Document:

Unassociated Document

Exhibit 10.2

 

EXHIBIT C TO ASSET PURCHASE AGREEMENT

Form of Warrant

	
   

	
WARRANT

	  
	
NO. [     ]

	
PERSHING GOLD CORPORATION

	
5,000,000 Shares

	  	  	  

WARRANT TO PURCHASE COMMON STOCK

 

VOID AFTER 5:00 P.M. PACIFIC TIME

ON THE EXPIRATION DATE

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”) OR ANY STATE SECURITIES LAWS, AND MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO PERSHING GOLD CORPORATION (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE U.S. SECURITIES ACT, (C) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH REGULATION S UNDER THE U.S. SECURITIES ACT, (D) IN COMPLIANCE WITH THE EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER, IF AVAILABLE, AND IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWS, OR (E) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE LAWS AND REGULATIONS GOVERNING THE OFFER AND SALE OF SECURITIES, AND, IN THE CASE OF (C) OR (E), ONLY IF THE HOLDER HAS PRIOR TO SUCH TRANSFER FURNISHED TO THE COMPANY AN OPINION OF COUNSEL OF RECOGNIZED STANDING IN CUSTOMARY FORM AND SUBSTANCE AND IN THE CASE OF (D), THE HOLDER HAS PROVIDED TO THE COMPANY CUSTOMARY DOCUMENTATION OF THE HOLDER AND ITS BROKER.

 

FOR VALUE RECEIVED, PERSHING GOLD CORPORATION, a Nevada corporation (the “Company”), hereby agrees to sell upon the terms and on the conditions hereinafter set forth, but no later than 5:00 p.m., Pacific Time, on the Expiration Date (as hereinafter defined) to VICTORIA GOLD CORP., a British Columbia corporation, whose address is 80 Richmond Street West, Suite 303, Toronto, Ontario M5H 2A4, Canada, or registered assigns (the “Holder”), under the terms as hereinafter set forth, Five Million (5,000,000) fully paid and non-assessable shares of the Company’s Common Stock, par value $0.0001 per share (the “Warrant Stock”), at a purchase price of $0.60 per share (the “Warrant Price”), pursuant to this warrant (this “Warrant”).  The number of shares of Warrant Stock to be so issued and the Warrant Price are subject to adjustment in certain events as hereinafter set forth.  The term “Common Stock” shall mean, when used herein, unless the context otherwise requires, the stock and other securities and property at the time receivable upon the exercise of this Warrant.

 

1.   Exercise of Warrant.

 

a.           The Holder may exercise this Warrant according to its terms by surrendering the Warrant to the Company at the address set forth in Section 11, the Notice of Exercise attached hereto having then been duly executed by the Holder, accompanied by cash, certified check or bank draft in payment of the purchase price, in lawful money of the United States of America, for the number of shares of the Warrant Stock specified in the Notice of Exercise (the “Aggregate Purchase Price”), prior to 5:00 p.m., Pacific Time, on [        ] 2014 (the “Expiration Date”)

 

  

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b.           Cashless Exercise.  This Warrant may be exercised, in whole or in part, at any time by means of a “cashless exercise” (in lieu of making a payment upon such exercise) in which the Holder shall be entitled to receive a certificate for the number of shares of Warrant Stock equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

 

(A) = the closing price on the Trading Day immediately preceding the date on which Holder elects to exercise this Warrant by means of a “cashless exercise,” as set forth in the applicable Notice of Exercise;

(B) = the Warrant Price, as adjusted hereunder; and

(X) = the number of shares of Warrant Stock that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise.

c.           If exercised in part, the Company shall, as soon as practicable and in no event later than five (5) trading days after receipt of this Warrant and at its own expense, deliver to the Holder a new Warrant, identical in form, in the name of the Holder, evidencing the right to purchase the number of shares of Warrant Stock as to which this Warrant has not been exercised.

d.           No fractional shares of Common Stock will be issuable upon any exercise of this Warrant and the Holder will not be entitled to any cash payment or compensation in lieu of a fractional share of Common Stock.

e.           In the event of any exercise of the rights represented by this Warrant, a certificate or certificate for the Warrant Stock so purchased, registered in the name of the Holder, shall be delivered to the Holder within three (3) trading days after such rights have been exercised and the other requirements for issuance have been fully satisfied. The person or entity in whose name any certificate for the Warrant Stock is issued upon exercise of the rights represented by this Warrant, shall for all purposes be deemed to have become the holder of record of such shares immediately prior to the close of business on the date on which the Warrant was surrendered and payment of the Warrant Price and any applicable taxes was made, irrespective of the date of delivery of such certificate, except that, if the date of such surrender and payment is a date when the stock transfer books of the Company are closed, such person shall be deemed to have become the holder of such shares at the opening of business on the next succeeding date on which the stock transfer books are open.

 

2.    Disposition of Warrant Stock and Warrant.

 

a.           The Holder hereby acknowledges that this Warrant and any Warrant Stock purchased pursuant hereto are, as of the date hereof, not registered under the Securities Act of 1933, as amended (the “U.S. Securities Act”) or under any applicable state securities law; and that the Company’s reliance on certain exemptions under the U.S. Securities Act and applicable state securities laws is predicated in part on the representations made to the Company in Section 3.11 of the Asset Purchase Agreement (the “Asset Purchase Agreement”) dated March [  ], 2012 by and among the Company, Victoria Gold Corp. and Victoria Resources, (US), Inc.

b.           Any certificate representing Common Stock issued upon the exercise of this Warrant will bear the following legend:

 

  

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“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”) OR ANY STATE SECURITIES LAWS, AND MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO PERSHING GOLD CORPORATION, (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE U.S. SECURITIES ACT, (C) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH REGULATION S UNDER THE U.S. SECURITIES ACT, (D) IN COMPLIANCE WITH THE EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER, IF AVAILABLE, AND IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWS, OR (E) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE LAWS AND REGULATIONS GOVERNING THE OFFER AND SALE OF SECURITIES, AND, IN THE CASE OF (C) OR (E), ONLY IF THE HOLDER HAS PRIOR TO SUCH TRANSFER FURNISHED TO THE COMPANY AN OPINION OF COUNSEL OF RECOGNIZED STANDING IN CUSTOMARY FORM AND SUBSTANCE AND IN THE CASE OF (D), THE HOLDER HAS PROVIDED TO THE COMPANY CUSTOMARY DOCUMENTATION OF THE HOLDER AND ITS BROKER.”

In addition, so long as the foregoing legend may remain on any stock certificate delivered to the Holder, the Company may maintain appropriate “stop transfer” orders with respect to such certificates and the shares represented thereby on its books and records and with those to whom it may delegate registrar and transfer functions.  Notwithstanding the foregoing, the foregoing legend and any related “stop transfer” orders shall be removed, or the stock certificate shall be issued without any such legend or “stop transfer” order, under any of the circumstances described in clauses (i) through (iv) of Section 3.11(l) of the Asset Purchase Agreement.

3.           Reservation of Shares.  The Company hereby agrees that at all times there shall be reserved for issuance upon the exercise of this Warrant such number of shares of its Common Stock as shall be required for issuance upon exercise of this Warrant.  The Company further agrees that all shares which may be issued upon the exercise of the rights represented by this Warrant will be duly authorized and will, upon issuance and against payment of the exercise price, be validly issued, fully paid and non-assessable, free from all taxes, liens, charges and preemptive rights with respect to the issuance thereof, other than taxes, if any, in respect of any transfer occurring contemporaneously with such issuance and other than transfer restrictions imposed by federal, state or other applicable securities laws.

4.           Exchange, Transfer or Assignment of Warrant.  This Warrant is exchangeable, without expense , at the option of the Holder, upon presentation and surrender hereof to the Company or at the office of its stock transfer agent, if any, for other Warrants of different denominations, entitling the Holder or Holders thereof to purchase in the aggregate the same number of shares of Common Stock purchasable hereunder.  Upon surrender of this Warrant to the Company or at the office of its stock transfer agent, if any, with the Assignment Form annexed hereto duly executed and funds sufficient to pay any transfer tax, the Company shall, without charge, execute and deliver a new Warrant in the name of the assignee named in such instrument of assignment and this Warrant shall promptly be canceled.

