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SECURITIES PURCHASE AGREEMENT

Purchase and Sale Agreement

SECURITIES PURCHASE AGREEMENT | Document Parties: CAL ALTA AUTO GLASS INC | ENERGY ONE RESOURCE SERVICES, INC You are currently viewing:
This Purchase and Sale Agreement involves

CAL ALTA AUTO GLASS INC | ENERGY ONE RESOURCE SERVICES, INC

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Title: SECURITIES PURCHASE AGREEMENT
Governing Law: Nevada     Date: 1/14/2009
Industry: Business Services     Sector: Services

SECURITIES PURCHASE AGREEMENT, Parties: cal alta auto glass inc , energy one resource services  inc
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Ver: #4:12-30-08

SECURITIES PURCHASE AGREEMENT

THIS SECURITIES PURCHASE AGREEMENT (the "Agreement") is dated

and is effective as of December 30, 2008, by and among Cal Alta

Auto Glass, Inc., a Nevada corporation with principal offices at

#8, 3927 Edmonton Trail, N.E., Calgary, Alberta T2E 6T1 (the

"Buyer") and each of the stockholders who own and hold certain

shares of the capital stock of Energy One Resource Services,

Inc., a corporation domiciled in the province of Alberta, Canada

with principal offices at 1000, 888 - 3rd Street, S.W., Calgary,

Alberta T2P 5LR and whose names and signatures and number of

shares owned are listed on the signature page of this Agreement

(all collectively, as the "Sellers") and Energy One Resource

Services, Inc., a corporation domiciled in the province of

Alberta, Canada with principal offices at 1000, 888 - 3rd Street,

S.W., Calgary, Alberta T2P 5LR (the "Acquired Company" or

"Company"). As used herein, the term "Parties" shall be used to

identify each of the Sellers, the Buyer, and the Company

jointly.

WHEREAS:

A. The Parties acknowledge and agree that the purpose of

this Agreement is to set forth the terms and conditions upon

which the Buyer will acquire all of the outstanding capital

stock of the Acquired Company so that, upon closing of the

transactions contemplated herein, the Acquired Company shall

become a wholly-owned subsidiary of the Buyer and all of the

Acquired Company's stockholders shall become stockholders of the

Buyer.

B. Each of the Sellers warrants and represents that they

seek to acquire certain shares of the Buyer's Common Stock (par

value $0.001) in exchange for certain shares of the Class "A"

Common Stock of the Acquired Company owned and held by them in

such amount as is listed on the signature page of this

Agreement.

C. Each of the Sellers warrants and represents that they

are experienced and sophisticated in business, financial,

investment, and tax matters that allows them sufficient skill

and knowledge to enter into this Agreement, undertake the

transactions contemplated and described in this Agreement, and

evaluate the risks and merits of acquiring the Buyer's Common

Stock.

D. Each of the Sellers warrants and represents that they

own and will own at closing, all right, title, and interest to

the shares of the capital stock of the Acquired Company

registered in their name free of any accrued or contingent

claims, interests, or equitable charges that may be asserted by

any third party, including, but not limited to any claims that

may be asserted under applicable marital property or community

property laws and with a full and unrestricted right to convey

full and unrestricted title to all said shares of the capital

stock of the Acquired Company to the Buyer as further set forth

in this Agreement.

E. Each of the Sellers warrants and represents that they

received, prior to this Agreement, such disclosures regarding

the Buyer, its corporate and financial affairs, stockholder

information, and such other disclosures that has allowed each of

them to make an informed investment decision and further that

each has had a sufficient opportunity to ask questions of the

Buyer's management and to receive answers from the Buyer's

management regarding all such matters.

F. The Acquired Company warrants and represents that this

Agreement and the transactions contemplated hereby have been

duly approved by the Acquired Company's Board of Directors.

G. Upon the closing of this Agreement, the Parties

understand that it is the plan of the Buyer to sell and divest

all of the business and assets conducted by the Buyer prior to

the acquisition of the Seller as described as the "Divestiture"

in Section 1.1 of this Agreement.

NOW THEREFORE THE PARTIES AGREE AS FOLLOWS:

ARTICLE I

DEFINITIONS

SECTION 1.1. Definitions. The following terms shall have

the following meanings for the purposes of this Agreement.

"Accountants" means the accountants employed by the

Acquired Company to prepare the Acquired Company's financial

statements.

