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AGREEMENT AND PLAN OF MERGER
 
among
 
GCA I ACQUISITION CORP., a Delaware Corporation,

BIXBY ENERGY ACQUISITION CORP., a Delaware Corporation,

BIXBY ENERGY SYSTEMS, INC., a Delaware Corporation

and

ROBERT A. WALKER, an Individual

_____

Dated: May 7, 2008
 

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TABLE OF CONTENTS

Section
Page
   
ARTICLE I - THE MERGER
 
1.1
The Merger
2
1.2
Effective Time; Closing
2
1.3
Effects of the Merger
2
1.4
Post-Merger Actions
3
1.5
Further Assurances
3
     
ARTICLE II - CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
 
2.1
Conversion of Securities
4
2.2
Exchange of Securities and Certificates
9
2.3
Dissenters' Rights
12
2.4
Withholding
13
2.5
Stock Transfer Books
13
     
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF THE COMPANY PRINCIPAL
STOCKHOLDER
 
3.1
Authority Relative To The Operative Agreements
13
3.2
Execution; Enforceability
13
3.3
Title to Securities of the Company
13
3.4
No Conflicts
14
3.5
Governmental Approvals and Filings
14
3.6
Legal Proceedings
14
   
 
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF THE COMPANY
 
4.1
Organization and Qualification; Subsidiaries
14
4.2
Certificate of Incorporation and Bylaws
15
4.3
Books and Records
15
4.4
Capitalization
15
4.5
Authority Relative To This Agreement
16
4.6
No Conflict; Required Filings and Consents
17
4.7
Permits; Compliance
17
4.8
Financial Statements
18
4.9
Notes and Accounts Receivable
18
4.10
Undisclosed Liabilities
19
4.11
Taxes
19
4.12
Title To Personal Property
21
4.13
Condition of Tangible Fixed Assets
21
4.14
Inventory
21
4.15
Product Warranty
22
4.16
Product Liability
22
4.17
Real Property
22

 
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4.18
Intellectual Property
22
4.19
Material Contracts
26
4.20
Litigation
28
4.21
Employee Benefit Plans
28
4.22
Labor and Employment Matters
31
4.23
Environmental
31
4.24
Related Party Transactions
33
4.25
Insurance
33
4.26
Absence of Certain Changes or Events
34
4.27
Solvency
35
4.28
Brokers or Finders
35
4.29
No Illegal Payments
35
4.30
Information Supplied
35
4.31
Antitakeover Statutes
35
4.32
Compliance with Securities Laws
35
4.33
Change in Control
35
4.34
Powers of Attorney
35
4.35
Material Disclosures
35
 
   
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
 
5.1
Corporate Organization and Qualification
36
5.2
Certificate of Incorporation and Bylaws
36
5.3
Books and Records
36
5.4
Capitalization
36
5.5
Authority Relative To This Agreement
37
5.6
No Conflict; Required Filings and Consents
38
5.7
SEC Reports; Financial Statements
38
5.8
Taxes
39
5.9
Absence of Litigation
41
5.10
Related Party Transactions
41
5.11
Ownership of Merger Sub; No Prior Activities
41
5.12
Absence of Certain Changes or Events
41
5.13
No Illegal Payments
42
5.14
Antitakeover Statutes
43
5.15
Compliance with Securities Laws
43
5.16
Brokers or Finders
43
   
 
ARTICLE VI - COVENANTS RELATING TO CONDUCT OF BUSINESS PENDING THE MERGER
 
6.1
Conduct of Business by the Company Pending the Merger
43
6.2
Conduct of Business by Parent Pending the Merger
45
6.3
Conduct of Company Principal Stockholder Pending the Merger
45
     
ARTICLE VII - ADDITIONAL AGREEMENTS
 
7.1
Voting Agreement
45

 
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7.2
Certain Corporate and Securities Compliance
45
7.3
Regulatory Approvals
49
7.4
Public Announcements
50
7.5
Tax-Free Reorganization
50
7.6
Affiliates
50
7.7
Consents
50
7.8
Notification of Certain Matters
51
7.9
Conveyance Taxes
51
  7.10
Dissenters' Rights
51
  7.11
Post-Closing Current Report Filing on Form 8-K
51
  7.12
Post-Closing Establishment of Trading Market; Quotation; Listing
51
  7.13
Certain Registration Obligations
51
  7.14
Certain Liability & Indemnification
54
  7.15
Further Assurances
55
 
   
ARTICLE VIII - CONDITIONS TO THE MERGER
 
8.1
Conditions to the Obligations of Each Party to Effect the Merger
55
8.2
Conditions to the Obligations of Parent and Merger Sub to Effect the Merger
55
8.3
Conditions to the Obligations of the Company to Effect the Merger
57
     
ARTICLE IX - TERMINATION, AMENDMENT AND WAIVER
 
9.1
Termination
57
9.2
Amendment
58
9.3
Waiver
59
     
ARTICLE X - MISCELLANEOUS
 
10.1
Notices
59
10.2
Certain Definitions
60
10.3
Index of Other Defined Terms
66
10.4
Interpretation
68
10.5
Survival
69
10.6
Severability
69
10.7
Assignment; Binding Effect; Benefit
69
10.8
Fees and Expenses
69
10.9
Incorporation of Schedules
70
  10.10
Specific Performance
70
  10.11
Governing Law
70
  10.12
Consent to Jurisdiction;Waiver of Jury Trial
70
  10.13
Headings
71
  10.14
Counterparts
71
  10.15
Entire Agreement
71

EXHIBITS  
Exhibit A
Form of Voting Agreement
Exhibit B
Form of Certificate of Merger

 
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Exhibit C
Articles of Incorporation – Merger Sub
Exhibit D
Bylaws – Merger Sub
Exhibit E
Form of Affiliate Agreement
Exhibit F
Form of Registrable Securities Lock-Up Agreement

SCHEDULES  
Schedule A
Company Disclosure Schedule
Organization and Qualification; Subsidiaries
Section 4.1
Capitalization
Section 4.4
No Conflict; Required Filings and Consents
Section 4.6
Permits; Compliance
Section 4.7
Financial Statements
Section 4.8
Taxes
Section 4.11
Inventory
Section 4.14
Product Warranty
Section 4.15
Real Property
Section 4.17
Intellectual Property
Section 4.18
Material Contracts
Section 4.19
Litigation
Section 4.20
Employee Benefit Plans
Section 4.21
Environmental
Section 4.23
Related Party Transactions
Section 4.24
Insurance
Section 4.25
Absence of Certain Changes or Events
Section 4.26
Change in Control
Section 4.33
Conduct of Business by the Company Pending the Merger
Section 6.1
 
 
Schedule B
Parent Disclosure Schedule
Capitalization
Section 5.4
No Conflict; Required Filings and Consents
Section 5.6
Taxes
Section 5.8
Absence of Certain Changes or Events
Section 5.12
Conduct of Business by the Parent Pending the Merger
Section 6.2

 
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This AGREEMENT AND PLAN OF MERGER, dated as of May 7, 2008 (this “Agreement”),
among GCA I Acquisition Corp., a Delaware corporation (“Parent”), Bixby Energy
Acquisition Corp., a Delaware corporation and a direct, wholly-owned Subsidiary
of Parent (“Merger Sub”), Bixby Energy Systems, Inc., a Delaware corporation
(the “Company”) and Robert A. Walker, the President, Chief Executive Officer,
and a principal shareholder of the Company (the “Company Principal Stockholder”)
(Parent, Merger Sub, Company, and the Company Principal Stockholder may
hereinafter be referred to individually as a “Party” or collectively as the
“Parties”).

WHEREAS, upon the terms and subject to the conditions of this Agreement and in
accordance with the Delaware General Corporation Law (the “DGCL”), Parent,
Merger Sub, and the Company intend to enter into a certain business combination
transaction;

WHEREAS, for federal income tax purposes, it is intended that the acquisition of
the Company by Parent pursuant to this Agreement qualify as a tax-free
reorganization under the provisions of Section 368(a) of the U.S. Internal
Revenue Code of 1986, as amended (the “Code”);

WHEREAS, the board of directors of the Company (i) has determined that the
Merger (as defined in Section 1.1 below) is in the best interests of the Company
and its shareholders (ii) has approved this Agreement, the Merger, and the other
transactions contemplated hereby (collectively, the “Transactions”) (iii) has
adopted a resolution declaring the Merger advisable, and (iv) has determined to
recommended approval of this Agreement by, and directed that this Agreement be
submitted to a vote of, the shareholders of the Company;

WHEREAS, the board of directors of Parent (i) has determined that the Merger is
consistent with and in furtherance of the long-term business strategy of Parent
and fair to, and in the best interests of, Parent and its stockholders, (ii) has
approved this Agreement, the Merger and the Transactions, (iii) has adopted a
resolution declaring the Merger advisable, and (iv) has approved the issuance of
certain shares of the common stock of Parent, $.0001 par value per share
(“Parent Common Stock”), pursuant to the Merger; and

WHEREAS, the board of directors of Merger Sub (i) has determined that the Merger
is consistent with and in furtherance of the long-term business strategy of
Merger Sub, and fair to and in the best interests of Merger Sub and its
stockholders, (ii) has approved this Agreement, the Merger and the Transactions,
(iii) has adopted a resolution declaring the Merger advisable, and (iv) has
determined to recommend that the sole stockholder of Merger Sub adopt this
Agreement;
 
WHEREAS, contemporaneously with the execution of this Agreement, and as a
condition and inducement to Parent’s willingness to enter into this Agreement,
the Company Principal Stockholder is entering into a voting agreement with
Parent in substantially the form annexed hereto as Exhibit A and made a part
hereof (collectively, the “Voting Agreement”); and
 
WHEREAS, capitalized terms used throughout this Agreement shall have the
meanings assigned to them in Section 10.2 or in the applicable Section of this
Agreement to which reference is made within Section 10.3.
 
NOW, THEREFORE, in consideration of the covenants, promises and representations
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree as follows:
 
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ARTICLE I

THE MERGER

1.1 The Merger. Upon the terms and subject to the conditions set forth in this
Agreement, and pursuant to the certificate of merger in such form as is required
by and executed in accordance with the relevant provisions of the DGCL, a form
of which is annexed hereto as Exhibit B (the “Certificate of Merger”), at the
Effective Time (as hereinafter defined), Merger Sub shall be merged with and
into the Company and the separate corporate existence of Merger Sub shall
thereupon cease, and the Company shall continue as the surviving corporation
(the “Surviving Corporation”) of the Merger (the “Merger”) (Merger Sub and the
Company are sometimes referred to herein jointly as the “Constituent
Corporations”). As a result of the Merger, the outstanding shares of capital
stock of the Company and Merger Sub shall be converted or canceled in the manner
provided in Article II of this Agreement.

1.2 Effective Time; Closing. The closing of the Merger (the “Closing”) shall
take place at the offices of the Company at 10:00 a.m. on a date to be specified
by the Parties which shall be no later than two (2) Business Days following the
satisfaction or waiver (as provided herein) of the conditions set forth in
Article VII ( other than those conditions that by their nature are to be
satisfied at the Closing), unless another time, date and/or place is agreed to
in writing by the Parties (the date upon which the Closing occurs is referred to
hereinafter as the “Closing Date”). Simultaneously with, or as soon as
practicable following the Closing, the Company, as the surviving corporation,
shall file the Certificate of Merger with the Secretary of State of the State of
Delaware (the “Delaware Secretary of State”) as provided in Section 252(c) of
the DGCL. The Merger shall become effective at such time as the Certificate of
Merger is so filed or at such later time as may be specifically set forth in the
Certificate of Merger, if different, which time is hereinafter referred to as
the “Effective Time”.
 
1.3 Effects of the Merger. At and after the Effective Time:

(a) the Merger shall have the effects as set forth in the applicable provisions
of the DGCL, including without limitation Section 259(a) thereof. Without
limiting the generality of the foregoing, and subject thereto, at the Effective
Time, all the rights, privileges, immunities, powers and franchises (of a public
as well as of a private nature) of the Company and Merger Sub and all property
(real, personal and mixed) of the Company and Merger Sub and all debts due to
either the Company or Merger Sub on any account, including subscriptions to
shares, and all other choses in action, and every other interest of or belonging
to or due to each of the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, Liabilities, obligations and duties of each of the
Company and Merger Sub shall become the debts, Liabilities, obligations and
duties of the Surviving Corporation and may be enforced against the Surviving
Corporation to the same extent as if such debts, Liabilities, obligations and
duties had been incurred or contracted by the Surviving Corporation, and all
rights of creditors and all Liens upon any property of the Company or Merger Sub
shall be preserved unimpaired in the Surviving Corporation following the Merger;

(b) the certificate of incorporation of the Company shall be the certificate of
incorporation of the Surviving Corporation until such time as it may thereafter
be amended in accordance with applicable Delaware Law;

(c) the bylaws of the Company shall be the bylaws of the Surviving Corporation
until such time as they may thereafter be amended in accordance with applicable
Delaware Law;
 
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(d) the directors and officers of the Company immediately prior to the Effective
Time shall remain the directors and officers of the Surviving Corporation, each
to hold office until their respective death, permanent disability, resignation
or removal or until their respective successors are duly elected and qualified,
all in accordance with the certificate of incorporation and bylaws of the
Surviving Corporation and applicable Law.

1.4 Post-Merger Actions.

(a) Immediately following the Effective Time:

(i) the officers of Parent prior to the Effective Time shall resign their
respective positions as officers of Parent;

(ii) the sole director of Parent (Michael M. Membrado) shall resign from his
seat on the board of directors of Parent; and

(b) As soon as practicable following the Effective Time:

(i) the board of directors of Parent, through appropriate action duly taken,
shall amend the bylaws of Parent to permit a board of directors of not less than
one (1) nor more than twelve (12) directors;

(ii) the board of directors of Parent, through appropriate action duly taken,
shall appoint as directors to fill some or all of such vacancies such persons as
the management of the Company shall have had appointed to such positions as they
shall have held respectively prior to the Merger, which persons shall include a
majority of “independent” directors as such term is defined under the Rules of
the American Stock Exchange;

(iii) the board of directors of Parent, through appropriate action duly taken,
shall elect new officers of Parent who shall be the same officers as the Company
had prior to the Merger.

1.5 Further Assurances. If, at any time after the Effective Time, the Surviving
Corporation shall consider or be advised that any deeds, bills of sale,
assignments or assurances or any other acts or things are necessary, desirable
or proper (a) to vest, perfect or confirm, of record or otherwise, in the
Surviving Corporation its right, title and interest in, to or under any of the
rights, privileges, powers, franchises, properties or assets of either of the
Constituent Corporations, or (b) otherwise to carry out the purposes of this
Agreement, the Surviving Corporation and its proper officers and directors or
their designees shall be authorized to execute and deliver, in the name and on
behalf of either Constituent Corporation, all such deeds, bills of sale,
assignments and assurances and to do, in the name and on behalf of either
Constituent Corporation, all such other acts and things as may be necessary,
desirable or proper to vest, perfect or confirm the Surviving Corporation’s
right, title and interest in, to and under any of the rights, privileges,
powers, franchises, properties or assets of such Constituent Corporation and
otherwise to carry out the purposes of this Agreement.
 
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ARTICLE II

CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES

2.1 Conversion of Securities. At the Effective Time, by virtue of the Merger and
without any action on the part of Parent, Merger Sub, the Company or any
shareholders of Parent, Merger Sub or the Company (each stockholder of the
Company being referred to individually hereinafter as a “Company Stockholder”):

(a) Subject to the other provisions of this Section 2.1 and to Section 2.2:

(i) Each share of common stock, par value $0.001 per share, of the Company
(“Company Common Stock”) issued and outstanding immediately prior to the
Effective Time (each, a “Cancelable Common Share”) shall be automatically
converted without payment of any consideration (subject to any required
adjustment pursuant to Subsection (c) of this Section 2.1) into the right to
receive one (1) share of fully paid and nonassessable Parent Common (the
“Exchange Ratio”); provided, however, that, in the event that any shares of
Company Common Stock outstanding immediately prior to the Effective Time are
unvested or otherwise subject to a repurchase option, risk of forfeiture, or
other condition under any applicable restricted stock purchase or other
agreement with the Company, then the shares of Parent Common Stock to be issued
in exchange for such shares of Company Common Stock shall also be unvested and
subject to the same repurchase option, risk of forfeiture or other condition
without regard, however, to any provisions regarding the acceleration of vesting
in the event of certain transactions that may otherwise be applicable. At the
Effective Time, (a) all such shares of Company Common Stock shall be deemed no
longer to be outstanding and shall automatically be canceled and cease to exist,
and each certificate previously evidencing any such shares shall thereafter
represent the right to receive a certificate representing the shares of Parent
Common Stock into which such shares of Company Common Stock shall have been
converted in the Merger pursuant to this Section 2.1(a)(i), (b) the holders of
certificates previously evidencing shares of Company Common Stock outstanding
immediately prior to the Effective Time shall cease to have any rights with
respect to such shares of Company Common Stock except as otherwise provided
herein or under the DGCL, (c) any certificates previously evidencing shares of
Company Common Stock shall be exchanged for certificates representing whole
shares of Parent Common Stock issued in consideration therefor upon the
surrender of such certificates in accordance with the provisions of Section 2.2
of this Agreement, and (d) the certificates representing any shares of Parent
Common Stock which have been exchanged for shares of Company Common Stock which,
immediately prior to the Effective Time, had been unvested or otherwise subject
to a repurchase option, risk of forfeiture, or other condition under any
applicable restricted stock purchase or other agreement with the Company, shall
contain an appropriate legend evidencing such continuing restriction.
 
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(ii) Each share of convertible preferred stock, $0.001 par value per share, of
the Company (“Company Convertible Preferred Stock”) issued and outstanding as of
the date hereof and which remains issued and outstanding immediately prior to
the Effective Time (each, a “Cancelable Pre-Definitive Agreement Convertible
Preferred Share”) shall be automatically converted without payment of any
consideration (subject to any required adjustment pursuant to Subsection (c) of
this Section 2.1) into the right to receive a number of shares (rounded down to
the nearest whole number) of fully paid and nonassessable Parent Common Stock
equal to the number of shares of Company Common Stock into which each such
Cancelable Pre-Definitive Agreement Convertible Preferred Share of Company
Convertible Preferred Stock would have been convertible as of the Effective Time
adjusted to give effect to the Exchange Ratio; provided, however, that, in the
event that any Cancelable Pre-Definitive Agreement Convertible Preferred Shares
of Company Convertible Preferred Stock outstanding immediately prior to the
Effective Time are unvested or otherwise subject to a repurchase option, risk of
forfeiture, or other condition under any applicable restricted stock purchase or
other agreement with the Company, then the shares of Parent Common Stock to be
issued in exchange for such shares of Company Convertible Preferred Stock shall
also be unvested and subject to the same repurchase option, risk of forfeiture
or other condition without regard, however, to any provisions regarding the
acceleration of vesting in the event of certain transactions that may otherwise
be applicable. At the Effective Time, (a) all such Cancelable Pre-Definitive
Agreement Convertible Preferred Shares of Company Convertible Preferred Stock
shall be deemed no longer to be outstanding and shall automatically be canceled
and cease to exist, and each certificate previously evidencing any such shares
shall thereafter represent the right to receive a certificate representing the
shares of Parent Common Stock into which such Cancelable Pre-Definitive
Agreement Convertible Preferred Shares of Company Convertible Preferred Stock
shall have been converted in the Merger pursuant to this Section 2.1(a)(ii), (b)
the holders of certificates previously evidencing Cancelable Pre-Definitive
Agreement Convertible Preferred Shares of Company Convertible Preferred Stock
outstanding immediately prior to the Effective Time shall cease to have any
rights with respect to such Cancelable Pre-Definitive Agreement Convertible
Preferred Shares of Company Convertible Preferred Stock except as otherwise
provided herein or under the DGCL, (c) any certificates previously evidencing
Cancelable Pre-Definitive Agreement Convertible Preferred Shares of Company
Convertible Preferred Stock shall be exchanged for certificates representing
whole shares of Parent Common Stock issued in consideration therefor upon the
surrender of such certificates in accordance with the provisions of Section 2.2
of this Agreement, and (d) the certificates representing any shares of Parent
Common Stock which have been exchanged for Cancelable Pre-Definitive Agreement
Convertible Preferred Shares of Company Convertible Preferred Stock which,
immediately prior to the Effective Time, had been unvested or otherwise subject
to a repurchase option, risk of forfeiture, or other condition under any
applicable restricted stock purchase or other agreement with the Company, shall
contain an appropriate legend evidencing such continuing restriction.

(iii) Unless otherwise agreed by the Parties in writing prior to the Effective
Time to be treated as Cancelable Pre-Definitive Agreement Convertible Preferred
Shares, each share of Company Convertible Preferred Stock issued and outstanding
immediately prior to the Effective Time (each, a “Cancelable Post-Definitive
Agreement Convertible Preferred Share”) shall be automatically converted without
payment of any consideration (subject to any required adjustment pursuant to
Subsection (c) of this Section 2.1) into the right to receive one share of fully
paid and nonassessable convertible preferred stock, par value $0.0001 per share,
of Parent (“Parent Convertible Preferred Stock”) of the series designated by the
same letter (e.g. A, B, C) as the series of Cancelable Post-Definitive Agreement
Convertible Preferred Shares of the Company Convertible Preferred Stock from
which such shares are being converted; provided, however, that, in the event
that any Cancelable Post-Definitive Agreement Convertible Preferred Shares of
Company Convertible Preferred Stock outstanding immediately prior to the
Effective Time are unvested or otherwise subject to a repurchase option, risk of
forfeiture, or other condition under any applicable restricted stock purchase or
other agreement with the Company, then the shares of Parent Convertible
Preferred Stock to be issued in exchange for such shares of Company Convertible
Preferred Stock shall also be unvested and subject to the same repurchase
option, risk of forfeiture or other condition without regard, however, to any
provisions regarding the acceleration of vesting in the event of certain
transactions that may otherwise be applicable. At the Effective Time, (a) all
such Cancelable Post-Definitive Agreement Convertible Preferred Shares of the
Company Convertible Preferred Stock shall be deemed no longer to be outstanding
and shall automatically be canceled and cease to exist, and each certificate
previously evidencing any such shares shall thereafter represent the right to
receive a certificate representing the shares of Parent Convertible Preferred
Stock into which such Cancelable Post-Definitive Agreement Convertible Preferred
Shares of Company Convertible Preferred Stock shall have been converted in the
Merger pursuant to this Section 2.1(a)(iii), (b) the holders of certificates
previously evidencing Cancelable Post-Definitive Agreement Convertible Preferred
Shares of Company Convertible Preferred Stock outstanding immediately prior to
the Effective Time shall cease to have any rights with respect to such
Cancelable Post-Definitive Agreement Convertible Preferred Shares of Company
Convertible Preferred Stock except as otherwise provided herein or under the
DGCL, (c) any certificates previously evidencing Cancelable Post-Definitive
Agreement Convertible Preferred Shares of the Company Convertible Preferred
Stock shall be exchanged for certificates representing whole shares of Parent
Convertible Preferred Stock issued in consideration therefor upon the surrender
of such certificates in accordance with the provisions of Section 2.2 of this
Agreement, and (d) the certificates representing any shares of Parent
Convertible Preferred Stock which have been exchanged for Cancelable
Post-Definitive Agreement Convertible Preferred Shares of Company Convertible
Preferred Stock which, immediately prior to the Effective Time, had been
unvested or otherwise subject to a repurchase option, risk of forfeiture, or
other condition under any applicable restricted stock purchase or other
agreement with the Company, shall contain an appropriate legend evidencing such
continuing restriction.
 
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(iv) Each share of non-convertible preferred stock, $0.001 par value per share,
of the Company (“Company Non-Convertible Preferred Stock”) issued and
outstanding immediately prior to the Effective Time (each a “Cancelable
Non-Convertible Preferred Share”) shall be automatically converted without
payment of any consideration into the right to receive one share of fully paid
and nonassessable non-convertible preferred stock, par value $0.0001 per share,
of Parent (“Parent Non-Convertible Preferred Stock”) of the series designated by
the same letter (e.g. A, B, C) as the series of Cancelable Non-Convertible
Preferred Shares of Company Non-Convertible Preferred Stock from which such
shares are being converted. At the Effective Time, (a) all such Cancelable
Non-Convertible Preferred Shares of Company Non-Convertible Preferred Stock
shall be deemed no longer to be outstanding and shall automatically be canceled
and cease to exist, and each certificate previously evidencing any such shares
shall thereafter represent the right to receive a certificate representing a
number of shares of Parent Non-Convertible Preferred Stock into which such
Cancelable Non-Convertible Preferred Shares of Company Non-Convertible Preferred
Stock shall have been converted in the Merger pursuant to this Section
2.1(a)(iv), (b) the holders of certificates previously evidencing Cancelable
Non-Convertible Preferred Shares of Company Non-Convertible Preferred Stock
outstanding immediately prior to the Effective Time shall cease to have any
rights with respect to such Cancelable Non-Convertible Preferred Shares of
Company Non-Convertible Preferred Stock except as otherwise provided herein or
under the DGCL, and (c) any certificates previously evidencing Cancelable
Non-Convertible Preferred Shares of Company Non-Convertible Preferred Stock
shall be exchanged for certificates representing whole shares of Parent
Non-Convertible Preferred Stock issued in consideration therefor upon the
surrender of such certificates in accordance with the provisions of Section 2.2
of this Agreement.

(v) Each convertible note and/or debenture of the Company (“Company Convertible
Debentures”) issued and outstanding as of the date hereof and which remains
issued and outstanding immediately prior to the Effective Time (each, a
“Cancelable Pre-Definitive Agreement Convertible Debenture”) shall be
automatically converted without payment of any consideration (subject to any
required adjustment pursuant to Subsection (c) of this Section 2.1) into the
right to receive a number of shares (rounded down to the nearest whole number)
of fully paid and nonassessable Parent Common Stock equal to the number of
shares of Company Common Stock into which each such Cancelable Pre-Definitive
Agreement Convertible Debenture would have been convertible as of the Effective
Time adjusted to give effect to the Exchange Ratio. At the Effective Time, (a)
all such Cancelable Pre-Definitive Agreement Convertible Debentures shall be
deemed no longer to be outstanding and shall automatically be canceled and cease
to exist, and each not or certificate previously evidencing any such Company
Convertible Debentures shall thereafter represent the right to receive a
certificate representing the shares of Parent Common Stock into which such
Cancelable Pre-Definitive Agreement Convertible Debentures shall have been
converted in the Merger pursuant to this Section 2.1(a)(v), (b) the holders of
notes or certificates previously evidencing Cancelable Pre-Definitive Agreement
Convertible Debentures outstanding immediately prior to the Effective Time shall
cease to have any rights with respect to such Cancelable Pre-Definitive
Agreement Convertible Debentures except as otherwise provided herein or under
the DGCL, and (c) any notes or certificates previously evidencing Cancelable
Pre-Definitive Agreement Convertible Debentures shall be exchanged for
certificates representing whole shares of Parent Common Stock issued in
consideration therefor upon the surrender of such certificates in accordance
with the provisions of Section 2.2 of this Agreement.
 
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(vi) Unless otherwise agreed by the Parties in writing prior to the Effective
Time to be treated as Cancelable Pre-Definitive Agreement Convertible
Debentures, each Company Convertible Debenture issued and outstanding
immediately prior to the Effective Time other than any Company Convertible
Debentures constituting Cancelable Pre-Definitive Agreement Convertible
Debentures (each, a “Cancelable Post-Definitive Agreement Convertible
Debenture”) shall be automatically converted without payment of any
consideration (subject to any required adjustment pursuant to Subsection (c) of
this Section 2.1) into a debenture of Parent (each, an “Parent Convertible
Debenture”) carrying precisely the same substantive rights, obligations and
other terms as the Cancelable Post-Definitive Agreement Convertible Debentures
in exchange for which they are issued, provided, however, that such Parent
Convertible Debentures shall be convertible, in each respective case, into the
right to receive a number of shares of Parent Common Stock equal to the number
of shares of Company Common Stock into which each such Cancelable
Post-Definitive Agreement Convertible Debenture would have been convertible as
of the Effective Time adjusted as appropriate based on the Exchange Ratio. At
the Effective Time, (a) all such Cancelable Post-Definitive Agreement
Convertible Debentures shall be deemed no longer to be outstanding and shall
automatically be canceled and cease to exist, and each note or certificate
previously evidencing any such Cancelable Post-Definitive Agreement Convertible
Debentures shall thereafter represent the right to receive a certificate
representing the Parent Convertible Debenture into which such Cancelable
Post-Definitive Agreement Convertible Debentures shall have been converted in
the Merger pursuant to this Section 2.1(a)(vi), (b) the holders of notes or
certificates previously evidencing Cancelable Post-Definitive Agreement
Convertible Debentures outstanding immediately prior to the Effective Time shall
cease to have any rights with respect to such Cancelable Post-Definitive
Agreement Convertible Debentures except as otherwise provided herein or under
the DGCL, and (c) any notes or certificates previously evidencing Cancelable
Post-Definitive Agreement Convertible Debentures shall be exchanged for
certificates representing Parent Convertible Debentures issued in consideration
therefor upon the surrender of such certificates in accordance with the
provisions of Section 2.2 of this Agreement.

(vii) Each non-convertible note, bond or other debt security of the Company
(“Company Non-Convertible Debt Security”) issued and outstanding immediately
prior to the Effective Time, and all obligations arising and existing
thereunder, shall, by virtue of the Merger, be automatically assumed by Parent
as of the Effective Time; provided, however, that each Company Non-Convertible
Debt Security so assumed by Parent under this Agreement shall continue to have,
and be subject to, the same terms and conditions of such securities as shall
have been in effect immediately prior to the Effective Time.
 
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(viii) Each warrant to purchase shares of Company Common Stock (each, a “Company
Common Stock Purchase Warrant”) issued and outstanding immediately prior to the
Effective Time, and all obligations arising and existing thereunder, shall, by
virtue of the Merger, be automatically assumed by Parent; provided, however,
that each Company Common Stock Purchase Warrant so assumed by Parent under this
Agreement (each, a “Replacement Common Warrant”) shall (a) continue to have, and
be subject to, the same terms and conditions of such warrants as shall have been
in effect immediately prior to the Effective Time, including without limitation
any repurchase rights, risk of forfeiture, or vesting provisions and any related
provisions regarding the acceleration of vesting and exercisability in the event
of certain transactions, (b) be exercisable (or become exercisable in accordance
with its terms) for that number of whole shares of Parent Common Stock for which
such Company Common Stock Purchase Warrant had been exercisable (for shares of
Company Common Stock) immediately prior to the Effective Time, adjusted to give
effect to the Exchange Ratio (rounded down to the nearest whole share), (c) be
exercisable (or become exercisable in accordance with its terms) at a price per
share of Parent Common Stock equal to the exercise price per share of Company
Common Stock at which such Company Common Stock Purchase Warrant was exercisable
immediately prior to the Effective Time, adjusted to give effect to the Exchange
Ratio (the exercise price per share, as so determined, being rounded up to the
nearest full cent), and (d) be deemed to refer to Parent wherever reference is
made to the Company in and throughout any agreement and/or certificates
representing the Company Common Stock Purchase Warrant.

(ix) Each warrant to purchase shares of Company Convertible Preferred Stock
(each, a “Company Convertible Preferred Purchase Warrant”) issued and
outstanding immediately prior to the Effective Time, and all obligations arising
and existing thereunder, shall, by virtue of the Merger, be automatically
assumed by Parent; provided, however, that each Company Convertible Preferred
Stock Purchase Warrant so assumed by Parent under this Agreement (each, a
“Replacement Preferred Warrant”) shall (a) continue to have, and be subject to,
the same terms and conditions of such warrants as shall have been in effect
immediately prior to the Effective Time, including without limitation any
repurchase rights, risk of forfeiture, or vesting provisions and any related
provisions regarding the acceleration of vesting and exercisability in the event
of certain transactions, (b) be exercisable (or become exercisable in accordance
with its terms) for that number of whole shares of Parent Common Stock for which
the Company Convertible Preferred Stock into which the Company Convertible
Preferred Stock Purchase Warrant would have been exercisable would have been
convertible immediately prior to the Effective Time, adjusted to give effect to
the Exchange Ratio (rounded down to the nearest whole share), (c) be exercisable
(or become exercisable in accordance with its terms) at a price per share of
Parent Common Stock equal to the exercise price per share of Company Convertible
Preferred Stock at which such Company Convertible Preferred Stock Purchase
Warrant was exercisable immediately prior to the Effective Time, adjusted to
give effect to the Exchange Ratio and the conversion ratio of the underlying
Company Convertible Preferred Stock (the exercise price per share, as so
determined, being rounded up to the nearest full cent), and (d) be deemed to
refer to Parent wherever reference is made to the Company in and throughout any
agreement and/or certificates representing the Company Convertible Preferred
Stock Purchase Warrant.
 
(x) The Bixby Energy Systems, Inc. 2001 Stock Option Plan (the “Bixby Option
Plan”), and each option to purchase shares of Company Common Stock issued and
outstanding thereunder prior to the Effective Time (each, a “Company Stock
Option”), whether or not vested, shall, by virtue of the Merger, be assumed by
Parent; provided, however, that each Company Stock Option so assumed by Parent
under this Agreement (each, a “Replacement Option”) shall (a) continue to have,
and be subject to, the same terms and conditions of such warrants as shall have
been in effect immediately prior to the Effective Time, including without
limitation any repurchase rights, risk of forfeiture, or vesting provisions and
any related provisions regarding the acceleration of vesting and exercisability
in the event of certain transactions, (b) be exercisable (or become exercisable
in accordance with its terms) for that number of whole shares of Parent Common
Stock for which such Company Stock Option had been exercisable (for shares of
Company Common Stock) immediately prior to the Effective Time, adjusted to give
effect to the Exchange Ratio (rounded down to the nearest whole share), (c) be
exercisable (or become exercisable in accordance with its terms) at a price per
share of Parent Common Stock equal to the exercise price per share of Company
Common Stock at which such Company Stock Option was exercisable immediately
prior to the Effective Time, adjusted to give effect to the Exchange Ratio (the
exercise price per share, as so determined, being rounded up to the nearest full
cent), and (d) be deemed to refer to Parent wherever reference is made to the
Company in and throughout any agreement and/or certificates representing the
Company Stock Option. It is intended that the Company Stock Options assumed by
Parent pursuant hereto shall qualify following the Effective Time as incentive
stock options as defined in Section 422 of the Code to the extent the Company
Stock Options qualified as incentive stock options immediately prior to the
Effective Time and the provisions of this Section 2.1(a)(x) shall be applied
consistently with such intent, it being understood that Parent makes no
representation or warranty whatsoever that such options shall so qualify.
 
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(xi) each share of common stock, par value $.0001 per share, of Merger Sub
(“Merger Sub Common Stock”) issued and outstanding immediately prior to the
Effective Time shall be converted into one (1) validly issued, fully paid and
nonassessable share of common stock of the Surviving Corporation at the
Effective Time, and the Surviving Corporation thereafter shall have no other
equity securities; and
 
(xii) any outstanding options to purchase shares of Parent Common Stock or
Parent Preferred Stock (each, an “Parent Stock Option”), whether or not vested,
and any outstanding warrants to purchase shares of Parent Common Stock or Parent
Preferred Stock (each, an “Parent Warrant”), whether or not then exercisable,
shall, by virtue of the Merger, be cancelled.

(b) It is expressly understood and acknowledged that no fractional shares of
Parent Common Stock shall be issued in connection with the Merger and that no
holder of Cancelable Common Shares, Cancelable Pre-Definitive Agreement
Convertible Preferred Shares, or Cancelable Pre-Definitive Agreement Convertible
Debentures shall be entitled to receive a cash payment in lieu of any fractional
share of Parent Common Stock.

(c) Except for any changes resulting from the Parent Stock-Split, if between the
date of this Agreement and the Effective Time the outstanding shares of Parent
Common Stock shall have been changed into a different number of shares or a
different class, by reason of any stock dividend, reclassification,
recapitalization, split, division, subdivision, combination or exchange of
shares, the Exchange Ratio shall be correspondingly adjusted to reflect such
stock dividend, reclassification, recapitalization, split, division,
subdivision, combination or exchange of shares.

2.2 Exchange of Securities and Certificates.

(a) Following the execution hereof, and as of or before the Effective Time,
Parent shall enter into an agreement with such transfer agent, bank, or trust
company of recognized standing that may be designated by Parent and is
reasonably satisfactory to the Company (the “Exchange Agent”). Upon the
Company’s receipt of Company Stockholder Approval, Parent shall deposit, or
shall cause to be deposited, with the Exchange Agent, for the benefit of the
holders of Cancelable Common Shares, Cancelable Pre-Definitive Agreement
Convertible Preferred Shares, Cancelable Post-Definitive Agreement Convertible
Preferred Shares, Cancelable Non-Convertible Preferred Shares, Cancelable
Pre-Definitive Agreement Convertible Debentures, and Cancelable Post-Definitive
Agreement Convertible Debentures (collectively, the “Cancelable Securities”)for
exchange in accordance with this Article II, through the Exchange Agent,
certificates representing (i) the whole shares of Parent Common Stock issuable
pursuant to Sections 2.1(a)(i), (ii), and (v) in exchange for Cancelable Common
Shares, Cancelable Pre-Definitive Agreement Convertible Preferred Shares and
Cancelable Pre-Definitive Agreement Convertible Debentures, respectively, (ii)
the whole shares of Parent Convertible Preferred Stock issuable pursuant to
Section 2.1(a)(iii) in exchange for Cancelable Post-Definitive Agreement
Convertible Preferred Shares, (iii) the whole shares of Parent Non-Convertible
Preferred Stock issuable pursuant to Section 2.1(a)(iv) in exchange for
Cancelable Non-Convertible Preferred Shares, and (iv) Parent Convertible
Debentures issuable pursuant to Section 2.1(a)(vi) in exchange for Cancelable
Post-Definitive Agreement Convertible Debentures (such Certificates being
hereinafter referred to collectively as the “Exchange Fund”). The Exchange Agent
shall, pursuant to irrevocable instructions from Parent, deliver the various
certificates for securities to be issued pursuant to Section 2.1 out of the
Exchange Fund (collectively, the “Merger Securities”).
 
