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AGREEMENT AND PLAN OF MERGER AND REORGANIZATION

AMONG

CLEAR SYSTEM RECYCLING, INC.,

CLEAR SYSTEM MERGER SUB, INC.

AND

MASTERPIECE INVESTMENTS CORP.

AUGUST 23, 2012

 

		
	TABLE OF CONTENTS
	

   

	ARTICLE 1 THE MERGER	1
	ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY	6
	ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF PARENT AND	 
	MERGER SUB	14
	ARTICLE 4 ADDITIONAL AGREEMENTS	23
	ARTICLE 5 CLOSING; DELIVERIES	24
	ARTICLE 6 DEFINITIONS	29
	ARTICLE 7 MISCELLANEOUS	33

 

 

LIST OF EXHIBITS AND DISCLOSURE SCHEDULES

Exhibits

	A      	

   Articles of Incorporation of Merger Sub

	B      	

   By-laws of Merger Sub

	C      	

   Form of Opinion of Synergy Law Group, LLC

	D      	

   Form of Opinion of Pearlman & Schneider, LLP

Company Disclosure Schedules

	2.4      	

   Indebtedness

	2.5      	

   Company Stockholders and Shares; Allocation of Parent Common Stock

	2.7      	

   Compliance with Laws

	2.9      	

   Broker’s and Finder’s Fees

			
	2.13	(a)	Schedule of Real and Personal Property
	2.13	(b)	Material Agreements
	2.13	(c)	Schedule of Insurance
	2.13	(d)	Schedule of Patents and Other Intangible Assets

 

	2.14      	

   Employees and Employment Agreements

	2.16      	

   Ownership of Intellectual Property

	2.17      	

   Schedule of Employee Benefit Plans

	2.19      	

   Product Liability Claims

	2.20      	

   Litigation

	2.22      	

   Interested Party Transactions

	2.26      	

   Obligations to or by Stockholders

Parent Disclosure Schedules

			
	3.1	(c)	Parent Board of Directors, Committees and Officers
	3.2	(a)	Subsidiaries of Parent
	3.2	(c)	Subsidiary Board of Directors, Committees and Officers

 

	3.10      	

   SEC Reporting

	3.16      	

   Compliance with Laws

	3.20      	

   Obligations to or by Stockholders

	3.23      	

   Interested Party Transactions

	3.25      	

   Bank Accounts and Safe Deposit Boxes

	3.26      	

   Intellectual Property

ii

 

AGREEMENT AND PLAN OF MERGER AND REORGANIZATION

     THIS AGREEMENT AND PLAN OF MERGER AND REORGANIZATION (the “Agreement”) is made and entered into on August __, 2012, by and among Clear System Recycling, Inc., a Nevada corporation (“Parent”), Clear System Merger Sub, Inc. (“Merger Sub”), an Oregon corporation and wholly-owned subsidiary of Parent, and Masterpiece Investments Corp., an Oregon corporation (“Company”).

W I T N E S S E T H:

     WHEREAS, the Board of Directors of each of the Parent, the Merger Sub and the Company have each determined that it is in the best interests of their respective entities and the stockholders thereof to enter into a business combination transaction pursuant to which the Company will merge with and into the Merger Sub (the “Merger”), with the Merger Sub continuing after the Merger as the surviving corporation and wholly-owned subsidiary of the Parent; WHEREAS, pursuant to the Merger, outstanding shares of common stock, $0.001 par value per share, of the Company (“Company Common Stock”) will, in accordance with this Agreement, be converted into the right to receive shares of common stock, $0.001 par value per share, of the Parent (“Parent Common Stock”); WHEREAS, the Board of Directors of Parent, the Board of Directors of the Merger Sub and the Board of Directors of the Company have each approved this Agreement and transactions contemplated hereby; WHEREAS, the parties hereto intend, by executing this Agreement, to adopt a plan of reorganization within the meaning of Section 368 of the Internal Revenue Code of 1986, as amended (the “Code”) and the regulations promulgated thereunder and to cause the Merger to qualify as a tax-free reorganization under the provisions of Section 368 of the Code; and WHEREAS, the Parent Common Stock to be issued in connection with the Merger are expected to be exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”) and Rule 506 promulgated thereunder; NOW, THEREFORE, in consideration of the mutual agreements and covenants hereinafter set forth, the parties hereto agree as follows:

ARTICLE 1

THE MERGER

     1.1 Merger of the Company with and into the Merger Sub. Upon the terms and subject to the conditions set forth in this Agreement and in accordance with the Nevada Revised Statutes (“NRS”) and the Oregon Revised Statutes (“ORS”), at the Effective Time, the Company shall be merged with and into the Merger Sub, and the separate existence of the Company shall cease. The Merger Sub will change its name to “Masterpiece Investments Corp.” and continue as the surviving corporation (“Masterpiece Nevada”) following the Merger. The Closing of the Merger shall be conditioned upon approval of the Stockholders of the Company.

 

     1.2 Effect of the Merger. The Merger shall have the effects set forth in this Agreement and the applicable provisions of the NRS and the ORS. As a result of the Merger, Masterpiece Nevada will become a wholly-owned subsidiary of the Parent. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, all the property, rights, privileges, powers and franchises of the Company and Merger Sub shall vest in Masterpiece Nevada, and all debts, liabilities and duties of the Company and Merger Sub shall become the debts, liabilities and duties of Masterpiece Nevada.

     1.3 Closing; Effective Time. Subject to the terms and conditions of this Agreement, simultaneous with the Closing hereof, the parties hereto shall cause the Merger to be consummated by executing and filing with the Secretary of State of the State of Nevada and the Secretary of State of the State of Oregon articles of merger (the “Articles of Merger”) with respect to the Merger, satisfying the applicable requirements of the NRS and the ORS and in a form reasonably acceptable to the Parent, the Merger Sub and the Company. The Merger shall become effective at the time of the filing of such Articles of Merger with the Secretary of State of the State of Nevada and the Secretary of State of the State of Oregon or at such later time as may be specified in such Articles of Merger (the time as of which the Merger becomes effective being referred to as the “Effective Time”).

				
	
 	
1.4	
Articles of Incorporation and Bylaws; Directors and Officers. At the Effective
	
Time:	
 	
 	
 
	
 
	
 	
 	
(a)	
Merger Sub Articles of Incorporation. The Merger Sub Articles of
	
 	
Incorporation, as in effect immediately before the Effective Time, attached as Exhibit A

 

hereto, shall be the Articles of Incorporation of Masterpiece Nevada until thereafter amended as provided by the NRS and such Articles of Incorporation; (b) Merger Sub Bylaws. The Merger Sub Bylaws, as in effect immediately before the Effective Time, attached as Exhibit B hereto, shall be the Bylaws of Masterpiece Nevada, until thereafter amended as provided by the NRS and such Bylaws; (c) Merger Sub Directors. The directors of the Merger Sub immediately before the Effective Time shall be the directors of Masterpiece Nevada, each to hold office in accordance with the Articles of Incorporation and bylaws of the Masterpiece Nevada; and (d) Merger Sub Officers. The officers of the Merger Sub immediately before the Effective Time shall be the officers of Masterpiece Nevada, in each case until their respective successors are duly elected or appointed and qualified, or until their earlier death, resignation or removal.

     1.5 Shares to Be Issued; Effect on Capital Stock. Subject to the terms and conditions of this Agreement, at the Effective Time, by virtue of the Merger, the following shall occur:

     (a) Conversion of Company Stock. Subject to the terms of Section 1.5(c), each share of Company Common Stock issued and outstanding immediately before the Effective Time will be converted automatically into the right to receive: (A) that number

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of shares of Parent Common Stock equal to the Exchange Ratio and (B) any fractional share be rounded up to the nearest whole number.

     (b) Capital Stock of Merger Sub. Each stock certificate of Merger Sub evidencing ownership of any such shares shall, as of the Effective Time, evidence ownership of such shares of common stock of Masterpiece Nevada.

     (c) No Fractional Shares. No fractional shares of Parent Common Stock shall be issued in connection with the Merger, and no certificates or scrip representing such fractional shares shall be issued. Fractional shares shall be rounded up to the nearest whole number. The holder of shares of Company Common Stock who would otherwise be entitled to receive a fraction of a share of Parent Common Stock (after aggregating all fractional shares of Parent Common Stock to be received by such holder), in lieu of such fractional share and upon surrender of such holder’s certificate representing shares of Company Common Stock (the “Company Stock Certificate”), shall instead receive Parent Common Stock rounded up to the nearest whole number.

     (d) Cancellation of Treasury Shares. Each share of stock held in the treasury of either the Parent, Merger Sub or the Company immediately prior to the Effective Time shall be cancelled and cease to exist.

     1.6 Calculation of Exchange Ratios. The “Exchange Ratio” shall be one share of Parent Common Stock in exchange for four shares of Company Common Stock outstanding immediately before the Effective Time.

     1.7 Dissenting Shares. Notwithstanding any other provision of this Agreement to the contrary, any shares of Company Common Stock that have not been voted in favor of adoption of this Agreement, and with respect to which a demand for payment and appraisal have been properly made in accordance with ORS 60.551 through 60.594 (such shares referred to as “Dissenting Shares”), shall not be converted into or represent a right to receive Parent Common Stock pursuant to Section 1.5(a), but shall be converted in to the right to receive such consideration as may be determined to be due with respect to such Dissenting Shares pursuant to the ORS, as applicable; provided, however, that if a holder of Dissenting Shares (a “Dissenting Stockholder”) withdraws such holder’s demand for such payment and appraisal or becomes ineligible for such payment and appraisal then, as of the later of the Effective Time or the date of which such Dissenting Stockholder withdraws such demand or otherwise becomes ineligible for such payment and appraisal, such holder’s Dissenting Shares will cease to be Dissenting Shares and will be converted into the right to receive Parent Common Stock as determined in accordance with Section 1.5(a).

     1.8 No Further Transfer of Company Common Stock. At the Effective Time all shares of Company Common Stock outstanding immediately before the Effective Time shall automatically be exchanged, and all holders of Company Common Stock that were outstanding immediately before the Effective Time shall cease to have any rights as stockholders of the Company, except the right to receive the consideration described in Section 1.5(a) or Section 1.7, as applicable. No further transfer of any such shares of Company Common Stock shall be made on such stock transfer books after the Effective Time. Subject to Section 1.9(f) if, after the

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Effective Time, any shares of Company Common Stock are presented to the Exchange Agent or to the Company or the Parent, such shares shall be canceled and shall be exchanged as provided in Section 1.9.

	
1.9      		
Exchange of Certificates.

	
	 	
(a)      		
Exchange Agent. The Parent and the Company have jointly selected and

	
	 	
designated      		
Island Stock Transfer Company (the “Exchange Agent”) to act as agent of the

	

Parent for purposes of, among other things, mailing and receiving transmittal letters and distributing the Parent Common Stock to the holders of Company Common Stock.

     (b) Parent to Provide Common Stock. Promptly after the Effective Time, the Parent shall supply or cause to be supplied or made available to the Exchange Agent for exchange in accordance with this Section 1.9 through such reasonable procedures as the Parent may adopt, instructions regarding issuance of certificates evidencing the shares of Parent Common Stock issuable pursuant to Section 1.5(a) in exchange for shares of Company Common Stock outstanding immediately before the Effective Time (the “Exchange Shares”).

     (c) Exchange Procedures. As promptly as practicable after the Effective Time, the Exchange Agent will mail to each holder of record of Company Common Stock whose shares would be converted into the right to receive shares of Parent Common Stock pursuant to Section 1.5(a), (i) a letter of transmittal in customary form; (ii) such other customary documents as may be required pursuant to such instructions; and (iii) instructions for use in effecting the surrender of Company Common Stock in exchange for certificates representing shares of Parent Common Stock. Upon surrender of Company Common Stock for cancellation to the Exchange Agent, together with such letter of transmittal and other documents, duly completed and validly executed in accordance with the instructions thereto, the holder of such Company Common Stock shall be entitled to receive in exchange therefor (y) a certificate representing the number of whole Exchange Shares into which the Company Common Stock represented thereby shall have been converted into the right to receive as of the Effective Time and (z) cash in respect of any fractional shares as provided in Section 1.5(c), and the Company Common Stock so surrendered shall forthwith be canceled. Until so surrendered, each such outstanding share of Company Common Stock will be deemed from and after the Effective Time, for all corporate purposes other than the payment of dividends, to evidence the ownership of the number of full shares of Parent Common Stock into which such shares of Company Common Stock shall have been so converted and the right to receive cash in lieu of the issuance of any fractional shares. If any Company Stock Certificate shall have been lost, stolen or destroyed, Parent may, in its discretion and as a condition precedent to the issuance of any certificate representing Parent Common Stock, require the owner of such lost, stolen or destroyed Company Stock Certificate to provide a reasonable affidavit as indemnity against any claim that may be made against the Exchange Agent, Parent or the Company with respect to such Company Stock Certificate.

     (d) Distributions With Respect to Unexchanged Shares. No dividends or other distributions with respect to Parent Common Stock with a record date after the

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Effective Time will be paid to the holder of any unsurrendered Company Common Stock with respect to the shares of Parent Common Stock represented thereby until the holder of record of such Company Common Stock shall surrender such shares of Company Common Stock. Subject to applicable law, following surrender of any such Company Common Stock, there shall be delivered to the record holder of Company Common Stock a certificate representing whole shares of Parent Common Stock issued in exchange therefor (including any cash in respect of any fractional shares), without interest at the time of such surrender, and the amount of any such dividends or other distributions with a record date after the Effective Time theretofore payable (but for the provisions of this Section) with respect to such shares of Parent Common Stock.

     (e) Transfers of Ownership. If any certificate for shares of Parent Common Stock is to be issued in a name other than that in which Company Stock Certificate surrendered in exchange therefor is registered, it will be a condition of the issuance thereof that the Company Common Stock so surrendered will be properly endorsed and otherwise in proper form for transfer and that the person requesting such exchange will have paid to Parent or the Exchange Agent any transfer or other taxes required by reason of the issuance of a certificate for shares of Parent Common Stock in any name other than that of the registered holder of the Company Common Stock surrendered, or established to the satisfaction of Parent or the Exchange Agent that such tax has been paid or is not payable, and shall provide such written assurances regarding federal and state securities law compliance as the Parent or the Exchange Agent may reasonably request.

     (f) Termination of Exchange Shares. Any Exchange Shares which remain undistributed to the stockholders of the Company twelve (12) months after the Effective Time shall be delivered to Parent, upon demand, and any Company Stockholder who has not previously complied with this Section shall thereafter look only to Parent for payment of their claim for their portion of the Exchange Shares and any dividends or distributions with respect to the Exchange Shares.

     (g) No Liability. Notwithstanding anything to the contrary in this Section, none of the Exchange Agent, Parent, the Company or any party hereto shall be liable to any person for any amount properly paid to a public official pursuant to any applicable abandoned property, escheat or similar law.

     (h) Dissenting Shares. The provisions of this Section shall also apply to Dissenting Shares that lose their status as such, except that the obligations of Parent under this Section shall commence on the date of loss of such status and the holder of such shares shall be entitled to receive in exchange such shares to which such holder is entitled pursuant to Section 1.5.

     1.10 Further Action. If, at any time after the Effective Time, any further action that is commercially reasonable and lawful is determined by Parent to be necessary or appropriate to carry out the purposes of this Agreement or to vest Parent with full right, title and possession of all shares of Company Common Stock, the officers and directors of the Company and Parent shall be fully authorized (in the name of the Company and otherwise) to take such action.

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ARTICLE 2

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     The Company hereby represents and warrants to the Parent that, except as set forth in the Company’s Disclosure Schedules attached hereto, the statements contained in this Article 2 are true and correct as set forth below: 2.1 Organization, Standing, Etc. The Company is a corporation duly organized and existing in good standing under the laws of the State of Oregon, and has all requisite power and authority to carry on its business, to own or lease its properties and assets, to enter into this Agreement and to carry out the terms hereof. Copies of the Articles of Incorporation and Bylaws of the Company that have been delivered to the Parent prior to the execution of this Agreement are true and complete and have not since been amended or repealed. The Company has no subsidiaries or direct or indirect interest (by way of stock ownership or otherwise) in any firm, corporation, limited liability company, partnership, association or business.

     2.2 Qualification. The Company is duly qualified to conduct business as a foreign corporation and is in good standing in each state or other jurisdiction wherein the nature of its activities or properties owned or leased makes such qualification necessary, except where the failure to be so qualified could not reasonably be expected to have a material adverse effect (“Material Adverse Effect”) on the properties, assets, liabilities or results of operations of the Company taken as a whole.

     2.3 Capitalization of the Company. There are 215,536,519 shares of common stock of the Company issued and outstanding, and such shares are duly authorized, validly issued, fully paid and, none of such shares have been issued in violation of preemptive rights, if any, of any person. The offer, issuance and sale of the shares were (a) exempt from the registration and prospectus delivery requirements of the Securities Act, (b) registered or qualified (or were exempt from registration or qualification) under the registration or qualification requirements of all applicable state securities laws and (c) accomplished in conformity with all other applicable securities laws. The Company has no outstanding options, rights or commitments to issue shares or other equity securities, and there are no outstanding securities convertible or exercisable into or exchangeable for shares or other equity securities of the Company.

     2.4 Indebtedness. The Company has no Indebtedness except as identified on the Company Financial Statements (as defined below) or in Schedule 2.4 hereto.

     2.5 Stockholders of the Company. Schedule 2.5 hereto contains a true and complete list of the names and addresses of the record owners of all of the outstanding shares and other equity securities of the Company, together with the number securities held. To the best knowledge of the Company, there is no voting trust, agreement or arrangement among any of the beneficial holders of the shares affecting the nomination or election of directors or the exercise of the voting rights of the shares.

     2.6 Acts and Proceedings. The execution, delivery and performance of this Agreement has been duly authorized by the Board of Directors of the Company, and all of the acts and other proceedings required for the due and valid authorization, execution, delivery and

6

 

performance of this Agreement have been or, at the Closing, shall be, validly and appropriately taken.

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

										
	
2.7	
Compliance	
with	
Laws	
and	
Instruments.	
The	
execution,	
delivery	
and

 

performance by the Company of this Agreement and the consummation by the Company of the transactions contemplated by this Agreement: (a) will not require any authorization, consent or approval of, or filing or registration with, any court or governmental agency or instrumentality, except such as shall have been obtained prior to the Closing or as set forth in Schedule 2.7, (b) will not cause the Company to violate or contravene (i) any provision of law, (ii) any rule or regulation of any agency or government, (iii) any order, judgment or decree of any court, or (iv) any provision of the Articles of Incorporation or By-laws of the Company, (c) will not violate or be in conflict with, result in a breach of or constitute (with or without notice or lapse of time, or both) a default under, any indenture, loan or credit agreement, deed of trust, mortgage, security agreement or other contract, agreement or instrument to which the Company is a party or by which the Company or any of its properties is bound or affected, except where any such violation, conflict, breach or default could not reasonably be expected to have a Material Adverse Effect, and (d) will not result in the creation or imposition of any Lien upon any property or asset of the Company. To the knowledge of the Company, the Company is not in violation of, or (with or without notice or lapse of time, or both) in default under, any material term or provision of its Articles of Incorporation or By-laws or any indenture, loan or credit agreement, deed of trust, mortgage, security agreement or any other material agreement or instrument to which the Company is a party or by which the Company or any of its respective properties is bound or affected, in each case except as could not reasonably be expected to have a Material Adverse Effect.

     2.8 Binding Obligations. This Agreement constitutes the legal, valid and binding obligation of the Company and is enforceable against the Company in accordance with its terms, except as such enforcement is limited by bankruptcy, insolvency and other similar laws affecting the enforcement of creditors’ rights generally and by general principles of equity.

     2.9 Financial Statements. Prior to the Closing Date the Company shall furnish Parent with a true and complete copy of (i) the audited balance sheets of the Company as of December 31, 2011 and December 31, 2010, and the related audited statements of income and statements of cash flow of the Company for the fiscal years ended December 31, 2011 and December 31, 2010; and (ii) unaudited balance sheets and related unaudited income and unaudited statements of cash flow for the interim period ending June 30, 2012 (together items (i) and (ii) in this section are the “Company Financial Statements”). The Company Financial Statements will fairly present in all material respects the financial position, results of operations and other information purported to be shown thereon of the Company, at the dates and for the respective periods to which they apply. The Company Financial Statements through December 31, 2011 have been audited by LBB &Associates Ltd, LP and all Company Financial Statements (i) were prepared in conformity with United States generally accepted accounting

7

 

principles consistently applied throughout the periods involved (“GAAP”); and (ii) have been adjusted for all normal and recurring accruals (and, in the case of unaudited financial information, on a basis consistent with year-end audits).

