ex10-1.htm


    Exhibit
      10.1

     

    ACQUISITION
      AGREEMENT

    


    This
      Agreement dated as of the 26th day of December, 2007 by and among ARTFEST
      INTERNATIONAL, INC., a Delaware Corporation, with an address at 27758 Santa
      Margarita Parkway, Suite 281, Mission Viejo, California, 92691
      (“International”), those shareholders of International who are listed on Exhibit
“A” (Article “Heading”), which is annexed hereto and made part hereof, (the
“International Shareholders”),  those shareholders of ART CHANNEL,
      INC. who are listed on Exhibit “B” (Article “Heading”), which is annexed to, and
      made a part of, this Agreement (the “Channel Shareholders”), and ART CHANNEL,
      INC., a Texas Corporation, with an address at 16160 County Road 635, Blue Ridge,
      Texas, 75424 (“Channel”), which is only a party to this Agreement with respect
      to Articles “6”, “9”, “11” through “15” and “17” through “21” of this
      Agreement.

    


    WITNESSETH

     

    WHEREAS,
      International desires
      to acquire all of the shares of Channel;

     

    WHEREAS,
      the Channel
      Shareholders desire to exchange all of their shares of Channel for twenty-eight
      million (28,000,000) shares of common stock of International of which eight
      million (8,000,000) shares will be issued at Closing (the “Closing Issuance”),
      which is hereinafter defined, and an additional twenty million (20,000,000)
      shares of common stock (the “Second Issuance”) shall be issued as soon as is
      practicable after the Closing and International files with the Delaware
      Secretary of State a Certificate of Amendment to the Certificate of
      Incorporation increasing the authorized shares to one hundred million shares
      of
      common stock and two million (2,000,000) shares

    of
      preferred stock (the “Amendment”);

     

     

    
      
        
        

      

      
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    WHEREAS,
      International would
      not enter into this Agreement with the Channel Shareholders unless Channel
      agreed to make the representations and warranties set forth in Article “6” of
      this Agreement;

     

    WHEREAS,
      Channel agrees to
      make the representations and warranties set forth in Article “6” of this
      Agreement in order to induce International to enter into this
      Agreement;

     

    WHEREAS,
      the Channel
      Shareholders and the Board of Directors of International deem it advisable
      and
      in the best interests of each corporation and their respective shareholders
      that
      International acquires all of the shares of Channel from the Channel
      Shareholders in order to advance the long-term business interests of Channel
      and
      International;

     

    WHEREAS,
      the Boards of
      Directors of each of Channel and International have adopted, approved and
      authorized the execution and delivery of this Agreement to implement the
      acquisition of all of the shares of Channel by International from the Channel
      Shareholders in compliance with the provisions of the Texas State Corporate
      Law
      and the Delaware General Corporation Law with the result that International
      shall issue shares of International to the Channel shareholders in exchange
      for
      one hundred (100%) percent of the issued and outstanding shares of Channel,
      and
      Channel shall thereby become a wholly-owned subsidiary of
      International;

     

    WHEREAS,
      Channel and
      International intend that the acquisition of all of the shares of Channel by
      International from the Channel shareholders will qualify as a tax-free
      reorganization pursuant to Section 368(a)(1)(B) of the Internal Revenue Code
      of
      1986, as amended;

     

    WHEREAS,
      the Boards of
      Directors of Channel and International intend to, and shall, have this Agreement
      and the transactions with respect to this Agreement approved by the shareholders
      of  Channel
      and International in accordance with the applicable provisions of the Texas
      State Corporate Law and the Delaware General Corporation Law; the Channel
      shareholders shall approve of this Agreement in its entirety, including, but
      not
      limited to, Article “6” of this Agreement;

     

     

    
      
        
        

      

      
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    WHEREAS,
      as of the date of
      this Agreement, International has issued and outstanding twenty eight million
      one hundred ninety thousand six hundred  twenty nine (28,190,629)
      shares of common stock, par value $0.00001 (the “International Common
      Stock”);

     

    WHEREAS, on
      the Closing Date
      International shall issue eight million (8,000,000)  shares of common
      stock, and shall issue an additional twenty million (20,000,000) shares as
      soon
      as it is practicable after the Amendment, of International Common Stock to
      the
      Channel Shareholders on a pro rata basis as set forth on Exhibit “B” (Article
“3A”), which is annexed to, and made a part of this Agreement, in exchange for
      all of their shares of common stock of Channel, par value $0.001 per share
      (the
“Channel Common Stock”), after which exchange International shall own one
      hundred (100%) percent of Channel’s issued and outstanding common stock, and
      Channel shall thereby become a wholly-owned subsidiary of
      International.

    


    NOW,
      THEREFORE, in
      consideration of the mutual covenants of the parties hereinafter set forth,
      and
      for good and valuable consideration, receipt of which is hereby
      acknowledged,

    


    IT
      IS AGREED:

    


    1. 
      Recitals.  The
      parties hereby adopt as part of this Agreement each of the recitals which is
      set
      forth above in the WHEREAS clauses, and agree that such recitals shall be
      binding upon
      the
      parties hereto by way of contract and not merely by way of recital or inducement
      and such WHEREAS clauses are hereby confirmed and ratified as being accurate
      by
      each party as to itself, herself  and himself.

     

     

    
      
        
        

      

      
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    2.
Authorized
      Shares.  International agrees to authorize and implement the
      Amendment to increase its number of authorized shares as soon as it is
      practicable, so that there shall be one hundred million (100,000,000) authorized
      shares, par value $.0001 of International Common Stock, and two million
      (2,000,000) authorized shares, par value $.001) of International Preferred
      Stock.

    


    3. Closing
      Transactions.

     

    A.
      On the
      Closing Date, subject to, and consistent with, the provisions of this Agreement,
      International shall issue eight million (8,000,000) shares of common stock
      to
      the Channel Shareholders as set forth on Exhibit “B” (Article “3A”), which is
      annexed to, and made a part of, this Agreement, in exchange for all of the
      shares of Channel Common Stock; after which exchange International shall own
      one
      hundred (100%) percent of Channel’s common stock, and Channel shall thereby
      become a wholly-owned subsidiary of International.

    


    B.
      Subject to, and consistent with, the provisions of this Agreement, and in
      accordance with the relevant provisions of the Texas State Corporate Law and
      Delaware General Corporation Law, Channel shall become a wholly-owned subsidiary
      of International through the share exchange set forth in Paragraph “A” of this
      Article “3” of this Agreement (the “Exchange”).  As soon as
      practicable on, or subsequent to, the Closing Date, the Articles of Exchange
      pursuant toArticle
      5.02 of the Texas Business Corporation Act shall be duly executed and
      acknowledged and promptly delivered to the Secretary of State of the State
      of
      Texas for filing, as provided in the Texas Business Corporation Act. The
      Exchange shall become effective upon the time of filing of the Articles of
      Exchange with the Delaware Secretary of State (such time, the “Effective Time”).
      Upon the Effective Time, the effect of the Exchange shall be as provided in
      the
      applicable provisions of the Texas State Corporate Law and the Delaware General
      Corporation Law.

    


    
      
        
        

      

      
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    C.
Voting
      Agreement.  The shareholders of International owning a majority
      of the issued and outstanding shares of common stock shall enter into the voting
      agreement (the “Voting Agreement”) with the Channel Shareholders, in the form
      annexed hereto and made a part hereof as Exhibit “C” which sets forth
      that:

    


    i.
      The
      Shareholders of International shall authorize and implement the Amendment as
      soon as is practicable;

     

    ii.
      The
      Shareholders of International shall authorize the Second Issuance;
      and

     

    iii.
      After the Closing Issuance until the Second Issuance, the Shareholders of
      International agree to, in all circumstances in which the Board of Directors
      of
      International seek approval of its shareholders either voluntarily or by
      requirement of law, deliver to the Channel shareholder proxies such that the
      Channel Shareholders shall have the right to vote forty seven and eight-tenths
      (47.8%) percent of the total issued and outstanding shares of
      International.

    


    


    
      
        
        

      

      
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    4.  Post-Closing
      Obligations.

     

    A.
      Satisfaction of Liabilities. Subject to, and consistent with, the provisions
      of
      this Agreement:

     

    i.
      Channel shall utilize its best effort to enter into agreements with all of
      International’s creditors, except for the secured note owed to the Ditto Family
      Trust (“DFT”), of which the balance owed as of November 30, 2007 was four
      hundred fifty –four thousand nine hundred sixty-seven ($454,967) dollars, for
      the payment of all outstanding loan obligations by International.

     

    ii.
      In
      consideration for the cancellation of the secured note  held by DFT,
      Channel shall pay to the DFT an aggregate of five hundred thousand ($500,000)
      dollars, pursuant to the following schedule:

     

    a.
      twenty five thousand ($25,000)
      dollars due upon the closing of this Agreement;

     

    b.
      one hundred and twenty five
      thousand ($125,000) dollars on March 31, 2008; and

    


    c.
      monthly installments of seven
      thousand ($7,000) dollars per month until the remaining balance of three hundred
      fifty thousand ($350,000) dollars is fully satisfied, due upon the first
      business day of each month, beginning April 1, 2008.

    


    iii.
      In
      exchange for the cancellation of International’s indebtedness owed to Mr. Larry
      Ditto, as soon as practicable subsequent to Closing, International shall issue
      to Mr. Ditto one millionfive
      hundred thousand (1,500,000) shares of common stock..

    


    
      
        
        

      

      
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    B.
Capital.  The
      management of Channel agrees to use its best efforts subsequent to Closing
      to
      introduce to International  sources to provide up to five million
      ($5,000,000) dollars of working capital to Acquisition; provided, however,
      that
      there shall be no consequences if all or a portion of such monies is not
      raised.

    


    C.
Forbearance
      of Reverse Stock
      Split  International agrees that, for a period of one hundred
      eighty (180) days after Closing, International shall not approve or implement
      a
      reverse stock split of the Internatontal’s shares of common stock, or engage in
      any other measures outside of the ordinary course of business in which the
      intended result is the reduction of the value of shares of common stock, or
      the
      substantial dilution of the shares of common stock.

    


    D.
Increase
      in Authorized
      Shares.  As soon as is practicable after the Closing, and in
      accordance with the Voting Agreement, International shall authorize and
      implement the Amendment, increasing the authorized number of shares of common
      stock to one hundred million (100,000,000), and the number of shares of
      preferred stock to two million (2,000,000).

     

    E.
Second
      Issuance.  Immediately after the implementation of the
      Amendment, the Board of Directors of International shall resolve to issue to
      the
      Channel Shareholders as additional consideration for the Channel shares being
      exchanged,  the Second Issuance, to be distributed pro-rata to the of
      Channel Shareholders, based upon his, her or its ownership of Channel
      immediately prior to the Closing of this Agreement, and each share shall further
      be duly authorized and validlyissued
      and free of preemptive rights, with no personal liability attaching to the
      ownership thereof.

    


    
      
        
        

      

      
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    5.
Directors
      and
      Officers.

     

    A.
      At the
      Closing, the Board of Directors of International shall appoint two directors,
      who shall be designated by Channel to serve as the directors of International,
      to hold office in accordance with the certificate of incorporation and bylaws
      of
      the respective entity until their successor is duly elected or appointed and
      qualified. Larry Ditto, a director of International immediately prior to the
      Closing, shall remain on the Board of Directors for a period of at least six
      (6)
      months, and there after shall serve only if appointed by the Board of Directors
      and/or stockholders of International, All other directors of International
      serving immediately prior to the Closing Date shall resign upon the
      Closing.

    


    B.
      At the
      Closing, after the appointment of individuals so designated by Channel as set
      forth in Paragraph “A” of this Article “5” of this agreement to International’s
      Board of Directors, International shall appoint the current officers of Channel,
      to hold office in accordance with the certificate of incorporation and bylaws
      of
      International.  The officers of International serving immediately
      prior to the Closing Date shall resign upon the Closing.

    


    5.
Closing
      Date.  The closing of this transaction (the “Closing”) shall
      take place at the offices having an address of 15851 Dallas Parkway, Suite
      225,
      Addison, Texas, 75001 at 12:00 PMCentral
      Standard Time (“CST”) on December 28th, 2007 (the “Closing Date”).

    


    
      
        
        

      

      
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    6.
Channel
      and the Channel
      shareholders’ Joint and Several Representations, Warranties and
      Covenants.  Channel and the Channel shareholders jointly and
      severally represent, warrant and covenant to International as
      follows:

    


    A.
Corporate
      Status.

    


    i.
      Channel is a corporation duly organized pursuant to the laws of the State of
      Texas, with all requisite power and authority to carry on its business as
      presently conducted in all jurisdictions where presently conducted, to enter
      into this Agreement and to consummate the transactions set forth in this
      Agreement; and

    


    ii.
      Copies of (a) the Certificate of Incorporation of Channel, and all amendments
      thereto, certified by the Secretary of State of the State of Texas, (b) the
      By-Laws of Channel, as amended, certified by the Secretary of Channel, and
      (c) a
      good standing certificate for Channel issued by the Secretary of State of the
      State of Texas as of a date not more than thirty (30) days prior to the date
      of
      this Agreement, are annexed to, and made a part of, this Agreement as Exhibits
      “D” (Article “6Aii”),  “E” (Article “6Aii”), and “F” (Article “6Aii”),
      respectively, and are complete and correct as of the date of this
      Agreement.

    


    B.
Authority
      of
      Channel.  Channel has the full corporate power and authority
      toexecute,
      deliver and perform this Agreement and has taken all corporate action required
      by law and its organizational documents to authorize the execution and delivery
      of this Agreement and the consummation of the transactions set forth in this
      Agreement, and no other corporate action on its part is necessary to authorize
      and approve this Agreement or to consummate the transactions contemplated
      hereby.  This Agreement and the consummation by Channel of the
      transactions set forth in this Agreement have been duly and validly authorized,
      executed and delivered by the Board of Directors of Channel, and (assuming
      the
      valid authorization, execution and delivery of this Agreement by
      International) this
      Agreement is valid and binding upon Channel and enforceable against Channel
      in
      accordance with its terms (except as the enforceability thereof may be limited
      by bankruptcy, insolvency, bank moratorium or similar laws affecting creditors'
      rights generally and laws restricting the availability of equitable remedies,
      and may be subject to general principles of equity whether or not such
      enforceability is considered in a proceeding at law or in equity).  A
      certified resolution of the Board of Directors of Channel and a unanimous
      consent of the Channel shareholders approving Channel’s entry into this
      Agreement and consummation of the transactions set forth in this Agreement
      are
      annexed to, and made a part of, this Agreement as Exhibits “G” (Article “6B”)
      and “H” (Article “6B”).

    


    
      
        
        

      

      
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    C.
Ownership.  Annexed
      hereto and made a part hereof as Exhibit “I” (Article “6C”), is a schedule of
      all Channel shareholders and their respective ownership of Channel Common
      Stock.

    


    D.
Compliance
      with the Law and
      Other Instruments.  Except as otherwise provided in this
      Agreement and in the Exhibits annexed to, and made a part of, this Agreement,
      the businessand
      operations of Channel have been and are being conducted in all material respects
      in accordance with all applicable laws, rules and regulations of all authorities
      which affect Channel or its properties, assets, businesses or
      prospects.

    


    
      
        
        

      

      
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    E.
Absence
      of
      Conflicts.  The execution and delivery of this Agreement, and
      the consummation by Channel of the transactions set forth in this Agreement:
      (i)
      do not and shall not conflict with or result in a breach of any provision of
      Channel’s Certificate of Incorporation or By-Laws, (ii) do
      not
      and shall not result in any breach of, or constitute a default or cause an
      acceleration under any arrangement, agreement or other instrument to which
      Channel is a party to or by which any of its assets are bound, (iii) do not
      and
      shall not cause Channel to violate or contravene any provision of law or any
      governmental rule or regulation, and (iv) will not and shall not result in
      the
      imposition of any lien, or encumbrance upon, any property of
      Channel.  Channel has performed in all material respects all of its
      obligations which are, as of the date of this Agreement, required to be
      performed, pursuant to the terms of any such agreement, contract or
      commitment.

    


    F.
Financial
      Condition.  Except as set forth on the Channel Disclosure
      Schedule, which is annexed to, and made a part of, this Agreement as Exhibit
“H”
(Article “7F”) (i) Channel does not have any outstanding indebtedness or other
      liabilities or obligations of any nature (whether absolute, accrued, contingent
      or otherwise, and whether due or to become due), (ii) there has not been any
      material adverse change in Channel’s financial condition, assets, liabilities or
      business, (iii) there has not been any damage, destruction or loss, whether
      or
      not covered by insurance, materially affecting Channel’s properties, assets or
      business, (iv) Channel has not incurred any indebtedness, liability or other
      obligation of any nature whatsoever except in the ordinary course of business,
      and(v)
      Channel has not made any change in its accounting methods or
      practices.

    


    
      
        
        

      

      
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    G.
Environmental
      Compliance.  Channel is
      in
      compliance with all applicable environmental laws.

    


    H.
OSHA
      Compliance.  Channel is in compliance with all applicable
      federal, state and local laws, rules, regulations, codes, plans, injunctions,
      judgments, orders, decrees, rulings, and charges thereunder and other
      governmental requirements relating to occupational health and safety including,
      but not limited to, the Occupational Safety and Health Act of 1970, as amended,
      and the rules and regulations promulgated thereunder.

    


    I.
Taxes. 
Channel
      has timely filed all required federal tax returns for income, franchise, social
      security, withholding, sales, excise, unemployment insurance, real estate and
      other taxes, and has paid or made adequate provisions for the payment of all
      such taxes shown to be due on said returns.

    


    J.
Litigation. There
      are no legal, administrative, arbitration or other proceedings or governmental
      investigations adversely affecting Channel or its properties, assets or
      businesses, or with respect to any matter arising out of the conduct of
      Channel’s business pending or to its knowledge threatened, by or against, any
      officer or director of Channel in connection with its affairs, whether or not
      covered by insurance.  Except as set forth on the Channel Disclosure
      Schedule, which is annexed to, and made a part of, this Agreement as Exhibit
“J”
(Article “6J”), neither Channel norits
      officers or directors are subject to any order, writ, injunction or decree
      of
      any court, department, agency or instrumentality affecting
      Channel.  Channel is not presently engaged in any legal
      action.

    


    
      
        
        

      

      
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    K.
Contracts.  Except
      as set forth on the Channel Disclosure Schedule, Channel is not a party to
      any
      material contracts.

    


    L.
No
      Approvals.  No approval of any governmental authority is
      required of Channel in connection with the consummation of the transactions
      set
      forth in this Agreement.

    


    M.
Broker.  Channel
      has not had any dealing with respect to this transaction with any business
      broker, firm or salesman, or any person or corporation, investment banker or
      financial advisor who is or shall be entitled to any broker's or finder's fee
      or
      any other commission or similar fee with respect to the transactions set forth
      in this Agreement.  Channel represents that it has not dealt with any
      such person, firm or corporation and agrees to indemnify and hold harmless
      International from and against any and all claims for brokerage commissions
      by
      any person, firm or corporation on the basis of any act or statement alleged
      to
      have been made by Channel or its affiliates or agents.

    


    N.
Complete
      Disclosure.  No representation or warranty of Channel which is
      contained in this Agreement, or in a writing furnished or to be furnished
      pursuant to this Agreement, to Channel’s knowledge contains or shall contain any
      untrue statement of a material fact, or omits orshall
      omit to state any fact which is required to make the statements which are
      contained herein or therein, in light of the circumstances under which they
      were
      made, not materially misleading.  There is no fact relating to the
      business, affairs, operations, conditions (financial or otherwise) or prospects
      of Channel which would materially adversely affect same which has not been
      disclosed to International in this Agreement.

    


    
      
        
        

      

      
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O.
No
        Defense.  It shall not be a defense to a suit for damages for
        any misrepresentation or breach of covenant or warranty that International
        knew
        or had reason to know that any covenant, representation or warranty of Channel
        in this Agreement or furnished or to be furnished to International contained
        untrue statements.

    

     

    O.
Securities
      Laws.  Neither Channel nor, to Channel's knowledge, any
      director or executive officer thereof, is or has been the subject of any action
      involving a claim of violation of or liability under federal or state securities
      laws or a claim of breach of fiduciary duty.  There has not been, and
      to the knowledge of Channel, there is not, pending or contemplated, any
      investigation by the Securities and Exchange Commission, the Financial Industry
      Regulatory Authority (FINRA), or other regulatory authority with respect to
      Channel or, to Channel's knowledge, any current or former director or executive
      officer of Channel.

    


    7.
International’s
      and
      International’s Shareholders Representations, Warranties and
      Covenants.  International and the International Shareholders,
      jointly and severally, represent, warrant and covenant to Channel and to each
      of
      the Channel shareholders as follows:

    


    
      
        
        

      

      
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    A.
Corporate
      Status.

    


    i.
      International is a corporation duly organized, validly existing and in good
      standing pursuant to the laws of the State of Delaware, with all requisite
      power
      and authority to carry on its business as presently conducted in all
      jurisdictions where presently conducted, to enter into this Agreement and to
      consummate the transactions set forth in this Agreement; and

    


    ii.
      copies of (a) the Certificate of Incorporation of International, and all
      amendments thereto, certified by the Secretary of State of the State of
      Delaware, (b) the By-Laws of International, as amended, certified by the
      Secretary of International, and (c) a good standing certificate for
      International issued by the Secretary of State of the State of Delaware as
      of a
      date not more than thirty (30) days prior to the date of this Agreement, are
      annexed to, and made a part of, this Agreement as Exhibits “K” (Article “7Aii”),
“L” (Article “7Aii”) and “M” (Article “7Aii”) respectively, and are complete and
      correct as of the date of this Agreement.

    


     

    B.
Capitalization. Prior
      to the Amendment required pursuant to Article “4” of this Agreement,
      International’s authorized capital stock consists of forty million (40,000,000)
      shares of International Common Stock.  After the Amendment,
      International’s authorized capital stock shall consist of one hundred million
      (100,000,000) shares of International Common Stock, and two million (2,000,000)
      shares of International Preferred Stock.  Except as set forth in this
      Agreement, there are no subscriptions, options, warrants, rights or other
      agreements outstanding to acquire from  International
      shares of stock of International or any other equity security or security
      convertible into an equity security. Except as  set forth in this
      Agreement, there are no agreements or commitments to increase, decrease or
      otherwise alter the authorized capital stock of International.  Except
      as set forth on the disclosure schedule (the “International Disclosure
      Schedule”) which is annexed to, and made a part of, this Agreement as Exhibit
“N” (Article “7B”), International has not granted any registration rights with
      respect to any series of International stock outstanding.

    


    
      
        
        

      

      
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    C.
Authority
      of International
      and the International Shareholders.  International and the
      International Shareholders have the full power and authority to execute, deliver
      and perform this Agreement and has taken all action required by law and its
      organizational documents to authorize the execution and delivery of this
      Agreement and the consummation of the transactions set forth in this Agreement,
      and no other corporate action on its part is necessary to authorize and approve
      this Agreement or to consummate the transactions contemplated
      hereby.  This Agreement and the consummation by International and the
      International Shareholders of the transactions set forth in this Agreement
      have
      been duly and validly authorized, executed, and delivered by the Board of
      Directors of International, and (assuming the valid authorization, execution
      and
      delivery of this Agreement by the Channel shareholders) this Agreement is valid
      and binding upon International and enforceable against International in
      accordance with its terms (except as the enforceability thereof may be limited
      by bankruptcy, insolvency, bank moratorium or similar laws affecting creditors'
      rights generally and laws restricting the availability of equitable remedies
      and
      may be subject to general principles of equity whether or not such
      enforceability is considered in a proceeding at law or in equity).  A
      certified resolution of the Board of Directors of International and a consent
      of
      the shareholders holding
      a
      majority of the votes of International approving International’s entry into this
      Agreement and consummation of the transactions set forth in this Agreement
      are
      annexed to, and made a part of, this Agreement as Exhibits “O” (Article “7C”)
      and “P” (Article “7C”).

    


    
      
        
        

      

      
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    D.
Ownership.  The
      individuals and/or entities set forth on Exhibit “Q” (Article “7D”) which is
      annexed to, and made a part of, this Agreement, are the shareholders of record
      of International.

    


    E.
Financial
      Condition.  International has fully disclosed its financial
      condition including all assets and liabilities on Form 10-QSB for the period
      ending September 30, 2007 which was filed on November 19, 2007 with the SEC
      (the
“10-QSB).  All liabilities accrued after September 30, 2007 are set
      forth on the International Disclosure Schedule, which is annexed hereto and
      made
      a part hereof as Exhibit “N”.  Channel shall satisfy the obligations
      owed to the DFT pursuant to the schedule set forth in Subparagraph “ii” of
      Paragraph “A” of Article “4” of this Agreement, and shall seek to satisfy all
      other obligations of International pursuant to Subparagraph “i” of Paragraph “A”
of Article “4” of this Agreement.  Channel understands that the
      liabilities of International not owed to the DFT  (the “Liability
      Balance”) are held by a group of International shareholders which may upon
      reaching an agreement with International after the Closing shall convert a
      portion of, or all of the Liability Balance into Common Shares of International
      at a future date.

     

    F.
Compliance
      with the Law and
      Other Instruments.  The business and operations of
      International have been and are being conducted in all material respects in
      accordance with allapplicable
      laws, rules and regulations of all authorities which affect International or
      its
      properties, assets, businesses or prospects.

    


    
      
        
        

      

      
        -17-

        
          

        

      

      
        
        

      

    

    G.
Absence
      of
      Conflicts.  The execution and delivery of this Agreement and
      the issuance of the securities of International, and the consummation by
      International of the transactions set forth in this Agreement: (i) do not and
      shall not conflict with or result in a breach of any provision of
      International’s Certificate of Incorporation or By-Laws, (ii) do
      not
      and shall not result in any breach of, or constitute a default or cause an
      acceleration under any arrangement, agreement or other instrument to which
      International is a party to or by which any of its assets are bound, (iii)
      do
      not and shall not cause International to violate or contravene any provision
      of
      law or any governmental rule or regulation, and (iv) will not and shall not
      result in the imposition of any lien, or encumbrance upon, any property of
      International.  International has performed in all material respects
      all of its obligations which are, as of the date of this Agreement, required
      to
      be performed, pursuant to the terms of any such agreement, contract or
      commitment.

    


    H.
Environmental
      Compliance.  International
      is
      in compliance with all applicable environmental laws.

    


    I.
OSHA
      Compliance.  International is in compliance with all applicable
      federal, state and local laws, rules, regulations, codes, plans, injunctions,
      judgments, orders, decrees, rulings, and charges thereunder and other
      governmental requirements relating to occupational health and safety including,
      but not limited to, the Occupational Safety and Health Act of 1970, as
      amended,and
      the
      rules and regulations promulgated thereunder.

    


    
      
        
        

      

      
        -18-

        
          

        

      

      
        
        

      

    

    


    J.
Taxes. International
      has timely filed all required federal, state, city and local tax returns for
      income, franchise, social security, withholding, sales, excise, unemployment
      insurance, real estate and other taxes, and has paid or made adequate provisions
      for the payment of all such taxes shown to be due on said returns.

    


    K.
Litigation. There
      are no legal, administrative, arbitration, or other proceedings or governmental
      investigations adversely affecting International or its properties, assets
      or
      businesses, or with respect to any matter arising out of the conduct of
      International’s business pending, or to its knowledge threatened, by or against,
      any officer or director of International in connection with its affairs, whether
      or not covered by insurance.  Except as set forth on the International
      Disclosure Schedule, neither International nor its officers or directors are
      subject to any order, writ, injunction, or decree of any court, department,
      agency, or instrumentality, affecting International.  International is
      not presently engaged in any legal action.

    


    L.
Contracts.  Except
      as set forth on the International Disclosure Schedule, International is not
      a
      party to any material contracts.

    


    M.
Absence
      of
      Changes.  There has not been any material adverse change in, or
      any event or condition (financial or otherwise) affecting the business,
      properties, assets, liabilities, historical
      operations or prospects of International, there are no liabilities or
      obligations of any nature, whether absolute, contingent or otherwise, whether
      due or to become due (including, without limitation, liabilities for taxes
      with
      respect to or measured by income of International for any period prior to the
      date of this Agreement or arising out of any transaction of International prior
      to such date).  There has not been any declaration, setting aside or
      payment of any dividend or other distribution with respect to International’s
      securities, or any direct or indirect redemption, purchase or other acquisition
      of any of International’s securities.  To International’s knowledge,
      there has not been an assertion against International of any liability of any
      nature or in any amount not fully reflected or reserved against in the
      International Disclosure Schedule.

    


    
      
        
        

      

      
        -19-

        
          

        

      

      
        
        

      

    

    N.
No
      Approvals.  No approval of any governmental authority is
      required of International in connection with the consummation of the
      transactions set forth in this Agreement.