"Acquired Company" or "Company" means Energy One Resource

Services, Inc., a corporation domiciled in the province of

Alberta, Canada with principal offices at 1000, 888 - 3rd Street,

S.W., Calgary, Alberta T2P 5LR.

"Acquired Company's Capital Stock" shall mean the total

amount of authorized shares of the Acquired Company's capital

stock (of every class and series) which shall include all

classes of said capital stock as authorized or for which the

Acquired Company has the authority to issue at the Closing.

"Affiliate" means, with respect to any specified Person, a

Person that directly or indirectly, through one or more

intermediaries, controls or is controlled by, or is under common

control with, the Person specified.

"Agreement" means this Securities Purchase Agreement,

including all exhibits hereto, as it may be amended from time to

time.

"Authority" means any governmental regulatory or

administrative body, governmental agency, governmental

subdivision or authority, any court or judicial authority, any

public, private or industry governmental regulatory authority,

whether foreign, national, federal, state or local or otherwise,

or any Person lawfully empowered by any of the foregoing to

enforce or seek compliance with any regulation.

"Business" means with respect to the Acquired Company it

current business operations.

"Buyer" has the meaning set forth in the preface above.

"Buyer's Common Stock" shall mean shares of the Buyer's

Common Stock (par value $0.001).

"Buyer's Stock Transfer Agent" shall mean Holliday Stock

Transfer with principal offices at 2939 North 67th Place,

Scottsdale, Arizona 85251.

"Calculated Amount" shall mean the pro rata number of the

Buyer's Common Stock owned by each Seller, which pro rata

number shall be determined by multiplying the fraction with each

Seller's Common Stock as the numerator and the total number of

Sellers' Common Stock as the denominator outstanding as of the

Closing times the Purchase Price.

"Closing" has the meaning set forth in Section 2.5 below.

"Closing Date" has the meaning set forth in Section 2.5

below.

"Closing Financial Statements" has the meaning set forth in

Section 6.6 below.

"Code" means the Internal Revenue Code of 1986, as amended.

"Competitive Business" has the meaning set forth in Section

5.14(a) below.

"Confidential Information" means any information concerning

the Business and affairs of each of the Acquired Company that is

not already generally available to the public.

"Contract" means any contract, lease, commitment,

understanding, sales order, purchase order, agreement,

indenture, mortgage, note, bond, right, warrant, instrument,

plan, permit or license, whether written or oral, which is

intended or purports to be binding and enforceable.

"Directors" shall mean all of the members of the Board of

Directors of the Acquired Company.

"Divestiture" shall mean the planned sale and divestiture

of all of the asset's and business of the Buyer to the Buyer's

two existing officers and directors immediately following the

close of this Transaction. Under the terms of the Divestiture,

the Buyer intends to sell and transfer all of its existing

assets and business to its two existing officers and directors

in exchange for the return to the Buyer, of certain shares of

the Buyer's common stock previously issued and owned by an the

Buyer's President and Chairman, Frank Aiello.

"Environmental Laws" mean all federal, state, local and

foreign statutes, regulations, ordinances and other provisions

having the force or effect of law, all judicial and

administrative orders and determinations, all contractual

obligations and all common law concerning public health and

safety, worker health and safety, and pollution or protection of

the environment including, without limitation, all those

relating to the presence, use, production, generation, handling,

transportation, treatment, storage, disposal, distribution,

labeling, testing, processing, discharge, release, threatened

release, control, or cleanup of any Hazardous Substances,

materials or wastes, chemical substances or mixtures,

pesticides, pollutants, contaminants, toxic chemicals, petroleum

products or byproducts, asbestos, polychlorinated biphenyls,

noise or radiation, each as amended and as now or hereafter in

effect, including (but not limited to) Canadian Environmental

Protection Act, R.S.C. 1985, c. 16 (4th Supp.), as amended from

time to time

"Financial Statements" means the financial statements

delivered to the Buyer for the fiscal year ending immediately

prior to the date of this Agreement and the financial statements

delivered to the Buyer for the financial period immediately

preceding the date of this Agreement each of which is attached

to Exhibit A hereto.

"GAAP" means Canadian generally accepted accounting

principles as in effect from time to time as consistently

applied by the Acquired Company.