     2.10 Liabilities. Except as otherwise disclosed in Company Financial Statements, Notes to the Financial Statements, or in Schedule 2.4, Company does not have any material liability or obligation whatsoever, either direct or indirect, matured or unmatured, accrued, absolute, contingent or otherwise. Furthermore, there is no pending proceeding that has been commenced against Company that challenges, or may have the effect of preventing, delaying, making illegal, or otherwise interfering with, any of the transactions contemplated by this Agreement. To the knowledge of Company, no such proceeding has been threatened.

	
2.11      		
Adverse Officer and Director Information.

	

     Except as set forth on Schedule 2.11, during the past five year period neither the Company, nor, to its knowledge, any of its executive officers, members of executive management or directors, nor any Person intended upon consummation of the Merger to be nominated by the Company to become an officer, member of executive management or director of the Surviving Company or any successor entity or subsidiary, has been the subject of: (a) a petition under the federal bankruptcy laws or any other insolvency or moratorium law or has a receiver, fiscal agent or similar officer been appointed by a court for the business or property of the Company or such Person, or any partnership in which the Company or any such Person was a general partner at or within two years before the time of such filing, or any corporation or business association of which the Company or any such Person was an executive officer at or within two years before the time of such filing;

	
(b)      		
a conviction in a criminal proceeding or a named subject of a pending criminal

	

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

8

 

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

     2.12 Absence of Certain Changes. Since the date of the Company Financial Statements, and except as set forth on Schedule 2.12, the Financial Statements or the Notes to the Financial Statements, the Company has been operated only in the ordinary course, consistent with past practice, and there has not been any adverse change, or any event, fact or circumstance which might reasonably be expected to result in an adverse change, in either event that would have a Material Adverse Effect. Without limiting the generality of the foregoing, except as set forth on Schedule 2.12 and except in the ordinary course of business, since June 30, 2012, there has not been with respect to the Company:

     (a) any sale, lease, transfer, license or assignment of any assets, tangible or intangible, of the Company; (b) any damage, destruction or property loss, whether or not covered by insurance, affecting adversely the properties or business of the Company; (c) any declaration or setting aside or payment of any dividend or distribution with respect to the shares of capital stock of the Company or any redemption, purchase or other acquisition of any such shares; (d) any subjection to any lien on any of the assets, tangible or intangible, of the Company; (e) any incurrence of indebtedness or liability or assumption of obligations by the Company;

	
(f)      		
any waiver or release by the Company of any right of any material value;

	
	
(g)      		
any compensation or benefits paid to officers or directors of the Company;

	
	
(h)      		
any change made or authorized in the articles of incorporation or bylaws

	

of the Company;

     (i) any loan to or other transaction with any officer, director or stockholder of the Company giving rise to any claim or right of the Company against any such person or of such person against the Company; or (j) any material adverse change in the condition (financial or otherwise) of the respective properties, assets, liabilities or business of the Company.

     2.13 Schedule of Assets and Contracts. Attached hereto as Schedules 2.13(a) through 2.13(d) are various schedules listing assets and contracts of the Company, as described herein.

9

 

     (a) Schedule 2.13(a) contains a true and complete list of all real property leased by the Company, including a brief description of each item thereof and of the nature of the Company’ interest therein, and of all tangible personal property owned or leased by the Company having a cost or fair market value of greater than $25,000, including a brief description of each item and of the nature of the interest of the Company therein. All the property listed in Schedule 2.13(a) as being leased by the Company is held by the Company under valid and enforceable leases having the rental terms, termination dates and renewal and purchase options described in Schedule 2.13(a); and there is not, under any such lease, any existing default or event of default or event which with notice or lapse of time, or both, would constitute a default by the Company, and the Company has not received any notice or claim of any such default. The Company does not own any real property.

     (b) Except as expressly set forth in this Agreement, the Balance Sheet or the notes thereto, or as disclosed in Schedule 2.13(b) hereto, the Company is not a party to any written or oral agreement not made in the ordinary course of business that is material to the Company. Except as disclosed in Schedule 2.13(b) hereto, the Company is not a party to any written or oral (a) agreement with any labor union, (b) agreement for the purchase of fixed assets or for the purchase of materials, supplies or equipment in excess of normal operating requirements, (c) agreement for the employment of any officer, individual employee or other Person on a full-time basis or any agreement with any Person for consulting services, (d) bonus, pension, profit sharing, retirement, stock purchase, stock option, deferred compensation, medical, hospitalization or life insurance or similar plan, contract or understanding with respect to any or all of the employees of the Company or any other Person, (e) indenture, loan or credit agreement, note agreement, deed of trust, mortgage, security agreement, promissory note or other agreement or instrument relating to or evidencing Indebtedness or subjecting any asset or property of the Company to any Lien or evidencing any Indebtedness, (f) guaranty of any Indebtedness, (g) other than as set forth in Schedule 2.13(a) hereto, lease or agreement under which the Company is lessee of or holds or operates any property, real or personal, owned by any other Person under which payments to such Person exceed $25,000 per year or with an unexpired term (including any period covered by an option to renew exercisable by any other party) of more than 60 days, (h) lease or agreement under which the Company is lessor or permits any Person to hold or operate any property, real or personal, owned or controlled by the Company, (i) agreement granting any preemptive right, right of first refusal or similar right to any Person, (j) agreement or arrangement with any Affiliate or any “associate” (as such term is defined in Rule 405 under the Securities Act) of the Company or any present or former officer, director or stockholder of the Company, (k) agreement obligating the Company to pay any royalty or similar charge for the use or exploitation of any tangible or intangible property, (1) covenant not to compete or other restriction on its ability to conduct a business or engage in any other activity, (m) distributor, dealer, manufacturer’s representative, sales agency, franchise or advertising contract or commitment, (n) agreement to register securities under the Securities Act, (o) collective bargaining agreement, or (p) agreement or other commitment or arrangement with any Person continuing for a period of more than three months from the Closing Date which involves an expenditure or receipt by the Company in excess of $25,000. Except as disclosed in Schedule 2.13(b), none of the agreements,

10

 

contracts, leases, instruments or other documents or arrangements listed in Schedule 2.13(a) through Schedule 2.13(d) requires the consent of any of the parties thereto other than the Company to permit the contract, agreement, lease, instrument or other document or arrangement to remain effective following consummation of the Merger and exchange and the transactions contemplated hereby.

     (c) Schedule 2.13(c) contains a true and complete list of all insurance policies and insurance coverage with respect to the Company, and its business, premises, properties, assets, employees and agents.

     (d) Schedule 2.13(d) contains a true and complete list of all patents, patent applications, trade names, trademarks, trademark registrations and applications, copyrights, copyright registrations and applications, and grants of licenses, both domestic and foreign, presently owned, possessed, used or held by the Company; and, except as set forth in Schedule 2.16, the Company owns the entire right, title and interest in and to the same, free and clear of all Liens and restrictions. Schedule 2.13(d) also contains a true and complete list of all licenses granted to or by the Company with respect to the foregoing. Except as disclosed in Schedule 2.13(d), none of the Company’s patents, patent applications, trade names, trademarks, trademark registrations and applications, copyrights, copyright registrations and applications and grants of licenses set forth in Schedule 2.13(d) are subject to any pending or, to the knowledge of the Company and the Stockholders, threatened challenge. Neither the execution nor delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will give any licensor or licensee of the Company any right to change the terms or provisions of, terminate or cancel, any license to which the Company is a party.

     (e) The Company has furnished to Parent true and complete copies of all agreements and other documents and a description of all applicable oral agreements disclosed or referred to in Schedule 2.13(a) through Schedule 2.13(d), as well as any additional agreements or documents, requested by Parent. The Company has in all material respects performed all obligations required to be performed by it to date and is not in default in any respect under any of the contracts, agreements, leases, documents, commitments or other arrangements to which it is a party or by which it or any of its property is otherwise bound or affected. To the best knowledge of the Company, all parties having material contractual arrangements with the Company are in substantial compliance therewith and none are in material default thereunder. The Company has no outstanding power of attorney.

     2.14 Employees. The Company has complied in all material respects with all laws relating to the employment of labor, and the Company has encountered no material labor union difficulties. Except as set forth in Schedule 2.14, and other than pursuant to ordinary arrangements of employment compensation, the Company is not under any obligation or liability to any officer, director, employee or Affiliate of the Company.

     2.15 Tax Returns and Audits. All required federal, state and local Tax Returns of the Company 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

11

 

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 Material Adverse Effect. To the knowledge of the Company, the Company is not and has not been delinquent in the payment of any Tax. To the knowledge of the Company, the Company has not had a Tax deficiency assessed against it. None of the Company’s federal income tax returns or any state or local income or franchise tax returns has been audited by governmental authorities. The reserves for Taxes reflected on the Balance Sheet are sufficient for the payment of all unpaid Taxes payable by the Company with respect to the period ended on the 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 Company now pending, and the Company has not received any notice of any proposed audits, investigations, claims or administrative proceedings relating to Taxes or any Tax Returns.

	
2.16      		
Patents and Other Intangible Assets.

	
	 	
(a) Except as set forth in Schedule 2.16, the Company (i) owns or has the

	
	
right      		
to use, free and clear of all Liens, claims and restrictions, all patents, trademarks,

	

service marks, trade names, copyrights, licenses and rights with respect to the foregoing used in or necessary for the conduct of its business as now conducted or proposed to be conducted without infringing upon a claimed right of any Person under or with respect to any of the foregoing and (ii) is not obligated to make any payments by way of royalties, fees or otherwise to any owner or licensor of, any patent, trademark, service mark, trade name, copyright or other intangible asset, with respect to the use thereof or in connection with the conduct of its business.

     (b) To the knowledge of the Company, the Company owns or has the unrestricted right to use all trade secrets, if any, including know-how, negative knowhow, formulas, patterns, programs, devices, methods, techniques, inventions, designs, processes, computer programs and technical data (collectively, “intellectual property”) required for the development, operation and sale of its products, and all related technologies, products and services.

	
2.17      		
Employee Benefit Plans; ERISA.

	
	 	
(a) Except as disclosed in Schedule 2.17 hereto, there are no “employee

	
	
benefit      		
plans” (within the meaning of Section 3(3) of the ERISA) or any other employee

	

benefit or fringe benefit arrangements, practices, contracts, policies or programs other than programs merely involving the regular payment of wages, commissions, or bonuses established, maintained or contributed to by the Company. The plans listed in Schedule 2.17 hereto are hereinafter referred to as the “Employee Benefit Plans.” (b) All current and prior material documents, including all amendments thereto, with respect to each Employee Benefit Plan have been given to Parent or its advisors.

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

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

     (e) There is no pending or, to the knowledge of the Company, threatened, investigation or pending or possible enforcement action by the Pension Benefit Guaranty Corporation, the Department of Labor, the Internal Revenue Service or any other government agency with respect to any Employee Benefit Plan.

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

     2.18 The Company has good, valid and marketable title to all properties and assets used in the conduct of its business free of all Liens and other encumbrances, except Permitted Liens and such ordinary and customary imperfections of title, restrictions and encumbrances as could not reasonably be expected to have a Material Adverse Effect.

     2.19 Except as disclosed in Schedule 2.19 hereto, no suit, proceeding or action or threat of suit, proceeding or action has been asserted or made against the Company within the last two years due to alleged bodily injury, death or property damage arising out of the function or malfunction of a product, procedure or service designed, manufactured, sold or distributed by the Company.

     2.20 Except as disclosed in Schedule 2.20 hereto, there is no legal action, suit, arbitration or other legal, administrative or other governmental proceeding pending or, to the knowledge of the Company, threatened against or affecting the Company or its properties, assets or business that could reasonably be expected to have a Material Adverse Effect. The Company is not in default with respect to any order, writ, judgment, injunction, decree, determination or award of any court or any governmental agency or instrumentality or arbitration authority.

     2.21 The Company possesses from the appropriate governmental authorities all licenses, permits, authorizations, approvals, franchises and rights necessary for the Company to engage in the businesses currently conducted by it (except for those, the absence of which would not reasonably be expected to have a Material Adverse Effect), and all are in full force and effect.

     2.22 Except as disclosed in Schedule 2.22 hereto, no officer, director or stockholder of the Company or any Affiliate or “associate” (as such term is defined in Rule 405 under the Securities Act) of any such Person or the Company has or has had, either directly or indirectly, (a) an interest in any Person that (i) furnishes or sells services or products that are furnished or sold or are proposed to be furnished or sold by the Company or (ii) purchases from or sells or

13

 

furnishes to the Company any goods or services, or (b) a beneficial interest in any contract or agreement to which either of the Company is a party or by which either of them may be bound or affected.

     2.23 There is no substance or material defined or designated as hazardous or toxic waste, material, substance or other similar term, by any environmental statute, regulation or ordinance currently in effect, on, about, or in any of the real property in which the Company now has or previously had any leasehold or ownership interest.

     2.24 The Company has not been advised within the past thirty (30) days that any material customer, supplier or independent contractor of the Company intends to terminate or materially curtail its business relationship with the Company which could reasonably be expected to have a Material Adverse Effect.

     2.25 Neither the Company nor, to their knowledge, any director, officer, stockholder, agent, employee or other Person associated with or acting on behalf of the Company, has used any corporate funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity; made any direct or indirect unlawful payments to government officials or employees from corporate funds; established or maintained any unlawful or unrecorded fund of corporate monies or other assets; made any false or fictitious entries on the books of record of any such corporations; or made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment.

     2.26 Except as disclosed in Schedule 2.26, the Company has no liability or obligation or commitment to any Stockholder or any Affiliate or “associate” (as such term is defined in Rule 405 under the Securities Act) of any Stockholder, nor does any Stockholder or any such Affiliate or associate have any liability, obligation or commitment to the Company.

     2.27 No representation or warranty by the Company herein and no information disclosed in the schedules or exhibits hereto by the Company, when considered as a whole together with all other information furnished to Parent, contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained herein or therein not misleading.

     2.28 Broker’s and Finder’s Fees. No Person has, or as a result of the transactions contemplated herein will have, any right or valid claim against the Company for any commission, fee or other compensation as a finder or broker, or in any similar capacity, except as disclosed in Schedule 2.28 hereto.

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

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

3.1 Organization and Good Standing.

14

 

     (a) Parent is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada, with requisite corporate power and authority to conduct its business as now being conducted and to own or use its properties and assets. Parent has not conducted any business under or otherwise used, for any purpose or in any jurisdiction, any fictitious name, assumed name, trade name or other name, other than the name “Clear Systems Recycling, Inc.” (b) Parent is duly qualified to do business as a foreign corporation and is in good standing under the laws of each state or other jurisdiction in which either the ownership or use of the properties owned or used by it, or the nature of the activities conducted by it, requires such qualification except where the failure to be so qualified or in good standing would not have a Material Adverse Effect on Parent.

     (c) Schedule 3.1(c) accurately sets forth (i) the names of the members of the board of directors of Parent, (ii) the names of the members of each committee of such board of directors, and (iii) the names and titles of the officers of Parent.

     (d) Merger Sub was formed for the sole purpose of effecting the Merger and, except as contemplated by this Agreement, Merger Sub has not conducted any business activities and does not have any liabilities.

	
3.2      		
Subsidiaries.

	
	 	
(a) Schedule 3.2(a) sets forth all direct and indirect Subsidiaries of Parent.

	
	
Parent      		
owns all of the equity of each Subsidiary. Except as set forth on Schedule 3.2(a),

	

Parent does not have any Subsidiaries or affiliated companies and does not otherwise own any shares in the capital of or any interest in, or control, directly or indirectly, any entity. Parent has not agreed and is not obligated to make any future investment in or capital contribution to any entity. Parent has not guaranteed and is not responsible or liable for any obligation of any of the entities in which it owns or has owned any equity interest.

     (b) Each Subsidiary of Parent: (i) is a corporation duly organized and validly existing under the laws of its jurisdiction of incorporation, (ii) has all requisite corporate power and authority to own, operate or lease the properties and assets owned, operated or leased by such Subsidiary and to carry on its business as it has been and is currently conducted by such Subsidiary and (iii) is duly qualified to do business and is in good standing in each jurisdiction in which the properties owned or leased by it or the operation of its business makes such license and qualification necessary, expect, in each of clauses (i), (ii) and (iii), such failures which, when taken together with all other such failures, would not have a Material Adverse Effect on Parent or such Subsidiary.

     (c) Schedule 3.2(c) accurately sets forth (i) the names of the members of the boards of directors of each Subsidiary of Parent, (ii) the names of the members of each committee of such boards of directors, and (iii) the names and titles of the officers of each Subsidiary of Parent.

15

 

     3.3 Authority. Each of Parent and Merger Sub has all requisite corporate power and authority to enter into this Agreement and the ancillary agreements to which it is a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and the ancillary agreements and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of Parent and Merger Sub, subject only to the approval of this Agreement by the stockholders of Parent and Merger Sub. The Board of Directors of Parent and Merger Sub have unanimously approved this Agreement and authorized the Merger. This Agreement has been (and the ancillary agreements will be at the Closing) duly executed and delivered by Parent and Merger Sub, and this Agreement constitutes (and the ancillary agreements will constitute at the Closing) the valid and binding obligations of Parent and Merger Sub enforceable against each of Parent and Merger Sub in accordance with their terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting or relating to creditors' rights generally, and subject to general principles of equity. Merger Sub has been formed solely for the purpose of executing and delivering this Agreement and consummating the transactions contemplated hereby. Since the date of its incorporation, Merger Sub has neither engaged in nor transacted any business or activity of any nature whatsoever other than activities related to its corporate organization and the execution and delivery of this Agreement and the related documents and instruments. Merger Sub has no assets or properties or debts, liabilities or obligations of any kind whatsoever, and with the exception of this Agreement and the related documents and instruments, is not a party to any contract, agreement or undertaking of any nature.

     3.4 No Conflict. The execution and delivery by Parent of this Agreement and the ancillary agreements to which Parent is a party, does not, and the consummation of the transactions contemplated hereby and thereby will not (a) conflict with, or result in any violation of, any provision of the Parent Articles of Incorporation or Parent Bylaws, (b) conflict with, or result in any violation of or default under (with or without notice or lapse of time, or both), or give rise to a right of termination, cancellation or acceleration of any obligation or loss of any benefit under any mortgage, indenture, lease, contract or other agreement or instrument, permit, concession, franchise or license of Parent, (c) conflict with, or result in any violation of any judgment, order, decree, statute, law, ordinance, rule or regulation applicable to Parent or any of its properties or assets, or (d) conflict with, or result in a violation of any resolution adopted by Parent’s stockholders, Parent’s board of directors or any committee of Parent’s board of directors.

     3.5 Consents. No consent, approval, order or authorization of or registration, declaration or filing with, any governmental entity or any party to any material contract is required by or with respect to Parent or any of its subsidiaries in connection with the execution and delivery of this Agreement by Parent and any ancillary agreement to which Parent is a party or the consummation by Parent of the transactions contemplated hereby, except (a) such consents, waivers, approvals, orders, authorizations, registrations, declarations and filings as may be required under applicable securities laws, (b) the filing of the Articles of Merger with the Secretary of State of the State of Nevada and (c) such consents, waivers, approvals, orders, authorizations, registrations, declarations and filings which, if not obtained or made, would not have a Material Adverse Effect on Parent.

16

 

     3.6 Governmental Authorizations. Parent has obtained each material federal, state, county, local or foreign governmental consent, license, permit, grant, or other authorization of a governmental entity (a) pursuant to which Parent currently operates or holds any interest in any of its properties, or (b) that is required for the operation of Parent’s business or the holding of any such interest, and all of such authorizations are in full force and effect.

     3.7 Broker’s and Finder’s Fees. No person, firm, corporation or other entity is entitled by reason of any act or omission of Parent to any broker’s or finder’s fees, commission or other similar compensation with respect to the execution and delivery of this Agreement, or with respect to the consummation of the transactions contemplated hereby, including the Merger and exchange.

	
3.8      		
Capitalization of Parent.

	
	 	
(a) The authorized capital stock of Parent consists of (i) 100,000,000 shares of

	
	
Parent      		
Common Stock, of which 36,750,000 shares are issued and outstanding on the

	

date hereof, and (ii) 15,000,000 shares of undesignated preferred stock, none of which are issued or outstanding, prior to taking into consideration the issuance of Parent Common Stock in the exchange. Except with respect to the Parent Incentive Plan, the Parent has no other shares of capital stock reserved for issuance upon the exercise of any other options or any warrants and no shares of capital stock are reserved for issuance to any party, including upon the conversion of any outstanding convertible notes, debentures or securities. Parent has no outstanding options, rights, calls, preemptive rights, subscriptions or commitments to issue any equity Securities of Parent.