5.           Capital Adjustments.  This Warrant is subject to the following further provisions:

 

a.           Subdivision or Combination of Shares.  If the Company at any time while this Warrant remains outstanding and unexpired shall subdivide or combine its Common Stock, the number of shares of Warrant Stock purchasable upon exercise of this Warrant and the Warrant Price shall be proportionately adjusted.  Any adjustment under this Section 5(a) shall become effective at the close of business on the date the subdivision or combination becomes effective or, if earlier, the record date with respect to the subdivision or combination.

 

  

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b.           Stock Dividends and Distributions.  If the Company at any time while this Warrant is outstanding and unexpired shall issue or pay the holders of its Common Stock, or take a record of the holders of its Common Stock for the purpose of entitling them to receive, a dividend payable in, or other distribution of, Common Stock, then (i) the Warrant Price shall be adjusted in accordance with Section 5(e) and (ii) the number of shares of Warrant Stock purchasable upon exercise of this Warrant shall be adjusted to the number of shares of Common Stock that the Holder would have owned immediately following such action had this Warrant been exercised immediately prior thereto.

 

c.           Stock and Rights Offering to Shareholders.  If the Company shall at any time while this Warrant is outstanding distribute to all holders of its Common Stock any shares of capital stock of the Company (other than Common Stock) or evidences of its indebtedness or assets (excluding cash dividends or distributions) or rights or warrants to subscribe for or purchase any of its securities (excluding those referred to in the immediately preceding paragraph), or securities convertible or exchangeable into Common Stock (any of the foregoing, the “Securities”), then in each such case, the Company shall reserve shares or other units of such Securities for distribution to the Holder upon exercise of this Warrant so that, in addition to the shares of the Common Stock to which such Holder is entitled, such Holder will receive upon such exercise the amount and kind of such Securities which such Holder would have received if the Holder had, immediately prior to the record date for the distribution of the Securities, exercised this Warrant.

d.           Organic Change.  Any recapitalization, reorganization, reclassification, consolidation, merger, sale of all or substantially all of the Company’s assets to another person or entity or other transaction that is effected in such a way that holders of Common Stock are entitled to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Stock is referred to herein as an “Organic Change.”

(i)           In connection with any (x) bona fide sale of all or substantially all of the Company’s assets to an acquiring person or entity or (y) other Organic Change involving an arm’s length third party or parties

following which the Company is not the surviving entity and as a result of which the then current shareholders of the Company will not, directly or indirectly own 50% or more of the surviving entity, the Company shall elect in its sole discretion: (A) to require that the Holder exercise this Warrant prior to the consummation of such Organic Change, and if not so exercised, that this Warrant shall terminate upon consummation of such Organic Change, or (B) to secure from the person or entity purchasing such assets or the successor resulting from such Organic Change (in each case, the “Acquiring Entity”) a written agreement (in form and substance reasonably satisfactory to the Holder) to deliver to the Holder, in exchange for this Warrant, a warrant of the Acquiring Entity (the “Replacement Warrant”) evidenced by a written instrument substantially similar in form and substance to this Warrant and reasonably satisfactory to the Holder reflecting the adjustments required so as to preserve the value of the Warrant applicable at the Closing of the transaction, by the terms of the Replacement Warrant.  The Replacement Warrant shall be exercisable for such number of shares of common stock or other securities of the Acquiring Entity as the Holder would have had the right to receive upon such Organic Change by a holder of the number of Common Shares that such Holder would have been entitled to receive upon exercise of this Warrant had this Warrant been exercised immediately prior to the effective date of such Organic Change.  The Company shall give the Holder written notice of such Organic Change at least thirty (30) days prior to the closing and consummation of such Organic Change.

 

  

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(ii)         Prior to the consummation of any Organic Change unless not required as contemplated in subsection (i) above, the Company shall make appropriate provision (in form and substance reasonably satisfactory to the Holder) to ensure that the Holder will thereafter have the right to acquire and receive in lieu of or in addition to (as the case may be) the shares of Common Stock immediately theretofore acquirable and receivable upon the exercise of this Warrant, such shares of stock, securities or assets that would have been issued or payable in such Organic Change with respect to or in exchange for the number of shares of Common Stock that would have been acquirable and receivable upon the exercise of this Warrant as of the date of such Organic Change.

e.          Warrant Price Adjustment.  Except as otherwise provided herein, whenever the number of shares of Warrant Stock purchasable upon exercise of this Warrant is adjusted, as herein provided, the Warrant Price payable upon the exercise of this Warrant shall be adjusted to that price determined by multiplying the Warrant Price immediately prior to such adjustment by a fraction (i) the numerator of which shall be the number of shares of Warrant Stock purchasable upon exercise of this Warrant immediately prior to such adjustment, and (ii) the denominator of which shall be the number of shares of Warrant Stock purchasable upon exercise of this Warrant immediately thereafter.

 

f.           Par Value.  Notwithstanding anything to the contrary contained in Section 5, if, as a result of an adjustment pursuant to Section 5, the par value per share of Common Stock would be greater than the Warrant Price, then the Warrant Price shall be an amount equal to the par value per share of the Common Stock but the number of shares the holder of this Warrant shall be entitled to purchase shall be such greater number of shares of Common Stock as would have resulted from the Warrant Price that, absent such limitation, would have been in effect pursuant to this Section 5.

g.          Certain Shares Excluded. The number of shares of Common Stock outstanding at any given time for purposes of the adjustments set forth in this Section 5 shall exclude any shares then directly or indirectly held in the treasury of the Company.

 

h.          Deferral and Cumulation of De Minimis Adjustments.  The Company shall not be required to make any adjustment pursuant to this Section 5 if the amount of such adjustment would be less than one percent (1%) of the Warrant Price in effect immediately before the event that would otherwise have given rise to such adjustment.  In such case, however, any adjustment that would otherwise have been required to be made shall be made at the time of and together with the next subsequent adjustment which, together with any adjustment or adjustments so carried forward, shall amount to not less than one percent (1%) of the Warrant Price in effect immediately before the event giving rise to such next subsequent adjustment.

 

i.            Duration of Adjustment.  Following each computation or readjustment as provided in this Section 5, the new adjusted Warrant Price and number of shares of Warrant Stock purchasable upon exercise of this Warrant shall remain in effect until a further computation or readjustment thereof is required.

 

6. Intentionally Omitted.

7. Intentionally Omitted.

 

8. Notice to Holders.

 

  

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a. Notice of Record Date.  In case:

 

(i) the Company shall take a record of the holders of its Common Stock (or other stock or securities at the time receivable upon the exercise of this Warrant) for the purpose of entitling them to receive any dividend (other than a cash dividend) or other distribution, or any right to subscribe for or purchase any shares of stock of any class or any other securities, or to receive any other right;

  

(ii) of any Organic Change; or

 

(iii) of any voluntary dissolution, liquidation or winding-up of the Company;

 

then, and in each such case, the Company will mail or cause to be mailed to the Holder hereof at the time outstanding a notice specifying, as the case may be, (i) the date on which a record is to be taken for the purpose of such dividend, distribution or right, and stating the amount and character of such dividend, distribution or right, or (ii) the date on which such Organic Change, dissolution, liquidation or winding-up is to take place, and the time, if any, is to be fixed, as of which the holders of record of Common Stock (or such stock or securities at the time receivable upon the exercise of this Warrant) shall be entitled to exchange their shares of Common Stock (or such other stock or securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, conveyance, dissolution or winding-up.  Such notice shall be mailed at least fifteen (15) days prior to the record date therein specified, or if no record date shall have been specified therein, at least fifteen (15) days prior to such specified date, provided, however, failure to provide any such notice shall not affect the validity of such transaction.

 

b. Certificate of Adjustment. Whenever any adjustment shall be made pursuant to Section 5 hereof, the Company shall promptly make a certificate signed by its Chairman, Chief Executive Officer, President, Vice President, Chief Financial Officer or Treasurer, setting forth in reasonable detail the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated and the Warrant Price and number of shares of Warrant Stock purchasable upon exercise of this Warrant after giving effect to such adjustment, and shall promptly cause copies of such certificates to be mailed (by first class mail, postage prepaid) to the Holder of this Warrant.

 

9. Loss, Theft, Destruction or Mutilation.  If this Warrant is lost, stolen, mutilated or destroyed, upon receipt by the Company, in the case of loss, theft or destruction, of an indemnity in customary form or, in the case of mutilation, upon surrender and cancellation of this Warrant, the Company will execute and deliver in lieu thereof, without expense to the Holder, a new Warrant of like denomination and tenor dated the date hereof.

 

10. Warrant Holder Not a Stockholder.  The Holder of this Warrant, as such, shall not be entitled by reason of this Warrant to any rights whatsoever as a stockholder of the Company.

