTER AGGREGATING ALL FRACTIONAL SHARES OF PARENT COMMON
STOCK TO BE RECEIVED BY SUCH HOLDER), IN LIEU OF SUCH FRACTIONAL SHARE AND UPON
SURRENDER OF SUCH HOLDER’S CERTIFICATE REPRESENTING SHARES OF COMPANY COMMON
STOCK (THE “COMPANY STOCK CERTIFICATE”), SHALL INSTEAD RECEIVE PARENT COMMON
STOCK ROUNDED UP TO THE NEAREST WHOLE NUMBER. 

(D)               CANCELLATION OF TREASURY SHARES. EACH SHARE OF STOCK HELD IN
THE TREASURY OF EITHER THE PARENT, MERGER SUB OR THE COMPANY IMMEDIATELY PRIOR
TO THE EFFECTIVE TIME SHALL BE CANCELLED AND CEASE TO EXIST.

1.6                       CALCULATION OF EXCHANGE RATIOS. THE “EXCHANGE RATIO”
SHALL BE ONE SHARE OF PARENT COMMON STOCK IN EXCHANGE FOR ONE SHARE OF COMPANY
COMMON STOCK OUTSTANDING IMMEDIATELY BEFORE THE EFFECTIVE TIME.

1.7                       DISSENTING SHARES.  NOTWITHSTANDING ANY OTHER
PROVISION OF THIS AGREEMENT TO THE CONTRARY, ANY SHARES OF COMPANY COMMON STOCK
THAT HAVE NOT BEEN VOTED IN FAVOR OF ADOPTION OF THIS AGREEMENT, AND WITH
RESPECT TO WHICH A DEMAND FOR PAYMENT AND APPRAISAL HAVE BEEN PROPERLY MADE IN
ACCORDANCE WITH ORS 60.551 THROUGH 60.594 (SUCH SHARES REFERRED TO AS
“DISSENTING SHARES”), SHALL NOT BE CONVERTED INTO OR REPRESENT A RIGHT TO
RECEIVE PARENT COMMON STOCK PURSUANT TO SECTION 1.5(A), BUT SHALL BE CONVERTED
IN TO THE RIGHT TO RECEIVE SUCH CONSIDERATION AS MAY BE DETERMINED TO BE DUE
WITH RESPECT TO SUCH DISSENTING SHARES PURSUANT TO THE ORS, AS APPLICABLE;
PROVIDED, HOWEVER, THAT IF A HOLDER OF DISSENTING SHARES (A “DISSENTING
STOCKHOLDER”) WITHDRAWS SUCH HOLDER’S DEMAND FOR SUCH PAYMENT AND APPRAISAL OR
BECOMES INELIGIBLE FOR SUCH PAYMENT AND APPRAISAL THEN, AS OF THE LATER OF THE
EFFECTIVE TIME OR THE DATE OF WHICH SUCH DISSENTING STOCKHOLDER WITHDRAWS SUCH
DEMAND OR OTHERWISE BECOMES INELIGIBLE FOR SUCH PAYMENT AND APPRAISAL, SUCH
HOLDER’S DISSENTING SHARES WILL CEASE TO BE DISSENTING SHARES AND WILL BE
CONVERTED INTO THE RIGHT TO RECEIVE PARENT COMMON STOCK AS DETERMINED IN
ACCORDANCE WITH SECTION 1.5(A).  

1.8                       NO FURTHER TRANSFER OF COMPANY COMMON STOCK.  AT THE
EFFECTIVE TIME ALL SHARES OF COMPANY COMMON STOCK OUTSTANDING IMMEDIATELY BEFORE
THE EFFECTIVE TIME SHALL AUTOMATICALLY BE EXCHANGED, AND ALL HOLDERS OF COMPANY
COMMON STOCK THAT WERE OUTSTANDING IMMEDIATELY BEFORE THE EFFECTIVE TIME SHALL
CEASE TO HAVE ANY RIGHTS AS STOCKHOLDERS OF THE

 

 

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

 
 

 

COMPANY, EXCEPT THE RIGHT TO RECEIVE THE CONSIDERATION DESCRIBED IN SECTION
1.5(A) OR SECTION 1.7, AS APPLICABLE.  NO FURTHER TRANSFER OF ANY SUCH SHARES OF
COMPANY COMMON STOCK SHALL BE MADE ON SUCH STOCK TRANSFER BOOKS AFTER THE
EFFECTIVE TIME. SUBJECT TO SECTION 1.9(F) IF, AFTER THE EFFECTIVE TIME, ANY
SHARES OF COMPANY COMMON STOCK ARE PRESENTED TO THE EXCHANGE AGENT OR TO THE
COMPANY OR THE PARENT, SUCH SHARES SHALL BE CANCELED AND SHALL BE EXCHANGED AS
PROVIDED IN SECTION 1.9.

1.9                       EXCHANGE OF CERTIFICATES. 

(A)                EXCHANGE AGENT.  THE PARENT AND THE COMPANY HAVE JOINTLY
SELECTED AND DESIGNATED ISLAND STOCK TRANSFER COMPANY (THE “EXCHANGE AGENT”) TO
ACT AS AGENT OF THE PARENT FOR PURPOSES OF, AMONG OTHER THINGS, MAILING AND
RECEIVING TRANSMITTAL LETTERS AND DISTRIBUTING THE PARENT COMMON STOCK TO THE
HOLDERS OF COMPANY COMMON STOCK.

(B)               PARENT TO PROVIDE COMMON STOCK.  PROMPTLY AFTER THE EFFECTIVE
TIME, THE PARENT SHALL SUPPLY OR CAUSE TO BE SUPPLIED OR MADE AVAILABLE TO THE
EXCHANGE AGENT FOR EXCHANGE IN ACCORDANCE WITH THIS SECTION 1.9 THROUGH SUCH
REASONABLE PROCEDURES AS THE PARENT MAY ADOPT, INSTRUCTIONS REGARDING ISSUANCE
OF CERTIFICATES EVIDENCING THE SHARES OF PARENT COMMON STOCK ISSUABLE PURSUANT
TO SECTION 1.5(A) IN EXCHANGE FOR SHARES OF COMPANY COMMON STOCK OUTSTANDING
IMMEDIATELY BEFORE THE EFFECTIVE TIME (THE “EXCHANGE SHARES”).

(C)                EXCHANGE PROCEDURES.  AS PROMPTLY AS PRACTICABLE AFTER THE
EFFECTIVE TIME, THE EXCHANGE AGENT WILL MAIL TO EACH HOLDER OF RECORD OF COMPANY
COMMON STOCK WHOSE SHARES WOULD BE CONVERTED INTO THE RIGHT TO RECEIVE SHARES OF
PARENT COMMON STOCK PURSUANT TO SECTION 1.5(A), (I) A LETTER OF TRANSMITTAL IN
CUSTOMARY FORM; (II) SUCH OTHER CUSTOMARY DOCUMENTS AS MAY BE REQUIRED PURSUANT
TO SUCH INSTRUCTIONS; AND (III) INSTRUCTIONS FOR USE IN EFFECTING THE SURRENDER
OF COMPANY COMMON STOCK IN EXCHANGE FOR CERTIFICATES REPRESENTING SHARES OF
PARENT COMMON STOCK. UPON SURRENDER OF COMPANY COMMON STOCK FOR CANCELLATION TO
THE EXCHANGE AGENT, TOGETHER WITH SUCH LETTER OF TRANSMITTAL AND OTHER
DOCUMENTS, DULY COMPLETED AND VALIDLY EXECUTED IN ACCORDANCE WITH THE
INSTRUCTIONS THERETO, THE HOLDER OF SUCH COMPANY COMMON STOCK SHALL BE ENTITLED
TO RECEIVE IN EXCHANGE THEREFOR (Y) A CERTIFICATE REPRESENTING THE NUMBER OF
WHOLE EXCHANGE SHARES INTO WHICH THE COMPANY COMMON STOCK REPRESENTED THEREBY
SHALL HAVE BEEN CONVERTED INTO THE RIGHT TO RECEIVE AS OF THE EFFECTIVE TIME AND
(Z) CASH IN RESPECT OF ANY FRACTIONAL SHARES AS PROVIDED IN SECTION 1.5(C), AND
THE COMPANY COMMON STOCK SO SURRENDERED SHALL FORTHWITH BE CANCELED. UNTIL SO
SURRENDERED, EACH SUCH OUTSTANDING SHARE OF COMPANY COMMON STOCK WILL BE DEEMED
FROM AND AFTER THE EFFECTIVE TIME, FOR ALL CORPORATE PURPOSES OTHER THAN THE
PAYMENT OF DIVIDENDS, TO EVIDENCE THE OWNERSHIP OF THE NUMBER OF FULL SHARES OF
PARENT COMMON STOCK INTO WHICH SUCH SHARES OF COMPANY COMMON STOCK SHALL HAVE
BEEN SO CONVERTED AND THE RIGHT TO RECEIVE CASH IN LIEU OF THE ISSUANCE OF ANY
FRACTIONAL SHARES. IF ANY COMPANY STOCK CERTIFICATE SHALL HAVE BEEN LOST, STOLEN
OR DESTROYED, PARENT MAY, IN ITS DISCRETION AND AS A CONDITION PRECEDENT TO THE
ISSUANCE OF ANY CERTIFICATE REPRESENTING PARENT COMMON STOCK, REQUIRE THE OWNER
OF SUCH LOST, STOLEN OR DESTROYED COMPANY STOCK CERTIFICATE TO PROVIDE A
REASONABLE AFFIDAVIT AS INDEMNITY AGAINST ANY CLAIM THAT MAY BE MADE AGAINST THE
EXCHANGE AGENT, PARENT OR THE COMPANY WITH RESPECT TO SUCH COMPANY STOCK
CERTIFICATE.

 

 

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

 
 

 

(D)               DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. NO DIVIDENDS
OR OTHER DISTRIBUTIONS WITH RESPECT TO PARENT COMMON STOCK WITH A RECORD DATE
AFTER THE EFFECTIVE TIME WILL BE PAID TO THE HOLDER OF ANY UNSURRENDERED COMPANY
COMMON STOCK WITH RESPECT TO THE SHARES OF PARENT COMMON STOCK REPRESENTED
THEREBY UNTIL THE HOLDER OF RECORD OF SUCH COMPANY COMMON STOCK SHALL SURRENDER
SUCH SHARES OF COMPANY COMMON STOCK. SUBJECT TO APPLICABLE LAW, FOLLOWING
SURRENDER OF ANY SUCH COMPANY COMMON STOCK, THERE SHALL BE DELIVERED TO THE
RECORD HOLDER OF COMPANY COMMON STOCK A CERTIFICATE REPRESENTING WHOLE SHARES OF
PARENT COMMON STOCK ISSUED IN EXCHANGE THEREFOR (INCLUDING ANY CASH IN RESPECT
OF ANY FRACTIONAL SHARES), WITHOUT INTEREST AT THE TIME OF SUCH SURRENDER, AND
THE AMOUNT OF ANY SUCH DIVIDENDS OR OTHER DISTRIBUTIONS WITH A RECORD DATE AFTER
THE EFFECTIVE TIME THERETOFORE PAYABLE (BUT FOR THE PROVISIONS OF THIS SECTION)
WITH RESPECT TO SUCH SHARES OF PARENT COMMON STOCK.

(E)                TRANSFERS OF OWNERSHIP.  IF ANY CERTIFICATE FOR SHARES OF
PARENT COMMON STOCK IS TO BE ISSUED IN A NAME OTHER THAN THAT IN WHICH COMPANY
STOCK CERTIFICATE SURRENDERED IN EXCHANGE THEREFOR IS REGISTERED, IT WILL BE A
CONDITION OF THE ISSUANCE THEREOF THAT THE COMPANY COMMON STOCK SO SURRENDERED
WILL BE PROPERLY ENDORSED AND OTHERWISE IN PROPER FORM FOR TRANSFER AND THAT THE
PERSON REQUESTING SUCH EXCHANGE WILL HAVE PAID TO PARENT OR THE EXCHANGE AGENT
ANY TRANSFER OR OTHER TAXES REQUIRED BY REASON OF THE ISSUANCE OF A CERTIFICATE
FOR SHARES OF PARENT COMMON STOCK IN ANY NAME OTHER THAN THAT OF THE REGISTERED
HOLDER OF THE COMPANY COMMON STOCK SURRENDERED, OR ESTABLISHED TO THE
SATISFACTION OF PARENT OR THE EXCHANGE AGENT THAT SUCH TAX HAS BEEN PAID OR IS
NOT PAYABLE, AND SHALL PROVIDE SUCH WRITTEN ASSURANCES REGARDING FEDERAL AND
STATE SECURITIES LAW COMPLIANCE AS THE PARENT OR THE EXCHANGE AGENT MAY
REASONABLY REQUEST.

(F)                TERMINATION OF EXCHANGE SHARES.  ANY EXCHANGE SHARES WHICH
REMAIN UNDISTRIBUTED TO THE STOCKHOLDERS OF THE COMPANY TWELVE (12) MONTHS AFTER
THE EFFECTIVE TIME SHALL BE DELIVERED TO PARENT, UPON DEMAND, AND ANY COMPANY
STOCKHOLDER WHO HAS NOT PREVIOUSLY COMPLIED WITH THIS SECTION SHALL THEREAFTER
LOOK ONLY TO PARENT FOR PAYMENT OF THEIR CLAIM FOR THEIR PORTION OF THE EXCHANGE
SHARES AND ANY DIVIDENDS OR DISTRIBUTIONS WITH RESPECT TO THE EXCHANGE SHARES.

(G)               NO LIABILITY.  NOTWITHSTANDING ANYTHING TO THE CONTRARY IN
THIS SECTION, NONE OF THE EXCHANGE AGENT, PARENT, THE COMPANY OR 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.

(H)               DISSENTING SHARES.  THE PROVISIONS OF THIS SECTION SHALL ALSO
APPLY TO DISSENTING SHARES THAT LOSE THEIR STATUS AS SUCH, EXCEPT THAT THE
OBLIGATIONS OF PARENT UNDER THIS SECTION SHALL COMMENCE ON THE DATE OF LOSS OF
SUCH STATUS AND THE HOLDER OF SUCH SHARES SHALL BE ENTITLED TO RECEIVE IN
EXCHANGE SUCH SHARES TO WHICH SUCH HOLDER IS ENTITLED PURSUANT TO SECTION 1.5.

1.10                   FURTHER ACTION.  IF, AT ANY TIME AFTER THE EFFECTIVE
TIME, ANY FURTHER ACTION THAT IS COMMERCIALLY REASONABLE AND LAWFUL IS
DETERMINED BY PARENT TO BE NECESSARY OR APPROPRIATE TO CARRY OUT THE PURPOSES OF
THIS AGREEMENT OR TO VEST PARENT WITH FULL RIGHT, TITLE AND POSSESSION OF

 

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

 
 

 

ALL SHARES OF COMPANY COMMON STOCK, THE OFFICERS AND DIRECTORS OF THE COMPANY
AND PARENT SHALL BE FULLY AUTHORIZED (IN THE NAME OF THE COMPANY AND OTHERWISE)
TO TAKE SUCH ACTION.

ARTICLE 2  
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company hereby represents and warrants to the Parent that, except as set
forth in the Company’s Disclosure Schedules to be provided at Closing, the
statements contained in this Article 2 are true and correct as set forth below:

2.1                       ORGANIZATION, STANDING, ETC.  THE COMPANY IS A
CORPORATION DULY ORGANIZED AND EXISTING IN GOOD STANDING UNDER THE LAWS OF THE
STATE OF OREGON, AND HAS ALL REQUISITE POWER AND AUTHORITY TO CARRY ON ITS
BUSINESS, TO OWN OR LEASE ITS PROPERTIES AND ASSETS, TO ENTER INTO THIS
AGREEMENT AND TO CARRY OUT THE TERMS HEREOF. COPIES OF THE ARTICLES OF
INCORPORATION AND BY-LAWS OF THE COMPANY THAT HAVE BEEN DELIVERED TO THE PARENT
PRIOR TO THE EXECUTION OF THIS AGREEMENT ARE TRUE AND COMPLETE AND HAVE NOT
SINCE BEEN AMENDED OR REPEALED. EXCEPT AS PROVIDED IN SCHEDULE 2.1 HERETO, THE
COMPANY HAS NO SUBSIDIARIES OR DIRECT OR INDIRECT INTEREST (BY WAY OF STOCK
OWNERSHIP OR OTHERWISE) IN ANY FIRM, CORPORATION, LIMITED LIABILITY COMPANY,
PARTNERSHIP, ASSOCIATION OR BUSINESS.

2.2                       QUALIFICATION.  THE COMPANY IS DULY QUALIFIED TO
CONDUCT BUSINESS AS A FOREIGN CORPORATION AND IS IN GOOD STANDING IN EACH STATE
OR OTHER JURISDICTION WHEREIN THE NATURE OF ITS ACTIVITIES OR PROPERTIES OWNED
OR LEASED MAKES SUCH QUALIFICATION NECESSARY, EXCEPT WHERE THE FAILURE TO BE SO
QUALIFIED COULD NOT REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT
(“MATERIAL ADVERSE EFFECT”) ON THE PROPERTIES, ASSETS, LIABILITIES OR RESULTS OF
OPERATIONS OF THE COMPANY TAKEN AS A WHOLE. 

2.3                       CAPITALIZATION OF THE COMPANY.  THERE ARE 6,600,000
SHARES OF COMMON STOCK OF THE COMPANY ISSUED AND OUTSTANDING, AND SUCH SHARES
ARE DULY AUTHORIZED, VALIDLY ISSUED, FULLY PAID AND, NONE OF SUCH SHARES HAVE
BEEN ISSUED IN VIOLATION OF PREEMPTIVE RIGHTS, IF ANY, OF ANY PERSON. THE OFFER,
ISSUANCE AND SALE OF THE SHARES WERE (A) EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF THE SECURITIES ACT, (B) REGISTERED OR
QUALIFIED (OR WERE EXEMPT FROM REGISTRATION OR QUALIFICATION) UNDER THE
REGISTRATION OR QUALIFICATION REQUIREMENTS OF ALL APPLICABLE STATE SECURITIES
LAWS AND (C) ACCOMPLISHED IN CONFORMITY WITH ALL OTHER APPLICABLE SECURITIES
LAWS. THE COMPANY HAS NO OUTSTANDING OPTIONS, RIGHTS OR COMMITMENTS TO ISSUE
SHARES OR OTHER EQUITY SECURITIES, AND THERE ARE NO OUTSTANDING SECURITIES
CONVERTIBLE OR EXERCISABLE INTO OR EXCHANGEABLE FOR SHARES OR OTHER EQUITY
SECURITIES OF THE COMPANY.

2.4                       INDEBTEDNESS.  THE COMPANY HAS NO INDEBTEDNESS EXCEPT
THE ASSUMED INDEBTEDNESS AS IDENTIFIED ON THE COMPANY FINANCIAL STATEMENTS (AS
DEFINED BELOW) OR IN SCHEDULE 2.4 HERETO.

2.5                       STOCKHOLDERS OF THE COMPANY.  SCHEDULE 2.5 HERETO
CONTAINS A TRUE AND COMPLETE LIST OF THE NAMES AND ADDRESSES OF THE RECORD
OWNERS OF ALL OF THE OUTSTANDING SHARES AND OTHER EQUITY SECURITIES OF THE
COMPANY, TOGETHER WITH THE NUMBER SECURITIES HELD. TO THE BEST KNOWLEDGE OF THE
COMPANY, THERE IS NO VOTING TRUST, AGREEMENT OR ARRANGEMENT AMONG ANY OF THE

 

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

 
 

 

BENEFICIAL HOLDERS OF THE SHARES AFFECTING THE NOMINATION OR ELECTION OF
DIRECTORS OR THE EXERCISE OF THE VOTING RIGHTS OF THE SHARES.

2.6                       ACTS AND PROCEEDINGS.  THE EXECUTION, DELIVERY AND
PERFORMANCE OF THIS AGREEMENT HAS BEEN DULY AUTHORIZED BY THE BOARD OF DIRECTORS
OF THE COMPANY, AND ALL OF THE ACTS AND OTHER PROCEEDINGS REQUIRED FOR THE DUE
AND VALID AUTHORIZATION, EXECUTION, DELIVERY AND PERFORMANCE OF THIS AGREEMENT
HAVE BEEN OR, AT THE CLOSING, SHALL BE, VALIDLY AND APPROPRIATELY TAKEN.

Except for the requisite approval of the Merger and the adoption of this
Agreement by the Company’s stockholders and the Merger filings with the State of
Oregon, no other corporate proceedings on the part of the Company are necessary
to authorize this Agreement or to consummate the transactions contemplated
hereby.

2.7                       COMPLIANCE WITH LAWS AND INSTRUMENTS. THE EXECUTION,
DELIVERY AND PERFORMANCE BY THE COMPANY OF THIS AGREEMENT AND THE CONSUMMATION
BY THE COMPANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT: (A) WILL NOT
REQUIRE ANY AUTHORIZATION, CONSENT OR APPROVAL OF, OR FILING OR REGISTRATION
WITH, ANY COURT OR GOVERNMENTAL AGENCY OR INSTRUMENTALITY, EXCEPT SUCH AS SHALL
HAVE BEEN OBTAINED PRIOR TO THE CLOSING OR AS SET FORTH IN SCHEDULE 2.7, (B)
WILL NOT CAUSE THE COMPANY TO VIOLATE OR CONTRAVENE (I) ANY PROVISION OF LAW,
(II) ANY RULE OR REGULATION OF ANY AGENCY OR GOVERNMENT, (III) ANY ORDER,
JUDGMENT OR DECREE OF ANY COURT, OR (IV) ANY PROVISION OF THE ARTICLES OF
INCORPORATION OR BY-LAWS OF THE COMPANY, (C) WILL NOT VIOLATE OR BE IN CONFLICT
WITH, RESULT IN A BREACH OF OR CONSTITUTE (WITH OR WITHOUT NOTICE OR LAPSE OF
TIME, OR BOTH) A DEFAULT UNDER, ANY INDENTURE, LOAN OR CREDIT AGREEMENT, DEED OF
TRUST, MORTGAGE, SECURITY AGREEMENT OR OTHER CONTRACT, AGREEMENT OR INSTRUMENT
TO WHICH THE COMPANY IS A PARTY OR BY WHICH THE COMPANY OR ANY OF ITS PROPERTIES
IS BOUND OR AFFECTED, EXCEPT WHERE ANY SUCH VIOLATION, CONFLICT, BREACH OR
DEFAULT COULD NOT REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT, AND
(D) WILL NOT RESULT IN THE CREATION OR IMPOSITION OF ANY LIEN UPON ANY PROPERTY
OR ASSET OF THE COMPANY. TO THE KNOWLEDGE OF THE COMPANY, THE COMPANY IS NOT IN
VIOLATION OF, OR (WITH OR WITHOUT NOTICE OR LAPSE OF TIME, OR BOTH) IN DEFAULT
UNDER, ANY MATERIAL TERM OR PROVISION OF ITS ARTICLES OF INCORPORATION OR
BY-LAWS OR ANY INDENTURE, LOAN OR CREDIT AGREEMENT, DEED OF TRUST, MORTGAGE,
SECURITY AGREEMENT OR ANY OTHER MATERIAL AGREEMENT OR INSTRUMENT TO WHICH THE
COMPANY IS A PARTY OR BY WHICH THE COMPANY OR ANY OF ITS RESPECTIVE PROPERTIES
IS BOUND OR AFFECTED, IN EACH CASE EXCEPT AS COULD NOT REASONABLY BE EXPECTED TO
HAVE A MATERIAL ADVERSE EFFECT.

2.8                       BINDING OBLIGATIONS.  THIS AGREEMENT CONSTITUTES THE
LEGAL, VALID AND BINDING OBLIGATION OF THE COMPANY AND IS ENFORCEABLE AGAINST
THE COMPANY IN ACCORDANCE WITH ITS TERMS, EXCEPT AS SUCH ENFORCEMENT IS LIMITED
BY BANKRUPTCY, INSOLVENCY AND OTHER SIMILAR LAWS AFFECTING THE ENFORCEMENT OF
CREDITORS’ RIGHTS GENERALLY AND BY GENERAL PRINCIPLES OF EQUITY.