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(b) The provisions of Section 2.2(a) notwithstanding, in the event that the
Exchange Agent shall only be willing to accept the assignment as Exchange Agent
to the extent that it excludes from its responsibilities those relating to the
exchange of Cancelable Post-Definitive Agreement Convertible Debentures for
Parent Convertible Debentures pursuant to Section 2.1(vi) above, then, and, in
such event, any responsibilities relating to the exchange of Cancelable
Post-Definitive Agreement Convertible Debentures for Parent Convertible
Debentures pursuant to Section 2.1(vi) above shall be assigned to a separate
third-party agent to be reasonably agreed upon between Parent and the Company,
who will be subject to the same responsibilities in relation to the exchange of
Cancelable Post-Definitive Agreement Convertible Debentures for Parent
Convertible Debentures as Exchange Agent bears in relation to the exchange of
all other securities under this Article II.

(c) As promptly as reasonably practicable after the Effective Time, Parent will
instruct the Exchange Agent to mail to each holder of record of a certificate or
certificates which immediately prior to the Effective Time evidenced Cancelable
Securities (i) a letter of transmittal, and (ii) instructions for use in
effecting the surrender of such certificates for Cancelable Securities in
exchange for certificates evidencing the Merger Securities, which instructions
shall be in customary form and shall specify that delivery shall be effected,
and risk of loss and title to the Merger Securities shall pass, only upon proper
delivery of the certificates representing the Merger Securities to the Exchange
Agent for use in exchanging the Cancelable Securities for the Merger Securities.
Upon surrender of a certificate for cancellation to the Exchange Agent, together
with such letter of transmittal, duly executed and completed in accordance with
the instructions thereto, and such other documents as may be reasonably required
pursuant to such instructions, the holder of such Cancelable Securities shall be
entitled to receive certificates evidencing the Merger Securities due to such
holder in accordance with Section 2.1(a), together with any dividends or
distribution to which such holder may otherwise be entitled, and the
certificate(s) so surrendered shall immediately be canceled. Subject to Section
2.2(h), under no circumstances will any holder of a certificate representing
Cancelable Securities be entitled to receive any of the Merger Securities or
certificates evidencing the same until such holder shall have surrendered any
and all certificates reflecting the corresponding Cancelable Securities from
which such entitlement derives.

(d) In the event of a transfer of ownership of Cancelable Securities which has
not been registered in the transfer records of the Company, the Merger
Securities into which the Cancelable Securities were converted in the Merger may
be delivered by the Exchange Agent in accordance with this Article II to the
Person other than the Person in whose name the surrendered certificate is
surrendered if (i) the certificate(s) evidencing such Cancelable Securities
is/are presented to the Exchange Agent, properly endorsed and accompanied by all
documents required to evidence and effect such transfer, including without
limitation an opinion of counsel for the Company that such transfer was effected
in compliance with all federal and state securities Laws, and (ii) evidence is
presented in form satisfactory to Exchange Agent that any applicable Taxes have
been duly paid, or, if not paid, the Person requesting such issuance pays to the
Exchange Agent any and all Taxes required as a result of the issuance to a
Person other than the registered holder of the certificate. Until surrendered or
transferred as contemplated by this Section 2.2, each certificate representing
Cancelable Securities, other than any certificates representing Dissenting
Shares, shall represent at all times after the Effective Time solely the right
to receive, upon such surrender or transfer, in accordance with the terms
hereof, the Merger Securities, together with any amounts payable pursuant to
Section 2.1(e) of this Agreement. 
 
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(e) Notwithstanding any other provisions of this Agreement, no dividends or
other distributions declared or made after the Effective Time with respect to
the Merger Securities with a record date after the Effective Time shall be paid
to the holder of any unsurrendered certificate(s) evidencing Cancelable
Securities until the holder of such Cancelable Securities shall surrender such
certificate(s) to the Exchange Agent in accordance with Section 2.2(c). Subject
to the effect of applicable Laws, following surrender of any such certificate(s)
reflecting Cancelable Securities, there shall be paid to the holder of such
certificate(s), in addition to the Merger Securities to which such holder is
entitled pursuant to Section 2.1(a), without interest, the corresponding amount
of dividends or other distributions with a record date after the Effective Time
theretofore paid with respect to any of such Merger Securities, less the amount
of any withholding Taxes which may be required thereon. No holder of Cancelable
Securities shall be entitled, until the surrender of any certificate for any
such Cancelable Securities, to vote any shares of Parent Common Stock or other
capital stock which such holder shall have the right to receive pursuant to this
Article II.

(f) All Merger Securities issued upon conversion of the Cancelable Securities in
accordance with Section 2.1(a), and any cash paid or other distributions made
pursuant to Section 2.2(e), shall be deemed to have been issued or paid,
respectively, in full satisfaction of all rights pertaining to such Cancelable
Securities. At 5:00 p.m. on the day immediately preceding the Effective Time,
the stock transfer books of the Company shall be closed and there shall be no
further registration of transfers of Cancelable Securities thereafter on the
records of the Company. From and after the Effective Time, holders of Cancelable
Securities shall cease to have any rights with respect to such Cancelable
Securities outstanding immediately prior to the Effective Time, except as
otherwise provided in this Agreement or by Law.

(g) Any portion of the Exchange Fund which remains undistributed to the holders
of Cancelable Securities for six (6) months after the Effective Time shall be
returned to Parent, and, subject to Section 2.2(h), any holders of Cancelable
Securities which have not theretofore complied with this Article II shall
thereafter look only to Parent for the Merger Securities and any dividends or
other distributions to which they are entitled pursuant to Section 2.1(a). Any
portion of the Exchange Fund remaining unclaimed by holders of Cancelable
Securities as of a date that is immediately prior to such time as such amounts
would otherwise escheat to or become property of any government entity shall, to
the extent permitted by applicable Law, become the property of Parent free and
clear of any claims or interest of any Person previously entitled thereto. To
the fullest extent permitted by Law, neither Parent nor the Surviving
Corporation shall be liable to any holders of Cancelable Securities for any
Merger Securities, cash or other property delivered from the Exchange Fund to a
public official pursuant to any applicable abandoned property, escheat or
similar Law.
 
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(h) If any certificate representing Cancelable Securities shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the party
claiming such certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation or the Exchange Agent, the posting by such party of a
bond, in such reasonable amount as the Surviving Corporation or the Exchange
Agent may direct, as indemnity against any claim that may be made against it
with respect to such certificate and the amount of any fee charged by the
Exchange Agent for such service, the Exchange Agent shall issue in exchange for
such lost, stolen or destroyed certificate the Merger Securities, together with
any unpaid dividends and distributions deliverable in respect thereof.
 
(i) Notwithstanding anything to the contrary contained herein, each Person
entitled to receive shares of Parent Common Stock under this Section 2.2 shall
receive them on the condition and subject to the requirement that, whether or
not registered or otherwise eligible for resale, (i) ninety percent (90%) of
such shares may not be sold (but may be transferred (A) by gift to an immediate
family member, (B) by will or intestacy or distribution, or (C) to a trust for
the benefit of the transferor or a family member) except in accordance with the
following schedule (calculated on a cumulative basis):

Up to Five Percent (5%)
Ninety (90) Days Following Closing
Up to Additional Five Percent (5%)
One Hundred and Eighty (180) Days Following Closing
Up to Additional Five Percent (5%)
Two Hundred and Seventy (270) Days Following Closing
Up to Additional Five Percent (5%)
Three Hundred and Sixty-Five (365) Days Following Closing
Up to Additional Ten Percent (10%)
Four Hundred and Fifty-Five (455) Days Following Closing
Up to Additional Fifteen Percent (15%)
Five Hundred and Forty-Five (545) Days Following Closing
Up to Additional Twenty Percent (20%)
Six Hundred and Thirty-Five (635) Days Following Closing
Up to Additional Twenty-Five Percent (25%)
Seven Hundred and Thirty (730) Days Following Closing

and the certificates evidencing such shares shall have a legend reflecting such
restriction, and (ii) the remaining ten percent (10%) of such shares may be
freely sold or transferred at any time following the Closing Date, provided,
however, that such shares of Parent Common Stock are, as a class, duly
authorized and qualified for trading at the time of any such sale on the NASDAQ
Capital Market and/or the OTCBB.

(j) Notwithstanding anything to the contrary contained herein, no certificates
representing Merger Securities shall be delivered to a Person who is an
“affiliate” of the Company for purposes of Rule 145 under the Securities Act
until such Person shall have executed and delivered to Parent a written
agreement substantially in the form attached hereto as Exhibit F (the “Affiliate
Agreement”).

2.3 Dissenters’ Rights.

(a) Notwithstanding anything in this Agreement to the contrary, any shares of
Company Common Stock or other Cancelable Securities which, under the DGCL
entitle the holder to appraisal rights (“Dissentable Shares”), and which are
held by any holder (a “Dissenting Holder”) who shall have demanded and not lost
or withdrawn, or who shall be eligible to demand, appraisal rights with respect
to such Dissentable Shares in the manner provided in the DGCL (“Dissenting
Shares”) shall not represent the right to receive any portion of the Merger
Securities (or any dividends or distributions associated therewith). If any
holder of Dissentable Shares shall fail to perfect or shall effectively withdraw
or lose its right to appraisal and payment under the DGCL, as the case may be,
all Dissentable Shares held by such holder shall thereupon, in accordance with
and subject to the provisions set forth in this Article II, represent the right
to receive its portion of the Merger Securities, together with any dividends or
distributions due in connection therewith pursuant to Section 2.2(e).
 
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(b) Both the Company and Parent, as the case may be, shall give one another
prompt notice of any demands for appraisal received by the Company or Parent,
withdrawals of such demands and any other communications received by the Company
or Parent in connection with any demands for appraisal. The Company may
voluntarily make any payment with respect to any such demands. The Company shall
have the right to control all negotiations and Proceedings with respect to
demands for appraisal, including the right to settle any such demands.

2.4 Withholding. Each of the Surviving Corporation, Parent and the Exchange
Agent shall be entitled to deduct and withhold from the consideration payable
pursuant to this Agreement to any holder of Cancelable Securities or Dissenting
Shares such amounts as it is required to deduct and withhold with respect to the
making of such payment under the Code or any provision of applicable state,
local or foreign Tax Law. To the extent that amounts are so withheld by the
Surviving Corporation, Parent or the Exchange Agent, as the case may be, such
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the holder of Cancelable Securities or Dissenting Shares in respect
of which such deduction and withholding was made by the Surviving Corporation,
Parent or the Exchange Agent, as the case may be.

2.5 Stock Transfer Books. At the Effective Time, the stock transfer books of the
Company shall be closed and there shall be no further registration of transfers
of Cancelable Securities thereafter on the records of the Company. On or after
the Effective Time, any certificates reflecting Cancelable Securities presented
to the Exchange Agent or Parent for any reason shall carry only those rights as
expressly stated in this Article II.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY PRINCIPAL STOCKHOLDER

The Company Principal Stockholder represents and warrants to Parent and Merger
Sub that the statements contained in this Article III are true and correct.

3.1 Authority Relative To The Operative Agreements. He has all legal right,
power and capacity to execute and deliver and to perform his obligations under
this Agreement and the Operative Agreements to which he is a party and to
consummate the Transactions.

3.2 Execution; Enforceability. He has duly and validly executed and delivered
this Agreement and the other Operative Agreements and, assuming the due
authorization, execution and delivery of this Agreement and the other Operative
Agreements by Parent, Merger Sub, and the Company, as required, constitutes his
legal, valid and binding obligations, enforceable against him in accordance with
their respective terms, except as the enforceability thereof may be limited by
(i) applicable bankruptcy, insolvency, reorganization, moratorium or other
similar Laws affecting or relating to creditors’ rights generally, and (ii) the
availability of injunctive relief and other equitable remedies.

3.3 Title to Securities of the Company. He is the record and Beneficial Owner of
the securities of the Company as specifically reflected in the Voting Agreement
which he has executed and delivered in connection and contemporaneously
herewith, and immediately prior to the Effective Time, he will own such
securities free and clear of any Liens.
 
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3.4 No Conflicts. To the best of his knowledge, the execution and delivery by
him of this Agreement and each of the other Operative Agreements to which he is
a party does not, and the performance by him of his obligations under this
Agreement and such other Operative Agreements, and the consummation of the
Transactions do not and will not:
 
(a) subject to obtaining the consents, approvals and actions, making the filings
and providing the notices referred to in Section 3.5 below, if any, conflict
with or result in a violation or breach of any term or provision of any Law or
Order applicable to him or any of his assets and properties; or

(b)  (i) conflict with or result in a violation or breach of, (ii) constitute
(with or without notice or lapse of time or both) a default under, (iii) require
him to obtain any consent, approval or action of, make any filing with or give
any notice to any Person as a result or under the terms of, (iv) result in or
give to any Person any right of termination, cancellation, acceleration or
modification in or with respect to, (v) result in or give to any Person any
additional rights or entitlement to increased, additional, accelerated or
guaranteed payments under, or (vi) result in the creation or imposition of any
Lien upon him or any of his assets and properties under, any Contract to which
he is a party or by which any of his assets and properties is bound.

3.5 Governmental Approvals and Filings. Except as may otherwise be set forth in
this Agreement, to the best of his knowledge, no consent, approval or action of,
filing with or notice to, any Governmental Authority on his part is required in
connection with the execution, delivery and performance of this Agreement or any
of the other Operative Agreements.

3.6 Legal Proceedings. To the best of his knowledge, there are no Proceedings
pending or threatened against, relating to or affecting either him or any of his
assets and properties which could reasonably be expected to result in the
issuance of an Order restraining, enjoining or otherwise prohibiting or making
illegal any of the Transactions or otherwise result in a material diminution of
the benefits contemplated by this Agreement or any of the other Operative
Agreements to Parent, Merger Sub, the Company, or the Surviving Corporation.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Except as set forth in the Disclosure Schedule delivered by the Company and
signed by the Company and Parent for identification prior to the execution and
delivery of this Agreement (the “Company Disclosure Schedule”), which shall
identify exceptions by specific section references, the Company hereby
represents and warrants to Parent and Merger Sub that the statements contained
in this Article IV 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 IV).

4.1 Organization and Qualification; Subsidiaries. The Company is a corporation,
and each Subsidiary of the Company is a corporation, in each case duly
organized, validly existing and in good standing under the Laws of the
jurisdiction of its incorporation and has the requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as it is now being conducted. The Company and each Subsidiary are duly qualified
or licensed as a foreign corporation to do business, and are in good standing,
in each jurisdiction where the character of the properties owned, leased or
operated by them or the nature of their business makes such qualification or
licensing necessary, except for such failures to be so qualified or licensed and
in good standing that would not, individually or in the aggregate, have a
Material Adverse Effect on the Company. As of the date hereof, a true and
correct list of all Subsidiaries, together with the jurisdiction of organization
of each Subsidiary and the percentage of the outstanding capital stock or other
equity interests of each Subsidiary owned by the Company and each other
Subsidiary, is set forth in Section 4.1 of the Company Disclosure Schedule.
Except as disclosed in Section 4.1 of the Company Disclosure Schedule, the
Company does not directly or indirectly own any equity or similar interest in,
or any interest convertible into or exchangeable or exercisable for any equity
or similar interest in, any corporation, partnership, joint venture or other
business association or entity.
 
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4.2 Certificate of Incorporation and Bylaws. The Company has previously
furnished or made available to Parent a complete and correct copy of the
certificate of incorporation and bylaws or equivalent organizational documents,
each as amended to date, of the Company and each of its Subsidiaries. Neither
the Company nor any such Subsidiary is in violation of any provision of its
certificate of incorporation or bylaws.

4.3 Books and Records.

(a) The books of account, minute books, stock record books, and other records of
the Company and its Subsidiaries are complete and correct and have been
maintained in accordance with sound business practices, including the
maintenance of an adequate system of internal controls. The minute books of the
Company and its Subsidiaries contain accurate and complete records of all
meetings held of, consents of, and corporate action taken by, the stockholders,
the boards of directors, and any committees of the boards of directors of each
of Company and such Subsidiaries, and no meeting of such stockholders, boards of
directors or committees has been held for which minutes have not been prepared
and are not contained in such minute books.

(b) None of the records, systems, data or information of either the Company or
any of its Subsidiaries is recorded, stored, maintained, operated or otherwise
wholly or partly dependent on or held or accessible by any means (including, but
not limited to, an electronic, mechanical or photographic process computerized
or not) which are not under the exclusive ownership and direct control of either
the Company or its Subsidiaries, as the case may be.

4.4 Capitalization.

(a) The authorized capital stock of the Company consists of one hundred twenty
five million (125,000,000) shares of Company Common Stock and five million
(5,000,000) shares of blank-check preferred stock, par value $0.001 per share.
As of the date of this Agreement, thirty-two million one hundred ninety-four
thousand eight hundred eighty (32,194,880) shares of Company Common Stock, and
one million forty-six thousand eight hundred and forty-six (1,046,846) shares of
Series A convertible preferred stock (the “Company Series A Convertible
Preferred Stock”), were issued and outstanding, all of which are validly issued,
fully paid and nonassessable and not subject to preemptive rights, and there
were no other shares of capital stock issued and outstanding. Except as set
forth in this Section 4.4(a) or as may be specified in Section 4.4(a) of the
Company Disclosure Schedule, as of the date of this Agreement, (i) there are no
options, warrants or other rights, agreements, arrangements or commitments of
any character relating to the issued or unissued capital stock of, or other
equity interests in, the Company or any Subsidiary obligating the Company or any
Subsidiary to issue or sell any shares of capital stock of, or other equity
interests in, the Company or any Subsidiary, (ii) there are no outstanding
contractual obligations of the Company or any Subsidiary to repurchase, redeem
or otherwise acquire any shares of Company Common Stock, Company Series A
Convertible Preferred Stock or any other capital stock of the Company, nor any
capital stock of, or any equity interest in, any of its Subsidiaries, (iii)
there are no declared or accrued unpaid dividends with respect to any of the
Company’s outstanding securities, and (iv) the Company does not have outstanding
or authorized any stock appreciation, phantom stock, profit participation, or
similar rights. Each outstanding share of capital stock of, or other equity
interest in, each Subsidiary is duly authorized, validly issued, fully paid and
nonassessable.
 
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(b) Except as may be specified in Section 4.4(b) of the Company Disclosure
Schedule, as of the date of this Agreement, of the Company’s outstanding equity,
convertible and/or equity-linked securities (including options and warrants),
only the Company Common Stock and Company Series A Convertible Preferred Stock
provide the holders thereof with any voting rights of any kind.

(c) Except as may be specified in Section 4.4(c) of the Company Disclosure
Schedule, as of the date of this Agreement, neither the Company nor any of its
Subsidiaries have outstanding any bonds, debentures, notes or other obligations
or debt securities, and also except as set forth in Section 4.4(c) of the
Company Disclosure Schedule, no outstanding bonds, debentures, notes or other
obligations or debt securities carry with them any voting rights of any kind.

4.5 Authority Relative To This Agreement.

(a) The Company has all necessary corporate power and authority to execute and
deliver this Agreement and the other Operative Agreements and, with respect to
the Merger, upon the approval of this Agreement and the Merger by the Company’s
shareholders in accordance with this Agreement and applicable Law, to perform
its obligations hereunder and to consummate the Transactions. The execution and
delivery of this Agreement and the other Operative Agreements by the Company and
the consummation by the Company of the Transactions have been duly and validly
authorized by all necessary corporate action and no other corporate proceedings
on the part of the Company are necessary to authorize this Agreement or to
consummate the Transactions, other than, with respect to the Merger, the
approval of this Agreement and the Merger by the Company’s shareholders in
accordance with applicable Law and the filing and recordation of the Certificate
of Merger with the Delaware Secretary of State in accordance with this Agreement
and applicable Law. This Agreement has been duly and validly executed and
delivered by the Company, and, assuming the due authorization, execution and
delivery of this Agreement by Parent and Merger Sub, and the Company Principal
Stockholder, constitutes a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as the
enforceability thereof may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar Laws affecting or relating to
creditors’ rights generally, and (ii) the availability of injunctive relief and
other equitable remedies.

(b) At a meeting duly called and held in compliance with the DGCL and the bylaws
of the Company, or otherwise through unanimous written consent if permitted
pursuant thereto, the board of directors of the Company has duly taken action
(i) approving the Merger, based on a determination that the Merger is fair to
the holders of Company Common Stock and Series A Convertible Preferred Stock and
in the best interests of such Company Stockholders, and (ii) approving this
Agreement and the Transactions and recommending approval of this Agreement and
the Transactions by the shareholders of the Company. As of the date hereof, such
action has not been rescinded and is in full force and effect.
 
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(c) In accordance with the Company’s certificate of incorporation, bylaws, and
the DGCL, the affirmative vote of the combined holders of at least fifty percent
(50%) of the then-outstanding shares of Company Common Stock and Series A
Convertible Preferred Stock (voting on an as-converted-to-Company-Common-Stock
basis) is the only vote of the holders of any class or series of capital stock
of the Company necessary to approve the Merger, and such vote, in accordance
with the Company’s certificate of incorporation, bylaws, and the DGCL, may be
duly obtained by written consent in lieu of a meeting.

4.6 No Conflict; Required Filings and Consents.

(a) The execution and delivery of this Agreement and the other Operative
Agreements by the Company do not, and the performance of this Agreement and the
other Operative Agreements by the Company will not (in each case, with or
without the giving of notice or lapse of time, or both), subject to (x) with
respect to the Merger, obtaining the requisite approval of this Agreement and
the Merger by the Company’s shareholders in accordance with this Agreement and
applicable Law, and (y) obtaining the consents (the “Required Company
Consents”), approvals, Authorizations and permits and making the filings
described in Section 4.6(b) and Section 4.6(b) of the Company Disclosure
Schedule, (i) conflict with or violate the certificate of incorporation, bylaws
or equivalent organizational documents of the Company or any of its
Subsidiaries, (ii) conflict with or violate any Law applicable to the Company or
any of its Subsidiaries or by which any property or asset of the Company or any
of its Subsidiaries is bound or affected, or (iii) except as may be specified in
Section 4.6(a)(iii) of the Company Disclosure Schedule, result in any breach of
or constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any right of termination,
unilateral amendment, acceleration or cancellation of, or result in the creation
of a Lien or other encumbrance on any property or asset of the Company or any of
its Subsidiaries, or require the consent of any third party pursuant to, any
note, bond, mortgage, indenture, Contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries or
any property or asset of the Company or any of its Subsidiaries is bound or
affected, except for such conflicts, violations, breaches, defaults or other
occurrences, which individually or in the aggregate would not reasonably be
expected to have a Material Adverse Effect on the Company or any of its
Subsidiaries.

(b) The execution and delivery of this Agreement and the other Operative
Agreements by the Company do not, and the performance of this Agreement and the
other Operative Agreements by the Company will not, require any consent,
approval, Authorization or permit of, or filing with or notification to, any
governmental or regulatory authority, domestic or foreign, except (i) the filing
of the Form S-4 Registration Statement with the SEC in connection with the
issuance of the Merger Securities pursuant to the Merger, (ii) filing and
recordation of the Certificate of Merger with the Delaware Secretary of State as
required by the DGCL, (iii) as may be specified in Section 4.6(b) of the Company
Disclosure Schedule, and (iv) where failure to obtain any such consents,
approvals, Authorizations or permits, or to make such filings or notifications,
would not prevent or delay consummation of the Merger, or otherwise prevent the
Company from performing its obligations under this Agreement or the other
Operative Agreements.

4.7 Permits; Compliance. Except as may be specified in Section 4.7 of the
Company Disclosure Schedule, each of the Company and its Subsidiaries is in
possession of all franchises, grants, Authorizations, licenses, permits,
easements, variances, exceptions, consents, certificates, approvals and orders
of any Governmental Authority necessary for the Company or any such Subsidiaries
to own, lease and operate its properties or to carry on its business as it is
now being conducted, except for those which the failure to possess would not
individually or in the aggregate reasonably be expected to have a Material
Adverse Effect on the Company (the “Company Permits”) and, as of the date
hereof, no suspension or cancellation of any of the Company Permits is pending
or, to the Knowledge of the Company, threatened, except such suspension or
termination as would not reasonably be expected to have a Material Adverse
Effect on the Company. Except as disclosed in Section 4.7 of the Company
Disclosure Schedule or as would not reasonably be expected to have a Material
Adverse Effect on the Company, neither the Company nor any of its Subsidiaries
is in conflict with, or in default or violation of, or, with the giving of
notice or the passage of time, would be in conflict with, or in default or
violation of, (a) any Law applicable to the Company or any of its Subsidiaries
or by which any property or asset of the Company or any of its Subsidiaries is
bound or affected, or (b) any of the Company Permits.
 
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4.8 Financial Statements.
 
(a) Section 4.8(a) of the Company Disclosure Schedule contains true and complete
copies of the following consolidated financial statements: (i) unaudited
consolidated income statement for the fiscal year ended May 26, 2007 (the “Most
Recent Company Income Statement”), (ii) unaudited consolidated balance sheet at
May 26, 2007 (the “Most Recent Company Balance Sheet”), (ii) unaudited
consolidated statement of stockholders’ equity for the fiscal year ended May 26,
2007 (the “Most Recent Company Statement of Stockholders’ Equity”), and (iv)
unaudited consolidated cash flow statement for the fiscal year ended May 26,
2007 (the “Most Recent Company Cash Flow Statement”), in each case internally
prepared by the Company (the Most Recent Company Income Statement, the Most
Recent Company Balance Sheet, the Most Recent Company Statement of Stockholders’
Equity, and the Most Recent Company Cash Flow Statement shall be referred to
collectively as the “Most Recent Company Financial Statements”). Each of the
Most Recent Company Financial Statements (including, in each case, any notes
thereto) are true, complete and correct, and fairly presented in all material
respects the financial position, results of operations and changes in
shareholders’ equity and cash flows of the Company and its Subsidiaries as at
the respective dates thereof and for the respective periods indicated therein
(subject to normal and recurring year-end adjustments which were not and are not
expected, individually or in the aggregate, to have a Material Adverse Effect on
the Company or any of its Subsidiaries).

(b) Except (i) to the extent set forth on the Most Recent Company Balance Sheet,
including the notes thereto, or (ii) as may be specified in Section 4.8(b) of
the Company Disclosure Schedule, neither the Company nor any Subsidiary has any
Liability which would be required to be reflected on a balance sheet, or in the
notes thereto, prepared in accordance with GAAP, applied on a consistent basis,
which would not, individually or in the aggregate, be reasonably expected to
have a Material Adverse Effect on the Company.

4.9 Notes and Accounts Receivable. All notes and accounts receivables of the
Company and its Subsidiaries appearing on the Most Recent Company Balance Sheet
and all of the receivables which have arisen or been acquired by the Company or
its Subsidiaries since the date thereof (collectively, the
“Company Receivables”), are bona fide trade receivable and have arisen or were
acquired in the Ordinary Course of Business of the Company or its Subsidiaries
and in a manner consistent with their normal past credit practices. Since the
date of the Most Recent Company Balance Sheet, neither the Company nor any of
its Subsidiaries has cancelled or agreed to cancel, in whole or in part, any
Company Receivables except in the Ordinary Course of Business consistent with
demonstrated past practices. All of the Company Receivables are reflected
properly on the books and records of the Company or its Subsidiaries, and,
except as set forth on Section 4.9 of the Company Disclosure Schedule, are
current and collectible and not subject to set-off or counterclaim, and will be
collected in accordance with their terms at their recorded amounts, subject only
to reserve for bad debts or doubtful accounts set forth on the Most Recent
Company Balance Sheet (as opposed to the notes thereto) as adjusted for the
passage of time through the Closing Date in accordance with the past custom and
practice of the Company and its Subsidiaries. For purposes of the foregoing,
Company Receivables shall be deemed to be “collected in accordance with their
terms at their recorded amounts” if they are collected in full within one
hundred and twenty (120) days of the date such receivables are billed.
 
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4.10 Undisclosed Liabilities. None of the Company and its Subsidiaries has any
material Liability, except for (i) Liabilities set forth on the face of the Most
Recent Company Balance Sheet (rather than in any notes thereto), and (ii)
Liabilities which have arisen since the date of the Most Recent Company Balance
Sheet in the Ordinary Course of Business.

4.11 Taxes.

(a) Except as may be specified in Section 4.11(a) of the Company Disclosure
Schedule, (i) each of the Company and its Subsidiaries has duly and timely filed
all Tax Returns required to have been filed by or with respect to the Company or
such Subsidiary, (ii) each such Tax Return correctly and completely reflects all
liability for Taxes and all other information required to be reported thereon,
(iii) all Taxes owed by the Company and each Subsidiary of the Company (whether
or not shown on any Tax Return) have been timely paid, and (iv) each of the
Company and its Subsidiaries has adequately provided for, in its books of
account and related records, all Liability for unpaid Taxes, being current Taxes
not yet due and payable.

(b) Except as may be specified in Section 4.11(b) of the Company Disclosure
Schedule, each of the Company and its Subsidiaries has withheld and timely paid
all Taxes required to have been withheld and paid by it and has complied with
all information reporting and backup withholding requirements, including
maintenance of required records with respect thereto.

(c) Except as may be specified in Section 4.11(c) of the Company Disclosure
Schedule, neither Company nor any of its Subsidiaries (i) is the beneficiary of
any extension of time within which to file any Tax Return, nor has Company or
any of its Subsidiaries made (or had made on its behalf) any requests for such
extensions, or (ii) has waived (or is subject to a waiver of) any statute of
limitations in respect of Taxes or has agreed to (or is subject to) any
extension of time with respect to a Tax assessment or deficiency.

(d) Section 4.11(d) of the Company Disclosure Schedule indicates those Tax
Returns that have been audited and those Tax Returns that currently are the
subject of audit. Except as set forth in Section 4.11(d) of the Company
Disclosure Schedule (i) there is no Action now pending or threatened against or
with respect to the Company or any of its Subsidiaries in respect of any Tax or
any assessment or deficiency, and (ii) there are no liens for Taxes (other than
current Taxes not yet due and payable) upon the assets of the Company.

(e) Section 4.11(e) of the Company Disclosure Schedule lists, as of the date of
this Agreement, all jurisdictions in which the Company or any of its
Subsidiaries currently files Tax Returns. No claim has been made by any Taxing
Authority in a jurisdiction where the Company or any of its Subsidiaries does
not file Tax Returns that any of them is or may be subject to taxation by that
jurisdiction or that any of them must file Tax Returns.
 
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(f) None of the assets or properties of the Company or any of its Subsidiaries
constitutes tax-exempt bond financed property or tax-exempt use property within
the meaning of Section 168 of the Code. Neither the Company nor any of its
Subsidiaries is a party to any “safe harbor lease” within the meaning of
Section 168(f)(8) of the Code, as in effect prior to amendment by the Tax Equity
and Fiscal Responsibility Act of 1982, or to any “long-term contract” within the
meaning of Section 460 of the Code. Neither the Company nor any of its
Subsidiaries has ever been a United States real property holding corporation
within the meaning of Section 897(c)(2) of the Code. Company is not a “foreign
person” within the meaning of Section 1445 of the Code.

(g) Neither the Company nor any of its Subsidiaries has agreed to or is required
to make by reason of a change in accounting method or otherwise, or could be
required to make by reason of a proposed or threatened change in accounting
method or otherwise, any adjustment under Section 481(a) of the Code. Neither
the Company nor any of its Subsidiaries has been the “distributing corporation”
(within the meaning of Section 355(c)(2) of the Code) with respect to a
transaction described in Section 355 of the Code within the 5-year period ending
as of the date of this Agreement.

(h) No Subsidiary of the Company that is incorporated in a non-U.S. jurisdiction
has, or at any time has had, an investment in “United States property” within
the meaning of Section 956(c) of the Code. No Subsidiary of the Company is, or
at any time has been, a passive foreign investment company within the meaning of
Section 1297 of the Code and neither Company nor any of its Subsidiaries is a
shareholder, directly or indirectly, in a passive foreign investment company. No
Subsidiary of the Company that is incorporated in a non-U.S. jurisdiction is, or
at any time has been, engaged in the conduct of a trade or business within the
United States, or treated as or considered to be so engaged.

(i) Neither the Company nor any of its Subsidiaries (i) has ever been a party to
any Tax allocation or sharing agreement or Tax indemnification agreement,
(ii) has ever been a member of an affiliated, consolidated, condensed or unitary
group, or (iii) has any Liability for or obligation to pay Taxes of any other
Person under Treas. Reg. 1.1502-6 (or any similar provision of Tax Law), or as
transferee or successor, by Contract or otherwise. Neither the Company nor any
of its Subsidiaries is a party to any joint venture, partnership, or other
arrangement that is treated as a partnership for federal income tax purposes.

(j) Neither the Company nor any of its Subsidiaries will be required to include
any item of income in, or exclude any item of deduction from, taxable income for
any taxable period (or portion thereof) ending after the Effective Time as a
result of any: (i) intercompany transactions or excess loss accounts described
in Treasury regulations under Section 1502 of the Code (or any similar provision
of state, local, or foreign Tax Law), (ii) installment sale or open transaction
disposition made on or prior to the Effective Time, or (iii) prepaid amount
received on or prior to the Effective Time.

(k) The Company has not entered into any transaction that constitutes a
“reportable transaction” within the meaning of Treasury
Regulation Section 1.6011-4(b).

(l) Section 4.11(l) of the Company Disclosure Schedule lists each person who the
Company reasonably believes is, with respect to the Company or any Affiliate of
the Company, a “disqualified individual” within the meaning of Section 280G of
the Code and the Regulations thereunder.

(m) Neither the Company nor, to the Knowledge of Company, any of its Affiliates
has taken or agreed to take any action (other than actions contemplated by this
Agreement) that would reasonably be expected to prevent the Merger from
constituting a “reorganization” under Section 368 of the Code. The Company is
not aware of any agreement or plan to which the Company or any of its Affiliates
is a party or other circumstances relating to the Company or any of its
Affiliates that could reasonably be expected to prevent the Merger from so
qualifying as a “reorganization” under Section 368 of the Code.
 
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(n) Except as may be specified in Section 4.11(l) of the Company Disclosure
Schedule, the unpaid Taxes of the Company (i) did not, as of the date of the
Most Recent Company Balance Sheet, exceed the reserve for Tax liability (rather
than any reserve for deferred Taxes established to reflect timing differences
between book and Tax income) set forth on the face of the Most Recent Company
Balance Sheet (rather than in any notes thereto), and (ii) will not exceed that
reserve as adjusted for the passage of time through the Closing Date in
accordance with the past custom and practice of the Company in filing its Tax
Returns. Since the date of the Most Recent Company Balance Sheet, the Company
has not incurred any liability for Taxes arising from extraordinary gains or
losses, as that term is used in GAAP, outside the Ordinary Course of Business
consistent with past custom and practice.

4.12 Title to Personal Property.

(a) With respect to personal properties and assets that are purported to be
owned by the Company and its Subsidiaries, including all properties and assets
reflected as owned on the Most Recent Company Balance Sheet (other than
inventory sold and items of obsolete equipment disposed of in the Ordinary
Course of Business since the date thereof), the Company or one of its
Subsidiaries has good and valid title to all of such properties and assets, free
and clear of all Liens other than Permitted Liens.

(b) With respect to personal properties and assets that are leased, the Company
or one of its Subsidiaries has a valid leasehold interest in such properties and
assets and all such leases are in full force and effect and constitute valid and
binding obligations of the other party(ies) thereto. Neither the Company nor any
of its Subsidiaries nor any other party thereto is in violation of any of the
terms of any such lease.

4.13 Condition of Tangible Fixed Assets. All buildings, plants, leasehold
improvements, structures, facilities, equipment and other items of tangible
property and assets which are owned, leased or used by the Company or any of its
Subsidiaries are structurally sound, free from material defects (patent and
latent), have been maintained in accordance with normal industry practice, are
in good operating condition and repair (subject to normal wear and tear given
the use and age of such assets), are usable in the regular and Ordinary Course
of Business and conform in all material respects to all Laws and Authorizations
relating to their construction, use and operation.

4.14 Inventory. Except as may be specified in Section 4.14 of the Company
Disclosure Schedule, the inventory of the Company and its Subsidiaries consists
of raw materials and supplies, manufactured and processed parts,
work-in-process, and finished goods, all of which is merchantable and fit for
the purpose for which it was procured or manufactured, and none of which is
slow-moving, obsolete, damaged, or defective, subject only to the reserve for
inventory writedown set forth on the face of the Most Recent Company Balance
Sheet (rather than in any notes thereto) as adjusted for operations and
transactions through the Closing Date in accordance with the past custom and
practice of the Company and its Subsidiaries.
 