    


    O.
Broker.  International
      has not had any dealing with respect to this transaction with any business
      broker, firm or salesman, or any person or corporation, investment banker or
      financial advisor who is or shall be entitled to any broker's or finder's fee
      or
      any other commission or similar fee with respect to the transactions set forth
      in this Agreement.  International represents that it has not dealt
      with any such person, firm or corporation and agrees to indemnify and hold
      harmless each of the Channel shareholders from and against any and all claims
      for brokerage commissions by any person, firm or corporation including on the
      basis of any act or statement alleged to have been made by International or
      its
      affiliates or agents.

     

    P.
Securities
      Laws.  Neither International nor, to International's knowledge,
      any director or executive officer thereof, is or has been the subject of any
      action involving a claim of violation of or liability under federal or state
      securities laws or a claim of breach of fiduciary duty.  There has not
      been, and to the knowledge of International, there is not, pending or
      contemplated, any investigation by the Securities and Exchange Commission,
      the
      Financial Industry Regulatory Authority (FINRA), or other regulatory authority
      with respect to International or, to International's knowledge, any current
      or
      former director or executive officer of International.

    


    
      
        
        

      

      
        -20-

        
          

        

      

      
        
        

      

    

    Q.
Complete
      Disclosure.  No representation or warranty of International
      which is contained in this Agreement, or in a writing furnished or to be
      furnished pursuant to this Agreement, to International’s knowledge contains or
      shall contain any untrue statement of a material fact, or omits or shall omit
      to
      state any fact which is required to make the statements which are contained
      herein or therein, in light of the circumstances under which they were made,
      not
      materially misleading.  There is no fact relating to the business,
      affairs, operations, conditions (financial or otherwise) or prospects of
      International which would materially adversely affect same which has not been
      disclosed to the Channel shareholders in this Agreement.

    


    R.
No
      Defense.  It shall not be a defense to a suit for damages for
      any misrepresentation or breach of covenant or warranty that any of the Channel
      shareholders knew or had reason to know that any covenant, representation or
      warranty of International in this Agreement or furnished or to be furnished
      to
      such Channel Shareholder contained untrue statements.

    


    
      
        
        

      

      
        -21-

        
          

        

      

      
        
        

      

    

    8.
Channel
      Shareholders’
Representations, Warranties and Covenants.Each
      of
      the Channel shareholders, each as to himself or itself, hereby represents and
      warrants to each of the other parties to this Agreement that the statements
      contained in this Article “8” of this Agreement are true and
      correct:

    


    A.
Ownership.  He,
      she or it is the record, beneficial and equitable owner of such number of shares
      of Channel Common Stock as is set forth opposite his or its name on Exhibit
“I”
or “Q”.  He or it holds said shares free and clear of all liens,
      claims or encumbrances, and has the full right and authority to exchange or
      transfer said shares pursuant to the terms of this Agreement.

    


    B.
Absence
      of
      Conflicts.  His, she or its execution and delivery of this
      Agreement, the transfer of his or its shares of Channel Common Stock and the
      consummation by him or it of the transactions set forth in this Agreement do
      not
      and shall not cause him or it to violate or contravene any provision of law
      or
      any governmental rule or regulation.

    


    C.
No
      Approvals.  No approval of any governmental authority is
      required of him , her or it in connection with the consummation of the
      transactions set forth in this Agreement.

    


    D.
Complete
      Disclosure.  No representation or warranty of him, her or it
      which is contained in this Agreement, or in a writing furnished or to be
      furnished pursuant to this Agreement, to his or its knowledge contains or shall
      contain any untrue statement of a material fact, omits or shall omit to state
      any fact which is required to make the statements which are contained herein
      or
      therein, in light of the circumstances under which they were made, not
      materially misleading.

    


    
      
        
        

      

      
        -22-

        
          

        

      

      
        
        

      

    

    E.
No
      Defense.  It shall not be a defense to a suit for damages by
      another party to this Agreement against him, her or it for any misrepresentation
      or breach of covenant or warranty that the other party which is suing him or
      it
      knew or had reason to know that any covenant, representation or warranty of
      him,
      her or it in this Agreement contained untrue statements.

    


    F.
Broker.  He,
      she or it has not had any dealing with respect to this transaction with any
      business broker, firm or salesman, or any person or corporation, investment
      banker or financial advisor who is or shall be entitled to any broker's or
      finder's fee or any other commission or similar fee with respect to the
      transactions set forth in this Agreement.  Each of the Channel
      shareholders represents that he or it has not dealt with any such person, firm
      or corporation and agrees to indemnify and hold harmless International from
      and
      against any and all claims for brokerage commissions by any person, firm or
      corporation on the basis of any act or statement alleged to have been made
      by
      him or it or his or its affiliates or agents.

    


    9.
Mutual
      Covenants of All of
      the Parties Hereto.

    


    


    A.
Best
      Efforts.  Each of the parties hereto shall use its best efforts
      to perform or satisfy each covenant or condition to be performed or satisfied
      by
      each of them before and after the Closing Date.

     

    
      
        
        

      

      
        -23-

        
          

        

      

      
        
        

      

    

    B.
Notice
      of Developments and
      Updates.  Each of the parties hereto shall give prompt written
      notice pursuant to Paragraph “C” of Article “21” of this Agreement to the other
      parties hereto of any act, event or occurrence which may cause or constitute
      a
      breach of any of its own representations and warranties in Articles “6”, “7” or
“8” of this Agreement, as the case may be.

    


    C.
No
      Public
      Announcement.  None of the parties hereto shall, without the
      prior written approval of all of the Channel shareholders and International,
      make any press release or other public announcement or communicate with any
      customer, competitor, or supplier of, or others having business dealings with,
      either of Channel or International concerning the transactions contemplated
      by
      this Agreement, except as and to the extent that such party shall determine
      such
      disclosure is required by law (which determination shall be made by such party
      based upon the advice of its counsel), in which event the other parties hereto
      shall be advised and the parties shall use their best efforts to cause a
      mutually agreeable release or announcement to be issued.

    


    D.
Exclusivity.   Neither
      Channel nor International shall, without the prior written approval of (i)
      in
      the case of International, all of the Channel shareholders or (ii) in the case
      of Channel, International, (i) enter into, or (ii) solicit, initiate or
      encourage any inquiries or proposals that constitute, or could reasonably be
      expected to lead to, a proposal or offer for, a merger, consolidation, business
      combination, sale of substantial assets, sale of shares of capital stock
      (including, but not limited to, by way of a tender offer) or similar transaction
      involving such party, other than the transactions contemplated by this
      Agreement.

     

     

    
      
        
        

      

      
        -24-

        
          

        

      

      
        
        

      

    

    10.
Conduct
      of International’s
      Business Prior to the Closing Date.  Between the date of this
      Agreement and the Closing Date, International shall carry on its business in
      the
      ordinary course and in the same manner as heretofore conducted and shall
      preserve intact the existing business organization of International, and use
      its
      best efforts to preserve International’s relationships, if any, with customers,
      suppliers and others having business dealings with International, to the end
      that its goodwill and ongoing business shall not be materially impaired on
      the
      Closing Date.  Without the prior written consent of all of the Channel
      shareholders, International shall not:

    


    A.
      make
      any change in its Certificate of Incorporation or By-Laws, except pursuant
      to
      the terms and conditions of this Agreement;

    


    B.
      authorize or issue any capital stock or any rights, warrants, options or
      convertible securities to acquire such stock, except pursuant to the terms
      and
      conditions of this Agreement;

    


    C.
      take
      any action or omit to do any act which would cause the representations or
      warranties of International contained herein to be untrue or incorrect in any
      material respect;

    


    D.
      declare or make any payment or distribution to its shareholders (other than
      payment of compensation for services rendered, if applicable) or purchase or
      redeem any shares of capital stock, except pursuant to the terms and conditions
      of this Agreement;

    


    
      
        
        

      

      
        -25-

        
          

        

      

      
        
        

      

    

    E.
      commit
      any act or omit to do any act which would cause a material breach ofany
      agreement, contract or commitment which is listed in an Exhibit annexed to
      this
      Agreement;

    


    F.
      wind
      down or transfer its business; or

    


    G.
      engage
      in any business activities whatsoever.

    


    11.
Conduct
      of Channel Business
      Prior to the Closing Date.  Between the date of this Agreement
      and the Closing Date, Channel shall carry on its business in the ordinary course
      and in the same manner as heretofore conducted and shall preserve intact the
      existing business organization of Channel, and use its best efforts to (i)
      keep
      available to Channel the services of Channel’s present officers and employees,
      (ii) preserve Channel’s relationships, if any, with customers, suppliers and
      others having business dealings with Channel, to the end that its goodwill
      and
      ongoing business shall not be materially impaired on the Closing
      Date.  Without the prior written consent of International, Channel
      shall not:

    


    A.
      make
      any change in the Certificate of Incorporation or By-Laws of
      Channel;

    


    B.
      conduct the business of Channel in any manner other than in the ordinary
      course;

    


    C.
      authorize or issue any capital stock or any rights, warrants, options or
      convertible securities to acquire such stock;

    


    
      
        
        

      

      
        -26-

        
          

        

      

      
        
        

      

    

    D.
      declare or make any payment or distribution to its shareholders (other than
      payment of compensation for services rendered, if applicable) or purchase or
      redeem any shares of capital stock, except pursuant to the terms and conditions
      of this Agreement;

    


    E.
      take
      any action or omit to do any act which would cause the representations or
      warranties of Channel contained herein to be untrue or incorrect in any material
      respect;

    


    F.
      commit
      any act or omit to do any act which would cause a material breach of any
      agreement, contract or commitment which is listed in an Exhibit annexed to
      this
      Agreement; or

    


    G.
      commit
      any other act or omit to do any other act which would have a material adverse
      effect upon the business, financial condition or earnings of
      Channel.

    


    12.
Nondisclosure
      of
      Confidential Information/Non-Circumvent.

    


    A.
      As
      used in this Agreement, “Confidential Information” shall mean oral or written
      information which is directly or indirectly presented to a party, its past,
      present or future subsidiaries, parents, officers, consultants, directors,
      shareholders, affiliates, attorneys, employees, agents and its and their
      respective Immediate Families (as defined below; all of the foregoing are
      hereinafter collectively referred to as “Agents”) by another party or its
      Agents, including, but not limited to, information which is developed, conceived
      or created by the party, or disclosed to the other party or  its
      Agents or known by or conceived or created by the other party or its Agents
      during, or after the termination of, this Agreement if disclosed to the other
      party or its Agents or known by or conceived or created by the other party
      or
      its Agents as a result of this Agreement, with respect to the party, its
      business or any of said party’s products, processes, and other services relating
      thereto relating to the past or present business or any plans with respect
      to
      future business of the party, or relating to the past or present business of
      a
      third party or plans with respect to future business of a third party which
      are
      disclosed to the party.  Confidential Information includes, but is not
      limited to, all documentation, hardware and software relating thereto, and
      information and data in written, graphic and/or machine readable form, products,
      processes and services, whether or not patentable, trademarkable or
      copyrightable or otherwise protectable, including, but not limited to,
      information with respect to discoveries; know-how; ideas; computer programs,
      source codes and object codes; designs; algorithms; processes and structures;
      product information; marketing information; price lists; cost information;
      product contents and formulae; manufacturing and production techniques and
      methods; research and development information; lists of customers and vendors
      and other information relating thereto; financial data and information; business
      plans and processes; documentation with respect to any of the foregoing; and
      any
      other information of the party that the party informs the other party or its
      Agents or the other party or its Agents should know, by virtue of said party’s
      position or the circumstances in which said party learned such other
      information, is to be kept confidential including, but not limited to, any
      information acquired by the other party or its Agents from any sources prior
      to
      the commencement of this Agreement.  Confidential Information also
      includes similar information obtained by the party in confidence from its
      vendors, licensors, licensees, customers and/or clients.  Confidential
      Information may or may notbe
      labeled as confidential.

    


    
      
        
        

      

      
        -27-

        
          

        

      

      
        
        

      

    

    For
      purposes of this Agreement, “Immediate Family” shall include the following: (A)
      any spouse, parent, spouse of a parent, mother-in-law, father-in-law,
      brother-in-law, sister-in-law, child, spouse of a child, adopted child, spouse
      of an adopted child, sibling, spouse of a sibling, grandparent, spouse of a
      grandparent, and any issue or spouse of any of the foregoing, and (B) such
      child
      or issue of such child which is born and/or adopted during or after the term
      of
      this Agreement and the issue (whether by blood or adoption) of such person;
      provided, however, that it shall not include any person who was legally adopted
      after attaining the age of eighteen (18) by any of the persons specified in
      this
      Paragraph “A” of this Article “12” of this Agreement or any spouse or issue
      (whether by blood or adoption) of any such person.  A parent of a
      specified person shall include an affiliate.

    


    B.
      Except
      as required in the performance of a party’s or its Agents’ obligations pursuant
      to this Agreement, neither said party nor its Agents shall, during, or after
      the
      termination of, this Agreement, directly or indirectly, use any Confidential
      Information or disseminate or disclose any Confidential Information to any
      person, firm, corporation, association or other entity.  Said Party or
      its Agents shall take all reasonable measures to protect Confidential
      Information from any accidental, unauthorized or premature use, disclosure
      or
      destruction.  The foregoing prohibition shall not apply to any
      Confidential Information which: (i) was generally available to the public prior
      to such disclosure; (ii) becomes publicly available through no act or omission
      of said party or its Agents (iii) is disclosed as reasonably required in a
      proceeding to enforce said party’s rights under this Agreement
      or (iv) is disclosed as required by court order or applicable law; provided,
      however, that if said party and/or its Agents are legally requested or required
      by court order or applicable law, including, but not limited to, by oral
      question, interrogatories, request for information or documents, subpoenas,
      civil investigative demand or similar process to disclose any Confidential
      Information, said party and/or its Agents, as the case may be, shall promptly
      notify the party of such request or requirement so that the party may seek
      an
      appropriate protective order; provided further, however; that if such protective
      order is not obtained, said party and/or its Agents, as the case may be, agree
      to furnish only that portion of the Confidential Information which they are
      advised by their respective counsel is legally required.

    


    
      
        
        

      

      
        -28-

        
          

        

      

      
        
        

      

    

    C.
      Upon
      termination of this Agreement for any reason or at any time upon request of
      a
      party, the other party and its Agents agree to deliver to the requesting party
      all materials of any nature which are in the other party’s or its Agents’
possession or control and which are or contain Confidential Information, or
      which are otherwise the property of the requesting party or any vendor,
      licensor, licensee, customer or client of the party, including, but not limited
      to writings, designs, documents, records, data, memoranda, tapes and disks
      containing software, computer source code listings, routines, file layouts,
      record layouts, system design information, models, manuals, documentation and
      notes.  The other party and its Agents shall destroy all written
      documentation prepared by them for internal purposes based in whole or in part
      on any Confidential Information and such destruction shall be confirmed to
      the
      requesting party in writing by the other party and/or its Agents.

     

    D.
      Upon
      the consummation of the transaction set forth in this Agreement, all of the
      Confidential Information shall be deemed to be the property of
      International.

    


    
      
        
        

      

      
        -29-

        
          

        

      

      
        
        

      

    

    13.
Survival
      of Representations,
      Warranties and Covenants.  All covenants, agreements,
      representations and warranties made in or in connection with this Agreement
      shall survive the Closing Date hereof, and shall continue in full force and
      effect, it being understood and agreed that each of such covenants, agreements,
      representations and warranties is of the essence of this Agreement and the
      same
      shall be binding upon and shall inure to the benefit of the parties hereto,
      and
      their successors and assigns.

    


    14.
Conditions
      of
      Closing.

    


    A.
Conditions
      to the Channel
      shareholders’ Obligation to Close.  The obligation of the
      Channel shareholders to close the transactions set forth in this Agreement
      shall
      be subject to the following conditions:

    


    i.
Representations
      and
      Warranties of International and the International Shareholders to be
      True.  To International and the International Shareholders’
knowledge, the representations and warranties of International and International
      Shareholders set forth in this Agreement shall be true in all material respects
      on the Closing Date with the same effect as though made at such time, except
      to
      the extent waived or affected by the transactions set forth in this Agreement;
      and International shall have delivered to the Channel shareholders a certificate
      ofInternational
      (the “International Certificate”) in the form annexed to, and made a part of,
      this Agreement as Exhibit “R” (Article “14Ai”), signed by the President of
      International dated the Closing Date to such effect;

    


    
      
        
        

      

      
        -30-

        
          

        

      

      
        
        

      

    

    ii.
Performance
      of Obligations
      of International.  International shall have performed all
      obligations and complied with all covenants set forth in this Agreement to
      be
      performed or complied with in all material respects by it prior to the Closing
      Date, and International shall have delivered to the Channel shareholders the
      International Certificate signed by the President of International and dated
      the
      Closing Date to such effect;

    


    iii.
      No Adverse
      Change.  There shall not have occurred any material adverse
      change since the date of this Agreement and through the date of the Closing
      Date
      in the business, properties, results of operations or business or financial
      condition of International, and International shall have delivered to the
      Channel shareholders the International Certificate signed by the President
      of
      International and dated the Closing Date to such effect;

    


    iv.
Statutory
      Requirements.  Any statutory requirement for the valid
      consummation by International of the transactions set forth in this Agreement
      shall have been fulfilled; any authorizations, consents and approvals of all
      federal, state and local governmental agencies and authorities required to
      be
      obtained, in order to permit consummation by International of the transactions
      set forth in this Agreement and to permit the business presently carried on
      by
      International to continue unimpaired following the Closing Date, shall have
      been
      obtained, andInternational
      shall have delivered to the Channel shareholders the International Certificate
      signed by the President of International and dated the Closing Date to such
      effect;

    


    
      
        
        

      

      
        -31-

        
          

        

      

      
        
        

      

    

    v.
No
      Governmental
      Proceedings.  No action or proceeding shall have been
      instituted before a court or other governmental body by any governmental agency
      or public authority to restrain or prohibit the transactions set forth in this
      Agreement and International shall have delivered to the Channel shareholders
      the
      International Certificate signed by the President of International and dated
      the
      Closing Date to such effect;

    


    vi.
Consents
      Under
      Agreements.  International shall have obtained the consent or
      approval of each person whose consent or approval shall be required in
      connection with the transactions set forth in this Agreement and International
      shall have delivered to the Channel shareholders the International Certificate
      signed by the President of International and dated the Closing Date to such
      effect;

    


    vii.
      Good Standing
      Certificate.  On the Closing Date, International shall provide
      the Channel shareholders with a good standing certificate for International
      issued by the Secretary of State of the State of Delaware, which certificate
      is
      complete and correct as of a date within thirty (30) days prior to the Closing
      Date;

    


    viii.
      Shareholder
      Approval.  As soon as it practicable subsequent to the
      execution of this Agreement, the shareholders of International approve this
      Agreement and its related transactions
      in accordance with the applicable provisions of the Delaware Corporations Code,
      and International shall have delivered to the Channel shareholders a consent
      of
      the shareholders of International in the form annexed to, and made a part of,
      this Agreement as Exhibit “P” (Article “7C”); and

    


    
      
        
        

      

      
        -32-

        
          

        

      

      
        
        

      

    

    ix.
Directors
      and
      Officers.  The Board of Directors of International shall have
      appointed so designated by Channel pursuant to Paragraph “A” of Article “4” of
      this Agreement, and the directors and officers of International serving
      immediately prior to the Closing Date shall have resigned pursuant to Paragraphs
      “A” and “B” of Article “4” of this Agreement, respectively; provided however,
      that Larry D. Ditto shall remain a member of the Board of Directors for a period
      of six month subsequent to Closing, and thereafter upon the discretion of
      Channel and Channel’s shareholders.

    


    x.
No
      Liabilities.  International shall have no liabilities,
      contractual or other obligations, or business activities, all of which shall
      have been satisfied, resolved or transferred  except those which have
      been set forth on the Form 10-QSB, those liabilities set forth in Paragraph
“A”
of Article “4” or set forth on the International Disclosure Schedule prior to
      the Closing without any recourse or liability to International.

    


    B.
Conditions
      to
      International’s Obligation to Close.  The obligation of
      International to close the transactions set forth in this Agreement shall be
      subject to the following conditions:

     

    
      
        
        

      

      
        -33-

        
          

        

      

      
        
        

      

    

    i.
Representations
      and
      Warranties of Channel and the Channel shareholders to be
      True.  To Channel and the Channel shareholders’ knowledge, the
      representations and warranties of Channel and the Channel shareholders set
      forth
      in this Agreement shall be true in all material respects on the Closing Date
      with the same effect as though made at such time, except to the extent waived
      or
      affected by the transactions set forth in this Agreement; and the Channel
      shareholders shall have delivered to International a certificate of Channel
      (the
“Channel Certificate”) in the form annexed hereto and made a part hereof as
      Exhibit “S” (Article “14Bi”), signed by the President of Channel and all of the
      Channel shareholders and dated the Closing Date to such effect;

    


    ii.
Performance
      of Obligations
      of Channel and the Channel shareholders.  Channel and each of
      the Channel shareholders shall have performed all obligations and complied
      with
      all covenants set forth in this Agreement to be performed or complied with
      in
      all material respects by him or it prior to the Closing Date, and the Channel
      shareholders shall have delivered to International the Channel Certificate
      signed by the President of Channel and all of the Channel shareholders and
      dated
      the Closing Date to such effect;

    


    iii.
      No Adverse
      Change.  There shall not have occurred any material adverse
      change through the date of the Closing Date in the business, properties, results
      of operations or business or financial condition of Channel, and Channel shall
      have delivered to International the Channel Certificate signed by the President
      of Channel and all of the Channel shareholders and dated the Closing Date to
      such effect;

     

     

    
      
        
        

      

      
        -34-

        
          

        

      

      
        
        

      

    

    iv.
Statutory
      Requirements.  Any statutory requirement for the valid
      consummation by Channel and the Channel shareholders of the transactions set
      forth in this Agreement shall have been fulfilled; any authorizations, consents
      and approvals of all federal, state and local governmental agencies and
      authorities required to be obtained, in order to permit consummation by Channel
      and the Channel shareholders of the transactions set forth in this Agreement
      and
      to permit the business presently carried on by Channel to continue unimpaired
      following the Closing Date, shall have been obtained, and the Channel
      shareholders shall have delivered to International the Channel Certificate
      signed by the President of Channel and all of the Channel shareholders and
      dated
      the Closing Date to such effect;

    


    v.
No
      Governmental
      Proceedings.  No action or proceeding shall have been
      instituted before a court or other governmental body by any governmental agency
      or public authority to restrain or prohibit the transactions set forth in this
      Agreement, and the Channel shareholders shall have delivered to International
      the Channel Certificate signed by the President of Channel and all of the
      Channel shareholders and dated the Closing Date to such effect;

    


    vi.
Consents
      Under
      Agreements.  The Channel shareholders shall have obtained the
      consent or approval of each person whose consent or approval shall be required
      in connection with the transactions set forth in this Agreement, and the Channel
      shareholders shall have delivered to International the Channel Certificate
      signed by the President of Channel and all of the Channel shareholders and
      dated
      the Closing Date to such effect; and

     

    
      
        
        

      

      
        -35-

        
          

        

      

      
        
        

      

    

    vii.
      Shareholder
      Approval.  The Channel shareholders shall have approved this
      Agreement and its related transactions pursuant to the applicable provisions
      of
      the Texas Business Corporation Act, and the Channel shareholders shall have
      delivered to International a consent of the Channel shareholders in the form
      annexed to, and made a part of, this Agreement as Exhibit “H” (Article
“6B”).

    


    viii.
      Good Standing
      Certificate.  On the Closing Date, the Channel shareholders
      shall provide International with a status certificate for Channel issued by
      the
      Secretary of State of the State of Texas, which certificate is complete and
      correct as of a date within thirty (30) days prior to the Closing
      Date;


    x.
Shareholder
      Designation. The Channel shareholders irrevocably constitute and appoint
      Eddie Vakser with full power of substitution and re-substitution, as its and
      their true and lawful agent, attorney-in-fact and representative, with full
      power to act for and on behalf of the Shareholders, and each of them, for all
      purposes pursuant to this Agreement and in connection with the transactions
      therein as set forth in the form annexed to, and made a part of, this Agreement
      as Exhibit “W”.

    


    15.
Documents,
      Certificates,
      etc. to be Delivered at Closing.

    


    A.
      At the
      Closing, International shall deliver the following items to the Channel
      shareholders:

    


    
      
        
        

      

      
        -36-

        
          

        

      

      
        
        

      

    

    i.
      the
      International Certificate (as defined in Subparagraph “i” of Paragraph “A” of
      Article “14” of this Agreement), signed by the President of International, in
      the form annexed to, and made a part of, this Agreement as Exhibit “R” (Article
“14Ai”);

    


    ii.
      stock
      certificates evidencing the Closing Issuance, as defined in the
      second  “WHEREAS” clause of this Agreement;

    


    iii.
      a
      good standing certificate of International, dated within thirty (30) days prior
      to the Closing Date;

    


    iv.
      a
      consent of the shareholders of International, in the form annexed to, and made
      a
      part of, this Agreement as Exhibit “P” (Article “7C”).

    


    B.
      At the
      Closing, the Channel shareholders shall deliver the following items to
      International:

    


    i.
      the
      Channel Certificate, as defined in Subparagraph “i” of Paragraph “B” of Article
“14” of this Agreement, signed by the President of Channel, in the form annexed
      to, and made a part of, this Agreement as Exhibit “S” (Article
“14Bi”);

     

    
      
        
        

      

      
        -37-

        
          

        

      

      
        
        

      

    

    


    ii.
      a
      single stock certificate evidencing all of the issued and outstanding shares
      of
Channel
      Common Stock; and

    


    iii.
      a
      consent of the Channel shareholders, in the form annexed to, and made a part
      of,
      this Agreement as Exhibit “H” (Article “6B”).

    


    iv.
      a
      good standing certificate of Channel, dated within thirty (30) days prior to
      the
      Closing Date.

    


    16.
Equitable
      Relief.

    


    A.
      International acknowledges that the Channel shareholders shall be irreparably
      damaged if this Agreement is not consummated.  Therefore, in the event
      of any breach by International of this Agreement, any of the Channel
      shareholders shall have the right, at his or its election, to obtain equitable
      relief including, but not limited to, an order for specific performance of
      this
      Agreement or an injunction, without the need to: (i) post a bond or other
      security, (ii) to prove any actual damage or (iii) to prove that money damages
      would not provide an adequate remedy.  Resort to such equitable
      relief, however, shall not be construed to be a waiver of any other rights
      or
      remedies which any of the Channel shareholders may have for damages or
      otherwise.

    


    


    B.
      Each
      of the Channel shareholders acknowledges that International shall be irreparably
      damaged if this Agreement is not consummated.  Therefore, in the event
      of any breach byChannel
      or any of the Channel shareholders of this Agreement, International shall have
      the right, at its election, to obtain equitable relief including, but not
      limited to, an order for specific performance of this Agreement or an
      injunction, without the need to: (i) post a bond or other security, (ii) to
      prove any actual damage or (iii) to prove that money damages would not provide
      an adequate remedy.  Resort to such equitable relief, however, shall
      not be construed to be a waiver of any other rights or remedies which
      International may have for damages or otherwise.