2.9                       FINANCIAL STATEMENTS.  PRIOR TO THE CLOSING DATE THE
COMPANY SHALL FURNISH PARENT WITH A TRUE AND COMPLETE COPY OF THE FOLLOWING
FINANCIAL STATEMENTS OR THEREAFTER PROVIDE SUCH STATEMENTS AS SHALL BE REQUIRED
BY THE U. S. SECURITIES AND EXCHANGE COMMISSION: (I) THE AUDITED BALANCE SHEETS
OF THE COMPANY AS OF DECEMBER 31, 2012, AND THE RELATED AUDITED STATEMENTS OF
INCOME AND STATEMENTS OF CASH FLOW OF THE COMPANY FOR THE FISCAL YEAR ENDED
DECEMBER 31, 2012; AND (II) AUDITED BALANCE SHEETS AND RELATED AUDITED
STATEMENTS OF INCOME AND

 

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

 
 

 

AUDITED STATEMENTS OF CASH FLOW FOR CHIURAZZI INTERNAZIONALE, S.R.L. FOR THE
FISCAL YEAR ENDING DECEMBER 31, 2011 AND THE PERIOD ENDING DECEMBER 17, 2012
(TOGETHER ITEMS (I) AND (II) IN THIS SECTION ARE THE “COMPANY FINANCIAL
STATEMENTS”). THE COMPANY FINANCIAL STATEMENTS WILL FAIRLY PRESENT IN ALL
MATERIAL RESPECTS THE FINANCIAL POSITION, RESULTS OF OPERATIONS AND OTHER
INFORMATION PURPORTED TO BE SHOWN THEREON OF THE COMPANY, AT THE DATES AND FOR
THE RESPECTIVE PERIODS TO WHICH THEY APPLY. THE COMPANY FINANCIAL STATEMENTS
THROUGH DECEMBER 31, 2012 HAVE BEEN AUDITED BY LBB &ASSOCIATES LTD, LLP AND ALL
COMPANY FINANCIAL STATEMENTS (I) WERE PREPARED IN CONFORMITY WITH UNITED STATES
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES CONSISTENTLY APPLIED THROUGHOUT THE
PERIODS INVOLVED (“GAAP”); AND (II) HAVE BEEN ADJUSTED FOR ALL NORMAL AND
RECURRING ACCRUALS (AND, IN THE CASE OF UNAUDITED FINANCIAL INFORMATION, ON A
BASIS CONSISTENT WITH YEAR-END AUDITS). THE FINANCIAL STATEMENTS OF CHIURAZZI
INTERNAZIONALE, S.R.L. HAVE BEEN AUDITED BY BAKER TILLY REVISA S.P.A. AND WERE
PREPARED IN CONFORMITY WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS.

2.10                   LIABILITIES.  EXCEPT AS OTHERWISE DISCLOSED IN COMPANY
FINANCIAL STATEMENTS, NOTES TO THE FINANCIAL STATEMENTS, OR IN SCHEDULE 2.4, THE
COMPANY DOES NOT HAVE ANY MATERIAL LIABILITY OR OBLIGATION WHATSOEVER, EITHER
DIRECT OR INDIRECT, MATURED OR UNMATURED, ACCRUED, ABSOLUTE, CONTINGENT OR
OTHERWISE. FURTHERMORE, THERE IS NO PENDING PROCEEDING THAT HAS BEEN COMMENCED
AGAINST THE COMPANY THAT CHALLENGES, OR MAY HAVE THE EFFECT OF PREVENTING,
DELAYING, MAKING ILLEGAL, OR OTHERWISE INTERFERING WITH, ANY OF THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT. TO THE KNOWLEDGE OF THE COMPANY, NO SUCH
PROCEEDING HAS BEEN THREATENED.

2.11                   ADVERSE OFFICER AND DIRECTOR INFORMATION. 

Except as set forth on Schedule 2.11, during the past five year period neither
the Company, nor, to its knowledge, any of its executive officers, members of
executive management or directors, nor any Person intended upon consummation of
the Merger to be nominated by the Company to become an officer, member of
executive management or director of the Surviving Company or any successor
entity or subsidiary, has been the subject of:

(a)        a petition under the federal bankruptcy laws or any other insolvency
or moratorium law or has a receiver, fiscal agent or similar officer been
appointed by a court for the business or property of the Company or such Person,
or any partnership in which the Company or any such Person was a general partner
at or within two years before the time of such filing, or any corporation or
business association of which the Company or any such Person was an executive
officer at or within two years before the time of such filing;

(b)        a conviction in a criminal proceeding or a named subject of a pending
criminal proceeding  for violation of any federal or state securities statute or
regulation;(c) any order, judgment or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction, permanently or
temporarily enjoining the Company or any such Person from, or otherwise limiting
(i) acting as a futures commission merchant, introducing broker, commodity
trading advisor, commodity pool operator, floor broker, leverage transaction
merchant, any other Person regulated by the United States Commodity Futures
Trading Commission or the SEC or an associated Person of any of the foregoing,
or as an investment adviser, underwriter, broker or dealer in securities, or as
an affiliated Person, director or employee of any investment company, bank,
savings and loan association or insurance company, or engaging in or continuing
any conduct or practice in connection with such activity; (ii) engaging in any
type of business practice; or (iii) engaging in any activity in connection with
the purchase or sale of any security or commodity or in connection with any
violation of federal, state or other securities laws or commodities laws;

 

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

 
 

 

 (d)      a finding by a court of competent jurisdiction in a civil action or by
the SEC to have violated any securities law, regulation or decree and the
judgment in such civil action or finding by the Commission has not been
subsequently reversed, suspended or vacated; or

(e)        a finding by a court of competent jurisdiction in a civil action or
by the United States Commodity Futures Trading Commission to have violated any
federal commodities law, and the judgment in such civil action or finding has
not been subsequently reversed, suspended or vacated. 

2.12                   ABSENCE OF CERTAIN CHANGES.  SINCE THE DATE OF THE
COMPANY FINANCIAL STATEMENTS, AND EXCEPT AS SET FORTH ON SCHEDULE 2.12, THE
FINANCIAL STATEMENTS OR THE NOTES TO THE FINANCIAL STATEMENTS, THE COMPANY HAS
BEEN OPERATED ONLY IN THE ORDINARY COURSE, CONSISTENT WITH PAST PRACTICE, AND
THERE HAS NOT BEEN ANY ADVERSE CHANGE, OR ANY EVENT, FACT OR CIRCUMSTANCE WHICH
MIGHT REASONABLY BE EXPECTED TO RESULT IN AN ADVERSE CHANGE, IN EITHER EVENT
THAT WOULD HAVE A MATERIAL ADVERSE EFFECT. WITHOUT LIMITING THE GENERALITY OF
THE FOREGOING, EXCEPT AS SET FORTH ON SCHEDULE 2.12 AND EXCEPT IN THE ORDINARY
COURSE OF BUSINESS, THERE HAS NOT BEEN WITH RESPECT TO THE COMPANY:

(A)                ANY SALE, LEASE, TRANSFER, LICENSE OR ASSIGNMENT OF ANY
ASSETS, TANGIBLE OR INTANGIBLE, OF THE COMPANY;

(B)               ANY DAMAGE, DESTRUCTION OR PROPERTY LOSS, WHETHER OR NOT
COVERED BY INSURANCE, AFFECTING ADVERSELY THE PROPERTIES OR BUSINESS OF THE
COMPANY;

(C)                ANY DECLARATION OR SETTING ASIDE OR PAYMENT OF ANY DIVIDEND
OR DISTRIBUTION WITH RESPECT TO THE SHARES OF CAPITAL STOCK OF THE COMPANY OR
ANY REDEMPTION, PURCHASE OR OTHER ACQUISITION OF ANY SUCH SHARES;

(D)               ANY SUBJECTION TO ANY LIEN ON ANY OF THE ASSETS, TANGIBLE OR
INTANGIBLE, OF THE COMPANY;

(E)                ANY INCURRENCE OF INDEBTEDNESS OR LIABILITY OR ASSUMPTION OF
OBLIGATIONS BY THE COMPANY;

(F)                ANY WAIVER OR RELEASE BY THE COMPANY OF ANY RIGHT OF ANY
MATERIAL VALUE;

(G)               ANY COMPENSATION OR BENEFITS PAID TO OFFICERS OR DIRECTORS OF
THE COMPANY;

(H)               ANY CHANGE MADE OR AUTHORIZED IN THE ARTICLES OF INCORPORATION
OR BYLAWS OF THE COMPANY;

 

 

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

 
 

 

(I)                 ANY LOAN TO OR OTHER TRANSACTION WITH ANY OFFICER, DIRECTOR
OR STOCKHOLDER OF THE COMPANY GIVING RISE TO ANY CLAIM OR RIGHT OF THE COMPANY
AGAINST ANY SUCH PERSON OR OF SUCH PERSON AGAINST THE COMPANY; OR

(J)                 ANY MATERIAL ADVERSE CHANGE IN THE CONDITION (FINANCIAL OR
OTHERWISE) OF THE RESPECTIVE PROPERTIES, ASSETS, LIABILITIES OR BUSINESS OF THE
COMPANY.

2.13                   SCHEDULE OF ASSETS AND CONTRACTS.  ATTACHED HERETO AS
SCHEDULES 2.13(A) THROUGH 2.13(D) ARE VARIOUS SCHEDULES LISTING ASSETS AND
CONTRACTS OF THE COMPANY, AS DESCRIBED HEREIN.

(A)                SCHEDULE 2.13(A) CONTAINS A TRUE AND COMPLETE LIST OF ALL
REAL PROPERTY LEASED BY THE COMPANY, INCLUDING A BRIEF DESCRIPTION OF EACH ITEM
THEREOF AND OF THE NATURE OF THE COMPANY’ INTEREST THEREIN, AND OF ALL TANGIBLE
PERSONAL PROPERTY OWNED OR LEASED BY THE COMPANY HAVING A COST OR FAIR MARKET
VALUE OF GREATER THAN $25,000, INCLUDING A BRIEF DESCRIPTION OF EACH ITEM AND OF
THE NATURE OF THE INTEREST OF THE COMPANY THEREIN.  ALL THE PROPERTY LISTED IN
SCHEDULE 2.13(A) AS BEING LEASED BY THE COMPANY IS HELD BY THE COMPANY UNDER
VALID AND ENFORCEABLE LEASES HAVING THE RENTAL TERMS, TERMINATION DATES AND
RENEWAL AND PURCHASE OPTIONS DESCRIBED IN SCHEDULE 2.13(A); AND THERE IS NOT,
UNDER ANY SUCH LEASE, ANY EXISTING DEFAULT OR EVENT OF DEFAULT OR EVENT WHICH
WITH NOTICE OR LAPSE OF TIME, OR BOTH, WOULD CONSTITUTE A DEFAULT BY THE
COMPANY, AND THE COMPANY HAS NOT RECEIVED ANY NOTICE OR CLAIM OF ANY SUCH
DEFAULT. THE COMPANY DOES NOT OWN ANY REAL PROPERTY.

(B)               EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE BALANCE
SHEET OR THE NOTES THERETO, OR AS DISCLOSED IN SCHEDULE 2.13(B) HERETO, THE
COMPANY IS NOT A PARTY TO ANY WRITTEN OR ORAL AGREEMENT NOT MADE IN THE ORDINARY
COURSE OF BUSINESS THAT IS MATERIAL TO THE COMPANY. EXCEPT AS DISCLOSED IN
SCHEDULE 2.13(B) HERETO, THE COMPANY IS NOT A PARTY TO ANY WRITTEN OR ORAL (A)
AGREEMENT WITH ANY LABOR UNION, (B) AGREEMENT FOR THE PURCHASE OF FIXED ASSETS
OR FOR THE PURCHASE OF MATERIALS, SUPPLIES OR EQUIPMENT IN EXCESS OF NORMAL
OPERATING REQUIREMENTS, (C) AGREEMENT FOR THE EMPLOYMENT OF ANY OFFICER,
INDIVIDUAL EMPLOYEE OR OTHER PERSON ON A FULL-TIME BASIS OR ANY AGREEMENT WITH
ANY PERSON FOR CONSULTING SERVICES, (D) BONUS, PENSION, PROFIT SHARING,
RETIREMENT, STOCK PURCHASE, STOCK OPTION, DEFERRED COMPENSATION, MEDICAL,
HOSPITALIZATION OR LIFE INSURANCE OR SIMILAR PLAN, CONTRACT OR UNDERSTANDING
WITH RESPECT TO ANY OR ALL OF THE EMPLOYEES OF THE COMPANY OR ANY OTHER PERSON,
(E) INDENTURE, LOAN OR CREDIT AGREEMENT, NOTE AGREEMENT, DEED OF TRUST,
MORTGAGE, SECURITY AGREEMENT, PROMISSORY NOTE OR OTHER AGREEMENT OR INSTRUMENT
RELATING TO OR EVIDENCING INDEBTEDNESS OR SUBJECTING ANY ASSET OR PROPERTY OF
THE COMPANY TO ANY LIEN OR EVIDENCING ANY INDEBTEDNESS, (F) GUARANTY OF ANY
INDEBTEDNESS, (G) OTHER THAN AS SET FORTH IN SCHEDULE 2.13(A) HERETO, LEASE OR
AGREEMENT UNDER WHICH THE COMPANY IS LESSEE OF OR HOLDS OR OPERATES ANY
PROPERTY, REAL OR PERSONAL, OWNED BY ANY OTHER PERSON UNDER WHICH PAYMENTS TO
SUCH PERSON EXCEED $25,000 PER YEAR OR WITH AN UNEXPIRED TERM (INCLUDING ANY
PERIOD COVERED BY AN OPTION TO RENEW EXERCISABLE BY ANY OTHER PARTY) OF MORE
THAN 60 DAYS, (H) LEASE OR AGREEMENT UNDER WHICH THE COMPANY IS LESSOR OR
PERMITS ANY PERSON TO HOLD OR OPERATE ANY PROPERTY, REAL OR PERSONAL, OWNED OR
CONTROLLED BY THE COMPANY, (I) AGREEMENT GRANTING ANY PREEMPTIVE RIGHT, RIGHT OF
FIRST REFUSAL OR SIMILAR RIGHT TO ANY PERSON, (J) AGREEMENT OR ARRANGEMENT

 

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

 
 

 

WITH ANY AFFILIATE OR ANY “ASSOCIATE” (AS SUCH TERM IS DEFINED IN RULE 405 UNDER
THE SECURITIES ACT) OF THE COMPANY OR ANY PRESENT OR FORMER OFFICER, DIRECTOR OR
STOCKHOLDER OF THE COMPANY, (K) AGREEMENT OBLIGATING THE COMPANY TO PAY ANY
ROYALTY OR SIMILAR CHARGE FOR THE USE OR EXPLOITATION OF ANY TANGIBLE OR
INTANGIBLE PROPERTY, (1) COVENANT NOT TO COMPETE OR OTHER RESTRICTION ON ITS
ABILITY TO CONDUCT A BUSINESS OR ENGAGE IN ANY OTHER ACTIVITY, (M) DISTRIBUTOR,
DEALER, MANUFACTURER’S REPRESENTATIVE, SALES AGENCY, FRANCHISE OR ADVERTISING
CONTRACT OR COMMITMENT, (N) AGREEMENT TO REGISTER SECURITIES UNDER THE
SECURITIES ACT, (O) COLLECTIVE BARGAINING AGREEMENT, OR (P) AGREEMENT OR OTHER
COMMITMENT OR ARRANGEMENT WITH ANY PERSON CONTINUING FOR A PERIOD OF MORE THAN
THREE MONTHS FROM THE CLOSING DATE WHICH INVOLVES AN EXPENDITURE OR RECEIPT BY
THE COMPANY IN EXCESS OF $25,000. EXCEPT AS DISCLOSED IN SCHEDULE 2.13(B), NONE
OF THE AGREEMENTS, CONTRACTS, LEASES, INSTRUMENTS OR OTHER DOCUMENTS OR
ARRANGEMENTS LISTED IN SCHEDULE 2.13(A) THROUGH SCHEDULE 2.13(D) REQUIRES THE
CONSENT OF ANY OF THE PARTIES THERETO OTHER THAN THE COMPANY TO PERMIT THE
CONTRACT, AGREEMENT, LEASE, INSTRUMENT OR OTHER DOCUMENT OR ARRANGEMENT TO
REMAIN EFFECTIVE FOLLOWING CONSUMMATION OF THE MERGER AND EXCHANGE AND THE
TRANSACTIONS CONTEMPLATED HEREBY.

(C)                SCHEDULE 2.13(C) CONTAINS A TRUE AND COMPLETE LIST OF ALL
INSURANCE POLICIES AND INSURANCE COVERAGE WITH RESPECT TO THE COMPANY, AND ITS
BUSINESS, PREMISES, PROPERTIES, ASSETS, EMPLOYEES AND AGENTS.

(D)               SCHEDULE 2.13(D) CONTAINS A TRUE AND COMPLETE LIST OF ALL
PATENTS, PATENT APPLICATIONS, TRADE NAMES, TRADEMARKS, TRADEMARK REGISTRATIONS
AND APPLICATIONS, COPYRIGHTS, COPYRIGHT REGISTRATIONS AND APPLICATIONS, AND
GRANTS OF LICENSES, BOTH DOMESTIC AND FOREIGN, PRESENTLY OWNED, POSSESSED, USED
OR HELD BY THE COMPANY; AND, EXCEPT AS SET FORTH IN SCHEDULE 2.16, THE COMPANY
OWNS THE ENTIRE RIGHT, TITLE AND INTEREST IN AND TO THE SAME, FREE AND CLEAR OF
ALL LIENS AND RESTRICTIONS. SCHEDULE 2.13(D) ALSO CONTAINS A TRUE AND COMPLETE
LIST OF ALL LICENSES GRANTED TO OR BY THE COMPANY WITH RESPECT TO THE FOREGOING.
EXCEPT AS DISCLOSED IN SCHEDULE 2.13(D), NONE OF THE COMPANY’S PATENTS, PATENT
APPLICATIONS, TRADE NAMES, TRADEMARKS, TRADEMARK REGISTRATIONS AND APPLICATIONS,
COPYRIGHTS, COPYRIGHT REGISTRATIONS AND APPLICATIONS AND GRANTS OF LICENSES SET
FORTH IN SCHEDULE 2.13(D) ARE SUBJECT TO ANY PENDING OR, TO THE KNOWLEDGE OF THE
COMPANY AND THE STOCKHOLDERS, THREATENED CHALLENGE. NEITHER THE EXECUTION NOR
DELIVERY OF THIS AGREEMENT, NOR THE CONSUMMATION OF THE TRANSACTIONS
CONTEMPLATED HEREBY, WILL GIVE ANY LICENSOR OR LICENSEE OF THE COMPANY ANY RIGHT
TO CHANGE THE TERMS OR PROVISIONS OF, TERMINATE OR CANCEL, ANY LICENSE TO WHICH
THE COMPANY IS A PARTY.

(E)                THE COMPANY HAS FURNISHED TO PARENT TRUE AND COMPLETE COPIES
OF ALL AGREEMENTS AND OTHER DOCUMENTS AND A DESCRIPTION OF ALL APPLICABLE ORAL
AGREEMENTS DISCLOSED OR REFERRED TO IN SCHEDULE 2.13(A) THROUGH SCHEDULE
2.13(D), AS WELL AS ANY ADDITIONAL AGREEMENTS OR DOCUMENTS, REQUESTED BY PARENT.
THE COMPANY HAS IN ALL MATERIAL RESPECTS PERFORMED ALL OBLIGATIONS REQUIRED TO
BE PERFORMED BY IT TO DATE AND IS NOT IN DEFAULT IN ANY RESPECT UNDER ANY OF THE
CONTRACTS, AGREEMENTS, LEASES, DOCUMENTS, COMMITMENTS OR OTHER ARRANGEMENTS TO
WHICH IT IS A PARTY OR BY WHICH IT OR ANY OF ITS PROPERTY IS OTHERWISE BOUND OR
AFFECTED. TO THE BEST KNOWLEDGE OF THE COMPANY, ALL PARTIES HAVING MATERIAL
CONTRACTUAL ARRANGEMENTS WITH THE COMPANY ARE IN SUBSTANTIAL

 

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

 
 

 

COMPLIANCE THEREWITH AND NONE ARE IN MATERIAL DEFAULT THEREUNDER. THE COMPANY
HAS NO OUTSTANDING POWER OF ATTORNEY.

2.14                   EMPLOYEES.  THE COMPANY HAS COMPLIED IN ALL MATERIAL
RESPECTS WITH ALL LAWS RELATING TO THE EMPLOYMENT OF LABOR, AND THE COMPANY HAS
ENCOUNTERED NO MATERIAL LABOR UNION DIFFICULTIES. EXCEPT AS SET FORTH IN
SCHEDULE 2.14, AND OTHER THAN PURSUANT TO ORDINARY ARRANGEMENTS OF EMPLOYMENT
COMPENSATION, THE COMPANY IS NOT UNDER ANY OBLIGATION OR LIABILITY TO ANY
OFFICER, DIRECTOR, EMPLOYEE OR AFFILIATE OF THE COMPANY.

2.15                   PATENTS AND OTHER INTANGIBLE ASSETS. 

(A)                EXCEPT AS SET FORTH IN SCHEDULE 2.15, THE COMPANY (I) OWNS OR
HAS THE RIGHT TO USE, FREE AND CLEAR OF ALL LIENS, CLAIMS AND RESTRICTIONS, ALL
PATENTS, TRADEMARKS, SERVICE MARKS, TRADE NAMES, COPYRIGHTS, LICENSES AND RIGHTS
WITH RESPECT TO THE FOREGOING USED IN OR NECESSARY FOR THE CONDUCT OF ITS
BUSINESS AS NOW CONDUCTED OR PROPOSED TO BE CONDUCTED WITHOUT INFRINGING UPON A
CLAIMED RIGHT OF ANY PERSON UNDER OR WITH RESPECT TO ANY OF THE FOREGOING AND
(II) IS NOT OBLIGATED TO MAKE ANY PAYMENTS BY WAY OF ROYALTIES, FEES OR
OTHERWISE TO ANY OWNER OR LICENSOR OF, ANY PATENT, TRADEMARK, SERVICE MARK,
TRADE NAME, COPYRIGHT OR OTHER INTANGIBLE ASSET, WITH RESPECT TO THE USE THEREOF
OR IN CONNECTION WITH THE CONDUCT OF ITS BUSINESS.

(B)               TO THE KNOWLEDGE OF THE COMPANY, THE COMPANY OWNS OR HAS THE
UNRESTRICTED RIGHT TO USE ALL TRADE SECRETS, IF ANY, INCLUDING KNOW-HOW,
NEGATIVE KNOW-HOW, FORMULAS, PATTERNS, PROGRAMS, DEVICES, METHODS, TECHNIQUES,
INVENTIONS, DESIGNS, PROCESSES, COMPUTER PROGRAMS AND TECHNICAL DATA
(COLLECTIVELY, “INTELLECTUAL PROPERTY”) REQUIRED FOR THE DEVELOPMENT, OPERATION
AND SALE OF ITS PRODUCTS, AND ALL RELATED TECHNOLOGIES, PRODUCTS AND SERVICES.

2.16                   EMPLOYEE BENEFIT PLANS; ERISA.   

(A)                EXCEPT AS DISCLOSED IN SCHEDULE 2.16 HERETO, THERE ARE NO
“EMPLOYEE BENEFIT PLANS” (WITHIN THE MEANING OF SECTION 3(3) OF THE ERISA) OR
ANY OTHER EMPLOYEE BENEFIT OR FRINGE BENEFIT ARRANGEMENTS, PRACTICES, CONTRACTS,
POLICIES OR PROGRAMS OTHER THAN PROGRAMS MERELY INVOLVING THE REGULAR PAYMENT OF
WAGES, COMMISSIONS, OR BONUSES ESTABLISHED, MAINTAINED OR CONTRIBUTED TO BY THE
COMPANY.  THE PLANS LISTED IN SCHEDULE 2.16 HERETO ARE HEREINAFTER REFERRED TO
AS THE “EMPLOYEE BENEFIT PLANS.”

(B)               ALL CURRENT AND PRIOR MATERIAL DOCUMENTS, INCLUDING ALL
AMENDMENTS THERETO, WITH RESPECT TO EACH EMPLOYEE BENEFIT PLAN HAVE BEEN GIVEN
TO PARENT OR ITS ADVISORS.

(C)                ALL EMPLOYEE BENEFIT PLANS ARE IN MATERIAL COMPLIANCE WITH
THE APPLICABLE REQUIREMENTS OF ERISA, THE CODE, AND ANY OTHER APPLICABLE STATE,
FEDERAL OR FOREIGN LAW.

