Exhibit 10.1

 

 

 

 

SHARE EXCHANGE AGREEMENT

 

BY AND AMONG

 

SKIN SHOES, INC.,

 

ALL OF ITS STOCKHOLDERS

 

AND

 

LOGICOM, INC.

 

NOVEMBER 2, 2005

 

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SHARE EXCHANGE AGREEMENT

This SHARE EXCHANGE AGREEMENT ("Agreement") dated as of November 2, 2005 is
entered into by and among SKIN SHOES INC., a Delaware corporation ("Target"),
all of the STOCKHOLDERS (as defined below), and LOGICOM INC. ("Pubco"), a Nevada
corporation.

R E C I T A L S

WHEREAS, the Stockholders own, in the aggregate, all of the issued and
outstanding securities of Target;

WHEREAS, the Boards of Directors of Target and Pubco have approved the
Acquisition and all of the ancillary transactions contemplated by this Agreement
upon the terms and subject to the conditions set forth herein; and

WHEREAS, it is intended that Target, Pubco and the Stockholders will recognize
no gain or loss for federal income tax purposes under the Code as a result of
the consummation of the Acquisition.

NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements contained herein, the parties hereto,
intending to be legally bound hereby, agree as follows:

ARTICLE 1

INTERPRETATION AND DEFINITIONS

1.1

Definitions.

For all purposes of this Agreement:

 

(a)

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

 

(b)

"1934 Act" means the Securities Exchange Act of 1934, as amended;

 

(c)

"Acquisition" means the acquisition of Target by Pubco pursuant to this
Agreement;

 

(d)

"Assets" has the meaning set forth in Section 5.2(o) hereof;

 

(e)

"Audited Financial Statements" means the audited financial statements of Target
described in Section 5.3(a), below;

 

(f)

"Closing" has the meaning set forth in Section 3.1 hereof;

 

(g)

"Closing Date" has the meaning set forth in Section 3.1 hereof;

 

(h)

"Code" means the Internal Revenue Code of 1986, as amended, and the regulations
thereunder;

 

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(i)

"Convertible Debenture" means the one or more convertible debentures issued by
Pubco in the First Private Placement for aggregate net proceeds of $150,000,
each containing a mandatory conversion feature that requires a mandatory
conversion, at Closing, into an aggregate of 178,572 Units;

 

(j)

"Delivery Date" means the date upon which each of Pubco and Target receive a
fully executed original of this Agreement;

 

(k)

"Employees" has the meaning set forth in Section 5.2(aa) hereof;

 

(l)

"Environmental Law" means all legal requirements that relate to protection of
the environment, natural resources, or public or employee health and safety, or
relating to the production, generation, use, storage, treatment, processing,
transportation, disposal or release of regulated materials, including common law
trespass, nuisance, property damage and similar common law theories. The term
“Environmental Law” includes: (i) the Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. §§ 9601-9675 (“CERCLA”); (ii) the
Superfund Amendments and Reauthorization Act, Public Law 99-499, 100 Stat. 1613
(“SARA”); (iii) the Emergency Planning and Community Right to Know Act, 42
U.S.C. §§11001-11050; (iv) the Resource Conservation and Recovery Act, 42 U.S.C.
§§ 6901-6992k; (v) the National Environmental Policy Act, 42 U.S.C. §§
4321-4370e; (vi) the Safe Drinking Water Act, 42 U.S.C. §§ 300f to 300j-26;
(vii) the Toxic Substances Control Act, 15 U.S.C. §§ 2601-2692; (viii) the
Hazardous Materials Transportation Act, 49 U.S.C. §§ 5101-5127; (ix) the Federal
Water Pollution Control Act, 33 U.S.C. §§ 1251-1387; (x) the Oil Pollution Act
of 1990, 33 U.S.C. §§ 2701--2761; (xi) the Rivers and Harbors Acts of 1899, 44
U.S.C. § 401 et seq. (xii) the Clean Air Act, 42 U.S.C. §§ 7401-7671q; (xiii)
the Atomic Energy Act of 1954, as amended, 42 U.S.C. §§2011 et seq.; (xiv) the
Low Level Radioactive Waste Policy Act, as amended, 42 U.S.C. §2021b et seq.;
(xv) any Occupational Safety and Health Law, including the Occupational Safety
and Health Act, 29 U.S.C. §§651-678, and in each case the regulations adopted
pursuant to the above listed statutes, and (xvi) any and all counterpart state,
Canadian, Canadian province, Chinese or Chinese province or regional laws and
regulations;

 

(m)

"Financial Statements" means the unaudited management prepared financial
statements of Target for the period from inception through September 30, 2005,
which are attached to this Agreement as Schedule “C”

 

(n)

"First Private Placement" means the private placement by Pubco, prior to or at
the Delivery Date, in which Pubco will sell the Convertible Debenture;

 

(o)

"Hazardous Material" means any (i) hazardous substance as defined by any
Environmental Law, (ii) any petroleum or petroleum product, oil or waste oil;
(iii) any asbestos or polychlorinated byphenyls; (iv) any hazardous material,
toxic substance, toxic pollutant, solid waste, municipal waste, industrial
waste, hazardous waste, flammable material, radioactive material, pollutant or

 

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contaminant or words of similar meaning and regulatory effect under any
applicable Environmental Law; and (v) any other chemical, material, or substance
exposure to which or whose discharge, emission, disposal or release is
prohibited, limited, or regulated under any applicable Environmental Law.
“Hazardous Material” includes any mixture or solution of the foregoing, and all
derivatives or synthetic substitutes of the foregoing;

 

(p)

"Intellectual Property Rights" means all patents and patent applications,
registered and unregistered trade or brand names, business names, domain names,
domain name registrations and applications, trade-marks, trade-mark
registrations and applications, uniform resource locators (URLs), copyrights,
drawings, logos, designs, trade secrets, restrictive covenants, confidential
information, processes, technology, registered user agreements, research data,
inventions, instruction manuals, formulae and other industrial or intellectual
property rights;

 

(q)

"Loan" means the loan of $150,000 from Pubco to Target, the proceeds of which
will be sourced from the First Private Placement, all as more particularly
described in Article 4, below;

 

(r)

"Liens" means all liens, mortgages, debentures, charges, hypothecations, pledges
or other security interests or encumbrances of whatever kind;

 

(s)

"Loss(es)" means any and all liabilities, demands, claims, suits, actions,
judgments, causes of action, assessments, damages, fines, fees, taxes,
penalties, amounts paid in settlement, deficiencies, losses and expenses,
including interest, expenses of investigation, court costs, fees and expenses of
attorneys, accountants and other experts or other expenses of litigation or
other proceedings or of any claim, default or assessment, such fees and expenses
to include all fees and expenses, including fees and expenses of attorneys,
incurred in connection with (i) the investigation, defense or settlement (or
preparation of any of the foregoing) of any Third Party Claims; or
(ii) asserting or disputing any rights under this Agreement against any party
hereto or otherwise;

 

(t)

"Material" means, when used to qualify a matter or subject, that there is a
substantial likelihood that a reasonable person would consider the matter to be
important;

 

(u)

"Material Adverse Effect" means an adverse effect that is, or would be, singly
or in the aggregate, Material;

 

(v)

"Net Proceeds" means the sum of $1,850,000, being the balance of the proceeds of
the Second Private Placement after deducting the sum required for the repurchase
of Wayne Weaver’s Pubco Shares pursuant to Section 7.12, below, to be held in
escrow as contemplated in Section 8.2(b), below;

 

(w)

"New Directors" means Mark Klein, Stephen Hochberg, Steve Reimer and Michael J.
Rosenthal;

 

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(x)

"Option Shares" has the meaning attributed in Section 2.2, below;

 

(y)

"OTCBB" means the over-the-counter Bulletin Board of the National Association of
Securities Dealers;

 

(z)

"Pubco Options" has the meaning attributed in Section 2.1, below;

 

(aa)

"Pubco Share" means a common share in the share capital of Pubco, par value
$0.001 per share;

 

(bb)

"Public Record" means the Electronic Data Gathering, Analysis and Retrieval
public record known by the acronym “EDGAR” and maintained by the SEC at
www.sec.gov;

 

(cc)

"Registration Statements" shall have the meaning attributed in Section 7.3,
below;

 

(dd)

"SEC" means the United States Securities and Exchange Commission;

 

(ee)

"Second Private Placement" means the private placement of up to 2,321,428 Units
in the capital of Pubco at a purchase price of at least $0.84 per Unit;

 

(ff)

"Stockholders" means all of Mage Capital LLC, Mark Klein, Geoffrey Dubey, Joshua
Hermelin, Tamar Dessou Tzafrir, Idan Miller, Nimrod Mai, Larry Joffe, Roni
Sapir-Haim, Ilan Kottler and Daniel Zerah;

 

(gg)

"Stock Split" shall have the meaning attributed to it in Section 7.11 hereof;

 

(hh)

"Target Options" shall have the meaning attributed to it in Section 2.1 hereof;

 

(ii)

"Target Share" means an issued and outstanding common share of Target, par value
$0.001 per share;

 

(jj)

"Third Party Claim" shall have the meaning attributed to in Section 9.9 hereof;

 

(kk)

"Unit" means a unit in the capital of Pubco consisting of one Pubco Share and
one-half of one Warrant; and

 

(ll)

"Warrant" means a share purchase warrant issued by Pubco as part of a Unit
either (i) upon conversion of the Convertible Debentures or (i) in the Second
Private Placement, each Warrant having a term of three years from the date of
issue and an exercise price of $1.00.

1.2

Interpretation.

For all purposes of this Agreement, except as otherwise expressly provided or
unless the context otherwise requires:

 

(a)

"this Agreement" means this Agreement and all Schedules attached hereto;

 

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(b)

any reference in this Agreement to a designated "Article", "Section", "Schedule"
or other subdivision refers to the designated Article, Section, Schedule or
other subdivision of this Agreement;

 

(c)

the words "herein" and "hereunder" and other words of similar import refer to
this Agreement as a whole and not to any particular Article, Section or other
subdivision of this Agreement;

 

(d)

the word "including", when following any general statement, term or matter, is
not to be construed to limit such general statement, term or matter to the
specific items or matters set forth immediately following such word or to
similar items or matters, whether or not non-limited language (such as "without
limitation" or "but not limited to" or words of similar import) is used with
reference thereto but rather refers to all other items or matters that could
reasonably fall within the broadest possible scope of such general statement,
term or matter;

 

(e)

any reference to a statute includes and, unless otherwise specified herein, is a
reference to, such statute and to the regulations made pursuant thereto, with
all amendments made thereto and in force from time to time, and to any statute
or regulations that may be passed which has the effect of supplementing or
superseding such statute or such regulation;

 

(f)

any reference to "dollars" or "currency" is and shall be deemed to be a
reference to U.S. currency unless otherwise expressly stated; and

 

(g)

words importing the masculine gender include the feminine or neuter gender and
words in the singular include the plural, and vice versa.

1.3

Schedules.

The following are the Schedules to this Agreement, and are incorporated herein
by reference:

 

Schedule "A":

List of all Target Assets, including Intellectual Property

 

Schedule "B":

Material Contracts of Target

 

 

Schedule "C":

Unaudited Financial Statements of Target

 

 

Schedule "D":

Form of Employment Agreement (Mark Klein)

 

 

Schedule "E":

Target Indebtedness

 

 

Schedule "F":

Pubco Indebtedness

 

 

Schedule "G":

Form of Promissory Note

 

 

Schedule "H"

Form of General Security Agreement

 

 

Schedule "I"

Form of Accredited Investor Questionnaire

 

 

Schedule "J"

List of Target Options

 

 

Schedule "K"

Form of Target’s 2005 Incentive Plan

 

 

Schedule "L"

Form of Target’s Stock Option Agreement

 

 

 

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ARTICLE 2

THE ACQUISITION

2.1

The Acquisition.

On the Closing Date and upon the terms and subject to the conditions of this
Agreement, the Stockholders shall exchange with Pubco all of the Target Shares
for an aggregate total of 18,000,000 Pubco Shares in the manner contemplated in
Article 3 of this Agreement. In addition, Pubco shall assume such of the options
to purchase Target Shares issued pursuant to Target’s 2005 Incentive Plan that
are shown on Schedule “J” hereto that are still outstanding immediately prior to
the Closing Date (the “Target Options”), which shall, upon assumption, become
options to purchase Pubco Shares (“Pubco Options”).

2.2

No Registration of Pubco Shares.

None of the Pubco Shares or Pubco Options issued to the Stockholders or assumed
by Pubco at closing, nor any of the Pubco Shares that might thereafter be issued
upon exercise of any of the Pubco Options (“Option Shares”), shall at the time
of Closing be registered or qualified under federal or state Blue Sky securities
laws but rather shall be issued pursuant to an exemption therefrom. These Pubco
Shares and Option Shares may not be offered or sold in the United States or to
U.S. Persons except pursuant to an exemption from, or in a transaction not
subject to, the 1933 Act and in each case only in accordance with applicable
state securities laws. The Pubco Shares issued to the Stockholders at Closing
and the Option Shares that may be issued from time to time thereafter will be
subject to a one-year holding period or such other period as is required under
applicable securities laws. All of such Pubco Shares and Option Shares issued to
those Stockholders that are U.S. Persons (as defined in Regulation S,
promulgated by the SEC under the 1933 Act) shall bear a legend worded
substantially as follows:

"NONE OF THE SECURITIES HAVE BEEN REGISTERED UNDER THE UNITED STATES SECURITIES
ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR ANY U.S. STATE SECURITIES LAWS,
AND, UNLESS SO REGISTERED, NONE MAY BE OFFERED OR SOLD IN THE UNITED STATES OR,
DIRECTLY OR INDIRECTLY, TO U.S. PERSONS (AS DEFINED HEREIN) EXCEPT PURSUANT TO
AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE
STATE SECURITIES LAWS."

All of such Pubco Shares and Option Shares issued to those Stockholders that are
not U.S. Persons (as defined in Regulation S, promulgated by the SEC under the
1933 Act) shall bear a legend worded substantially as follows:

THE SECURITIES REPRESENTED HEREBY HAVE BEEN OFFERED IN AN OFFSHORE TRANSACTION
TO A PERSON WHO IS NOT A U.S. PERSON (AS DEFINED HEREIN) PURSUANT TO REGULATION
S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT").

 

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NONE OF THE SECURITIES REPRESENTED HEREBY HAVE BEEN REGISTERED UNDER THE 1933
ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, MAY NOT BE
OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES (AS DEFINED
HEREIN) OR TO U.S. PERSONS EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF
REGULATION S UNDER THE 1933 ACT, PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE 1933 ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN
EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION,
HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN
COMPLIANCE WITH THE 1933 ACT. "UNITED STATES" AND "U.S. PERSON" ARE AS DEFINED
BY REGULATION S UNDER THE 1933 ACT.

Pubco's transfer agent shall annotate its records to reflect the restrictions on
transfer embodied in the legend set forth above. There shall be no requirement
that Pubco register the Pubco Shares issued to the Stockholders at Closing or
the Option Shares that might thereafter be issued under the 1933 Act or qualify
any of these Pubco Shares or Option Shares under any state Blue Sky laws. The
Stockholders will provide all representations and collateral agreements
requested by Pubco as may be necessary to ensure that the issuance to them of
Pubco Shares or Option Shares complies with the requirements of all applicable
securities laws and regulations.

2.3

2005 Incentive Plan.

At the Closing, Skin Shoes will assign, and Pubco will assume:

 

(i)

Target’s 2005 Incentive Plan, which shall be substantially in the form attached
hereto as Schedule “K”, and

 

(ii)

all of the Stock Option Agreements pursuant to which Target granted Target
Options, which Stock Option Agreements shall all be substantially in the form
attached hereto as Schedule “L”.

2.4

Tax and Accounting Consequences.

It is intended by the parties hereto that the Acquisition shall constitute a
reorganization within the meaning of Section 368 of the Code. Each party has
consulted with its own tax advisors and accountants with respect to the tax and
accounting consequences, respectively, of the Acquisition.

Each of the parties shall:

 

(a)

keep its records and file in connection with its federal and state income tax
returns all such information as may be required by Treas. Reg. Section 1.368-3;

 

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(b)

for federal and state income tax purposes report the share exchange as
qualifying as a reorganization under Section 368(a)(1)(B) of the Code;

 

(c)

refrain from taking any position in connection with its federal or any state
income tax liability that would be inconsistent with such qualification; and

 

(d)

comply with all the requirements of Section 368(a)(1)(B) applicable to such
corporation.

ARTICLE 3.

CLOSING

3.1

Closing.

Subject to the satisfaction of the conditions precedent specified herein, the
closing of the Acquisition (the “Closing”) shall occur on December __, 2005 or
on such other date as all of the parties hereto mutually agree (the “Closing
Date”). The Closing shall take place at the offices of Clark, Wilson,
800 - 885 West Georgia Street, Vancouver, B.C.

3.2

Deliveries by Target At The Closing:

At the Closing, Target shall deliver the following to Pubco:

 

(a)

copies of the resolutions or consents of the Board of Directors of Target
approving this Agreement, the Acquisition and any other actions or transactions
contemplated hereby, in form and substance reasonably satisfactory to Pubco;

 

(b)

a bring down certificate dated the Closing Date and signed by an officer or
director of Target;

 

(c)

the Audited Financial Statements;

 

(d)

a good standing certificate for Target issued by the Secretary of State of the
State of Delaware and dated not more than 10 days prior to the Closing Date; and

 

(e)

all such other documents and instruments as may reasonably be required to
consummate the transactions provided for in this Agreement.

3.3

Deliveries By The Stockholders At the Closing:

At the Closing, the Stockholders shall deliver the following to Pubco:

 

(a)

originals of all of the certificates representing all of the Target Shares;

 

(b)

a properly executed stock power of attorney or similar stock transfer document
from each Stockholder effective under Delaware law and transferring, in the
aggregate, all of the Target Shares either in blank or in favour of Pubco;

 

(c)

a bring down certificate dated the Closing Date and signed by each Stockholder;

 

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(d)

all books, records and accounts of Target and any other information necessary
for Pubco to operate and manage the business of Target and the assets owned by
Target, provided that these items shall be deemed delivered if they are tendered
at Target's office in Tel Aviv, Israel, on the Closing Date;

 

(e)

a Consent to Act as a member of the Board of Directors of Pubco from each of the
New Directors;

 

(f)

any approvals and consents from third parties as may be required for Target to
consummate the Acquisition and the other transactions contemplated by this
Agreement including, by way of example and not in limitation, any necessary
consents of the persons referred to in 5.2(r)(iii) of this Agreement; and

 

(g)

all such other documents and instruments as may reasonably be required to
consummate the transactions provided for in this Agreement.

3.4

Deliveries by Pubco To The Stockholders At The Closing:

At the Closing, Pubco shall deliver or cause to be delivered to the Stockholders
the following:

 

(a)

copies of the resolutions or consents of the Board of Directors of Pubco
approving this Agreement, the Acquisition and any other agreements, transactions
or actions contemplated hereby and authorizing the issuance of the Pubco Shares,
as fully paid and non-assessable Pubco Shares, to the Stockholders as
contemplated in Section 3.4(b), below;

 

(b)

a copy of one or more treasury orders and irrevocable directions to Pubco’s
transfer agent directing the transfer agent to issue certificates representing
the number of Pubco Shares to each Stockholder as fully paid and non-assessable
Pubco Shares, in the numbers set forth opposite their name in the table below:

 

NAME OF STOCKHOLDER

NUMBER OF PUBCO SHARES

Mage Capital LLC

360,000

Mark Klein

9,052,155

Geoffrey Dubey

2,846,700

Joshua Hermelin

3,093,300

Tamar Dessou Tzafrir

209,250

Idan Miller

83,700

Nimrod Mai

119,273

 

 

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Larry Joffe

544,050

Roni Sapir-Haim

355,725

Ilan Kottler

35,573

Daniel Zerah

355,725

Michael J. Rosenthal

900,000

 

(c)

a certified copy of a resolution of the Board of Directors of Pubco increasing
the number of members of Pubco's Board of Directors to five (5) and electing the
New Directors to the Board, effective upon Closing;

 

(d)

the written resignation of Gary Musil from all of his offices at Pubco
(excluding his seat on the Board of Directors), effective upon Closing;

 

(e)

a bring down certificate dated the Closing Date and signed by an officer or
director of Pubco;

 

(f)

a good standing certificate for Pubco issued by the Secretary of State of the
State of Nevada and dated not more than 10 days prior to the Closing Date; and

 

(g)

such other documents as are required to be delivered prior to or on the Closing
Date pursuant to this Agreement or as may reasonably be required to consummate
the transactions provided for in this Agreement.

