AGREEMENT AND PLAN OF MERGER

AGREEMENT AND PLAN OF MERGER (“Agreement”) dated as of October 1,  2009  by and
among PACIFIC ALLIANCE CORPORATION, a Delaware corporation (“Pacific”), SL
MERGER CORPORATION, a Utah corporation (“Merger Sub”), STAR LEASING, INC., a
North Carolina corporation (the “Company”) and RANDALL MENSCER, the sole
shareholder of the Company (“Sole Shareholder”)

Recitals

A.

The Company is engaged principally in the trucking business and is a common
carrier (the “Business”).  The Sole Shareholder owns all of the issued and
outstanding shares of the Company’s common stock (“Company Common Stock”) issued
and outstanding, the only class of the Company’s common stock issued and
outstanding.  The Sole Shareholder has approved and consented to this Agreement
and the Merger.

B.

Pacific is engaged principally in the air filtration product business. Pacific
is a publically held corporation with its common stock registered under Section
12(g) of the Securities Exchange Act of 1934, as amended (“Exchange Act”).
 Pacific’s common stock is quoted on the OTCBB and is traded on a limited basis
in the over-the-counter-market.

C.

Merger Sub is a wholly owned subsidiary of Pacific and was formed to merge with
and into the Company so that as a result of the merger, the Company will survive
and become a wholly owned subsidiary of Pacific.

D.

The Board of Directors of each of Pacific, Merger Sub and the Company has
determined that the merger of Merger Sub with and into the Company (“Merger”) in
accordance with the provisions of the Utah Revised Business Corporations Act
(“URBCA”) and the North Carolina Business Corporations Act (“NCBCA”), and
subject to the terms and conditions of this Agreement, is advisable and in the
best interests of Pacific, Merger Sub and the Company and their respective
stockholders.

E.

Pursuant to the Merger, among other things, and subject to the terms and
conditions of this Agreement, all of the capital stock of the Company shall be
converted into the right to receive a number of shares of Pacific common stock
(“Pacific Common Stock”) set forth in Section 1 herein.

F.

The Board of Directors of each of Pacific, Merger Sub and the Company has
approved this Agreement and the transactions contemplated hereby.

G.

The parties intend that, for federal income tax purposes, the Merger shall
qualify as a “reorganization” within the meaning of Section 368(a) of the Code
and that this Agreement shall constitute a plan of reorganization.

H.

The Pacific Common Stock to be issued to the Sole Shareholder in the Merger will
not be registered under Section 5 of the Securities Act of 1933, as amended
(“Securities Act”) but will be issued in reliance on the exemption from
registration provided by Section 4(2) of the Securities Act as shares issued in
a non-public offering.

NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto intending to be legally bound do hereby agree
as follows:

Article 1. The Merger

1.1

General.

(a)

The Merger. Subject to the terms and conditions of this Agreement and in
accordance with the applicable provisions of the URBCA and the NCBCA, at the
Effective Time, (i) Merger Sub shall be merged with and into the Company, (ii)
the separate corporate existence of Merger Sub shall cease and (iii) the Company
shall be the surviving corporation (the “Surviving Corporation”) and shall
continue its corporate existence under the laws of the State of North Carolina.
As a result of the Merger, the Company shall become a wholly-owned subsidiary of
Pacific and all shares of the Company’s issued and outstanding common stock
shall be automatically converted into shares of Pacific Common Stock.

(b)

Effective Time. The Merger shall become effective at the time of filing of
Articles of Merger in the State of Utah pursuant to the URBCA and in the State
of North Carolina pursuant to the NCBCA under a Certificate of Merger,
substantially in the forms of Exhibit A attached hereto (the “Articles of
Merger”), or at such later time as may be stated in the Articles of Merger or
such later date as the parties may mutually agree (“Effective Time”).

(c)

Closing. The closing of the Merger (“Closing”) shall take place at the offices
of Pacific Alliance Corporation, 986 West 2nd Street, Ogden, Utah 84404 at 10:00
a.m. two business days after the date on which the last of the conditions set
forth in Section 6 shall have been satisfied or waived, or on such other date,
time and place as the parties may mutually agree (“Closing Date”).

(c)

Effect of the Merger. At the Effective Time, the effect of the Merger shall be
as provided in the applicable provisions of the URBCA and the NCBA. Without
limiting the generality of the foregoing, and subject thereto, at the Effective
Time, all the property, rights, privileges, powers and franchises of the Company
and Merger Sub shall vest in the Surviving Corporation, and all debts,
liabilities, obligations, restrictions, disabilities and duties of the Company
and Merger Sub shall become the debts, liabilities, obligations, restrictions,
disabilities and duties of the Surviving Corporation.

1.2

Articles of Incorporation. The Articles of Incorporation of the Company, as in
effect immediately prior to the Effective Time, shall be the Articles of
Incorporation of the Surviving Corporation until thereafter amended as provided
therein or by applicable law.

1.3

Bylaws. The Bylaws of the Company, as in effect immediately prior to the
Effective Time, shall be the Bylaws of the Surviving Corporation until
thereafter amended as provided therein and by law.

1.4

Directors and Officers. From and after the Effective Time, the officers and
directors of the Company at the Effective Time shall be those persons listed on
Schedule 1.4, unless modified by the agreement of Pacific and the Company.  Such
persons shall serve as officers and/or directors until their respective
successors are duly elected or appointed and qualified.

1.5

Conversion of Securities. At the Effective Time, by virtue of the Merger and
without any action on the part of Merger Sub, the Company or the holders of any
of the following securities:

(a)

Merger Sub Stock. Each issued and outstanding share of common stock of Merger
Sub shall be converted into one validly issued, fully paid and nonassessable
share of Common Stock, and no par value per share, of the Surviving Corporation;

(b)

Company Stock Held in Treasury. Each share of Company Common Stock and preferred
or other capital stock, (collectively “Company Capital Stock”) held in the
treasury of the Company and each share of Company Capital Stock owned by Merger
Sub or Pacific or any of its Subsidiaries shall be canceled without any
conversion thereof and no payment or distribution shall be made with respect
thereto; and

(c)

Conversion of Outstanding Company Common Stock into Pacific Common Stock.
 Subject to the provisions of Sections 1.6 and 1.8, each of the 5,000 shares of
the Company Common Stock issued and outstanding immediately prior to the
Effective Time (other than shares canceled in accordance with Section 1.5(b), if
any, shall be converted into 4,000 shares (“Conversion”) (such number as
adjusted in accordance with Section 1.6 (“Exchange Ratio”)), of a validly
issued, fully paid and nonassessable share of Pacific Common Stock.
 Accordingly, subject to Section 1.6, Section 1.8 and Section 1.9, the 5,000
outstanding shares of the Company will be converted into 15,000,000 shares of
Pacific Common Stock.  As of the Effective Time, each share of Company Common
Stock shall no longer be outstanding and shall automatically be canceled and
retired, and each holder of a certificate representing any shares of Company
Common Stock shall cease to have any rights with respect thereto other than (i)
the right to receive shares of Pacific Common Stock to be issued in
consideration therefor upon the surrender of such certificate, (ii) any
additional whole share cash, without interest, to be paid in lieu of any
fractional share of Pacific Common Stock in accordance with Section 1.8; and
(iii) in increase or decrease pursuant to Section 1.9 hereof.

1.6

Adjustment of the Exchange Ratio Based Upon Splits and Recapitalizations.    The
Exchange Ratio has been determined upon the assumption that Pacific will effect
a 1-for-20 reverse split of its issued and outstanding shares of common stock on
or about December 23, 2009 or shortly thereafter.  If for any reason such
reverse split has not occurred by the Effective Time, the Exchange Ratio shall
be adjusted accordingly. In the event that, prior to the Effective Time, any
other stock split, combination, reclassification or stock dividend with respect
to the Pacific Common Stock, any change or conversion of Pacific Common Stock
into other securities or any other dividend or distribution with respect to the
Pacific Common Stock should occur or, if a record date with respect to any of
the foregoing should occur, appropriate and proportionate adjustments shall be
made to the Exchange Ratio, and thereafter all references to the Exchange Ratio
shall be deemed to be as so adjusted.

1.7

Dissenting Shares.  A condition to Closing is that no shareholder of the Company
shall exercise any dissenting shareholder right under the NCBCA and accordingly,
the parties have made no provision hereunder for payments to dissenting
shareholders in connection will their appraisal rights under the NCBCA.

1.8

No Fractional Shares. No certificates or scrip representing fractional shares of
Pacific Common Stock shall be issued upon the surrender for exchange of
Certificates.  Any fractional share of Pacific Common Stock to result from the
conversion shall be rounded up to the next whole number of Pacific Common Stock.

1.9

Adjustment of Exchange Ratio Based Upon the Company’s Shareholders’ Equity.  The
Exchange Ratio was agreed to by the Parties on the assumption that the Most
Recent Financial Statements of the Company will reflect that the Company has net
shareholders’ equity of not less than $3,500,000 or more than $4,500,000.  

(a)

If the shareholders equity as of the date of the Most Recent Financial
Statements is less than $3,500,000, the Exchange Ratio shall be adjusted
downward so that the total number of shares of Pacific Common Stock to be issued
in the Conversion, subject to Sections 1.6 and Section 1.8, shall be the same
number as the number of the actual shareholders’ equity of Pacific as of the
date of the Most Recent Financial Statements of the Company.  For example, if
the Company’s shareholder equity on such date is $3,000,000, then the number of
shares of Pacific Common Stock to be issued in the Merger will be 12,855,000 and
accordingly, the Exchange Ratio will be reduced.

(b)

If the shareholders equity as of the date of the Most Recent Financial
Statements is greater than $5,000,000, the Exchange Ratio shall be adjusted
upward so that the total number of shares of Pacific Common Stock to be issued
in the Conversion, subject to Sections 1.6 and Section 1.8, shall be the same
number as the number of the actual shareholders’ equity of Pacific as of the
date of the Most Recent Financial Statements of the Company.  For example, if
the Company’s shareholder equity on such date is $5,500,000, the number of
shares of Pacific Common Stock to be issued in the Merger will be 23,567,500 and
accordingly, then the Exchange Ratio will be increased.

1.10

Exchange Procedures.

(a)

Promptly after the Effective Time, Pacific shall deliver to the Sole Stockholder
a notice of the effectiveness of the Merger.  Upon surrender of the Sole
Stockholder’s certificate for his shares of Company Common Stock (“Old
Certificates”) duly endorsed, the Sole Shareholder shall be entitled to receive
in exchange therefor, certificates representing the shares of Pacific Common
Stock into which his shares of the Company Common Stock were converted pursuant
to the Merger (“New Certificate”), that the Sole Shareholder is entitled to
receive in the Merger.

(b)

Until surrendered and exchanged as herein provided, each outstanding certificate
which, prior to the Effective Time, represented the Company Common Stock shall
be deemed for all corporate purposes to evidence ownership of the same number of
shares of Pacific Common Stock into which the shares of the Company Common Stock
represented by such certificate shall have been so converted. No dividends or
other distributions declared or made with respect to Pacific Common Stock after
the Effective Time will be paid to the holder of any certificate that prior to
the Effective Time evidenced shares of the Company Common Stock until the holder
of such certificate surrenders or exchanges such certificate as herein provided.
Subject to the effect of any applicable abandoned property, escheat or similar
laws, following surrender of any such certificate, there will be paid to the
holder of the certificates evidencing shares of Pacific Common Stock issued in
exchange therefor, without interest, (i) the amount of dividends or other
distributions with a record date after the Effective Time theretofore paid with
respect to such shares of Pacific Common Stock and (ii) at the appropriate
payment date, the amount of dividends or other distributions, with a record date
after the Effective Time but prior to the surrender and a payment date occurring
after surrender, payable with respect to such shares of Pacific Common Stock
less any withholding taxes which are required thereon.

(c)

 In the event any certificate representing the Company Common Stock shall have
been lost, stolen or destroyed, upon the making of an affidavit of that fact by
the holder of The Company Common Stock claiming such certificate to be lost,
stolen or destroyed and an agreement by such holder to indemnify and hold
harmless Pacific and the Surviving corporation.

1.11

No Further Ownership Rights in Company Capital Stock. All certificates
representing shares of Pacific Common Stock delivered upon the surrender for
exchange of any Certificate in accordance with the terms shall be deemed to have
been delivered (and paid) in full satisfaction of all rights pertaining to the
Company Common Stock previously represented by such Certificate.

1.12

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 or interest in, to or under any of the
rights, privileges, powers, franchises, properties or assets of either the
Company or Merger Sub 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 the Company or Merger Sub, all such deeds, bills of sale,
assignments and assurances and do, in the name and on behalf of the Company or
Merger Sub, all such other acts and things necessary, desirable or proper to
vest, perfect or confirm its right, title or interest in, to or under any of the
rights, privileges, powers, franchises, properties or assets of the Company or
Merger Sub, as applicable, and otherwise to carry out the purposes of this
Agreement.

2

Article 2.  Approval by Stockholders

2.1

Approval by Stockholders. Each of the Company and Merger Sub have solicited
written consents of their respective stockholder in lieu thereof for purposes of
voting upon this Agreement. Each of the Company and Merger Sub have, through
their respective boards of directors, recommend to their respective stockholders
approval of this Agreement. The Company, Merger Sub and Pacific each agree to
execute and deliver such further documents and instruments and to do such other
acts and things as may be required to complete all requisite corporate action in
connection with the transactions contemplated by this Agreement.

Article 3. Representations and Warranties of the Company and the Sole
Shareholder

Except as set forth on Disclosure Schedule 3, each of the Company and the Sole
Shareholder represents and warrants to Merger Sub and Pacific as follows:

3.1

Organization. The Company and each of its Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its respective incorporation or formation and has all requisite
power and authority and all necessary governmental approval to carry on its
business as it has been and is now being conducted. All Subsidiaries of the
Company, and their respective jurisdiction of formation, are listed on schedule
3.1.  Except as set forth in Schedule 3.1, each of the Company 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 nature of its
business or the ownership, leasing or operation of its properties makes such
qualification or licensing necessary, except where the failure to be so
qualified or licensed and in good standing, could not reasonably be expected to
have a Material Adverse Effect on the Company.

3.2

Capitalization; Options and Other Rights.