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4.15 Product Warranty. Except as may be specified in Section 4.15 of the Company
Disclosure Schedule, substantially all of the products manufactured, sold,
leased, and delivered by the Company and its Subsidiaries have conformed in all
material respects with all applicable contractual commitments and all express
and implied warranties, and none of the Company and its Subsidiaries has any
material 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) for replacement or repair
thereof or other damages in connection therewith, subject only to the reserve
for product warranty claims set forth on the face of the Most Recent Company
Balance Sheet (rather than in any notes thereto) as adjusted for operations and
transactions through the Closing Date in accordance with the past custom and
practice of the Company and its Subsidiaries. Substantially all of the products
manufactured, sold, leased, and delivered by the Company and its Subsidiaries
are subject to standard terms and conditions of sale or lease. Section 4.15 of
the Company Disclosure Schedule includes copies of the standard terms and
conditions of sale or lease for each of the Company and its Subsidiaries
(containing applicable guaranty, warranty, and indemnity provisions).

4.16 Product Liability. None of the Company and its Subsidiaries has any
material 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) arising out of any injury to
individuals or property as a result of the ownership, possession, or use of any
product manufactured, sold, leased, or delivered by any of the Company and its
Subsidiaries.

4.17 Real Property.

(a) Section 4.17(a) of the Company Disclosure Schedule contains (i) a list of
all real property and interests in real property owned in fee by the Company or
any of its Subsidiaries (the “Company-Owned Real Property”), and (ii) a list of
all real property and interests in real property leased by Company or any of its
Subsidiaries with respect to each of which the annual rental payments exceed
$80,000 (the “Company-Leased Real Property”).

(b) With respect to each parcel of Company-Owned Real Property, the Company or
one of its Subsidiaries has good and marketable title to each such parcel of
Company-Owned Real Property free and clear of all Liens, except (A) Permitted
Liens and (B) zoning and building restrictions, easements, covenants,
rights-of-way and other similar restrictions of record, none of which materially
impairs the current or proposed use of such Company-Owned Real Property. There
are no outstanding options or rights of first refusal to purchase such parcel of
Company-Owned Real Property, or any portion thereof or interest therein.

(c) Each lease with respect to Company-Leased Real Property (each, a “Company
Lease”) is in full force and effect. Neither the Company nor any of its
Subsidiaries is in default under any such Company Lease and, to the Company’s
Knowledge, no other party thereto is in default under any such Company Lease.

4.18 Intellectual Property . Except to the extent as would not have a Material
Adverse Effect, individually or in the aggregate, on the Company:

(a) Section 4.18(a) of the Company Disclosure Schedule lists (by name, owner
and, where applicable, registration number and jurisdiction of registration,
application, certification or filing) all Intellectual Property that is owned by
Company and/or one or more of its Subsidiaries (whether exclusively, jointly
with another Person or otherwise) (“Company-Owned Intellectual Property”);
provided, however, that Company Disclosure Schedule does not include items of
Company-Owned Intellectual Property which are both (i) immaterial to Company and
its Subsidiaries and (ii) not registered or the subject of an application for
registration. Except as described in Company Disclosure Schedule, Company or one
of its Subsidiaries owns the entire right, title and interest to all
Company-Owned Intellectual Property free and clear of all Liens.
 
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(b) Section 4.18(b) of the Company Disclosure Schedule lists all licenses,
sublicenses and other Contracts (“Company In-Bound Licenses”) pursuant to which
a third party authorizes the Company or any of its Subsidiaries to use, practice
any rights under, or grant sublicenses with respect to, any Intellectual
Property owned by such third party, including the incorporation of any such
Intellectual Property into the Company’s or any of its Subsidiaries’ products
and, with respect to each Company In-Bound License, whether Company In-Bound
License is exclusive or non-exclusive; provided, however, that Company
Disclosure Schedule is not required to list Company In-Bound Licenses that
consist solely of “shrink-wrap” and similar commercially available end-user
licenses.

(c) Section 4.18(c) of the Company Disclosure Schedule lists all licenses,
sublicenses and other Contracts (“Company Out-Bound Licenses”) pursuant to which
the Company or any of its Subsidiaries authorizes a third party to use, practice
any rights under, or grant sublicenses with respect to, any Company Owned
Intellectual Property or pursuant to which Company or any of its Subsidiaries
grants rights to use or practice any rights under any Intellectual Property
owned by a third party and, with respect to each Company Out-Bound License,
whether Company Out-Bound License is exclusive or non-exclusive.

(d) Except as may be specified in Section 4.18(d) of the Company Disclosure
Schedule, each Company In-Bound License and each Company Out-Bound License is in
full force and effect and valid and enforceable in accordance with its terms,
and neither the Company nor any of its Subsidiaries has violated any provision
of, or committed or failed to perform any act which, with or without the giving
of notice or lapse of time, or both, would constitute a default in the
performance, observance or fulfillment of any obligation, covenant, condition or
other term contained in any Company In-Bound License or Company Out-Bound
License, and neither the Company nor any of its Subsidiaries has given or
received notice to or from any Person relating to any such alleged or potential
default that has not been cured.

(e) Except as may be specified in Section 4.18(e) of the Company Disclosure
Schedule, the Company and/or one or more of its Subsidiaries (i) exclusively own
the entire right, interest and title to all Intellectual Property that is used
in or necessary for the businesses of Company and its Subsidiaries as they are
currently conducted free and clear of Liens (including the design, manufacture,
license and sale of all products currently under development or in production),
or (ii) otherwise rightfully use or otherwise enjoy such Intellectual Property
pursuant to the terms of a valid and enforceable Company In-Bound License that
is listed in Company Disclosure Schedule or that is a “shrink-wrap” or similar
commercially available end-user license. Company-Owned Intellectual Property,
together with Company’s and its Subsidiaries’ rights under Company In-Bound
Licenses listed in Section 4.18(b) of the Company Disclosure Schedule or that
are “shrink-wrap” and similar commercially available end-user licenses
(collectively, the “Company Intellectual Property”), constitutes all the
Intellectual Property used in or necessary for the operation of Company’s and
its Subsidiaries’ businesses as they are currently conducted.

(f) Except as may be specified in Section 4.18(f) of the Company Disclosure
Schedule, (i) all registration, maintenance and renewal fees related to Patents,
Marks, Copyrights and any other certifications, filings or registrations that
are owned by Company or any of its Subsidiaries (collectively, “Company
Registered Intellectual Property”) that are currently due have been paid and all
documents and certificates related to such Company Registered Intellectual
Property have been filed with the relevant Governmental Authority or other
authorities in the United States or foreign jurisdictions, as the case may be,
for the purposes of maintaining such Company Registered Intellectual Property,
(ii) all Company Registered Intellectual Property is in good standing, held in
compliance with all applicable legal requirements and enforceable by Company
and/or one or more of its Subsidiaries, and (iii) all Patents that have been
issued to the Company or any of its Subsidiaries are valid.
 
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(g) Except as may be specified in Section 4.18(g) of the Company Disclosure
Schedule, the Company is not aware of any challenges (or any basis therefor)
with respect to the validity or enforceability of any Company Intellectual
Property. Neither Company nor any of its Subsidiaries has taken any action or
failed to take any action that would reasonably be expected to result in the
abandonment, cancellation, forfeiture, relinquishment, invalidation, waiver or
unenforceability of any Company Intellectual Property. Section 4.18(g) of the
Company Disclosure Schedule lists all previously held Company Registered
Intellectual Property that the Company or any of its Subsidiaries has abandoned,
cancelled, forfeited or relinquished during the twelve (12) months preceding the
date of this Agreement.

(h) Except as may be specified in Section 4.18(h) of the Company Disclosure
Schedule, (i) none of the products or services currently or formerly developed
manufactured, sold, distributed, provided, shipped or licensed, by the Company
or any of its Subsidiaries, or which are currently under development, has
infringed or infringes upon, or otherwise unlawfully used or uses, the
Intellectual Property Rights of any third party, (ii) neither the Company nor
any of its Subsidiaries, by conducting its business as currently conducted, has
infringed or infringes upon, or otherwise unlawfully used or uses, any
Intellectual Property Rights of a third party, (iii) neither the Company nor any
of its Subsidiaries has received any communication alleging that Company or any
of its Subsidiaries or any of their respective products, services, activities or
operations infringe upon or otherwise unlawfully use any Intellectual Property
Rights of a third party nor, to the Company’s Knowledge, is there any basis
therefor, (iv) no Action has been instituted, or, to Company’s Knowledge,
threatened, relating to any Intellectual Property formerly or currently used by
the Company or any of its Subsidiaries and none of Company Intellectual Property
is subject to any outstanding Order, and (v) to the Company’s Knowledge, no
Person has infringed or is infringing any Intellectual Property Rights of the
Company or any of its Subsidiaries or has otherwise misappropriated or is
otherwise misappropriating any Company Intellectual Property.

(i) With respect to the Company’s or any of its Subsidiaries’ Proprietary
Information, the documentation relating thereto is current, accurate and
sufficient in detail and content to identify and explain it and to allow its
full and proper use without reliance on the special knowledge or memory of
others. The Company and its Subsidiaries have taken commercially reasonable
steps to protect and preserve the confidentiality of all Proprietary Information
owned by the Company and its Subsidiaries that is not covered by an issued
Patent. Without limiting the generality of the foregoing, the Proprietary
Information of the Company and its Subsidiaries (other than Proprietary
Information that is covered by an issued Patent) is not part of the public
knowledge and has not been used or divulged for the benefit of any Person other
than the Company and its Subsidiaries.

(j) Except as specified in Section 4.18(j) of the Company Disclosure Schedule,
(i) all current and former employees, consultants and contractors of the Company
and its Subsidiaries have executed and delivered, and are in compliance with,
enforceable agreements regarding the protection of Proprietary Information and
providing valid written assignments of all Intellectual Property conceived or
developed by such employees, consultants or contractors in connection with their
services for the Company and its Subsidiaries, and (ii) no current or former
employee, consultant or contractor or any other Person has any right, claim or
interest to any of Company Intellectual Property.
 
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(k) No employee, consultant or contractor of the Company or any of its
Subsidiaries has been, is or will be, by performing services for the Company or
such Subsidiary, in violation of any term of any employment, invention
disclosure or assignment, confidentiality, noncompetition agreement or other
restrictive covenant or any Order as a result of such employee’s, consultant’s
or independent contractor’s employment by the Company or any of its Subsidiaries
or any services rendered by such employee, consultant or independent contractor.

(l) The execution and delivery of this Agreement and the other Operative
Agreements by the Company does not, and the consummation of the Merger (in each
case, with or without the giving of notice or lapse of time, or both) will not,
directly or indirectly, result in the loss or impairment of, or give rise to any
right of any third party to terminate or reprice or otherwise renegotiate any of
the Company’s or any of its Subsidiaries’ rights to own any of its Intellectual
Property or their respective rights under any Company Out-Bound License or
Company In-Bound License, nor require the consent of any Governmental Authority
or other third party in respect of any such Intellectual Property.

(m) Software.

(i) The Software owned, or purported to be owned by the Company or any of its
Subsidiaries (collectively, the “Company-Owned Software” ), has been either
(A) developed by employees of the Company or one or more of its Subsidiaries
within the scope of their employment by the Company or such Subsidiary,
(B) developed by independent contractors who have assigned all of their right,
title and interest therein to the Company or one of its Subsidiaries pursuant to
written Contracts, or (C) otherwise acquired by the Company or one of its
Subsidiaries from a third party pursuant to a written Contract in which such
third party assigns all of its right, title and interest therein. No
Company-Owned Software contains any programming code, documentation or other
materials or development environments that embody Intellectual Property Rights
of any Person other than the Company and its Subsidiaries, other than such
materials obtained by the Company and its Subsidiaries from other Persons who
make such materials generally available to all interested Persons or end-users
on standard commercial terms.

(ii) Each of the Company’s and its Subsidiaries’ existing and currently
supported and marketed Software (including Software-embedded) products performs,
in all material respects, the functions described in any agreed specifications
or end-user documentation or other information provided to customers of the
Company or such Subsidiary on which such customers relied when licensing or
otherwise acquiring such products, subject only to routine bugs and errors that
can be corrected promptly by the Company or such Subsidiary in the course of
providing customer support without further liability to the Company or such
Subsidiary, and all of the code of such products has been developed in a manner
that meets common industry practice, including the use of regression test and
release procedures. To the Company’s Knowledge, each of the Company’s and its
Subsidiaries’ existing and currently supported and marketed Software (including
Software-embedded) products is free of all viruses, worms, trojan horses and
material known Contaminants and does not contain any bugs, errors, or problems
in each case that would substantially disrupt its operation or have a
substantial adverse impact on the operation of the Software.

(iii) The Company and its Subsidiaries have taken all actions customary in the
Software industry to document the Company-Owned Software and its operation, such
that the materials comprising the Company-Owned Software, including the source
code and documentation, have been written in a clear and professional manner so
that they may be understood, modified and maintained in an efficient manner by
reasonably competent programmers.
 
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(iv) Neither the Company nor any of its Subsidiaries has exported or transmitted
Software or other material in connection with the Company’s or such
Subsidiaries’ business to any country to which such export or transmission is
restricted by any applicable Law, without first having obtained all necessary
and appropriate Authorizations.

(v) All Company-Owned Software is free of any Disabling Code or Contaminants
that may, or may be used to, access, modify, delete, damage or disable any
Systems or that may result in damage thereto. The Company and its Subsidiaries
have taken reasonable steps and implemented reasonable procedures to ensure that
its and their internal computer systems used in connection with Company’s and
its Subsidiaries’ business are free from Disabling Codes and Contaminants. The
Software licensed by the Company is free of any Disabling Codes or Contaminants
that may, or may be used to, access, modify, delete, damage or disable the
Systems of the Company or its Subsidiaries or that might result in damage
thereto. The Company and its Subsidiaries have taken all reasonable steps to
safeguard their respective Systems and restrict unauthorized access thereto.

(vi) No Public Software: (A) forms part of any Company Intellectual Property;
(B) was, or is, used in connection with the development of any Company-Owned
Intellectual Property or any products or services developed or provided by the
Company or any of its Subsidiaries; or (C) was, or is, incorporated or
distributed, in whole or in part, in conjunction with Company Intellectual
Property.

4.19 Material Contracts

(a) Section 4.19 of the Company Disclosure Schedule contains a complete and
accurate list of each Contract or series of related Contracts to which the
Company or any of its Subsidiaries is a party or is subject, or by which any of
their respective assets are bound:

(i) for the purchase of materials, supplies, goods, services, equipment or other
assets and that involves or would reasonably be expected to involve (A) annual
payments by the Company or any of its Subsidiaries of $50,000 or more, or
(B) aggregate payments by the Company or any of its Subsidiaries of $50,000 or
more;

(ii) (A) for the sale by the Company or any of its Subsidiaries of materials,
supplies, goods, services, equipment or other assets, and that provides for
(1) a specified annual minimum dollar sales amount by the Company or any of its
Subsidiaries of $50,000 or more, or (2) aggregate payments to the Company or any
of its Subsidiaries of $50,000 or more, or (B) pursuant to which the Company or
any of its Subsidiaries received payments of more than $50,000 in the year ended
May 26, 2007, or expects to receive payments of more than $50,000 in the year
ending May 26, 2008;

(iii) that continues over a period of more than six (6) months from the date
hereof and provides for payments to or by the Company or any of its Subsidiaries
exceeding $50,000, except for arrangements disclosed pursuant to the preceding
subparagraphs (i) and (ii);

(iv) that is an employment, consulting, termination or severance Contract that
involves or would reasonably be expected to involve the payment of $50,000 or
more by the Company or any of its Subsidiaries following the date hereof, except
for any such Contract that is terminable at-will by the Company or any of its
Subsidiaries without liability to the Company or any such Subsidiary;
 
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(v) that is a distribution, dealer, representative or sales agency Contract,
other than Contracts entered into in the Ordinary Course of Business with
distributors, representatives and sales agents that are cancelable without
penalty on not more than one hundred eighty (180) days’ notice and does not
deviate in any material respect from the Company’s standard form;

(vi) that is a (A) Company Lease, or (B) Contract for the lease of personal
property, in each case which provides for payments to or by the Company or any
of its Subsidiaries in any one case of $75,000 or more annually or $250,000 or
more over the term of such Company Lease or lease;

(vii) which provides for the indemnification by the Company or any of its
Subsidiaries of any Person, the undertaking by the Company or any of its
Subsidiaries to be responsible for consequential damages, or the assumption by
the Company or any of its Subsidiaries of any Tax, environmental or other
Liability;

(viii) that is a note, debenture, bond, equipment trust, letter of credit, loan
or other Contract for Indebtedness or lending of money (other than to employees
for travel expenses in the Ordinary Course of Business) or Contract for a line
of credit or guarantee, pledge or undertaking of the Indebtedness of any other
Person;

(ix) for any capital expenditure or leasehold improvement in any one case in
excess of $50,000 or any such Contracts in the aggregate greater than $100,000;

(x) that restricts or purports to restrict the right of the Company or any of
its Subsidiaries to engage in any line of business, acquire any property,
develop or distribute any product or provide any service (including geographic
restrictions) or to compete with any Person or granting any exclusive
distribution rights, in any market, field or territory;

(xi) that is a partnership, joint venture, joint development or similar
Contract;

(xii) that relates to the acquisition or disposition of any business (whether by
merger, sale of stock, sale of assets or otherwise);

(xiii) that is a collective bargaining Contract or other Contract with any labor
organization, union or association; and

(xiv) that is a Contract or series of Contracts, the termination or breach of
which would reasonably be expected to have a Material Adverse Effect on the
Company and not previously disclosed pursuant to this Section 4.19.

(b) Each Contract required to be listed in Schedule 4.19 of the Company
Disclosure Schedule (collectively, the “Company Material Contracts”) is in full
force and effect and valid and enforceable in accordance with its terms, except
to the extent a failure to be in full force and effect and valid or enforceable
in accordance with its terms would not have a Material Adverse Effect on the
Company.
 
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(c) Neither the Company nor any of its Subsidiaries is, and to the Company’s
Knowledge, no other party thereto is, in default in the performance, observance
or fulfillment of any obligation, covenant, condition or other term contained in
any Company Material Contract, and neither the Company nor any of its
Subsidiaries has given or received notice to or from any Person relating to any
such alleged or potential default that has not been cured. No event has occurred
which with or without the giving of notice or lapse of time, or both, may
conflict with or result in a violation or breach of, or give any Person the
right to exercise any remedy under or accelerate the maturity or performance of,
or cancel, terminate or modify, any Company Material Contract.

(d) The Company has provided accurate and complete copies of each Company
Material Contract to Parent.

(e) All Contracts other than Company Material Contracts to which the Company or
any of its Subsidiaries is a party or is subject, or by which any of their
respective assets are bound (collectively, the “Company Minor Contracts”), are
in all material respects valid and enforceable in accordance with their terms.
Neither the Company nor any of its Subsidiaries is in default in the
performance, observance or fulfillment of any obligation, covenant or condition
contained therein, and no event has occurred which with or without the giving of
notice or lapse of time, or both, would constitute a default thereunder by the
Company or any of its Subsidiaries, except in either case where any such default
or defaults could not reasonably be expected have, individually or in the
aggregate, a Material Adverse Effect on Company taken as a whole.

4.20 Litigation. Except as may be specified in Section 4.20 of the Company
Disclosure Schedule, (i) there is no Proceeding pending or, to the Knowledge of
the Company, threatened against the Company or any if its Subsidiaries, which
(a) individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect on the Company, or (b) seeks to and is reasonably likely
to significantly delay or prevent the consummation of the Merger, (ii) there is
no Proceeding against any current or, to Company’s Knowledge, former director or
employee of the Company or any of its Subsidiaries with respect to which the
Company or any of its Subsidiaries has or is reasonably likely to have an
indemnification obligation, and (iii) neither the Company or any of its
Subsidiaries, nor any property or asset of the Company or any of its
Subsidiaries is in violation of any Order having, individually or in the
aggregate, a Material Adverse Effect on the Company.

4.21 Employee Benefit Plans.

(a) Section 4.21(a) of the Company Disclosure Schedule sets forth a complete and
accurate list of all Benefit Plans sponsored, maintained or contributed to by
the Company, any of its Subsidiaries, or any Company ERISA Affiliate, or with
respect to which the Company, any of its Subsidiaries, or any Company ERISA
Affiliate otherwise has any present or future Liability (each, a “Company
Benefit Plan”). A current, accurate and complete copy of each Company Benefit
Plan has been provided to Parent. Neither the Company nor any of its
Subsidiaries has any intent or commitment to create any additional Company
Benefit Plan or amend any Company Benefit Plan.  

(b) Each Company Benefit Plan has been and is currently administered in
compliance in all material respects with its constituent documents and with all
reporting, disclosure and other requirements of ERISA and the Code applicable to
such Company Benefit Plan. Each Company Benefit Plan that is an Employee Pension
Benefit Plan (as defined in Section 3(2) of ERISA) and which is intended to be
qualified under Section 401(a) of the Code (a “Company Pension Plan”), has been
determined by the Internal Revenue Service to be so qualified and no condition
exists that would adversely affect any such determination. No Company Benefit
Plan is a “defined benefit plan” as defined in Section 3(35) of ERISA.
 
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(c) None of the Company, any Subsidiary of Company, any Company ERISA Affiliate
or any trustee or agent of any Company Benefit Plan has been or is currently
engaged in any prohibited transactions as defined by Section 406 of ERISA or
Section 4975 of the Code for which an exemption is not applicable which could
subject Company, any Subsidiary of the Company, any Company ERISA Affiliate or
any trustee or agent of any Company Benefit Plan to the tax or penalty imposed
by Section 4975 of the Code or Section 502 of ERISA.

(d) There is no event or condition existing which could be deemed a “reportable
event” (within the meaning of Section 4043 of ERISA) with respect to which the
thirty (30)-day notice requirement has not been waived. To the Company’s
Knowledge, no condition exists which could subject the Company or any of its
Subsidiaries to a penalty under Section 4071 of ERISA.

(e) None of the Company, any Subsidiary of Company, nor any Company ERISA
Affiliate is, or has been, party to any “multi-employer plan,” as that term is
defined in Section 3(37) of ERISA.

(f) True and correct copies of the most recent annual report on Form 5500 and
any attached schedules for each Company Benefit Plan (if any such report was
required by applicable Law) and a true and correct copy of the most recent
determination letter issued by the Internal Revenue Service for each Company
Pension Plan have been provided to Parent.
 
(g) With respect to each Company Benefit Plan, there are no Proceedings (other
than routine claims for benefits in the ordinary course) pending or, to the
Company’s Knowledge, threatened against any Company Benefit Plan, the Company,
any Subsidiary of the Company, any Company ERISA Affiliate or any trustee or
agent of any Company Benefit Plan.

(h) With respect to each Company Benefit Plan to which the Company, any
Subsidiary of the Company or any Company ERISA Affiliate is a party which
constitutes a group health plan subject to Section 4980B of the Code, each such
Company Benefit Plan complies, and in each case has complied, in all material
respects with all applicable requirements of Section 4980B of the Code.

(i)  Full payment has been made of all amounts which the Company, any Subsidiary
of the Company or any Company ERISA Affiliate was required to have paid as a
contribution to any Company Benefit Plan as of the last day of the most recent
fiscal year of each of the Benefit Plans ended prior to the date of this
Agreement, and no Company Benefit Plan has incurred any “accumulated funding
deficiency” (as defined in Section 302 of ERISA and Section 412 of the Code),
whether or not waived, as of the last day of the most recent fiscal year of each
such Company Benefit Plan ended prior to the date of this Agreement.

(j) Each Company Benefit Plan is, and its administration is and has been during
the six-year period preceding the date of this Agreement, in all material
respects in compliance with, and none of the Company, any Subsidiary of the
Company or any Company ERISA Affiliate has received any claim or notice that any
such Company Benefit Plan is not in material compliance with, all applicable
Laws and Orders and prohibited transaction exemptions, including to the extent
applicable, the requirements of ERISA.

(k) None of the Company, any Subsidiary of the Company and any Company ERISA
Affiliate is in default in any material respect in performing any of its
contractual obligations under any Company Benefit Plans or any related trust
agreement or insurance contract.
 
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(l) There are no material outstanding Liabilities of any Company Benefit Plan
other than Liabilities for benefits to be paid to participants in any Company
Benefit Plan and their beneficiaries in accordance with the terms of such
Company Benefit Plan.

(m) Subject to ERISA and the Code, each Company Benefit Plan may be amended,
modified, terminated or otherwise discontinued by the Company, a Subsidiary of
the Company or a Company ERISA Affiliate at any time without liability.

(n) No Company Benefit Plan other than a Company Pension Plan, retiree medical
plan or severance plan provides benefits to any individual after termination of
employment.

(o) The consummation of the Merger will not (either alone or in conjunction with
any other event) (i) entitle any current or former director, employee,
contractor or consultant of the Company or any of its Subsidiaries to severance
pay, unemployment compensation or any other payment, (ii) accelerate the time of
payment or vesting, or increase the amount of compensation due to any such
director, employee, contractor or consultant, or result in the payment of any
other benefits to any Person or the forgiveness of any Indebtedness of any
Person, (iii) result in any prohibited transaction described in Section 406 of
ERISA or Section 4975 of the Code for which an exemption is not available, or
(iv) result in the payment or series of payments by the Company or any of its
Affiliates to any person of an “excess parachute payment” within the meaning of
Section 280G of the Code.

(p) With respect to each Company Benefit Plan that is funded wholly or partially
through an insurance policy, all premiums required to have been paid to date
under the insurance policy have been paid, all premiums required to be paid
under the insurance policy through the Closing will have been paid on or before
the Closing and, as of the Closing, there will be no liability of the Company,
any Subsidiary of the Company or any Company ERISA Affiliate under any insurance
policy or ancillary agreement with respect to such insurance policy in the
nature of a retroactive rate adjustment, loss sharing arrangement or other
actual or contingent liability arising wholly or partially out of events
occurring prior to the Closing.

(q) Each Company Benefit Plan that constitutes a “welfare benefit plan,” within
the meaning of Section 3(1) of ERISA, and for which contributions are claimed by
the Company, any Subsidiary of the Company or any Company ERISA Affiliate as
deductions under any provision of the Code, is in compliance in all material
respects with all applicable requirements pertaining to such deduction. With
respect to any welfare benefit fund (within the meaning of Section 419 of the
Code) related to a welfare benefit plan, there is no disqualified benefit
(within the meaning of Section 4976(b) of the Code) that would result in the
imposition of a tax under Section 4976(a) of the Code. All welfare benefit funds
intended to be exempt from tax under Section 501(a) of the Code have been
determined by the Internal Revenue Service to be so exempt and no event or
condition exists which would adversely affect any such determination.

(r) Section 4.21(r) of the Company Disclosure Schedule sets forth all Company
Benefit Plans covering employees of the Company or any of its Subsidiaries
outside of the United States (the “Company Foreign Plans”).  The Company Foreign
Plans have been operated in accordance, and are in compliance, in all material
respects with their constituent documents and all applicable Laws. There are no
material unfunded Liabilities under or in respect of any Company Foreign Plans,
and all contributions or other payments required to be made to or in respect of
the Company Foreign Plans prior to the Closing Date have been made or will be
made prior to the Closing Date.
 
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4.22 Labor and Employment Matters.

(a) Neither the Company nor any of its Subsidiaries is a party or subject to any
labor union or collective bargaining Contract. There have not been since the
Company began operations and there are not pending or threatened any labor
disputes, work stoppages, requests for representation, pickets, work slow-downs
due to labor disagreements or any actions or arbitrations which involve the
labor or employment relations of the Company or any of its Subsidiaries.  There
is no unfair labor practice, charge or complaint pending, unresolved or, to the
Company’s Knowledge, threatened before the National Labor Relations Board. No
event has occurred or circumstance exist that may provide the basis of any work
stoppage or other labor dispute.

(b) Each of the Company and its Subsidiaries has complied in all material
respects with each, and is not in violation in any material respect of any, Law
relating to anti-discrimination and equal employment opportunities and there
are, and have been, no material violations of any other Law respecting the
hiring, hours, wages, occupational safety and health, employment, promotion,
termination or benefits of any employee or other Person. Each of the Company and
its Subsidiaries has filed all reports, information and notices required under
any Law respecting the hiring, hours, wages, occupational safety and health,
employment, promotion, termination or benefits of any employee or other Person,
and will timely file prior to Closing all such reports, information and notices
required by any Law to be given prior to Closing.

(c) Each of the Company and its Subsidiaries has paid or properly accrued in the
Ordinary Course of Business all wages and compensation due to employees,
including all vacations or vacation pay, holidays or holiday pay, sick days or
sick pay, and bonuses.

(d) Neither the Company nor any of its Subsidiaries is a party to any Contract
which restricts the Company or any of its Subsidiaries from relocating, closing
or terminating any of its operations or facilities or any portion thereof.
 Neither the Company nor any of its Subsidiaries have effectuated a “plant
closing” (as defined in the Worker Adjustment and Retraining Notification Act of
1988 (the “WARN Act”)) or (ii) a “mass lay-off” (as defined in the WARN Act), in
either case affecting any site of employment or facility of the Company or any
of its Subsidiaries, except in accordance with the WARN Act. The consummation of
the Merger will not create Liability for any act by the Company or any of its
Subsidiaries on or prior to the Closing Date under the WARN Act or any other Law
respecting reductions in force or the impact on employees on plant closings or
sales of businesses.

4.23 Environmental.

(a) Each of the Company and its Subsidiaries has secured, and is in compliance
in all material respects with, all Environmental Permits required in connection
with its operations and the Real Property. Each Environmental Permit, together
with the name of the Governmental Authority issuing such Environmental Permit,
is set forth in Section 4.23(a) of the Company Disclosure Schedule. All such
Environmental Permits are valid and in full force and effect and none of such
Environmental Permits will be terminated or impaired or become terminable as a
result of the Merger. Each of the Company and its Subsidiaries has been, and are
currently, in compliance in all material respects with all Environmental Laws.
Neither the Company nor any of its Subsidiaries has received any notice alleging
that the Company or any of its Subsidiaries is not in such compliance with
Environmental Laws.
 
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(b) There are no past, pending or, to the Company’s Knowledge, threatened
Environmental Actions against or affecting the Company or any of its
Subsidiaries, and the Company is not aware of any facts or circumstances which
could be expected to form the basis for any Environmental Action against the
Company or any of its Subsidiaries.

(c) Neither the Company nor any of its Subsidiaries has entered into or agreed
to any Order, and neither the Company nor any of its Subsidiaries is subject to
any Order, relating to compliance with any Environmental Law or to investigation
or cleanup of a Hazardous Substance under any Environmental Law.

(d) No Lien has been attached to, or asserted against, the assets, property or
rights of the Company or any of its Subsidiaries pursuant to any Environmental
Law, and, to the Company’s Knowledge, no such Lien has been threatened. There
are no facts, circumstances or other conditions that could be expected to give
rise to any Liens on or affecting any Real Property.

(e) There has been no treatment, storage, disposal or Release of any Hazardous
Substance at, from, into, on or under any Real Property or any other property
currently or formerly owned, operated or leased by the Company or any of its
Subsidiaries. No Hazardous Substances are present in, on, about or migrating to
or from any Real Property that could be expected to give rise to an
Environmental Action against the Company or any of its Subsidiaries.

(f) Neither the Company nor any of its Subsidiaries has received a CERCLA 104(e)
information request nor has the Company or any of its Subsidiaries been named a
potentially responsible party for any National Priorities List site under CERCLA
or any site under analogous state Law. Neither the Company nor any of its
Subsidiaries has received an analogous notice or request from any non-U.S.
Governmental Authority.

(g) There are no aboveground tanks or underground storage tanks on, under or
about the Real Property. Any aboveground or underground tanks previously
situated on the Real Property or any other property currently or formerly owned,
operated or leased by the Company or any of its Subsidiaries have been removed
in accordance with all Environmental Laws and no residual contamination, if any,
remains at such sites in excess of applicable standards.

(h) There are no PCBs leaking from any article, container or equipment on, under
or about the Real Property and there are no such articles, containers or
equipment containing PCBs. There is no asbestos containing material or
lead-based paint containing materials in at, on, under or within the Real
Property.

(i) Neither the Company nor any of its Subsidiaries has transported or arranged
for the treatment, storage, handling, disposal, or transportation of any
Hazardous Material to any off-site location which is an Environmental Clean-up
Site.

(j) None of the Real Property is an Environmental Clean-up Site.

(k) The Company has provided to Parent true and complete copies of, or access
to, all written environmental assessment materials and reports that have been
prepared by or on behalf of the Company or any of its Subsidiaries.
 
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4.24 Related Party Transactions.  There are no Contracts of any kind, written or
oral, entered into by the Company or any of its Subsidiaries with, or for the
benefit of, any officer, director or stockholder of the Company or, to the
Knowledge of the Company, any Affiliate of any of them, except in each case, for
(a) employment agreements, indemnification agreements fringe benefits and other
compensation paid to directors, officers and employees consistent with
previously established policies (including normal merit increases in such
compensation in the Ordinary Course of Business) and copies of which have been
provided to Parent and are listed in Section 4.24 of the Company Disclosure
Schedule, (b) reimbursements of ordinary and necessary expenses incurred in
connection with their employment or service, (c) amounts paid pursuant to
Company Benefit Plans of which copies have been provided to Parent, (d) the
occupancy of certain of the Company’s facilities which do not provide for the
payment of significant amounts of rent, and (e) those loans made to the Company
listed in, and the details of which are specifically set forth in, Section 4.24
of the Company Disclosure Schedule. To the Knowledge of the Company, none of
such Persons has any material direct or indirect ownership interest in any firm
or corporation with which the Company or any of its Subsidiaries has a business
relationship, or with any firm or corporation that competes with the Company or
any of its Subsidiaries (other than ownership of securities in a publicly-traded
company representing less than one percent of the outstanding stock of such
company). No officer or director of the Company or any of its Subsidiaries or
member of his or her immediate family or greater than 5% stockholder of the
Company or, to the Knowledge of the Company, any Affiliate of any of them or any
employee of the Company or any of its Subsidiaries is directly or indirectly
interested in any Company Material Contract.

4.25 Insurance. Section 4.25 of the Company Disclosure Schedule sets forth the
following information with respect to each material insurance policy (including
policies providing property, casualty, liability, and workers' compensation
coverage and bond and surety arrangements) with respect to which any of the
Company and its Subsidiaries is a party, a named insured, or otherwise the
beneficiary of coverage:

(i) the name, address, and telephone number of the agent;

(ii) the name of the insurer, the name of the policyholder, and the name of each
covered insured;

(iii) the policy number and the period of coverage;

(iv) the scope (including an indication of whether the coverage is on a claims
made, occurrence, or other basis) and amount (including a description of how
deductibles and ceilings are calculated and operate) of coverage; and

(v) a description of any retroactive premium adjustments or other material
loss-sharing arrangements.

With respect to each such insurance policy: (A) the policy is legal, valid,
binding, enforceable, and in full force and effect in all material respects; (B)
neither the Company, any of its Subsidiaries nor any other party to the policy
is in material breach or default (including with respect to the payment of
premiums or the giving of notices), and no event has occurred which, with notice
or the lapse of time, would constitute such a material breach or default, or
permit termination, modification, or acceleration, under the policy; and (C) no
party to the policy has repudiated any material provision thereof. Section 4.25
of the Company Disclosure Schedule describes any material self-insurance
arrangements affecting the Company and/or any of its Subsidiaries.
 
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4.26 Absence of Certain Changes or Events. Since May 26, 2007, except as may be
contemplated by, or disclosed pursuant to, this Agreement, including Section
4.26 of the Company Disclosure Schedule:

(a) there has not been any event or events (whether or not covered by
insurance), individually or in the aggregate, which have had a Material Adverse
Effect on the Company or any of its Subsidiaries, including without limitation
the imposition of any security interests on any of the assets of the Company or
any of its Subsidiaries;

(b) there have not been any amendments or other modifications to the certificate
of incorporation or bylaws of either the Company or any of its Subsidiaries;

(c) there has not been any entry by the Company nor any of its Subsidiaries into
any commitment or transaction material to the Company or such Subsidiaries,
except in the Ordinary Course of Business and consistent with past practice,
including without limitation any (i) borrowings or the issuance of any
guaranties, (ii) any capital expenditures in excess of $60,000, or (iii) any
grant of any increase in the base compensation payable, or any loans, to any
directors, officers or employees;
 
(d) there has not been, other than pursuant to the Plans, any increase in or
establishment of any bonus, insurance, severance, deferred compensation,
pension, retirement, profit sharing, stock option, stock purchase or other
employee benefit plan, except in the Ordinary Course of Business consistent with
past practice.
 
(e) there have not been any material changes by the Company in its accounting
methods, principles or practices;

(f) neither Company nor any of its Subsidiaries has declared, set aside or paid
any dividend or other distribution (whether in cash, stock or property) with
respect to any of its securities;

(g) neither Company nor any of its Subsidiaries has split, combined or
reclassified any of its securities, or issued, or authorized for issuance, any
securities;

(h) there has not been any material damage, destruction or loss with respect to
the property and assets of Company or any of its Subsidiaries, whether or not
covered by insurance;

(i) there has not been any revaluation of Company’s or any of its Subsidiaries’
assets, including writing down the value of inventory or writing off notes or
accounts receivable, other than in the Ordinary Course of Business consistent
with past practice; and

(j) neither Company nor any of its Subsidiaries has agreed, whether in writing
or otherwise, to do any of the foregoing.
 