    


    
      
        
        

      

      
        -38-

        
          

        

      

      
        
        

      

    

    17.
Method
      of
      Termination.  This Agreement may be terminated prior to the
      Closing Date, by any of the following methods:

    


    A.
      by
      mutual written consent of International and all of the Channel shareholders,
      authorized by the Boards of Directors of each of International and
      Channel;

    


    B.
      by
      written notice from (i) International to all of the Channel shareholders, or
      (ii) all of the Channel shareholders to International, if within ten (10)
      business days after receipt of such written notice that the Closing Date has
      passed, the Closing has not occurred; provided, however, that if
      the Closing shall not have occurred on, or prior to, the Closing Date as a
      result of any action taken, or failure to act, by any governmental or regulatory
      authority including, but not limited to, the withholding of, or a delay in,
      any
      approval in connection with any aspect of the transactions contemplated hereby,
      then the Closing Date shall automatically be extended until a date which is
      a
      reasonable time subsequent to the date upon which such governmental or
      regulatory action is resolved which will allow the parties to complete the
      procedures required to consummate the  transactions
      contemplated hereby; provided,
      further, however, that the right to terminate this Agreement pursuant to
      this Paragraph “B” of this Article “17” of this Agreement shall not be available
      to any party whose failure to fulfill any obligation pursuant to this Agreement
      has been the cause of or resulted in the failure of the Closing to occur on
      or
      before such date;

    


    
      
        
        

      

      
        -39-

        
          

        

      

      
        
        

      

    

    C.
      by
      International if there is a material breach of any representation or warranty
      set forth in Article “6” of this Agreement or by any Channel Shareholder in
      Article “8” of this Agreement or any covenant or agreement to be complied with
      or performed by Channel or any of the Channel shareholders pursuant to the
      terms
      of this Agreement, including, but not limited to, the covenants set forth in
      Article “9” of this Agreement, or the failure of a condition set forth in
      Paragraph “B” of Article “14” of this Agreement to be satisfied (and such
      condition is not waived in writing by International) on or prior to the Closing
      Date, or the occurrence of any event which results in the failure of a condition
      set forth in Paragraph “B” of Article “14” of this Agreement to be satisfied on
      or prior to the Closing Date; provided however, that,
      International may not terminate this Agreement prior to the Closing
      Date
      if Channel or any of the Channel shareholders, as the case may be, has not
      had
      an adequate opportunity to cure such failure, pursuant to Article “19” of this
      Agreement; or

    


    D.
      by the
      mutual written consent of all of the Channel shareholders if there is a material
      breach of any representation or warranty set forth in Article “7” of this
      Agreement or any covenant or agreement to be complied with or performed by
      International, including, but not limited to, the covenants set forth in Article
      “9” of this Agreement, or the failure of a condition set forth
      in Paragraph
      “A” of Article “14” of this Agreement to be satisfied (and such condition is not
      waived in writing by Channel) on or prior to the Closing Date, or the occurrence
      of any event which results in the failure of a condition set forth in Paragraph
      “A” of Article “14” of this Agreement to be satisfied on or prior to the Closing
      Date; provided however, that,
      the Channel shareholders may not terminate this Agreement by mutual
      written consent prior to the Closing Date if International has not had an
      adequate opportunity to cure such failure pursuant to Article “19” of this
      Agreement.

    


    
      
        
        

      

      
        -40-

        
          

        

      

      
        
        

      

    

    18.
Effect
      of
      Termination.  If this Agreement is terminated pursuant to the
      provisions set forth in Article “17” of this Agreement, this Agreement shall
      become null and void and shall have no further effect.

    


    19.
Cooperation;
      Notice;
      Cure.  Subject to compliance with applicable law, from the date
      of this Agreement until the Closing Date, each of the parties shall confer
      on a
      regular and frequent basis with one or more representatives of the other parties
      to report on the general status of ongoing operations.  Channel or the
      Channel shareholders, as the case may be, shall promptly provide International
      or its counsel with copies of any filings any of them made with any governmental
      entity in connection with this Agreement and the transactions contemplated
      hereby and thereby.  Each of the
      parties shall notify the others of, and will use all commercially reasonable
      efforts to cure before the Closing Date, any event, transaction or circumstance,
      as soon as practical after it becomes known to such party, that causes or will
      cause any covenant or agreement of the parties pursuant to this Agreement to
      be
      breached or that renders or will render untrue any representation or warranty
      of
      the parties
      contained in this Agreement.  Each of the parties shall also notify
      the others in writing of, and will use all commercially reasonable efforts
      to
      cure, before the Closing Date, any violation or breach, as soon as practical
      after it becomes known to such party, of any representation, warranty, covenant
      or agreement made by the parties.  No notice given pursuant to this
      paragraph shall have any effect on the representations, warranties, covenants
      or
      agreements contained in this Agreement for purposes of determining satisfaction
      of any condition contained herein.

    


    
      
        
        

      

      
        -41-

        
          

        

      

      
        
        

      

    

    20.
Indemnification.

    


    A.
Indemnification
      by
      International.   In order to induce Channel and the
      Channel shareholders to enter into and perform this Agreement, International
      does hereby indemnify, protect, defend and save and hold harmless Channel and
      each of the Channel shareholders and each of their Agents (the "Indemnified
      Parties"), from and against any loss resulting to any of them from any material
      loss, liability, cost, damage, or expense which the Indemnified Parties may
      suffer, sustain or incur arising out of or due to a breach by International
      of
      the representations, warranties and covenants set forth in Article “7” of this
      Agreement or in any documents delivered pursuant hereto or of a breach by
      International of any of its obligations pursuant to this Agreement or in any
      documents delivered pursuant hereto.

    


    B.
Indemnification
      by the
      Channel shareholders.  In order to induce International to
      enter into and perform this Agreement, each of the Channel shareholders hereby
      jointly indemnifies, protects, defends and saves and holds harmless
      International and each of its Agents (the "Indemnified  Parties"),
      from and against any loss resulting to any of them from any material loss,
      liability, cost, damage, or expense which the Indemnified Parties may suffer,
      sustain or incur arising out of or due to a breach by Channel or such Channel
      Shareholder of the representations, warranties and covenants set forth in
      Article “6” of this Agreement or in any documents delivered pursuant hereto or
      of a breach by Channel or such Channel Shareholder of any of his or its
      obligations pursuant to this Agreement or in any documents delivered pursuant
      hereto.

    


    
      
        
        

      

      
        -42-

        
          

        

      

      
        
        

      

    

    C.
Reasonable
      Costs,
      Etc.  The indemnification, which is set forth in this Article
“20” of this Agreement shall be deemed to include not only the specific
      liabilities or obligation with respect to which such indemnity is provided,
      but
      also all counsel fees, reasonable costs, expenses and expenses of settlement
      relating thereto, whether or not any such liability or obligation shall have
      been reduced to judgment.

    


    D.
Third
      Party
      Claims.  If any demand, claim, action or cause of action, suit,
      proceeding or investigation (collectively, the “Claim”) is brought against an
      Indemnified Party for which the Indemnified Party intends to seek indemnity
      from
      the other party hereto (the "Indemnifying Party"), then the Indemnified Party
      within twenty-one (21) days after such Indemnified Party's receipt of the Claim,
      shall notify the Indemnifying Party pursuant to Paragraph “C” of Article “21” of
      this Agreement which notice shall contain a reasonably thorough description
      of
      the nature and amount of the Claim (the "Claim Notice").  The
      Indemnifying Party shall have the option to undertake, conduct and control
      the
      defense of such claim or demand.  Such option to undertake, conduct
      and control the defense of such claim or demand shall be exercised by
      notifyingthe
      Indemnified Party within ten (10) days after receipt of the Claim Notice
      pursuant to Paragraph “C” of Article “21” of this Agreement (such notice to
      control the defense is hereinafter referred to as the “Defense
      Notice”).  The failure of the Indemnified Party to notify the
      Indemnifying Party of the Claim shall not relieve the Indemnifying Party from
      any liability which the Indemnifying Party may have pursuant to this Article
      “20” of this Agreement except to the extent that such failure to notify the
      Indemnifying Party prejudices the Indemnifying Party.  The Indemnified
      Party shall use all reasonable efforts to assist the Indemnifying Party in
      the
      vigorous defense of the Claim.  All costs and expenses incurred by the
      Indemnified Party in defending the Claim shall be paid by the Indemnifying
      Party.  If, however, the Indemnified Party desires to participate in
      any such defense or settlement, it may do so at its sole cost and expense (it
      being understood that the Indemnifying Party shall be entitled to control the
      defense).  The Indemnified Party shall not settle the
      Claim.  If the Indemnifying Party does not elect to control the
      defense of the Claim, within the aforesaid ten (10) day period by proper notice
      pursuant to Paragraph “C” of Article “21” of this Agreement, then the
      Indemnified Party shall be entitled to undertake, conduct and control the
      defense of the Claim (a failure by the Indemnifying Party to send the Defense
      Notice to the Indemnified Party within the aforesaid ten (10) day period by
      proper notice pursuant to Paragraph “C” of Article “21” of this Agreement shall
      be deemed to be an election by the Indemnifying Party not to control the defense
      of the Claim); provided, however, that the Indemnifying Party shall be entitled,
      if it so desires, to participate therein (it being understood that in such
      circumstances, the Indemnified Party shall be entitled to control the
      defense).  Regardless of which party has undertaken to defend any
      claim, the Indemnifying Party may, without the prior written consent of the
      Indemnified Party, settle, compromise or offer to settle or compromise any
      such
      claim or demand; provided however, that ifany
      settlement would result in the imposition of a consent order, injunction or
      decree which would restrict the future activity or conduct of the Indemnified
      Party, the consent of the Indemnified Party shall be a condition to any such
      settlement.  Notwithstanding the foregoing provisions of this Article
“20” of this Agreement, as a condition to the Indemnifying Party either having
      the right to defend the Claim, or having control over settlement as indicated
      in
      this Article “20” of this Agreement, the Indemnifying Party shall execute an
      agreement, in the form annexed hereto and made a part hereof as Exhibit “T”
(Article “20D”), acknowledging its liability for indemnification pursuant to
      this Article “20” of this Agreement.  Whether the Indemnifying Party
      shall control and assume the defense of the Claim or only participate in the
      defense or settlement of the Claim, the Indemnified Party shall give the
      Indemnifying Party and its counsel access, during normal business hours, to
      all
      relevant business records and other documents, and shall permit them to consult
      with its employees and counsel.

    


    
      
        
        

      

      
        -43-

        
          

        

      

      
        
        

      

    

    21.
Miscellaneous.

    


    A.
Headings.  Headings
      contained in this Agreement are for reference purposes only and shall not affect
      in any way the meaning or interpretation of this Agreement.

    


    B.
Enforceability.  If
      any provision which is contained in this Agreement, should, for any reason,
      be
      held to be invalid or unenforceable in any respect under the laws of any State
      of the United States, such invalidity or unenforceability shall not affect
      any
      other provision of this Agreement and in this Agreement shall be construed
      as if
      such invalid or unenforceable provisionhad
      not
      been contained herein.

    


    
      
        
        

      

      
        -44-

        
          

        

      

      
        
        

      

    

    C.
Notices.  Any
      notice or other communication required or permitted hereunder shall be
      sufficiently given if sent by (i) mail by (a) certified mail, postage prepaid,
      return receipt requested and (b) first class mail, (ii) overnight delivery
      with
      confirmation of delivery or (iii) facsimile transmission with an original mailed
      by first class mail, postage prepaid, addressed as follows:

    


    
      	
              If
                to Channel:

            	
              ART
                CHANNEL INC.

            
	 	
              16160
                County Road 635,

            
	 	
              Blue
                Ridge, Texas, 75424

            
	 	
              Attention:
                Eddie Vasker, CEO

            
	 	
              Facsimile
                No.: (208) 955-3056

            
	 	 
	
              with
                a copy to:

            	
              Mintz
                & Fraade, P.C.

            
	 	
              488
                Madison Avenue, Suite 1100

            
	 	
              New
                York, New York 10022

            
	 	
              Attention:
                Frederick M. Mintz, Esq.

            
	 	
              Facsimile
                No.: (212) 486-0701

            
	 	 
	
              If
                to International:

            	
              ARTFEST
                INTERNATIONAL, INC.

            
	 	
              27758
                Santa Margarita Parkway

            
	 	
              Suite
                281

            
	 	
              Mission
                Viejo, CA 92691

            
	 	
              Attention:
                Larry Ditto

            
	 	
              Facsimile
                No.: _____________

            


    

     

     

     

     

    
      
        
        

      

      
        -45-

        
          

        

      

      
        
        

      

    

     

    
      	 	 
	
              with
                a copy to:

            	
              ________________________

            
	 	
              ________________________

            
	 	
              ________________________

            
	 	
              Attention:
                _______________

            
	 	
              Facsimile
                No.: _____________

            
	 	 
	
              If
                to any of the Channel Shareholders:

            	
              To
                the address set forth for said party on Exhibit “A”.

            
	 	 
	
              with
                a copy to:

            	
              Mintz
                & Fraade, P.C.

            
	 	
              488
                Madison Avenue, Suite 1100

            
	 	
              New
                York, New York 10022

            
	 	
              Attention:
                Frederick M. Mintz, Esq.

            
	 	
              Facsimile
                No.: (212) 486-0701

            


    

    


    or
      in
      each case to such other address and facsimile number as shall have last been
      furnished by like notice.  If all of the methods of notice set forth
      in this Paragraph “C” of this Article “21” of this Agreement are impossible for
      any reason, notice shall be in writing and personally delivered to
      theaforesaid
      addresses.  Each notice or communication shall be deemed to have been
      given as of the date so mailed or delivered as the case may be; provided,
      however, that any notice sent by facsimile shall be deemed to have been given
      as
      of the date so sent if a copy thereof is also mailed by first class mail on
      the
      date sent by facsimile.  If the date of mailing is not the same as the
      date of sending by facsimile, then the date of mailing by first class mail
      shall
      be deemed to be the date upon which notice is given; provided further, however,
      that any notice sent by overnight delivery shall be deemed to have been given
      as
      of the date of delivery.

    


    
      
        
        

      

      
        -46-

        
          

        

      

      
        
        

      

    

    D.
Governing
      Law;
      Disputes.  This Agreement shall in accordance with Section
      5-1401 of the General Obligations Law of New York in all respects be construed,
      governed, applied and enforced under the internal laws of the State of New
      York
      without giving effect to the principles of conflicts of laws and be deemed
      to be
      an agreement entered into in the State of New York and made pursuant to the
      laws
      of the State of New York.  The parties agree that they shall be deemed
      to have agreed to binding arbitration with respect to the entire subject matter
      of any and all disputes relating to or arising under this Agreement including,
      but not limited to, the specific matters or disputes as to which arbitration
      has
      been expressly provided for by other provisions of this Agreement and that
      any
      such arbitration shall be commenced exclusively in New York, New
      York.  Any such arbitration shall be by a panel of three arbitrators
      and pursuant to the commercial rules then existing of the American Arbitration
      Association in the State of New York, County of New York.  In all
      arbitrations, judgment upon the arbitration award may be entered in any court
      having jurisdiction.  The parties specifically designate the courts in
      the City of New York, State of New York as properly having jurisdiction for
      any
      proceeding to confirm and enter judgment upon any such arbitration award.  The
      parties hereby consent to and submit to the exclusive jurisdiction of the courts
      of the State of New York in any action or proceeding and submit to personal
      jurisdiction over each of them by such courts.  The parties hereby
      waive personal service of any and all process and specifically consent that
      in
      any such action or proceeding brought in the courts of the State of New York,
      any service of process may be effectuated upon any of them by certified mail,
      return receipt requested, in accordance with Paragraph “C” of this Article “21”
of this Agreement.  Nothing contained herein shall be deemed to limit
      in any way any right to serve process in any manner permitted by
      law.

    


    
      
        
        

      

      
        -47-

        
          

        

      

      
        
        

      

    

    The
      parties agree, further, that the prevailing party in any such arbitration as
      determined by the arbitrators shall be entitled to such costs and attorney's
      fees, if any, in connection with such arbitration as may be awarded by the
      arbitrators.  In connection with the arbitrators’ determination for
      the purpose of which party, if any, is the prevailing party, they shall take
      into account all of the factors and circumstances including, without limitation,
      the relief sought, and by whom, and the relief, if any, awarded, and to
      whom.  In addition, and notwithstanding the foregoing sentence, a
      party shall not be deemed to be the prevailing party in a claim seeking monetary
      damages, unless the amount of the arbitration award exceeds the amount offered
      in a legally binding writing by the other party by fifteen percent (15%) or
      more.  For example, if the party initiating arbitration (“A”) seeks an
      award of $100,000 plus costs and expenses, the other party (“B”) has offered A
      $50,000 in a legally binding written offer prior to the commencement of the
      arbitration proceeding, and the arbitration panel awards any amount less than
      $57,500 to A, the panel should determine that B has “prevailed”.

     

    The
      arbitration panel shall have no power to award non-monetary or equitable relief
      of any sort.  It shall also have no power to award (i) damages
      inconsistent with any applicable agreement between the parties or (ii) punitive
      damages or any other damages not measured by the prevailing party’s actual
      damages; and the parties expressly waive their right to obtain such damages
      in
      arbitration or in any other forum.  In no event, even if any other
      portion of these provisions is held invalid or unenforceable, shall the
      arbitration panel have power to make an award or impose a remedy which could
      not
      be made or imposed by a court deciding the matter in the same
      jurisdiction.

    


    
      
        
        

      

      
        -48-

        
          

        

      

      
        
        

      

    

    Discovery
      shall be permitted in connection with the arbitration only to the extent, if
      any, expressly authorized by the arbitration panel upon a showing of substantial
      need by the party seeking discovery.

    


    All
      aspects of the arbitration shall be treated as confidential.  The
      parties and the arbitration panel may disclose the existence, content or results
      of the arbitration only as provided in the rules of the American Arbitration
      Association in New York, New York.  Before making any such disclosure,
      a party shall give written notice to all other parties and shall afford such
      parties a reasonable opportunity to protect their interest.

    


    


    E.
Expenses.  Each
      party to this Agreement shall bear and pay its own costs and expenses incurred
      in connection with the execution and delivery of this Agreement and the
      transactions set forth in this Agreement.  International shall bear
      all legal fees and expenses withrespect
      to the preparation of this Agreement, and the preparation and filing of the
      Offering as set forth in Subparagraph “xii” of Paragraph “A” of Article “14” of
      this Agreement.

    


    
      
        
        

      

      
        -49-

        
          

        

      

      
        
        

      

    

    F.
Construction.  Each
      of the parties hereto hereby further acknowledges and agrees that (i) each
      has
      been advised by counsel during the course of negotiations and (ii) each counsel
      has had significant input in the development of this Agreement and (iii) this
      Agreement shall not, therefore, be construed more strictly against any party
      responsible for its drafting regardless of any presumption or rule requiring
      construction against the party whose attorney drafted this
      Agreement.

    


    G.
Entire
      Agreement.  This Agreement and all documents and instruments
      referred to herein (a) constitute the entire agreement and supersedes all prior
      agreements and understandings, both written and oral, among the parties with
      respect to the subject matter hereof and thereof, and (b) are not intended
      to
      confer upon any person other than the parties hereto any rights or remedies
      hereunder.  Each party hereto agrees that, except for the
      representations and warranties contained in this Agreement, none makes any
      other
      representations or warranties, and each hereby disclaims any other
      representations and warranties made by itself or any of its officers, directors,
      employees, agents, financial and legal advisors or other representatives, with
      respect to the execution and delivery of this Agreement or the transactions
      contemplated hereby, notwithstanding the delivery or disclosure to the other
      or
      the other's representatives of any documentation or other information with
      respect to any one or more of the foregoing.

    


    H.
Further
      Assurances.  The parties agree to execute any and all such
      other furtherinstruments
      and documents, and to take any and all such further actions which are reasonably
      required to effectuate this Agreement and the intents and purposes
      hereof.

    


    
      
        
        

      

      
        -50-

        
          

        

      

      
        
        

      

    

    I.
Binding
      Agreement.  This Agreement shall be binding upon and inure to
      the benefit of the parties hereto and their heirs, executors, administrators,
      personal representatives, successors and assigns.

    


    J.
Non-Waiver.  Except
      as otherwise expressly provided herein, no waiver of any covenant, condition,
      or
      provision of this Agreement shall be deemed to have been made unless expressly
      in writing and signed by the party against whom such waiver is charged; and
      (i)
      the failure of any party to insist in any one or more cases upon the performance
      of any of the provisions, covenants or conditions of this Agreement or to
      exercise any option herein contained shall not be construed as a waiver or
      relinquishment for the future of any such provisions, covenants or conditions,
      (ii) the acceptance of performance of anything required by this Agreement to
      be
      performed with knowledge of the breach or failure of a covenant, condition
      or
      provision hereof shall not be deemed a waiver of such breach or failure and
      (iii) no waiver by any party of one breach by another party shall be construed
      as a waiver of any other or subsequent breach.

    


    K.
Counterparts.  This
      Agreement may be executed simultaneously in one or more counterparts, each
      of
      which shall be deemed an original, but all of which together shall constitute
      one and the same instrument.

    


    L.
Facsimile
      Signatures.  Any signature which is delivered via facsimile
      shall be deemed to be an original and have the same force and effect as if
      such
      facsimile signature were the original thereof.

    


    
      
        
        

      

      
        -51-

        
          

        

      

      
        
        

      

    

    M.
Modifications.  This
      Agreement may not be changed, modified, extended, terminated or discharged
      orally, except by a written agreement specifically referring to this Agreement
      which is signed by all of the parties to this Agreement.

    


    N.
Exhibits.  All
      Exhibits annexed or attached to this Agreement are incorporated into this
      Agreement by reference thereto and constitute an integral part of this
      Agreement.

    


    O.
Severability.  The
      provisions of this Agreement shall be deemed separable.  Therefore, if
      any part of this Agreement is rendered void, invalid or unenforceable, such
      rendering shall not affect the validity or enforceability of the remainder
      of
      this Agreement; provided, however, that if the part or parts which are void,
      invalid or unenforceable as aforesaid shall substantially impair the value
      of
      this whole Agreement to any party, that party may cancel and terminate this
      Agreement by giving written notice to the other party.

    


    


    
      
        
        

      

      
        -52-

        
          

        

      

      
        
        

      

    

    


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

    
      	 	
              ART
                CHANNEL INC.

            
	 	 
	 	 
	 	
              By:
                Eddie
                Vakser                                                 
                

            
	 	
              Name:
                Eddie Vasker

            
	 	
              Title:  Chairman,
                President and CEO

            
	 	 
	 	
              (ART
                CHANNEL INC. agrees to be bound by Articles “6”, “9”, “11” through “15”
                and “17”  through “21” of this Agreement)

            
	 	 
	 	
              ARTFEST
                INTERNATIONAL, INC.

            
	 	 
	 	 
	 	
              By:
                Larry
                Ditto                                                       
                

            
	 	
              Name:
                Larry Ditto

            
	 	
              Title:

            
	 	 
	 	
              INTERNATIONAL
                SHAREHOLDERS

            
	 	 
	 	 
	 	
              Larry
                Ditto                                                               

            
	 	
              Name:  Larry
                Ditto  

            
	 	
              Shares:

            


    

    


    


    


    


    
      
        
        

      

      
        -53-

        
          

        

      

      
        
        

      

    

     

    Exhibit
      List

    


    
      	
              Exhibit
                A

            	
              International
                Shareholders Parties to this Agreement (Article
                “Heading”)

            
	 	 
	
              Exhibit
                B

            	
              Channel
                shareholders Parties to this Agreement (Article
                “Heading”)

            
	 	 
	
              Exhibit
                C

            	
              Voting
                Agreement

            
	 	 
	
              Exhibit
                D

            	
              Channel
                Certificate of Incorporation (Article “6Aii”)

            
	 	 
	
              Exhibit
                E

            	
              Channel
                By-Laws (Article “6Aii”)

            
	 	 
	
              Exhibit
                F

            	
              Channel
                Good Standing Certificate (Article “6Aii”)

            
	 	 
	
              Exhibit
                G

            	
              Resolution
                of Board of Directors of Channel (Article “6B”)

            
	 	 
	
              Exhibit
                H

            	
              Unanimous
                Resolution of the Channel shareholders (Article “6B”)

            
	 	 
	
              Exhibit
                I

            	
              List
                of Shareholders of Channel (Article “6C”)

            
	 	 
	
              Exhibit
                J

            	
              Channel
                Disclosure Schedule (Article “6J”)

            
	 	 
	
              Exhibit
                K

            	
              International
                Certificate of Incorporation (Article “7Aii”)

            
	 	 
	
              Exhibit
                L

            	
              International
                By-Laws (Article “7Aii”)

            
	 	 
	
              Exhibit
                M

            	
              International
                Good Standing Certificate (Article “7Aii”)

            
	 	 
	
              Exhibit
                N

            	
              International
                Disclosure Schedule (Article “7B”)

            
	 	 
	
              Exhibit
                O

            	
              Resolution
                of Board of Directors of International (Article “7C”)

            
	 	 
	
              Exhibit
                P

            	
              Resolution
                of Shareholders of International (Article “7C”)

            
	 	 
	
              Exhibit
                Q

            	
              List
                of Shareholders of International (Article “7D”)

            
	 	 
	
              Exhibit
                R

            	
              International
                Certificate (Article “14Ai”)

            
	 	 
	
              Exhibit
                S

            	
              Channel
                Certificate (Article “14Bi”)

            
	 	 
	
              Exhibit
                T

            	
              Indemnification
                Letter Agreement (Article “20D”)

            
	 	 
	
              Exhibit
                W

            	
              Shareholder
                Designation (Article “14Bx”)

            


    

     

     

    
      
        
        

      

      
        -54-

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A

    


    INTERNATIONAL
      SHAREHOLDERS PARTIES TO THIS AGREEMENT

    


    
      	
              Name
&
                Address

            	
              Shares
                Held

            
	 	 
	
              Larry
                Ditto

            	
              1,000,000

            
	
              17
                Via Belmonte

            	
              3.542%

            
	
              Rancho
                Santa, CA  92688

            	 
	 	 
	Ditto
              Family Trust	2,000,000 
	21282
              Canea Street	7.085% 
	Mission
              Viejo, CA 92692	 


    

     

    *
      Additional shareholders to be added at a later date.

     

     

     

     

    
      
        
        

      

      
        A-1

        
          

        

      

      
        
        

      

    

    
    

    
      EXHIBIT
        B

      


      CHANNEL
        SHAREHOLDERS PARTIES TO THIS AGREEMENT

    

    


    


    Deleted
      from SEC filing due to the confidential nature of the
      information.


     

    
      
        
        

      

      
        B-1

        
          

        

      

      
        
        

      

    

    DRAFT
      (Subject to Execution)

    EXHIBIT
      C

     

    
      STOCKHOLDER
        AGREEMENT

      

        AGREEMENT
          made as of the 28th day of December, 2007, by and among Artfest International,
          Inc., a Delaware corporation with an office located at 27758 Santa Margarita
          Parkway, Suite 281, Mission Viejo, California, 92691 (”International”), Mr.
          Larry D. Ditto  with an address at 27758 Santa Margarita Parkway,
          Suite 281, Mission Viejo, California, 92691 (the “Stockholder”), and Art
          Channel, Inc., a Texas corporation with an address at 16160 County Road
          635,
          Blue Ridge, Texas, 75424 (“Channel”).

        


        WHEREAS,
          International and Channel have entered into the Acquisition Agreement dated
          December 26, 2007 (the “Acquisition Agreement”), whereby International shall
          acquire one hundred (100%) of the issued and outstanding shares of Channel,
          and
          accordingly Channel shall become a wholly owned subsidiary of
          International;

        


        WHEREAS,
          the Stockholder owns or controls an aggregate of three million (3,000,000)
          shares of International common stock.

        


        WHEREAS,
          on the Closing Date of the Acquisition Agreement, International shall issue
          eight million (8,000,000) shares of common stock to the Channel Stockholders
          (the “Closing Issuance”) as partial consideration for one hundred (100%) of the
          issued and outstanding shares of Channel;

        


        WHEREAS,
          International has agreed to issue an additional twenty million (20,000,000)
          shares of common stock to the Channel Stockholders as set forth on Exhibit
“A”,
          which is annexed hereto and made a part hereof,  (the “Additional
          Shares”), however as of the date of closing, International does not have
          sufficient number of authorized shares of common stock to do so;

        


        WHEREAS,
          International has agreed that as soon as is practicable after the Closing
          of the
          Acquisition Agreement, International shall amend its Certificate of
          Incorporation to increase its authorized shares to one hundred million
          (100,000,000) shares of common stock and two million (2,000,000) shares
          of
          preferred stock (the “Amendment”);

        


        WHEREAS,
          International, pursuant to Delaware law, requires the approval of stockholder(s)
          owing a majority of its issued and outstanding common stock to implement
          the
          Amendment.



    

    
      
        
        

      

      
        C-1

        
          

        

      

      
        
        

      

    

    

      WHEREAS;
        as soon as is practicable after the Amendment is filed with the Delaware
        Secretary of State, International shall issue the Additional Shares on a
        pro-rata basis to the Channel Shareholders, listed on Exhibit “B’, which is
        annexed hereto and made part hereof;


      WHEREAS;
        after the Closing of the Acquisition Agreement but prior to the issuance
        of the
        Additional Shares, the Stockholder, together with certain other stockholders
        of
        International, agree to provide to the Channel Shareholders such number of
        additional votes which shall be equal to the percentage ownership of shares
        which the Channel Shareholders would have received if they had received the
        Additional Shares at Closing; and

      


      WHEREAS,
        as a material inducement to International and Channel entering into the
        Acquisition Agreement, the Stockholder has agreed to enter into this Agreement
        and abide by the covenants and obligations with respect to the shares of
        International.

      


      NOW
        THEREFORE, in consideration of the mutual covenants of the parties which
        are
        hereinafter set forth and for other good and valuable consideration, receipt
        of
        which is hereby acknowledged,

      


      IT
        IS
        AGREED:

      


      1.           Recitals.  The
        parties hereby adopt as part of this Agreement each of the recitals which
        is set
        forth above in the WHEREAS clauses, and agree that such recitals shall be
        binding upon the parties hereto by way of contract and not merely by way
        of
        recital or inducement and such WHEREAS clauses are hereby confirmed and ratified
        as being accurate by each party as to itself.