     (b) There is no plan or arrangement to issue capital stock by Parent except as set forth in this Agreement, and there are no registration rights. There is no voting trust, proxy, rights plan, anti-takeover plan or other agreement or understanding to which the Parent is a party or by which it is bound with respect to any equity securities of Parent.

     (c) There are no outstanding contractual obligations (contingent or otherwise) of Parent to retire, repurchase, redeem or otherwise acquire any outstanding shares of capital stock of, or other ownership interests in, Parent or to provide funds to or make any investment (in the form of a loan, capital contribution or otherwise) in any other entity or person.

	
3.9      		
Validity of Shares.

	
	 	
(a) All outstanding shares of the capital stock of Parent are (i) validly issued

	
	
and      		
outstanding, fully paid and non-assessable, (ii) were not issued in violation of the

	

preemptive rights of any person, (iii) were issued in transactions that were (A) exempt from the registration and prospectus delivery requirements of the Securities Act, (B) registered or qualified (or were exempt from registration or qualification) under the registration or qualification requirements of all applicable state securities laws and (C) accomplished in conformity with all other applicable securities laws.

     (b) The approximately 53,884,130 shares of Parent Common Stock to be issued at the Closing pursuant to Section 1.9(b) hereof, when issued and delivered in

17

 

accordance with the terms hereof, shall be duly and validly issued, fully paid and non-assessable and not in violation of any preemptive rights. Based, in part, on the representations and warranties of the Stockholders as contemplated by Section 4 hereof and assuming the accuracy thereof, the issuance of the Parent Common Stock upon the Merger and exchange pursuant to Article will be exempt from the registration and prospectus delivery requirements of the Securities Act and from the qualification or registration requirements of any applicable state blue sky or securities laws.

	
3.10      		
SEC Reporting and Compliance.

	
	 	
(a) Parent filed a registration statement on Form S-1 (No. 333-174175) under

	
	
the      		
Securities Act which became effective on July 12, 2011, and has not been withdrawn.

	

All shares held by selling stockholders in such registration statement, other than those held by Affiliates of Parent, have been sold in accordance with the Plan of Distribution set forth in such registration statement.

     (b) Since July 12, 2011, Parent has filed with the Commission all registration statements, proxy statements, information statements, reports, schedules, forms and other documents required to be filed pursuant to the Securities Act, the Exchange Act and the rules and regulations of the Commission on a timely basis (or has received a valid extension of such time of filing and has filed any such reports or other documents prior to the expiration of any such extension). Parent has not filed with the Commission a certificate on Form 15 pursuant to Rule 12h-3 of the Exchange Act.

     (c) Parent has delivered or made available to the Company true and complete copies of its registration statement (including all amendments thereto and supplements to the prospectus contained therein) and reports (collectively, the “Parent SEC Documents”) filed by Parent with the Commission. The Parent SEC Documents, as of their respective dates (or, if amended, supplemented or superseded by a filing prior to the date hereof, then as of the date of such amendment, supplement or superseding filing) complied in all material respects with the requirements of the Securities Act or the Exchange Act, as the case may be, and the rules and regulations of the Commission promulgated thereunder applicable thereto, and did not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein not misleading.

     (d) Except as set forth on Schedule 3.10, Parent has not filed, and nothing has occurred with respect to which Parent would be required to file, any report on Form 8-K since February 3, 2012. Prior to and until the Closing, Parent will provide to the Company copies of any and all amendments or supplements to the Parent SEC Documents filed with the Commission since July 12, 2011, and all subsequent registration statements and reports filed by Parent subsequent to the filing of the Parent SEC Documents with the Commission and any and all subsequent documents or notices filed by the Parent with the Commission or delivered to the stockholders of Parent.

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

18

 

     (f) The shares of Parent Common Stock are quoted on the Over-the-Counter (OTC) Bulletin Board under the symbol “CLRS.OB,” and Parent is in compliance in all material respects with all rules and regulations of the OTC Bulletin Board applicable to it and the Parent Common Stock.

     (g) The Parent SEC Documents include all certifications and statements required of it, if any, by (i) Rule 13a-14 or 15d-14 under the Exchange Act, and (ii) 18 U.S.C. Section 1350 (Section 906 of the Sarbanes-Oxley Act of 2002), and each of such certifications and statements contain no qualifications or exceptions to the matters certified therein other than a knowledge qualification, permitted under such provision, and have not been modified or withdrawn and neither Parent nor any of its officers has received any notice from the SEC or any other governmental entity questioning or challenging the accuracy, completeness, form or manner of filing or submission of such certifications or statements.

     3.11 Financial Statements. The balance sheets, and statements of income, changes in financial position and stockholders’ equity contained in the Parent SEC Documents (i) have been prepared in accordance with GAAP applied on a basis consistent with prior periods (and, in the case of unaudited financial information, on a basis consistent with year-end audits), (ii) are in accordance with the books and records of the Parent, and (iii) present fairly in all material respects the financial condition of the Parent at the dates therein specified and the results of its operations and changes in financial position for the periods therein specified. The financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2011 (the “Parent Financial Statements”) were audited by, and include the related opinion of Sadler Gibb & Associates, Parent’s independent registered public accounting firm.

     3.12 Events Subsequent to Financial Statements. Since December 31, 2011, there has not been: (a) any sale, lease, transfer, license or assignment of any assets, tangible or intangible, of Parent; (b) any damage, destruction or property loss, whether or not covered by insurance, affecting adversely the properties or business of Parent;

     (c) any declaration or setting aside or payment of any dividend or distribution with respect to the shares of capital stock of Parent or any redemption, purchase or other acquisition of any such shares;

			
	
 	
(d)	
any subjection to any lien on any of the assets, tangible or intangible, of
	
Parent;	
 	
 
	
 	
(e)	
any incurrence of indebtedness or liability or assumption of obligations by
	
Parent;	
 	
 
	
 	
(f)	
any waiver or release by Parent of any right of any material value;
	
 	
(g)	
any compensation or benefits paid to officers or directors of Parent;

 

19

 

     (h) any change made or authorized in the articles of incorporation or bylaws of Parent; (i) any loan to or other transaction with any officer, director or stockholder of Parent giving rise to any claim or right of Parent against any such person or of such person against Parent; or (j) any material adverse change in the condition (financial or otherwise) of the respective properties, assets, liabilities or business of Parent.

     3.13 Liabilities. Except as otherwise disclosed in Parent Financial Statements, Parent does not have any liability or obligation whatsoever, either direct or indirect, matured or unmatured, accrued, absolute, contingent or otherwise. In addition, Parent represents that upon Closing, Parent will not have any liability or obligation whatsoever, either direct or indirect, matured or unmatured, accrued, absolute, contingent or otherwise. Furthermore, there is no pending proceeding that has been commenced against Parent that challenges, or may have the effect of preventing, delaying, making illegal, or otherwise interfering with, any of the transactions contemplated by this Agreement. To the knowledge of Parent, no such proceeding has been threatened.

     3.14 Tax Matters. Parent has duly filed all federal, state, local and foreign tax returns required to be filed by or with respect to it with the Internal Revenue Service or other applicable taxing authority, and no extensions with respect to such tax returns have been requested or granted. Parent has paid, or adequately reserved against in Parent Financial Statements, all material taxes due, or claimed by any taxing authority to be due, from or with respect to it. To the knowledge of Parent, there has been no material issue raised or material adjustment proposed (and none is pending) by the Internal Revenue Service or any other taxing authority in connection with any of Parent’s Tax Returns. No waiver or extension of any statute of limitations as to any material federal, state, local or foreign tax matter has been given by or requested from Parent. For the purposes of this Section, a Tax is due (and must therefore either be paid or adequately reserved against in Parent Financial Statements) only on the last date payment of such Tax can be made without interest or penalties, whether such payment is due in respect of estimated Taxes, withholding Taxes, required Tax credits or any other Tax.

     3.15 Governmental Consents. All consents, approvals, orders or authorizations of, or registrations, qualifications, designations, declarations, or filings with any federal or state governmental authority on the part of Parent required in connection with the consummation of the Merger and exchange have been or shall have been obtained prior to, and be effective as of, the Closing.

     3.16 Compliance with Laws and Other Instruments. The execution, delivery and performance by Parent of this Agreement and the consummation by it of the transactions contemplated by this Agreement, including the Merger and exchange: (a) will not require any authorization, consent or approval of, or filing or registration with, any court or governmental agency or instrumentality, except (i) such as shall have been obtained prior to the Closing, or (ii) as set forth in Schedule 3.16; (b) will not cause the Parent to violate or contravene (i) any provision of law, (ii) any rule or regulation of any agency or government, (iii) any order,

20

 

judgment or decree of any court, or (iv) any provision of its Articles of Incorporation or By-laws; (c) will not violate or be in conflict with in a material manner, result in a material breach of or constitute (with or without notice or lapse of time, or both) a material default under, any indenture, loan or credit agreement, deed of trust, mortgage, security agreement or other material contract, agreement or instrument to which the Parent is a party or by which the Parent or any of its properties are bound or affected, except where any such violation, conflict, breach or default could not reasonably be expected to have a Material Adverse Effect; and (d) will not result in the creation or imposition of any material Lien upon any property or asset of the Parent. Parent is not in violation of, or (with or without notice or lapse of time, or both) in default under, any term or provision of its Articles of Incorporation or By-laws, to its knowledge, or any indenture, loan or credit agreement, deed of trust, mortgage, security agreement, except as could not reasonably be expected to have a Material Adverse Effect on the Parent, or any other material agreement or instrument to which the Parent is a party or by which it or any of its properties are bound or affected.

     3.17 Binding Obligations. This Agreement constitutes the legal, valid and binding obligation of the Parent, and is enforceable against the Parent, in accordance with its terms, except as such enforcement is limited by bankruptcy, insolvency and other similar laws affecting the enforcement of creditors’ rights generally and by general principles of equity.

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

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

     3.20 Obligations to or by Stockholders. Except as disclosed in the Parent SEC Documents or on Schedule 3.20, the Parent has no liability or obligation or commitment to any stockholder of Parent or any Affiliate or “associate” (as such term is defined in Rule 405 under the Securities Act) of any stockholder of Parent, nor does any stockholder of Parent or any such Affiliate or associate have any liability, obligation or commitment to Parent.

     3.21 Material Contracts. Parent has provided to the Company, prior to the date of this Agreement, true, correct and complete copies of each written material Parent contract, including each amendment, supplement and modification thereto.

     3.22 Employees. Except as disclosed in the Parent SEC Documents, Parent has no employees, independent contractors or other Persons providing services to it. Except as would not have a Material Adverse Effect, Parent is in full compliance with all relevant laws regarding employment, wages, hours, benefits, equal opportunity, collective bargaining, the payment of Social Security and other taxes, occupational safety and health and plant closing. Parent is not liable for the payment of any compensation, damages, taxes, fines, penalties or other amounts, however designated, for failure to comply with any of the foregoing laws. No director, officer or

21

 

employee of Parent is a party to, or is otherwise bound by, any contract (including any confidentiality, non-competition or proprietary rights agreement) with any other party that in any way adversely affects or will materially affect (a) the performance of his or her duties as a director, officer or employee of Parent or (b) the ability of Parent to conduct its business. Except as set forth in the Parent SEC Documents, each employee of Parent is employed on an at-will basis and Parent does not have any contract with any of its employees which would interfere with its ability to discharge its employees.

     3.23 Interested Party Transactions. Except as disclosed in Schedule 3.23, no officer, director or stockholder of Parent or any Affiliate or “associate” (as such term is defined in Rule 405 of the Commission under the Securities Act) of any such party, has or has had, either directly or indirectly, (a) an interest in any Person which (a) furnishes or sells services or products which are furnished or sold or are proposed to be furnished or sold by Parent, or (b) purchases from or sells or furnishes to, or proposes to purchase from, sell to or furnish Parent any goods or services; or (b) a beneficial interest in any contract or agreement to which Parent is a party or by which it may be bound or affected.

     3.24 Governmental Inquiries. Parent has provided to the Company a copy of each material written inspection report, questionnaire, inquiry, demand or request for information received by Parent from any governmental authority, and Parent’s response thereto, and each material written statement, report or other document filed by Parent with any governmental authority.

     3.25 Bank Accounts and Safe Deposit Boxes. Schedule 3.25 discloses the title and number of each bank or other deposit or financial account, and each lock box and safety deposit box used by Parent, the financial institution at which that account or box is maintained and the names of the persons authorized to draw against the account or otherwise have access to the account or box, as the case may be.

     3.26 Intellectual Property. Parent does not own, use or license any Intellectual Property in its business as presently conducted, except as set forth in Schedule 3.26.

     3.27 Parent has no stock option plans except the Clear System Recycling, Inc. 2012 Incentive Compensation Plan (the “Parent Incentive Plan”), which will be adopted prior to the Closing. Parent has made no grants under the Parent Incentive Plan. Parent has no employee benefit plans or arrangements covering their present and former employees or providing benefits to such persons in respect of services provided to Parent. Neither the consummation of the transactions contemplated hereby alone, nor in combination with another event, with respect to each director, officer, employee and consultant of Parent, will result in (a) any payment (including, without limitation, severance, unemployment compensation or bonus payments) becoming due from Parent, (b) any increase in the amount of compensation or benefits payable to any such individual or (c) any acceleration of the vesting or timing of payment of compensation payable to any such individual. No agreement, arrangement or other contract of Parent provides benefits or payments contingent upon, triggered by, or increased as a result of a change in the ownership or effective control of Parent.

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     3.28 No representation or warranty by Parent herein and no information disclosed in the schedules or exhibits hereto by Parent when considered as a whole together with all other information furnished to the Company contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained herein or therein misleading.

ARTICLE 4

ADDITIONAL AGREEMENTS

     4.1 Within four (4) business days following the execution hereof, the Parent shall prepare file with the U.S. Securities and Exchange Commission a Current Report on Form 8-K disclosing the entry into this Agreement under Item 1.01 thereof.

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

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     4.3 Subject to the terms and conditions herein provided, each of the parties hereto agrees to use its commercially reasonable efforts to take, or cause to be taken, all action and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate and make effective the transactions contemplated by this Agreement. In order to obtain any necessary governmental or regulatory action or non-action, waiver, consent, extension or approval, each of Parent and the Company agrees to take all reasonable actions and to enter into all reasonable agreements as may be necessary to obtain timely governmental or regulatory approvals and to take such further action in connection therewith as may be necessary. In case at any time after the Closing any further action is necessary or desirable to carry out the purposes of this Agreement, the proper officers and/or directors of Parent and the Company shall take all such necessary action.

     4.4 No party shall issue any press release or public announcement pertaining to the Exchange that has not been agreed upon in advance by Parent and the Company, except as Parent reasonably determines to be necessary in order to comply with the rules of the Commission or of the principal trading exchange or market for Parent Common Stock and after reasonable advance notice to the Company.

     4.5 At the Closing, Parent shall accept the resignations of the current officers and directors of Parent as provided by Section 5.3(i) hereof, and shall increase the size of the Board of Directors of Parent to five (5) directors and cause the existing directors of the Company to be elected to the Board of Directors of Parent.

     4.6 Immediately prior to the Closing, Parent shall take all required legal actions to change its corporate name to “Masterpiece Holdings, Inc.” by means of an amendment to its Articles of Incorporation.

     4.7 At the Closing, each of Mark Ghiglieri and Kenneth Kepp will enter into Executive Employment Agreements with Parent or Masterpiece Nevada to serve in the respective positions of Chief Executive Officer and President and Chief Financial Officer, respectively, through at least December 31, 2014.

     4.8 Simultaneously with the Closing, the Parent shall cause 23,000,000 shares of its issued and outstanding common stock to be cancelled.

     4.9 Each party to this Agreement will pay all costs and expenses (including the fees and disbursements of legal counsel, its accountants, third party fees, and other advisers) it incurs in connection with the negotiation, preparation and execution of this Agreement and the transactions contemplated by this Agreement (whether such payables are received prior to or after Closing).

ARTICLE 5

CLOSING; DELIVERIES

     5.1 Closing Date. Subject to the terms and conditions set forth herein, the closing of the transactions contemplated by this Agreement (the “Closing”) shall take place on September 30, 2012, or on such other date agreed upon orally or in writing by the parties (the “Closing Date”). All proceedings to be taken and all documents to be executed at the Closing,

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including those in connection with this Agreement, shall be deemed to have been taken, delivered and executed simultaneously, and no proceeding shall be deemed taken nor documents deemed executed or delivered until all have been taken, delivered and executed. The Closing shall occur via the exchange of documents and signatures at the offices of Synergy Law Group, LLC, 730 W. Randolph Street, 6th Floor, Chicago, IL 60661. At the Closing, Parent shall present to the Transfer Agent for delivery to each Stockholder the certificate representing the Parent Common Stock to be issued to them in accordance herewith. Such presentment for delivery shall be against delivery to Parent of the certificates, opinions, agreements and other instruments referred to in Section 6.2 below. Parent will deliver at such Closing to the Company the officers’ certificate, agreements, instruments and opinion referred to in Section 5.3 below. All of the other documents and certificates and agreements referenced in this Article will also be executed as described therein. The Company and the Parent may waive compliance with any of the closing deliveries specified in this Article. At or immediately following the Closing, the Parent shall cause to be delivered to the Company all records and documents relating to the Parent which the Parent possesses, including, without limitation, books, records, government filings, tax returns, charter documents, corporate records, stock record books, consent decrees, orders, and correspondence, director and stockholder minutes and resolutions, stock ownership records, financial information and records, electronic files containing any financial information and records, and other documents associated with Parent. Should the Closing not occur within ninety (90) days following execution of this Agreement, Parent or Company may terminate this Agreement.

     5.2 Closing Deliveries of the Company. At Closing, the Company shall deliver the following documents to Parent: (a) A certificate, dated the Closing Date, executed on behalf of the Company by each of their Chief Executive Officer and President, certifying the following: (i) the representations and warranties of each Company under this Agreement are true and correct in all material respects on the Closing Date;

     (ii) the Company has performed and complied in all material respects with all agreements and conditions required by this Agreement to be performed or complied with by it on or before the Closing Date; and (iii) there does not exist on the Closing Date any Default or Event of Default or any event or condition that, with the giving of notice or lapse of time, or both, would constitute a Default or Event of Default, and since the Balance Sheet Date, there has been no change that has or will have a Material Adverse Effect on such Company, except as a result of the transactions contemplated by this Agreement.

     (b) A certificate, dated the Closing Date, executed by the Company’s Secretary, certifying that: (i) all consents, authorizations, orders and approvals of, and filings and registrations with, any court, governmental body or instrumentality that are required for the execution and delivery of this Agreement and the consummation of the Merger and exchange shall have been duly made or obtained, and all material consents by

25

 

third parties that are required for the Merger and exchange have been obtained; and (ii) no action or proceeding before any court, governmental body or agency has been threatened, asserted or instituted to restrain or prohibit, or to obtain substantial damages in respect of, this Agreement or the carrying out of the transactions contemplated by this Agreement.

     (c) Copies of resolutions of the Board of Directors, certified by the Secretary of the Company, authorizing and approving the execution, delivery and performance of this Agreement and all other documents and instruments to be delivered pursuant hereto.

     (d) A certificate of incumbency executed by the Secretary of the Company certifying the names, titles and signatures of the officers authorized to execute this Agreement and any documents referred to herein, and further certifying that the Articles of Incorporation and By-laws of the Company delivered to Parent at the time of the execution of this Agreement have been validly adopted and have not been amended or modified.

     (e) All written consents, satisfactory in form and substance to Parent, from each party to the leases, contracts, instruments and other documents listed in Schedule 2.13(a) through Schedule 2.13(d) as necessary to consent to the change in ownership upon the effectiveness of the Merger and exchange, of all of the rights and interests of the Company in and to such leases, contracts, instruments and documents, except to the extent the failure to so obtain such consents could not reasonably be expected to have a Material Adverse Effect.

     (f) Evidence as of a recent date of the good standing and existence of the Company issued by the Secretary of State of the State of Oregon and evidence that the Company is qualified to transact business as a foreign corporation and is in good standing in each state of the United States and in each other jurisdiction where the character of the property owned or leased by it or the nature of its activities makes such qualification necessary.