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4.27 Solvency. No Order has been made, petition presented, or resolution passed
for the winding up (or other process whereby the business is terminated and the
assets of the subject company are distributed among its creditors and/or
shareholders) of either the Company or any of its Subsidiaries. There are no
cases or Proceedings of any kind pending under any applicable insolvency,
reorganization or similar Law in any jurisdiction concerning the Company or any
of its Subsidiaries, and no circumstances exist which, under applicable Law,
would justify any such cases or Proceedings. No receiver or trustee has been
appointed with respect to all or any portion of the Company or any of its
Subsidiaries business or assets.

4.28 Brokers or Finders. The Company shall indemnify and hold harmless Parent
and the officers and directors of Parent from any obligations or liabilities to
any person or entity engaged by or to whom the Company or any of its
Subsidiaries is liable for brokerage, investment banking and/or finder’s fees or
commissions for services rendered in connection with the Transactions.

4.29 No Illegal Payments.  None of the Company, any of its Subsidiaries or, to
the Knowledge of the Company, any Affiliate, officer, agent or employee thereof,
directly or indirectly, has, since inception, on behalf of or with respect to
the Company or any of its Subsidiaries, (a) made any unlawful domestic or
foreign political contributions, (b) made any payment or provided services which
were not legal to make or provide or which the Company, any of its Subsidiaries
or any Affiliate thereof or any such officer, employee or other Person should
reasonably have known were not legal for the payee or the recipient of such
services to receive, (c) received any payment or any services which were not
legal for the payer or the provider of such services to make or provide, (d) had
any material transactions or payments which are not recorded in its accounting
books and records, or (e) had any off-book bank or cash accounts or “slush
funds.”

4.30 Information Supplied.  None of the information furnished or to be furnished
by or on behalf of the Company for inclusion or incorporation by reference in
the Form S-4 Registration Statement to be filed with the SEC by Parent in
connection with the issuance of the Merger Securities pursuant to the Merger,
will, as of the time furnished, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading.

4.31 Antitakeover Statutes. The Company has taken all action necessary to exempt
the Merger, this Agreement, the Voting Agreement, and the Transactions from
Section 203 of the DGCL.  Neither such Section nor any other anti-takeover or
similar Law applies or purports to apply to the Transactions.  No other “control
share acquisition,” “fair price,” “moratorium” or other anti-takeover Laws apply
to this Agreement or any of the Transactions.

4.32 Compliance with Securities Laws.  Except to the extent as would not have a
Material Adverse Effect, individually or in the aggregate, on the Company or any
of its Subsidiaries, the offering and issuance by the Company and any of its
Subsidiaries of all securities to date were made and completed in substantial
compliance with all applicable state, federal and, if applicable, foreign
securities Laws.

4.33 Change in Control. Except as may be set forth in Section 4.33 of the
Company Disclosure Schedule, the Company is not a party to any Contract that
contains a “change in control,” “potential change in control” or similar
provision.

4.34 Powers of Attorney. To the Knowledge of the Company, there are no material
outstanding powers of attorney executed on behalf of the Company or any of its
Subsidiaries.

4.35 Material Disclosures. No statement, representation or warranty made by the
Company in this Agreement, or in any certificate, statement, list, schedule or
other document furnished or to be furnished to Parent hereunder, contains, or
when so furnished will contain, any untrue statement of a material fact, or
fails to state, or when so furnished will fail to state, a material fact
necessary in order to make the statements contained herein or therein, in light
of the circumstances in which they are or will be made, not misleading.
 
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ARTICLE V

REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

Except as set forth in the Disclosure Schedule delivered by Parent to the
Company and signed by the Company and Parent for identification prior to the
execution and delivery of this Agreement (the “Parent Disclosure Schedule”),
which shall identify exceptions by specific section references, Parent and
Merger Sub hereby, jointly and severally, represent and warrant to the Company
that:

5.1 Corporate Organization and Qualification. Parent and Merger Sub are
corporations duly organized, validly existing and in good standing under the
Laws of the State of Delaware. Parent and each of its Subsidiaries is duly
qualified or licensed as a foreign corporation to do business, and is in good
standing, in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its business makes such qualification
or licensing necessary, except for such failures to be so qualified or licensed
and in good standing as would not, individually or in the aggregate, have a
Material Adverse Effect on either or both of Parent and/or Merger Sub.

5.2 Certificate of Incorporation and Bylaws. Parent has heretofore furnished or
made available to the Company a complete and correct copy of the certificate of
incorporation and bylaws of Parent, and the certificate of incorporation and
bylaws of Merger Sub, each as amended to date. Neither Parent nor Merger Sub is
in violation of any provision of its certificate of incorporation or bylaws.

5.3 Books and Records.

(a) The books of account, minute books, stock record books, and other records of
Parent and Merger Sub, all of which have heretofore been furnished or made
available to the Company, are complete and correct and have been maintained in
accordance with sound business practices, including the maintenance of an
adequate system of internal controls. The minute books of Parent and Merger Sub
contain accurate and complete records of all meetings held of, consents of, and
corporate action taken by, the stockholders, the boards of directors, and any
committees of the boards of directors of each of Parent and Merger Sub, and no
meeting of such stockholders, boards of directors or committees has been held
for which minutes have not been prepared and are not contained in such minute
books.

(b) None of the records, systems, data or information of either Parent or Merger
Sub is recorded, stored, maintained, operated or otherwise wholly or partly
dependent on or held or accessible by any means (including, but not limited to,
an electronic, mechanical or photographic process computerized or not) which are
not under the exclusive ownership and direct control of either Parent or Merger
Sub, as the case may be.

5.4 Capitalization.

(a) As of the date of this Agreement, the authorized capital stock of Parent
consists of (i) one hundred million (100,000,000) shares of Parent Common Stock,
$.0001 par value, and (ii) twenty million (20,000,000) shares of “blank check”
preferred stock, $.0001 par value (“Parent Preferred Stock”). As of the date of
this Agreement, (A) 5,000,000 shares of Parent Common Stock were issued and
outstanding, all of which were validly issued, fully paid and nonassessable, (B)
no shares of Parent Common Stock were held in the treasury of Parent, (C) no
shares of Parent Common Stock were reserved for future issuance pursuant to
outstanding stock options or stock incentive rights granted pursuant to any
stock option plan, and (D) no shares of Parent Preferred Stock were issued or
outstanding. Except as contemplated by this Agreement and as set forth in
Section 5.4(a) of the Parent Disclosure Schedule, as of the date of this
Agreement, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character relating to the issued or unissued
capital stock of Parent obligating Parent to issue or sell any shares of capital
stock of, or other equity interests in, Parent or Merger Sub. There are no
outstanding contractual obligations of Parent to repurchase, redeem or otherwise
acquire any shares of Parent Common Stock, Parent Preferred Stock or any other
securities of Parent. The shares of Parent Common Stock to be issued pursuant to
the Merger will be duly authorized, validly issued, fully paid and nonassessable
and not subject to preemptive rights created by statute, Parent’s certificate of
incorporation or bylaws, or any agreement to which Parent is a party or by which
Parent is bound.
 
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(b) As of the date of this Agreement, the authorized capital stock of Merger Sub
consists of (i) 1,000,000 shares of Merger Sub Common stock, $.0001 par value,
and (ii) 1,000,000 shares of “blank check” preferred stock, $.0001 par value
(“Merger Sub Preferred Stock”). As of the date of this Agreement, (A) 1,000
shares of Merger Sub Common Stock were issued and outstanding, each of which are
held by Parent, and all of which were validly issued, fully paid and
nonassessable, (B) no shares of Merger Sub Common Stock were held in the
treasury of Merger Sub, (C) no shares of Merger Sub Common Stock were reserved
for future issuance pursuant to outstanding stock options or stock incentive
rights granted pursuant to any stock option plan, and (D) no shares of Merger
Sub Preferred Stock were issued or outstanding. Except as contemplated by this
Agreement and as set forth in Section 5.4(b) of the Parent Disclosure Schedule,
as of the date of this Agreement, there are no options, warrants or other
rights, agreements, arrangements or commitments of any character relating to the
issued or unissued capital stock of Merger Sub obligating Merger Sub to issue or
sell any shares of capital stock of, or other equity interests in, Merger Sub.
There are no outstanding contractual obligations of Merger Sub to repurchase,
redeem or otherwise acquire any shares of Merger Sub Common Stock or Merger Sub
Preferred Stock.

5.5 Authority Relative To This Agreement. Each of Parent and Merger Sub has all
necessary corporate power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate the Transactions. The
execution and delivery of this Agreement by Parent and Merger Sub and the
consummation by Parent and Merger Sub of the Transactions have been duly and
validly authorized by all necessary corporate action and no other corporate
proceedings on the part of Parent or Merger Sub are necessary to authorize this
Agreement or to consummate the Transactions (other than with respect to the
Merger, the filing and recordation of the Certificate of Merger with the
Delaware Secretary of State, as required by this Agreement and applicable Law).
This Agreement has been duly and validly executed and delivered by Parent and
Merger Sub and, assuming the due authorization, execution and delivery of this
Agreement by the Company and the Company Principal Stockholder, constitutes a
legal, valid and binding obligation of each of Parent and Merger Sub enforceable
against each of Parent and Merger Sub in accordance with its terms, except as
the enforceability thereof may be limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium or other similar Laws affecting or
relating to creditors’ rights generally, and (ii) the availability of injunctive
relief and other equitable remedies.
 
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5.6 No Conflict; Required Filings and Consents.

(a) The execution and delivery of this Agreement by Parent and Merger Sub do
not, and the performance of this Agreement by Parent and Merger Sub will not,
subject to obtaining the consents, approvals, Authorizations and permits and
making the filings described in Section 5.6(b) of this Agreement and Section
5.6(b) of the Parent Disclosure Schedule, (i) conflict with or violate the
certificate of incorporation or bylaws of either Parent or Merger Sub, (ii)
conflict with or violate any Law applicable to Parent or Merger Sub or by which
any property or asset of any of them is bound or affected, or (iii) result in
any breach of or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a Lien or other encumbrance on any property or asset of Parent or
Merger Sub or require the consent of any third party pursuant to, any note,
bond, mortgage, indenture, Contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Parent or Merger Sub is a
party or by which Parent or Merger Sub or any property or asset of any of them
is bound or affected, except for any such conflicts, violations, breaches,
defaults or other occurrences which would not, individually or in the aggregate,
have a Material Adverse Effect on Parent or prevent Parent and Merger Sub from
performing their respective obligations under this Agreement and consummating
the Transactions.

(b) The execution and delivery of this Agreement by Parent and Merger Sub do
not, and the performance of this Agreement by Parent and Merger Sub will not,
require any consent, approval, Authorization or permit of, or filing with or
notification to, any Governmental Authority, domestic or foreign, except (i) 
the filing of the Form S-4 registration statement with the SEC in connection
with the issuance of the Merger Securities pursuant to the Merger (including any
amendments or supplements thereto, the “Form S-4 Registration Statement”), (ii)
such filings as may otherwise be required in accordance with federal and state
securities Law compliance in connection with the issuance of the Merger
Securities pursuant to the Merger, (iii) the filing of a Schedule 14F in
accordance with Exchange Act Section 14f, (iv) the filing and recordation of the
Certificate of Merger with the Delaware Secretary as required by this Agreement
and applicable Law, (v) such filings as may be required under the Exchange Act
and/or by FINRA, (vi) as may be specified in Section 5.6(b) of the Parent
Disclosure Schedule, and (vii) where failure to obtain such consents, approvals,
Authorizations or permits, or to make such filings or notifications, would not
have a Material Adverse Effect on Parent or Merger Sub and would not prevent or
delay consummation of the Transactions, or otherwise prevent Parent or Merger
Sub from performing their respective obligations under this Agreement.
 
5.7 SEC Reports; Financial Statements.

(a) Parent has made available to Company all forms, reports and documents
required to be filed by it with the SEC since April 1, 2007 (collectively, the
“Parent SEC Reports”). Parent SEC Reports (i) at the time they were filed
complied as to form in all material respects with the applicable requirements of
the Exchange Act, and (ii) did not at the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing) 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 the light of the circumstances under which they were
made, not misleading.
 
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(b) The consolidated financial statements (including, in each case, any related
notes) contained in Parent SEC Reports complied as to form in all material
respects with the applicable rules and regulations of the SEC with respect
thereto, were prepared in accordance with GAAP applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes to such
financial statements or, in the case of unaudited statements, as permitted by
the SEC) and fairly presented the consolidated financial position of Parent and
its Subsidiaries as at the respective dates and the consolidated results of its
operations and cash flows for the periods indicated (subject, in the case of the
unaudited financial statements, to normal year-end recurring adjustments).
 
(c) Parent and its Subsidiaries have no Liabilities except (a) those which are
adequately reflected or reserved against as noted above in the Financial
Statements included in the most recently filed Parent SEC Report, and (b) those
which have been incurred in the Ordinary Course of Business and consistent with
past practice since the last balance sheet date therein or which are not,
individually or in the aggregate, material in amount.

5.8 Taxes.

(a) Except as may be specified in Section 5.8(a) of the Parent Disclosure
Schedule, (i) each of the Parent and its Subsidiaries has duly and timely filed
all Tax Returns required to have been filed by or with respect to the Parent or
such Subsidiary, (ii) each such Tax Return correctly and completely reflects all
liability for Taxes and all other information required to be reported thereon,
(iii) all Taxes owed by the Parent and each Subsidiary of the Parent (whether or
not shown on any Tax Return) have been timely paid, and (iv) each of the Parent
and its Subsidiaries has adequately provided for, in its books of account and
related records, all Liability for unpaid Taxes, being current Taxes not yet due
and payable.

(b) Except as may be specified in Section 5.8(b) of the Parent Disclosure
Schedule, each of the Parent and its Subsidiaries has withheld and timely paid
all Taxes required to have been withheld and paid by it and has complied with
all information reporting and backup withholding requirements, including
maintenance of required records with respect thereto.

(c) Except as may be specified in Section 5.8(c) of the Parent Disclosure
Schedule, neither Parent nor any of its Subsidiaries (i) is the beneficiary of
any extension of time within which to file any Tax Return, nor has Parent or any
of its Subsidiaries made (or had made on its behalf) any requests for such
extensions, or (ii) has waived (or is subject to a waiver of) any statute of
limitations in respect of Taxes or has agreed to (or is subject to) any
extension of time with respect to a Tax assessment or deficiency.

(d) Section 5.8(d) of the Parent Disclosure Schedule indicates those Tax Returns
that have been audited and those Tax Returns that currently are the subject of
audit. Except as set forth in Section 5.8(d) of the Parent Disclosure Schedule
(i) there is no Action now pending or threatened against or with respect to the
Parent or any of its Subsidiaries in respect of any Tax or any assessment or
deficiency, and (ii) there are no liens for Taxes (other than current Taxes not
yet due and payable) upon the assets of the Parent.

(e) Section 5.8(e) of the Parent Disclosure Schedule lists, as of the date of
this Agreement, all jurisdictions in which the Parent or any of its Subsidiaries
currently files Tax Returns. No claim has been made by any Taxing Authority in a
jurisdiction where the Parent or any of its Subsidiaries does not file Tax
Returns that any of them is or may be subject to taxation by that jurisdiction
or that any of them must file Tax Returns.
 
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(f) None of the assets or properties of the Parent or any of its Subsidiaries
constitutes tax-exempt bond financed property or tax-exempt use property within
the meaning of Section 168 of the Code. Neither the Parent nor any of its
Subsidiaries is a party to any “safe harbor lease” within the meaning of
Section 168(f)(8) of the Code, as in effect prior to amendment by the Tax Equity
and Fiscal Responsibility Act of 1982, or to any “long-term contract” within the
meaning of Section 460 of the Code. Neither the Parent nor any of its
Subsidiaries has ever been a United States real property holding corporation
within the meaning of Section 897(c)(2) of the Code. Parent is not a “foreign
person” within the meaning of Section 1445 of the Code.

(g) Neither the Parent nor any of its Subsidiaries has agreed to or is required
to make by reason of a change in accounting method or otherwise, or could be
required to make by reason of a proposed or threatened change in accounting
method or otherwise, any adjustment under Section 481(a) of the Code. Neither
the Parent nor any of its Subsidiaries has been the “distributing corporation”
(within the meaning of Section 355(c)(2) of the Code) with respect to a
transaction described in Section 355 of the Code within the 5-year period ending
as of the date of this Agreement.

(h) No Subsidiary of the Parent that is incorporated in a non-U.S. jurisdiction
has, or at any time has had, an investment in “United States property” within
the meaning of Section 956(c) of the Code. No Subsidiary of the Parent is, or at
any time has been, a passive foreign investment company within the meaning of
Section 1297 of the Code and neither Parent nor any of its Subsidiaries is a
shareholder, directly or indirectly, in a passive foreign investment company. No
Subsidiary of the Parent that is incorporated in a non-U.S. jurisdiction is, or
at any time has been, engaged in the conduct of a trade or business within the
United States, or treated as or considered to be so engaged.

(i) Neither the Parent nor any of its Subsidiaries (i) has ever been a party to
any Tax allocation or sharing agreement or Tax indemnification agreement,
(ii) has ever been a member of an affiliated, consolidated, condensed or unitary
group, or (iii) has any Liability for or obligation to pay Taxes of any other
Person under Treas. Reg. 1.1502-6 (or any similar provision of Tax Law), or as
transferee or successor, by Contract or otherwise. Neither the Parent nor any of
its Subsidiaries is a party to any joint venture, partnership, or other
arrangement that is treated as a partnership for federal income tax purposes.

(j) Neither the Parent nor any of its Subsidiaries will be required to include
any item of income in, or exclude any item of deduction from, taxable income for
any taxable period (or portion thereof) ending after the Effective Time as a
result of any: (i) intercompany transactions or excess loss accounts described
in Treasury regulations under Section 1502 of the Code (or any similar provision
of state, local, or foreign Tax Law), (ii) installment sale or open transaction
disposition made on or prior to the Effective Time, or (iii) prepaid amount
received on or prior to the Effective Time.

(k) The Parent has not entered into any transaction that constitutes a
“reportable transaction” within the meaning of Treasury
Regulation Section 1.6011-4(b).

(l) Section 5.8(l) of the Parent Disclosure Schedule lists each person who the
Parent reasonably believes is, with respect to the Parent or any Affiliate of
the Parent, a “disqualified individual” within the meaning of Section 280G of
the Code and the Regulations thereunder.

(m) Neither the Parent nor, to the Knowledge of Parent, any of its Affiliates
has taken or agreed to take any action (other than actions contemplated by this
Agreement) that would reasonably be expected to prevent the Merger from
constituting a “reorganization” under Section 368 of the Code. The Parent is not
aware of any agreement or plan to which the Parent or any of its Affiliates is a
party or other circumstances relating to the Parent or any of its Affiliates
that could reasonably be expected to prevent the Merger from so qualifying as a
“reorganization” under Section 368 of the Code.
 
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(n) Except as may be specified in Section 5.8(n) of the Parent Disclosure
Schedule, the unpaid Taxes of the Parent (i) did not, as of the date of the Most
Recent Parent Balance Sheet, exceed the reserve for Tax liability (rather than
any reserve for deferred Taxes established to reflect timing differences between
book and Tax income) set forth on the face of the Most Recent Parent Balance
Sheet (rather than in any notes thereto), and (ii) will not exceed that reserve
as adjusted for the passage of time through the Closing Date in accordance with
the past custom and practice of the Parent in filing its Tax Returns. Since the
date of the Most Recent Parent Balance Sheet, the Parent has not incurred any
liability for Taxes arising from extraordinary gains or losses, as that term is
used in GAAP, outside the Ordinary Course of Business consistent with past
custom and practice.

5.9 Absence of Litigation. There is no claim, action, Proceeding or
investigation pending or, to the Knowledge of Parent, threatened against Parent
or any Subsidiary of Parent including Merger Sub, before any arbitrator or
Governmental Authority, which (a) individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect on Parent, or (b) seeks
to delay or prevent the consummation of the Merger. Neither Parent nor Merger
Sub, nor any property or asset of Parent or Merger Sub is in violation of any
Order, writ, judgment, injunction, decree, determination or award having,
individually or in the aggregate, a Material Adverse Effect.

5.10 Related Party Transactions.  There are no Contracts of any kind, written or
oral, entered into by the Parent or any of its Subsidiaries with, or for the
benefit of, any officer, director or stockholder of the Parent or, to the
Knowledge of the Parent, any Affiliate of any of them, except in each case, for
(a)  reimbursements of ordinary and necessary expenses incurred in connection
with their services, (b) the occupancy of certain of the Parent’s facilities
which do not provide for the payment of significant amounts of rent, and (c) as
may have otherwise been disclosed in the Parent SEC Reports.

5.11 Ownership of Merger Sub; No Prior Activities.

(a) Merger Sub was formed solely for the purpose of engaging in the transactions
contemplated by this Agreement.

(b) As of the date hereof and the Effective Time, except for obligations or
Liabilities incurred in connection with its incorporation or organization and
the Transactions, and except for this Agreement and any other agreements or
arrangements contemplated by this Agreement, Merger Sub has not and will not
have incurred, directly or indirectly, through any Subsidiary or Affiliate, any
obligations or Liabilities or engaged in any business activities of any type or
kind whatsoever or entered into any agreements or arrangements with any Person.

5.12 Absence of Certain Changes or Events. Since the date of the most recently
filed Parent SEC Reports that included financial statements, and except as may
be contemplated by, or disclosed pursuant to, this Agreement, including Section
5.12 of the Parent Disclosure Schedule:

(a) there has not been any event or events (whether or not covered by
insurance), individually or in the aggregate, which have had a Material Adverse
Effect on the Parent or any of its Subsidiaries, including without limitation
the imposition of any security interests on any of the assets of the Parent or
any of its Subsidiaries;
 
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(b) there have not been any amendments or other modifications to the certificate
of incorporation or bylaws of either the Parent or any of its Subsidiaries;

(c) there has not been any entry by the Parent nor any of its Subsidiaries into
any commitment or transaction material to the Parent or such Subsidiaries,
except in the Ordinary Course of Business and consistent with past practice,
including without limitation any (i) borrowings or the issuance of any
guaranties, (ii) any capital expenditures in excess of $1,000, or (iii) any
grant of any increase in the base compensation payable, or any loans, to any
directors, officers or employees;
 
(d) there has not been, other than pursuant to the Plans, any increase in or
establishment of any bonus, insurance, severance, deferred compensation,
pension, retirement, profit sharing, stock option, stock purchase or other
employee benefit plan, except in the Ordinary Course of Business consistent with
past practice.
 
(e) there have not been any material changes by the Parent in its accounting
methods, principles or practices;

(f) neither Parent nor any of its Subsidiaries has declared, set aside or paid
any dividend or other distribution (whether in cash, stock or property) with
respect to any of its securities;

(g) neither Parent nor any of its Subsidiaries has split, combined or
reclassified any of its securities, or issued, or authorized for issuance, any
securities;

(h) there has not been any material damage, destruction or loss with respect to
the property and assets of Parent or any of its Subsidiaries, whether or not
covered by insurance;

(i) there has not been any revaluation of Parent’s or any of its Subsidiaries’
assets, including writing down the value of inventory or writing off notes or
accounts receivable, other than in the Ordinary Course of Business consistent
with past practice; and

(j) neither Parent nor any of its Subsidiaries has agreed, whether in writing or
otherwise, to do any of the foregoing.
 
5.13 No Illegal Payments.  None of the Parent, any of its Subsidiaries or, to
the Knowledge of the Parent, any Affiliate, officer, agent or employee thereof,
directly or indirectly, has, since inception, on behalf of or with respect to
the Parent or any of its Subsidiaries, (a) made any unlawful domestic or foreign
political contributions, (b) made any payment or provided services which were
not legal to make or provide or which the Parent, any of its Subsidiaries or any
Affiliate thereof or any such officer, employee or other Person should
reasonably have known were not legal for the payee or the recipient of such
services to receive, (c) received any payment or any services which were not
legal for the payer or the provider of such services to make or provide, (d) had
any material transactions or payments which are not recorded in its accounting
books and records, or (e) had any off-book bank or cash accounts or “slush
funds.”
 
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5.14 Antitakeover Statutes. The Parent has taken all action believed to be
necessary to exempt the Merger, this Agreement, the Voting Agreement, and the
Transactions from Section 203 of the DGCL.  Neither such Section nor any other
anti-takeover or similar Law applies or purports to apply to the Transactions.
 No other “control share acquisition,” “fair price,” “moratorium” or other
anti-takeover Laws apply to this Agreement or any of the Transactions.

5.15 Compliance with Securities Laws.  Except to the extent as would not have a
Material Adverse Effect, individually or in the aggregate, on the Parent or any
of its Subsidiaries, the offering and issuance by the Parent and any of its
Subsidiaries of all securities to date were made and completed in substantial
compliance with all applicable state and federal securities Laws.

5.16 Brokers or Finders. No broker, finder or investment banker is entitled to
any brokerage, finder’s or other fee or commission in connection with the
Transactions based upon arrangements made by or on behalf of Parent or Merger
Sub.

ARTICLE VI

COVENANTS RELATING TO CONDUCT OF BUSINESS PENDING THE MERGER

6.1 Conduct of Business by the Company Pending the Merger. The Company covenants
and agrees that, between the date of this Agreement and the Effective Time,
except as set forth in Section 6.1 of the Company Disclosure Schedule or as
contemplated by any other provision of this Agreement, and unless Parent shall
otherwise agree in writing (which agreement shall not be unreasonably withheld),
(1) the business of the Company and any of its Subsidiaries shall be conducted
only in, and the Company and any such Subsidiaries shall not take any action
except in, the Ordinary Course of Business, (2) the Company shall use all
reasonable efforts to preserve substantially intact its business organization,
to keep available the services of the current officers, employees and
consultants of the Company and any of its Subsidiaries and to preserve the
current relationships of the Company and such Subsidiaries with customers,
suppliers and other persons with which the Company and any of its Subsidiaries
has significant business relations, (3) comply with all applicable Laws, (4)
prepare and timely file all foreign, Federal, state and local Tax Returns as
required by applicable Law, and make timely payment of all applicable Taxes when
due, (5) use reasonable efforts to obtain, prior to the Closing Date, all
Required Company Consents, (6) take all actions to be in substantial compliance
with all Company Permits, (7) make full and timely payment of all amounts
required to be contributed under the terms of each Plan and applicable Law or
required to be paid as expenses under any such Plan, and (8) the Company will
not, and will not permit any Subsidiary to:

(a) amend or otherwise change its Articles of Incorporation or Bylaws;

(b) issue, sell, pledge, dispose of, grant, encumber, or authorize the issuance,
sale, pledge, disposition, grant or encumbrance of, (i) any shares of capital
stock of the Company or any Subsidiary of any class, or any options, warrants,
convertible securities or other rights of any kind to acquire any shares of such
capital stock, or any other ownership interest (including, without limitation,
any phantom interest), of the Company (except for shares of the Company Common
Stock, if any, issuable under agreements currently in effect on the date hereof
and described in Section 4.4(a) of the Company Disclosure Schedule), shares of
capital stock pursuant to Plans currently in effect as of the date hereof and
described in Section 4.21(a) of the Company Disclosure Schedule, and such shares
of Company Common Stock as it otherwise deems appropriate, , or (ii) any of the
Company’s or any Subsidiaries’ assets, except for sales in the Ordinary Course
of Business and in a manner consistent with past practice;
 
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(c) declare, set aside, make or pay any dividend or other distribution, payable
in cash, stock, property or otherwise, with respect to any of its capital stock;

(d) reclassify, combine, split, divide or redeem, purchase or otherwise acquire,
directly or indirectly, any of its capital stock;

(e) (i) acquire (including, without limitation, by merger, consolidation, or
acquisition of stock or assets) any interest in any Person or any division
thereof or any assets, other than the acquisition of assets in the Ordinary
Course of Business consistent with past practice; (ii) merge with any Person
(other than Merger Sub), (iii) incur any indebtedness for borrowed money or
issue any debt securities or assume, guarantee or endorse, or otherwise as an
accommodation become responsible for, the obligations of any Person, or make any
loans or advances; (iv) enter into any Contract material to the business,
results of operations or financial condition of the Company other than in the
Ordinary Course of Business, consistent with past practice; (v) authorize any
capital expenditure, other than capital expenditures set forth in Section
4.19(a)(ix) of the Company Disclosure Schedule; or (vi) enter into or amend any
Contract with respect to any matter set forth in this subsection (e);

(f)  (i) increase the compensation payable or to become payable to any director,
officer or other employee, or grant any bonus, to, or grant any severance or
termination pay to, or enter into any employment or severance agreement with any
director, officer or other employee of the Company or any Subsidiary or enter
into or amend any collective bargaining agreement, or (ii) establish, adopt,
enter into or amend any bonus, profit sharing, thrift, compensation, stock
option, restricted stock, pension, retirement, deferred compensation or other
plan, trust or fund for the benefit of any director, officer or class of
employees;

(g) settle or compromise any pending or threatened litigation which is material
or which relates to the Transactions;

(h) grant or convey to any Person any rights, including, but not limited to, by
way of sale, license or sub-license, in any of the Company Intellectual
Property;

(i) make any Tax election, change its method of Tax accounting or settle any
claim relating to Taxes;

(j) make any change in any of the Company’s or any of its Subsidiaries
accounting methods or in the manner of keeping each of their respective books
and records or any change in any of their respective current practices with
respect to inventory, sales, receivables, payables or accrued expenses;

(k) file or cause to be filed any registration statements under the Securities
Act or Exchange Act relating to any of its capital stock or other securities;

(l) take any action or omit to do any act within its reasonable control which
action or omission is reasonably likely to result in any of the conditions to
the Merger not being satisfied, except as may be required by applicable Law;

(m) take or omit to take any action that would result in the representations and
warranties hereunder being rendered untrue in any material respect; or
 
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(n) agree to do any of the foregoing.

6.2 Conduct of Business by Parent Pending the Merger. Parent covenants and
agrees that, between the date of this Agreement and the Effective Time, except
as may be set forth in Section 6.2 of the Parent Disclosure Schedule, as
contemplated by any other provision of this Agreement, or as may not have a
Material Adverse Effect on the Parent or any of its Subsidiaries, and unless the
Company shall otherwise agree in writing (which agreement shall not be
unreasonably withheld), (i) the businesses of the Parent and Merger Sub shall be
conducted only in, and the Parent shall not, and shall cause Merger Sub not to,
take any action except in, the Ordinary Course of Business consistent with past
practice, (ii) Parent shall timely file all Parent SEC Reports as may be
required under the Exchange Act (including any extensions afforded by way of
compliance with Rule 12b-25 thereunder, if applicable), (iii) Parent shall
comply with all applicable Laws, (iv) Parent shall prepare and timely file all
foreign, Federal, state and local Tax Returns as required by applicable Law, and
make timely payment of all applicable Taxes when due, (v) Parent shall not amend
any of the terms or provisions of the Parent Common Stock, (vi) Parent shall not
take any action or omit to do any act within its reasonable control which action
or omission is reasonably likely to result in any of the conditions to the
Merger not being satisfied, except as may be required by applicable Law, and
(vii) Parent shall take or omit to take any action that would result in the
representations and warranties hereunder being rendered untrue in any material
respect.

6.3 Conduct of Company Principal Stockholder Pending the Merger. The Company
Principal Stockholder covenants and agrees to refrain from taking any action,
directly or indirectly, that is intended to, would, or that might reasonably be
likely to, (i) encourage Company Stockholders from approving the Merger and this
Agreement as required under the DGCL and the bylaws of the Company, or (ii)
encourage, or that might otherwise result in, any holder of Dissentable Shares
becoming a Dissenting Holder.
 
ARTICLE VII

ADDITIONAL AGREEMENTS
 
7.1 Voting Agreement. Contemporaneously with the execution of this Agreement,
the Company Principal Stockholder shall have delivered to Parent an executed
Voting Agreement.

7.2 Certain Corporate and Securities Compliance.
 
(a) As may be necessary in order to fulfill its obligations pursuant to Section
2.1(a)(iii) and (iv) of this Agreement, following execution of this Agreement
and prior to the Closing Date, Parent shall take whatever steps may be necessary
to obtain the requisite written consent from Parent Stockholders to duly
authorize and approve (i) amendments to the certificate of incorporation of
Parent, in the form of certificates of designation, designating one or more
series of Parent Convertible Preferred Stock and/or Parent Non-Convertible
Preferred Stock, and (ii) the reservation of a sufficient number of shares for
delivery and issuance upon exercise of all Replacement Options.
 
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(b) The Company hereby agrees that, as soon as practicable after the execution
of this Agreement, it shall take whatever action may be reasonably necessary to
(i) solicit and obtain, and forward to Parent, completed securityholder
questionnaires (in form satisfactory to Parent) from all Company securityholders
regarding their investor qualification, (ii) have its financial statements
audited by an independent auditing firm duly registered with the PCAOB, and
immediately make available such audited financial statements to Parent, and
(iii) obtain and deliver to Parent an opinion of counsel, in form satisfactory
to Parent, that the Merger will qualify as a tax-free reorganization under the
Code.

(c) As soon as practicable after the execution of this Agreement, Parent, with
the fullest of cooperation and assistance of the Company applying its best
efforts, shall prepare the Form S-4 Registration Statement. Parent shall give
the Company, its counsel and its independent accountants/auditors a reasonable
opportunity to review, comment upon, and edit the Form S-4 Registration
Statement prior to filing with the SEC, and, also prior to filing the Form S-4
Registration Statement, Parent shall have obtained the written approval of the
Company as to the accuracy and completeness of the information relating to the
Company and its Subsidiaries contained therein.

(d) The Company hereby agrees to cooperate, and agrees to use all reasonable
efforts to cause its Subsidiaries and Affiliates to cooperate, with Parent’s
officers, directors, employees, accountants, counsel and/or other agents
retained by Parent (“Parent Representatives”) in connection with the preparation
of any and all information required, as determined by Parent, to be disclosed
pursuant to applicable securities Laws in the Form S-4 Registration Statement.
The Company shall furnish all information concerning itself as may be reasonably
requested by Parent or its counsel in connection with the foregoing, including
without limitation (unless determined by Parent in its exclusive discretion
otherwise) complete financial statements as required under the Securities Act
and/or the regulations promulgated thereunder, which financial statements shall
have been fully audited by a PCAOB registered independent auditing firm. The
Company shall, and shall cause its Subsidiaries to, afford to the Parent
Representatives reasonable access to its properties, assets and records during
the period prior to the Effective Time to obtain all information concerning its
business as Parent may reasonably request. Parent shall furnish to the Company
all such documents and copies of documents and records and information with
respect to itself and its Subsidiaries, and copies of any working papers
relating thereto, as Parent may reasonably request. Anything to the contrary
notwithstanding, nothing in this Section 7.2(d) shall require the Company to
provide any access, or to disclose any information, if permitting such access or
disclosing such information would (a) violate applicable Law, (b) violate any of
its obligations with respect to confidentiality (provided, however, that the
Company shall, upon the request of Parent, use its reasonable best efforts to
obtain the required consent of any third party to such access or disclosure), or
(c) result in the loss of attorney-client privilege (provided, however, that the
Company shall use its reasonable best efforts to allow for such access or
disclosure in a manner that does not result in a loss of attorney-client
privilege). The Company shall reasonably avail itself to the Parent regarding
its business on an as-requested basis.

(e)  In connection with the issuance of the Merger Securities:

(i) Parent, with the fullest of cooperation and assistance of the Company
applying its reasonable best efforts, shall use its reasonable best efforts to
cause the Form S-4 Registration Statement to be declared effective by the SEC as
promptly as practicable and, prior to the effective date of the Form S-4
Registration Statement, Parent shall use its reasonable best efforts to take any
and all action required under any applicable federal or state securities Laws in
connection with the issuance of the Merger Securities pursuant to the Merger.
 
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(ii) Parent shall give the Company, its counsel and its independent
accountants/auditors a reasonable opportunity to review and comment on any
amendment or supplement to the Form S-4 Registration Statement prior to filing
any amendment or supplement with the SEC. Parent shall (i) promptly provide the
Company, its counsel and its independent accountants/auditors with any comments
or other communications, whether written or oral, that it or its counsel may
receive from time to time from the SEC with respect to the Form S-4 Registration
Statement promptly after receipt of any such comments or other communications,
and (ii) provide the Company, its counsel and its independent
accountants/auditors a reasonable opportunity to participate in the response to
those comments and any corresponding amendments to the Form S-4 Registration
Statement, including, as may be requested, participation in any discussions or
meetings with the SEC. Parent shall not file any amendment or supplement to the
Form S-4 Registration Statement without the approval of the Company, which
approval shall not be unreasonably withheld or delayed. Parent shall advise the
Company promptly after it receives notice of, or otherwise becomes aware of (i)
the time at which the Form S-4 Registration Statement has been declared
effective under the Securities Act by the SEC, (ii) the time at which any
supplements or amendments to the Form S-4 Registration Statement have been
declared effective under the Securities Act by the SEC, or (iii) the issuance of
any stop Order or the suspension of the qualification of the shares of Parent
Common Stock issuable pursuant to the Merger for offering or sale in any
jurisdiction.