(D)               THERE ARE NO PENDING OR, TO THE KNOWLEDGE OF THE COMPANY,
THREATENED, CLAIMS OR LAWSUITS WHICH HAVE BEEN ASSERTED OR INSTITUTED AGAINST
ANY EMPLOYEE BENEFIT PLAN, THE ASSETS OF ANY OF THE TRUSTS OR FUNDS UNDER THE
EMPLOYEE BENEFIT PLANS, THE PLAN

 

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

 
 

 

SPONSOR OR THE PLAN ADMINISTRATOR OF ANY OF THE EMPLOYEE BENEFIT PLANS OR
AGAINST ANY FIDUCIARY OF AN EMPLOYEE BENEFIT PLAN WITH RESPECT TO THE OPERATION
OF SUCH PLAN.

(E)                THERE IS NO PENDING OR, TO THE KNOWLEDGE OF THE COMPANY,
THREATENED, INVESTIGATION OR PENDING OR POSSIBLE ENFORCEMENT ACTION BY THE
PENSION BENEFIT GUARANTY CORPORATION, THE DEPARTMENT OF LABOR, THE INTERNAL
REVENUE SERVICE OR ANY OTHER GOVERNMENT AGENCY WITH RESPECT TO ANY EMPLOYEE
BENEFIT PLAN. 

(F)                NO ACTUAL OR, TO THE KNOWLEDGE OF THE COMPANY, CONTINGENT,
LIABILITY EXISTS WITH RESPECT TO THE FUNDING OF ANY EMPLOYEE BENEFIT PLAN OR FOR
ANY OTHER EXPENSE OR OBLIGATION OF ANY EMPLOYEE BENEFIT PLAN, EXCEPT AS
DISCLOSED ON THE FINANCIAL STATEMENTS OF THE COMPANY OR THE SCHEDULES TO THIS
AGREEMENT, AND TO THE KNOWLEDGE OF THE COMPANY, NO CONTINGENT LIABILITY EXISTS
UNDER ERISA WITH RESPECT TO ANY “MULTI-EMPLOYER PLAN,” AS DEFINED IN SECTION
3(37) OR SECTION 4001(A)(3) OF ERISA.

2.17                   THE COMPANY HAS GOOD, VALID AND MARKETABLE TITLE TO ALL
PROPERTIES AND ASSETS USED IN THE CONDUCT OF ITS BUSINESS FREE OF ALL LIENS AND
OTHER ENCUMBRANCES, EXCEPT PERMITTED LIENS AND SUCH ORDINARY AND CUSTOMARY
IMPERFECTIONS OF TITLE, RESTRICTIONS AND ENCUMBRANCES AS COULD NOT REASONABLY BE
EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT.

2.18                   EXCEPT AS DISCLOSED IN SCHEDULE 2.18 HERETO, NO SUIT,
PROCEEDING OR ACTION OR THREAT OF SUIT, PROCEEDING OR ACTION HAS BEEN ASSERTED
OR MADE AGAINST THE COMPANY WITHIN THE LAST TWO YEARS DUE TO ALLEGED BODILY
INJURY, DEATH OR PROPERTY DAMAGE ARISING OUT OF THE FUNCTION OR MALFUNCTION OF A
PRODUCT, PROCEDURE OR SERVICE DESIGNED, MANUFACTURED, SOLD OR DISTRIBUTED BY THE
COMPANY.

2.19                   EXCEPT AS DISCLOSED IN SCHEDULE 2.19 HERETO, THERE IS NO
LEGAL ACTION, SUIT, ARBITRATION OR OTHER LEGAL, ADMINISTRATIVE OR OTHER
GOVERNMENTAL PROCEEDING PENDING OR, TO THE KNOWLEDGE OF THE COMPANY, THREATENED
AGAINST OR AFFECTING THE COMPANY OR ITS PROPERTIES, ASSETS OR BUSINESS THAT
COULD REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT. THE COMPANY IS
NOT IN DEFAULT WITH RESPECT TO ANY ORDER, WRIT, JUDGMENT, INJUNCTION, DECREE,
DETERMINATION OR AWARD OF ANY COURT OR ANY GOVERNMENTAL AGENCY OR
INSTRUMENTALITY OR ARBITRATION AUTHORITY.

2.20                   THE COMPANY POSSESSES FROM THE APPROPRIATE GOVERNMENTAL
AUTHORITIES ALL LICENSES, PERMITS, AUTHORIZATIONS, APPROVALS, FRANCHISES AND
RIGHTS NECESSARY FOR THE COMPANY TO ENGAGE IN THE BUSINESSES CURRENTLY CONDUCTED
BY IT (EXCEPT FOR THOSE, THE ABSENCE OF WHICH WOULD NOT REASONABLY BE EXPECTED
TO HAVE A MATERIAL ADVERSE EFFECT), AND ALL ARE IN FULL FORCE AND EFFECT.

2.21                   EXCEPT AS DISCLOSED IN SCHEDULE 2.21 HERETO, NO OFFICER,
DIRECTOR OR STOCKHOLDER OF THE COMPANY OR ANY AFFILIATE OR “ASSOCIATE” (AS SUCH
TERM IS DEFINED IN RULE 405 UNDER THE SECURITIES ACT) OF ANY SUCH PERSON OR THE
COMPANY HAS OR HAS HAD, EITHER DIRECTLY OR INDIRECTLY, (A) AN INTEREST IN ANY
PERSON THAT (I) FURNISHES OR SELLS SERVICES OR PRODUCTS THAT ARE FURNISHED OR
SOLD OR ARE PROPOSED TO BE FURNISHED OR SOLD BY THE COMPANY OR (II) PURCHASES
FROM OR SELLS OR FURNISHES TO THE COMPANY ANY GOODS OR SERVICES, OR (B) A
BENEFICIAL INTEREST IN ANY CONTRACT OR AGREEMENT TO WHICH EITHER OF THE COMPANY
IS A PARTY OR BY WHICH EITHER OF THEM MAY BE BOUND OR AFFECTED.

 

 

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

 
 

 

2.22                   THERE IS NO SUBSTANCE OR MATERIAL DEFINED OR DESIGNATED
AS HAZARDOUS OR TOXIC WASTE, MATERIAL, SUBSTANCE OR OTHER SIMILAR TERM, BY ANY
ENVIRONMENTAL STATUTE, REGULATION OR ORDINANCE CURRENTLY IN EFFECT, ON, ABOUT,
OR IN ANY OF THE REAL PROPERTY IN WHICH THE COMPANY NOW HAS OR PREVIOUSLY HAD
ANY LEASEHOLD OR OWNERSHIP INTEREST.

2.23                   THE COMPANY HAS NOT BEEN ADVISED WITHIN THE PAST THIRTY
(30) DAYS THAT ANY MATERIAL CUSTOMER, SUPPLIER OR INDEPENDENT CONTRACTOR OF THE
COMPANY INTENDS TO TERMINATE OR MATERIALLY CURTAIL ITS BUSINESS RELATIONSHIP
WITH THE COMPANY WHICH COULD REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE
EFFECT.

2.24                   NEITHER THE COMPANY NOR, TO THEIR KNOWLEDGE, ANY
DIRECTOR, OFFICER, STOCKHOLDER, AGENT, EMPLOYEE OR OTHER PERSON ASSOCIATED WITH
OR ACTING ON BEHALF OF THE COMPANY, HAS USED ANY CORPORATE FUNDS FOR UNLAWFUL
CONTRIBUTIONS, GIFTS, ENTERTAINMENT OR OTHER UNLAWFUL EXPENSES RELATING TO
POLITICAL ACTIVITY; MADE ANY DIRECT OR INDIRECT UNLAWFUL PAYMENTS TO GOVERNMENT
OFFICIALS OR EMPLOYEES FROM CORPORATE FUNDS; ESTABLISHED OR MAINTAINED ANY
UNLAWFUL OR UNRECORDED FUND OF CORPORATE MONIES OR OTHER ASSETS; MADE ANY FALSE
OR FICTITIOUS ENTRIES ON THE BOOKS OF RECORD OF ANY SUCH CORPORATIONS; OR MADE
ANY BRIBE, REBATE, PAYOFF, INFLUENCE PAYMENT, KICKBACK OR OTHER UNLAWFUL
PAYMENT.

2.25                   EXCEPT AS DISCLOSED IN SCHEDULE 2.25, THE COMPANY HAS NO
LIABILITY OR OBLIGATION OR COMMITMENT TO ANY STOCKHOLDER OR ANY AFFILIATE OR
“ASSOCIATE” (AS SUCH TERM IS DEFINED IN RULE 405 UNDER THE SECURITIES ACT) OF
ANY STOCKHOLDER, NOR DOES ANY STOCKHOLDER OR ANY SUCH AFFILIATE OR ASSOCIATE
HAVE ANY LIABILITY, OBLIGATION OR COMMITMENT TO THE COMPANY.

2.26                   NO REPRESENTATION OR WARRANTY BY THE COMPANY HEREIN AND
NO INFORMATION DISCLOSED IN THE SCHEDULES OR EXHIBITS HERETO BY THE COMPANY,
WHEN CONSIDERED AS A WHOLE TOGETHER WITH ALL OTHER INFORMATION FURNISHED TO
PARENT, CONTAINS ANY UNTRUE STATEMENT OF A MATERIAL FACT OR OMITS TO STATE A
MATERIAL FACT NECESSARY TO MAKE THE STATEMENTS CONTAINED HEREIN OR THEREIN NOT
MISLEADING.

2.27                   BROKER’S AND FINDER’S FEES.  NO PERSON HAS, OR AS A
RESULT OF THE TRANSACTIONS CONTEMPLATED HEREIN WILL HAVE, ANY RIGHT OR VALID
CLAIM AGAINST THE COMPANY FOR ANY COMMISSION, FEE OR OTHER COMPENSATION AS A
FINDER OR BROKER, OR IN ANY SIMILAR CAPACITY, EXCEPT AS DISCLOSED IN SCHEDULE
2.27 HERETO.

ARTICLE 3  
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

 

            Parent and Merger Sub (with respect to the representations,
warranties and covenants of Merger Sub) represent and warrant to the Company
that, except as set forth in the Parent’s Disclosure Schedules attached hereto,
the statements contained in this Article 3 are true and correct as set forth
below:  

3.1                       ORGANIZATION AND GOOD STANDING. 

(A)                PARENT IS A CORPORATION DULY ORGANIZED, VALIDLY EXISTING AND
IN GOOD STANDING UNDER THE LAWS OF THE STATE OF NEVADA, WITH REQUISITE CORPORATE
POWER AND AUTHORITY TO CONDUCT ITS BUSINESS AS NOW BEING CONDUCTED AND TO OWN OR
USE ITS PROPERTIES

 

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

 
 

 

AND ASSETS. PARENT HAS NOT CONDUCTED ANY BUSINESS UNDER OR OTHERWISE USED, FOR
ANY PURPOSE OR IN ANY JURISDICTION, ANY FICTITIOUS NAME, ASSUMED NAME, TRADE
NAME OR OTHER NAME.

(B)               PARENT IS DULY QUALIFIED TO DO BUSINESS AS A FOREIGN
CORPORATION AND IS IN GOOD STANDING UNDER THE LAWS OF EACH STATE OR OTHER
JURISDICTION IN WHICH EITHER THE OWNERSHIP OR USE OF THE PROPERTIES OWNED OR
USED BY IT, OR THE NATURE OF THE ACTIVITIES CONDUCTED BY IT, REQUIRES SUCH
QUALIFICATION EXCEPT WHERE THE FAILURE TO BE SO QUALIFIED OR IN GOOD STANDING
WOULD NOT HAVE A MATERIAL ADVERSE EFFECT ON PARENT.

(C)                SCHEDULE 3.1(C) ACCURATELY SETS FORTH (I) THE NAMES OF THE
MEMBERS OF THE BOARD OF DIRECTORS OF PARENT, (II) THE NAMES OF THE MEMBERS OF
EACH COMMITTEE OF SUCH BOARD OF DIRECTORS, AND (III) THE NAMES AND TITLES OF THE
OFFICERS OF PARENT.

(D)               MERGER SUB WAS FORMED FOR THE SOLE PURPOSE OF EFFECTING A
MERGER AND, EXCEPT AS CONTEMPLATED BY THIS AGREEMENT, MERGER SUB HAS NOT
CONDUCTED ANY BUSINESS ACTIVITIES AND DOES NOT HAVE ANY LIABILITIES. 

3.2                       SUBSIDIARIES. 

(A)                SCHEDULE 3.2(A) SETS FORTH ALL DIRECT AND INDIRECT
SUBSIDIARIES OF PARENT. PARENT OWNS ALL OF THE EQUITY OF EACH SUBSIDIARY. EXCEPT
AS SET FORTH ON SCHEDULE 3.2(A), PARENT DOES NOT HAVE ANY SUBSIDIARIES OR
AFFILIATED COMPANIES AND DOES NOT OTHERWISE OWN ANY SHARES IN THE CAPITAL OF OR
ANY INTEREST IN, OR CONTROL, DIRECTLY OR INDIRECTLY, ANY ENTITY. PARENT HAS NOT
AGREED AND IS NOT OBLIGATED TO MAKE ANY FUTURE INVESTMENT IN OR CAPITAL
CONTRIBUTION TO ANY ENTITY. PARENT HAS NOT GUARANTEED AND IS NOT RESPONSIBLE OR
LIABLE FOR ANY OBLIGATION OF ANY OF THE ENTITIES IN WHICH IT OWNS OR HAS OWNED
ANY EQUITY INTEREST.

(B)               EACH SUBSIDIARY OF PARENT: (I) IS A CORPORATION DULY ORGANIZED
AND VALIDLY EXISTING UNDER THE LAWS OF ITS JURISDICTION OF INCORPORATION, (II)
HAS ALL REQUISITE CORPORATE POWER AND AUTHORITY TO OWN, OPERATE OR LEASE THE
PROPERTIES AND ASSETS OWNED, OPERATED OR LEASED BY SUCH SUBSIDIARY AND TO CARRY
ON ITS BUSINESS AS IT HAS BEEN AND IS CURRENTLY CONDUCTED BY SUCH SUBSIDIARY AND
(III) IS DULY QUALIFIED TO DO BUSINESS AND IS IN GOOD STANDING IN EACH
JURISDICTION IN WHICH THE PROPERTIES OWNED OR LEASED BY IT OR THE OPERATION OF
ITS BUSINESS MAKES SUCH LICENSE AND QUALIFICATION NECESSARY, EXPECT, IN EACH OF
CLAUSES (I), (II) AND (III), SUCH FAILURES WHICH, WHEN TAKEN TOGETHER WITH ALL
OTHER SUCH FAILURES, WOULD NOT HAVE A MATERIAL ADVERSE EFFECT ON PARENT OR SUCH
SUBSIDIARY.

(C)                SCHEDULE 3.2(C) ACCURATELY SETS FORTH (I) THE NAMES OF THE
MEMBERS OF THE BOARDS OF DIRECTORS OF EACH SUBSIDIARY OF PARENT, (II) THE NAMES
OF THE MEMBERS OF EACH COMMITTEE OF SUCH BOARDS OF DIRECTORS, AND (III) THE
NAMES AND TITLES OF THE OFFICERS OF EACH SUBSIDIARY OF PARENT.

3.3                       AUTHORITY.  EACH OF PARENT AND MERGER SUB HAS ALL
REQUISITE CORPORATE POWER AND AUTHORITY TO ENTER INTO THIS AGREEMENT AND THE
ANCILLARY AGREEMENTS TO WHICH IT IS A PARTY, TO PERFORM ITS OBLIGATIONS
HEREUNDER AND THEREUNDER AND TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED HEREBY
AND THEREBY. THE EXECUTION AND DELIVERY OF THIS AGREEMENT AND THE

 

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

 
 

 

ANCILLARY AGREEMENTS AND THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED
HEREBY HAVE BEEN DULY AUTHORIZED BY ALL NECESSARY CORPORATE ACTION ON THE PART
OF PARENT AND MERGER SUB, SUBJECT ONLY TO THE APPROVAL OF THIS AGREEMENT BY THE
STOCKHOLDERS OF PARENT AND MERGER SUB. THE BOARD OF DIRECTORS OF PARENT AND
MERGER SUB HAVE UNANIMOUSLY APPROVED THIS AGREEMENT AND AUTHORIZED THE MERGER.
THIS AGREEMENT HAS BEEN (AND THE ANCILLARY AGREEMENTS WILL BE AT THE CLOSING)
DULY EXECUTED AND DELIVERED BY PARENT AND MERGER SUB, AND THIS AGREEMENT
CONSTITUTES (AND THE ANCILLARY AGREEMENTS WILL CONSTITUTE AT THE CLOSING) THE
VALID AND BINDING OBLIGATIONS OF PARENT AND MERGER SUB ENFORCEABLE AGAINST EACH
OF PARENT AND MERGER SUB IN ACCORDANCE WITH THEIR TERMS, EXCEPT AS MAY BE
LIMITED BY BANKRUPTCY, INSOLVENCY, REORGANIZATION, MORATORIUM OR OTHER SIMILAR
LAWS AFFECTING OR RELATING TO CREDITORS' RIGHTS GENERALLY, AND SUBJECT TO
GENERAL PRINCIPLES OF EQUITY. MERGER SUB HAS BEEN FORMED SOLELY FOR THE PURPOSE
OF EXECUTING AND DELIVERING A MERGER AGREEMENT AND CONSUMMATING A MERGER
TRANSACTION. SINCE THE DATE OF ITS INCORPORATION, MERGER SUB HAS NEITHER ENGAGED
IN NOR TRANSACTED ANY BUSINESS OR ACTIVITY OF ANY NATURE WHATSOEVER OTHER THAN
ACTIVITIES RELATED TO ITS CORPORATE ORGANIZATION AND THE EXECUTION AND DELIVERY
OF A MERGER AGREEMENT AND THE RELATED DOCUMENTS AND INSTRUMENTS. MERGER SUB HAS
NO ASSETS OR PROPERTIES OR DEBTS, LIABILITIES OR OBLIGATIONS OF ANY KIND
WHATSOEVER, AND WITH THE EXCEPTION OF THIS AGREEMENT AND THE RELATED DOCUMENTS
AND INSTRUMENTS, IS NOT A PARTY TO ANY CONTRACT, AGREEMENT OR UNDERTAKING OF ANY
NATURE.

3.4                       NO CONFLICT.  THE EXECUTION AND DELIVERY BY PARENT OF
THIS AGREEMENT AND THE ANCILLARY AGREEMENTS TO WHICH PARENT IS A PARTY, DOES
NOT, AND THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY
WILL NOT (A) CONFLICT WITH, OR RESULT IN ANY VIOLATION OF, ANY PROVISION OF THE
PARENT ARTICLES OF INCORPORATION OR PARENT BYLAWS, (B) CONFLICT WITH, OR RESULT
IN ANY VIOLATION OF OR DEFAULT UNDER (WITH OR WITHOUT NOTICE OR LAPSE OF TIME,
OR BOTH), OR GIVE RISE TO A RIGHT OF TERMINATION, CANCELLATION OR ACCELERATION
OF ANY OBLIGATION OR LOSS OF ANY BENEFIT UNDER ANY MORTGAGE, INDENTURE, LEASE,
CONTRACT OR OTHER AGREEMENT OR INSTRUMENT, PERMIT, CONCESSION, FRANCHISE OR
LICENSE OF PARENT, (C) CONFLICT WITH, OR RESULT IN ANY VIOLATION OF ANY
JUDGMENT, ORDER, DECREE, STATUTE, LAW, ORDINANCE, RULE OR REGULATION APPLICABLE
TO PARENT OR ANY OF ITS PROPERTIES OR ASSETS, OR (D) CONFLICT WITH, OR RESULT IN
A VIOLATION OF ANY RESOLUTION ADOPTED BY PARENT’S STOCKHOLDERS, PARENT’S BOARD
OF DIRECTORS OR ANY COMMITTEE OF PARENT’S BOARD OF DIRECTORS.

3.5                       CONSENTS.  NO CONSENT, APPROVAL, ORDER OR
AUTHORIZATION OF OR REGISTRATION, DECLARATION OR FILING WITH, ANY GOVERNMENTAL
ENTITY OR ANY PARTY TO ANY MATERIAL CONTRACT IS REQUIRED BY OR WITH RESPECT TO
PARENT OR ANY OF ITS SUBSIDIARIES IN CONNECTION WITH THE EXECUTION AND DELIVERY
OF THIS AGREEMENT BY PARENT AND ANY ANCILLARY AGREEMENT TO WHICH PARENT IS A
PARTY OR THE CONSUMMATION BY PARENT OF THE TRANSACTIONS CONTEMPLATED HEREBY,
EXCEPT (A) SUCH CONSENTS, WAIVERS, APPROVALS, ORDERS, AUTHORIZATIONS,
REGISTRATIONS, DECLARATIONS AND FILINGS AS MAY BE REQUIRED UNDER APPLICABLE
SECURITIES LAWS, (B) THE FILING OF THE ARTICLES OF MERGER WITH THE SECRETARY OF
STATE OF THE STATE OF NEVADA AND (C) SUCH CONSENTS, WAIVERS, APPROVALS, ORDERS,
AUTHORIZATIONS, REGISTRATIONS, DECLARATIONS AND FILINGS WHICH, IF NOT OBTAINED
OR MADE, WOULD NOT HAVE A MATERIAL ADVERSE EFFECT ON PARENT.

3.6                       GOVERNMENTAL AUTHORIZATIONS.  PARENT HAS OBTAINED EACH
MATERIAL FEDERAL, STATE, COUNTY, LOCAL OR FOREIGN GOVERNMENTAL CONSENT, LICENSE,
PERMIT, GRANT, OR OTHER AUTHORIZATION OF A GOVERNMENTAL ENTITY (A) PURSUANT TO
WHICH PARENT CURRENTLY OPERATES OR HOLDS ANY INTEREST IN ANY

 

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

 
 

 

OF ITS PROPERTIES, OR (B) THAT IS REQUIRED FOR THE OPERATION OF PARENT’S
BUSINESS OR THE HOLDING OF ANY SUCH INTEREST, AND ALL OF SUCH AUTHORIZATIONS ARE
IN FULL FORCE AND EFFECT.

3.7                       BROKER’S AND FINDER’S FEES.  NO PERSON, FIRM,
CORPORATION OR OTHER ENTITY IS ENTITLED BY REASON OF ANY ACT OR OMISSION OF
PARENT TO ANY BROKER’S OR FINDER’S FEES, COMMISSION OR OTHER SIMILAR
COMPENSATION WITH RESPECT TO THE EXECUTION AND DELIVERY OF THIS AGREEMENT, OR
WITH RESPECT TO THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY,
INCLUDING THE MERGER AND EXCHANGE.

3.8                       CAPITALIZATION OF PARENT. 

(A)                THE AUTHORIZED CAPITAL STOCK OF PARENT CONSISTS OF (I)
100,000,000 SHARES OF PARENT COMMON STOCK, OF WHICH 36,750,000 SHARES ARE ISSUED
AND OUTSTANDING ON THE DATE HEREOF, AND (II) 15,000,000 SHARES OF UNDESIGNATED
PREFERRED STOCK, NONE OF WHICH ARE ISSUED OR OUTSTANDING, PRIOR TO TAKING INTO
CONSIDERATION THE ISSUANCE OF PARENT COMMON STOCK IN THE EXCHANGE. EXCEPT WITH
RESPECT TO THE PARENT INCENTIVE PLAN, THE PARENT HAS NO OTHER SHARES OF CAPITAL
STOCK RESERVED FOR ISSUANCE UPON THE EXERCISE OF ANY OTHER OPTIONS OR ANY
WARRANTS AND NO SHARES OF CAPITAL STOCK ARE RESERVED FOR ISSUANCE TO ANY PARTY,
INCLUDING UPON THE CONVERSION OF ANY OUTSTANDING CONVERTIBLE NOTES, DEBENTURES
OR SECURITIES. PARENT HAS NO OUTSTANDING OPTIONS, RIGHTS, CALLS, PREEMPTIVE
RIGHTS, SUBSCRIPTIONS OR COMMITMENTS TO ISSUE ANY EQUITY SECURITIES OF PARENT.