 

11. Notices.  Any notice required or contemplated by this Warrant shall be deemed to have been duly given if transmitted by registered or certified mail, return receipt requested, or nationally recognized overnight delivery service, to the Company at its principal executive offices located at 1658 Cole Boulevard, Building 6 - Suite 210, Lakewood, Colorado 80401, Attention: President, or to the Holder at the name and address set forth in the Warrant Register maintained by the Company.

 

  

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12. Choice of Law.  THIS WARRANT IS ISSUED UNDER AND SHALL FOR ALL PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.

 

13. Jurisdiction and Venue.  The Company and Holder hereby agree that any dispute which may arise between them arising out of or in connection with this Warrant shall be adjudicated before a court located in New York County, New York and they hereby submit to the exclusive jurisdiction of the federal and state courts of the State of York located in New York County with respect to any action or legal proceeding commenced by any party, and irrevocably waive any objection they now or hereafter may have respecting the venue of any such action or proceeding brought in such a court or respecting the fact that such court is an inconvenient forum, relating to or arising out of this Warrant or any acts or omissions relating to the sale of the securities hereunder, and consent to the service of process in any such action or legal proceeding by means of registered or certified mail, return receipt requested, in care of the address set forth herein or such other address as either party shall furnish in writing to the other.

14.           Amendment and Waiver.  Except as otherwise provided herein, the provisions of this Warrant and the other Warrants may be amended and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company has obtained the written consent of the Holder.

 

  

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 IN WITNESS WHEREOF, the Company has duly caused this Warrant to be signed on its behalf, in its corporate name and by its duly authorized officers, as of this __ day of _____________________, 2012.

 

	  	
PERSHING GOLD CORPORATION 

	  
	 	 	 	 
	  	
By: 

	
 

	  
	  	  	
Name:  Stephen D. Alfers

Title:   President and CEO

	  

 

 

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NOTICE OF EXERCISE

 

	
TO:

	
Pershing Gold Corporation

	  	
1658 Cole Boulevard

Building 6 – Suite 210

Lakewood, Colorado 80401

	  	
Attn: President

	  	
Tel: (___) ___-____

	  	
Fax: (___) ___-____

 

(1) The undersigned hereby elects to purchase ______________ shares of Warrant Stock of the Company pursuant to the terms of the attached Warrant to Purchase Common Stock (the “Warrant”), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

 

(2) Payment shall take the form of (check applicable box):

 

oo the Aggregate Exercise Price in the sum of $________________________________________ in lawful money of the United States in accordance with the terms of the Warrant; or

 

(3) Please issue a certificate or certificates representing said shares of Warrant Stock in the name of the undersigned or in such other name as is specified below:

 

The shares of Warrant Stock shall be delivered to the following DWAC Account Number, if permitted, or by physical delivery of a certificate to:

 

(4) Accredited Investor. By executing this exercise form, the undersigned represents and warrants that the undersigned:

(a)           (i) purchased the Warrant directly from the Company for its own account or the account of another “accredited investor”, as that term is defined in Rule 501(a) (a “U.S. Accredited Investor”) of Regulation D promulgated under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”); (ii) will acquire the shares of Warrant Stock upon the exercise of the Warrant contemplated hereby solely for its own account or the account of such other U.S. Accredited Investor; (iii) was a U.S. Accredited Investor on the date the Warrant was purchased from the Company and continues to be a U.S. Accredited Investor on the date of the exercise of the Warrant; and (iv) if the Warrant is being exercised on behalf of another person, represents, warrants and certifies such person was a U.S. Accredited Investor, on the date the Warrant was purchased from the Company and continues to be a U.S. Accredited Investor on the date of the exercise of the Warrant; or

 

  

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(b)           (i) is outside the United States (as defined in Regulation S promulgated by the United States Securities Exchange Commission under the U.S. Securities Act) and not a U.S. person (as defined in Regulation S (a “U.S. Person”), at the time of execution and delivery of this notice; (ii) is not exercising the right provided for herein for the account or benefit of a person in the United States or a U.S. Person; (iii) is not exercising the Warrant with the intent to distribute either directly or indirectly any of the securities acquirable upon exercise in the United States, except in compliance with the U.S. Securities Act; and (iv) has in all other respects complied with the terms of Regulation S of the U.S. Securities Act.

Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant.

Name of Registered Holder of the Warrant:  ___________________________                                                             

Signature of Authorized Signatory of Registered Holder:______________________________                                                       

Name and Title of Authorized Signatory:______________________________                                               

Date:______________________________

 

  

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ASSIGNMENT FORM

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto ______________________________________________________ (include name and address of the transferee) a Warrant exercisable for ____________ shares of common stock, represented by warrant certificate number _________, of Sagebrush Gold Ltd. (the “Company”) registered in the name of the undersigned on the register of the Company maintained therefor, and hereby irrevocably appoints the attorney of the undersigned to transfer the said securities on the books maintained by the Company with full power of substitution.

DATED this _______ day of ___________________, 20___.

	
 

	
Signature of Transferor

 

______________________________

 

______________________________

 

 
Address of Transferor 

The undersigned transferee hereby certifies that:

(check one)

o said transferee was not offered the Warrants in the United States and is not in the United States or a “U.S. Person” (as defined in Regulation S under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”)), and is not acquiring the Warrants for the account or benefit of a person in the United States or a U.S. Person; or

o [enclosed herewith is a customary form of opinion of counsel of recognized standing to the effect that no violation of the U.S. Securities Act or applicable securities laws will result from transfer, exercise or deemed exercise of the Warrants.]

 

  

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It is understood that the Company may require additional evidence necessary to verify the foregoing.

DATED: ________________________                  

	
Address of Transferee:

 

 

___________________________

 

___________________________

 

___________________________

 

___________________________

 

 

 

 

 

	
X  ______________________________________            

Signature of individual (if Transferee is an individual)

 

X ________________________________________ 

Authorized signatory (if Transferee is not an individual)

 

__________________________________________

Name of Transferee (please print)

 

__________________________________________

Name of authorized signatory (please print)

 

__________________________________________

Official capacity of authorized signatory (please print)

C-12ex10-1stockpurchaseagreement.htm - Generated by SEC Publisher for SEC Filing

 

COMMON STOCK PURCHASE AGREEMENT

THIS COMMON STOCK PURCHASE AGREEMENT is entered into the _____ day
of February, 2012 (the “Agreement”), by and among the Sellers listed
on Schedule 1.1 (the “Sellers”), the Purchaser listed on Schedule 1.1
(the “Purchaser”) and Clear System Recycling, Inc., a Nevada corporation (“CLSR”
or the “Company”). Certain capitalized terms are defined in Section 9.12.

WHEREAS, the Sellers owns an aggregate of 2,000,000 shares (the “Shares”)
of common stock, par value $0.001 per share of the Company (the “Common Stock”)
representing approximately 68% of the issued and outstanding shares of Common
Stock of the Company; and

WHEREAS, the Purchaser desire to purchase from the Sellers, and the
Sellers desires to sell to the Purchaser, all the Shares (the “Purchased Shares”)
subject to the tenus
and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained in this Agreement, the Purchaser and the Sellers agree as
follows:

ARTICLE
1. 

SALE AND/OR CANCELLATION OF THE SHARES

Section 1.1            
Sale of the Shares. Subject to the terms and conditions set forth
in this Agreement, Sellers agree to (a) sell, transfer and assign to the
Purchaser and the Purchaser agrees to purchase from the Sellers the Purchased
Shares, for an aggregate purchase price of One Hundred Twenty Thousand US
dollars ($120,000.00), (the “Purchase Price”).

Section 1.2            
Allocation of the Shares. The proportion of the Purchased Shares purchased

and the Purchase  Price to be paid, by
the Purchaser is set forth on Schedule 1.1 attached hereto.

ARTICLE
2. 

CLOSING AND DELIVERY

Section 2.1            
Closing Date. Upon the terms and subject to the conditions set
forth herein, the consummation of the purchase and sale of the Purchased Shares
(the “Closing”) shall be held at such date (the “Closing Date”) and time as
determined at the mutual discretion of the Sellers and the Purchaser; provided, 
however,  that the Closing shall occur no later than 30 days after the
conditions precedent contained in Article 7 herein have been satisfied (which
the parties hereto agree shall not be later than February 21, 2012 unless
extended as provided for herein). The Closing shall take place at the offices
of Purchaser in Toronto, or by the exchange of documents and instruments by
mail, courier, telecopy and wire transfer to the extent mutually acceptable to
the parties hereto.