(iii) As soon as practicable following the time at which the Form S-4
Registration Statement shall have been declared effective under the Securities
Act by the SEC, the Company, in accordance with the requirements of its bylaws
and the DGCL, as applicable, and subject to any procedural and/or other
directives as may be provided by the SEC or any state securities regulators, or
as may otherwise be required in relation to federal and/or state securities
compliance in the exclusive determination of Parent, shall:
 
(A) prepare, distribute and deliver a package to all Company Stockholders
entitled to vote on the Merger under applicable Law which package shall contain
(a) a letter (in form satisfactory to Parent) advising that the board of
directors of the Company recommends that they approve the Merger and this
Agreement and soliciting their written consent thereto, together with (b) a form
of majority written stockholders’ consent approving the Merger and this
Agreement for them to execute and return, and (c) a complete copy of the Form
S-4 Registration Statement; and

(B) use its diligent best efforts thereafter to promptly solicit and obtain the
written consents from each such Company Stockholders.

(iv) To the extent that the Company is successful in obtaining the majority
written consent of the Company Stockholders approving the Merger and this
Agreement, upon the obtaining of such consent, the Company, in accordance with
the requirements of its bylaws and the DGCL, as applicable, and subject to any
procedural and/or other directives as may be provided by the SEC or any state
securities regulators, or as may otherwise be required in relation to federal
and/or state securities compliance in the exclusive discretion of Parent, shall
promptly prepare, distribute and deliver a package to each of the Company
Stockholders entitled to vote in relation to the Merger exclusive of those from
which the majority written consent of the Company Stockholders approving the
Merger and this Agreement was previously obtained, which package shall contain a
letter (in form satisfactory to Parent) indicating that the Company shall have
previously obtained the written consent of Company Stockholders representing a
majority of the shares of the capital stock of the Company entitled to vote on
the Merger and this Agreement, and that approval of the Merger and this
Agreement shall have therefore been duly obtained, but that he/she/it may
nonetheless elect not to have his/her/its Dissentable Shares exchanged in the
Merger and pursue his/her/its appraisal rights under the DGCL.
 
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(v) To the extent that the Company is unsuccessful in obtaining a majority
written consent of the Company Stockholders approving the Merger and this
Agreement, and subject to any procedural and/or other directives as may be
provided by the SEC or any state securities regulators, or as may otherwise be
required in relation to federal and/or state securities compliance in the
exclusive discretion of Parent, the Company shall as promptly as practicable
take all action necessary under the DGCL and its bylaws to duly call, convene
and hold a special meeting of Company Stockholders for the purposes of
considering, among other potential proposals, a proposal to approve the Merger
and this Agreement, and each of the Company and the Company Principal
Stockholder shall use its best efforts to solicit from the Company Stockholders
proxies in favor of such approval and take all other action it deems advisable
to secure the vote of its stockholders required by the DGCL to obtain such
approvals. In connection with any such special meeting of stockholders, and
subject to any procedural and/or other directives as may be provided by the SEC
or any state securities regulators, or as may otherwise be required in relation
to federal and/or state securities compliance in the exclusive discretion of
Parent, the Company agrees to provide a proxy statement to all Company
Stockholders which includes a statement advising that the board of directors of
the Company recommends that they approve the Merger and this Agreement.

(vi) The information provided by the Company for inclusion in the Form S-4
Registration Statement shall not, (A) at the time provided, (B) at the time the
Form S-4 Registration Statement is declared effective by the SEC, or (C) at the
time the Company proxy statement (inclusive of the Form S-4 Registration
Statement) (or any amendment thereof or supplement thereto) is first mailed to
Company Stockholders, contain any untrue statement of a material fact or fail to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading. If, at any time prior to the Effective Time, any
event or circumstance relating to the Company and/or its Subsidiaries, or their
respective officers or directors, should be discovered by the Company that
should be set forth in an amendment or a supplement to the Form S-4 Registration
Statement so that any of such documents will not contain any untrue statement of
a material fact or omit to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, the Company shall promptly inform Parent in writing. All
documents that Parent is responsible for filing with the SEC in connection with
the Merger or the other Transactions shall comply as to form and substance in
all material respects with the applicable requirements of the Securities Act and
the Exchange Act, as appropriate.

(vii) Each of the Company and Parent shall use its reasonable best efforts to
cause to be delivered to the other party two letters from their respective
independent accountants/auditors, one dated approximately as of the date the
Form S-4 Registration Statement shall have been declared effective by the SEC
and one dated approximately as of the Closing Date, each addressed to the other
Party, in form and substance reasonably satisfactory to the other Party and
customary in scope and substance for comfort letters delivered by independent
public accountants in connection with registration statements on Form S-4 under
the Securities Act.

(viii) Each of the Company and Parent shall use its reasonable best efforts to
cause to be delivered to the other party consents from their respective
independent accountants, dated the date on which the Form S-4 Registration
Statement is declared effective or a date not more than two (2) days prior to
such date, in form reasonably satisfactory to the other party and customary in
scope and substance for consents delivered by independent public accountants in
connection with registration statements on Form S-4 under the Securities Act.
 
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(f) At such time as (1) the Form S-4 Registration Statement shall have been
declared effective by the SEC, (2) the Company shall have obtained the requisite
approval of its stockholders to the Merger and this Agreement in accordance with
the DGCL and its bylaws, and (3) each of Parent and the Company shall have
agreed in writing to a specified date for Closing, Parent shall be given up to
twenty (20) Business Days in which to take whatever steps as may be reasonably
necessary, in accordance with the requirements of its bylaws and the DGCL, to do
the following:

(i) obtain the requisite written consent from the board of directors of Parent
and Parent Stockholders to duly authorize and approve amendments to the
certificate of incorporation of Parent

(A) changing the name of Parent to “Bixby Energy Systems, Inc.”, which name
change shall not become effective, if at all, until the Effective Time; and

(B) effecting a forward or reverse-split of the Parent Common Stock on the basis
of a split ratio pursuant to which the number of all outstanding shares of
Parent Common Stock at the effective time of the reverse-split would be
increased or decreased as necessary to a number of shares such that,
collectively, such shares would equal four percent (4%) of the sum of (x) the
number of shares of Parent Common Stock then outstanding, plus (y) the number of
shares of Company Common Stock then outstanding on a Fully-Diluted Basis (the
“Parent Stock-Split”); and

(ii) causing such amendments to the certificate of incorporation of Parent to be
duly filed with the Delaware Secretary of State.

From and after the Parent Stock-Split, the Company shall be prohibted from
issuing any securities of any kind (the “Pre-Closing Company Standstill
Commitment”).

(g) It is acknowledged that each of the Parent and the Company have made a
determination, and agreed, to forego the obtaining of any fairness opinion in
relation to the Merger.
 
(h) At least ten (10) days prior to the Closing Date, and pursuant to the
Exchange Act Section 14(f), Parent, with the fullest of cooperation and
assistance of the Company applying its reasonable best efforts, shall prepare,
file with the SEC, and mail to its stockholders at least ten (10) days prior to
the Closing Date a Schedule 14F.

7.3 Regulatory Approvals.

(a) Each of the Company, Parent and Merger Sub shall promptly apply for, and
take all reasonably necessary actions to obtain or make, as applicable, all
Authorizations, Orders, declarations and filings with, and notices to, any
Governmental Authority required to be obtained or made by it for the
consummation of the Transactions. Each Party shall cooperate with and promptly
furnish information to the other Parties necessary in connection with any
requirements imposed upon such other Parties in connection with the consummation
of the Merger.
 
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(b) Each of the Company and Parent shall give the other reasonable prior notice
of any communication with, and any proposed understanding or agreement with, any
Governmental Authority regarding any Authorizations, Orders, declarations and
filings with, and notices to, any Governmental Authority, and permit the other
to review and discuss in advance, and consider in good faith the views of the
other in connection with, any proposed communication, understanding or agreement
with any Governmental Authority with respect to the Merger and the Transactions.
Notwithstanding the foregoing, neither the Company nor Parent shall be required
to nor any of their respective Affiliates shall have any obligation to contest,
administratively or in court, any ruling, order or other action of any
Governmental Authority or any other Person respecting the Transactions.

7.4 Public Announcements. If there is an initial press release relating to this
Agreement, it shall be a joint press release the text of which shall have been
agreed to in writing in advance by each of Parent and the Company. Thereafter,
each of Parent and the Company shall not issue any press release or otherwise
make any public statements with respect to this Agreement or any of the
Transactions without the prior written consent of the other Party; provided,
however, that a Party may, without such consent (but after prior consultation to
the extent practicable under the circumstances), issue such press releases and
make such public statements and/or disclosures that it reasonably determines are
required under applicable Law, including without limitation the Exchange Act, or
the rules of the OTCBB or, if applicable, the NASDAQ Capital Market.
Notwithstanding the foregoing, a Party may make public statements in response to
questions from the press, analysts and investors and make internal announcements
to employees, so long as such statements and announcements are accurate and not
misleading, consistent with previous press releases or public statements made
jointly by the Company and Parent, and do not contain forward-looking statements
of any kind.

7.5 Tax Free Reorganization. Each of the Company and Parent shall use their
reasonable best efforts, and shall cause their respective Subsidiaries to use
their reasonable best efforts, to take or cause to be taken any action necessary
for the Merger to qualify as a “reorganization” within the meaning of Section
368(a) of the Code. Neither the Company nor Parent shall (and following the
Effective Time, Parent shall cause the Surviving Corporation not to) take any
action that would cause the Merger to fail to qualify as a “reorganization”
within the meaning of Section 368(a) of the Code. This Agreement is intended to
constitute a “plan of reorganization” within the meaning of Section 1.368-2(g)
of the income tax regulations promulgated under the Code.

7.6 Affiliates. Not less than thirty (30) days after the day hereof, the Company
shall deliver to Parent a letter identifying all Persons who, in the judgment of
the Company, may be deemed at the time this Agreement is submitted for adoption
by Company Stockholders, “affiliates” of the Company for purposes of Rule 145
under the Securities Act, and such list shall be updated as necessary from time
to time to reflect changes from the date thereof. The Company shall use its
reasonable best efforts to cause each Person identified on such list who is not
a Dissenting Holder to deliver to Parent an Affiliate Agreement as of the time
this Agreement is submitted for adoption by Company Stockholders.

7.7 Consents. The Company shall, and shall cause each of its Subsidiaries to,
use its reasonable best efforts to obtain all Required Company Consents.
 
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7.8 Notification of Certain Matters. Each of the Company and Parent shall give
prompt notice to the other Party of any fact, event or circumstance known to it
(a) that individually or taken together with all other facts, events and
circumstances known to it, has had or could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company or
Parent or a Material Adverse Effect on the Company and its Subsidiaries or
Parent and its Subsidiaries, in each case taken as a whole, (b) that would cause
or constitute a breach of any of its representations, warranties, covenants or
agreements contained herein, (c) that would cause the failure of any condition
precedent to its obligations, (d) regarding any consent of a third party that is
or may be required in connection with the Merger, (e) relating to any notice or
other communication from any Governmental Authority in connection with the
Merger, or (f) in respect of any Proceedings commenced relating to it or any of
its Subsidiaries that, if pending on the date of this Agreement, would have been
required to have been disclosed pursuant to Section 4.20 or Section 5.9, as
applicable; provided, however, that (i) the delivery of any notice pursuant to
this Section 7.8 shall not prevent or cure any misrepresentations, breach of
warranty or breach of covenant, and (ii) disclosure by the Company or Parent
pursuant to this Section 7.8 shall not be deemed to amend or supplement either
the Company Disclosure Schedule or the Parent Disclosure Schedule, or constitute
an exception to any representation or warranty under this Agreement.

7.9 Conveyance Taxes. Each of the Company and Parent shall cooperate in the
preparation, execution and filing of all returns, questionnaires, applications
or other documents regarding any Taxes which become payable in connection with
the Transactions that are required or permitted to be filed on or before the
Effective Time.

7.10 Dissenter’s Rights. Except as otherwise required by applicable Law, neither
the Company, the Company Principal Stockholder, nor Parent shall do anything,
either directly or indirectly, that is intended to, or would, encourage, or that
might otherwise result in, any holder of Dissentable Shares becoming a
Dissenting Holder.

7.11 Post-Closing Current Report Filing on Form 8-K. Within four Business Days
of the Closing Date, Parent shall file with the SEC a current report on Form 8-K
regarding consummation of the Merger pursuant to Items 5.01, 5.02, and/or 5.06
of such form (or such other Items as may otherwise be appropriate). 

7.12 Post-Closing Establishment of Trading Market; Quotation; Listing. As soon
as practicable following the Closing Date, the Parent shall use its reasonable
best efforts to cause the Parent Common Stock, as a class, to become authorized
for quotation, and to be quoted, on the OTCBB, and/or to the extent qualified,
to become authorized for listing, and to become listed, on the NASDAQ Capital
Market, including, as applicable, the preparation, filing and prosecution of a
Form 211 with FINRA in accordance with Rule 15c-211 under the Exchange Act
and/or a listing application.

7.13 Certain Registration Obligations.

(a) Within twenty (20) Business Days following the Closing Date, Parent shall
have prepared, and shall file, at its own expense, a registration statement
covering the resale of the Registrable Securities on Form S-1 or such other
appropriate registration form of the SEC for the Parent as of such date as shall
permit the disposition of such Registrable Securities in accordance with the
intended method or methods of disposition specified in the registration
statement (the “Resale Registration Statement”). The Company shall thereafter
use its best efforts to cause the Resale Registration Statement to be declared
effective by the SEC by the earlier of (i) forty (40) Business Days following
the filing date thereof, (ii) five (5) Business Days following the receipt of a
“No Review” or similar letter or communication from the SEC, or (iii) one (1)
Business Day following the day upon which the SEC shall have determined the
Resale Registration Statement eligible to be declared effective. Anything in
this agreement to the contrary notwithstanding, Parent shall pay to the holders
of Registrable Securities, pro rata, as liquidated damages and not as a penalty,
an amount in cash equal to two thousand five hundred dollars ($2,500) per day
for any delays in meeting any of the foregoing timeframes; provided, however,
that, in addition to such liquidated damages, the holders of Registrable
Securities shall be entitled to pursue and obtain specific performance or other
equitable relief with respect to the registration rights hereunder.
 
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(b) From and after the date of effectiveness of the Resale Registration
Statement, Parent shall do each the following:

(i) prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may be
necessary to keep such Resale Registration Statement effective and to comply
with the provisions of the Securities Act with respect to the disposition of all
Registrable Securities covered by such registration statement until the earlier
to occur of (x) twenty-four (24) months after the date of effectiveness of the
Resale Registration Statement (subject to the right of Parent, once the Parent
Common Stock is quoted for trading, to suspend the effectiveness thereof for not
more than ten (10) consecutive Trading Days or an aggregate of twenty (20)
Trading Days during each year), or (y) such time as all of the securities which
are the subject of such registration statement cease to be Registrable
Securities;

(ii) furnish to each holder of Registrable Securities covered by such Resale
Registration Statement such number of conformed copies of such Resale
Registration Statement and of each such amendment and supplement thereto (in
each case including all exhibits), such number of copies of the prospectus
contained in such registration statement (including each preliminary prospectus
and any summary prospectus) and any other prospectus filed under Rule 424 under
the Securities Act, in conformity with the requirements of the Securities, and
such other documents, as such holder of Registrable Securities may reasonably
request in order to facilitate the public sale or other disposition of the
Registrable Securities owned by such holder of Registrable Securities;

(iii) use its reasonable best efforts to register or qualify all Registrable
Securities and other securities covered by such Resale Registration Statement
under such other state securities Laws as any holder of Registrable Securities
thereof shall reasonably request, to keep such registrations or qualifications
in effect for so long as such Resale Registration Statement remains in effect,
and take any other action which may be reasonably necessary to enable such
holder of Registrable Securities to consummate the disposition in such
jurisdictions of the Registrable Securities owned by such holder; provided,
however, that Parent shall not for any such purpose be required to qualify
generally to do business as a foreign corporation in any jurisdiction wherein it
would not but for the requirements of this subdivision (iii) be obligated to be
so qualified or to consent to general service of process in any such
jurisdiction;

(iv) use its reasonable best efforts to cause all Registrable Securities covered
by such Resale Registration Statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary to enable the
holders of Registrable Securities to consummate the disposition of such
Registrable Securities;

(v) furnish to each holder of Registrable Securities a signed counterpart,
addressed to such holder of Registrable Securities, and the underwriters, if
applicable, of an opinion of counsel for Parent, dated the effective date of
such Resale Registration Statement (or, if such registration includes an
underwritten public offering, an opinion dated the date of the closing under the
underwriting agreement), reasonably satisfactory in form and substance to such
holder of Registrable Securities, including that the prospectus and any
prospectus supplement forming a part of the Resale Registration Statement does
not contain an untrue statement of a material fact or omit 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; and
 
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(vi) notify the holders of Registrable Securities promptly and confirm such
advice in writing promptly after Parent has Knowledge thereof:

(A) when the Resale Registration Statement, the prospectus or any prospectus
supplement related thereto or post-effective amendment to the Resale
Registration Statement has been filed, and, with respect to the Resale
Registration Statement or any post-effective amendment thereto, when the same
has become effective;

(B) of any request by the SEC for amendments or supplements to the Resale
Registration Statement or the prospectus or for additional information;

(C) of the issuance by the SEC of any stop order suspending the effectiveness of
the Resale Registration Statement or the initiation of any proceedings by any
Person for that purpose; and

(D) of the receipt by Parent of any notification with respect to the suspension
of the qualification of any Registrable Securities for sale under any federal or
state securities Laws or the initiation or threat of any Proceeding for such
purpose.

(vii) notify each holder of Registrable Securities covered by such Resale
Registration Statement, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, upon discovery that, or upon
the happening of any event as a result of which, the prospectus included in such
Resale Registration Statement, as then in effect, includes an untrue statement
of a material fact or omits to state any material facts required to be stated
therein or necessary to make the statements therein not misleading in the light
of the circumstances then existing, and, at the request of any such holder of
Registrable Securities, promptly prepare and furnish to such holder of
Registrable Securities a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such securities, such prospectus shall not
include an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing;

(viii) use its best efforts to obtain the withdrawal of any order suspending the
effectiveness of the Resale Registration Statement at the earliest possible
moment;

(ix) otherwise use its reasonable best efforts to comply with all applicable
rules and regulations of the SEC, and make available to its security holders, as
soon as reasonably practicable, an earnings statement covering the period of at
least twelve (12) months, but not more than eighteen (18) months, beginning with
the first full calendar month after the effective date of such registration
statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act and Rule 158 thereunder;

(x) enter into such agreements and take such other actions as the holders of
Registrable Securities shall reasonably request in writing in order to expedite
or facilitate the disposition of the Registrable Securities; and
 
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(xi) use its reasonable best efforts to list all Registrable Securities covered
by such Resale Registration Statement on any national securities exchange on
which any of the Registrable Securities are then listed.

(c) Notwithstanding anything to the contrary contained herein, the obligations
of Parent under this Section 7.13 shall only be enforceable by the holders of
Registrable Securities if and to the extent that such holders of Registrable
Securities individually execute and deliver to the Parent after the Effective
Time a separate agreement in substantially the form annexed hereto as Exhibit F
and made a part hereof (the “Registrable Securities Lock-Up Agreement”).

(d) This Section 7.13 is intended to be for the benefit of, and shall be
enforceable by, the holders of Registrable Securities and their heirs and
personal representatives, and shall be binding on the Parent and its successors
and assigns. In the event that Parent or any of its successors or assigns (i)
consolidates with or merges into any other Person and shall not be the
continuing or surviving corporation or entity in such consolidation or merger,
or (ii) transfers all or substantially all of its properties and assets to any
Person, then, and in each case, proper provision shall be made so that the
successors and assigns of the Parent shall be legally bound to honor the
registration obligations set forth in this Section 7.13.

7.14 Certain Liability & Indemnification.

(a) With an understanding that all material information regarding the
post-merger Parent to be provided in the Form S-4 registration Statement
furnished to Company Stockholders in connection with the issuance of the Merger
Securities is information that, of necessity, shall have originated with, and
been provided by, the Company, and provided that the written authorization of
the Company in relation to the Form S-4 Registration Statement shall have been
obtained by Parent pursuant to Section 7.2(c), from and after the Effective
Time, the Parent and the Company Principal Stockholder shall have full and
complete direct and primary joint and several liability for any and all amounts
for which any officer or director of Parent is otherwise found to be liable in
connection with any actions arising, directly or indirectly, out of the offering
by Parent of the Merger Securities.

(b) From and after the Effective Time, the Parent and the Company Principal
Stockholder, shall, jointly and severally and to the fullest extent permitted by
applicable Law, indemnify, defend and hold harmless, and provide advancement of
expenses to, each Person who is now, or has been at any time prior to the date
hereof or who becomes prior to the Effective Time, an officer, director or
employee of Parent (the “Indemnified Parties”) against all Damages, Liabilities
or Orders or amounts that are paid in settlement of or in connection with any
claim or Proceeding that is based in whole or in part on, or arises in whole or
in part out of, the fact that such Person is or was a director, officer or
employee of Parent, and pertaining to any matter existing or occurring, or any
acts or omissions occurring, at or prior to the Effective Time, whether asserted
or claimed prior to, or at or after, the Effective Time (including matters, acts
or omissions occurring in connection with the approval of this Agreement and the
consummation of the Transactions, as well as matters arising out of any failures
of disclosure in relation to the Form S-4 Registration Statement) to the same
extent such Persons are entitled to be indemnified or have the right to
advancement of expenses as of the date of this Agreement by Parent pursuant to
its certificate of incorporation, bylaws, and/or any indemnification agreements
in effect as of the date hereof.
 
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(c) This Section 7.14 is intended to be for the benefit of, and shall be
enforceable by, the Indemnified Parties and their heirs and personal
representatives, and shall be binding on the Parent, the Company Principal
Stockholder, and their respective successors and assigns. In the event that
Parent or the Company Principal Stockholder, or any of their respective
successors or assigns (i) consolidates with or merges into any other Person and
shall not be the continuing or surviving corporation or entity in such
consolidation or merger, or (ii) transfers all or substantially all of its
properties and assets to any Person, then, and in each case, proper provision
shall be made so that the successors and assigns of the Parent or Company
Principal Stockholder, as applicable, shall be legally bound to honor the
indemnification obligations set forth in this Section 7.14.

7.15 Further Assurances. Upon the terms and subject to the conditions hereof,
each of the Parties hereto shall execute such documents and other instruments
and take such further actions as may be reasonably required from time to time to
carry out the provisions hereof and consummate the Merger and the other
Transactions.

ARTICLE VIII

CONDITIONS TO THE MERGER

8.1 Conditions to the Obligations of Each Party to Effect the Merger. In
addition to the other conditions set forth in this Article VIII, the obligations
of the Company, Parent and Merger Sub to consummate the Merger are subject to
the satisfaction on or prior to the Closing Date of the following conditions:

(a) the Merger and this Agreement shall have been approved by the affirmative
vote (or written consent) of a majority of the shares of Company Common Stock
and other Cancelable Securities entitled to vote on the matter;

(b) all Authorizations and Orders of, declarations and filings with, and notices
to any Governmental Authority required to permit the consummation of the Merger
shall have been obtained or made and shall be in full force and effect;

(c) no temporary restraining order, preliminary or permanent injunction or other
Order prohibiting the consummation of the Merger shall be in effect, and no Law
shall have been enacted or shall be deemed applicable to the Merger which makes
the consummation of the Merger unlawful;

(d) the shares of Parent Common Stock and, if applicable, other Merger
Securities issuable as part of the Merger in accordance with Section 2.1 of this
Agreement shall have been duly authorized; and

(e) the Form S-4 Registration Statement shall have been declared effective under
the Securities Act by the SEC, delivered to all holders of Cancelable
Securities, and shall not be the subject of any stop order or Proceeding seeking
a stop order.

8.2 Conditions to the Obligations of Parent and Merger Sub to Effect the Merger.
The obligations of Parent and Merger Sub to consummate the Merger are subject to
satisfaction (or waiver by Parent in its sole discretion) on or prior to the
Closing Date of the following conditions:
 
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(a) Company Principal Stockholder shall have delivered an executed Voting
Agreement;

(b) each of the representations and warranties of the Company set forth in this
Agreement that is qualified by a Material Adverse Effect on the Company shall be
true and correct at and as of the Closing Date as if made at and as of the
Closing Date and each of such representations and warranties that is not so
qualified shall be true and correct in all material respects at and as of the
Closing Date as if made at and as of the Closing Date, except to the extent that
such representations and warranties refer specifically to an earlier date, in
which case such representations and warranties shall have been true and correct
as of such earlier date;

(c) each of the representations and warranties of the Company Principal
Stockholder set forth in this Agreement that is qualified by a Material Adverse
Effect on the Company shall be true and correct at and as of the Closing Date as
if made at and as of the Closing Date and each of such representations and
warranties that is not so qualified shall be true and correct in all material
respects at and as of the Closing Date as if made at and as of the Closing Date,
except to the extent that such representations and warranties refer specifically
to an earlier date, in which case such representations and warranties shall have
been true and correct as of such earlier date;
 
(d) the Parent, at the expense of the Company, shall have procured directors and
officers liability insurance coverage in an aggregate amount satisfactory to
Parent from a carrier rated A++XV by A.M. Best & Company (or toherwise
satisfactory to Parent) which coverage shall specifically include liability
arising out of any errors or omissions that shall have occurred in connection
with the offering and issuance of the Merger Securities;

(e) the Company shall not have violated the Pre-Closing Company Standstill
Commitment;

(f) the Company shall have delivered an opinion of counsel to Parent, in form
satisfactory to Parent, that the Merger will qualify as a tax-free
reorganization under the Code;

(g) the Company shall have performed, or complied with, in all material respects
all obligations required to be performed or complied with by it under this
Agreement at or prior to the Closing Date, and the Company shall have delivered
to Parent a certificate signed by the Chief Executive Officer of the Company to
such effect;

(h) there shall not have occurred any event, occurrence or change that has had,
or could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company;

(i) each of Parent and Merger Sub shall have received a certificate signed by
the Chief Executive Officer of the Company certifying as to the satisfaction of
the conditions set forth in Sections 8.1 and 8.2 as of the Closing Date; and

(j) all actions to be taken by the Company in connection with consummation of
the Transactions and all certificates, opinions, instruments, and other
documents required to effect the Transactions will be reasonably satisfactory in
form and substance to the Parent or its counsel.
 
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8.3 Conditions to the Obligations of the Company to Effect the Merger. The
obligation of the Company to consummate the Merger is subject to satisfaction
(or waiver by the Company in its sole discretion) on or prior to the Closing
Date of the following conditions:

(a) each of the representations and warranties of Parent set forth in this
Agreement that is qualified by a Material Adverse Effect on Parent shall be true
and correct at and as of the Closing Date as if made at and as of the Closing
Date and each of such representations and warranties that is not so qualified
shall be true and correct in all material respects at and as of the Closing Date
as if made at and as of the Closing Date, except to the extent that such
representations and warranties refer specifically to an earlier date, in which
case such representations and warranties shall have been true and correct as of
such earlier date;

(b) the Company shall have obtained the requisite approval of its stockholders
to the Merger and this Agreement in accordance with the DGCL and its bylaws;

(c) the holders of no more than twenty percent (20%) of the Dissentable Shares
shall be in a position to perfect their appraisal rights under the DGCL as
determined immediately prior to the Effective Time;
 
(d) Parent shall have performed, or complied with, in all material respects all
obligations required to be performed or complied with by it under this Agreement
at or prior to the Closing Date, and Parent shall have delivered to the Company
a certificate signed by the Chief Executive Officer of Parent to such effect;

(e) there shall not have occurred any event, occurrence or change that has had,
or could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on Parent;

(f) the Company shall have received resignations of each of the officers of
Parent, effective, in each case, as of the Effective Time;

(g) the Company shall have received a certificate signed by the Chief Executive
Officer of Parent certifying as to the satisfaction of the conditions set forth
in Sections 8.1 and 8.3 as of the Closing Date; and

(h) all actions to be taken by Parent in connection with consummation of the
Transactions and all certificates, opinions, instruments, and other documents
required to effect the Transactions will be reasonably satisfactory in form and
substance to the Company or its counsel.

(i)  Parent shall have duly effected the Parent Stock-Split.

ARTICLE IX

TERMINATION, AMENDMENT AND WAIVER

9.1 Termination. This Agreement may be terminated and the Merger and the other
Transactions may be abandoned at any time prior to the Effective Time,
notwithstanding any requisite approval of this Agreement and the Transactions,
as follows:
 
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(a) by mutual written consent duly authorized by the boards of directors of each
of Parent, Merger Sub and the Company;

(b) by Parent:

(i) to the extent that the Effective Time shall not have occurred on or before
January 31, 2009; provided, however, that the right to terminate this Agreement
under this Section 9.1(b) shall not be available to Parent if Parent’s failure
to fulfill any obligation under this Agreement has been the cause of, or
resulted in, the failure of the Effective Time to occur on or before such date;

(ii) if the Parent reasonably concludes that material information regarding the
Company and/or its Subsidiaries that it determines to include in the Form S-4
Registration Statement has been unreasonably withheld by the Company and/or its
Subsidiaries;

(iii) if the Company unreasonably withholds its approval as to the accuracy and
completeness of the Form S-4 Registration Statement;

(iv) if the Company’s independent auditors resign at any time after having been
engaged citing a disagreement with management of the Company or any of its
officers and/or directors as the reason therefor;

(v) upon a breach of any representation, warranty, covenant or agreement on the
part of the Company set forth in this Agreement, or if any representation or
warranty of the Company shall have become untrue, in either case such that the
conditions set forth in Section 8.2(a)-(j) would not be satisfied (a
“Terminating Company Breach”); provided, however, that, if such Terminating
Company Breach is curable by the Company through the exercise of its best
efforts and for so long as the Company continues to exercise such best efforts,
Parent may not terminate this Agreement under this Section 9.1(b)(v); or
 
(c) by the Company:

(i) if the Company Stockholders shall have failed to duly approve the Merger and
this Agreement within a reasonable period following good faith compliance by the
Company with all of its obligations under Sections 7.3 and 7.11;

(ii) upon breach of any representations, warranty, covenant or agreement on the
part of Parent set forth in this Agreement, or if any representation or warranty
of Parent shall have become untrue, in either case such that the conditions set
forth in Section 8.3(a)-(h) would not be satisfied (“Terminating Parent
Breach”); provided, however, that, if such Terminating Parent Breach is curable
by Parent through best efforts and for so long as Parent continues to exercise
such best efforts, the Company may not terminate this Agreement under this
Section 9.1(c)(ii).

9.2 Amendment. This Agreement may be amended by the Company, Parent and Merger
Sub by action taken by or on behalf of their respective boards of directors at
any time prior to the Effective Time; provided, however, that, (i) any such
amendment is in writing signed by each of the Parties, and (ii) after approval
of the matters presented in connection with the Merger by the Company
Stockholders, no amendment shall be made which by Law requires further approval
by the Company Stockholders without such further approval, including without
limitation any amendment which would reduce the amount or change the type of
consideration into which each share of Company Common Stock shall be converted
upon consummation of the Merger.
 
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9.3 Waiver. At any time prior to the Effective Time, any Party hereto may (a)
extend the time for the performance of any obligation or other act of any other
Party hereto, (b) waive any inaccuracy in the representations and warranties
contained herein or in any document delivered pursuant hereto, and (c) waive
compliance with any agreement or condition contained herein. Any such extension
or waiver shall be valid only if set forth in an instrument in writing signed by
the Party or Parties to be bound thereby. No failure or delay by any Party in
exercising any right or privilege hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. To the
maximum extent permitted by Law, (i) no waiver that may be given by a Party
shall be applicable except in the specific instance for which it was given, and
(ii) no notice to or demand on one Party shall be deemed to be a waiver of any
obligation of such Party or the right of the Party giving such notice or demand
to take further action without notice or demand.

ARTICLE X

GENERAL PROVISIONS

10.1 Notices. Any notice, request, demand, waiver, consent, approval or other
communication which is required or permitted hereunder shall be in writing and
shall be deemed given: (a) on the date established by the sender as having been
delivered personally; (b) on the date delivered by FedEx, UPS, USPS, or DHL as
established by the sender by evidence obtained from such courier; (c) on the
date sent by facsimile, with confirmation of transmission, if sent during normal
business hours of the recipient, if not, then on the next Business Day; or
(d) on the fifth (5th) day after the date mailed, by certified or registered
mail, return receipt requested, postage prepaid. Such communications, to be
valid, must be addressed as follows:

If to Parent or Merger Sub:

GCA I Acquisition Corp.
115 East 57th Street, Suite 1006
New York, New York 10022
Att: Michael M. Membrado, President & CEO

Fax: 646-486-9771

with a copy to:

M.M. Membrado, PLLC
115 East 57th Street, Suite 1006
New York, New York 10022
Att: Michael M. Membrado

Fax: 646-486-9771
 
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If to the Company:

Bixby Energy Systems, Inc.
6893 139th Lane N.W.
Ramsey, MN 55303
Att: Robert Walker, CEO

Fax: 763-428-7903
 
with a copy to:

Davisson & Associates, PA
3649 Brunswick Avenue North
Minneapolis, MN 55422
Att: Peder K. Davisson, Esq.

Fax: 763-535-0490

or to such other address or to the attention of such Person or Persons as the
recipient party has specified by prior written notice to the sending party (or
in the case of counsel, to such other readily ascertainable business address as
such counsel may hereafter maintain). If more than one method for sending notice
as set forth above is used, the earliest notice date established as set forth
above shall control.

10.2 Certain Definitions. For purposes of this Agreement, the following terms,
in their capitalized forms, shall have the correspondingly ascribed meanings:

“Affiliate” means, with respect to any specified Person, any other Person who,
directly or indirectly, through one or more intermediaries, Controls, is
Controlled By, or is Under Common Control With, such specified Person.

“Applicable Rate” means the corporate base rate of interest publicly announced
from time to time by Citibank N.A. plus 2% per annum.

“Authorization” means any authorization, approval, consent, certificate,
license, permit or franchise of or from any Governmental Authority or pursuant
to any Law.

“Beneficial Owner” with respect to any shares means a Person who shall be deemed
to be the beneficial owner of such shares (i) which such Person or any of its
Affiliates or associates (as such term is defined in Rule 12b-2 promulgated
under the Exchange Act) beneficially owns, directly or indirectly, (ii) which
such Person or any of its Affiliates or associates has, directly or indirectly,
(A) the right to acquire (whether such right is exercisable immediately or
subject only to the passage of time), pursuant to any agreement, arrangement or
understanding or upon the exercise of consideration rights, exchange rights,
warrants or options, or otherwise, or (B) the right to vote pursuant to any
agreement, arrangement or understanding, (iii) which are beneficially owned,
directly or indirectly, by any other Persons with whom such Person or any of its
Affiliates or associates or any Person with whom such Person or any of its
Affiliates or associates has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of any such shares, or (iv)
pursuant to Section 13(d) of the Exchange Act and any rules or regulations
promulgated thereunder.
 
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“Benefit Plan” means any “employee benefit plan” as defined in 3(3) of ERISA,
including any (a) nonqualified deferred compensation or retirement plan or
arrangement which is an Employee Pension Benefit Plan (as defined in ERISA
Section 3(2)), (b) qualified defined contribution retirement plan or arrangement
which is an Employee Pension Benefit Plan, (c) qualified defined benefit
retirement plan or arrangement which is an Employee Pension Benefit Plan
(including any Multiemployer Plan (as defined in ERISA Section 3(37)),
(d) Employee Welfare Benefit Plan (as defined in ERISA Section 3(1)) or material
fringe benefit plan or program, or (e) stock purchase, stock option, severance
pay, employment, change-in-control, vacation pay, company awards, salary
continuation, sick leave, excess benefit, bonus or other incentive compensation,
life insurance, or other employee benefit plan, contract, program, policy or
other arrangement, whether or not subject to ERISA.

“Business Day” means any day on which the principal offices of the SEC in
Washington, D.C. are open to accept filings, or, in the case of determining a
date when any payment is due, any day other than Saturday, Sunday or other day
on which banks located in New York City are required or authorized by Law to
close.

“CERCLA” means the Comprehensive Environmental Response, Compensation, and
Liability Act, 42 U.S.C. Section 9601 et seq.

“Company ERISA Affiliate” means any entity which is a member of a “controlled
group of corporations” with, under “common control” with or a member of an
“affiliated services group” with, the Company or any of its Subsidiaries, as
defined in Section 414(b), (c), (m) or (o) of the Code.

“Contaminant” means, in relation to any Software, any virus or other
intentionally created, undocumented contaminant.

“Contract” means any agreement, contract, license, lease, commitment,
arrangement or understanding, written or oral, including any sales order and
purchase order.

“Control” (including the terms “Controlled By” and “Under Common Control With”)
means the possession, directly or indirectly or as trustee or executor, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, as trustee or
executor, by Contract or credit arrangement or otherwise.

“Copyrights” means registered and unregistered copyrights in both published and
unpublished works.

“Damages” means all Proceedings, demands, claims, assessments, losses, damages,
costs, expenses, Liabilities, obligations, injunctions, judgments, Orders,
decrees, rulings, awards, fines, sanctions, penalties, charges, Taxes and
amounts paid in settlement, including, without limitation, (i) interest on cash
disbursements in respect of any of the foregoing at the Applicable Rate,
compounded quarterly, from the date each such cash disbursement is made until
the Person incurring the same shall have been indemnified in respect thereof,
and (ii) reasonable costs, fees and expenses of attorneys, accountants and other
agents of the relevant Person.

“Disabling Codes” means, with respect to any Software, any disabling codes or
related instructions.
 
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“Environment” means all air, surface water, groundwater, land, including land
surface or subsurface, including all fish, wildlife, biota and all other natural
resources.

“Environmental Action” means any Proceeding brought or threatened under any
Environmental Law or otherwise asserting the incurrence of Environmental
Liabilities.