"Hazardous Substance" means any material or substance which

(i) constitutes a hazardous substance, toxic substance or

pollutant (as such terms are defined by or pursuant to any

Environmental Laws) or (ii) is regulated or controlled as a

hazardous substance, toxic substance, pollutant or other

regulated or controlled material, substance or matter pursuant

to any Environmental Laws.

"Indemnified Party" has the meaning set forth in Article

VIII.

"Indemnifying Party" has the meaning set forth in Article

VIII below.

"Intellectual Property" means (a) all inventions (whether

patentable or unpatentable and whether or not reduced to

practice), all improvements thereto, and all patents, patent

applications, and patent disclosures, together with all

reissuances, continuations, continuations-in-part, revisions,

extensions, and reexaminations thereof, (b) all trademarks,

service marks, trade dress, logos, trade names, and corporate

names, together with all translations, adaptations, derivations,

and combinations thereof and including all goodwill associated

therewith, and all applications, registrations, and renewals in

connection therewith, (c) all copyrightable works, all

copyrights, and all applications, registrations, and renewals in

connection therewith, (d) all mask works and all applications,

registrations, and renewals in connection therewith, (e) all

trade secrets and confidential business information (including

ideas, research and development, know-how, formulas,

compositions, manufacturing and production processes and

techniques, technical data, designs, drawings, specifications,

customer and supplier lists, pricing and cost information, and

business and marketing plans and proposals), (f) all computer

software (including data and related documentation), (g) all

other proprietary rights, and (h) all copies and tangible

embodiments thereof (in whatever form or medium).

"Irrevocable Instructions" shall mean the irrevocable

instructions approved by the Buyer and the Acquired Company and

to be given, at Closing to the Buyer's Stock Transfer Agent

instructing the Buyer's Stock Transfer Agent to issue one (1)

share of the Buyer's Common Stock to each Seller for each share

of the Seller's Common Stock received and delivered by each

Seller at Closing.

"Knowledge" means what is known or should have been known

after reasonable investigation.

"Latest Balance Sheet" means the unaudited balance sheet of

the Acquired Company delivered to the Buyer for the financial

period immediately preceding the date of this Agreement as

attached to Exhibit A hereto.

"Law" means any law, statute, regulation, ordinance, rule,

order, decree, judgment, consent decree, settlement agreement or

governmental requirement enacted, promulgated, entered into,

agreed or imposed by any Authority.

"Liability" means any liability (whether known or unknown,

whether asserted or unasserted, whether absolute or contingent,

whether accrued or unaccrued, whether liquidated or

unliquidated, and whether due or to become due), including any

liability for Taxes.

"Lien" means any mortgage, lien (except for any lien for

Taxes not yet due and payable), charge, restriction, pledge,

security interest, option, lease or sublease, claim, right of

any third party, easement, encroachment or encumbrance.

"Material Adverse Effect" shall mean any adverse

circumstances, developments or matters whose effect on the

Business or any of the Acquired Company, properties, assets,

results, operations, condition (financial and other) and

prospects, either alone or in the aggregate, is or would

reasonably expected to exceed $100,000.00..

"Ordinary Course of Business" means the ordinary course of

business consistent with past custom and practice (including

with respect to quantity and frequency).

"Owned Property" has the meaning set forth in Article III

below.

"PBGC" means the Pension Benefit Guaranty Corporation.

"Permits" has the meaning set forth in Article III below.

"Permitted Encumbrances" means those charges as set forth

in Exhibit "G"

"Person" means an individual, a partnership, a

corporation, an association, a joint stock company, a trust, a

joint venture, an unincorporated organization, or a governmental

entity (or any department, agency, or political subdivision

thereof).

"Purchase Price" means fourteen million eight hundred

thirty-nine thousand (14,839,000) shares of the Buyer's Common

Stock.

"Schedules" means the disclosure schedules accompanying

this Agreement.

"Securities Act" means the Securities Act of 1933, as

amended.

"Securities Exchange Act" means the Securities Exchange Act

of 1934, as amended.

"Sellers" has the meaning set forth in the preface above.

"Seller's Common Stock" means all of the Class "A" Common

Stock of the Acquired Company.

"Subsidiary" means any corporation, partnership or limited

liability company with respect to which a specified Person (or a

Subsidiary thereof) owns a majority of the common stock or has

the power to vote or direct the voting of sufficient securities

to elect a majority of the directors.

