AGREEMENT OF MERGER
THIS AGREEMENT OF MERGER (hereinafter called "this Agreement"),
effective as of the 26th 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
("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 parties
may
mutually agree upon
(the "Closing Date"), the parties shall execute
such documents as may be necessary to consummate the Closing.
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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 execute