     (g) The Company’s (i) audited consolidated balance sheet (the “Balance Sheet”) as of December 31, 2011 (the “Balance Sheet Date”) and audited consolidated statements of operations, changes in stockholders’ equity and cash flows for the year ended December 31, 2011, together with the related independent auditors’ report of LBB & Associates, Ltd., LP and (ii) unaudited balance sheets and related unaudited income and unaudited statements of cash flow for the interim period ending June 30, 2012. Such financial statements (i) are in accordance with the books and records of the Company, (ii) present fairly in all material respects the financial condition of the Company at the dates therein specified and the results of their operations and changes in financial position for the periods therein specified and (iii) have been prepared in all material respects in accordance with U.S. generally accepted accounting principles (“GAAP”) applied on a basis consistent with prior accounting periods.

     (h) A certificate that the Company has no material obligation or liability (whether accrued, absolute, contingent, liquidated or otherwise, whether due or to

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become due), arising out of any transaction entered into at or prior to the Closing, except (a) as disclosed by schedule, (b) to the extent set forth on or reserved against in the Balance Sheet or the Notes to the Financial Statements, (c) current liabilities incurred and obligations under agreements entered into in the usual and ordinary course of business since the Balance Sheet Date, none of which (individually or in the aggregate) have a Material Adverse Effect, and (d) by the specific terms of any written agreement, document or arrangement identified in the Schedules hereto or which are not required to be disclosed thereby.

     (i) A certificate from the Company that since the Balance Sheet Date, except as disclosed by schedule, the Company has not (a) incurred any debts, obligations or liabilities, absolute, accrued, or, to the Company’s knowledge, contingent, whether due or to become due, except for fees, expenses and liabilities incurred in connection with the Merger and related transactions, and current liabilities incurred in the usual and ordinary course of business, (b) discharged or satisfied any Liens other than those securing, or paid any obligation or liability other than, current liabilities shown on the Balance Sheet and current liabilities incurred since the Balance Sheet Date, in each case in the usual and ordinary course of business, (c) mortgaged, pledged or subjected to Lien any of its assets, tangible or intangible, other than in the usual and ordinary course of business, (d) sold, transferred or leased any of its assets, except in the usual and ordinary course of business, (e) cancelled or compromised any debt or claim, or waived or released any right, of material value, (f) suffered any physical damage, destruction or loss (whether or not covered by insurance) which could reasonably be expected to have a Material Adverse Effect, (g) entered into any transaction other than in the usual and ordinary course of business, (h) encountered any labor union difficulties, (i) made or granted any wage or salary increase or made any increase in the amounts payable under any profit sharing, bonus, deferred compensation, severance pay, insurance, pension, retirement or other employee benefit plan, agreement or arrangement, other than in the ordinary course of business consistent with past practice, or entered into any employment agreement, (j) issued or sold any shares or other securities or granted any options (including employee options), warrants or other rights with respect thereto, (k) declared or paid any dividends on or made any other distributions with respect to, or purchased or redeemed, any of its outstanding shares, (l) suffered or experienced any change in, or condition affecting, the financial condition of the Company other than changes, events or conditions in the usual and ordinary course of its business, none of which (either by itself or in conjunction with all such other changes, events and conditions) could reasonably be expected to have a Material Adverse Effect, (m) made any change in the accounting principles, methods or practices followed by it or depreciation or amortization policies or rates theretofore adopted, (n) made or permitted any amendment or termination of any material contract, agreement or license to which it is a party which has a Material Adverse Effect, (o) suffered any material loss not reflected in the Balance Sheet or its statement of operations for the period ended on the Balance Sheet Date, (p) paid, or made any accrual or arrangement for payment of, bonuses or special compensation of any kind or any severance or termination pay to any present or former officer, director, employee, stockholder or consultant, (q) made or agreed to make any charitable contributions or incurred any non-business expenses in excess of $25,000 in the aggregate, or (r) entered into any agreement, or otherwise obligated itself, to do any of the foregoing.

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     (j) An opinion of Synergy Law Group, counsel for the Company, to the effect as set forth in Exhibit C hereto.

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

     5.3 Deliveries of Parent. At Closing, Parent and Merger Sub shall deliver the following documents to the Company:

     (a) Certificate, dated the Closing Date, executed on behalf of the Parent and Merger Sub by their Chief Executive Officer or other duly authorized officers, certifying the following: (i) the representations and warranties of Parent and Merger Sub under this Agreement are true and correct in all material respects on the Closing Date; (ii) Parent and Merger Sub have performed and complied in all material respects with all agreements and conditions required by this Agreement to be performed or complied with by them on or before the Closing Date; and (iii) there does not exist on the Closing Date any Default or Event of Default or any event or condition, that with the giving of notice or lapse of time, or both, would constitute a Default of Event of Default, and since the Parent Balance Sheet Date, there has been no change that has or will have a Material Adverse Effect on the Parent.

     (b) An opinion of Pearlman & Schneider LLP, counsel for Parent and Merger Sub, to the effect set forth in Exhibit D hereto.

     (c) Certificates, dated the Closing Date, executed by the Secretary of the Parent and the Secretary of Merger Sub, certifying that: (i) all consents, authorizations, orders and approvals of, and filings and registrations with, any court, governmental body or instrumentality that are required for the execution and delivery of this Agreement and the consummation of the Merger and exchange shall have been duly made or obtained, and all material consents by third parties required for the Merger and exchange have been obtained; and (ii) no action or proceeding before any court, governmental body or agency has been threatened, asserted or instituted to restrain or prohibit, or to obtain substantial damages in respect of, this Agreement or the carrying out of the transactions contemplated by this Agreement.

     (d) Copies of resolutions of Parent’s and Merger Sub’s Boards of Directors, certified by the Secretary, authorizing and approving the execution, delivery and performance of this Agreement and the transactions contemplated hereby, including the Merger and exchange and all other documents and instruments to be delivered by it pursuant hereto.

     (e) Certificates of incumbency executed by the Secretary of Parent and the Secretary of Merger Sub certifying the names, titles and signatures of the officers authorized to execute this Agreement and any documents referred to herein, and further certifying that the Articles of Incorporation and By-laws of Parent and Merger Sub appended thereto have not been amended or modified.

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     (f) A certificate of the Transfer Agent, certifying as of the business day prior to the date of the Merger and exchange, a true and complete list of the names and addresses of the record owners of all of the outstanding shares of Parent Common Stock, together with the number of shares of Parent Common Stock held by each record owner.

     (g) A letter from the Transfer Agent setting forth the number of shares of Parent Common Stock that would be issued and outstanding as of the Closing Date after taking into consideration the closing of the Merger and exchange (including the cancellation of the 23,000,000 shares of common stock of the Company).

			
	
 	
(h)	
the executed resignation of Arthur John Carter as a director and officer of
	
Parent.	
 	
 
	
 
	
 	
(i)	
Evidence as of a recent date of the good standing and corporate existence

 

of Parent and Merger Sub issued by the Secretary of State of the State of Nevada and evidence that the Parent and Merger Sub are qualified to transact business as foreign corporations and are in good standing in each state of the United States and in each other jurisdiction where the character of the property owned or leased by them or the nature of their activities makes such qualification necessary.

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

ARTICLE 6

DEFINITIONS

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

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

“Agreement” shall mean this Agreement.

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

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

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

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

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

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“Company” shall mean Masterpiece Investments Corp., an Oregon corporation. “Company Common Stock” shall have the meaning assigned to it in the recitals.

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

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

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

“Dissenting Stockholder” shall have the meaning assigned to it in Section 1.7 hereof. “Effective Time” shall have the meaning assigned to it in Section 1.3 hereof.

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

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

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

“Exchange Agent” shall have the meaning assigned to it in Section 1.9(a) hereof. “Exchange Ratio” shall have the meaning assigned to it in Section 1.6 hereof.

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

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

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

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

     "knowledge" and "know" means, when referring to any person or entity, the actual knowledge of the Chief Executive Officer, President or Chief Financial Officer or the person or entity of the particular matter or fact with respect to which it is used, “Indebtedness” shall mean any obligation of the Company which under generally accepted accounting principles is required to be shown on the balance sheet of the Company as a liability, excluding however, accounts payable, accrued expenses and other short term liabilities.

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

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

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

     “Masterpiece Nevada” shall mean Masterpiece Investments Corp., a Nevada corporation which is the surviving entity and new name of the Merger Sub following the Merger of the Company into the Merger Sub.

“Material Adverse Effect” shall have the meaning assigned to it in Section 2.2 hereof. “Merger” shall mean the merger of the Company with and into the Merger Sub.

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

“NRS” shall mean the Nevada Revised Statutes. “ORS” shall mean the Oregon Revised Statutes.

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

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

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

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

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

“Parent Incentive Plan” shall have the meaning assigned to it in Section 3.27 hereof. “Parent SEC Documents” shall have the meaning assigned to it in Section 3.10 hereof.

     “Permitted Liens” shall mean (a) Liens for taxes and assessments or governmental charges or levies not at the time due or in respect of which the validity thereof shall currently be contested in good faith by appropriate proceedings; (b) Liens in respect of pledges or deposits under workmen’s compensation laws or similar legislation, carriers’, warehousemen’s, mechanics’, laborers’, 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.

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

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

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

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

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

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

ARTICLE 7

MISCELLANEOUS

7.1 Notices.

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

		
	If to Parent:

	Clear System Recycling, Inc. 73 Raymar Place Oakville, Ontario Canada

Attention: Mr. Arthur John Carter, President

	
 
	With a copy to:

If to Merger Sub:

	Clear System Merger Sub, Inc. 73 Raymar Place Oakville, Ontario Canada

Attention: Mr. Arthur John Carter, President

	
 
	With a copy to:

	Pearlman Schneider LLP 2200 Corporate Boulevard West Suite 210 Boca Raton, FL 33431 Attention: Brian A. Pearlman, Esq.

	
 
	If to the Company:

	Masterpiece Investments Corp. 27929 SW 95th Avenue, Suite 601 Wilsonville, OR 97070 Attention: Mr. Mark Ghiglieri, President

	
 
	With a copy to:

	Synergy Law Group

730 West Randolph Street, Suite 600 Chicago, Illinois 60661 Attention: Kristen A. Baracy

 

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

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     7.2 Entire Agreement. This Agreement, including the schedules and exhibits attached hereto and other documents referred to herein, contains the entire understanding of the parties hereto with respect to the subject matter hereof. This Agreement supersedes all prior agreements and undertakings between the parties with respect to such subject matter.

     7.3 Expenses. Each party shall bear and pay all of the legal, accounting and other expenses incurred by it in connection with the transactions contemplated by this Agreement.

     7.4 Time. Time is of the essence in the performance of the parties’ respective obligations herein contained.

     7.5 Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

     7.6 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors, assigns and heirs; provided, however, that no Stockholder shall directly or indirectly transfer or assign any of his or her rights hereunder in whole or in part without the written consent of the Parent and the Company, which shall not be unreasonably withheld, and any such transfer or assignment without said consent shall be void.

     7.7 No Third Parties Benefited. This Agreement is made and entered into for the sole protection and benefit of the parties hereto (including all Stockholders who acquire shares of Parent Common Stock), their successors, assigns and heirs, and no other Person shall have any right or action under this Agreement.

     7.8 Counterparts. This Agreement may be executed in one or more counterparts and by transmission of a digital or facsimile signature, each of which shall be deemed and accepted as an original, and all of which together shall constitute a single agreement.

     7.9 Recitals, Schedules and Exhibits. The Recitals, Schedules and Exhibits to this Agreement are incorporated herein and, by this reference, made a part hereof as if fully set forth herein.

     7.10 Section Headings and Gender. The Section headings used herein are inserted for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement. All personal pronouns used in this Agreement shall include the other genders, whether used in the masculine, feminine or neuter gender, and the singular shall include the plural, and vice versa, whenever and as often as may be appropriate.

     7.11 Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of Nevada. This Agreement and the transactions contemplated hereby shall be subject to the exclusive jurisdiction of the courts of the State of Nevada. The parties to this Agreement agree that any breach of any term or condition of this Agreement or the transactions contemplated hereby shall be deemed to be a breach occurring

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in the State of Nevada by virtue of a failure to perform an act required to be performed in the State of Nevada. The parties to this Agreement irrevocably and expressly agree to submit to the jurisdiction of the courts of the State of Nevada for the purpose of resolving any disputes among the parties relating to this Agreement or the transactions contemplated hereby. The parties irrevocably waive, to the fullest extent permitted by law, any objection which they may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement and the transactions contemplated hereby, or any judgment entered by any court in prospect hereof brought in the State of Nevada and further irrevocably waive any claim that any suit, action or proceeding brought in the State of Nevada has been brought in an inconvenient forum. With respect to any action before the above courts, the parties hereto agree to service of process by certified or registered United States mail, postage prepaid, addressed to the party in question.

     7.12 Amendment of Agreement. This Agreement may be amended or modified at any time in all respects by an instrument in writing executed by Parent and the Company, provided that any amendment that materially and adversely affects the rights or changes the obligation of any Stockholder (as opposed to the Company) shall require the consent of any such Stockholder.

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

(Signature Page Follows)

35ex41.htm

AMERCO,

Issuer

to

U.S. BANK NATIONAL ASSOCIATION,

Trustee

_____________________

 

TWENTIETH SUPPLEMENTAL

INDENTURE

Dated as of

September 4, 2012

TO

U-HAUL INVESTORS CLUB INDENTURE

Dated as of

February 14, 2011

 

_____________________

FIXED RATE SECURED NOTES SERIES UIC-01B, 02B, 04B and 12B

  

  

  

THIS TWENTIETH SUPPLEMENTAL INDENTURE, dated as of September 4, 2012 (the “Supplemental Indenture”), is entered into between AMERCO, a corporation duly organized and existing under the laws of the State of Nevada (hereinafter called the “Company”), having its principal executive office located at 1325 Airmotive Way, Suite 100, Reno, Nevada 89502, and U.S. Bank National Association, a national banking association (hereinafter called the “Trustee”).

 

 

RECITALS

 

The Company and the Trustee entered into the U-Haul Investors Club Indenture, dated as of February 14, 2011 (the “Base Indenture”, and together with the Supplemental Indenture, the “Indenture”), to provide for the issuance by the Company from time to time of its debentures, notes or other evidences of indebtedness (hereinafter called the “Securities”), unlimited as to principal amount, to bear such rates of interest, to mature at such time or times, to be issued in one or more series.

 

The Company has duly authorized, and desires to cause to be established, a series of its notes to be known as its “Fixed Rate Secured Notes Series UIC-01B, 02B, 04B and 12B” (the “Notes”), the form and substance of and the terms, provisions and conditions thereof to be set forth as provided in the Base Indenture and this Supplemental Indenture.

The Executive Finance Committee of the Board of Directors of the Company has duly authorized the issuance of the Notes and the other amendments to the Indenture provided for in this Supplemental Indenture, and has authorized the proper officers of the Company to execute any and all appropriate documents necessary or appropriate to effect each such issuance.

 

This Supplemental Indenture is being entered into pursuant to the provisions of Sections 301 and 901 of the Base Indenture.  All terms used in this Supplemental Indenture that are not otherwise defined herein will have the meanings assigned to such terms in the Base Indenture.

 

The Company has requested that the Trustee execute and deliver this Supplemental Indenture, and do all things necessary to make this Supplemental Indenture a valid agreement of the Company, in accordance with its terms.

 

 

NOW THEREFORE, in consideration of the premises and the purchase and acceptance of the Notes by the Holders thereof, and for the purpose of setting forth, as provided in the Indenture, the forms and terms of the Notes, the Company covenants and agrees, with the Trustee, as follows:

 

ARTICLE ONE

 

 

GENERAL TERMS AND CONDITIONS OF THE NOTES

 

Section 1.01 Designation.

 

 

The Notes, designated as the “Fixed Rate Secured Notes Series UIC-01B, 02B, 04B and 12B”, are hereby authorized and established as a series of Securities under the Indenture.

 

  

  

  

 

Section 1.02 Form and Denomination of Notes.

 

The Notes will be issued as Book-entry Securities.  Therefore, the Notes will not be certificated, and will be registered in the name of the Holders in book-entry form only with the Securities Registrar.  For the avoidance of doubt, the Notes will be issued without coupons, and all references to “Global Securities”, “Bearer Securities” and “Coupons” do not apply to the Notes and will be disregarded.

 

The Notes will be issued in denominations of $100 and integral multiples of $100 in excess thereof.

 

The Notes will be issued over a period of time and from time to time, in up to four separate sub-series, each with potential sub-series thereunder, with each such four sub-series bearing a unique interest rate and term as provided herein.  Prospective investors shall have the opportunity to select the sub-series of the Notes for which such prospective investor is subscribing. As sub-series of the Notes are issued, the Company shall so notify the Trustee.  Such notification shall set forth the following, with respect to each such sub-series so issued:  the issue date; the dollar-amount funded; the sub-series number; identification of the Collateral; the maturity date; and the aggregate principal amount of the Notes previously issued.

 

Section 1.03 Principal, Maturity and Interest; Payment Amortization Schedule.

 

With respect to each series of the Notes, the term and interest rate are as follows:

	
-  

	
Series UIC-01B, 3.75%, 3-year term

	
-  

	
Series UIC-02B, 3.0%, 2-year term

	
-  

	
Series UIC-04B, 3.0%, 2-year term

        Series UIC-12B, 8.0%, 30-year term

 

The Notes shall have such other terms as are stated herein, in the form of definitive Notes or in the Indenture.

As notes are offered, prospective investors shall have the opportunity to select the series and sub-series of notes for which such prospective investor is subscribing.   The Notes are fully amortizing.  Payments of principal and interest on the Notes will be credited to each Holder’s U-Haul Investors Club account, in arrears every three months, throughout the term (each such date, a “Credit Date”).  With respect to notes issued under Series UIC-1B and UIC-2B, principal and interest payments shall be credited to each holder thereof commencing three months from the issue date of the applicable subseries.  With respect to notes issued under Series UIC-4B and UIC-12B, principal and interest payments shall be credited to each holder thereof commencing three months from the issue date of the first subseries of notes issued to any investor under such applicable series, and shall be based on the actual number of days the holder is invested in such notes during such quarter. Principal and interest will be credited to the U-Haul Investors Club accounts of the holders who own the notes as of each applicable record date. Interest on the Notes is calculated based upon the outstanding balance of principal of the Notes at the time interest is due.  The following schedules illustrate investments of $100 in each of the four series of the notes.

