Exhibit2.1 SHAREEXCHANGE AGREEMENT By andAmong E-18Corp. ADelaware Corporation and SquareOneMedical, Inc. A NevadaCorporation and theShareholders of SquareOne Medical, Inc., a Nevada Corporation Dated asof June 25, 2009 SHAREEXCHANGE AGREEMENT

Section 1.01 Share Exchange. On the terms and subject to the conditions set forth in this Agreement, on the Closing Date, the SquareOne Shareholders by executing this Agreement, shall assign, transfer and deliver, free and clear of all liens, pledges, encumbrances, charges, restrictions or known claims of any kind, nature, or description, the number of shares of SquareOne set forth on the SquareOne Schedule attached hereto, constituting all of the shares of SquareOne held by such SquareOne Shareholders.

Upon consummation of the transaction contemplated herein, all of the issued and outstanding shares of SquareOne shall be held by E-18.  Upon consummation of the transaction contemplated herein there shall be 45,000,000 shares of E-18 Common Stock issued and outstanding.

 

Section 1.02 Exchange of Convertible Securities. Effective as of the Closing Date, the holders (individually, the “Holder,” and collectively the “Holders”) of the outstanding warrants, options and convertible debentures of SquareOne (collectively, the “Convertible Securities”), as set forth on Schedule 1.02 hereto, upon the exercise or conversion of the Convertible Securities, shall have the right to convert such Convertible Securities into the kind and amount of shares of stock and other securities and property which such Holder would have owned or have been entitled to receive prior to the Closing of the share exchange transaction contemplated in this Agreement, multiplied by 1.6897. 

 

Section 1.03 Cancellation of Certain Shares of E-18 Common Stock. Prior to the Closing Date, Hadas Yaron and Yosef Itamar Krytman, the former officers and directors of E-18, and Avraham Yoel Zeitlin, a principal shareholder of E-18, shall cancel a total number of 15,000,000 shares of E-18 Common Stock.

 

Section 1.04 Closing.  The closing (“Closing”) of the transactions contemplated by this Agreement shall occur upon the exchange of the stock of E-18 and SquareOne as described in Section 1.01 herein (the “Closing Date”).  Such Closing shall take place at a mutually agreeable time and place.

 

Section 1.05 Closing Events.  At the Closing, E-18, SquareOne and the SquareOne Shareholders shall execute, acknowledge, and deliver (or shall ensure to be executed, acknowledged, and delivered), any and all certificates, opinions, financial statements, schedules, agreements, resolutions, rulings or other instruments required by this Agreement to be so delivered at or prior to the Closing, together with such other items as may be reasonably requested by the parties hereto and their respective legal counsel in order to effectuate or evidence the transactions contemplated hereby.

 

Section 1.06 Termination.  This Agreement may be terminated by the board of directors of SquareOne or E-18 only in the event that E-18 or SquareOne does not meet the conditions precedent set forth in Articles VI and VII.  If this Agreement is terminated pursuant to this section, this Agreement shall be of no further force or effect, and no obligation, right or liability shall arise hereunder.

 

Section 1.07 Directors of E-18 at Closing. Effective as of the Closing Date, and subject to applicable regulatory requirements, including the preparation, filing and distribution to the shareholders of E-18 of a Schedule 14(f)-1 Notice to Stockholders, Hudas Yaron and Yosef Itamar Krytman shall resign from the board of directors of E-18 and the following individuals shall be appointed to the board of E-18:

Section 1.08 Officers of E-18 at Closing.  Effective as of the Closing Date, Hadas Yaron and Yosef Itamar Krytman shall resign from each officer position held at E-18, and the following individual shall be appointed to the offices of E-18:

As an inducement to, and to obtain the reliance of E-18, except as set forth in the SquareOne Schedules, (as hereinafter defined), SquareOne represents and warrants as of the Closing Date, as defined below, as follows:

 

Section 2.01 Incorporation. Section 2.02 SquareOne is a company duly incorporated, validly existing, and in good standing under the laws of the state of Nevada and has the corporate power and is duly authorized under all applicable laws, regulations, ordinances, and orders of public authorities to carry on its business in all material respects as it is now being conducted. Included in the SquareOne Schedules are complete and correct copies of the articles of incorporations and bylaws of SquareOne as in effect on the date hereof. The execution and delivery of this Agreement does not, and the consummation of the transactions contemplated hereby will not, violate any provision of SquareOne’s articles of incorporation or bylaws. SquareOne has taken all actions required by law, its articles of incorporation and bylaws, or otherwise to authorize the execution and delivery of this Agreement.  SquareOne has full power, authority, and legal capacity and has taken all action required by law, its articles of incorporation and bylaws, and otherwise to consummate the transactions herein contemplated.