Section 2.2            
Delivery at Closing. At the Closing:

(a)               
The Sellers shall deliver to the Escrow Agent stock certificates
representing the Shares, duly endorsed for transfer to the Purchaser, and
accompanied by: (i) if required by the Company’s transfer agent, an opinion of
counsel reasonably acceptable to the Company, the Purchaser and the Company’s
transfer agent and (ii) stock powers or other instruments of transfer duly
executed to the Purchaser, and with all requisite documentary or transfer tax
stamps affixed; and 

(b)              
The Purchaser shall transfer the aggregate Purchase Price to the Escrow
Agent in the form of certified bank check or wire transfer pursuant to the
instructions on Schedule 1.1.

 

                                                                               1

 

 

Section 2.3    
Escrow.  Subject to the terms and conditions set
forth herein, Sellers, Purchaser, the Company
and Charles B. Pearlman, Esq., Pearlman & Pearlman LLC, Counsel to Quintairos,
Prieto, Wood & Boyer, P.A., One East Broward Boulevard, Suite 1400, Fort Lauderdale,
FL 33301. Phone: 954-523-7008 x6021; Fax:
954-523-7009.  Email:
cpearlman@gpwblaw.com and James B.
Parsons, Esq., Parsons / Burnett / Bjordhal /Hume, LLP (the “Escrow
Agents”) upon execution and delivery, shall enter into that certain escrow agreement, substantially in the form of Exhibits B
and C attached hereto, providing that the funds be held by Pearlman and Pearlman and the shares and
supporting documents be held by James
B. Parsons, Esq., Parsons / Burnett / Bjordhal / Hume, LLP 1850 Skyline Tower,
10900 NE 4th Street, Bellevue, WA 98004. T: 425-451-8036 F:
425-451-8568, Email: jparsons@pblaw.biz each being released as described according to this Agreement as detailed
in the Escrow Agreements (the “Escrow Agreements”).

ARTICLE
3. 

REPRESENTATIONS AND WARRANTIES OF SELLERS AND THE COMPANY

Except as set forth under the corresponding section of the disclosure
schedules (the “Disclosure Schedules”) attached hereto as Exhibit A,
Sellers and the Company jointly and severally represent and warrant to the
Purchaser that:

Section 3.1            
Existence and Power. CLSR is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Nevada and
has all corporate powers and all governmental licenses, authorizations,
permits, consents and approvals required to carry on its business as now
conducted. CLSR has heretofore delivered to the Purchaser true and complete
copies of the Articles of Incorporation, as amended, and By-laws, each as
currently in effect.

Section 3.2            
Authorization; No Agreements. The execution, delivery and
performance by Sellers of this Agreement, the performance of its obligations
hereunder, and the consummation of the transactions contemplated are within the
Sellers’s powers. This Agreement has been duly and validly executed and
delivered by the Sellers and is a legal, valid and binding obligation of the
Sellers, enforceable against it in accordance with its terms. The execution,
delivery and performance by the Sellers of this Agreement does not violate any
contractual restriction contained in any agreement which binds or affects or
purports to bind or affect the Sellers. The Sellers are not a party to any
agreement, written or oral, creating rights in respect of any of such Shares in
any third party or relating to the voting of the Shares. Sellers are the lawful
owner of the Shares, free and clear of all security interests, liens, encumbrances,
equities and other charges, Sellers represents that, following consummation of
the transactions contemplated, they shall not own shares of Common Stock.
Sellers further represents that they do not beneficially own any options,
warrants or other rights to purchase shares of Common Stock. There are no
outstanding or authorized options, warrants, rights, calls, commitments,
conversion rights, rights of exchange or other agreements of any character,
contingent or otherwise, providing for the purchase, issuance or sale of any of
the Shares, or any arrangements that require or permit any of the Shares to be
voted by or at the discretion of anyone other than the Sellers, and there are
no restrictions of any kind on the transfer of any of the Shares other than (a)
restrictions on transfer imposed by the Securities Act of 1933, as amended (the
“Securities Act”) and (b) restrictions on transfer imposed by applicable state
securities or “blue sky” laws. Sellers acquired the Shares on January 27, 2011.

Section 3.3            
Capitalization. 

(a)               
The number of shares and type of all authorized, issued and outstanding
capital stock of the Company is set forth in the Disclosure Schedules attached
hereto. All of the issued and outstanding shares of capital stock of the
Company have been duly authorized, validly issued and are fully paid and non-assessable.
All of the issued and outstanding shares of capital stock of the Company have
been 

                                                                               2

 

 

offered, issued and sold by the Company in
compliance with all applicable federal and state securities laws. No securities
of the Company are entitled to preemptive or similar rights, and no Person has
any right of first refusal, preemptive right, right of participation, or any
similar right to participate in the transactions contemplated. Except as a
result of the purchase and sale of the Shares, there are no outstanding
options, warrants, script rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities, rights or obligations
convertible into or exchangeable for, or giving any Person any right to
subscribe for or acquire, any shares of Common Stock, or contracts,
commitments, understandings or arrangements by which the Company is or may
become bound to issue additional shares of Common Stock, or securities or rights
convertible or exchangeable into shares of Common Stock. The issuance and sale
of the Shares will not obligate the Company to issue shares of Common Stock or
other securities to any Person (other than the Purchaser) and shall not result
in a right of any holder of Company securities to adjust the exercise,
conversion, exchange or reset price under such securities.

(b)              
There are no outstanding obligations, contingent or otherwise, of CLSR
to redeem, purchase or otherwise acquire any capital stock or other securities
of CLSR.

(c)               
There are no shareholder agreements, voting trusts or other agreements
or understandings to which CLSR or Sellers is a party or by which either of
them are bound relating to the voting of any shares of the capital stock of
CLSR.

(d)              
The Shares shall be duly authorized for issuance, when delivered in
accordance with the terms of this Agreement, and shall be validly issued, fully
paid and non-assessable and the transfer of said Shares shall not be subject to
any preemptive or other similar right.

Section 3.4            
Subsidiaries.  CLSR has no subsidiaries.

Section 3.5            
Financial Statements. 

(a)               
SEC Reports; Financial Statements. The Company has filed
all reports required to be filed by it under the Securities Act and the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), including
pursuant to Section 13(a) or 15(d) of the Exchange Act, since its inception as
a public reporting company (the foregoing materials being collectively referred
to herein as the “SEC Reports”) on a timely basis or has received a valid
extension of such time of filing and has filed any such SEC Reports prior to
the expiration of any such extension. The Sellers has identified and made
available to the Purchaser a copy of all SEC Reports filed within the 10 days
preceding the date of this Agreement. As of their respective dates, the SEC
Reports complied in all material respects with the requirements of the
Securities Act and the Exchange Act, and the rules and regulations of the
Securities and Exchange Commission (the “Commission”) promulgated thereunder,
and none of the SEC Reports, when filed, contained any untrue statement of a
material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the SEC Reports
comply in all material respects with applicable accounting requirements and the
rules and regulations of the Commission with respect thereto as in effect at
the time of filing. Such financial statements have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
during the periods involved (“GAAP”), except as may be otherwise specified in
such financial statements or the notes thereto, and fairly present in all
material respects the financial position of the Company and its consolidated
subsidiaries as of and for the dates thereof and the results of operations and
cash flows for the periods then ended, subject, in the case of unaudited
statements, to normal, immaterial, year-end audit adjustments.

 

                                                                               3

 

 

(b)              
Except as set forth in its Form S-1/A for the fiscal year ended March
31, 2011, CLSR has not been engaged in any other business activity since at
least September 30, 2011.