(B)               THERE IS NO PLAN OR ARRANGEMENT TO ISSUE CAPITAL STOCK BY
PARENT EXCEPT AS SET FORTH IN THIS AGREEMENT, AND THERE ARE NO REGISTRATION
RIGHTS.  THERE IS NO VOTING TRUST, PROXY, RIGHTS PLAN, ANTI-TAKEOVER PLAN OR
OTHER AGREEMENT OR UNDERSTANDING TO WHICH THE PARENT IS A PARTY OR BY WHICH IT
IS BOUND WITH RESPECT TO ANY EQUITY SECURITIES OF PARENT.

(C)                THERE ARE NO OUTSTANDING CONTRACTUAL OBLIGATIONS (CONTINGENT
OR OTHERWISE) OF PARENT TO RETIRE, REPURCHASE, REDEEM OR OTHERWISE ACQUIRE ANY
OUTSTANDING SHARES OF CAPITAL STOCK OF, OR OTHER OWNERSHIP INTERESTS IN, PARENT
OR TO PROVIDE FUNDS TO OR MAKE ANY INVESTMENT (IN THE FORM OF A LOAN, CAPITAL
CONTRIBUTION OR OTHERWISE) IN ANY OTHER ENTITY OR PERSON.

3.9                       VALIDITY OF SHARES.  

(A)                ALL OUTSTANDING SHARES OF THE CAPITAL STOCK OF PARENT ARE (I)
VALIDLY ISSUED AND OUTSTANDING, FULLY PAID AND NON-ASSESSABLE, (II) WERE NOT
ISSUED IN VIOLATION OF THE PREEMPTIVE RIGHTS OF ANY PERSON, (III) WERE ISSUED IN
TRANSACTIONS THAT WERE (A) EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF THE SECURITIES ACT, (B) REGISTERED OR QUALIFIED (OR WERE EXEMPT
FROM REGISTRATION OR QUALIFICATION) UNDER THE REGISTRATION OR QUALIFICATION
REQUIREMENTS OF ALL APPLICABLE STATE SECURITIES LAWS AND (C) ACCOMPLISHED IN
CONFORMITY WITH ALL OTHER APPLICABLE SECURITIES LAWS.

(B)               THE APPROXIMATELY 6,600,000 SHARES OF PARENT COMMON STOCK TO
BE ISSUED AT THE CLOSING PURSUANT TO SECTION 1.9(B) HEREOF, WHEN ISSUED AND
DELIVERED IN ACCORDANCE WITH THE TERMS HEREOF, SHALL BE DULY AND VALIDLY ISSUED,
FULLY PAID AND NON-ASSESSABLE AND NOT IN VIOLATION OF ANY PREEMPTIVE RIGHTS.
BASED, IN PART, ON THE REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS AS
CONTEMPLATED BY SECTION 4 HEREOF AND ASSUMING THE

 

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

 
 

 

ACCURACY THEREOF, THE ISSUANCE OF THE PARENT COMMON STOCK UPON THE MERGER AND
EXCHANGE PURSUANT TO ARTICLE WILL BE EXEMPT FROM THE REGISTRATION AND PROSPECTUS
DELIVERY REQUIREMENTS OF THE SECURITIES ACT AND FROM THE QUALIFICATION OR
REGISTRATION REQUIREMENTS OF ANY APPLICABLE STATE BLUE SKY OR SECURITIES LAWS. 

3.10                SEC REPORTING AND COMPLIANCE. 

(A)                PARENT FILED A REGISTRATION STATEMENT ON FORM S-1 (NO.
333-174175) UNDER THE SECURITIES ACT WHICH BECAME EFFECTIVE ON JULY 12, 2011,
AND HAS NOT BEEN WITHDRAWN.  ALL SHARES HELD BY SELLING STOCKHOLDERS IN SUCH
REGISTRATION STATEMENT, OTHER THAN THOSE HELD BY AFFILIATES OF PARENT, HAVE BEEN
SOLD IN ACCORDANCE WITH THE PLAN OF DISTRIBUTION SET FORTH IN SUCH REGISTRATION
STATEMENT.

(B)               SINCE JULY 12, 2011, PARENT HAS FILED WITH THE COMMISSION ALL
REGISTRATION STATEMENTS, PROXY STATEMENTS, INFORMATION STATEMENTS, REPORTS,
SCHEDULES, FORMS AND OTHER DOCUMENTS REQUIRED TO BE FILED PURSUANT TO THE
SECURITIES ACT, THE EXCHANGE ACT AND THE RULES AND REGULATIONS OF THE COMMISSION
ON A TIMELY BASIS (OR HAS RECEIVED A VALID EXTENSION OF SUCH TIME OF FILING AND
HAS FILED ANY SUCH REPORTS OR OTHER DOCUMENTS PRIOR TO THE EXPIRATION OF ANY
SUCH EXTENSION). PARENT HAS NOT FILED WITH THE COMMISSION A CERTIFICATE ON FORM
15 PURSUANT TO RULE 12H-3 OF THE EXCHANGE ACT.

(C)                PARENT HAS DELIVERED OR MADE AVAILABLE TO THE COMPANY TRUE
AND COMPLETE COPIES OF ITS REGISTRATION STATEMENT (INCLUDING ALL AMENDMENTS
THERETO AND SUPPLEMENTS TO THE PROSPECTUS CONTAINED THEREIN) AND REPORTS
(COLLECTIVELY, THE “PARENT SEC DOCUMENTS”) FILED BY PARENT WITH THE COMMISSION. 
THE PARENT SEC DOCUMENTS, AS OF THEIR RESPECTIVE DATES (OR, IF AMENDED,
SUPPLEMENTED OR SUPERSEDED BY A FILING PRIOR TO THE DATE HEREOF, THEN AS OF THE
DATE OF SUCH AMENDMENT, SUPPLEMENT OR SUPERSEDING FILING) COMPLIED IN ALL
MATERIAL RESPECTS WITH THE REQUIREMENTS OF THE SECURITIES ACT OR THE EXCHANGE
ACT, AS THE CASE MAY BE, AND THE RULES AND REGULATIONS OF THE COMMISSION
PROMULGATED THEREUNDER APPLICABLE THERETO, AND DID NOT CONTAIN ANY UNTRUE
STATEMENT OF A MATERIAL FACT OR OMIT TO STATE A MATERIAL FACT NECESSARY IN ORDER
TO MAKE THE STATEMENTS CONTAINED THEREIN NOT MISLEADING.

(D)               EXCEPT AS SET FORTH ON SCHEDULE 3.10, PARENT HAS NOT FILED,
AND NOTHING HAS OCCURRED WITH RESPECT TO WHICH PARENT WOULD BE REQUIRED TO FILE,
ANY REPORT ON FORM 8-K SINCE OCTOBER 3, 2012. PRIOR TO AND UNTIL THE CLOSING,
PARENT WILL PROVIDE TO THE COMPANY COPIES OF ANY AND ALL AMENDMENTS OR
SUPPLEMENTS TO THE PARENT SEC DOCUMENTS FILED WITH THE COMMISSION SINCE JULY 12,
2011, AND ALL SUBSEQUENT REGISTRATION STATEMENTS AND REPORTS FILED BY PARENT
SUBSEQUENT TO THE FILING OF THE PARENT SEC DOCUMENTS WITH THE COMMISSION AND ANY
AND ALL SUBSEQUENT DOCUMENTS OR NOTICES FILED BY THE PARENT WITH THE COMMISSION
OR DELIVERED TO THE STOCKHOLDERS OF PARENT.

(E)                PARENT IS NOT AN INVESTMENT COMPANY WITHIN THE MEANING OF
SECTION 3 OF THE INVESTMENT COMPANY ACT.

(F)                THE SHARES OF PARENT COMMON STOCK ARE QUOTED ON THE
OVER-THE-COUNTER (OTC) BULLETIN BOARD UNDER THE SYMBOL “CLRS.OB,” AND PARENT IS
IN COMPLIANCE IN ALL

 

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

 
 

 

MATERIAL RESPECTS WITH ALL RULES AND REGULATIONS OF THE OTC BULLETIN BOARD
APPLICABLE TO IT AND THE PARENT COMMON STOCK AND, EXCEPT AS DISCLOSED ON
SCHEDULE 3.10, HAS NO KNOWLEDGE OR NOTICE OF ANY TRADING IRREGULARITIES WITH
RESPECT TO THE PARENT COMMON STOCK INCLUDING, WITHOUT LIMITATION, PRICE
MANIPULATION.

(G)               THE PARENT SEC DOCUMENTS INCLUDE ALL CERTIFICATIONS AND
STATEMENTS REQUIRED OF IT, IF ANY, BY (I) RULE 13A-14 OR 15D-14 UNDER THE
EXCHANGE ACT, AND (II) 18 U.S.C. SECTION 1350 (SECTION 906 OF THE SARBANES-OXLEY
ACT OF 2002), AND EACH OF SUCH CERTIFICATIONS AND STATEMENTS CONTAIN NO
QUALIFICATIONS OR EXCEPTIONS TO THE MATTERS CERTIFIED THEREIN OTHER THAN A
KNOWLEDGE QUALIFICATION, PERMITTED UNDER SUCH PROVISION, AND HAVE NOT BEEN
MODIFIED OR WITHDRAWN AND NEITHER PARENT NOR ANY OF ITS OFFICERS HAS RECEIVED
ANY NOTICE FROM THE SEC OR ANY OTHER GOVERNMENTAL ENTITY QUESTIONING OR
CHALLENGING THE ACCURACY, COMPLETENESS, FORM OR MANNER OF FILING OR SUBMISSION
OF SUCH CERTIFICATIONS OR STATEMENTS.

3.11                   FINANCIAL STATEMENTS.  THE BALANCE SHEETS, AND STATEMENTS
OF INCOME, CHANGES IN FINANCIAL POSITION AND STOCKHOLDERS’ EQUITY CONTAINED IN
THE PARENT SEC DOCUMENTS (I) HAVE BEEN PREPARED IN ACCORDANCE WITH GAAP APPLIED
ON A BASIS CONSISTENT WITH PRIOR PERIODS (AND, IN THE CASE OF UNAUDITED
FINANCIAL INFORMATION, ON A BASIS CONSISTENT WITH YEAR-END AUDITS), (II) ARE IN
ACCORDANCE WITH THE BOOKS AND RECORDS OF THE PARENT, AND (III) PRESENT FAIRLY IN
ALL MATERIAL RESPECTS THE FINANCIAL CONDITION OF THE PARENT AT THE DATES THEREIN
SPECIFIED AND THE RESULTS OF ITS OPERATIONS AND CHANGES IN FINANCIAL POSITION
FOR THE PERIODS THEREIN SPECIFIED. THE FINANCIAL STATEMENTS INCLUDED IN THE
ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2011 (THE “PARENT
FINANCIAL STATEMENTS”) WERE AUDITED BY, AND INCLUDE THE RELATED OPINION OF
SADLER GIBB & ASSOCIATES, PARENT’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM.

3.12                   EVENTS SUBSEQUENT TO FINANCIAL STATEMENTS. SINCE DECEMBER
31, 2012, THERE HAS NOT BEEN:

(A)                ANY SALE, LEASE, TRANSFER, LICENSE OR ASSIGNMENT OF ANY
ASSETS, TANGIBLE OR INTANGIBLE, OF PARENT;

(B)               ANY DAMAGE, DESTRUCTION OR PROPERTY LOSS, WHETHER OR NOT
COVERED BY INSURANCE, AFFECTING ADVERSELY THE PROPERTIES OR BUSINESS OF PARENT;

(C)                ANY DECLARATION OR SETTING ASIDE OR PAYMENT OF ANY DIVIDEND
OR DISTRIBUTION WITH RESPECT TO THE SHARES OF CAPITAL STOCK OF PARENT OR ANY
REDEMPTION, PURCHASE OR OTHER ACQUISITION OF ANY SUCH SHARES;

(D)               ANY SUBJECTION TO ANY LIEN ON ANY OF THE ASSETS, TANGIBLE OR
INTANGIBLE, OF PARENT;

(E)                ANY INCURRENCE OF INDEBTEDNESS OR LIABILITY OR ASSUMPTION OF
OBLIGATIONS BY PARENT;

(F)                ANY WAIVER OR RELEASE BY PARENT OF ANY RIGHT OF ANY MATERIAL
VALUE;

(G)               ANY COMPENSATION OR BENEFITS PAID TO OFFICERS OR DIRECTORS OF
PARENT;

 

 

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

 
 

 

(H)               ANY CHANGE MADE OR AUTHORIZED IN THE ARTICLES OF INCORPORATION
OR BYLAWS OF PARENT;

(I)                 ANY LOAN TO OR OTHER TRANSACTION WITH ANY OFFICER, DIRECTOR
OR STOCKHOLDER OF PARENT GIVING RISE TO ANY CLAIM OR RIGHT OF PARENT AGAINST ANY
SUCH PERSON OR OF SUCH PERSON AGAINST PARENT; OR

(J)                 ANY MATERIAL ADVERSE CHANGE IN THE CONDITION (FINANCIAL OR
OTHERWISE) OF THE RESPECTIVE PROPERTIES, ASSETS, LIABILITIES OR BUSINESS OF
PARENT.

3.13                   LIABILITIES. EXCEPT AS OTHERWISE DISCLOSED IN PARENT
FINANCIAL STATEMENTS, PARENT DOES NOT HAVE ANY LIABILITY OR OBLIGATION
WHATSOEVER, EITHER DIRECT OR INDIRECT, MATURED OR UNMATURED, ACCRUED, ABSOLUTE,
CONTINGENT OR OTHERWISE.  IN ADDITION, PARENT REPRESENTS THAT UPON CLOSING,
PARENT WILL NOT HAVE ANY LIABILITY OR OBLIGATION WHATSOEVER, EITHER DIRECT OR
INDIRECT, MATURED OR UNMATURED, ACCRUED, ABSOLUTE, CONTINGENT OR OTHERWISE. 
FURTHERMORE, THERE IS NO PENDING PROCEEDING THAT HAS BEEN COMMENCED AGAINST
PARENT THAT CHALLENGES, OR MAY HAVE THE EFFECT OF PREVENTING, DELAYING, MAKING
ILLEGAL, OR OTHERWISE INTERFERING WITH, ANY OF THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT. TO THE KNOWLEDGE OF PARENT, NO SUCH PROCEEDING HAS BEEN
THREATENED. 

3.14                   TAX MATTERS.  PARENT HAS DULY FILED ALL FEDERAL, STATE,
LOCAL AND FOREIGN TAX RETURNS REQUIRED TO BE FILED BY OR WITH RESPECT TO IT WITH
THE INTERNAL REVENUE SERVICE OR OTHER APPLICABLE TAXING AUTHORITY, AND NO
EXTENSIONS WITH RESPECT TO SUCH TAX RETURNS HAVE BEEN REQUESTED OR GRANTED. 
PARENT HAS PAID, OR ADEQUATELY RESERVED AGAINST IN PARENT FINANCIAL STATEMENTS,
ALL MATERIAL TAXES DUE, OR CLAIMED BY ANY TAXING AUTHORITY TO BE DUE, FROM OR
WITH RESPECT TO IT.  TO THE KNOWLEDGE OF PARENT, THERE HAS BEEN NO MATERIAL
ISSUE RAISED OR MATERIAL ADJUSTMENT PROPOSED (AND NONE IS PENDING) BY THE
INTERNAL REVENUE SERVICE OR ANY OTHER TAXING AUTHORITY IN CONNECTION WITH ANY OF
PARENT’S TAX RETURNS. NO WAIVER OR EXTENSION OF ANY STATUTE OF LIMITATIONS AS TO
ANY MATERIAL FEDERAL, STATE, LOCAL OR FOREIGN TAX MATTER HAS BEEN GIVEN BY OR
REQUESTED FROM PARENT.  FOR THE PURPOSES OF THIS SECTION, A TAX IS DUE (AND MUST
THEREFORE EITHER BE PAID OR ADEQUATELY RESERVED AGAINST IN PARENT FINANCIAL
STATEMENTS) ONLY ON THE LAST DATE PAYMENT OF SUCH TAX CAN BE MADE WITHOUT
INTEREST OR PENALTIES, WHETHER SUCH PAYMENT IS DUE IN RESPECT OF ESTIMATED
TAXES, WITHHOLDING TAXES, REQUIRED TAX CREDITS OR ANY OTHER TAX.

3.15                   GOVERNMENTAL CONSENTS.  ALL CONSENTS, APPROVALS, ORDERS
OR AUTHORIZATIONS OF, OR REGISTRATIONS, QUALIFICATIONS, DESIGNATIONS,
DECLARATIONS, OR FILINGS WITH ANY FEDERAL OR STATE GOVERNMENTAL AUTHORITY ON THE
PART OF PARENT REQUIRED IN CONNECTION WITH THE CONSUMMATION OF THE MERGER AND
EXCHANGE HAVE BEEN OR SHALL HAVE BEEN OBTAINED PRIOR TO, AND BE EFFECTIVE AS OF,
THE CLOSING.

3.16                   COMPLIANCE WITH LAWS AND OTHER INSTRUMENTS. THE
EXECUTION, DELIVERY AND PERFORMANCE BY PARENT OF THIS AGREEMENT AND THE
CONSUMMATION BY IT OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, INCLUDING
THE MERGER AND EXCHANGE:  (A) WILL NOT REQUIRE ANY AUTHORIZATION, CONSENT OR
APPROVAL OF, OR FILING OR REGISTRATION WITH, ANY COURT OR GOVERNMENTAL AGENCY OR
INSTRUMENTALITY, EXCEPT (I) SUCH AS SHALL HAVE BEEN OBTAINED PRIOR TO THE
CLOSING, OR (II) AS SET FORTH IN SCHEDULE 3.16; (B) WILL NOT CAUSE THE PARENT TO
VIOLATE OR CONTRAVENE (I) ANY PROVISION OF LAW, (II) ANY RULE OR REGULATION OF
ANY AGENCY OR GOVERNMENT, (III) ANY ORDER,

 

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

 
 

 

JUDGMENT OR DECREE OF ANY COURT, OR (IV) ANY PROVISION OF ITS ARTICLES OF
INCORPORATION OR BY-LAWS; (C) WILL NOT VIOLATE OR BE IN CONFLICT WITH IN A
MATERIAL MANNER, RESULT IN A MATERIAL BREACH OF OR CONSTITUTE (WITH OR WITHOUT
NOTICE OR LAPSE OF TIME, OR BOTH) A MATERIAL DEFAULT UNDER, ANY INDENTURE, LOAN
OR CREDIT AGREEMENT, DEED OF TRUST, MORTGAGE, SECURITY AGREEMENT OR OTHER
MATERIAL CONTRACT, AGREEMENT OR INSTRUMENT TO WHICH THE PARENT IS A PARTY OR BY
WHICH THE PARENT OR ANY OF ITS PROPERTIES ARE BOUND OR AFFECTED, EXCEPT WHERE
ANY SUCH VIOLATION, CONFLICT, BREACH OR DEFAULT COULD NOT REASONABLY BE EXPECTED
TO HAVE A MATERIAL ADVERSE EFFECT; AND (D) WILL NOT RESULT IN THE CREATION OR
IMPOSITION OF ANY MATERIAL LIEN UPON ANY PROPERTY OR ASSET OF THE PARENT. 
PARENT IS NOT IN VIOLATION OF, OR (WITH OR WITHOUT NOTICE OR LAPSE OF TIME, OR
BOTH) IN DEFAULT UNDER, ANY TERM OR PROVISION OF ITS ARTICLES OF INCORPORATION
OR BY-LAWS, TO ITS KNOWLEDGE, OR ANY INDENTURE, LOAN OR CREDIT AGREEMENT, DEED
OF TRUST, MORTGAGE, SECURITY AGREEMENT, EXCEPT AS COULD NOT REASONABLY BE
EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT ON THE PARENT, OR ANY OTHER MATERIAL
AGREEMENT OR INSTRUMENT TO WHICH THE PARENT IS A PARTY OR BY WHICH IT OR ANY OF
ITS PROPERTIES ARE BOUND OR AFFECTED.

3.17                   BINDING OBLIGATIONS.  THIS AGREEMENT CONSTITUTES THE
LEGAL, VALID AND BINDING OBLIGATION OF THE PARENT, AND IS ENFORCEABLE AGAINST
THE PARENT, IN ACCORDANCE WITH ITS TERMS, EXCEPT AS SUCH ENFORCEMENT IS LIMITED
BY BANKRUPTCY, INSOLVENCY AND OTHER SIMILAR LAWS AFFECTING THE ENFORCEMENT OF
CREDITORS’ RIGHTS GENERALLY AND BY GENERAL PRINCIPLES OF EQUITY.

3.18                   NO GENERAL SOLICITATION.  IN ISSUING THE PARENT COMMON
STOCK IN THE MERGER AND EXCHANGE HEREUNDER, NEITHER PARENT NOR, TO ITS
KNOWLEDGE, ANYONE ACTING ON ITS BEHALF HAS OFFERED TO SELL THE PARENT COMMON
STOCK BY ANY FORM OF GENERAL SOLICITATION OR ADVERTISING.

3.19                   LITIGATION 

.  There is no legal action, suit, arbitration or other legal, administrative or
other governmental proceeding pending or, to the knowledge of Parent, threatened
against or affecting Parent or its properties, assets or business.  Parent is
not in default with respect to any order, writ, judgment, injunction, decree,
determination or award of any court or any governmental agency or
instrumentality or arbitration authority.

3.20                   OBLIGATIONS TO OR BY STOCKHOLDERS.  EXCEPT AS DISCLOSED
IN THE PARENT SEC DOCUMENTS OR ON SCHEDULE 3.20, THE PARENT HAS NO LIABILITY OR
OBLIGATION OR COMMITMENT TO ANY STOCKHOLDER OF PARENT OR ANY AFFILIATE OR
“ASSOCIATE” (AS SUCH TERM IS DEFINED IN RULE 405 UNDER THE SECURITIES ACT) OF
ANY STOCKHOLDER OF PARENT, NOR DOES ANY STOCKHOLDER OF PARENT OR ANY SUCH
AFFILIATE OR ASSOCIATE HAVE ANY LIABILITY, OBLIGATION OR COMMITMENT TO PARENT.

3.21                   MATERIAL CONTRACTS.  PARENT HAS PROVIDED TO THE COMPANY,
PRIOR TO THE DATE OF THIS AGREEMENT, TRUE, CORRECT AND COMPLETE COPIES OF EACH
WRITTEN MATERIAL PARENT CONTRACT, INCLUDING EACH AMENDMENT, SUPPLEMENT AND
MODIFICATION THERETO.

3.22                   EMPLOYEES.  EXCEPT AS DISCLOSED IN THE PARENT SEC
DOCUMENTS, PARENT HAS NO EMPLOYEES, INDEPENDENT CONTRACTORS OR OTHER PERSONS
PROVIDING SERVICES TO IT.  EXCEPT AS WOULD NOT HAVE A MATERIAL ADVERSE EFFECT,
PARENT IS IN FULL COMPLIANCE WITH ALL RELEVANT LAWS REGARDING EMPLOYMENT, WAGES,
HOURS, BENEFITS, EQUAL OPPORTUNITY, COLLECTIVE BARGAINING, THE PAYMENT OF SOCIAL
SECURITY AND OTHER TAXES, OCCUPATIONAL SAFETY AND HEALTH AND PLANT CLOSING. 
PARENT IS NOT LIABLE FOR THE PAYMENT OF ANY COMPENSATION, DAMAGES, TAXES, FINES,
PENALTIES OR OTHER AMOUNTS, HOWEVER DESIGNATED, FOR FAILURE TO COMPLY WITH ANY
OF THE FOREGOING LAWS.  NO DIRECTOR, OFFICER OR

 

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

 
 

 

EMPLOYEE OF PARENT IS A PARTY TO, OR IS OTHERWISE BOUND BY, ANY CONTRACT
(INCLUDING ANY CONFIDENTIALITY, NON-COMPETITION OR PROPRIETARY RIGHTS AGREEMENT)
WITH ANY OTHER PARTY THAT IN ANY WAY ADVERSELY AFFECTS OR WILL MATERIALLY AFFECT
(A) THE PERFORMANCE OF HIS OR HER DUTIES AS A DIRECTOR, OFFICER OR EMPLOYEE OF
PARENT OR (B) THE ABILITY OF PARENT TO CONDUCT ITS BUSINESS.  EXCEPT AS SET
FORTH IN THE PARENT SEC DOCUMENTS, EACH EMPLOYEE OF PARENT IS EMPLOYED ON AN
AT-WILL BASIS AND PARENT DOES NOT HAVE ANY CONTRACT WITH ANY OF ITS EMPLOYEES
WHICH WOULD INTERFERE WITH ITS ABILITY TO DISCHARGE ITS EMPLOYEES.