ARTICLE 4

PRE-CLOSING LOAN

Within two business days after delivery to Pubco of a fully executed original of
this Agreement, Pubco shall make the Loan to Target. The Loan shall be evidenced
by a promissory note in the form attached hereto as Schedule “G”, which shall
specify that the Loan shall mature upon the earlier of (a) the Closing Date and
(b) the date upon which this Agreement is terminated for any reason, and shall
be secured by a first lien on all of the property of Target, which shall be
evidenced by a General Security Agreement in the form attached hereto as
Schedule “H” and perfected by the appropriate public record filings.

 

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ARTICLE 5

REPRESENTATIONS, WARRANTIES AND COVENANTS

OF THE STOCKHOLDERS

5.1

Representations and Warranties.

Each Stockholder represents and warrants, severally and not jointly, as follows
with the intent that Pubco will rely thereon in entering into this Agreement and
in closing the transactions contemplated hereby:

 

(a)

s/he is the sole beneficial and record owner of the number of Target Shares
shown opposite his or her name below:

 

NAME OF SHAREHOLDER

NUMBER OF TARGET SHARES

Mage Capital LLC

 

2

Mark Klein

 

50.28975

Geoffrey Dubey

 

15.815

Joshua Hermelin

 

17.185

Tamar Dessou Tzafrir

 

1.1625

Idan Miller

 

0.465

Nimrod Mai

 

0.662625

Larry Joffe

 

3.0225

Roni Sapir-Haim

 

1.97625

Ilan Kottler

 

0.197625

Daniel Zerah

 

1.97625

Michael J. Rosenthal

 

5

 

(b)

his/her Target Shares are free and clear of all Liens;

 

(c)

except for this Agreement, no person, firm or corporation has any right,
agreement or option, present or future, contingent or absolute, or any right
capable of becoming a right, agreement or option to purchase or otherwise
acquire any of his or her Target Shares;

 

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(d)

s/he has the full and absolute right, power and authority to enter into this
Agreement, and this Agreement constitutes his or her legal, valid and binding
obligation in accordance with its terms except as limited by laws of general
application affecting the rights of creditors;

 

(e)

s/he does not have any specific information relating to Target which is not
generally known and which, to his or her knowledge, has not been disclosed to
Pubco and which if known could reasonably be expected to have a Material Adverse
Effect on the value of the Target Shares;

 

(f)

there are no brokerage, finder's or similar fees paid or payable by him or her
or on his or her behalf in connection with the transactions contemplated herein;

 

(g)

s/he is not aware of any fact which, if known to Target, would cause Target's
representations and warranties herein to be untrue or incorrect;

 

(h)

s/he is not aware of any infringement by Target of any registered patent,
trade-mark or copyright;

 

(i)

s/he (i) has adequate net worth and means of providing for his or her current
financial needs and possible personal contingencies, (ii) has no need for
liquidity in the Pubco Shares, and (iii) is able to bear the economic risks of
an investment in the Pubco Shares for an indefinite period of time, and can
afford the complete loss of such investment;

 

(j)

s/he is aware that an investment in Pubco is speculative and involves certain
risks, including the possible loss of the investment, and s/he has carefully
read and considered the matters set forth under the caption "Risk Factors"
appearing in Pubco's most current reports filed with the SEC;

 

(k)

s/he is acquiring the Pubco Shares for his or her own account for investment
purposes only and not for the account of any other person and not for
distribution, assignment or resale to others, and no other person has a direct
or indirect beneficial interest in his or her Target Shares or the Pubco Shares
that will be issued to him or her pursuant to this Agreement, and s/he has not
subdivided his or her interest in the Pubco Shares with any other person; and

 

(l)

s/he is not acquiring the Pubco Shares as a result of any form of general
solicitation or general advertising including advertisements, articles, notices
or other communications published in any newspaper, magazine or similar media or
broadcast over radio, or television, or any seminar or meeting whose attendees
have been invited by general solicitation or general advertising.

5.2

Representations and Warranties of Target

Target does hereby represent and warrant to Pubco with the intent that Pubco
will rely thereon in entering into this Agreement and in closing the
transactions contemplated hereby, that:

 

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(a)

Target is duly incorporated, validly existing and in good standing under the
laws of the State of Delaware;

 

(b)

the authorized capital of Target consists of 1,000 Target Shares, of which 101
are issued and outstanding;

 

(c)

all of the issued and outstanding Target Shares are duly authorized, validly
issued, fully paid, non-assessable and free of preemptive rights;

 

(d)

except as disclosed in this Agreement, no Target Shares are reserved for
issuance;

 

(e)

all of the Stockholders are all of the Stockholders of Target;

 

 

(f)

except as contemplated by or disclosed in this Agreement, there are no
outstanding or authorized securities, options, warrants, calls, rights,
commitments, agreements, arrangements, convertible securities, rights to
subscribe, conversion rights or other agreements, commitments or undertakings of
any kind to which Target is a party or by which it is bound obligating Target to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock or other equity or voting securities of Target or
obligating Target to issue, grant, extend or enter into any such security,
option, warrant, call, right, commitment, agreement, arrangement or undertaking,
nor are there any outstanding stock option rights, phantom equity or similar
rights, contracts, arrangements or commitments to issue capital stock of Target.
There are no voting trusts or any other agreements or understandings with
respect to the voting of Target’s capital stock;

 

(g)

each of the Stockholders holds the number of Target Shares set forth opposite
his or her name in Section 5.1(a), above;

 

(h)

Target has the power, authority and capacity to carry on its business as
presently conducted by it;

 

(i)

the execution and delivery of this Agreement and the completion of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of Target, and this Agreement constitutes a legal, valid and
binding obligation of Target in accordance with its terms except as limited by
laws of general application affecting the rights of creditors;

 

(j)

Target is duly registered to carry on business in all jurisdictions in which
Target carries on business except where the failure to so register would not
have a Material Adverse Effect on Target;

 

(k)

all alterations to the constating documents of Target since its incorporation
have been duly effected in accordance with the laws of the State of Delaware;

 

(l)

the corporate records of Target, as required to be maintained by it under its
statute of incorporation and constating documents, are accurate, complete and
up-to-date in all material respects and all material transactions of Target have
been promptly

 

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and properly recorded in its books or filed with its records; Target is not in
default under or in violation of any provision of its Articles of Incorporation
or Bylaws in any respect;

 

(m)

the directors and officers of Target at the date of this Agreement are as
follows:

Name

Position

Mark Klein

Director, President, Vice President and Secretary

Stephen Hochberg

Director

Steve Reimer

Director

Michael J. Rosenthal

Director

 

(n)

the corporate records of Target, as required to be maintained by it under its
statute of incorporation and constating documents, are accurate, complete and
up-to-date in all material respects and all material transactions of Target have
been promptly and properly recorded in its books or filed with its records;

 

(o)

Schedule “A” contains a list of Target's assets, including a complete list of
all Intellectual Property Rights owned by Target and all of Target's other
assets that have a value of at least One Thousand Dollars (the "Assets"), and
Target has good and marketable title thereto, and all Assets are free and clear
of any Liens not previously disclosed in writing to Pubco;

 

(p)

Target holds all licences and permits required for the conduct in the ordinary
course of its business as presently conducted by it (and as the same is
currently intended to be conducted after the Closing Date), and all such
licences and permits are in good standing and the conduct and uses of the same
by Target are in compliance with all laws and other restrictions, rules,
regulations and ordinances applicable to Target and its business, save and
except for breaches which do not have a Material Adverse Effect on Target or its
business;

 

(q)

with the exception of this Agreement, no party has any agreement, security,
right or option, consensual or arising by law, present or future, contingent or
absolute, or capable of becoming an agreement, right or option:

 

(i)

to require Target to issue or allot any further or other shares in its capital
or any other security convertible or exchangeable into shares in its capital or
to convert or exchange any securities into or for shares in the capital of
Target;

 

(ii)

to require Target to purchase, redeem or otherwise acquire any of the issued and
outstanding shares in its capital; or

 

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(iii)

to purchase or otherwise acquire any Target Shares or any other security in the
capital of Target;

 

(r)

the making of this Agreement and the completion of the transactions contemplated
hereby and the performance of and compliance with the terms hereof will not:

 

(i)

conflict with or result in a breach of or violate any of the terms, conditions,
or provisions of the constating documents of Target;

 

(ii)

conflict with or result in a breach of or violate any of the terms, conditions
or provisions of any law, judgment, order, injunction, decree, regulation or
ruling of any court or governmental authority, domestic or foreign, to which
Target is subject, or constitute or result in a default by Target under any
agreement, contract or commitment to which Target is a party;

 

(iii)

give to any person any remedy, cause of action, right of termination,
cancellation or acceleration in or with respect to any understanding, agreement,
contract, or commitment, written, oral or implied, to which Target is a party;

 

(iv)

give to any government or governmental authority, including any governmental
department, commission, bureau, board, or administrative agency, any right of
termination, cancellation, or suspension of, or constitute a breach of or result
in a default under any permit, license, control, or authority issued to Target
and which is necessary or desirable in connection with the conduct and operation
of the business currently conducted by Target;

 

(v)

constitute a default by Target or an event which, with the giving of notice or
lapse of time or both, might constitute an event of default or non-observance
under any agreement, contract, indenture or other instrument relating to any
indebtedness of Target which would give any party the right to accelerate the
maturity for the payment of any amount payable under that agreement, contract,
indenture, or other instrument;

 

(s)

The outstanding indebtedness of Target and any liabilities of any nature of
Target is as set forth on Schedule “E” hereto. Except as set forth on Schedule
“E” hereto or as set forth in this Agreement, there are no outstanding
contractual obligations, commitments, understandings or arrangements of Target
to repurchase, redeem or otherwise acquire or make any payment in respect of any
shares of capital stock of Target;

 

(t)

the business of Target as currently carried on by it complies with all
applicable laws, judgments, decrees, orders, injunctions, rules, statutes and
regulations of all courts, arbitrators or governmental authorities, except where
the failure to comply would not have a Material Adverse Effect on Target;

 

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(u)

other than this Agreement, and except as disclosed in Schedule “B” hereto,
Target does not have:

 

(i)

any material contract, agreement, undertaking or arrangement, whether oral,
written or implied, which cannot be terminated on not more than thirty (30)
days' notice, without penalty, or

 

(ii)

any outstanding material agreements, contracts or commitments (whether written
or oral) whatsoever relating to or affecting the conduct of its business as
currently carried on, or any of its assets, or for the purchase, sale or lease
of its assets;

 

(v)

there are no management contracts or consulting contracts to which Target is a
party or by which either is bound, and no amount is payable or has been agreed
to be paid by Target to any persons as remuneration, pension, bonus, share of
profits or other similar benefit and no director, officer or member, or former
director, officer or member, of Target, nor any associate or affiliate of any
such person, has any claim of any nature against, or is indebted to, Target;

 

(w)

there are no actions, suits, judgments, investigations or proceedings
outstanding or pending, or to Target’s knowledge and without independent
inquiry, threatened against, involving or affecting Target, or its business,
assets or property, at law or in equity, before or by any domestic or foreign:

 

(i)

court,

 

(ii)

federal, provincial, state, municipal or other governmental authority, or

 

(iii)

department, commission, board, tribunal, bureau or agency;

 

(x)

Target is not:

 

(i)

in breach of any of the terms, covenants, conditions, or provisions of, or in
default under, and has not done or omitted to do anything which, with the giving
of notice or lapse of time or both, would constitute a breach of or a default
under any contract to which it is a party (including, by way of example and not
in limitation, any contract disclosed in Schedule “A”);

 

(ii)

in violation of, nor are any present uses by Target of any of its assets in
violation of or contravention of, any applicable law, statute, order, rule or
regulation;

 

(iii)

in breach or default under any judgment, injunction or other order or aware of
any judicial, administration, governmental, or other authority or arbitrator by
which Target is bound or to which Target or any of its assets are subject;

 

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(y)

Target has not guaranteed, or agreed to guarantee, any indebtedness or other
obligation of any party;

 

(z)

The books and records of Target, which were made available for inspection to
Pubco, its accountants and attorneys pursuant to this Agreement, are the
complete books and records of Target and correctly and fairly reflect the
underlying facts and transactions in all material respects;

 

(aa)

Target has no employees except for Mark Klein and Kobi Levy (the "Employees")
and it has no consultants;

 

(bb)

Target has not failed to comply in any material respect with all applicable
federal, state, and local laws, rules, and regulations relating to employment or
employment termination, and all applicable laws, rules and regulations governing
payment of minimum wages and overtime rates, and the withholding and payment of
taxes from compensation of employees, which failure has had or could reasonably
be expected to have (either individually or in the aggregate) a Material Adverse
Effect;

 

(cc)

there are no labor controversies pending or threatened between Target and any of
its Employees or former employees or any labor union or other collective
bargaining unit representing any of such employees;

 

(dd)

Target has not ever entered into a collective bargaining agreement or other
labor union contract relating to its business or applicable to the Employees;

 

(ee)

there are no written employment or separation agreements, or oral employment or
separation agreements between Target and any of the Employees;

 

(ff)

no employee has any accrued benefits (including vacation, paid time off, sick
leave and similar entitlements);

 

(gg)

Target owns, without restriction, all of the Intellectual Property Rights
included in the Assets used in the conduct of its business as currently
conducted or as Target (or, post-closing, Pubco) currently proposes to conduct
its business, without any conflict with or infringement of the rights of others;

 

(hh)

Target is not aware of any infringement by Target of any patent, trade-mark or
copyright;

 

(ii)

Neither Target nor any of its employees, agents or representatives has, directly
or indirectly, made any bribes, kickbacks, illegal payments or illegal political
contributions using Target’s funds or made any payments from Target’s funds to
governmental officials for improper purposes or made any illegal payments from
Target’s funds to obtain or retain business;

 

(jj)

Environmental Matters.

 

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(i)

To the knowledge of Target, after due investigation, there has been no material
failure by Target to comply with all applicable requirements of Environmental
Laws relating to Target, Target’s operations, and Target’s manufacture,
processing, distribution, use, treatment, generation, recycling, reuses, sale,
storage, handling, transportation or disposal of any Hazardous Material and
Target is not aware of any facts or circumstances which could materially impair
such compliance with all applicable Environmental Laws;

 

(ii)

Target has not received notice from any governmental authority or any other
person of any actual or alleged violation of any Environmental Laws, nor is any
such notice anticipated;

 

(iii)

To the knowledge of Target, after due investigation, Environmental Laws do not
require that any permits, licenses or similar authorizations to construct,
occupy or operate any equipment or facilities used in the conduct of Target’s
business.

 

(iv)

No Hazardous Materials are now located at Target’s business location, and, to
the knowledge of Target, after due investigation, Target has not ever caused or
permitted any Hazardous Materials to be generated, placed, stored, held,
handled, located or used at Target’s business locations, except those which may
lawfully be used, transported, stored, held, handled, generated or placed at the
business locations in the conduct of Target’s business.

 

(v)

Target has not received any notices, whether from a governmental authority or
some other third party, that Hazardous Material contamination exists at a
business location or at any other location utilized by Target in the conduct of
its business nor is Target aware of any circumstances that would give rise to an
allegation of such contamination.

 

(vi)

To the knowledge of Target, after due investigation, no investigation,
administrative order, consent order or agreement, litigation or settlement with
respect to Hazardous Materials or Hazardous Materials contamination is proposed,
threatened, anticipated, pending or otherwise in existence with respect to the
business locations or with respect to any other site controlled or utilized by
Target in the operation of its business. To the knowledge of Target, after due
investigation, no Target business location is currently on, and has never been
on, any federal or state “Superfund” or “Superlien” list.

 

(kk)

Target does not own any capital stock or have any interest in any corporation,
partnership, or other form of business organization;

 

(ll)

There are no disagreements of any kind presently existing, or reasonably
anticipated by Target to arise, between the accountants and lawyers formerly or

 

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- 20 -

 

 

presently employed by Target and Target is current with respect to any fees owed
to its accountants and lawyers with the exception of fees owed to Kirkpatrick &
Lockhart Nicholson Graham LLP in connection with the Acquisition;

 

(mm)

Other than certain fees and Target Options owed to Shy Kurtz by Target as a
finder’s fee, there are no brokerage, finder's or similar fees paid or payable
by or on behalf of Target in connection with the transactions contemplated
herein;

 

(nn)

Target represents and warrants that it has always been and presently is in full
compliance with all applicable laws and regulations of the United States of
America and any country in which it conducts business that prohibits unfair,
fraudulent or corrupt business practices in the performance of business
activities, including but not limited to the following prohibitions: (a) making
any expenditures other than for lawful purposes or directly or indirectly
offering, giving, promising to give or authorizing the payment or the gift of
any money, or anything of value, to any entity or individual, while knowing or
having reason to know that all or a portion of such money or thing of value will
be given or promised, directly or indirectly, to any government official,
official of an international organization, officer or employee of a foreign
government or anyone acting in an official capacity for a foreign government,
for the purpose of (x) influencing any action, inaction or decision of such
official in a manner contrary to his or her position or creating an improper
advantage; or (y) inducing such official to influence any government or
instrumentality thereof to effect or influence any act or decision of such
government or instrumentality; (b) conducting any activity or any failure to
conduct any activity, if such action or inaction constitutes a money laundering
crime, including any money laundering crime prohibited under the International
Money Laundering Abatement and Anti-Terrorist Financing Act (“Patriot Act”) and
any amendments or successors thereto; (c) disclosing, sublicensing or selling
any of the information or rights to any person, or any government agency of any
nation, if such disclosure, sublicense or sale would be regarded by any
governmental agency or department of the United States as a breach of the
Foreign Assets Control Regulations, 31 C.F.R. Section 500 et seq. (1988), or the
Transaction Control Regulations, 31 C.F.R. Section 505 et seq. (1988); and

 

(oo)

The representations and warranties and statements of fact made by Target in this
Agreement are, as applicable, accurate, correct and complete and do not contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements and information contained herein not
false or misleading.

5.3

Covenants of Target

 

(a)

Target shall cause its Auditors to audit the Financial Statements and any
financial statements for any subsequent period as may be required by the SEC
(collectively, the “Audited Financial Statements”) and to issue a report thereon
on or before the Closing Date. Target shall provide a copy of the Audited
Financial

 

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Statements and the Auditors’ report to Pubco at the Closing and shall assist
Pubco in the timely completion and filing of a Form 8-K announcing the
completion of the Acquisition.

5.4

Covenants of Target and the Stockholders.

 

(a)

Target and the Stockholders jointly and severally covenant with Pubco that both
before and after the Closing Date, each of them shall execute and do all such
further deeds, acts, things and give such assurances as may reasonably be
required to consummate the transactions contemplated hereby and referenced
herein.

 

(b)

Target shall carry on its business in the ordinary course consistent with past
practice and in compliance with all applicable laws, regulations and rules of
all governmental authorities;

 

(c)

Target and the Stockholders will give to Pubco and Pubco's counsel, accountants
and other representatives full access, during normal business hours throughout
the period prior to the time of Closing, to all of the properties, books,
contracts, commitments and records of Target, and Target will furnish to counsel
for Pubco during such period all such information as Pubco or counsel for Pubco
may reasonably request subject to reasonable restrictions on disclosure, use and
covenants of confidentiality imposed in advance by Target or Target's counsel;
and

 

(d)

if and as required from time-to-time between the date of this Agreement and the
Closing Date, the Stockholders and Target shall update any of the Schedules
attached to this Agreement.

