AMENDED AND RESTATED AGREEMENT
AND PLAN OF MERGER


by and among


Smart
Kids Group Inc.,


SKGI
Acquisition Corp.


and


Paragon
GPS, Inc.


 November 4 , 2011


 




    	    



    	 



    

 


TABLE OF CONTENTS


	ARTICLE I DEFINITIONS	 	5
	Section 1.1	Definitions. 	5
	ARTICLE II THE MERGER	10
	Section 2.1	Merger.	10
	Section 2.2	Effective Time. 	10
	Section 2.3	Articles of Incorporation;	10
	Section 2.4	Effects of the Merger. 	11
	Section 2.5	Closing. 	11
	Section 2.6	Tax-Free Merger. 	11
	ARTICLE III MERGER CONSIDERATION; CONVERSION AND EXCHANGE OF SECURITIES	12
	Section 3.1	Manner and Basis of Converting and Exchanging Capital Stock. 	12
	Section 3.2	Surrender and Exchange of Certificates.	13
	Section 3.3	Options, Warrants.	10
	Section 3.4	Parent Common Stock. 	15
	ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY	15
	Section 4.1	Organization.	15
	Section 4.2	Authorization; Validity of Agreement.	15
	Section 4.3	Capitalization.	16
	Section 4.4	Consents and Approvals; No Violations. 	16
	Section 4.5	Financial Statements. 	16
	Section 4.6	No Undisclosed Liabilities.	17
	Section 4.7	Litigation. 	17
	Section 4.8	No Default; Compliance with Applicable Laws. 	17
	Section 4.9	Broker’s and Finder’s Fees.	17
	Section 4.10	Contracts. 	17
	Section 4.11	Tax Returns and Audits.	18
	Section 4.12	Patents and Other Intangible Assets.	18
	Section 4.13	Employee Benefit Plans; ERISA.	19
	Section 4.14	Title to Property and Encumbrances. 	20
	Section 4.15	Condition of Properties.	20
	Section 4.16	Insurance Coverage.	20
	Section 4.17	Environmental Matters.	20
	Section 4.18	Disclosure. 	21
	ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION CORP.	21
	Section 5.1	Organization.	21







    	   



    	 



    



	Section 5.2	Authorization; Validity of Agreement. 	22
	Section 5.3	Consents and Approvals; No Violations. 	22
	Section 5.4	Litigation.	22
	Section 5.5	No Default; Compliance with Applicable Laws.  	22
	Section 5.6	Broker’s and Finder’s Fees; Broker/Dealer Ownership.	23
	Section 5.7	Capitalization of Parent. 	23
	Section 5.8	Acquisition Corp. 	18
	Section 5.9	Validity of Shares. 	23
	Section 5.10	SEC Reporting and Compliance.	24
	Section 5.11	Financial Statements. 	25
	Section 5.12	No General Solicitation. 	24
	Section 5.13	Absence of Undisclosed Liabilities. 	24
	Section 5.14	Changes. 	25
	Section 5.15	Tax Returns and Audits. 	26
	Section 5.16	Employee Benefit Plans; ERISA.	26
	Section 5.17	Interested Party Transactions.	27
	Section 5.18	Questionable Payments.	27
	Section 5.19	Obligations to or by Stockholders.	27
	Section 5.20	Schedule of Assets and Contracts. 	27
	Section 5.21	Environmental Matters.	28
	Section 5.22	Employees.	29
	Section 5.23	Title to Property and Encumbrances. 	29
	Section 5.24	Condition of Properties. 	29
	Section 5.25	Insurance Coverage. 	29
	Section 5.26	Disclosure.	29
	Section 5.27	No Liabilities	29
	 	 	 
	ARTICLE VI CONDUCT OF BUSINESSES PENDING THE MERGER	30
	Section 6.1	Conduct of Business by the Company Pending the Merger. 	30
	Section 6.2	Conduct of Business by Parent and Acquisition Corp. 	31
	ARTICLE VII ADDITIONAL AGREEMENTS	32
	Section 7.1	Access and Information. 	32
	Section 7.2	Additional Agreements.	32
	Section 7.3	Publicity. 	33
	Section 7.4	Appointment of Directors.	33
	Section 7.5	 Name Changes. 	33
	Section 7.6	Stockholder Consent.	33
	ARTICLE VIII CONDITIONS OF PARTIES’ OBLIGATIONS	33
	Section 8.1	Company Obligations. 	33
	Section 8.2	Parent and Acquisition Corp. Obligations. 	35
	ARTICLE IX INDEMNIFICATION AND RELATED MATTERS	37
	Section 9.1	Indemnification by Parent.	37
	Section 9.2	Survival. 	37







    	  



    	 



    
 


	Section 9.3	Time Limitations. 	37
	Section 9.4	Limitation on Liability. 	37
	Section 9.5	Notice of Claims.	38
	ARTICLE X TERMINATION PRIOR TO CLOSING	38
	Section 10.1	Termination of Agreement. 	38
	Section 10.2	Termination of Obligations. 	39
	ARTICLE XI MISCELLANEOUS	39
	Section 11.1	Amendments. 	39
	Section 11.2	Notices.	39
	Section 11.3	Entire Agreement. 	40
	Section 11.4	Expenses.	40
	Section 11.5	Severability. 	40
	Section 11.6	Successors and Assigns; Assignment. 	40
	Section 11.7	No Third Party Beneficiaries. 	40
	Section 11.8	Counterparts; Delivery by Facsimile. 	40
	Section 11.9	Waiver. 	41
	Section 11.10	No Constructive Waivers. 	41
	Section 11.11	Further Assurances.	41
	Section 11.12	Recitals. 	41
	Section 11.13	Headings. 	41
	Section 11.14	Governing Law. 	41
	Section 11.15	Dispute Resolution. 	41
	Section 11.16	Interpretation.	42






 


LIST
OF EXHIBITS


	Exhibit	Description
		
	Exhibit A	Articles of Incorporation of Surviving Corporation
	Exhibit B	By-laws of Surviving Corporation
	Exhibit C	Directors and officers of Company Pre-Effective Time and Post-Effective Time
	Exhibit D	Articles of Incorporation of Parent
	Exhibit E	Bylaws of Parent








    	 



    	 



    
AGREEMENT AND PLAN OF MERGER




 THIS AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER is entered into as of November 4, 2011 by and among Smart
Kids Group, Inc., a Florida corporation (“Parent”), SKGI
Acquisition Corp., a Nevada corporation and a wholly-owned subsidiary of Parent (“Acquisition
Corp.”), and Paragon GPS, Inc., a Delaware corporation (the
“Company”). This Agreement amends and supersedes in its entirety that certain Agreement and Plan of Merger
dated October 17, 2011.


W
I T N E S S E T H:


WHEREAS, the respective
Boards of Directors of each of Parent, Acquisition Corp. and the Company have approved, and deem it advisable and in the best interests
of their respective stockholders to consummate, the acquisition of the Company by Parent, which acquisition is to be effected by
the merger of the Acquisition Corp. with and into, the Company with the Company being the surviving entity (the “Merger”),
upon the terms and subject to the conditions set forth in this Agreement (as defined herein);


WHEREAS,
the parties hereto intend that the Merger shall qualify as a reorganization within the meaning
of Section 368(a)(1)(A) of the Internal Revenue Code of 1986, as amended (the “Code”), by reason of Section
368(a)(2)(E) of the Code; and


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


ARTICLE I

DEFINITIONS


Section 1.1           
Definitions. Capitalized terms used in this Agreement shall have the following meanings:


“Acquisition
Corp.” shall have the meaning given to such term in the preamble to this Agreement.


“Acquisition
Proposal” shall have the meaning given to such term in Section 6.2 hereof.


“Action”
shall mean any claim, action, suit, proceeding, investigation or order.


“Affiliate”
shall mean, with respect to any Person, any Person directly or indirectly controlling, controlled by or under common control with,
such Person. For the purposes of this definition, “control” (including, with correlative meaning, the terms
“controlling,” “controlled by” and “under common control with”) means
the possession, directly or indirectly, of the power to direct or cause the direction of management and policies of such Person
through the ownership of voting securities, by contract or otherwise.


“Agreement”
shall mean this Agreement and Plan of Merger, including the exhibits attached hereto or referred to herein, as the same may be
amended or modified from time to time in accordance with the provisions hereof.



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“Articles
of Incorporation” shall have the meaning given to such term in Section 2.3(a) hereof.


“Balance
Sheet” shall have the meaning given to such term in Section 4.5 hereof.


“Balance
Sheet Date” shall have the meaning given to such term in Section 4.5 hereof.


“By-laws”
shall have the meaning given to such term in Section 2.3(b) hereof.


“Closing”
shall have the meaning given to such term in Section 2.5 hereof.


“Closing
Date” shall have the meaning given to such term in Section 2.5 hereof.


“Code”
shall have the meaning given to such term in the second recital to this Agreement.


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


“Company”
shall have the meaning given to such term in the preamble to this Agreement.


“Company
Common Stock” shall mean the common stock, par value $0.001, of the Company.


“Company
Material Adverse Effect” shall mean any change, effect or circumstance that is materially adverse or is reasonably likely
to be materially adverse to the business, assets, liabilities, condition (financial or otherwise) or operations of the Company
and its subsidiaries, taken as a whole, other than any such change, effect or circumstance relating to general economic, regulatory
or political conditions, except to the extent such change, effect or circumstance disproportionately affects the Company and its
subsidiaries, taken as a whole.


“Contract”
shall have the meaning given to such term in Section 4.4 hereof.


“Consents”
shall mean any permits, filings, notices, licenses, consents, authorizations, accreditation, waivers, approvals and the like of,
to, with or by any Person.


"Convertible
Securities" shall mean any options, warrants, rights or other agreements or instruments convertible, exchangeable
or exercisable into common or preferred stock or equity securities.


“Date of
Acquisition” as used herein means March 13, 2009, the date the Company experienced a change of management and control.


“DRS”
shall mean the Delaware General Corporation Law, as amended.


“Dissenting
Shares” shall have the meaning given to such term in Section 3.2(d) hereof.


“Effective
Time” shall have the meaning given to such term in Section 2.2 hereof.



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“Employee
Benefit Plans” shall have the meaning assigned to it in Section 4.13 hereof.


“Environmental
Law” shall mean the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. §§ 9601
et seq.; the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. §§ 11001 et seq.; the Resource Conservation
and Recovery Act, 42 U.S.C. §§ 6901 et seq.; the Toxic Substances Control Act, 15 U.S.C. §§ 2601 et seq.; the
Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. §§ 136 et seq. and comparable state statutes dealing with
the registration, labeling and use of pesticides and herbicides; the Clean Air Act, 42 U.S.C. §§ 7401 et seq.; the Clean
Water Act (Federal Water Pollution Control Act), 33 U.S.C. §§ 1251 et seq.; the Safe Drinking Water Act, 42 U.S.C. §§
300f et seq.; and the Hazardous Materials Transportation Act, 49 U.S.C. §§ 1801 et seq., as any of the above referenced
statutes have been amended as of the date hereof, all rules, regulations and policies promulgated pursuant to any of the above
referenced statutes, and any other foreign, federal, state or local law, statute, ordinance, rule, regulation or policy governing
environmental matters, as the same have been amended as of the date hereof.


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


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


“Exempt
Issuances” shall mean: (i) with respect to Company, the sale (or agreement to sell) up to 4,339,872 shares of
Company Common Stock, which shares shall be convertible to Parent Common Stock on a 1:10 basis at any time prior to the Reverse
Split or on a 10:1 basis at any time after the Reverse Split), and (ii) with respect to Parent, the sale (or agreement
to sell) up to 119,948,328 shares of Parent Common Stock.


“Federal
Securities Laws” means the Securities Act, the Exchange Act and the rules and regulations promulgated thereunder.


“FRS”
means the Florida Business Corporation Act, as amended.


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


“Hazardous
Material” means any substance or material meeting any one or more of the following criteria: (a) it is or contains a
substance designated as or meeting the characteristics of a hazardous waste, hazardous substance, hazardous material, pollutant,
chemical substance or mixture, contaminant or toxic substance under any Environmental Law; (b) its presence at some quantity requires
investigation, notification or remediation under any Environmental Law; (c) it contains, without limiting the foregoing, asbestos,
polychlorinated biphenyls, petroleum hydrocarbons, petroleum derived substances or waste, pesticides, herbicides, crude oil or
any fraction thereof, nuclear fuel, natural gas or synthetic gas; or (d) mold.


“Indebtedness”
shall mean any obligation of the Company that under GAAP is required to be shown on the Balance Sheet of the Company as a Liability.
Any obligation secured by a Lien on, or payable out of the proceeds of production from, property of the Company shall be deemed
to be Indebtedness even though such obligation is not assumed by the Company.



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


“Intellectual
Property” shall have the meaning given to such term in Section 4.12(b) hereof.


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


“Issuance
Date” shall have the meaning assigned to it in Section 3.2(b) hereof.


“Letter
of Transmittal” shall have the meaning assigned to it in Section 3.2 hereof.


“Liability”
shall mean any and all liability, debt, obligation, deficiency, Tax, penalty, fine, claim, cause of action or other loss, cost
or expense of any kind or nature whatsoever, whether asserted or unasserted, absolute or contingent, accrued or unaccrued, liquidated
or unliquidated, and whether due or to become due and regardless of when asserted.