      


      2.           Stockholder
        Voting.  The Stockholder hereby agrees to vote his shares of
        International as follows:

      


      A.          to
        consent to the Amendment as soon as is practicable;

      


      B.           to
        consent to the Additional Shares;  and

      


      C.           Until
        the Additional Shares are issued, in all circumstances in which the Board
        of
        Directors of International seeks approval of its stockholders either voluntarily
        or by requirement of law, the Stockholder, together with certain other
        stockholders of International, shall deliver to the Channel shareholders
        proxies
        on a pro-rata basis based upon the number of shares each of Channel Shareholders
        owned as of the Closing Date  such that  the Channel
        Shareholders shall have the right to vote an aggregate of additional thirty
        four
        and two-thirds (342⁄3%) percent of the total issued and outstanding shares of
        International.

    

    
      
        
        

      

      
        C-2

        
          

        

      

      
        
        

      

    

    

      3.           Representations
        of the Stockholder.  The Stockholder hereby represents, warrants
        and covenants the following:

      


      (A)          The
        Stockholder shall not (i) sell or otherwise transfer any shares of Stock,
        beneficial ownership thereof or any other interest therein to any person
        or
        entity pursuant to a private transaction pursuant to the Securities Act of
        1933,
        as amended, unless said person(s) or entity agrees to be bound by the terms
        of
        this Agreement, (ii)


      enter
        into any agreement, arrangement or understanding with any person or entity,
        or
        take any other action that violates or conflicts with or would reasonably
        be
        expected to violate or conflict with, or result in or give rise to a violation
        of or conflict with, such Stockholder’s representations, warranties, covenants
        and obligations pursuant to this Agreement, or (iii) take any action that
        could
        restrict or otherwise affect such Stockholder’s legal power, authority and right
        to comply with and perform its covenants and obligations under this
        Agreement.  Any transfer of any Stock or interests in violation of
        this Paragraph “C” of this Article “3” of this Agreement shall be
        void.

      


      (B)           Except
        for this Agreement, the Stockholder (i) has not entered into, and shall not
        enter into at any time while this Agreement remains in effect, any voting
        agreement or voting trust with respect to his, her or its shares of
        International, (ii) has not granted, and shall not grant at any time while
        this
        Agreement remains in effect, a proxy (except as set forth in this Agreement),
        consent or power of attorney with respect to his, her or its shares of
        International and (iii) has not taken and shall not knowingly take any action
        that would make any representation or warranty of the Stockholder contained
        herein untrue or incorrect or have the effect of preventing or disabling
        the
        Stockholder from performing any of his obligations pursuant to this
        Agreement.

      


      (C)           This
        Agreement has been duly executed and delivered by the Stockholder and, assuming
        this Agreement constitutes a valid and binding obligation of the other parties
        hereto, constitutes a legal, valid and binding agreement of the Stockholder,
        enforceable against it in accordance with its terms, subject to bankruptcy,
        insolvency, fraudulent transfer, reorganization, moratorium and similar laws
        of
        general applicability relating to or affecting creditors’ rights and to general
        equitable principles.

      


      (D)           No
        consent, approval, order or authorization of, or registration, declaration
        or
        filing with, any governmental authority is necessary to be obtained or made
        by
        the Stockholder in connection with the Stockholder’s execution, delivery and
        performance of this Agreement or the consummation by the Stockholder of the
        transactions contemplated hereby, except for (i) the applicable requirements
        of
        the Securities Act of 1933, as amended, the Securities Exchange Act of 1934,
        as
        amended, and state securities and “blue sky” laws, and (ii) such other consents,
        approvals, orders or authorizations of, or registrations, declarations or
        filings with, any governmental authority where the failure to obtain or take
        such action, individually or in the aggregate, would not reasonably be expected
        to impair the ability of the Stockholder to perform its obligations hereunder
        on
        a timely basis.



    
      
        
        

      

      
        C-3

        
          

        

      

      
        
        

      

    

    

      (E)           There
        is no action pending and no order of any governmental authority outstanding
        nor,
        to the knowledge of the Stockholder, is any such action or order threatened,
        against the Stockholder which may prevent or materially delay such Stockholder
        from performing its obligations under this Agreement or consummating the
        transactions contemplated hereby on a timely basis.

      


       4.           Term. This
        Agreement and the respective rights and obligations of the parties hereto
        shall
        commence upon the Closing Date of the Acquisition Agreement and shall
        terminate upon the earlier of the following to occur: (A) the issuance of
        the
        Additional Shares, or (B) March 31, 2008; provided, however, that if
        the Information Statement that is required to be sent to the stockholders
        of
        International with respect to the Amendment has been delayed either due to
        any
        failure of the International Stockholders to cooperate or due to a delay
        in the
        review and approval by the Securities and Exchange Commission, then the Term
        of
        this Agreement shall be automatically extended for such period of time of
        any
        such delay.

      


    

    
      
        
        

      

      
        C-4

        
          

        

      

      
        
        

      

    

    

      5.           Miscellaneous.

      


      A.
        Headings.  Headings contained in this Agreement are for
        reference purposes only and shall not affect in any way the meaning or
        interpretation of this Agreement.

      


      B.
        Enforceability.  If any provision which is contained in this
        Agreement, should, for any reason, be held to be invalid or unenforceable
        in any
        respect under the laws of any State of the United States, such invalidity
        or
        unenforceability shall not affect any other provision of this Agreement and
        in
        this Agreement shall be construed as if such invalid or unenforceable provision
        had not been contained herein.

      


      C.
        Notices.  Any notice or other communication required or
        permitted hereunder shall be sufficiently given if sent by (i) mail by (a)
        certified mail, postage prepaid, return receipt requested and (b) first class
        mail, (ii) overnight delivery with confirmation of delivery or (iii) facsimile
        transmission with an original mailed by first class mail, postage prepaid,
        addressed as follows:

      


      If
        to
        International:                                                              Artfest
        International, Inc..

      16160
        County Road 635,

      Blue
        Ridge, Texas, 75424

      Attn:
        Eddie Vakser,
        President

      Facsimile
        No.:
        _______________

      


      


      with
        a
        copy
        to:                                                                     Mintz
& Fraade, P.C.

      488
        Madison Avenue, Suite
        1100

      New
        York, NY 10022

      Attention:
        Frederick M. Mintz,
        Esq.

      Facsimile
        No.: (212)
        486-0701

      


      


      If
        to the
        Stockholder:                                                          Larry
        D. Ditto

      27758
        Santa Margarita Parkway, Suite
        281,

      Mission
        Viejo, California,
        92691

      Fax
        No.:
        ___________________

 

      with
        a
        copy
        to:                                                                  __________________________

      ________________________

      ________________________

      Attention:
        ________________

      Facsimile
        No.:
        _____________

      


      or
        in
        each case to such other address and facsimile number as shall have last been
        furnished by like notice.  If all of the methods of notice set forth
        in this Paragraph “C” of this Article “5” of this Agreement are impossible for
        any reason, notice shall be in writing and personally delivered to the aforesaid
        addresses.  Each notice or communication shall be deemed to have been
        given as of the date so mailed or delivered as the case may be; provided,
        however, that any notice sent by facsimile shall be deemed

      to
        have
        been given as of the date so sent if a copy thereof is also mailed by first
        class mail on the date sent by facsimile.  If the date of mailing is
        not the same as the date of sending by facsimile, then the date of mailing
        by
        first class mail shall be deemed to be the date upon which notice is given;
        provided further, however, that any notice sent by overnight delivery shall
        be
        deemed to have been given as of the date of delivery.

      


    

    
      
        
        

      

      
        C-5

        
          

        

      

      
        
        

      

    

    
      

        


        or
          in
          each case to such other address and facsimile number as shall have last
          been
          furnished by like notice.  If all of the methods of notice set forth
          in this Paragraph “C” of this Article “5” of this Agreement are impossible for
          any reason, notice shall be in writing and personally delivered to the
          aforesaid
          addresses.  Each notice or communication shall be deemed to have been
          given as of the date so mailed or delivered as the case may be; provided,
          however, that any notice sent by facsimile shall be deemed

        to
          have
          been given as of the date so sent if a copy thereof is also mailed by first
          class mail on the date sent by facsimile.  If the date of mailing is
          not the same as the date of sending by facsimile, then the date of mailing
          by
          first class mail shall be deemed to be the date upon which notice is given;
          provided further, however, that any notice sent by overnight delivery shall
          be
          deemed to have been given as of the date of delivery.

        


        D.
          Governing Law; Disputes.  This Agreement shall in accordance
          with Section 5-1401 of the General Obligations Law of New York in all respects
          be construed, governed, applied and enforced under the internal laws of
          the
          State of New York without giving effect to the principles of conflicts
          of laws
          and be deemed to be an agreement entered into in the State of New York
          and made
          pursuant to the laws of the State of New York.  The parties agree that
          they shall be deemed to have agreed to binding arbitration with respect
          to the
          entire subject matter of any and all disputes relating to or arising under
          this
          Agreement including, but not limited to, the specific matters or disputes
          as to
          which arbitration has been expressly provided for by other provisions of
          this
          Agreement and that any such arbitration shall be commenced exclusively
          in New
          York, New York.  Any such arbitration shall be by a panel of three
          arbitrators and pursuant to the commercial rules then existing of the American
          Arbitration Association in the State of New York, County of New
          York.  In all arbitrations, judgment upon the arbitration award may be
          entered in any court having jurisdiction.  The parties specifically
          designate the courts in the City of New York, State of New York as properly
          having jurisdiction for any proceeding to confirm and enter judgment upon
          any
          such arbitration award.  The parties hereby consent to and submit to
          the exclusive jurisdiction of the courts of the State of New York in any
          action
          or proceeding and submit to personal jurisdiction over each of them by
          such
          courts.  The parties hereby waive personal service of any and all
          process and specifically consent that in any such action or proceeding
          brought
          in the courts of the State of New York, any service of process may be
          effectuated upon any of them by certified mail, return receipt requested,
          in
          accordance with Paragraph “C” of this Article “5” of this
          Agreement.  Nothing contained herein shall be deemed to limit in any
          way any right to serve process in any manner permitted by law.


        
        

      

      
        C-6

        
          

        

      

      
        
        

      

    

     

    
      The
        parties agree, further, that the prevailing party in any such arbitration
        as
        determined by the arbitrators shall be entitled to such costs and attorney's
        fees, if any, in connection
        with such arbitration as may be awarded by the arbitrators.  In
        connection with the arbitrators’ determination for the purpose of which party,
        if any, is the prevailing party, they shall take into account all of the
        factors
        and circumstances including, without limitation, the relief sought, and by
        whom,
        and the relief, if any, awarded, and to whom.  In addition, and
        notwithstanding the foregoing sentence, a party shall not be deemed to be
        the
        prevailing party in a claim seeking monetary damages, unless the amount of
        the
        arbitration award exceeds the amount offered in a legally binding writing
        by the
        other party by fifteen percent (15%) or more.  For example, if the
        party initiating arbitration (“A”) seeks an award of $100,000 plus costs and
        expenses, the other party (“B”) has offered A $50,000 in a legally binding
        written offer prior to the commencement of the arbitration proceeding, and
        the
        arbitration panel awards any amount less than $57,500 to A, the panel should
        determine that B has “prevailed”.

      


      The
        arbitration panel shall have no power to award non-monetary or equitable
        relief
        of any sort.  It shall also have no power to award (i) damages
        inconsistent with any applicable agreement between the parties or (ii) punitive
        damages or any other damages not measured by the prevailing party’s actual
        damages; and the parties expressly waive their right to obtain such damages
        in
        arbitration or in any other forum.  In no event, even if any other
        portion of these provisions is held invalid or unenforceable, shall the
        arbitration panel have power to make an award or impose a remedy which could
        not
        be made or imposed by a court deciding the matter in the same
        jurisdiction.

      


      Discovery
        shall be permitted in connection with the arbitration only to the extent,
        if
        any, expressly authorized by the arbitration panel upon a showing of substantial
        need by the party seeking discovery.

      


      All
        aspects of the arbitration shall be treated as confidential.  The
        parties and the arbitration panel may disclose the existence, content or
        results
        of the arbitration only as provided in the rules of the American Arbitration
        Association in New York, New York.  Before making any such disclosure,
        a party shall give written notice to all other parties and shall afford such
        parties a reasonable opportunity to protect their interest.

      


    

    
      
        
        

      

      
        C-7

        
          

        

      

      
        
        

      

    

    

      E. 
        Expenses.  Each party to this Agreement shall bear and pay its
        own costs and expenses incurred in connection with the execution and delivery
        of
        this Agreement and the transactions set forth in this Agreement.

      


      F. 
        Construction.  Each of the parties hereto hereby further
        acknowledges and agrees that (i) each has been advised by counsel during
        the
        course of negotiations and (ii) each counsel has had significant input in
        the
        development of this Agreement and (iii) this Agreement shall not, therefore,
        be
        construed more strictly against any party responsible for its drafting
        regardless of any presumption or rule requiring construction against the
        party
        whose attorney drafted this Agreement.

      


      G. 
        Entire Agreement.  This Agreement and all documents and
        instruments referred to herein (a) constitute the entire agreement and
        supersedes all prior agreements and understandings, both written and oral,
        among
        the parties with respect to the subject matter
        hereof and thereof, and (b) are not intended to confer upon any person other
        than the parties hereto any rights or remedies hereunder.  Each party
        hereto agrees that, except for the representations and warranties contained
        in
        this Agreement, none makes any other representations or warranties, and each
        hereby disclaims any other representations and warranties made by itself
        or any
        of its officers, directors, employees, agents, financial and legal advisors
        or
        other representatives, with respect to the execution and delivery of this
        Agreement or the transactions contemplated hereby, notwithstanding the delivery
        or disclosure to the other or the other's representatives of any documentation
        or other information with respect to any one or more of the
        foregoing.

      


      H.
        Further Assurances.  The parties agree to execute any and all
        such other further instruments and documents, and to take any and all such
        further actions which are reasonably required to effectuate this Agreement
        and
        the intents and purposes hereof.

      


      I.  
        Binding Agreement.  This Agreement shall be binding upon and
        inure to the benefit of the parties hereto and their heirs, executors,
        administrators, personal representatives, successors and assigns.

      


      J.  
        Non-Waiver.  Except as otherwise expressly provided herein, no
        waiver of any covenant, condition, or provision of this Agreement shall be
        deemed to have been made unless expressly in writing and signed by the party
        against whom such waiver is charged; and (i) the failure of any party to
        insist
        in any one or more cases upon the performance of any of the provisions,
        covenants or conditions of this Agreement or to exercise any option herein
        contained shall not be construed as a waiver or relinquishment for the future
        of
        any such provisions, covenants or conditions, (ii) the acceptance of performance
        of anything required by this Agreement to be performed with knowledge of
        the
        breach or failure of a covenant, condition or provision hereof shall not
        be
        deemed a waiver of such breach or failure and (iii) no waiver by any party
        of
        one breach by another party shall be construed as a waiver of any other or
        subsequent breach.

      

        K. 
          Counterparts.  This Agreement may be executed simultaneously in
          one or more counterparts, each of which shall be deemed an original, but
          all of
          which together shall constitute one and the same instrument.

        


        L.  
          Facsimile Signatures.  Any signature which is delivered via
          facsimile shall be deemed to be an original and have the same force and
          effect
          as if such facsimile signature were the original thereof.

        


        M.
          Modifications.  This Agreement may not be changed, modified,
          extended, terminated or discharged orally, except by a written agreement
          specifically referring to this Agreement which is signed by all of the
          parties
          to this Agreement.

        


        N.
          Severability.  The provisions of this Agreement shall be deemed
          separable.  Therefore, if any part of this Agreement is rendered void,
          invalid or unenforceable, such rendering shall not affect the validity
          or
          enforceability of the remainder of this Agreement; provided, however, that
          if
          the part or parts which are void, invalid
          or unenforceable as aforesaid shall substantially impair the value of this
          whole
          Agreement to any party, that party may cancel and terminate this Agreement
          by
          giving written notice to the other party.

      

    

    
      
        
        

      

      
        C-8

        
          

        

      

      
        
        

      

    

    

      IN
        WITNESS WHEREOF, this Agreement is executed effective as of the day, month
        and
        year set forth above.

      


      


      _________________________________

      Larry
        D. Ditto

      


      


      Artfest
        International,
        Inc.

      


      


      By:______________________________

                 Eddie
        Vakser, CEO

           :

      


      Art
        Channel, Inc.

      


      


      By:______________________________

      Eddie
        Vakser,
        CEO


 

    
      
        
        

      

      
        C-9

        
          

        

      

      
        
        

      

    

    


    EXHIBIT
      D

    


    CHANNEL
      CERTIFICATE OF INCORPORATION

    
 

    
      
        	
                Corporations
                  Section

                
                  P.O.
                    Box
                    13697

                

                
                  Austin,
                    Texas
                    78711-3697

                

              	
                 

              	Roger
Williams
                
                  Secretary
                    of  State

                

              
	 	 	 
	 	 	 


      

      
        Office
          of the
          Secretary of State

      

      
         

        CERTIFICATE
          OF FILING


        OF

      

      
        
          	
                   

                	
                  ART
                    CHANNEL,
                    INC. 

                  File
                    Number:
                    800779313

                


        

      

      
        


         

        The
          undersigned, as Secretary of State
          of Texas, hereby certifies that a Certificate of Formation for the above named Domestic
          For-Profit
          Corporation has been received in this office and has been found to conform to the applicable
          provisions of
          law.


      

      
         

        ACCORDINGLY,
          the undersigned, as
          Secretary of State, and by virtue of the authority vested in the secretary by law,
          hereby issues this
          certificate evidencing filing effective on the date shown
          below.

      

      
         

        The
issuance
of
          this certificate does
          not authorizethe use of a name
          in this
          state in
          violation of the rights
of
          another under the federal Trademark
          Act of 1946, the Texas trademark law, the Assumed Business or Professional
          Name
          Act, or the common law.

      

       

      Dated:
        02/26/2007 

       

      Effective:
        02/26/2007

      
         

        

      

      
        
          
            	 	 
	 	
	 	
                    Roger
                      Williams


                    Secretary
                      of
                      State

                  


          

        

         

        
           

          
            
              
                	 	 	 	


              

            

             

          

        

        
          
            	
                    Phone:
                      (512) 463-5355
                      

                    Prepared
                      by: Misty
                      Shaw

                  	
                    Come
                      visit us on the internet at
                      http://www.tos.state.tx.us/

                    
                      Fax:
                        (512)
                        463-5709

                    

                    
                      TID:
                        10306

                    

                  	
                    Dial:
                      7-1-1 for Relay Services
                      

                    Document:
                      161751740002

                  
	 	 	 
	 	 	 


          

        

        
          
            
            

          

          
            D-1

            
              

            

          

          
            
            

          

        

      

       

      
        ARTICLES
          OF
          INCORPORATION

      

      
        OF

      

      
        ART
          CHANNEL,
          INC.

      

      
        


         

        I,
          the undersigned natural person of the
          age of twenty-one years or more, a citizen of the State of Texas, acting
          as
          incorporator of the corporation under the Texas Business Corporation Act,
          do hereby adopt the
          following Articles of Incorporation for such corporation.

      

      
        


         

        ARTICLE
          I

      

      
        


         

        
          	
                   

                	
                  The
                    name of the corporation is ART
                    CHANNEL, INC.

                


        

      

      
        


         

        ARTICLE
          II

      

      
        


         

        
          	
                   

                	
                  The
                    period of its duration is
                    perpetual.

                


        

      

      
        ARTICLE
          III

      

      
        


      

      
         

        The
          purpose for which
          the corporation is organized is the transaction of anylawful
          act or activity
          for which corporations may be organized under the Texas BusinessAct.

      

      
        


         

        ARTICLE
          IV


      

      
         

        The
          aggregate number of
          shares which the corporation shall have authority toissue
          is 5,000,000
          shares of common stock of the par value of $0.001 each. The sharesshall
          be designated as
          common stock and shall have identical voting rights, privileges andpowers,
          except that
          cumulative voting as permitted by the Texas Business CorporationAct
          is hereby expressly
          prohibited in all elections of every kind and character and in all voting
          issues
          where the same, under any circumstances and in absence of this
          prohibition,might
          otherwise be
          permissible.

      

      
         

      

      
        ARTICLE
          V


      

      
         

        The
          corporation shall
          not commence business until it has received for issuance of its
          shares
          consideration of the value of ONE THOUSAND DOLLARS ($1,000.00)consisting
          of money,
          labor done, or property actually received, which sum is not less
          thanONE
          THOUSAND DOLLARS ($1,000.00).

      

      
        


         

        


        
          
            
            

          

          
            D-2

            
              

            

          

          
            
            

          

        

      

      


      
        Articles
          of Incorporation of ART
          CHANNEL, INC. 

        Page
          Two

      

      
        


         

        ARTICLE
          VI

      

      
        


         

        The
          corporation shall indemnify any
          director, officer of employee or former director, officer
          or employee of the
          corporation, or any person who may have served as director, officer
          or employee or another
          corporation in which it owns shares of stock, or of which it is a
          creditor, against
          expenses actually and necessarily incurred in any action, suit or proceeding,
          whether civil or
          criminal in nature, in which he/she is made a party by reason of being or
          having been such
          director, officer or employee (whether or not a director, officer
          or employee at the
          time such costs or expenses were incurred by or imposed upon him),
          except in relation to
          matters as to which he/she shall be adjudged in such action, suit
          or proceeding to be
          liable for gross negligence or willful misconduct Such rights of indemnification
          and
          reimbursement shall not be deemed exclusive of any other rights to which
          such director,
          officer or employee may be entitled by law or under any bylaw, agreement,
          vote of
          shareholders, or otherwise.

      

      
        


         

        ARTICLE
          VII

      

      
        


         

        No
          shares of capital
          stock of the corporation may be sold or transferred except incompliance
          with the
          registration provisions of the Securities Act of 1933, as amended,
          orpursuant
          to an exemption there from, and the corporation shall not be obligated
          to
          registerany
          stock transfer or
          to recognize the transferee as a shareholder of the corporation forany
          purpose unless and
          until the transferee shall have delivered to the corporation anopinion,
          satisfactory
          to the corporation and its counsel, of legal counsel experience in
          thepractice
          of federal
          securities law to the effect that such shares have been registered in
accordance
          with the registration provisions of the Securities Act of 1933, as amended,
          orthat
          a
          specified exemption from such registration provisions is available in
          connectionwith
          the transactions
          described in such opinion.

        
 

      

      
         

        ARTICLE
          VIII


      

      
         

         No
          contract or
          transaction between the corporation and one or more of itsdirectors
          or officers,
          or between the corporation and any other corporation, partnership,association,
          or other
          organization in which one or more of the directors or officers of
          thecorporation
          are
          directors,  officers, or partners or have financial interest in such
corporation,
          partnership, association or other organization shall be void or voidable
          solelyby
          reason of such relationship, or solely because the director or officer
          is
          present at orparticipated
          in the
          meeting of the Board of Directors of the corporation or committeethere
          of which
          authorized the contract or transaction, or solely because his/her or
          theirvotes
          are counted for such purpose, if any of the following conditions is
          met:

      

      
        


         

        
          
            
            

          

          
            D-3

            
              

            

          

          
            
            

          

        

        Articles
          of Incorporation of ART
          CHANNEL, INC. 

        Page
          Three

      

      
        


         

        
          	
                  (1)

                	
                  The
                    material facts as to the
                    relationship or interest of the director or officer and as
                    the contract or transaction
                    are disclosed or known to the Board of Directors of the corporation
                    or the
                    committee thereof that authorized the contract
                    or transaction, and the
                    Board of Directors of the corporation or committee
                    thereof in good faith
                    authorizes the contract or transaction by the affirmative
                    votes of a majority of
                    the disinterested directors or members of such  committee,
                    even
                    though the  disinterested directors or committee members
                    be less than a quorum;
                    or

                


        

      

      
        
          	
                  (2)

                	
                  The
                    material facts as to the
                    relationship or interest of the director or officer and as
                    to the contract, or
                    transaction are disclosed or are known to the shareholders
                    of the corporation
                    entitled to vote thereon, and the contract or transaction
                    is specifically
                    approved in good faith by a vote of the shareholders of the
                    corporation at any annual
                    or special meeting of shareholders called for the purpose;
                    or

                


        

      

      
        
          	
                  (3)

                	
                  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 of the corporation, a committee
                    thereof, or the
                    shareholders of the
                    corporation.

                


        

      

      
        


         

        


      

      
        Common
          or interested
          directors may be counted in determining the presence of a quorumat
          a meeting of the
          Board of Directors of the corporation or of a committee thereof,
          whichauthorizes
          the contract
          or transaction.


      

      
         

        ARTICLE
          IX


      

      
         

        No
          shareholder or other person shall
          have any pre-emptive rights whatsoever.

      

      
        


         

        


      

      
        


         

        ARTICLE
          X

      

      
        


         

        The
          post office address of its initial
          registered office is:

      

      
        


        10300
          N. Central Expressway, Suite
          530

      

      
        Dallas,
          TX
          75231

      

      
        


         

        and
          the name of its initial registered
          agent at such address is:

         

      

      
        Eddie
          Vakser

      

      


      
        


        
          
            
            

          

          
            D-4

            
              

            

          

          
            
            

          

        

        Articles
          of Incorporation of ART
          CHANNEL, INC. 

        Page
          Four

      

      
        


         

        ARTICLE
          XI

      

      
        


         

        The
          number of directors of the
          corporation shall be fixed from time to time by resolution of the
          Board of Directors of
          the corporation. The number of directors constituting the
          initial board of
          directors is one (1), and the names and addresses of the persons who are to
          serve as directors
          until the first annual meeting of the shareholders or until their successors
          be
          elected and qualified is as follows:

      

      
        	
                
                

                Eddie
                  Vakser

              	
                
                

                10300
                  N. Central Expressway, Suite
                  530

              
	 	
                Dallas,
                  TX
                  75231

              


      

      
        


      

      
        


      

      
        


         

        ARTICLE
          XII

      

      
        


         

        The
          initial by-laws shall be adopted by
          the Board of Directors. The power to alter, amend or repeal the by-laws
          or adopt
          new by-laws is vested in the Board of Directors, subject
          to repeal or change
          by action of the shareholders.

      

      
        


         

        ARTICLE
          XII

      

      
        


         

        The
          name and address of the incorporator
          is:

      

      
        


         

        


      

      
        	
                
                

                Eddie
                  Vakser

              	
                
                

                10300
                  N. Central Expressway, Suite
                  530

              
	 	
                
                

                Dallas,
                  TX
                  75231

              


      

      
        


         

        IN
          WITNESS WHEREOF, I have executed
          these Articles of Incorporation on this 15thday
          of February
          2007.

      

      
         

      

      
        /s/
          Eddie Vakser

      

      
        Eddie
          Vakser,
          Incorporator

         

         

        

         

        
          
            
            

          

          
            D-5

            
              

            

          

          
            
            

          

        

      

      
         

      

    

    EXHIBIT
      E

    


    CHANNEL
      BY-LAWS

     

     

    
      BYLAWS

      OF

      ART
        CHANNEL, INC.

      a
        Texas corporation

      


      ARTICLE
        1.

      DEFINITIONS

      


      1.1
Definitions.
        Unless
        the context clearly requires otherwise, in these Bylaws:

      


      (a)
        "Board" means the board
        of directors of the Company.

      


      (b)
        "Bylaws" means these
        bylaws as adopted by the Board and includes amendments
        subsequently adopted
        by the Board or by the Stockholders.

      


      (c)
        "Articles of
        Incorporation" means the Articles of Incorporation of Art Channel, Inc.,
        as filed with the
        Secretary of State of the State of Texas and includes all amendments thereto
        and
        restatementsthereof
        subsequently filed.

      


      (d)
        "Company" means Art
        Channel, Inc., a Texas corporation.

      


      (e)
        "Section" refers to
        sections of these Bylaws.

      


      (f)
        "Stockholder" means
        stockholders of record of the Company.

      


      1.2
Offices.
        The title of
        an office refers to the person or persons who at any given time perform the
        duties of that particular office for the Company.

      


      ARTICLE
        2.

      OFFICES

      


      2.1
Principal
        Office. The
        Company may locate its principal office within or without the state of
        incorporation as the Board may determine.

      


      2.2
Registered
        Office.
        The registered office of the Company required by law to be maintained in
        the
        state of incorporation may be, but need not be, the same as the principal
        place
        of business of the Company. The Board may change the address of the registered
        office from time to time.

      


      2.3
Other
        Offices. The
        Company may have offices at such other places, either within or without the
        state ofincorporation,
        as the Board may designate or as the business of the Company may require
        from
        time to time.