5.5

Negative Covenants of Target.

Target shall not, prior to the Closing Date, except with the prior written
consent of Pubco (which consent will not be unreasonably withheld):

 

(a)

make or permit to be made any employment contracts or other arrangements;

 

(b)

make or assume or permit to be made or assumed any commitment, obligation or
liability which is outside of the usual and ordinary course of the business of
Target, and for the purpose of carrying on the same, but Target will operate its
properties and carry on its businesses as heretofore and will maintain all of
its properties, rights and assets in good standing, order, and repair;

 

(c)

declare or pay any dividends or make any other distributions or appropriations
of profits or capital;

 

(d)

create or assume any indebtedness other than in the ordinary course of business
or guarantee the obligations of any third party; or

 

(e)

sell or otherwise in any way alienate or dispose of or encumber any of its
Assets.

 

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5.6

Securities Matters

Each Stockholder acknowledges that he must assure Pubco that the offer and sale
of the Pubco Shares to him qualifies for an exemption from the registration
requirements imposed by the 1933 Act and from applicable securities laws of any
state of the United States. Each Stockholder agrees that he meets the criteria
established in one or more of subsections 5.6(a), (b) or (c), below.

 

(a)

Accredited Investor, Section 4(2) of the 1933 Act and/or Rule 506 of Regulation
D. The Stockholder qualifies as an “accredited investor”, as that term is
defined in Rule 501 of Regulation D and he agrees that he will provide to Pubco
prior to Closing a completed and signed accredited investor questionnaire in the
form attached hereto as Schedule “I”.

 

(b)

Offshore Investor, Rule 903 of Regulation S. The Stockholder is not a U.S
Person, as defined in Rule 901 of Regulation S promulgated under the 1933 Act,
and the Stockholder, severally but not jointly, represents and warrants to Pubco
that:

 

(i)

he is not acquiring the Pubco Shares as a result of, and he covenants that he
will not engage in any "directed selling efforts" (as defined in Regulation S
under the 1933 Act) in the United States in respect of the Pubco Shares which
would include any activities undertaken for the purpose of, or that could
reasonably be expected to have the effect of, conditioning the market in the
United States for the resale of any of the Pubco Shares;

 

(ii)

he is not acquiring the Pubco Shares for the account or benefit of, directly or
indirectly, any U.S. Person;

 

(iii)

he is resident in Israel;

 

(iv)

the offer and the sale of the Pubco Shares to him as contemplated in this
Agreement complies with or is exempt from the applicable securities legislation
of Israel;

 

(v)

he is outside the United States when receiving and executing this Agreement and
that he will be outside the United States when acquiring the Pubco Shares,

and he covenants with Pubco that:

 

(vi)

offers and sales of any of the Pubco Shares prior to the expiration of a period
of one year after the date of original issuance of the Pubco Shares (the one
year period hereinafter referred to as the “Distribution Compliance Period”)
shall only be made in compliance with the safe harbor provisions set forth in
Regulation S, pursuant to the registration provisions of the 1933 Act or an
exemption therefrom, and that all offers

 

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and sales after the Distribution Compliance Period shall be made only in
compliance with the registration provisions of the 1933 Act or an exemption
therefrom and in each case only in accordance with applicable state securities
laws; and

 

(vii)

he will not engage in hedging transactions with respect to the Pubco Shares
until after the expiration of the Distribution Compliance Period.

 

(c)

Non-Accredited Investor, Section 4(2) of the 1933 Act and/or Rule 506 of
Regulation D. The Stockholder is not an accredited investor, nor is he able to
qualify the offer and sale of the Pubco Shares for an exemption under Regulation
S (Subsection 5.6(b), above), but he has, either alone or with his purchaser
representative(s), such knowledge and experience in financial and business
matters that he is capable of evaluating the merits and risks of the investment
in Pubco and the Pubco Shares and he will provide reasonable evidence of this
knowledge and experience to Pubco prior to the Closing Date. In addition, the
Stockholder will comply with any other reasonable requirements imposed by Pubco,
and provide any other information reasonably requested by Pubco, in order to
assure Pubco that the issuance of the Pubco Shares to him qualifies for an
exemption from the registration requirements of the 1933 Act.

ARTICLE 6

REPRESENTATIONS, WARRANTIES AND COVENANTS

OF PUBCO

6.1

Representations and Warranties.

Pubco represents and warrants, as of the date of this Agreement and as of the
Closing and with the intent that each of the Stockholders and Target will rely
thereon in entering into this Agreement and in closing the transactions
contemplated hereby, that:

 

(a)

Pubco is duly incorporated, validly existing and in good standing under the laws
of the state of Nevada;

 

(b)

as of the date of this Agreement, the authorized capital of Pubco consists of
50,000,000 Pubco Shares, of which a total of 2,225,000 Pubco Shares are issued
and outstanding;

 

(c)

all of the issued and outstanding Pubco Shares are duly authorized, validly
issued, fully paid, non-assessable and free of preemptive rights;

 

(d)

Except as set forth above, no shares of capital stock or other equity securities
of Pubco are issued, reserved for issuance or outstanding;

 

(e)

there are no outstanding bonds, debentures, notes or other indebtedness or other
securities of Pubco having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
Stockholders of Pubco may vote;

 

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(f)

except as contemplated by or disclosed in this Agreement, there are no
outstanding securities, options, warrants, calls, rights, commitments,
agreements, arrangements, convertible securities, rights to subscribe,
conversion rights or other agreements, commitments or undertakings of any kind
to which Pubco is a party or by which it is bound obligating Pubco to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares of
capital stock or other equity or voting securities of Pubco or obligating Pubco
to issue, grant, extend or enter into any such security, option, warrant, call,
right, commitment, agreement, arrangement or undertaking, nor are there any
outstanding stock option rights, phantom equity or similar rights, contracts,
arrangements or commitments to issue capital stock of Pubco. There are no voting
trusts or any other agreements or understandings with respect to the voting of
Pubco’s capital stock;

 

(g)

The outstanding indebtedness of Pubco and any liabilities of any nature of Pubco
are as set forth on Schedule “F” hereto. Except as set forth on Schedule “F”
hereto or as set forth in this Agreement, there are no outstanding contractual
obligations, commitments, understandings or arrangements of Pubco to repurchase,
redeem or otherwise acquire or make any payment in respect of any shares of
capital stock of Pubco;

 

(h)

except as contemplated by the terms of this Agreement, there are no agreements
or arrangements pursuant to which Pubco is or could be required to register
shares of its common stock or other securities under the 1933 Act, or other
agreements or arrangements with any security holders of Pubco with respect to
securities of Pubco;

 

(i)

any disclosure that Pubco has made in the Public Record with respect to the
existence, nature or status of its business or operations was accurate at the
time it was filed;

 

(j)

the execution and delivery of this Agreement and the completion of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action on the part of Pubco, and this Agreement constitutes
the legal, valid and binding obligation of Pubco in accordance with its terms
except as limited by laws of general application affecting the rights of
creditors;

 

(k)

all alterations to the constating documents of Pubco since its incorporation
have been duly effected in accordance with the laws of the state of Nevada;

 

(l)

the corporate records of Pubco, as required to be maintained by it under its
statute of incorporation and constituent documents, are accurate, complete and
up-to-date in all material respects and all material transactions of Pubco have
been promptly and properly recorded in its books or filed with its records;
Pubco is not in default under or in violation of any provision of its Articles
of Incorporation or Bylaws in any respect;

 

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(m)

the making of this Agreement and the completion of the transactions contemplated
hereby and the performance of and compliance with the terms hereof will not:

 

(i)

conflict with or result in a breach of or violate any of the terms, conditions,
or provisions of the constating documents of Pubco;

 

(ii)

conflict with or result in a breach of or violate any of the terms, conditions
or provisions of any law, judgment, order, injunction, decree, regulation or
ruling of any court or governmental authority, domestic or foreign, to which
Pubco is subject, or constitute or result in a default by Pubco under any
agreement, contract or commitment to which Pubco is a party;

 

(iii)

give to any person any remedy, cause of action, right of termination,
cancellation or acceleration in or with respect to any understanding, agreement,
contract, or commitment, written, oral or implied, to which Pubco is a party;

 

(iv)

give to any government or governmental authority, including any governmental
department, commission, bureau, board, or administrative agency, any right of
termination, cancellation, or suspension of, or constitute a breach of or result
in a default under, any permit, license, control, or authority issued to Pubco
and which is necessary or desirable in connection with the conduct and operation
of the business currently conducted by Pubco;

 

(v)

constitute an event of default by Pubco or an event which, with the giving of
notice or lapse of time or both, might constitute an event of default or
non-observance under any agreement, contract, indenture or other instrument
relating to any indebtedness of Pubco which would give any party the right to
accelerate the maturity for the payment of any amount payable under that
agreement, contract, indenture, or other instrument;

so as to have a Material Adverse Effect on Pubco;

 

(n)

Pubco has no indebtedness or liability except for the matters listed on Schedule
“F” hereto;

 

(o)

there are no actions, suits, judgments, investigations or proceedings
outstanding or pending or, to Pubco’s knowledge without independent inquiry,
threatened, against, involving or affecting Pubco, or its assets or property, at
law or in equity, before or by any domestic or foreign:

 

(i)

court,

 

(ii)

federal, provincial, state, municipal or other governmental authority, or

 

(iii)

department, commission, board, tribunal, bureau or agency;

 

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(p)

Pubco is not:

 

(i)

a party to any contract; nor is Pubco a party to or bound by or affected by any
contract, lease, arrangement or commitment (whether oral or written) relating
to: (a) the employment of any person; (b) collective bargaining with, or any
representation of any employees by, any labor union or association; (c) the
acquisition of services, supplies, equipment or other personal property; (d) the
purchase or sale of real property; (e) distribution, agency or construction; (f)
lease of real or personal property as lessor or lessee or sublessor or
sublessee; (g) lending or advancing of funds; (h) borrowing of funds or receipt
of credit; (i) incurring any obligation or liability; or (j) the sale of
personal property.

 

(ii)

in violation of, nor are any present uses by Pubco of any of its assets in
violation of or contravention of, any applicable law, statute, order, rule or
regulation;

 

(iii)

in breach or default under any judgment, injunction or other order or aware of
any judicial, administration, governmental, or other authority or arbitrator by
which Pubco is bound or to which Pubco or any of its assets are subject;

 

(q)

Pubco is not aware of any infringement by Pubco of any registered patent,
trade-mark or copyright; and

 

(r)

there are no brokerage, finder's or similar fees paid or payable by or on behalf
of Pubco in connection with the transactions contemplated herein;

 

(s)

since June 30, 2005, the date of its most recent financial statements, and
except as may have been disclosed in any filing with the SEC, there is not and
has not been: (i) any material adverse change with respect to Pubco; (ii) any
condition, event or occurrence which individually or in the aggregate could
reasonably be expected to have a material adverse effect or give rise to a
material adverse change with respect to Pubco; or (iii) any condition, event or
occurrence which could reasonably be expected to prevent, hinder or materially
delay the ability of Pubco to consummate the transactions contemplated by this
Agreement.

 

(t)

Pubco is not a party to any collective bargaining agreement or any bonus,
pension, profit sharing, deferred compensation, incentive compensation, stock
ownership, stock purchase, phantom stock, retirement, vacation, severance,
disability, death benefit, hospitalization, medical or other plan, arrangement
or understanding (whether or not legally binding) under which Pubco currently
has an obligation to provide benefits to any current or former employee, officer
or director of Pubco.

 

(u)

except as may be contemplated in this Agreement, Pubco is not a party to any
written or oral employment agreement or separation agreement which could result
in the payment to any current, former or future director or employee of Pubco of

 

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any money or other property or rights or accelerate or provide any other rights
or benefits to any such employee or director as a result of the transactions
contemplated by this Agreement, whether or not (i) such payment, acceleration or
provision would constitute a "parachute payment" (within the meaning of Section
280G of the Code), or (ii) some other subsequent action or event would be
required to cause such payment, acceleration or provision to be triggered;

 

(v)

Pubco does not have any (i) non-qualified deferred or incentive compensation or
retirement plans or arrangements, (ii) qualified retirement plans or
arrangements, (iii) other employee compensation, severance or termination pay or
welfare benefit plans, programs or arrangements or (iv) any related trusts,
insurance contracts or other funding arrangements maintained, established or
contributed to by Pubco;

 

(w)

Pubco has not filed any tax returns and, to its knowledge and without
independent inquiry, it does not owe any taxes. No material claim for unpaid
taxes has been made or become a lien against the property of Pubco or is being
asserted against Pubco, no audit of any tax return of Pubco is being conducted
by a tax authority, and no extension of the statute of limitations on the
assessment of any taxes has been granted by Pubco and is currently in effect. As
used herein, "taxes" shall mean all taxes of any kind, including, without
limitation, those on or measured by or referred to as income, gross receipts,
sales, use, ad valorem, franchise, profits, license, withholding, payroll,
employment, excise, severance, stamp, occupation, premium value added, property
or windfall profits taxes, customs, duties or similar fees, assessments or
charges of any kind whatsoever, together with any interest and any penalties,
additions to tax or additional amounts imposed by any governmental authority,
domestic or foreign. As used herein, "tax return" shall mean any return, report,
or statement required to be filed with any governmental authority with respect
to Taxes.

 

(x)

Pubco has not guaranteed, or agreed to guarantee, any indebtedness or other
obligation of any party;

 

(y)

Pubco has not failed to comply in any respect with all applicable federal,
state, and local laws, rules, and regulations relating to employment or
employment termination, and all applicable laws, rules and regulations governing
payment of minimum wages and overtime rates, and the withholding and payment of
taxes from compensation of employees, which failure has had or could reasonably
be expected to have (either individually or in the aggregate) a Material Adverse
Effect;

 

(z)

no employee has any accrued benefits (including vacation, paid time off, sick
leave and similar entitlements);

 

(aa)

Pubco has filed or furnished, as applicable, all reports, schedules, forms,
information statements, certifications or other documents required to be filed
or furnished by it under the 1933 Act and the Exchange Act, including pursuant
to

 

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Section 13(a) or 15(d) thereof, for the two (2) years preceding the date hereof
(or such shorter period as Pubco was required by law to file such material);

 

(bb)

Except as set forth in the reviewed financial statements of Pubco, including the
notes thereto, which were included in the Form 10-QSB filed by Pubco for the
quarter ended June 30, 2005, or as otherwise contemplated by or in this
Agreement, including the Schedules to this Agreement, Pubco has no liability or
obligation of any nature (whether accrued, absolute, contingent or otherwise and
whether required to be reflected on a balance sheet or other financial
statement);

 

(cc)

Pubco’s audited financial statements for the year ended March 31, 2005 and
Pubco’s interim financial statements for the quarter ended June 30, 2005 are (i)
in accordance with the books and records of Pubco, (ii) correct and complete,
(iii) fairly present the financial position and results of operations of Pubco
as of the dates indicated, and (iv) prepared in accordance with U.S. GAAP
[except that (x) unaudited financial statements may not be in accordance with
U.S. GAAP because of the absence of footnotes normally contained therein, and
(y) interim (unaudited) financial statements are subject to normal year-end
audit adjustments];

 

(dd)

Pubco does not own or lease any real property;

 

(ee)

Neither Pubco nor any of its employees, agents or representatives has, directly
or indirectly, made any bribes, kickbacks, illegal payments or illegal political
contributions using Pubco’s funds or made any payments from Pubco’s funds to
governmental officials for improper purposes or made any illegal payments from
Pubco’s funds to obtain or retain business;

 

(ff)

Environmental Matters.

 

(i)

To the knowledge of Pubco, after due investigation, there has been no material
failure by Pubco to comply with all applicable requirements of Environmental
Laws relating to Pubco, Pubco’s operations, and Pubco’s manufacture, processing,
distribution, use, treatment, generation, recycling, reuses, sale, storage,
handling, transportation or disposal of any Hazardous Material and Pubco is not
aware of any facts or circumstances which could materially impair such
compliance with all applicable Environmental Laws.

 

(ii)

Pubco has not received notice from any governmental authority or any other
person of any actual or alleged violation of any Environmental Laws, nor is any
such notice anticipated.

 

(iii)

To the knowledge of Pubco, after due investigation, Environmental Laws do not
require that any permits, licenses or similar authorizations to construct,
occupy or operate any equipment or facilities used in the conduct of Pubco’s
business.

 

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(iv)

No Hazardous Materials are now located at Pubco’s office, and, to the knowledge
of Pubco, after due investigation, Pubco has not ever caused or permitted any
Hazardous Materials to be generated, placed, stored, held, handled, located or
used at Pubco’s business locations, except those which may lawfully be used,
transported, stored, held, handled, generated or placed at the business
locations in the conduct of Pubco’s business.

 

(v)

Pubco has not received any notices, whether from a governmental authority or
some other third party, that Hazardous Material contamination exists at a
business location or at any other location utilized by Pubco in the conduct of
its business nor is Pubco aware of any circumstances that would give rise to an
allegation of such contamination.

 

(vi)

To the knowledge of Pubco, after due investigation, no investigation,
administrative order, consent order or agreement, litigation or settlement with
respect to Hazardous Materials or Hazardous Materials contamination is proposed,
threatened, anticipated, pending or otherwise in existence with respect to the
business locations or with respect to any other site controlled or utilized by
Pubco in the operation of its business. To the knowledge of Pubco, after due
investigation, no Pubco business location is currently on, and has never been
on, any federal or state “Superfund” or “Superlien” list.

 

(gg)

Pubco has no insurance policies in effect;

 

(hh)

Pubco is in compliance in all material respects with all currently applicable
rules, regulations and requirements of the Sarbanes-Oxley Act and the SEC, and
any other applicable foreign, federal, state and local laws and regulations. No
claim has been filed against Pubco alleging a violation of any applicable law or
regulation of any foreign, federal, state and local government or agency
thereof. Pubco holds all of the material permits, licenses, certificates or
other authorizations of foreign, federal, state or local governmental agencies
required for the conduct of any business of Pubco as may currently be conducted;

 

(ii)

Pubco has no business or operations located outside of the United States of
America;

 

(jj)

Pubco does not own any capital stock or have any interest in any corporation,
partnership, or other form of business organization;

 

(kk)

There are no disagreements of any kind presently existing, or reasonably
anticipated by Pubco to arise, between the accountants and lawyers formerly or
presently employed by Pubco and Pubco is current with respect to any fees owed
to its accountants and lawyers except for fees owed to Clark Wilson LLP;

 

(ll)

Pubco represents and warrants that it has always been and presently is in full
compliance with all applicable laws and regulations of the United States of
America and any country in which it conducts business that prohibits unfair,

 

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fraudulent or corrupt business practices in the performance of business
activities, including but not limited to the following prohibitions: (a) making
any expenditures other than for lawful purposes or directly or indirectly
offering, giving, promising to give or authorizing the payment or the gift of
any money, or anything of value, to any entity or individual, while knowing or
having reason to know that all or a portion of such money or thing of value will
be given or promised, directly or indirectly, to any government official,
official of an international organization, officer or employee of a foreign
government or anyone acting in an official capacity for a foreign government,
for the purpose of (x) influencing any action, inaction or decision of such
official in a manner contrary to his or her position or creating an improper
advantage; or (y) inducing such official to influence any government or
instrumentality thereof to effect or influence any act or decision of such
government or instrumentality; (b) conducting any activity or any failure to
conduct any activity, if such action or inaction constitutes a money laundering
crime, including any money laundering crime prohibited under the International
Money Laundering Abatement and Anti-Terrorist Financing Act (“Patriot Act”) and
any amendments or successors thereto; (c) disclosing, sublicensing or selling
any of the information or rights to any person, or any government agency of any
nation, if such disclosure, sublicense or sale would be regarded by any
governmental agency or department of the United States as a breach of the
Foreign Assets Control Regulations, 31 C.F.R. Section 500 et seq. (1988), or the
Transaction Control Regulations, 31 C.F.R. Section 505 et seq. (1988); and

 

(mm)

The representations and warranties and statements of fact made by Pubco in this
Agreement are, as applicable, accurate, correct and complete and do not contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements and information contained herein not
false or misleading.