"Tax" means any federal, provincial, local, or foreign

income, gross receipts, license, payroll, employment, excise,

severance, stamp, occupation, premium, windfall profits, ,

customs duties, capital stock, franchise, profits, withholding,

social security (or similar), unemployment, disability, real

property, personal property, sales, use, transfer, registration,

value added, alternative or add-on minimum, estimated, or other

tax of any kind whatsoever, including any interest, penalty, or

addition thereto, whether disputed or not.

"Tax Return" means any return, declaration, report, claim

for refund, or information return or statement relating to

Taxes, including any schedule or attachment thereto, and

including any amendment thereof.

"Transaction" means the acquisition by the Buyer of all of

the Acquired Company's Capital Stock under the terms of this

Agreement.

ARTICLE II

PURCHASE AND SALE OF SHARES

SECTION 2.1. Basic Transaction. On and subject to the terms

and conditions of this Agreement, the Buyer agrees to purchase

from each of the Sellers, and each of the Sellers agrees to

sell, or cause to be sold, to the Buyer, all of the Seller's

Common Stock owned and held by them in consideration of the

Buyer's issuance of the Calculated Amount to each Seller which,

in the aggregate, represents the Purchase Price specified

herein.

SECTION 2.2. Payment of Purchase Price. On the Closing

Date, in consideration for the delivery of good and marketable

title of the Seller's Stock owned by each of the Sellers, the

Buyer shall pay to each of the Sellers and in payment of the

Purchase Price, the Calculated Amount. The aggregate number of

the Buyer's Common Stock to be issued shall not exceed the

Purchase Price and the Parties agree that the Buyer shall

reasonably rely upon the information provided by the Company and

each Seller in determining the number of shares of the Buyer's

Common Stock to be issued to each Seller. All of the shares of

the Buyer's Common Stock issued pursuant to this Agreement shall

bear a restricted securities legend. Each of the Sellers

acknowledges and agrees that he, she, or it is acquiring the

Buyer's Common Stock for investment purposes only and each

further agrees that each stock certificate so issued shall carry

such customary language restricting the sale or transfer of the

Buyer's Common Stock to reasonably ensure that the Buyer can

claim an exemption under Section 4(2) of the Securities Act of

1933 and each Seller further agrees to execute and deliver any

additional documents or agreements as reasonably requested by

the Buyer and to assist the Buyer with claiming said exemption.

SECTION 2.3. The Closing. The closing of this Transaction

(the "Closing") shall take place at the offices of the Buyer,

#8, 3927 Edmonton Trail, N.E., Calgary, Alberta T2E 6T1,

commencing at 11:00 a.m. local time on December 30, 2008 (the

"Closing Date"). It is the intent of the parties that the Buyer

shall assume control of the Acquired Company immediately after

the Closing.

SECTION 2.6. Closing Deliveries by each Seller. To effect

the transfer referred to in Section 2.1 hereof and the delivery

of the Purchase Price, each Seller shall deliver the following

at the Closing:

(a) certificates evidencing the Seller's Stock, free

and clear of any and all Liens, duly endorsed in blank by

the Seller whose name is registered as the registered

holder of the stock certificate representing the Seller's

Common Stock thereon for transfer or accompanied by stock

powers duly executed in blank;

(b) all consents, approvals, releases and waivers from

any governmental Authorities and other third parties

required or necessary to consummate this Transaction

satisfactory in form and substance to the Buyer and its

counsel;

All instruments and documents executed and delivered to the

Buyer pursuant hereto shall be in form and substance and shall

be executed in a manner satisfactory to the Buyer and its

counsel.

SECTION 2.7. Closing Deliveries by the Buyer. To effect the

transfer referred to in Section 2.1 hereof and the delivery of

the Purchase Price, the Buyer shall deliver the following at the

Closing:

(a) irrevocable instructions to the Buyer's Stock

Transfer Agent instructing the Buyer's Stock Transfer Agent

to issue the Calculated Amount of the Buyer's Common Stock

to each Seller for the Seller's Common Stock received and

delivered by each Seller at Closing in accordance with

Section 2.6 of this Agreement (the "Irrevocable

Instructions"). The aggregate total number of shares of the

Buyer's Common Stock set forth in the Irrevocable

Instructions shall not exceed the Purchase Price and in the

event that the Buyer reasonably believes that one or more

shares of the Seller's Common Stock are not received and

delivered at Closing in accordance with Section 2.6 of this

Agreement, the Parties agree that the Purchase Price shall

be reduced by the Calculated Amount for said shares.