3.23                   INTERESTED PARTY TRANSACTIONS.  EXCEPT AS DISCLOSED IN
SCHEDULE 3.23, NO OFFICER, DIRECTOR OR STOCKHOLDER OF PARENT OR ANY AFFILIATE OR
“ASSOCIATE” (AS SUCH TERM IS DEFINED IN RULE 405 OF THE COMMISSION UNDER THE
SECURITIES ACT) OF ANY SUCH PARTY, HAS OR HAS HAD, EITHER DIRECTLY OR
INDIRECTLY, (A) AN INTEREST IN ANY PERSON WHICH (A) FURNISHES OR SELLS SERVICES
OR PRODUCTS WHICH ARE FURNISHED OR SOLD OR ARE PROPOSED TO BE FURNISHED OR SOLD
BY PARENT, OR (B) PURCHASES FROM OR SELLS OR FURNISHES TO, OR PROPOSES TO
PURCHASE FROM, SELL TO OR FURNISH PARENT ANY GOODS OR SERVICES; OR (B) A
BENEFICIAL INTEREST IN ANY CONTRACT OR AGREEMENT TO WHICH PARENT IS A PARTY OR
BY WHICH IT MAY BE BOUND OR AFFECTED.

3.24                   GOVERNMENTAL INQUIRIES.  PARENT HAS PROVIDED TO THE
COMPANY A COPY OF EACH MATERIAL WRITTEN INSPECTION REPORT, QUESTIONNAIRE,
INQUIRY, DEMAND OR REQUEST FOR INFORMATION RECEIVED BY PARENT FROM ANY
GOVERNMENTAL AUTHORITY, AND PARENT’S RESPONSE THERETO, AND EACH MATERIAL WRITTEN
STATEMENT, REPORT OR OTHER DOCUMENT FILED BY PARENT WITH ANY GOVERNMENTAL
AUTHORITY.

3.25                   BANK ACCOUNTS AND SAFE DEPOSIT BOXES.  SCHEDULE 3.25
DISCLOSES THE TITLE AND NUMBER OF EACH BANK OR OTHER DEPOSIT OR FINANCIAL
ACCOUNT, AND EACH LOCK BOX AND SAFETY DEPOSIT BOX USED BY PARENT, THE FINANCIAL
INSTITUTION AT WHICH THAT ACCOUNT OR BOX IS MAINTAINED AND THE NAMES OF THE
PERSONS AUTHORIZED TO DRAW AGAINST THE ACCOUNT OR OTHERWISE HAVE ACCESS TO THE
ACCOUNT OR BOX, AS THE CASE MAY BE. 

3.26                   INTELLECTUAL PROPERTY.  PARENT DOES NOT OWN, USE OR
LICENSE ANY INTELLECTUAL PROPERTY IN ITS BUSINESS AS PRESENTLY CONDUCTED, EXCEPT
AS SET FORTH IN SCHEDULE 3.26. 

3.27                   PARENT HAS NO STOCK OPTION PLANS EXCEPT THE CLEAR SYSTEM
RECYCLING, INC. 2012 INCENTIVE COMPENSATION PLAN (THE “PARENT INCENTIVE PLAN”),
WHICH WILL BE ADOPTED PRIOR TO THE CLOSING. PARENT HAS MADE NO GRANTS UNDER THE
PARENT INCENTIVE PLAN. PARENT HAS NO EMPLOYEE BENEFIT PLANS OR ARRANGEMENTS
COVERING THEIR PRESENT AND FORMER EMPLOYEES OR PROVIDING BENEFITS TO SUCH
PERSONS IN RESPECT OF SERVICES PROVIDED TO PARENT. NEITHER THE CONSUMMATION OF
THE TRANSACTIONS CONTEMPLATED HEREBY ALONE, NOR IN COMBINATION WITH ANOTHER
EVENT, WITH RESPECT TO EACH DIRECTOR, OFFICER, EMPLOYEE AND CONSULTANT OF
PARENT, WILL RESULT IN (A) ANY PAYMENT (INCLUDING, WITHOUT LIMITATION,
SEVERANCE, UNEMPLOYMENT COMPENSATION OR BONUS PAYMENTS) BECOMING DUE FROM
PARENT, (B) ANY INCREASE IN THE AMOUNT OF COMPENSATION OR BENEFITS PAYABLE TO
ANY SUCH INDIVIDUAL OR (C) ANY ACCELERATION OF THE VESTING OR TIMING OF PAYMENT
OF COMPENSATION PAYABLE TO ANY SUCH INDIVIDUAL. NO AGREEMENT, ARRANGEMENT OR
OTHER CONTRACT OF PARENT PROVIDES BENEFITS OR PAYMENTS CONTINGENT UPON,
TRIGGERED BY, OR INCREASED AS A RESULT OF A CHANGE IN THE OWNERSHIP OR EFFECTIVE
CONTROL OF PARENT.

 

 

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

 
 

 

3.28                   NO REPRESENTATION OR WARRANTY BY PARENT HEREIN AND NO
INFORMATION DISCLOSED IN THE SCHEDULES OR EXHIBITS HERETO BY PARENT WHEN
CONSIDERED AS A WHOLE TOGETHER WITH ALL OTHER INFORMATION FURNISHED TO THE
COMPANY CONTAINS ANY UNTRUE STATEMENT OF A MATERIAL FACT OR OMITS TO STATE A
MATERIAL FACT NECESSARY TO MAKE THE STATEMENTS CONTAINED HEREIN OR THEREIN
MISLEADING.

ARTICLE 4  
ADDITIONAL AGREEMENTS

4.1                       WITHIN FOUR (4) BUSINESS DAYS FOLLOWING THE EXECUTION
HEREOF, THE PARENT SHALL PREPARE FILE WITH THE U.S. SECURITIES AND EXCHANGE
COMMISSION A CURRENT REPORT ON FORM 8-K DISCLOSING THE ENTRY INTO THIS
AGREEMENT. UPON THE CLOSING OF THE MERGER, THE PARENT SHALL COOPERATE IN THE
FILING OF THE CURRENT REPORT ON FORM 8-K DISCLOSING THE CLOSING OF THE MERGER,
THE CHANGE IN CONTROL OF THE PARENT, DEPARTURE OF DIRECTORS, ELECTION OF
DIRECTORS, UNREGISTERED SALES OF EQUITY SECURITIES, CHANGES IN PARENT’S
CERTIFYING ACCOUNTANT AND ANY OTHER REPORTABLE EVENT CONTEMPLATED BY THE MERGER.

4.2                       THE COMPANY AND PARENT SHALL EACH AFFORD TO THE OTHER
AND TO THE OTHER’S ACCOUNTANTS, COUNSEL AND OTHER REPRESENTATIVES FULL ACCESS,
DURING NORMAL BUSINESS HOURS THROUGHOUT THE PERIOD PRIOR TO THE CLOSING, AND
SUBSEQUENT TO THE CLOSING UNTIL ALL PRE-CLOSING FILING REQUIREMENTS ARE MET,
SOLELY FOR THE PURPOSES OF FILING ANY DOCUMENTS REQUIRED TO BE FILED WITH THE
COMMISSION, TO ALL OF ITS PROPERTIES, BOOKS, CONTRACTS, COMMITMENTS AND RECORDS
(INCLUDING BUT NOT LIMITED TO TAX RETURNS) AND DURING SUCH PERIOD, EACH SHALL
FURNISH PROMPTLY TO THE OTHER ALL INFORMATION CONCERNING ITS BUSINESS,
PROPERTIES AND PERSONNEL AS SUCH OTHER PARTY MAY REASONABLY REQUEST, PROVIDED
THAT NO INVESTIGATION PURSUANT TO THIS ARTICLE SHALL AFFECT ANY REPRESENTATIONS
OR WARRANTIES MADE HEREIN.  EACH PARTY SHALL HOLD, AND SHALL CAUSE ITS EMPLOYEES
AND AGENTS TO HOLD, IN STRICT CONFIDENCE, ALL SUCH INFORMATION (OTHER THAN SUCH
INFORMATION WHICH:  (I) IS ALREADY IN SUCH PARTY’S POSSESSION; (II) BECOMES
GENERALLY AVAILABLE TO THE PUBLIC OTHER THAN AS A RESULT OF A DISCLOSURE BY SUCH
PARTY OR ITS DIRECTORS, OFFICERS, MANAGERS, EMPLOYEES, AGENTS OR ADVISORS; OR
(III) BECOMES AVAILABLE TO SUCH PARTY ON A NON-CONFIDENTIAL BASIS FROM A SOURCE
OTHER THAN A PARTY HERETO OR ITS ADVISORS PROVIDED THAT SUCH SOURCE IS NOT KNOWN
BY SUCH PARTY TO BE BOUND BY A CONFIDENTIALITY AGREEMENT WITH OR OTHER
OBLIGATION OF SECRECY TO A PARTY HERETO OR ANOTHER PARTY UNTIL SUCH TIME AS SUCH
INFORMATION IS OTHERWISE PUBLICLY AVAILABLE; PROVIDED, HOWEVER, THAT (A) ANY
SUCH INFORMATION MAY BE DISCLOSED TO SUCH PARTY’S DIRECTORS, OFFICERS, EMPLOYEES
AND REPRESENTATIVES OF SUCH PARTY’S ADVISORS WHO NEED TO KNOW SUCH INFORMATION
FOR THE PURPOSE OF EVALUATING THE TRANSACTIONS CONTEMPLATED HEREBY (IT BEING
UNDERSTOOD THAT SUCH DIRECTORS, OFFICERS, EMPLOYEES AND REPRESENTATIVES SHALL BE
INFORMED BY SUCH PARTY OF THE CONFIDENTIAL NATURE OF SUCH INFORMATION), (B) ANY
DISCLOSURE OF SUCH INFORMATION MAY BE MADE AS TO WHICH THE PARTY HERETO
FURNISHING SUCH INFORMATION HAS CONSENTED IN WRITING, AND (C) ANY SUCH
INFORMATION MAY BE DISCLOSED PURSUANT TO A JUDICIAL, ADMINISTRATIVE OR
GOVERNMENTAL ORDER OR REQUEST; PROVIDED, HOWEVER, THAT THE REQUESTED PARTY WILL
PROMPTLY SO NOTIFY THE OTHER PARTY SO THAT THE OTHER PARTY MAY SEEK A PROTECTIVE
ORDER OR APPROPRIATE REMEDY AND/OR WAIVE COMPLIANCE WITH THIS AGREEMENT AND IF
SUCH PROTECTIVE ORDER OR OTHER REMEDY IS NOT OBTAINED OR THE OTHER PARTY WAIVES
COMPLIANCE WITH THIS PROVISION, THE REQUESTED PARTY WILL FURNISH ONLY THAT
PORTION OF SUCH INFORMATION WHICH IS LEGALLY REQUIRED AND WILL EXERCISE ITS BEST
EFFORTS TO OBTAIN A PROTECTIVE ORDER OR OTHER RELIABLE ASSURANCE THAT
CONFIDENTIAL TREATMENT WILL BE ACCORDED THE INFORMATION FURNISHED).  IF THIS
AGREEMENT IS TERMINATED, EACH PARTY WILL DELIVER TO THE OTHER ALL DOCUMENTS AND
OTHER MATERIALS (INCLUDING COPIES) OBTAINED BY SUCH PARTY OR ON ITS BEHALF FROM
THE OTHER

 

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

 
 

 

PARTY AS A RESULT OF THIS AGREEMENT OR IN CONNECTION HEREWITH, WHETHER SO
OBTAINED BEFORE OR AFTER THE EXECUTION HEREOF.

4.3                       SUBJECT TO THE TERMS AND CONDITIONS HEREIN PROVIDED,
EACH OF THE PARTIES HERETO AGREES TO USE ITS COMMERCIALLY REASONABLE EFFORTS TO
TAKE, OR CAUSE TO BE TAKEN, ALL ACTION AND TO DO, OR CAUSE TO BE DONE, ALL
THINGS NECESSARY, PROPER OR ADVISABLE UNDER APPLICABLE LAWS AND REGULATIONS TO
CONSUMMATE AND MAKE EFFECTIVE THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. 
IN ORDER TO OBTAIN ANY NECESSARY GOVERNMENTAL OR REGULATORY ACTION OR
NON-ACTION, WAIVER, CONSENT, EXTENSION OR APPROVAL, EACH OF PARENT AND THE
COMPANY AGREES TO TAKE ALL REASONABLE ACTIONS AND TO ENTER INTO ALL REASONABLE
AGREEMENTS AS MAY BE NECESSARY TO OBTAIN TIMELY GOVERNMENTAL OR REGULATORY
APPROVALS AND TO TAKE SUCH FURTHER ACTION IN CONNECTION THEREWITH AS MAY BE
NECESSARY.  IN CASE AT ANY TIME AFTER THE CLOSING ANY FURTHER ACTION IS
NECESSARY OR DESIRABLE TO CARRY OUT THE PURPOSES OF THIS AGREEMENT, THE PROPER
OFFICERS AND/OR DIRECTORS OF PARENT AND THE COMPANY SHALL TAKE ALL SUCH
NECESSARY ACTION.

4.4                       NO PARTY SHALL ISSUE ANY PRESS RELEASE OR PUBLIC
ANNOUNCEMENT PERTAINING TO THE MERGER THAT HAS NOT BEEN AGREED UPON IN ADVANCE
BY PARENT AND THE COMPANY, EXCEPT AS PARENT REASONABLY DETERMINES TO BE
NECESSARY IN ORDER TO COMPLY WITH THE RULES OF THE COMMISSION OR OF THE
PRINCIPAL TRADING EXCHANGE OR MARKET FOR PARENT COMMON STOCK AND AFTER
REASONABLE ADVANCE NOTICE TO THE COMPANY.

4.5                       AT THE CLOSING, PARENT SHALL ACCEPT THE RESIGNATIONS
OF ARTHUR JOHN CARTER AS OFFICER AND DIRECTOR OF PARENT AS PROVIDED BY SECTION
5.3(H) HEREOF AND CAUSE GORDON ROOT, KENNETH KEPP AND MICHAEL NOONAN TO BE
ELECTED TO THE BOARD OF DIRECTORS OF PARENT.   

4.6                       AT THE CLOSING, EACH OF GORDON ROOT AND KENNETH KEPP
WILL ENTER INTO EXECUTIVE EMPLOYMENT AGREEMENTS WITH PARENT OR EAD TO SERVE IN
THE RESPECTIVE POSITIONS OF PRESIDENT, CHIEF EXECUTIVE OFFICER AND CHIEF
OPERATING OFFICER AND CHIEF FINANCIAL OFFICER, RESPECTIVELY, THROUGH AT LEAST
DECEMBER 31, 2014.

4.7                       SIMULTANEOUSLY WITH THE CLOSING, THE PARENT SHALL
CAUSE 23,000,000 SHARES OF ITS ISSUED AND OUTSTANDING COMMON STOCK TO BE
CANCELLED.

4.8                       EACH PARTY TO THIS AGREEMENT WILL PAY ALL COSTS AND
EXPENSES (INCLUDING THE FEES AND DISBURSEMENTS OF LEGAL COUNSEL, ITS
ACCOUNTANTS, THIRD PARTY FEES, AND OTHER ADVISERS) IT INCURS IN CONNECTION WITH
THE NEGOTIATION, PREPARATION AND EXECUTION OF THIS AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT  (WHETHER SUCH PAYABLES ARE RECEIVED
PRIOR TO OR AFTER CLOSING).  

ARTICLE 5  
CLOSING; DELIVERIES

5.1                       CLOSING DATE.  SUBJECT TO THE TERMS AND CONDITIONS SET
FORTH HEREIN, THE CLOSING OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT
(THE “CLOSING”) SHALL TAKE PLACE ON FEBRUARY 18, 2013, OR ON SUCH OTHER DATE
AGREED UPON ORALLY OR IN WRITING BY THE PARTIES (THE “CLOSING DATE”). ALL
PROCEEDINGS TO BE TAKEN AND ALL DOCUMENTS TO BE EXECUTED AT THE CLOSING,
INCLUDING THOSE IN CONNECTION WITH THIS AGREEMENT, SHALL BE DEEMED TO HAVE BEEN
TAKEN, DELIVERED AND EXECUTED SIMULTANEOUSLY, AND NO PROCEEDING SHALL BE DEEMED
TAKEN NOR DOCUMENTS DEEMED

 

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

 
 

 

EXECUTED OR DELIVERED UNTIL ALL HAVE BEEN TAKEN, DELIVERED AND EXECUTED.  THE
CLOSING SHALL OCCUR VIA THE EXCHANGE OF DOCUMENTS AND SIGNATURES AT THE OFFICES
OF SYNERGY LAW GROUP, LLC, 730 W. RANDOLPH STREET, 6TH FLOOR, CHICAGO, IL 60661.
AT THE CLOSING, PARENT SHALL PRESENT TO THE TRANSFER AGENT FOR DELIVERY TO EACH
STOCKHOLDER THE CERTIFICATE REPRESENTING THE PARENT COMMON STOCK TO BE ISSUED TO
THEM IN ACCORDANCE HEREWITH. SUCH PRESENTMENT FOR DELIVERY SHALL BE AGAINST
DELIVERY TO PARENT OF THE CERTIFICATES, OPINIONS, AGREEMENTS AND OTHER
INSTRUMENTS REFERRED TO IN SECTION 6.2 BELOW. PARENT WILL DELIVER AT SUCH
CLOSING TO THE COMPANY THE OFFICERS’ CERTIFICATE, AGREEMENTS, INSTRUMENTS AND
OPINION REFERRED TO IN SECTION 5.3 BELOW. ALL OF THE OTHER DOCUMENTS AND
CERTIFICATES AND AGREEMENTS REFERENCED IN THIS ARTICLE WILL ALSO BE EXECUTED AS
DESCRIBED THEREIN. THE COMPANY AND THE PARENT MAY WAIVE COMPLIANCE WITH ANY OF
THE CLOSING DELIVERIES SPECIFIED IN THIS ARTICLE. AT OR IMMEDIATELY FOLLOWING
THE CLOSING, THE PARENT SHALL CAUSE TO BE DELIVERED TO THE COMPANY ALL RECORDS
AND DOCUMENTS RELATING TO THE PARENT WHICH THE PARENT POSSESSES, INCLUDING,
WITHOUT LIMITATION, BOOKS, RECORDS, GOVERNMENT FILINGS, TAX RETURNS, CHARTER
DOCUMENTS, CORPORATE RECORDS, STOCK RECORD BOOKS, CONSENT DECREES, ORDERS, AND
CORRESPONDENCE, DIRECTOR AND STOCKHOLDER MINUTES AND RESOLUTIONS, STOCK
OWNERSHIP RECORDS, FINANCIAL INFORMATION AND RECORDS, ELECTRONIC FILES
CONTAINING ANY FINANCIAL INFORMATION AND RECORDS, AND OTHER DOCUMENTS ASSOCIATED
WITH PARENT.  SHOULD THE CLOSING NOT OCCUR WITHIN NINETY (90) DAYS FOLLOWING
EXECUTION OF THIS AGREEMENT, PARENT OR COMPANY MAY TERMINATE THIS AGREEMENT. 

5.2                       CLOSING DELIVERIES OF THE COMPANY.  AT CLOSING, THE
COMPANY SHALL DELIVER THE FOLLOWING DOCUMENTS TO PARENT:

(A)                A CERTIFICATE, DATED THE CLOSING DATE, EXECUTED ON BEHALF OF
THE COMPANY BY EACH OF THEIR CHIEF EXECUTIVE OFFICER AND PRESIDENT, CERTIFYING
THE FOLLOWING:

(i)                 the representations and warranties of each Company under
this Agreement are true and correct in all material respects on the Closing
Date;

(ii)               the Company has performed and complied in all material
respects with all agreements and conditions required by this Agreement to be
performed or complied with by it on or before the Closing Date; and

(iii)             there does not exist on the Closing Date any Default or Event
of Default or any event or condition that, with the giving of notice or lapse of
time, or both, would constitute a Default or Event of Default, and since the
Balance Sheet Date, there has been no change that has or will have a Material
Adverse Effect on such Company, except as a result of the transactions
contemplated by this Agreement.

(B)               A CERTIFICATE, DATED THE CLOSING DATE, EXECUTED BY THE
COMPANY’S SECRETARY, CERTIFYING THAT:  (I) ALL CONSENTS, AUTHORIZATIONS, ORDERS
AND APPROVALS OF, AND FILINGS AND REGISTRATIONS WITH, ANY COURT, GOVERNMENTAL
BODY OR INSTRUMENTALITY THAT ARE REQUIRED FOR THE EXECUTION AND DELIVERY OF THIS
AGREEMENT AND THE CONSUMMATION OF THE MERGER AND EXCHANGE SHALL HAVE BEEN DULY
MADE OR OBTAINED, AND ALL MATERIAL CONSENTS BY THIRD PARTIES THAT ARE REQUIRED
FOR THE MERGER AND EXCHANGE HAVE BEEN OBTAINED; AND (II) NO ACTION OR PROCEEDING
BEFORE ANY COURT, GOVERNMENTAL BODY OR AGENCY HAS BEEN

 

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

 
 

 

THREATENED, ASSERTED OR INSTITUTED TO RESTRAIN OR PROHIBIT, OR TO OBTAIN
SUBSTANTIAL DAMAGES IN RESPECT OF, THIS AGREEMENT OR THE CARRYING OUT OF THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

(C)                COPIES OF RESOLUTIONS OF THE BOARD OF DIRECTORS, CERTIFIED BY
THE SECRETARY OF THE COMPANY, AUTHORIZING AND APPROVING THE EXECUTION, DELIVERY
AND PERFORMANCE OF THIS AGREEMENT AND ALL OTHER DOCUMENTS AND INSTRUMENTS TO BE
DELIVERED PURSUANT HERETO.

(D)               A CERTIFICATE OF INCUMBENCY EXECUTED BY THE SECRETARY OF THE
COMPANY CERTIFYING THE NAMES, TITLES AND SIGNATURES OF THE OFFICERS AUTHORIZED
TO EXECUTE THIS AGREEMENT AND ANY DOCUMENTS REFERRED TO HEREIN, AND FURTHER
CERTIFYING THAT THE ARTICLES OF INCORPORATION AND BY-LAWS OF THE COMPANY
DELIVERED TO PARENT AT THE TIME OF THE EXECUTION OF THIS AGREEMENT HAVE BEEN
VALIDLY ADOPTED AND HAVE NOT BEEN AMENDED OR MODIFIED.

(E)                ALL WRITTEN CONSENTS, SATISFACTORY IN FORM AND SUBSTANCE TO
PARENT, FROM EACH PARTY TO THE LEASES, CONTRACTS, INSTRUMENTS AND OTHER
DOCUMENTS LISTED IN SCHEDULE 2.13(A) THROUGH SCHEDULE 2.13(D) AS NECESSARY TO
CONSENT TO THE CHANGE IN OWNERSHIP UPON THE EFFECTIVENESS OF THE MERGER AND
EXCHANGE, OF ALL OF THE RIGHTS AND INTERESTS OF THE COMPANY IN AND TO SUCH
LEASES, CONTRACTS, INSTRUMENTS AND DOCUMENTS, EXCEPT TO THE EXTENT THE FAILURE
TO SO OBTAIN SUCH CONSENTS COULD NOT REASONABLY BE EXPECTED TO HAVE A MATERIAL
ADVERSE EFFECT.

(F)                EVIDENCE AS OF A RECENT DATE OF THE GOOD STANDING AND
EXISTENCE OF THE COMPANY ISSUED BY THE SECRETARY OF STATE OF THE STATE OF OREGON
AND EVIDENCE THAT THE COMPANY IS QUALIFIED TO TRANSACT BUSINESS AS A FOREIGN
CORPORATION AND IS IN GOOD STANDING IN EACH STATE OF THE UNITED STATES AND IN
EACH OTHER JURISDICTION WHERE THE CHARACTER OF THE PROPERTY OWNED OR LEASED BY
IT OR THE NATURE OF ITS ACTIVITIES MAKES SUCH QUALIFICATION NECESSARY.