6.2

Covenants of Pubco.

Pubco covenants with Target that:

 

(a)

both before and after the closing date it shall execute and do all such further
deeds, acts, things and give such assurances as may reasonably be required to
consummate the transactions contemplated hereby and referenced herein;

 

(b)

both before and after the Closing Date it shall use its best efforts to comply
with the 1933 Act, the 1934 Act and all applicable rules and regulations
promulgated thereunder by the SEC including, by way of example and not in
limitation, Pubco’s effort to ensure that each of the Stockholders qualifies, at
the time of Closing and with respect to any Pubco Shares or Pubco Options issued
to them, for an exemption from the registration requirements of the 1933 Act;

 

(c)

prior to the Closing Date it shall not conduct any business that is out of the
ordinary course and it shall not initiate any new operations;

 

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(d)

give to Target and Target’s counsel, accountants and other representatives full
access, during normal business hours throughout the period prior to the time of
Closing, to all of the properties, books, contracts, commitments and records of
Pubco, and Pubco will furnish to counsel for Target during such period all such
information as Target or counsel for Target may reasonably request, at Target’s
expense, subject, in any event to reasonable restrictions on disclosure, use and
covenants of confidentiality imposed in advance by Pubco or Pubco’s counsel; and

 

(e)

if and as required from time-to-time between the date of this Agreement and the
Closing Date, update any of the Schedules attached to this Agreement.

6.3

Negative Covenants of Pubco. Pubco shall not, prior to the Closing Date, except
with the prior written consent of Target (which consent will not be unreasonably
withheld or delayed) or as is contemplated by the terms of this Agreement:

 

(a)

make or permit to be made any employment contracts or other employment
arrangements;

 

(b)

make or assume or permit to be made or assumed any commitment, obligation or
liability;

 

(c)

declare or pay any dividends or make any other distributions or appropriations
of profits or capital;

 

(d)

create or assume any indebtedness or guarantee the obligations of any third
party; or

 

(e)

sell or otherwise in any way alienate or dispose of or encumber any of its
Assets.

ARTICLE 7

ADDITIONAL AGREEMENTS

7.1

Expenses.

All costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses.

7.2

Agreement to Cooperate.

Subject to the terms and conditions herein provided, each of the parties hereto
shall use all reasonable efforts to take, or cause to be taken, all action and
to do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including using its reasonable
efforts to obtain all necessary or appropriate waivers, consents and approvals
and to effect all necessary registrations, filings and submissions and to lift
any injunction or other legal bar to the Acquisition (and, in such case, to
proceed with the Acquisition as expeditiously as possible).

 

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7.3

Form 8-K and Form SB-2

Each of Target and the Stockholders shall provide all information to Pubco as is
necessary for the preparation by Pubco of a Form 8-K announcing the completion
of the Acquisition and a Form SB-2 registering all of the Pubco Shares
(including those to be issued upon conversion of the Convertible Debenture and
upon exercise of the Warrants) issued or to be issued by Pubco pursuant to the
First Private Placement and the Second Private Placement (collectively, the
“Registration Statements”). Each of Target and the Stockholders shall cooperate,
at their own cost and expense, with Pubco in the completion and filing of the
Registration Statements, provided that none of the Stockholders shall be
responsible for any of the costs of preparing and filing the Registration
Statements. Target and the Stockholders acknowledge that Pubco will be required
to file the Form 8-K announcing the completion of the Acquisition within 4 days
after the Closing Date and that Pubco will be required to file the Form SB-2
within 30 days after the Closing Date.

7.4

Public Statements By Pubco.

 

(a)

Pubco shall prepare and file with the SEC a Form 8-K announcing the execution of
this Agreement and attaching a copy of this Agreement as an exhibit.

 

(b)

At Closing, Pubco shall issue such press release or announcement of the
transactions contemplated by this Agreement as may be required by the reporting
requirements of the 1934 Act, subject to the applicable requirements of Rules
135(a) and 135(c) under the 1933 Act, and such release or announcement will be
reasonably satisfactory in form and substance to Target and its counsel. Except
as otherwise provided in subsection 7.4(a), above, Pubco shall not issue any
other press release or otherwise make public any information with respect to
this Agreement or the transactions contemplated hereby, prior to the Closing,
without the prior written consent of Target which consent shall not be
unreasonably withheld or delayed. Notwithstanding the foregoing, if required by
law, Pubco may issue such a press release or otherwise make public such
information as long as Pubco notifies Target of such requirement and discusses
with Target in good faith the contents of such disclosure.

7.5

Public Statements by Target or the Stockholders.

Neither of Target or the Stockholders shall have any right to publish any
Publication either before or after the Closing Date.

7.6

Management Agreement

On the Closing Date but subject to completion of the transactions contemplated
in this Agreement, Pubco shall enter into an employment agreement with Mark
Klein in substantially the form, and subject to the terms, as set forth on
Schedule “D” to this Agreement.

 

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7.7

Post-Closing Corporate Governance

At Closing, the Board of Directors of Pubco shall be increased to five (5)
members and the New Directors will be appointed to the Board. Ten days prior to
the Closing, Pubco shall file an Information Statement with the SEC, with a copy
mailed to all of its Stockholders, in the form and otherwise as required by Rule
14f-1 promulgated under Regulation 14E of the SEC and the Securities Exchange
Act of 1934, nominating the New Directors to the Board. On the later of the
tenth day following the filing of the Information Statement with the SEC and the
Closing, the New Directors shall take office. In the event of a vacancy caused
by a resignation, the remaining directors shall be entitled to fill the vacancy
by majority vote subject, in any event, to Pubco's constating documents.

7.8

Post-Closing Finance Issues

From and after the Closing, any expenditure by Pubco or Target in excess of
$50,000 shall require the prior approval of one independent director of Pubco.
The Board of Directors of Pubco shall revisit and reconsider this requirement on
or after the second anniversary of the Closing Date.

7.9

Litigation.

From the date hereof through the Closing, each party hereto shall promptly
notify the representative of the other parties of any lawsuits, claims,
proceedings or investigations which after the date hereof are threatened or
commenced against such party or any of its affiliates or any officer, director,
employee, consultant, agent or shareholder thereof, in their capacities as such,
which, if decided adversely, could reasonably be expected to have a material
adverse effect upon the condition (financial or otherwise), assets, liabilities,
business, operations or prospects of Target or Pubco.

7.10

Notice of Default.

From the date hereof through the Closing, each party hereto shall give to the
representative of the other parties prompt written notice of the occurrence or
existence of any event, condition or circumstance occurring which would
constitute a violation or breach of this Agreement by such party or which would
render inaccurate in any material respect any of such party’s representations or
warranties herein.

7.11

Stock Split

Prior to Closing, Pubco intends to effect a stock split by way of a stock
dividend to its stockholders as at a record date subsequent to the date of this
Agreement (the “Stock Split”). The Stock Split shall result in Pubco having,
immediately prior to Closing, after adjustment for the re-purchase from Wayne
Weaver referred to in Section 7.12, below but without adjustment for the
mandatory conversion of the Convertible Debenture or the Second Private
Placement, 12,000,000 issued and outstanding Pubco Shares.

 

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7.12

Re-Purchase of Pubco Shares

Immediately prior to the Closing, Pubco shall re-purchase from Wayne Weaver, for
the sum of $100,000, all 800,000 of his then issued and outstanding Pubco
Shares.

ARTICLE 8

CONDITIONS

8.1

Conditions of Pubco.

The obligation of Pubco to consummate the transactions herein contemplated is
subject to the fulfilment of each of the following conditions at the times
stipulated:

 

(a)

the representations and warranties of Target and the Stockholders contained in
Article 5 herein are true and correct in all respects at the time of the
execution of this Agreement and at the Closing Date;

 

(b)

all covenants, agreements and obligations hereunder on the part of the
Stockholders and Target to be performed or complied with at or prior to the
Closing, including the respective obligations of the Stockholders and Target to
deliver the documents and instruments herein provided for, shall have been
performed and complied with at and as of the Closing;

 

(c)

all of the transactions contemplated by this Agreement shall have been approved,
as required, by the Board of Directors and, if required, by any regulatory
authorities having jurisdiction over the transactions contemplated by this
Agreement;

 

(d)

on or before the Closing Date, each of Target and Pubco shall have received
approval to this Agreement and the transactions contemplated herein from any
third parties whose approval is required;

 

(e)

that Pubco has received the Audited Financial Statements;

 

(f)

that their has been no direct or indirect Material Adverse Effect to the assets
of Target;

 

(g)

that Pubco and Mark Klein have entered into the employment agreement described
in Section 7.6, above;

 

(h)

that Pubco has received a Consent to Act as a director of Pubco from each of
Mark Klein, Stephen Hochberg, Steve Reimer and Michael J. Rosenthal, each
agreeing to serve in the capacity contemplated by the terms of this Agreement;

 

(i)

that at the Closing and after accounting for the Pubco Shares to be issued in
the mandatory conversion of the Convertible Debenture, the Pubco Shares to be
re-purchased from Wayne Weaver, the Pubco Shares to be issued in the Stock
Split, the Pubco Shares to be issued in the Second Private Placement and the
Pubco

 

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Shares to be issued to the Stockholders at Closing, the capitalization of Pubco
will be such that, on a fully diluted basis, the investors in the First Private
Placement and the Second Private Placement will hold approximately 3,750,000
Pubco Shares, the Stockholders will hold approximately 18,000,000 Pubco Shares
and the Stockholders of Pubco holding Pubco Shares as at the Delivery Date will
hold approximately 12,000,000 Pubco Shares; and

 

(j)

that Pubco has received, at least five days before the Closing, and approved
(which approval will not be unreasonably withheld) a copy of every material
contract to which Target is a party or which will bind Target after the Closing
Date.

8.2

Target and the Stockholders' Conditions.

The respective obligations of Target and the Stockholders to complete the
transactions contemplated hereby are subject to the following conditions (which
are for the exclusive benefit of Target and the Stockholders) having been
satisfied or expressly waived in writing by Target and the Stockholders:

 

(a)

the representations and warranties of Pubco contained in Article 6 herein are
true and correct in all respects;

 

(b)

that Pubco shall have completed the Second Private Placement and shall have
placed the Net Proceeds in escrow with Clark Wilson LLP for release at Closing;

 

(c)

that Pubco and Mark Klein have entered into the employment agreement described
in Section 7.6, above;

 

(d)

that at the Closing and after accounting for the Pubco Shares to be issued in
the upon conversion of the Convertible Debenture, the Pubco Shares to be
re-purchased from Wayne Weaver, the Pubco Shares to be issued in the Second
Private Placement and the Pubco Shares to be issued to the Stockholders at
Closing, the capitalization of Pubco will be such that, on a fully diluted
basis, the investors in the First Private Placement and the Second Private
Placement will hold approximately 3,750,000 Pubco Shares, the Stockholders will
hold approximately 18,000,000 Pubco Shares and the Stockholders of Pubco as at
the Delivery Date will hold approximately 12,000,000 Pubco Shares;

 

(e)

that Gary Musil has resigned, effective at completion of the Closing, from all
of his offices at Pubco (except for his seat on the Board of Directors);

 

(f)

that Pubco has appointed, effective at completion of the Closing, Mark Klein as
President and Chief Executive Officer of Pubco;

 

(g)

that Pubco has appointed, effective at completion of the Closing, the New
Directors to the Board of Directors of Pubco; and

 

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(h)

all covenants, agreements and obligations hereunder on the part of Pubco to be
performed or complied with at or prior to the Closing, including the obligation
of Pubco to deliver the documents and instruments herein provided for, shall
have been performed and complied with at and as of the Closing.

8.3

Waiver of Conditions.

 

(a)

The conditions set forth in Section 8.1 are for the exclusive benefit of Pubco
and may be waived by Pubco in writing in whole or in part at any time.

 

(b)

The conditions set forth in Section 8.2 are for the exclusive benefit of Target
and the Stockholders, and may be waived by Target and the Stockholders in
writing in whole or in part at any time.

ARTICLE 9

SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND

AGREEMENTS; INDEMNIFICATION; PLEDGE PROVISIONS

9.1

Survival of Representations, Warranties, Covenants and Agreements.

Notwithstanding any right of Pubco (whether or not exercised) to investigate the
affairs of Target or the Stockholders to investigate the affairs of Pubco, or a
waiver by Pubco, Target or the Stockholders of any condition to Closing set
forth in Article 8, each party shall have the right to rely fully upon the
representations, warranties, covenants and agreements of the other parties
contained in this Agreement, except to the extent expressly waived in writing,
or in any instrument delivered pursuant to this Agreement and, in addition,
Pubco and the Stockholders shall have the indemnification rights set forth
herein. Unless earlier terminated pursuant to Article 10, all of the
representations, warranties, covenants and agreements of the parties contained
in this Agreement or in any instrument delivered pursuant to this Agreement
shall survive the Closing and continue until the first anniversary of the
Closing Date.

 

9.2

Indemnification by the Stockholders

 

The Stockholders shall, for a period of one year from the earlier of the Closing
Date or the date of termination of this Agreement, severally but not jointly,
indemnify, defend and hold harmless each of Pubco and its respective officers,
directors, subsidiaries, agents, affiliates, and employees from and against any
and all Losses arising out of, directly or indirectly, any misrepresentation or
breach of or default in connection with any of the representations, warranties,
covenants and agreements given or made by the Stockholders in Section 5.1(a)
through (d) of this Agreement.

9.3

Indemnification by Target

Target shall, for a period of one year from the earlier of the Closing Date or
the date of termination of this Agreement, indemnify, defend and hold harmless
each of Pubco and its respective officers, directors, subsidiaries, agents,
affiliates, and employees from and against any and all Losses arising out of,
directly or indirectly, any misrepresentation or breach of or default in
connection with any of the representations, warranties, covenants and agreements
given or made by Target in this Agreement, the schedules hereto, or any
certificate, instrument or

 

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document delivered by Target pursuant to this Agreement and any material
liabilities of Target not included in the Financial Statements.

9.4

Indemnification by Pubco.

Pubco shall, for a period of one year after the earlier of the Closing Date or
the date of termination of this Agreement, indemnify, defend and hold harmless
each of the Stockholders and Target, and Target's officers, directors,
subsidiaries, agents, affiliates and employees from and against any and all
Losses arising out of, directly or indirectly, any misrepresentation or breach
of or default in connection with any of the representations, warranties,
covenants and agreements given or made by Pubco in this Agreement, the schedules
to this Agreement or any certificate, instrument or document delivered by Pubco
pursuant to this Agreement.

ARTICLE 10

TERMINATION, AMENDMENT AND WAIVER.

10.1

Termination.

This Agreement may be terminated at any time prior to the Closing Date:

 

(a)

by mutual consent of all of the Stockholders, Target and Pubco;

 

(b)

unilaterally by Target and all of the Stockholders if none of them is in breach
of any material agreement, covenant or representation contained in this
Agreement and Pubco fails to perform or breaches any material agreement,
covenant or representation in this Agreement, and does not cure the failure in
all material respects within fifteen (15) business days after the terminating
parties deliver written notice of the alleged failure or if any condition to the
obligations of that party is not satisfied (other than by reason of a breach by
that party of its obligations hereunder), and it reasonably appears that the
condition cannot be satisfied prior to December 31, 2005;

 

(c)

unilaterally by Pubco if Pubco is not in breach of any material agreement,
covenants or representation contained in this Agreement and Target or any of the
Stockholders fails to perform or breaches any material agreement, covenant or
representation in this Agreement, and does not cure the failure in all material
respects within fifteen (15) business days after the terminating party delivers
written notice of the alleged failure or if any condition to the obligations of
that party is not satisfied (other than by reason of a breach by that party of
its obligations hereunder), and it reasonably appears that the condition cannot
be satisfied prior to December 31, 2005; or

 

(d)

by either party if any material adverse effect has occurred with respect to the
other party.

10.2

Effect of Termination.

Nothing in this Article 10 shall relieve any party from liability for any breach
of this Agreement.

 

D/EPM/762545.9

 

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10.3

Amendment.

This Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto and in compliance with applicable law.

10.4

Waiver.

No consent or waiver, express or implied, by either party to or of any breach or
default by the other party in the performance by the other of any obligation on
its part hereunder will be deemed or construed to be a consent or waiver to or
of any other breach or default of such obligation or a consent or waiver to or
of any other obligation of that party.

ARTICLE 11

MISCELLANEOUS

11.1

Notices.

Any notice required or permitted to be given under this Agreement will be
validly given if in writing and delivered, sent by facsimile transmission or
telex or sent by electronic or prepaid registered mail, to the following
addresses:

To Target or to the Stockholders:

Mark Klein

Skin Shoes, Inc.

Lipsky Street, #10, Suite 7

Tel Aviv, Israel 62195

Voice: (US Cell) 917 421-2934

Fax:

972-3-532-6524

 

e-mail:

Mark@Skinshoes.com

with a copy to:

Kirkpatrick & Lockhart Nicholson Graham LLP

10100 Santa Monica Boulevard, Seventh Floor

Los Angeles, CA 90067

Attention: Thomas J. Poletti, Esq.

Voice:

310-552-5045

 

Fax:

310-552-5001

 

e-mail:

TPoletti@KLNG.com

 

 

D/EPM/762545.9

 

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To Pubco:

Logicom Inc.

Suite 600, 625 Howe Street

Vancouver, British Columbia

Canada V6C 2T6

Facsimile: (604) 683-1350

Attention: President

e-mail:

gmusil@telus.net

with a copy to:

 

Clark Wilson LLP

800-885 West Georgia Street

Vancouver, BC V6C 3H1

Attention: Ethan P. Minsky

Voice:

(604) 643-3151

 

Fax:

(604) 687-6314

 

e-mail:

epm@CWilson.com

or to such other address as any party may specify by notice in writing to the
other parties. Any notice delivered on a business day will be deemed
conclusively to have been effectively given on the date notice was delivered and
any notice given by facsimile transmission will be deemed conclusively to have
been given on the date of such transmission. Any notice sent by prepaid
registered mail will be deemed conclusively to have been effectively given on
the third business day after posting, but if at the time of posting or between
the time of posting and the fifth business day thereafter there is a strike,
lockout or other labour disturbance affecting postal service, then the notice
will not be effectively given until actually delivered.

11.2

Time.

Time shall be of the essence hereof.

11.3

Entire Agreement.

This Agreement constitutes the entire agreement between the parties hereto and
supersedes all prior contracts, agreements and understandings between the
parties. There are no representations warranties, collateral agreements or
conditions affecting this transaction other than as are expressed or referred to
herein in writing.

 

D/EPM/762545.9

 

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11.4

Governing Law.

This Agreement shall be governed by and construed in accordance with the laws of
the State of Nevada, regardless of the laws that might otherwise govern under
applicable principles of conflicts of laws thereof.

11.5

Enurement.

This Agreement shall enure to the benefit of and be binding upon the respective
heirs, successors and assigns of the parties hereto.

11.6

Headings.

The headings in this Agreement have been inserted for convenience only, and do
not define, limit, alter or enlarge the meaning of any provision of this
Agreement.

11.7

Schedules.

The Schedules to this Agreement are incorporated herein by this reference and
all references to this Agreement shall include the Schedules. Wherever any term
or condition, expressed or implied, in such schedules conflicts or is at
variance with any term or condition contained in the body of this Agreement, the
terms or conditions of the body of this Agreement shall prevail.

11.8

Severability.

If a provision of this Agreement is deemed to be wholly or partly invalid, this
Agreement will be interpreted as if the invalid provision had not been a part
thereof.

11.9

Separate Counsel.