 

Section 2.02 Authorized Shares. SquareOne is authorized to issue 70,000,000 shares of capital stock, consisting of 50,000,000 shares of common stock, par value of $0.01 per share and 20,000,000 shares of preferred stock, par value of $0.01 per share.  There are 20,714,000 shares of common stock currently issued and outstanding and zero shares of preferred stock currently issued and outstanding.  The issued and outstanding shares are validly issued, fully paid, and non-assessable and not issued in violation of the preemptive or other rights of any person.  Except as disclosed in the Schedule 2.02, there are not  other bonds, debentures, notes or other indebtedness of SquareOne having the right to vote (or convertible into, or exchangeable for, securities having right to the vote (“Voting SquareOne Debt”). Except as disclosed in the Schedule 2.02, there are not other options, warrants, rights, stock-based performance units, commitments, contracts, arrangements or undertakings of any kind to which SquareOne is a party or by which any of them is bound (a) obligating SquareOne to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock or other equity interests in, or any security convertible or exercisable for or exchangeable into any capital stock of or other equity interest in SquareOne or any Voting SquareOne Debt, (b) obligating SquareOne to issue, grant, extend or enter into any such option, warrant, call, right, security, commitment, contract, arrangement or undertaking or (c) that give any person the right to receive any economic benefit or right similar to or derived from the economic benefits and rights occurring to holders of the capital stock of SquareOne. As of the date of this Agreement, there are not any outstanding contractual obligations of SquareOne to repurchase, redeem or otherwise acquire any shares of capital stock of SquareOne.

Section 2.03 Subsidiaries.  As of the date of this Agreement, SquareOne does not have any subsidiaries, and does not own, beneficially or of record, any shares of any other corporation.

 

Section 2.04 Financial Statements.

 

(a) Included in the SquareOne Schedules are the audited balance sheets of SquareOne as of December 31, 2008 and 2007 and the related audited statements of operations, stockholders’ equity and cash flows for the fiscal years ended December 31, 2008 and 2007 and for the quarter ended March 31, 2009, together with the notes to such statements and the opinion of Moore & Associates, Chartered, independent certified public accountants.

 

(b) All such financial statements have been prepared in accordance with generally accepted accounting principles (the “US GAAP”) consistently applied throughout the periods involved. The SquareOne balance sheets are true and accurate and present fairly as of their respective dates the financial condition of SquareOne.  As of the date of such balance sheets, except as and to the extent reflected or reserved against therein, SquareOne had no other liabilities or obligations (absolute or contingent) which should be reflected in the balance sheets or the notes thereto prepared in accordance with the U.S. GAAP, and all assets reflected therein are properly reported and present fairly the value of the assets of SquareOne, in accordance with the US GAAP. The statements of operations, stockholders’ equity and cash flows reflect fairly the information required to be set forth therein by generally accepted accounting principles.

 

(c) SquareOne has duly and punctually paid all governmental fees and taxation which it has become liable to pay and has duly allowed for all taxation reasonably foreseeable and is under no liability to pay any penalty or interest in connection with any claim for governmental fees or taxation and SquareOne has made any and all proper declarations and returns for taxation purposes and all information contained in such declarations and returns is true and complete and full provision or reserves have been made in its financial statements for all governmental fees and taxation.

 

(d) The books and records, financial and otherwise of SquareOne are in all material aspects complete and correct and have been maintained in accordance with good business and accounting practices.

(e) All of SquareOne’s assets are reflected on its financial statements, and, except as set forth in the SquareOne Schedules or the financial statements of SquareOne or the notes thereto, SquareOne has no material liabilities, direct or indirect, matured or unmatured, contingent or otherwise.

 

Section 2.05 Information.  The information concerning SquareOne set forth in this Agreement and in the SquareOne Schedules is complete and accurate in all material respects and does not contain any untrue statement of a material fact or omit to state a material fact required to make the statements made, in light of the circumstances under which they were made, not misleading.  In addition, SquareOne has fully disclosed in writing to E-18 (through this Agreement or the SquareOne Schedules) all information relating to matters involving SquareOne or its assets or its present or past operations or activities which (i) indicated or may indicate, in the aggregate, the existence of a greater than $50,000 liability , (ii) have led or may lead to a competitive disadvantage on the part of SquareOne or (iii) either alone or in aggregation with other information covered by this Section, otherwise have led or may lead to a material adverse effect on SquareOne, its assets, or its operations or activities as presently conducted or as contemplated to be conducted after the Closing Date, including, but not limited to, information relating to governmental, employee, environmental, litigation and securities matters and transactions with affiliates.