(a)

The total authorized shares of capital stock of the Company consists of (i)
________  shares of Company Common Stock, of which 5,000 shares are issued and
outstanding  all of which are owned by the Sole Shareholder (“Outstanding Common
Shares”) and; (ii) ________  shares of Company Preferred Stock, of which no
shares are issued or outstanding. All the Outstanding Common Shares have been
duly and validly authorized and issued and are fully paid and nonassessable.
 None of the Outstanding Common Shares has been issued in violation of the
preemptive rights of any stockholder of the Company. The Outstanding Common
Shares have been be issued, in compliance in all material respects with all
applicable federal and state securities laws and regulations.  The Company will
not issue any share of its capital stock prior to the Effective Time.

(b)

There are no existing agreements, subscriptions, options, warrants, calls,
commitments, trusts (voting or otherwise), or rights of any kind whatsoever
granting to any Person any interest in or the right to purchase or otherwise
acquire from the Company or granting to the Company any interest in or the right
to purchase or otherwise acquire from any Person, at any time, or upon the
occurrence of any stated event, any securities of the Company, whether or not
presently issued or outstanding, nor are there any outstanding securities of the
Company or any other entity which are convertible into or exchangeable for other
securities of the Company, nor are there any agreements, subscriptions, options,
warrants, calls, commitments or rights of any kind granting to any Person any
interest in or the right to purchase or otherwise acquire from the Company or
any  other Person any securities so convertible or exchangeable, nor, to the
Best Knowledge of the Company, are there any proxies, agreements or
understandings with respect to the voting of the Shares or the direction of the
business operations or conduct of the Company or its Subsidiary, except as
contemplated by this Agreement.

(c)

The Sole Shareholder is the only shareholder of the Outstanding Common Shares.  

3.3

Authority; Stockholder Vote.

(a)

The Company and the Sole Shareholder each have full power and authority to
execute, deliver and perform this Agreement and the transactions contemplated
hereunder. The execution, delivery and performance of this Agreement by the
Company have been duly authorized and approved by all necessary corporate or
other action including the approval of the Sole Shareholder, except for the
filing and recordation of appropriate merger documents as required by the NCBCA.
 No other corporate proceedings on the part of the Company are necessary to
authorize this Agreement and the transactions contemplated hereby. This
Agreement has been duly authorized, executed and delivered by the Company and
the Sole Shareholder and is the legal, valid and binding obligation of the
Company and the Sole Shareholder, enforceable in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors rights generally and by the effect of general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law).

(b)

The execution, delivery and performance by the Company of this Agreement and the
consummation of the Merger do not, and will not, (i) violate or conflict with
any provision of the Certificate of Incorporation or Bylaws of the Company or
any of its Subsidiaries, (ii) violate any law, rule, regulation, order, writ,
injunction, judgment or decree of any court, governmental authority or
regulatory agency applicable to the Company or any of its Subsidiaries, except
for violations which, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect on the Company, or (iii) result in a
violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, cancellation
or acceleration) under, any note, bond, indenture, lien, mortgage, lease,
permit, guaranty or other agreement, instrument or obligation to which the
Company or any of its Subsidiary is a party or by which any of its properties
may be bound, except (A) as set forth in Schedule 3.3(b) and (B) for violations,
breaches or defaults which, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect on the Company.

(c)

The execution and delivery of this Agreement by the Company and the Sole
Shareholder do not, and the performance by the Company of this Agreement will
not, require any consent, approval, authorization or permission of, or filing
with or notification to any governmental or regulatory authority, domestic or
foreign, or any other Person except for (i) the filing and recordation of
appropriate merger documents as required by the NCBCA, and (ii) any such
consent, approval, authorization, permission, notice or filing which if not
obtained or made could not reasonably be expected to have a Material Adverse
Effect on the Company.

(d)

The Board of Directors of the Company (i) has approved this Agreement and the
transactions contemplated hereby, (ii) has determined that the terms of the
Merger are advisable and in the best interests of the Sole Shareholder of the
Company, and (iii) has resolved to recommend the approval of the Merger and the
adoption of this Agreement and the consummation of the transactions contemplated
hereby to the Sole Shareholder of the Company.

(e)

Pursuant to the provisions of the NCBCA, the Articles of Incorporation of the
Company, the Bylaws of the Company and any other applicable law, the only
approval of holders of Company Common Stock required to approve the Merger and
to approve and adopt this Agreement and the transactions contemplated hereby is
the approval of the Sole Shareholder, which approval has been obtained.
 Attached as Schedule 3.3(c) is a copy of a duly executed written consent of the
Sole Shareholder consenting to and approving the Merger.  Such consent has been
executed in accordance with the Company’s Bylaws and the NCBCA.

3.4

Charter Documents. Schedule 3.4 contains a true, complete and correct copy of
the Articles of Incorporation and the Bylaws (or other documents of formation)
of the Company and each of its Subsidiaries. The Articles of Incorporation and
Bylaws or equivalent constituent documents of the Company and each of its
Subsidiaries are in full force and effect. Neither the Company nor any of its
Subsidiaries is in violation of any provision of its respective Articles of
Incorporation or Bylaws or other documents of formation.

3.5

Financial Statements.

(a)

Schedule 3.5 contains true and complete copies of the following financial
statements of the Company (the “Financial Statements”): (i) audited consolidated
balance sheets of the Company as of December 31, 2008  and December 31, 2007
(the “Balance Sheet”) audited and with a report by ________  LLP; (ii) audited
consolidated statements of operations, stockholders' equity and cash flows of
the Company for the period from December 31, 2006 to the year ended December 31,
2007, and for the period from January 1, 2007 to the year ended December 31,
2008 audited and with a report by ________  LLP; (iii) the unaudited
consolidated balance sheet of the Company as of September 30, 2009  (the
“Unaudited Balance Sheet”); and (iv) unaudited consolidated statements of
operations and cash flows of the Company and each of its Subsidiaries for the
nine-month period ended September 30, 2009. The parties acknowledge that if the
Effective is later than October 1, 2009, the Merger may not close unless the
Company has provided Pacific with audited financial statements for the year
ended December 31, 2009.  For purposes of this agreement, the “Most Recent
Financial Statements” are those financial statements dated September 30, 2009 or
December 31, 2009, whichever is latest.

(b)

The Financial Statements were prepared in accordance with GAAP (except, in the
case of the unaudited financial statements, for normal and recurring year-end
adjustments and the omission of footnotes). The Financial Statements were
prepared on the basis of the books and records of the Company and, to the extent
its Subsidiary was then organized, such Subsidiary (in each case, as of the date
of such Financial Statements) and present fairly, in all material respects, the
financial position of the Company as of the dates thereof and the results of its
operations and changes in stockholders' equity and cash flows for each of the
periods then ended in conformity with GAAP.

3.6

Absence of Undisclosed Liabilities; Indebtedness.

(a)

Except as disclosed in Schedule 3.6(a) or as set forth in the notes to the Most
Recent Financial Statements, neither the Company nor any of its Subsidiaries has
any liability or obligation of any nature (whether absolute, accrued or
contingent or otherwise) which is materially in excess of amounts shown or
reserved therefor in the Most Recent Financial Statements other than (a)
liabilities or obligations not required under GAAP on a basis consistent with
that of preceding accounting periods to be reported on such Most Recent
Financial Statements and (b) liabilities or obligations incurred after the date
of the Most Recent Financial Statements incurred in the ordinary course of
business and consistent with past practice.

(b)

Except as disclosed in the Most Recent Financial Statements or on Schedule
3.6(b), neither the Company nor any of its Subsidiaries has any Indebtedness.

3.7

Operations and Obligations.

(a)

Except as set forth in Schedule 3.7(a), or reflected on the later of the
Unaudited Balance Sheet or the December 31, 2009 Audited Balance Sheet (“Balance
Sheet Date”), since such Balance Sheet Date: (i) there has been no event or
condition that has had or reasonably could be expected to have a Material
Adverse Effect on the Company (other than as a result of (i) general economic
conditions, (ii) business and economic conditions generally affecting the data
networking industry, (iii) liabilities incurred in connection with this
Agreement or the transactions contemplated hereby (including litigation brought
or threatened against the Company or any member of its Board of Directors in
respect of this Agreement), or (iv) resulting from the announcement of the
transactions contemplated hereby (including loss of personnel, distribution
partners, customers or suppliers or the delay or cancellation of orders or
products)); and (ii) there has been no impairment, damage, destruction, loss or
claim, whether or not covered by insurance, or condemnation or other taking
which could reasonably be expected to have a Material Adverse Effect on the
Company.

(b)

Except (i) as set forth in Schedule 3.7(b) and (ii) for actions required to be
taken hereunder or approved in advance thereof by Pacific in writing, since
September 30, 2009, the Company and each of its Subsidiaries have conducted
their business only in the ordinary course and consistent with past practice.
Without limiting the generality of the foregoing, since September 30, 2009,
except as set forth in such Schedule, neither the Company nor any of its
Subsidiaries has:

(i)

issued, delivered or agreed (conditionally or unconditionally) to issue or
deliver, or granted any option, warrant or other right to purchase, any of its
capital stock or other equity interest or any security convertible into its
capital stock or other equity interest;

(ii)

other than in the ordinary course of business consistent with past practice,
issued, delivered or agreed (conditionally or unconditionally) to issue or
deliver any bonds, notes or other debt securities, or borrowed or agreed to
borrow any funds or entered into any lease the obligations of which, in
accordance with generally accepted accounting principles, would be capitalized;

(iii)

 paid any obligation or liability (absolute or contingent) other than
liabilities reflected or reserved against in the Balance Sheet and liabilities
incurred since  September 30, 2009, in the ordinary course of business
consistent with past practice;

(iv)

declared or made, or agreed to declare or make, any payment of dividends or
distributions to its stockholders or purchased or redeemed, or agreed to
purchase or redeem, any Company Capital Stock or any equity interest in any of
its Subsidiaries;

(v)

except in the ordinary course of business consistent with past practice, made or
permitted any material amendment or termination of any agreement to which the
Company or any of its Subsidiaries is a party and is or should be set forth on
Schedule 3.10;

(vi)

undertaken or committed to undertake capital expenditures exceeding $200,000
 for any single project or related series  of projects;

(vii)

sold, leased (as lessor), transferred or otherwise disposed of, mortgaged or
pledged, or imposed or suffered to be imposed any Lien on, any of the assets
reflected on the Balance Sheet or any assets acquired by the Company after
September 30, 2009, except for inventory and personal property sold or otherwise
disposed of for fair value in the ordinary course of its business consistent
with past practice and except for Permitted Liens;

(viii)

canceled any debts owed to or claims held by the Company (including the
settlement of any claims or litigation) other than in the ordinary course of its
business consistent with past practice;

(ix)

accelerated or delayed collection of accounts receivable in advance of or beyond
their regular due dates or the dates when the same would have been collected
except in the ordinary course of its business consistent with past practice;

(x)

delayed or accelerated payment of any account payable or other liability beyond
or in advance of its due date or the date when such liability would have been
paid except in the ordinary course of its business consistent with past
practice;

(xi)

entered into or become committed to enter into any other material transaction
except in the ordinary course of business;

(xii)

allowed the levels of supplies or other materials included in the inventory of
the Company or any of its Subsidiaries to vary materially from the levels
customarily maintained in accordance with past practice;   

(xiii)

except for increases in the ordinary course of business consistent with past
practice, instituted any increase in any compensation payable to any employee of
the Company or any of its Subsidiaries, amended any Benefit Plan or modified any
other benefits made available to any such employees;   

(xiv)

made any change in the accounting principles or made any material change in
accounting practices used by the Company from those applied in the preparation
of the Financial Statements; or

(xv)

taken any of the actions which, under Section 5.2, they are prohibited from
taking between the date hereof and the Closing Date.

(c)

There are no accrued and unpaid dividends or distributions with respect to the
Company Capital Stock.

3.8

Properties and Assets.  Except as set forth on Schedule 3.8, the Company and
each of its Subsidiaries has good and valid title to all its properties and
assets (other than Intellectual Property Rights and Patents to the extent
qualified by Section 3.15) reflected on the Balance Sheet or acquired after the
date thereof except for (i) properties and assets sold or otherwise disposed of
in the ordinary course of business since the date of such Balance Sheet, (ii)
leasehold interests, in which event the Company or such Subsidiary has a valid
leasehold interest and (iii) properties and assets which individually or in the
aggregate are not material to the operations of the business of the Company and
each of its Subsidiaries taken as a whole.

3.9

Real Property.

(a)

Schedule 3.9 (a) sets forth the address and description of each parcel of “Owned
Real Property.” With respect to each parcel of Owned Real Property:

(i)

Company or one of its Subsidiaries has good and marketable indefeasible fee
simple title, free and clear of all Liens, except “Permitted Liens;”

(ii)

except as set forth in Schedule 3.9(a), neither Company nor any of its
Subsidiaries has leased or otherwise granted to any Person the right to use or
occupy such Owned Real Property or any portion thereof; and

(iii)

there are no outstanding options, rights of first offer or rights of first
refusal to purchase such Owned Real Property or any portion thereof or interest
therein.