  

  

  

	
UIC-01B

	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Payment Number

	 	 	
U-Note Balance

	 	 	
Principal

	 	 	
Interest

	 	 	
Payout

	 
	 	1	 	 	$	100.00	 	 	$	11.25	 	 	$	0.94	 	 	$	12.19	 
	 	2	 	 	$	88.75	 	 	$	11.25	 	 	$	0.83	 	 	$	12.08	 
	 	3	 	 	$	77.50	 	 	$	11.25	 	 	$	0.73	 	 	$	11.98	 
	 	4	 	 	$	66.25	 	 	$	11.25	 	 	$	0.62	 	 	$	11.87	 
	 	5	 	 	$	55.00	 	 	$	8.25	 	 	$	0.52	 	 	$	8.77	 
	 	6	 	 	$	46.75	 	 	$	8.25	 	 	$	0.44	 	 	$	8.69	 
	 	7	 	 	$	38.50	 	 	$	8.25	 	 	$	0.36	 	 	$	8.61	 
	 	8	 	 	$	30.25	 	 	$	8.25	 	 	$	0.28	 	 	$	8.53	 
	 	9	 	 	$	22.00	 	 	$	5.50	 	 	$	0.21	 	 	$	5.71	 
	 	10	 	 	$	16.50	 	 	$	5.50	 	 	$	0.15	 	 	$	5.65	 
	 	11	 	 	$	11.00	 	 	$	5.50	 	 	$	0.10	 	 	$	5.60	 
	 	12	 	 	$	5.50	 	 	$	5.50	 	 	$	0.05	 	 	$	5.55	 
	
Total

	 	 	 	 	 	 	$	100.00	 	 	$	5.23	 	 	$	105.23	 

 

	
UIC-02B

	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Payment Number

	 	 	
U-Note Balance

	 	 	
Principal

	 	 	
Interest

	 	 	
Payout

	 
	 	1	 	 	$	100.00	 	 	$	19.00	 	 	$	0.75	 	 	$	19.75	 
	 	2	 	 	$	81.00	 	 	$	19.00	 	 	$	0.61	 	 	$	19.61	 
	 	3	 	 	$	62.00	 	 	$	19.00	 	 	$	0.47	 	 	$	19.47	 
	 	4	 	 	$	43.00	 	 	$	19.00	 	 	$	0.32	 	 	$	19.32	 
	 	5	 	 	$	24.00	 	 	$	6.00	 	 	$	0.18	 	 	$	6.18	 
	 	6	 	 	$	18.00	 	 	$	6.00	 	 	$	0.14	 	 	$	6.14	 
	 	7	 	 	$	12.00	 	 	$	6.00	 	 	$	0.09	 	 	$	6.09	 
	 	8	 	 	$	6.00	 	 	$	6.00	 	 	$	0.05	 	 	$	6.05	 
	
Total

	 	 	 	 	 	 	$	100.00	 	 	$	2.61	 	 	$	102.61	 

 

	
UIC-04B

	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Payment Number

	 	 	
U-Note Balance

	 	 	
Principal

	 	 	
Interest

	 	 	
Payout

	 
	 	1	 	 	$	100.00	 	 	$	12.18	 	 	$	0.75	 	 	$	12.93	 
	 	2	 	 	$	87.82	 	 	$	12.26	 	 	$	0.66	 	 	$	12.92	 
	 	3	 	 	$	75.56	 	 	$	12.36	 	 	$	0.57	 	 	$	12.93	 
	 	4	 	 	$	63.20	 	 	$	12.46	 	 	$	0.47	 	 	$	12.93	 
	 	5	 	 	$	50.74	 	 	$	12.54	 	 	$	0.38	 	 	$	12.92	 
	 	6	 	 	$	38.20	 	 	$	12.63	 	 	$	0.29	 	 	$	12.92	 
	 	7	 	 	$	25.57	 	 	$	12.74	 	 	$	0.19	 	 	$	12.93	 
	 	8	 	 	$	12.83	 	 	$	12.83	 	 	$	0.10	 	 	$	12.93	 
	
Total

	 	 	 	 	 	 	$	100.00	 	 	$	3.41	 	 	$	103.41	 

 

  

  

  

 

	
UIC-12B

	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Payment Number

	 	 	
U-Note Balance

	 	 	
Principal

	 	 	
Interest

	 	 	
Payout

	 
	 	1	 	 	$	100.00	 	 	$	0.20	 	 	$	2.00	 	 	$	2.20	 
	 	2	 	 	$	99.80	 	 	$	0.20	 	 	$	2.00	 	 	$	2.20	 
	 	3	 	 	$	99.60	 	 	$	0.22	 	 	$	1.99	 	 	$	2.21	 
	 	4	 	 	$	99.38	 	 	$	0.21	 	 	$	1.99	 	 	$	2.20	 
	 	5	 	 	$	99.17	 	 	$	0.23	 	 	$	1.98	 	 	$	2.21	 
	 	6	 	 	$	98.94	 	 	$	0.22	 	 	$	1.98	 	 	$	2.20	 
	 	7	 	 	$	98.72	 	 	$	0.24	 	 	$	1.97	 	 	$	2.21	 
	 	8	 	 	$	98.48	 	 	$	0.23	 	 	$	1.97	 	 	$	2.20	 
	 	9	 	 	$	98.25	 	 	$	0.23	 	 	$	1.97	 	 	$	2.20	 
	 	10	 	 	$	98.02	 	 	$	0.25	 	 	$	1.96	 	 	$	2.21	 
	 	11	 	 	$	97.77	 	 	$	0.25	 	 	$	1.96	 	 	$	2.21	 
	 	12	 	 	$	97.52	 	 	$	0.26	 	 	$	1.95	 	 	$	2.21	 
	 	13	 	 	$	97.26	 	 	$	0.25	 	 	$	1.95	 	 	$	2.20	 
	 	14	 	 	$	97.01	 	 	$	0.27	 	 	$	1.94	 	 	$	2.21	 
	 	15	 	 	$	96.74	 	 	$	0.28	 	 	$	1.93	 	 	$	2.21	 
	 	16	 	 	$	96.46	 	 	$	0.27	 	 	$	1.93	 	 	$	2.20	 
	 	17	 	 	$	96.19	 	 	$	0.28	 	 	$	1.92	 	 	$	2.20	 
	 	18	 	 	$	95.91	 	 	$	0.29	 	 	$	1.92	 	 	$	2.21	 
	 	19	 	 	$	95.62	 	 	$	0.29	 	 	$	1.91	 	 	$	2.20	 
	 	20	 	 	$	95.33	 	 	$	0.29	 	 	$	1.91	 	 	$	2.20	 
	 	21	 	 	$	95.04	 	 	$	0.31	 	 	$	1.90	 	 	$	2.21	 
	 	22	 	 	$	94.73	 	 	$	0.32	 	 	$	1.89	 	 	$	2.21	 
	 	23	 	 	$	94.41	 	 	$	0.31	 	 	$	1.89	 	 	$	2.20	 
	 	24	 	 	$	94.10	 	 	$	0.32	 	 	$	1.88	 	 	$	2.20	 
	 	25	 	 	$	93.78	 	 	$	0.33	 	 	$	1.88	 	 	$	2.21	 
	 	26	 	 	$	93.45	 	 	$	0.34	 	 	$	1.87	 	 	$	2.21	 
	 	27	 	 	$	93.11	 	 	$	0.34	 	 	$	1.86	 	 	$	2.20	 
	 	28	 	 	$	92.77	 	 	$	0.35	 	 	$	1.86	 	 	$	2.21	 
	 	29	 	 	$	92.42	 	 	$	0.36	 	 	$	1.85	 	 	$	2.21	 
	 	30	 	 	$	92.06	 	 	$	0.36	 	 	$	1.84	 	 	$	2.20	 
	 	31	 	 	$	91.70	 	 	$	0.38	 	 	$	1.83	 	 	$	2.21	 
	 	32	 	 	$	91.32	 	 	$	0.37	 	 	$	1.83	 	 	$	2.20	 
	 	33	 	 	$	90.95	 	 	$	0.39	 	 	$	1.82	 	 	$	2.21	 
	 	34	 	 	$	90.56	 	 	$	0.39	 	 	$	1.81	 	 	$	2.20	 
	 	35	 	 	$	90.17	 	 	$	0.41	 	 	$	1.80	 	 	$	2.21	 
	 	36	 	 	$	89.76	 	 	$	0.40	 	 	$	1.80	 	 	$	2.20	 
	 	37	 	 	$	89.36	 	 	$	0.42	 	 	$	1.79	 	 	$	2.21	 
	 	38	 	 	$	88.94	 	 	$	0.42	 	 	$	1.78	 	 	$	2.20	 
	 	39	 	 	$	88.52	 	 	$	0.44	 	 	$	1.77	 	 	$	2.21	 
	 	40	 	 	$	88.08	 	 	$	0.44	 	 	$	1.76	 	 	$	2.20	 
	 	41	 	 	$	87.64	 	 	$	0.46	 	 	$	1.75	 	 	$	2.21	 
	 	42	 	 	$	87.18	 	 	$	0.46	 	 	$	1.74	 	 	$	2.20	 
	 	43	 	 	$	86.72	 	 	$	0.47	 	 	$	1.73	 	 	$	2.20	 
	 	44	 	 	$	86.25	 	 	$	0.47	 	 	$	1.73	 	 	$	2.20	 
	 	45	 	 	$	85.78	 	 	$	0.49	 	 	$	1.72	 	 	$	2.21	 
	 	46	 	 	$	85.29	 	 	$	0.50	 	 	$	1.71	 	 	$	2.21	 
	 	47	 	 	$	84.79	 	 	$	0.51	 	 	$	1.70	 	 	$	2.21	 
	 	48	 	 	$	84.28	 	 	$	0.52	 	 	$	1.69	 	 	$	2.21	 
	 	49	 	 	$	83.76	 	 	$	0.53	 	 	$	1.68	 	 	$	2.21	 
	 	50	 	 	$	83.23	 	 	$	0.55	 	 	$	1.66	 	 	$	2.21	 
	 	51	 	 	$	82.68	 	 	$	0.55	 	 	$	1.65	 	 	$	2.20	 
	 	52	 	 	$	82.13	 	 	$	0.56	 	 	$	1.64	 	 	$	2.20	 

  

  

  

	 	53	 	 	$	81.57	 	 	$	0.57	 	 	$	1.63	 	 	$	2.20	 
	 	54	 	 	$	81.00	 	 	$	0.59	 	 	$	1.62	 	 	$	2.21	 
	 	55	 	 	$	80.41	 	 	$	0.59	 	 	$	1.61	 	 	$	2.20	 
	 	56	 	 	$	79.82	 	 	$	0.61	 	 	$	1.60	 	 	$	2.21	 
	 	57	 	 	$	79.21	 	 	$	0.63	 	 	$	1.58	 	 	$	2.21	 
	 	58	 	 	$	78.58	 	 	$	0.63	 	 	$	1.57	 	 	$	2.20	 
	 	59	 	 	$	77.95	 	 	$	0.64	 	 	$	1.56	 	 	$	2.20	 
	 	60	 	 	$	77.31	 	 	$	0.66	 	 	$	1.55	 	 	$	2.21	 
	 	61	 	 	$	76.65	 	 	$	0.68	 	 	$	1.53	 	 	$	2.21	 
	 	62	 	 	$	75.97	 	 	$	0.68	 	 	$	1.52	 	 	$	2.20	 
	 	63	 	 	$	75.29	 	 	$	0.69	 	 	$	1.51	 	 	$	2.20	 
	 	64	 	 	$	74.60	 	 	$	0.72	 	 	$	1.49	 	 	$	2.21	 
	 	65	 	 	$	73.88	 	 	$	0.73	 	 	$	1.48	 	 	$	2.21	 
	 	66	 	 	$	73.15	 	 	$	0.74	 	 	$	1.46	 	 	$	2.20	 
	 	67	 	 	$	72.41	 	 	$	0.76	 	 	$	1.45	 	 	$	2.21	 
	 	68	 	 	$	71.65	 	 	$	0.77	 	 	$	1.43	 	 	$	2.20	 
	 	69	 	 	$	70.88	 	 	$	0.79	 	 	$	1.42	 	 	$	2.21	 
	 	70	 	 	$	70.09	 	 	$	0.80	 	 	$	1.40	 	 	$	2.20	 
	 	71	 	 	$	69.29	 	 	$	0.82	 	 	$	1.39	 	 	$	2.21	 
	 	72	 	 	$	68.47	 	 	$	0.84	 	 	$	1.37	 	 	$	2.21	 
	 	73	 	 	$	67.63	 	 	$	0.85	 	 	$	1.35	 	 	$	2.20	 
	 	74	 	 	$	66.78	 	 	$	0.86	 	 	$	1.34	 	 	$	2.20	 
	 	75	 	 	$	65.92	 	 	$	0.89	 	 	$	1.32	 	 	$	2.21	 
	 	76	 	 	$	65.03	 	 	$	0.91	 	 	$	1.30	 	 	$	2.21	 
	 	77	 	 	$	64.12	 	 	$	0.92	 	 	$	1.28	 	 	$	2.20	 
	 	78	 	 	$	63.20	 	 	$	0.95	 	 	$	1.26	 	 	$	2.21	 
	 	79	 	 	$	62.25	 	 	$	0.95	 	 	$	1.25	 	 	$	2.20	 
	 	80	 	 	$	61.30	 	 	$	0.98	 	 	$	1.23	 	 	$	2.21	 
	 	81	 	 	$	60.32	 	 	$	1.00	 	 	$	1.21	 	 	$	2.21	 
	 	82	 	 	$	59.32	 	 	$	1.01	 	 	$	1.19	 	 	$	2.20	 
	 	83	 	 	$	58.31	 	 	$	1.04	 	 	$	1.17	 	 	$	2.21	 
	 	84	 	 	$	57.27	 	 	$	1.06	 	 	$	1.15	 	 	$	2.21	 
	 	85	 	 	$	56.21	 	 	$	1.09	 	 	$	1.12	 	 	$	2.21	 
	 	86	 	 	$	55.12	 	 	$	1.10	 	 	$	1.10	 	 	$	2.20	 
	 	87	 	 	$	54.02	 	 	$	1.13	 	 	$	1.08	 	 	$	2.21	 
	 	88	 	 	$	52.89	 	 	$	1.14	 	 	$	1.06	 	 	$	2.20	 
	 	89	 	 	$	51.75	 	 	$	1.17	 	 	$	1.04	 	 	$	2.21	 
	 	90	 	 	$	50.58	 	 	$	1.20	 	 	$	1.01	 	 	$	2.21	 
	 	91	 	 	$	49.38	 	 	$	1.21	 	 	$	0.99	 	 	$	2.20	 
	 	92	 	 	$	48.17	 	 	$	1.25	 	 	$	0.96	 	 	$	2.21	 
	 	93	 	 	$	46.92	 	 	$	1.26	 	 	$	0.94	 	 	$	2.20	 
	 	94	 	 	$	45.66	 	 	$	1.30	 	 	$	0.91	 	 	$	2.21	 
	 	95	 	 	$	44.36	 	 	$	1.31	 	 	$	0.89	 	 	$	2.20	 
	 	96	 	 	$	43.05	 	 	$	1.35	 	 	$	0.86	 	 	$	2.21	 
	 	97	 	 	$	41.70	 	 	$	1.37	 	 	$	0.83	 	 	$	2.20	 
	 	98	 	 	$	40.33	 	 	$	1.39	 	 	$	0.81	 	 	$	2.20	 
	 	99	 	 	$	38.94	 	 	$	1.43	 	 	$	0.78	 	 	$	2.21	 
	 	100	 	 	$	37.51	 	 	$	1.46	 	 	$	0.75	 	 	$	2.21	 
	 	101	 	 	$	36.05	 	 	$	1.48	 	 	$	0.72	 	 	$	2.20	 
	 	102	 	 	$	34.57	 	 	$	1.51	 	 	$	0.69	 	 	$	2.20	 
	 	103	 	 	$	33.06	 	 	$	1.55	 	 	$	0.66	 	 	$	2.21	 
	 	104	 	 	$	31.51	 	 	$	1.57	 	 	$	0.63	 	 	$	2.20	 
	 	105	 	 	$	29.94	 	 	$	1.61	 	 	$	0.60	 	 	$	2.21	 
	 	106	 	 	$	28.33	 	 	$	1.63	 	 	$	0.57	 	 	$	2.20	 
	 	107	 	 	$	26.70	 	 	$	1.68	 	 	$	0.53	 	 	$	2.21	 
	 	108	 	 	$	25.02	 	 	$	1.70	 	 	$	0.50	 	 	$	2.20	 

  

  

  

	 	109	 	 	$	23.32	 	 	$	1.74	 	 	$	0.47	 	 	$	2.21	 
	 	110	 	 	$	21.58	 	 	$	1.78	 	 	$	0.43	 	 	$	2.21	 
	 	111	 	 	$	19.80	 	 	$	1.80	 	 	$	0.40	 	 	$	2.20	 
	 	112	 	 	$	18.00	 	 	$	1.85	 	 	$	0.36	 	 	$	2.21	 
	 	113	 	 	$	16.15	 	 	$	1.88	 	 	$	0.32	 	 	$	2.20	 
	 	114	 	 	$	14.27	 	 	$	1.91	 	 	$	0.29	 	 	$	2.20	 
	 	115	 	 	$	12.36	 	 	$	1.96	 	 	$	0.25	 	 	$	2.21	 
	 	116	 	 	$	10.40	 	 	$	2.00	 	 	$	0.21	 	 	$	2.21	 
	 	117	 	 	$	8.40	 	 	$	2.04	 	 	$	0.17	 	 	$	2.21	 
	 	118	 	 	$	6.36	 	 	$	2.08	 	 	$	0.13	 	 	$	2.21	 
	 	119	 	 	$	4.28	 	 	$	2.11	 	 	$	0.09	 	 	$	2.20	 
	 	120	 	 	$	2.17	 	 	$	2.17	 	 	$	0.04	 	 	$	2.21	 
	
Total

	 	 	 	 	 	 	$	100.00	 	 	$	164.65	 	 	$	264.65	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

The Regular Record Date for installments of principal and interest payments on the Notes is the first day of the month preceding the related Credit Date; provided, however, that if a Credit Date falls on a day that is not a Business Day, the required installment payment of principal and interest will be made on the next Business Day as if made on the applicable Credit Date, and no interest will accrue on that payment for the period from and after the applicable Credit Date to the next Business Day.

 

Section 1.04 Limit on Amount of Series.

 

The Notes will be limited to $5,806,800 in aggregate principal amount.  Notes issued under Series UIC-01B shall be limited in aggregate principal amount to $1,680,000.  Notes issued under Series UIC-02B shall be limited in aggregate principal amount to $802,800.    Notes issued under Series UIC-04B shall be limited in aggregate principal amount to $400,000; and   Notes issued under Series UIC-12B shall be limited in aggregate principal amount to $2,000,000.

 

Section 1.05 Ranking.

 

The Notes are the obligations of the Company only.  The Notes are not guaranteed by any of the Company’s Subsidiaries or Affiliates, and will be structurally subordinated to all of the existing and future liabilities of the Company’s Subsidiaries.  The Notes are secured in the Collateral (as defined in Section 1.06 below) and will rank equally among themselves.

 

Section 1.06 Security Agreement; Events of Default.

 

The Company, the Trustee, U-Haul Leasing & Sales Co., a Nevada corporation (with respect to the Appliance dollies, Utility Dollies and Furniture Pads, as hereinafter defined); and Amerco Real Estate Company, a Nevada corporation (with respect to the Warrington Property, as hereinafter defined), both of such entities being indirect subsidiaries of the Company, will enter into a Pledge and Security Agreement, substantially in the form attached hereto as Exhibit A (the “Pledge and Security Agreement”), concurrently with the execution of this Supplemental Indenture.  The Trustee is hereby directed to execute the Pledge and Security Agreement and to perform its duties as specified therein.

  

  

  

In all cases subject to collateral substitutions as provided herein, the notes issued under Series UIC-01B are secured by a first-priority lien on a pool of U-Haul appliance dollies (the “Appliance Dollies”); the notes issued under Series UIC-02B are secured by a first priority lien on a pool of U-Haul utility dollies (the “Utility Dollies”); the notes issued under Series UIC-04B are secured by a first priority lien on a pool of U-Haul furniture pads (the “Furniture Pads”); and the notes issued under Series UIC-12B are secured by a first priority mortgage  lien on U-Haul operated real property and improvements thereon known as Warrington Equipment Manufacturing Co., located in Warrington Township, Bucks County, Pennsylvania (the “Warrington Property”, and together with the Appliance Dollies, the Utility Dollies and the Furniture Pads, the “Initial Collateral”)

For each $100 invested with us in the notes under Series UIC-01B, we will pledge to the trustee, for the benefit of the noteholders, one Appliance Dolly.  For each $45 invested with us in the notes under Series UIC-02B, we will pledge to the trustee, for the benefit of the noteholders, one Utility Dolly.   For each $3.31 invested with us in the notes under Series UIC-04B, we will pledge to the trustee, for the benefit of the noteholders, one Furniture Pad.  Once $100 has been invested with us in the notes under Series UIC-12B, we will pledge and mortgage to the trustee, for the benefit of the noteholders, the Warrington Property.

 

As new sub-series of the Notes are issued, or as additional Notes are issued under a given sub-series of the Notes, new schedules to the Pledge and Security Agreement will be added thereto and provided to the Trustee, to identify the specific Collateral being pledged under such sub-series of the Notes.  Pursuant to the Pledge and Security Agreement, the Collateral is being pledged by Pledgor to the Trustee, for the benefit of the Holders of the Notes.  Subject to certain conditions set forth therein, the Company has the right, in its sole discretion, to make Collateral substitutions.  The Pledge and Security Agreement describes, without limitation, the Company’s right to make Collateral substitutions and the release of the Trustee’s security interest in the Collateral.

 

With respect to the Notes, “Event of Default”, in addition to the meaning given in Section 501 of the Base Indenture, shall include (i) the Company’s or Pledgor’s default in the performance, or breach of any covenant or representation and warranty in the Pledge and Security Agreement, and continuance of such default or breach (without such default or breach having been waived in accordance of the provisions of this Indenture) for a period of 90 days after there has been given, by registered or certified mail, to the Company and the Pledgor by the Trustee if it has notice or actual knowledge of such event of default or to the Company, the Pledgor and the Trustee by the Holders of at least 51% in principal amount of the Outstanding Notes a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a “Notice of Default” under the Indenture, (ii) the repudiation or disaffirmation by the Company or the Pledgor of its material obligations under the Pledge and Security Agreement, and (iii) the determination in a judicial proceeding that the Pledge and Security Agreement is unenforceable or invalid against the Pledgor for any reason with respect to a material portion of the Collateral.

 

  

  

  

 

Section 1.07 Maturity Date.

 

The Notes will mature the specified number of years as indicated in Section 1.03 herein following such Note’s respective issue date.  The schedules to the Pledge and Security Agreement shall set forth the different respective maturity dates of the Notes.

 

Section 1.08 Further Issues.