(c)               
Since the date of the filing of its quarterly report on Form 10-Q for
the period ended September 30, 2011, except as specifically disclosed in the
SEC Reports: (i) there has been no event, occurrence or development that has
had or that could result in a Material Adverse Effect; (ii) the Company has not
incurred any liabilities (contingent or otherwise) or amended of any material
term of any outstanding security; (iii) the Company has not altered its method
of accounting or the identity of its auditors; (iv) the Company has not
declared or made any dividend or distribution of cash or other property to its
stockholders or purchased, redeemed or made any agreements to purchase or
redeem any shares of its capital stock; (v) the Company has not issued any
equity securities to any officer, director or Affiliate of the Company; (vi)
the Company has not made any loan, advance or capital contributions to or
investment in any Person; (vii) the Company has not entered into any transaction or commitment made, or any contract or
agreement entered into, relating to its business or any of its assets
(including the acquisition or disposition of, or creation of a lien on, any
assets) or any relinquishment by CLSR of any contract or other right; (viii)
the Company has not granted any severance or termination pay to any current or
former director, officer or employee of CLSR, or increased the benefits payable
under any existing severance or termination pay policies or employment
agreements or entered into any employment, deferred compensation or other
similar agreement (or any amendment to any such existing agreement) with any
current or former director, officer or employee of CLSR; (ix) the Company has
not established, adopted or amended (except as required by applicable law) any
collective bargaining, bonus, profit sharing, thrift, pension, retirement,
deferred compensation, compensation, stock option, restricted stock or other
benefit plan or arrangement covering any current or former director, officer or
employee of CLSR; (x) the Company has not increased the compensation, bonus or
other benefits payable or otherwise made available to any current or former
director, officer or employee of CLSR; (xi) the Company has not made any tax
election or any settlement or compromise of any tax liability, in either case
that is material to CLSR or entered into any transaction by the Company not in
the ordinary course of business.

Section 3.6            
No Liabilities or Debts.  As of the date of this
Agreement, there are no liabilities or debts
of CLSR of any kind whatsoever, 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 a liability or debt. The Company is not a guarantor of any indebtedness
of any other person, firm or corporation.

Section 3.7            
Litigation.  There is no action, suit, investigation, audit or
proceeding pending against, or to the best knowledge of CLSR threatened against
or affecting, CLSR or any of its assets or properties before any court or
arbitrator or any governmental body, agency or official. The Company is not
subject to any outstanding judgment, order or decree. Neither the Company nor
any officer, key employee or 5% stockholder of the Company in his, her or its
capacity as such, is in default with respect to any order, writ, injunction,
decree, ruling or decision of any court, commission, board or any other
government agency. The Commission has not issued any stop order or other order
suspending the effectiveness of any registration statement filed by the Company
under the Exchange Act or the Securities Act.

Section 3.8            
Taxes.  (a) CLSR has (i) duly filed with the appropriate taxing
authorities all tax returns required to be filed by or with respect to its business,
or are properly on extension and all such duly filed tax returns are true,
correct and complete in all material respects and (ii) paid in full or made
adequate provisions for on its balance sheet (in accordance with GAAP) all
Taxes shown to be due on such tax returns. There are no liens for taxes upon
the assets of CLSR except for statutory liens for current taxes not yet due and
payable or which may thereafter be paid without penalty or are being contested
in good faith. CLSR has not received ans’ notice of audit,
is not undergoing any audit of its tax returns, or 

                                                                               4

 

 

has
received any notice of deficiency or assessment from any taxing authority with
respect to liability for taxes which has not been fully paid or finally settled.
There have been no waivers of statutes of limitations by CLSR with respect to
any tax returns. CLSR has not filed a request with the Internal Revenue Service
for changes in accounting methods within the last three years which change
would affect the accounting for tax purposes, directly or indirectly, of its
business. CLSR has not executed an extension or waiver of any statute of
limitations on the assessment or collection of any taxes due (excluding such
statutes that relate to years currently under examination by the Internal Revenue
Service or other applicable taxing authorities) that is currently in effect.

Section 3.9            
Internal Accounting Controls Sarbanes-Oxley Act of 2002.
To the best of its knowledge, the Company is in compliance with the
requirements of the Sarbanes-Oxley Act of 2002 applicable to it as of the date
of this Agreement. The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management’s general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
asset accountability, (iii) access to assets is permitted only in accordance
with management’s general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. The
Company has established disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such
disclosures controls and procedures to ensure that material information
relating to the Company is made known to the certifying officers by others
within those entities, particularly during the period in which the Company’s
Form 10-K or 10-Q, as the case may be, is being prepared. The Company’s
certifying officers have evaluated the effectiveness of the Company’s controls
and procedures as of the date of its most recently filed periodic report (such
date, the “Evaluation Date”). The Company presented in its most
recently filed periodic report the conclusions of the certifying officers about
the effectiveness of the disclosure controls and procedures based on their
evaluations as of the Evaluation Date. Since the Evaluation Date, there have
been no significant changes in the Company’s internal controls (as such term is
defined in Item 307(b) of Regulation S-K under the Exchange Act) or, to the
Company’s knowledge, in other factors that could significantly
affect the Company’s internal controls. CLSR’s auditors, at  all relevant times, have been duly registered in
good standing with the Public Company Accounting Oversight Board.

Section 3.10        
Solvency; Indebtedness. Based on the financial condition of the
Company as of the Closing Date: (i) the fair saleable value of the Company’s
assets exceeds the amount that will be required to be paid on or in respect of
the Company’s existing debts and other liabilities (including known contingent
liabilities) as they mature; (ii) the Company’s assets do not constitute
unreasonably small capital to carry on its business for the current fiscal year
as now conducted and as proposed to be conducted, including its capital needs
taking into account the particular capital requirements of the business
conducted by the Company and projected capital requirements and capital
availability thereof; and (iii) the current cash flow of the Company, together
with the proceeds the Company would receive, were it to liquidate all of its
assets, after taking into account all anticipated uses of the cash, would be
sufficient to pay all amounts on or in respect of its debt when such amounts
are required to be paid. The Company does not intend to incur debts beyond its
ability to pay such debts as they mature. The Company has no knowledge of any
facts or circumstances which lead it to believe that it will file for
reorganization or liquidation under the bankruptcy or reorganization laws of
any jurisdiction within one (1) year from the Closing Date. The SEC Reports set
forth as of the dates thereof all outstanding secured and unsecured
Indebtedness of the Company, or for which the Company has commitments. The
Company is not in default with respect to any Indebtedness. At the Closing,
there will be no outstanding liabilities, obligations or indebtedness of the
Company whatsoever.

 

                                                                               5

 

 

Section 3.11        
No brokerage or finder’s fees or commissions are or will be payable by
the Company or Sellers to any broker, financial advisor or consultant, finder,
placement agent, investment banker, bank or other Person with respect to the
transactions contemplated by this Agreement, and the Company has not taken any
action that would cause any Purchaser to be liable for any such fees or
commissions. The Company and Sellers agree that the Purchaser shall have no
obligation with respect to any fees or with respect to any claims made by or on
behalf of any Person, including for fees of the type contemplated by this
Section, and Sellers shall indemnify and hold Purchaser and the Company harmless
from any fees, costs or liabilities of any kind incurred by Purchaser in
connection therewith.

Section 3.12        
Disclosure.  The Company and Sellers confirm that neither it nor
they, nor any other Person acting on their behalf has provided any of the
Purchaser or her agents or counsel with any information that constitutes or
might constitute material, nonpublic information concerning the Company. The
Company and Sellers understand and confirm that the Purchaser will rely on the
foregoing representations in effecting transactions in securities of the
Company. All disclosure provided to the Purchaser regarding the Company, its
business and the transactions contemplated,. including the Disclosure Schedules
to this Agreement, furnished by or on behalf of the Company with respect to the
representations and warranties made herein are true and correct with respect to
such representations and warranties and do not contain any untrue statement of
a material fact or omit to state any material fact necessary in order to make
the statements made therein, in light of the circumstances under which they
were made, not misleading. The Company and Sellers acknowledge and agree that
the Purchaser has not made, nor is the Purchaser making, any representations or
warranties with respect to the transactions contemplated other than those
specifically set forth herein.

Section 3.13        
No Disagreements with Accountants and Lawyers. There are no
disagreements of any kind presently existing, or reasonably anticipated by the
Company to arise, between the accountants and lawyers formerly or presently
employed by the Company and the Company is current with respect to any fees
owed to its accountants and lawyers.

Section 3.14        
No Conflicts. The execution, delivery and performance of this
Agreement and the transactions contemplated
do not and will not: (i) conflict with or violate any provision of the
Company’s Certificate or Articles of Incorporation, By-laws or other
organizational or charter documents, or (ii) conflict with, or constitute a
default (or an event that with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or both) of
any agreement, credit facility, debt or
other instrument (evidencing a Company debt or otherwise) or other
understanding to which the Company is
a party or by which any property or asset of the Company is bound or affected
or (iii) result in a violation of any law, rule, regulation, order, judgment,
injunction, decree or other restriction of
any court or governmental authority to which the Company is subject (including
federal and state securities laws and
regulations), or by which any property or asset of the Company is bound
or affected.