Section 2.06 Absence of Certain Changes or Events.  Since March 31, 2009:

 

(a) There has not been any material adverse change in the business, operations, properties, assets, or condition (financial or otherwise) of SquareOne;

 

(b) SquareOne has not (i) amended its articles of incorporation or bylaws; (ii) declared or made, or agreed to declare or make, any payment of dividends or distributions of any assets of any kind whatsoever to stockholders or purchased or redeemed, or agreed to purchase or redeem, any of its shares; (iii) made any material change in its method of management, operation or accounting, (iv) entered into any other material transaction other than sales in the ordinary course of its business; or (v) made any increase in or adoption of any profit sharing, bonus, deferred compensation, insurance, pension, retirement, or other employee benefit plan, payment, or arrangement made to, for, or with its officers, directors, or employees; and

 

(c) Except as disclosed in the SquareOne Schedules, SquareOne has not (i) granted or agreed to grant any options, warrants or other rights for its stocks, bonds or other corporate securities calling for the issuance thereof, (ii) borrowed or agreed to borrow any funds or incurred, or become subject to, any material obligation or liability (absolute or contingent) except as disclosed herein and except liabilities incurred in the ordinary course of business; (iii) sold or transferred, or agreed to sell or transfer, any of its assets, properties, or rights or canceled, or agreed to cancel, any debts or claims; or (iv) issued, delivered, or agreed to issue or deliver any stock, bonds or other corporate securities including debentures (whether authorized and unissued or held as treasury stock) except in connection with this Agreement.

Section 2.07 Litigation and Proceedings. As of the date of this Agreement, there are no actions, suits, proceedings, or investigations pending or, to the knowledge of SquareOne after reasonable investigation, threatened by or against SquareOne or affecting SquareOne or its properties, at law or in equity, before any court or other governmental agency or instrumentality, domestic or foreign, or before any arbitrator of any kind.  SquareOne does not have any knowledge of any material default on its part with respect to any judgment, order, injunction, decree, award, rule, or regulation of any court, arbitrator, or governmental agency or instrumentality or of any circumstances which, after reasonable investigation, would result in the discovery of such a default.

 

Section 2.08 Contracts.

 

(a) All “material” contracts, agreements, franchises, license agreements, debt instruments or other commitments to which  SquareOne is a party or by which it or any of its assets, products, technology, or properties are bound other than those incurred in the ordinary course of business are set forth on the SquareOne Schedules. A “material” contract, agreement, franchise, license agreement, debt instrument or commitment is one which (i) will remain in effect for more than six (6) months after the date of this Agreement or (ii) involves aggregate obligations of at least fifty thousand dollars ($50,000);

 

(b) All contracts, agreements, franchises, license agreements, and other commitments to which SquareOne is a party or by which its properties are bound and which are material to the operations of SquareOne taken as a whole are valid and enforceable by SquareOne in all respects, except as limited by bankruptcy and insolvency laws and by other laws affecting the rights of creditors generally; and

 

(c) Except as included or described in the SquareOne Schedules or reflected in the most recent SquareOne balance sheet, SquareOne is not a party to any oral or written (i) contract for the employment of any officer or employee; (ii) profit sharing, bonus, deferred compensation, stock option, severance pay, pension benefit or retirement plan, (iii) agreement, contract, or indenture relating to the borrowing of money, (iv) guaranty of any obligation; (vi) collective bargaining agreement; or (vii) agreement with any present or former officer or director of SquareOne.

 

Section 2.09 No Conflict with Other Instruments.  The execution of this Agreement and the consummation of the transactions contemplated by this Agreement will not result in the breach of any term or provision of, constitute a default under, or terminate, accelerate or modify the terms of any indenture, mortgage, deed of trust, or other material agreement, or instrument to which SquareOne is a party or to which any of its assets, properties or operations are subject.

 

Section 2.10 Compliance with Laws and Regulations.  To the best of its knowledge, SquareOne has complied with all applicable statutes and regulations of any federal, state, or other governmental entity or agency thereof, except to the extent that noncompliance would not materially and adversely affect the business, operations, properties, assets, or condition of SquareOne or except to the extent that noncompliance would not result in the occurrence of any material liability for SquareOne.  This compliance includes, but is not limited to, the filing of all reports to date with federal and state securities authorities.

 

 

 

 

Section 2.11 Authority, Execution and Delivery; Enforceability of Agreement. SquareOne has all requisite corporate power and authority to execute and deliver this Agreement and to consummate the Share Exchange. The execution and delivery by SquareOne of this Agreement and the consummation by SquareOne of the Share Exchange have been duly authorized and approved by the Board of Directors of SquareOne and no other corporate proceedings on the part of SquareOne are necessary to authorize this Agreement and the Share Exchange.  When executed and delivered, this Agreement will be enforceable against SquareOne in accordance with its terms.