 

Without the consent of Holders of not less than 51% of the principal amount of the outstanding Notes, the Company will not issue additional Notes secured by the Collateral.  However, the Company has the right, from time to time, without the consent of the Holders of the Notes, but in compliance with the terms of the Indenture, issue other Securities.

 

Section 1.09 Optional Redemption; Sinking Fund.

 

The Notes, including any sub-series thereof and any portion of any sub-series thereof, may be redeemed by the Company in its sole discretion at any time, in whole or in part, without any penalty, premium or fee, at a price equal to 100% of the principal amount then outstanding, plus accrued and unpaid interest, if any, through the date of redemption.  A partial redemption may be on a pro rata basis or on such other basis as is determined by the company in its sole discretion.  The Company will not be obligated to redeem fractions of Notes.   In the event of a redemption, the Company will cause notices of redemption to be emailed to the email address associated with each respective Holder’s U-Haul Investors Club account in accordance with the terms and conditions set forth in the Base Indenture.

 

The Notes are not subject to any sinking fund, and the Company is not obligated to repay any principal and interest due on the Notes before such payments become due.  For the avoidance of doubt, Articles XII and XIII contained in the Indenture will not be applicable to the Notes.

 

Section 1.10 Payment.

 

Principal and interest payments on the Notes, including without limitation the payment due on each date of Stated Maturity with respect to the Notes, will be credited to each Holder’s U-Haul Investors Club account, in U.S. dollars.  For the avoidance of doubt, Article XIV of the Indenture will not be applicable to the Notes.

 

Principal and interest payments on the Notes will be deposited by or on behalf of the Company into one or more segregated accounts maintained by Servicer (as defined in Section 1.16 below) (collectively, the “Investment Account”) with a third party financial institution.  Servicer, on behalf of the Company, will maintain sub-accounts under the Investment Account for each Holder, which are referred to as “U-Haul Investors Club accounts”.  The U-Haul Investors Club accounts are record-keeping sub-accounts under the Investment Account that are purely administrative and reflect balances and transactions concerning the funds of each Holder with respect to the Notes.  Funds in the Investment Account will always be maintained at an FDIC member financial institution.

  

  

  

Cash funds may remain in a Holder’s U-Haul Investors Club account indefinitely and will not earn interest.  Upon request by a Holder, made through the U-Haul Investors Club website and such Holder’s U-Haul Investors Club account, but subject to specified hold periods as disclosed in the Terms of Use, the Company will transfer, or will cause Servicer to transfer, funds in such Holder’s U-Haul Investors Club account to such Holder’s linked U.S. outside bank account, by a transfer through the ACH System, provided such funds are not already committed to the purchase of other Securities, or to offset any fees payable by such Holder, pursuant to the U-Haul Investors Club.  

 

Section 1.11 Restrictions on Transfer.

 

The Notes are not transferable except between members of the U-Haul Investors Club through privately negotiated transactions, as to which neither the Company, the Servicer, the Trustee, nor any of their respective affiliates will have any involvement.  The Notes are not being listed on any securities exchange, and there is no anticipated public market for the Notes.

 

 

Upon a transfer of one or more Notes following a privately negotiated transaction with another member of the Company’s U-Haul Investors Club, the transferor the transferee and must notify the Company through the U-Haul Investors Club website.  Thereafter, the Company will recognize the transfer and re-register the applicable notes in the name of the transferee.

 

Section 1.12 Fees.

 

The Company will charge a transfer fee for a Note transfer permitted by Section 1.11 of this Supplemental Indenture equal to $25.00 per transaction, assessed to the transferor.  Such fee will be automatically deducted from the funds in such Holder’s U-Haul Investor Club account.

 

Section 1.13 Company and Trustee Notices.

 

Holders of the Notes agree to receive all documents, communications, notices, contracts, securities offering materials, account statements, agreements and tax documents, including IRS Form 1099s, arising from the U-Haul Investors Club, or required to be delivered by the Indenture or any Security Documents applicable to the Notes, and to submit all documents, statements, communications, records and notices due from the Holders to the Company, electronically through the U-Haul Investors Club website and the Holders’ U-Haul Investors Club accounts.  In addition, the Security Registrar agrees to deliver on behalf of the Trustee, and the Holders of the Notes agree to receive, electronically through the U-Haul Investors Club website and the Holders’ U-Haul Investors Club accounts, all reports of the Trustee required to be delivered to the Holders of the Notes pursuant to the Indenture (including, without limitation, Section 703 of the Base Indenture) or any Security Documents applicable to the Notes.

 

Section 1.14 Place of Payment.

 

Notwithstanding anything contained in the Indenture to the contrary, no Place of Payment for the Notes shall be maintained by the Company.  The Notes may only be presented or surrendered for payment, surrendered for registration of transfer or exchange, or surrendered in

 

  

  

  

connection with an optional redemption by the Company described in Section 1.09 of this Supplemental Indenture, electronically through the Company’s U-Haul Investors Club website.

 

Section 1.15 Security Registrar and Paying Agent.

 

The Security Registrar and Paying Agent shall be the Company’s Affiliate, U-Haul International, Inc., a Nevada corporation, or its designee (in such capacity, “Servicer”).

 

Section 1.16 Non-Applicable Provisions.

 

The Notes will not (i) be convertible into and/or exchangeable for Common Stock or other securities or property, (ii) be issuable upon the exercise of warrants, or (iii) be guaranteed by any Person on the date of issuance.  The Company will not pay Additional Amounts on such Securities.

 

ARTICLE TWO

 

 

ORIGINAL ISSUE OF NOTES

 

Section 2.01 Original Issue of Notes.

 

 

The Notes may, upon execution of this Supplemental Indenture, be issued by the Company in the form provided in Section 1.02.

 

ARTICLE THREE

 

MISCELLANEOUS

 

Section 3.01 Arbitration.

 

In the event that the Company, on the one hand, and one or more of the Holders, or the Trustee on behalf of one or more of the Holders, on the other hand, are unable to resolve any dispute, claim or controversy between them (“Dispute”) related to the Indenture, the Notes or the U-Haul Investors Club, as applicable, such parties agree to submit the Dispute to binding arbitration in accordance with the following terms:

 

(a)       Any party in its reasonable discretion may give written notice to the other applicable parties that the Dispute be submitted to arbitration for final resolution.  Within fifteen (15) calendar days after receipt of such notice, the receiving parties shall submit a written response.  If the Dispute remains following the exchange of the written notice and response, the parties involved in the Dispute shall mutually select one arbitrator within fifteen (15) calendar days of receipt of the response and shall submit the matter to that arbitrator to be settled in accordance with this Section 3.01(a).  If these parties cannot mutually agree on a single arbitrator during such fifteen (15) day period, these parties shall no later than the expiration of that fifteen (15) day period jointly submit the matter to the American Arbitration Association (“AAA”) for expedited arbitration proceedings to be conducted at the AAA offices, or at another mutually agreeable location, in Phoenix, Arizona pursuant to the Association Commercial Arbitration Rules then in effect (the “Rules”).  The AAA will follow the Rules to select a single arbitrator

 

  

  

  

within fifteen (15) calendar days from the date the matter is jointly submitted to the AAA.  The arbitrator (whether selected by the parties or by the AAA) shall hold a hearing within forty-five (45) calendar days following the date that the arbitrator is selected and shall provide a timeline for the parties to submit arguments and supporting materials with sufficient advance notice to enable the arbitrator to hold the hearing within that forty-five (45) day period.  The arbitrator shall issue a tentative ruling with findings of fact and law within fifteen (15) calendar days after the date of the hearing.  The arbitrator shall provide the parties an opportunity to comment on the tentative ruling within a timeframe established by the arbitrator, provided that the arbitrator shall render a final ruling within thirty (30) calendar days after the date of the hearing.  The arbitrator shall have the authority to grant any equitable and legal remedies that would be available in any judicial proceeding to resolve a disputed claim, including, without limitations, the authority to impose sanctions, including attorneys’ fees and costs, to the same extent as a competent court of law or equity.

 

(b) The Company, Trustee and each of the Holders agree that judgment upon any award rendered by the arbitrator may be entered in the courts of the State of Arizona or in the United States District Courts located in Arizona.  Such court may enforce the provisions of this Section 3.01(b), and the party seeking enforcement shall be entitled to an award of all costs and fees, including reasonable attorneys’ fees, to be paid by the party against whom enforcement is ordered.  The parties involved in a Dispute may terminate any arbitration proceeding by mutually resolving any Dispute prior to the issuance of a final arbitration ruling pursuant to this Section 3.01.

 

(c) For the avoidance of doubt, where a dispute arises related to the Indenture, the Notes, the U-Haul Investors Club or the Security Documents applicable to the Notes between (i) the Trustee and the Company (other than with respect to when the Trustee is acting on behalf of one or more of the Holders), (ii) the Trustee and one or more of the Holders, or (iii) the Trustee and any third party, then in no event will the arbitration provisions set forth in this Section 3.01 apply to such dispute.

 

Section 3.02 Ratification of Indenture.

 

The Indenture, as supplemented by this Supplemental Indenture, is in all respects ratified and confirmed, and this Supplemental Indenture will be deemed part of the Indenture in the manner and to the extent herein and therein provided; provided that the provisions of this Supplemental Indenture apply solely with respect to the Notes and not to any other Securities that may be issued pursuant to the U-Haul Investors Club.  To the extent there is a conflict between the Indenture and this Supplemental Indenture with respect to the Notes, the terms of this Supplemental Indenture will govern.

 

Section 3.03 Trustee Not Responsible for Recitals.

 

The recitals herein contained are made by the Company and not by the Trustee, and the Trustee assumes no responsibility for the correctness thereof.  The Trustee makes no representation as to the validity or sufficiency of this Supplemental Indenture, the Pledge and Security Agreement or the Collateral (as defined in the Pledge and Security Agreement).

  

  

  

 

Section 3.04 Governing Law.

 

This Supplemental Indenture and the Notes will be governed by and construed in accordance with the laws of the State of New York.

 

Section 3.05 Separability.

 

In case any one or more of the provisions contained in this Supplemental Indenture, the Notes will for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability will not affect any other provisions of this Supplemental Indenture or of the Notes, but this Supplemental Indenture and the Notes will be construed as if such invalid or illegal or unenforceable provision had never been contained herein or therein.

 

Section 3.06 Counterparts.

 

This Supplemental Indenture may be executed in any number of counterparts each of which will be an original; but such counterparts will together constitute but one and the same instrument.  This Supplemental Indenture will be effective when one or more counterparts has been signed by the parties hereto and delivered (including by electronic transmission) to the other parties.

  

  

  

 

[Signature page to Twentieth Supplemental Indenture; Series UIC-01B, 02B, 04B and 12B]

 

IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed, as of the day and year first above written.

 

AMERCO, as the Company

 

By:  _______________________________

 

Name:  Jason A. Berg

 

Title:  Principal Accounting Officer

 

U.S. BANK NATIONAL ASSOCIATION, as the Trustee

 

By:  _______________________________

 

Name:

 

Title:

  

  

  

 

EXHIBIT A

Series UIC-01B, 02B, 04B and 12B

 

PLEDGE AND SECURITY AGREEMENT

 

THIS PLEDGE AND SECURITY AGREEMENT (this “Agreement”) is entered into as of September 4, 2012, by and among AMERCO, a Nevada corporation (the “Company”), U-Haul Leasing & Sales Co., Amerco Real Estate Company, a Nevada corporation (collectively, “Pledgor”), and U.S. Bank National Association, a national banking association in its capacity as Trustee under the Indenture  (the “Trustee”).

 

RECITALS

 

A.           Pursuant to the terms of the U-Haul Investors Club Indenture, dated as of February 14, 2011, by and between the Company and the Trustee (the “Base Indenture”), and the Twentieth Supplemental Indenture relating to the Fixed Rate Secured Notes Series UIC-01B, 02B, 04B and 12B, dated as of the date hereof, by and between the Company and the Trustee (the “Supplemental Indenture”; the Base Indenture and the Supplemental Indenture collectively the “Indenture”), the Company is authorized to issue from time to time a series of its notes to be known as its “Fixed Rate Secured Notes Series UIC-01B, 02B, 04B and 12B” (collectively the “Notes”), such Notes to be issued in sub-series over a period of time and from time to time, as determined by the Company.  Capitalized terms not defined in this Agreement shall have the meanings given to them in the Indenture.

 

B.           Under the Indenture, a condition of issuance of the Notes is that the Company’s obligations under the Notes be secured by a first priority lien, equally and ratably, on specified assets owned by the applicable Pledgor (the “Collateral”).  The Collateral is described in Exhibit A hereto, as such Exhibit A shall be supplemented from time to time as provided herein.

 

C.           The applicable Pledgor is willing to grant the Trustee, for the benefit of the holders of the Notes (the “Holders”), such first priority lien on such Collateral or portion thereof, on the terms and conditions set forth herein.

 

NOW, THEREFORE, BE IT AGREED THAT:

 

1. Definitions and Terms.

 

(a) Definitions.  For purposes of this Agreement, the following terms shall have the following definitions:

 

“Appliance Dolly” means a pool of U-Haul appliance dollies, as identified by serial number.

 

“Collateral” means (i) that portion of the property of the applicable Pledgor described in Exhibit A, as amended or supplemented from time in accordance with the terms hereof, which relates to the particular sub-series of the Notes in question, and (ii) all Proceeds of such property.

 

“Company” shall include both of the named Company and any other Person at any time assuming or otherwise becoming primarily liable for all or any part of the

 

  

1

  

Obligations under the Financing Documents, including the trustee and the debtor-in-possession in any bankruptcy or similar proceeding involving the named Company.

 

“Financing Documents” means this Agreement, the Indenture, the Notes and all other documents entered into by the Company or the Pledgor with respect to the Obligations.

 

“Furniture Pad” means a pool of U-Haul furniture pads stamped “2012” .

 

“Insolvency Proceeding” means any proceeding commenced by or against any Person under any provision of the United States Bankruptcy Code, as amended, or under any other bankruptcy or insolvency law, including assignments for the benefit of creditors, formal or informal moratoria, compositions, extension generally with its creditors, or proceedings seeking reorganization, arrangement, or other relief.

 

“Lien” means any mortgage, deed of trust, deed to secure debt, pledge, hypothecation, assignment, deposit arrangement, security interest, lien, charge, easement, encumbrance, preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever on or with respect to such property or assets, conditional sale or other title retention agreement having substantially the same economic effect as any of the foregoing; provided that in no event shall an operating lease be deemed to constitute a Lien.

 

“Obligations” means (i) all principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the Notes and the Indenture and all other obligations, liabilities and indebtedness of every kind, nature and description owing by the Company under the Notes and the Indenture, in each case whether now or hereafter existing, direct or indirect, absolute or contingent, due or not due, primary or secondary, liquidated or unliquidated, renewed or restructured, whether or not from time to time decreased or extinguished and later increased, including all such obligations which would become due but for the operation of the (A) automatic stay under Section 362(a) of the Bankruptcy Code, (B) Section 502(b) of the Bankruptcy Code, or (C) Section 506(b) of the Bankruptcy Code, including interest accruing under the Notes and the Indenture after the commencement of an Insolvency Proceeding, whether or not allowed or allowable as a claim in such Insolvency  Proceeding, and (ii) all other obligations, liabilities and indebtedness of every kind, nature and description owing by the Pledgor hereunder, in each case whether now or hereafter existing, direct or indirect, absolute or contingent, due or not due, primary or secondary, liquidated or unliquidated, renewed or restructured, whether or not from time to time decreased or extinguished and later increased, including all such obligations which would become due but for the operation of the (A) automatic stay under Section 362(a) of the Bankruptcy Code, (B) Section 502(b) of the Bankruptcy Code, or (C) Section 506(b) of the Bankruptcy Code, including interest accruing hereunder after the commencement of an Insolvency Proceeding, whether or not allowed or allowable as a claim in such Insolvency  Proceeding.

 

“Permitted Liens” means:

 

(a) Liens for taxes, fees, assessments or other government charges or levies, either not delinquent or being contested in good faith and for which the Pledgor maintains adequate reserves in accordance with GAAP; and

 

  

2

  

(b) Materialmen’s, mechanic’s, repairmen’s or other like Liens arising in the ordinary course of business and which are not delinquent for more than 45 days or are being contested in good faith by appropriate proceedings.

 

“Proceeds” has the meaning specified in Section 9-102(a) of the UCC.

 

“Required Holders” means the Holders of not less than a majority in principal amount of the Notes.

 

“UCC” means the Uniform Commercial Code, as in effect from time to time, of the State of New York or of any other state the laws of which are required as a result of such law to be applied in connection with perfection of security interests.

 

“Utility Dolly” means a pool of U-Haul utility dollies identified as “UIC-02B” and including the specified applicable subseries number.

 

“Warrington Property” means that certain U-Haul operated real property and improvements thereon known as Warrington Equipment Manufacturing Co., located in Warrington Township, Bucks County, Pennsylvania, known as U-Haul location number 163000, with a street address of 2051 Bunnell Rd., Warrington Township, Pennsylvania.

 

Other Terms.  All other capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture.

 

2. Grant of Security Interest.  As an inducement for the Holders to purchase the Notes, and to secure the complete and timely payment, performance and discharge in full, as the case may be, of all the Obligations with respect to any given sub-series of the Notes, the Pledgor hereby unconditionally and irrevocably pledges and grants to the Trustee, for the benefit of each Holder of each individual sub-series of the Notes that may be issued from time to time, and to the Trustee, a continuing security interest in and to, and a Lien against that portion of the Collateral identified in the applicable schedule hereto with respect to the applicable sub-series of the Notes for which such Holder is an investor.  The obligations of the Company with respect to each sub-series of the Notes will be initially secured by a first-priority lien, equally and ratably, on a specified pool of assets owned by Pledgor and identified on the applicable portion of Exhibit A hereto.  As new sub-series of the Notes are issued, or as additional Notes are issued under any given sub-series of the Notes, new schedules hereto will be added, to identify the specific Units of Collateral being pledged under such sub-series or further issuance of the Notes.  The Units of Collateral securing one sub-series of the Notes or securing an additional issuance of the Notes under a given sub-series, shall not serve as Collateral for other sub-series of the Notes or other issuances of Notes under the same sub-series. Notwithstanding any other term or provision herein, for each $100 invested in the notes under Series UIC-01B, the applicable Pledgor will pledge to the trustee, for the benefit of the noteholders, one Appliance Dolly.  For each $45 invested in the notes under Series UIC-02B, the applicable Pledgor will pledge to the trustee, for the benefit of the noteholders, one Utility Dolly.   For each $3.31 invested in the notes under Series UIC-4B, the applicable Pledgor will pledge to the trustee, for the benefit of the noteholders, one Furniture Pad.  Once $100 has been invested with us in the notes under Series UIC-14B, the applicable Pledgor will pledge and mortgage to the trustee, for the benefit of the noteholders, the Warrington Property.

 

  

3

  

Notwithstanding any provision hereof or any of the other Financing Documents, none of the Company, the Pledgor or the Trustee has any obligation to maintain and keep the Collateral in good condition, repair and working order or to replace lost, stolen, damaged or destroyed Collateral or Collateral taken through condemnation or deed in lieu of condemnation.  There shall be no obligation to repay the Notes with proceeds from any condemnation or deed in lieu of condemnation.

 

3. No Recourse to Pledgor.  The Pledgor’s grant of the Lien against the Collateral is a guaranty of prompt and punctual payment of the Obligations, whether at stated maturity, by acceleration or otherwise, and is not merely a guaranty of collection.  The Pledgor has and shall have no personal liability or obligation with respect to payment of the Obligations, which are payable solely by the Company.

 

4. Perfection of Security Interest.  Each Pledgor hereby authorizes the Company to file or cause the filing, from time to time, of financing statements and any other collateral documents as may be necessary or appropriate, without notice to the Pledgor, with all appropriate jurisdictions to perfect or protect the Trustee’s interest or rights hereunder.  Each Pledgor shall take all actions reasonably requested by the Company to perfect and to give notice of the Trustee’s Lien against the Collateral.  To the extent perfection of the Trustee’s interest or rights hereunder requires the modification of one or more certificates of title, if any, representing the Collateral, upon the request from time to time by the Trustee, the Pledgor shall provide the Trustee with a list of all such certificates of title issued in electronic form by the relevant governmental department, as well as any applications for such certificates of title submitted with the relevant governmental department and such other information as the Pledgor has in its possession related to such certificates of title.