Section 3.15        
Filings, Consents and. Approvals. Neither the Sellers nor the
Company are required to obtain any consent, waiver, authorization or order of,
give any notice to, or make any filing or registration with, any court or other
federal, state, local or other governmental authority or other Person in
connection with the execution, delivery and performance of this Agreement.

Section 3.16        
Compliance.  The Company: (i) is not in default under or in
violation of (and no event has occurred that
has not been waived that, with notice or lapse of time or both, would result
in a default by the Company under), nor has the Company received notice of a
claim that it is in default under or that it is in violation of, any indenture,
loan or credit agreement or any other agreement or instrument to which it is a
party or by which it or any of its properties is bound (whether or not such
default or violation 

                                                                               6

 

 

has been waived), (ii) is not in
violation of any order of any court, arbitrator or governmental body and (iii)
is not and has not been in violation of any statute, rule or regulation of any
governmental authority.

Section 3.17        
Transactions With Affiliates and Employees. Except as required to
be set forth in the SEC Reports, none of the
officers or directors of the Company and, to the knowledge of the
Sellers, none of the Affiliates or employees of the Company is presently a
party to any transaction with the Company (other than for services as
employees, officers and directors), including
any contract, agreement or other arrangement providing for the furnishing of
services to or by, providing for
rental of real or personal property to or from, or otherwise requiring payments
to or from any officer, director or such employee or, to the knowledge
of the Company, any entity in which any officer, director, or any such employee
has a substantial interest or is an officer, director, trustee or partner.

Section 3.18        
Assets.  Except as set forth in the SEC Reports, the Company has
no assets, including, without limitation, goodwill, assets, real property,
tangible personal property, intangible personal property, rights and benefits
under contracts and cash, as to which there will be no distribution prior to
March 31, 2012. All Company leases for real or personal property are in good
standing, valid and effective in accordance with their respective terms, and
there is not under any of such leases, any existing material default or event
of default (or event which with notice or lapse of time, or both, would
constitute a material default).

Section 3.19        
Investment Company/Investment Advisor. The business of the
Company does not require it to be registered as an investment company or
investment advisor, as such terms are defined under the Investment Company Act
and the Investment Advisors Act of 1940.

Section 3.20        
Environmental Matters. The Company has complied with all
applicable Environmental Laws (as defined below). There is no pending or
threatened civil or criminal litigation, written notice of violation, formal
administrative proceeding or investigation, inquiry or information request by
any Governmental Entity relating to any Environmental Law involving the
Company.

Section 3.21        
Informed Decision. Sellers are aware of the Company’s business
affairs and financial condition, and have reached an informed and knowledgeable
decision to sell the Shares.

Section 3.22        
Trading With the Enemy Act; Patriot Act. No sale of the Company’s
securities or the Company’s use of the proceeds from such sale has violated the
Trading with the Enemy Act, as amended, or any of the foreign assets control
regulations of the United States Treasury Department (31 CFR, Subtitle B,
Chapter V, as amended) or any enabling legislation or executive order relating
thereto. Without limiting the foregoing, the Company (a) is not a person whose
property or interests in property are blocked pursuant to Section 1 of
Executive Order 13224 of September 23, 2001 Blocking Property and Prohibiting
Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism
(66 Fed, Reg. 49079 (2001)) and (b) does not engage in any dealings or
transactions, or be otherwise associated, with any such person. The Company is
in compliance with the Patriot Act of 2001.

Section 3.23        
Listing on the OTCBB. The Common Stock has been approved for
listing on the Over-The-Counter Bulletin Board (the “OTCBB”) and the Company
has and continues to satisfy all of the requirements of the OTCBB for such
listing and for the trading of its Common Stock thereunder.

Section 3.24        
Consummation of the Merger. Sellers acknowledges that it is the
intention of the Purchaser, upon completion of the transactions contemplated,
to cause the Company to consummate a Merger. Sellers further acknowledge that,
upon consummation of the Merger, it is likely
that each Share will increase in value, possibly substantially. Sellers have
had such opportunity as it desires to ask Purchaser any questions and
receive information concerning the proposed Merger, including the risks 

                                                                               7

 

 

associated therewith, and
have received satisfactory answers to such questions and desires to
complete the sale of the Purchased Shares contemplated under this Agreement.

ARTICLE
4. 

REPRESENTATIONS OF THE PURCHASER

The Purchaser represents and warrants, solely as to herself, to the
Sellers, as follows:

Section 4.1            
Execution and Delivery. The execution, delivery and performance
by the Purchaser of this Agreement is within Purchaser’s powers, and does not
violate any contractual restriction contained in any agreement which binds or
affects or purports to bind or affect the Purchaser.

Section 4.2            
Binding Effect. This Agreement, when executed and delivered by
the Purchaser shall be irrevocable and will constitute the legal, valid and
binding obligations of the Purchaser enforceable against the Purchaser in
accordance with its terms, except as may be limited by applicable bankruptcy,
insolvency, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally or general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).

Section 4.3            
Investment Purpose. The Purchaser represents that she is
purchasing the Shares for her own account, with the intention of holding the
Shares, with no present intention of dividing or allowing others to participate
in this investment or of reselling or otherwise participating, directly or
indirectly, in a distribution of the Shares, and shall not make any sale,
transfer, or pledge thereof without registration under the Securities Act and
any applicable securities laws of any state unless an exemption from
registration is available under those laws. The Purchased Shares delivered to
the Purchaser shall bear a restrictive legend indicating that they have not
been registered under the Securities Act of 1933 and are “restricted securities”
as that term is defined in Rule 144 under the Act.

Section 4.4            
Investment Representation. The Purchaser represents that she has
adequate means of providing for her current needs and have no need for
liquidity in this investment in the Shares. The Purchaser represents that she
is an “accredited investor” as defined in Rule 501(a) of Regulation D
promulgated under the Securities Act. The Purchaser has no reason to anticipate
any material change in her financial condition for the foreseeable future. The
Purchaser is financially able to bear the economic risk of this investment,
including the ability to hold the Shares indefinitely or to afford a complete
loss of his, her or its investment in the Shares.

Section 4.5            
Investment Experience. The Purchaser has such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of an investment in the Shares.

Section 4.6            
Opportunity to Ask Questions. The Purchaser has had a full and
fair opportunity to make inquiries about the terms and conditions of this
Agreement, to discuss the same and all related matters with her own independent
counsel, her own accountants and tax advisers. The Purchaser has been given the
opportunity to ask questions of, and receive answers from Sellers concerning
the terms and conditions of this Agreement, and to obtain such additional
written information about CLSR to the extent Sellers possesses such information
or can acquire it without unreasonable effort or expense. Notwithstanding the
foregoing, the Purchaser has had the opportunity to conduct her own independent
investigation.

Section 4.7            
Negative Covenant. The Purchaser covenants, prior to the Closing,
not to vote in favor of any action, other than the Merger and all actions in
connection therewith (which may or may not 

                                                                               8

 

 

include
dilution), which dilutes the share ownership of Sellers or effect any action
which materially adversely effects Sellers and the Company.

ARTICLE
5. 

COVENANTS OF THE COMPANY

Section 5.1            
Public Company Status. The Company shall make any and all
necessary filings under the Exchange Act so that it remains a reporting company
under the Exchange Act and its Common Stock continues to be a publicly-traded
security.

Section 5.2            
Listing of Common Stock. The Company shall, to the best of its
ability, cause the Common Stock of CLSR to continue to be approved for listing
on the OTCBB.

ARTICLE
6. 

COVENANTS OF THE PARTIES

The parties hereto agree that:

Section 6.1            
Public Announcements. The Sellers, the Company and the Purchaser
shall consult with each other before issuing any press release or making any
public statement with respect to this Agreement or the transactions
contemplated and, except as may be required by applicable law, will not issue
any such press release or make any such public statement prior to such
consultation and without the consent of the other parties.

Section 6.2            
Notices of Certain Events. In addition to any other notice
required to be given by the terms of this Agreement, each of the parties shall
promptly notify the other party hereto of:

(a)               
any notice or other communication from any Person alleging that the
consent of such Person is or may be required in connection with any of the
transactions contemplated by this Agreement;

(b)              
Any notice or other communication from any governmental or regulatory
agency or authority in connection with the transactions contemplated by this
Agreement; and

(c)               
any actions, suits, claims, investigations or proceedings commenced or,
to its knowledge threatened against, relating to or involving or otherwise
affecting such party that, if pending on the date of this Agreement, would have
been required to have been disclosed pursuant to Section 3 or Section 4 (as the
case may be) or that relate to the consummation of the transactions
contemplated by this Agreement.