(b)

Schedule 3.9(b) sets forth the address of each parcel of “Leased Real Property,”
and a true and complete list of all leases (“Lease”)  for each such Leased Real
Property (including the date and name of the parties to such Lease document).
 Company and each of its Subsidiaries has delivered to Buyer a true and complete
copy of each such Lease document, and in the case of any oral Lease, a written
summary of the material terms of such Lease. Except as set forth in schedule
3.9(c), with respect to each of the Leases:

(i)

such Lease is legal, valid, binding, enforceable and in full force and effect;

(ii)

the transaction contemplated by this Agreement does not require the consent of
any other party to such Lease (except for those Leases for which Lease Consents
(as hereinafter defined) are obtained), will not result in a breach of or
default under such Lease, and will not otherwise cause such Lease to cease to be
legal, valid, binding, enforceable and in full force and effect on identical
terms following the Closing;

(iii)

neither Company's nor any of its Subsidiaries' possession and quiet enjoyment of
the Leased Real Property under such Lease has been disturbed and there are no
disputes with respect to such Lease;

(iv)

neither Company nor any of its Subsidiaries nor any other party to the Lease is
in breach or default under such Lease, and no event has occurred or circumstance
exists which, with the delivery of notice, the passage of time or both, would
constitute such a breach or default, or permit the termination, modification or
acceleration of rent under such Lease;

 (v)

neither Company nor any of its Subsidiaries owes, or will owe in the future, any
brokerage commissions or finder's fees with respect to such Lease;

 (vi)

neither Company nor any of its Subsidiaries has subleased, licensed or otherwise
granted any Person the right to use or occupy such Leased Real Property or any
portion thereof;

(c)

All buildings, structures, fixtures, building systems and equipment, and all
components thereof, including the roof, foundation, load-bearing walls and other
structural elements thereof, heating, ventilation, air conditioning, mechanical,
electrical, plumbing and other building systems, environmental control,
remediation and abatement systems, sewer, storm and waste water systems,
irrigation and other water distribution systems, parking facilities, fire
protection, security and surveillance systems, and telecommunications, computer,
wiring and cable installations, included in the Owned Real Property or the
Leased Real Property (jointly the “Real Property”) (the “Improvements”) are in
good condition and repair and sufficient for the operation of Company's and its
Subsidiaries' business. There are no structural deficiencies or latent defects
affecting any of the Improvements and there are no facts or conditions affecting
any of the Improvements which would, individually or in the aggregate, interfere
in any respect with the use or occupancy of the Improvements or any portion
thereof in the operation of Company's or its Subsidiaries' business as currently
conducted thereon.

(d)

There is no condemnation, expropriation or other proceeding in eminent domain,
pending or threatened, affecting any parcel of Real Property or any portion
thereof or interest therein. There is no injunction, decree, order, writ or
judgment outstanding, nor any claims, litigation, administrative actions or
similar proceedings, pending or threatened, relating to the ownership, lease,
use or occupancy of the Real Property or any portion thereof, or the operation
of Company's or its Subsidiaries' business as currently conducted thereon.

(e)

The Real Property is in compliance with all applicable building, zoning,
subdivision, health and safety and other land use laws, and the current use and
occupancy of the Real Property and operation of Company's and its Subsidiaries'
business thereon do not violate any real property laws. Neither Company nor any
of its Subsidiaries has received any notice of violation of any real property
law and there is no basis for the issuance of any such notice or the taking of
any action for such violation. There is no pending or anticipated change in any
real property law that will materially impair the ownership, lease, use or
occupancy of any Real Property or any portion thereof in the continued operation
of Company's or any of its Subsidiaries' business as currently conducted
thereon.

 (f)

All water, oil, gas, electrical, steam, compressed air, telecommunications,
sewer, storm and waste water systems and other utility services or systems for
the Real Property have been installed and are operational and sufficient for the
operation of Company's or any of its Subsidiaries' business as currently
conducted thereon. Each such utility service enters the Real Property from an
adjoining public street or valid private easement in favor of the supplier of
such utility service or appurtenant to such Real Property, and is not dependent
for its access, use or operation on any land, building, improvement or other
real property interest which is not included in the Real Property.

3.10

Customers and Suppliers. Except as set forth in Schedule 3.10, as of the date of
this Agreement, none of the Company's customers which individually account for
more than ten percent (10%) of the Company's consolidated gross revenues during
the 12-month period immediately preceding the date hereof has terminated or
indicated in writing that it intends to terminate any agreement with the Company
or any of its Subsidiaries. During the 12-month period immediately preceding the
date hereof, no material supplier of the Company and each of its Subsidiaries
taken as a whole has indicated in writing that it will stop, or decrease the
rate of, supplying materials, products or services to the Company or such
Subsidiary.

3.11

Contracts. Schedule 3.11 lists any of the following not otherwise listed on any
other Schedule:

(a)

each written contract or commitment which creates an obligation on the part of
the Company or any Subsidiary in excess of $200,000;

(b)

each written debt instrument, including, without limitation, any loan agreement,
line of credit, promissory note, security agreement or other evidence of
indebtedness for money borrowed, where the Company or any of  its Subsidiaries
is a lender, borrower or guarantor, in a principal amount in excess of $200,000;

(c)

each non-competition agreement or any other similar agreement or obligation
which purports to limit the manner in which, or the localities in which, the
business of the Company and each of its Subsidiaries is conducted or by which
the Company manufactures or distributes its products;

(d)

each written contract to which the Company or any of its Subsidiaries is a party
which contains a change of control provision or a prohibition against assignment
that would cause the termination of any such agreement as a result of the
transactions contemplated hereby;

(e)

each written joint venture or partnership agreement to which the Company or  any
of its Subsidiary is a party;

(f)

each written agreement in excess of $200,000  to which  the Company or any of
its Subsidiaries is a party with respect to any assignment, discounting or
reduction of any receivables of the Company or any Subsidiary;

(i)

each agreement, option or commitment or right with, or held by, any third party
to acquire any assets or properties, or any interest therein, of the Company or
any Subsidiary, having a value in excess of $200,000 , except for contracts for
the sale of inventory, machinery or equipment in the ordinary course of
business;

(j)

each written employment or consulting contract entered into by the Company or
any Subsidiary; and

(k)

each supply agreement that the Company or any Subsidiary could not readily
replace without a material impact on the Company and each of its Subsidiaries
taken as a whole.

Except as set forth in Schedule 3.11, (i) there are no oral contracts or oral
commitments of the types described in this Section 3.11 which create an
obligation on the part of the Company or any Subsidiary which are individually
in excess of $200,000  or in the aggregate in excess of $400,000 , (ii) there
are no contracts or commitments between the Company or any Subsidiary and any
Affiliate, (iii) there are no contracts, commitments or arrangements between the
Company or  any Subsidiary and any employee which require the payment of any
compensation upon the occurrence of any specified contingency, (iv) there are no
contracts or arrangements to which the Company or any Subsidiary is a party,
except this Agreement, which require notice to, the consent of, or any payment
of any compensation (whether as a penalty, liquidated damages or otherwise) to
any party with respect to the Merger or any of the transactions contemplated
hereby or in the event of the termination of such contract or arrangement on or
following the Effective Time, and (v) there are no contracts to which the
Company or any Subsidiary is a party which would create rights to any Person
against Pacific or any of its Affiliates (other than rights against the Company
and each of its Subsidiaries as in effect on the Closing Date).

3.12

Absence of Default. Except as set forth in Schedule 3.12,

(a)

each of the agreements listed in Schedules 3.11, 3.15, 3.18 and 3.24 that
creates obligations of any Person in excess of $200,000 constitutes a valid and
binding obligation of the parties thereto, is in full force and effect and will
continue in full force and effect after giving effect to the Merger, in each
case, without breaching the terms thereof or resulting in the forfeiture or
impairment of any rights thereunder and without notice to, the consent, approval
or act of, or the making of any filing with, any other Person;

(b)

the Company and each of its Subsidiaries have fulfilled and performed in all
material respects their obligations under each such agreement to which they are
a party to the extent such obligations are required by the terms thereof to have
been fulfilled or performed through the date hereof;

(c)

the Company and each of its Subsidiaries are not and are not alleged in writing
to be, and each other party to any such agreement is not, to the Best Knowledge
of the Company, in default under, nor is there alleged in writing to be any
basis for termination of, any such agreement;

(d)

no event has occurred and no condition or state of facts exists which, with the
passage of time or the giving of notice or both, would constitute such a default
or breach by the Company or, to the Best Knowledge of the Company, by any such
other party, and

(e)

neither the Company nor any Subsidiary is currently renegotiating any such
agreement or paying liquidated damages in lieu of performance thereunder. Except
as set forth in Schedule 3.29, the Company has previously delivered complete and
correct copies of all such agreements (including all amendments) to Pacific.

3.13

Litigation. There are no actions, suits, arbitrations, legal or administrative
proceedings or investigations pending or, to the Best Knowledge of the Company
and the Sole Shareholder, threatened against the Company or any Subsidiary.
Neither the Company nor any Subsidiary, nor the assets, properties or business
of the Company nor any Subsidiary, is subject to any judgment, order, writ,
injunction or decree of any court, governmental agency or arbitration tribunal.
Neither the Company nor any Subsidiary is the plaintiff in any such proceeding
nor is the Company or its Subsidiary contemplating commencing legal action
against any other Person.

3.14

Compliance with Law.

(a)

Each of the Company and each of its Subsidiaries has complied in all material
respects with, and is not in violation of, in any material respect, any law,
ordinance or governmental rule or regulation (collectively, “Laws”) which is
material to the business of the Company and each of its Subsidiaries taken as a
whole; and

(b)

The Company and each of its Subsidiaries has obtained all licenses, permits,
certificates or other governmental authorizations (collectively
“Authorizations”) necessary for the ownership or use of its assets and
properties or the conduct of its business other than Authorizations (i) which
are ministerial in nature and which the Company or such Subsidiary has no reason
to believe would not be issued in due course and (ii) which, the failure of the
Company or such Subsidiary to possess, would not subject the Company and each of
its Subsidiaries to penalties other than fines not to exceed $25,000  in the
aggregate (“Immaterial Authorizations”); and

(c)

Neither the Company nor any Subsidiary has received written notice of violation
of, or, to the Best Knowledge of the Company and the Sole Shareholder, has
violated any Laws which are material to the business of the Company or any
Authorization necessary for the ownership or use of its assets and properties or
the conduct of its business (other than Immaterial Authorizations).

3.15

Intellectual Property.

(a)

The Company and each of its Subsidiaries own, or are validly licensed or
otherwise have the right to use, all trademarks, trade secrets, trademark
rights, trade names, trade name rights, service marks, service mark rights and
copyrights which are material to the conduct of the Business (the “Intellectual
Property Rights”). Schedule 3.15(a) contains a list of (i) patents and patent
applications (“Patents”), (ii) trademark registrations and applications and
(iii) copyright registrations and applications owned by the Company and each of
its Subsidiaries.

(b)

To the Best Knowledge of the Company and the Sole Shareholder, neither the
Company nor any of its Subsidiaries has interfered with, infringed upon,
misappropriated or otherwise come into conflict with any Patent or Intellectual
Property Rights of any other Person. Neither the Company nor any Subsidiary has
received any written charge, complaint, claim, demand or notice alleging any
such interference, infringement, misappropriation or violation (including any
claim that the Company or any such Subsidiary must license or refrain from using
any Patents or Intellectual Property Rights of any other Person) which has not
been settled or otherwise fully resolved. To the Best Knowledge of the Company
and the Sole Shareholder, no other Person has interfered with, infringed upon,
misappropriated or otherwise come into conflict with any Patents or Intellectual
Property Rights of the Company or any of its Subsidiaries.

 (c)

Except as disclosed in Schedule 3.15(c), each employee, agent, consultant,
officer, director or contractor who has materially contributed to or
participated in the creation or development of any copyrightable, patentable or
trade secret material on behalf of the Company or any of its Subsidiary, or any
predecessor in interest thereto either: (i) is a party to a “work-for-hire”
agreement under which the Company or such Subsidiary is deemed to be the
original owner/author of all property rights therein; or (ii) has executed an
assignment or an agreement to assign in favor of the Company, such Subsidiary or
such predecessor in interest, as applicable, all right, title and interest in
such material, a copy of which assignment or agreement to assign has been made
available to Pacific.

(e)

Except as disclosed in Schedule 3.15(e), (i) neither the Company and nor any of
its Subsidiaries has not sold, assigned, transferred, licensed or sublicensed,
or entered into any contract to sell, assign, transfer or sublicense their
Patents or Intellectual Property Rights other than, in connection with the
Company's and any of its Subsidiary's assets, in the ordinary course of
business, permitting their customers to operate under any Patents covering, or
Intellectual Property Rights embedded in their products and (ii)neither the
Company and nor any of its Subsidiaries has not entered into any contract (oral
or written) or other arrangement pursuant to which the Company or  any
Subsidiary have agreed or are obligated to license, transfer or place in escrow
the source code for any of their software products (prior or current) or
restrict  themselves from using any of their Patents or Intellectual Property
Rights.

(g)

To the Best Knowledge of the Company and the Sole Shareholder, no Stockholder or
employee of the Company has any interest in any Intellectual Property Rights or
Patents (other than as a stockholder of the Company) that is material to the
business or operations of the Company.

3

3.16

Tax Matters.  

Except as set forth in Schedule 3.16, (i) the Company and each of its
Subsidiaries has filed all Tax Returns required to be filed; (ii) all such Tax
Returns are complete and accurate in all material respects and all Taxes shown
to be due on such Tax Returns have been timely paid; (iii) all Taxes (whether or
not shown on any Tax Return) owed by the Company and each of its Subsidiaries
have been timely paid or the Company has established adequate reserves therefor;
(iv) neither the Company nor any Subsidiary has waived or been requested to
waive any statute of limitations in respect of Taxes; (v) there is no action,
suit, investigation, audit, claim or assessment pending or, to the Best
Knowledge of the Company and the Sole Shareholder, proposed or threatened with
respect to Taxes of the Company or any Subsidiary; (vi) all deficiencies
asserted or assessments made as a result of any examination of the Tax Returns
have been paid in full; (vii) Tax indemnity arrangements, if any, will terminate
prior to Closing and the Surviving Corporation will not have any liability
thereunder on or after Closing; (viii) there are no Liens for Taxes upon the
assets of the Company except Liens relating to current Taxes not yet due; (ix)
all Taxes which the Company or  any Subsidiary is required by law to withhold or
to collect for payment have been duly withheld and collected, and have been paid
or accrued, reserved against and entered on the books of the Company or such
Subsidiary in accordance with GAAP, and (x) neither the Company nor its
Subsidiary is or has been a member of any group of corporations filing a
consolidated tax return for United States federal income tax purposes other than
a group comprising exclusively the Company and each of its Subsidiaries.

3.17

Employee Benefit Plans.