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


“Merger”
shall have the meaning given to such term in the second recital to this Agreement.


“NRS”
shall mean the Nevada Revised Statutes, as amended.


“OTC”
shall mean the Over the Counter Bulletin Board.


“Parent”
shall have the meaning given to such term in the preamble to this Agreement.


“Parent
Balance Sheet” shall have the meaning assigned to such term in Section 5.13 hereof.


“Parent
Balance Sheet Date” shall have the meaning assigned to it in Section 5.13 hereof.


“Parent
Common Stock” shall mean the common stock, par value $0.0001 per share, of Parent.



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“Parent
Employee Benefit Plans” shall have the meaning assigned to such term in Section 5.16 hereof.


“Parent
Financial Statements” shall have the meaning assigned to such term in Section 5.10 hereof.


“Parent
Material Adverse Effect” means any change, effect or circumstance that is materially adverse or is reasonably likely
to be materially adverse to the business, assets, liabilities, condition (financial or otherwise) or operations of Parent and its
subsidiaries, taken as a whole, other than any such change, effect or circumstance relating to general economic, regulatory or
political conditions, except to the extent such change, effect or circumstance disproportionately affects Parent and its subsidiaries,
taken as a whole.


“Parent
SEC Documents” shall have the meaning assigned to such term in Section 5.9 hereof.


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


“Parent
Stockholder Consent” shall have the meaning assigned to such term in Section 7.6 hereof.


“Person”
shall mean any individual, corporation, limited liability company, partnership, joint venture, trust or other entity or organization,
including any government or political subdivision or an agency or instrumentality thereof.


“Record
Date” shall mean the calendar date established by FINRA to determine the holders of record of Parent Common Stock who
are eligible under applicable law to participate in the Reverse Split.


“Reverse
Split” shall have the meaning given to such term in Section 3.4 hereof.


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


“Stockholder”
shall mean any record holder of Company Common Stock.


“Surviving
Corporation” shall have the meaning given to such term in Section 2.1 hereof.



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


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


“Tax Sharing
Agreements” shall have the meaning given to such term in Section 4.15 hereof.


ARTICLE II

THE MERGER


Section 2.1           
Merger. Upon the terms and subject to the conditions of this Agreement, at the Effective
Time, the Acquisition Corp. shall be merged with and into the Company in accordance with the
DRS. Following the Effective Time, the separate corporate existence of the Acquisition Corp. shall cease, and Company shall continue
as the corporation surviving the Merger (sometimes hereinafter referred to as the “Surviving Corporation”).



Section 2.2           
Effective Time. The Parent, the Company and Acquisition Corp. shall cause articles
of merger to be filed on the Closing Date (or on such other date as the Company and Parent may agree in writing) with the Secretary
of State of the State of Nevada and with the Secretary of State of the State of Delaware as provided by law, and shall make all
other filings or recordings required by applicable law in connection with the Merger. The Merger shall become effective at such
time as the articles of merger are duly filed in accordance with applicable law or such later time as specified in the articles
of merger, with such time hereinafter referred to as the “Effective Time.”


Section 2.3           
Certificate of Incorporation; By-laws; Directors and Officers.


(a)               
The Certificate of Incorporation of the Company as in effect immediately prior to the Effective
Time, a copy of which is attached as Exhibit A hereto, shall be the Certificate of Incorporation of the Surviving Corporation
(the “Articles of Incorporation”) from and after the Effective Time until thereafter changed or amended as provide
therein or in accordance with applicable law.



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(b)              
The by-laws of the Company as in effect immediately prior to the Effective Time,
a copy of which is attached as Exhibit B hereto, shall be the by-laws of the Surviving Corporation (the “By-laws”)
from and after the Effective Time until thereafter changed or amended as provided therein or in accordance with applicable law.


(c)               
At the Effective Time as contemplated by Section 2.2 hereof,
the officers and directors of the Company designated on Exhibit C hereto shall resign, and the officers and director designated
on Exhibit C hereto shall be the officers and director of the Surviving Corporation. The appointment in accordance with
the terms of this Section 2.3(c) shall be accomplished through the filling of vacancies in the Board of Directors of the
Company in compliance with the applicable provisions of Delaware law and the by-laws of the Company and without the vote (by written
consent or otherwise) of the shareholders of the Company. 


(d)              
One or more of the directors of the Parent immediately prior to the Effective Time shall be
the initial directors of the Surviving Corporation and shall hold office from the Effective Time until their respective successors
have been duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with the Articles
of Incorporation and By-laws. One or more officers of the Parent immediately prior to the Effective Time shall be the initial officers
of the Surviving Corporation and shall hold office from the Effective Time until their respective successors have been duly elected
or appointed and qualified or until their earlier death, resignation or removal in accordance with the Articles of Incorporation
and By-laws


Section 2.4           
Effects of the Merger. The Merger shall have the effects set forth in the FRS, NRS
and DRS, as applicable. Without limiting the generality of the foregoing, at the Effective Time, except as otherwise provided herein,
all of the property, rights, privileges, powers and franchises of the Company and Acquisition Corp. shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and Acquisition Corp. shall become the debts, liabilities and
duties of the Surviving Corporation. The Company acknowledges that, from and after the Effective Time, Parent shall have the absolute
and unqualified right to deal with the assets and business of the Surviving Corporation as its own property without limitation
on the disposition or use of such assets or the conduct of such business. 


Section 2.5           
Closing. The consummation of the transactions contemplated by this Agreement, including
the Merger (the “Closing”), shall take place: (a) at the offices of Cane Clark LLP, 3273 E. Warm Springs Rd.,
Las Vegas, NV at 10:00 a.m. local time on the date on which all of the conditions to the Closing set forth in Article VIII
hereof shall be fulfilled or waived in accordance with this Agreement (other than conditions that can be satisfied only at the
Closing, but subject to the fulfillment or waiver of those conditions at the Closing); or (b) at such other place, time and date
as the Company and Parent may agree in writing (the “Closing Date”).


Section 2.6           
Tax-Free Merger. The parties hereto intend that the Merger will be treated as a tax-free
reorganization under Section 368 of the Code.



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ARTICLE III

MERGER CONSIDERATION; CONVERSION AND EXCHANGE OF SECURITIES


Section 3.1           
Manner and Basis of Converting and Exchanging Capital Stock. At the Effective Time,
by virtue of the Merger and without any action on the part of the Company, Parent or Acquisition Corp. or the holders of any outstanding
shares of capital stock or other securities of the Company, Parent or Acquisition Corp.:


(a)               
Acquisition Corp. Stock. Each share of common stock, par value $0.001
per share, of the Company issued and outstanding immediately prior to the Effective Time shall be converted into and become one
validly issued, fully paid and non-assessable share of capital stock, $0.001 par value per share, of the Surviving Corporation,
such that Parent shall be the holder of all of the issued and outstanding shares of capital stock of the Surviving Corporation
following the Merger.


(b)              
Company Common Stock. Each Share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than Dissenting Shares) shall be converted or exchanged into the right to receive
on the Issuance Date:


(i)                
With respect to all shares of Company Common Stock acquired before the Record
Date of the Reverse Split if the Reverse Split has occurred or if acquired at any time (before or after the Record Date) if the
Reverse Split has not occurred, ten (10) shares of Parent Common Stock for every one (1) share of Company Common stock, such that
the number of shares of Parent Common Stock to be issued to the holders of Company Common Stock shall be equal to the sum
of (i) 596,321,280 (excluding Dissenting Shares) plus (ii) ten (10) multiplied by the number of Exempt Issuances by the
Company. These shares shall exist on the official records of Parent’s transfer agent as uncertificated
shares prior to the Issuance Date, at which time such shares shall be certificated and delivered to the appropriate holders thereof.



(ii)              
With respect to all shares of Company Common Stock acquired after the Record
Date of the Reverse Split if the Reverse Split has occurred, one (1) share of Parent Common Stock for every ten (10)
shares of Company Common stock, such that number of shares of Parent Common Stock to be issued to the holders of Company Common
Stock shall be equal to the sum of (i) 5,963,212 (excluding Dissenting Shares) plus (ii) the number of Exempt Issuances
by the Company divided by ten (10) . 


(c)               
Preferred Stock. There are no issued and outstanding shares of preferred
stock of the Company. 


(d)              
Treasury Stock. Notwithstanding any provision of this Agreement to the
contrary, each share of Company Common Stock held in the treasury of the Company and each share of Company Common Stock, if any,
owned by Parent or any direct or indirect wholly-owned subsidiary of Parent immediately prior to the Effective Time shall be canceled
in the Merger and shall not be converted or exchanged into the right to receive any shares of capital stock or other securities
of Parent.



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(e)               
No Fractional Shares. No fractional shares of Parent Common Stock shall
be issued in, or as a result of, the Merger. Any fractional shares of Parent Common Stock that a holder of record of Company Common
Stock would otherwise be entitled to receive as a result of the Merger shall be aggregated. If a fractional share of Parent Common
Stock results from such aggregation, the number of shares required to be issued to such record holder shall be rounded to the nearest
whole number of shares of Parent Common Stock.


Section 3.2           
Surrender and Exchange of Certificates. 


(a)               
Letter of Transmittal. Promptly after the Effective Time, Parent shall
mail, or cause to be mailed, to each record holder of certificate(s) formerly representing ownership of Company Common Stock that
was converted into the right to receive Parent Common Stock pursuant to Section 3.1 hereof a letter of transmittal (“Letter
of Transmittal”) (i) announcing the Closing of the Merger and confirming that the recipient of the Letter of Transmittal
has been to the proper address for delivery of certificate(s) of Parent Common Stock such shareholders are entitled to receive,
(ii) instructing such shareholders that the enclosed certificates of Parent Common Stock replace and supersede any certificates
of Company Common Stock previously issued to such holders of Company Common Stock , in each case in form and substance mutually
agreeable to the Company and Parent. Delivery shall be effected, and risk of loss and title to the Parent Common Stock shall pass,
only upon delivery to the Parent (or a duly authorized agent of Parent) by Company of a certified shareholder list of the record
shareholders of the Company. Notwithstanding the foregoing, Parent shall not be required to mail, or cause to be mailed, a Letter
of Transmittal to any record holder of certificate(s) formerly representing ownership of Company Common Stock if such holder has
previously agreed or consented to the exchange of certificates that are held in custody by the Company for the benefit of such
holder. 


(b)              
Exchange Procedures. Promptly after the earlier to occur of (i) the Reverse
Split or (ii) the denial by FINRA or any other regulatory body of Parent’s request to consummate the Reverse Split (the “Issuance
Date”), Parent shall issue to each former record holder of Company Common Stock, a stock certificate registered in the
name of such former record holder for the number of shares of Parent Common Stock that such former record holder is entitled to
receive in accordance with Section 3.1 hereof. 


(c)               
Termination of Exchange Process. Any Parent Common Stock that remains
unclaimed due to an inability to deliver to a former record holder of Company Common Stock, following commercially reasonable attempts
by Parent to confirm the correct address for delivery, at the first anniversary of the Issuance Date may be deemed “abandoned
property” subject to applicable abandoned property, escheat and other similar laws in the State or Country in which the former
record holder resides. None of the Company, Parent, Acquisition Corp. or the Surviving Corporation shall be liable to any person
in respect of any Parent Company Stock delivered to a public official pursuant to any applicable abandoned property, escheat or
similar law upon proof by Parent or the Company that a Letter of Transmittal was sent to the record address of such holder indicated
on the Company’s duly certified shareholder list.


(d)              
Dissenting Shares. Notwithstanding any provision of this Agreement to
the contrary, shares of Company Common Stock issued and outstanding immediately prior to the Effective Time and held by a Stockholder
who has demanded appraisal for such shares of Company Common Stock in accordance with the DRS (“Dissenting Shares”)
shall not be entitled to vote for any purpose or receive dividends, shall not be converted into the right to receive Parent Common
Stock in accordance with Section 3.1 hereof, and shall only be entitled to receive such consideration as shall be determined
pursuant to the DRS; provided, however, that if, after the Effective Time, such Stockholder fails to perfect or withdraws
or loses his or her right to appraisal or otherwise fails to establish the right to be paid the value of such Stockholder’s
shares of Company Common Stock under the DRS, such shares of Company Common Stock shall be treated as if they had converted as
of the Effective Time into the right to receive Parent Common Stock in accordance with Section 3.1 hereof, and such shares
of Company Common Stock shall no longer be Dissenting Shares. All negotiations with respect to payment for Dissenting Shares shall
be handled jointly by Parent and the Company prior to the Closing Date and exclusively by the Company thereafter. In the
event that more than 35% of the outstanding shares of the Company are Dissenting Shares, either the Company or Parent may elect
to terminate this Agreement, which shall forthwith become void and of no further force and effect and the parties hereto shall
be released from any and all obligations hereunder; provided, however, that nothing herein shall relieve any party hereto from
liability for the breach of any of its representations, warranties, covenants or agreements set forth in this Agreement.