All instruments and documents executed and delivered by each of

the Sellers pursuant hereto shall be in form and substance, and

shall be executed in a manner, reasonably satisfactory to the

Buyer and its counsel.

ARTICLE III-A

REPRESENTATIONS OF EACH OF THE SELLERS

Each of the Sellers hereby represents and warrants to the

Buyer that the statements contained in this Article III-A are

correct and complete as of the date of this Agreement, and will

be correct and complete as of the Closing Date (as though made

then and as though the Closing Date were substituted for the

date of this Agreement throughout this Article III-A), except as

set forth in the Schedules hereto.

SECTION 3.1A. Authorization of Transaction. Each of the

Sellers has full power and authority to execute and deliver this

Agreement and to perform his, her, or its obligations hereunder.

This Agreement constitutes the valid and legally binding

obligation of each of the Sellers, enforceable in accordance

with its terms and conditions. Each of the Sellers need not

give any notice to, make any filing with, or obtain any

authorization, consent, or approval of any government or

governmental agency in order to consummate this Transaction.

SECTION 3.2.A. Brokers' Fees. Each of the Sellers has no

Liability or obligation to pay any fees or commissions to any

broker, finder, or agent with respect to this Transaction for

which the Buyer could become liable or obligated.

SECTION 3.3A. Seller's Common Stock. Each of the Sellers

holds of record and owns beneficially all of the Seller's Common

Stock, free and clear of any restrictions on transfer (other

than any restrictions under the Securities Act and applicable

securities Laws), Taxes, Liens, options, warrants, purchase

rights, Contracts, commitments, equities, claims, and demands.

Each of the Sellers is not a party to any option, warrant,

purchase right, or other Contract or commitment that could

require said Seller to sell, transfer, or otherwise dispose of

any of the Seller's Common Stock (other than this Agreement).

Each of the Sellers is not a party to any voting trust, proxy,

or other agreement or understanding with respect to the voting

of any of the Seller's Common Stock.

SECTION 3.4A. Understanding RE: Tax Matters. Prior to

entering into this Agreement, each of the Sellers warrant and

represent that they have consulted with and relied upon a tax

advisor of their own choosing and in so doing that they are

aware and understand the following special tax risks and

considerations related to the acquisition of the Buyer's Common

Stock as contemplated by this Agreement:

SECTION 3.4A.1. Share Exchange & Tax Issues for Canadians

Holding the Seller's Common Stock. The Canadian Income Tax Act

does not provide for any income tax deferral on a transfer by

way of share for share exchange where the taxpayer is receiving

securities from a non-resident corporation. Therefore each

Canadian resident taxpayer must report the disposition of their

shares in Energy One Resource Services, Inc. in the taxation

year that they disposed of their shares in Energy One Resource

Services, Inc. The proposed closing date is December 30, 2008

and therefore the Energy One Resources Services, Inc.

shareholders that effect the share exchange must report the

disposition of their Energy One Resource Services, Inc. shares

in the fiscal year that includes December 30, 2008.

 

SECTION 3.4A.2. Dividends. Upon the issuance of the shares of

Buyer's Common Stock to each Seller, each Seller may have rights

to receive stock dividends if and when any such dividends are

every declared and paid by the Buyer to its stockholders If

any dividends are declared by the Buyer, such dividends will be

paid out from the jurisdiction of the Buyer. This means that

each Canadian resident shareholder will be subject to United

States withholding tax on the dividend as well as the dividend

will be required to be reported (and tax to be paid) on the

Canadian Income Tax return in the fiscal year that it is

declared to be paid. The Canada-US Income Tax Convention does

provide relief from the double taxation by providing a credit

for the withholding tax paid by the Canadian taxpayer.

SECTION 3.4A.3. US Income and Estate Tax Issues Additionally,

since the Buyer is a corporation domiciled in the United States,

each Seller may be exposed to liability for United States income

and estate taxes. We recommend that you obtain independent legal

and tax advice on this matter.