(a)

Schedule 3.17(a) contains a list and brief description of all “employee pension
benefit plans” (as defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”)) (sometimes referred to as “Pension
Plans”), “employee welfare benefit plans” (as defined in Section 3(1) of ERISA)
(sometimes referred to as “Welfare Plans”) and all other Benefit Plans (together
with the Pension Plans and Welfare Plans, the “Plans”) maintained, or
contributed to, by the Company or its Subsidiary or any Person that, together
with the Company and each of its Subsidiaries, is treated as a single employer
under Section 414(b), (c), (m) or (o) of the Code (the Company and each such
other Person, a “Commonly Controlled Entity”) for the benefit of any current or
any former employees, officers or directors of the Company or its Subsidiary.
The Company has made available to Pacific true, complete and correct copies of
(i) each Plan (or, in the case of any unwritten Benefit Plans, descriptions
thereof), (ii) the most recent annual  report on Form 5500 filed with the IRS
with respect to each Plan (if any such report was required), (iii) the most
recent summary plan description for each Plan for which such summary plan
description is required, (iv) each trust agreement and group annuity contract
relating to any Plan and (v) all correspondence with the IRS or the United
States Department of Labor relating to any outstanding controversy or audit.
Except as could not reasonably be expected to have a Material Adverse Effect on
the Company, (i) each Plan has been administered in accordance with its terms,
and (ii) the Company and all Plans are in compliance with applicable provisions
of ERISA and the Code.

(b)

Neither the Company nor its Subsidiary has any liability or obligation under any
Welfare Plan to provide life insurance or medical benefits after termination of
employment to any employee or dependent other than as required by Part 6 of
Subtitle B of Title I of ERISA or other applicable law.

(c)

Except as set forth in Schedule 3.17(c) or as provided by this Agreement, no
employee of the Company or its Subsidiary will be entitled to any additional
compensation or benefits or any acceleration of the time of payment or vesting
of any compensation or benefits under any Plan as a result of the transactions
contemplated by this Agreement.

4

3.18

Officers. Schedule 3.18 lists the names, titles and current annual salary rates
of, and bonuses paid or payable to, all present officers of the Company and each
of its Subsidiaries whose 2009 annual base salary exceeded $100,000 (“Executive
Officers”).

3.19

Employees.

(a)

The Company and each of its Subsidiaries has complied in all material respects
with all applicable laws, rules and regulations respecting employment and
employment practices, terms and conditions of employment, wages and hours, other
than instances of non-compliance which, individually or in the aggregate, could
not be reasonably expected to result in a Material Adverse Effect on the
Company, and neither the Company nor its Subsidiary is liable for any arrears of
wages or any taxes or penalties for failure to comply with any such laws, rules
or regulations;

(b)

the Company believes that each of the Company's and its Subsidiary's relations
with their respective employees is satisfactory;

(c)

there are no controversies pending or, to the Best Knowledge of the Company or
the Sole Shareholder, threatened between the Company or any Subsidiary and any
of their respective employees, which controversies have or could reasonably be
expected to have a Material Adverse Effect on the Company;

(d)

except as disclosed in Schedule 3.19, neither the Company nor  any Subsidiary is
a party to any collective bargaining agreement or other labor union contract
applicable to persons employed by the Company or its Subsidiary, nor, to the
Best Knowledge of the Company, are there any activities or proceedings of any
labor union to organize any such employees;

(e)

there are no unfair labor practice complaints pending against the Company before
the National Labor Relations Board or any current union representation questions
involving employees of the Company or any Subsidiary;

(f)

no charges are pending before the Equal Employment Opportunity Commission or any
state, local or foreign agency responsible for the prevention of unlawful
employment practices with respect to the Company or  any Subsidiary;

3.20

Environmental Laws. The Company has not received any notice or claim (and is not
aware of any facts that would form a reasonable basis for any claim), or entered
into any negotiations or agreements with any other Person, and, to the Best
Knowledge of the Company and the Sole Shareholder, neither the Company nor any
Subsidiary is the subject of any investigation by any governmental or regulatory
authority, domestic or foreign, in each case, relating to any material or
potentially material liability or remedial action under any Environmental Laws.
There are no pending or, to the Best Knowledge of the Company and the Sole
Shareholder, threatened, actions, suits or proceedings against the Company,  any
Subsidiary or any of their respective properties, assets or operations asserting
any such material liability or seeking any material remedial action in
connection with any Environmental Laws.  To the Best Knowledge of the Company
and the Sole Shareholder, the Company is in compliance with all applicable
federal, state or local environmental laws, rules and regulations, except to the
extent non-compliance would not have a Material Adverse Effect on the Company or
any of its Subsidiaries.

3.21

Bank Accounts, Letters of Credit and Powers of Attorney. Schedule 3.21 lists (a)
all bank accounts, lock boxes and safe deposit boxes relating to the business
and operations of each of the Company and each of its Subsidiaries (including
the name of the bank or other institution where such account or box is located
and the name of each authorized signatory thereto), (b) all outstanding letters
of credit issued by financial institutions for the account of the Company or its
Subsidiary (setting forth, in each case, the financial institution issuing such
letter of credit, the maximum amount available under such letter of credit, the
terms (including the expiration date) of such letter of credit and the party or
parties in whose favor such letter of credit was issued), and (c) the name and
address of each Person who has a power of attorney to act on behalf of the
Company or any Subsidiary. The Company has heretofore delivered to Pacific true,
correct and complete copies of each letter of credit and each power of attorney
described in Schedule 3.21.

3.22

Subsidiaries.

(a)

Schedule 3.22 sets forth (i) the name and jurisdiction of incorporation of each
Subsidiary of the Company, (ii) the total number of shares of each class of
capital stock of each Subsidiary authorized, the number of shares outstanding
and the number of shares owned by the Company or any other Subsidiary of the
Company and (iii) a complete list of the directors and officers of the Company
and each Subsidiary. All the issued and outstanding shares of capital stock of
each Subsidiary have been duly and validly authorized and issued and are fully
paid, non-assessable and free of pre-emptive rights. None of the outstanding
shares of capital stock of any Subsidiary has been issued in violation of the
preemptive rights of any stockholder of such Subsidiary. The shares of each
Subsidiary were issued in compliance with all applicable Federal and state
securities laws and regulations, and are owned free and clear of all Liens.

(b)

Except as set forth in Schedule 3.22, there are no existing agreements,
subscriptions, options, warrants, calls, commitments, trusts (voting or
otherwise), or rights of any kind whatsoever granting to any Person any interest
in or the right to purchase or otherwise acquire from the Company or any
Subsidiary, at any time, or upon the occurrence of any stated event, any shares
of capital stock of or equity interest in any Subsidiary, whether or not
presently issued or outstanding, nor are there any outstanding shares of capital
stock of or equity  interests in any Subsidiary or any other entity which are
convertible into or exchangeable for other shares of capital stock of or equity
interests in any Subsidiary nor are there any agreements, subscriptions,
options, warrants, calls, commitments or rights of any kind granting to any
Person any interest in or the right to purchase or otherwise acquire from any
Subsidiary or any other Person any shares of capital stock or equity interests
so convertible or exchangeable, nor are there any proxies, agreements or
understandings with respect to the voting of the shares of capital stock of or
equity interests in any Subsidiary. Except for the Company's ownership of the
Subsidiary as disclosed in Schedule 3.22, the Company does not, directly or
indirectly, have any ownership or other interest in, or control of, any Person,
nor is any Subsidiary controlled by or under common control with any Person.

3.23

Affiliate Transactions. Except for the individuals listed in Schedule 3.23, (i)
no officer or director of the Company or its Subsidiary has any significant
interest in any Person that is engaged in a business which is in competition
with the Business of the Company, and (ii) no officer or director of the Company
is a supplier to, or a customer of, the Company, or is a party to any contract
listed in Schedule 3.11, 3.13 or 3.24.

3.24

Insurance. Schedule 3.24 sets forth a list of all policies of insurance
maintained, owned or held by the Company or its Subsidiary as of the date hereof
and a brief description of any outstanding claims under any of such insurance
policies. Each of the Company and each of its Subsidiaries shall use all
commercially reasonable efforts to keep such insurance or comparable insurance
in full force and effect through the Closing Date. Each of the Company and each
of its Subsidiaries has complied in all material respects with each such
insurance policy to which it is a party and has not failed to give any notice or
present any claim thereunder in a due and timely manner, other than instances
which, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect on the Company. Except as disclosed in Schedule
3.24, to the Best Knowledge of the Company and the Sole Shareholder, the full
policy limits (subject to deductibles provided in such policies) are available
and unimpaired under each such policy and no insurer under any of such policies
has a basis to void such policy on grounds of non-disclosure on the part of the
Company or any Subsidiary thereunder. Each such policy is in full force and
effect and will not in any way be affected by or terminate or lapse by reason of
the transactions contemplated by this Agreement.

3.25

Assets. Schedule 3.25 lists each material item of machinery, equipment,
furniture, vehicles or other personal property owned by the Company or its
Subsidiary having an original cost of $50,000 or more.

3.26

Accounts Receivable and Inventory. Except as set forth in Schedule 3.26, all
accounts receivable of the Company and each of its Subsidiaries have arisen from
bona fide transactions by the Company or its Subsidiary in the ordinary course
of its business.  All such inventories (net of any such reserves) are properly
included in the Financial Statements in accordance with GAAP. Such inventories
are located at the locations set forth in Schedule 3.26.

3.27

Minute Books. The minute books of the Company made available to Pacific contain,
in all material respects, a complete and accurate summary of all meetings of
directors and stockholders or actions by written resolutions since the time of
incorporation of the Company through the date of this Agreement, and reflect all
transactions referred to in such minutes and resolutions accurately, except for
omissions which are not material.

3.28

Reorganization. Neither the Company nor any of its Subsidiaries has taken any
action or failed to take any action which action or failure would reasonably be
expected to jeopardize the qualification of the Merger as a reorganization
within the meaning of Section 368(a) of the Code.

3.29

Complete Copies of Materials. Except as set forth in Schedule 3.29, the Company
has delivered or made available true and complete copies of each document that
has been requested by Pacific or its counsel in connection with their legal and
accounting review of the Company.

3.30

Disclosure. None of the representations or warranties of the Company contained
herein, none of the information contained in the Schedules referred to in this
Section 3, and none of the other information or documents furnished or to be
furnished to Pacific or Merger Sub by the Company or any of its Subsidiaries or
pursuant to any provision of this Agreement, contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
herein or therein necessary in order to make the statements contained herein or
therein not misleading in any material respect.

Article 4. Representations and Warranties of Merger Sub and Pacific

 Each of Merger Sub and Pacific represents and warrants to the Company and the
Sole Shareholder as follows:

4.1

Organization. Each of Pacific and Merger Sub is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and the State of Utah, respectively, and has all requisite corporate power and
authority and all necessary governmental approvals to enter into and perform
this Agreement and the transactions contemplated hereby to be performed by it.

4.2

Capital Structure. The authorized capital stock of Pacific consists of
(i)250,000,000   shares of common stock, par value $0.001 per share (the
“Pacific Common Stock”), (ii) 20,000,000 shares of preferred stock, par value
$0.001  per share (“Pacific Authorized Preferred Stock”), of which 1,000,000
shares have been designated Series A Convertible Preferred Stock and 3,300,000
shares have been designated as Series B Convertible Preferred Stock. As of the
date of this Agreement, no bonds, debentures, notes or other indebtedness of
Pacific having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which stockholders of
Pacific may vote are issued or outstanding. All outstanding shares of capital
stock of Pacific are, and all shares which may be issued will be, when issued,
duly authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights.  Attached hereto as Schedule 4.2 is a description of the
outstanding shares of Pacific’s capital stock issued and outstanding.

4.3

Authority.

(a)

Each of Pacific and Merger Sub has full corporate power and authority to
execute, deliver and perform this Agreement and the transactions contemplated
hereunder. The Board of Directors of each of Pacific and Merger Sub has declared
the Merger advisable and approved this Agreement and the execution, delivery and
performance thereof, and the Board of Directors of Merger Sub has resolved to
recommend the approval of the Merger and adoption of this Agreement and the
consummation of the transactions contemplated hereby to the sole stockholder of
Merger Sub. The filing of appropriate merger documents as required by the URCBA.
This Agreement has been duly authorized, executed and delivered by each of
Pacific and Merger Sub and is the legal, valid and binding obligation of each of
Pacific and Merger Sub, enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors rights generally and by the effect of  general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law).

(b)

The execution, delivery and performance by each of Pacific and Merger Sub of
this Agreement and the consummation of the Merger do not, and will not, (i)
violate or conflict with any provision of the Certificate of Incorporation or
Bylaws of either Pacific or Merger Sub, (ii) violate any law, rule, regulation,
order, writ, injunction, judgment or decree of any court, governmental
authority, or regulatory agency, except for violations which, individually or in
the aggregate, will not have a Material Adverse Effect on Pacific and Merger Sub
taken as a whole, or (iii) result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give rise to
any right of termination, cancellation or acceleration) under, any note, bond,
indenture, lien, mortgage, lease, permit, guaranty or other agreement,
instrument or obligation, oral or written, to which Pacific or Merger Sub is a
party or by which any of the properties of Pacific or Merger Sub may be bound,
except for violations, breaches or defaults which, individually or in the
aggregate, will not have a Material Adverse Effect on Pacific its Subsidiaries
and Merger Sub taken as a whole.

(c)

The execution and delivery of this Agreement by each of Pacific and Merger Sub
does not, and the performance by each of Pacific and Merger Sub of this
Agreement will not, require any consent, approval, authorization or permit of,
or filing with or notification to, any governmental or regulatory authority,
domestic or foreign, or any other Person except for (i) the filing and
recordation of appropriate merger documents as required by the URBC and the
NCBCA; (ii) any such consent, approval, authorization, permission, notice or
filing which is required under the Securities Act, the Exchange Exchange Act
(together with the rules and regulations promulgated thereunder, the “Exchange
Act”) and applicable state securities laws; and (iv) any such consent, approval,
authorization, permission, notice or filing which if not obtained or made would
not have a Material Adverse Effect on Pacific its Subsidiaries and Merger Sub
taken as a whole.

4.4

Litigation.

(a)

Neither Pacific nor Merger Sub is a party to any suit, action, arbitration or
legal, administrative, governmental or other proceeding or investigation pending
or, to its knowledge threatened, which reasonably could adversely affect or
restrict its ability to consummate the transactions contemplated by this
Agreement or to perform its obligations hereunder.

(b)

There is no judgment, order, writ, injunction or decree of any court,
governmental agency or arbitration tribunal to which Pacific or Merger Sub is
subject which might adversely affect or restrict its ability to consummate the
transactions contemplated by this Agreement or to perform its obligations
hereunder.

5

4.5

SEC Filings; Pacific Financial Statements.