 

5. Release of Security Interest; Substitution of Collateral.  The Trustee’s Lien against any equipment or property constituting Collateral shall be automatically released upon (i) the sale or other disposition of such equipment or property to a buyer in the ordinary course of business, in accordance with Section 9-320 of the UCC, or (ii) a casualty loss of such equipment or property, provided that the Trustee’s Lien attaches to the Proceeds, if any, of such disposition or loss.  In addition, the Company shall have the right from time to time, so long as no Event of Default exists, to have the Trustee’s Lien against any equipment, property or Proceeds constituting Collateral released by the Trustee; provided that the Company causes one or more of the Pledgor, and/or any other third parties or Affiliates of the Company (each, an “Additional Pledgor”) to pledge, in replacement of such Collateral, other equipment or property with a value, as determined by the Company in its reasonable discretion, that is not less than the value of such Collateral at the time of substitution; and provided further that if an Additional Pledgor pledges any such equipment or property in replacement thereof, then the Company, such Additional Pledgor and the Trustee shall promptly enter into separate pledge and security agreement in substantially the form of this Agreement, granting the Trustee, for the benefit of the Holders, a first priority lien, equitably and ratably, in such equipment or property, on such terms and conditions set forth therein (each, a “New Pledge and Security Agreement”).  The Company shall exercise such right by delivering to the Trustee an officers’ certificate in the form attached hereto as Exhibit B (the “Officers’ Certificate”), which shall provide the Trustee with notice of the equipment, property or Proceeds constituting Collateral for which the Trustee’s Lien is requested to be released, and shall describe the equipment or property that is requested to replace

 

  

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such Collateral, and which shall certify that the Company has determined, in accordance with this Section 5, that the value of such equipment or property is not less than the value of the Collateral to be released from the Trustee’s Lien at the time of substitution.  The Trustee, within five (5) days of receipt of the Company’s Officer’s Certificate, shall provide the Company and the Pledgor with a written notice acknowledging the release and substitution of equipment or property as Collateral under this Agreement and/or as collateral under a New Pledge and Security Agreement, as applicable.  The Company shall amend Exhibit A to reflect each release of any such equipment or property as Collateral hereunder and each addition of equipment as Collateral hereunder pledged by the Pledgor, as applicable.  The Pledgor shall take all actions reasonably requested by the Trustee to evidence and to give effect to the addition of equipment or property as Collateral hereunder, as applicable.  The Company shall not be required to obtain any appraisal of equipment or property to be released from the Trustee’s Lien or to be added as Collateral hereunder and/or as collateral under a New Pledge and Security Agreement, in connection with the Company’s determination of the value of substitute equipment or property in accordance with this Section 5, and neither the Company nor the Pledgor shall have any liability to the Trustee or the Holders if the value of such substitute equipment or property is subsequently determined to be less than the value of the Collateral released from the Trustee’s Lien in accordance with this Section 5.  The Company’s determination as to the value of substitute equipment or property as Collateral in accordance with this Section 5 shall be final and binding on the Trustee and the Holders, and the Trustee shall have no responsibility or liability to the Holders or any other person with respect thereto.

 

In addition, the Trustee’s Lien against any equipment or property constituting Collateral shall be released upon the repayment in full of all Obligations and the delivery by the Company to the Trustee of an officer’s certificate substantially in the form of Exhibit C hereto.

 

6. Termination of Security Interest.  In addition to the provisions of Section 5 above, if this Agreement is terminated, the Trustee’s Lien in the Collateral with respect to any given sub-series of the Notes shall continue until the Obligations under such sub-series of the Notes are repaid in full.  Upon the crediting in full of the Obligations to each Holder’s U-Haul Investors Club account with respect to any given sub-series or any additional issuance of the Notes under any given sub-series, and the termination of such sub-series or additional issuance of the Notes and payment to the Trustee of all amounts due and owing to it, the Trustee shall, at the Pledgor’s sole cost and expense, release its Liens in the Collateral and all rights therein shall revert to the Pledgor.

 

7. The Trustee’s Rights.  The Pledgor authorizes the Trustee, without giving notice to the Pledgor or obtaining the Pledgor’s consent and without affecting the Pledgor’s liability for the Obligations to the extent described herein, from time to time, to:

 

(a) compromise, settle, renew, extend the time for payment, change the manner or terms of payment, discharge the performance of, decline to enforce, or release all or any of the Obligations; grant other indulgences to the Company in respect thereof; or modify in any manner any documents (other than this Agreement) relating to the Obligations, in each case (other than with respect to decisions not to enforce and to grant indulgences) in accordance with Financing Documents;

 

  

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(b) declare all Obligations due and payable upon the occurrence of an Event of Default;

 

(c) take and hold security for the performance of the Obligations and exchange, enforce, waive and release any such security;

 

(d) apply and reapply such security and direct the order or manner of sale thereof as the Trustee, in its sole discretion, may determine;

 

(e) release, surrender or exchange any deposits or other property securing the Obligations or on which the Trustee at any time may have a Lien; release, substitute or add any one or more endorsers or guarantors of the Obligations; or compromise, settle, renew, extend the time for payment, discharge the performance of, decline to enforce, or release all or any obligations of any such endorser or the Pledgor or other Person who is now or may hereafter be liable on any Obligations or release, surrender or exchange any deposits or other property of any such Person; and

 

(f) apply payments received by the Trustee from the Company, if any, to any Obligations, in such order as the Trustee shall determine, in its sole discretion.

 

8. The Pledgor’s Waivers.

 

(a) The Pledgor waives:

 

(i) any defense based upon any legal disability or other defense of the Company, or by reason of the cessation or limitation of the Company’s liability from any cause (other than full payment of all Obligations), including failure of consideration, breach of warranty, statute of frauds, statute of limitations, accord and satisfaction, and usury;

 

(ii) any defense based upon any legal disability or other defense of any other Person;

 

(iii) any defense based upon any lack of authority of the officers, directors or agents acting or purporting to act on behalf of the Company or any defect in the formation of the Company;

 

(iv) any defense based upon the application by the Company of the proceeds of the Notes for purposes other than the purposes represented by the Company to the Trustee or the Holders;

 

(v) any defense based on the Pledgor’s rights, under statute or otherwise, to require the Trustee to sue the Company or otherwise to exhaust its rights and remedies against the Company or any other Person or against any other collateral before seeking to enforce this Agreement;

 

(vi) any defense based on the Trustee’s failure at any time to require strict performance by the Company of any provision of the Financing Documents or by the Pledgor of this Agreement.  The Pledgor agrees that no such failure shall waive, alter or diminish

 

  

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any right of the Trustee thereafter to demand strict compliance and performance therewith.  Nothing contained herein shall prevent the Trustee from foreclosing on the Lien of any other security agreement, or exercising any rights available to the Trustee thereunder, and the exercise of any such rights shall not constitute a legal or equitable discharge of the Pledgor;

 

(vii) any defense arising from any act or omission of the Trustee which changes the scope of the Pledgor’s risks hereunder;

 

(viii) any defense based upon the Trustee’s election of any remedy against the Pledgor or the Company or both; any defense based on the order in which the Trustee enforces its remedies;

 

(ix) any defense based on (A) the Trustee’s surrender, release, exchange, substitution, dealing with or taking any additional collateral, (B) the Trustee’s abstaining from taking advantage of or realizing upon any Lien or other guaranty, and (C) any impairment of collateral securing the Obligations, including, but not limited to, the Company’s failure to perfect, or maintain the perfection or priority of, a Lien in such collateral;

 

(x) any defense based upon the Trustee’s failure to disclose to the Pledgor any information concerning the Company’s financial condition or any other circumstances bearing on the Company’s ability to pay the Obligations;

 

(xi) any defense based upon any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in any other respects more burdensome than that of a principal;

 

(xii) any defense based upon the Trustee’s election, in any proceeding instituted under the Bankruptcy Code, of the application of Section 1111(b)(2) of the Bankruptcy Code or any successor statute;

 

(xiii) any defense based upon any borrowing or any grant of a Lien under Section 364 of the Bankruptcy Code;

 

(xiv) any defense based on the Trustee’s failure to be diligent or to act in a commercially reasonable manner, or to satisfy any other standard imposed on a secured party, in exercising rights with respect to collateral securing the Obligations;

 

(xv) notice of acceptance hereof; notice of the existence, creation or acquisition of any Obligation; notice of any Event of Default; notice of the amount of the Obligations outstanding from time to time; notice of any other fact which might increase the Pledgor’s risk; diligence; presentment; demand of payment; protest; filing of claims with a court in the event of the Company’s Insolvency Proceeding and all other notices and demands to which the Pledgor might otherwise be entitled (and agrees the same shall not have to be made on the Company as a condition precedent to the Pledgor’s obligations hereunder);

 

(xvi) any defense based on the Trustee’s failure to seek relief from stay or adequate protection in the Company’s Insolvency Proceeding or any other act or omission by the Trustee which impairs Pledgor’s prospective subrogation rights;

 

  

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(xvii) any defense based on legal prohibition of the Trustee’s acceleration of the maturity of the Obligations during the occurrence of an Event of Default or any other legal prohibition on enforcement of any other right or remedy of the Trustee with respect to the Obligations and the security therefor; and

 

(xviii) the benefit of any statute of limitations affecting the Pledgor’s liability hereunder or the enforcement hereof.

 

(b) The Pledgor agrees that the payment of all sums payable under the Financing Documents or any part thereof or other act which tolls any statute of limitations applicable to the Financing Documents shall similarly operate to toll the statute of limitations applicable to Pledgor’s liability hereunder.

 

9. Subrogation.  The Pledgor shall not exercise any rights which it may acquire by reason of any payment of the Obligations made hereunder through enforcement of the Lien against any of the Collateral, whether by way of subrogation, reimbursement or otherwise, until (i) the prior payment, in full and in cash, of all Obligations and (ii) the termination of the Notes.

 

10. The Pledgor’s Representations and Warranties.  The Pledgor represents and warrants to the Trustee that:

 

(a) Each Pledgor’s name as of the date hereof as it appears in official filings in the state of its incorporation is: (i) U-Haul Leasing & Sales Co., and its organizational identification number issued by its state of incorporation is C120-1968;  and (ii) Amerco Real Estate Company.

 

(b) the Pledgor’s execution, delivery and performance of this Agreement (i) do not contravene any law or any contractual restriction binding on or affecting the Pledgor or by which the Pledgor’s assets may be affected; and (ii) do not require any authorization or approval or other action by, or any notice to or filing with, any other Person except such as have been obtained or made;

 

(c) there are no conditions precedent to the effectiveness of this Agreement, and this Agreement shall be in full force and effect and binding on the Pledgor as of the date hereof, regardless of whether the Trustee or the Holders obtain collateral or any guaranties from other Persons or takes any other action contemplated by the Pledgor;

 

(d) this Agreement constitutes the legal, valid and binding obligation of the Pledgor, enforceable in accordance with its terms, except as the enforceability thereof may be subject to or limited by bankruptcy, insolvency, reorganization, arrangement, moratorium or other similar laws relating to or affecting the rights of creditors generally and by general principles of equity; and

 

(e) the Pledgor has established adequate means of obtaining from sources other than the Trustee, on a continuing basis, financial and other information pertaining to the Company’s financial condition and the status of Company’s performance of obligations imposed by the Financing Documents, and the Pledgor agrees to keep adequately informed from such means of any facts, events or circumstances which might in any way affect the Pledgor’s risks

 

  

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hereunder and neither the Trustee nor any of the Holders has made any representation or warranty to the Pledgor as to any such matters.

 

11. The Pledgor’s and Company’s Covenants.  The Pledgor covenants with the Trustee that:

 

(a) The Pledgor shall not change its name or jurisdiction of organization without giving thirty (30) days’ prior written notice to the Trustee; and

 

(b) The Collateral will not become subject to any Lien other than Permitted Liens and the Trustee’s Lien.

 

(c) During the continuance of an Event of Default, the proceeds payable under any liability policy, to the extent that they relate to the Collateral, shall be payable to the Trustee on account of the Obligations.  The foregoing notwithstanding, so long as no Event of Default has occurred and is continuing, the Pledgor shall have the option, but not the obligation, of applying such proceeds toward the replacement or repair of destroyed or damaged Collateral; provided that any such replaced or repaired property (i) shall be of equal or like value as the replaced or repaired Collateral, as determined by the Company in its reasonable judgment in accordance with Section 5, and (ii) shall be deemed Collateral in which the Trustee has been granted a first priority Lien.

 

(d) The Pledgor shall notify the Trustee and the Company in writing promptly, but in no event more than two business days after the occurrence of an event which constitutes a breach of its obligations or duties under this Agreement.

 

(e)           The Company covenants with the Trustee that it will notify the Trustee and the Pledgor in writing promptly of an event which constitutes an Event of Default.

 

12. The Trustee’s and Holders’ Rights, Duties and Liabilities.

 

(a) Each Holder, by acceptance of its Note, appoints the Trustee to act as its agent under this Agreement.  Each Holder hereby irrevocably authorizes the Trustee to take such action on its behalf under the provisions of this Agreement and the other documents relating to the Collateral (together with this Agreement, the “Security Documents”) and to exercise such powers and to perform such duties hereunder and thereunder as are specifically delegated to or required of the Trustee by the terms hereof and thereof and such other powers as are reasonably incidental thereto and the Trustee shall hold all Collateral, charges and collections received pursuant to this Agreement, for the ratable benefit of the Holders.  The Trustee may perform any of its duties hereunder by or through its agents or employees or a co-trustee.  As to any matters not expressly provided for by this Agreement the Trustee shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Required Holders, and such instructions shall be binding; provided, however, that the Trustee shall not be required to take any action which in the Trustee’s reasonable discretion exposes it to liability or which is contrary to this Agreement, the Indenture or the other Security Documents or applicable law unless the Trustee is furnished with an indemnification by the Holders acceptable to the Trustee in its sole discretion with respect thereto and the Trustee shall not be responsible for any

 

  

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misconduct or negligence on the part of any of the agents appointed with due care by the Trustee.  The Trustee shall have no duties or responsibilities except those expressly set forth in this Agreement.  The Trustee shall not be under any obligation to any Holder to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any of the other Security Documents.  The Trustee shall not have by reason of this Agreement a fiduciary relationship in respect of any Holder; and nothing in this Agreement, expressed or implied, is intended to or shall be so construed as to impose upon the Trustee any obligations in respect of this Agreement except as expressly set forth herein.

 

(b) The Pledgor assumes all responsibility and liability arising from or relating to the use, sale, license or other disposition of the Collateral.  The Obligations shall not be affected by any failure to take any steps to perfect the Trustee’s Liens or to collect or realize upon the Collateral, nor shall loss of or damage to the Collateral release the Company from any of the Obligations or the Pledgor from its obligations hereunder.

 

(c) The Pledgor shall remain liable under each of its contracts and each of its licenses relating to the Collateral.  Neither the Trustee nor any Holder shall have any obligation or liability under any such contract or license by reason of or arising out of this Agreement.  Neither the Trustee nor any Holder shall be required or obligated in any manner to perform or fulfill any of the Pledgor’s obligations under or pursuant to any such contract or license or to enforce any of the Pledgor’s rights under or pursuant to any contract or license.

 

(d) In no event shall the Trustee or any Holder be responsible or liable for special, indirect, or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.

 

(e) In acting hereunder, the Trustee shall be entitled to all of the rights, protections, privileges and immunities afforded to the Trustee under the Indenture, and all such rights, protections, privileges and immunities are incorporated by reference herein and shall inure to the benefit of the trustee herein.

 

(f) No provision of this Agreement shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or any exercise of any rights or powers if it shall have reasonable grounds for believing that repayment of such funds or indemnity satisfactory to it against such risk or liability is not reasonably assured to it and none of the provisions contained in this Agreement shall require the Trustee to perform or be responsible for the performance of any of the obligations of the Company or the Pledgor.

 

(g) The Trustee shall not be deemed to have notice of any matter including without limitation any default or Event of Default or any breach by the Pledgor or the Company unless one of its Responsible Officers has actual knowledge thereof or written notice thereof is received by the trustee and such notice references this Agreement or the Indenture.

 

(h) For the avoidance of doubt, notwithstanding anything herein or in the Indenture to the contrary, the Trustee shall only be liable to the extent of obligations specifically

 

  

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imposed upon and undertaken by the trustee as pledgee hereunder and the Trustee shall only be liable to the extent of its gross negligence or willful misconduct in connection with its duties hereunder.

 

13. Remedies and Rights During Event of Default.

 

(a) In addition to all other rights and remedies granted to it under this Agreement, the Indenture, and under any other instrument or agreement securing, evidencing or relating to any of the Obligations, during the continuance of any Event of Default, the Trustee may exercise all rights and remedies of a secured party under the UCC.  Without limiting the generality of the foregoing, the Pledgor expressly agrees that in any such event the Trustee or any agent acting on behalf of the Trustee, without demand of performance or other demand, advertisement or notice of any kind (except the notice specified below of time and place of public or private sale) to or upon the Pledgor or any other Person (all and each of which demands, advertisements and notices are hereby expressly waived to the maximum extent permitted by the UCC and other applicable law), may forthwith enter upon the premises of the Pledgor where any Collateral is located through self-help, without judicial process, without first obtaining a final judgment or giving the Pledgor or any other Person notice and opportunity for a hearing on the Trustee’s claim or action and may collect, receive, assemble, process, appropriate and realize upon the Collateral, or any part thereof, and may forthwith sell, lease, license, assign, give an option or options to purchase, or sell or otherwise dispose of and deliver the Collateral (or contract to do so), or any part thereof, in one or more parcels at a public or private sale or sales, at any exchange at such prices as it may deem acceptable, for cash or on credit or for future delivery without assumption of any credit risk.  The Trustee or any Holder shall have the right but not the obligation upon any such public sale or sales and, to the extent permitted by law, upon any such private sale or sales, to purchase for the benefit of the Trustee and Holders, the whole or any part of the Collateral so sold, free of any right or equity of redemption, which equity of redemption the Pledgor hereby releases.  Such sales may be adjourned and continued from time to time with or without notice.  The Trustee shall have the right to conduct such sales on the Pledgor’s premises or elsewhere and shall have the right to use the Pledgor’s premises without charge for such time or times as the Trustee reasonably deems necessary or advisable.

 

(b) The Pledgor further agrees, at the Trustee’s request, to provide such information as may be needed to enable the Trustee to assemble the Collateral and, to the extent required by the UCC, to make it available to the Trustee at a place or places designated by the Trustee which are reasonably convenient to the Trustee and the Pledgor, whether at the Pledgor’s premises or elsewhere.  Until the Trustee is able to effect a sale, lease, or other disposition of Collateral, the Trustee shall have the right to hold or use Collateral, or any part thereof, to the extent that it deems appropriate for the purpose of preserving the Collateral or its value or for any other purpose deemed appropriate by the Trustee.  The Trustee shall have no obligation to the Pledgor to maintain or preserve the rights of the Pledgor as against third parties with respect to Collateral while Collateral is in the Trustee’s possession.  The Trustee may, if it so elects, seek the appointment of a receiver or keeper to take possession of Collateral and to enforce any of the Trustee’s remedies (for the benefit of the Trustee and the Holders), with respect to such appointment without prior notice or hearing as to such appointment.  The Trustee shall apply the net proceeds of any such collection, recovery, receipt, appropriation, realization or sale to the Obligations as provided herein and in the Indenture, and only after so paying over such net

 

  

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proceeds, and after the payment by the Trustee of any other amount required by any provision of law, need the Trustee account for the surplus, if any, to the Pledgor.  To the maximum extent permitted by applicable law, the Pledgor waives all claims, damages, and demands against the Trustee or any Holder arising out of the repossession, retention or sale of the Collateral except such as determined by a court of competent jurisdiction in a final nonappealable judgment to have resulted primarily from the gross negligence or willful misconduct of the Trustee or such Holder.  The Pledgor agrees that ten (10) days’ prior written notice by the Trustee of the time and place of any public sale or of the time after which a private sale may take place is reasonable notification of such matters.  The Company shall remain liable for any deficiency if the proceeds of any sale or disposition of the Collateral are insufficient to pay all Obligations, including any reasonable attorneys’ fees or other out-of-pocket expenses actually incurred by the Trustee or any Holder to collect such deficiency.

 

(c) Except as otherwise specifically provided herein, the Pledgor hereby waives presentment, demand, protest or any notice (to the maximum extent permitted by applicable law) of any kind in connection with this Agreement or any Collateral.