NO OPINION OF COUNSEL OR RULING FROM ANY GOVERNMENTAL

AUTHORITY WILL BE REQUESTED WITH RESPECT TO ANY TAX

MATTER CONCERNING THIS TRANSACTION. HOLDERS OF THE

SELLER'S COMMON STOCK ARE URGED TO CONSULT THEIR OWN

TAX ADVISORS, ATTORNEYS OR ACCOUNTANTS CONCERNING

THEIR OWN TAX SITUATION AND POTENTIAL CHANGES IN THE

APPLICABLE LAW.

SECTION 3.5A. Receipt of Disclosures RE: The Buyer. Each

of the Sellers expressly warrants and represents that they have

fully reviewed the risks and merits of acquiring the Buyer's

Common Stock pursuant to this Transaction. In particular, each

of the Sellers has fully reviewed and evaluated the following

documents as filed by the Seller with the United States

Securities and Exchange Commission (the "SEC") (as found at the

SEC's website:

http://idea.sec.gov/cgi-bin/browse

idea?company=Cal+Alta+Auto+Glass&match=&CIK=&filenum=&State=&Country=&SIC=

&owner=exclude&Find=Find+Companies&action=getcompany

which includes the following:

(1) A copy of the Buyer's Form 10-KSB, as filed with the SEC,

for the year ending December 31, 2006;

(1)(2) A copy of the Buyer's Form 10-KSB, as filed with the

SEC, for the year ending December 31, 2007;

(1)(3) A copy of the Buyer's Form 10-QSB for the First

Quarter 2006, Second Quarter 2006, and Third Quarter 2006

and the Buyer's Form 10-QSB for the First Quarter 2007,

Second Quarter 2007, and Third Quarter 2007, each as

filed with the SEC;

(4) A copy of the following Form 8-Ks, related to this

contemplated Transaction and each as filed with the SEC

on the following dates: May 30, 2007, October 19, 2007,

March 10, 2008, and August 28, 2008.

SECTION 3.6A. Matter of General Risks Associated with the

Purchase of the Buyer's Common Stock. The acquisition of the

Buyer's Common Stock involves a HIGH DEGREE OF RISK and is

suitable only for persons of substantial means who have the

financial capability to make the required investment and hold

the Buyer's Common Stock for a long period of time and incur the

loss of their entire investment. A Seller will not likely be

able to resell the Buyer's Common Stock readily. Each Seller

must, therefore, have adequate means of providing for their

current needs and personal contingencies. After the Closing of

this Transaction, the Buyer plans to divest itself of its

existing business and sell all of its existing assets. As a

result, it may be impossible to evaluate the merits of acquiring

the Buyer's Common Stock and make any historical comparisons of

the likely market value of the Buyer's Common Stock after the

planned divestiture. The Buyer's current and post-divestiture

business organization and debt obligations on its balance sheet

all involve elements of substantial risk. In many instances,

these risks arise from factors over which the Buyer will have

little or no control. Some adverse events may be more likely

than others and the consequence of some adverse events may be

greater than others. No attempt has been made to rank risks in

the order of their likelihood or potential harm. In addition to

these general risks, each of the Sellers should also consider

the factors set forth in Section 3.7A. below.

SECTION 3.7A. Risks Associated with Buyer's Common Stock.

In addition to those risks set forth in the Buyer's 2007 Form

10-KSB filed with the SEC, the acquisition of the Buyer's Common

Stock should only be acquired by those persons who can afford to

lose their entire investment:

(1) The Buyer's Common Stock trades only on a limited and

sporadic basis and no liquid trading market exists or is

likely to exist in the foreseeable future. The Buyer's

Common Stock is deemed a "penny stock" within the meaning

of Rule 3a51-1 of the Securities Exchange Act of 1934. As

a result, any holder of the Buyer's Common Stock will

likely face difficulties in selling or disposing of the

Buyer's Common Stock in the future.

(2) The Buyer had a loss of $1,616,794 and negative cash flow

during the fiscal year ending December 31, 2007 and there

can be no assurance that the Buyer will achieve

profitability and positive cash flow at any time in the

near future or, if it does achieve profitability and

positive cash flow, that it can be sustained. Further, the

Buyer has not paid any dividends and there is presently no

plans to pay any dividends.