(G)               THE COMPANY’S (I) AUDITED CONSOLIDATED BALANCE SHEET (THE
“BALANCE SHEET”) AS OF DECEMBER 31, 2012 (THE “BALANCE SHEET DATE”) AND AUDITED
CONSOLIDATED STATEMENTS OF OPERATIONS, CHANGES IN STOCKHOLDERS’ EQUITY AND CASH
FLOWS FOR THE YEAR ENDED DECEMBER 31, 2012, TOGETHER WITH THE RELATED
INDEPENDENT AUDITORS’ REPORT OF LBB & ASSOCIATES, LTD., LLP AND (II) AUDITED
BALANCE SHEETS AND RELATED AUDITED STATEMENTS OF INCOME AND AUDITED STATEMENTS
OF CASH FLOW FOR CHIURAZZI INTERNAZIONALE, S.R.L. FOR THE FISCAL YEAR ENDING
DECEMBER 31, 2011 AND THE PERIOD ENDING DECEMBER 17, 2012. SUCH FINANCIAL
STATEMENTS (I) ARE IN ACCORDANCE WITH THE BOOKS AND RECORDS OF THE COMPANY, (II)
PRESENT FAIRLY IN ALL MATERIAL RESPECTS THE FINANCIAL CONDITION OF THE COMPANY
AT THE DATES THEREIN SPECIFIED AND THE RESULTS OF THEIR OPERATIONS AND CHANGES
IN FINANCIAL POSITION FOR THE PERIODS THEREIN SPECIFIED AND (III) HAVE BEEN
PREPARED IN ALL MATERIAL RESPECTS IN ACCORDANCE WITH U.S. GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES (“GAAP”) APPLIED ON A BASIS CONSISTENT WITH PRIOR
ACCOUNTING PERIODS OR, WITH RESPECT TO CHIURAZZI INTERNAZIONALE, S.R.L., IN
ACCORDANCE WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS.

(H)               A CERTIFICATE THAT THE COMPANY HAS NO MATERIAL OBLIGATION OR
LIABILITY (WHETHER ACCRUED, ABSOLUTE, CONTINGENT, LIQUIDATED OR OTHERWISE,
WHETHER DUE OR TO

 

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

 
 

 

BECOME DUE), ARISING OUT OF ANY TRANSACTION ENTERED INTO AT OR PRIOR TO THE
CLOSING, EXCEPT (A) AS DISCLOSED BY SCHEDULE, (B) TO THE EXTENT SET FORTH ON OR
RESERVED AGAINST IN THE BALANCE SHEET OR THE NOTES TO THE FINANCIAL STATEMENTS,
(C) CURRENT LIABILITIES INCURRED AND OBLIGATIONS UNDER AGREEMENTS ENTERED INTO
IN THE USUAL AND ORDINARY COURSE OF BUSINESS SINCE THE BALANCE SHEET DATE, NONE
OF WHICH (INDIVIDUALLY OR IN THE AGGREGATE) HAVE A MATERIAL ADVERSE EFFECT, AND
(D) BY THE SPECIFIC TERMS OF ANY WRITTEN AGREEMENT, DOCUMENT OR ARRANGEMENT
IDENTIFIED IN THE SCHEDULES HERETO OR WHICH ARE NOT REQUIRED TO BE DISCLOSED
THEREBY.

(I)                 A CERTIFICATE FROM THE COMPANY THAT SINCE THE BALANCE SHEET
DATE, EXCEPT AS DISCLOSED BY SCHEDULE, THE COMPANY HAS NOT (A) INCURRED ANY
DEBTS, OBLIGATIONS OR LIABILITIES, ABSOLUTE, ACCRUED, OR, TO THE COMPANY’S
KNOWLEDGE, CONTINGENT, WHETHER DUE OR TO BECOME DUE, EXCEPT FOR FEES, EXPENSES
AND LIABILITIES INCURRED IN CONNECTION WITH THE MERGER AND RELATED TRANSACTIONS,
AND CURRENT LIABILITIES INCURRED IN THE USUAL AND ORDINARY COURSE OF BUSINESS,
(B) DISCHARGED OR SATISFIED ANY LIENS OTHER THAN THOSE SECURING, OR PAID ANY
OBLIGATION OR LIABILITY OTHER THAN, CURRENT LIABILITIES SHOWN ON THE BALANCE
SHEET AND CURRENT LIABILITIES INCURRED SINCE THE BALANCE SHEET DATE, IN EACH
CASE IN THE USUAL AND ORDINARY COURSE OF BUSINESS, (C) MORTGAGED, PLEDGED OR
SUBJECTED TO LIEN ANY OF ITS ASSETS, TANGIBLE OR INTANGIBLE, OTHER THAN IN THE
USUAL AND ORDINARY COURSE OF BUSINESS, (D) SOLD, TRANSFERRED OR LEASED ANY OF
ITS ASSETS, EXCEPT IN THE USUAL AND ORDINARY COURSE OF BUSINESS, (E) CANCELLED
OR COMPROMISED ANY DEBT OR CLAIM, OR WAIVED OR RELEASED ANY RIGHT, OF MATERIAL
VALUE, (F) SUFFERED ANY PHYSICAL DAMAGE, DESTRUCTION OR LOSS (WHETHER OR NOT
COVERED BY INSURANCE) WHICH COULD REASONABLY BE EXPECTED TO HAVE A MATERIAL
ADVERSE EFFECT, (G) ENTERED INTO ANY TRANSACTION OTHER THAN IN THE USUAL AND
ORDINARY COURSE OF BUSINESS, (H) ENCOUNTERED ANY LABOR UNION DIFFICULTIES, (I)
MADE OR GRANTED ANY WAGE OR SALARY INCREASE OR MADE ANY INCREASE IN THE AMOUNTS
PAYABLE UNDER ANY PROFIT SHARING, BONUS, DEFERRED COMPENSATION, SEVERANCE PAY,
INSURANCE, PENSION, RETIREMENT OR OTHER EMPLOYEE BENEFIT PLAN, AGREEMENT OR
ARRANGEMENT, OTHER THAN IN THE ORDINARY COURSE OF BUSINESS CONSISTENT WITH PAST
PRACTICE, OR ENTERED INTO ANY EMPLOYMENT AGREEMENT, (J) ISSUED OR SOLD ANY
SHARES OR OTHER SECURITIES OR GRANTED ANY OPTIONS (INCLUDING EMPLOYEE OPTIONS),
WARRANTS OR OTHER RIGHTS WITH RESPECT THERETO, (K) DECLARED OR PAID ANY
DIVIDENDS ON OR MADE ANY OTHER DISTRIBUTIONS WITH RESPECT TO, OR PURCHASED OR
REDEEMED, ANY OF ITS OUTSTANDING SHARES, (L) SUFFERED OR EXPERIENCED ANY CHANGE
IN, OR CONDITION AFFECTING, THE FINANCIAL CONDITION OF THE COMPANY OTHER THAN
CHANGES, EVENTS OR CONDITIONS IN THE USUAL AND ORDINARY COURSE OF ITS BUSINESS,
NONE OF WHICH (EITHER BY ITSELF OR IN CONJUNCTION WITH ALL SUCH OTHER CHANGES,
EVENTS AND CONDITIONS) COULD REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE
EFFECT, (M) MADE ANY CHANGE IN THE ACCOUNTING PRINCIPLES, METHODS OR PRACTICES
FOLLOWED BY IT OR DEPRECIATION OR AMORTIZATION POLICIES OR RATES THERETOFORE
ADOPTED, (N) MADE OR PERMITTED ANY AMENDMENT OR TERMINATION OF ANY MATERIAL
CONTRACT, AGREEMENT OR LICENSE TO WHICH IT IS A PARTY WHICH HAS A MATERIAL
ADVERSE EFFECT, (O) SUFFERED ANY MATERIAL LOSS NOT REFLECTED IN THE BALANCE
SHEET OR ITS STATEMENT OF OPERATIONS FOR THE PERIOD ENDED ON THE BALANCE SHEET
DATE, (P) PAID, OR MADE ANY ACCRUAL OR ARRANGEMENT FOR PAYMENT OF, BONUSES OR
SPECIAL COMPENSATION OF ANY KIND OR ANY SEVERANCE OR TERMINATION PAY TO ANY
PRESENT OR FORMER OFFICER, DIRECTOR, EMPLOYEE, STOCKHOLDER OR CONSULTANT, (Q)
MADE OR AGREED TO MAKE ANY CHARITABLE CONTRIBUTIONS OR INCURRED ANY NON-BUSINESS
EXPENSES IN EXCESS OF $25,000 IN THE AGGREGATE, OR (R) ENTERED INTO ANY
AGREEMENT, OR OTHERWISE OBLIGATED ITSELF, TO DO ANY OF THE FOREGOING.

 

 

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

 
 

 

(J)                 AN OPINION OF SYNERGY LAW GROUP, COUNSEL FOR THE COMPANY, TO
THE EFFECT AS SET FORTH IN EXHIBIT C HERETO.

(k)        Such additional supporting documentation and other information with
respect to the transactions contemplated hereby as Parent or its counsel may
reasonably request.

5.3                       DELIVERIES OF PARENT.  AT CLOSING, PARENT AND MERGER
SUB SHALL DELIVER THE FOLLOWING DOCUMENTS TO THE COMPANY:

(A)                CERTIFICATE, DATED THE CLOSING DATE, EXECUTED ON BEHALF OF
THE PARENT AND MERGER SUB BY THEIR CHIEF EXECUTIVE OFFICER OR OTHER DULY
AUTHORIZED OFFICERS, CERTIFYING THE FOLLOWING:  (I) THE REPRESENTATIONS AND
WARRANTIES OF PARENT AND MERGER SUB UNDER THIS AGREEMENT ARE TRUE AND CORRECT IN
ALL MATERIAL RESPECTS ON THE CLOSING DATE; (II) PARENT AND MERGER SUB HAVE
PERFORMED AND COMPLIED IN ALL MATERIAL RESPECTS WITH ALL AGREEMENTS AND
CONDITIONS REQUIRED BY THIS AGREEMENT TO BE PERFORMED OR COMPLIED WITH BY THEM
ON OR BEFORE THE CLOSING DATE; AND (III) THERE DOES NOT EXIST ON THE CLOSING
DATE ANY DEFAULT OR EVENT OF DEFAULT OR ANY EVENT OR CONDITION, THAT WITH THE
GIVING OF NOTICE OR LAPSE OF TIME, OR BOTH, WOULD CONSTITUTE A DEFAULT OF EVENT
OF DEFAULT, AND SINCE THE PARENT BALANCE SHEET DATE, THERE HAS BEEN NO CHANGE
THAT HAS OR WILL HAVE A MATERIAL ADVERSE EFFECT ON THE PARENT.

(B)               AN OPINION OF PEARLMAN & SCHNEIDER LLP, COUNSEL FOR PARENT AND
MERGER SUB, TO THE EFFECT SET FORTH IN EXHIBIT D HERETO.

(C)                CERTIFICATES, DATED THE CLOSING DATE, EXECUTED BY THE
SECRETARY OF THE PARENT AND THE SECRETARY OF MERGER SUB, CERTIFYING THAT: (I)
ALL CONSENTS, AUTHORIZATIONS, ORDERS AND APPROVALS OF, AND FILINGS AND
REGISTRATIONS WITH, ANY COURT, GOVERNMENTAL BODY OR INSTRUMENTALITY THAT ARE
REQUIRED FOR THE EXECUTION AND DELIVERY OF THIS AGREEMENT AND THE CONSUMMATION
OF THE MERGER AND EXCHANGE SHALL HAVE BEEN DULY MADE OR OBTAINED, AND ALL
MATERIAL CONSENTS BY THIRD PARTIES REQUIRED FOR THE MERGER AND EXCHANGE HAVE
BEEN OBTAINED; AND (II) NO ACTION OR PROCEEDING BEFORE ANY COURT, GOVERNMENTAL
BODY OR AGENCY HAS BEEN THREATENED, ASSERTED OR INSTITUTED TO RESTRAIN OR
PROHIBIT, OR TO OBTAIN SUBSTANTIAL DAMAGES IN RESPECT OF, THIS AGREEMENT OR THE
CARRYING OUT OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

(D)               COPIES OF RESOLUTIONS OF PARENT’S AND MERGER SUB’S BOARDS OF
DIRECTORS, CERTIFIED BY THE SECRETARY, AUTHORIZING AND APPROVING THE EXECUTION,
DELIVERY AND PERFORMANCE OF THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
HEREBY, INCLUDING THE MERGER AND EXCHANGE AND ALL OTHER DOCUMENTS AND
INSTRUMENTS TO BE DELIVERED BY IT PURSUANT HERETO.

(E)                CERTIFICATES OF INCUMBENCY EXECUTED BY THE SECRETARY OF
PARENT AND THE SECRETARY OF MERGER SUB CERTIFYING THE NAMES, TITLES AND
SIGNATURES OF THE OFFICERS AUTHORIZED TO EXECUTE THIS AGREEMENT AND ANY
DOCUMENTS REFERRED TO HEREIN, AND FURTHER CERTIFYING THAT THE ARTICLES OF
INCORPORATION AND BY-LAWS OF PARENT AND MERGER SUB APPENDED THERETO HAVE NOT
BEEN AMENDED OR MODIFIED.

 

 

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

 
 

 

(F)                A CERTIFICATE OF THE TRANSFER AGENT, CERTIFYING AS OF THE
BUSINESS DAY PRIOR TO THE DATE OF THE MERGER AND EXCHANGE, A TRUE AND COMPLETE
LIST OF THE NAMES AND ADDRESSES OF THE RECORD OWNERS OF ALL OF THE OUTSTANDING
SHARES OF PARENT COMMON STOCK, TOGETHER WITH THE NUMBER OF SHARES OF PARENT
COMMON STOCK HELD BY EACH RECORD OWNER.

(G)               A LETTER FROM THE TRANSFER AGENT SETTING FORTH THE NUMBER OF
SHARES OF PARENT COMMON STOCK THAT WOULD BE ISSUED AND OUTSTANDING AS OF THE
CLOSING DATE AFTER TAKING INTO CONSIDERATION THE CLOSING OF THE MERGER AND
EXCHANGE (INCLUDING THE CANCELLATION OF THE 23,000,000 SHARES OF COMMON STOCK OF
THE COMPANY). 

(H)               THE EXECUTED RESIGNATION OF ARTHUR JOHN CARTER AS A DIRECTOR
AND OFFICER OF PARENT.

(I)                 EVIDENCE AS OF A RECENT DATE OF THE GOOD STANDING AND
CORPORATE EXISTENCE OF PARENT AND MERGER SUB ISSUED BY THE SECRETARY OF STATE OF
THE STATE OF NEVADA AND EVIDENCE THAT THE PARENT AND MERGER SUB ARE QUALIFIED TO
TRANSACT BUSINESS AS FOREIGN CORPORATIONS AND ARE IN GOOD STANDING IN EACH STATE
OF THE UNITED STATES AND IN EACH OTHER JURISDICTION WHERE THE CHARACTER OF THE
PROPERTY OWNED OR LEASED BY THEM OR THE NATURE OF THEIR ACTIVITIES MAKES SUCH
QUALIFICATION NECESSARY.

(J)                 SUCH ADDITIONAL SUPPORTING DOCUMENTATION AND OTHER
INFORMATION WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED HEREBY AS THE COMPANY
OR ITS COUNSEL MAY REASONABLY REQUEST.

ARTICLE 6  
DEFINITIONS

Unless the context otherwise requires and in addition to any terms defined
elsewhere in this Agreement, the terms defined in this Article shall have the
meanings herein specified for all purposes of this Agreement, applicable to both
the singular and plural forms of any of the terms herein defined.

“Affiliate” shall mean any Person that directly or indirectly controls, is
controlled by, or is under common control with, the indicated Person.

“Agreement” shall mean this Agreement.

“Assumed Indebtedness” shall have the meaning assigned to it in the recitals and
Schedule 2.4 hereof.

“Balance Sheet” and “Balance Sheet Date” shall have the meanings assigned to
such terms in Section 5.2(g) hereof.

“Certificates” shall have the meaning assigned thereto in Section 1.4(b) hereof.

“Closing” and “Closing Date” shall have the meanings assigned to such terms in
Section 6.1 hereof.

 

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

 
 

 

“Code” shall have the meaning assigned to it in the recitals.

“Commission” shall mean the U.S. Securities and Exchange Commission.

“Company” shall mean CI Holdings, Inc., an Oregon corporation.

“Company Common Stock” shall have the meaning assigned to it in the recitals.

“Company Common Stock Certificate” shall have the meaning assigned to it in
Section 1.5(c).

 “Default” shall mean a default or failure in the due observance or performance
of any covenant, condition or agreement to be observed or performed under the
terms of this Agreement if such default or failure in performance shall remain
unremedied for ten (10) days after receipt of written notice of such default.

“Dissenting Shares” shall have the meaning assigned to it in Section 1.7 hereof.

“Dissenting Stockholder” shall have the meaning assigned to it in Section 1.7
hereof.

“EAD” shall mean Experience Art & Design, Inc., the new name of the Merger Sub
which will exist as a Nevada corporation and a wholly-owned subsidiary of the
Parent following the closing of the transactions contemplated herein.

“Effective Time” shall have the meaning assigned to it in Section 1.3 hereof.

“Employee Benefit Plans” shall have the meaning assigned to it in Section 2.17
hereof.

“Equity Security” shall mean any stock, interest or similar equity security of
an issuer or any security (whether stock or Indebtedness for Borrowed Money)
convertible, with or without consideration, into any stock, interest or similar
equity security, or any security (whether stock or Indebtedness for Borrowed
Money) carrying any warrant, option or right to subscribe to or purchase any
stock, interest or similar equity security, or any such warrant, option or
right.

“ERISA” shall mean the Employee Retirement Income Securities Act of 1974, as
amended.

 “Exchange Agent” shall have the meaning assigned to it in Section 1.9(a)
hereof.

 “Exchange Ratio” shall have the meaning assigned to it in Section 1.6 hereof.

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

“Exchange Shares” shall have the meaning assigned to it in Section 1.9(b)
hereof.

“Event of Default” shall mean (a) the failure to pay any Indebtedness for
Borrowed Money, or any interest or premium thereon, within five (5) days after
the same shall become due, whether such Indebtedness shall become due by
scheduled maturity, by required prepayment, by acceleration, by demand or
otherwise, (b) an event of default under any material agreement or instrument
evidencing or securing or relating to any such Indebtedness, or (c) the failure
to perform or observe any material term, covenant, agreement or condition on
one’s part to be performed or observed under any agreement or instrument
evidencing or securing or relating to any such Indebtedness when such term,
covenant or agreement is required to be performed or observed.

 

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

 
 

 

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

"knowledge" and "know" means, when referring to any person or entity, the
actual knowledge of the Chief Executive Officer, President or Chief Financial
Officer or the person or entity of the particular matter or fact with respect to
which it is used,

“Indebtedness” shall mean any obligation which under generally accepted
accounting principles is required to be shown on the balance sheet as a
liability, excluding however, accounts payable, accrued expenses and other short
term liabilities.

“Indebtedness for Borrowed Money” shall mean (a) all Indebtedness in respect of
money borrowed including, without limitation, Indebtedness which represents the
unpaid amount of the purchase price of any property and is incurred in lieu of
borrowing money or using available funds to pay such amounts and not
constituting an account payable or expense accrual incurred or assumed in the
ordinary course of business, (b) all Indebtedness evidenced by a promissory
note, bond or similar written obligation to pay money, or (c) all such
Indebtedness guaranteed or for which one is otherwise contingently liable.

“Investment Company Act” shall mean the Investment Company Act of 1940, as
amended.

“Lien” shall mean any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind, including, without limitation, any conditional sale or other
title retention agreement, any lease in the nature thereof and the filing of or
agreement to give any financing statement under the Uniform Commercial Code of
any jurisdiction and including any lien or charge arising by statute or other
law.

 “Material Adverse Effect” shall have the meaning assigned to it in Section 2.2
hereof.

“Merger” shall mean the merger of the Company with and into the Merger Sub.

“Merger Sub” shall mean Clear System Merger Sub, Inc., a Nevada corporation and
wholly-owned subsidiary of Parent.

“NRS” shall mean the Nevada Revised Statutes.

“ORS” shall mean the Oregon Revised Statutes.

“Parent” shall mean Clear System Recycling, Inc., a Nevada corporation.

“Parent Balance Sheet Date” shall have the meaning assigned to it in Section
3.14 hereof.

 

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

 
 

 

“Parent Common Stock” shall have the meaning assigned to it in the recitals.

“Parent Employee Benefit Plans” shall have the meaning assigned to it in Section
3.17 hereof.

“Parent Financial Statements” shall have the meaning assigned to it in Section
3.11 hereof.

“Parent Incentive Plan” shall have the meaning assigned to it in Section 3.27
hereof.

“Parent SEC Documents” shall have the meaning assigned to it in Section 3.10
hereof.

“Permitted Liens” shall mean (a) Liens for taxes and assessments or governmental
charges or levies not at the time due or in respect of which the validity
thereof shall currently be contested in good faith by appropriate proceedings;
(b) Liens in respect of pledges or deposits under workmen’s compensation laws or
similar legislation, carriers’, warehousemen’s, mechanics’, laborers’,
material-men’s’ and similar Liens, if the obligations secured by such Liens are
not then delinquent or are being contested in good faith by appropriate
proceedings; and (c) Liens incidental to the conduct of the business that were
not incurred in connection with the borrowing of money or the obtaining of
advances or credits and which do not in the aggregate materially detract from
the value of its property or materially impair the use made thereof in business.

“Person” shall include all natural persons, corporations, business trusts,
associations, limited liability Company, partnerships, joint ventures and other
entities and governments and agencies and political subdivisions.

“Securities Act” shall mean the Securities Act of 1933, as amended.

“Stockholder” or “Stockholders” shall mean the holders of common stock of the
Company who are signatories to this Agreement.

“Tax” or “Taxes” shall mean (a) any and all taxes, assessments, customs, duties,
levies, fees, tariffs, imposts, deficiencies and other governmental charges of
any kind whatsoever (including, but not limited to, taxes on or with respect to
net or gross income, franchise, profits, gross receipts, capital, sales, use, ad
valorem, value added, transfer, real property transfer, transfer gains, transfer
taxes, inventory, capital stock, license, payroll, employment, social security,
unemployment, severance, occupation, real or personal property, estimated taxes,
rent, excise, occupancy, recordation, bulk transfer, intangibles, alternative
minimum, doing business, withholding and stamp), together with any interest
thereon, penalties, fines, damages,  costs, fees, additions to tax or additional
amounts with respect thereto, imposed by the United States or other applicable
jurisdiction; (b) any liability for the payment of any amounts described in
clause (a) as a result of being a stockholder of an affiliated, consolidated,
combined, unitary or similar group or as a result of transferor or successor
liability, including, without limitation, by reason of Regulation section
1.1502-6; and (c) any liability for the payments of any amounts as a result of
being a party to any Tax Sharing Agreement or as a result of any express or
implied obligation to indemnify any other Person with respect to the payment of
any amounts of the type described in clause (a) or (b).

 

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

 
 

 

“Tax Return” shall include all returns and reports (including elections,
declarations, disclosures, schedules, estimates and information returns
(including Form 1099 and partnership returns filed on Form 1065) required to be
supplied to a Tax authority relating to Taxes.

“Transfer Agent” means Island Stock Transfer Company, Parent’s transfer agent
and registrar.

ARTICLE 7  
MISCELLANEOUS

7.1                       NOTICES. 

Any notice, request or other communication hereunder shall be given in writing
and shall be served either personally by overnight delivery or delivered by
mail, certified return receipt and addressed to the following addresses:

If to Parent:                 Clear System Recycling, Inc.

73 Raymar Place

Oakville, Ontario Canada

Attention:  Mr. Arthur John Carter, President

With a copy to:          

If to Merger Sub:        Clear System Merger Sub, Inc.

73 Raymar Place

Oakville, Ontario Canada

Attention:  Mr. Arthur John Carter, President

With a copy to:           Pearlman Schneider LLP

2200 Corporate Boulevard West

Suite 210

Boca Raton, FL 33431

Attention: Brian A. Pearlman, Esq.

 

                        If to the Company:     Experience Art & Design,
Inc.          

                                                            386 NW 3rd Avenue

                                    Canby, OR  97013  

Attention: Mr. Gordon Root, President

With a copy to:           Synergy Law Group

730 West Randolph Street, Suite 600

Chicago, Illinois 60661

Attention: Kristen A. Baracy

Notices shall be deemed received at the earlier of actual receipt or three (3)
business days following mailing.  Counsel for a party (or any authorized
representative) shall have authority to accept delivery of any notice on behalf
of such party.