    	13



    	 



    



In the event
the Company is unable to pay the Dissenting Shareholders the consideration required by DRS, then Parent or the Company may elect
to terminate this Agreement, which shall forthwith become void and of no further force and effect and the parties hereto shall
be released from any and all obligations hereunder; provided, however, that nothing herein shall relieve any party hereto from
liability for the breach of any of its representations, warranties, covenants or agreements set forth in this Agreement.


(e)               
Stock Transfer Books. Except with respect to Exempt Issuances, at the
Effective Time, the stock transfer books of the Company will be closed and there will be no further registration of transfers of
shares of Company Common Stock thereafter on the records of the Company. If, after the Issuance Date, certificates formerly representing
Company Common Stock are presented to the Surviving Corporation, these certificates shall be canceled and exchanged for the number
of shares of Parent Common Stock to which the former record holder may be entitled pursuant to Section 3.1 hereof.


(f)               
Further
Rights
in Company
Stock. 
All
shares
of Parent
Common
Stock issued
upon exchange
of shares
of Company Common Stock in accordance
with the
terms hereof
shall
be deemed
to have
been
issued
in full
satisfaction
of all rights
pertaining
to such
shares
of Company Common Stock.


Section 3.3           
Options, Warrants. 


(a)               
As of the Effective Time, the Company warrants that no Convertible Securities
shall be issued or outstanding by the Company. 


(b)              
As of the Effective Time, the Parent warrants that no Convertible Securities
shall be issued or outstanding by the Parent or the Acquisition Corp. 



    	14



    	 



    



Section 3.4           
Parent Common Stock. Parent shall reserve a sufficient number of shares of Parent
Common Stock to complete the conversion and exchange of Company Common Stock into Parent Capital Stock contemplated by Sections
3.1 and 3.2 hereof. Parent covenants and agrees that immediately prior to the Effective Time there will be 1,040,201,672
shares of Parent Common Stock issued and outstanding plus the number of Exempt Issuances. Upon the Closing and the issuance
of shares of Parent Common Stock to the shareholders of the Company in an amount equal to the sum listed in Section 3.1, as the
case may be, in exchange for a number of shares of Company Common Stock equal to 59,632,128 plus the number of Exempt Issuances
by the Company, there will be a number of shares of Parent Common Stock issued and outstanding equal to 1,636,522,952 plus
the number of shares issued or to be issued as Exempt Issuances. All Exempt Issuances shall be deemed completed upon the earlier
to occur of either of the following events: (i) Parent and Company have provided notice, each to the other, that all Exempt Issuances
permitted to such party have been completed; or (ii) the Closing Date . 


Section 3.5           
Reverse Split. Immediately following the execution of this Agreement, Parent will
take all necessary steps to obtain regulatory approval for a 100 :1 reverse split (the “Reverse Split”)
of the shares of Parent Common Stock that will then be issued and outstanding including, if applicable, those held in uncertificated
form for the benefit of the shareholders of Company as provided in Section 3.1 of this Agreement. The Record Date shall be set
by FINRA and will occur on an unknown date in the future upon completion of its review of the Parent’s submission of the
Reverse Split. 


ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE COMPANY


The Company hereby
represents and warrants to Parent as follows:


Section 4.1           
Organization. The Company (i) is duly organized, validly existing and in good standing
(or its equivalent) under the laws of the State of Delaware, (ii) has all licenses, permits, authorizations and other Consents
necessary to own, lease and operate its properties and assets and to carry on its business as it is now being conducted and (iii)
has all requisite corporate or other applicable power and authority to own, lease and operate its properties and assets and to
carry on its business as it is now being conducted and presently proposed to be conducted, except where such failure would not
have, or be reasonably likely to have, a Company Material Adverse Effect. The Company is duly qualified or authorized to conduct
business and is in good standing (or its equivalent) as a foreign corporation or other entity in all jurisdictions in which the
ownership or use of its assets or nature of the business conducted by it makes such qualification or authorization necessary, except
where the failure to be so duly qualified, authorized and in good standing would not have a Company Material Adverse Effect. 


Section 4.2           
Authorization; Validity of Agreement. The Company has all requisite corporate power
and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution, delivery
and performance by the Company of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized
by the Board of Directors of the Company and no other action (except the approval of the requisite Stockholders solely with respect
to consummation of the Merger) on the part of the Company or any of its Stockholders or subsidiaries is necessary to authorize
the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby. This Agreement has been
duly executed and delivered by the Company and (assuming due and valid authorization, execution and delivery hereof by Parent and
Acquisition Corp.) is a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms,
except as such enforcement is limited by bankruptcy, insolvency and other similar laws affecting the enforcement of creditors’
rights generally and by general principles of equity.



    	15



    	 



    



Section 4.3           
Capitalization. As of the Effective Time, including those set aside for Exempt Issuances,
the authorized and issued capital stock of the Company shall consist of shares of Company Common Stock equal to the sum of 59,632,128
plus the number of Exempt Issuances completed prior to such time.  As of the Effective Time,
except for Exempt Issuances, all the outstanding shares of Company Common Stock shall be duly authorized, validly issued,
fully paid and non-assessable and there shall be no rights in favor of any person to purchase any Company
Common Stock.


Section 4.4           
Consents and Approvals; No Violations. Except for (a) approval of the Merger by the
requisite Stockholders and (b) filing of the certificate of merger with the Secretary of State of the State of Delaware, neither
the execution, delivery or performance of this Agreement by the Company nor the consummation of the transactions contemplated hereby
will (i) violate any provision of its Articles of Incorporation or by-laws; (ii) violate, conflict with or result in a breach of
any provision of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default)
under, require the consent of or result in the creation of any encumbrance upon any of the properties of the Company or any of
its subsidiaries under any material note, bond, mortgage, indenture, deed of trust, license, franchise, permit, lease, contract,
agreement or other instrument (collectively, “Contract”) to which the Company or any its subsidiaries or any
of their respective properties may be bound; (iii) require any Consent, approval or authorization of, or notice to, or declaration,
filing or registration with, any governmental entity by or with respect to the Company or any of its subsidiaries; or (iv) violate
any order, writ, judgment, injunction, decree, law, statute, rule or regulation applicable to the Company or any of its subsidiaries
or any of their respective properties or assets; except, in the cases of clauses (ii), (iii) and (iv), any such violations, conflicts,
breaches, defaults or encumbrances, or any failure to receive any such Consent, approval or authorization, or to make any such
notice, declaration, filing or registration as will not result in, or could reasonably be expected to result in, a Company Material
Adverse Effect.


Section 4.5           
Financial Statements. The Company has delivered or made available as of the date hereof
or shall, prior to the Closing Date, deliver or make available to Parent (a) the audited consolidated balance sheets of the Company
for the fiscal years ended December 31, 2010 and 2009 (excluding the period from January 1, 2009 to the Date of Acquisition) together
with interim financial statements for the period January 1, 2011 through September 30, 2011, and (b) the related audited consolidated
and consolidating statements of income, stockholders’ equity and cash flows of the Company for the fiscal years ended December
31, 2010 and 2009 (excluding the period from January 1, 2009 to the Date of Acquisition) together with interim financial statements
for the period January 1, 2011 through September 30, 2011. The foregoing financial statements (including any notes thereto) (i)
have been prepared based upon the books and records of the Company, (ii) have been prepared in accordance with GAAP (except as
otherwise noted therein), and (iii) present fairly, in all material respects, the financial position, results of operations and
cash flows of the Company as at their respective dates and for the periods then ended. To the knowledge of the Company, since the
Balance Sheet Dates, no fact or condition exists that has not been disclosed to Parent that has had or could reasonably be expected
to have a Company Material Adverse Effect.



    	16



    	 



    



Section 4.6           
No Undisclosed Liabilities. As of the date hereof, except (a) for Liabilities reflected
on the face of the balance sheet dated September 30, 2011 (the “Balance Sheets”), (b) Liabilities of the same
type, magnitude and scope as those reflected on the Balance Sheets which have arisen since the Balance Sheet Dates in the ordinary
course of business, and which would not, in the aggregate, result in a Company Material Adverse Effect, and (c) attorney’s
fees and accounting fees incurred by the Parent since the date of the Balance Sheets, including those related to this Agreement
and all of the transactions related thereto and contemplated thereby, including but not limited to preparation and filing of disclosures
with the SEC, the Company does not have any Liability.


Section 4.7           
Litigation. There is no Action pending or, to the knowledge of the Company, threatened,
involving the Company or its subsidiaries or affecting any of the officers, directors or employees of the Company or its subsidiaries
with respect to the Company’s or any subsidiary’s business by or before any Person or by any third party that has had
or could reasonably be expected to have a Company Material Adverse Effect and neither the Company nor any of its subsidiaries have
received written notice that any such Action is threatened. Neither the Company nor any of its subsidiaries is in default under
any judgment, order or decree of any governmental entity applicable to its business, which default could reasonably be expected
to have a Company Material Adverse Effect.


Section 4.8           
No Default; Compliance with Applicable Laws. The Company is not in default or violation
of any material term, condition or provision of (i) its Articles of Incorporation or by-laws or (ii) to the Company’s knowledge,
any law applicable to the Company or its property and assets, and the Company has not received written notice of any violation
of or Liability under any of the foregoing (whether material or not).


Section 4.9           
Broker’s and Finder’s Fees. To the knowledge of the Company, no Person
has, or as a result of the transactions contemplated or described herein will have, any right or valid claim against the Company
for any commission, fee or other compensation as a finder or broker, or in any similar capacity.


Section 4.10       
Contracts.


(a)               
To the knowledge of the Company, it is not in violation or breach of
any material contract, except such violations that, in the aggregate, would not result in, or would not reasonably be expected
to result in, a Company Material Adverse Effect. There does not exist any event or condition that, after notice or lapse of time
or both, would constitute an event of default or breach under any material Contract on the part of the Company or, to the knowledge
of the Company, any other party thereto or would permit the modification, cancellation or termination of any material Contract
or result in the creation of any lien upon, or any person acquiring any right to acquire, any assets of the Company, other than
any events or conditions that, in the aggregate would not result in, or would not reasonably be expected to result in, a Company
Material Adverse Effect. The Company has not received in writing any claim or threat that the Company has breached any of the terms
and conditions of any material Contract, other than any material Contracts the breach of which, in the aggregate, would not result
in, or would not reasonably be expected to result in, a Company Material Adverse Effect.



    	17



    	 



    



(b)              
The consent of, or the delivery of notice to or filing with, any party to a material Contract
is not required for the execution and delivery by the Company of this Agreement or the consummation of the transactions contemplated
under the Agreement. The Company has made available to Parent and Acquisition Corp. true and complete
copies of all Contracts and other documents requested by Parent or Acquisition Corp. 


Section 4.11       
Tax Returns and Audits. To the knowledge of the Company: (i) all required federal,
state and local Tax Returns of the Company have been accurately prepared and duly and timely filed, and all federal, state and
local Taxes required to be paid with respect to the periods covered by such returns have been paid; (ii) the Company is not and
has not been delinquent in the payment of any Tax; (iii) the Company has not had a Tax deficiency proposed or assessed against
it and has not executed a waiver of any statute of limitations on the assessment or collection of any Tax; (iv) none of the Company’s
federal income Tax Returns nor any state or local income or franchise Tax Returns has been audited by governmental authorities;
(v) the reserves for Taxes reflected on the Balance Sheets are and will be sufficient for the payment of all unpaid Taxes payable
by the Company as of the Balance Sheet Dates; (vii) since the Balance Sheet Dates, the Company has made adequate provisions on
its books of account for all Taxes with respect to its business, properties and operations for such period; (viii) the Company
has withheld or collected from each payment made to each of its employees the amount of all Taxes (including, but not limited to,
federal, state and local income taxes, Federal Insurance Contribution Act taxes and Federal Unemployment Tax Act taxes) required
to be withheld or collected therefrom, and has paid the same to the proper Tax receiving officers or authorized depositaries; (ix)
there are no federal, state, local or foreign audits, actions, suits, proceedings, investigations, claims or administrative proceedings
relating to Taxes or any Tax Returns of the Company now pending; (x) the Company has not received any notice of any proposed audits,
investigations, claims or administrative proceedings relating to Taxes or any Tax Returns; (xi) the Company is not obligated to
make a payment, nor is it a party to any agreement that under certain circumstances could obligate it to make a payment, that would
not be deductible under Section 280G of the Code; (xii) the Company has not agreed nor is required to make any adjustments under
Section 481(a) of the Code (or any similar provision of state, local and foreign law) by reason of a change in accounting method
or otherwise for any Tax period for which the applicable statute of limitations has not yet expired; (xiii) the Company is not
a party to, is not bound by and does not have any obligation under, any Tax sharing agreement, Tax indemnification agreement or
similar contract or arrangement, whether written or unwritten (collectively, “Tax Sharing Agreements”), nor
does it have any potential liability or obligation to any Person as a result of, or pursuant to, any Tax Sharing Agreements.


Section 4.12       
Patents and Other Intangible Assets. 


(a)               
To the knowledge of the Company, the Company (i) owns or has the right to use,
pursuant to a valid license, sublicense, agreement, or permission, free and clear of all Liens,
all patents, trademarks, service marks, trade names, copyrights, licenses and rights with respect to the foregoing used in or necessary
for the conduct of its business as now conducted or proposed to be conducted without infringing upon
or otherwise acting adversely to the right or claimed right of any Person under or with respect to any of the foregoing.