      


      ARTICLE
        3.

      MEETINGS
        OF STOCKHOLDERS

      


      3.1
Annual
        Meetings. The
        Stockholders of the Company shall hold their annual meetings for the purpose
        ofelecting
        directors and for the transaction of such other proper business as may come
        before such meetings at such time, date and place as the Board shall determine
        by resolution.

      


      3.2
Special
        Meetings. The
        Board, the Chairman of the Board, the President or a committee of the Board
        duly
        designated and whose powers and authority include the power to call meetings
        may
        call special meetings of the Stockholders of the Company at any time for
        any
        purpose or purposes. Special meetings of the Stockholders of the Company
        may
        also be called by the holders of at least 30% of all shares entitled to vote
        at
        the proposed special meeting.

      


      3.3
Place
        of Meetings.
        The Stockholders shall hold all meetings at such places, within or without
        the
        State of Texas, as the Board or a committee of the Board shall specify in
        the
        notice or waiver of notice for such meetings.

      


      
        
          
          

        

        
          
            1/13
              

            Bylaws
              of


            Art
              Channel, Inc.

          

          
            

          

        

        
          
          

        

      

      3.4
Notice
        of Meetings.
        Except as otherwise required by law, the Board or a committee of the Board
        shall
        give notice of each meeting of Stockholders, whether annual or special, not
        less
        than 10 nor more than 50 days before the date of the meeting. The Board or
        a
        committee of the Board shall deliver a notice to each Stockholder entitled
        to
        vote at such meeting by delivering a typewritten or printed notice thereof
        to
        him personally, or by depositing such notice in the United States mail, in
        a
        postage prepaid envelope, directed to him at his address as it appears on
        the
        records of the Company, or by transmitting a notice thereof to him at such
        address by telegraph, telecopy, cable or wireless. If mailed, notice is given
        on
        the date deposited in the United States mail, postage prepaid, directed to
        the
        Stockholder at his address as it appears on the records of the Company. An
        affidavit of the Secretary or an Assistant Secretary or of the Transfer Agent
        of
        the Company that he has given notice shall constitute, in the absence of
        fraud,
        prima facie evidence of the facts stated therein.

      


      Every
        notice of a meeting of the Stockholders shall state the place, date and hour
        of
        the meeting and, in the case of a special meeting, also shall state the purpose
        or purposes of the meeting. Furthermore, if the Company will maintain the
        list
        at a place other than where the meeting will take place, every notice of
        a
        meeting of the Stockholders shall specify where the Company will maintain
        the
        list of Stockholders entitled to vote at the meeting.

      


      3.5
Stockholder
        Notice.
        Subject to the Articles of Incorporation, the Stockholders who intend to
        nominate persons to the Board of Directors or propose any other action at
        an
        annual meeting of Stockholders must timely notify the Secretary of the Company
        of such intent. To be timely, a Stockholder's notice must be delivered to
        or
        mailed and received at the principal executive offices of the Company not
        less
        than 50 days nor more than 90 days prior to the date of such meeting; provided,
        however, that in the event that less than 75 days' notice of the date of
        the
        meeting is given or made to Stockholders, notice by the Stockholder to be
        timely
        must be received not later than the close of business on the 15th day following
        the date on which such notice of the date of the annual meeting was mailed.
        Such
        notice must be in writing and must include a (i) a brief description of the
        business desired to the brought before the annual meeting and the reasons
        for
        conducting such business at the meeting; (ii) the name and record address
        of the
        Stockholder proposing such business; (iii) the class, series and number of
        shares of capital stock of the Company which are beneficially owned by the
        Stockholder; and (iv) any material interest of the Stockholder in such business.
        The Board of Directors reserves the right to refuse to submit any such proposal
        to stockholders at an annual meeting if, in its judgment, the information
        provided in the notice is inaccurate or incomplete.

      


      3.6
Waiver
        of Notice.
        Whenever these Bylaws require written notice, a written waiver thereof, signed
        by the person entitled to notice, whether before or after the time stated
        therein, shall constitute the equivalent of notice. Attendance of a person
        at
        any meeting shall constitute a waiver of notice of such meeting, except when
        the
        person attends the meeting for the express purpose of objecting, at the
        beginning of the meeting, to the transaction of any business because the
        meeting
        is not lawfully called or convened. No written waiver of notice need specify
        either the business to be transacted at, or the purpose or purposes of any
        regular or special meeting of the Stockholders, directors or members of a
        committee of the Board.

      


      3.7
Adjournment
        of
        Meeting. When the Stockholders adjourn a meeting to another time or
        place, notice need not be given of the adjourned meeting if the time and
        place
        thereof are announced at the meeting at which the adjournment is taken. At
        the
        adjourned meeting, the Stockholders may transact any business which they
        may
        have transacted at the original meeting. If the adjournment is for more than
        30
        days or, if after the adjournment, the Board or a committee of the Board
        fixes a
        new record date for the adjourned meeting, the Board or a committee of the
        Board
        shall give notice of the adjourned meeting to each Stockholder of record
        entitled to vote at the meeting.

      


      3.8
Quorum.
        Except as
        otherwise required by law, the holders of a majority of all of the shares
        of the
        stock

      entitled
        to vote at the meeting, present in person or by proxy, shall constitute a
        quorum
        for all purposes at any meeting of the Stockholders. In the absence of a
        quorum
        at any meeting or any adjournment thereof, the holders of a majority of the
        shares of stock entitled to vote who are present, in person or by proxy,
        or, in
        the absence therefrom of all the Stockholders, any officer entitled to preside
        at, or to act as secretary of, such meeting may adjourn such meeting to another
        place, date or time.

      


      If
        the
        chairman of the meeting gives notice of any adjourned special meeting of
        Stockholders to allStockholders
        entitled to vote thereat, stating that the minimum percentage of stockholders
        for a quorum as provided by Texas law shall constitute a quorum, then, except
        as
        otherwise required by law, that percentage at such adjourned meeting shall
        constitute a quorum and a majority of the votes cast at such meeting shall
        determine all matters.

      


      
        
          
          

        

        
          
            2/13
              

            Bylaws
              of


            Art
              Channel, Inc.

          

          
            

          

        

        
          
          

        

      

      3.9
Organization.
        Such
        person as the Board may have designated or, in the absence of such a person,
        the
        highest ranking officer of the Company who is present shall call to order
        any
        meeting of the Stockholders, determine the presence of a quorum, and act
        as
        chairman of the meeting. In the absence of the Secretary or an Assistant
        Secretary of the Company, the chairman shall appoint someone to act as the
        secretary of the meeting.

      


      3.10
        Conduct of
        Business. The chairman of any meeting of Stockholders shall determine the
        order of business and the procedure at the meeting, including such regulations
        of the manner of voting and the conduct of discussion as he deems in
        order.

      


      3.11
        List of
        Stockholders. At least 10 days before every meeting of Stockholders, the
        Secretary shall prepare a list of the Stockholders entitled to vote at the
        meeting or any adjournment thereof, arranged in alphabetical order, showing
        the
        address of each Stockholder and the number of shares registered in the name
        of
        each Stockholder. The Company shall make the list available for examination
        by
        any Stockholder for any purpose germane to the meeting, during ordinary business
        hours, for a period of at least 10 days prior to the meeting, either at a
        place
        within the city where the meeting will take place or at the place designated
        in
        the notice of the meeting.

      


      The
        Secretary shall produce and keep the list at the time and place of the meeting
        during the entire duration of the meeting, and any Stockholder who is present
        may inspect the list at the meeting. The list shall constitute presumptive
        proof
        of the identity of the Stockholders entitled to vote at the meeting and the
        number of shares each Stockholder holds.

      


      A
        determination of Stockholders entitled to vote at any meeting of Stockholders
        pursuant to this Sectionshall
        apply to any adjournment thereof.

      


      3.12
        Fixing of Record
        Date. For the purpose of determining Stockholders entitled to notice of
        or to vote at any meeting of Stockholders or any adjournment thereof, or
        Stockholders entitled to receive payment of any dividend, or in order to
        make a
        determination of Stockholders for any other proper purpose, the Board or
        a
        committee of the Board may fix in advance a date as the record date for any
        such
        determination of Stockholders. However, the Board shall not fix such date, in
        any case, more than 60 days nor less than 10 days prior to the date of the
        particular action.

      


      If
        the
        Board or a committee of the Board does not fix a record date for the
        determination of Stockholders entitled to notice of or to vote at a meeting
        of
        Stockholders, the record date shall be at the close of business on the day
        next
        preceding the day on which notice is given or if notice is waived, at the
        close
        of business on the day next preceding the day on which the meeting is held
        or
        the date on which the Board adopts the resolution declaring a
        dividend.

      


      3.13
        Voting of Shares. Each
        Stockholder shall have one vote for every share of stock having voting
        rightsregistered
        in his name on the record date for the meeting. The Company shall not have
        the
        right to vote treasury stock of the Company, nor shall another corporation
        have
        the right to vote its stock of the Company if the Company holds, directly
        or
        indirectly, a majority of the shares entitled to vote in the election of
        directors of such other corporation. Persons holding stock of the Company
        in a
        fiduciary capacity shall have the right to vote such stock. Persons who have
        pledged their stock of the Company shall have the right to vote such stock
        unless in the transfer on the books of the Company the pledgor expressly
        empowered the pledgee to vote such stock. In that event, only the pledgee,
        or
        his proxy, may represent such stock and vote thereon.

      


      A
        plurality of the votes of the shares present in person or represented by
        proxy
        at the meeting and entitledto
        vote
        shall determine all elections and, except when the law or Articles of
        Incorporation require otherwise, the affirmative vote of a majority of the
        shares present in person or represented by proxy at the meeting and entitled
        to
        vote shall determine all other matters.

      


      Where
        a
        separate vote by a class or classes is required, a majority of the outstanding
        shares of such class orclasses,
        present in person or represented by proxy, shall constitute a quorum entitled
        to
        take action with respect to that vote on that matter and the affirmative
        vote of
        the majority of shares of such class or classes present in person or represented
        by proxy at the meeting shall be the act of such class.

      


      
        
          
          

        

        
          
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      The
        Stockholders may vote by voice vote on all matters. Upon demand by a Stockholder
        entitled to vote,or
        his
        proxy, the Stockholders shall vote by ballot. In that event, each ballot
        shall
        state the name of the Stockholder or proxy voting, the number of shares voted
        and such other information as the Company may require under the procedure
        established for the meeting.

      


      3.14
        Inspectors. At
        any meeting in which the Stockholders vote by ballot, the chairman may appoint
        one ormore
        inspectors. Each inspector shall take and sign an oath to execute the duties
        of
        inspector at such meeting faithfully, with strict impartiality, and according
        to
        the best of his ability. The inspectors shall ascertain the number of shares
        outstanding and the voting power of each; determine the shares represented
        at a
        meeting and the validity of proxies and ballots; count all votes and ballots;
        determine and retain for a reasonable period a record of the disposition
        of any
        challenges made to any determination by the inspectors; and certify their
        determination of the number of shares represented at the meeting, and their
        count of all votes and ballots. The certification required herein shall take
        the
        form of a subscribed, written report prepared by the inspectors and delivered
        to
        the Secretary of the Company. An inspector need not be a Stockholder of the
        Company, and any officer of the Company may be an inspector on any question
        other than a vote for or against a proposal in which he has a material
        interest.

      


      3.15
        Proxies. A
        Stockholder may exercise any voting rights in person or by his proxy appointed
        by aninstrument
        in writing, which he or his authorized attorney-in-fact has subscribed and
        which
        the proxy has delivered to the Secretary of the meeting pursuant to the manner
        prescribed by law.

      


      A
        proxy
        is not valid after the expiration of 13 months after the date of its execution,
        unless the person executing it specifies thereon the length of time for which
        it
        is to continue in force (which length may exceed 12 months) or limits its
        use to
        a particular meeting. Each proxy is irrevocable if it expressly states that
        it
        is irrevocable and if, and only as long as, it is coupled with an interest
        sufficient in law to support an irrevocable power.

      


      The
        attendance at any meeting of a Stockholder who previously has given a proxy
        shall not have the effect of revoking the same unless he notifies the Secretary
        in writing prior to the voting of the proxy.

      


      3.16
        Action by
        Consent. Any action required to be taken at any annual or special meeting
        of stockholders of the Company or any action which may be taken at any annual
        or
        special meeting of such stockholders, may be taken without a meeting, without
        prior notice and without a vote, if a consent or consents 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 and shall be delivered to the Company by delivery
        to its registered office, its principal place of business, or an officer
        or
        agent of the Company having custody of the book in which proceedings of meetings
        of stockholders are recorded. Delivery made to the Company's registered office
        shall be by hand or by certified or registered mail, return receipt
        requested.

      


      Every
        written consent shall bear the date of signature of each stockholder who
        signs
        the consent, and nowritten
        consent shall be effective to take the corporate action referred to therein
        unless, within 50 days of the earliest dated consent delivered in the manner
        required by this section to the Company, written consents signed by a sufficient
        number of holders to take action are delivered to the Company by delivery
        to its
        registered office, its principal place of business or an officer or agent
        of the
        Company having custody of the book in which proceedings of meetings of
        stockholders are recorded. Delivery made to the Company's registered office
        shall be by hand or by certified or registered mail, return receipt
        requested.

      


      Prompt
        notice of the taking of the corporate action without a meeting by less than
        unanimous writtenconsent
        shall be given to those stockholders who have not consented in
        writing.

      


      
        
          
          

        

        
          
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      ARTICLE
        4.

      BOARD
        OF DIRECTORS

      


      4.1
General
        Powers. The
        Board shall manage the property, business and affairs of the
        Company.

      


      4.2
Number.
        The number of
        directors who shall constitute the Board shall equal not less than 1 nor
        more
        than 10, as the Board or majority stockholders may determine by resolution
        from
        time to time.

      


      4.3
Election
        of Directors and
        Term of Office. The Stockholders of the Company shall elect the directors
        at the annual or adjourned annual meeting (except as otherwise provided herein
        for the filling of vacancies). Each director shall hold office until his
        death,
        resignation, retirement, removal, or disqualification, or until his successor
        shall have been elected and qualified.

      


      4.4
Resignations.
        Any
        director of the Company may resign at any time by giving written notice to
        the
        Board or to the Secretary of the Company. Any resignation shall take effect
        upon
        receipt or at the time specified in the notice. Unless the notice specifies
        otherwise, the effectiveness of the resignation shall not depend upon its
        acceptance.

      


      4.5
Removal.
        Stockholders
        holding 2/3 of the outstanding shares entitled to vote at an election of
        directors may remove any director or the entire Board of Directors at any
        time,
        with or without cause.

      


      4.6
Vacancies.
        Any
        vacancy on the Board, whether because of death, resignation, disqualification,
        an increase in the number of directors, or any other cause may be filled
        by a
        majority of the remaining directors, a sole remaining director, or the majority
        stockholders. Any director elected to fill a vacancy shall hold office until
        his
        death, resignation, retirement, removal, or disqualification, or until his
        successor shall have been elected and qualified.

      


      4.7
Chairman
        of the
        Board. At the initial and annual meeting of the Board, the directors may
        elect from their number a Chairman of the Board of Directors. The Chairman
        shall
        preside at all meetings of the Board and shall perform such other duties
        as the
        Board may direct. The Board also may elect a Vice Chairman and other officers
        of
        the Board, with such powers and duties as the Board may designate from time
        to
        time.

      


      4.8
Compensation.
        The
        Board may compensate directors for their services and may provide for the
        payment of all expenses the directors incur by attending meetings of the
        Board
        or otherwise.

      


      ARTICLE
        5.

      MEETINGS
        OF DIRECTORS

      


      5.1
Regular
        Meetings. The
        Board may hold regular meetings at such places, dates and times as the Board
        shall establish by resolution. If any day fixed for a meeting falls on a
        legal
        holiday, the Board shall hold the meeting at the same place and time on the
        next
        succeeding business day. The Board need not give notice of regular
        meetings.

      


      5.2
Place
        of Meetings.
        The Board may hold any of its meetings in or out of the State of Texas, at
        such
        places as the Board may designate, at such places as the notice or waiver
        of
        notice of any such meeting may designate, or at such places as the persons
        calling the meeting may designate.

      


      5.3
Meetings
        by
        Telecommunications. The Board or any committee of the Board may hold
        meetings by means of conference telephone or similar telecommunications
        equipment that enable all persons participating in the meeting to hear each
        other. Such participation shall constitute presence in person at such
        meeting.

      


      5.4
Special
        Meetings. The
        Chairman of the Board, the President, or one-half of the directors then in
        office may call a special meeting of the Board. The person or persons authorized
        to call special meetings of the Board may fix any place, either in or out
        of the
        State of Texas as the place for the meeting.

      


      5.5
Notice
        of Special
        Meetings. The person or persons calling a special meeting of the Board
        shall give written notice to each director of the time, place, date and purpose
        of the meeting of not less than three business days if by mail and not less
        than
        24 hours if by telegraph or in person before the date of the meeting. If
        mailed,
        notice is given on the date deposited in the United States mail, postage
        prepaid, to such director. A director may waive notice of any special meeting,
        and any meeting shall constitute a legal meeting without notice if all the
        directors are present or if those not present sign either before or after
        the
        meeting a written waiver of notice, a consent to such meeting, or an approval
        of
        the minutes of the meeting. A notice or waiver of notice need not specify
        the
        purposes of the meeting or the business which the Board will transact at
        the
        meeting.

      


      
        
          
          

        

        
          
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      5.6
Waiver
        by Presence.
        Except when expressly for the purpose of objecting to the legality of a meeting,
        adirector's
        presence at a meeting shall constitute a waiver of notice of such
        meeting.

      


      5.7
Quorum.
        A majority of
        the directors then in office shall constitute a quorum for all purposes at
        any
meeting
        of the Board. In the absence of a quorum, a majority of directors present
        at any
        meeting may adjourn the meeting to another place, date or time without further
        notice. No proxies shall be given by directors to any person for purposes
        of
        voting or establishing a quorum at a directors’ meetings.

      


      5.8
Conduct
        of Business.
        The Board shall transact business in such order and manner as the Board
        may

      determine.
        Except as the law requires otherwise, the Board shall determine all matters
        by
        the vote of a majority of the directors present at a meeting at which a quorum
        is present. The directors shall act as a Board, and the individual directors
        shall have no power as such.

      


      5.9
        Action by Consent.
        The Board committee may take any required or permitted action without a meeting
        if all members of the Board or committee consent thereto in writing and file
        such consent with the minutes of the proceedings of the Board or
        committee.

      


      ARTICLE
        6.

      COMMITTEES

      


      6.1
Committees
        of the
        Board. The Board may designate, by a vote of a majority of the directors
        then in office, committees of the Board. The committees shall serve at the
        pleasure of the Board and shall possess such lawfully delegable powers and
        duties as the Board may confer.

      


      6.2
Selection
        of Committee
        Members. The Board shall elect by a vote of a majority of the directors
        then inoffice
        a
        director or directors to serve as the member or members of a committee. By
        the
        same vote, the Board may designate other directors as alternate members who
        may
        replace any absent or disqualified member at any meeting of a committee.
        In the
        absence or disqualification of any member of any committee and any alternate
        member in his place, the member or members of the committee present at the
        meeting and not disqualified from voting, whether or not he or they constitute
        a
        quorum, may appoint by unanimous vote another member of the Board to act
        at the
        meeting in the place of the absent or disqualified member.

      


      6.3
Conduct
        of Business.
        Each committee may determine the procedural rules for meeting and conducting
        its
        business and shall act in accordance therewith, except as the law or these
        Bylaws require otherwise. Each committee shall make adequate provision for
        notice of all meetings to members. A majority of the members of the committee
        shall constitute a quorum, unless the committee consists of one or two members.
        In that event, one member shall constitute a quorum. A majority vote of the
        members present shall determine all matters. A committee may take action
        without
        a meeting if all the members of the committee consent in writing and file
        the
        consent or consents with the minutes of the proceedings of the
        committee.

      


      6.4
Authority.
        Any
        committee, to the extent the Board provides, shall have and may exercise
        all the
        powersand
        authority of the Board in the management of the business and affairs of the
        Company, and may authorize the affixation of the Company's seal to all
        instruments which may require or permit it. However, no committee shall have
        any
        power or authority with regard to amending the Articles of Incorporation,
        adopting an agreement of merger or consolidation, recommending to the
        Stockholders the sale, lease or exchange of all or substantially all of the
        Company's property and assets, recommending to the Stockholders a dissolution
        of
        the Company or a revocation of a dissolution of the Company, or amending
        these
        Bylaws of the Company. Unless a resolution of the Board expressly provides,
        no
        committee shall have the power or authority to declare a dividend, to authorize
        the issuance of stock, or to adopt a certificate of ownership and
        merger.

      


      
        
          
          

        

        
          
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      6.5
Minutes.
        Each
        committee shall keep regular minutes of its proceedings and report the same
        to
        the Boardwhen
        required.

      


      ARTICLE
        7.

      OFFICERS

      


      7.1
Officers
        of the
        Company. The officers of the Company shall consist of a President, a
        Secretary, a Treasurer and such Vice Presidents, Assistant Secretaries,
        Assistant Treasurers, and other officers as the Board may designate and elect
        from time to time. The same person may hold at the same time any two or more
        offices.

      


      7.2
Election
        and Term.
        The Board shall elect the officers of the Company. Each officer shall hold
        office until his death, resignation, retirement, removal or disqualification,
        or
        until his successor shall have been elected and qualified.

      


      7.3
Compensation
        of
        Officers. The Board shall fix the compensation of all officers of the
        Company. Noofficer
        shall serve the Company in any other capacity and receive compensation, unless
        the Board authorizes the additional compensation.

      


      7.4
Removal
        of Officers and
        Agents. The Board may remove any officer or agent it has elected or
        appointed at any time, with or without cause.

      


      7.5
Resignation
        of Officers and
        Agents. Any officer or agent the Board has elected or appointed may
        resign at any time by giving written notice to the Board, the Chairman of
        the
        Board, the President, or the Secretary of the Company. Any such resignation
        shall take effect at the date of the receipt of such notice or at any later
        time
        specified. Unless otherwise specified in the notice, the Board need not accept
        the resignation to make it effective.

      


      7.6
Bond.
        The Board may
        require by resolution any officer, agent, or employee of the Company to give
        bond to the Company, with sufficient sureties conditioned on the faithful
        performance of the duties of his respective office or agency. The Board also
        may
        require by resolution any officer, agent or employee to comply with such
        other
        conditions as the Board may require from time to time.

      


      7.7
President.
        The
        President shall supervise and direct all of the business and affairs of the
        Company. Whenpresent,
        he shall sign (with or without the Secretary, an Assistant Secretary, or
        any
        other officer or agent of the Company which the Board has authorized) deeds,
        mortgages, bonds, contracts or other instruments which the Board has authorized
        an officer or agent of the Company to execute. However, the President shall
        not
        sign any instrument which the law, these Bylaws, or the Board expressly require
        some other officer or agent of the Company to sign and execute. In general,
        the
        President shall perform all duties incident to the office of President and
        such
        other duties as the Board may prescribe from time to time.

      


      7.8
Vice
        Presidents. In
        the absence of the President or in the event of his death, inability or refusal
        to act, the Vice Presidents in the order of their length of service as Vice
        Presidents, unless the Board determines otherwise, shall perform the duties
        of
        the President. When acting as the President, a Vice President shall have
        all the
        powers and restrictions of the Presidency. A Vice President shall perform
        such
        other duties as the President or the Board may assign to him from time to
        time.

      


      7.9
Secretary.
        The
        Secretary shall (a) keep the minutes of the meetings of the Stockholders
        and of
        the Board in one or more books for that purpose, (b) give all notices which
        these Bylaws or the law requires, (c) serve as custodian of the records and
        seal
        of the Company, (d) affix the seal of the corporation to all documents which
        the
        Board has authorized execution on behalf of the Company under seal, (e) maintain
        a register of the address of each Stockholder of the Company, (f) sign, with
        the
        President, a Vice President, or any other officer or agent of the Company
        which
        the Board has authorized, certificates for shares of the Company, (g) have
        charge of the stock transfer books of the Company, and (h) perform all duties
        which the President or the Board may assign to him from time to
        time.

      


      7.10
        Assistant
        Secretaries. In the absence of the Secretary or in the event of his
        death, inability or refusal to act, the Assistant Secretaries in the order
        of
        their length of service as Assistant Secretary, unless the Board determines
        otherwise, shall perform the duties of the Secretary. When acting as the
        Secretary, an Assistant Secretary shall have the powers and restrictions
        of the
        Secretary. An Assistant Secretary shall perform such other duties as the
        President, Secretary or Board may assign from time to time.

      


      
        
          
          

        

        
          
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      7.11
        Treasurer. The
        Treasurer shall (a) have responsibility for all funds and securities of the
        Company, (b)receive
        and give receipts for moneys due and payable to the corporation from any
        source
        whatsoever, (c) deposit all moneys in the name of the Company in depositories
        which the Board selects, and (d) perform all of the duties which the President
        or the Board may assign to him from time to time.

      


      7.12
        Assistant
        Treasurers. In the absence of the Treasurer or in the event of his death,
        inability or refusal to act, the Assistant Treasurers in the order of their
        length of service as Assistant Treasurer, unless the Board determines otherwise,
        shall perform the duties of the Treasurer. When acting as the Treasurer,
        an
        Assistant Treasurer shall have the powers and restrictions of the Treasurer.
        An
        Assistant Treasurer shall perform such other duties as the Treasurer, the
        President, or the Board may assign to him from time to time.

      


      7.13
        Delegation of
        Authority. Notwithstanding any provision of these Bylaws to the contrary,
        the Board may delegate the powers or duties of any officer to any other officer
        or agent.

      


      7.14
        Action with Respect to
        Securities of Other Corporations. Unless the Board directs otherwise, the
        President shall have the power to vote and otherwise act on behalf of the
        Company, in person or by proxy, at any meeting of stockholders of or with
        respect to any action of stockholders of any other corporation in which the
        Company holds securities. Furthermore, unless the Board directs otherwise,
        the
        President shall exercise any and all rights and powers which the Company
        possesses by reason of its ownership of securities in another
        corporation.

      


      7.15
        Vacancies. The
        Board may fill any vacancy in any office because of death, resignation,
        removal,disqualification
        or any other cause in the manner which these Bylaws prescribe for the regular
        appointment to such office.

      


      ARTICLE
        8.

      CONTRACTS,
        LOANS, DRAFTS, DEPOSITS AND ACCOUNTS

      


      8.1
Contracts.
        The Board
        may authorize any officer or officers, agent or agents, to enter into any
        contract orexecute
        and deliver any instrument in the name and on behalf of the Company. The
        Board
        may make suchauthorization
        general or special.

      


      8.2
Loans.
        Unless the
        Board has authorized such action, no officer or agent of the Company shall
        contract for a loan on behalf of the Company or issue any evidence of
        indebtedness in the Company's name.

       

      8.3
Drafts.
        The
        President, any Vice President, the Treasurer, any Assistant Treasurer, and
        such
        other persons as the Board shall determine shall issue all checks, drafts
        and
        other orders for the payment of money, notes and other evidences of indebtedness
        issued in the name of or payable by the Company.

      


      8.4
Deposits.
        The
        Treasurer shall deposit all funds of the Company not otherwise employed in
        such
        banks,trust
        companies, or other depositories as the Board may select or as any officer,
        assistant, agent or attorney of the Company to whom the Board has delegated
        such
        power may select. For the purpose of deposit and collection for the account
        of
        the Company, the President or the Treasurer (or any other officer, assistant,
        agent or attorney of the Company whom the Board has authorized) may endorse,
        assign and deliver checks, drafts and other orders for the payment of money
        payable to the order of the Company.

      


      8.5
General
        and Special Bank
        Accounts. The Board may authorize the opening and keeping of general
        andspecial
        bank accounts with such banks, trust companies, or other depositories as
        the
        Board may select or as any officer, assistant, agent or attorney of the Company
        to whom the Board has delegated such power may select. The Board may make
        such
        special rules and regulations with respect to such bank accounts, not
        inconsistent with the provisions of these Bylaws, as it may deem
        expedient.

      


      
        
          
          

        

        
          
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      ARTICLE
        9.