(a)

Since January 1, 2006, Pacific has filed with the SEC all required reports,
schedules, forms, statements and other documents (including exhibits and all
other information incorporated therein) required to be filed under the
Securities Act and the Exchange Act (the “Pacific SEC Documents”). As of their
respective dates, the Pacific SEC Documents complied in all material respects
with the requirements of the Securities Act or the Exchange Act, as the case may
be, and the rules and regulations of the SEC promulgated thereunder applicable
to such Pacific SEC Documents. Except to the extent that information contained
in any Pacific SEC Document has been revised or superseded by a later filed
Pacific SEC Document, none of the Pacific SEC Documents when filed contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
financial statements of Pacific included in the Pacific SEC Documents comply as
to form, as of their respective dates of filing with the SEC, in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, have been prepared in accordance
with generally accepted accounting principles (except, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto)
and fairly present in all material respects the consolidated financial position
of Pacific and its consolidated Subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal recurring
year-end audit adjustments).

(b)

Except for liabilities (i) reflected in such financial statements or in the
notes thereto, (ii) incurred in the ordinary course of business consistent with
past practice since September 30, 2009 , the date of the most recent audited
financial statements included in the Pacific SEC Documents, or (iii) incurred in
connection with this Agreement or the transactions contemplated hereby, neither
Pacific nor any of its Subsidiaries has any liabilities or obligations (whether
absolute, accrued, contingent or otherwise) of any nature which, individually or
in the aggregate, could reasonably be expected to have a Material Adverse Effect
on Pacific or its Subsidiaries taken as a whole.

4.6

Operations and Obligations. Except as described in the Pacific SEC Documents,
since December 31, 2008  the date of the most recent audited balance sheet of
Pacific contained in the Pacific SEC Documents, (i) except as a result of the
transactions contemplated by this Agreement, there has not been any development
that has had or reasonably would be expected to have a Material Adverse Effect
on Pacific and its Subsidiaries taken as a whole; (ii) there has not been any
material change by Pacific in its accounting methods, principles or practices,
except as required by changes in GAAP or any other change provided such other
change could not reasonably be expected to have a Material Adverse Effect on
Pacific and its Subsidiaries; or (iii) except as a result of the transactions
contemplated by this Agreement or in connection with the acquisition by Pacific
or any of its Subsidiaries of all or substantially all the capital stock or all
or substantially all the assets of another Person, there has not been any
material revaluation by Pacific of any of its assets including, without
limitation, writing down the value of capitalized software or inventory or
writing off notes or accounts receivable which would have a Material Adverse
Effect.

4.7

Environmental Laws.   Pacific has not received any notice or claim (and is not
aware of any facts that would form a reasonable basis for any claim), or entered
into any negotiations or agreements with any other Person, and, to the Best
Knowledge of Pacific, neither Pacific nor any Subsidiary is the subject of any
investigation by any governmental or regulatory authority, domestic or foreign,
in each case, relating to any material or potentially material liability or
remedial action under any Environmental Laws. There are no pending or, to the
Best Knowledge of Pacific, threatened, actions, suits or proceedings against the
Pacific, any Subsidiary or any of their respective properties, assets or
operations asserting any such material liability or seeking any material
remedial action in connection with any Environmental Laws.  To the Best
Knowledge of Pacific, it is in compliance with all applicable federal, state or
local environmental laws, rules and regulations, except to the extent
non-compliance would not have a Material Adverse Effect on Pacific or any of its
Subsidiaries.

4.8

Interim Operations of Merger Sub. Merger Sub was formed solely for the purpose
of engaging in the transactions contemplated hereby has engaged in no other
business activities and has conducted its operations only as contemplated
hereby.

4.9

Reorganization. Neither Pacific nor Merger Sub has taken any action or failed to
take any action which action or failure would reasonably be expected to
jeopardize the qualification of the Merger as a reorganization within the
meaning of Section 368(a) of the Code.

4.10

Intellectual Property.

(a)

Pacific and each of its Subsidiaries own, or are validly licensed or otherwise
have the right to use, all trademarks, trade secrets, trademark rights, trade
names, trade name rights, service marks, service mark rights and copyrights
which are material to the conduct of the Business (the “Intellectual Property
Rights”). Schedule 4.10(a) contains a list of (i) patents and patent
applications (“Patents”), (ii) trademark registrations and applications and
(iii) copyright registrations and applications owned by Pacific and each of its
Subsidiaries.

(b)

To the Best Knowledge of Pacific, neither Pacific nor any of its Subsidiaries
has interfered with, infringed upon, misappropriated or otherwise come into
conflict with any Patent or Intellectual Property Rights of any other Person.
Neither Pacific nor any Subsidiary has received any written charge, complaint,
claim, demand or notice alleging any such interference, infringement,
misappropriation or violation (including any claim that Pacific or any such
Subsidiary must license or refrain from using any Patents or Intellectual
Property Rights of any other Person) which has not been settled or otherwise
fully resolved. To the Best Knowledge of Pacific, no other Person has interfered
with, infringed upon, misappropriated or otherwise come into conflict with any
Patents or Intellectual Property Rights of Pacific or any of its Subsidiaries.

 (c)

Except as disclosed in Schedule 4.10(c), each employee, agent, consultant,
officer, director or contractor who has materially contributed to or
participated in the creation or development of any copyrightable, patentable or
trade secret material on behalf of Pacific or any of its Subsidiary, or any
predecessor in interest thereto either: (i) is a party to a “work-for-hire”
agreement under which Pacific or such Subsidiary is deemed to be the original
owner/author of all property rights therein; or (ii) has executed an assignment
or an agreement to assign in favor of Pacific, such Subsidiary or such
predecessor in interest, as applicable, all right, title and interest in such
material, a copy of which assignment or agreement to assign has been made
available to Pacific.

(e)

Except as disclosed in Schedule 4.10(e), (i) neither Pacific and nor any of its
Subsidiaries has not sold, assigned, transferred, licensed or sublicensed, or
entered into any contract to sell, assign, transfer or sublicense their Patents
or Intellectual Property Rights other than, in connection with Pacific's and any
of its Subsidiary's assets, in the ordinary course of business, permitting their
customers to operate under any Patents covering, or Intellectual Property Rights
embedded in their products and (ii)neither Pacific and nor any of its
Subsidiaries has not entered into any contract (oral or written) or other
arrangement pursuant to which Pacific or  any Subsidiary have agreed or are
obligated to license, transfer or place in escrow the source code for any of
their software products (prior or current) or restrict  themselves from using
any of their Patents or Intellectual Property Rights.

(g)

To the Best Knowledge of Pacific, no stockholder or employee of Pacific has any
interest in any Intellectual Property Rights or Patents (other than as a
stockholder of Pacific) that is material to the business or operations of
Pacific.

6

4.11

Tax Matters.  

Except as set forth in Schedule 4.11, (i) Pacific and each of its Subsidiaries
has filed all Tax Returns required to be filed; (ii) all such Tax Returns are
complete and accurate in all material respects and all Taxes shown to be due on
such Tax Returns have been timely paid; (iii) all Taxes (whether or not shown on
any Tax Return) owed by Pacific and each of its Subsidiaries have been timely
paid or Pacific has established adequate reserves therefor; (iv) neither Pacific
nor any Subsidiary has waived or been requested to waive any statute of
limitations in respect of Taxes; (v) there is no action, suit, investigation,
audit, claim or assessment pending or, to the Best Knowledge of Pacific,
proposed or threatened with respect to Taxes of Pacific or any Subsidiary; (vi)
all deficiencies asserted or assessments made as a result of any examination of
the Tax Returns have been paid in full; (vii) Tax indemnity arrangements, if
any, will terminate prior to Closing and the Surviving Corporation will not have
any liability thereunder on or after Closing; (viii) there are no Liens for
Taxes upon the assets of Pacific except Liens relating to current Taxes not yet
due; (ix) all Taxes which Pacific or  any Subsidiary is required by law to
withhold or to collect for payment have been duly withheld and collected, and
have been paid or accrued, reserved against and entered on the books of Pacific
or such Subsidiary in accordance with GAAP, and (x) neither Pacific nor its
Subsidiary is or has been a member of any group of corporations filing a
consolidated tax return for United States federal income tax purposes other than
a group comprising exclusively Pacific and each of its Subsidiaries.

Article 5. Conduct Pending Closing

5.1

Conduct of Business Pending Closing. From the date hereof until the Closing,
each of the Company and Pacific will (and each will cause its respective
Subsidiaries to):

(a)

maintain its existence in good standing;

(b)

maintain the general character of its business and properties and conduct its
business in the ordinary and usual manner consistent with past practices, except
as expressly permitted by this Agreement;

(c)

maintain business and accounting records consistent with past practices; and

(d)

use its reasonable best efforts (i) to preserve its business intact, (ii) to
keep available to the Company the services of its present officers and
employees, and (iii) to preserve for the Company or such Subsidiary the goodwill
of its suppliers, customers and others having business relations with the
Company.

5.2

Prohibited Actions Pending Closing. Except as set forth in Schedule 5.2 or
otherwise provided for herein or approved by the other Party in writing, from
the date hereof until the Closing, a Party shall not (and shall not permit any
of its Subsidiaries to):

(a)

amend or otherwise change its Articles of Incorporation or Bylaws;

(b)

issue, sell or authorize for issuance or sale any shares of its capital stock or
any other of its securities (other than in connection with the exercise of
outstanding options or warrants of Pacific); or issue, grant or take any action
with respect to any options (including any modification of any option plan or
the vesting of any options previously granted), or make other agreements with
respect to, any shares of its capital stock or any other of its securities,
except for  Pacific may grant of stock options to purchase up to an aggregate of
2,000,000 shares of Pacific Common Stock granted to employees of Pacific or its
Subsidiaries with an exercise price reflecting fair market value.  

(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, subdivide or redeem, purchase or otherwise acquire,
directly or indirectly, any of its capital stock except for the reverse stock
split of Pacific Common Stock anticipated to be effected in December 2009 or
January 2010;

(e)

(i) acquire (including, without limitation, by merger,  consolidation, or
acquisition of stock or assets) any corporation, partnership, other business
organization or any division thereof or any material amount of assets; (ii)
incur any indebtedness for borrowed money (other than in the ordinary course of
business; (iii) enter into any contract or agreement (or series of related
contracts or agreements) in excess of $200,000 other than in the ordinary course
of business, consistent with past practice; (iv) authorize any capital
commitment which is in excess of $200,000  or capital expenditures which are, in
the aggregate, in excess of $200,000; or (v) enter into or amend any contract,
agreement, commitment or arrangement with respect to any matter set forth in
this Section 5.2(e);

(f)

mortgage, pledge or subject to Lien, any of its assets or properties or agree to
do so except for Permitted Liens;

(g)

assume, guarantee or otherwise become responsible for the obligations of any
other Person or agree to so do;

(h)

enter into or agree to enter into or terminate (prior to the expiration date
thereof) any employment agreement other than in the ordinary course of business
in the case of international hires;

(i)

increase the compensation or benefits payable or to become payable to its
officers or employees, except for increases to employees who are not officers in
the ordinary course of business and in accordance with past practices in
salaries or wages of employees, or grant any severance or termination pay to, or
enter into any severance agreement with any director, officer or other employee,
or establish, adopt, enter into or amend any collective bargaining, bonus,
profit sharing, thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance or other
plan, agreement, trust, fund, policy or arrangement for the benefit of any such
director, officer or employee;

(j)

take any action, other than in the ordinary course of business and consistent
with past practice, with respect to accounting policies or procedures
(including, without limitation, procedures with respect to the payment of
accounts payable and collection of accounts receivables);

(k)

make any material Tax election or settle or compromise any material federal,
state, local or foreign income Tax liability;

(l)

settle or compromise any pending or threatened suit, action or claim which is
material or which relates to any of the transactions contemplated by this
Agreement;

(m)

pay, discharge or satisfy any claim, liability or obligation (absolute, accrued,
asserted or unasserted, contingent or otherwise), other than (i) the payment,
discharge or satisfaction, in the ordinary course of business and consistent
with past practice, of liabilities reflected or reserved against in the Balance
Sheet or subsequently incurred in the ordinary course of business and consistent
with past practice and (ii) other claims, liabilities or obligations (qualified
as aforesaid) that in the aggregate do not exceed $200,000  and as to which a
party or its Subsidiary's failure to so pay, discharge or satisfy could not
reasonably be expected to have a Material Adverse Effect on the Party;

(n)

except in connection with the sale or licensing of a Party’s products in the
ordinary course of business and consistent with past practice, sell, assign,
transfer, license, sublicense, pledge or otherwise encumber any of the
Intellectual Property Rights; or

(o)

announce an intention, or commit or agree to do any of the foregoing.

7

5.3

Access; Documents; Supplemental Information.

(a)

From and after the date hereof until the Closing, each Party shall afford, shall
cause its Subsidiaries to afford and, with respect to clause (ii) below, shall
use its reasonable best efforts to cause the independent certified public
accountants for the Party to afford, (i) to the officers, independent certified
public accountants, counsel and other representatives of  the other Party upon
reasonable notice, reasonable access at all reasonable times to the properties,
books and records, including tax returns filed and those in preparation of the
Party, and the right to consult with officers, employees, accountants, counsel,
investment bankers and other representatives of the Party or its Subsidiary in
order that the inquiring Party may have full opportunity to make such
investigations as they shall reasonably desire to make of the operations,
properties, business, financial condition and prospects of the disclosing Party
and each of its Subsidiaries, and (ii) to the independent certified public
accountants of  the disclosing Party free and full access at all reasonable
times to the work papers and other records of the accountants relating to the
disclosing Party and each of its Subsidiaries.   Each Party shall cooperate with
the other Party to take such steps as are reasonably necessary to ensure that
any consultation with employees does not materially interfere with the ongoing
operations of the Company.

(b)

From the date of this Agreement through and including the Closing, each Party,
agrees to furnish to each other Party copies of any notices, documents,
requests, court papers, or other materials received from any governmental agency
or any other third party with respect to the transactions contemplated by this
Agreement, except where it is obvious from such notice, document, request, court
paper or other material that the other party was already furnished with a copy
thereof.

(c)

Pacific shall deliver to the Company, without charge, a copy of any filing made
by Pacific with the SEC under the Exchange Act, including, without limitation,
any Form 10-Q, 8-K, 10-K or amendments thereto, not later than five business
days after the date of such filing with the SEC.