Section 6.3            
Access to Information. Following the date of this Agreement,
until consummation of all transactions contemplated, the Sellers and the
Company shall give to the Purchaser, her counsel, financial advisers, auditors
and other authorized representatives reasonable access to the offices,
properties, books and records, financial and other data and information as the
Purchaser and her respective representatives may reasonably request.

Section 6.4            
CLSR’s Business. CLSR will not, without the prior written consent
of Purchaser: (i) make any material change in the type or nature of its
business, or in the nature of its operations, (ii) create or suffer to exist
any debt, other than that currently shown in the SEC Reports, (iii) issue any
capital stock or (iv) enter into any new agreements of any kind (other than
those contemplated by this Agreement) or undertake any new obligations or
liabilities.

 

                                                                               9

 

 

ARTICLE 7. 

CONDITIONS PRECEDENT

Section 7.1            
Conditions of Obligations of the Purchaser. The obligations of
the Purchaser are subject to the satisfaction of the following conditions, any
or all of which may be waived in whole or in part by the Purchaser, solely as
to herself:

(a)               
Representations and Warranties. Each of the representations and
warranties of the Sellers and the Company set forth in this Agreement shall be
true and correct in all material respects as of (1) the date of this Agreement
(except to the extent such representations and warranties speak as of an
earlier date), (2) the date of the Merger and (3) the Closing Date, as though
made on and as of all of such dates.

(b)              
Compliance Certificate. The authorized officer of CLSR shall
deliver to the Purchaser at the Closing a certificate certifying: (i) that
there has been no material adverse change in the business, affairs, prospects,
operations, properties, assets or conditions of the Company since the date of
this Agreement; (ii) that attached thereto is a true and complete copy of CLSR’s
Articles of Incorporation, as amended, as in effect at the Closing; (iii) that.
attached thereto is a true and complete copy of its By-laws as in effect at the
Closing; and (iv) each of the representations and warranties of the Sellers and
the Company set forth in this Agreement are true and correct in all material
respects as of the Closing Date as though made on and as of the Closing Date.

(c)               
Good Standing Certificate. The Company shall have furnished the
Purchaser with good standing and existence certificates for CLSR in its
jurisdiction of formation and such other jurisdictions as the Purchaser
reasonably requests.

(d)              
Certified List of Record Holders. The Purchaser shall have
received a current certified list from the CLSR’s transfer agent of the holders
of record of CLSR’s Common Stock.

(e)               
Board of Directors Resolutions. The Purchaser shall have received
executed resolutions of the Board of Directors of CLSR approving the election
of Helen Min Zou to the board of directors.

(f)               
Performance.  The Sellers and the Company shall have performed and
complied with all agreements, obligations and conditions contained in this
Agreement that are required to be performed or complied with by it on or before
the Closing, including, but not limited to, execution, and compliance with all
terms and provisions, of the Escrow Agreements.

Section 7.2            
Conditions of Obligations of the Sellers. The obligations of the
Sellers to effect the sale of the Shares are subject to the following
conditions, any or all of which may be waived in whole or in part by the
Purchaser.

(a)               
Representations and Warranties. Each of the representations and
warranties of the Purchaser set forth in this
Agreement shall be true and correct in all material respects as of the date of
this Agreement and (except to the extent such representations and warranties
speak as of an earlier date) as of the Closing Date as though made on and as of
the Closing Date.

(b)              
Compliance Certificate.           The Purchaser shall each
deliver to the Sellers at the Closing a certificate certifying each of the
representations and warranties of the Purchaser set forth in  this Agreement are true and correct in all material
respects as of the Closing Date as though made on and as of the Closing Date.

 

                                                                               10

 

 

(c)               
Performance.  The Purchaser shall have performed and complied with
all agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by heron or before the Closing,
including, but not limited to, execution, and compliance with all terms and
provisions of the Escrow Agreement.

ARTICLE
8. 

TERMINATION

Section 8.1            
Termination.  This Agreement may be terminated and the purchase
and sale of the Shares may be abandoned at any time prior to the Closing:

(a)               
by mutual written consent of the parties hereto;

(b)              
by either the Sellers or the Purchaser if the Closing shall not have
occurred on or before February 15, 2012 (unless the failure to consummate the
transactions by such date shall be due to the action or failure to act of the
party seeking to terminate this Agreement or regulatory delays);

(c)               
by the Purchaser if (i) Sellers shall have failed to comply in any
material respect with any of the covenants, conditions, terms or agreements
contained in this Agreement to be complied with or performed by Sellers; or
(ii) any representations and warranties of Sellers or the Company contained in
this Agreement shall not have been true when made or on and as of the Closing
Date as if made on and as of Closing Date (except to the extent it relates to a
particular date); or (iii) she is not satisfied with her due diligence review
of the Sellers and the Company; or

(d)              
by Sellers if (i) the Purchaser shall have failed to comply in any
material respect with any of the covenants, conditions, terms or agreements
contained in this Agreement to be complied with or performed by her; or (ii)
any representations and warranties of the Purchaser contained in this Agreement
shall not have been true when made or on and as of the Closing Date.

Section 8.2            
Effect of Termination. In the event of the termination of this
Agreement pursuant to this Article 8, all further obligations of the parties
under this Agreement shall forthwith be terminated without any further
liability of any party to the other parties; provided, however, that nothing
contained in this Section 8.2 shall relieve any party from liability for any
breach of this Agreement.

ARTICLE
9. 

MISCELLANEOUS

Section 9.1            
Notices.  All notices, requests and other communications to any
party hereunder shall be in writing and either delivered personally, telecopied
or sent by certified or registered mail, postage prepaid.

If to the
Sellers:             Dr. Brian Pollard

Dr. Cheryl
Nesler

4915 Portales Way 

Anacortes,
Washington 98221

 

With a
copy to:             James B. Parsons, Esq.

Parsons /
Burnett / Bjordhal / Hume, LLP

1850 Skyline Tower 10900 NE 4th
Street Bellevue, WA 98004

                                                                               11

 

 

T: 425-451-8036

F: 425-451-8568

Email: jparsons@pblaw.biz

 

If to
Purchaser:             Helen Min Zou

1020 Dennison St. Unit 200 Markham, Ontario

Canada
L3R3W5

 

With a copy to:             Charles
B. Pearlman, Esq. 

                                     Pearlman
& Pearlman LLC Counsel to Quintairos, Prieto, Wood & Boyer, P.A.

One East
Broward Boulevard, Suite 1400

Fort Lauderdale, FL 33301 954-523-7008 x6021

954-523-7009

Email:
cpearlman@qpwblaw.com

 

If to the Company:        Clear System Recycling,
Inc. 4915 Portales Way Anacortes, WA 98221

With a copy to:             James B. Parsons, Esq.

Parsons / Burnett / Bjordhal / Hume, LLP 1850 Skyline Tower

10900 NE
4th Street

Bellevue,
WA 98004

T;
425-451-8036

F:
425-451-8568

Email:
jparsons@pblaw.biz

or such other address or fax
number as such party may hereafter specify for the purpose by notice to the
other parties hereto. All such notices, requests and other communications shall
be deemed received on the date delivered personally or by overnight delivery
service, electronically with read receipt, telecopied or, if mailed, five (5)
business days after the date of mailing if received prior to 5 p.m. in the
place of receipt and such day is a business day in the place of receipt.
Otherwise, any such notice, request or communication shall be deemed not to
have been received until the next succeeding business day in the place of
receipt.

 

Section 9.2            
Amendments; No Waivers. 

(a)               
Any provision of this Agreement with respect to transactions
contemplated may be amended or waived if, but only if, such amendment or waiver
is in writing and is signed, in the case of an amendment, by the Sellers and
Purchaser; or in the case of a waiver, by the party against whom the waiver is
to be effective.

(b)              
No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.

 

                                                                               12

 

 

Section 9.3            
Fees and Expenses. All costs and expenses incurred in connection
with this Agreement shall be paid by the party incurring such cost or expense.

Section 9.4            
Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties and their respective
successors and assigns; provided that Purchaser shall have the right to assign
this Agreement to an affiliate of the Purchaser, and no other party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of each other party, but any such transfer or
assignment will not relieve the appropriate party of its obligations hereunder.

Section 9.5            
Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Florida, without giving effect to
the principles of conflicts of law thereof.