Each party hereby expressly acknowledges that Clark Wilson LLP represents only
Pubco and that Kirkpatrick & Lockhart Nicholson Graham LLP represents only
Target. Each of the Stockholders acknowledges that he has been advised to seek
his own separate legal counsel for advice with respect to this Agreement, and
that no counsel to any party hereto has acted or is acting as counsel to any
other party hereto in connection with this Agreement.

11.10

Counterparts.

This Agreement may be executed in one or more counterparts which, when so
executed, by facsimile signature or otherwise, shall be read together and be
construed as one agreement.

[The next page is the signature page]

 

D/EPM/762545.9

 

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IN WITNESS WHEREOF the parties hereto have executed this Agreement on the day
and year first set forth above.

 

SKIN SHOES INC. a Delaware corporation

 

By:

/s/ Mark Klein

 

Mark Klein

 

 

President

 

 

LOGICOM INC., a Nevada corporation

 

By:

/s/ Gary Musil

 

Gary Musil

 

 

President

 

MAGE CAPITAL LLC, a ____ limited liability company

 

By:

/s/ Stephen Hochberg

 

Stephen Hochberg

 

 

Managing Member

 

 

 

SIGNED by MARK KLEIN, as Stockholder, in the presence of:

/s/ Joshn Hermelin
John Hermelin
Name

Yismach Melech 5/1
David’s Village
Jerusalem, Israel 94121
Address

Self Employed
Occupation

)
)
)
)
)
)
)
)
)
)
)

./s/ Mark Klein

MARK KLEIN

 

 

 

D/EPM/762545.9

 

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SIGNED by GEOFFREY DUBEY, as Stockholder, in the presence of:

/s/ Jean Dubey
Jean Dubey
Name

20965 NE 32nd Avenue
Aventura, FL 33180
Address

Musician
Occupation

)
)
)
)
)
)
)
)
)
)
)

/s/ Geoffrey Dubey

GEOFFREY DUBEY

 

SIGNED by JOSHUA HERMELIN, as Stockholder, in the presence of:

/s/ Miryam Hermelin
Miryam Hermelin
Name

Yismach Melech 5/1
David’s Village
Jerusalem, Israel 94121
Address

Student
Occupation

)
)
)
)
)
)
)
)
)
)
)

/s/ Joshua Hermelin

JOSHUA HERMELIN

 

SIGNED by TAMAR DESSOU TZAFRIR, as Stockholder, in the presence of:

/s/ Eyal Dessou-Tzafrir
Eyal Dessou-Tzafrir
Name

729 Park Aenue
Hoboken, NJ
Address

Real Estate Broker
Occupation

)
)
)
)
)
)
)
)
)
)
)

/s/ Tamar Dessou Tzafrir

TAMAR DESSOU TZAFRIR

 

 

 

D/EPM/762545.9

 

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SIGNED by IDAN MILLER, as Stockholder, in the presence of:

/s/ Danny Trishman
Danny Trishman
Name

Nordow 22
Tel Aviv, Israel
Address

Lawyer
Occupation

)
)
)
)
)
)
)
)
)
)
)

/s/ Idan Miller

IDAN MILLER

 

SIGNED by NIMROD MAI, as Stockholder, in the presence of:

/s/ Sharon Joffe-May
Sharon Joffe-May
Name

2 Shaz Street
Address

Graphic Animator
Occupation

)
)
)
)
)
)
)
)
)
)
)

/s/ Nimrod Mai

NIMROD MAI

 

SIGNED by LARRY JOFFE, as Stockholder, in the presence of:

/s/ Nadine Joffe
Nadine Joffe
Name

7 rue d’Ostende
L-2271 Luxemburg
Address

Programmer Analyst
Occupation

)
)
)
)
)
)
)
)
)
)
)

/s/ Larry Joffe

LARRY JOFFE

 

 

 

D/EPM/762545.9

 

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SIGNED by RONI SAPIR-HAIM, as Stockholder, in the presence of:

/s/ Daniel Zerah
Daniel Zerah
Name

51 Havradim Street
Yehud, Israel
Address

Electronic Engineer
Occupation

)
)
)
)
)
)
)
)
)
)
)

/s/ Roni Sapir-Haim

RONI SAPIR-HAIM

 

SIGNED by ILAN KOTLER, as Stockholder, in the presence of:

/s/ Rachel Hanig
Rachel Hanig
Name

20 Harav-Kook Street
Bat-Yam Israel
Address

Occupation

)
)
)
)
)
)
)
)
)
)
)

/s/ Ilan Kotler

ILAN KOTLER

SIGNED by DANIEL ZERAH, as Stockholder, in the presence of:

/s/ Batia Zerah
Batia Zerah
Name

HavradimStreet
Yehud, Israel
Address

Computer Programmer
Occupation

)
)
)
)
)
)
)
)
)
)
)

/s/ Daniel Zerah

DANIEL ZERAH

 

 

D/EPM/762545.9

 

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SIGNED by MICHAEL J. ROSENTHAL, as Stockholder, in the presence of:

/s/ Vivian Rosenthal
Vivian Rosenthal
Name

140 East 28th Apt. 50
New York, NY 10016
Address

Architect
Occupation

)
)
)
)
)
)
)
)
)
)
)

/s/ Michael J. Rosenthal

MICHAEL J. ROSENTHAL

 

 

D/EPM/762545.9

 

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SCHEDULE "A"

LIST OF ALL TARGET ASSETS, INCLUDING INTELLECTUAL PROPERTY

Target applied on October 10, 2003 for a patent on its Modular Shoe System, U.S.
Patent App. No. 10/683,246, and Target management responded to a first PTO
Office Action for review on August 1, 2005. Target also filed International
(PCT) Patent App. No. PCT/US04/433446 for its Modular Shoe System. The
application was filed October 7, 2004, and an International Search Report should
be issued in the next quarter. The 30 month deadline for national or regional
entry is April 10, 2006. In addition, Target filed a trademark application with
the USPTO for its mark "SKIBO," U.S. Serial No. 78/535,239, which application is
pending for "shoes and footwear".

The content of Schedule "B" is hereby incorporated by this reference.

 

D/EPM/762545.9

 

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SCHEDULE "B"

MATERIAL CONTRACTS OF TARGET

Design Services Agreement dated July ___, by and between Studio Dror Inc., with
offices at 408 West 14th Street, New York, New York 10014 and the Target.

 

 

D/EPM/762545.9

 

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SCHEDULE "C"

UNAUDITED FINANCIAL STATEMENTS OF TARGET

Unaudited Financial Statements

(attached)

 

 

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SCHEDULE "D"

FORM OF EMPLOYMENT AGREEMENT (MARK KLEIN)

EXECUTIVE EMPLOYMENT AGREEMENT

This EXECUTIVE EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into as of
this ____ day of _____________ 2005, by and between Logicom Inc., a Nevada
corporation (the “Company”), and Mark Klein, an individual (the “Executive”).
Company or Executive are sometimes referred to herein as a “party,” or
collectively, as the “parties”.

RECITALS

WHEREAS, Executive previously served as the President and Chief Executive
Officer of Skin Shoes, Inc., a Delaware corporation (“Skins”);

WHEREAS, Skins is a party to that certain Share Exchange Agreement dated October
___, 2005 by and among the Company, Skins and all of the stockholders of Skins
(the “Share Exchange Agreement);

WHEREAS, upon the closing of the transactions contemplated by the Share Exchange
Agreement, Skins shall become a wholly-owned subsidiary of the Company; and

WHEREAS, pursuant to Sections 8.1(g) and 8.2(c) of the Share Exchange Agreement,
the execution of this Agreement by and between the Company and Executive is a
condition to the consummation of the transactions contemplated by the Share
Exchange Agreement.

NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, and for other good and valuable consideration, it is
hereby agreed by and between the parties hereto as follows:

 

1.

Employment and Duties

1.1          Employment. The Company hereby employs Executive as the President
and Chief Executive Officer of the Company and Executive hereby accepts such
employment as of the date hereof pursuant to the terms, covenants and conditions
set forth herein. Executive shall report directly to the Board of Directors of
the Company.

1.2          Duties. During the Term of this Agreement, Executive shall serve as
the Company’s President and Chief Executive Officer, and, in such capacities,
shall perform the duties and functions commensurate with such positions and such
other duties and functions consistent with his status as a senior executive
officer of the Company as may be assigned by the Company’s Board of Directors.
Executive’s authority shall at all times be subject to the policies and
directives of the Company’s Board of Directors.

 

D/EPM/762545.9

 

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1.3          Relocation. Executive will relocate from Tel-Aviv, Israel with his
family to the Greater New York Area to manage and run the business. The Company
will pay up to $20,000.00 to cover moving and relocation expenses for Executive
and his family.

1.4          Time and Efforts. Executive shall devote his best efforts,
energies, skills and attention to the business and affairs of the Company.
Executive shall also devote substantially all of his business time to his duties
hereunder and shall, to the best of his ability, perform such duties in a manner
that will faithfully and diligently further the business interests of the
Company. Executive’s services shall be exclusive to the Company, but does not
limit Executive’s right to be involved in other not-for-profit, civic or
charitable activities, provided that such activities do not materially interfere
with the providing of his services hereunder.

 

2.

Term

The term of employment under this Agreement shall be for a period of three (3)
years commencing on the date hereof (the “Term”), unless terminated earlier
pursuant to the provisions of Section 5 below.

 

3.

Compensation and Benefits

As the total consideration for Executive’s services rendered hereunder,
Executive shall be entitled to the following:

3.1          Base Salary. Executive shall be paid an annual base salary of One
Hundred Fifty Dollars ($150,000.00) per year (“Base Salary”)(or the equivalent
of $2,884.61 per week) beginning on the date hereof and payable in regular
installments in accordance with the customary payroll practices of the Company.
The Base Salary shall be subject to all payroll and withholding deductions as
required by law.

3.2          Annual Incentive Bonus. In addition to Base Salary, the Company and
Executive shall also agree on an incentive bonus plan to be based on the annual
volume and net profit of the Company. The bonus plan will be structured in such
a way that the annual bonus could be an amount up to 50% of the Base Salary of
Executive, based upon his performance for the preceding year as measured against
certain targets and goals as mutually established by the parties. If Executive’s
employment is terminated for any reason pursuant to the provisions of Section 5
below, then Executive shall not be entitled to receive any portion of the annual
bonus for the year in which his employment is terminated.

3.3          Expenses. During employment, Executive is entitled to reimbursement
for reasonable and necessary business expenses incurred by Executive in
connection with the performance of Executive’s duties. Payments to Executive
will be made upon presentation of itemized statements of such business expenses
in such detail as the Company may reasonably require and pursuant to applicable
Company policy.

3.4                        Vacation. Executive shall be entitled to receive four
(4) weeks of paid vacation each year. Executive’s vacation shall be governed by
the Company’s usual vacation policies, including the cap on accrual, applicable
to all Company employees.

 

D/EPM/762545.9

 

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3.5                        Benefits. Executive shall be entitled to participate
in and receive all benefits made available by the Company to its Executives,
subject to and on a basis consistent with the terms, conditions, co-payments and
overall administration of such plans and arrangements, including without
limitation, medical, dental, vision, life and disability insurance plans and
coverage, and any applicable 401k or other pension plans, to the extent they are
provided.

4.            Participation in Stock Option Plan. Executive shall be entitled to
participate in the Company’s 2005 Incentive Plan (the “Plan”), pursuant to the
terms and conditions of the Plan and the Company’s standard Stock Option
Agreement to be signed by Executive. Executive will be granted options at fair
market value to be determined by the Company’s Board of Directors at the time of
grant and in an amount and with a vesting schedule in accordance with his title
and role as well as in relation to what other key executives are receiving in
the Company will be granted.

 

5.

Termination

Executive’s employment shall terminate upon the happening of the following:

5.1                        Termination For Cause. The Company may terminate
Executive’s employment for Cause if the Company determines that Cause exists.
For purposes of this Agreement, “Cause” shall mean

(a)          An act of dishonesty, fraud, embezzlement, or misappropriation of
funds or proprietary information in connection with the Executive’s
responsibilities as an Executive;

(b)          Executive’s conviction of, or plea of nolo contendere to, a felony
or a crime involving moral turpitude;

(c)          Executive’s willful or gross misconduct in connection with his
employment duties; or

(d)          Executive’s habitual failure or refusal to perform his employment
duties under this Agreement, if such failure or refusal is not cured by
Executive within ten (10) days after receiving written notice thereof from the
Company.

5.2                        Termination Due to Disability or Death. Executive’s
employment hereunder may be terminated by the Company as follows:

(a)          To the extent permitted by law, in the event that Executive has
been unable to perform his duties under this Agreement due to injury or illness
for an aggregate of 180 days (inclusive of weekends and holidays) within any
12-month period, or in the event Executive is unable to perform the essential
functions of his job due to a physical or mental disability and after reasonable
accommodation made by the Company, by providing Executive with written notice of
termination.

 

(b)

Immediately upon the death of Executive.

 

 

D/EPM/762545.9

 

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In cases of either death or disability, the Executive or his beneficiaries will
be paid the Executive’s salary and shall receive benefits for the remainder of
this Agreement and will be eligible for the full amount of his annual bonus for
that calendar year. This clause is also applicable for termination without
Cause.

 

5.3                        Effect of Termination. In the event that Executive’s
employment is terminated pursuant to Section 5.1 above, or in the event that
Executive voluntarily resigns:

(a)          The Company shall pay to Executive, or his representatives, on the
date of termination of employment (the “Termination Date”) only that portion of
the Base Salary provided in Section 3.1 that has been earned to the Termination
Date, and any accrued but unpaid Vacation pay provided in Section 3.4, and any
expense reimbursements due and owing to Executive as of the Termination Date;
and

(b)          Executive shall not be entitled to (i) any other salary or
compensation, (ii) any Bonus pursuant to Section 3.2, (iii) any further vesting
of stock options pursuant to Section 4.2, nor (iv) any Benefits pursuant to
Section 3.5, except for benefit continuation under COBRA or similar state or
federal legislation.

 

6.

Confidentiality; Non-Solicitation; Non-Competition  

6.1                        Confidentiality. Executive agrees that at all times
during the Term and after termination of Executive’s employment with the
Company, Executive will hold a fiduciary capacity for the benefit of the Company
and will not use or disclose to any third party any trade secret, information,
knowledge or data not generally known or available to the public which Executive
may have learned, discovered, developed, conceived, originated or prepared
during or as a result of Executive’s employment by the Company with respect to
the operations, businesses, affairs, products, services, technology,
intellectual properties, operations, customers, clients, policies, procedures,
accounts, personnel, concepts, format, style, techniques or software of the
Company (collectively “Confidential Information”). Executive agrees (a) to
execute and deliver, as requested by the Company, reasonable confidentiality
agreements with respect to the Confidential Information; (b) to comply with any
and all procedures which the Company may adopt from time to time to preserve the
confidentiality of the Confidential Information; (c) that the absence of any
legend indicating the confidentiality of any materials will not give rise to an
inference that the contents thereof or information derived there from are not
confidential; and (d) that immediately following the termination of Executive’s
employment with the Company, Executive will return to the Company all materials,
except for Executive’s rolodex or personal phone book and other personal items
provided to Executive by the Company during the Term hereof, all works created
by Executive or others in the course of his or their employment duties during
the term of Executive’s employment hereunder, and all copies thereof.
Notwithstanding the foregoing, the limitations imposed on Executive pursuant to
this Section 6.1 shall not apply to Executive’s (i) compliance with legal
process or subpoena, or (ii) statements in response to inquiry from a court or
regulatory body, provided that Executive gives the Company reasonable prior
written notice of such process, subpoena or request.

 

D/EPM/762545.9

 

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6.2                        Non-Solicitation. Executive agrees that at all times
during the Term of this Agreement and for one (1) year after the termination of
Executive’s employment with the Company, Executive shall not, directly or
indirectly:

(a)          Solicit or attempt to solicit the business of any customer or
client of the Company;

(b)          Induce or attempt to induce any client or customer of the Company
to reduce its business with the Company; or

(c)          Induce or attempt to induce any employee of the Company to
terminate his or her employment with the Company or attempt to hire any such
person.

 

6.3

Non-Competition.

 

(a)          Employee agrees that he shall not in the United States, at any time
during his employment by the Company and for a period of one (1) year after the
date of termination of employment, directly or indirectly, as owner, partner,
joint venturer, stockholder, employee, broker, agent, principal, trustee,
corporate officer or manager, licensor or in any capacity whatsoever engage in,
become financially interested in, be employed by, render consulting services to,
or have any connection with, any business which engages in the design,
marketing, sale, license and/or distribution of casual or athletic footwear (the
“Business”). Notwithstanding the foregoing, Employee may (i) own an equity
interest in the Company, and (ii) own up to 1% of the securities in a
corporation engaged in a business that competes with the Company, provided that
such securities are listed on a national securities exchange or reported on The
Nasdaq National Market.

 

(b)          Employee declares that the foregoing limitations are reasonable and
necessary to protect the business of the Company and its affiliates. If any
portion of the restrictions set forth in this Section 6.3 should, for any reason
whatsoever, be declared invalid by a court of competent jurisdiction, the
validity or enforceability of the remainder of such restrictions shall not
thereby be adversely affected, but rather such court shall reform the provision
deemed invalid so that it shall be as near to the terms of this Agreement as
possible and still remain enforceable under applicable law.

 

 

7.

Notices.

 

All notices and other communications required or permitted under this Agreement,
which are addressed as provided below (or otherwise provided in writing by the
party to receive such notice) shall be delivered personally, or sent by
certified or registered mail with postage prepaid, or sent by Federal Express or
similar courier service with courier fees paid by the sender, and, in either
case, shall be effective upon delivery.

 

D/EPM/762545.9

 

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If to the Company:

Logicom Inc.

Lipsky Street #10

Suite 7

Tel-Aviv, Israel 62195

 

If to Executive:

Mark Klein

Lipsky Street #10

Suite 7

Tel-Aviv, Israel 62195

 

8.

Assignability.

This Agreement is personal in nature, and neither this Agreement nor any part of
any obligation herein shall be assignable by Executive. The Company shall be
entitled to assign this Agreement to any affiliate or successor of the Company
that assumes the ownership or control of the business of the Company, and the
Agreement shall inure to the benefit of any such successor or assign.

 

9.

Entire Agreement.

This Agreement contains the entire agreement between the Company and Executive
with respect to the subject matter hereof, and supersedes all prior oral and
written agreements between the Company and Executive with respect to the subject
matter hereof.

 

10.

Captions.

The Section captions herein are inserted only as a matter of convenience and
reference and in no way define, limit or describe the scope of this Agreement or
the intent of any provisions hereof.

 

11.

Waivers and Further Agreements.

Neither this Agreement nor any term or condition hereof may be waived or
modified in whole or in part as against the Company or Executive except by a
written instrument executed by or on behalf of the party to be charged
therewith. Each of the parties agrees to execute all such further instruments
and documents and to take all such further action as the other party may
reasonably require in order to effectuate the terms and purposes of this
Agreement as stated herein.

 

12.

Amendments.

This Agreement may not be amended, nor shall any change, modification, consent
or discharge be effected, except by a written instrument executed by or on
behalf of the party against whom enforcement of any change, modification,
consent or discharge is sought.

 

D/EPM/762545.9

 

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13.

Applicable Law; Severability.

This Agreement shall be interpreted, construed and enforced in accordance with
the laws of the State of Delaware, without regard or effect being given to that
State’s choice of law or conflict of law provisions. If any provision of this
Agreement shall be held to be illegal, invalid, or unenforceable, such provision
shall be construed and enforced as if it had been more narrowly drawn so as not
to be illegal, invalid or unenforceable, and such illegality, invalidity or
unenforceability shall have no effect upon and shall not impair the
enforceability or any other provision of this Agreement.

 

14.

No Conflicting Obligations.

Executive represents and warrants to the Company that he is not now under any
obligation to any person other than the Company, which would prevent Executive’s
performance of any of the covenants or duties hereinabove set forth, and that
Executive is not subject to any restrictive covenant, restraint, or agreement as
a result of any employment with a prior employer.

 

15.

Resolution of Disputes – Binding Arbitration.