5.4

Notification of Certain Matters. Each Party shall give prompt notice to each
other Party, of (a) the occurrence, or non-occurrence, of any event which would
be likely to cause (i) any representation or warranty contained in this
Agreement to be untrue or inaccurate in any material respect or (ii) any
covenant, condition or agreement contained in this Agreement not to be complied
with or satisfied; and (b) any failure of the Company, Pacific or Merger Sub, as
the case may be, to comply with or satisfy any covenant, condition or agreement
to be complied with or satisfied by it hereunder; provided that the delivery of
any notice pursuant to this Section 5.13 shall not limit or otherwise affect the
remedies available to the party receiving such notice.

5.5

Tax Returns; Cooperation. The Company on the one hand and Pacific on the other
will cooperate with each other and provide  such information as any party may
require in order to file any return to determine Tax liability or a right to a
Tax refund or to conduct a Tax audit or other Tax proceeding. Such cooperation
shall include, but not be limited to, making employees available on a mutually
convenient basis to explain any documents or information provided hereunder or
otherwise as required in the conduct of any audit or other proceeding. The
Company and Pacific will retain until the expiration of any applicable statutes
of limitations (including any extensions thereof) all Tax Returns, schedules and
work papers and all other material records or documents relating to the Company
for all Tax periods through the first Tax period ending after the Closing Date.
At the expiration of such statutory period (including any extensions thereof),
each party shall have the right to dispose of any such Returns and other
documents or records on thirty (30) days written notice to the other party. Any
information, documents or records obtained under this Section 5.5 shall be kept
confidential, except as may be otherwise necessary in connection with the filing
of Tax Returns or claims for refund or in conducting an audit or other
proceeding.

5.6

Actions by the Parties. Upon the terms and subject to the conditions set forth
in this Agreement, each of the parties hereto will use its reasonable best
efforts to take or cause to be taken all actions, and to do, or cause to be
done, all things necessary, proper or advisable under applicable law and
regulations to consummate and make effective in the most expeditious manner
practicable, the transactions contemplated by this Agreement including (i) the
obtaining of all necessary actions and non-actions, waivers and consents, if
any, from any governmental agency or authority and the making of all necessary
registrations and filings and the taking of all reasonable steps as may be
necessary to obtain an approval or waiver from, or to avoid an action or
proceeding by any governmental agency or authority; (ii) the obtaining of all
necessary consents, approvals or waivers from any other Person; (iii) the
defending of any claim, investigation, action, suit or other legal proceeding,
whether judicial or administrative, challenging this Agreement or the
consummation of the transactions contemplated hereby; and (iv) the execution of
additional instruments necessary to consummate the transactions contemplated by
this Agreement. Each party will promptly consult with the other and provide
necessary information (including copies thereof) with respect to all filings
made by such party with any agency or authority in connection with this
Agreement and the transactions contemplated hereby.

5.7

Covenants Regarding Reorganization Status. Neither Pacific nor Merger Sub will
take any action or fail to take any action between the date of this Agreement
and the Effective Time or following the Effective Time which action or failure
would reasonably be expected to jeopardize the qualification of the Merger as a
reorganization within the meaning of Section 368(a) of the Code. Neither the
Company nor its Subsidiary will take any action or fail to take any action
between the date of this Agreement and the Effective Time which action or
failure would reasonably be expected to jeopardize the qualification of the
Merger as a reorganization within the meaning of Section 368(a) of the Code.

Article 6. Conditions Precedent

6.1

Conditions Precedent to Each Party's Obligation to Effect the Merger. The
respective obligations of each party hereto to effect the Merger shall be
subject to the fulfillment or satisfaction, prior to or on the Closing Date of
the following conditions:

(a)

Stockholder Approval. The Merger shall have been duly approved by the Sole
Shareholder, such approval has been obtained.  The Merger shall have been
approved by Pacific as Sole Stockholder of Merger Sub, such approval has been
obtained.  The Parties represent such stockholder approval has been obtained.

(b)

Approvals. All authorizations, consents, orders, declarations or approvals of,
or filings with, or terminations or expirations of waiting periods imposed by,
any governmental or regulatory authority, domestic or foreign, which the failure
to obtain, make or occur would have the effect of making the Merger or any of
the transactions contemplated hereby illegal or would have a Material Adverse
Effect on Pacific or the Company (as Surviving Corporation), assuming the Merger
had taken place, shall have been obtained, made or occurred.

(c)

No Litigation. No judgment, order, decree, statute, law, ordinance, rule or
regulation, entered, enacted, promulgated, enforced or issued by any court or
other governmental entity of competent jurisdiction or other legal restraint or
prohibition (collectively, “Restraints”) shall be in effect specifically
referencing any of the parties hereto or the transactions contemplated by this
Agreement which (i) prevents or materially delays the consummation of the Merger
or (ii) otherwise would materially impair the ability of the Company or Pacific
to perform its obligations under this Agreement. No action or proceeding shall
 have been commenced seeking any temporary restraining order, preliminary or
permanent injunction or other order from any court of competent jurisdiction or
seeking any other legal restraint or prohibition preventing or materially
delaying the consummation of the Merger or which would materially impair the
ability of the Company or Pacific to perform its obligations under this
Agreement other than any of the foregoing which shall have been dismissed with
prejudice; provided that each of the parties shall have used its reasonable best
efforts to prevent the entry of any such temporary restraining order,
preliminary or permanent injunction or other order and to appeal as promptly as
possible any of the foregoing.

6.2

Conditions Precedent to Obligations of Merger Sub and Pacific. All obligations
of Merger Sub and Pacific under this Agreement are subject to the fulfillment or
satisfaction, prior to or on the Closing Date, of each of the following
conditions precedent:

(a)

Performance of Obligations; Representations and Warranties. The Company shall
have performed and complied in all material respects with all agreements and
conditions contained in this Agreement that are required to be performed or
complied with by it prior to or at the Closing. Each of the Company's and Sole
Shareholder’s representations and warranties contained in Section 3 of this
Agreement on and as of the Closing with the same effect as though such
representations and warranties were made on and as of the Closing, except for
changes permitted by this Agreement and except to the extent that any
representations and warranties expressly relate to an earlier date, in which
case such representations and warranties shall be as of such earlier date.
Pacific and Merger Sub shall have received a certificate dated the Closing Date
and signed by the Chairman, President or a Vice-President of the Company,
certifying that, the conditions specified in this Section 6.2(a) have been
satisfied.

(b)

No Material Adverse Change. There shall have been no material adverse change in
the assets, business, financial condition or operations of the Company and no
event or events shall have occurred that could reasonably be expected to have a
Material Adverse Effect (other than as a result of (i) general economic
conditions, (ii) business and economic conditions generally affecting the data
networking industry, (iii) liabilities incurred in connection with this
Agreement or the transactions contemplated hereby (including litigation brought
or threatened against the Company or any member of its Board of Directors in
respect of this Agreement), or (iv) resulting from the announcement of the
transactions contemplated hereby (including loss of personnel, customers or
suppliers or the delay or cancellation of orders or products)) on the Company,
and Pacific shall have received a certificate signed on behalf of the Company by
its Chief Executive Officer and Chief Financial Officer to such effect.

(c)

Consents; Waivers. The Company shall have received all necessary consents, in
form and substance satisfactory to Pacific and Merger Sub, from the other
parties to each contract, lease or agreement to which the Company is a party,
except where the failure to receive such consent would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect on
the Company.

(d)

Escrow Agreement. Each of Pacific the Company, the Escrow Agent and the
Stockholders' Representative shall have entered into the Escrow Agreement
substantially in the form of Exhibit B hereto (the “Escrow Agreement”).

6.3

Conditions Precedent to the Company's Obligations. All obligations of the
Company under this Agreement are subject to the fulfillment or satisfaction,
prior to or on the Closing Date, of each of the following conditions precedent:

(a)

Performance of Obligations; Representations and Warranties. Merger Sub and
Pacific shall have performed and complied in all material respects with all
agreements and conditions contained in this Agreement that are required to be
performed or complied with by them prior to or at the Closing. Each of the
representations and warranties of Merger Sub and Pacific contained in Section 4
of this Agreement shall be true and correct in all material respects on and as
of the Closing with the same effect as though such representations and
warranties were made on and as of the Closing, except for changes permitted by
this Agreement and except to the extent that such representations and warranties
expressly relate to an earlier date, in which case such representations and
warranties shall be as of such earlier date. The Company shall have received
certificates dated the Closing Date and signed by the President or a
Vice-President of Merger Sub and an authorized signatory of Pacific certifying
that the conditions specified in this Section 6.3(a) have been satisfied.

(b)

No Material Adverse Change. There shall have been no material adverse change in
the assets, business, financial condition or operations of Pacific and no event
or events shall have occurred that could reasonably be expected to have a
Material Adverse Effect (other than as a result of (i) general economic
conditions, (ii) business and economic conditions generally affecting the data
networking industry, (iii) liabilities incurred in connection with this
Agreement or the transactions contemplated hereby (including litigation brought
or threatened against Pacific or any member of its Board of Directors in respect
of this Agreement), or (iv) resulting from the announcement of the transactions
contemplated hereby (including loss of personnel, customers or suppliers or the
delay or cancellation of orders or products)) on Pacific and the Company shall
have received a certificate signed on behalf of Pacific by an authorized
signatory thereof.

(c)

Financial Statements.  The Company shall deliver all audited, unaudited and
pro-forma financial statements required for filing with the Securities and
Exchange Commission as a result of the Merger.

(d)

Lockup Agreement.  The Sole Stockholder shall enter into a Lockup Agreement in
the form of Exhibit C attached hereto.

6.4

Frustration of Closing Conditions. None of the Company, Pacific or Merger Sub
may rely on the failure of any condition set forth in Sections 6.1, 6.2 or 6.3,
as the case may be, to be satisfied if such failure was caused by such party's
failure to use reasonable efforts to consummate the Merger and the other
transactions contemplated by this Agreement.

Article 7. Survival of Representation and Warranties

7.1

Representations and Warranties. The representations and warranties of the
Company contained in this Agreement (including the schedules to the Agreement
which are hereby incorporated by reference) or in any instrument delivered
pursuant to this Agreement shall survive for 12 months following the Effective
Time. This Section shall not limit any claim for fraud or any covenant or
agreement by the parties which contemplates performance after the Effective
Time.

Article 8. Indemnification

8.1

Escrow Shares. As soon as practicable after the Closing Date, 5% of the total
number of shares of Pacific Common Stock to be issued in exchange for the
Company Common Stock (the “Escrow Fund”), shall be deposited with ____________
 (or another institution selected by Pacific), as escrow agent (the “Escrow
Agent”), such deposit to be governed by the terms set forth herein and in the
Escrow Agreement. The Escrow Fund shall be the sole and exclusive source
available to compensate Pacific for the indemnification obligations of the Sole
Stockholder under Section 8.2 except that Pacific may elect not to have recourse
to the Escrow Fund for any claim of fraud.

8.2

General Indemnification.

(a)

Subject to the limitations set forth in this Section 8, the Sole Stockholder
will  indemnify and hold harmless Pacific and each Person, if any, who controls,
may control or is controlled by Pacific within the meaning of the Securities Act
and their respective officers, directors, employees, agents and advisors (each
such indemnitee being referred to herein as an “Indemnified Person”), from and
against any and all losses, costs, damages, liabilities, obligations,
impositions, inspections, assessments, fines, deficiencies and expenses arising
from claims, demands, actions, causes of action, including, without limitation,
reasonable legal fees (collectively, “Damages”), arising out of (i) any
inaccuracy in any representation or warranty made by the Company in this
Agreement or in any exhibit or schedule to this Agreement, and (ii) any breach
or default by the Company of any of the covenants or agreements given or made by
it in this Agreement or any exhibit or schedule to this Agreement.

(b)

Pacific and the Sole Stockholder each acknowledge that such Damages, if any,
would relate to unresolved contingencies existing at the Closing Date, which if
resolved at the Closing Date would have led to a reduction in the total
consideration that Pacific would have agreed to pay in connection with the
transactions contemplated hereby.

(c)

Subject to the limitations set forth in this Section 8,  Pacific will  indemnify
and hold harmless the Sole Shareholder from and against any and all Damages
arising out of (i) any inaccuracy in any representation or warranty made by
Pacific in this Agreement or in any exhibit or schedule to this Agreement, and
(ii) any breach or default by  Pacific of any of the covenants or agreements
given or made by it in this Agreement or any exhibit or schedule to this
Agreement.

8.3

Damages Threshold; Damages Cap.

(a)

Notwithstanding anything to the contrary contained in this Agreement, solely
with respect to any claim by Pacific for indemnification under Section
8.2(a)(i), Pacific may not seek indemnification with respect to any claim for
Damages until the aggregate amount of all Damages for which Pacific is seeking
indemnification under Section 8.2(a)(i) equals or exceeds $100,000 (the
“Threshold”), whereupon Pacific shall be entitled to seek indemnification with
respect to all such Damages that exceed the Threshold.  

(b)

Notwithstanding anything to the contrary contained in this Agreement, solely
with respect to any claim by the Sole Shareholder for indemnification under
Section 8.2(c)(i), the Sole Shareholder  may not seek indemnification with
respect to any claim for Damages until the aggregate amount of all Damages for
which the Sole Shareholder is seeking indemnification under Section 8.2(c)(i)
equals or exceeds the Threshold, whereupon the Sole Shareholder shall be
entitled to seek indemnification with respect to all such Damages that exceed
the Threshold

(c)

In determining the amount of any Damage for which Pacific may seek
indemnification under Section 8.2(a)(i) or Section 8.2(a)(ii), but not in
determining whether there has been a breach of any representation, warranty or
covenant, any materiality standard contained in a representation, warranty or
covenant shall be disregarded. In determining the amount of any Damage for which
the Sole Shareholder may seek indemnification under Section 8.2(c)(i) or Section
8.2(c)(ii), but not in determining whether there has been a breach of any
representation, warranty or covenant, any materiality standard contained in a
representation, warranty or covenant shall be disregarded

(c)

The liability of the Sole Stockholder to Pacific for all Damages for which
indemnification is provided hereunder shall not exceed the Escrow Fund, except
for any claims of fraud.  All payments of Damages by the Sole Shareholder shall
be made through the cancellation of the Sole Shareholder’s shares that are held
in the Escrow Fund.