      CERTIFICATES
        FOR SHARES AND THEIR TRANSFER

      


      9.1
Certificates
        for
        Shares. Every owner of stock of the Company shall have the right to
        receive a certificate or certificates, certifying to the number and class
        of
        shares of the stock of the Company which he owns. The Board shall determine
        the
        form of the certificates for the shares of stock of the Company. The Secretary,
        transfer agent, or registrar of the Company shall number the certificates
        representing shares of the stock of the Company in the order in which the
        Company issues them. The President or any Vice President and the Secretary
        or
        any Assistant Secretary shall sign the certificates in the name of the Company.
        Any or all certificates may contain facsimile signatures. In case any officer,
        transfer agent, or registrar who has signed a certificate, or whose facsimile
        signature appears on a certificate, ceases to serve as such officer, transfer
        agent, or registrar before the Company issues the certificate, the Company
        may
        issue the certificate with the same effect as though the person who signed
        such
        certificate, or whose facsimile signature appears on the certificate, was
        such
        officer, transfer agent, or registrar at the date of issue. The Secretary,
        transfer agent, or registrar of the Company shall keep a record in the stock
        transfer books of the Company of the names of the persons, firms or corporations
        owning the stock represented by the certificates, the number and class of
        shares
        represented by the certificates and the dates thereof and, in the case of
        cancellation, the dates of cancellation. The Secretary, transfer agent, or
        registrar of the Company shall cancel every certificate surrendered to the
        Company for exchange or transfer. Except in the case of a lost, destroyed,
        stolen or mutilated certificate, the Secretary, transfer agent, or registrar
        of
        the Company shall not issue a new certificate in exchange for an existing
        certificate until he has canceled the existing certificate.

      


      9.2
Transfer
        of Shares. A
        holder of record of shares of the Company's stock, or his attorney-in-fact
        authorized by power of attorney duly executed and filed with the Secretary,
        transfer agent or registrar of the Company, may transfer his shares only
        on the
        stock transfer books of the Company. Such person shall furnish to the Secretary,
        transfer agent, or registrar of the Company proper evidence of his authority
        to
        make the transfer and shall properly endorse and surrender for cancellation
        his
        existing certificate or certificates for such shares. Whenever a holder of
        record of shares of the Company's stock makes a transfer of shares for
        collateral security, the Secretary, transfer agent, or registrar of the Company
        shall state such fact in the entry of transfer if the transferor and the
        transferee request.

      


      9.3
Lost
        Certificates.
        The Board may direct the Secretary, transfer agent, or registrar of the Company
        to issue a new certificate to any holder of record of shares of the Company's
        stock claiming that he has lost such certificate, or that someone has stolen,
        destroyed or mutilated such certificate, upon the receipt of an affidavit
        from
        such holder to such fact. When authorizing the issue of a new certificate,
        the
        Board, in its discretion may require as a condition precedent to the issuance
        that the owner of such certificate give the Company a bond of indemnity in
        such
        form and amount as the Board may direct.

      


      9.4
Regulations.
        The
        Board may make such rules and regulations, not inconsistent with these Bylaws,
        as itdeems
        expedient concerning the issue, transfer and registration of certificates
        for
        shares of the stock of thecorporation.
        The Board may appoint or authorize any officer or officers to appoint one
        or
        more transfer agents, or one or more registrars, and may require all
        certificates for stock to bear the signature or signatures of any of
        them.

      


      9.5
Holder
        of Record. The
        Company may treat as absolute owners of shares the person in whose name
        theshares
        stand of record as if that person had full competency, capacity and authority
        to
        exercise all rights ofownership,
        despite any knowledge or notice to the contrary or any description indicating
        a
        representative, pledge or other fiduciary relation, or any reference to any
        other instrument or to the rights of any other person appearing upon its
        record
        or upon the share certificate. However, the Company may treat any person
        furnishing proof of his appointment as a fiduciary as if he were the holder
        of
        record of the shares.

      


      9.6
Treasury
        Shares.
        Treasury shares of the Company shall consist of shares which the Company
        has
        issuedand
        thereafter acquired but not canceled. Treasury shares shall not carry voting
        or
        dividend rights.

      


      
        
          
          

        

        
          
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      ARTICLE
        10.

      INDEMNIFICATION

      


      10.1
        Definitions. In
        this Article:

      


      (a)
        "Indemnitee" means (i)
        any present or former Director, advisory director or officer of theCompany,
        (ii) any person who while serving in any of the capacities referred to in
        clause
        (i) hereof servedat
        the
        Company's request as a director, officer, partner, venturer, proprietor,
        trustee, employee, agent orsimilar
        functionary of another foreign or domestic corporation, partnership, joint
        venture, trust, employeebenefit
        plan or other enterprise, and (iii) any person nominated or designated by
        (or
        pursuant to authoritygranted
        by) the Board of Directors or any committee thereof to serve in any of the
        capacities referred to inclauses
        (i) or (ii) hereof.

      


      (b)
        "Official Capacity"
        means (i) when used with respect to a Director, the office of Director of
        theCompany,
        and (ii) when used with respect to a person other than a Director, the elective
        or appointiveoffice
        of
        the Company held by such person or the employment or agency relationship
        undertaken by suchperson
        on
        behalf of the Company, but in each case does not include service for any
        other
        foreign ordomestic
        corporation or any partnership, joint venture, sole proprietorship, trust,
        employee benefit plan orother
        enterprise.

      


      (c)
        "Proceeding" means any
        threatened, pending or completed action, suit or proceeding, whethercivil,
        criminal, administrative, arbitrative or investigative, any appeal in such
        an
        action, suit or proceeding,and
        any
        inquiry or investigation that could lead to such an action, suit or
        proceeding.

      


      10.2
        Indemnification. The
        Company shall indemnify every Indemnitee against all judgments,
        penalties(including
        excise and similar taxes), fines, amounts paid in settlement and reasonable
        expenses actually incurred by the Indemnitee in connection with any Proceeding
        in which he was, is or is threatened to be named defendant or respondent,
        or in
        which he was or is a witness without being named a defendant or respondent,
        by
        reason, in whole or in part, of his serving or having served, or having been
        nominated or designated to serve, in any of the capacities referred to in
        Section 10.1, if it is determined in accordance with Section 10.4 that the
        Indemnitee (a) conducted himself in good faith, (b) reasonably believed,
        in the
        case of conduct in his Official Capacity, that his conduct was in the Company's
        best interests and, in all other cases, that his conduct was at least not
        opposed to the Company's best interests, and (c) in the case of any criminal
        proceeding, had no reasonable cause to believe that his conduct was unlawful;
        provided, however, that in the event that an Indemnitee is found liable to
        the
        Company or is found liable on the basis that personal benefit was improperly
        received by the Indemnitee the indemnification (i) is limited toreasonable
        expenses actually incurred by the Indemnitee in connection with the Proceeding
        and (ii) shall not be made in respect of any Proceeding in which the Indemnitee
        shall have been found liable for willful or intentional misconduct in the
        performance of his duty to the Company. Except as provided in the immediately
        preceding proviso to the first sentence of this Section 10.2, no indemnification
        shall be made under this Section 10.2 in respect of any Proceeding in which
        such
        Indemnitee shall have been (a) found liable on the basis that personal benefit
        was improperly received by him, whether or not the benefit resulted from
        an
        action taken in the Indemnitee's Official Capacity, or (b) found liable to
        the
        Company. The termination of any Proceeding by judgment, order, settlement
        or
        conviction, or on a plea of nolo contendere or its equivalent, is not of
        itself
        determinative that the Indemnitee did not meet the requirements set forth
        in
        clauses (a), (b) or (c) in the first sentence of this Section 10.2. An
        Indemnitee shall be deemed to have been found liable in respect of any claim,
        issue or matter only after the Indemnitee shall have been so adjudged by
        a court
        of competent jurisdiction after exhaustion of all appeals therefrom. Reasonable
        expenses shall, include, without limitation, all court costs and all fees
        and
        disbursements of attorneys for the Indemnitee. The indemnification provided
        herein shall be applicable whether or not negligence or gross negligence
        of the
        Indemnitee is alleged or proven.

      


      10.3
        Successful
        Defense. Without limitation of Section 10.2 and in addition to the
        indemnification provided for in Section 10.2, the Company shall indemnify
        every
        Indemnitee against reasonable expenses incurred by such person in connection
        with any Proceeding in which he is a witness or a named defendant or respondent
        because he served in any of the capacities referred to in Section 10.1, if
        such
        person has been wholly successful, on the merits or otherwise, in defense
        of the
        Proceeding.

      


      
        
          
          

        

        
          
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      10.4
        Determinations.
        Any indemnification under Section 10.2 (unless ordered by a court of
        competentjurisdiction)
        shall be made by the Company only upon a determination that indemnification
        of
        the Indemnitee is proper in the circumstances because he has met the applicable
        standard of conduct. Such determination shall be made (a) by the Board of
        Directors by a majority vote of a quorum consisting of Directors who, at
        the
        time of such vote, are not named defendants or respondents in the Proceeding;
        (b) if such a quorum cannot be obtained, then by a majority vote of a committee
        of the Board of Directors, duly designated to act in the matter by a majority
        vote of all Directors (in which designated Directors who are named defendants
        or
        respondents in the Proceeding may participate), such committee to consist
        solely
        of two (2) or more Directors who, at the time of the committee vote, are
        not
        named defendants or respondents in the Proceeding; (c) by special legal counsel
        selected by the Board of Directors or a committee thereof by vote as set
        forth
        in clauses (a) or (b) of this Section 10.4 or, if the requisite quorum of
        all of
        the Directors cannot be obtained therefor and such committee cannot be
        established, by a majority vote of all of the Directors (in which Directors
        who
        are named defendants or respondents in the Proceeding may participate); or
        (d)
        by the shareholders in a vote that excludes the shares held by Directors
        that
        are named defendants or respondents in the Proceeding. Determination as to
        reasonableness of expenses shall be made in the same manner as the determination
        that indemnification is permissible, except that if the determination that
        indemnification is permissible is made by special legal counsel, determination
        as to reasonableness of expenses must be made in the manner specified in
        clause
        (c) of the preceding sentence for the selection of special legal counsel.
        In the
        event a determination is made under this Section 10.4 that the Indemnitee
        has
        met the applicable standard of conduct as to some matters but not as to others,
        amounts to be indemnified may be reasonably prorated.

      


      10.5
        Advancement of
        Expenses. Reasonable expenses (including court costs and attorneys' fees)
        incurred by an Indemnitee who was or is a witness or was, is or is threatened
        to
        be made a named defendant or respondent in a Proceeding shall be paid by
        the
        Company at reasonable intervals in advance of the final disposition of such
        Proceeding, and without making any of the determinations specified in Section
        10.4, after receipt by the Company of (a) a written affirmation by such
        Indemnitee of his good faith belief that he has met the standard of conduct
        necessary for indemnification by the Company under this Article and (b) a
        written undertaking by or on behalf of such Indemnitee to repay the amount
        paid
        or reimbursed by the Company if it shall ultimately be determined that he
        is not
        entitled to be indemnified by the Company as authorized in this Article.
        Such
        written undertaking shall be an unlimited obligation of the Indemnitee but
        need
        not be secured and it may be accepted without reference to financial ability
        to
        make repayment. Notwithstanding any other provision of this Article, the
        Company
        may pay or reimburse expenses incurred by an Indemnitee in connection with
        his
        appearance as a witness or other participation in a Proceeding at a time
        when he
        is not named a defendant or respondent in the Proceeding.

      


      10.6
        Employee Benefit
        Plans. For purposes of this Article, the Company shall be deemed to have
        requested an Indemnitee to serve an employee benefit plan whenever the
        performance by him of his duties to the Company also imposes duties on or
        otherwise involves services by him to the plan or participants or beneficiaries
        of the plan. Excise taxes assessed on an Indemnitee with respect to an employee
        benefit plan pursuant to applicable law shall be deemed fines. Action taken
        or
        omitted by an Indemnitee with respect to an employee benefit plan in the
        performance of his duties for a purpose reasonably believed by him to be
        in the
        interest of the participants and beneficiaries of the plan shall be deemed
        to be
        for a purpose which is not opposed to the best interests of the
        Company.

      


      10.7
        Other Indemnification
        and Insurance. The indemnification provided by this Article shall (a) not
        be deemed exclusive of, or to preclude, any other rights to which those seeking
        indemnification may at any time be entitled under the Company's Articles
        of
        Incorporation, any law, agreement or vote of shareholders or disinterested
        Directors, or otherwise, or under any policy or policies of insurance purchased
        and maintained by the Company on behalf of any Indemnitee, both as to action
        in
        his Official Capacity and as to action in any other capacity, (b) continue
        as to
        a person who has ceased to be in the capacity by reason of which he was an
        Indemnitee with respect to matters arising during the period he was in such
        capacity, (c) inure to the benefit of the heirs, executors and administrators
        of
        such a person and (d) not be required if and to the extent that the person
        otherwise entitled to payment of such amounts hereunder has actually received
        payment therefor under any insurance policy, contract or otherwise.

      


      10.8
        Notice. Any
        indemnification of or advance of expenses to an Indemnitee in accordance
        with
        this Article shall be reported in writing to the shareholders of the Company
        with or before the notice or waiver of notice of the next shareholders' meeting
        or with or before the next submission to shareholders of a consent to action
        without a meeting and, in any case, within the 12-month period immediately
        following the date of the indemnification or advance.

      


      
        
          
          

        

        
          
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      10.9
        Construction.
        The indemnification provided by this Article shall be subject to all valid
        and
        applicable laws, including, without limitation, the Texas Business Organization
        Code, and, in the event this Article or any of the provisions hereof or the
        indemnification contemplated hereby are found to be inconsistent with or
        contrary to any such valid laws, the latter shall be deemed to control and
        this
        Article shall be regarded as modified accordingly, and, as so modified, to
        continue in full force and effect.

      


      10.10
        Continuing Offer,
        Reliance, etc. The provisions of this Article (a) are for the benefit of,
        and may be enforced
        by, each Indemnitee of the Company, the same as if set forth in their entirety
        in a written instrument duly executed and delivered by the Company and such
        Indemnitee and (b) constitute a continuing offer to all present and future
        Indemnitees. The Company, by its adoption of these Bylaws, (a) acknowledges
        and
        agrees that each Indemnitee of the Company has relied upon and will continue
        to
        rely upon the provisions of this Article in becoming, and serving in any
        of the
        capacities referred to in Section 10.1 of this Article, (b) waives reliance
        upon, and all notices of acceptance of, such provisions by such Indemnitees
        and
        (c) acknowledges and agrees that no present or future Indemnitee shall be
        prejudiced in his right to enforce the provisions of this Article in accordance
        with its terms by any act or failure to act on the part of the
        Company.

      


      10.11
        Effect of
        Amendment. No amendment, modification or repeal of this Article or any
        provision hereof shall in any manner terminate, reduce or impair the right
        of
        any past, present or future Indemnitees to be indemnified by the Company,
        nor
        the obligation of the Company to indemnify any such Indemnitees, under and
        in
        accordance with the provisions of the Article as in effect immediately prior
        to
        such amendment, modification or repeal with respect to claims arising from
        or
        relating to matters occurring, in whole or in part, prior to such amendment,
        modification or repeal, regardless of when such claims may arise or be
        asserted.

      


      ARTICLE
        11.

      TAKEOVER
        OFFERS

      


      In
        the
        event the Company receives a takeover offer, the Board of Directors shall
        consider all relevantfactors
        in evaluating such offer, including, but not limited to, the terms of the
        offer,
        and the potential economic and social impact of such offer on the Company's
        stockholders, employees, customers, creditors and community in which it
        operates.

      


      ARTICLE
        12.

      NOTICES

      


      12.1
        General.
        Whenever these Bylaws require notice to any Stockholder, director, officer
        or
        agent, such notice does not mean personal notice. A person may give effective
        notice under these Bylaws in every case by depositing a writing in a post
        office
        or letter box in a postpaid, sealed wrapper, or by dispatching a prepaid
        telegram addressed to such Stockholder, director, officer or agent at his
        address on the books of the Company. Unless these Bylaws expressly provide
        to
        the contrary, the time when the person sends notice shall constitute the
        time of
        the giving of notice.

      


      12.2
        Waiver of
        Notice. Whenever the law or these Bylaws require notice, the person
        entitled to said notice may waive such notice in writing, either before or
        after
        the time stated therein.

      


      ARTICLE
        13.

      MISCELLANEOUS

      


      13.1
        Facsimile
        Signatures. In addition to the use of facsimile signatures which these
        Bylaws specificallyauthorize,
        the Company may use such facsimile signatures of any officer or officers,
        agents
        or agent, of theCompany
        as the Board or a committee of the Board may authorize.

      


      
        
          
          

        

        
          
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      13.2
        Corporate Seal.
        The Board may provide for a suitable seal containing the name of the Company,
        of
        which the Secretary shall be in charge. The Treasurer, any Assistant Secretary,
        or any Assistant Treasurer may keep and use the seal or duplicates of the
        seal
        if and when the Board or a committee of the Board so directs.

      


      13.3
        Fiscal Year.
        The Board shall have the authority to fix and change the fiscal year of the
        Company.

      


      ARTICLE
        14.

      AMENDMENTS

      


      14.1
        Subject to the provisions of the Articles of Incorporation, the Stockholders
        or
        the Board may amend orrepeal
        these Bylaws at any meeting.

      


      The
        undersigned hereby certifies that the foregoing constitutes a true and correct
        copy of the Bylaws of theCompany
        as adopted by the Directors on the 16th day of February,
        2007.

      


      


      
        	 	
                Executed
                  as of this 16th day
                  of February, 2007.

              
	 	 
	 	
                _______________________________________

              
	 	
                Eddie
                  Vakser

              
	 	
                President

              


      

      


      
        
          
          

        

        
          
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    EXHIBIT
      F

    


    CHANNEL
      GOOD STANDING CERTIFICATE

     

    
      
        	
                Corporations
                  Section

                
                  P.O.
                    Box 13697

                  
                    Austin,
                      Texas 78711-3697

                  

                

              	
                

              	
                Phil
                  Wilson

                
                  Secretary
                    of State

                

              
	
              	
                Office
                  of the Secretary of State

              	 


      

      


      Certificate
        of Fact

      


      The
        undersigned, as Secretary of State of Texas, does hereby certify that the document, Certificate of Formation
        for ART CHANNEL, INC. (file number 800779313), a Domestic For-Profit
        Corporation, was filed in this office on February 26, 2007.

       

      It
        is further certified that the entity status in Texas is in
        existence.

      


      
        	 	
                In
                  testimony whereof, I have hereunto signed my name officially and
                  caused to
                  be impressed hereon the Seal of State at my office in Austin, Texas
                  on
                  December 26, 2007.

              


      

      


      


      
        	 	 
	
                

              	
                 

                 

                 

                 

                 

                 

                 

                /s/
                  Phil Wilson

                Phil
                  Wilson

                Secretary
                  of State

              
	 	 


      

      


      


      


      


      


      


      


      


      
        	 	
                Come
                  visit us on the internet at http://www.sos.state.tx.us/

              	 
	
                Phone:
                  (512) 463-5555

              	
                Fax:
                  (512) 463-5709

              	
                Dial:
                  7-1-1 for Relay Services

              
	
                Prepared
                  by: SOS-WEB

              	
                TID:
                  10264

              	
                Document:
                  197600670003

              


      

      


    

     

     

    
      
        
        

      

      
        F-1

        
          

        

      

      
        
        

      

    

    


    EXHIBIT
      G

    


    ART
      CHANNEL, INC.

    RESOLUTION
      OF THE BOARD OF DIRECTORS

    


    At
      the
      meeting of the Board of Directors of Art Channel, Inc. (“Company”) held on
      December 5, 2007, the following resolutions were proposed and approved by the
      Board:

    


    WHEREAS,
      ArtFest International, Inc. (ARTI), a publicly traded company with its common
      stock traded on the OTCBB under the stock symbol (ARTI), wishes to acquire
      the
      Company through a tax-free share exchange agreement (hereinafter, the
“Acquisition”), whereupon the Company shall become a wholly owned subsidiary of
      ARTI.  In connection with the Acquisition, each issued and outstanding
      share of the Company’s common stock shall be deemed cancelled and converted into
      the right to receive, as applicable, 28,000,000 shares of ARTI common
      stock.

    


    BE
      IT
      RESOLVED, that the Board approves the Acquisition and intends to have completed
      by January 31, 2008, or sooner.

    


    


    Date: December
      5,
      2007

    


    


    
      	 	
              CHAIRMAN
                AND
                PRESIDENT

            
	 	 
	 	 
	 	
              ____________________________

            
	 	
              Eddie
                Vakser

            
	 	 
	 	 
	 	
              SECRETARY

            
	 	 
	 	 
	 	
              ____________________________

            
	 	
              Anzhelika
                Tassan

            
	 	 
	 	 
	 	
              TREASURER

            
	 	 
	 	 
	 	
              ____________________________

            
	 	
              J.
                Scott
                Tassan

            


    

    


     

    
      
        
        

      

      
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    EXHIBIT
      H

    


    ART
      CHANNEL, INC.

    RESOLUTION
      OF THE MAJORITY SHAREHOLDERS

    


    At
      the
      meeting of the Majority Shareholders (“Shareholders”) of the Art Channel, Inc.
      (“Company”) held on December 5, 2007, collectively holding over 66.7% of the
      shares of the Company, the following resolutions were approved by the
      Shareholders:

    


    WHEREAS,
      ArtFest International, Inc. (ARTI), a publicly traded company with its common
      stock traded on the OTCBB under the stock symbol (ARTI), wishes to acquire
      the
      Company through a tax-free share exchange agreement (hereinafter, the
“Acquisition”), whereupon the Company shall become a wholly owned subsidiary of
      ARTI.  In connection with the Acquisition, each issued and outstanding
      share of the Company’s common stock shall be deemed cancelled and converted into
      the right to receive, as applicable, 28,000,000 shares of ARTI common
      stock.

    


    BE
      IT
      RESOLVED, that the Shareholders approve the Acquisition and intends to have
      completed by January 31, 2008,
      or sooner.

    


    


    Date: December
      5,
      2007

    


    


    


    
      	
              Majority
                Shareholder

               

            	 
	
              NRG,
                INC.

            	 
	 	 
	 	 
	
              By:
________________________

            	
              ____________/_____________

            
	
              Eddie
                Vakser

            	
              No.
                of Shares  %
                Ownership

            
	 	 
	 	 
	
              Majority
                Shareholder

            	 
	 	 
	 	 
	
              ____________ _____________

            	
              ____________/_____________

            
	
              J.
                Scott and Anzhelika
                Tassan

            	
              No.
                of Shares  %
                Ownership

            
	 	 


    

    
    

    
       

       

       

      
        
          
          

        

        
          H-1

          
            

          

        

        
          
          

        

      

       

      EXHIBIT
        I

      


      LIST
        OF SHAREHOLDERS OF CHANNEL

    

    


    Deleted from SEC
      filing due to the confidential nature of the information.

     

    
 

    
      
        
        

      

      
        I-1

        
          

        

      

      
        
        

      

    

    


    EXHIBIT
      J

    


    CHANNEL
      DISCLOSURE SCHEDULE

    


    Financial
      Condition

    


    Since
      the
      date of Channel’s last financial audit, for the period ending Sept. 30, 2007,
      Channel incurred additional liabilities of $15,000 in the form of Notes Payable
      in a similar format to those of the other note holders as identified in Item
      #5
      of the financial audit.

    


    These
      funds were used for general operating expenses and other expenses associated
      to
      professional fees related to this acquisition transaction.

     

     

     

     

    
      
        
        

      

      
        J-1

        
          

        

      

      
        
        

      

    

    


    EXHIBIT
      K

    


    CERTIFICATE
      OF INCORPORATION

    


    OF

    


    SOLDNET,
      INC.

    


    FIRST:
      The name of the Corporation is Soldnet Inc.

    


    SECOND:  Its  registered  office
      is to be located at Suite 606,  1220 N.  Market
      Street,  Wilmington,  DE 19801,  County of New
      Castle.  The registered  agent is American Incorporators
      Limited whose address is the same as above.

    


    THIRD:  The
      nature of business and purpose of the  organization  is to
      engage in any lawful act or activity for
      which  corporations  may
      be  organized  under the Delaware General Corporation
      Laws.

    


    FOURTH:  The
      total  number of shares of stock which
      the  corporation  shall have authority to issue is forty
      million  (40000000).  All such shares are to be with par
      value of 0.001 and are to be of one class.

    


    FIFTH:
      The name and address of the incorporator are as follows:

    


    Jennifer
      Crone

    Suite
      606

    1220
      N.
      Market Street

    Wilmington,
      DE 19801

    


    SIXTH:
      The powers of the undersigned  incorporator will terminate upon filing
      of the certificate of incorporation.  The name and mailing address of
      the person(s) who will serve as director(s) until the first annual meeting
      of
      the stockholders or until a successor(s) is elected and qualified
      are:

    


    Judith
      Stahl

    4719
      Quarton Road

    Bloomfield
      Hills, MI  48301

    


    SEVENTH:  Each  person  who  serves  or
      has  served as a  director  shall not be
      personally  liable to the corporation or
      its  stockholders  for monetary damages for breach of
      fiduciary duty as a director,  provided that this
      provision  shall not  eliminate  or limit
      the  liability  of a  director:  (i) for
      any  breach of loyalty to the corporation or its stockholders; (ii)
      for acts or omission not in good faith or which
      involve  intentional  misconduct  or a
      knowing  violation of law;  (iii)
      for  unlawful  payment of  dividend
      or  unlawful  stock  purchase or
      redemption  as
      such  liability  is  imposed  under  Section  174
      of the  General Corporation  Laws
      of  Delaware;  or (iv)  for
      any  transaction  from  which  the
      director derived an improper personal benefit.

     

     

    
      
        
        

      

      
        K-1

        
          

        

      

      
        
        

      

    

    I,
      THE
      UNDERSIGNED,  for the purpose of forming a
      corporation  under the laws of the State of Delaware, do make, file
      and record this certificate, and do certify that the facts stated herein are
      true, and I have accordingly set my hand.

    


    


    


    
      	 	
              /s/
                Jennifer Crone

            
	 	
              Jennifer
                Crone

            
	 	
              INCORPORATOR

            


    

     

    
 

    
      
        
        

      

      
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    EXHIBIT
      L

    


    WRITTEN
      CONSENT OF THE

    BOARD
      OF
      DIRECTORS

    ARTFEST
      INTERNATIONAL, INC.

    


    Re:  2005
      Special Meeting of Board, BYLAWS

    


    Effective
      Date: November 7, 2005

    


    THESE
      ARE
      THE MINUTES of the Board of Directors of Artfest International, Inc., by Written
      Consent in lieu of a Special Meeting of the Board, effective the date
      above.  Notice of any Meeting is waived. Reference is made to past
      Board discussions regarding this subject, and the need to maintain records
      of
      approvals and related items, therefore, the Board hereby resolves:

    


    1.
      The
      Board acknowledges that the attached Bylaws are the Bylaws for our Company,
      and
      the name is hereby amended to become Artfest International, Inc., for the
      document.

    


     2.
      Joseph Walsh, President and CEO, is authorized to execute documents and take
      action as is reasonable and lawful to give effect to the above.

    This
      may
      be executed in counterparts and by fax and notwithstanding when executed, is
      ratified as being effective the effective date above.

    


    


    _____________________________

    Joseph
      Walsh

    


    _____________________________

    Roger
      Bergman

    


    _____________________________

    Scott
      Dyk

    


    


    


    
      
        
        

      

      
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    BY-LAWS

    


    ARTICLE
      I

    


    The
      Stockholders

    


    SECTION
      1.1. ANNUAL
      MEETING.  The annual meeting of the stockholders of Soldnet, Inc. (the
      "Corporation") shall be held on the third Thursday in January of each year
      at
      10:30 a.m. local time, or at such other date or time as shall be
      designated  from time to time by the Board of Directors and stated in
      the notice of the meeting,  for the election of directors and for
      the  transaction  of such other business as may come before
      the meeting.

    


    SECTION
      1.2.  SPECIAL  MEETINGS.  A special meeting of the
      stockholders may be called at any time by the written  resolution or
      request of two-thirds or more of the members of the Board of
      Directors,  the president,  or any executive
      vice  president  and shall be called upon the
      written  request of the holders of two-thirds  or more in
      amount,  of each class or series of the capital  stock of
      the Corporation  entitled to vote at such meeting on the matters(s)
      that are the subject of the proposed  meeting,  such
      written  request in each case to specify the purpose or purposes for
      which such meeting shall be called, and with respect to
      stockholder  proposals,  shall further comply with
      the  requirements  of this Article.

    


    SECTION  1.3.  NOTICE
      OF  MEETINGS.  Written  notice of each meeting
      stockholders whether annual or special, stating the date, hour and place where
      it is to be held,  shall be reserved either  personally or
      by mail,  not less than fifteen nor more than sixty days before the
      meeting,  upon each  stockholder  of
      record  entitled to vote at such meeting,  and to any
      other  stockholder to whom the giving of notice may be required by
      law.  Notice of a special  meeting shall also state
      the  purpose or  purposes  for which
      the  meeting is called and shall indicate  that it is
      being  issued  by, or at
      the  direction  of,  the person or persons calling
      the meeting. If, at any meeting, action is proposed to be taken that would,
      if
      taken, entitle stockholders to receive payment for their stock, the notice
      of
      such meeting shall include a statement of that purpose and to that effect.
      If
      mailed,  notice shall be deemed to be delivered when deposited in the
      United States mail or with any private express mail service, postage or delivery
      fee prepaid,  and shall be directed to each such stockholder at his
      address,  as it appears on the  records of
      the  stockholders  of
      the  Corporation,  unless he shall
      have  previously  filed with the  secretary of
      the  Corporation  a written request that notices intended
      for him be mailed to some other address,  in which case, it shall be
      mailed to the address designated in such request.