Pursuant to the Federal Arbitration Act and applicable state law, the parties
mutually agree that all disputes arising out of or relating to this Agreement
and the matters covered herein shall be decided by final and binding arbitration
pursuant to the American Arbitration Association Rules and Procedures for
Employment Disputes in effect at the time. Among the disputes that must be
submitted to arbitration are those concerning the interpretation, enforcement or
alleged breach of this Agreement, and the termination of Executive’s employment,
as well as those based on state and/or federal civil rights and discrimination
laws, and other state and/or federal statutes, torts, and public policies,
regardless of whether such disputes are asserted against the Company or its
related entities, employees or agents, or against the Executive. The arbitration
shall be held in New York City. The decision or award of the Arbitrator shall be
issued in writing pursuant to California law and shall be final and binding on
all parties, subject only to such limited review as may be permitted or required
by Delaware law. The prevailing party shall be entitled to recover all provable
damages and other remedies that would otherwise be available at law or equity in
a civil action, including costs and fees that may be awarded by any applicable
statute. The Company shall pay for the administrative costs and expenses of the
arbitration, including the costs of the arbitrator. Executive and the Company
agree that the right to take limited discovery and the right to seek injunctive
or other equitable relief in court prior to the arbitration shall be available
to either party pursuant to applicable California law covering the arbitration
of disputes, but the right to pursue a civil action or seek a jury trial is
waived and shall not be available pursuant to this agreement to arbitrate all
disputes.

[The next page is the signature page]

 

D/EPM/762545.9

 

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- 8 -

 

 

IN WITNESS WHEREOF, this Agreement is executed as of the day and year first
above written.

 

COMPANY:

 

 

LOGICOM INC.

 

 

 

By:                                                        

 

Name:                                                  

 

 

Title:                                                    

 

 

 

 

EXECUTIVE:

 

 

MARK KLEIN

 

 

 

                                                               

 

Name: Mark Klein

 

 

 

 

 

D/EPM/762545.9

 

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SCHEDULE "E"

TARGET INDEBTEDNESS

Balance Sheet

 

Income Statements

 

Liabilities

 

 

 

Line of Credit

22,489.29

Operating Expenses

 

 

 

Design &

 

Accounts Payable

130,843.62

Development

62,902.65

 

 

 

 

Loans Payable

71,402.16

G&A

152,731.96

 

 

 

 

Total Liabilities

224,735.07

Total Opeating

215,634.61

 

 

D/EPM/762545.9

 

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SCHEDULE "F"

PUBCO'S OUTSTANDING INDEBTEDNESS

Logicom, Inc.

Summary of Outstanding Liabilities

at September 30, 2005

Accounting Services Inc.

$454.75 CDN

 

-

Contact: Gurdeep Phachu

 

 

-

Bookkeeping services

 

Amisano Hanson, CA

90.50 USD

 

-

Contact: Terry Amisano, CA

 

 

-

Audit & review services

 

CT Corporation

512.60 USD

 

-

Contact: Sheila McEvilly

 

 

-

Incorporation (Nevada) and Amendments, Resident Agents

 

Clark Wilson LLP

- July 1/05

1,395.02 CDN

 

- Aug. 1/05

1,258.91 CDN

 

- Sept. 1/05

12,857.16 CDN

 

- Oct. 1/05

8,940.86 CDN

 

-

Contact: Bernard Pinsky, Ethan Minsky

 

 

-

Legal Services

 

The Excalibur Group AG

1,784.12 USD

 

-

Contact: Tom O'Connor

250.00 USD

 

-

Short Term Loans

Interest

83.06 USD

Nevada Agency & Trust Company

90.44 USD

 

-

Contact: Amanda Cardinalli, President

 

 

-

Transfer Agent & Trust Company Services

 

Note:

Some of the above creditors may accrue additional interest charges

on unpaid invoices outstanding since July 1/05. Clark Wilson LLP

has rendered a subsequent invoice dated October 1, 2005.

 

D/EPM/762545.9

 

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SCHEDULE "G"

FORM OF PROMISSORY NOTE

THIS PROMISSORY NOTE IS SECURED BY A GENERAL SECURITY AGREEMENT DATED OF EVEN
DATE AND FILED WITH THE SECRETARY OF STATE OF THE STATE OF DELAWARE

PROMISSORY NOTE

November 2, 2005

$150,000 U.S.

FOR VALUE RECEIVED, the undersigned (the “Borrower”) promises to pay to the
order of LOGICOM INC., of Suite 600, 625 Howe Street, Vancouver, B.C. V6C 2T6
(the “Lender”) the principal sum of One Hundred Fifty Thousand ($150,000)
Dollars in lawful currency of the United States (the “Principal Sum”), together
with interest thereon as herein provided.

The Principal Sum or such amount as shall remain outstanding from time to time
shall bear interest thereon, calculated and compounded semi-annually, not in
advance, at a rate of five (5%) percent per annum both before and after each of
maturity, default and judgment commencing on the day any portion of the
Principal Sum is advanced by the Lender to the Borrower and shall be payable
monthly in arrears, commencing on the 1st day of February, 2006. In the event of
any partial repayments made on the Principal Sum, such payments shall be applied
firstly towards accrued interest and then towards the Principal Sum.

The Principal Sum and all accrued but unpaid interest at the rate aforesaid will
become due and payable on demand, provided that the Lender may not make demand
until the earlier of the date of (a) completion of the transactions contemplated
in the Share Exchange Agreement dated November 2, 2005, between the Lender, the
Borrower and all of the stockholders of Borrower (the “Share Exchange
Agreement”) or (b) the date of termination of the Share Exchange Agreement for
any reason.

Extension of time of payment of all or any part of the amount owing hereunder at
any time or times and failure of the Lender to enforce any of its rights or
remedies hereunder shall not release the Borrower from its obligations hereunder
or constitute a waiver of the rights of the Lender to enforce any rights and
remedies therein.

On default in payment of any sum due hereunder for the Principal Sum or interest
or after 5 days’ notice of Default to the Borrower upon the occurrence of an
Event of Default as defined in the General Security Agreement dated November 2,
2005 entered into between the Borrower and the Lender to secure repayment of
this note, or any amendments thereto, the unpaid balance of the Principal Sum
and all accrued interest thereon shall at the option of the Lender forthwith
become due and payable.

 

This Promissory Note shall be governed by the laws of the State of Nevada.

 

 

D/EPM/762545.9

 

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- 2 -

 

 

The undersigned, when not in default hereunder, will have the privilege of
prepaying in whole or in part the Principal Sum and accrued interest without
bonus or penalty.

 

Presentment, protest, notice of protest and notice of dishonour are hereby
waived.

SKIN SHOES, INC.

 

Per:                                                                         

 

 

D/EPM/762545.9

 

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SCHEDULE "H"

FORM OF GENERAL SECURITY AGREEMENT

THIS SECURITY AGREEMENT AND ASSIGNMENT CONTAINS AFTER-ACQUIRED PROPERTY
PROVISIONS AND COVERS PROCEEDS OF COLLATERAL

SECURITY AGREEMENT

AND ASSIGNMENT

THIS SECURITY AGREEMENT AND ASSIGNMENT (this "Agreement") is made this 2nd day
of November, 2005 by SKIN SHOES, INC., (the "Borrower") in favor of LOGICOM INC.
(the "Secured Party").

W I T N E S S E T H:

A.           WHEREAS, the Borrower, the Secured Party and all of the
Stockholders of the Borrower (the “Stockholders”) are all parties to a share
exchange agreement dated November 2, 2005 (the “Share Exchange Agreement”)
pursuant to which the Secured Party will acquire all of the issued and
outstanding shares of the Borrower from the Stockholders;

B.           WHEREAS, the Share Exchange Agreement requires that the Secured
Party lend to the Borrower the sum of $150,000 (the “Loan”) prior to the
completion of the transactions contemplated in the Share Exchange Agreement (the
“Closing”);

C.           WHEREAS, the Secured Party has made the Loan to the Borrower, as
evidenced by a promissory note dated of even date with this Agreement (the
“Note”) made by the Borrower in favor of the Secured Party;

D.           WHEREAS, the Share Exchange Agreement requires that Borrower grant
to the Secured Party a security interest in all of its assets to secure its
obligations under the Loan; and

E.            WHEREAS, the delivery of this Security Agreement and the grant of
the security interests made herein constitutes a material part of the
consideration to the Secured Party in agreeing to make the Loan;

NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties hereto agree as follows:

1.

GRANT OF SECURITY.

1.1

To secure the performance and the prompt payment by Borrower of the Obligations
(as hereinafter defined), the Borrower hereby grants to the Secured Party a
continuing security interest in, and collaterally assigns to the Secured Party,
all of the present and after acquired property of the Borrower (collectively,
the "Collateral") including, by way of example and not in limitation:

 

D/EPM/762545.9

 

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- 2 -

 

 

 

(a)

Patents. All of the Borrower's right, title and interest, whether now owned or
hereafter acquired, in and to all issued patents and patent applications
(including without limitation the patents and patent applications identified on
Schedule I attached hereto and incorporated herein by reference) and including
the right to recover for all past, present and future infringements thereof and
all reissues, divisions, continuations, continuations-in-part, substitutes,
renewals, and extensions thereof, all improvements thereon, and all other rights
of any kind whatsoever of the Borrower accruing thereunder or pertaining thereto
(collectively, the "Patents").

 

(b)

Trademarks. All of the Borrower's right, title and interest, whether now owned
or hereafter acquired, in and to all trademarks, trade names, trade dress,
domain names, service marks, trademark and service mark registrations, and
applications for trademark or service mark registration and any renewals
thereof, including all income, royalties, damages and payments now and hereafter
due and/or payable with respect thereto (including without limitation damages
for past or future infringements thereof), the right to sue or otherwise recover
for all past, present and future infringements thereof, all rights corresponding
thereto throughout the world (but only such rights as now exist or may come to
exist under applicable local law) and all other rights of any kind whatsoever of
the Borrower accruing thereunder or pertaining thereto, together in each case
with the goodwill of the business connected with the use of, and symbolized by,
each such trademark and service mark (collectively, the "Trademarks").

 

(c)

Copyrights. All of the Borrower's right, title and interest, whether now owned
or hereafter acquired, in and to all copyrights and copyright applications,
including the right to recover for all past, present and future infringements
thereof and all reissues, divisions, continuations, continuations-in-part,
substitutes, renewals, and extensions thereof, all improvements thereon, and all
other rights of any kind whatsoever of the Borrower accruing thereunder or
pertaining thereto (collectively, the "Copyrights").

 

(d)

Licenses. All license agreements regarding Patents, Trademarks or Copyrights
with any other party, whether the Borrower is a licensor or licensee under any
such license agreement, and the right to prepare for sale, sell and advertise
for sale, all inventory now or hereafter owned by the Borrower and now or
hereafter covered by such licenses (collectively, the "Licenses").

 

(e)

All equipment, inventory, improvements, fixtures, accessions, goods and other
personal property of the Borrower.

 

(f)

All accounts of the Borrower.

 

(g)

All chattel paper of the Borrower.

 

(h)

All contract rights, choses in action, commercial tort claims and other general
intangibles of the Borrower.

 

 

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

 

- 3 -

 

 

 

(i)

All instruments or documents of the Borrower.

 

(j)

All goods of the Borrower, together with parts, accessories, attachments and
accessions, now or hereafter attached or pertaining thereto or used in
connection therewith.

 

(k)

All securities, including partnership interests, owned by the Borrower.

 

(l)

This Security Agreement extends to all collateral of any kind which is the
subject of this Agreement which the Borrower now has or may hereafter acquire.

 

(m)

This Security Agreement extends to all proceeds from any disposition or sale of
the collateral.

2.

SECURITY FOR OBLIGATIONS.  

2.1

The security interests granted under this Agreement (the "Security Interests")
by the Borrower secure the payment of all Obligations of the Borrower. The term
"Obligations" of the Borrower shall mean the prompt payment when due or within
any applicable grace period, whether at stated maturity, by acceleration or
otherwise and at all times thereafter of any and all obligations of the Borrower
owed to the Secured Party under the Note irrespective of any change of the time,
manner, or place of payment.

3.

COLLATERAL ASSIGNMENT.

3.1

In addition to, and not in limitation of, the grant of the Security Interests in
the Patents, Trademarks, Copyrights and Licenses in Section 1 above, the
Borrower hereby grants, assigns, transfers, conveys and sets over to the Secured
Party, the Borrower's entire right, title and interest in and to the Patents,
Trademarks, Copyrights and Licenses; provided, that such grant, assignment,
transfer and conveyance shall become effective only at the election of the
Secured Party after the occurrence of an Event of Default (as hereinafter
defined) that is continuing at the time of such election and provided, further,
that this authorization shall not extend to an Event of Default of the type
contemplated in Section 10(b), below, if such Event of Default is caused by the
Secured Party’s breach of the Share Exchange Agreement or by the Secured Party’s
failure to satisfy any of the conditions contained in Section 8.2 of the Share
Exchange Agreement. The Borrower hereby agrees that after the effectiveness of
such grant, assignment, transfer and conveyance of any of the Patents,
Trademarks, Copyrights and License, the use by the Secured Party of any of such
Patents, Trademarks, Copyrights and Licenses shall be without any liability for
royalties or other related charges from the Secured Party to the Borrower.

3.2

The Borrower has executed in blank and delivered to the Secured Party an
assignment of the Licenses and federally registered Patents, Trademarks and
Copyrights (the "IP Assignment") owned by it in the form of Schedule II hereto.
The Borrower hereby authorizes the Secured Party to complete as Assignee and
record with the United States Patent and Trademark Office (the "Patent and
Trademark Office") and the United States Copyright Office (the "Copyright
Office") each IP Assignment upon the occurrence of an

 

 

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- 4 -

 

Event of Default that is continuing at the time of filing; provided, however,
that this authorization shall not extend to an Event of Default of the type
contemplated in Section 10(b), below, if such Event of Default is caused by the
Secured Party’s breach of the Share Exchange Agreement or by the Secured Party’s
failure to satisfy any of the conditions contained in Section 8.2 of the Share
Exchange Agreement.

4.

FURTHER ASSURANCES.

4.1

The Borrower agrees that from time to time, at the expense of the Borrower, the
Borrower will promptly execute and deliver all further instruments and documents
and take all further actions that may be necessary or desirable in the Secured
Party’s reasonable determination, or that the Secured Party may reasonably
request, in order to (i) continue, perfect and protect any Security Interest
granted or purported to be granted hereby, and (ii) enable the Secured Party,
for the benefit of the Secured Party, to exercise and enforce its rights and
remedies hereunder with respect to any part of the Collateral. Without limiting
the generality of the foregoing, the Borrower will execute and file (with the
appropriate governmental offices, authorities, agencies and regulatory bodies in
the United States) such supplements to this Agreement and such financing or
continuation statements, or amendments thereto, and such other instruments or
notices, including executed IP Assignments, with the Patent and Trademark Office
and the Copyright Office, as may be necessary or desirable, or as the Secured
Party may reasonably request, in order to perfect and preserve the security
interests granted hereby.

4.2

The Borrower hereby authorizes the Secured Party to file one or more financing
or continuation statements, and amendments thereto, relative to all or any part
of the Collateral without the signature of the Borrower. A carbon, photographic
or other reproduction of this Agreement or any financing statement covering the
Collateral or any part thereof shall be sufficient as a financing statement
where permitted by law.

4.3

The Borrower will furnish to the Secured Party, from time to time statements and
schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as the Secured Party may reasonably
request, all in reasonable detail.

 

4.4

The Borrower agrees that should it have or obtain an ownership interest in any
patent or patent application that is not now identified on Schedule I, or any
trademark or trademark application or any copyright or copyright application or
any license agreement in respect of any patent, trademark or copyright not
currently held or owned by Borrower: (i) the provisions of this Agreement shall
automatically apply to such item, and such item shall automatically become part
of the Collateral; (ii) the Borrower shall, within 30 days after acquiring or
becoming aware of such ownership interest, (A) give written notice thereof to
the Secured Party, (B) with respect to Trademarks and Patents, cause such
Trademarks and Patents to be properly registered with the Patent and Trademark
Office, (C) with respect to Copyrights, cause such Copyrights to be registered
with the Copyright Office, and (D) file all documents that are known by the
Borrower to be necessary or that the Secured Party reasonably request in order
to perfect the Security Interest of the Secured Party therein; provided,
however, that so long as no Event of Default shall have occurred

 

 

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- 5 -

 

 

and be continuing, the registration obligations of the Borrower pursuant to
subsections (ii)(B) and (ii)(C) of this Section 4.4 shall be limited to those
that are consistent with the Borrower's business judgement and actual use of
such Trademarks, Patents and Copyrights.

4.5

The Borrower agrees: (i) to take all necessary steps in any proceeding before
the Patent and Trademark Office, the Copyright Office or in any court, to
maintain and pursue each patent application now or hereafter included in the
Collateral and to maintain each material patent, trademark or copyright now or
hereafter included in the Collateral, including the filing of divisional,
continuation, continuation-in-part and substitute applications, the filing of
applications for reissue, renewal or extensions, the payment of maintenance
fees, and the participation in interference, reexamination, opposition and
cancellation proceedings; (ii) to take corresponding steps with respect to
material unpatented inventions on which the Borrower is now or hereafter becomes
entitled to seek protection; (iii) to bear any expenses incurred in connection
with such activities; and (iv) not to abandon any right to file a material
patent application, or abandon any material pending application with respect to
any of the Collateral, without the prior written consent of the Secured Party;
provided, however, that so long as no Event of Default shall have occurred and
be continuing, the requirements of the Borrower pursuant to subsections (i) and
(ii) of this Section 4.5 shall be governed by the Borrower's business judgement
and actual use of such Trademarks, Patents and Copyrights.

4.6

The Borrower shall not do any act or omit to do any act whereby any of the
Collateral may become dedicated or abandoned, except where such dedication or
abandonment (i) will not materially adversely affect the business, condition
(financial or otherwise), operations, performance, or properties of the Borrower
and its subsidiaries taken as a whole, and (ii) is in the ordinary course of the
Borrower's business. The Borrower agrees to notify the Secured Party promptly
and in writing if it learns that any of the Collateral may become abandoned or
dedicated or of any adverse determination or any development (including without
limitation the institution of any proceeding in the Patent and Trademark Office,
the Copyright Office, or any court) regarding any material part of the
Collateral.

4.7

The Borrower agrees that in the event that any of the Collateral as to which it
has granted the Security Interests is infringed or misappropriated by a third
party, the Borrower shall promptly notify the Secured Party and shall take all
reasonable steps to terminate the infringement or misappropriation, and take
such other actions as the Borrower shall deem appropriate under the
circumstances to protect such Collateral; provided, however, that so long as no
Event of Default shall have occurred and be continuing, the termination of
infringement or misappropriation obligations of the Borrower described in this
sentence shall be limited to those that are consistent with the Borrower's
business judgement and actual use of such Collateral. Any expense incurred in
connection with such activities shall be borne by the Borrower.

4.8

The Borrower agrees (i) to maintain the quality of any and all products in
connection with which the Collateral is used, consistent with the quality
standards established by the Borrower for said products as of the date of
determination, and (ii) to provide the Secured

 

 

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- 6 -

 

 

Party, quarterly, with a certificate of an officer of the Borrower certifying
the Borrower's compliance with this Section 4.

4.9

The Borrower shall mark its products as required by statute with the numbers of
all appropriate Patents.

5.

GENERAL REPRESENTATIONS AND WARRANTIES.

5.1

The Borrower represents and warrants as follows:

 

 

(a)

It has the unqualified right to enter into this Agreement and to perform its
terms and to grant all the rights, titles and interests granted herein.