 

Section 2.12 SquareOne Schedules.  SquareOne has delivered to E-18 the following schedules, which are collectively referred to as the “SquareOne Schedules” and which consist of separate schedules dated as of the date of execution of this Agreement, all certified by the chief executive officer of SquareOne as complete, true, and correct as of the date of this Agreement in all material respects:

 

(a) a schedule containing complete and correct copies of the articles of incorporation and bylaws in effect as of the date of this Agreement;

 

(b) a schedule containing the financial statements of SquareOne identified in paragraph 2.04(a);

 

(c) a schedule setting forth a description of any material adverse change in the business, operations, property, inventory, assets, or condition of SquareOne since March 31, 2009, required to be provided pursuant to section 2.06 hereof;

 

(d) a schedule of any exceptions to the representations made herein; and

 

(e) a schedule containing the other information requested above.

 

SquareOne shall cause the SquareOne Schedules and the instruments and data delivered to E-18 hereunder to be promptly updated after the date hereof up to and including the Closing Date.

 

Section 2.13 Valid Obligation.  This Agreement and all agreements and other documents executed by SquareOne in connection herewith constitute the valid and binding obligation of SquareOne, enforceable in accordance with its or their terms, except as may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and subject to the qualification that the availability of equitable remedies is subject to the discretion of the court before which any proceeding therefore may be brought.

 

Section 2.14 Title to Properties.  Except as disclosed in Schedule 2.14, SquareOne does not own any real property.

 

Section 2.15 Intellectual Property.  Except as disclosed in Schedule 2.15, SquareOne does not own, nor is validly licensed nor otherwise has the right to use, any Intellectual Property Rights.  No claims are pending or, to the knowledge of SquareOne, threatened that SquareOne is infringing or otherwise adversely affecting the rights of any person with regard to any Intellectual Property Rights.

As an inducement to, and to obtain the reliance of SquareOne and the SquareOne Shareholders, except as set forth in the E-18 Schedules (as hereinafter defined), E-18 represents and warrants, as of the date hereof and as of the Closing Date, as follows:

 

Section 3.01 Organization.  E-18 is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware and has the corporate power and is duly authorized under all applicable laws, regulations, ordinances, and orders of public authorities to carry on its business in all material respects as it is now being conducted.  Included in the E-18 Schedules are complete and correct copies of the certificate of incorporation and bylaws of E-18 as in effect on the date hereof. The execution and delivery of this Agreement does not, and the consummation of the transactions contemplated hereby will not, violate any provision of E-18’ certificate of incorporation or bylaws.  E-18 has taken all action required by law, its certificate of incorporation, its bylaws, or otherwise to authorize the execution and delivery of this Agreement, and E-18 has full power, authority, and legal right and has taken all action required by law, its certificate of incorporation, bylaws, or otherwise to consummate the transactions herein contemplated.

 

Section 3.02 Capitalization.  E-18 is authorized to issue 150,000,000 shares of common stock, par value $.0001 per share (“E-18 Common Stock”), of which 10,000,000 shares are issued and outstanding after the cancellation of 15,000,000 shares of common stock by our officers, directors, and majority shareholder as of the date hereof, and no shares of preferred stock.  All issued and outstanding shares are legally issued, fully paid, and non-assessable and not issued in violation of the preemptive or other rights of any person. There are no bonds, debentures, notes or other indebtedness of E-18 having the right to vote (or convertible into, or exchangeable for, securities having right to the vote (“Voting E-18 Debt”). There are no options, warrants, rights, stock-based performance units, commitments, contracts, arrangements or undertakings of any kind to which E-18 is a party or by which the company is bound (a) obligating E-18 to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock or other equity interests in, or any security convertible or exercisable for or exchangeable into any capital stock of or other equity interest in E-18 or any Voting E-18 Debt, (b) obligating E-18 to issue, grant, extend or enter into any such option, warrant, call, right, security, commitment, contract, arrangement or undertaking or (c) that give any person the right to receive any economic benefit or right similar to or derived from the economic benefits and rights occurring to holders of the capital stock of E-18. As of the date of this Agreement, there are not any outstanding contractual obligations of E-18 to repurchase, redeem or otherwise acquire any shares of capital stock of E-18.

 

Section 3.03 Subsidiaries and Predecessor Corporations. E-18 does not have any subsidiaries, and does not own, beneficially or of record, any shares of any other corporation.

Section 3.04 No Assets or Liabilities. Except as set forth on the attached Schedule 3.04, E-18 does not have any (a) material assets of any kind or (b) material liabilities or obligations, whether secured or unsecured, accrued, determined, absolute or contingent, asserted or unasserted or otherwise.

 

Section 3.05  Financial Statements.

 

(a) Included in the E-18 Schedules are (i) the audited balance sheets of E-18 as of December 31, 2008 and 2007 and the related audited statements of operations, stockholders’ equity and cash flows for December 31, 2008 and 2007 together with the notes to such statements and the opinion of Weinberg & Associates LLC, independent certified public accountants with respect thereto.