(d)

Except for any claims of fraud, the liability of Pacific to the Sole Shareholder
for all Damages for which indemnification is provided hereunder, shall be paid
through the issuance of additional shares of Pacific Common Stock to the Sole
Shareholder.  The number of shares of Pacific Common Stock that may be issued
for Damages shall not exceed the number of Shares the Sole shareholder Deposited
into the Escrow Fund.

(e)

All Shares issued or cancelled in connection with the payment of Damages, shall
be valued at $1.00 per share, the agreed upon value attributed to Pacific Common
Stock to be issued in the Merger.

8.4

Escrow Period; Release of Escrow Fund. The Escrow Fund shall commence on the
Closing Date and terminate on the first anniversary of the Closing Date. On the
first anniversary of the Closing Date, all shares of Pacific Common Stock then
remaining in the Escrow Fund shall be released to the Sole Stockholder; provided
that the amount of any claim made pursuant to Section 8.5 during the Escrow
Period shall be withheld and remain in the Escrow Fund pending resolution of
such claim; provided further that the number of shares of Pacific Common Stock
in the Escrow Fund which is necessary to satisfy any unsatisfied claims
specified in any Pacific Notice theretofore delivered to the Escrow Agent prior
to the termination of the Escrow Period with respect to facts and circumstances
existing prior to the expiration of the Escrow Period, shall remain in the
Escrow Fund until such claims have been resolved. Any portion of the Escrow Fund
contributed under Section 8.1 for which there is no claim pursuant to this
Section 8 shall be promptly distributed by the Escrow Agent to the Sole
Stockholders' Representative for distribution by the Escrow Agent to the
Stockholders in accordance with each such Stockholder's percentage of the Escrow
Fund as set forth in the Escrow Agreement.

8.5

Claims Upon Escrow Fund.  

(a)

Subject to the provisions of this Section 8, Pacific shall make claims upon the
Escrow Fund by delivery to the Escrow Agent on or before the last day of the
Escrow Period of a notice signed by an authorized representative of Pacific (a
“Pacific Notice”) specifying in reasonable detail the individual items of
Damages for which indemnification is being sought, the date each such item was
paid, or properly accrued or arose, and the nature of the misrepresentation,
breach of warranty or claim to which such item is related. Pacific shall,
concurrently with the sending of any Pacific Notice to the Escrow Agent, provide
a copy of such Pacific Notice to the Sole Shareholders. Within 20 days after the
receipt of any Pacific Notice, the Sole Shareholder shall deliver a notice to
Pacific and the Escrow Agent (a “Shareholder’s'  Response Notice”) certifying
that the Sole Shareholder either agree with the Pacific Notice or object to the
Pacific Notice. If the Sole Shareholder agrees with the Pacific Notice, the
Escrow Agent shall deliver to Pacific out of the Escrow Fund, as promptly as
practicable after receipt of the Shareholder’s' Notice, the number of Shares
held in the Escrow Fund equal to such Damages calculated at a price of $.,00 per
share. If the Sole Shareholders objects to the Pacific Notice within the 20-day
period after receipt of the Pacific Notice, Pacific and the Sole Shareholders
shall resolve such dispute in accordance with Section 8.6. If the Sole
Shareholder fails to deliver a Shareholder’s Response Notice within such 20-day
period, the Sole Shareholders shall be deemed to have consented to the Pacific
Notice and the Escrow Agent shall deliver to Pacific out of the Escrow Fund, as
promptly as practicable after such 20-day period, the number of Shares held in
the Escrow Fund equal to such Damages calculated at $5.00 per share.

(b)

Subject to the provisions of this Section 8, the Sole Shareholder shall make
claims upon the Escrow Fund by delivery to the Escrow Agent on or before the
last day of the Escrow Period of a notice signed by the Sole Shareholder (a
“Shareholder Notice”) specifying in reasonable detail the individual items of
Damages for which indemnification is being sought, the date each such item was
paid, or properly accrued or arose, and the nature of the misrepresentation,
breach of warranty or claim to which such item is related.  The Sole Shareholder
shall, concurrently with the sending of any Shareholder Notice to the Escrow
Agent, provide a copy of such Shareholder Notice to the Chief executive Officer
of Pacific. Within 20 days after the receipt of any Shareholder Notice, Pacific
shall deliver a notice to the Sole Shareholder and the Escrow Agent (a “Pacific
 Response Notice”) certifying that Pacific either agrees with the Shareholder
Notice or object to the Shareholder Notice. If Pacific agrees with the
Shareholder Notice, Pacific shall deliver a certificate for additional shares of
Pacific Common Stock to the Escrow Agent in the amount of the Damages, valued at
$1.00 per share for the Damages.  The Escrow Agent shall deliver such stock
certificate to the Sole Shareholder as soon as practical.  If Pacific objects to
the Shareholder Notice within the 20-day period after receipt of the Shareholder
Notice, Pacific and the Sole Shareholder shall resolve such dispute in
accordance with Section 8.6. If Pacific fails to deliver a Pacific Response
Notice within such 20-day period, Pacific shall be deemed to have consented to
the Shareholder and shall be obligated to deliver additional shares of Pacific
Common Stock to the Sole Shareholder equal to the Damages calculated at the
price of $1.00 per share.

8.6

Objections to Claims.

(a)

If the Sole Shareholder or Pacific shall object to a Notice claim by the other
within the twenty-day period after receipt thereof, then Pacific and the Sole
Shareholder shall use their good faith efforts to resolve such dispute. If
Pacific and the Sole Shareholder resolve such dispute, the parties shall deliver
a written notice to the Escrow Agent directing the delivery of the Escrow Fund
based upon such resolution.

(b)

If Pacific and the Sole Shareholder are unable to resolve such dispute within 30
days after a Notice claim has been delivered to the Escrow Agent, either Pacific
or the Sole Shareholders' may, by written notice to the other and the Escrow
Agent, demand arbitration of such dispute. Any such arbitration shall be
conducted by American Arbitration Association or such other alternative dispute
service (“Arbitration Service”) as shall be reasonably acceptable to Pacific and
the Sole Shareholder. The Arbitration Service shall select one arbitrator
reasonably acceptable to Pacific and the Sole Shareholder. The decision by the
arbitrator shall be binding and conclusive and, notwithstanding any other
provisions of this Section 8, the Escrow Agent shall be entitled to act in
accordance with such decision and make delivery of the Escrow Fund in accordance
therewith.

(c)

The arbitration shall be held in Salt Lake, Utah. The costs of any such
arbitration shall be borne one-half for the account of Pacific and one-half by
the Sole Stockholder. Judgment upon any award rendered by the arbitrator may be
entered in any court of competent jurisdiction.

8.7

Third-Party Claims. In the event a Party becomes aware of a third-party claim
which Pacific believes may result in a demand pursuant to this Section 8, such
Party shall promptly notify the other Party of such claim, and the other Party
shall be entitled to participate in any defense of such claim; provided that
original Party shall control such defense, and shall have the right with the
consent of the other Party (which consent shall not be unreasonably withheld) to
settle any such claim. In the event that a Party has consented to any such
settlement, such Party shall have no power or authority to object under any
provision of this Section 8 to the amount of any claim by the settling Party for
indemnity with respect to such settlement.

Article 9. Brokers' and Finders' Fees

9.1

Company. The Company represents and warrants to Merger Sub and Pacific that,
except as set forth in Schedule 9.1, no broker, investment banker or financial
advisor is entitled to receive a brokerage fee, financing commission or other
commission from the Company in respect of the execution of this Agreement or the
consummation of the transactions contemplated hereby. The Company agrees that if
the transactions contemplated by this Agreement are not consummated (other than
as a result of a breach or default by Pacific or Merger Sub), it shall indemnify
and hold Merger Sub and Pacific harmless against any and all claims, losses,
liabilities, costs or expenses which may be asserted against them as a result of
the Company's or any of its Affiliates' dealings, arrangements or agreements
with any such Person.

9.2

Merger Sub and Pacific. Merger Sub and Pacific represent and warrant to the
Company that no broker, investment banker or financial advisor is entitled to
receive any brokerage fee, financing commission or other commission from Pacific
in respect of the execution of this Agreement or the consummation of the
transactions contemplated hereby. Merger Sub and Pacific agree that if the
transactions contemplated hereby are not consummated (other than as a result of
a breach or default by the Company), they shall jointly and severally indemnify
and hold the Company harmless against any and all claims, losses, liabilities,
costs or expenses which may be asserted against them, as a result of Merger
Sub's or Pacific's or any of their respective Affiliates' dealings, arrangements
or agreements with any such Person.

Article 10. Expenses

10.1

Pacific and the Company shall each pay its own expenses incidental to the
preparation of this Agreement, the carrying out of the provisions of this
Agreement and the consummation of the transactions contemplated hereby, whether
or not the Merger is consummated, except that all printing expenses and SEC
filing fees shall be divided equally between Pacific and the Company.

Article 11. Press Releases

11.1

Pacific has filed a press release in connection with the execution of a Letter
of Intent signed by the Parties.  Pacific will file a press release in
connection with the execution of this Agreement and upon the closing of this
Agreement.

Article 12. No Shop

12.1

 The Company  agrees that, from the date last set forth below until the
termination of this Agreement, the Company will not, and will not authorize or
permit any officer or director of the Company or any other person on its behalf
to, directly or indirectly, solicit, facilitate, encourage, entertain, discuss,
negotiate or accept or enter into any offer, inquiry or proposal from or any
agreement with any party other than Pacific concerning a possible investment in,
or an acquisition, merger or consolidation of the Company with or into any other
entity, a disposition of all or any substantial portion of the business, assets
or securities of the Company, or provide any confidential information to any
party other than Pacific concerning any such investment, acquisition, merger,
consolidation or disposition (a “the Company Third Party Transaction”).  the
Company will promptly notify Pacific in writing of any such offer, the principal
terms of the same and the identity of the party making the same, unless the
Company’s sole response to such offer is to refuse to discuss the offer with
such party.  In the event that the Company breaches any of its undertakings
provided for in this Article 12 and the Company enters into a definitive
agreement or agreement in principle with any third party in respect of which it
breached such undertaking within six months after the termination by the Company
of this Letter of Intent, then the Company shall cause Pacific to be paid, by
the Company or another party or parties to the Company Third Party Transaction,
the amount of $500,000 in cash upon the closing of such the Company Third Party
Transaction.

Article 13. Termination

13.1

This Agreement may be terminated, and the Merger may be abandoned at any time
prior to the Effective Time whether before or after the approval and adoption of
this Agreement and the transactions contemplated hereby by the stockholders of
the Company or the stockholders of Merger Sub:

(a)

by the mutual agreement of the Boards of Directors of Merger Sub and the Company
and the appropriate corporate authority of Pacific;

(b)

by Pacific Merger Sub or the Company if (i) the Effective Time shall not have
occurred by March 30 , 2010 ; provided that the right to terminate this
Agreement under this Section 14(b) shall not be available to any party whose
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;
or (ii) any court of competent jurisdiction in the United States or other United
States governmental authority shall have issued an order, decree, ruling or
taken any other action restraining, enjoining or otherwise prohibiting the
Merger and such order, decree, ruling or other action shall have become final
and nonappealable;

(c)

by the Company, in the event Pacific or Merger Sub materially breaches its
obligations under this Agreement, unless such breach is cured within 15 days
after notice to Pacific by the Company; or

(d)

by Pacific or Merger Sub, in the event the Company materially breaches its
obligations under this Agreement unless such breach is cured within 15 days
after notice by Pacific or Merger Sub.

8

Article 14. Definitions

14.1

As used in this Agreement the terms set forth below shall have the following
meanings:

(a)

“Affiliate” of a Person shall mean any other Person who (i) directly or
indirectly through one or more intermediaries controls, is controlled by or is
under common control with, such Person or (ii) owns more than 10 % of the
capital stock or equity interest in such Person. “Control” means the possession
of the power, directly or indirectly, to direct or cause the direction of the
management and policies of a Person whether through the ownership of voting
securities, by contract or otherwise.

(b)

“Agreement” has the meaning set forth in the preamble to this Agreement.

(c)

“Benefit Plan” shall mean any bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase, stock
option, phantom stock, retirement, vacation, severance, disability, death
benefit, hospitalization, medical or other material plan, arrangement or
understanding (whether or not legally binding) providing material benefits to
any current or former employee, officer or director of the Company.

(d)

“Best Knowledge” in respect of (i) any representation and warranty of the
Company set forth in this Agreement (other than Section 3.14) shall mean the
actual and constructive knowledge of Randall Menscer  to the extent such
knowledge would have been obtained by due inquiry of the officers and employees
charged with responsibility for the particular matter which is the subject of
such representation or warranty and (ii) the representations and warranties of
the Company set forth in Section 3.14 shall mean the actual and constructive
knowledge (to the extent such knowledge would have been obtained by the
reasonable exercise of due diligence in the ordinary course of business) of the
Designated Group; provided, that with respect to Patents, such term shall only
mean the actual knowledge of the Designated Group.

(e)

“Business” has the meaning set forth in Recital A.

(f)

“Closing” and “Closing Date” shall have the meanings set forth in Section
1.1(c).

(g)

“Code” shall mean the Internal Revenue Code of 1986, as amended.

(h)

“Company” shall mean Star Leasing, Inc., a North Carolina corporation.

(i)

“Company Capital Stock” shall have the meaning set forth in Section 1.5(b).

(j)

“Conversion” shall have the meaning set forth in Section 1.5(c)

(k)

“Effective Time” shall have the meaning set forth in Section 1.1(b).

(l)

“Environmental Laws” shall mean all applicable federal, state, local or foreign
laws, rules and regulations, orders, decrees, judgments, permits, filings and
licenses relating (i) to protection and clean-up of the environment and
activities or conditions related thereto, including those relating to the
generation, handling, disposal, transportation or release of Hazardous
Substances and (ii) the health or safety of employees in the workplace
environment, all as amended from time to time, and shall also include any common
law theory based on nuisance, trespass, negligence or other tortuous conduct.

(m)

“Exchange Act” has the meaning set forth in Recital B.