    	18



    	 



    



(b)              
To the knowledge of the Company, the Company owns and has the right to use all
trade secrets, if any, including know-how, negative know-how, formulas, patterns, programs, devices, methods, techniques, inventions,
designs, processes, computer programs and technical data and all information that derives independent economic value, actual or
potential, from not being generally known or known by competitors (collectively, “Intellectual Property”) required
for or incident to the development, operation and sale of all products and services sold by the Company, free and clear of any
right, Lien or claim of others. All Intellectual Property can and will be transferred by the Company to the Surviving Corporation
as a result of the Merger and without the consent of any Person other than the Company.


Section 4.13       
Employee Benefit Plans; ERISA. 


(a)               
All “employee benefit plans” (within the meaning of Section 3(3) of the ERISA)
of the Company and other employee benefit or fringe benefit arrangements, practices, contracts,
policies or programs of every type, other than programs merely involving the regular payment of wages, commissions, or bonuses
established, maintained or contributed to by the Company, whether written or unwritten and whether or not funded (collectively,
"Employee Benefit Plans"), are in material compliance with the applicable requirements
of ERISA, the Code and any other applicable state, federal or foreign law.


(b)              
There are no pending claims or lawsuits that have been asserted or instituted
against any Employee Benefit Plan, the assets of any of the trusts or funds under the Employee Benefit Plans, the plan sponsor
or the plan administrator of any of the Employee Benefit Plans or against any fiduciary of an Employee Benefit Plan with respect
to the operation of such plan, nor does the Company have any knowledge of any incident, transaction, occurrence or circumstance
which might reasonably be expected to form the basis of any such claim or lawsuit.


(c)               
There is no pending or, to the knowledge of the Company, threatened investigation,
or pending or possible enforcement action by the Pension Benefit Guaranty Corporation, the Department of Labor, the Internal Revenue
Service or any other government agency with respect to any Employee Benefit Plan and the Company has no knowledge of any incident,
transaction, occurrence or circumstance which might reasonably be expected to trigger such an investigation or enforcement action.


(d)              
No actual or, to the knowledge of the Company, contingent Liability exists with
respect to the funding of any Employee Benefit Plan or for any other expense or obligation of any Employee Benefit Plan, except
as disclosed on the Balance Sheet, and no contingent Liability exists under ERISA with respect to any “multi-employer plan,”
as defined in Section 3(37) or Section 4001(a)(3) of ERISA.


(e)               
No events have occurred or are reasonably expected to occur with respect to
any Employee Benefit Plan that would cause a material change in the costs of providing benefits under such Employee Benefit Plan
or would cause a material change in the cost of providing such Employee Benefit Plan.



    	19



    	 



    



Section 4.14       
Title to Property and Encumbrances. The Company has good and valid title to all properties
and assets used in the conduct of its business (except for property held under valid and subsisting leases which are in full force
and effect and which are not in default) free of all Liens except Permitted Liens and such ordinary and customary imperfections
of title, restrictions and encumbrances as do not in the aggregate constitute a Company Material Adverse Effect.


Section 4.15       
Condition of Properties. All facilities, machinery, equipment, fixtures and other properties
owned, leased or used by the Company are in operating condition, subject to ordinary wear and tear, and are adequate and sufficient
for the Company’s existing business.


Section 4.16       
Insurance Coverage. There is in full force and effect one or more policies of insurance
issued by insurers of recognized responsibility insuring the Company and its properties, products and business against such losses
and risks, and in such amounts, if any, as are customary for corporations of established reputation engaged in the same or similar
business and similarly situated. To the knowledge of the Company, it has not been refused any
insurance coverage sought or applied for, and the Company has no reason to believe that it will be unable to renew its existing
insurance coverage, if any, as and when the same shall expire upon terms at least as favorable to those currently in effect, other
than possible increases in premiums that do not result from any act or omission of the Company. No suit, proceeding or action or,
to the knowledge of the Company, threat of suit, proceeding or action has been asserted or made against the Company due to alleged
bodily injury, disease, medical condition, death or property damage arising out of the function or malfunction of a product, procedure
or service designed, manufactured, sold or distributed by the Company.


Section 4.17       
Environmental Matters.


(a)               
To the knowledge of the Company, the Company has never generated, used, handled,
treated, released, stored or disposed of any Hazardous Materials on any real property on which it now has or previously had any
leasehold or ownership interest, except in compliance with all applicable Environmental Laws.


(b)              
To the knowledge of the Company, the historical and present operations of the
business of the Company are in compliance with all applicable Environmental Laws, except where any non-compliance has not had and
would not reasonably be expected to have a Company Material Adverse Effect.


(c)               
There are no material pending or, to the knowledge of the Company, threatened,
demands, claims, information requests or notices of noncompliance or violation against or to the Company relating to any Environmental
Law; and, to the knowledge of the Company, there are no conditions or occurrences on any of the real property used by the Company
in connection with its business that would reasonably be expected to lead to any such demands, claims or notices against or to
the Company, except such as have not had, and would not reasonably be expected to have, a Company Material Adverse Effect.



    	20



    	 



    



(d)              
To the knowledge of the Company, (i) the Company has not, sent or disposed of,
otherwise had taken or transported, arranged for the taking or disposal of (on behalf of itself, a customer or any other party)
or in any other manner participated or been involved in the taking of or disposal or release of a Hazardous Material to or at a
site that is contaminated by any Hazardous Material or that, pursuant to any Environmental Law, (A) has been placed on the “National
Priorities List”, the “CERCLIS” list, or any similar state or federal list, or (B) is subject to or the source
of a claim, an administrative order or other request to take “removal”, “remedial”, “corrective”
or any other “response” action, as defined in any Environmental Law, or to pay for the costs of any such action at
the site; (ii) the Company is not involved in (and has no basis to reasonably expect to be involved in) any suit or proceeding
and has not received (and has no basis to reasonably expect to receive) any written notice, request for information or other communication
from any governmental authority or other third party with respect to a release or threatened release of any Hazardous Material
or a violation or alleged violation of any Environmental Law, and has not received (and has no basis to reasonably expect to receive)
written notice of any claims from any Person relating to property damage, natural resource damage or to personal injuries from
exposure to any Hazardous Material; and (iii) the Company has timely filed every report required to be filed, acquired all necessary
certificates, approvals and permits, and generated and maintained all required data, documentation and records under all Environmental
Laws, in all such instances except where the failure to do so would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect.


Section 4.18       
Disclosure. There is no fact relating to the Company that the Company has not disclosed
to Parent in writing that has had or is currently having a Company Material Adverse Effect. No representation or warranty by the
Company herein and no information disclosed in the exhibits hereto by the Company contains any untrue statement of a material fact
or omits to state a material fact necessary to make the statements contained herein or therein not misleading.


ARTICLE V

REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION CORP.


Parent and Acquisition
Corp. hereby represent and warrant to the Company as follows:


Section 5.1           
Organization. Each of Parent and Acquisition Corp. (i) is duly organized, validly existing
and in good standing under the laws of its State of incorporation or organization, (ii) has all licenses, permits, authorizations
and other Consents necessary to own, lease and operate its properties and assets and to carry on its business as it is now being
conducted and (iii) has all requisite corporate or other applicable power and authority to own, lease and operate its properties
and assets and to carry on its business as it is now being conducted and presently proposed to be conducted, in each case except
where such failures would not have, or be reasonably likely to have an apparent Material Adverse Effect. Each of Parent and Acquisition
Corp. is duly qualified or authorized to conduct business and is in good standing (or its equivalent) as a foreign corporation
or other entity in all jurisdictions in which the ownership or use of its assets or nature of the business conducted by it makes
such qualification or authorization necessary, except where the failure to be so duly qualified, authorized and in good standing
would not have an apparent Material Adverse Effect.



    	21



    	 



    



Section 5.2           
Authorization; Validity of Agreement. Each of Parent and Acquisition Corp. has all
requisite corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby.
The execution, delivery and performance by each of Parent and Acquisition Corp. of this Agreement and all other agreements and
instruments to be executed pursuant to this Agreement, and the consummation of the transactions contemplated hereby and thereby,
have been duly authorized by the Board of Directors of each of Parent and Acquisition Corp. and the stockholder of Acquisition
Corp., and no other action on the part of either of Parent or Acquisition Corp. is necessary to authorize the execution and delivery
of this Agreement and all other agreements and instruments to be executed pursuant to this Agreement and the consummation by either
of Parent or Acquisition Corp. of the transactions contemplated hereby and thereby. This Agreement has been duly executed and delivered
by the Parent and Acquisition Corp. and (assuming due and valid authorization, execution and delivery hereof by the Company) is
a valid and binding obligation of each of Parent and Acquisition Corp., enforceable against each of them in accordance with its
terms, except as such enforcement is limited by bankruptcy, insolvency and other similar laws affecting the enforcement of creditors’
rights generally and by general principles of equity.


Section 5.3           
Consents and Approvals; No Violations. Except for filing of the certificate of merger
with the Secretary of State of the State of Nevada, neither the execution, delivery or performance of this Agreement by either
of Parent and Acquisition Corp. nor the consummation of the transactions contemplated hereby will (i) violate any provision of
the articles of incorporation or by-laws of Parent or Acquisition Corp.; (ii) violate, conflict with or result in a breach of any
provision of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under,
require the consent of or result in the creation of any Lien upon any of the properties of Parent or Acquisition Corp. under any
Contract to which Parent or Acquisition Corp. or any of their properties may be bound; (iii) require any Consent, approval or authorization
of, or notice to, or declaration, filing or registration with, any governmental entity by or with respect to Parent or any subsidiary
of Parent, or (iv) violate any order, writ, judgment, injunction, decree, law, statute, rule or regulation applicable to any of
Parent or Acquisition Corp. or any of their respective properties or assets; except, in the cases of clauses (ii), (iii) and (iv),
any such violations, conflicts, breaches, defaults or encumbrances, or any failure to receive any such Consent, approval or authorization,
or to make any such notice, declaration, filing or registration as will not result in, or could reasonably be expected to result
in, a Parent Material Adverse Effect. 


Section 5.4           
Litigation. There is no Action pending or, to the knowledge of the Parent, threatened,
involving Parent or Acquisition Corp. or any subsidiary of Parent or affecting the officers, directors or employees of Parent or
Acquisition Corp. or any subsidiary of Parent with respect to Parent’s, Acquisition Corp.’s, or any of Parent’s
subsidiaries’, businesses by or before any governmental entity or by any third party and none of Parent, Acquisition Corp.
nor any subsidiary of Parent has received written notice that any such Action is threatened. None of Parent, Acquisition Corp.
nor any subsidiary of Parent is in default under any judgment, order or decree of any governmental entity applicable to its business
which could reasonably be expected to have a Parent Material Adverse Effect.


Section 5.5           
No Default; Compliance with Applicable Laws. Neither Parent nor any of Parent’s
subsidiaries is in default or violation of any material term, condition or provision of (i) their respective articles of incorporation,
by-laws or similar organizational documents or (ii) any law applicable to Parent or any of Parent’s subsidiaries or its property
and assets and neither Parent nor any of Parent’s subsidiaries has received written notice of any violation of or Liability
under any of the foregoing (whether material or not).



    	22



    	 



    



Section 5.6           
Broker’s and Finder’s Fees; Broker/Dealer Ownership. No Person or other
entity is entitled by reason of any act or omission of Parent or Acquisition Corp. to any broker’s or finder’s fees,
commission or other similar compensation, nor, with respect to the execution, delivery and performance of this Agreement or with
respect to the consummation of the transactions contemplated hereby will any such person have any right or valid claim against
the Company, Parent or Acquisition Corp. to any such payment.


Section 5.7           
Capitalization of Parent. As of the date hereof, the authorized capital stock of Parent
consists of 1,800,000,000 shares of Parent Common Stock and 40,000,000 shares of preferred stock. As of the date hereof and immediately
prior to the Effective Time, there are 1,040,201,672 shares of Parent Common Stock, par value $0.0001, issued and outstanding
and 0 shares of preferred stock issued and outstanding. Other than as provided in Article III of this Agreement in connection
with securities to be issued or to become issuable in connection with or as a result of the Merger, Parent has no outstanding
Convertible Securities to issue shares of Parent Common Stock or any capital stock or other securities of Parent or Acquisition
Corp., and there are no outstanding Convertible Securities of Parent Common Stock or any capital stock or other securities of
Parent or Acquisition Corp. There is no voting trust, agreement or arrangement among any of the beneficial holders of Parent Common
Stock affecting the nomination or election of directors or the exercise of the voting rights of Parent Common Stock. There are
no registration rights or similar rights applicable to any shares of Parent Common Stock or any capital stock or other securities
of Parent or Acquisition Corp. All outstanding shares of the capital stock of Parent are validly issued and outstanding, fully
paid and non-assessable, and none of such shares have been issued in violation of the preemptive rights of any person. All of
the shares of Parent Common Stock issued and outstanding immediately prior to the Effective Time have been issued in compliance
with the Securities Act and applicable state securities laws and (i) pursuant to effective registration statements filed with
the Securities and Exchange Commission and/or (ii) in reliance on valid exemptions from registration or qualification thereunder.