 

(b) Included in the E-18 Schedules are: (i) unaudited balance sheets of March 31, 2009 and the related unaudited statements of operations, stockholders’ equity and cash flows for the quarters ended on such dates and all such financial statements have been reviewed by Weinberg & Associates LLC.

 

(c) All such financial statements have been prepared in accordance with the U.S. GAAP consistently applied throughout the periods involved. The E-18 balance sheets are true and accurate and present fairly as of their respective dates the financial condition of E-18.  As of the date of such balance sheets, except as and to the extent reflected or reserved against therein, E-18 had no liabilities or obligations (absolute or contingent) which should be reflected in the balance sheets or the notes thereto prepared in accordance with generally accepted accounting principles, and all assets reflected therein are properly reported and present fairly the value of the assets of E-18, in accordance with the US GAAP. The statements of operations, stockholders’ equity and cash flows reflect fairly the information required to be set forth therein by the US GAAP.

 

(d) E-18 has no liabilities with respect to the payment of any federal, state, county, local or other taxes (including any deficiencies, interest or penalties), except for taxes accrued but not yet due and payable.

 

(e) E-18 has timely filed all state, federal or local income and/or franchise tax returns required to be filed by it from inception to the date hereof.  Each of such income tax returns reflects the taxes due for the period covered thereby, except for amounts which, in the aggregate, are immaterial.

 

(f) The books and records, financial and otherwise, of E-18 are in all material aspects complete and correct and have been maintained in accordance with good business and accounting practices.

 

(g) All of E-18’s assets are reflected on its financial statements, and, except as set forth in the E-18 Schedules or the financial statements of E-18 or the notes thereto, E-18 has no material liabilities, direct or indirect, matured or unmatured, contingent or otherwise.

Section 3.06 Information.  The information concerning E-18 set forth in this Agreement and the E-18 Schedules is complete and accurate in all material respects and does not contain any untrue statements of a material fact or omit to state a material fact required to make the statements made, in light of the circumstances under which they were made, not misleading.  In addition, E-18 has fully disclosed in writing to E-18 (through this Agreement or the E-18 Schedules) all information relating to matters involving E-18 or its assets or its present or past operations or activities which (i) indicated or may indicate, in the aggregate, the existence of a greater than $500 liability , (ii) have led or may lead to a competitive disadvantage on the part of E-18 or (iii) either alone or in aggregation with other information covered by this Section, otherwise have led or may lead to a material adverse effect on E-18, its assets, or its operations or activities as presently conducted or as contemplated to be conducted after the Closing Date, including, but not limited to, information relating to governmental, employee, environmental, litigation and securities matters and transactions with affiliates.

Section 3.07 Absence of Certain Changes or Events.  Since December 31, 2008:

 

(a) there has not been (i) any material adverse change in the business, operations, properties, assets or condition of E-18 or (ii) any damage, destruction or loss to E-18 (whether or not covered by insurance) materially and adversely affecting the business, operations, properties, assets or condition of E-18;

 

(b) E-18  has not (i) amended its certificate of incorporation or bylaws except as required by this Agreement; (ii) declared or made, or agreed to declare or make any payment of dividends or distributions of any assets of any kind whatsoever to stockholders or purchased or redeemed, or agreed to purchase or redeem, any of its capital stock; (iii) waived any rights of value which in the aggregate are outside of the ordinary course of business or material considering the business of  E-18; (iv) made any material change in its method of management, operation, or accounting; (v) entered into any transactions or agreements other than in the ordinary course of business; (vi) made any accrual or arrangement for or payment of bonuses or special compensation of any kind or any severance or  termination pay to any present or former officer or employee; (vii) increased the rate of compensation payable or to become payable by it to any of its officers or directors or any of its salaried employees whose monthly compensation exceed $1,000; or  (viii) made any increase in any profit sharing, bonus, deferred compensation, insurance, pension, retirement, or other employee benefit plan, payment, or arrangement, made to, for or with its officers, directors, or employees;

 

(c) E-18 has not (i) granted or agreed to grant any options, warrants, or other rights for its stock, bonds, or other corporate securities calling for the issuance thereof; (ii) borrowed or agreed to borrow any funds or incurred, or become subject to, any material obligation or liability (absolute or contingent) except liabilities incurred in the ordinary course of business; (iii) paid or agreed to pay any material obligations or liabilities (absolute or contingent) other than current liabilities reflected in or shown on the most recent E-18 balance sheet and current liabilities incurred since that date in the ordinary course of business and professional and other fees and expenses in connection with the preparation of this Agreement and the consummation of the transaction contemplated hereby; (iv) sold or transferred, or agreed to sell or transfer, any of its assets, properties, or rights (except assets, properties, or rights not used or useful in its business which, in the aggregate have a value of less than $1,000), or canceled, or agreed to cancel, any debts or claims (except debts or claims which in the aggregate are of a value less than $1,000); (v) made or permitted any amendment or termination of any contract, agreement, or license to which it is a party if such amendment or termination is material, considering the business of E-18; or (vi) issued, delivered or agreed to issue or deliver, any stock, bonds or other corporate securities including debentures (whether authorized and unissued or held as treasury stock), except in connection with this Agreement; and