(n)

“Exchange Agent” shall mean a bank or trust company designated as the exchange
agent by Pacific (which designation shall be reasonably acceptable to the
Company).

(o)

“Exchange Ratio” shall have the meaning set forth in Section 1.5(c).

(p)

“GAAP” shall mean United States generally accepted accounting principles.

(q)

“Hazardous Substances” shall mean any and all hazardous and toxic substances,
wastes or materials, any pollutants, contaminants, or dangerous materials
(including, but not limited to, polychlorinated biphenyls, PCBs, friable
asbestos, volatile and semi-volatile organic compounds, oil, petroleum products
and fractions, and any materials which include hazardous constituents or become
hazardous, toxic or dangerous when their composition or state is changed), or
any other similar substances or materials included under or regulated by any
Environmental Laws.

(r)

“Immaterial Authorization” has the meaning set forth in Section 3.14.

(s)

“Indebtedness” shall mean as at any date of determination, the sum of the
following items of the Company and its Subsidiary, without duplication: (i)
obligations created, issued or incurred for borrowed money, including all fees
and obligations thereunder (including, without limitation, any prepayment or
termination fees arising or which will arise out of the prepayment of such
Indebtedness prior to its maturity and termination), (ii) obligations to pay the
deferred purchase price or acquisition price of property or services, other than
trade or accounts payable arising, and accrued expenses incurred, in the
ordinary course of business consistent with past practice, (iii) the face amount
of all letters of credit issued for the account of the Company or its Subsidiary
and all drafts thereunder, (iv) capital lease obligations, if any, and (v) any
obligation guaranteeing any Indebtedness or other obligations of any other
Person (including any obligations under any keep well or support agreements).

(t)

“Leased Real Property” has the meaning set forth in Section 3.9(b).

(u)

“Liens” shall mean any mortgage, pledge, lien, security interest, conditional or
installment sale agreement, encumbrance, charge or other claims of third parties
of any kind.

(v)

“Material Adverse Effect” on a Person shall mean (unless otherwise specified)
any condition or event that may: (a) have a material adverse effect on the
assets, business, financial condition or operations of such Person and its
Subsidiaries, taken as a whole; (b) materially impair the ability of the such
Person to perform its obligations under this Agreement; or (c) prevent or delay
the consummation of the transactions contemplated under this Agreement.

(w)

“Merger” has the meaning set forth in Recital D.

(x)

“Merger Sub” shall mean SL Merger Corporation, a Utah corporation which is a
wholly-owned subsidiary of Pacific.

(y)

“Most Recent Financial Statements” shall mean the Company’s most recent
financial statements which will be required under Section 3.5.

(z)

“NCBCA” has the meaning set forth in Recital D.

(aa)

“New Certificates” has the meaning set forth in Section 1.10.

(bb)

“Old Certificates” has the meaning set forth in Section 1.10.

(cc)

“Outstanding Common Shares” shall have the meaning set forth in Section 3.2.

(dd)

“Owned Real Property” has the meaning set forth in Section 3.9(a).

(ee)

“Pacific” shall mean Pacific Alliance Corporation.

(ff)

“Pacific Common Stock” has the meaning set forth in Recital E.

(gg)

“Permitted Liens” shall mean (a) Liens for taxes, assessments, or similar
charges, incurred in the ordinary course of business that are not yet due and
payable or are being contested in good faith; (b) pledges or deposits made in
the ordinary course of business; (c) Liens of mechanics, material men,
warehousemen or other like Liens securing obligations incurred in the ordinary
course of business that are not yet due and payable or are being contested in
good faith; (d) liens reflected on the Company’s Most Recent Financial
Statements; and (e) similar Liens and encumbrances which are incurred in the
ordinary course of business and which do not in the aggregate materially detract
from the value of such assets or properties or materially impair the use thereof
in the operation of such business.

(hh)

“Person” shall mean any individual, corporation, partnership, limited
partnership, limited liability company, trust, association or entity or
government agency or authority.

(ii)

“Real Property” shall have the meaning set forth in Section 3.9(c).

(jj)

“Reasonable best efforts” shall mean prompt, substantial and persistent efforts
as a prudent Person desirous of achieving a result would use in similar
circumstances; provided that the Company, Pacific or Merger Sub, as applicable,
shall be required to expend only such resources as are commercially reasonable
in the applicable circumstances.

(kk)

“Securities Act” has the meaning set forth in Recital H.

(ll)

“Sole Shareholder” shall mean Randall Menscer.

(mm)

“Subsidiary” of a Person shall mean any corporation, partnership, joint venture
or other entity in which such Person (a) owns, directly or indirectly, 50% or
more of the outstanding voting securities or equity interests or (b) is a
general partner.

(nn)

“Surviving Corporation” shall mean the Company.

(oo)

“Tax” (and, with correlative meaning, “Taxes” and “Taxable”) shall mean any
federal, state, local, municipal or foreign net income, gross income, gross
receipts, windfall profit, severance, property, production, sales, use, license,
excise, franchise, employment, payroll, withholding, alternative or add-on
minimum, ad valorem, value-added, transfer, stamp, or environmental tax, or any
other tax, custom, duty, tariff levy, import, governmental fee or other like
assessment or charge, together with any interest or penalty, addition to tax or
additional amount imposed by any governmental authority.

(pp)

“Tax Return” shall mean any return, report or similar statement required to be
filed with respect to any Tax (including any attached schedules), including,
without limitation, any information return, claim for refund, amended return or
declaration of estimated Tax.

(qq)

“URBCA” has the meaning set forth in Recital D.

Article 15. Notices

15.1

Any notice, request, demand, waiver, consent, approval, or other communication
which is required or permitted to be given to any party hereunder shall be in
writing and shall be deemed given only if delivered to the party personally or
sent to the party by facsimile transmission (promptly followed by a hard-copy
delivered in accordance with this Section 16) or by registered or certified mail
(return receipt requested), with postage and registration or certification fees
thereon prepaid, addressed to the party at its address set forth below:

If to Merger Sub or Pacific:

Steven Clark

Pacific Alliance Corporation

Superior Filtration Products, LLC

986 West 2nd Street

Building 12A, Bay 6

Ogden, UT 84404

E-mail: sclark@superiorfiltrationproducts.com

with copies to:

Elliot Taylor.

Parsons, Behle, & Latimer

If to the Company

or Randall Menscer:

Randall Menscer

Star Leasing, Inc.

3243 Camden Road

Fayetteville, NC 28306

Email:_____________________

with a copy to:

___________________________

___________________________

___________________________

___________________________

or to such other address or Person as any party may have specified in a notice
duly given to the other party as provided herein. Such notice, request, demand,
waiver, consent, approval or other communication will be deemed to have been
given as of the date so delivered, telegraphed or mailed.

Article 16. General Provisions

16.1

Amendment. This Agreement may be amended, modified or supplemented at any time
prior to the Effective Time by the respective Boards of Directors of the parties
hereto notwithstanding the approval hereof by the stockholders of the Company or
the stockholders of Merger Sub, as applicable. Any amendment, modification or
revision of this Agreement and any waiver of compliance or consent with respect
hereto shall be effective only if in a written instrument executed by the
parties hereto.

16.2

Governing law.   This Agreement shall be governed by and interpreted and
enforced in accordance with the laws of the State of Utah as applied to
contracts made and fully performed in such state, except insofar as the NCBCA
shall be mandatorily applicable to the Merger and the rights of the shareholders
of the Company in connection therewith.

16.3

 Assignment. No party to this Agreement will convey, assign or otherwise
transfer any of its rights or obligations under this Agreement without the prior
written consent of the Company (in the case of an assignment by Pacific) or of
Pacific (in the case of an assignment by the Company). Any conveyance,
assignment or transfer requiring the prior written consent of the Company or
Pacific which is made without such consent will be void ab initio. No assignment
will relieve the assigning party of its obligations hereunder or thereunder.

16.4

 Parties in Interest. This Agreement is binding upon and is for the benefit of
the parties hereto and their respective successors and permitted assigns. This
Agreement is not made for the benefit of any Person not a party hereto, and no
Person other than the parties hereto or their respective successors and
permitted assigns will acquire or have any benefit, right, remedy or claim under
or by reason of this Agreement.

16.5

Waiver; Remedies. No failure or delay on the part of Pacific or the Company in
exercising any right, power or privilege under this Agreement will operate as a
waiver thereof, nor will any waiver on the part of Pacific or the Company of any
right, power or privilege under this Agreement operate as a waiver of any other
right, power or privilege under this Agreement, nor will any single or partial
exercise of any right, power or privilege preclude any other or further exercise
thereof or the exercise of any other right, power or privilege under this
Agreement. The rights and remedies herein provided are cumulative and are not
exclusive of any rights or remedies which the parties may otherwise have at law
or in equity.

16.6

Expenses. All fees and expenses incurred in connection with the transactions
contemplated hereby, including, without limitation, all legal, accounting,
financial advisory, consulting and all other fees and expenses of third parties
incurred by a party in connection with the negotiation and effectuation of the
terms and conditions of this Agreement and the transactions contemplated
thereby, shall be the obligation of the respective party incurring such fees and
expenses.

16.7

Severability.  If any term or other provision of this Agreement is determined to
be invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other terms and provisions of the Agreement shall remain in full
force and effect. Upon such determination, the parties hereto shall negotiate in
good faith to modify this Agreement so as to give effect to the original intent
of the parties to the fullest extent permitted by applicable law.

16.8

Entire Agreement.  This Agreement constitutes the entire agreement between the
parties with respect to the subject matter hereof, and supersedes all prior
negotiations, agreements and understandings of the parties of any nature,
whether oral or written, relating thereto.

16.9

Schedules and Exhibits.  All Schedules and Exhibits referred to herein are
intended to be and hereby are specifically made a part of this Agreement.

16.10

Counterparts.  This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, and the Company, the Sole Shareholder,
Merger Sub and Pacific may become a party hereto by executing a counterpart
hereof. This Agreement and any counterpart so executed shall be deemed to be one
and the same instrument.

16.11

Consent to Jurisdiction.

(a)

Each of the parties hereto irrevocably agrees that any legal action or
proceeding with respect to this Agreement and the rights and obligations arising
hereunder, or for recognition and enforcement of any judgment in respect of this
Agreement and the rights and obligations arising hereunder brought by the other
party hereto or its successors or assigns, shall be brought and determined
exclusively in the Third District Court of the State of Utah and any state
appellate court therefrom within the State of Utah. Each of the parties hereto
hereby irrevocably submits with regard to any such action or proceeding for
itself and in respect of its property, generally and unconditionally, to the
personal jurisdiction of the aforesaid courts and agrees that it will not bring
any action relating to this Agreement or any of the transactions contemplated by
this Agreement in any court other than the aforesaid courts. Each of the parties
hereto hereby irrevocably waives, and agrees not to assert as a defense,
counterclaim or otherwise, in any action or proceeding with respect to this
Agreement, (i) any claim that it is not personally subject to the jurisdiction
of the above-named courts for any reason other than the failure to serve in
accordance with this Section 16.11, (ii) any claim that it or its property is
exempt or immune from jurisdiction of any such court or from any legal process
commenced in such courts (whether through service  of notice, attachment prior
to judgment, attachment in aid of execution of judgment, execution of judgment
or otherwise), and (iii) to the fullest extent permitted by applicable Law, any
claim that (A) the suit, action or proceeding in such court is brought in an
inconvenient forum, (B) the venue of such suit, action or proceeding is improper
or (C) this Agreement, or the subject matter hereof, may not be enforced in or
by such courts.

(b)

EACH OF THE PARTIES IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO ANY OF THIS AGREEMENT, THE MERGER OR THE ACTIONS
OF THE PARTIES IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT
THEREOF.

16.12.

Rules of Construction. The following rules shall apply to the interpretation of
this Agreement:

(a)

The parties have participated jointly in the negotiation and drafting of this
Agreement. In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the parties
and no presumption or burden of proof shall arise favoring or disfavoring any
party by virtue of the authorship of any of the provisions of this Agreement.

(b)

Any reference to any federal, state, local, or foreign Law shall be deemed also
to refer to all rules and regulations promulgated thereunder, unless the context
requires otherwise, and shall be deemed to refer to any such Law as amended and
in effect at any time.

(c)

For the purposes of this Agreement, the Disclosure Statements, the Schedules and
Exhibits to this Agreement, (i) words in the singular will include the plural
and vice versa and words of one gender will include the other gender as the
context requires, (ii) the terms “hereof,” “herein,” and “herewith” and words of
similar import will, unless otherwise stated, be construed to refer to this
Agreement as a whole and not to  any particular provision of this Agreement,
(iii) the word “including” and words of similar import will mean “including,
without limitation,” unless otherwise specified, (iv) the word “or” will not be
exclusive, (v) the phrase “made available” will mean that the information
referred to has been made available if requested by the party to whom such
information is to be made available, and (vi) any accounting term will have,
unless otherwise specifically provided herein, the meaning customarily given
such term in accordance with GAAP, and all financial computations will be made,
unless otherwise specifically provided herein, in accordance with GAAP
consistently applied, and all references to GAAP, unless otherwise specifically
provided herein, will be to United States GAAP.

(d)

A “breach” of a representation, warranty, covenant, obligation or other
provision of this Agreement or any Transaction Document will be deemed to have
occurred if there is or has been any inaccuracy in or breach of or any failure
to perform or comply with, such representation, warranty, covenant, obligation
or other provision.

(e)

The article, section and paragraph captions herein and the table of contents
hereto are for convenience of reference only, do not constitute part of this
Agreement and will not be deemed to limit or otherwise affect any of the
provisions hereof. Unless otherwise specified, all references herein to numbered
Articles and Sections are to Articles and Sections of this Agreement and all
references herein to Exhibits are to Exhibits to this Agreement.

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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby,
have duly executed this Agreement as of the date first above written. Pacific
Corp.

 

PACIFIC

PACIFIC ALLIANCE CORPORATION,

a Delaware corporation

By:

/s/Steven Clark

Steven Clark, CEO

MERGER SUB

SL MERGER CORPORATION

By:

/s/Steven Clark

Steven Clark, President

THE COMPANY

STAR LEASING, INC.

a North Carolina corporation

By:

/s/Randall Menscer

Randall Menscer, President

SOLE SHAREHOLDER

/s/Randall Menscer

Randall Menscer

 

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