 

 

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

 
 

 

7.2                       ENTIRE AGREEMENT.  THIS AGREEMENT, INCLUDING THE
SCHEDULES AND EXHIBITS ATTACHED HERETO AND OTHER DOCUMENTS REFERRED TO HEREIN,
CONTAINS THE ENTIRE UNDERSTANDING OF THE PARTIES HERETO WITH RESPECT TO THE
SUBJECT MATTER HEREOF.  THIS AGREEMENT SUPERSEDES ALL PRIOR AGREEMENTS AND
UNDERTAKINGS BETWEEN THE PARTIES WITH RESPECT TO SUCH SUBJECT MATTER.

7.3                       EXPENSES.  EACH PARTY SHALL BEAR AND PAY ALL OF THE
LEGAL, ACCOUNTING AND OTHER EXPENSES INCURRED BY IT IN CONNECTION WITH THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

7.4                       TIME.  TIME IS OF THE ESSENCE IN THE PERFORMANCE OF
THE PARTIES’ RESPECTIVE OBLIGATIONS HEREIN CONTAINED.

7.5                       SEVERABILITY.  ANY PROVISION OF THIS AGREEMENT THAT IS
PROHIBITED OR UNENFORCEABLE IN ANY JURISDICTION SHALL, AS TO SUCH JURISDICTION,
BE INEFFECTIVE TO THE EXTENT OF SUCH PROHIBITION OR UNENFORCEABILITY WITHOUT
INVALIDATING THE REMAINING PROVISIONS HEREOF, AND ANY SUCH PROHIBITION OR
UNENFORCEABILITY IN ANY JURISDICTION SHALL NOT INVALIDATE OR RENDER
UNENFORCEABLE SUCH PROVISION IN ANY OTHER JURISDICTION.

7.6                       SUCCESSORS AND ASSIGNS.  THIS AGREEMENT SHALL BE
BINDING UPON AND INURE TO THE BENEFIT OF THE PARTIES HERETO AND THEIR RESPECTIVE
SUCCESSORS, ASSIGNS AND HEIRS; PROVIDED, HOWEVER, THAT NO STOCKHOLDER SHALL
DIRECTLY OR INDIRECTLY TRANSFER OR ASSIGN ANY OF HIS OR HER RIGHTS HEREUNDER IN
WHOLE OR IN PART WITHOUT THE WRITTEN CONSENT OF THE PARENT AND THE COMPANY,
WHICH SHALL NOT BE UNREASONABLY WITHHELD, AND ANY SUCH TRANSFER OR ASSIGNMENT
WITHOUT SAID CONSENT SHALL BE VOID.

7.7                       NO THIRD PARTIES BENEFITED.  THIS AGREEMENT IS MADE
AND ENTERED INTO FOR THE SOLE PROTECTION AND BENEFIT OF THE PARTIES HERETO
(INCLUDING ALL STOCKHOLDERS WHO ACQUIRE SHARES OF PARENT COMMON STOCK), THEIR
SUCCESSORS, ASSIGNS AND HEIRS, AND NO OTHER PERSON SHALL HAVE ANY RIGHT OR
ACTION UNDER THIS AGREEMENT.

7.8                       COUNTERPARTS.  THIS AGREEMENT MAY BE EXECUTED IN ONE
OR MORE COUNTERPARTS AND BY TRANSMISSION OF A DIGITAL OR FACSIMILE SIGNATURE,
EACH OF WHICH SHALL BE DEEMED AND ACCEPTED AS AN ORIGINAL, AND ALL OF WHICH
TOGETHER SHALL CONSTITUTE A SINGLE AGREEMENT.

7.9                       RECITALS, SCHEDULES AND EXHIBITS.  THE RECITALS,
SCHEDULES AND EXHIBITS TO THIS AGREEMENT ARE INCORPORATED HEREIN AND, BY THIS
REFERENCE, MADE A PART HEREOF AS IF FULLY SET FORTH HEREIN.

7.10                   SECTION HEADINGS AND GENDER.  THE SECTION HEADINGS USED
HEREIN ARE INSERTED FOR REFERENCE PURPOSES ONLY AND SHALL NOT IN ANY WAY AFFECT
THE MEANING OR INTERPRETATION OF THIS AGREEMENT. ALL PERSONAL PRONOUNS USED IN
THIS AGREEMENT SHALL INCLUDE THE OTHER GENDERS, WHETHER USED IN THE MASCULINE,
FEMININE OR NEUTER GENDER, AND THE SINGULAR SHALL INCLUDE THE PLURAL, AND VICE
VERSA, WHENEVER AND AS OFTEN AS MAY BE APPROPRIATE.

7.11                   GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
NEVADA. THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE SUBJECT
TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEVADA. THE PARTIES
TO THIS AGREEMENT AGREE THAT ANY BREACH OF ANY TERM OR CONDITION OF THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE DEEMED TO BE A BREACH
OCCURRING

 

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

 
 

 

IN THE STATE OF NEVADA BY VIRTUE OF A FAILURE TO PERFORM AN ACT REQUIRED TO BE
PERFORMED IN THE STATE OF NEVADA. THE PARTIES TO THIS AGREEMENT IRREVOCABLY AND
EXPRESSLY AGREE TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF
NEVADA FOR THE PURPOSE OF RESOLVING ANY DISPUTES AMONG THE PARTIES RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. THE PARTIES IRREVOCABLY
WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH THEY MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
HEREBY, OR ANY JUDGMENT ENTERED BY ANY COURT IN PROSPECT HEREOF BROUGHT IN THE
STATE OF NEVADA AND FURTHER IRREVOCABLY WAIVE ANY CLAIM THAT ANY SUIT, ACTION OR
PROCEEDING BROUGHT IN THE STATE OF NEVADA HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.  WITH RESPECT TO ANY ACTION BEFORE THE ABOVE COURTS, THE PARTIES HERETO
AGREE TO SERVICE OF PROCESS BY CERTIFIED OR REGISTERED UNITED STATES MAIL,
POSTAGE PREPAID, ADDRESSED TO THE PARTY IN QUESTION.

7.12                   AMENDMENT OF AGREEMENT.  THIS AGREEMENT MAY BE AMENDED OR
MODIFIED AT ANY TIME IN ALL RESPECTS BY AN INSTRUMENT IN WRITING EXECUTED BY
PARENT AND THE COMPANY, PROVIDED THAT ANY AMENDMENT THAT MATERIALLY AND
ADVERSELY AFFECTS THE RIGHTS OR CHANGES THE OBLIGATION OF ANY STOCKHOLDER (AS
OPPOSED TO THE COMPANY) SHALL REQUIRE THE CONSENT OF ANY SUCH STOCKHOLDER.

Survival of Representations and Warranties.  The representations and warranties
of the parties made in Articles 2 and 3 of this Agreement shall survive six (6)
months beyond the Closing. This Section shall not limit any claim for fraud
based on such representations and warranties. Nothing in this Section shall
impair or alter any covenant or agreement of the parties which by its terms
contemplates performance after the Closing.

 

(Signature Page Follows)

 

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

 
 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be
binding and effective as of the day and year first above written.

PARENT:

CLEAR SYSTEM RECYCLING, INC.,

a Nevada corporation

 

 

By:      /s/ Arthur John Carter                          

Arthur John Carter

President

MERGER SUB:

CLEAR SYSTEM MERGER SUB, INC.,

a Nevada corporation

 

By:      /s/ Arthur John Carter                          

Arthur John Carter

President

 

COMPANY:

EXPERIENCE ART & DESIGN, INC.,

an Oregon corporation

 

 

 

By:      /s/ Gordon Root                                    

Gordon Root

President

  

 

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

 

 

EXHIBIT A

 

MERGER SUB ARTICLES OF INCORPORATION

 

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

 

 

EXHIBIT B

 

MERGER SUB BY-LAWS

 

 

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

 

 

 

ARTICLE 8 BY-LAWS 

of

CLEAR SYSTEM MERGER SUB, INC.

A Nevada Corporation

 

[x13031811214800.gif] 

ARTICLE I - OFFICES

1.1       Registered Office.  The registered office shall be in Carson City,
Nevada.

1.2       Additional Offices.  The corporation may also have offices at such
other places both within and without the State of Nevada as the Board of
Directors may from time to time determine or the business of the corporation may
require.

ARTICLE II - MEETINGS OF SHAREHOLDERS

2.1       Location of Meetings.  All meetings of the shareholders for the
election of directors shall be held in the State of Nevada, at such place as may
be fixed from time to time by the Board of Directors, or at such other place
either within or without the State of Nevada as shall be designated from time to
time by the Board of Directors and stated in the notice of the meeting. 
Meetings of shareholders for any other purpose may be held at such time and
place, within or without the State of Nevada, as shall be stated in the notice
of the meeting or in a duly executed waiver of notice thereof.

2.2       Annual Meetings.  Annual meetings of shareholders shall be held each
year in the month of December, unless otherwise directed by the Board of
Directors, at such date and time as shall be designated from time to time by the
Board of Directors and stated in the notice of the meeting, at which the common
shareholders shall elect by a plurality vote a Board of Directors, and transact
such other business as may properly be brought before the meeting.  “Common
Shareholders” shall mean the holders of Common Stock of the corporation as duly
reflected on the stock ledger of the corporation.

2.3       Notice of Meetings.  Written notice of the annual meeting stating the
place, date and hour of the meeting, and the means by which any remote
communications shall be utilized for purposes of attending and participating in
such meeting, shall be given to each shareholder entitled to vote at such
meeting not less than ten (10) days nor more than sixty (60) days before the
date of the meeting.

2.4       Participation and Attendance at Meetings.  If the directors shall
provide for the participation of meetings of shareholders by means of remote
communication, shareholders shall be considered present and may participate and
vote in the meeting if they shall avail themselves of such remote communication
services provided for by the directors.  Any such meeting conducted in whole or
in part by means of remote communication shall be conducted by reasonable
measures as directed by the directors to ensure verification of participating
and voting is by a shareholder and that shareholders shall have a reasonable
opportunity to participate in the meeting and vote on matters submitted to the
shareholders for which they are entitled to vote, including an opportunity to
read or hear the proceedings of the meeting substantially concurrently with such
proceedings, and if any shareholder votes or takes other action at the meeting
by means of remote communication, a record of such vote or other action shall be
maintained by the corporation.

 

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

 

 

2.5       Shareholder Records.  The officer who has charge of the stock ledger
of the corporation shall prepare and make, at least ten (10) days before every
meeting of shareholders, a complete list of the shareholders entitled to vote at
the meeting, arranged in alphabetical order, and showing the address of each
shareholder and the number of shares registered in the name of each
shareholder.  Such list shall be open to the examination of any shareholder, for
any purpose germane to the meeting for a period of at least ten (10) days prior
to the meeting, either (a) on a reasonably accessible electronic network, with
sufficient access information contained in the notice of such meeting or (b)
during normal business hours at the principal place of business of the
corporation.  The list shall also be produced and kept at the time and place of
the meeting during the whole time thereof, and may be inspected by any
shareholder who is present.

2.6       Calling of Special Meetings.  Unless otherwise prescribed by statute
or by the Articles of Incorporation, special meetings of the shareholders
entitled to vote on the matter, for any purpose or purposes, may be called by
the Chief Executive Officer or President and shall be called by the Chief
Executive Officer, President or Secretary at the request in writing of a
majority of the Board of Directors, or at the request in writing of shareholders
owning twenty percent (20%) of the entire capital stock of the corporation
issued and outstanding and entitled to vote on the matter.  Such request shall
state the purpose or purposes of the proposed meeting.

2.7       Notice of Special Meetings.  Written notice of a special meeting
stating the place, date and hour of the meeting, and the means by which any
remote communications shall be utilized for purposes of attending and
participating in such meeting, and the purpose or purposes for which the meeting
is called, shall be given not less than ten (10) nor more than sixty (60) days
before the date of the meeting, to each shareholder entitled to vote at such
meeting.

2.8       Purpose of Meetings.  Business transacted at any special meeting of
shareholders shall be limited to the purposes stated in the notice.

2.9       Quorum.  The holders of a majority of the stock issued and outstanding
and entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the shareholders for the transaction of
business except as otherwise provided by statute or by the Articles of
Incorporation.  If, however, such quorum shall not be present or represented at
any meeting of the shareholders, the shareholders entitled to vote thereat,
present in person or represented by proxy, shall have power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented.  At such adjourned
meeting at which a quorum shall be present or represented any business may be
transacted which might have been transacted at the meeting as originally
notified.  If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each shareholder of record entitled to
vote at the meeting.

 

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

 

 

2.10     Voting Approval.  When a quorum is present at any meeting, the vote of
the holders of a majority of the stock having voting power present in person or
represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which by express provision of the statutes or of
the Articles of Incorporation, a different vote is required in which case such
express provision shall govern and control the decision of such question.

2.11     Voting.  Unless otherwise provided in the Articles of Incorporation,
each shareholder having voting power on the matter shall at every meeting of the
shareholders be entitled to one (1) vote in person or by proxy for each share of
the capital stock having voting power held by such shareholder.  At any meeting
of the shareholders, every shareholder entitled to vote may vote in person or by
proxy authorized by an instrument in writing or by a transmission permitted by
law filed in accordance with the procedure established for the meeting, but no
proxy shall be voted on after three (3) years from its date, unless the proxy
provides for a longer period.  Any copy, facsimile telecommunication or other
reliable reproduction of the writing or transmission created pursuant to this
paragraph may be substituted or used in lieu of the original writing or
transmission for any and all purposes for which the original writing or
transmission could be used; provided that such copy, facsimile telecommunication
or other reproduction shall be a complete reproduction of the entire original
writing or transmission.  All voting may (except where otherwise required by
law) be by a voice vote; provided, however, that upon demand therefor by a
shareholder entitled to vote or by his or her proxy, a stock vote shall be
taken.  The corporation may, and to the extent required by law shall, in advance
of any meeting of shareholders, appoint one or more inspectors to act at the
meeting, count the votes, decide the results and make a written report thereof. 
The corporation may designate one or more persons as alternate inspectors to
replace any inspector who fails to act.  If no inspector or alternate is able to
act at a meeting of shareholders, the person presiding at the meeting may, and
to the extent required by law shall, appoint one or more inspectors to act at
the meeting.  Each inspector, before entering upon the discharge of his or her
duties, shall take and sign an oath to faithfully execute the duties of
inspector with strict impartiality and according to the best of his or her
ability.

2.12     Action without Meeting.  Unless otherwise provided in the Articles of
Incorporation, any action required to be taken at any annual or special meeting
of shareholders of the corporation, or any action which may be taken at any
annual or special meeting of such shareholders, may be taken without a meeting,
without prior notice and without a vote, if a consent in writing, setting forth
the action so taken, shall be signed by the holders of outstanding stock having
not less than the minimum number of votes that would be necessary to authorize
or take such action at a meeting at which all shares entitled to vote thereon
were present and voted. A telegram, cablegram or other electronic transmission
consenting to an action to be taken and transmitted by a shareholder, or by a
person or persons authorized to act for a shareholder, shall be deemed to be
written, signed and dated for the purposes of this section, provided that any
such telegram, cablegram or other electronic transmission sets forth or is
delivered with information from which the corporation can determine (a) that the
telegram, cablegram or other electronic transmission was transmitted by the
shareholder or by a person or persons authorized to act for the shareholder and
(b) the date on which such shareholder or authorized person or persons
transmitted such telegram, cablegram or electronic transmission. The date on
which such telegram, cablegram or electronic transmission is transmitted shall
be deemed to be the date on which such consent was signed.  No consent given by
telegram, cablegram or other electronic transmission shall be deemed to have
been delivered until such consent is reproduced in paper form and until such
paper form shall be delivered to the corporation by delivery to its registered
office in this State, its principal place of business or an officer or agent of
the corporation having custody of the book in which proceedings of meetings of
shareholders are recorded.  Delivery made to a corporation’s registered office
shall be made by hand or by certified or registered mail, return receipt
requested.  Notwithstanding the foregoing limitations on delivery, consents
given by telegram, cablegram or other electronic transmission, may be otherwise
delivered to the principal place of business of the corporation or to an officer
or agent of the corporation having custody of the book in which proceedings of
meetings of shareholders are recorded if, to the extent and in the manner
provided by resolution of the Board of Directors of the corporation.  Prompt
notice of the taking of the corporate action without a meeting by less than
unanimous written consent of shareholders entitled to vote or consent on the
matter shall be given to those shareholders who have not consented in writing
and who, if the action had been taken at a meeting, would have been entitled to
notice of the meeting if the record date for such meeting had been the date that
written consents signed by a sufficient number of holders or members to take the
action were delivered to the corporation. 

 

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

 

 

2.13     Presiding Over Meetings.  The Chairman of the Board of Directors shall
preside at all meetings of the shareholders.  In the absence or inability to act
of the Chairman, the Vice Chairman, the Chief Executive Officer, the President
or a Vice President (in that order) shall preside, and in their absence or
inability to act, another person designated by one of them shall preside.  The
Secretary of the corporation shall act as Secretary of each meeting of the
shareholders.  In the event of his or her absence or inability to act, the
Chairman of the meeting shall appoint a person who need not be a shareholder to
act as Secretary of the meeting.

2.14     Conducting Meetings.  Meetings of the shareholders shall be conducted
in a fair manner but need not be governed by any prescribed rules of order.  The
presiding officer of the meeting shall establish an agenda for the meeting.  The
presiding officer’s rulings on procedural matters shall be final.  The presiding
officer is authorized to impose reasonable time limits on the remarks of
individual shareholders and may take such steps as such officer may deem
necessary or appropriate to assure that the business of the meeting is conducted
in a fair and orderly manner.

ARTICLE III - DIRECTORS

3.1       Directors.  The number of directors which shall constitute the whole
board shall be not less than one or more than seven.  Thereafter, within the
limits above specified, the number of directors shall be determined by
resolution unanimously approved by the Board of Directors or, in the absence of
a determination by the Board of Directors, then by the Common Shareholders at
the annual meeting.  The directors shall be elected at the annual meeting of the
Common Shareholders, except as provided in Section 2 of this Article, and each
director elected shall hold office until his successor is elected and qualified
or until his or her earlier resignation or removal.  Directors need not be
shareholders.

3.2       Vacancies.  Vacancies and newly created directorships resulting from
any increase in the authorized number of directors may be filled by a majority
of the directors then in office, though less than a quorum, or by a sole
remaining director, and the directors so chosen shall hold office until the next
annual election and until their successors are duly elected and shall qualify,
or until his or her earlier resignation or removal.  If there are no directors
in office, then an election of directors may be held in the manner provided by
statute, subject to the provisions of the Articles of Incorporation.  If, at the
time of filling any vacancy or any newly created directorship by the directors
then in office, such that the directors then in office shall constitute less
than a majority of the whole board (as constituted immediately prior to any such
vacancy or increase), a court of competent jurisdiction may, upon application of
any shareholder or shareholders holding at least ten percent of the total number
of the shares at the time outstanding having the right to vote for such
directors, summarily order an election to be held to fill any such vacancies or
newly created directorships, or to replace the directors chosen by the directors
then in office.

 

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

 

 

3.3       Management of Corporation.  The business of the corporation shall be
managed by or under the direction of its Board of Directors which may exercise
all such powers of the corporation and do all such lawful acts and things as are
not by statute or by the Articles of Incorporation or by these by-laws directed
or required to be exercised or done by the shareholders.

ARTICLE IV - MEETINGS OF THE BOARD OF DIRECTORS

4.1       Meetings.  The Board of Directors of the corporation may hold
meetings, both regular and special, either within or without the State of
Nevada.

4.2       First Meeting.  The first meeting of each newly elected Board of
Directors shall be held at such time and place as shall be fixed by the vote of
the shareholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present.  In the event of the failure of the
shareholders to fix the time or place of such first meeting of the newly elected
Board of Directors, or in the event such meeting is not held at the time and
place so fixed by the shareholders, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter provided for
special meetings of the Board of Directors, or as shall be specified in a
written waiver signed by all of the directors.

4.3       Regular Meetings.  Regular meetings of the Board of Directors may be
held without notice at such time and at such place as shall from time to time be
determined by the board.

4.4       Special Meetings.  Special meetings of the board may be called by the
Chief Executive Officer or President on twenty-four hours’ notice to each
director, either personally or by mail or by facsimile communication; special
meetings shall be called by the Chief Executive Officer, President or Secretary
in like manner and on like notice on the written request of one director unless
the board consists of only one director; in which case special meetings shall be
called by the Chief Executive Officer, President or Secretary in like manner and
on like notice on the written request of the sole director.

4.5       Quorum.  At all meetings of the board, a majority of directors shall
constitute a quorum for the transaction of business and the act of a majority of
the directors present at any meeting at which there is a quorum shall be the act
of the Board of Directors, except as may be otherwise specifically provided by
statute or by the Articles of Incorporation.  If a quorum shall not be present
at any meeting of the Board of Directors the directors present thereat may
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present.

 

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

 

 

4.6       Informal Action.  Unless otherwise restricted by the Articles of
Incorporation or these by-laws, any action required or permitted to be taken at
any meeting of the Board of Directors or of any committee thereof may be taken
without a meeting, if all members of the board or committee, as the case may be,
consent thereto in writing or by electronic transmission, and the writing(s) or
paper forms of any electronic transmission(s) are filed with the minutes of
proceedings of the board or committee.

4.7       Participation in Meetings.  Unless otherwise restricted by the
Articles of Incorporation or these by-laws, members of the Board of Directors,
or any committee designated by the Board of Directors, may participate in a
meeting of the Board of Directors, or any committee, by any means permitted
under the Chapter 78 of the Nevada Revised Statutes (including participation in
a meeting of the Board of Directors, or committee, by means of conference
telephone or other communications equipment by means of which all persons
participating in the meeting can hear each other), and any such participation in
a meeting shall constitute presence in person at the meeting.

4.8       Presiding Over Meetings.  The Chairman of the Board of Directors shall
preside at all meetings of the directors.  In the absence or inability to act of
the Chairman, the Vice Chairman, the Chief Executive Officer, the President or a
Vice President (in that order) shall preside, and in their absence or inability
to act, another person designated by one of them shall preside.  The Secretary
of the corporation shall act as Secretary of each meeting of the directors.  In
the event of his or her absence or inability to act, the Chairman of the meeting
shall appoint a person who need not be a shareholder to act as Secretary of the
meeting.

4.9       Conducting Meetings.  Meetings of the directors be conducted in a fair
manner but need not be governed by any prescribed rules of order.  The presiding
officer of the meeting shall establish an agenda for the meeting.  The presiding
officer’s rulings on procedural matters shall be final.  The presiding officer
is authorized to impose reasonable time limits on the remarks of individual
board member and may take such steps as such officer may deem necessary or
appropriate to assure that the business of the meeting is conducted in a fair
and orderly manner.

4.10     Presumption of Assent.  A director of the corporation who is present at
a meeting of the Board of Directors at which action on any corporate matter is
taken shall be conclusively presumed to have assented to the action taken unless
his or her dissent shall be entered in the minutes of the meeting or unless he
or she shall file his or her written dissent to such action with the person
acting as the Secretary of the meeting before the adjournment thereof or shall
forward such dissent by registered mail to the Secretary of the corporation
immediately after the adjournment of the meeting. Such right to dissent shall
not apply to a director who voted in favor of such action.

 

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

 

 

4.11     Committees. 

(a)        The Board of Directors may designate one or more committees, each
committee to consist of one or more of the directors of the corporation.  The
board may designate one or more directors as alternate members of any committee,
who may replace any absent or disqualified member at any meeting of the
committee.  Any member of any committee appointed by the Board of Directors, or
the entire membership of such committee, may be removed, with or without cause,
by the vote of a majority of the Board of Directors.

(b)        In the absence or disqualification of a member of a committee, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absent or disqualified member.

(c)        Any such committee, to the extent provided in the resolution of the
Board of Directors, shall have and may exercise all the powers and authority of
the Board of Directors in the management of the business and affairs of the
corporation, and may authorize the seal of the corporation to be affixed to all
papers which may require it; but no such committee shall have the power or
authority in reference to the following matters: (i) approving or adopting, or
recommending to the shareholders, any action or matter expressly required by
Chapter 78 of the Nevada Revised Statutes to be submitted to shareholders for
approval or (ii) adopting, amending or repealing any by-law of the corporation.
Such committee or committees shall have such name or names as may be determined
from time to time by resolution adopted by the Board of Directors.

(d)       Each committee shall keep regular minutes of its meetings and report
the same to the Board of Directors when required.