Section 9.6            
Jurisdiction.  Any suit, action or proceeding seeking to enforce
any provision of, or based on any matter arising out of or in connection with
this Agreement or the transactions contemplated may be brought in any federal
or state court located in the City of Ft. Lauderdale, County of Broward, State
of Florida, and each of the parties consents to the jurisdiction of such courts
(and of the appropriate appellate courts therefrom) in any such suit, action or
proceeding and irrevocably waives, to the fullest extent permitted by law, any
objection which it may now or hereafter have to the laying of the venue of any
such suit, action or proceeding in any such court or that any such suit, action
or proceeding which is brought in any such court has been brought in an
inconvenient forum. Process in any such suit, action or proceeding may be
served on any party anywhere in the world, whether within or without the
jurisdiction of any such court. Without limiting the foregoing, each party
agrees that service of process on such party as provided in Section 9.1. shall
be deemed effective service of process on such party. Each party (including its
affiliates, agents, officers, directors and employees)  irrevocably waives, to
the fullest extent permitted by applicable law, any and all right to trial by
jury in any legal proceeding arising out of or relating to this Agreement or
the transactions contemplated.

Section 9.7            
Counterparts; Effectiveness. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same
effect as if the signatures were upon the same instrument. This Agreement shall
become effective when each party has received counterparts signed by all of the
other parties. No provision of this Agreement is intended to confer upon any
Person other than the parties hereto any rights or remedies under this
Agreement.

Section 9.8            
Entire Agreement. This Agreement and the attached Exhibits and
Schedules constitute the entire agreement between the parties with respect to
the subject matter of this Agreement and supersedes all prior agreements and
understandings, both oral and written, between the parties with respect to the
subject matter of this Agreement.

Section 9.9            
Captions.  The captions are included for convenience of reference
only and shall be ignored in the construction or interpretation of this
Agreement.

Section 9.10        
Severability.  If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction or other authority
to be invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated so long as the
economic or legal substance of the transactions contemplated is not affected in
any manner materially adverse to any parties. Upon such a determination, the
parties shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner in order that the transactions contemplated are consummated as
originally contemplated to the fullest extent possible.

 

                                                                               13

 

 

Section 9.11        
Specific Performance. The parties agree that irreparable damage
would occur in the event any provision of this Agreement was not performed in
accordance with the its terms and that the parties shall be entitled to
specific performance of the terms of this Agreement in addition to any other
remedy to which they are entitled at law or in equity.

Section 9.12        
Definition and Usage. For purposes of this Agreement:

“Affiliate” means,
with respect to any Person, any other Person, or indirectly controlling,
controlled by or under common control with such Person.

 

“Environmental Law”
shall mean any federal, state or local law, statute, rule or regulation or the
common law relating to the environment or occupational health and safety,
including any statute, regulation, administrative decision or order pertaining
to: (i) treatment, storage, disposal, generation and transportation of
industrial, toxic or hazardous materials or substances or solid or hazardous
waste; (ii) air, water and noise pollution; (iii) groundwater and soil
contamination; (iv) the release or threatened release into the environment of
industrial, toxic or hazardous materials or substances, or solid or hazardous
waste, including emissions, discharges, injections, spills, escapes or dumping
of pollutants, contaminants or chemicals; (v) the  protection of wild life, marine
life and wetlands, including all endangered and threatened species; (vi)
storage tanks, vessels, containers, abandoned or discarded barrels and other
closed receptacles; (vii) health and safety of employees and other persons; and
(viii) manufacturing, processing, using, distributing, treating, storing,
disposing, transporting or handling of materials regulated under any law as
pollutants, contaminants, toxic or hazardous materials or substances or oil or
petroleum products or solid or hazardous waste. As used above, the terms “release”
and “environment” shall have the meaning set forth in the federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended (CERCLA). 

 

“Indebtedness”
shall mean (a) any liabilities for borrowed money or amounts owed, (b) all
guaranties, endorsements and other contingent obligations, whether or not the
same are or should be reflected in the Company’s balance sheet or the notes
thereto, except guaranties by endorsement of negotiable instruments for deposit
or collection in the ordinary course of business, and (c) the present value of any lease payments
under leases required to be capitalized in accordance with GAAP.

 

“Material
Adverse Effect” means any effect or change that is or would be materially
adverse to the business, operations, assets, prospects, condition (financial or
otherwise) or results of operations of the Company and any of its subsidiaries, taken as a whole.

 

“Person”
means an individual, corporation, partnership, limited liability company,
association, trust or other entity or organization, including a government or
political subdivision or an agency or instrumentality of the foregoing.

 

“Taxes”
means any and all federal, state, local, foreign or other taxes of any kind (together with any and all
interest, penalties, additions to tax and additional amounts imposed with respect thereto) imposed by any
taxing authority, including, without limitation, taxes or other charges on or with
respect to income, franchises, windfall or other profits, gross receipts,
sales, use, capital stock, payroll, employment, social security, workers’
compensation, unemployment compensation, or net worth, and taxes or other
charges in the nature of excise, withholding, ad valorem or value added.

 

 

                                                                               14

 

 

Section 9.13        
Survival.  The representations and warranties contained in this
Agreement shall survive the Closing and delivery of the Shares only as against
Sellers, and notwithstanding any provision to the contrary contained in this
Agreement, upon and after the Closing, any claim by Purchaser for a breach of
any representation or warranty of Sellers or the Company contained in this
Agreement may be made only against Sellers and Purchaser shall have no claim
against the Company for any such breach.

[REMAINDER OF THE
PAGE INTENTIONALLY LEFT BLANK]

                                                                               15

 

 

IN
WITNESS WHEREOF, each of the following individuals has caused this Agreement to
be signed, and each party that is not an individual has caused this Agreement
to be duly executed under seal by its respective authorized officers, all as of
the day and year first above written.

 

SELLERS:

By: /s/ Brian Pollard_______________ 

Name: Brian Pollard

By: /s/ Cheryl Nesler______________ 

Name: Cheryl Nesler

THE COMPANY:

 

CLEAR
SYSTEM RECYCLING, INC.

 

 

By: /s/ Brian Pollard_______________ 

Name: Brian Pollard Title: President

 

 

PURCHASER:

By: /s/
Helen Min Zou_____________ 

Name: Helen Min Zou

                                                                               16

 

 

Schedule 1.1

 

Portion of Purchased Shares and Purchase Price

 

SELLERS:        Brian Pollard                                                                        1,000,000  50% 

                         Cheryl Nesler                                                                       1,000,000  50%

Portion of Purchased Shares and Purchase Price

 

2,000,000  100%

PURCHASERS: Helen Min Zou

 

 

 

 

ESCROW AGENT WIRING INSTRUCTIONS For the Sellers:

 

 

BANK: Bank of America, Bellevue at Fourth Branch (Bellevue, WA) ABA: 026009593

BENEFICIARY: Parsons/Burnett/Bjordahl/Hume, LLP IOLTA ACCOUNT: 50046416

REFERENCE: Clear System Recycling, Inc.

 

 

 

Schedule 1.2

The “Purchased Shares” shall
mean all of Seller’s shares in Clear System Recycling Inc..

 

 

 

EXHIBIT A

Disclosure Schedules

of

Clear System Recycling., Inc.

Matters reflected in these
disclosure schedules are not necessarily limited to the matters required by the
Agreement to be disclosed in the disclosure schedules. Such additional matters
are set forth for informational pup-poses and do not necessarily
include other matters of a similar nature.

 

 

 

Section 3.3

Capitalization

The Company currently has 100,000,000 shares of common capital
stock, $0.001 par value authorized of which 2,940,000 shares are issued and
outstanding and 15,000,000 shares of $0.001 par value Preferred Shares, none of
which are issued or outstanding.

 

 

 

 

Section 3.5

Financial Statements

CLSR’s financial statements are true
and correct.

The Company is a fully reporting company under Section 12(g) of the
Exchange Act.

 

 

 

Section 3.10

Solvency; Indebtedness

 N/A 

 

 

 

Section 3.15

Filings, Consents and Approvals

CLSR is filing an 8K with respect to the change of ownership and
control.

 

 

 

Section
3.17

Transactions with Affiliates and Employees 

At the effective time no contracts, agreements or other
arrangements exist between the Company (CLSR) and any officer, director or
affiliate.

 

 

 

 

Section 3.18

Assets

The Company has no leases and no assets other than the website
which it built for its business and which is no longer operative.

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