(d) to its knowledge, E-18 has not become subject to any law or regulation which materially and adversely affects, or in the future, may adversely affect, the business, operations, properties, assets or condition of E-18.

 

Section 3.08 Litigation and Proceedings.  There are no actions, suits, proceedings or investigations pending or, to the knowledge of E-18 after reasonable investigation, threatened by or against E-18 or affecting E-18 or its properties, at law or in equity, before any court or other governmental agency or instrumentality, domestic or foreign, or before any arbitrator of any kind except as disclosed in the E-18 Schedules.  E-18 has no knowledge of any default on its part with respect to any judgment, order, writ, injunction, decree, award, rule or regulation of any court, arbitrator, or governmental agency or instrumentality or any circumstance which after reasonable investigation would result in the discovery of such default.

 

Section 3.09  Contracts.

 

(a) E-18 is not a party to, and its assets, products, technology and properties are not bound by, any contract, franchise, license agreement, agreement, debt instrument or other commitments whether such agreement is in writing or oral.

 

(b) E-18 is not a party to or bound by, and the properties of E-18 are not subject to any contract, agreement, other commitment or instrument; any charter or other corporate restriction; or any judgment, order, writ, injunction, decree, or award; and

 

(c) E-18 is not a party to any oral or written (i) contract for the employment of any officer or employee; (ii) profit sharing, bonus, deferred compensation, stock option, severance pay, pension benefit or retirement plan, (iii) agreement, contract, or indenture relating to the borrowing of money, (iv) guaranty of any obligation, (vi) collective bargaining agreement; or (vii) agreement with any present or former officer or director of E-18.

 

Section 3.10 No Conflict with Other Instruments.  The execution of this Agreement and the consummation of the transactions contemplated by this Agreement will not result in the breach of any term or provision of, constitute a default under, or terminate, accelerate or modify the terms of, any indenture, mortgage, deed of trust, or other material agreement or instrument to which E-18 is a party or to which any of its assets, properties or operations are subject.

 

Section 3.11 Compliance with Laws and Regulations. To the best of its knowledge, E-18 has complied with all applicable statutes and regulations of any federal, state, or other applicable governmental entity or agency thereof. This compliance includes, but is not limited to, the filing of all reports to date with federal and state securities authorities.

Section 3.12 Approval of Agreement.  The board of directors of E-18 has authorized the execution and delivery of this Agreement by E-18 and has approved this Agreement and the transactions contemplated hereby.

 

Section 3.13 Material Transactions or Affiliations.  Except as disclosed herein and in the E-18 Schedules, there exists no contract, agreement or arrangement between E-18 and any predecessor and any person who was at the time of such contract, agreement or arrangement an officer, director, or person owning of record or known by E-18 to own beneficially, 5% or more of the issued and outstanding common stock of E-18 and which is to be performed in whole or in part after the date hereof or was entered into not more than three years prior to the date hereof.  Neither any officer, director, nor 5% Shareholders of E-18 has, or has had since inception of E-18, any known interest, direct or indirect, in any such transaction with E-18 which was material to the business of E-18.  E-18 has no commitment, whether written or oral, to lend any funds to, borrow any money from, or enter into any other transaction with, any such affiliated person.

 

Section 3.14 E-18 Schedules.  E-18 has delivered to SquareOne the following schedules, which are collectively referred to as the “E-18 Schedules” and which consist of separate schedules, which are dated the date of this Agreement, all certified by the chief executive officer of E-18 to be complete, true, and accurate in all material respects as of the date of this Agreement.

 

(a) a schedule containing complete and accurate copies of the certificate of incorporation and bylaws of E-18 as in effect as of the date of this Agreement;

 

(b) a schedule containing the financial statements of E-18 identified in paragraph 3.04(a) and (b);

 

(c) a schedule setting forth a description of any material adverse change in the business, operations, property, inventory, assets, or condition of E-18 since December 31, 2008, required to be provided pursuant to section 3.07 hereof; and

 

(d) a schedule setting forth any other information, together with any required copies of documents, required to be disclosed in the E-18 Schedules.

 

E-18 shall cause the E-18 Schedules and the instruments and data delivered to SquareOne hereunder to be promptly updated after the date hereof up to and including the Closing Date.