Section 5.8           
Acquisition Corp. Acquisition Corp. is a Nevada corporation and a wholly-owned subsidiary
of Parent that was formed on October 14, 2011 specifically for the purpose of the Merger and that has not conducted any business
or acquired any property, and will not conduct an business or acquire any property prior to the Closing Date, except in preparation
for and otherwise in connection with the transactions contemplated by this Agreement. Parent owns all of the issued and outstanding
capital stock of Acquisition Corp., has no outstanding Convertible Securities of Acquisition Corp., other than the capital stock
of Acquisition Corp. owned by Parent. Except for Acquisition Corp., Parent has no subsidiaries. Acquisition Corp. has no subsidiaries.
Company has no subsidiaries.


Section 5.9           
Validity of Shares. The shares of Parent Common Stock to be issued in accordance with
Article III hereof, when issued and delivered in accordance with the terms hereof, shall be duly authorized, validly issued,
fully paid and non-assessable. 



    	23



    	 



    



Section 5.10       
SEC Reporting and Compliance. 


(a)               
Parent filed a registration statement on Form S-1 under the Securities Act which
became effective on August 14, 2009, and a registration statement on Form 8-A12G under the Exchange Act, which became effective
on June 13, 2011. Since that date, Parent has timely filed with the Commission all registration statements, proxy statements, information
statements and reports required to be filed by Parent pursuant to the Exchange Act (collectively, the “Parent SEC Documents”).
Parent has not filed with the Commission a certificate on Form 15 pursuant to the Exchange Act. Parent does not have any outstanding
correspondence with the SEC or FINRA.


(b)              
None of the Parent SEC Documents, as of their respective dates, contained any
untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements contained therein
not misleading. Each of the Parent SEC Documents complied, and each Parent SEC Document to be filed with the Commission prior to
the Effective Time shall comply, in all material respects, with the applicable requirements of the Securities Act and the Securities
Exchange, as the case may be. Each of the financial statements (including, in each case, any related notes), contained in the Parent
SEC Documents, including any Parent SEC Documents filed after the date of this Agreement until the Closing, complied, as of its
respective filing date, in all material respects with all applicable accounting requirements and the published rules and regulations
of the Commission with respect thereto.


(c)               
Nothing has occurred with respect to which Parent would be required to file,
any report on Form 8-K prior to the date hereof for which Parent has failed to file such report. Prior to and until the Closing,
Parent will provide to the Company copies of any and all amendments or supplements to the Parent SEC Documents filed with the Commission
and all subsequent registration statements and reports filed by Parent subsequent to the filing of the Parent SEC Documents with
the Commission and any and all subsequent information statements, proxy statements, reports or notices filed by the Parent with
the Commission or delivered to the stockholders of Parent.


(d)              
Parent is not an “investment company” within the meaning of Section
3 of the Investment Company Act.


(e)               
The Parent Common Stock is presently eligible for quotation and trading on the
FINRA Over-the-Counter Bulletin Board and is DTC eligible.


(f)               
Between the date hereof and the Closing Date, Parent shall continue to satisfy
any applicable filing requirements of the Exchange Act or the Securities Act, as the case may be, and all other requirements of
applicable securities laws.


(g)              
To the knowledge of Parent, Parent has complied with the Securities Act, Exchange
Act and all other applicable federal and state securities laws.


Section 5.11       
No General Solicitation. In issuing Parent Common Stock in the Merger hereunder, neither
Parent nor anyone acting on its behalf has offered to sell Parent Common Stock by any form of general solicitation or advertising.



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Section 5.12       
Financial Statements. The balance sheets, and statements of income, stockholders’
equity and cash flows (including any notes thereto) contained in the Parent SEC Documents (the “Parent Financial Statements”)
(i) have been prepared in accordance with GAAP, (ii) are in accordance with the books and records of the Parent, and (iii) present
fairly in all material respects the financial condition of the Parent at the dates therein specified and the results of its operations
and changes in financial position for the periods therein specified.


Section 5.13       
Absence of Undisclosed Liabilities. Neither Parent nor Acquisition Corp. has any Liability
at or prior to the Closing, except (a) as disclosed in the Parent SEC Documents, (b) to the extent set forth on or reserved against
in the balance sheet of Parent (the “Parent Balance Sheet”) as of June 30, 2011 (the “Parent Balance Sheet
Date”) or the notes to the Parent Financial Statements, (c) current Liabilities incurred and obligations under agreements
entered into in the usual and ordinary course of business, consistent with past practice, since the Parent Balance Sheet Date,
none of which, individually or in the aggregate, constitutes a Parent Material Adverse Effect, (d) attorney’s fees and accounting
fees incurred by the Parent since the Parent Balance Sheet Date, including those related to this Agreement and all of the transactions
related thereto and contemplated thereby, including but not limited to preparation and filing of disclosures with the SEC, and
(e) by the specific terms of any written agreement, document or arrangement attached as an exhibit to the Parent SEC Documents.
At Closing, neither the Parent nor the Acquisition Corp. will have any Liabilities. 


Section 5.14       
Changes. Since the Parent Balance Sheet Date, except as disclosed in the Parent SEC
Documents, Parent has not (a) incurred any debts, obligations or Liabilities, absolute, accrued or, to the Parent’s knowledge,
contingent, whether due or to become due, except for current Liabilities incurred in the usual and ordinary course of business,
(b) discharged or satisfied any Liens other than those securing, or paid any obligation or Liability other than, current liabilities
shown on the Parent Balance Sheet and current Liabilities incurred since the Parent Balance Sheet Date, in each case in the usual
and ordinary course of business, (c) mortgaged, pledged or subjected to Lien any of its assets, tangible or intangible, other than
in the usual and ordinary course of business, (d) sold, transferred or leased any of its assets, except in the usual and ordinary
course of business, (e) cancelled or compromised any debt or claim, or waived or released any right of material value, (f) suffered
any physical damage, destruction or loss (whether or not covered by insurance) that could reasonably be expected to have a Parent
Material Adverse Effect, (g) entered into any transaction other than in the usual and ordinary course of business, (h) encountered
any labor union difficulties, (i) made or granted any wage or salary increase or made any increase in the amounts payable under
any profit sharing, bonus, deferred compensation, severance pay, insurance, pension, retirement or other employee benefit plan,
agreement or arrangement, other than in the ordinary course of business consistent with past practice, or entered into any employment
agreement, (j) issued or sold any shares of capital stock, bonds, notes, debentures or other securities or granted any options
(including employee stock options), warrants or other rights with respect thereto, (k) declared or paid any dividends on or made
any other distributions with respect to, or purchased or redeemed, any of its outstanding capital stock, (l) suffered or experienced
any change in, or condition affecting, the financial condition of the Parent other than changes, events or conditions in the usual
and ordinary course of its business, none of which (either by itself or in conjunction with all such other changes, events and
conditions) could reasonably be expected to have a Parent Material Adverse Effect, (m) made any change in the accounting principles,
methods or practices followed by it or depreciation or amortization policies or rates theretofore adopted, (n) made or permitted
any amendment or termination of any material Contract, agreement or license to which it is a party, (o) suffered any material loss
not reflected in the Parent Balance Sheet or its statement of income for the year ended on the Parent Balance Sheet Date, (p) paid,
or made any accrual or arrangement for payment of, bonuses or special compensation of any kind or any severance or termination
pay to any present or former officer, director, employee, stockholder or consultant, (q) made or agreed to make any charitable
contributions or incurred any non-business expenses in excess of $1,000 in the aggregate, or (r) entered into any Contract, agreement
or license, or otherwise obligated itself, to do any of the foregoing.



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Section 5.15       
Tax Returns and Audits. All required federal, state and local Tax Returns of the Parent
have been accurately prepared in all material respects and duly and timely filed, and all federal, state and local Taxes required
to be paid with respect to the periods covered by such returns have been paid to the extent that the same are material and have
become due, except where the failure so to file or pay could not reasonably be expected to have a Parent Material Adverse Effect.
The Parent is not and has not been delinquent in the payment of any Tax. The Parent has not had a Tax deficiency assessed against
it. None of the Parent’s federal income Tax Returns nor any state or local income or franchise Tax Returns has been audited
by governmental authorities. The reserves for Taxes reflected on the Parent Balance Sheet are sufficient for the payment of all
unpaid Taxes payable by the Parent with respect to the period ended on the Parent Balance Sheet Date. There are no federal, state,
local or foreign audits, actions, suits, proceedings, investigations, claims or administrative proceedings relating to Taxes or
any Tax Returns of the Parent now pending, and the Parent has not received any notice of any proposed audits, investigations, claims
or administrative proceedings relating to Taxes or any Tax Returns.


Section 5.16       
Employee Benefit Plans; ERISA. 


(a)               
Except as disclosed in the Parent SEC Documents, there are no “employee
benefit plans” (within the meaning of Section 3(3) of ERISA) nor any other employee benefit or fringe benefit arrangements,
practices, contracts, policies or programs other than programs merely involving the regular payment of wages, commissions, or bonuses
established, maintained or contributed to by the Parent, whether written or unwritten and whether or not funded.
Any plans listed in the Parent SEC Documents are hereinafter referred to as the “Parent Employee Benefit Plans.”


(b)              
Any current and prior material documents, including all amendments thereto,
with respect to each Parent Employee Benefit Plan have been made available to the Company.


(c)               
All Parent Employee Benefit Plans are in material compliance with the applicable
requirements of ERISA, the Code and any other applicable state, federal or foreign law.


(d)              
There are no pending, or to the knowledge of the Parent, threatened, claims
or lawsuits that have been asserted or instituted against any Parent Employee Benefit Plan, the assets of any of the trusts or
funds under the Parent Employee Benefit Plans, the plan sponsor or the plan administrator of any of the Parent Employee Benefit
Plans or against any fiduciary of a Parent Employee Benefit Plan with respect to the operation of such plan.



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(e)               
There is no pending, or to the knowledge of the Parent, threatened, investigation
or pending or possible enforcement action by the Pension Benefit Guaranty Corporation, the Department of Labor, the Internal Revenue
Service or any other government agency with respect to any Parent Employee Benefit Plan and Parent has no knowledge of any incident,
transaction, occurrence or circumstance which might reasonably be expected to trigger such an investigation or enforcement action.


(f)               
No actual or, to the knowledge of Parent, contingent Liability exists with respect to the
funding of any Parent Employee Benefit Plan or for any other expense or obligation of any Parent Employee Benefit Plan, except
as disclosed on the Parent Financial Statements or the Parent SEC Documents, and to the knowledge of the Parent, no contingent
Liability exists under ERISA with respect to any “multi-employer plan,” as defined in Section 3(37) or Section 4001(a)(3)
of ERISA.


Section 5.17       
Interested Party Transactions. Except as disclosed in the Parent SEC Documents, no
officer, director or stockholder of the Parent or any Affiliate of any such Person or the Parent has or has had, either directly
or indirectly, (a) an interest in any Person that (i) furnishes or sells services or products that are furnished or sold or are
proposed to be furnished or sold by the Parent or (ii) purchases from or sells or furnishes to the Parent any goods or services,
or (b) a beneficial interest in any Contract to which the Parent is a party or by which it may be bound or affected.


Section 5.18       
Questionable Payments. Neither the Parent, Acquisition Corp. nor to the knowledge of
the Parent, any director, officer, agent, employee or other Person associated with or acting on behalf of the Parent or Acquisition
Corp., has used any corporate funds for (a) unlawful contributions, gifts, entertainment or other unlawful expenses relating to
political activity, (b) made any direct or indirect unlawful payments to government officials or employees from corporate funds,
(c) established or maintained any unlawful or unrecorded fund of corporate monies or other assets, (d) made any false or fictitious
entries on the books of record of any such corporations, or (e) made any bribe, rebate, payoff, influence payment, kickback or
other unlawful payment.


Section 5.19       
Obligations to or by Stockholders. Except as disclosed in the Parent SEC Documents,
the Parent has no Liability or obligation or commitment to any stockholder of Parent or any Affiliate or “associate”
(as such term is defined in Rule 405 under the Securities Act) of any stockholder of Parent, nor does any stockholder of Parent
or any such Affiliate or associate have any Liability, obligation or commitment to the Parent. 


Section 5.20       
Schedule of Assets and Contracts. Except as expressly set forth in this Agreement,
the Parent Balance Sheet or the notes thereto, the Parent is not a party to any Contract. Parent does not own any real property.
Parent is not a party to any Contract (a) with any labor union, (b) for the purchase of fixed assets or for the purchase of materials,
supplies or equipment in excess of normal operating requirements, (c) for the employment of any officer, individual employee or
other Person on a full-time basis or any contract with any Person for consulting services, (d) with respect to bonus, pension,
profit sharing, retirement, stock purchase, stock option, deferred compensation, medical, hospitalization or life insurance or
similar plan, contract or understanding with any or all of the employees of Parent or any other Person, (e) relating to or evidencing
Indebtedness for Borrowed Money or subjecting any asset or property of Parent to any Lien or evidencing any Indebtedness, (f) guaranteeing
of any Indebtedness, (g) under which Parent is lessee of or holds or operates any property, real or personal, owned by any other
Person, (h) under which Parent is lessor or permits any Person to hold or operate any property, real or personal, owned or controlled
by Parent, (i) granting any preemptive right, right of first refusal or similar right to any Person, (j) with any Affiliate of
Parent or any present or former officer, director or stockholder of Parent, (k) obligating Parent to pay any royalty or similar
charge for the use or exploitation of any tangible or intangible property, (1) containing a covenant not to compete or other restriction
on the parent’s ability to conduct a business or engage in any other activity, (m) with respect to any distributor, dealer,
manufacturer’s representative, sales agency, franchise or advertising contract or commitment, (n) regarding the registration
of securities under the Securities Act, (o) characterized as a collective bargaining agreement, or (p) with any Person continuing
for a period of more than three months from the Closing Date that involves an expenditure or receipt by Parent in excess of $1,000.
The Parent maintains no insurance policies and insurance coverage of any kind with respect to Parent, its business, premises, properties,
assets, employees and agents. Parent has furnished to the Company true and complete copies of all agreements and other documents
requested by the Company.