(3) The Buyer plans to sell all of its existing business and

assets immediately after closing of this Transaction. While

the Buyer believes that the Divestiture, will better allow

the Buyer to focus on the business of the Acquired Company,

there can be no assurance that the sale or divestiture of

its existing business will not result in additional and

significant losses to the Buyer with the result that the

Buyer's financial condition will deteriorate further after

the close of this Transaction and the Divestiture.

(3)(4) In the event that all of the stockholders of the

Acquired Company (described herein as the "Sellers"), sell

their Seller's Common Stock to the Buyer in this

Transaction, control over the Buyer will still remain with

its officers and directors. As a result, each Seller will

have little or no ability to influence or control the Buyer

and thereby have little or no control over their

investment.

(3)(5) The Buyer had, as of September 30, 2008, $130,553 in

Total Equity on its Balance Sheet. On the same date, the

Buyer had Total Current Assets of only $167,915 and Total

Current Liabilities of $397,740. While the Buyer's

management believes that its financial policies are prudent

and appropriate to the Buyer's plans and circumstances, the

Buyer's minimal equity when combined with its high level of

Total Current Liabilities relative to its Total Current

Assets, further confirms that the Buyer will need to raise

additional capital in the future. While the Buyer has

expressed an interest in raising as much as $3,000,000

(U.S.D.) in the future, there can be no assurance that the

Buyer will, upon close of this Transaction and the

Divestiture, raise any additional capital or if it does

raise additional capital that it will be able to do so on

terms that reasonable in light of the Buyer's existing

circumstances.

(3)(6) The Buyer has not received any commitment or

expression of interest from any underwriter, broker-dealer,

or other source of capital and there can be no assurance

that the Buyer will be able to raise any additional capital

at any time in the future. However, in the event that the

Buyer is able to raise additional capital, each Seller

should be prepared to incur immediate and substantial

dilution on their current investment.

(3)(7) The terms of this Transaction provides that each share

of the Seller's Common Stock is to be exchanged for one

share of the Buyer's Common Stock. The terms of this

exchange have been determined on an arbitrary basis and the

terms of this Transaction have not been examined or

evaluated in light of any fair market value or other

customary measurements.

(8) As described in Section 3.4A of this Agreement, each Seller

will be exposed to certain tax-related risks associated

with the exchange of the Seller's Common Stock for the

Buyer's Common Stock. Each Seller will need to consult and

seek the advice of their own tax advisor prior to entering

into this Agreement.

(9) The Buyer's Common Stock is a HIGH RISK investment and the

acquisition of the Buyer's Common Stock, as contemplated by

the terms of this Agreement, should only be undertaken by

persons who can afford the total loss of their investment.

SECTION 3.8A. Further Representations of Each Seller. Each

Seller represents and warrants to the Buyer that:

(1) They are an Accredited Investor (as that term is defined

in Rule 501 of Regulation D of the Securities Act of

1933).

(1)(2) They are experienced and sophisticated in purchasing

the securities of small public companies whose securities

are traded on a limited and sporadic basis.

(1)(3) They have had a full and unrestricted opportunity to

ask questions of the Buyer's officers and directors and

to receive answers to all said questions.

(1)(4) They have had access to the Buyer's financial and

corporate books and records for the purpose of assessing

the Buyer and the merits and risks of acquiring the

Buyer's Common Stock.

(1)(5) They have received such disclosures regarding the

Buyer and its corporate and financial affairs equivalent

to that found in a Registration Statement.

(1)(6) The Transaction contemplated by this Agreement is not

the result of any advertising or general solicitation.

(1)(7) The Buyer's Common Stock to be acquired by each Seller

hereby will be issued with a restricted securities legend

in accordance with the Securities Act of 1933 and the

Seller is acquiring the Buyer's Common Stock for

investment purposes only and not with a view toward

distribution.

(1)(8) They have, at all times hereunder, relied upon their

own business, financial, investment, tax, and legal

advisor in evaluating the terms of this Agreement and the

proposal to acquire the Buyer's Common Stock.

ARTICLE III

REPRESENTATIONS OF THE ACQUIRED COMPANY

The Acquired Company hereby represents and warrants to the

Buyer that the statements contained in this Article III are

correct and complete as of the date of this Agreement, and will

be correct and complete as of the Closing Date (as though made

then and as though the Closing Date were substituted for the

date of this Agreement throughout this Article III), except as

set forth in the Schedules hereto.

SECTION 3.1. Authorization of Transaction. The Acquired

Company has full po


 
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