 

Section 3.15 Bank Accounts; Power of Attorney.  Set forth in the E-18 Schedules is a true and complete list of (a) all accounts with banks, money market mutual funds or securities or other financial institutions maintained by E-18 within the past twelve (12) months, the account numbers thereof, and all persons authorized to sign or act on behalf of E-18, (b) all safe deposit boxes and other similar custodial arrangements maintained by E-18 within the past twelve (12) months, (c) the check ledger for the last 12 months, and (d) the names of all persons holding powers of attorney from E-18 or who are otherwise authorized to act on behalf of E-18 with respect to any matter, other than its officers and directors, and a summary of the terms of such powers or authorizations.

(a) E-18 has made available to SquareOne a correct and complete copy, or there has been available on EDGAR, copies of each report, registration statement and definitive proxy statement filed by E-18 with the SEC for the 36 months prior to the date of this Agreement (the “E-18 SEC Reports”), which, to E-18’s knowledge, are all the forms, reports and documents filed by E-18 with the SEC for the 36 months prior to the date of this Agreement. As of their respective dates, to E-18’s knowledge, the E-18 SEC Reports: (i) were prepared in accordance and 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 SEC thereunder applicable to such E-18 SEC Reports, and (ii) did not at the time they were filed (and if amended or superseded by a filing prior to the date of this Agreement then on the date of such filing and as so amended or superceded) contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

 

(b) To E-18’s knowledge, each set of financial statements (including, in each case, any related notes thereto) contained in the E-18 SEC Reports comply as to form in all material respects with the published rules and regulations of the SEC with respect thereto, were prepared in accordance with the U.S. GAAP applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto or, in the case of unaudited statements, do not contain footnotes as permitted by Form 10-Q or Form 10-QSB promulgated under the Exchange Act) and each fairly presents in all material respects the financial position of E-18 at the respective dates thereof and the results of its operations and cash flows for the periods indicated, except that the unaudited interim financial statements were or are subject to normal adjustments which were not or are not expected to have a Material Adverse Effect taken as a whole.

 

Section 3.18 Over-the-Counter Bulletin Board Quotation. E-18 Common Stock is quoted on the Over-the-Counter Electronic Bulletin Board (“OTC BB”). There is no action or proceeding pending or, to E-18’s knowledge, threatened against E-18 by The Financial Industry Regulatory Authority, Inc. ("FINRA") with respect to any intention by such entities to prohibit or terminate the quotation of E-18 Common Stock on the OTC BB.

Section 3.19 Exchange Act Compliance.  E-18 is in compliance with, and current in, all of the reporting, filing and other requirements under the Exchange Act, the shares of E-18 Common Stock have been registered under Section 12(g) of the Exchange Act, and E-18 is in compliance with all of the requirements under, and imposed by, Section 12(g) of the Exchange Act, except where a failure to so comply is not reasonably likely to have a Material Adverse Effect on E-18.

Each SquareOne Shareholder hereby represents and warrants, severally and not jointly, to E-18 as follows.

Section 4.01  Good Title. The SquareOne Shareholder is the record and beneficial owner, and has good title to his SquareOne Common Stock, with the right and authority to sell and deliver such SquareOne Common Stock.  Upon delivery of any certificate or certificates duly assigned, representing the same as herein contemplated and/or upon registering of E-18 as the new owner of such SquareOne Common Stock in the share register of SquareOne, E-18 will receive good title to such SquareOne Common Stock, free and clear of all Liens.

Section 4.02  Power and Authority. The SquareOne Shareholder has the legal power, capacity and authority to execute and deliver this Agreement to consummate the transactions contemplated by this Agreement, and to perform the SquareOne Shareholder’s obligations under this Agreement and each Transaction Document to which the SquareOne Shareholder is a party.  This Agreement constitutes a legal, valid and binding obligation of the SquareOne Shareholder, enforceable against the SquareOne Shareholder in accordance with the terms hereof.

Section 4.03   No Conflicts.  The execution and delivery of this Agreement by the SquareOne Shareholder and the performance by the SquareOne Shareholder of its obligations hereunder in accordance with the terms hereof: (a) will not require the consent of any third party or Governmental Entity under any Laws; (b) will not violate any Laws applicable to the SquareOne Shareholder and (c) will not violate or breach any contractual obligation to which the SquareOne Shareholder is a party.

Section 4.04   Finder’s Fee.  The SquareOne Shareholder represents and warrants that it has not created any obligation for any finder’s, investment banker’s or broker’s fee in connection with the Share Exchange.

Section 4.05   Purchase Entirely for Own Account. The E-18 Common Stock proposed to be acquired by the SquareOne Shareholder hereunder will be acquired for investment for its own account, and not with a view to the resale or distribution of any part thereof, and the SquareOne Shareholder has no present intention of selling or otherwise distributing the E-18 Common Stock, except in compliance with applicable securities laws.