 

(d) To the extent that applicable law imposes duties on the Trustee to exercise remedies in a commercially reasonable manner, the Pledgor acknowledges and agrees that it is not commercially unreasonable for the Trustee (i) to fail to incur expenses reasonably deemed significant by the Trustee to prepare Collateral for disposition, (ii) to fail to obtain third party consents for access to Collateral to be disposed of, or to obtain or, if not required by other law, to fail to obtain governmental or third party consents for the collection or disposition of Collateral to be collected or disposed of, (iii) to fail to remove Liens on or any adverse claims against Collateral, (iv) to advertise dispositions of Collateral through publications or media of general circulation, whether or not the Collateral is of a specialized nature, (v) to contact other Persons, whether or not in the same business as the Pledgor, for expressions of interest in acquiring all or any portion of such Collateral, (vi) to hire one or more professional auctioneers to assist in the disposition of Collateral, (vii) to dispose of Collateral by utilizing Internet sites that provide for the auction of assets of the types included in the Collateral or that have the reasonable capacity of doing so, or that match buyers and sellers of assets, (viii) to dispose of Collateral  in wholesale rather than retail markets, (ix) to disclaim disposition warranties, such as title, possession or quiet enjoyment, (x) to purchase insurance to insure the Trustee against risks of loss, collection or disposition of Collateral or to provide to the Trustee a guaranteed return from the disposition of Collateral, or (xi) to the extent deemed appropriate by the Trustee, to obtain the services of other brokers, investment bankers, consultants and other professionals to assist the Trustee in the collection or disposition of any of the Collateral.  The Pledgor acknowledges that the purpose of this Section 13(d) is to provide non-exhaustive indications of what actions or omissions by the Trustee would not be commercially unreasonable in the Trustee’s exercise of remedies against the Collateral and that other actions or omissions by the Trustee shall not be deemed commercially unreasonable solely on account of not being indicated in this Section 13(d).  Without limitation upon the foregoing, nothing contained in this Section 13(d) shall be construed to grant any rights to the Pledgor or to impose any duties on the Trustee that would not have been granted or imposed by this Agreement or by applicable law in the absence of this Section 13(d).

 

  

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(e)Notwithstanding any provision to the contrary contained in this Agreement, the Trustee shall not be required to obtain title to any Collateral that constitutes real property as a result of or in lieu of foreclosure or otherwise acquire possession of, or take any other action with respect to, any such Collateral if, as a result of any such action, the Trustee for itself or on behalf of the Holders would be considered to hold title to, to be a “mortgagee-in-possession” of, or to be an “owner” or “operator” of such Collateral within the meaning of the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended from time to time, or any comparable law, unless the Trustee has previously determined based on its reasonable judgment and a report prepared by an independent Person who regularly conducts environmental audits using customary industry standards, that:

 

(i)such Collateral is in compliance with applicable environmental laws or, if not, that it would be in the best economic interest of the Holders to take such actions as are necessary to bring the Collateral into compliance therewith; and

 

(ii)there are no circumstances present at such Collateral relating to the use, management or disposal of any hazardous substances, hazardous materials, hazardous wastes, or petroleum-based materials for which  investigation, testing, monitoring, containment, clean-up or remediation could be required under any federal, state or local law or regulation, or that if any such materials are present for which such action could be required, that it would be in the best economic interest of the Holders to take such actions with respect to the affected Collateral.

 

The cost of the environmental audit report contemplated by this Section shall be advanced by the Company.

 

During the continuance of an Event of Default, if the Trustee determines that it is in the best economic interest of the Holders to take such actions as are necessary to bring any such Collateral into compliance with applicable environmental laws, or to take such action with respect to the containment, clean-up or remediation of hazardous substances, hazardous materials, hazardous wastes, or petroleum-based materials affecting any such Collateral, then the Trustee shall take such action as it deems to be in the best economic interest of the Holders.  The cost of any such compliance, containment, cleanup or remediation shall be advanced by the Company.

 

14. Power of Attorney.  The Pledgor hereby irrevocably appoints the Trustee as its lawful attorney-in-fact, exercisable during the continuance of an Event of Default, to: (a) make, settle, and adjust all claims under the Pledgor’s insurance policies with respect to the Collateral, if any; (b) pay, contest or settle any Lien or adverse claim in or to the Collateral, or any judgment based thereon, or otherwise take any action to terminate or discharge the same; and (c) transfer the Collateral into the name of the Trustee or a third party as the UCC permits.  The Pledgor hereby appoints the Company as its lawful attorney-in-fact to sign the Pledgor’s name on any documents necessary to perfect or continue the perfection of any security interest regardless of whether an Event of Default has occurred until all Obligations have been satisfied in full, in cash, and the Notes have terminated.  The Company’s foregoing appointment as the Pledgor’s attorney in fact, and all of the Company’s rights and powers, coupled with an interest, are irrevocable until all Obligations have been satisfied in full, in cash and the Notes have terminated.

 

  

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15. Cost and Expenses; Indemnification.

 

(a) The Company agrees to pay to the Trustee, for its benefit, on demand, (i) all fees, costs and expenses that the Trustee pays or incurs as provided in that fee letter dated January 26, 2011 between the Company and the Trustee; and (ii) sums paid or incurred to pay any amount or take any action required of the Pledgor under this Agreement that the Pledgor fails to pay or take; and (iii) costs and expenses of preserving and protecting the Collateral or taking any other action contemplated or required by this Agreement or the other Security Documents.  The foregoing shall not be construed to limit any other directly contrary provisions of this Agreement regarding costs and expenses to be paid by the Pledgor or the Company.

 

(b) The Company will save, indemnify and keep the Trustee, and the Trustee’s officers, employees, directors and agents, and the Holders harmless from and against all expense (including reasonable attorneys’ fees and expenses), loss, claim, liability or damage arising out of their actions or inaction hereunder or in connection with the Collateral, the Indenture or any Security Document, except to the extent such expense, loss, claim, liability or damage is determined by a court of competent jurisdiction in a final nonappealable judgment to have resulted from the gross negligence or willful misconduct of the Trustee or the Holders as finally determined by a court of competent jurisdiction.  This Section 15(b) shall be expressly construed to include, but not be limited to, such indemnities, compensation, expenses, disbursements, advances, losses, liabilities, damages and the like, as may pertain or relate to any environmental law or environmental matter.

The benefits of this Section 15 shall survive the termination of this Agreement or the removal or resignation of the Trustee.

 

16. Limitation on the Trustee’s and the Holders’ Duties with Respect to the Collateral.

 

(a) Neither the Trustee nor any Holder shall have any other duty as to any Collateral in its possession or control or in the possession or control of any agent or nominee of the Trustee or such Holder.

 

(b) The Trustee shall not be responsible for filing any financing or continuation statements or recording any documents or instruments in any public office at any time or times or otherwise perfecting or maintaining the perfection of any security interest in the Collateral.  The Trustee shall be deemed to have exercised reasonable care in the custody of the Collateral in its possession if the Collateral is accorded treatment substantially equal to that which it accords its own property and shall not be liable or responsible for any loss or diminution in the value of any of the Collateral, by reason of the act or omission of any agent or bailee selected by the Trustee in good faith.

 

(c) The Trustee shall not be responsible for the existence, genuineness or value of any of the Collateral or for the validity, perfection, priority or enforceability of the Liens in any of the Collateral, whether impaired by operation of law or by reason of any action or omission to act on its part hereunder, for the validity or sufficiency of the Collateral or any agreement or assignment contained therein, for the validity of the title of the Pledgor to the

 

  

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Collateral, for insuring the Collateral or for the payment of taxes, charges, assessments or Liens upon the Collateral or otherwise as to the maintenance of the Collateral.

 

(d) The Pledgor bears all risk of loss for damage or destruction of the Collateral.

 

17. No Waiver; Remedies Cumulative.  The Trustee’s failure, at any time or times, to require strict performance by the Pledgor of any provision of this Agreement or any other Financing Document shall not waive, affect, or diminish any right of the Trustee thereafter to demand strict performance and compliance herewith or therewith.  No waiver hereunder shall be effective unless signed by the Trustee and then is only effective for the specific instance and purpose for which it is given.  The Trustee’s rights and remedies under this Agreement and the other Financing Documents are cumulative.  The Trustee has all rights and remedies provided under the UCC, by law, or in equity.  The Trustee’s exercise of one right or remedy is not an election, and the Trustee’s waiver of any Event of Default is not a continuing waiver.  The Trustee’s delay in exercising any remedy is not a waiver, election, or acquiescence.

 

18. Marshaling of Assets.  The Trustee shall be under no obligation to marshal any assets in favor of Pledgor, the Company or any other Person liable for the Obligations or against or in payment of any Obligations.

 

19. Independent Obligations.  This Agreement is independent of the Company’s obligations under the Financing Documents.  The Trustee may bring a separate action to enforce the provisions hereof against the Pledgor without taking action against the Company or any other Person or joining the Company or any other Person as a party to such action.

 

20.  Term; Revival.

 

(a) This Agreement is irrevocable by the Pledgor.  It shall terminate only upon the full satisfaction of the Obligations and termination of the Notes.  If, notwithstanding the foregoing, the Pledgor shall have any nonwaivable right under applicable law or otherwise to terminate or revoke this Agreement, the Pledgor agrees that such termination or revocation shall not be effective until the Trustee receives written notice of such termination or revocation.  Such notice shall not affect the Trustee’s right and power to enforce rights arising prior to receipt thereof.

 

(b) The Pledgor’s pledge hereunder of the Collateral shall be reinstated and revived, and the Trustee’s rights shall continue, if at any time payment and performance of the Obligations, or any part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee of the Obligations, whether as a “voidable preference,” “fraudulent conveyance,” or otherwise, all as though such payment or performance had not been made.  If any payment, or any part thereof, is rescinded, reduced, restored or returned, the Obligations shall be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.

 

21. Notices.  Except as otherwise provided herein, whenever it is provided herein that any notice, demand, request, consent, approval, declaration or other communication shall or may be given to or served upon any of the parties by any other party, or whenever any of the parties

 

  

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desire to give and serve upon the other party any communication with respect to this Agreement, each such notice, demand, request, consent, approval, declaration or other communication shall be in writing and, in the case of the Company and the Trustee, shall be given in the manner, and deemed received, as provided for in the Indenture and in the case of the Pledgor shall be mailed, first-class postage prepaid, to the Pledgor’s Treasurer at the address of its principal office specified below its signature block herein or at any other address previously furnished in writing to the Trustee by the Pledgor.

 

22. Miscellaneous.

 

(a)           Arbitration.  In the event that the Company or the Pledgor, on the one hand, and one or more of the Holders, or the Trustee as pledgee on behalf of one or more of the Holders, on the other hand, are unable to resolve any dispute, claim or controversy between them (“Dispute”) related to this Agreement, such parties agree to submit the Dispute to binding arbitration in accordance with the following terms:

 

(i) Any party in its reasonable discretion may give written notice to the other applicable parties that the Dispute be submitted to arbitration for final resolution.  Within fifteen (15) calendar days after receipt of such notice, the receiving parties shall submit a written response.  If the Dispute remains following the exchange of the written notice and response, the parties involved in the Dispute shall mutually select one arbitrator within fifteen (15) calendar days of receipt of the response and shall submit the matter to that arbitrator to be settled in accordance with this Section 22(a).  If these parties cannot mutually agree on a single arbitrator during such fifteen (15) day period, these parties shall no later than the expiration of that fifteen (15) day period jointly submit the matter to the American Arbitration Association (“AAA”) for expedited arbitration proceedings to be conducted at the AAA offices, or at another mutually agreeable location, in Phoenix, Arizona pursuant to the Association Commercial Arbitration Rules then in effect (the “Rules”).  The AAA will follow the Rules to select a single arbitrator within fifteen (15) calendar days from the date the matter is jointly submitted to the AAA.  The arbitrator (whether selected by the parties or by the AAA) shall hold a hearing within forty-five (45) calendar days following the date that the arbitrator is selected and shall provide a timeline for the parties to submit arguments and supporting materials with sufficient advance notice to enable the arbitrator to hold the hearing within that forty-five (45) day period.  The arbitrator shall issue a tentative ruling with findings of fact and law within fifteen (15) calendar days after the date of the hearing.  The arbitrator shall provide the parties an opportunity to comment on the tentative ruling within a timeframe established by the arbitrator, provided that the arbitrator shall render a final ruling within thirty (30) calendar days after the date of the hearing.  The arbitrator shall have the authority to grant any equitable and legal remedies that would be available in any judicial proceeding to resolve a disputed claim, including, without limitations, the authority to impose sanctions, including attorneys’ fees and costs, to the same extent as a competent court of law or equity.

 

(ii) The Company, the Pledgor, Trustee and each of the Holders agree that judgment upon any award rendered by the arbitrator may be entered in the courts of the State of Arizona or in the United States District Courts located in Arizona.  Such court may enforce the provisions of this Section 22(a)(ii), and the party seeking enforcement shall be entitled to an award of all costs and fees, including reasonable attorneys’ fees, to be paid by the party against

 

  

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whom enforcement is ordered.  The parties involved in a Dispute may terminate any arbitration proceeding by mutually resolving any Dispute prior to the issuance of a final arbitration ruling pursuant to this Section 22(a).

 

(iii) For the avoidance of doubt, where a dispute arises related to this Pledge and Security Agreement between (x) the Trustee and the Company or the Pledgor, (y) the Trustee and one or more of the Holders, or (z) the Trustee and any third party, then in no event will the arbitration provisions set forth in this Section 22  apply to such dispute.

 

(b) No Waiver; Cumulative Remedies.  Neither the Trustee nor any Holder shall by any act, delay or omission or otherwise be deemed to have waived any of its rights or remedies hereunder, and no waiver shall be valid unless in writing, signed by the Trustee and then only to the extent therein set forth.  A waiver by the Trustee of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which the Trustee would otherwise have had on any future occasion.  No failure to exercise nor any delay in exercising on the part of the Trustee or any Holder, any right, power or privilege hereunder, shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege hereunder preclude any other or future exercise thereof or the exercise of any other right, power or privilege.  The rights and remedies hereunder provided are cumulative and may be exercised singly or concurrently, and are not exclusive of any rights and remedies provided by law.

 

(c) Limitation by Law.  All rights, remedies and powers provided in this Agreement may be exercised only to the extent that the exercise thereof does not violate any applicable provision of law, and all the provisions of this Agreement are intended to be subject to all applicable mandatory provisions of law that may be controlling and to be limited to the extent necessary so that they shall not render this Agreement invalid, unenforceable, in whole or in part, or not entitled to be recorded, registered or filed under the provisions of any applicable law.

 

(d) Headings.  All headings appearing in this Agreement are for convenience only and shall be disregarded in construing this Agreement.

 

(e) Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to agreements made or instruments entered into and, in each case, performed in said State.

 

(f) Waiver of Jury Trial.  EACH OF THE PLEDGOR, THE COMPANY AND THE TRUSTEE HEREBY 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 HEREBY.

 

(g) Successor Person Substituted for the Pledgor.  Upon any consolidation by the Pledgor with or merger of the Pledgor into any other Person or any sale, assignment, transfer, lease or conveyance of all or substantially all of the properties and assets of the Pledgor to any Person in accordance with Section 801 of the Base Indenture, the successor Person formed

 

  

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by such consolidation or into which the Pledgor is merged or to which such sale, assignment, transfer, lease or other conveyance is made shall succeed to, and be substituted for, and may exercise every right and power of, the Pledgor under this Agreement with the same effect as if such successor Person had been named as the Pledgor herein; and thereafter the predecessor Person shall be released from all obligations and covenants under this Agreement.

 

(h) Assignment; Binding Effect.  Except as provided in Section 22(g), the Pledgor may not assign this Agreement without the Trustee’s prior written consent.  This Agreement shall be binding upon the Pledgor, its successors, permitted transferees and permitted assigns, and shall inure to the benefit of the Trustee and its successors, transferees and assigns under the Indenture.

 

(i) Entire Agreement; Modifications.  This Agreement is intended by the Pledgor, the Company and the Trustee to be the final, complete, and exclusive expression of the agreement among them with respect to the subject matter hereof.  This Agreement supersedes all prior and contemporaneous oral and written agreements relating to such subject matter.  No modification, rescission, waiver, release, or amendment of any provision of this Agreement shall be made, except by a written agreement signed by the Pledgor, the Company and the Trustee; provided, however, that the Trustee may not enter into any such written agreement except with the written consent of the Required Holders, by Act of such Holders delivered to the Company, the Pledgor and the Trustee (such restriction shall not apply to the Trustee’s right to amend Exhibit A in accordance with Section 5.

 

(j) Severability.  If any provision of this Agreement shall be determined by a court of competent jurisdiction to be invalid, illegal or unenforceable, that portion shall be deemed severed from this Agreement and the remaining parts shall remain in full force as though the invalid, illegal or unenforceable portion had never been part of this Agreement.

 

(k) Incorporation by Reference.  All of the rights, protections, immunities and privileges granted to the Trustee under the Indenture are incorporated by reference herein and shall inure to the benefit of the Trustee herein.

 

(l) Counterparts.  This Agreement may be authenticated in any number of separate counterparts, each of which shall collectively and separately constitute one and the same agreement.  This Agreement may be authenticated by manual signature, facsimile or, if approved in writing by the Trustee, electronic means, all of which shall be equally valid.

 

[Signature Pages Follow]

  

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[Signature page to Pledge and Security Agreement, Series UIC-01B, 02B, 04B and 12B]

 

 

IN WITNESS WHEREOF, this Agreement has been duly executed by the undersigned as of the date first written above.

 

AMERCO, as the Company

By:  _________________________________________

Jason A. Berg, Principal Accounting Officer

U-Haul Leasing & Sales Co., as Pledgor

Amerco Real Estate Company, as Pledgor

By:  ____________________________________

Jennifer M. Settles, Secretary

Address for Notices:

c/o U-Haul international, Inc.

2727 N. Central Avenue

Phoenix, AZ  85004

Attn:  Legal Department

U.S. BANK NATIONAL ASSOCIATION, as the Trustee

By:  ____________________________________

Name:  __________________________________

Title:  ___________________________________

  

  

  

EXHIBIT A TO PLEDGE AND SECURITY AGREEMENT SERIES UIC-01B, 02B, 04B and 12B

 

COLLATERAL

 

 

  

  

  

EXHIBIT B

FORM OFFICERS’ CERTIFICATE – COLLATERAL SUBSTITUTION

The undersigned, _________________________, _________________________ of AMERCO, a Nevada corporation (the “Company”), hereby certifies to U. S. Bank National Association, as trustee under the U-Haul Investors Club Base Indenture dated as of February 14, 2011 (the “Base Indenture”), as follows:

1.           Pursuant to Section 5 of the Pledge Agreement dated as of ___________________ (“Pledge Agreement”), the equipment, property or Proceeds constituting Collateral under the _______ Supplemental Indenture dated as of _________________ to the Base Indenture (the “_______ Supplement”) and identified on Exhibit A hereto (“Initial Collateral”) is to be released from the Lien created pursuant to  the Pledge Agreement, such release to be effective as of _________________ (such date, the “Date of Substitution”).

2.           The equipment, property or other asset identified on Exhibit B hereto (“Replacement Collateral”) shall replace such Initial Collateral, pursuant to Section 5 of the Pledge Agreement.

3.           The Company has determined, in accordance with Section 5 of the Pledge Agreement, that the value of such Replacement Collateral is not less than the value of the Initial Collateral as of the Date of Substitution.

4.           I have read the conditions set forth in the Pledge Agreement and the _________ Supplement relating to the substitution of Collateral, and all conditions thereto have  been satisfied. In my opinion, I have made such examination and investigation as is necessary to enable me to express an informed opinion with respect thereto.

IN WITNESS WHEREOF, the undersigned executes this Officer’s Certificate as of ____________________________.

                                                                AMERCO, a Nevada corporation

By: _____________________________________

Its: _____________________________________

  

  

  

EXHIBIT C

FORM OF OFFICER’S CERTIFICATE - LIEN RELEASE UPON REPAYMENT IN FULL

The undersigned, _________________________, _________________________ of AMERCO, a Nevada corporation (the “Company”), hereby certifies to U. S. Bank National Association, as trustee under the U-Haul Investors Club Base Indenture dated as of February 14, 2011 (the “Base Indenture”), as follows:

1.           All conditions precedent set forth in the Base Indenture and in the _______ Supplemental Indenture thereto dated ____________________ (the “Indenture Supplement”)  to the release of the Trustee’s Lien  on the Collateral securing the obligations under the Indenture Supplement have been satisfied.

2.           To the extent the Collateral includes box trucks or trailers evidenced by certificates of title, such Collateral is identified by VIN on the attachment hereto and the certificates of title with respect to such Collateral shall be sent by you to the following address: _______________________________________.

We acknowledge that the Trustee is not responsible for determining whether the conditions to the release of Liens on the Collateral have been satisfied.

IN WITNESS WHEREOF, the undersigned executes this Officer’s Certificate as of _____________________________.

                                                                AMERCO, a Nevada corporation

By: _____________________________________

Its: _____________________________________

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