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Section 5.21       
Environmental Matters.


(a)               
The Parent has never generated, used, handled, treated, released, stored or
disposed of any Hazardous Materials on any real property on which it now has or previously had any leasehold or ownership interest,
except in compliance with all applicable Environmental Laws.


(b)              
The historical and present operations of the business of the Parent compliance
with all applicable Environmental Laws, except where any non-compliance has not had and would not reasonably be expected to have
a Parent Material Adverse Effect.


(c)               
The Parent has not, sent or disposed of, otherwise had taken or transported,
arranged for the taking or disposal of (on behalf of itself, a customer or any other party) or in any other manner participated
or been involved in the taking of or disposal or release of a Hazardous Material to or at a site that is contaminated by any Hazardous
Material or that, pursuant to any Environmental Law, (A) has been placed on the “National Priorities List”, the “CERCLIS”
list, or any similar state or federal list, or (B) is subject to or the source of a claim, an administrative order or other request
to take “removal”, “remedial”, “corrective” or any other “response” action, as
defined in any Environmental Law, or to pay for the costs of any such action at the site; (ii) the Parent is not involved in (and
has no basis to reasonably expect to be involved in) any suit or proceeding and has not received (and has no basis to reasonably
expect to receive) any written notice, request for information or other communication from any governmental authority or other
third party with respect to a release or threatened release of any Hazardous Material or a violation or alleged violation of any
Environmental Law, and has not received (and has no basis to reasonably expect to receive) written notice of any claims from any
Person relating to property damage, natural resource damage or to personal injuries from exposure to any Hazardous Material; and
(iii) the Parent has timely filed every report required to be filed, acquired all necessary certificates, approvals and permits,
and generated and maintained all required data, documentation and records under all Environmental Laws, in all such instances except
where the failure to do so would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse
Effect.



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(d)              
There are no material pending or, to the knowledge of Parent, threatened, demands, claims,
information requests or notices of noncompliance or violation against or to the Parent relating to any Environmental Law; and,
to the knowledge of Parent, there are no conditions or occurrences on any of the real property used by Parent in connection with
its business that would reasonably be expected to lead to any such demands, claims or notices against or to Parent, except such
as have not had, and would not reasonably be expected to have, a Parent Material Adverse Effect. 


Section 5.22       
Employees. Parent is not under any obligation or liability to any officer, director,
employee, Parent or Affiliate of Parent.


Section 5.23       
 Title to Property and Encumbrances. Parent has good
and valid title to all properties and assets used in the conduct of its business (except for property held under valid and subsisting
leases which are in full force and effect and which are not in default) free of all Liens except Permitted Liens and such ordinary
and customary imperfections of title, restrictions and encumbrances as do not, individually or in the aggregate constitute a Parent
Material Adverse Effect.


Section 5.24       
Condition of Properties. All facilities, machinery, equipment, fixtures and other properties
owned, leased or used by Parent are in operating condition, subject to ordinary wear and tear,
and are adequate and sufficient for the Parent’s existing business.


Section 5.25       
Insurance Coverage. Parent does not have in full force and effect any one or more policies
of insurance issued by insurers of recognized responsibility insuring Parent and its properties,
products and business against such losses and risks, and in such amounts, as are customary for corporations of established reputation
engaged in the same or similar business and similarly situated. Parent has not been refused any
insurance coverage sought or applied for, and Parent has no reason to believe that it will be
unable to renew any existing insurance coverage as and when the same shall expire upon terms at least as favorable to those currently
in effect, other than possible increases in premiums that do not result from any act or omission of Parent.
No suit, proceeding or action or, to the best current actual knowledge of Parent, threat of suit,
proceeding or action has been asserted or made against Parent due to alleged bodily injury, disease,
medical condition, death or property damage arising out of the function or malfunction of a product, procedure or service designed,
manufactured, sold or distributed by Parent.


Section 5.26       
Disclosure. There is no fact relating to Parent or Acquisition Corp. that Parent has
not disclosed to the Company in writing that has had, is having or is reasonably likely to have a Parent Material Adverse Effect.
No representation or warranty by Parent or Acquisition Corp. herein and no information disclosed in the exhibits hereto by Parent
or Acquisition Corp. contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements
contained herein or therein not misleading.



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Section 5.27       
No Liabilities. As of the Closing Date, there are no Liabilities or Indebtedness of
the Parent or Acquisition Corp. of any kind whatsoever, whether recorded on the Balance Sheet of Parent or Acquisition Corp. or
not, whether accrued, contingent, absolute, determined, determinable or otherwise, and there is no existing condition, situation
or set of circumstances which could reasonably be expected to result in such Liability or Indebtedness. Neither the Parent nor
the Acquisition Corp. is a guarantor of any Indebtedness of any other person, firm or corporation.


Section 5.28       
Disclosure. There is no fact relating to the Parent or Acquisition Corp. that the Parent
has not disclosed to the Company in writing that has had or is currently having a Parent Material Adverse Effect. No representation
or warranty by the Parent herein and no information disclosed in the exhibits hereto by the Parent contains any untrue statement
of a material fact or omits to state a material fact necessary to make the statements contained herein or therein not misleading.


 


ARTICLE VI

CONDUCT OF BUSINESSES PENDING THE MERGER


Section 6.1           
Conduct of Business by the Company Pending the Merger. Prior to the Effective Time,
unless Parent or Acquisition Corp. shall otherwise agree in writing or as otherwise contemplated by this Agreement:


(i)                            
the business of the Company shall be conducted only in the ordinary course consistent with
the past practice;


(ii)                          
the Company shall not (A) directly or indirectly redeem, purchase or otherwise
acquire or agree to redeem, purchase or otherwise acquire any shares of Company Common Stock; (B) amend its articles of incorporation
or by-laws except to effectuate the transactions contemplated in this Agreement; or (C) split, combine or reclassify the outstanding
Company Common Stock or declare, set aside or pay any dividend payable in cash, stock or property or make any distribution with
respect to any such stock;


(iii)                        
the Company shall not (A) issue any additional shares of, or options, warrants
or rights of any kind to acquire any shares of, Company Common Stock except Exempt Issuances; (B) acquire or dispose of any fixed
assets or acquire or dispose of any other substantial assets other than in the ordinary course of business; (C) incur additional
Indebtedness or any other Liabilities or enter into any other transaction other than in the ordinary course of business; (D) enter
into any Contract, agreement, commitment or arrangement with respect to any of the foregoing except this Agreement; or (E) except
as contemplated by this Agreement, enter into any Contract, agreement, commitment or arrangement to dissolve, merge, consolidate
or enter into any other material business combination; and



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(iv)                                    
the Company shall use its reasonable best efforts to preserve intact the business
of the Company, to keep available the service of its present officers and key employees, and to preserve the good will of those
having business relationships with it.


Section 6.2           
Conduct of Business by Parent and Acquisition Corp. Pending the Merger. Prior to the
Effective Time, unless the Company shall otherwise agree in writing or as otherwise contemplated expressly permitted by this Agreement:



(i)                                        
the business of Parent and Acquisition Corp. shall be conducted only in the
ordinary course consistent with past practice;


(ii)                                      
neither Parent nor Acquisition Corp. shall (A) directly or indirectly redeem,
purchase or otherwise acquire or agree to redeem, purchase or otherwise acquire any shares of its capital stock; (B) amend its
articles of incorporation or by-laws; or (C) split, combine or reclassify its capital stock or declare, set aside or pay any dividend
payable in cash, stock or property or make any distribution with respect to such stock; 


(iii)                                    
neither Parent nor Acquisition Corp. shall (A) issue or agree to issue any additional
shares of, or options, warrants or rights of any kind to acquire shares of, its capital stock, unless it is an Exempt Issuance;
(B) acquire or dispose of any assets other than in the ordinary course of business; (C) incur additional Indebtedness or any other
Liabilities or enter into any other transaction except in the ordinary course of business; (D) enter into any Contract, agreement,
commitment or arrangement with respect to any of the foregoing except this Agreement, or (E) except as contemplated by this Agreement,
enter into any Contract, agreement, commitment or arrangement to dissolve, merge; consolidate or enter into any other material
business contract or enter into any negotiations in connection therewith.


(iv)                                    
Parent shall use its best efforts to preserve intact the business of Parent
and Acquisition Corp., to keep available the service of its present officers and key employees, and to preserve the good will of
those having business relationships with Parent and Acquisition Corp. and to file all required SEC Reports under the Exchange Act;


(v)                                      
neither Parent nor Acquisition Corp. will, nor will they authorize any director
or authorize or permit any officer or employee or any attorney, accountant or other representative retained by them to, make, solicit,
encourage any inquiries with respect to, or engage in any negotiations concerning, any Acquisition Proposal (as defined below).
Parent will promptly advise the Company in writing of any such inquiries or Acquisition Proposal (or requests for information)
and the substance thereof. As used in this paragraph, “Acquisition Proposal” shall mean any proposal for a merger
or other business combination involving the Parent or Acquisition Corp. or for the acquisition of a substantial equity interest
in either of them or any material assets of either of them other than as contemplated by this Agreement. Parent will immediately
cease and cause to be terminated any existing activities, discussions or negotiations with any Person conducted heretofore with
respect to any of the foregoing; and



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(vi)                                    
neither Parent nor Acquisition Corp. will enter into any new employment agreements
with any of their officers or employees or grant any increases in the compensation or benefits of their officers and employees.


ARTICLE VII

ADDITIONAL AGREEMENTS


Section 7.1           
Access and Information. The Company, Parent and Acquisition Corp. shall each afford
to the other and to the other’s accountants, counsel and other representatives reasonable access during normal business hours
throughout the period prior to the Effective Time of all of its properties, books, contracts, commitments and records (including
but not limited to Tax Returns) and during such period, each shall furnish promptly to the other all information concerning its
business, properties and personnel as such other party may reasonably request, provided that no investigation pursuant to this
Section 7.1 shall affect any representations or warranties made herein. Each party shall hold, and shall cause its employees
and agents to hold, in confidence all such information (other than such information that (i) becomes generally available to the
public other than as a result of a disclosure by such party or its directors, officers, managers, employees, agents or advisors,
or (ii) becomes available to such party on a non-confidential basis from a source other than a party hereto or its advisors, provided
that such source is not known by such party to be bound by a confidentiality agreement with or other obligation of secrecy to a
party hereto or another party until such time as such information is otherwise publicly available; provided, however,
that: (A) any such information may be disclosed to such party’s directors, officers, employees and representatives of such
party’s advisors who need to know such information for the purpose of evaluating the transactions contemplated hereby (it
being understood that such directors, officers, employees and representatives shall be informed by such party of the confidential
nature of such information); (B) any disclosure of such information may be made as to which the party hereto furnishing such information
has consented in writing; and (C) any such information may be disclosed pursuant to a judicial, administrative or governmental
order or request provided, that the requested party will promptly so notify the other party so that the other party may
seek a protective order or appropriate remedy and/or waive compliance with this Agreement and if such protective order or other
remedy is not obtained or the other party waives compliance with this provision, the requested party will furnish only that portion
of such information which is legally required and will exercise its best efforts to obtain a protective order or other reliable
assurance that confidential treatment will be accorded the information furnished. If this Agreement is terminated, each party will
deliver to the other all documents and other materials (including copies) obtained by such party or on its behalf from the other
party as a result of this Agreement or in connection herewith, whether so obtained before or after the execution hereof.


Section 7.2           
Additional Agreements. Subject to the terms and conditions herein provided, each of
the parties hereto agrees to use its commercially reasonable best efforts to take, or cause to be taken, all action and to do,
or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate and make effective
the transactions contemplated by this Agreement, including using its commercially reasonable best efforts to satisfy the conditions
precedent to the obligations of any of the parties hereto to obtain all necessary waivers, and to lift any injunction or other
legal bar to the Merger (and, in such case, to proceed with the Merger as expeditiously as possible). In order to obtain any necessary
governmental or regulatory action or non-action, waiver, Consent, extension or approval, each of Parent, Acquisition Corp. and
the Company agrees to take all reasonable actions and to enter into all reasonable agreements as may be necessary to obtain timely
governmental or regulatory approvals and to take such further action in connection therewith as may be necessary. In case at any
time after the Effective Time any further action is necessary or desirable to carry out the purposes of this Agreement, the proper
officers and/or directors of Parent, Acquisition Corp. and the Company shall take all such necessary action.