4.12     Compensation of Directors.  Unless otherwise restricted by the Articles
of Incorporation or these by-laws, the Board of Directors shall have the
authority to fix the compensation of directors.  The directors may be paid their
expenses, if any, of attendance at each meeting of the Board of Directors and
may be paid a fixed sum for attendance at each meeting of the Board of Directors
or a stated salary as director.  No such payment shall preclude any director
from serving the corporation in any other capacity and receiving compensation
therefor.  Members of special or standing committees may be allowed like
compensation for attending committee meetings.

4.13     Removal and Resignation of Directors.  Unless otherwise restricted by
the Articles of Incorporation or by law, any director or the entire Board of
Directors may be removed, with or without cause, by the holders of a majority of
shares entitled to vote in the election of directors.  Any director of the
corporation may resign at any time by giving notice in writing or electronic
transmission to the Board of Directors, the Chairman, the Chief Executive
Officer or the President.  Such resignation shall take effect at the time
specified therein and, unless tendered to take effect upon acceptance thereof,
the acceptance of such resignation shall not be necessary to make it effective.

 

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

 

 

ARTICLE V - NOTICES

5.1       Notice.  Whenever, under the provisions of the statutes or of the
Articles of Incorporation or of these by-laws, notice is required to be given to
any director or shareholder, it shall not be construed to mean personal notice,
but such notice may be given in any manner as prescribed by Chapter 78 of the
Nevada Revised Statutes.

5.2       Wavier of Notice.  Whenever any notice is required to be given under
the provisions of the statutes or of the Articles of Incorporation or of these
by-laws, a waiver thereof in writing, signed by the person or persons entitled
to said notice, or a waiver by electronic transmission by the person entitled to
notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.

ARTICLE VI - OFFICERS

6.1       Officers.  The officers of the corporation shall be chosen by the
Board of Directors and shall include a President, a Vice-President, a Secretary
and a Treasurer.  The Board of Directors may also appoint a Chairman of the
board, Chief Executive Officer, Chief Financial Officer, Chief Operating
Officer, Chief Technology Officer, Vice President of Development Services, one
or more Senior Vice-Presidents, additional Vice-Presidents, and one or more
assistant secretaries and assistant treasurers.  Any number of offices may be
held by the same person, unless the Articles of Incorporation or these by-laws
otherwise provide.

6.2       Election of Officers.  The Board of Directors at its first meeting
after each annual meeting of shareholders shall choose a Chief Executive
Officer, President, one or more Vice-Presidents, a Secretary and a Treasurer. 
Any number of offices may be held by the same person, unless the Articles of
Incorporation or these by-laws otherwise provide.  The Board of Directors may
appoint such other officers and agents as it shall deem necessary that shall
hold their offices for such terms and shall exercise such powers and perform
such duties as shall be determined from time to time by the board.

6.3       Compensation of Officers.  The salaries and other compensation of all
officers and agents of the corporation shall be fixed by the Board of Directors.

6.4       Term of Officers.  The officers of the corporation shall hold office
until their successors are chosen and qualify.  Any officer elected or appointed
by the Board of Directors may be removed at any time by the affirmative vote of
a majority of the Board of Directors.  Any vacancy occurring in any office of
the corporation shall be filled by the Board of Directors.

6.5       Chairman of the Board.  The Chairman of the Board shall preside at all
meetings of the Board of Directors and shall see that orders and resolutions of
the Board of Directors are carried into effect.  The Chairman of the Board shall
perform such other duties as the Board of Directors may from time to time
prescribe.

 

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

 

 

6.6       Chief Executive Officer.  The Board of Directors may select a Chief
Executive Officer of the corporation who, if appointed, shall be subject to the
control of the Board of Directors and have general supervision, direction and
control of the business and the officers of the corporation.  The Chief
Executive Officer shall preside at all meetings of the shareholders and, in the
absence or nonexistence of a Chairman of the board, at all meetings of the Board
of Directors.  The Chief Executive Officer shall see that the resolutions and
directions of the Board of Directors are carried into effect except in those
instances in which that responsibility is specifically assigned to some other
person by the Board of Directors, and, in connection therewith, shall be
authorized to delegate to the President and the other executive officers such of
his powers and duties as Chairman of the board at such times and in such manner
as he may deem to be advisable.  In general, he shall discharge all duties
incident to such office and such other duties as may be prescribed by the Board
of Directors from time to time.  Except where by law or by order of the Board of
Directors the signature of the President is required, the Chief Executive
Officer shall have the same power as the President to execute instruments on
behalf of the corporation.

6.7       President.  The President shall act at the direction of the Chief
Executive Officer and the Board of Directors and shall be the executive officer
next in authority to the Chief Executive Officer.  If there shall be no Chief
Executive Officer, or in his or her absence or inability or refusal to act, then
the President shall perform the duties prescribed for such office, and when so
acting, shall have all the powers of and be subject to all the restrictions upon
the Chief Executive Officer.  The President shall assist the Chief Executive
Officer in the management of the business of the corporation, and shall have
such other powers and duties as the Board of Directors may from time to time
prescribe.

6.8       Senior Vice-President(s).  In the absence of the President or in the
event of his inability or refusal to act, the Senior Vice-President (or in the
event there be more than one Senior Vice-President, the Senior Vice-Presidents
in the order designated by the directors, or in the absence of any designation,
then in the order of their election) shall perform the duties of the President,
and when so acting, shall have all the powers of and be subject to all the
restrictions upon the President.  The Senior Vice-Presidents shall perform such
other duties and have such other powers as the Board of Directors may from time
to time prescribe.

6.9       Vice-President(s).  In the absence of the Senior Vice-President or in
the event of their inability or refusal to act, the Vice-President (or in the
event there be more than one Vice-President, the Vice-Presidents in the order
designated by the directors, or in the absence of any designation, then in the
order of their election) shall perform the duties of the Senior
Vice-President(s), and when so acting, shall have all the powers of and be
subject to all the restrictions upon the Senior Vice-President(s).  The
Vice-Presidents shall perform such other duties and have such other powers as
the Board of Directors may from time to time prescribe.

6.10     Chief Financial Officer.  The Board of Directors may select a Chief
Financial Officer who, if appointed, shall be subject to the control of the
Board of Directors, the Chief Executive Officer and the President, and shall be
the principal financial and accounting officer of the corporation.  The Chief
Financial Officer shall: (a) have charge of and be responsible for the
maintenance of adequate books of account for the corporation; (b) have charge
and custody of all funds and securities of the corporation, and be responsible
therefor and for the receipt and disbursement thereof; and (c) perform all the
duties incident to the office of the Chief Financial Officer and such other
duties as the Chief Executive Officer, the President or the Board of Directors
may from time to time prescribe.  The duties and role of Treasurer, as set forth
herein shall be subsumed by the Chief Financial Officer if one is appointed
where no separate Treasurer is appointed.  If there shall also be a separate
Treasurer, the Treasurer shall perform his duties at the direction of the Chief
Financial Officer, the President and the Board of Directors.  If required by the
Board of Directors, the Chief Financial Officer shall give a bond for the
faithful discharge of his duties as Chief Financial Officer in such sum and with
such surety or sureties as the Board of Directors may determine.

 

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

 

 

6.11     Chief Operating Officer.        The Chief Operating Officer shall be
the chief operating officer of the Company, and as such shall direct the
operations of the Company within the limits prescribed by the Chief Executive
Officer, the President and the Board of Directors.  He shall have such other
powers and duties as the Chief Executive Officer, the President or the Board of
Directors may assign to him from time to time.  He may (i) sign, alone or with
the Secretary or any other proper officer of the Company thereunto authorized by
the Board of Directors, any policies, deeds, mortgages, bonds, contracts or
other instruments which the Board of Directors has authorized to be executed
except in cases where the signing and execution thereof shall be expressly
delegated by the Board of Directors to some other officer or agent of the
corporation, or shall be required by law to be otherwise signed or executed,
(ii) notwithstanding the foregoing, sign, alone or with the Secretary or any
other proper officer of the corporation, contracts, documents or other
instruments in the ordinary course of business consistent with past practice,
and (iii) appoint and discharge agents and employees of the corporation except
those that are appointed by the Chief Executive Officer, the President or the
Board of Directors.  He shall, in general, perform all duties incident to the
office of Chief Operating Officer.

6.12     Chief Technology Officer.  The Chief Technology Officer shall advise
the Board and the Chief Executive Officer on software and hardware technology,
software architecture development, information technology and other technical
issues related to the matters which they consider and shall oversee the
technology functions of the corporation.  The Chief Technology Officer shall
identify and evaluate trends in technologies and economic and regulatory issues,
assist the Chief Executive Officer in developing strategic goals and objectives
for the Corporation, and perform all other duties as may be incident thereto or
as otherwise assigned by the Board of Directors or the Chief Executive Officer.

6.13     Secretary.  The Secretary shall attend all meetings of the Board of
Directors and all meetings of the shareholders and record all the proceedings of
the meetings of the corporation and of the Board of Directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required.  He shall give, or cause to be given, notice of all meetings of
the shareholders and special meetings of the Board of Directors, and shall
perform such other duties as may be prescribed by the Board of Directors or
President, under whose supervision he shall be.  He shall have custody of the
corporate seal of the corporation and he, or an Assistant Secretary, shall have
authority to affix the same to any instrument requiring it and when so affixed,
it may be attested by his signature or by the signature of such Assistant
Secretary.  The Board of Directors may give general authority to any other
officer to affix the seal of the corporation and to attest the affixing by his
signature.

 

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

 

 

6.14     Assistant Secretary.  The Assistant Secretary, or if there be more than
one, the Assistant Secretaries in the order determined by the Board of Directors
(or if there be no such determination, then in the order of their election)
shall, in the absence of the Secretary or in the event of his inability or
refusal to act, perform the duties and exercise the powers of the Secretary and
shall perform such other duties and have such other powers as the Board of
Directors may from time to time prescribe.

6.15     Treasurer and Assistant Treasurers. 

(a)        The Treasurer shall have the custody of the corporate funds and
securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the Board of Directors.

(b)        He shall disburse the funds of the corporation as may be ordered by
the Board of Directors, taking proper vouchers for such disbursements, and shall
render to the President and the Board of Directors, at its regular meetings, or
when the Board of Directors so requires, an account of all his transactions as
Treasurer and of the financial condition of the corporation.

(c)        If required by the Board of Directors, he shall give the corporation
a bond (which shall be renewed every six years) in such sum and with such surety
or sureties as shall be satisfactory to the Board of Directors for the faithful
performance of the duties of his office and for the restoration to the
corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the corporation.

(d)       He shall perform all duties incident to the office of Treasurer and
all other duties as from time to time may be assigned to him by the Board of
Directors and the President; provided, that if there shall also be appointed a
Chief Financial Officer, the Treasurer shall perform his duties at the direction
of the Chief Financial Officer, President and Board of Directors.

(e)        The Assistant Treasurer, or if there shall be more than one, the
Assistant Treasurers in the order determined by the Board of Directors (or if
there be no such determination, then in the order of their election) shall, in
the absence of the Treasurer or in the event of his inability or refusal to act,
perform the duties and exercise the powers of the Treasurer and shall perform
such other duties and have such other powers as the Board of Directors may from
time to time prescribe.

ARTICLE VII - CERTIFICATES FOR SHARES

7.1       Certificates.  The shares of the corporation shall be represented by a
certificate or shall be uncertificated.  Certificates shall be signed by, or in
the name of the corporation by, the Chairman or Vice-Chairman of the Board of
Directors, or the President or a Vice-President, and by the Treasurer- or an
Assistant Treasurer, or the Secretary or an Assistant Secretary of the
corporation.

 

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

 

 

7.2       Classes of Stock.  If the corporation shall be authorized to issue
more than one class of stock or more than one series of any class, the powers,
designations, preferences and relative, participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights shall be set forth
in full or summarized on the face or back of the certificate which the
corporation shall issue to represent such class or series of stock, provided
that, except as otherwise provided in Sections 78.242 and 104.8204 of the Nevada
Revised Statutes, in lieu of the foregoing requirements, there may be set forth
on the face or back of the certificate which the corporation shall issue to
represent such class or series of stock, a statement that the corporation will
furnish without charge to each shareholder who so requests the powers,
designations, preferences and relative, participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights.

7.3       Uncertificated Shares.  Within a reasonable time after the issuance or
transfer of uncertificated stock, the corporation shall send to the registered
owner thereof a written notice containing the information required to be set
forth or stated on certificates pursuant to Sections 78.235, 78.242 or 78.365(1)
of the Nevada Revised Statutes or a statement that the corporation will furnish
without charge to each shareholder who so requests the powers, designations,
preferences and relative participating, optional or other special rights of each
class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights.

7.4       Signatures on Certificates.  Any of or all the signatures on a
certificate may be facsimile.  In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the corporation with the same effect
as if he were such officer, transfer agent or registrar at the date of issue.

7.5       Lost Certificates.  The Board of Directors may direct a new
certificate or certificates or uncertificated shares to be issued in place of
any certificate or certificates theretofore issued by the corporation alleged to
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the person claiming the certificate of stock to be lost, stolen or
destroyed.  When authorizing such issue of a new certificate or certificates or
uncertificated shares, the Board of Directors may, in its discretion and as a
condition precedent to the issuance thereof, require the owner of such lost,
stolen or destroyed certificate or certificates, or his legal representative, to
advertise the same in such manner as it shall require and/or to give the
corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the corporation with respect to the certificate alleged
to have been lost, stolen or destroyed.

7.6       Transfer of Stock.  Upon surrender to the corporation or the transfer
agent of the corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignation or authority to
transfer, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.  Upon receipt of proper transfer instructions from
the registered owner of uncertificated shares such uncertificated shares shall
be cancelled and issuance of new equivalent uncertificated shares or
certificated shares shall be made to the person entitled thereto and the
transaction shall be recorded upon the books of the corporation.

 

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

 

 

7.7       Fixing of Record Date.  In order that the corporation may determine
the shareholders entitled to notice of or to vote at any meeting of shareholders
or any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a record date,
which shall not be more than sixty nor less than ten days before the date of
such meeting, nor more than sixty days prior to any other action. A
determination of shareholders of record entitled to notice of or to vote at a
meeting of shareholders shall apply to any adjournment of the meeting: provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.

7.8       Registered Shareholders.  The corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise provided by
the laws of Nevada.

ARTICLE VII - CONFLICT OF INTERESTS

8.1       Contract or Relationship Not Void.  No contract or transaction between
the corporation and one or more of its directors or officers, or between the
corporation and any other corporation, partnership, association or other
organization in which one or more of its directors or officers are directors or
officers or have a financial interest shall be void or voidable solely for this
reason, or solely because such director or officer is present at, or
participates in, the meeting of the Board of Directors or committee thereof
which authorizes the contract or transaction, or solely because such director’s
or officer’s vote is counted for such purpose, if:

(a)    the material facts as to such director’s or officer’s relationship or
interest and as to the contract or transaction are disclosed or are known to the
Board of Directors or the committee, and the board or committee in good faith
authorizes the contract or transaction by the affirmative vote of a majority of
the disinterested directors, even though the disinterested directors be less
than a quorum; or

(b)   the material facts as to such director’s or officer’s relationship or
interest and as to the contract or transaction are disclosed or are known to the
shareholders entitled to vote thereon, and the contract or transaction is
specifically approved in good faith by vote of the shareholders; or

(c)  the contract or transaction is fair as to the corporation as of the time it
is authorized, approved or ratified by the Board of Directors, a committee
thereof, or the shareholders.

 

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

 

 

8.2       Quorum.  Common or interested directors may be counted in determining
the presence of a quorum at a meeting of the Board of Directors or of a
committee which authorizes the contract or transaction.

ARTICLE IX - GENERAL PROVISIONS

9.1       Dividends.  Dividends upon the capital stock of the corporation,
subject to the provisions of the Articles of Incorporation, if any, may be
declared by the Board of Directors at any regular or special meeting, pursuant
to law.  Dividends may be paid in cash, in property, or in shares of the capital
stock, subject to the provisions of the Articles of Incorporation.

9.2       Reserves.  Before payment of any dividend, there may be set aside out
of any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.

9.3       Annual Statement.  The Board of Directors shall present at each annual
meeting, and at any special meeting of the shareholders when called for by vote
of the shareholders, a full and clear statement of the business and condition of
the corporation.

9.4       Checks.  All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons as
the Board of Directors may from time to time designate.

9.5       Fiscal Year.  The fiscal year of the corporation shall be fixed by
resolution of the Board of Directors.

9.6       Seal.  The corporation may have, but shall not be required to have, a
corporate seal.  The corporate seal shall have inscribed thereon the name of the
corporation, the year of its organization and the words “Corporate Seal,
Nevada”.  The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or otherwise reproduced.

9.7       Indemnification.  The corporation shall indemnify its officers,
directors, employees and agents to the extent permitted by Chapter 78 of the
Nevada Revised Statutes and as may be set forth in the corporation’s Articles of
Incorporation.

9.8       Stock in Other Corporations.  Shares of any other corporation which
may from time to time be held by this corporation may be represented and voted
at any meeting of shareholders of such corporation by the Chairman, the Chief
Executive Officer, the President, the Chief Financial Officer or a Vice
President of the corporation, or by any proxy appointed in writing by the
Chairman, the Chief Executive Officer, the President, the Chief Financial
Officer or a Vice President of the corporation, or by any other person or
persons thereunto authorized by the Board of Directors. Shares represented by
certificates standing in the name of the corporation may be endorsed for sale or
transfer in the name of the corporation by the Chairman, the Chief Executive
Officer, the President, the Chief Financial Officer or any Vice President of the
corporation or by any other officer or officers thereunto authorized by the
Board of Directors.  Shares belonging to the corporation need not stand in the
name of the corporation, but may be held for the benefit of the corporation in
the individual name of the Chief Financial Officer or of any other nominee
designated for the purpose of the Board of Directors.

 

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

 

 

ARTICLE X - AMENDMENTS

These by-laws may be altered, amended or repealed or new by-laws may be adopted
by the shareholders or by the Board of Directors, when such power is conferred
upon the Board of Directors by the Articles of Incorporation, at any regular
meeting of the shareholders or of the Board of Directors or at any special
meeting of the shareholders or of the Board of Directors if notice of such
alteration, amendment, repeal or adoption of new by-laws be contained in the
notice of such special meeting in cases where such action is not unanimously
adopted by the Board of Directors or voting shareholders entitled to vote on the
matter, as the case may be.  If the power to adopt, amend or repeal by-laws is
conferred upon the Board of Directors by the Articles of Incorporation it shall
not divest or limit the power of the shareholders to adopt, amend or repeal
by-laws.  Notwithstanding the foregoing, the provisions of Sections 2.2, 2.6,
2.11, 3.1, 4.4 and Article X, shall not be altered, amended or repealed without
the approval of a majority of shareholders entitled to vote or consent on the
matter. 

 

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

 

 

EXHIBIT C

 

FORM OF OPINION OF SYNERGY LAW GROUP, LLC

AS COUNSEL FOR COMPANY

 

 

(A)                THE COMPANY IS A CORPORATION DULY ORGANIZED, VALIDLY EXISTING
AND, BASED SOLELY UPON INFORMATION FROM THE SECRETARY OF STATE OF THE STATE OF
OREGON, IN GOOD STANDING UNDER THE LAWS OF OREGON.

(B)               THE COMPANY HAS THE REQUISITE POWER AND AUTHORITY TO EXECUTE,
DELIVER AND PERFORM ITS OBLIGATIONS UNDER THE TRANSACTION DOCUMENTS, INCLUDING,
WITHOUT LIMITATION, THE MERGER AGREEMENT. 

(C)                ALL ACTIONS NECESSARY FOR THE AUTHORIZATION, EXECUTION, AND
DELIVERY OF THE TRANSACTION DOCUMENTS (INCLUDING, WITHOUT LIMITATION, THE MERGER
AGREEMENT) BY THE COMPANY AND THE PERFORMANCE BY THE COMPANY OF THE OBLIGATIONS
TO BE PERFORMED BY THE COMPANY AS OF THE DATE HEREOF UNDER THE TRANSACTION
DOCUMENTS HAS BEEN TAKEN ON THE PART OF THE COMPANY’S STOCKHOLDERS AND
DIRECTORS.

(D)               EACH OF THE TRANSACTION DOCUMENTS (INCLUDING, WITHOUT
LIMITATION, THE MERGER AGREEMENT) TO WHICH COMPANY IS A PARTY HAVE BEEN DULY
EXECUTED AND DELIVERED BY THE COMPANY.

 

 

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

 

 

 

EXHIBIT D

 

FORM OF OPINION OF PEARLMAN AND SCHNEIDER, LLP

AS COUNSEL FOR PARENT AND MERGER SUB

 

1.                  The Parent and Merger Sub is each a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Nevada.  The Parent and Merger Sub has full corporate power and authority to
own, lease and operate its properties and to carry on its business in the places
and in the manner currently conducted. 

 

2.                  The Parent and Merger Sub has the requisite corporate power
and authority to execute, deliver and perform the Agreement and Plan of Merger
and other transaction documents to which it is a party.  The execution, delivery
and performance of the Agreement and Plan of Merger and the other transaction
documents to which the Parent and Merger Sub are a party have been duly
authorized by all necessary corporate action on the part of the Parent and
Merger Sub.

 

3.                  Each of the Agreement and Plan of Merger and the Transaction
Documents has been duly executed and delivered by the Parent and Merger Sub (to
the extent they are party thereto) and consented to by its shareholders, and
constitutes the legal, valid and binding obligation of each of the Parent and
Merger Sub, enforceable in accordance with its terms, except to the extent that
their enforceability may be subject to applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors’ rights generally and to general equitable principles.

4.                  Execution and delivery by the Parent and Merger Sub of, and
performance of their agreements in, the transaction documents to which they are
a party do not (i) violate any law, statute, rule, regulation or  court order
applicable to the Parent and/or Merger Sub and known to us, (ii)  breach, result
in a default or loss of rights under, result in the creation of a right of
termination, acceleration or modification under, or result in the creation of,
or the right to create, any security interest in or lien on any assets of the
Parent and/or Merger Sub pursuant to any agreements known to us to which the
Parent and/or Merger Sub is a party or by which it or its assets is bound, or
(iii) violate, conflict with, result in a breach of any terms or provisions of,
or constitute a default under, the Parent or Merger Sub’s articles of
incorporation or bylaws.

 

5.                  No consent, approval, authorization, order or action of,
filing with or notice or payment to any regulatory agency or authority of the
State of Nevada or the United States Federal Government is required to be
obtained or made by the Parent and/or Merger Sub to perform their obligations
under the transaction documents and consummate the transactions contemplated
thereunder, except for such as have been obtained or made other than Form D and
filings with any state securities authorities.

 

6.                  Based solely upon a review of the Parent’s stock records,
the authorized capital stock of the Parent consists of [  ] shares, of which
[___________] shares are issued and outstanding immediately prior to the Parent
Share Cancellation, and [___________] shares are issued and outstanding after
the Parent Share Cancellation. Based solely upon a representation from the
Parent, we believe that all issued and outstanding shares of Common Stock have
been duly authorized and validly issued, are fully paid and nonassessable and
have not been issued in violation of any preemptive right of stockholders. 
Except as described in the Agreement and Plan of Merger or the exhibits thereto,
to our knowledge there are no options, warrants, or other rights or agreements
of any kind for the purchase or acquisition from, or the issuance or sale by,
the Parent of any shares of such authorized capital stock, nor any outstanding
securities or debt of any kind that is convertible into or exchangeable for any
shares of such authorized capital stock.

 

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

 

 

 

7.                  The issuance of the Shares in accordance with the Agreement
and Plan of Merger will be exempt from registration under the Securities Act of
1933, as amended.  The Shares which are being issued on the date hereof pursuant
to the Agreement and Plan of Merger have been duly authorized and validly issued
and are fully paid and nonassessable and free of preemptive or similar rights
contained in the Parent’s articles of incorporation or Bylaws or in any
agreement to which the Parent is party.

 

8.                     To our knowledge, there are no current claims, actions,
suits, investigations or proceedings, or any pending or threatened claim,
action, suit, investigation or proceeding against any of the Parent or the
Merger Sub before any court, arbitrator or governmental authority which, if
determined adversely to any of the Parent or the Merger Sub, as applicable,
would have a material adverse effect on the ability of the Parent or the Merger
Sub to perform their obligations under the transaction documents.