    


    SECTION
      1.4.  FIXING DATE
      OF RECORD.  (a) In order that the Corporation may determine
      the  stockholders  entitled to notice of or to vote at any
      meeting of stockholders,  or any
      adjournment  thereof,  the Board of Directors may fix a
      record  date,  which  record  date  shall
      not  precede  the date upon  which the
      resolution  fixing the record  date is  adopted by
      the Board of  Directors,  and which record date shall not be
      more than sixty nor less than ten days before the date of such meeting. If
      no
      record date is fixed by the Board of Directors,  the record date for
      determining stockholders entitled to notice of, or to vote at, a
      meeting  of  stockholders  shall  be at
      the  close of  business  on the day next preceding
      the day on which notice is given, or if notice is waived, at the close of
business
      on the day next  preceding  the day on which the meeting is
      held.  A determination of stockholders of record entitled to notice
      of, or to vote at, a meeting of stockholders 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.

    


    
      
        
        

      

      
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    (b)
      In
      order  that  the  Corporation  may  determine  the  stockholders
      entitled  to consent to  corporate  action in
      writing  without a meeting (to the extent that such action by
      written  consent is permitted by law, the Certificate
      of  Incorporation  or
      these  By-Laws),  the Board of Directors  may fix
      a record date,  which  record date shall
      not  precede the date upon which the  resolution fixing the
      record  date is  adopted  by the Board
      of  Directors,  and which date shall not be more than ten
      days after the date upon which the resolution  fixing the record date
      is adopted by the Board of Directors. If no record date has been fixed by the
      Board of Directors,  the record date
      for  determining  stockholders entitled to consent to
      corporate  action in writing  without a
      meeting,  when no prior action by the Board
      of  Directors  is required by law,  shall be the
      first date on which
      a  signed  written  consent  setting  forth  the  action  taken
      or proposed  to
      be  taken  is  delivered  to
      the  Corporation  by  delivery  to its
      registered  office  in
      its  state  of  incorporation,  its  principal  place  of
      business,  or an officer or agent of the Corporation  having
      custody of the book in which proceedings of meetings of stockholders are
      recorded.  Delivery made to
      the  Corporation's  registered  office  shall  be
      by  hand  or by  certified  or
      registered mail, return receipt  requested.  If no record
      date has been fixed by the Board of Directors and prior action by the Board
      of
      Directors is required by law,  the  record  date
      for  determining  stockholders  entitled  to  consent
      to corporate  action in writing without a meeting shall be at the
      close of business on the day on which the Board
      of  Directors  adopts
      the  resolution  taking such prior action.

    


    (c)
      In
      order  that  the  Corporation  may  determine  the  stockholders
      entitled to receive  payment of any dividend or
      other  distribution or allotment of any rights or the
      stockholders  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 a record date,  which record date shall not
      precede the date upon which the  resolution  fixing the
      record date is adopted, and which record date shall be not more than sixty
      days
      prior to such action. If no record date is fixed, the record date for
      determining stockholders for any such purpose shall be at the close of business
      on the day on which the Board of Directors adopts the resolution relating
      thereto.

    


    SECTION
      1.5. INSPECTORS. At each
      meeting of the stockholders, the polls shall be opened and closed and the
      proxies and ballots  shall be received and be taken in
      charge.  All questions  touching on the qualification of
      voters and the validity of proxies and the  acceptance or rejection of
      votes,  shall be decided by one or
      more  inspectors.  Such inspectors  shall be
      appointed by the Board of Directors before or at the meeting,  or, if
      no such appointment  shall have been made, then by the presiding
      officer at the meeting. If for any reason any of the

    inspectors  previously  appointed
      shall fail to attend or refuse or be unable to serve,  inspectors in
      place of any so failing to attend or refusing or unable to serve shall be
      appointed in like manner.

    


    SECTION
      1.6. QUORUM. At any meeting
      of the stockholders, the holders of a majority of the shares  entitled
      to vote,  represented  in person or by proxy,
      shall  constitute  a quorum of
      the  stockholders  for
      all  purposes,  unless the representation  of a
      larger  number shall be required by law,
      and,
      in that case, the representation of the number so required shall constitute
      a
      quorum.

    


    
      
        
        

      

      
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    If
      the holders of the amount of
      stock  necessary to constitute a quorum shall  fail
      to  attend  in  person  or by proxy at
      the time and  place  fixed in accordance  with
      these By-Laws for an annual or special  meeting,  a majority
      in interest of the  stockholders  present in person or by
      proxy may  adjourn,  from time to time,  without
      notice other than by announcement  at the meeting,  until
      holders of the amount of stock requisite to constitute a quorum shall attend.
      At
any
      such
      adjourned meeting at which a quorum shall be present,  any business
      may be  transacted  which might have
      been  transacted  at the meeting as  originally
      notified.

    


    SECTION  1.7.  BUSINESS.  The  chairman  of  the  Board,  if  any,  the
      president,  or in his absence
      the  vice-chairman,  if any, or an executive  vice
      president, in the order named, shall call meetings of the stockholders to order,
      and shall act as chairman of such meeting; provided,  however, that
      the Board of Directors or executive  committee may appoint any
      stockholder to act as chairman of any meeting in the absence of the chairman
      of
      the Board. The secretary of the Corporation
      shall act as secretary at all meetings of
      the  stockholders,  but in the absence of the secretary at
      any meeting of the  stockholders,  the presiding officer may
      appoint any person to act as secretary of the meeting.

    


    SECTION
      1.8. STOCKHOLDER
      PROPOSALS.  No proposal by a stockholder shall be presented for vote
      at a special or annual meeting of stockholders unless such
      stockholder  shall,  not  later  than
      the  close of  business  on the  fifth
      day
      following   the  date  on  which  notice  of  the  meeting  is  first  given  to
      stockholders, provide the Board of Directors or the secretary of the Corporation
      with  written  notice
      of  intention  to  present
      a  proposal  for  action at the
      forthcoming  meeting of  stockholders,  which
      notice shall  include the name and address of
      such  stockholder,  the number of
      voting  securities that he holds of record and that he holds
      beneficially,  the text of the proposal to be presented to the meeting
      and a statement in support of the proposal.

    


    Any  stockholder  who
      was
      a  stockholder  of record  on
      the  applicable record date may make any other proposal at an annual
      meeting or special  meeting of stockholders and the same may be
      discussed and considered,  but unless stated in writing and filed with
      the Board of Directors or the  secretary  prior to the date
      set forth herein above,  such proposal  shall be laid over
      for action at an adjourned,  special,  or annual meeting of
      the  stockholders  taking place sixty days or more
      thereafter.  This provision shall not prevent the consideration and
      approval or disapproval at the annual meeting of reports of officers, directors,
      and committees, but in connection with such reports, no new business proposed
      by
      a  stockholder,  qua  stockholder,  shall
      be acted upon at such  annual  meeting unless stated and
      filed as herein provided.

    


    Notwithstanding  any
      other
      provision of these By-Laws,  the Corporation shall be under
      no  obligation to include
      any  stockholder  proposal in its proxy
      statement  materials or otherwise present any such proposal to
      stockholders at a special or annual meeting of stockholders  if the
      Board of Directors  reasonably believes the
      proponents  thereof have not complied with Sections 13 or 14 of the
      Securities  Exchange  Act of
      1934,  as  amended,  and the rules
      and  regulations thereunder;  nor
      shall the  Corporation  be required to include
      any  stockholder proposal not required to be included in its
      proxy  materials to  stockholders in accordance with any
      such section, rule or regulation.

    


    
      
        
        

      

      
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    SECTION
      1.9.  PROXIES.  At all meetings of
      stockholders,  a stockholder entitled  to vote may
      vote  either in person or by proxy  executed in writing by
      the stockholder or by his duly authorized attorney-in-fact.  Such
      proxy shall be filed with the secretary before or at the time of the meeting.
      No
      proxy shall be valid after  eleven  months  from
      the date of its  execution,  unless  otherwise
      provided in the proxy.

    


    SECTION
      1.10. VOTING BY
      BALLOT.  The votes for directors,  and upon the demand of
      any  stockholder  or when required by law, the votes upon
      any question before the meeting, shall be by ballot.

    


    SECTION  1.11.  VOTING  LISTS.  The
      officer who has charge of the stock ledger of the Corporation shall prepare
      and
      make, at least ten days before every meeting of stockholders, a complete list
      of
      the stockholders entitled to vote at the meeting,  arranged
      in  alphabetical  order,  and showing the address
      of each stockholder  and the  number of shares of
      stock  registered  in the name of each
      stockholder.  Such list shall be open to the examination of any
      stockholder, for any purpose germane to the meeting,  during ordinary
      business hours for a period of at least ten days  prior to
      the  meeting,  either at a place  within the city
      where the meeting is to be held, which place shall be specified in the notice
      of
      the  meeting,  or if not
      so  specified,  at the place where the meeting is to be
      held.  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  stockholder who
      is
      present.

    


    SECTION  1.12.  PLACE
      OF
      MEETING.  The Board of Directors may designate any place, either
      within or without the state of incorporation,  as the place of
      meeting  for any annual  meeting or any
      special  meeting  called by the Board of
      Directors.  If no  designation  is made or if
      a  special  meeting  is  otherwise
      called, the place of meeting shall be the principal office of the
      Corporation.

    


    SECTION  1.13.  VOTING
      OF
      STOCK OF CERTAIN  HOLDERS.  Shares of capital stock of the
      Corporation standing in the name of
      another  corporation,  domestic or foreign, may be voted by
      such officer, agent, or proxy as the by-laws of such corporation may
      prescribe,  or in the absence of such provision, as the board of
      directors of such corporation may determine.

     

    Shares
      of
      capital  stock of the  Corporation  standing in
      the name of a deceased  person,  a minor  ward or
      an  incompetent  person  may be voted by his
      administrator,  executor,  court-appointed  guardian
      or  conservator,  either in person  or by
      proxy,  without a  transfer  of
      such  stock  into the name of such
      administrator,  executor,  court-appointed  guardian
      or  conservator.  Shares of capital stock of the
      Corporation  standing in the name of a trustee may be voted by him,
      either in person or by proxy.


    Shares
      of capital  stock of
      the  Corporation  standing in the name of a receiver may be
      voted, either in person or by proxy, by such receiver, and stock held by or
      under the control of a receiver may be voted by such receiver without
      the  transfer  thereof  into his name
      if  authority to do so is contained
      in any appropriate order of the court by which such receiver was
      appointed.

    


    
      
        
        

      

      
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    A  stockholder  whose  stock
      is pledged  shall be entitled to vote such stock,  either in
      person or by proxy,  until the stock has been transferred into the
      name of the pledgee,  and  thereafter the pledgee shall be
      entitled to vote, either in person or by proxy, the stock so
      transferred.

     

    Shares
      of
      its own capital stock belonging to this Corporation shall not be
      voted,  directly  or  indirectly,  at
      any meeting and shall not be counted in
      determining  the  total  number
      of  outstanding  stock at
      any  given  time,  but shares of its own stock
      held by it in a fiduciary capacity may be voted and shall be
      counted  in  determining  the total number
      of  outstanding  stock at any given

    time.

    


    ARTICLE
      II

    


    Board
      of
      Directors

    


    SECTION
      2.1. GENERAL POWERS. The
      business, affairs, and the property of
      the  Corporation  shall be managed and controlled by the
      Board of Directors (the "Board"), and, except as otherwise expressly provided
      by
      law, the Certificate of Incorporation  or these
      By-Laws,  all of the powers of the Corporation  shall be
      vested in the Board.

    


    SECTION
      2.2.  NUMBER OF
      DIRECTORS.  The number of directors which shall
      constitute  the  whole  Board  shall be
      not fewer than one or more than five. Within the limits above specified, the
      number of directors shall be determined by the Board
      of  Directors  pursuant to
      a  resolution  adopted by a majority of the directors then
      in office.

    


    SECTION
      2.3. ELECTION, TERM AND
      REMOVAL.  Directors shall be elected at the annual meeting
      of  stockholders  to succeed those directors whose terms
      have expired.  Each  director  shall
      hold  office for the term for which  elected and until his
      or her successor shall be elected and qualified. Directors need not be
      stockholders.  A director  may
      be  removed  from  office at a
      meeting  expressly
      called  for  that  purpose  by
      the  vote  of not  less  than
      a  majority  of the

    outstanding
      capital stock entitled to vote at an election of directors.

    


    SECTION
      2.4.
      VACANCIES.  Vacancies in the Board of Directors, including
      vacancies  resulting from an increase in the number of
      directors,  may be filled by the affirmative vote of a majority of the
      remaining directors then in office, though less than a quorum;  except
      that  vacancies  resulting  from removal from
      office by a vote of the  stockholders  may be filled by
      the  stockholders at the same meeting at which such removal
      occurs  provided that the holders of not less than a majority of the
      outstanding  capital stock of
      the  Corporation  (assessed upon the basis of votes and not
      on the basis of number of  shares)  entitled  to
      vote for the election of directors,  voting  together as a
      single  class,  shall vote for
      each  replacement  director.  All
      directors  elected to fill  vacancies shall hold office for
      a term expiring at the time of the next annual  meeting of
      stockholders and upon election and  qualification of his
      successor.  No decrease in the number of directors constituting the
      Board of Directors shall shorten the term of an incumbent director.

     

     

    
      
        
        

      

      
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    SECTION
      2.5.  RESIGNATIONS.  Any director of the Corporation may
      resign at any time by giving written notice to the president or to the secretary
      of the Corporation.  The  resignation  of
      any  director  shall take  effect at the time
      specified  therein and, unless
      otherwise  specified  therein,  the acceptance of
      such resignation shall not be necessary to make it effective.

    


    SECTION
      2.6.  PLACE OF
      MEETINGS,  ETC. The Board of Directors  may hold
      its  meetings,  and may have
      an  office  and keep the  books of
      the  Corporation (except as otherwise may be provided for by law), in
      such place or places in or outside the state of incorporation as the Board
      from
      time to time may determine.

    


    SECTION  2.7.  REGULAR  MEETINGS.  Regular  meetings  of
      the  Board  of Directors shall be held as soon as
      practicable  after  adjournment of the annual meeting
      of  stockholders  at such time and place as the Board
      of  Directors  may fix. No notice shall be required for any
      such regular meeting of the Board.

    


    SECTION  2.8.  SPECIAL  MEETINGS.  Special  meetings  of
      the  Board  of Directors  shall be held at places
      and times fixed by resolution of the Board of Directors,  or upon call
      of the chairman of the Board, if any, or  vice-chairman of the
      Board,  if any, the president,  an executive vice president
      or two-thirds of the directors then in office.

    


    The
      secretary or
      officer  performing the secretary's  duties shall give not
      less than twenty-four hours' notice by letter, telegraph or telephone (or in
      person) of all special meetings of the Board of Directors,  provided
      that notice need not given of the annual  meeting or of
      regular  meetings  held at times and
      places  fixed  by  resolution  of
      the  Board.  Meetings  may be held at any time
      without  notice if all of
      the  directors  are  present,  or if
      those not present waive  notice in
      writing  either  before or after
      the  meeting.  The  notice of meetings of the
      Board need not state the purpose of the meeting.

    


    SECTION
      2.9.  PARTICIPATION  BY  CONFERENCE  TELEPHONE.  Members
      of the Board of Directors of the Corporation, or any committee thereof, may
      participate in a regular or special or any other  meeting of the Board
      or committee by means of conference  telephone or
      similar  communications  equipment by means of which
      all  persons  participating  in
      the  meeting  can  hear  each  other,  and  such
      participation shall constitute presence in person at such meeting.

    


    SECTION  2.10.  ACTION
      BY  WRITTEN  CONSENT.  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 prior or subsequent to
      such
      action  all the  members  of the  Board
      or such committee,  as the case may be, consent  thereto
      in  writing,  and the  writing
      or  writings  are filed with the minutes of the proceedings
      of the Board or committee.

    


    SECTION
      2.11.  QUORUM. A
      majority of the total number of directors then in office
      shall  constitute a quorum for the transaction of
      business;  but if at any  meeting of the
      Board  there be less than a quorum  present,  a
      majority  of those present may adjourn the meeting from time to
      time.

    


    SECTION
      2.12. BUSINESS. Business
      shall be transacted at meetings of the Board of Directors in
      such
      order as the Board may determine.  At all meetings of the Board of
      Directors,  the chairman of the Board, if any, the president, or in
      his absence the  vice-chairman,  if any, or an executive
      vice president,  in the order named, shall preside.

    


    
      
        
        

      

      
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    SECTION
      2.13.  INTEREST OF
      DIRECTORS IN  CONTRACTS.  (a) 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
      the  Corporation's directors or officers,  are directors or
      officers, or have a financial interest, shall be void or voidable solely for
      this reason, or solely because the director
      or  officer  is  present  at
      or  participates  in the  meeting  of
      the  Board or committee which authorizes the contract or transaction,
      or solely because his or their votes are counted for such purpose,
      if:

    


    (1)
      The material facts as to his
      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  votes of a majority  of
      the  disinterested directors, even though the disinterested directors
      be less than a quorum; or

    


    (2)
      The material facts as to his
      relationship or interest and as to the contract or transaction are disclosed
      or
      are known to the stockholders  entitled to vote
      thereon,  and the contract or  transaction
      is  specifically  approved in good faith by vote of the
      stockholders; or

    


    (3)
      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 of the Board of
      Directors or the stockholders.

    


    (b)
      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.

    


    SECTION  2.14.   COMPENSATION  OF  DIRECTORS.   Each  director  of  the
      Corporation who is not a salaried officer or employee of the
      Corporation,  or of a subsidiary of the Corporation,  shall
      receive such allowances for serving as a director and such fees
      for  attendance  at meetings of the Board of Directors or
      the  executive  committee or any
      other  committee  appointed by the Board as the Board may
      from time to time determine.

    


    SECTION
      2.15.  LOANS TO
      OFFICERS OR  EMPLOYEES.  The Board of Directors may lend
      money to, guarantee any obligation of, or otherwise assist, any officer or
      other
      employee of the Corporation or of any  subsidiary,  whether
      or not such officer or  employee  is also a director of
      the  Corporation,  whenever,  in the judgment of
      the directors, such loan, guarantee, or assistance may reasonably be
      expected  to benefit
      the  Corporation;  provided,  however,  that
      any such loan, guarantee,  or
      other  assistance  given to an officer or
      employee  who is also a director
      of the Corporation must be authorized by a majority of the entire Board of
      Directors.  Any such loan, guarantee, or other assistance may be made
      with or without  interest and may be unsecured or secured in such
      manner as the Board of Directors  shall
      approve,  including,  but not limited to, a pledge of shares
      of the  Corporation,  and may be made upon such other terms
      and  conditions  as the Board of Directors may
      determine.

    


    
      
        
        

      

      
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    SECTION
      2.16. NOMINATION. Subject to
      the rights of holders of any class or series of stock having a
      preference  over the common stock as to dividends or
      upon  liquidation,  nominations for the election of
      directors may be made by the Board of  Directors  or by
      any  stockholder  entitled to vote in the election of
      directors  generally.  However, any stockholder entitled to
      vote in the election
      of  directors  generally  may  nominate  one
      or more  persons  for  election  as
      directors at a meeting only if written  notice of
      such  stockholder's  intent to make such nomination or
      nominations has been given,  either by personal delivery or by United
      States mail,  postage prepaid,  to the secretary of the
      Corporation not later than (i) with  respect to an election to be held
      at an annual  meeting of stockholders, the close of business on the
      last day of the eighth month after the immediately preceding annual meeting
      of
      stockholders,  and (ii) with respect to an election to be held at a
      special meeting of stockholders  for the election of directors, the
      close of business on the fifth day following the date on which notice of
      such  meeting is first given
      to  stockholders.  Each such notice shall set
      forth:  (a) the name and address of the  stockholder who
      intends to make the nomination  and of the person or persons to be
      nominated;  (b) a  representation that the stockholder is a
      holder of record of stock of the Corporation  entitled to vote at
      such  meeting  and
      intends  to  appear  in person or by proxy at the
      meeting to  nominate  the  person
      or  persons  specified  in
      the  notice;  (c) a description of
      all  arrangements or  understandings  between the
      stockholder and each  nominee and any other  person or
      persons  (naming  such person or persons)
      pursuant  to  which  the  nomination  or  nominations  are  to
      be  made  by  the stockholder;  (d) such
      other information regarding each nominee proposed by such
      stockholder  as would be  required to
      be  included  in a
      proxy  statement  filed pursuant to the proxy rules of the
      Securities and Exchange  Commission,  had the nominee been
      nominated,  or intended to be nominated, by the Board of Directors,
      and; (e) the consent of each  nominee to serve as a director of
      the  Corporation if so elected.  The
      presiding  officer at the meeting may refuse to  acknowledge
      the  nomination  of
      any  person  not  made  in  compliance  with  the  foregoing
      procedure.

    


    


    


    ARTICLE
      III

    


    Committees

    


    SECTION
      3.1.
      COMMITTEES.  The Board of Directors, by resolution adopted by
      a  majority  of
      the  number  of  directors  then  fixed
      by these  By-Laws  or
      resolution  thereto,  may establish  such standing
      or special  committees of the Board as it may deem
      advisable,  and the members,  terms,  and
      authority of such committees shall be set forth in the resolutions establishing
      such committee.

    


    SECTION
      3.2.  EXECUTIVE  COMMITTEE NUMBER AND TERM OF OFFICE. The
      Board of Directors  may, at any meeting,  by
      majority  vote of the Board of Directors, elect from the directors an
      executive  committee.  The executive committee shall
      consist  of  such  number  of  members  as
      may be  fixed  from  time  to time by
      resolution  of the Board of  Directors.  The Board
      of Directors  may designate a chairman of the  committee who
      shall  preside at all meetings thereof,  and the
      committee  shall  designate  a
      member  thereof to preside in the  absence of the
      chairman.

    


    
      
        
        

      

      
        L-9

        
          

        

      

      
        
        

      

    

    SECTION
      3.3.
      EXECUTIVE  COMMITTEE POWERS. The executive  committee may,
      while the  Board of  Directors  is not
      in  session,  exercise  all or any of the powers
      of the Board of Directors in all cases in which specific directions shall
      not  have  been  given by the  Board
      of  Directors;  except  that
      the  executive committee shall not have the power or authority of the
      Board of Directors to (i) amend the Certificate of Incorporation  or
      the By-Laws of the Corporation,  (ii) fill
      vacancies  on  the  Board  of  Directors,  (iii)  adopt  an  agreement  or
      certification  of  ownership,  merger
      or  consolidation,  (iv)  recommend to the
      stockholders  the sale,  lease or  exchange of all
      or  substantially  all of the
      Corporation's  property and assets,  or a
      dissolution  of the  Corporation or a
      revocation  of a  dissolution,  (v) declare a
      dividend,  or (vi)  authorize  the issuance of
      stock.

    


    SECTION
      3.4. EXECUTIVE COMMITTEE
      MEETINGS. Regular and special meetings
      of  the  executive  committee  may
      be  called  and  held  subject  to  the  same
      requirements  with respect to time,  place and notice as
      are  specified in these By-Laws  for regular
      and  special  meetings of the Board
      of  Directors.  Special meetings of the executive committee
      may be called by any member thereof.  Unless
      otherwise  indicated  in  the  notice  thereof,  any  and  all  business  may
      be transacted at a special or regular meeting of the
      executive  meeting if a quorum is  present.  At
      any meeting at which every  member of
      the  executive  committee shall be present, in person or by
      telephone, even though without any notice, any business  may
      be  transacted.  All action by
      the  executive  committee  shall be reported to
      the Board of Directors at its meeting next succeeding such action.

     

    The
      executive committee shall fix its
      own rules of procedure, and shall meet  where  and
      as  provided  by such  rules or
      by  resolution  of the Board of Directors,  but in
      every case the  presence of a majority of the total number of members
      of the executive committee shall be necessary to constitute a quorum. In every
      case, the affirmative vote of a quorum shall be necessary for the adoption
      of
      any resolution.

    


    


    SECTION
      3.5. EXECUTIVE COMMITTEE
      VACANCIES.  The Board of Directors, by majority vote of the Board of
      Directors then in office,  shall fill vacancies in the executive
      committee by election from the directors.

    


    ARTICLE
      IV

    


    The
      Officers

    


    SECTION
      4.1. NUMBER AND TERM OF
      OFFICE. The officers of the Corporation shall  consist of, as the
      Board of Directors may determine and appoint from time
      to  time,  a  chief  executive  officer,  a  president,  one
      or  more  executive vice-presidents,  a
      secretary,  a  treasurer,  a  controller,  and/or
      such other officers  as may from  time to time
      be  elected  or  appointed  by
      the  Board of Directors,  including such additional
      vice-presidents with such designations, if any,  as  may
      be  determined  by
      the  Board  of  Directors  and  such  assistant
secretaries
      and assistant  treasurers.  In addition,  the
      Board of Directors may elect a chairman of the Board and may also elect a
      vice-chairman  as officers of the Corporation.  Any two or
      more offices may be held by the same person. In its discretion,  the
      Board of Directors may leave  unfilled any

    office
      except as may be required by law.

    


    
      
        
        

      

      
        L-10

        
          

        

      

      
        
        

      

    

    The
      officers of the Corporation shall
      be elected or appointed from time to time by the Board
      of  Directors.  Each  officer  shall
      hold office  until his successor  shall have been duly
      elected or appointed or until his death or until he shall resign or shall have
      been removed by the Board of Directors.

    


    Each
      of
      the  salaried  officers  of
      the  Corporation  shall  devote his
      entire  time,  skill and energy to the business of
      the  Corporation,  unless the contrary is
      expressly  consented  to by the Board of Directors or
      the  executive committee.

    


    SECTION  4.2.  REMOVAL.  Any  officer  may
      be  removed  by the Board of Directors whenever, in its
      judgment, the best interests of the Corporation would be served
      thereby.

    


    SECTION
      4.3. THE CHAIRMAN OF THE
      BOARD.  The chairman of the Board,  if any, shall preside at
      all meetings of stockholders and of the Board of Directors and
      shall  have
      such  other  authority  and  perform  such  other  duties
      as are prescribed by law, by these By-Laws and by the Board of
      Directors.  The Board of Directors may designate the chairman of the
      Board as chief executive officer, in which  case
      he  shall  have  such  authority  and  perform  such  duties  as
      are prescribed
      by these  By-Laws and the Board of Directors for the
      chief  executive officer.

    


    SECTION
      4.4. THE
      VICE-CHAIRMAN.  The vice-chairman,  if any, shall have
      such  authority and perform such other duties as are prescribed by
      these By-Laws and by
      the  Board  of  Directors.  In
      the  absence  or  inability  to act of
      the chairman of the Board and the president, he shall preside at the meetings
      of
      the stockholders  and of the Board
      of  Directors  and shall have and exercise all of the powers
      and duties of the chairman of the Board.  The Board of
      Directors  may designate the vice-chairman as chief
      executive  officer,  in which case he shall have
      such  authority and perform such duties as are  prescribed
      by these By-Laws and the Board of Directors for the chief executive
      officer.

    


    SECTION
      4.5. THE PRESIDENT. The
      president shall have such authority and perform such duties as are prescribed
      by
      law, by these By-Laws,  by the Board of Directors and by the chief
      executive  officer (if the president is not the chief executive
      officer).  The president,  if there is no chairman of the
      Board, or in the absence or the inability to act of the chairman of the
      Board,  shall preside at all meetings of stockholders and of the Board
      of Directors.  Unless the Board of Directors  designates the
      chairman of the Board or the vice-chairman as chief executive
      officer,  the president shall be the chief executive officer, in which
      case he shall have such  authority and perform such duties as
      are  prescribed by these By-Laws and the Board of Directors for the
      chief executive officer.

    


    SECTION
      4.6. THE CHIEF EXECUTIVE
      OFFICER. Unless the Board of Directors designates  the chairman of the
      Board or the  vice-chairman  as chief  executive
      officer, the president shall be the chief executive officer. The chief executive
      officer of the Corporation shall have,  subject to the supervision and
      direction of the Board of
      Directors,  general  supervision  of the
      business,  property and affairs of the
      Corporation,  including the power to appoint and discharge agents and
      employees, and the powers vested in him by the Board of Directors, by law or
      by
      these By-Laws or which usually
      attach or pertain to such office.