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Section 7.3           
Publicity. No party shall issue any press release or public announcement pertaining
to the Merger that has not been agreed upon in advance by Parent and the Company, except as Parent reasonably determines to be
necessary in order to comply with the rules of the Commission; provided that in such case Parent will use its best efforts
to allow Company to review and reasonably approve any of the same prior to its release.


Section 7.4           
Appointment of Directors. At the first annual meeting of Parent’s stockholders
and thereafter, the election of members of Parent’s Board of Directors shall be accomplished in accordance with the by-laws
of Parent.


Section 7.5           
Name Change. Not applicable. 


Section 7.6           
Stockholder Consent. 


(a)               
The Company, acting through its Board of Directors, shall, in accordance with
DRS and its Articles of Incorporation and by-laws, take all actions reasonably necessary to obtain the requisite approval of this
Agreement and the transactions contemplated hereby by the Stockholders of the Company. The Company shall notify each Stockholder,
whether or not entitled to vote, of the proposed Merger. Such notice shall state the purpose of the Merger and shall contain a
web address where the Stockholders may download a copy of this Agreement. 


(b)              
The Board of Directors of the Company shall unanimously recommend such approval
and shall use all reasonable efforts to solicit and obtain such approval of the Stockholders of the Company.


(c)               
Pursuant to the DRS, at any time before the certificate of merger is filed with
the Secretary of State of the State of Delaware, including any time after the Merger is authorized by the Stockholders, the Merger
may be abandoned and this Agreement may be terminated in accordance with the terms hereof, without further action by the Stockholders.


ARTICLE VIII

CONDITIONS OF PARTIES’ OBLIGATIONS


Section 8.1           
Company Obligations. The obligations of Parent and Acquisition Corp. under this Agreement
are subject to the fulfillment by the Company at or prior to the Closing of the following conditions, any of which may be waived
in whole or in part by Parent.


(a)               
No Errors, etc. The representations
and warranties of the Company under this Agreement shall be deemed to have been made again on the Closing Date and shall then be
true and correct in all material respects.



    	33



    	 



    



(b)              
Compliance with Agreement. The Company shall have performed and complied
in all material respects with all agreements and conditions required by this Agreement to be performed or complied with by it on
or before the Closing Date.


(c)               
No Company Material Adverse Effect. Since the date hereof, there shall
not have been any event or circumstance that has resulted in a Company Material Adverse Effect, and no event has occurred or circumstance
exists that would reasonably be expected to result in a Company Material Adverse Effect.


(d)              
Certificate of Officers. The Company shall have delivered to Parent and
Acquisition Corp. a certificate dated the Closing Date, executed on its behalf by the Chairman and President of the Company, certifying
the satisfaction of the conditions specified in paragraphs (a), (b) and (c) of this Section 8.1.


(e)               
No Restraining Action. No Action or proceeding before any court, governmental body
or agency shall have been threatened, asserted or instituted to restrain or prohibit, or to obtain substantial damages in respect
of, this Agreement or the carrying out of the transactions contemplated by this Agreement.


(f)               
Super 8-K. The Company, with the assistance of the Parent, shall have prepared the
Current Report on Form 8-K required as a result of the consummation of the transactions contemplated hereby.


(g)              
Stockholder Consent. The Company shall have obtained from its Stockholders at least
51% approval by written consent of the Agreement and the transactions contemplated hereby in accordance
with Section 7.6 of this Agreement.


(h)              
There shall be no Dissenting Shares to the Merger in excess of those holding more than 35%
of the issued and outstanding shares of the Company, and in the case of any Dissenting Shares, the Company is able to pay the Dissenting
Shareholders the consideration required by DRS; provided, however, that for purposes of the satisfaction of this subsection (h)
the Company shall be deemed able to pay the consideration required by the DRS if it has sufficient funds to pay all settlement
offers to the Dissenting Shareholders if all such offers are equal to or greater than: (i) if such offer is made prior to the Reverse
Split, ten (10) multiplied by the value per share of Parent Common Stock on the OTC at the time such offer is made; or (ii) if
such offer is made after the Reverse Split, the value per share of Parent Common Stock on the OTC at the time such offer is made.


(i)                
The Company shall have received audited financial statements and unaudited pro forma financial
information in accordance with the requirements of Rule 8-04 of Regulation S-X. 


(j)                
Bridge Financing. Not applicable. 


(k)              
Supporting Documents. Parent and Acquisition Corp. shall have received the following:



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(1)                                                              
Copies of the minutes of the meeting of the Board of Directors
of the Company and the resolution of a majority of the stockholders of the Company, certified by the President of the Company,
authorizing and approving the Merger and the execution, delivery and performance of this Agreement and all other documents and
instruments to be delivered pursuant hereto and thereto.


(2)                                                              
A certificate of incumbency executed by the Secretary of the Company certifying
the names, titles and signatures of the officers authorized to execute any documents referred to in this Agreement and further
certifying that the articles of incorporation and by-laws of the Company delivered to Parent and Acquisition Corp. at the time
of the execution of this Agreement have been validly adopted and have not been amended or modified since the date hereof.


(3)                                                              
The executed resignations of all officers and directors of Company, with the
director resignations to take effect following the notice period required by federal law. 


(4)                                                              
Evidence as of a recent date of the good standing and corporate existence of
the Company issued by the Secretary of State of the State of Delaware. 


Section 8.2           
Parent and Acquisition Corp. Obligations. The obligations of the Company under this
Agreement are subject to the fulfillment by Parent and Acquisition Corp. at or prior to the Closing of the following conditions
any of which may be waived in whole or in part by the Company:


(a)               
No Errors, etc. The representations
and warranties of Parent and Acquisition Corp. under this Agreement shall be deemed to have been made again on the Closing Date
and shall then be true and correct in all material respects.


(b)              
Compliance with Agreement. Parent and Acquisition Corp. shall have performed
and complied in all material respects with all agreements and conditions required by this Agreement to be performed or complied
with by them on or before the Closing Date.


(c)               
No Parent Material Adverse Effect. Since the date hereof, there shall
not have been any event or circumstance that has resulted in a Parent Material Adverse Effect and no event has occurred or circumstance
exists that would be reasonably expected to result in such a Parent Material Adverse Effect.


(d)              
Certificate of Officers. Parent and Acquisition Corp. shall have delivered
to the Company a certificate dated the Closing Date, executed on their behalf by their respective Presidents, certifying the satisfaction
of the conditions specified in paragraphs (a), (b), and (c) of this Section 8.2.


(e)               
Stockholder Consent. The Company shall have obtained from its Stockholders at least
51% approval by written consent of the Agreement and the transactions contemplated hereby in accordance
with Section 7.6 of this Agreement.



    	35



    	 



    



(f)               
Parent shall have received and delivered to Company audited financial statements and unaudited
pro forma financial information in accordance with the requirements of Rule 8-04 of Regulation S-X. 


(g)              
Bridge Financing. Not applicable. 


(h)              
Supporting Documents. The Company shall have received the following:


(1)                                                              
Copies of resolutions of Parent’s and Acquisition Corp.’s respective
board of directors and the sole stockholder of Acquisition Corp., certified by their respective Secretaries, authorizing and approving
the Merger and the execution, delivery and performance of this Agreement and all other documents and instruments to be delivered
by them pursuant hereto.


(2)                                                              
A certificate of incumbency executed by the respective Secretaries of Parent
and Acquisition Corp. certifying the names, titles and signatures of the officers authorized to execute the documents referred
to in paragraph (1) above and further certifying that the certificates of incorporation and by-laws of Parent and Acquisition Corp.
appended thereto have not been amended or modified.


(3)                                                              
A certificate, dated the Closing Date, executed by the Secretary of each of
the Parent and Acquisition Corp., certifying that, except for the filing of the certificate of merger with the Secretary of State
of the State of Nevada: (i) all consents, authorizations, orders and approvals of, and filings and registrations with, any court,
governmental body or instrumentality that are required to be obtained by Parent or Acquisition Corp. for the execution and delivery
of this Agreement and the consummation of the Merger shall have been duly made or obtained; and (ii) no action or proceeding before
any court, governmental body or agency has been threatened, asserted or instituted against Parent or Acquisition Corp. to restrain
or prohibit, or to obtain substantial damages in respect of, this Agreement or the carrying out of the transactions contemplated
by this Agreement.


(4)                                                              
A certificate of Parent’s transfer agent and registrar, certifying as
of the business day prior to the Closing Date, a true and complete list of the names and addresses of the record owners of all
of the outstanding shares of Parent Common Stock, together with the number of shares of Parent Common Stock held by each record
owner.


(5)                                                              
Evidence as of a recent date of the good standing and corporate existence of
each of the Parent and Acquisition Corp. issued by the Secretary of State of their respective states of incorporation.


(6)                                                              
Such additional supporting documentation and other information with respect
to the transactions contemplated hereby as the Company may reasonably request.



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ARTICLE IX

INDEMNIFICATION AND RELATED MATTERS


Section 9.1           
Indemnification by Parent. Parent shall indemnify and hold harmless the Company and
the Stockholders (collectively, the “Company Indemnified Parties”), and shall reimburse the Company Indemnified
Parties for, any loss, liability, claim, damage, expense (including, but not limited to, costs of investigation and defense and
reasonable attorneys’ fees) or diminution of value (collectively, “Damages”) arising from or in connection
with (a) any inaccuracy, in any material respect, in any of the representations and warranties of Parent and Acquisition Corp.
in this Agreement or in any certificate delivered by Parent and Acquisition Corp. to the Company pursuant to this Agreement, or
any actions, omissions or statements of fact inconsistent with any such representation or warranty, (b) any failure by Parent or
Acquisition Corp. to perform or comply in any material respect with any covenant or agreement in this Agreement, (c) any claim
for brokerage or finder’s fees or commissions or similar payments based upon any agreement or understanding alleged to have
been made by any such party with Parent or Acquisition Corp. in connection with any of the transactions contemplated by this Agreement,
(d) Taxes attributable to any transaction or event occurring on or prior to the Closing, (e) any claim relating to or arising out
of any Liabilities of either Parent or Acquisition Corp. on or prior to Closing or with respect to accounting fees arising thereafter,
or (f) any litigation, action, claim, proceeding or investigation by any third party relating to or arising out of the business
or operations of Parent, or the actions of Parent or any holder of Parent capital stock prior to the Effective Time.


Section 9.2           
Survival. All representations, warranties, covenants and agreements of Parent and Company
contained in this Agreement or in any instrument delivered pursuant to this Agreement shall survive until twelve (12) months after
the Effective Time. The representations and warranties of Acquisition Corp. contained in this Agreement or in any instrument delivered
pursuant to this Agreement will terminate at, and have no further force and effect after, the Effective Time.


Section 9.3           
Time Limitations. Neither Parent nor Acquisition Corp. shall have any Liability (for
indemnification or otherwise) with respect to any representation or warranty, or covenant or agreement to be performed and complied
with prior to the Effective Time, unless on or before the twelve month anniversary of the Effective Time (the “Claims
Deadline”), Parent is given notice of a claim with respect thereto, in accordance with Section 9.5, specifying
the factual basis therefore in reasonable detail to the extent then known by the Company Indemnified Parties.


Section 9.4           
Limitation on Liability. The obligations of Parent and Acquisition Corp. to the Company
Indemnified Parties set forth in Section 9.1 shall be subject to the following limitations:


(a)               
The aggregate liability of Parent and Acquisition Corp. to the Company shall
not exceed $50,000.


(b)              
Other than claims based on fraud or for specific performance, injunctive or
other equitable relief, the Company Indemnified Parties’ sole and exclusive remedy for any and all claims for Damages pursuant
to Section 9.1 hereof shall be the indemnification provided under the terms and subject to the conditions of this Article
IX.



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Section 9.5           
Notice of Claims.


(a)               
If, at any time on or prior to the Claims Deadline, Company Indemnified Parties
shall assert a claim for indemnification pursuant to Section 9.1, such Company Indemnified Parties shall submit to Parent
a written claim stating: (i) that a Company Indemnified Party incurred or reasonably believes it may incur Damages and the amount
or reasonable estimate thereof of any such Damages; and (ii) in reasonable detail, the facts alleged as the basis for such claim
and the section or sections of this Agreement alleged as the basis or bases for the claim. 


(b)              
In the event that any action, suit or proceeding is brought against any Company
Indemnified Party with respect to which Parent may have liability under this Article IX, the Parent shall have the right,
at its cost and expense, to defend such action, suit or proceeding in the name and on behalf of the Company Indemnified Party;
provided, however, that a Company Indemnified Party shall have the right to retain its own counsel, with fees and
expenses paid by Parent, if representation of the Company Indemnified Party by counsel retained by Parent would be inappropriate
because of actual or potential differing interests between Parent and the Company Indemnified Party. In connection with any action,
suit or proceeding subject to this Article IX, Parent and each Company Indemnified Party agree to render to each other such
assistance as may reasonably be required in order to ensure proper and adequate defense of such action, suit or proceeding. Parent
shall not, without the prior written consent of the applicable Company Indemnified Parties, which consent shall not be unreasonably
withheld or delayed, settle or compromise any claim or demand if such settlement or compromise does not include an irrevocable
and unconditional release of such Company Indemnified Parties for any liability arising out of such claim or demand.