“Environmental Clean-Up Site” means any location which is listed on the National
Priorities List, the Comprehensive Environmental Response, Compensation and
Liability Information System, or on any similar state or foreign list of sites
requiring investigation or cleanup, or which is the subject of any pending or
threatened Proceeding related to or arising from any alleged violation of any
Environmental Law, or at which there has been a threatened or actual Release of
a Hazardous Substance.

“Environmental Laws” means any and all applicable Laws and Authorizations
issued, promulgated or entered into by any Governmental Authority relating to
the Environment, worker health and safety, preservation or reclamation of
natural resources, or to the management, handling, use, generation, treatment,
storage, transportation, disposal, manufacture, distribution, formulation,
packaging, labeling, Release or threatened Release of or exposure to Hazardous
Substances, whether now existing or subsequently amended or enacted, including
but not limited to: CERCLA; the Federal Water Pollution Control Act, 33 U.S.C.
Section 1251 et seq.; the Clean Air Act, 42 U.S.C. Section 7401 et seq.; the
Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq.; the Occupational
Safety and Health Act, 29 U.S.C. Section 651 et seq.; the Emergency Planning and
Community Right-to-Know Act of 1986, 42 U.S.C. Section 11001 et seq.; the Safe
Drinking Water Act, 42 U.S.C. Section 300(f) et seq.; the Hazardous Materials
Transportation Act, 49 U.S.C. Section 1801 et seq.; the Federal Insecticide,
Fungicide and Rodenticide Act 7 U.S.C. Section 136 et seq.; RCRA; the Toxic
Substances Control Act, 15 U.S.C. Section 2601 et seq.; the Oil Pollution Act of
1990, 33 U.S.C. Section 2701 et seq.; and any similar or implementing state or
local Law, and any non-U.S. Laws and regulations of similar import, and all
amendments or regulations promulgated thereunder; and any common law doctrine,
including but not limited to, negligence, nuisance, trespass, personal injury,
or property damage related to or arising out of the presence, Release, or
exposure to Hazardous Substances.

“Environmental Liabilities” means, with respect to any party, Liabilities
arising out of (A) the ownership or operation of the business of such party or
any of its Subsidiaries, or (B) the ownership, operation or condition of the
Real Property or any other real property currently or formerly owned, operated
or leased by such party or any of its Subsidiaries, in each case to the extent
based upon or arising out of (i) Environmental Law, (ii) a failure to obtain,
maintain or comply with any Environmental Permit, (iii) a Release of any
Hazardous Substance, or (iv) the use, generation, storage, transportation,
treatment, sale or other off-site disposal of Hazardous Substances.

“Environmental Permit” means any Authorization under Environmental Law, and
includes any and all Orders issued or entered into by a Governmental Authority
under Environmental Law.

“ERISA” means the U.S. Employee Retirement Income Security Act of 1974, as
amended.

“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.

“FINRA” mean the Financial Industry Regulatory Authority.
 
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“Fully-Diluted Basis” means, with respect to any calculation of common shares
for a given corporation outstanding at a given time, that amount, exclusive of
any and all shares held in treasury, which includes (i) any and all convertible
securities then outstanding assuming the full conversion thereof as of such
time, and (iii) any and all options and warrants then outstanding assuming the
full exercise thereof as of such time.

“GAAP” means U.S. Generally Accepted Accounting Principles.

“Governmental Authority” means any entity or body exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to United States federal, state, local, or municipal government, foreign,
international, multinational or other government, including any department,
commission, board, agency, bureau, subdivision, instrumentality, official or
other regulatory, administrative or judicial authority thereof, and any
non-governmental regulatory body to the extent that the rules and regulations or
orders of such body have the force of Law.

“Hazardous Substances” means all explosive or regulated radioactive materials or
substances, hazardous or toxic materials, wastes or chemicals, petroleum and
petroleum products (including crude oil or any fraction thereof), asbestos or
asbestos containing materials, and all other materials, chemicals or substances
which are regulated by, form the basis of liability or are defined as hazardous,
extremely hazardous, toxic or words of similar import, under any Environmental
Law, including materials listed in 49 C.F.R. Section 172.101 and materials
defined as hazardous pursuant to Section 101(14) of CERCLA.

“Indebtedness” means any of the following: (a) any indebtedness for borrowed
money, (b) any obligations evidenced by bonds, debentures, notes or other
similar instruments, (c) any obligations to pay the deferred purchase price of
property or services, except trade accounts payable and other current
Liabilities arising in the Ordinary Course of Business, (d) any obligations as
lessee under capitalized leases, (e) any indebtedness created or arising under
any conditional sale or other title retention agreement with respect to acquired
property, (f) any obligations, contingent or otherwise, under acceptance credit,
letters of credit or similar facilities, and (g) any guaranty of any of the
foregoing.

“Intellectual Property” means: (i) Proprietary Information; (ii) trademarks and
service marks (whether or not registered), trade names, logos, trade dress and
other proprietary indicia and all goodwill associated therewith;
(iii) documentation, advertising copy, marketing materials, web-sites,
specifications, mask works, drawings, graphics, databases, recordings and other
works of authorship, whether or not protected by Copyright; (iv) Software; and
(v) Intellectual Property Rights, including all Patents, Copyrights, Marks,
trade secret rights, mask works, moral rights or other literary property or
authors rights, and all applications, registrations, issuances, divisions,
continuations, renewals, reissuances and extensions of the foregoing.

“Intellectual Property Rights” means all forms of legal rights and protections
that may be obtained for, or may pertain to, any Intellectual Property in any
country of the world.

“Knowledge” of a given party (or any similar phrase) means, with respect to any
fact or matter, the actual knowledge of the directors and executive officers of
such party and each of its Subsidiaries, together with such knowledge that such
directors, executive officers and other employees could be expected to discover
after due investigation concerning the existence of the fact or matter in
question.
 
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“Law” means any statute, law (including common law), constitution, treaty,
ordinance, code, order, decree, judgment, rule, regulation and any other binding
requirement or determination of any Governmental Authority.

“Liability” or “Liabilities” means any liability, Indebtedness or obligation of
any kind, whether known or unknown, whether asserted or unasserted, whether
absolute or contingent, whether accrued or unaccrued, whether liquidated or
unliquidated, whether secured or unsecured, whether joint or several, whether
due or to become due, whether vested or unvested, including any liability for
Taxes.

“Liens” means any liens, claims, charges, security interests, mortgages,
pledges, easements, conditional sale or other title retention agreements,
defects in title, covenants or other restrictions of any kind, including, any
restrictions on the use, voting, transfer or other attributes of ownership.

“Marks” means trademarks, service marks and other proprietary indicia (whether
or not registered).

“Material Adverse Effect” means, with respect to any Person, any state of facts,
development, event, circumstance, condition, occurrence or effect that,
individually or taken collectively with all other preceding facts, developments,
events, circumstances, conditions, occurrences or effects (a) is materially
adverse to the condition (financial or otherwise), business, operations or
results of operations of such Person, (b) impairs the ability of such Person to
perform its obligations under this Agreement, or (c) delays the consummation of
the Merger.

“Operative Agreements” means, collectively, this Agreement, the Lock-Up & Voting
Agreement and the Affiliate Agreements.

“Order” means any award, injunction, judgment, decree, stay, order, ruling,
subpoena or verdict, or other decision entered, issued or rendered by any
Governmental Authority.

“Ordinary Course of Business” means the ordinary course of business consistent
with past custom and practice (including with respect to quantity and
frequency).

“OTCBB” means the Over-The-Counter Bulletin Board, operated by NASDAQ.

“Patents” means letters patent, patent applications, provisional patents, design
patents, PCT filings, invention disclosures and other rights to inventions or
designs.

“PCAOB” means the Public Company Accounting Oversight Board.

“PCBs” means polychlorinated biphenyls.

“Permitted Liens” means, with respect to any party, (i) Liens for current real
or personal property taxes not yet due and payable and with respect to which
such party maintains adequate reserves, (ii) workers’, carriers’ and mechanics’
or other like Liens incurred in the Ordinary Course of Business with respect to
which payment is not due and that do not impair the conduct of such party’s or
any of its Subsidiaries’ business in any material respect or the present or
proposed use of the affected property and (iii) Liens that are immaterial in
character, amount, and extent and which do not detract from the value or
interfere with the present or proposed use of the properties they affect.
 
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“Person” means an individual, a corporation, a partnership, a limited liability
company, a trust, an unincorporated association, Governmental Authority, a
person (including, without limitation, a “person” as defined in Section 13(d)(3)
of the Exchange Act), or any political subdivision, agency or instrumentality of
a Governmental Authority, or any other entity or body.

“Proceeding” or “Proceedings” means any actions, suits, claims, hearings,
arbitrations, mediations, Proceedings (public or private) or governmental
investigations that have been brought by any governmental authority or any other
Person.

“Proprietary Information” means, collectively, inventions (whether or not
patentable), trade secrets, technical data, databases, customer lists, designs,
tools, methods, processes, technology, ideas, know-how, source code, product
road maps and other proprietary information and materials.

“Public Software” means any Software that contains, or is derived in any manner
(in whole or in part) from, any Software that is distributed as free Software,
open source Software or similar licensing or distribution models, including
Software licensed or distributed under any of the following licenses or
distribution models, or licenses or distribution models similar to any of the
following: (i) GNU’s General Public License or Lesser/Library GPL; (ii) Mozilla
Public License; (iii) Netscape Public License; (iv) Sun Community Source/
Industry Standard License; (v) BSD License; and (vi) Apache License.

“RCRA” means the Resource Conservation and Recovery Act of 1976, 42 U.S.C.
Section 6901 et seq.

“Release” means any spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, dumping, or disposing of Hazardous
Substances into the Environment.

“Registrable Securities” means the shares of Parent Common Stock issued and
outstanding immediately prior to the Effective Time; provided, however, that, as
to any particular Registrable Securities, such securities will cease to be
Registrable Securities when (a) they have been effectively registered under the
Securities Act and disposed of in accordance with the registration statement
covering them, (b) they are or may be freely traded without registration
pursuant to Rule 144 under the Securities Act (or any similar provisions that
are then in effect), or (c) they have been otherwise transferred and new
certificates for them not bearing a restrictive legend have been issued by
Parent and Parent shall not have “stop transfer” instructions imposed against
them.

“Securities Act” means the U.S. Securities Act of 1933, as amended.

“SEC” means the U.S. Securities and Exchange Commission.

“Software” means, collectively, computer programs, including any and all
software implementations of algorithms, models and methodologies, whether in
source code or object code, design documents, flow-charts, user manuals and
training materials relating thereto and any translations thereof.
 
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“Subsidiary” or “Subsidiaries” means, with respect to any party, any Person, of
which (a) such party or any subsidiary of such party is a general partner
(excluding partnerships, the general partnership interests of which held by such
party or any Subsidiary of such party do not have a majority of the voting
interest in such partnership) or (b) at least a majority of the securities or
other interests having by their terms ordinary voting power to elect a majority
of the board of directors or others performing similar functions with respect to
such Person is directly or indirectly owned or controlled by such party and/or
by any one or more of its subsidiaries.

“Systems” means, in relation to any Person, any of the hardware, software,
databases or embedded control systems thereof.

“Tax” or “Taxes” means any means any and all federal, state, local, or foreign
net or gross income, gross receipts, net proceeds, sales, use, ad valorem, value
added, franchise, bank shares, withholding, payroll, employment, excise,
property, deed, stamp, alternative or add-on minimum, environmental (including
taxes under Code §59A), profits, windfall profits, transaction, license, lease,
service, service use, occupation, severance, energy, unemployment, social
security, workers’ compensation, capital, premium, and other taxes, assessments,
customs, duties, fees, levies, or other governmental charges of any nature
whatever, whether disputed or not, together with any interest, penalties,
additions to tax, or additional amounts with respect thereto.

“Tax Returns” 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.

“Taxing Authority” means any Governmental Authority having jurisdiction with
respect to any Tax.

“Trading Day” means any day on which the NASDAQ Stock Market is open for
trading.

“$” means United States dollars.

10.3 Index of Other Defined Terms. In addition to those terms defined above, the
following terms, in their capitalized forms, shall have the respective meanings
given thereto in the sections indicated below:
 
Defined Term
 
Section
     
“Affiliate Agreement”
 
2.2(j)
“Agreement”
 
Preamble
“Bixby Option Plan”
 
2.1(a)(x)
“Cancelable Common Share”
 
2.1(a)(i)
“Cancelable Non-Convertible Preferred Share”
 
2.1(a)(iv)
“Cancelable Pre-Definitive Agreement Convertible Debenture”
 
2.1(a)(v)
“Cancelable Pre-Definitive Agreement Convertible Preferred Share”
 
2.1(a)(ii)
“Cancelable Post-Definitive Agreement Convertible Debenture”
 
2.1(a)(vi)
“Cancelable Post-Definitive Agreement Convertible Preferred Share”
 
2.1(a)(iii)
“Cancelable Securities”
 
2.2(a)
“Certificate of Merger”
 
1.1
“Closing Date”
 
1.2
“Closing”
 
1.2

 
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“Code”
 
Recitals
“Company”
 
Preamble
“Company Benefit Plan”
 
4.21(a)
“Company Common Stock”
 
2.1(a)(i)
“Company Common Stock Purchase Warrant”
 
2.1(a)(viii)
“Company Convertible Debentures”
 
2.1(a)v)
“Company Convertible Preferred Purchase Warrant”
 
2.1(a)(ix)
“Company Convertible Preferred Stock”
 
2.1(a)(ii)
“Company Disclosure Schedule”
 
Art. IV Intro
“Company Foreign Plans”
 
4.21(r)
“Company In-Bound Licenses”
 
4.18(b)
“Company Intellectual Property”
 
4.18(e)
“Company Lease”
 
4.17(c)
“Company-Leased Real Property”
 
4.17(a)
“Company Material Contracts”
 
4.19(b)
“Company Minor Contracts”
 
4.19(e)
“Company Non-Convertible Debt Security”
 
2.1(a)(vii)
“Company Non-Convertible Preferred Stock”
 
2.1(a)(iv)
“Company Out-Bound Licenses”
 
4.18(c)
“Company-Owned Intellectual Property”
 
4.18(a)
“Company-Owned Real Property”
 
4.17(a)
“Company-Owned Software”
 
4.18(m)(i)
“Company Pension Plan”
 
4.21(b)
“Company Permits”
 
4.7
“Company Principal Stockholder”
 
Preamble
“Company Receivables”
 
4.9
“Company Registered Intellectual Property”
 
4.18(f)
“Company Series A Convertible Preferred Stock”
 
4.4(a)
“Company Stockholder”
 
2.1
“Company Stock Option”
 
2.1(a)(x)
“Constituent Corporations”
 
1.1
“Delaware Secretary of State”
 
1.2
“DGCL”
 
Recitals
“Dissentable Shares”
 
2.3(a)
“Dissenting Holder”
 
2.3(a)
“Dissenting Shares”
 
2.3(a)
“Effective Time”
 
1.2
“Exchange Agent”
 
2.2(a)
“Exchange Fund”
 
2.2(a)
“Exchange Ratio”
 
2.1(a)(i)
“Form S-4 Registration Statement”
 
5.6(b)
“Indemnified Parties”
 
7.14(b)
“Merger”
 
1.1
“Merger Securities”
 
2.2(a)
“Merger Sub”
 
Preamble
“Merger Sub Common Stock”
 
2.1(a)(xi)
“Merger Sub Preferred Stock”
 
5.4(b)

 
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“Most Recent Company Balance Sheet”
 
4.8(a)
“Most Recent Company Cash Flow Statement”
 
4.8(a)
“Most Recent Company Financial Statements”
 
4.8(a)
“Most Recent Company Income Statement”
 
4.8(a)
“Most Recent Company Statement of Stockholders’ Equity”
 
4.8(a)
“Parent”
 
Preamble
“Parent Common Stock”
 
Recitals
“Parent Convertible Debenture”
 
2.1(a)(vi)
“Parent Convertible Preferred Stock”
 
2.1(a)(iii)
“Parent Disclosure Schedule”
 
Art. V Intro
“Parent Non-Convertible Preferred Stock”
 
2.1(a)(iv)
“Parent Preferred Stock”
 
5.4(a)
“Parent Representatives
 
7.2(d)
“Parent Stock-Split”
 
7.2(f)(i)(B)
“Parent SEC Reports”
 
5.7(a)
“Parent Stock Option”
 
2.1(a)(xii)
“Parent Warrant”
 
2.1(a)(xii)
“Party” / “Parties”
 
Preamble
“Pre-Closing Company Standstill Commitment”
 
7.2(f)
“Registrable Securities Lock-Up Agreement”
 
7.13(c)
“Required Company Consents”
 
4.6(a)
“Replacement Common Warrant”
 
2.1(a)(viii)
“Replacement Option”
 
2.1(a)(x)
“Replacement Preferred Warrant”
 
2.1(a)(ix)
“Resale Registration Statement”
 
7.13(a)
“Surviving Corporation”
 
1.1
“Terminating Parent Breach”
 
9.1(c)(ii)
“Terminating Company Breach”
 
9.1(b)(v)
“Transactions”
 
Recitals
“Voting Agreement”
 
Recitals
“WARN Act”
 
4.22(d)

 
10.4 Interpretation.

(a) The meaning assigned to each term defined herein shall be equally applicable
to both the singular and the plural forms of such term and vice versa, and words
denoting either gender shall include both genders as the context requires. Where
a word or phrase is defined herein, each of its other grammatical forms shall
have a corresponding meaning.
 
(b) The terms “hereof”, “herein” and “herewith” and words of similar import
shall, unless otherwise stated, be construed to refer to this Agreement as a
whole and not to any particular provision of this Agreement.

(c) When a reference is made in this Agreement to an Article, Section,
paragraph, Exhibit or Schedule, such reference is to an Article, Section,
paragraph, Exhibit or Schedule to this Agreement unless otherwise specified.
 
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(d) The word “include”, “includes”, and “including” when used in this Agreement
shall be deemed to be followed by the words “without limitation”, unless
otherwise specified.

(e) A reference to any Party to this Agreement or any other agreement or
document shall include such Party’s predecessors, successors and permitted
assigns.

(f) Reference to any Law means such Law as amended, modified, codified, replaced
or reenacted, and all rules and regulations promulgated thereunder.

(g) The Parties have participated jointly in the negotiation and drafting of
this Agreement. Any rule of construction or interpretation otherwise requiring
this Agreement to be construed or interpreted against any Party by virtue of the
authorship of this Agreement shall not apply to the construction and
interpretation hereof.

(h) All accounting terms used and not defined herein shall have the respective
meanings given to them under GAAP.

10.5 Survival.  The representations and warranties and covenants and agreements
in this Agreement and in any certificate delivered pursuant hereto shall
terminate at the Effective Time, except that the covenants and agreements set
forth in Articles I, II, VII and this Article X, in each case as they relate to
any post-Closing matters, and including without limitation any provisions for
the benefit of third parties, shall survive the Effective Time.

10.6 Severability. If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of Law, or public policy, all
other conditions and provisions of this Agreement shall nevertheless remain in
full force and effect so long as the economic or legal substance of the
Transactions is not affected in any manner materially adverse to any Party. Upon
a determination that any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced, the Parties shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the
Parties as closely as possible in a mutually acceptable manner in order that the
Transactions be consummated as originally contemplated to the fullest extent
possible.

10.7 Assignment; Binding Effect; Benefit. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
Parties hereto (whether by operation of Law or otherwise) without the prior
written consent of the other Parties; provided, however, that Parent or Merger
Sub may assign any of their respective rights and obligations to any direct or
indirect Subsidiary of Parent. Subject to the preceding sentence, this Agreement
shall be binding upon and shall inure to the benefit of the Parties hereto and
their respective executors, heirs, personal representatives successors and
assigns. Notwithstanding anything contained in this Agreement to the contrary,
except for the provisions of Article II, and Sections 7.13 and 7.14, which are
intended to benefit and be enforceable by third parties as specifically set
forth therein, nothing in this Agreement, expressed or implied, is intended to
confer on any Person other than the Parties or their respective successors and
assigns any rights, remedies, obligations or Liabilities under or by reason of
this Agreement.

10.8 Fees and Expenses. All fees and expenses incurred in connection with the
Merger, the other Transactions, and this Agreement shall be paid by the Party
incurring such fees or expenses, whether or not the Merger is consummated;
provided, however, that:
 
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(a) As and when requested by Parent, the Company shall pay the reasonable legal,
accounting, independent auditing, and EDGARization service fees and expenses of
Parent in connection with the preparation and filing of any and all required
reports to be filed under the Exchange Act from and after the date of this
Agreement through the earlier of (i) the Effective Time, or (ii) the time at
which this Agreement shall have been terminated, if at all, in accordance with
Article IX hereof;

(b) As and when requested by Parent, the Company shall pay the reasonable legal,
accounting, independent auditing, and EDGARization/printing service fees and
expenses of Parent in connection with the preparation, filing and dissemination
of the Form S-4 Registration Statementand all related federal and state
securities Law compliance associated with the Merger; and

(c) Parent shall be free at all times to select the professional service firms
that it utilizes in respect of 10.8 (a) and (b) above in its exclusive
discretion, and, without limiting the foregoing, it is acknowledged that Parent
may utilize the services of M.M. Membrado, PLLC as legal counsel for certain
aspects of the legal work involved in this process (at a rate of $400/hr.) and
may use other law firms for other aspects (at rates that may be comparable or
higher).

10.9 Incorporation of Schedules. The Company Disclosure Schedule and the Parent
Disclosure Schedule referred to herein and signed for identification by the
Parties hereto are hereby incorporated herein and made a part hereof for all
purposes as if fully set forth herein.

10.10 Specific Performance. The Parties hereto agree that irreparable damage
would occur in the event any provision of this Agreement was not performed in
accordance with the terms hereof and that the Parties shall be entitled to
specific performance of the terms hereof, in addition to any other remedy at Law
or equity.

10.11 Governing Law. This Agreement and the Exhibits and Schedules hereto shall
be governed by and interpreted and enforced in accordance with the Laws of the
State of New York, without giving effect to any choice of Law or conflict of
Laws rules or provisions (whether of the State of New York or any other
jurisdiction) that would cause the application of the Laws of any jurisdiction
other than the State of New York.

10.12 Consent to Jurisdiction; Waiver of Jury Trial. Each Party irrevocably
submits to the exclusive jurisdiction of (a) New York County, New York, and
(b) the United States District Court for the Southern District of New York, for
the purposes of any Proceeding arising out of this Agreement or any of the
Transactions. Each Party agrees to commence any such Proceeding either in the
United States District Court for the Southern District of New York or if such
Proceeding may not be brought in such court for jurisdictional reasons, in the
Supreme Court sitting in New York County (including its Appellate Division).
Each Party further agrees that service of any process, summons, notice or
document by U.S. registered mail to such Party’s respective address set forth
above shall be effective service of process for any Proceeding in New York with
respect to any matters to which it has submitted to jurisdiction in this
Section 10.12. Each Party irrevocably and unconditionally waives any objection
to the laying of venue of any Proceeding arising out of this Agreement or any of
the Transactions in (i) the United States District Court for the Southern
District of New York, or (ii) the Supreme Court sitting in New York County
(including its Appellate Division), and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such Proceeding brought in any such court has been brought in an
inconvenient forum. EACH PARTY HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY
JURY IN ANY ACTION (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF SUCH PARTY IN THE NEGOTIATION,
ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.
 
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10.13 Headings. The descriptive headings contained in this Agreement are
included for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.

10.14 Counterparts. This Agreement may be executed and delivered (including by
facsimile transmission) in one or more counterparts, and by the different
Parties hereto in separate counterparts, each of which when executed and
delivered shall be deemed to be an original but all of which taken together
shall constitute one and the same agreement.

10.15 Entire Agreement. This Agreement, the Company Disclosure Schedule, the
Parent Disclosure Schedule and any documents delivered by the Parties in
connection herewith constitute the entire agreement among the Parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings among the Parties with respect thereto. Except as otherwise
provided herein, no addition to or modification of any provision of this
Agreement shall be binding upon any Party hereto unless made in writing and
signed by all Parties hereto.
 
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IN WITNESS WHEREOF, the Parties have executed this Agreement or caused this
Agreement to be executed by the respective officers thereunto duly authorized,
in each case as of the date first written above.

 
“PARENT”
   
GCA I ACQUISITION CORP.
                   
By:
       
Name:
Michael M. Membrado
   
Title:
President & Chief Executive Officer
                   
“MERGER SUB”
   
BIXBY ENERGY ACQUISITION CORP.
                   
By:
       
Name:
Michael M. Membrado
   
Title:
President & Chief Executive Officer
                   
“COMPANY”
   
BIXBY ENERGY SYSTEMS, INC.
                   
By:
       
Name:
Robert A. Walker
   
Title:
President & Chief Executive Officer
                         
Robert A. Walker, personally
 

 
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EXHIBITS

Exhibit A
Form of Voting Agreement
Exhibit B
Form of Certificate of Merger
Exhibit C
Articles of Incorporation – Merger Sub
Exhibit D
Bylaws – Merger Sub
Exhibit E
Form of Affiliate Agreement
Exhibit F
Form of Registrable Securities Lock-Up Agreement

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EXHIBIT A
 
VOTING AGREEMENT
 
This Voting Agreement (this “Agreement”) is made as of May 7, 2008, by and among
GCA I Acquisition Corp., a Delaware corporation (“Parent”) and Robert A. Walker,
a principal stockholder of Bixby Energy Systems, Inc., a Delaware corporation
(the “Company”)(the “Company Principal Stockholder”).
 
WHEREAS, concurrently with the execution and delivery of this Agreement, Parent,
Bixby Energy Acquisition Corp., a Delaware corporation and wholly-owned
subsidiary of Parent (“Merger Sub”) and the Company are entering into an
Agreement and Plan of Merger of even date herewith (the “Merger Agreement”),
pursuant to which Merger Sub will be merged with and into the Company, and the
Company shall be the surviving corporation following the merger (the “Merger”);
 
WHEREAS, as of the date hereof, the Company Principal Stockholder is a
Beneficial Owner (as defined below) of the Subject Shares (as defined
below); and
 
WHEREAS, in order to induce Parent to enter into the Merger Agreement, the
Company Principal Stockholder has agreed to enter into this Agreement.
 
NOW, THEREFORE, in consideration of the foregoing premises and of the covenants
and agreements set forth herein and in the Merger Agreement, and intending to be
legally bound hereby, the parties agree as follows:
 
1. Definitions.
 
(a) “Beneficially Own” or “Beneficial Owner” with respect to any securities
means having “beneficial ownership” as determined pursuant to Rule 13d-3 under
the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
 
(b) “Company Capital Stock” means shares of common stock, par value $0.001 per
share, of the Company.
 
(c) “Company Options and Other Rights” means options, warrants and other rights
to acquire, directly or indirectly, shares of Company Capital Stock.
 
(d) “Expiration Date” means the earlier to occur of (i) the Effective Time (as
defined in the Merger Agreement) or (ii) the date on which the Merger Agreement
is terminated pursuant to its terms.
 
(e) “Subject Shares” means (i) all shares of Company Capital Stock Beneficially
Owned by the Company Principal Stockholder as of the date of this Agreement and
(ii) all additional shares of Company Capital Stock of which the Company
Principal Stockholder acquires Beneficial Ownership during the period from the
date of this Agreement through the Expiration Date.
 
2. Voting.
 
(a) The Company Principal Stockholder hereby reresents that it is an “accredited
investor” as such term is defined within Rule 501 of Regulation D promulgated
under the Securities Act of 1933, as amended (the “Securities Act”);
 

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(b) The Company Principal Stockholder hereby agrees that, prior to the
Expiration Date, at any meeting of the stockholders of the Company, however
called, and in any written action by consent of stockholders of the Company,
unless otherwise directed in writing by Parent, the Company Principal
Stockholder shall cause to be counted as present thereat for purposes of
establishing a quorum and, subject only to Parent’s compliance with applicable
securities laws, shall vote, or cause to be voted, any and all Subject
Shares Beneficially Owned by the Company Principal Stockholder as of the record
date of such meeting or written consent:
 
(i) for the execution and delivery by the Company of the Merger Agreement and
the adoption and approval of the Merger Agreement and the terms thereof, in
favor of each of the other actions contemplated by the Merger Agreement and in
favor of any action in furtherance of any of the foregoing;
 
(ii) against any action or agreement that would result in a breach of any
representation, warranty, covenant or obligation of the Company in the Merger
Agreement; and
 
(iii) against the following actions (other than the Merger and the transactions
contemplated by the Merger Agreement): (A) any extraordinary corporate
transaction, such as a merger, consolidation or other business combination
involving the Company or any subsidiary of the Company; (B) any sale, lease,
sublease, license, sublicense or transfer of a material portion of the rights or
other assets of the Company or any subsidiary of the Company; (C) any
reorganization, recapitalization, dissolution or liquidation of the Company or
any subsidiary of the Company; (D) any change in the individuals who serve as
members of the board of directors of the Company; (E) any amendment to the
Company’s certificate of incorporation or bylaws; (F) any material change in the
capitalization of the Company or the Company’s corporate structure; and (G) any
other action which is intended, or could reasonably be expected, to impede,
interfere with, delay, postpone, discourage or adversely affect the Merger or
any of the other transactions contemplated by the Merger Agreement or this
Agreement.
 
(c) No provision contained in this Agreement shall prohibit the Company
Principal Stockholder from voting in his capacity as a director of the Company
in any manner whatsoever.
 
(d) Prior to the Expiration Date, the Company Principal Stockholder shall not
enter into any other agreement or understanding with any Person requiring him to
vote in his capacity as a stockholder or give instructions in any manner
inconsistent with clause “(i),” clause “(ii)” or clause “(iii)” of this
Section 2(a).
 
(e) The Company Principal Stockholder hereby waives and agrees not to exercise
any applicable “appraisal rights” under the Delaware General Corporation Law
with respect to the Subject Shares in connection with the Merger and the Merger
Agreement.
 
3. Written Consent of Stockholders.  Upon the U.S. Securities and Exchange
Commission’s declaration of the effectiveness of the Registration Statement on
Form S-4 filed by Parent in connection with the Merger, if at all, the Company
Principal Stockholder shall deliver to Parent a written consent in favor of the
adoption of the Merger Agreement and the Merger.
 
4. Representations and Warranties of Stockholder.  The Company Principal
Stockholder represents and warrants to Parent as follows:
 
(a) As of the date of this Agreement and at all times through the Expiration
Date:

2

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(i) He is the Beneficial Owner (free and clear of any encumbrances or
restrictions) of the outstanding shares of Company Capital Stock set forth under
the heading “Shares of Company Capital Stock Beneficially Owned”, on the
signature page hereof;
 
(ii) He is the Beneficial Owner (free and clear of any encumbrances or
restrictions) of the outstanding Company Options and Other Rights set forth
under the heading “Company Options and Other Rights Beneficially Owned” on the
signature page hereof; and
 
(iii) He does not directly or indirectly Beneficially Own any shares of Company
Capital Stock or Company Options or Other Rights or other securities of the
Company, other than the shares of Company Capital Stock and Company Options and
Other Rights set forth on the signature page hereof.
 
(b) The Company Principal Stockholder has the legal capacity, power and
authority to enter into and perform all of its obligations under this Agreement.
This Agreement has been duly executed and delivered by the Company Principal
Stockholder, and upon its execution and delivery by Parent, will constitute a
legal, valid and binding obligation of the Company Principal Stockholder,
enforceable against him in accordance with its terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting or relating to creditors rights generally, and the
availability of injunctive relief and other equitable remedies.
 
(c) The execution, delivery and performance by the Company Principal Stockholder
of this Agreement will not (i) conflict with, require a consent, waiver or
approval under, or result in a breach of or default under, any of the terms of
any contract, commitment or other obligation (written or oral) to which such
Company Principal Stockholder is a party or by which any of his assets may be
bound.
 
(d) No filing with, and no permit, authorization, consent or approval of, any
state or federal public body or authority is necessary for the execution of this
Agreement by the Company Principal Stockholder and the consummation by Company
Principal Stockholder of the transactions contemplated hereby.

5. Covenants of Stockholder.  The Company Principal Stockholder covenants and
agrees for the benefit of Parent that, until the Expiration Date, he shall not:
 
(a) sell, transfer, pledge, hypothecate, encumber, assign, tender or otherwise
dispose of, or enter into any contract, option or other arrangement or
understanding with respect to the sale, transfer, pledge, hypothecation,
encumbrance, assignment, tender or other disposition of, (i) any Subject Shares
or any interest therein, or (ii) any Company Options and Other Rights or any
interest therein; provided, however, that Stockholder may convert, exercise or
exchange Company Options and Other Rights into or for shares of Company Capital
Stock in which event such shares of Capital Stock shall become and be deemed
Subject Shares subject to all the terms and conditions of this Agreement;
 
(b) acquire any shares of the stock of Parent except pursuant to existing
Company Options and Other Rights or unless such shares shall become subject to
the terms of this Agreement;
 
(c) grant any powers of attorney or proxies or consents in respect of any of the
Subject Shares, deposit any of such Subject Shares into a voting trust, or enter
into a voting agreement with respect to any of such Subject Shares; or
 
3

--------------------------------------------------------------------------------

 
(d) take any other action with respect to the Subject Shares that would in any
way restrict, limit or interfere with the performance of Stockholder’s
obligations hereunder or the transactions contemplated hereby and the Merger
Agreement.
 
6. Adjustments; Additional Shares.  In the event (a) of any stock dividend,
stock split, merger, recapitalization, reclassification, combination, exchange
of shares or the like of the capital stock of the Company on, of or affecting
the Subject Shares, or (b) that Stockholder shall become the Beneficial Owner of
any additional shares of Company Capital Stock or other securities entitling the
holder thereof to vote or give consent with respect to the matters set forth in
Section 2(a), then the terms of this Agreement shall apply to the shares of
Company Capital Stock or other instruments or documents held by Stockholder
immediately following the effectiveness of the events described in clause (a) or
Stockholder becoming the Beneficial Owner thereof as described in clause (b), as
though, in either case, they were Subject Shares hereunder. The foregoing shall
apply (mutatis mutandis) to the Parent Shares and Section 3 of this Agreement.
 
7. Amendments and Waivers.  Any provision of this Agreement may be amended or
waived if, and only if, such amendment or waiver is in writing and is signed, in
the case of an amendment, by each party to this Agreement, or in the case of a
waiver, by the party against whom the waiver is to be effective. No failure or
delay by any party in exercising any right or privilege hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege. To the maximum extent permitted by law, (a) no waiver that may be
given by a party shall be applicable except in the specific instance for which
it was given and (b) no notice to or demand on one party shall be deemed to be a
waiver of any obligation of such party or the right of the party giving such
notice or demand to take further action without notice or demand.
 
8. Assignment.  This Agreement may not be assigned by any party hereto without
the prior written consent of the other parties. Subject to the foregoing, all of
the terms and provisions of this Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective executors, heirs, personal
representatives, successors and assigns.
 
9. Entire Agreement.  This Agreement and the documents, instruments and other
agreements specifically referred to herein or delivered pursuant hereto, set
forth the entire understanding of the parties with respect to the subject matter
hereof. Any and all previous agreements and understandings between or among the
parties regarding the subject matter hereof, whether written or oral, are
superseded by this Agreement.
 
10. Notices.  Any notice, request, demand, waiver, consent, approval or other
communication which is required or permitted hereunder shall be in writing and
shall be deemed given (a) on the date established by the sender as having been
delivered personally; (b) on the date delivered by a private courier as
established by the sender by evidence obtained from the courier; (c) on the date
sent by facsimile, with confirmation of transmission, if sent during normal
business hours of the recipient, if not, then on the next business day; or
(d) on the fifth day after the date mailed, by certified or registered mail,
return receipt requested, postage prepaid. Such communications, to be valid,
must be addressed as follows:
 
If to Parent, to:
 
GCA I Acquisition Corp. 
115 East 57th Street, Suite 1006
New York, New York 10022
Attn: Michael M. Membrado
 
Facsimile: 646-486-9771

4

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With a required copy to:
 
M.M. Membrado, PLLC
115 East 57th Street, Suite 1006
New York, New York 10022
Attn: Michael M. Membrado

Facsimile: 646-486-9771
 
If to any of the Company Principal Stockholder:
 
Robert A. Walker
c/o Bixby Energy Systems, Inc.
6893 139th Lane NW
Ramsey, MN 55303

Facsimile: 763-428-7903
 
With a required copy to:
 
Davisson & Associates, PA
3649 Brunswick Avenue North
Minneapolis, MN 55422
Attn: Peder Davisson, Esq.

Facsimile: 763-535-4090
 
or to such other address or to the attention of such person or persons as the
recipient party has specified by prior written notice to the sending party (or
in the case of counsel, to such other readily ascertainable business address as
such counsel may hereafter maintain). If more than one method for sending notice
as set forth above is used, the earliest notice date established as set forth
above shall control.
 
11.  Captions.   All captions contained in this Agreement are for convenience of
reference only, do not form a part of this Agreement and shall not affect in any
way the meaning or interpretation of this Agreement.
 
12.  Severability; Enforcement.  Any provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall be ineffective to the extent
of such invalidity or unenforceability without invalidating or rendering
unenforceable the remaining provisions hereof, and any such invalidity or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
 
13.  Specific Performance.  The Company Principal Stockholder acknowledges that
the agreements contained in this Agreement are an integral part of the
transactions contemplated by the Merger Agreement, and that, without these
agreements, Parent would not enter into the Merger Agreement, and acknowledges
that damages would be an inadequate remedy for any breach by the Company
Principal Stockholder of the provisions of this Agreement. Accordingly, the
Company Principal Stockholder agrees that his obligations hereunder shall be
specifically enforceable and he shall not take any action to impede the other
from seeking to enforce such right of specific performance.
 