    


    
      
        
        

      

      
        L-11

        
          

        

      

      
        
        

      

    

    SECTION  4.7.  THE  EXECUTIVE  VICE-PRESIDENTS.  In
      the  absence of the chairman
      of the Board, if any, the president and
      the  vice-chairman,  if any, or in the event of their
      inability or refusal to act, the executive  vice-president (or in the
      event there is more than one executive vice-president,  the executive
      vice-presidents  in the order designated,  or in the absence
      of any designation, then in the order of their election) shall perform the
      duties of the chairman of the Board, of the president and of the
      vice-chairman,  and when so acting, shall have
      all
      the powers of and be subject to all the restrictions  upon the
      chairman of the Board, the president and the vice-chairman.  Any
      executive vice-president may sign, with the secretary or an authorized assistant
      secretary,  certificates for stock of the Corporation and shall
      perform such other duties as from time to time may be assigned to him by
      the  chairman of the
      Board,  the  president,  the vice-chairman, the
      Board of Directors or these By-Laws.

    


    SECTION
      4.8. THE
      VICE-PRESIDENTS.  The  vice-presidents,  if any,
      shall perform such duties as may be assigned to them from time to time by the
      chairman of the Board, the president, the vice-chairman, the Board of Directors,
      or these By-Laws.

    


    SECTION
      4.9. THE TREASURER. Subject
      to the direction of chief executive officer and the Board of
      Directors,  the treasurer shall have charge and custody of all the
      funds and securities of the Corporation;  when necessary or proper he
      shall  endorse  for  collection,  or  cause
      to be  endorsed,  on  behalf  of the
      Corporation, checks, notes and other obligations, and shall cause the deposit
      of
      the same to the credit of the Corporation in such bank or banks or depositary
      as
      the Board of Directors  may designate or as the Board of Directors by
      resolution may authorize;  he shall sign all receipts and vouchers for
      payments made to the Corporation  other than
      routine  receipts and vouchers,  the signing of which he
      may  delegate;  he shall  sign
      all  checks  made by
      the  Corporation  (provided, however,  that the
      Board of Directors  may authorize and prescribe by resolution
      the  manner in which  checks  drawn on banks
      or  depositories  shall be  signed,
      including  the use of facsimile  signatures,  and
      the manner in which  officers, agents or employees shall be authorized
      to sign);  unless otherwise  provided by resolution of the
      Board of Directors, he shall sign with an officer-director all bills of exchange
      and promissory notes of the Corporation;  whenever required by the
      Board of  Directors,  he shall  render a statement
      of his cash  account;  he shall enter  regularly
      full and accurate  account of the Corporation in books of the
      Corporation to be kept by him for that purpose;  he shall, at all
      reasonable times,  exhibit his books and accounts to any director of
      the  Corporation  upon application at his office during
      business  hours;  and he shall perform all acts incident
      to the position of  treasurer.  If required by the Board
      of  Directors, the treasurer shall give a bond for the faithful
      discharge of his duties in such sum and with such sure ties as the Board of
      Directors may require.

    


    SECTION
      4.10.  THE
      SECRETARY.  The secretary  shall keep the minutes of
      all  meetings  of the Board
      of  Directors,  the  minutes of
      all  meetings of the
      stockholders  and  (unless  otherwise  directed
      by the Board of  Directors)  the minutes of all
      committees,  in books provided for that purpose;  he shall
      attend to the giving and serving of all notices of the Corporation; he may
      sign
      with an officer-director  or
      any  other  duly  authorized  person,  in
      the  name  of the
      Corporation,  all  contracts  authorized  by
      the  Board of  Directors  or by the
      executive  committee, and,  when so ordered
      by the Board of  Directors  or the executive
      committee,  he shall affix the seal of the Corporation thereto; he may
      sign with the  president  or an
      executive  vice-president  all certificates  of
      shares of the  capital  stock;  he shall have
      charge of the  certificate  books, transfer books and
      stock  ledgers,  and such other books and papers as the
      Board of Directors or the executive  committee may
      direct,  all of which shall, at all reasonable  times, be
      open to the examination of any director,  upon application at the
      secretary's office during business hours; and he shall in general perform all
      the duties  incident to the office of the
      secretary,  subject to the control of the chief executive officer and
      the Board of Directors.

    


    
      
        
        

      

      
        L-12

        
          

        

      

      
        
        

      

    

    SECTION  4.11.  THE  CONTROLLER.  The  controller  shall  be
      the  chief accounting  officer of the
      Corporation.  Subject to the supervision of the Board of
      Directors,  the chief  executive  officer and
      the  treasurer,  the controller shall provide for and
      maintain  adequate records of all assets,  liabilities and
      transactions  of  the  Corporation,  shall  see  that  accurate  audits  of  the
      Corporation's  affairs are currently and adequately  made
      and shall perform such

    other
      duties as from time to time may be assigned to him.

    


    SECTION
      4.12. THE ASSISTANT
      TREASURERS AND ASSISTANT  SECRETARIES.  The assistant
      treasurers shall respectively,  if required by the Board of Directors,
      give bonds for the faithful discharge of their duties in such sums and with
      such
      sureties as the Board of Directors may determine.  The
      assistant  secretaries as thereunto authorized by the Board of
      Directors may sign with the chairman of the
      Board,  the  president,  the  vice-chairman  or  an  executive   vice-president,
      certificates  for stock of the  Corporation,  the
      issue of which shall have been authorized
      by a resolution of the Board of Directors.  The
      assistant  treasurers
      and  assistant  secretaries,  in
      general,  shall perform such duties as shall be assigned  to
      them by the  treasurer  or
      the  secretary,  respectively,  or chief executive
      officer, the Board of Directors, or these By-Laws.

    


    SECTION  4.13.  SALARIES.  The
      salaries of the officers  shall be fixed from time to time by the
      Board of  Directors,  and no officer shall be prevented
      from  receiving  such salary by reason of the fact that he
      is also a director of the Corporation.

    


    SECTION
      4.14. VOTING UPON STOCKS.
      Unless otherwise ordered by the Board of Directors or by the executive
      committee, any officer,  director or any person
      or  persons  appointed  in  writing  by
      any of them,  shall  have full power and authority in behalf
      of the  Corporation  to attend and to act and to vote at any
      meetings of  stockholders  of any  corporation in
      which the Corporation may hold stock,  and at any such
      meeting  shall  possess and may exercise any and all the
      rights and powers  incident to the  ownership of such
      stock,  and which,  as the owner
      thereof,  the  Corporation  might have possessed
      and exercised if present. The Board of Directors may confer like powers upon
      any
      other person or persons.

    


    ARTICLE
      V

    


    Contracts
      and Loans

    


    SECTION  5.1.  CONTRACTS.  The
      Board of  Directors  may  authorize  any
      officer or officers,  agent or agents, to enter into any contract or
      execute and deliver any instrument in the name of
      and on
      behalf of the Corporation, and such authority may be general or confined to
      specific instances.

    


    
      
        
        

      

      
        L-13

        
          

        

      

      
        
        

      

    

    SECTION  5.2.  LOANS.  No
      loans  shall be  contracted  on behalf of the
      Corporation and no evidences of indebtedness  shall be issued in its
      name unless authorized  by a resolution  of the Board
      of  Directors.  Such  authority may be general or
      confined to specific instances.

    


    ARTICLE
      VI

    


    Certificates
      for Stock and Their Transfer

    


    SECTION
      6.1. CERTIFICATES FOR STOCK.
      Certificates representing stock of the  Corporation  shall
      be in such  form as may be  determined  by
      the  Board of Directors.  Such certificates  shall
      be signed by the chairman of the Board, the
      president,  the  vice-chairman  or an
      executive  vice-president  and/or  by the
      secretary or an authorized assistant secretary and shall be sealed with the
      seal
      of the  Corporation.  The seal may be
      a  facsimile.  If a
      stock  certificate  is countersigned  (i)  by
      a  transfer  agent  other  than  the  Corporation  or
      its employee, or (ii) by a registrar other than the Corporation or its employee,
      any other  signature on the  certificate  may be a
      facsimile.  In the event that 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.  All  certificates  for stock
      shall be consecutively  numbered or otherwise
      identified.  The name of the person to whom the shares of stock
      represented thereby are issued, with the number of shares of stock and date
      of
      issue,  shall be entered on the books of the
      Corporation.  All certificates  surrendered to
      the  Corporation for transfer shall be canceled and no
      new  certificates  shall be issued  until the
      former  certificate  for a like number of shares of stock
      shall have been surrendered and canceled, except that, in the event of a
      lost,  destroyed  or
      mutilated  certificate,  a new one may be issued therefore
      upon such terms and indemnity to the Corporation as the Board of Directors
      may
      prescribe.

    


    SECTION
      6.2. TRANSFERS OF
      STOCK.  Transfers of stock of the Corporation shall be
      made  only on the  books of
      the  Corporation  by the  holder  of
      record thereof or by his legal  representative,  who shall
      furnish  proper  evidence of
      authority  to  transfer,  or by his
      attorney  thereunto  authorized  by power of
      attorney duly executed and filed with the secretary of
      the  Corporation,  and on surrender
      for  cancellation  of
      the  certificate  for such stock.  The person in
      whose  name  stock  stands on the books of
      the  Corporation  shall be deemed the owner thereof for all
      purposes as regards the Corporation.

    


    


    ARTICLE
      VII

    


    Fiscal
      Year

    


    SECTION
      7.1.  FISCAL  YEAR.  The fiscal year of
      the  Corporation  shall begin  on
      the  first  day of  January  in
      each  year  and end on the last day of December in each
      year.

    


    
      
        
        

      

      
        L-14

        
          

        

      

      
        
        

      

    

    ARTICLE
      VIII

    


    Seal

    


    SECTION
      8.1.  SEAL.  The Board of
      Directors  shall  approve a corporate seal which shall be in
      the form of a circle and shall have inscribed thereon the name of the
      Corporation.

    


    ARTICLE
      IX

    


    Waiver
      of
      Notice

    


    SECTION  9.1.  WAIVER
      OF
      NOTICE.  Whenever any notice is required to be given  under
      the  provisions  of these  By-Laws or under
      the  provisions  of the Certificate
      of  Incorporation  or under the provisions of the
      corporation law of the state of incorporation,  waiver thereof in
      writing,  signed by the person or
      persons  entitled  to
      such  notice,  whether  before  or
      after  the time  stated therein, shall be deemed equivalent
      to the giving of such notice.  Attendance of any person at a
      meeting  for which any notice is  required to be given under
      the provisions of these By-Laws, the Certificate of Incorporation or the
      corporation law of the state
      of  incorporation  shall  constitute a waiver of
      notice of such meeting except when the person attends for the express purpose
      of
      objecting,  at the beginning of the meeting,  to
      the  transaction  of any business  because the
      meeting is not lawfully called or convened.

    


    ARTICLE
      X

    


    Amendments

    


    SECTION  10.1.  AMENDMENTS.  These  By-Laws
      may be altered,  amended or repealed and new By-Laws may be adopted at
      any meeting of the Board of Directors of the Corporation by
      the  affirmative  vote of a majority of the members of the
      Board, or by the affirmative vote of a majority of the outstanding capital
      stock
      of the  Corporation  (assessed  upon
      the  basis of votes and not on the basis of number of
      shares)  entitled to vote  generally  in
      the  election  of  directors, voting together as a
      single class.

    


    ARTICLE
      XI

    


    Indemnification

    


    SECTION
      11.1.  INDEMNIFICATION.  The  Corporation  shall  indemnify
      its officers, directors, employees and agents to the fullest extent permitted
      by
      the General Corporation Law of Delaware, as amended from time to
      time.

    


    


    
      
        
        

      

      
        L-15

        
          

        

      

      
        
        

      

    

    EXHIBIT
      M

    


    INTERNATIONAL
      GOOD STANDING CERTIFICATE

    


    


    To
      be
      provided.

    


    
      
        
        

      

      
        M-1

        
          

        

      

      
        
        

      

    

    EXHIBIT
      N

    


    INTERNATIONAL
      DISCLOSURE SCHEDULE

     

    
      28-Dec-07

      Exhibit
        N

      Artfest
        International, Inc.

      


      Current
        Debt

      


      
        	
                Bank
                  of America Visa Card

              	 	$	16,215.79	 	
                used
                  for operational costs

              
	
                GMAC

              	 	$	6,235.89	 	
                This
                  is to settle up a truck lease that Joe Walsh stuck us with

                Original
                  amount was $8314. They offered to settle of $6235

              
	
                World
                  Financial Services

              	 	$	650.00	 	
                for
                  sending out a email blast for us

              
	
                Lease
                  Finance Group

              	 	$	799.00	 	
                This
                  is for the lease on 2 credit card machines that Conrad Selle originally
                  guaranteed payment.  It runs 14 more months at 57.07 per month
                  per machine.

                The
                  equipment was lost when we closed the galleries

                The
                  two lease numbers are 1102555 and 1166605

              
	
                Canyon
                  Tax and Bookking

              	 	$	1,500.00	 	
                Completion
                  of 2005 taxes dated 12-20-07

              
	
                Canyon
                  Tax and Bookking

              	 	$	1,500.00	 	
                Completion
                  of 2006 taxes dated 12-20-07

              
	
                Canyon
                  Tax and Bookking

              	 	$	2,790.29	 	
                Completion
                  of 3rd quarter financials dated 12-05-07

              
	
                Klingman
                  Furniture

              	 	$	20,000.00	 	
                This
                  is a Walsh deal that went bad.  He took possession of over
                  $200,000 worth of furniture from Klingman on consignment.  Most
                  was returned but there was an amount he couldn't "find", so Klingman
                  billed us for the missing amount.  Klingmans is current selling
                  and I had hoped the debt will be overlooked in the process but
                  they sent
                  me a letter agreeing to settle for $20,000.

                I
                  wouldn't be surprise if the amount couldn't be reduced with an
                  offer.

              
	
                Shulman
                  Hodges and Bastin

              	 	$	2,770.00	 	
                Corporate
                  attorney.  We paid a $5,000.00 retainer so there should be a
                  refund.

              
	 	 	 	 	 	 
	 	 	 	 	 	 
	
                
                

                Monthly
                  Payments

              	 	 	 	 	 
	
                First
                  Data

              	 	$	79.95	 	
                Credit
                  card processing.  It is deducted from our bank account every
                  month.

              
	
                Bank
                  of America - VISA

              	 	$	400.00	 	
                varies

              
	
                Sprint

              	 	$	265.00	 	
                This
                  is a cell phone contract left over from Walsh.  I am not sure
                  how much longer it runs.

              
	
                Lease
                  Finance Group

              	 	$	57.07	 	
                Lease
                  payment on credit card machines

              
	 	 	 	 	 	 
	
                Disputed
                  Bills - Some Amounts unknown

              	 	 	 	 	 
	
                Zaira
                  Sepulveda

              	 	
                ???

              	 	
                The
                  Key West gallery was leased from her.  We broke it in April,
                  2006 because we closed the gallery.

                She
                  took our 3 month deposit and released it in a month or so.

                She
                  might have a weak claim.

              
	
                Grand
                  Rapids Landlord

              	 	
                ??

              	 	
                This
                  is one of Walsh's more confusing deals.  This was a lease for
                  space in a mall.  The mall was having problems getting and
                  keeping tenents. The management also changed.

                Walsh
                  originally gave the landlord 1,000,000 shares which he claimed
                  was for
                  rent.

                We
                  refused to pay them because of the stock.

                It
                  was broken in May 2006

                Any
                  claim would be very questionable

              
	 	 	 	 	 	 
	
                Reimburseable
                  Expenses Paid by Ditto After November 31

              	 	 	 	 	 
	
                11/19/2007

              	 	$	689.50	 	
                Equity
                  Technology Group for Edgarizing

                Charged
                  to personal MC

              
	
                12/3/2007

              	 	$	2,000.00	 	
                transferred
                  from personal acct to pay bills

              
	
                12/7/2007

              	 	$	500.00	 	
                transferred
                  from personal acct to pay bills

              
	
                12/15/2007

              	 	$	120.00	 	
                three
                  months of Vontage for our 800 number charged to personal
                  VISA

              
	
                12/13/2007

              	 	$	3,000.00	 	
                transferred
                  from personal acct to pay bills

              
	
                Total
                  of $6,309.50 Reimbursement to Ditto

              	 	 	 	 	 


      

      


      


      
        
          
          

        

        
          N-1

          
            

          

        

        
          
          

        

      

      28-Dec-07

      


      Artfest
        International, Inc.

      


      Exhibit
        N page 2

      


      Notes
        or
        long term debts other than Ditto Family Trust.

      We
        have
        actual documents on file for the first group.

      Some
        are
        unsigned but the bank deposit at the time of each reflects receipt of their
        payments.

      We
        have
        no documentation for the second group but the bank statements at the time
        of
        each record receipt of their payments.

      


      
        	
                Garrison

              	
                8/27/2004

              	 	$	20,000.00	 	 
	
                Anderson

              	
                4/9/2007

              	 	$	17,500.00	 	
                6-3-05
                  repaid $10,000.

              
	
                Anderson

              	
                8/18/2004

              	 	$	20,000.00	 	 
	
                Grimm

              	
                7/7/2004

              	 	$	30,000.00	 	 
	
                Bremmer

              	
                6/30/2004

              	 	$	20,000.00	 	 
	
                Reiffer

              	
                3/17/2004

              	 	$	2,500.00	 	 
	
                Dupon

              	
                6/28/2007

              	 	$	20,000.00	 	 
	
                Selle,
                  D

              	
                4/16/2004

              	 	$	17,500.00	 	 
	
                Clausing

              	
                3/14/2004

              	 	$	5,000.00	 	 
	
                Selle,
                  C

              	
                5/15/2007

              	 	$	35,000.00	 	 
	
                Usiak

              	
                8/27/2004

              	 	$	10,000.00	 	 
	
                Schubart

              	
                8/18/2004

              	 	$	20,000.00	 	 
	
                Hogdahl

              	
                1/1/2005

              	 	$	35,000.00	 	 
	
                Hogdahl

              	
                10/18/2007

              	 	$	20,000.00	 	 
	
                Trent

              	
                6/24/2004

              	 	$	15,000.00	 	 
	
                Art
                  Network

              	
                9/15/2005

              	 	$	18,682.05	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	
                Sells,
                  C

              	
                4/23/2003

              	 	$	20,100.00	 	 
	
                Bobby
                  Melton

              	
                5/30/2003

              	 	$	24,000.00	 	 
	
                Fleck,
                  D

              	
                10/6/2004

              	 	$	5,000.00	 	 
	
                Fleck,
                  D

              	
                10/13/2004

              	 	$	5,000.00	 	 
	
                Fleck,
                  D

              	
                11/24/2004

              	 	$	1,600.00	 	 
	
                Cliff
                  & Mary

              	
                8/27/2004

              	 	$	6,000.00	 	 


      

      


    

    


    
      
        
        

      

      
        N-2

        
          

        

      

      
        
        

      

    

    EXHIBIT
      O

    


    ARTFEST
      INTERNATIONAL, INC.

    RESOLUTION
      OF THE BOARD OF DIRECTORS

    


    At
      the
      meeting of the Board of Directors of ArtFest International, Inc. (“Company”)
      held on December 5, 2007, the following resolutions were proposed and approved
      by the Board:

    


    WHEREAS,
      the Company wishes to acquire Art Channel, Inc. (ACI), a privately held
      corporation, through a tax-free share exchange agreement (hereinafter, the
      “Acquisition”), whereupon ACI shall become a wholly owned subsidiary of the
      Company.

    


    WHEREAS,
      in connection with the Acquisition, each issued and outstanding share ACI’s
      common stock shall be deemed cancelled and converted into the right to receive,
      as applicable, 28,000,000 newly issued shares of the Company’s common
      stock.

    


    BE
      IT
      RESOLVED, that the Board approves the Acquisition, and in connection hereto,
      the
      issuance of 28,000,000 shares of the Company’s common stock to complete the
      Acquisition; and

    


    BE
      IT
      FURTHER RESOLVED, the Company intends to have the Acquisition completed by
      January 31, 2008, or sooner.

    


    Date: December
      5,
      2007

    


    


    CHAIRMAN

    


    


    ____________________________

    Larry
      S.
      Ditto

    


    


    DIRECTOR

    


    


    ____________________________

    Eric
      Hansen

    


    


    DIRECTOR

    


    


    ____________________________

    Mark
      Gordon

    


    
      
        
        

      

      
        O-1

        
          

        

      

      
        
        

      

    

    
      EXHIBIT
        P

    

     

    ARTFEST
      INTERNATIONAL, INC.

    RESOLUTION
      OF THE MAJORITY SHAREHOLDERS

    


    At
      the
      meeting of the Majority Shareholders (the “Shareholders”) of ArtFest
      International, Inc. (the “Company”) held on December 5, 2007, collectively
      holding over 66.7% of the shares of the Company, the following resolutions
      were
      approved by the Shareholders:

    


    WHEREAS,
      the Company wishes to acquire Art Channel, Inc. (ACI), a privately held
      corporation, through a tax-free share exchange agreement (hereinafter, the
      “Acquisition”), whereupon ACI shall become a wholly owned subsidiary of the
      Company.

    


    WHEREAS,
      in connection with the Acquisition, each issued and outstanding share ACI’s
      common stock shall be deemed cancelled and converted into the right to receive,
      as applicable, 28,000,000 newly issued shares of the Company’s common
      stock.

    


    BE
      IT
      RESOLVED, that the Shareholders approve the Acquisition, and in connection
      hereto, the issuance of 28,000,000 shares of the Company’s common stock to
      complete the Acquisition and that such Acquisition be completed by January
      31,
      2008, or sooner.

    


    
      	
              Majority
                Shareholder

            	 
	 	 
	
              ________________________

            	 
	 	 
	
              ________________________

            	
              ____________/_____________

            
	
              Printed
                Name

            	
              No.
                of Shares  %
                Ownership

            
	 	 
	
              Majority
                Shareholder

            	 
	 	 
	
              ________________________

            	 
	 	 
	
              ________________________

            	
              ____________/_____________

            
	
              Printed
                Name

            	
              No.
                of Shares  %
                Ownership

            
	 	 
	
              Majority
                Shareholder

            	 
	 	 
	
              ________________________

            	 
	 	 
	
              ________________________

            	
              ____________/_____________

            
	
              Printed
                Name

            	
              No.
                of Shares  %
                Ownership

            
	 	 
	
              Majority
                Shareholder

            	 
	 	 
	
              ________________________

            	 
	 	 
	
              ________________________

            	
              ____________/_____________

            
	
              Printed
                Name

            	
              No.
                of Shares  %
                Ownership

               

               

            


    

     

     

    
      
        
        

      

      
        P-1

        
          

        

      

      
        
        

      

    

     

     

     

    EXHIBIT
      Q

    


    LIST
      OF SHAREHOLDERS OF INTERNATIONAL

    


    Deleted
      from SEC Filing due to the confidential nature of the information.

     

     

     

    
      
        
        

      

      
        Q-1

        
          

        

      

      
        
        

      

    

    EXHIBIT
      R

    


    INTERNATIONAL
      CERTIFICATE

    


    


    Waived
      by
      the Parties.

     

    
      
        
        

      

      
        R-1

        
          

        

      

      
        
        

      

    

    


    EXHIBIT
      S

    


    CHANNEL
      CERTIFICATE

    


    


    Waived
      by
      the Parties.

    


    
      
        
        

      

      
        S-1

        
          

        

      

      
        
        

      

    

    EXHIBIT
      T

    


    INDEMNIFICATION
      LETTER AGREEMENT

    


    
      	
              From:

            	
              The
                Indemnifying Party

            
	 	
              (Name
                and Address)

            
	 	 
	
              To:

            	
              The
                Indemnified Party

            
	 	
              (Name
                and Address)

            


    

    


    Date:

    


    Gentlemen/Ladies:

    


    This
      will
      confirm and acknowledge that pursuant to Article “20” of the Acquisition
      Agreement and Plan of Merger (the “Agreement”) dated as of the 26th day of
      December, 2007, by and among Artfest International, Inc., certain shareholders
      of Artfest International, Inc., Art Channel, Inc. and certain shareholders
      of
      Art Channel Inc., the undersigned acknowledges its liability for indemnification
      to you with respect to _________________ (description of claim) (the "Claim”),
      and will not take the position that it is not liable to you with respect to
      the
      Claim.  Such obligation is subject to all of the provisions, terms and
      conditions of the Agreement.

     

    
      	 	 
	 	
              Very
                truly yours,

            
	 	 
	 	
              ___________________________

            
	 	
              Name
                of Indemnifying Party

            
	 	 
	 	
              By:
                ___________________________

            
	 	
              (Authorized
                Signature)

            


    

    


    


    
      	
              STATE
                OF

            	
              )

            
	 	
              )
                ss.:

            
	
              COUNTY
                OF

            	
              )

            


    

    


    


    On
      the
      ____ day of __________, ____ before me personally came __________ to me known,
      who, being by me duly sworn, did depose and say that that he or she is the
      ____________ of __________________________, the corporation described in and
      which executed the foregoing instrument; that he or she knows the seal of said
      corporation; that the seal affixed to said instrument is such corporate seal;
      that it was so affixed by order of the board of directors of said corporation,
      and that he or she signed his or her name thereto by like order.

     

    ______________________________
Notary
      Public

     

     

     

    
      
        
        

      

      
        T-1

        
          

        

      

      
        
        

      

    

    EXHIBIT
      U

     

    (Intentionally
      Deleted)

     

    
 

    
      
        
        

      

      
        U-1

        
          

        

      

      
        
        

      

    

    EXHIBIT
      V

    


    (Intentionally
      Deleted)

    


    
      
        
        

      

      
        V-1

        
          

        

      

      
        
        

      

    

    EXHIBIT
      W

    


    SHAREHOLDERS’
      DESIGNATION

    


    The
      Art
      Channel, Inc. shareholders, (the “Shareholders”) hereby irrevocably constitute
      and appoint Eddie Vasker with full power of substitution and re-substitution,
      as
      its and their true and lawful agent, attorney-in-fact and representative (such
      person and his appointed and designated successor or successors being herein
      referred to as the “Shareholder Representative”), with full power to act for and
      on behalf of the Shareholders, and each of them, for all purposes pursuant
      to
      the Acquisition Agreement, by and between Artfest International, Inc. (“ARTI”)
      and the Shareholders, (the “Agreement”) and in connection with the transactions
      therein contemplated including, without limitation, for purposes of: (i)
      determining the amount of damages  suffered or incurred by the
      Shareholders, (ii) receiving notices from ARTI given under this Agreement, of
      which the Shareholder Representative will give a copy to the Investors and
      the
      Shareholders as the Shareholder Representative deems necessary in his sole
      discretion, (iv) approving and agreeing with ARTI as to additions,
      deletions, changes, modifications and amendments to this Agreement and the
      Annexes hereto, except with respect to any addition, deletion, change,
      modification or amendment to a material financial term or condition of any
      of
      such documents that would materially, financially and adversely affect the
      Shareholders, (v) settling finally and completely any disputes or
      controversies among the parties hereto (other than solely among the
      Shareholders) with respect to the interpretation or effect of or damages or
      relief under this Agreement and any and all transactions contemplated hereby.
      The Shareholder Representative shall be entitled to reimbursement by the
      Shareholders from the consideration actually payable to the Shareholders or
      otherwise for all reasonable costs and expenses incurred by him in fulfilling
      his duties hereunder, and the Investors and the Shareholders agree among
      themselves that such costs and expenses shall be borne pro rata among them
      according to the number of Common Stock owned immediately after the Closing.
      The
      Shareholders agree that the Shareholder Representative may make reasonable
      requests for advances to cover such costs and expenses, and the Shareholders
      shall promptly make such advances. In no event shall ARTI be liable for any
      costs or expenses of any nature incurred by the Shareholder Representative
      in
      its capacity as such.  THE SHAREHOLDERS JOINTLY AND SEVERALLY, AGREE
      THAT THE SELLER REPRESENTATIVE SHALL HAVE NO LIABILITY TO THE SHAREHOLDERS
      FOR
      ACTION TAKEN OR OMITTED IN GOOD FAITH IN EXERCISING THE AUTHORITY GRANTED UNDER
      THIS SECTION.  ARTI shall not have any obligation or liability to
      indemnify or defend the Shareholder Representative in respect of any claim
      or
      liability asserted against the Shareholder Representative by any of the
      Shareholders or his successors or assigns. All determinations, decisions,
      actions and the like made by the Shareholder Representative shall be final,
      conclusive and binding upon all the Shareholders and all persons claiming under
      or through them.

    


    _______________________________

    Shareholder
      Name

    


    _______________________________

    Signature

    


    
      
        
        

      

      
        W-1