ARTICLE X

TERMINATION PRIOR TO CLOSING


Section 10.1       
Termination of Agreement. This Agreement may be terminated at any time prior to the
Closing:


(a)               
by the mutual written consent of the Company, Acquisition Corp. and Parent;


(b)              
by the Company, if Parent or Acquisition Corp. (i) fails to perform in any material
respect any of its agreements contained herein required to be performed by it on or prior to the Effective Time, (ii) materially
breaches any of its representations, warranties or covenants contained herein, which failure or breach is not cured within thirty
(30) days after the Company has notified Parent and Acquisition Corp. of its intent to terminate this Agreement pursuant to this
paragraph (b);


(c)               
by Parent and Acquisition Corp., if the Company (i) fails to perform in any
material respect any of its agreements contained herein required to be performed by it on or prior to the Closing Date, (ii) materially
breaches any of its representations, warranties or covenants contained herein, which failure or breach is not cured within thirty
(30) days after Parent or Acquisition Corp. has notified the Company of its intent to terminate this Agreement pursuant to this
paragraph (c);



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(d)              
by either the Company, on the one hand, or Parent and Acquisition Corp., on
the other hand, if there shall be any order, writ, injunction or decree of any court or governmental or regulatory agency binding
on Parent, Acquisition Corp. or the Company, which prohibits or materially restrains any of them from consummating the transactions
contemplated hereby; provided that the parties hereto shall have used their best efforts to have any such order, writ, injunction
or decree lifted and the same shall not have been lifted within ninety (90) days after entry, by any such court or governmental
or regulatory agency;


(e)               
by either the Company, on the one hand, or Parent and Acquisition Corp., on
the other hand, if the Closing has not occurred on or prior to December 30, 2011, for any reason other than delay or nonperformance
of the party seeking such termination;


Section 10.2       
by the Company if the Board of Directors of the Company determines in good faith,
based upon advice of legal counsel, that termination pursuant to this Section 10.1(f) is necessary to comply with its fiduciary
duties under applicable law as provided in Section 7.6(b) hereof. 


Section 10.3       
Termination of Obligations. Termination of this Agreement pursuant to Section 10.1
hereof shall terminate all obligations of the parties hereunder, except for the obligations under Article IX, Article
X, and Sections 11.4, 11.7, 11.14, 11.15 and 11.16 hereof; provided, however,
that termination pursuant to paragraphs (b) or (c) of Section 10.1 shall not relieve the defaulting or breaching party or
parties from any liability to the other parties hereto.


ARTICLE XI

MISCELLANEOUS


Section 11.1       
Amendments. Subject to applicable law, this Agreement may be amended or modified by
the parties hereto by written agreement executed by each party to be bound thereby and delivered by duly authorized officers of
the parties hereto at any time prior to the Effective Time; provided, however, that after the approval of the Merger
by the requisite Stockholders, no amendment or modification of this Agreement shall be made that by law requires further approval
from any Stockholders without such further approval.


Section 11.2       
Notices. Any notice, request, instruction, other document or communications to be given
hereunder by any party hereto to any other party hereto shall be in writing and shall be deemed to have been duly given (a) when
delivered personally, (b) upon confirmation of delivery if by electronic mail, (c) upon receipt of a transmission confirmation
(with a confirming copy delivered personally or sent by overnight courier) if sent by facsimile or like transmission, or (d) on
the next business day when sent by Federal Express, United Parcel Service, U.S. Express Mail or other reputable overnight courier
for guaranteed next day delivery, to such other persons or addresses as may be designated in writing by the party to receive such
notice. Nothing in this Section 11.2 shall be deemed to constitute consent to the manner and address for service of process
in connection with any legal proceeding (including arbitration arising in connection with this Agreement), which service shall
be effected as required by applicable law.



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Section 11.3       
Entire Agreement. This Agreement and the exhibits attached hereto or referred to herein
constitute the entire agreement of the parties hereto, and supersede all prior agreements and undertakings, both written and oral,
among the parties hereto, with respect to the subject matter hereof and thereof.


Section 11.4       
Expenses. Except as otherwise expressly provided herein, whether or not the Merger
occurs, all expenses and fees incurred by Parent and Acquisition Corp. on one hand, and the Company on the other, shall be borne
solely and entirely by the party that has incurred the same; provided, that if the Merger occurs, Parent agrees to pay,
and shall cause the Surviving Corporation to pay, any unpaid fees and expenses of the Company (including fees and expenses of its
counsel and other advisors) in connection with the consummation of the transactions contemplated by this Agreement.


Section 11.5       
Severability. If any term or other provision of this Agreement is invalid, illegal
or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement will
nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby
is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto will negotiate in good faith to amend or modify this Agreement so as
to effect the original intent of the parties as closely as possible in an acceptable manner to the end that transactions contemplated
hereby are fulfilled to the extent possible.


Section 11.6       
Successors and Assigns; Assignment. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and assigns. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned or delegated by any of the parties hereto without, in the case of Parent and
Acquisition Corp., the prior written approval of the Company and, in the case of the Company, the prior written approval of Parent.


Section 11.7       
No Third Party Beneficiaries. Except as set forth in Section 9.1 and Section
11.6, nothing herein expressed or implied shall be construed to give any person other than the parties hereto (and their successors
and assigns as permitted herein) any legal or equitable rights hereunder.


Section 11.8       
Counterparts; Delivery by Facsimile. This Agreement may be executed in multiple counterparts,
and by the different parties hereto in separate counterparts, each of which when executed will be deemed to be an original but
all of which taken together will constitute one and the same agreement. This Agreement and each other agreement or instrument entered
into in connection herewith or therewith or contemplated hereby or thereby, and any amendments hereto or thereto, to the extent
signed and delivered by means of a facsimile machine or by electronic mail, shall be treated in all manner and respects as an original
agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version
thereof delivered in person. At the request of any party hereto or to any such agreement or instrument, each other party hereto
or thereto shall re-execute original forms thereof and deliver them to all other parties. No party hereto or to any such agreement
or instrument shall raise the use of a facsimile machine or electronic mail to deliver a signature or the fact that any signature
or agreement or instrument was transmitted or communicated through the use of a facsimile machine or electronic mail as a defense
to the formation or enforceability of a contract and each such party forever waives any such defense.



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Section 11.9       
Waiver. At any time prior to the Effective Time, any party hereto may (a) extend the
time for the performance of any of the obligations or other acts of the other party hereto; (b) waive any inaccuracies in the representations
and breaches of the warranties of the other party contained herein or in any document delivered pursuant hereto; and (c) waive
compliance by the other party with any of the agreements or conditions contained herein. Any such extension or waiver will be valid
only if set forth in an instrument in writing signed by the party or parties to be bound thereby.


Section 11.10   
No Constructive Waivers. No failure or delay on the part of any party hereto in the
exercise of any right hereunder will impair such right or be construed to be a waiver of, or acquiescence in, any breach of any
representation, warranty, agreement or covenant herein, nor will any single or partial exercise of any such right preclude other
or further exercise thereof or of any other right. No waiver by any party of any default, misrepresentation, or breach of warranty
or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation,
or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence.


Section 11.11   
Further Assurances. The parties hereto shall use their commercially reasonable efforts
to do and perform or cause to be done and performed all such further acts and things and shall execute and deliver all such other
agreements, certificates, instruments or documents as any other party hereto may reasonably request in order to carry out fully
the intent and purposes of this Agreement and the consummation of the transactions contemplated hereby.


Section 11.12   
Recitals. The recitals set forth above are incorporated herein and, by this reference,
are made part of this Agreement as if fully set forth herein.


Section 11.13   
Headings. The headings contained in this Agreement are for reference purposes only
and shall not affect in any way the meaning or interpretation of this Agreement.


Section 11.14   
Governing Law. This Agreement and the agreements, instruments and documents contemplated
hereby shall be governed by and construed and enforced in accordance with the laws of the State of Delaware without regard to its
conflicts of law principles.


Section 11.15   
Dispute Resolution. The parties hereto shall initially attempt to resolve all claims,
disputes or controversies arising under, out of or in connection with this Agreement by conducting good faith negotiations amongst
themselves. If the parties hereto are unable to resolve the matter following good faith negotiations, the matter shall thereafter
be resolved by binding arbitration and each party hereto hereby waives any right it may otherwise have to the resolution of such
matter by any means other than binding arbitration pursuant to this Section 11.15. Whenever a party shall decide to institute
arbitration proceedings, it shall provide written notice to that effect to the other parties hereto. The party giving such notice
shall, however, refrain from instituting the arbitration proceedings for a period of sixty (60) days following such notice. During
this period, the parties shall make good faith efforts to amicably resolve the claim, dispute or controversy without arbitration.
Any arbitration hereunder shall be conducted in the English language under the commercial arbitration rules of the American Arbitration
Association. Any such arbitration shall be conducted in Dallas, Texas by a panel of three arbitrators: one arbitrator shall be
appointed by each of Parent and Company; and the third shall be appointed by the American Arbitration Association. The panel of
arbitrators shall have the authority to grant specific performance. Judgment upon the award so rendered may be entered in any court
having jurisdiction or application may be made to such court for judicial acceptance of any award and an order of enforcement,
as the case may be. In no event shall a demand for arbitration be made after the date when institution of a legal or equitable
proceeding based on the claim, dispute or controversy in question would be barred under this Agreement or by the applicable statute
of limitations. The prevailing party in any arbitration in accordance with this Section 11.15 shall be entitled to recover
from the other party, in addition to any other remedies specified in the award, all reasonable costs, attorneys’ fees and
other expenses incurred by such prevailing party to arbitrate the claim, dispute or controversy.



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Section 11.16   
Interpretation.


(a)               
When a reference is made in this Agreement to a section or article, such reference
shall be to a section or article of this Agreement unless otherwise clearly indicated to the contrary.


(b)              
Whenever the words “include”, “includes”
or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.”


(c)               
The words “hereof”, “hereby”, “herein”
and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement
as a whole and not to any particular provision of this Agreement, and article, section, paragraph, exhibit and schedule references
are to the articles, sections, paragraphs, exhibits and schedules of this Agreement unless otherwise specified.


(d)              
The words “knowledge,” or “known to,”
or similar terms, when used in this Agreement to qualify any representation or warranty, refer to the knowledge or awareness of
certain specific facts or circumstances related to such representation or warranty of the officers and directors of such parties,
which a prudent business person would have obtained after reasonable investigation or due diligence on the part of any such person.



(e)               
The word “subsidiary” shall mean any entity of which at least
a majority of the outstanding shares or other equity interests having ordinary voting power for the election of directors or comparable
managers of such entity is owned, directly or indirectly by another entity or person.


(f)               
For purposes of this Agreement, “ordinary course of business”
means the ordinary course of business consistent with past custom and practice (including with respect to quantity and frequency).



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(g)              
The plural of any defined term shall have a meaning correlative to such defined
term, and words denoting any gender shall include all genders. Where a word or phrase is defined herein, each of its other grammatical
forms shall have a corresponding meaning.


(h)              
A reference to any legislation or to any provision of any legislation shall
include any modification or re-enactment thereof, any legislative provision substituted therefor and all regulations and statutory
instruments issued thereunder or pursuant thereto, unless the context requires otherwise.


(i)                
The parties hereto have participated jointly in the negotiation and drafting of this Agreement.
In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship
of any provisions of this Agreement.


[The remainder of this page is intentionally
left blank]



    	43



    	 



    

IN WITNESS WHEREOF,
each of the parties hereto has caused this Agreement to be executed as of the date first above written by their respective officers
thereunto duly authorized.


			COMPANY:
			
			Paragon GPS, Inc.
			
			
			

By:	
         

         /s/ Charles Skylis

	 		Name:	Charles Skylis
	 		Title:	Chairman & President
			
			
			PARENT:
			
			Smart Kids Group, Inc.
			
			
			



By:	

    

    /s/ Richard Shergold

	 		Name:	Richard Shergold
	 		Title:	President & CEO
	 		
			
			ACQUISITION CORP.:
			
			SKGI
    Acquisition Corp.
			
			
			

    By:	

    /s/ Richard Shergold

	 		Name:	Richard Shergold
	 		Title:	President & CEO
	 	 	 	 	 


 



    	44



    	 



    

Exhibit A


 


Articles of Incorporation of Surviving Corporation


 


See attached.


 



    	45



    	 



    

Exhibit B


 


By-Laws of Surviving Corporation


 


See attached.


 



    	46



    	 



    

Exhibit C


 


Officers and Directors of Company


— Pre-Effective Time and Post-Effective
Time—


 


 


Pre-Effective Time:


 


Charles SkylisChairman of the Board, President, Secretary


John ParkinDirector


Joseph StangDirector


 


Following Notice Filings:


 


The following persons shall
be appointed as Officers and Directors of Company:


 


 


	Name	Officers
		
	Richard Shergold	Chairman of the Board and President
	Lisa Yakiwchuk	Secretary and Treasurer
	Marcel Scherger	Executive Vice-President
		
		
		



    	47



    	 



    

Exhibit D


 


Articles of Incorporation of Parent


 


 


See attached.


 



    	48



    	 



    

Exhibit E


 


Bylaws of Parent


 


 


See attached.



    	49