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14.  Consent to Jurisdiction.  Each party irrevocably submits to the exclusive
jurisdiction of (a) New York County, New York, and (b) the United States
District Court for the Southern District of New York, for the purposes of any
action, suit or proceeding arising out of this Agreement or any transaction
contemplated hereby. Each party agrees to commence any such action, suit or
proceeding either in the United States District Court for the Southern District
of New York or if such action, suit or proceeding may not be brought in such
court for jurisdictional reasons, in the Supreme Court sitting in New York
County (including its Appellate Division). Each party further agrees that
service of any process, summons, notice or document by U.S. registered mail to
such party’s respective address set forth above shall be effective service of
process for any action, suit or proceeding in New York with respect to any
matters to which it has submitted to jurisdiction in this Section 14. Each party
irrevocably and unconditionally waives any objection to the laying of venue of
any action, suit or proceeding arising out of this Agreement or the transactions
contemplated hereby in (i) the United States District Court for the Southern
District of New York, or (ii) the Supreme Court sitting in New York County
(including its Appellate Division), and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such action, suit or proceeding brought in any such court has been brought
in an inconvenient forum. EACH PARTY HEREBY IRREVOCABLY WAIVES ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF SUCH PARTY IN THE
NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.
 
15.  Governing Law.  This Agreement shall be governed by and interpreted and
enforced in accordance with the laws of the State of New York, without giving
effect to any choice of law or conflict of laws rules or provisions (whether of
the State of New York or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of New York,
except to the extent that the voting of the Subject Shares is subject to the
corporate law of the State of Delaware.
 
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto
all as of the day and year first above written.

GCA I ACQUISITION CORP.

By:
 
Name:  Michael M. Membrado
Title:    President and Chief Executive Officer

COMPANY PRINCIPAL STOCKHOLDER: 

 
ROBERT A. WALKER

Number of shares of Company Common Stock: ________________
 
Number of shares of Company Series _ Preferred Stock: ________________

Number of Company Stock Options and/or Warrants: __________________
 
6

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EXHIBIT B

CERTIFICATE OF MERGER
OF
BIXBY ENERGY SYSTEMS, INC.
AND
BIXBY ENERGY ACQUISITION CORP.
 
Pursuant to Section 251 of the General Corporation Law of the State of Delaware
(the “DGCL”), Bixby Energy Acquisition Corp., a Delaware corporation, DOES
HEREBY CERTIFY that:
 
1. The name and jurisdiction of incorporation of each of the constituent
corporations to the merger (collectively, the “Constituent Corporations”) are as
follows:

Name
 
Jurisdiction of Incorporation
Bixby Energy Systems, Inc.
 
Delaware
Bixby Energy Acquisition Corp.
 
Delaware

 
2. An Agreement and Plan of Merger, dated as of May 7, 2008 (the “Agreement and
Plan of Merger”), by and among GCA I Acquisition Corp., a Delaware corporation,
and each of the Constituent Corporations, providing for the merger of Bixby
Energy Acquisition Corp, with and into Bixby Energy Systems, Inc. has been
approved, adopted, certified, executed and acknowledged by each of the
Constituent Corporations in accordance with the requirements of Sections 228 and
251 of the DGCL.
 
3. The name of the corporation surviving the merger is Bixby Energy Systems,
Inc., a Delaware corporation (the “Surviving Corporation”).
 
4. The Certificate of Incorporation of Bixby Energy Systems, Inc., as now in
force and effect, shall continue to be the Certificate of Incorporation of the
Surviving Corporation until amended and changed pursuant to the provisions of
the DGCL.
 
5. The Bylaws of Bixby Energy Systems, Inc., as now in full force and effect,
shall continue to be the Bylaws of the Surviving Corporation until amended and
changed pursuant to the provisions of the DGCL.
 
6. The officers and directors of Bixby Energy Systems, Inc. immediately prior to
the filing of this Certificate of Merger with the Secretary of State of the
State of Delaware shall remain the officers and directors of the Surviving
Corporation, each to hold office until their respective death, permanent
disability, resignation or removal or until their respective successors are duly
elected and qualified, all in accordance with the Certificate of Incorporation
and Bylaws of the Surviving Corporation and the DGCL.
 
7. The executed Agreement and Plan of Merger is on file at an office of the
Surviving Corporation, the address of which is as follows:

Bixby Energy Systems, Inc.
6893 139th Lane N.W.
Ramsey, MN 55303
 
8. A copy of the Agreement and Plan of Merger will be furnished by the Surviving
Corporation, on request and without cost, to any stockholder of either
Constituent Corporation.
 

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9. This Certificate of Merger, and the merger provided for herein, shall be
effective immediately upon its filing with the Secretary of State of the State
of Delaware.
 
IN WITNESS WHEREOF, this Certificate of Merger has been duly executed on
________ __, 200_.
 
BIXBY ENERGY SYSTEMS, INC.
   
By
 
Name:          Robert Walker
Title:   President & ChiefExecutive Officer

 

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EXHIBIT C
 
CERTIFICATE OF INCORPORATION

OF
BIXBY ENERGY ACQUISITION CORP.
 
(Pursuant to Section 102 of the Delaware General Corporation Law)  

1. The name of the corporation is Bixby Energy Acquisition Corp. (the
“Corporation”).

2. The address of its registered office in the State of Delaware is 160
Greentree Drive, Suite 101, Dover, Delaware 19904, County of Kent. The name of
its registered agent at such address is the National Registered Agents, Inc..

3. The nature of the business or purposes to be conducted or promoted is to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware (the “DGCL”).

4. The Corporation is to have perpetual existence.

5. The total number of shares of capital stock which the Corporation shall have
authority to issue is: two million (2,000,000). These shares shall be divided
into two classes with 1,000,000 shares designated as common stock at $.0001 par
value (the “Common Stock”) and 1,000,000 shares designated as preferred stock at
$.0001 par value (the “Preferred Stock”).

The Preferred Stock of the Corporation shall be issued by the Board of Directors
of the Corporation in one or more classes or one or more series within any class
and such classes or series shall have such voting powers, full or limited, or no
voting powers, and such designations, preferences, limitations or restrictions
as the Board of Directors of the Corporation may determine, from time to time.

Holders of shares of Common Stock shall be entitled to cast one vote for each
share held at all stockholders’ meetings for all purposes, including the
election of directors. The Common Stock does not have cumulative voting rights.

No holder of shares of stock of any class shall be entitled as a matter of right
to subscribe for or purchase or receive any part of any new or additional issue
of shares of stock of any class, or of securities convertible into shares of
stock of any class, whether now hereafter authorized or whether issued for
money, for consideration other than money, or by way of dividend.

6.   The Board of Directors shall have the power to adopt, amend or repeal the
by-laws of the Corporation.  
 
7.   No director shall be personally liable to the Corporation or its
stockholders for monetary damages for any breach of fiduciary duty by such
director as a director. Notwithstanding the foregoing sentence, a director shall
be liable to the extent provided by applicable law, (i) for breach of the
director’s duty of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) pursuant to Section 174 of the DGCL or (iv) for
any transaction from which the director derived an improper personal benefit. If
the DGCL hereafter is amended to authorize the further elimination or limitation
of the liability of directors, then the liability of a director of the
Corporation, in addition to the limitation on personal liability provided
herein, shall be limited to the fullest extent permitted by the amended DGCL. No
amendment to or repeal of this Article 7 shall apply to or have any effect on
the liability or alleged liability of any director of the Corporation for or
with respect to any acts or omissions of such director occurring prior to such
amendment.

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8.   The Corporation shall indemnify, to the fullest extent permitted by Section
145 of the DGCL, as amended from time to time, each person that such section
grants the Corporation the power to indemnify.

9. The name and mailing address of the incorporator is Michael M. Membrado, c/o
M.M. Membrado, PLLC, 115 East 57th Street, Tenth Floor, New York, New York
10022.

IN WITNESS WHEREOF, the undersigned, being the incorporator hereinbefore named,
has executed, signed and acknowledged this certificate of incorporation this
23rd day of April, 2008.

 
Michael M. Membrado, Incorporator

 

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EXHIBIT D

BY-LAWS

OF

BIXBY ENERGY ACQUISITION CORP.
~ A Delaware corporation ~

ARTICLE I

STOCKHOLDERS
 
Section 1.  Certificates Representing Stock. (a) Certificates representing stock
in the corporation shall be signed by, or in the name of, the corporation by the
Chairman or Vice-Chairman of the Board of Directors, if any, or by the President
or a Vice-President and by the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary of the corporation. Any or all the
signatures on any such certificate may be a facsimile. In case any officer,
transfer agent, or registrar who has signed or whose facsimile signature has
been placed upon a certificate shall have ceased to be such officer, transfer
agent, or registrar before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer, transfer agent, or
registrar at the date of issue.

(b)   Whenever the corporation shall be authorized to issue more than one class
of stock or more than one series of any class of stock, and whenever the
corporation shall issue any shares of its stock as partly paid stock, the
certificates representing shares of any such class or series or of any such
partly paid stock shall set forth thereon the statements prescribed by the
General Corporation Law. Any restrictions on the transfer or registration of
transfer of any shares of stock of any class or series shall be noted
conspicuously on the certificate representing such shares.

(c)   The corporation may issue a new certificate of stock or uncertificated
shares in place of any certificate theretofore issued by it, alleged to have
been lost, stolen or destroyed, and the Board of Directors may require the owner
of the lost, stolen or destroyed certificate, or his legal representative, to
give the Corporation a bond sufficient to indemnify the corporation against any
claim that may be made against it on account of the alleged loss, theft or
destruction of any such certificate or the issuance of any such new certificate
or uncertificated shares.
 
Section 2.  Uncertificated Shares. Subject to any conditions imposed by the
General Corporation Law, the Board of Directors of the corporation may provide
by resolution or resolutions that some or all of any or all classes or series of
the stock of the corporation shall be uncertificated shares. Within a reasonable
time after the issuance or transfer of any uncertificated shares, the
corporation shall send to the registered owner thereof any written notice
prescribed by the General Corporation Law.
 
Section 3.  Fractional Share Interests. The corporation may, but shall not be
required to, issue fractions of a share. If the Corporation does not issue
fractions of a share, it shall (1) arrange for the disposition of fractional
interests by those entitled thereto, (2) pay in cash the fair value of fractions
of a share as of the time when those entitled to receive such fractions are
determined, or (3) issue scrip or warrants in registered form (either
represented by a certificate or uncertificated) or bearer form (represented by a
certificate) which shall entitle the holder to receive a full share upon the
surrender of such scrip or warrants aggregating a full share. A certificate for
a fractional share or an uncertificated fractional share shall, but scrip or
warrants shall not unless otherwise provided therein, entitle the holder to
exercise voting rights, to receive dividends thereon, and to participate in any
of the assets of the Corporation in the event of liquidation. The Board of
Directors may cause scrip or warrants to be issued subject to the conditions
that they shall become void if not exchanged for certificates representing the
full shares or uncertificated full shares before a specified date, or subject to
the conditions that the shares for which scrip or warrants are exchangeable may
be sold by the corporation and the proceeds thereof distributed to the holders
of scrip or warrants, or subject to any other conditions which the Board of
Directors may impose.

1

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Section 4.  Stock Transfers. Upon compliance with provisions restricting the
transfer or registration of transfer of shares of stock, if any, transfers or
registration of transfers of shares of stock of the corporation shall be made
only on the stock ledger of the corporation by the registered holder thereof, or
by his attorney thereunto authorized by power of attorney duly executed and
filed with the Secretary of the corporation or with a transfer agent or a
registrar, if any, and, in the case of shares represented by certificates, on
surrender of the certificate or certificates for such shares of stock properly
endorsed and the payment of all taxes due thereon.
 
Section 5.  Record Date For Stockholders. In order that the corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, the Board of Directors may fix a record
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted by the Board of Directors, and which record
date shall not be more than sixty nor less than ten days before the date of such
meeting. If no record date is fixed by the Board of Directors, the record date
for determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the day
on which notice is given, or, if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
In order that the corporation may determine the stockholders entitled to consent
to corporate action in writing without a meeting, the Board of Directors may fix
a record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of Directors, and
which date shall not be more than ten days after the date upon which the
resolution fixing the record date is adopted by the Board of Directors. If no
record date has been fixed by the Board of Directors, the record date for
determining the stockholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the Board of Directors is required by
the General Corporation Law, shall be the first date on which a signed written
consent setting forth the action taken or proposed to be taken is delivered to
the corporation by delivery to its registered office in the State of Delaware,
its principal place of business, or an officer or agent of the corporation
having custody of the book in which proceedings of meeting of stockholders are
recorded. Delivery made to the corporation’s registered office shall be by hand
or by certified or registered mail, return receipt requested. If no record date
has been fixed by the Board of Directors and prior action by the Board of
Directors is required by the General Corporation Law, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting shall be at the close of business on the day on which the
Board of Directors adopts the resolution taking such prior action. In order that
the corporation may determine the stockholders entitled to receive payment of
any dividend or other distribution or allotment of any rights or the
stockholders entitled to exercise any rights in respect of any change,
conversion, or exchange of stock, or for the purpose of any other lawful action,
the Board of Directors may fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted,
and which record date shall be not more than sixty days prior to such action. If
no record date is fixed, the record date for determining stockholders for any
such purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.
 
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Section 6.  Meaning of Certain Terms. As used herein in respect of the right to
notice of a meeting of stockholders or a waiver thereof or to participate or
vote thereat or to consent or dissent in writing in lieu of meeting, as the case
may be, the term “share” or “shares” or “share of stock” or “shares of stock” or
“stockholder” or “stockholders” refers to an outstanding share or shares of
stock and to a holder or holders of record of outstanding shares of stock when
the corporation is authorized to issue only one class of shares of stock, and
said reference is also intended to include any outstanding share or shares of
stock and any holder or holders of record of outstanding shares of stock of any
class upon which or upon whom the certificate of incorporation confers such
rights where there are two or more classes or series of shares of stock or upon
which or upon whom the General Corporation Law confers such rights
notwithstanding that the certificate of incorporation may provide for more than
one class or series of shares of stock, one or more of which are limited or
denied such rights thereunder; provided, however, that no such right shall vest
in the event of an increase or a decrease in the authorized number of shares of
stock of any class or series which is otherwise denied voting rights under the
provisions of the certificate of incorporation, except as any provision of law
may otherwise require.

Section 7.  Stockholder Meetings .

Time. The annual meeting shall be held on the date and at the time fixed, from
time to time, by the directors, provided that the first annual meeting shall be
held on a date within thirteen months after the organization of the corporation,
and each successive annual meeting shall be held on a date within thirteen
months after the date of the preceding annual meeting. A special meeting shall
be held on the date and at the time fixed by the directors.

Place. Annual meetings and special meetings shall be held at such place, within
or without the State of Delaware, as the directors may, from time to time, fix.
Whenever the directors shall fail to fix such place, the meeting shall be held
at the registered office of the corporation in the State of Delaware.

Call. Annual meetings and special meetings may be called by the directors or by
any officer instructed by the directors to call the meeting.

Notice or Waiver of Notice. Written notice of all meetings shall be given,
stating the place, date, hour of the meeting and stating the place within the
city or other municipality or community at which the list of stockholders of the
corporation may be examined. The notice of an annual meeting shall state that
the meeting is called for the election of directors and for the transaction of
other business which may properly come before the meeting, and shall (if any
other action which could be taken at a special meeting is to be taken at such
annual meeting) state the purpose or purposes. The notice of a special meeting
shall in all instances state the purpose or purposes for which the meeting is
called. The notice of any meeting shall also include, or be accompanied by, any
additional statements, information, or documents prescribed by the General
Corporation Law. Except as otherwise provided by the General Corporation Law, a
copy of the notice of any meeting shall be given, personally or by mail, not
less than ten days nor more than sixty days before the date of the meeting,
unless the lapse of the prescribed period of time shall have been waived, and
directed to each stockholder at his record address or at such other address
which he may have furnished by request in writing to the Secretary of the
corporation. Notice by mail shall be deemed to be given when deposited, with
postage thereon prepaid, in the United States Mail. If a meeting is adjourned to
another time, not more than thirty days hence, and/or place is made at the
meeting, it shall not be necessary to give notice of the adjourned meeting
unless the directors, after adjournment, fix a new record date for the adjourned
meeting. Notice need not be given to any stockholder who submits a written
waiver of notice signed by him before or after the time stated therein.
Attendance of a stockholder at a meeting of stockholders shall constitute a
waiver of notice of such meeting, except when the stockholder attends the
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, not the purpose of, any
regular or special meeting of the stockholders need be specified in any written
waiver of notice.

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Stockholder List. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders, arranged in alphabetical
order, and showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior to the meeting,
either at a place within the city or other municipality or community where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present. The stock ledger shall be the only evidence as to who are the
stockholders entitled to examine the stock ledger, the list required by this
section or the books of the corporation, or to vote at any meeting of
stockholders.

Conduct of Meeting. Meetings of the stockholders shall be presided over by one
of the following officers in the order of seniority and if present and
acting-the Chairman of the Board, if any, the Vice-Chairman of the Board, if
any, the President, a Vice-President, or, if none of the foregoing is in office
and present and acting, by a chairman to be chosen by the stockholders. The
Secretary of the corporation, or in his absence, an Assistant Secretary, shall
act as secretary of every meeting, but if neither the Secretary nor an Assistant
Secretary is present the Chairman of the meeting shall appoint a secretary of
the meeting.

Proxy Representation. Every stockholder may authorize another person or persons
to act for him by proxy in all matters in which a stockholder is entitled to
participate, whether by waiving notice of any meeting, voting or participating
at a meeting, or expressing consent or dissent without a meeting. Every proxy
must be signed by the stockholder or by his attorney-in-fact. No proxy shall be
voted or acted upon after three years from its date unless such proxy provides
for a longer period. A duly executed proxy shall be irrevocable if it states
that is irrevocable and, if, and only as long as it is coupled with an interest
sufficient in law to support an irrevocable power. A proxy may be made
irrevocable regardless of whether the interest with which it is coupled is an
interest in the stock itself or an interest in the corporation generally.

Inspectors. The directors, in advance of any meeting, may, but need not, appoint
one or more inspectors of election to act at the meeting or any adjournment
thereof. If any inspector or inspectors are not appointed, the person presiding
at the meeting may, but need not appoint one or more inspectors. In case any
person who may be appointed as an inspector fails to appear or act, the vacancy
may be filled by appointment made by the directors in advance of the meeting or
at the meeting by the person presiding thereat. Each inspector, if any, before
entering upon the discharge of his duties, shall take and sign an oath
faithfully to execute the duties of inspectors at such meeting with strict
impartiality and according to the best of his ability. The inspectors, if any,
shall determine the number of shares of stock outstanding and the voting power
of each, the shares of stock represented at the meeting, the existence of a
quorum, the validity and effect of proxies, and shall receive votes, ballots, or
consents, hear and determine all challenges and questions arising in connection
with the right to vote, count and tabulate all votes, ballots, or consents,
determine the result, and do such acts as are proper to conduct the election or
vote with fairness to all stockholders. Upon request of the person presiding at
the meeting, the inspector or inspectors, if any, shall make a report in writing
of any challenge, question, or matter determined by him or them and execute a
certificate of any fact found by him or them. Except as otherwise required by
subsection (e) of Section 231 of the General Corporation Law, the provisions of
that Section shall not apply to the corporation.
 
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Quorum. The holders of a majority of the outstanding shares of stock shall
constitute a quorum at a meeting of stockholders for the transaction of any
business. The stockholders presents may adjourn the meeting despite the absence
of a quorum.

Voting. Each share of stock shall entitle the holder thereof to one vote.
Directors shall be elected by a plurality of the votes of the shares present in
person or represented by proxy at the meeting and entitled to vote on the
election of directors. Any other action shall be authorized by a majority of the
votes cast except where the General Corporation Law prescribes a different
percentage of votes and/or a different exercise of voting power, and except as
may be otherwise prescribed by the provisions of the certificate of
incorporation and these Bylaws. In the election of directors, and for any other
action, voting need not be by ballot.

Section 8.  Stockholder Action Without Meetings. Any action required by the
General Corporation Law to be taken at any annual or special meeting of
stockholders, or any action which may be taken at any annual or special meeting
of stockholders, may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted. Prompt notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given to those stockholders who
have not consented in writing. Action taken pursuant to this paragraph shall be
subject to the provisions of Section 228 of the General Corporation Law.

ARTICLE II

DIRECTORS

Section 1.  Functions and Definition. The business and affairs of the
corporation shall be managed by or under the direction of the Board of Directors
of the corporation. The Board of Directors shall have the authority to fix the
compensation of the members thereof. The use of the phrase “whole board” herein
refers to the total number of directors which the corporation would have if
there were no vacancies.

Section 2.  Qualifications and Number. A director need not be a stockholder, a
citizen of the United States, or a resident of the State of Delaware. The
initial Board of Directors shall consist of one (1) person. Thereafter, the
number of directors may be increased or decreased from time to time by action of
the stockholders or of the directors, or, if the number is not fixed, the number
shall be one (1).
 
Section 3.  Election and Term. The first Board of Directors, unless the members
thereof shall have been named in the certificate of incorporation, shall be
elected by the incorporator or incorporators and shall hold office until first
annual meeting of stockholders and until their successors are elected and
qualified or until their earlier resignation or removal. Any director may resign
at any time upon written notice to the corporation. Thereafter, directors who
are elected at an annual meeting of stockholders, and directors who are elected
in the interim to fill vacancies and newly created directorships, shall hold
office until the next annual meeting resignation or removal. Except as the
General Corporation Law may otherwise require, in the interim between annual
meetings of stockholders or of special meetings of stockholders called for the
election of directors and/or for the removal of one or more directors and for
the filling of any vacancy in that connection, newly created directorships and
any vacancies in the Board of Directors, including unfilled vacancies resulting
from the removal of directors for cause or without cause, may be filled by the
vote of a majority of the remaining directors then in office, although less than
a quorum, or by the sole remaining director.  
  
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Section 4.  MEETINGS.

TIME. Meetings shall be held at such time as the Board shall fix, except that
the first meeting of a newly elected Board shall be held as soon after its
election as the directors may conveniently assemble.

PLACE. Meetings shall be held at such place within or without the State of
Delaware as shall be fixed by the Board.

CALL. No call shall be required for regular meetings for which the time and
place have been fixed. Special meetings may be called by or at the direction of
the Chairman of the Board, if any, the Vice-Chairman of the Board, if any, of
the President, or of a majority of the directors in office.

NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. No notice shall be required for regular
meetings for which the time and place have been fixed. Written, oral, or any
other mode of notice of the time and place shall be given for special meetings
in sufficient time for the convenient assembly of the directors thereat. Notice
need not be given to any director or to any member of a committee of directors
who submits a written waiver of notice signed by him before or after the time
stated therein. Attendance of any such person at a meeting shall constitute a
waiver of notice of such meeting, except when he attends a meeting for the
express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the directors need be specified in any written
waiver of notice.

QUORUM AND ACTION. A majority of the whole Board shall constitute a quorum
except when a vacancy or vacancies prevents such majority, whereupon a majority
of the directors in office shall constitute a quorum, provided, that such
majority shall constitute at least one-third of the whole Board. A majority of
the directors present, whether or not a quorum is present, may adjourn a meeting
to another time and place. Except as herein otherwise provided, and except as
otherwise provided by the General Corporation Law, the vote of the majority of
the directors present at a meeting at which a quorum is present shall be the act
of the Board. The quorum and voting provisions herein stated shall not be
construed as conflicting with any provisions of the General Corporation Law and
these Bylaws which govern a meeting of the directors held to fill vacancies and
newly created directorships in the Board or action of disinterested directors.

Any member or members of the Board of Directors or of any committee designated
by the Board, may participate in a meeting of the Board, or any such committee,
as the case may be, by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other.

CHAIRMAN OF THE MEETING. The Chairman of the Board, if any and if present and
acting, shall preside at all meetings. Otherwise, the Vice-Chairman of the
Board, if any and if present and acting, or the President, if present and
acting, or any other director chosen by the Board, shall preside.

Section 5.  REMOVAL OF DIRECTORS. Except as may otherwise be provided by the
General Corporation Law, any director or the entire Board of Directors may be
removed, with or without cause, by the holders of a majority of the shares then
entitled to vote at an election of directors.

Section 6.  COMMITTEES . The Board of Directors may, by resolution passed by a
majority of the whole Board, designate one or more committees, each committee to
consist of one or more of the directors of the corporation. The Board may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. In
the absence or disqualification of any member of any such committee or
committees, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the Board, shall have and
may exercise the powers and authority of the Board of Directors in the
management of the business and affairs of the corporation with the exception of
any authority the delegation of which is prohibited by Section 141 of the
General Corporation Law, and may authorize the seal of the corporation to be
affixed to all papers which may require it.

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Section 7.  WRITTEN ACTION. Any action required or permitted to be taken at any
meeting of the Board of Directors or any committee thereof may be taken without
a meeting if all members of the Board or committee, as the case may be, consent
thereto in writing, and the writing or writings are filed with the minutes of
proceedings of the Board or committee.

Section 8.   BOARD OF ADVISORS.   The Board of Directors, in its discretion, may
establish a Board of Advisors, consisting of individuals who may or may not be
stockholders or directors of the Corporation. The purpose of the Board of
Advisors would be to advise the officers and directors of the Corporation with
respect to such matters as such officers and directors shall choose, and any
other matters which the members of such Board of Advisors deem appropriate in
furtherance of the best interest of the Corporation. The Board of Advisors shall
meet on such basis as the members thereof may determine. The Board of Directors
may eliminate the Board of Advisors at any time. No member of the Board of
Advisors, nor the Board of Advisors itself, shall have any authority of the
Board of Directors or any decision-making power and shall be merely advisory in
nature. Unless the Board of Directors determines another method of appointment,
the President shall recommend possible members of the Board of Advisors to the
Board of Directors, who shall approve such appointments or reject them.
 
ARTICLE III

OFFICERS

The officers of the corporation shall consist of a President, a Secretary, a
Treasurer, and, if deemed necessary, expedient, or desirable by the Board of
Directors, a Chairman of the Board, a Vice-Chairman of the Board, an Executive
Vice-President, one or more other Vice-Presidents, one or more Assistant
Secretaries, one or more Assistant Treasurers, and such other officers with such
title as the resolution of the Board of Directors choosing them shall designate.
Except as may otherwise be provided in the resolution of the Board of Directors
choosing him, no officer other than the Chairman or Vice-Chairman of the Board,
if any, need be a director. Any number of offices may be held by the same
person, as the directors may determine.

Unless otherwise provided in the resolution choosing him, each officer shall be
chosen for a term which shall continue until the meeting of the Board of
Directors following the next annual meeting of stockholders and until his
successor shall have been chosen and qualified.

All officers of the corporation shall have such authority and perform such
duties in the management and operation of the corporation as shall be prescribed
in the resolutions of the Board of Directors designating and choosing such
officers and prescribing their authority and duties, and shall have such
additional authority and duties as are incident to their office except to the
extent that such resolutions may be inconsistent therewith. The Secretary or an
Assistant Secretary of the corporation shall record all of the proceedings of
all meetings and actions in writing of stockholders, directors, and committees
of directors, and shall exercise such additional authority and perform such
additional duties as the Board shall assign to him. Any officer may be removed,
with or without cause, by the Board of Directors. Any vacancy in any office may
be filled by the Board of Directors.

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ARTICLE IV

CORPORATE SEAL

The corporate seal shall be in such form as the Board of Directors shall
prescribe.

ARTICLE V

FISCAL YEAR
  
The fiscal year of the corporation shall be fixed, and shall be subject to
change, by the Board of Directors.

ARTICLE VI

AMENDMENT

These Bylaws may be adopted, amended or repealed at any time by the unanimous
written consent of the Board of Directors.
 
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EXHIBIT E
 
AFFILIATE AGREEMENT

____________   , 2008
 
 GCA I Acquisition Corp.
115 East 57th Street, Tenth Floor
New York, New York 10022

Ladies and Gentlemen:
 
The undersigned has been advised that as of the date of this letter it may be
deemed to be an “affiliate” of Bixby Energy Systems, Inc., a Delaware
corporation (the “Company”), as the term “affiliate” is defined for purposes of
paragraphs (c) and (d) of Rule 145 of the rules and regulations (the “Rules and
Regulations”) of the U.S. Securities and Exchange Commission (the “Commission”)
under the Securities Act of 1933, as amended (the “Securities Act”). Pursuant to
the terms of the Agreement and Plan of Merger, dated as of May 7, 2008 (the
“Merger Agreement”), by and among GCA I Acquisition Corp. (“Parent”), Bixby
Energy Acquisition Corp., a wholly-owned subsidiary of Parent (“Merger Sub”) and
the Company, Merger Sub will be merged with and into the Company (the “Merger”)
and the Company, as the entity surviving the Merger, will become a wholly-owned
subsidiary of Parent.
 
As a result of the Merger, the undersigned will receive shares of common stock,
par value $0.0001 per share, of Parent (the “Parent Common Stock”), in exchange
for common stock, par value $0.001 per share [and other Merger Securities] of
the Company owned by the undersigned immediately prior to the effective time of
the Merger.
 
The undersigned hereby represents and warrants to, and covenants with, Parent
that in relation to any Parent Common Stock it receives as a result of the
Merger:
 
A. The undersigned shall not make any sale, transfer or other disposition of the
Parent Common Stock in violation of the Act or the Rules and Regulations.
 
B. The undersigned has carefully read this letter and the Merger Agreement and
discussed the requirements of these documents and other applicable limitations
upon the undersigned’s ability to sell, transfer or otherwise dispose of the
Parent Common Stock, to the extent the undersigned deemed necessary, with his or
her counsel or counsel for the Company.

C. The undersigned has been advised that any issuance of Parent Common Stock to
him or her pursuant to the Merger has been, or will be, registered with the
Commission under the Act on a registration statement on Form S-4. However, the
undersigned has also been advised that, since at the time the Merger was
submitted for a vote of the stockholders of the Company, the undersigned may be
deemed to have been an affiliate of the Company, the undersigned may not sell,
transfer or otherwise dispose of any Parent Common Stock issued to it in the
Merger unless (a) such sale, transfer or other disposition has been registered
under the Act, (b) such sale, transfer or other disposition is made in
conformity with Rule 145 (as that rule may be hereinafter amended) promulgated
by the Commission under the Act, or (c) Parent shall have received either an
opinion of counsel acceptable to Parent or a “no action” letter obtained by the
undersigned from the staff of the Commission, to the effect that such sale,
transfer or other disposition is otherwise exempt from registration under the
Act.

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D. The undersigned also understands that, except as set forth in the Merger
Agreement, Parent is under no obligation to register the sale, transfer or other
disposition of the Parent Common Stock by the undersigned or on his or her
behalf under the Act or to take any other action necessary in order to comply
with any available exemption from the registration requirements of the Act. The
undersigned also understands that stop transfer instructions will be given to
Parent’s transfer agents with respect to the Parent Common Stock and that there
will be placed on the certificates for the Parent Common Stock issued to the
undersigned, or any substitutions therefor, a legend stating in substance:
 
“THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A TRANSACTION TO
WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“ACT”), APPLIES, AND MAY ONLY BE SOLD OR OTHERWISE TRANSFERRED IN COMPLIANCE
WITH THE REQUIREMENTS OF RULE 145 OR PURSUANT TO A REGISTRATION STATEMENT UNDER
THE ACT OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT.”
 
E. The undersigned also understands that unless the transfer by it of Parent
Common Stock has been registered under the Act or is a sale made in conformity
with the provisions of Rule 145, Parent reserves the right to place the
following legend on the certificates issued to the undersigned’s transferee:
 
“THE SALE OF THE SHARES REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND SUCH SHARES WERE
ACQUIRED FROM A PERSON WHO RECEIVED THESE SHARES IN A TRANSACTION TO WHICH
RULE 145 PROMULGATED UNDER THE ACT APPLIES. THE SHARES HAVE BEEN ACQUIRED BY THE
HOLDER NOT WITH A VIEW TO, OR FOR RESALE IN CONNECTION WITH, ANY DISTRIBUTION
THEREOF WITHIN THE MEANING OF THE ACT, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO A REGISTRATION STATEMENT UNDER THAT ACT OR IN
ACCORDANCE WITH AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT.”
 
F. Execution of this letter shall not be considered an admission on the part of
the undersigned that he or she is an “affiliate” of the Company as described in
the first paragraph of this letter, nor as a waiver of any rights the
undersigned may have to object to any claim that he is such an affiliate after
the date of this letter.

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It is understood and agreed that the legends set forth in paragraphs D and E
above shall be removed by delivery of substitute certificates without any legend
if either of these legends are not required for purposes of the Act or this
letter. It is understood and agreed that these legends and the stop transfer
orders referred to above will be removed if (i) evidence or representations
satisfactory to Parent and its transfer agent that the Parent Common Stock
represented by the certificates are being or have been sold in a transaction
made in conformity with the provisions of Rule 145(d) (as that rule may be
hereinafter amended), (ii) Parent has received either an opinion of counsel or a
“no action” letter obtained by the undersigned from the staff of the Commission,
to the effect that the restrictions imposed by Rule 145 under the Act no longer
apply to the undersigned, or (iii) the shares represented by the certificates
having such legend(s) are the subject of an effective registration statement
under the Act.

 
[NAME]     

Accepted this  __th day of
__________, 200_ by
 
GCA I ACQUISITION CORP.
 
By
 
Name:          Michael M. Membrado
Title:   President & Chief Executive Officer

 

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EXHIBIT F
 
REGISTRABLE SECURITIES LOCK-UP AGREEMENT
 
This Registrable Securities Lock-Up Agreement (this “Agreement”) is made as of
_______ __, 200_, by and among [___________________ (formerly known as GCA I
Acquisition Corp.)], a Delaware corporation (the “Company”) and _____________,
an individual stockholder of Company (the “Stockholder”).
 
WHEREAS, as of the date hereof, the Stockholder is the holder of record of
_________________ (__________) shares of common stock, par value $0.0001 per
share, of the Company (the “Registrable Securities”); and
 
WHEREAS, in order to compel the Company to register the Registrable Securities
in accordance with the terms of Section 7.13 of that certain Agreement & Plan of
Merger dated May 7, 2008 by and among GCA I Acquisition Corp., Bixby Energy
Acquisition Corp., and Bixby Energy Systems, Inc. (the “Merger Agreement”), the
Stockholder has agreed to enter into this Agreement.
 
NOW, THEREFORE, in consideration of the foregoing premises and of the covenants
and agreements set forth herein and in the Merger Agreement, and intending to be
legally bound hereby, the parties agree as follows:
   
1. Lock-up. In consideration of the registration of the Registrable Securities
by the Company pursuant to Section 7.13 of the Merger Agreement, the Stockholder
hereby agrees that, whether or not registered, he or she shall only be permitted
to sell shares in accordance with the schedule specifically set forth in Section
2.2(i) of the Merger Agreement (the “Release Schedule”) as if the Stockholder
were a recipient of shares of Parent Common Stock (as defined in the Merger
Agreement) in connection with the Merger Agreement.
 
2. Assignment.  This Agreement may not be assigned by any party hereto without
the prior written consent of the other party. Subject to the foregoing, all of
the terms and provisions of this Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective executors, heirs, personal
representatives, successors and assigns.
 
3. Entire Agreement.  This Agreement and the documents, instruments and other
agreements specifically referred to herein or delivered pursuant hereto, set
forth the entire understanding of the parties with respect to the subject matter
hereof. Any and all previous agreements and understandings between or among the
parties regarding the subject matter hereof, whether written or oral, are
superseded by this Agreement.
 
4. Notices.  Any notice, request, demand, waiver, consent, approval or other
communication made in connection with this Agreement shall be in writing and
shall be deemed given (a) on the date established by the sender as having been
delivered personally; (b) on the date delivered by a private courier as
established by the sender by evidence obtained from the courier; (c) on the date
sent by facsimile, with confirmation of transmission, if sent during normal
business hours of the recipient, if not, then on the next business day; or
(d) on the fifth day after the date mailed, by certified or registered mail,
return receipt requested, postage prepaid. Such communications, to be valid,
must be addressed as follows:
 

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If to the Company, to:
 
    Bixby Energy Systems, Inc.   6893 139th Lane N.W.   Ramsey, MN 55303   Att:
Robert Walker, CEO       Fax: 763-428-7903      
with a copy to:
        Davisson & Associates, PA   3649 Brunswick Avenue North   Minneapolis,
MN 55422   Att: Peder K. Davisson, Esq.     Fax: 763-535-0490
 
   
If to the Stockholder:
 
                          Facsimile:
 
 
   
With a required copy to:
                    Attn:
 
        Facsimile:
 

 
or to such other address or to the attention of such person or persons as the
recipient party has specified by prior written notice to the sending party (or
in the case of counsel, to such other readily ascertainable business address as
such counsel may hereafter maintain). If more than one method for sending notice
as set forth above is used, the earliest notice date established as set forth
above shall control.
 