Section 4.06   Sophistication.  The SquareOne Shareholder is a sophisticated investor, as described in Rule 506(b)(2)(ii) promulgated under the Securities Act and has such experience in business and financial matters that it is capable of evaluating the merits and risk of an investment in E-18.

Section 5.01 Access to Properties and Records.  E-18 and  SquareOne will each afford to the officers and authorized representatives of the other full access to the properties, books and records of E-18 or SquareOne , as the case may be, in order that each may have a full opportunity to make such reasonable investigation as it shall desire to make of the affairs of the other, and each will furnish the other with such additional financial and operating data and other information as to the business and properties of E-18 or SquareOne, as the case may be, as the other shall from time to time reasonably request.  Without limiting the foregoing, as soon as practicable after the end of each fiscal quarter (and in any event through the last fiscal quarter prior to the Closing Date), each party shall provide the other with quarterly internally prepared and unaudited financial statements.

 

Section 5.02   Delivery of Books and Records.  At the Closing, E-18 shall deliver to SquareOne, the originals of the corporate minute books, books of account, contracts, records, and all other books or documents of E-18 now in the possession of E-18 or its representatives.

 

Section 5.03  Third Party Consents and Certificates.  E-18 and SquareOne agree to cooperate with each other in order to obtain any required third party consents to this Agreement and the transactions herein contemplated.

 

Section 5.04  Designation of New Directors.  Effective as of the Closing Date, and subject to applicable regulatory requirements, including the preparation, filing and distribution to the shareholders of E-18 of a Schedule 14(f)-1 Notice to Stockholders, Hudas Yaron and Yosef Itamar Krytman shall resign from the board of directors of E-18 and the following individuals shall be appointed to the board of E-18:

 

John D. Olinger – Chairman

Jack Dillard – Director

Ronald Ginn – Director

John S. Salstrom – Director

Section 5.05  Designation of New Officers.  Effective as of the Closing Date, Hadas Yaron and Yosef Itamar Krytman shall resign from each officer position held at E-18, and the following individuals shall be appointed to the offices of E-18:

(a) From and after the date of this Agreement until the Closing Date and except as set forth in the E-18 Schedules or SquareOne Schedules or as permitted or contemplated by this Agreement, E-18 (subject to paragraph (d) below) and SquareOne respectively, will each:

 

(i) carry on its business in substantially the same manner as it has heretofore;

 

(ii) maintain and keep its properties in states of good repair and condition as at present, except for depreciation due to ordinary wear and tear and damage due to casualty;

 

(iii) maintain in full force and effect insurance comparable in amount and in scope of coverage to that now maintained by it;

 

(iv) perform in all material respects all of its obligations under material contracts, leases, and instruments relating to or affecting its assets, properties, and business;

 

(v) use its best efforts to maintain and preserve its business organization intact, to retain its key employees, and to maintain its relationship with its material suppliers and customers; and

 

(vi) fully comply with and perform in all material respects all obligations and duties imposed on it by all federal and state laws and all rules, regulations, and orders imposed by federal or state governmental authorities.

 

(b) From and after the date of this Agreement until the Closing Date, neither E-18 nor SquareOne will:

 

(i) make any changes in their memorandum of association, articles of association, articles or certificate of incorporation or bylaws except as contemplated by this Agreement including a name change;

 

(ii) take any action described in Section 2.06  in the case of SquareOne or in Section 3.07, in the case of E-18 (all except as permitted therein or as disclosed in the applicable party’s schedules);

 

(iii) enter into or amend any contract, agreement, or other instrument of any of the types described in such party’s schedules, except that a party may enter into or amend any contract, agreement, or other instrument in the ordinary course of business involving the sale of goods or services; or

 

(iv) sell any assets or discontinue any operations, sell any shares of capital stock or conduct any similar transactions other than in the ordinary course of business.

The obligations of SquareOne and the SquareOne Shareholders under this Agreement are subject to the satisfaction, at or before the Closing Date, of the following conditions:

 

 

 

 

 

 

 

 

or such other addresses as shall be furnished in writing by any party in the manner for giving notices hereunder, and any such notice or communication shall be deemed to have been given (i) upon receipt, if personally delivered, (ii) on the day after dispatch, if sent by overnight courier, (iii) upon dispatch, if transmitted by telecopy and receipt is confirmed by telephone and (iv) three (3) days after mailing, if sent by registered or certified mail.

 

 

 

 

 

 

 

 

 

 

 

IN WITNESS WHEREOF, the corporate parties hereto have caused this Agreement to be executed by their respective officers, hereunto duly authorized, as of the date first-above written.