AGREEMENT OF MERGER
THIS AGREEMENT OF MERGER
(hereinafter called "this Agreement"),
effective as of the day of September, 2005, by and
among Clancy
Systems International, Inc., a Colorado
corporation ("Clancy"), on
its behalf and on behalf of its
wholly-owned subsidiary, Klancy Newco,
Inc., a Puerto Rico corporation to be
formed ("Newco"), and
Urban Transit Solutions, Inc., a Puerto
Rico corporation ("UTS").
WHEREAS, Clancy currently owns 72% of the
issued and
outstanding capital stock of UTS.WHEREAS,
the Boards of Directors
of Clancy, Newco and UTS deem it advisable
for the mutual benefit
of Clancy, Newco and UTS, and their
respective stockholders, that
Clancy acquire the remaining 28% of UTS by
the merger of Newco
into UTS under the terms and conditions
hereinafter set forth.
NOW THEREFORE, in consideration of the
premises and of the mutual
agreements, representations, warranties and
covenants contained
herein, the parties hereto, intending to be
legally bound, hereby
agree as follows:
ARTICLE I
THE MERGER
Section 1.1 Actions to be Taken.
Subject to the terms
and conditions
of this Agreement, including the
fulfillment (or waiver) of all
conditions to the obligations of the
parties contained herein,
at the Closing Date (as hereinafter
defined) and pursuant to the
Puerto Rico General Corporation Law (the
"PRGCL"), the following
shall occur:
(a) Newco shall be merged with and into UTS
(such transaction
hereafter referred to as the "Merger"), and
UTS shall be the
surviving corporation (the "Surviving
Corporation"). The
separate
existence and corporate organization of
Newco shall cease upon
filing of this Agreement with the
Department of State in
Puerto Rico, and thereupon UTS and Newco
shall be a single
corporation.
(b) The Certificate of Incorporation of UTS
shall constitute
the certificate of incorporation of the
Surviving Corporation.
(c) The By-Laws of UTS shall constitute the
by-laws of the
Surviving Corporation.
(d) The officers and directors of UTS shall
continue as
the officers and directors, respectively,
of the Surviving
Corporation until their successors shall
have been elected and
qualified.
(e) On September 26, 2005, or such other
date as the
may mutually agree upon (the "Closing Date"), the parties
shall
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execute such documents as may be necessary
to consummate the Closing.
Facsimile signatures may be used for
closing. On the Closing Date,
this Agreement shall be executed and
forwarded for filing to the
Department of State in Puerto Rico.
Section 1.2 Conversion of UTS Securities;
Consideration. As of the
Closing Date, by virtue of the Merger and
without any action on
the part of any holder thereof,
14,000 shares of UTS
Common Stock
issued and outstanding immediately prior to
the Closing Date and not held
by Clancy shall be converted into
17,500,000 restricted shares (the
"Merger Shares") of the common stock, par
value $0.0001 per share,
of Clancy "Clancy Common Stock").
By virtue of the
merger,
all outstanding shares in Newco shall be
cancelled.
Section 1.3 Issuance and Delivery of Clancy
Common Stock.
Clancy
shall cause the release of the Clancy
Common Stock upon surrender
of certificates representing
shares of UTS Common Stock. The Merger
Shares shall be deemed, for all
corporate purposes, to have been
issued by Clancy at the Closing Date.
Certificates
representing
the Merger Shares in the names and amounts
set forth in Schedule
1.3 shall be issued by Clancy on the
Closing Date. Delivery of
the Merger Shares shall be made to the
respective shareholders
of UTS upon receipt by Clancy of a duly
executed Subscription
Agreement and Inve