5.  Severability; Enforcement.  Any provision of this Agreement which is invalid
or unenforceable in any jurisdiction shall be ineffective to the extent of such
invalidity or unenforceability without invalidating or rendering unenforceable
the remaining provisions hereof, and any such invalidity or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
 
2

--------------------------------------------------------------------------------

 
6.  Consent to Jurisdiction.  Each party irrevocably submits to the exclusive
jurisdiction of (a) New York County, New York, and (b) the United States
District Court for the Southern District of New York, for the purposes of any
action, suit or proceeding arising out of this Agreement or any transaction
contemplated hereby. Each party agrees to commence any such action, suit or
proceeding either in the United States District Court for the Southern District
of New York or if such action, suit or proceeding may not be brought in such
court for jurisdictional reasons, in the Supreme Court sitting in New York
County (including its Appellate Division). Each party further agrees that
service of any process, summons, notice or document by U.S. registered mail to
such party’s respective address set forth above shall be effective service of
process for any action, suit or proceeding in New York with respect to any
matters to which it has submitted to jurisdiction in this Section 15. Each party
irrevocably and unconditionally waives any objection to the laying of venue of
any action, suit or proceeding arising out of this Agreement or the transactions
contemplated hereby in (i) the United States District Court for the Southern
District of New York, or (ii) the Supreme Court sitting in New York County
(including its Appellate Division), and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such action, suit or proceeding brought in any such court has been brought
in an inconvenient forum. EACH PARTY HEREBY IRREVOCABLY WAIVES ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF SUCH PARTY IN THE
NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.
 
7.  Governing Law.  This Agreement shall be governed by and interpreted and
enforced in accordance with the laws of the State of New York, without giving
effect to any choice of law or conflict of laws rules or provisions (whether of
the State of New York or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of New York,
except to the extent that the voting of the Subject Shares is subject to the
corporate law of the State of Delaware.
 
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto
all as of the day and year first above written.

BIXBY ENERGY SYSTEMS, INC.    
By:
 
Name:
Title:    President and Chief Executive Officer

STOCKHOLDER: 

 
[NAME]

 
3

--------------------------------------------------------------------------------

 
SCHEDULES
 
Schedule A
Company Disclosure Schedule
Organization and Qualification; Subsidiaries
Section 4.1
Capitalization
Section 4.4
No Conflict; Required Filings and Consents
Section 4.6
Permits; Compliance
Section 4.7
Financial Statements
Section 4.8
Taxes
Section 4.11
Inventory
Section 4.14
Product Warranty
Section 4.15
Real Property
Section 4.17
Intellectual Property
Section 4.18
Material Contracts
Section 4.19
Litigation
Section 4.20
Employee Benefit Plans
Section 4.21
Environmental
Section 4.23
Related Party Transactions
Section 4.24
Insurance
Section 4.25
Absence of Certain Changes or Events
Section 4.26
Change in Control
Section 4.33
Conduct of Business by the Company Pending the Merger
Section 6.1
 
 
Schedule B
Parent Disclosure Schedule
Capitalization
Section 5.4
No Conflict; Required Filings and Consents
Section 5.6
Taxes
Section 5.8
Absence of Certain Changes or Events
Section 5.12
Conduct of Business by the Parent Pending the Merger
Section 6.2

--------------------------------------------------------------------------------

 
Company Disclosure Schedule: Section 4.1

Organization and Qualification; Subsidiaries
 
The Company was originally organized under the laws of the State of Minnesota
and subsequently changed its domicile to Delaware, filing a foreign
qualification to do business in the State of Minnesota. The Company’s
subsidiary, SS Acquisition Corp. is a corporation organized under the laws of
the State of Minnesota. The Company and its subsidiary are qualified to do
business in each jurisdiction in which they have determined they are required to
do so.
 

--------------------------------------------------------------------------------

Company Disclosure Schedule: Section 4.4

Capitalization

Section 4.4(a)
 

   
Shares
Issued
 
Common
Stock
Equivalents
                 
Common Stock
   
32,194,880
   
32,194,880
                 
Convertible Preferred
   
1,046,846
   
2,093,692
                 
Warrants for Convertible Preferred Stock
   
233,000
   
466,000
                 
Common Stock Warrants - Issued
   
40,054,338
   
40,054,338
                 
Employee/Board Options (5,000,000 Authorized)
 
3,157,000
                 
Loans With Conversion Features:
         
3,778,500
             

 
Total Common Stock Equivalents
         
81,744,410
 

 
Section 4.4b
 
[INTENTIONALLY BLANK]

--------------------------------------------------------------------------------

Company Disclosure Schedule: Section 4.4 (cont’d).
 
Section 4.4c
 
Debentures and Promissory Notes Outstanding:

Type
 
$ Amount
 
Due Date
 
Conversion Price
                 
Debenture
   
1,025,000
 
Nov 2010
 
$1.60/share
                   
Promissory Notes
   
500,000
 
May 2008
 
$1.60/share
       
150,000
 
June 2008
 
$1.60/share
       
300,000
 
July 2008
  N/A        
200,000
 
Nov 2008
 
$1.60/share
       
324,880
 
Oct 2009
 
$1.60/share
       
186,000
 
Nov 2009
 
$1.60/share
       
37,200
 
Dec 2009
 
$1.60/share
       
100,000
 
Jan 2010
 
$1.60/share
       
125,000
 
Feb 2010
 
$1.60/share
       
1,750,000
 
Mar 2010
 
$1.60/share
       
150,000
 
Apr 2010
 
$2.50/share
       
50,000
 
May 2010
 
$2.50/share
 

 

--------------------------------------------------------------------------------

Company Disclosure Schedule: Section 4.6

No Conflict; Required Filings and Consents
 
[INTENTIONALLY BLANK]
 

--------------------------------------------------------------------------------

 
Company Disclosure Schedule: Section 4.7

Permits; Compliance
 
[INTENTIONALLY BLANK]
 

--------------------------------------------------------------------------------

Company Disclosure Schedule: Section 4.8

Financial Statements
 
Section 4.8(a)
 
BIXBY ENERGY SYSTEMS, INC.
Consolidated Balance Sheets
Years ending May 26, 2007, May 27, 2006 and May 31, 2005

Assets
 
2007
 
2006
 
2005
 
Current assets:
                   
Cash and cash equivalents
 
$
286,673
   
2,273,439
   
70,701
 
Trade Accounts Receivable, less allowance for doubtful accounts of $204,687 and
$6,090 in 2007 and 2006, respectively
   
231,758
   
338,844
   
135,735
 
Inventories, less writedown to market of $1,212,642 and $0 in 2007 and 2006,
respectively
   
3,508,163
   
2,414,821
   
401,935
 
Other current assets
   
393,955
   
842,387
   
130,586
 
Total current assets
   
4,420,548
   
5,869,491
   
738,958
 
Property and equipment
   
1,761,610
   
1,470,398
   
890,269
 
Less accumulated depreciation and amortization
   
(752,046
)
 
(416,174
)
 
(213,079
)
Net property and equipment
   
1,009,564
   
1,054,224
   
677,190
 
Other assets
   
9,450,077
   
7,686,572
   
6,610,018
 
Total assets
 
$
14,880,189
   
14,610,287
   
8,026,165
 
Liabilities and Shareholders’ Deficit
                   
Current liabilities:
                   
Current portion of long-term debt
 
$
87,700
   
77,700
   
48,975
 
Short Term Debt
   
929,350
   
150,000
   
533,623
 
Trade accounts payable
   
3,460,697
   
1,880,472
   
1,048,996
 
Unearned Income
   
—
   
—
   
202,986
 
Accrued expenses
   
1,933,623
   
973,873
   
637,871
 
Total current liabilities
   
6,411,370
   
3,082,045
   
2,472,451
 
Long-term debt, less current portion
   
1,451,051
   
1,539,053
   
874,320
 
Other long-term liabilities
   
290,700
   
290,700
   
290,700
 
Total liabilities
   
8,153,121
   
4,911,798
   
3,637,472
 
Commitments and contingencies (note 4 and 8)
                   
Shareholders’ deficit:
                   
Undesignated preferred stock, $.001 par value.
                   
Authorized 3,900,000 shares; none issued and outstanding
                   
in 2007 and 2006
                   
Series A convertible preferred stock, $0.001 par value.
   
1,047
   
1,047
   
1,047
 
Authorized 1,100,000 shares; issued and outstanding
                   
1,046,846 shares in 2007 and 1,046,846 shares in 2006
                   
($1,046,846 liquidation preference)
                   
Common stock $0.001 par value. Authorized 50,000,000 shares;
   
27,984
   
24,365
   
17,238
 
issued and outstanding 27,983,894 shares in 2007 and
                   
24,364,721 shares in 2006
                   
Additional paid-in capital
   
31,742,484
   
25,936,754
   
15,698,741
 
Accumulated deficit
   
(25,044,447
)
 
(16,263,676
)
 
(11,328,333
)
Total shareholders’ equity
   
6,727,068
   
9,698,490
   
4,388,693
 
Total liabilities and shareholders’ equity
 
$
14,880,189
   
14,610,287
   
8,026,165
 

--------------------------------------------------------------------------------

 
BIXBY ENERGY SYSTEMS, INC.
Consolidated Statements of Operations
For 52 weeks ending May 26, 2007 and May 27 2006

   
2007
 
2006
 
Net Sales
 
$
7,252,559
   
6,746,635
 
Cost of goods
   
8,828,537
   
6,605,590
 
Gross Profit
   
(1,575,979
)
 
141,045
 
Operating expenses:
             
Selling, general, and administrative
   
7,132,828
   
4,180,420
 
Research and development
   
1,415,997
   
862,963
 
Total operating expenses
   
8,548,825
   
5,043,383
 
Other income (expense):
             
Miscellaneous income
   
—
   
5,292
 
Interest expense
   
(248,151
)
 
(239,217
)
Other, net
   
(1,598,646
)
 
(1,802,337
)
Net loss before taxes
 
$
(11,971,600
)
 
(6,938,600
)
               
Provision for Income Tax Loss
   
3,190,829
   
2,003,257
 
Net loss after taxes
 
$
(8,780,771
)
 
(4,935,343
)

--------------------------------------------------------------------------------

BIXBY ENERGY SYSTEMS, INC.
Consolidated Statements of Stockholders’ Equity
Years Ended May 26, 2007 and May 27, 2006

           
Series A convertible
         
Additional
     
Total
     
Undesignated preferred stock
 
preferred stock
 
Common stock
 
paid-in
 
Accumulated
 
stockholders’
     
Shares
 
Amount
 
Shares
 
Amount
 
Shares
 
Amount
 
capital
 
deficit
 
equity
 
Balances at May 31, 2005
   
—
 
$
—
   
1,046,846
 
$
1,047
   
17,237,990
 
$
17,238
   
15,698,741
   
(11,328,333
)
 
4,388,693
 
Shares issued in connection with conversion of debt
                           
411,250
   
411
   
657,589
         
658,000
 
Shares issued in connection with private placement, less issuance costs of
$1,704,332
                           
6,715,481
   
6,716
   
9,033,096
         
9,039,811
 
Warrants issued for debt issuance costs
                                       
547,328
         
547,328
 
Net loss for the year
   
 
   
 
   
 
   
 
   
 
   
 
   
 
   
(4,935,343
)
 
(4,935,343
)
Balances at May 27, 2006
   
—
   
—
   
1,046,846
   
1,047
   
24,364,721
   
24,365
   
25,936,754
   
(16,263,676
)  
 
9,698,490
 
Shares issued in connection with warrants exercised
                           
13,348
   
13
   
19,585
         
19,598
 
Shares issued in connection with private placement, less issuance costs of
$599,981
                           
3,605,825
   
3,606
   
5,786,146
         
5,789,752
 
Warrants issued for debt issuance costs
                                       
—
         
—
 
Net loss for the year
   
 
   
 
   
 
   
 
   
 
   
 
   
 
   
(8,780,771
)
 
(8,780,771
)
Balances at May 26, 2007
   
—
 
$
—
   
1,046,846
 
$
1,047
   
27,983,894
 
$
27,984
   
31,742,484
   
(25,044,447
)
 
6,727,068
 

--------------------------------------------------------------------------------

BIXBY ENERGY SYSTEMS, INC.
Consolidated Statements of Cash Flows
Years Ended May 26, 2007 and May 27, 2006

   
2007
 
2006
 
Cash flows from operating activities:
             
Net loss before Provision from Income Tax Loss
 
$
(11,971,600
)
 
(6,938,600
)
Adjustments to reconcile net loss to net cash used in operating activities:
             
Depreciation and amortization
   
1,692,532
   
1,513,478
 
Amortization of deferred financing costs
   
318,495
   
465,387
 
Loss on sale of property and equipment
             
(Benefit) provision for doubtful accounts
             
Change in current assets and current liabilities:
             
Accounts receivable
   
494,657
   
(632,259
)
Inventories
   
(1,093,342
)
 
(2,012,886
)
Other current assets
   
60,862
   
(282,650
)
Employee note receivable
             
Trade accounts payable
   
1,580,226
   
831,476
 
Accrued expenses
   
959,750
   
133,015
 
Net cash used in operating activities
   
(7,958,420
)
 
(6,923,039
)
Cash flows from investing activities:
             
Additions to property and equipment
   
291,212
   
580,129
 
Proceeds from sale of property and equipment
             
Additions to other assets
   
(70,664
)
 
383,680
 
Net cash used in investing activities
   
220,548
   
963,810
 
Cash flows from financing activities:
             
Proceeds from capital leases
   
—
   
119,166
 
Principal payments on capital leases
   
(33,794
)
 
(8,597
)
Proceeds from issuance of debt
   
1,360,945
   
1,630,317
 
Principal payments on debt
   
(323,885
)
 
(741,111
)
Proceeds from issuance of common stock
   
5,188,937
   
9,089,812
 
Net cash provided by financing activities
   
6,192,202
   
10,089,587
 
Net decrease in cash and cash equivalents
   
(1,986,766
)
 
2,202,738
 
Cash and cash equivalents at beginning of year
   
2,273,439
   
70,701
 
Cash and cash equivalents at end of year
 
$
286,673
   
2,273,439
 

 
Section 4.8(b)
 
[INTENTIONALLY BLANK]
 

--------------------------------------------------------------------------------

Company Disclosure Schedule: Section 4.9

Notes and Accounts Receivable
 
CUSTOMER
 
TOTAL
           
Empire Distributors
 
$
16,646.87
           
Field To Flue
 
$
20,882.51
           
Kowalkse's Hot Spot
 
$
19,566.25
           
Summer Winds Pool & Spas Inc.
 
$
78,320.35
 

 

--------------------------------------------------------------------------------

Company Disclosure Schedule: Section 4.11

Taxes
 
Section 4.11(a)

Income tax returns have only been filed through 5/31/04 (FY04). Returns for
FY05, FY06 and FY07 are in process.
 
Section 4.11(b)
 
[INTENTIONALLY BLANK]
 
Section 4.11(c)
 
[INTENTIONALLY BLANK]
 
Section 4.11(d)

No tax returns of the company have been audited.

Tax returns are open for all fiscal years ending from 2004 to current.
 
Section 4.11(e)

 
§
Federal

 
§
State of Minnesota

 
§
State of South Dakota (sales tax only)

--------------------------------------------------------------------------------

Company Disclosure Schedule: Section 4.11 (cont’d)
 
Section 4.11(l)
 
[INTENTIONALLY BLANK]
 
Section 4.11(n)
 
[INTENTIONALLY BLANK]
 

--------------------------------------------------------------------------------

Company Disclosure Schedule: Section 4.14

Inventory
 
The inventory for the stove operation consists mainly of slow moving items due
to current market conditions.  As of February 23, 2008 (the end of the 3rd
Quarter, 2008), the stove operation had the following inventory values, all of
which would be considered slow moving:

Raw Materials
 
$
1,160,601
 
Finished Goods
 
$
1,469,168
 

 

--------------------------------------------------------------------------------

 
Company Disclosure Schedule: Section 4.15

Product Warranty
 
Gca I [logo1.jpg]

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Bixby Energy Systems, Inc.
 
7 Year Limited Warranty
 
"Good Products come with Good Warranties"
 
RULES OF WARRANTY
 
This warranty is issued by Bixby Energy Systems, Inc., (the "Manufacturer") and
extends only to the original purchaser of this product. For the warranty to be
effective, you must complete and return the attached warranty card to the
address indicated within 30 days of your purchase. Failure to do so will mean
that you may not later make a claim under this warranty. The Manufacturer
excludes and disclaims all implied warranties including but not limited to, the
implied warranty of merchantability.
 
For a period of seven (7) years from the date of original consumer purchase, the
Manufacturer warrants the Room Heater to be free from defects in material or
workmanship, in normal use and service and for a period of four (4) years from
date of original consumer purchase, Manufacturer warrants its products for
mechanical and electrical failures. There is no express warranty on the
fiberglass rope gasketing, log sets, paint, nickel or gold plated surfaces or
handles.
 
For a period of one (1) year from the date of original consumer purchase, the
Manufacturer warrants Bixby Direct Vent pipe to be free from defects in material
or workmanship. Void if not installed according to the instructions detailed in
the venting section of the User's Manual.
 
Some states mandate a warranty from the installer of two (2) years on
workmanship. Check your state requirements for your specific rights and
coverage. This warranty covers defects in materials and workmanship in covered
components, provided that the product has been installed and operated properly
in strict accordance with the Manufacturers printed instructions. There is no
warranty coverage when damage or breakage is due or caused by mishandling,
freight damage or misuse or unauthorized modification of the structure or
electrical system. This warranty is limited to the Max Fire™ Room Heater and
Bixby Direct Vent only, accessories are not covered. Some states do not allow
the exclusion of limitation of consequential damages, or limitations of implied
warranties. The limitations or exclusions set forth in this warranty may not
apply to you. This warranty gives you specific legal rights and you may also
have other rights, which can vary, from state to state.
 
IF YOU NEED TO EXERCISE THIS WARRANTY
 
Inspection Required - Before exercising this warranty, a local representative of
the Manufacturer must inspect the unit to determine if it is defective. If the
inspection reveals that the failure is due to defective material or workmanship
and the part is covered by the condition of this warranty, the Manufacturer
will, at its option, repair or replace the defective part.
 
Responsibilities Of The Manufacturer - The sole duty of the Manufacturer and
liability under this warranty is limited to the repair or replacement of the
covered defective part. If it is determined that the defect was caused by the
Manufacturer, the Manufacturer will cover the costs of the shipping and repaired
unit or replacement parts to the original purchaser.
 
Responsibility Of The Consumer - The purchaser assumes all costs related to
shipping the replacement parts or return of the unit to the factory for
replacement. Removal Or Reinstallation Costs Are Not Covered By This Warranty.
All claims under this warranty must be made in writing to the Manufacturer. To
insure prompt and proper handling of your claim, you must include the following:
a) The name, address, and phone number of the dealer you purchased your unit
from; b) The name, address, and phone number of the person who originally
purchased this unit; c) The date of purchase along with the model and serial
number of the unit; d) a copy of the sales receipt from your dealer; e) The
nature of the problem and what procedures have been done to correct the problem.
 
THIS WARRANTY IS NULL AND VOID IF THE ROOM HEATER
WAS OPERATED WITH IMPROPER FUEL
 
Manufacturer
Bixby Energy Systems, Inc.
14295 James Road
Rogers, Minnesota 55374
1-877-500-2800
www.bixbyenergy.com
 

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Gca I [logo2.jpg]
BIXBY MAXFIRETM STOVE
OWNER LIMITED WARRANTY POLICY
 
RULES OF WARRANTY
 
This limited warranty is issued by Bixby Energy, Inc., ("Manufacturer") and
extends only to the original purchaser ("Consumer") of this product. This
warranty covers defects in materials and workmanship in covered components,
provided that the product has been installed, operated, and maintained properly
in strict accordance with the Manufacturers printed instructions and excludes
any incidental and consequential damages connected therewith. There is no
warranty coverage when purchased through internet sales from a non-servicing
dealer or when damage or breakage is due or caused by mishandling, freight
damage, misuse, or unauthorized modification of the structure or electrical
system. This warranty is limited to the MaxFire™ Room Heater only, accessories
are not covered. 
 
For the warranty to be effective, the warranty card provided with the Room
Heater must be completed and returned to the Manufacturer within 30 days of your
purchase. Failure to do so will prevent any claims under this warranty.
 
The Manufacturer limits all implied warranties, including but not limited to,
the implied warranty of merchantability or the implied warranty for a particular
purpose, in duration to:
 
- For a period of one (1) year from the date of original Consumer purchase, the
Manufacturer warrants the Room Heater steel frame and body panels to be free
from defects in material or workmanship when operated in normal residential use
and service.
 
- For a period of one (1) year from the date of original Consumer purchase, the
Manufacturer warrants the Room Heater heat exchanger and the
electrical/mechanical components from failure when operated in normal
residential use and service.
 
There are no express or implied warranties on: adjustments, tightening, regular
maintenance, filters, gaskets, glass, log set, paint, plated surfaces, handles,
caulking, Consumer education, software upgrades, upgraded parts, or cleaning.
Failure due, but not limited to, fire, lightning, acts of God, power failures
and/or surges, rust, corrosion, improper installation, and improper or
inadequate venting or ventilation are not covered. The Manufacturer shall be
held free and harmless from liability from damage to property related to the
operation, proper or improper, of the Room Heater.
 
Some states do not allow limitations on how long an implied warranty lasts, so
the above limitation may not apply to you. Some states do not allow the
exclusion or limitation of consequential damages, or limitations of implied
warranties. The limitations or exclusions set forth in this warranty may not
apply to you. This warranty gives you specific legal rights and you may also
have other rights, which can vary, from state to state.
 
Some states mandate a warranty from the installer of two (2) years on
workmanship. Check your state requirements for your specific rights and
coverage.
 
IF YOU NEED TO EXERCISE THIS WARRANTY
 
Before exercising this warranty, the Consumer must cause the local Bixby Dealer
from whom this appliance was purchased to inspect the Room Heater to determine
if it or a part is defective. If the inspection reveals a defect as covered by
this warranty, the Manufacturer will, at its option, repair or replace the Room
Heater or defective part.
 
The Consumer assumes all costs related to shipping the defective part or Room
Heater to the factory for repair or replacement. Any defective parts not
returned to the Manufacturer will be billed at current MSRP pricing.
 
The sole duty and liability under this warranty of the Manufacturer is limited
to the repair or replacement of the covered defective part or Room Heater.
Removal or reinstallation costs are not covered by this warranty. If it is
determined that the Manufacturer caused the defect, the Manufacturer will cover
the cost of shipping the repaired Room Heater or replacement part to the
original purchaser.
 
THIS WARRANTY IS NULL AND VOID IF THE ROOM HEATER WAS OPERATED
WITH IMPROPER FUEL OR VENTING AS DEFINED IN THE USER'S MANUAL
For warranty assistance or service, contact your Bixby Dealer.
 
Manufacturer:
Bixby Energy, Inc
9300 75th Avenue North,
Minneapolis, Minnesota 55428
 

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Company Disclosure Schedule: Section 4.17

Real Property
 
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Company Disclosure Schedule: Section 4.18

Intellectual Property

Section 4.18(a)

Registered patents pending or issued in the U.S. Patent and Trademark Office:

US Patent Number
 
Patent Description
     
B304001PPA
 
Closed Loop Fluidized Bed Flash Gasification System
10/630371
 
Apparatus and Method for Delivery of Biomass Fuel
11/049,611
 
Biomass Fuel Burning Stove and Method
29/179,835
 
Biomass Stove (design)
10/802,463
 
Burn Pot for Furnace

 
Exclusive license for Patent Number 5,445,192 – Method for Delivery of Salt.

Phase One: Bixby’s Confined Gasification Liquefaction Technology (Confined
Thermal DePolymerization Process)

We engaged Industrial Process Solutions, Inc. under a research and development
contract to design our closed loop fluidized bed gasification system. The
inventor has applied for a provisional patent which will be converted into a
full patent application once the unit is in production. Under the terms of our
agreement with Industrial Process Solutions, Inc. and the inventor, all patent
and other intellectual property rights related to Phase I of the Bixby CGL
Process belong to Bixby both contractually an under the “work-for -hire”
doctrine. The inventor retained the right to repurchase the intellectual
property rights in the event of our insolvency or bankruptcy.

Phase Two: Bixby’s Confined Liquefaction Technology (Carbon Thermal Refining
Process)

As a complement to Phase I of the Bixby CGL Process we entered into an exclusive
license agreement with TekGar, LLC for the conversion of coal based carbon into
liquid fuels within the United States and its territories. Under the terms of
our agreement with TekGar, LLC the Company will have a right to pursue a patent
or patents on the process, method and/or design of the Phase II Bixby CGL
Process and own all right title and interest in that patent or patents in the
United States. To date we have not applied for any patents and no assurances can
be made that any will be applied for, or that if applied for, that they would be
granted. Without adequate protection of this intellectual property our business
position could be severely compromised, resulting in significant losses to
investors.

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Company Disclosure Schedule: Section 4.18 (cont’d).
 
Trademarks

We currently maintain trademark rights on MaxFire™ and MaxYield™, which we
regard as a valuable future asset.

Whenever we deem it important for purposes of maintaining competitive
advantages, we require parties with whom we share, or who otherwise are likely
to become privy to, our trade secrets or other confidential information to
execute and deliver to us confidentiality and/or non-disclosure agreements.
Among others, this includes employees, consultants and other advisors, each of
whom we require to execute such an agreement upon commencement of their
employment, consulting or advisory relations. These agreements generally provide
that all confidential information developed or made known to the individual by
us during the course of the individual’s relationship with us is to be kept
confidential and not to be disclosed to third parties except under specific
circumstances,
 
Section 4.18(b)
 
[INTENTIONALLY BLANK]
 
Section 4.18(c)

[INTENTIONALLY BLANK]
 
Section 4.18(d)

[INTENTIONALLY BLANK]
 
Section 4.18(e)

See Section 4.18(a) Phase One: Bixby’s Confined Gasification Liquefaction
Technology (Confined Thermal DePolymerization Process) above.
 
Section 4.18(f)

[INTENTIONALLY BLANK]
 
Section 4.18(g)
 
[INTENTIONALLY BLANK]
 

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Company Disclosure Schedule: Section 4.18 (cont’d).
 
Section 4.18(h)
 
[INTENTIONALLY BLANK]
 
Section 4.18(j)

[INTENTIONALLY BLANK]
 

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Company Disclosure Schedule: Section 4.19

Material Contracts

 
§
Tek-Gar, LLC (“TekGar”). The Company has entered into agreements with TekGar to
provide the Company with technology that will allow it to use coal based
activated carbon as a feed stock for the production of diesel and jet fuel. The
contracts provide for the issuance of 2,000,000 warrants to purchase the
Company’s common stock at a purchase price of $ per share exercisable for a
period of 5 years, revenue sharing of 2% of sales of products derived from
TekGar Products not to exceed $5,000,000 per year and fees of $1,500,000 payable
in thee equal annual installments. In addition the Company agreed to pay an
additional $1,000,000 payable out of revenue from the sale of products derived
from the TekGar technology.

 

 
§
Industrial Process Solutions, Inc. (“IPS”) and Alfred Sherman Aaron (“Aaron”).
The Company entered into research and development agreement with IPS and Aaron
to develop the Company’s fluidized bed confined thermal depolymerization
process, and a supply agreement and compensation agreement with IPS. The
aforementioned contracts were entered into effective as of April 21, 2008. The
research and development agreement is scheduled to be completed by December 15,
2008 and the other agreements have terms that extend for the life of any patnes
granted on the fluidized bed confined thermal depolymerization process. This
technology is being designed to allow the Company to convert coal and other feed
stocks into activated carbon and gas. Under the research and development
contract, IPS will receive a warrant to purchase 500,000 warrants of the
Company’s common stock at a purchase price of $2.00 per share exercisable for a
period of 5 years. Under the compensation agreement IPS will receive revenue
sharing of 2% of sales of products derived from the technology up to a maximum
annual payment of $5,000,000. Under the supply agreement IPS will build units on
a basis of 125% of the cost of materials and labor.

 
§
Deloitte Financial Advisory Services, LLP (“Deloitte”) and Green Espel, PLLP
(“Green”). The Company was engaged in a dispute with Deloitte and Green over
fees that were approximately $1,000,000. This matter was settled for $570,000 on
January 31, 2008 and involves a series of payments $110,000 of which have been
paid, the balance of which are due in monthly payments over a three-year period.

 
§
Salo, LLC (“Salo”). The Company entered into a settlement agreement with Salo,
on October 8, 2007, a vendor who had provided consulting services to the Company
in the amount of approximately $360,000. Pursuant to the Settlement Agreement
the Company has agreed to make monthly payments over approximately 5 years.

 
§
Barnard Dalsin Manufacturing Company (“BDM”). The Company entered into a
settlement agreement in March, 2008, to pay $109,650.50 in the form of weekly
payments until paid in full.

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Company Disclosure Schedule: Section 4.19
 

 
§
Dadson’s Machining Inc., v. Bixby Energy Systems, Inc., a former vendor,
commenced an action in Hennepin County District Court in the state of Minnesota
against the company by service of process in June of 2007. This action was
settled by the parties in April of 2008. Under the terms of that agreement, The
Company will pay $60,000 to Dadson’s. The Company will make weekly payments to
Dadson’s in the amount of $10,000 post-marked by each consecutive Friday
beginning May 2, 2008 until the last payment is made by June 6, 2008. Dadson’s
retains a right of first sale for the Company’s product in Dadson’s inventory
until payment is made in full. The settlement provides for a confession of
judgment in the amount of $80,000 in favor of Dadson’s less any amounts paid.

 
§
Notes Payable. The Company has notes payable as part of its capital structure in
the form of current and long term debt. See the Financial Statements included
as Company Disclosure Schedule Section 4.8

 

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Company Disclosure Schedule: Section 4.20

Litigation

 
§
Bixby Energy Systems, Inc., Robert Walker and Dennis DeSender v. Alexander
Boylan. The plaintiffs commenced an action in Hennepin County District Court in
the state of Minnesota against Mr. Boylan by service of process in June of 2007.
This is a claim against a former employee for tort claims based upon statements
and emails the former employee sent to the Company’s shareholders. Although the
parties have had settlement discussions, to date they have not been able to
reach an agreement. The Company is planning to amend its complaint to add
another related individual.

 
§
Phoenix America, Inc. v Bixby Energy Systems, Inc., a former vendor brought suit
against the Company, in the Superior Court in Allen County in the State of
Indiana Cause No. 02D01-0704-CC-489 in April of 2007 and proceeded with out
notice after an extension to answer had been granted. The judgment, for which
vacation has been sought, was in the amount of approximately $173,000.

 
§
Country Side Stove & Chimney, Inc. d/b/a Empire Distributing v Bixby Energy
Systems, Inc., Plaintiff, a former distributor of the Company’s products,
brought suit against the Company in the Supreme Court in Erie County in the
State of New York Index No. 2007 006597 in July of 2007. Company distributor
claims that the Company’s freestanding stoves are defective and sued to rescind
its purchase of approximately 100 stoves. Empire continues to sell stoves.

 
§
Dadson’s Machining Inc., v. Bixby Energy Systems, Inc., a former vendor,
commenced an action in Hennepin County District Court in the state of Minnesota
against the company by service of process in June of 2007. This action was
settled by the parties in April of 2008. Under the terms of that agreement. The
Company will pay $60,000 to Dadson’s. The Company will make weekly payments to
Dadson’s in the amount of $10,000 post-marked by each consecutive Friday
beginning May 2, 2008 until the last payment is made by June 6, 2008. Dadson’s
retains a right of first sale for the Company’s product in Dadson’s inventory
until payment is made in full. The settlement provides for a confession of
judgment in the amount of $80,000 in favor of Dadson’s less any amounts paid.

 
§
NRI Electronics, Inc. is a vendor of the Company who the Company owed payment
for past deliveries. NRI brought suit against the Company for payment on product
the Company had received and for what it claims are open purchase orders for
approximately $100,000. The Company has been paying approximately $6,000 per
month.

 

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Company Disclosure Schedule: Section 4.21

Employee Benefit Plans

Section 4.21(a)
 
Through a co-employment arrangement with Administaff, a Professional Employment
Organization (PEO), the Company offers its employees the following benefits:

 
-
Health Insurance (United Health Care)

 
-
Dental Insurance (United Health Care)

 
-
Vision Care (VSP)

 
-
Health Care Flexible Spending Account

Administaff is responsible for the maintenance of the benefit plans and all
necessary reporting.
 
Section 4.21(r) 
 
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Company Disclosure Schedule: Section 4.23

Environmental
 
Section 4.23(a)
 
[INTENTIONALLY BLANK]
 

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Company Disclosure Schedule: Section 4.24

Related Party Transactions
 

 
§
Robert Walker, the Company’s President and Chief Executive Officer, loaned the
Company approximately $65,000 in early 2007 in exchange for which he was granted
a warrant to purchase 65,000 shares of the company’s common stock at a purchase
price of $2.00 per share, exercisable for a period of 5 years from April 11,
2007.

 

 
§
Ronald Kinner, the Company’s Treasurer and Chief Financial Officer, loaned the
Company approximately $50,000 in the fall of 2007 in exchange for which he was
granted a warrant to purchase 100,000 shares of the company’s common stock at a
purchase price of $2.00 per share, exercisable for a period of 5 years from the
date of the loan along with simple interest of 12%.

 

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Company Disclosure Schedule: Section 4.25

Insurance
 
Bixby Energy Systems
Business Insurance Summary

Agent Information: Hayes Companies, 80 South 8th Street, Suite 700, Minneapolis,
MN 55402

 
 
Property
 
General Liability
 
Auto Liability
 
Umbrella
 
Directors & Officers / Employment
Practice Liability
                     
Carrier
 
United Fire & Casualty Co.
 
Chubb Custom Insurance Company
 
United Fire & Casualty Company
 
RSUI Indemnity Company
 
American International Specialty Lines (AIG)
                     
Policy Number
 
60341231
 
79544134
 
60341231
 
NHA041965
 
053-06-91
                     
Effective Dates
 
11/1/07-11/1/08
 
11/1/07-11/1/08
 
11/1/07-11/1/08
 
11/1/07-11/1/08
 
10/12/07 - 10/12/08
                     
Named Insured
 
Bixby Energy Systems, Inc. SS Acquisitions dba Bixby Delivery Services
 
Bixby Energy Systems, Inc. SS Acquisitions dba Bixby Delivery Services
 
Bixby Energy Systems, Inc. SS Acquisitions dba Bixby Delivery Services
 
Bixby Energy Systems, Inc. SS Acquisitions dba Bixby Delivery Services
 
Bixby Energy Systems, Inc.
                     
Scope
 
Special Form
 
Occurrence Form
     
Occurrence Form
 
Claims Made Coverage
                     
Amount
 
Total Insured Value -3,360,500
 
General Aggregate - 2,000,000
Products or Completed Ops Agg.-2,000,000
Personal/Advertising Injury Per Occ.-1,000,000
Per Occurrence - 1,000,000
Fire Damage Legal Liability - 100,000
Employee Benefits E&O Liability - 1,000,000
Employee Benefits E&O Liab. Agg.-1,000,000
 
Liability - 1,000,000
Uninsured/Underinsured-1,000,000
Hired & Non-Owned - 1,000,000
Personal Injury Protection - Basic
 
General Aggregate - 1,000,000
Each Occurence.-1,000,000
Underlying Limits
Each Occurrence - 1,000,000
General Aggregate - 2,000,000
Products/Completed Ops Agg-2,000,000
Personal/Advertising Injury - 1,000,000
Automobile Per Occurrence - 1,000,000
Employers Liab. Each Accident -1,000,000
Employers Liab. Each Employee-1,000,000
Employers Liability Policy Limit -1,000,000
Employee Benefits Liab. Occ.-1,000,000
Employee Benefits Liability Agg-1,000,000
 
Shared Directors & Officers and Employment Practices Liability: 2,000,000 Shared
Limit
                     
Ded.
 
$1,000 24 Hours BI/EE
 
$5,000 Employee Benefits Retro Date - 11/1/07
 
Comprehensive & Collision $500
     
$-0- Non-Indemnifiable D&O Claims $-0- Non-Indemnifiable D&O Claims $35,000
Company D&O Claims $5,000 Employment Practices Claims

 

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Company Disclosure Schedule: Section 4.26

Absence of Certain Changes or Events
 

 
§
Since May 26, 2007, the company has granted general salary increases in the
Ordinary Course of Business.

 
§
In June, 2007, the Board of Directors promoted Ronald Kinner to the position of
Chief Financial Officer. A salary adjustment was made at that time to compensate
for these additional duties.

 
§
In April, 2008, the Board approved additional compensation for Robert Walker,
CEO of the company. This included a bonus to correct an error in the
compensation change made in April, 2007, and the approval of an additional grant
of options subject to certain attainments.

 

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Company Disclosure Schedule: Section 4.33

Change in Control
 
[INTENTIONALLY BLANK]
 

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Company Disclosure Schedule: Section 6.1

Conduct of Business by the Company Pending the Merger
 
[INTENTIONALLY BLANK]
 

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Parent Disclosure Schedule: Section 5.4

Capitalization
 
[INTENTIONALLY BLANK]
 

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Parent Disclosure Schedule: Section 5.6

No Conflict; Required Filings and Consents

[INTENTIONALLY BLANK]
 

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Parent Disclosure Schedule: Section 5.8

Taxes

1. Federal (Internal Revenue Service)

2. New York State

3. New York City
 

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Parent Disclosure Schedule: Section 5.12

Absence of Certain Changes or Events

[INTENTIONALLY BLANK]
 

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Parent Disclosure Schedule: Section 6.2

Conduct of Business by the Parent and Merger Sub

[INTENTIONALLY BLANK]
 

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