 

(b)

No authorization, consent, approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body or any other person
is required either (i) for the grant by the Borrower of the Security Interests
granted hereby (excluding such licenses which, by their terms, required the
consent of the licensor to assign the license but as to which the Borrower
represents and warrants such consent has been made in writing, copies of which
have been delivered to the Secured Party) or for the execution, delivery or
performance of this Agreement by the Borrower, or (ii) for the perfection of or
the exercise by the Secured Party of their rights and remedies hereunder in
North America, except for the filing of this Agreement with the Patent and
Trademark Office, the Copyright Office and the filings required by the Uniform
Commercial Code of the State of Delaware, and except to the extent that the
exercise of rights and remedies may be limited by any applicable bankruptcy,
insolvency, reorganization, moratorium or similar law affecting creditors’
rights generally or by general principles of equity.

 

(c)

The execution, delivery and performance by the Borrower of this Agreement does
not and will not contravene any contractual restriction binding on or affecting
the Borrower or any of its properties that has a reasonable likelihood of having
a material adverse effect on Borrower or its assets.

 

(d)

This Agreement has been duly executed and delivered by the Borrower and is a
legal, valid and binding obligation of the Borrower enforceable against the
Borrower in accordance with its terms except as such enforcement may be limited
by applicable bankruptcy, insolvency, reorganization or other similar laws
relating to or limiting creditors' rights generally or by general equity
principles.

 

(e)

To the best of the Borrower's knowledge and except as has previously been
disclosed to the Secured Party in writing, the Collateral does not infringe any
rights owned or possessed by any third party.

 

(f)

To the best of the Borrower's knowledge, there are no claims, judgments or
settlements to be paid by the Borrower or pending claims or litigation relating
to the Collateral.

 

 

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- 7 -

 

 

 

(g)

Except as disclosed to the Secured Party in writing prior to the date of this
Agreement, the Borrower has no knowledge of the existence of any right under any
patent, trademark, license agreement, trade name, trade secret, know-how,
confidential research, development and commercial information, or other
proprietary information held by any other person that would preclude the
Borrower from publishing, distributing, marketing, selling, or using any product
currently made by it, being made for it or sold or used by it, imported by it or
exported by it, as the case may be, or to use any processes currently used by it
(except, in each case, to the extent that the Borrower has granted an exclusive
license to another person), or materially interfere with the ability of the
Borrower to carry on its business as currently carried on or as it is proposed
to be carried on, and the Borrower has no knowledge of any claim to the contrary
that is likely to be made.

 

(h)

It is the sole legal and beneficial owner of the Patents set forth opposite its
name on Schedule I hereto, free and clear of any lien, security interest,
option, charge, pledge, assignment (whether conditional or not), or any other
encumbrance and no effective financing statement or other instrument similar in
effect covering all or any part of such Collateral is on file in any recording
office, except such as may have been filed in favor of the Secured Party.

6.

TRANSFERS AND OTHER LIENS.

6.1

The Borrower shall not:

 

 

(a)

sell, assign (except by operation of law) or otherwise dispose of any of, or
grant any option with respect to, the Collateral or any interest in the
Collateral, directly or indirectly, except as permitted by the Share Exchange
Agreement; or

 

(b)

take any other action in connection with any of the Collateral that would impair
the value of the interest or rights of the Borrower in the Collateral taken as a
whole or that would impair the interest or rights of the Secured Party.

7.

SECURED PARTY APPOINTED ATTORNEY-IN-FACT.

7.1

Without limiting any other provision of this Agreement, upon the occurrence and
during the continuance of an Event of Default, the Borrower hereby irrevocably
appoints the Secured Party as the Borrower's attorney-in-fact, with full
authority in the place and stead of the Borrower and in the name of the Borrower
or otherwise, from time to time in the Secured Party’s discretion, to take any
action and to execute any instrument that the Secured Party may reasonably deem
necessary or advisable to accomplish the purposes of this Agreement, including
without limitation:

 

(a)

to ask, demand, collect, sue for, recover, compromise, receive and give
acquittance and receipts for moneys due and to become due under or in respect of
any of the Collateral;

 

 

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- 8 -

 

 

 

(b)

to receive, endorse and collect any drafts or other instruments, documents and
chattel paper in connection with clause (a) above;

 

(c)

to file any claims or take any action or institute any proceedings that the
Secured Party may reasonably deem necessary or desirable for the collection of
any of the Collateral or otherwise to enforce the rights of the Secured Party,
with respect to any of the Collateral; and

 

(d)

to execute, in connection with the sale provided for in Section 10 hereof, any
endorsement, assignments, or other instruments of conveyance or transfer with
respect to the Collateral.

8.

SECURED PARTY MAY PERFORM.

8.1

If the Borrower fails to perform any agreement contained herein, the Secured
Party may itself perform, or cause performance of, such agreement, and the
expenses of the Secured Party incurred in connection therewith shall be payable
by the Borrower to the fullest extent permitted by applicable law.

8.2

The Secured Party or its designated representatives shall have the right to the
extent reasonably requested and upon reasonable prior notice, at any reasonable
time during normal business hours of the Borrower and from time to time, to
inspect the Borrower's premises and to examine the Borrower's books, records and
operations relating to the Collateral.

9.

THE SECURED PARTY'S DUTIES.

The powers conferred on the Secured Party hereunder are solely to protect the
interest of the Secured Party in the Collateral and shall not impose any duty
upon it to exercise any such powers. Except for the safe custody of any
Collateral in its possession and the accounting for moneys actually received by
it hereunder the Secured Party shall not have any duty as to any Collateral or
as to the taking of any necessary steps to preserve rights against other parties
or any other rights pertaining to any Collateral. The Secured Party shall be
deemed to have exercised reasonable care in the custody and preservation of the
Collateral in its possession if such Collateral is accorded treatment
substantially equal to that which it accords its own similar property.

10.

DEFAULT

Time is of the essence in this Security Agreement and in any of the following
events (each an “Event of Default”):

 

(a)

if default shall be made in the due and punctual payment of the principal or
interest due under the Obligations when and as the same shall become due and
payable, whether at maturity or by acceleration or otherwise and such default
shall continue for ten (10) days after written notice of default is given;

 

 

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- 9 -

 

 

 

(b)

if default shall be made in the performance or observance of or shall occur
under any covenant, agreement or other provision of this Agreement, the Note or
the Share Exchange Agreement or in any instrument or document delivered to the
Secured Party in connection with or pursuant to this Agreement, the Note or the
Share Exchange Agreement, or if any such instrument or document shall terminate
or become void or unenforceable without the written consent of the Secured
Party; and such default shall continue for thirty (30) days after written notice
of default is given;

 

(c)

if default shall occur in the payment of any principal, interest or premium with
respect to any indebtedness for borrowed money of the Borrower or under any
agreement or instrument under or pursuant to which any such indebtedness may
have been issued, created, assumed or guaranteed by the Borrower, and such
default shall continue for more than the period of grace, if any, therein
specified, or if any such indebtedness be declared due and payable prior to the
stated maturity thereof; and such default shall continue for thirty (30) days
after written notice of default is given;

 

(d)

if any representation or warranty or any other statement of fact herein or in
any writing, certificate, report or statement at any time furnished to the
Secured Party pursuant to or in connection with this Agreement or otherwise
shall be intentionally false or misleading in any material respect;

 

(e)

if the Borrower shall admit in writing its inability to pay its debts generally
as they become due, file a petition in bankruptcy or a petition to take
advantage of any insolvency act; make an assignment for the benefit of its
creditors, commence a proceeding for the appointment of a receiver, trustee,
liquidator or conservator of itself or of a whole or any substantial part of its
property; file a petition or answer seeking reorganization or arrangement or
similar relief under the federal bankruptcy laws or any other applicable law or
statute of the United States or any state;

 

(f)

if the Borrower shall be adjudged a bankrupt; or a court of competent
jurisdiction shall enter an order, judgment or decree appointing a receiver,
trustee, liquidator or conservator of the Borrower or of the whole or any
substantial part of its properties or approve a petition filed against the
Borrower seeking reorganization or similar relief under the federal bankruptcy
laws or any other applicable law or statute of the United States or any state or
if, under the provisions of any other law for the relief or aid of debtors, a
court of competent jurisdiction shall assume custody or control of the Borrower
or of the whole or any substantial part of its assets; or if there is commenced
against the Borrower any proceeding for any of the foregoing relief or if a
petition in bankruptcy is filed against the Borrower and such proceeding or
petition remains undismissed for a period of thirty (30) days; or if the
Borrower by any act indicates its consent to, approval of or acquiescence in any
such proceeding or petition; or

 

 

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

 

- 10 -

 

 

 

(g)

if any judgment against the Borrower or any attachment or execution against any
of its property for any amount in excess of $10,000.00 remains unpaid, unstayed
or undismissed for a period of more than thirty (30) days.

Then and in any such events of default the entire amount of indebtedness secured
hereby shall then or at any time thereafter, at the option of the Secured Party,
become immediately due and payable without notice or demand, and the Secured
Party shall have an immediate right to pursue the remedies set forth in this
Security Agreement; provided, however, that the Secured Party shall refrain from
pursuing any such remedies for a period of six months after the date of the
Event of Default.

11.

REMEDIES UPON AN EVENT OF DEFAULT.

 

11.1

If an Event of Default shall have occurred and be continuing:

 

(a)

The Secured Party may exercise in respect of the Collateral, in addition to
other rights and remedies provided for herein or otherwise available to it, all
of the rights and remedies of a secured party upon default under the Uniform
Commercial Code as in effect in the State of Delaware (the "UCC") and also may
(i) exercise any and all rights and remedies of the Borrower under, in
connection with, or otherwise in respect of, such Collateral, including the
completion and filing of the IP Assignment, (ii) require the Borrower to, and
the Borrower hereby agrees that it will at its expense and upon request of the
Secured Party forthwith, assemble all or part of the Collateral or the documents
embodying such Collateral as directed by the Secured Party and make it available
to the Secured Party, at a place to be designated by the Secured Party that is
reasonably convenient to both the Secured Party and the Borrower, (iii) occupy
any premises owned or leased by the Borrower where the Collateral or documents
embodying the Collateral or any part thereof are assembled for a reasonable
period in order to effectuate the Secured Party' rights and remedies hereunder
or under applicable law, without obligation to the Borrower in respect of such
occupation, (iv) license such Collateral or any part thereof, (v) with notice as
specified below, sell such Collateral or any part thereof in one or more parcels
at public or private sale, at any of the Secured Party' offices or elsewhere,
for cash, on credit or for future delivery, and upon such other terms as the
Secured Party may deem commercially reasonable, and (vi) without prior notice to
the Borrower, direct any licensee of any Collateral to pay all royalties and
other payments which may be or which may thereafter become payable to the
Borrower directly to the Secured Party or any designee of the Secured Party, but
the Secured Party shall give notice to the Borrower of any such direction no
later than five (5) business days after giving any such direction. The Borrower
agrees that at least ten (10) business days' notice to the Borrower of the time
and place of any public sale or the time after which any private sale is to be
made shall constitute reasonable notification. The Secured Party shall not be
obligated to make any sale of the Collateral regardless of notice of sale having
been given. The Secured Party may adjourn any public or private sale from time
to time by announcement at the time and place fixed

 

 

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- 11 -

 

 

therefor, and such sale may, with further notice to the Borrower, be made at the
time and place to which it was so adjourned.

 

(b)

All payments received by the Borrower under or in connection with the Collateral
shall be received in trust for the benefit of the Secured Party, shall be
segregated from other funds of the Borrower and shall be immediately paid over
to the Secured Party in the same form as so received (with any necessary
endorsement).

 

(c)

All payments made under or in connection with or otherwise in respect of the
Collateral, and all cash proceeds received by the Secured Party in respect of
any sale of, collection from, or other realization upon all or any part of such
Collateral may, in the discretion of the Secured Party, be held by the Secured
Party, as collateral for, and then or at any time thereafter applied for the
benefit of the Secured Party against all or any part of the Obligations. Any
sale or other disposition of the Collateral and the possession thereof by the
Secured Party shall be in compliance with all provisions of applicable law
(including applicable provisions of the UCC).

12.

AMENDMENTS, ETC.

No amendment or waiver of any provision of this Agreement nor consent to any
departure by the Borrower therefrom shall in any event be effective unless the
same shall be in writing and signed by the Secured Party, and then such waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which given.

13.

CONTINUING SECURITY INTEREST.

13.1

This Agreement shall create a continuing Security Interest in the Collateral and
shall remain in full force and effect until terminated in accordance with the
provisions of Section 20 hereof.

13.2

Except as permitted hereby or by the Share Exchange Agreement or the Note, the
Borrower shall not sell, lease, transfer or otherwise dispose of any item of
Collateral during the term of this Agreement without the prior written consent
of the Secured Party to such sale, lease, transfer or other disposition.
Notwithstanding the foregoing, unless and until the occurrence of an Event of
Default, the Secured Party hereby consents to the sale by Borrower of inventory
in the ordinary course of Borrower’s business.

13.3

Upon the termination of this Agreement in accordance with Section 20 hereof, the
Collateral shall be automatically released from the liens created hereby, all
rights to the Collateral shall automatically revert to the Borrower, and this
Agreement and all obligations of the Borrower hereunder shall terminate without
delivery of any instrument or performance of any act by any party. Upon such
termination of this Agreement, the Secured Party shall reassign and redeliver
such Collateral then held by or for the Secured Party and execute and deliver to
the Borrower, at the Borrower’s expense, such documents as Borrower shall
reasonably request to evidence such termination.

 

 

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- 12 -

 

 

 

14.

DEFINITIONS.

All terms used herein and not specifically defined shall be defined in
accordance with the appropriate definitions appearing in the Share Exchange
Agreement and the Note, and such definitions are hereby incorporated herein by
reference and made a part hereof.

15.

ENTIRE AGREEMENT.

This Agreement, together with the Share Exchange Agreement and the Note,
constitutes and expresses the entire understanding between the parties hereto
with respect to the subject matter hereof, and supersedes all prior agreements
and understandings, inducements, commitments or conditions, express or implied,
oral or written, except as herein contained. The express terms hereof control
and supersede any course of performance or usage of the trade inconsistent with
any of the terms hereof. Neither this Agreement nor any portion or provision
hereof may be changed, altered, modified, supplemented, discharged, canceled,
terminated, or amended orally or in any manner other than by an agreement, in
writing signed by the parties hereto.

16.

FURTHER ASSURANCES.

The Borrower agrees at its own expense to do such further acts and things, and
to execute and deliver such additional conveyances, assignments, financing
statements, agreements and instruments, as the Secured Party may at any time
reasonably request in connection with the administration or enforcement of this
Agreement or related to the Collateral or any part thereof or in order better to
assure and confirm unto the Secured Party their rights, powers and remedies
hereunder.

17.

BINDING AGREEMENT; ASSIGNMENT.

This Agreement, and the terms, covenants, conditions, rights and remedies
hereof, shall be binding upon and inure to the benefit of the parties hereto,
and to their respective heirs, legal representatives, successors and assigns;
provided, however, that the Borrower shall not be permitted to assign any of its
rights, powers, duties or obligations under this Agreement or any interest
herein or in the Collateral, or any part thereof, or otherwise pledge, encumber
or grant any option with respect to the Collateral, or any part thereof, or any
cash or property held by the Secured Party as Collateral under this Agreement.

18.

SEVERABILITY.

If any term or provision of this Agreement is or shall become illegal, invalid
or unenforceable in any jurisdiction, all other terms and provisions of this
Agreement shall remain legal, valid and enforceable in such jurisdiction and
such illegal, invalid or unenforceable provision shall be legal, valid and
enforceable in any other jurisdiction.

19.

COUNTERPARTS; FACSIMILE SIGNATURES.

This Agreement may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed shall be
deemed to be an original and all of which when taken together shall constitute
one and the same agreement. This Agreement,

 

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

 

- 13 -

 

 

once executed by a party, may be delivered to the other party hereto by
facsimile transmission of a copy of this Agreement bearing the signature of the
party so delivering this Agreement.

20.

TERMINATION.

This Agreement and all obligations of the Borrower hereunder shall terminate
once the Obligations have been paid in full.

21.

NOTICES.

Any notice, request or consent required hereunder or in connection herewith
shall be deemed satisfactorily given if in writing (including facsimile
transmissions) and delivered by hand, U.S. mail (registered or certified mail)
or recognized overnight courier to the parties at their respective addresses or
fax number set forth in the Share Exchange Agreement or such other addresses or
as may be given by any party to the others in writing.

22.

GOVERNING LAW.

This Agreement shall be governed as to its validity, interpretation and effect
in accordance with the laws of the state of Nevada, except as required by
mandatory provisions of law and except if the validity or perfection of the
security interest hereunder, or remedies hereunder, in respect of any particular
collateral are governed by the laws of a jurisdiction other than Nevada.

23.

WAIVER OF JURY TRIAL.

Borrower and Secured Party hereby waive trial by jury in any judicial proceeding
to which they are parties involving, directly or indirectly, any matter (whether
in tort, contract or otherwise) in any way arising out of, related to, or
connected with this Agreement and the relationships established hereunder.

IN WITNESS WHEREOF, the parties have duly executed this Security Agreement and
Assignment on the day and year first written above.

BORROWER:

SKIN SHOES, INC.

By                                                                     

 

Mark Klein, President

SECURED PARTY:

LOGICOM INC.

By:                                                                    

                Gary Musil, President

 

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

 

- 14 -

 

 

 

 

SCHEDULE I

Patents and Patent Applications

Country

Patent No.

Status

 

U.S. Patent A[img6.gif]
pp. No. 10/683,246

International (PCT) Patent App. No. PCT/US04/33446

 

 

D/EPM/762545.9

 

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

 

 

EXHIBIT A

 

ASSIGNMENT OF PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES

THIS ASSIGNMENT OF PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES (this
"Agreement") is made as of this 1st day of November, 2005 by SKIN SHOES, INC.
(the "Borrower") in favor of the LOGICOM INC. (the "Secured Party").

W I T N E S S E T H:

A.           WHEREAS, the Borrower, the Secured Party and all of the
Stockholders of the Borrower (the “Stockholders”) are all parties to a share
exchange agreement dated November 2, 2005 (the “Share Exchange Agreement”)
pursuant to which the Secured Party will acquire all of the issued and
outstanding shares of the Borrower from the Stockholders;

B.           WHEREAS, the Share Exchange Agreement requires that the Secured
Party lend to the Borrower the sum of $150,000 (the “Loan”) prior to the
completion of the transactions contemplated in the Share Exchange Agreement (the
“Closing”);

C.           WHEREAS, the Secured Party has made the Loan to the Borrower, as
evidenced by a promissory note dated of even date with this Agreement (the
“Note”) made by the Borrower in favor of the Secured Party;

D.           WHEREAS the Secured Party requires that the Borrower collaterally
assign to the Secured Party certain property as security for the repayment of
the Note and performance of all of the obligations of the Borrower under the
Note and a General Security Agreement of even date therewith.

NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby
acknowledged, the Borrower does hereby assign, sell and transfer unto the
Secured Party all right, title and interest in and to:

 

(a)

Patents. All of the Borrower's right, title and interest, whether now owned or
hereafter acquired, in and to all issued patents and patent applications
(including without limitation the patents and patent applications identified on
Schedule I attached hereto and incorporated herein by reference) and including
the right to recover for all past, present and future infringements thereof and
all reissues, divisions, continuations, continuations-in-part, substitutes,
renewals, and extensions thereof, all improvements thereon, and all other rights
of any kind whatsoever of the Borrower accruing thereunder or pertaining thereto
(collectively, the "Patents");

 

(b)

Trademarks. All of the Borrower's right, title and interest, whether now owned
or hereafter acquired, in and to all trademarks, trade names, trade dress,
domain names, service marks, trademark and service mark registrations, and
applications for trademark or service mark registration and any renewals
thereof, including all income, royalties, damages and payments now and hereafter
due and/or payable

 

D/EPM/762545.9

 

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- 2 -

 

 

with respect thereto (including without limitation damages for past or future
infringements thereof), the right to sue or otherwise recover for all past,
present and future infringements thereof, all rights corresponding thereto
throughout the world (but only such rights as now exist or may come to exist
under applicable local law) and all other rights of any kind whatsoever of the
Borrower accruing thereunder or pertaining thereto, together in each case with
the goodwill of the business connected with the use of, and symbolized by, each
such trademark and service mark (collectively, the "Trademarks");

 

(c)

Copyrights. All of the Borrower's right, title and interest, whether now owned
or hereafter acquired, in and to all copyrights and copyright applications,
including the right to recover for all past, present and future infringements
thereof and all reissues, divisions, continuations, continuations-in-part,
substitutes, renewals, and extensions thereof, all improvements thereon, and all
other rights of any kind whatsoever of the Borrower accruing thereunder or
pertaining thereto (collectively, the "Copyrights");

 

(d)

Licenses. All license agreements regarding Patents, Trademarks or Copyrights
with any other party, whether the Borrower is a licensor or licensee under any
such license agreement, and the right to prepare for sale, sell and advertise
for sale, all inventory now or hereafter owned by the Borrower and now or
hereafter covered by such licenses (collectively, the "Licenses"),

together with (i) the registrations of and registration applications therefor,
as applicable, (ii) the goodwill of the business symbolized by and associated
with the Trademarks and the registrations thereof, (iii) the right to sue and
recover for, and the right to profits or damages due or accrued arising out of
or in connection with, any and all past, present or future infringements or
dilution of or damage or injury to the Trademarks, Copyrights, Patents or the
registrations thereof or such associated goodwill, and (iv) all rights of the
Borrower to enforce all Licenses.

The Borrower hereby grants to the Secured Party, and notice is hereby given that
the Borrower has granted to the Secured Party, a first priority security
interest in the Collateral to secure the payment and performance in full of all
of the obligations of the Borrower under the Notes.

This Assignment is made pursuant to and subject to the terms of the IP Security
Agreement, which is deemed incorporated herein by this reference and shall
constitute part of this Assignment as if fully set forth herein.

This Assignment is intended to and shall take effect as a sealed instrument at
such time as the Secured Party shall complete this instrument by signing its
acceptance of this Assignment below.

The parties agree to promptly execute and deliver all further instruments
necessary or desirable to carry out the purposes of this Agreement.

This Agreement may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed shall be
deemed to be an original and all of which when taken together shall constitute
one and the same agreement. This Agreement,

 

D/EPM/762545.9

 

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- 3 -

 

 

once executed by a party, may be delivered to the other party hereto by
facsimile transmission of a copy of this Agreement bearing the signature of the
party so delivering this Agreement.

IN WITNESS WHEREOF, the parties have duly executed this Assignment of Patents,
Trademarks, Copyrights and Licenses on the day and year first written above.

BORROWER:

SKIN SHOES, INC.

By                                                                     

 

Mark Klein, President

 

 

D/EPM/762545.9

 

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

 

 

SCHEDULE I

SCHEDULE I

Patents and Patent Applications

Country

Patent No.

Status

[img5.gif]
U.S. Patent A[img7.gif]
pp. No. 10/683,246

International (PCT) Patent App. No. PCT/US04/33446

 

 

D/EPM/762545.9

 

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

 

 

SCHEDULE "I"

FORM OF ACCREDITED INVESTOR QUESTIONNAIRE

U.S. SECURITIES LAW QUESTIONNAIRE

This U.S. Securities Law Questionnaire is made by _________________ (“the
“Subscriber”) in favour of Logicom, Inc. (the “Company“), a Nevada corporation,
in connection with the subscription, by the Subscriber, for common shares or
other securities in the capital of the Company.

The Subscriber covenants, represents and warrants to the Company that:

 

(a)

it is a U.S. Person as defined in Regulation “S” promulgated under the
Securities Act of 1933 (the “Securities Act”);

 

(b)

it has such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of the transactions detailed in the
Agreement and it is able to bear the economic risk of loss arising from such
transactions;

 

(c)

it is acquiring the Securities for investment only and not with a view to resale
or distribution and, in particular, it has no intention to distribute either
directly or indirectly any of the Securities in the United States or to U.S.
Persons;

 

(d)

it acknowledges that the Company has not undertaken to register, and will have
no obligation to register, any of the Securities under the Securities Act;

 

(e)

it understands that none of the Securities have been registered under the
Securities Act and that the issuance contemplated hereby is being made in
reliance on an exemption from such registration requirement;

 

(f)

it satisfies one or more of the categories indicated below (please check the
appropriate box):

 

o

Category 1         An organization described in Section 501(c)(3) of the United
States Internal Revenue Code, a corporation, a Massachusetts or similar business
trust or partnership, not formed for the specific purpose of acquiring the
Securities, with total assets in excess of US $5,000,000;

 

o

Category 2         A natural person whose individual net worth, or joint net
worth with that person’s spouse, on the date of purchase exceeds US $1,000,000;

 

D/EPM/762545.9

 

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- 2 -

 

 

 

o

Category 3         A natural person who had an individual income in excess of
US $200,000 in each of the two most recent years or joint income with that
person’s spouse in excess of US $300,000 in each of those years and has a
reasonable expectation of reaching the same income level in the current year;

 

o

Category 4         A “bank” as defined under Section (3)(a)(2) of the Securities
Act or savings and loan association or other institution as defined in
Section 3(a)(5)(A) of the Securities Act acting in its individual or fiduciary
capacity; a broker dealer registered pursuant to Section 15 of the Securities
Exchange Act of 1934 (United States); an insurance company as defined in
Section 2(13) of the Securities Act; an investment company registered under the
Investment Company Act of 1940 (United States) or a business development company
as defined in Section 2(a)(48) of such Act; a Small Business Investment Company
licensed by the U.S. Small Business Administration under Section 301(c) or (d)
of the Small Business Investment Act of 1958 (United States); a plan with total
assets in excess of $5,000,000 established and maintained by a state, a
political subdivision thereof, or an agency or instrumentality of a state or a
political subdivision thereof, for the benefit of its employees; an employee
benefit plan within the meaning of the Employee Retirement Income Security Act
of 1974 (United States) whose investment decisions are made by a plan fiduciary,
as defined in Section 3(21) of such Act, which is either a bank, savings and
loan association, insurance company or registered investment adviser, or if the
employee benefit plan has total assets in excess of $5,000,000, or, if a
self-directed plan, whose investment decisions are made solely by persons that
are accredited investors;

 

o

Category 5         A private business development company as defined in
Section 202(a)(22) of the Investment Advisers Act of 1940 (United States);

 

o

Category 6

A director or executive officer of the Company;

 

o

Category 7         A trust with total assets in excess of $5,000,000, not formed
for the specific purpose of acquiring the Securities, whose purchase is directed
by a sophisticated person as described in Rule 506(b)(2)(ii) under the
Securities Act; or

 

o

Category 8         An entity in which all of the equity owners satisfy the
requirements of one or more of the foregoing categories.

 

 

D/EPM/762545.9

 

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- 3 -

 

 

 

(g)

it acknowledges that it is not acquiring the Securities as a result of any form
of general solicitation or general advertising including advertisements,
articles, notices or other communications published in any newspaper, magazine
or similar media or broadcast over radio, or television, or any seminar or
meeting whose attendees have been invited by general solicitation or general
advertising;

 

(h)

it agrees that if it decides to offer, sell or otherwise transfer any of the
Securities, it will not offer, sell or otherwise transfer any of such securities
directly or indirectly, unless:

 

(i)

the sale is to the issuer of the Securities;

 

(ii)

the sale is made outside the United States in a transaction meeting the
requirements of Rule 904 of Regulation S under the Securities Act and in
compliance with applicable local laws and regulations;

 

(iii)

the sale is made pursuant to the exemption from the registration requirements
under the Securities Act provided by Rule 144 thereunder if available and in
accordance with any applicable state securities or “Blue Sky” laws; or

 

(iv)

the Securities are sold in a transaction that does not require registration
under the Securities Act or any applicable U.S. state laws and regulations
governing the offer and sale of securities, and it has prior to such sale
furnished to the Company an opinion of counsel reasonably satisfactory to the
Company;

 

(i)

it understands and acknowledges that upon the issuance thereof, and until such
time as the same is no longer required under the applicable requirements of the
Securities Act, applicable U.S. State laws and regulations, or any contract
between the Subscriber and the Company, the certificates representing any of the
Securities will bear such legends as may be required by law and/or by any such
contract between the Subscriber and the Company; and

 

(j)

it consents to the Company making a notation on its records or giving
instruction to the registrar and transfer agent of the Company in order to
implement the restrictions on transfer set forth and described herein.

 

 

D/EPM/762545.9

 

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- 4 -

 

 

IN WITNESS WHEREOF, the undersigned has executed this Questionnaire as of the
____ day of _________, 2005.

If a Corporation, Partnership or Other Entity:

If an Individual:

 

 

                                                                           

 

Print or Type Name of Entity

Signature

 

                                                                           

 

Signature of Authorized Signatory

Print or Type Name

 

                                                                           

 

Type of Entity

Social Security/Tax I.D. No.

 

 

D/EPM/762545.9

 

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

 

 

SCHEDULE "J"

LIST OF TARGET OPTIONS

1.

Steve Reimer - 1.25% - 421,875 shares vested over three years @ .80 a share

 

2

Steve Hochberg - 1.25% - 421,875 shares vested over three years @ .80 a share

 

3.

Mark Itzkowitz - 1.25% - 421,875 shares - vested over three years @ .80 a share

 

4.

Bill Priakos - 1.25% - 421,875 shares - vested over three years @ .80 a share

 

5.

Shy Kurtz - 1.25% - 421,875 shares - immediately vested @ .80 a share

 

6.

Future Pool - 3.75% - 1,265,625 shares held by management @ fair market value

Option Issuance Price - .80 a share unless otherwise noted

Total Percentage = 10%

Total Shares = 3,375,000

 

 

D/EPM/762545.9

 

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SCHEDULE "K"

FORM OF TARGET’S 2005 INCENTIVE PLAN

 

SKIN SHOES, INC.

 

2005 INCENTIVE PLAN

 

ARTICLE I

 

PURPOSE AND ADOPTION OF THE PLAN

 

1.01.    Purpose. The purpose of the Skin Shoes, Inc. 2005 Incentive Plan (as
amended from time to time, the "Plan") is to assist in attracting and retaining
highly competent employees, directors and consultants to act as an incentive in
motivating selected employees, directors and consultants of Skin Shoes, Inc. and
its Subsidiaries to achieve long-term corporate objectives and to enable
stock-based and cash-based incentive awards to qualify as performance-based
compensation for purposes of the tax deduction limitations under Section 162(m)
of the Code.

 

1.02.    Adoption and Term. The Plan has been approved by the Board to be
effective as of October 26, 2005 and has been approved by the stockholders of
the Company to be effective as of October 26, 2005. The Plan shall remain in
effect until terminated by action of the Board; provided, however, that no
Awards may be granted hereunder after the tenth anniversary of its initial
effective date.

 

1.03     Share Exchange Transaction. The Company is a party to that certain
Share Exchange Agreement dated ___________, 2005 by and between the Company and
Logicom Inc., a Nevada corporation (“Logicom”), whereby Logicom shall assume the
Plan and all Awards then in existence upon the closing of the transactions
contemplated thereby (the “Share Exchange Transaction”). Upon the closing of the
Share Exchange Transaction, the governing law reflected in Section 10.10 hereof
shall change, with no further action by the Board or the stockholders of the
Company or Logicom, to be governed by the laws of Nevada and construed in
accordance therewith.

 

ARTICLE II

 

DEFINITIONS

 

For the purpose of this Plan, capitalized terms shall have the following
meanings:

 

 

D/EPM/762545.9

 

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- 2 -

 

 

2.01.    Award means any one or a combination of Non-Qualified Stock Options or
Incentive Stock Options described in Article VI, Stock Appreciation Rights
described in Article VI, Restricted Shares described in Article VII, Performance
Awards described in Article VIII, Stock Units and other stock-based Awards
described in Article IX, short-term cash incentive Awards described in Article X
or any other Award made under the terms of the Plan.

 

2.02.    Award Agreement means a written agreement between the Company and a
Participant or a written acknowledgment from the Company to a Participant
specifically setting forth the terms and conditions of an Award granted under
the Plan.

 

2.03.    Award Period means, with respect to an Award, the period of time, if
any, set forth in the Award Agreement during which specified target performance
goals must be achieved or other conditions set forth in the Award Agreement must
be satisfied.

 

2.04.    Beneficiary means an individual, trust or estate who or which, by a
written designation of the Participant filed with the Company, or if no such
written designation is filed, by operation of law, succeeds to the rights and
obligations of the Participant under the Plan and the Award Agreement upon the
Participant's death.

 

 

2.05.

Board means the Board of Directors of the Company.

 

2.06.    Change in Control means, and shall be deemed to have occurred upon the
occurrence of, any one of the following events, all of which shall exclude the
closing of the Share Exchange Transaction and the transactions contemplated
thereby:

 

(a)        The acquisition in one or more transactions, other than from the
Company, by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Exchange Act), other than the Company, a Subsidiary
or any employee benefit plan (or related trust) sponsored or maintained by the
Company or a Subsidiary, of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of a number of Company Voting
Securities in excess of 25% of the Company Voting Securities unless such
acquisition has been approved by the Board;

 

(b)         Any election has occurred of persons to the Board that causes
two-thirds of the Board to consist of persons other than (i) persons who were
members of the Board on the effective date of the Plan and (ii) persons who were
nominated for elections as members of the Board at a time when two-thirds of the
Board consisted of persons who were members of the Board on the effective date
of the Plan, provided, however, that any person nominated for election by a
Board at least two-thirds of whom constituted persons described in clauses (i)
and/or (ii) or by persons who were themselves nominated by such Board shall, for
this purpose, be deemed to have been nominated by a Board composed of persons
described in clause (i);

 

(c)        The consummation (i.e. closing) of a reorganization, merger or
consolidation involving the Company, unless, following such reorganization,
merger or

 

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consolidation, all or substantially all of the individuals and entities who were
the respective beneficial owners of the Outstanding Common Stock and Company
Voting Securities immediately prior to such reorganization, merger or
consolidation, following such reorganization, merger or consolidation
beneficially own, directly or indirectly, more than seventy five percent (75%)
of, respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors or trustees, as the case may be, of the
entity resulting from such reorganization, merger or consolidation in
substantially the same proportion as their ownership of the Outstanding Common
Stock and Company Voting Securities immediately prior to such reorganization,
merger or consolidation, as the case may be;

 

(d)       The consummation (i.e. closing) of a sale or other disposition of all
or substantially all the assets of the Company, unless, following such sale or
disposition, all or substantially all of the individuals and entities who were
the respective beneficial owners of the Outstanding Common Stock and Company
Voting Securities immediately prior to such reorganization, merger or
consolidation, following such reorganization, merger or consolidation
beneficially own, directly or indirectly, more than seventy five percent (75%)
of, respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors or trustees, as the case may be, of the
entity purchasing such assets in substantially the same proportion as their
ownership of the Outstanding Common Stock and Company Voting Securities
immediately prior to such sale or disposition, as the case may be; or

 

 

(e)

a complete liquidation or dissolution of the Company.

 

2.07.    Code means the Internal Revenue Code of 1986, as amended. References to
a section of the Code shall include that section and any comparable section or
sections of any future legislation that amends, supplements or supersedes said
section.

 

 

2.08.

Committee means the Committee defined in Section 3.01.

 

2.09.    Company means Skin Shoes, Inc., a Delaware corporation, and its
successors and assigns, including, but not limited to, Logicom.

 

2.10.    Common Stock means Common Stock of the Company, par value $.001 per
share.

 

2.10.    Company Voting Securities means the combined voting power of all
outstanding voting securities of the Company entitled to vote generally in the
election of directors to the Board.

 

 

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2.12.    Date of Grant means the date designated by the Committee as the date as
of which it grants an Award, which shall not be earlier than the date on which
the Committee approves the granting of such Award.

 

2.13.    Dividend Equivalent Account means a bookkeeping account related to an
Award that is credited with the amount of any cash dividends or stock
distributions that would be payable with respect to the shares of Common Stock
subject to such Awards had such shares been outstanding shares of Common Stock.

 

 

2.14

Exchange Act means the Securities Exchange Act of 1934, as amended.

 

2.15.    Exercise Price means, with respect to a Stock Appreciation Right, the
amount established by the Committee in the Award Agreement which is to be
subtracted from the Fair Market Value on the date of exercise in order to
determine the amount of the payment to be made to the Participant, as further
described in Section 6.02(b).

 

2.16.    Fair Market Value means, on any date, (i) the closing sale price of a
share of Common Stock, as reported on the Composite Tape for New York Stock
Exchange Listed Companies (or other established stock exchange on which the
Common Stock is regularly traded) on such date or, if there were no sales on
such date, on the last date preceding such date on which a sale was reported;
(ii) if the Common Stock is not listed for trading on an established stock
exchange, the closing sale price of a share of Common Stock on The Nasdaq Stock
Market's National Market ("NNM") or SmallCap Market (“NSM”), or if there were no
sales on such date, on the last date preceding such date on which a sale was
reported; (iii) if shares of Common Stock are not listed for trading on an
established stock exchange or quoted on NNM or NSM, but a regular, active public
market for the Common Stock exists (as determined in the sole discretion of the
Committee, whose discretion shall be conclusive and binding), the average of the
closing bid and ask quotations per share of Common Stock in the over-the-counter
(“OTC”) market for such shares on such date or, if no quotations are available
on such date, on the last date preceding such date on which a quotation was
reported; or (iv) if shares of Common Stock are not listed for trading on an
established stock exchange or quoted on NNM or NSM or OTC, Fair Market Value
shall be determined by the Committee in good faith. Such definition of Fair
Market Value shall be specified in the Award Agreement and may differ depending
on whether Fair Market Value is in reference to the grant, exercise, vesting, or
settlement or payout of an Award.

 

2.17.    Incentive Stock Option means a stock option within the meaning of
Section 422 of the Code.

 

2.18.    Merger means any merger, reorganization, consolidation, exchange,
transfer of assets or other transaction having similar effect involving the
Company.

 

2.19.    Non-Qualified Stock Option means a stock option which is not an
Incentive Stock Option.

 

 

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2.20.    Options means all Non-Qualified Stock Options and Incentive Stock
Options granted at any time under the Plan.

 

2.21.    Outstanding Common Stock means, at any time, the issued and outstanding
shares of Common Stock.

 

2.22.    Participant means a person designated to receive an Award under the
Plan in accordance with Section 5.01.

 

2.23.    Performance Awards means Awards granted in accordance with Article
VIII.

 

2.24.    Performance Goals means [list performances goals for Awards intended to
comply with the performance-based compensation exception under Code Section
162(m), such as: operating income, operating profit (earnings from continuing
operations before interest and taxes), earnings per share, return on investment
or working capital, return on stockholders' equity, economic value added (the
amount, if any, by which net operating profit after tax exceeds a reference cost
of capital), reductions in inventory, inventory turns and on-time delivery
performance, any one of which may be measured with respect to the Company or any
one or more of its Subsidiaries and divisions and either in absolute terms or as
compared to another company or companies, and quantifiable, objective measures
of individual performance relevant to the particular individual's job
responsibilities.]

 

 

2.25.

Plan shall have the meaning given to such term in Section 1.01.

 

2.26.    Purchase Price, with respect to Options, shall have the meaning set
forth in Section 6.01(b).

 

2.27.    Restoration Option means a Non-Qualified Stock Option granted pursuant
to Section 6.01(f).

 

2.28.    Restricted Shares means Common Stock subject to restrictions imposed in
connection with Awards granted under Article VII.

2.29.    Retirement means early or normal retirement under a pension plan or
arrangement of the Company or one of its Subsidiaries in which the Participant
participates or, in the case of a Participant who is a non-employee member of
the Board, retirement under the Board’s retirement policy, if any.

 

2.30.    Rule 16b-3 means Rule 16b-3 promulgated by the Securities and Exchange
Commission under Section 16 of the Exchange Act, as the same may be amended from
time to time, and any successor rule.

 

 

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2.31.    Stock Appreciation Rights means awards granted in accordance with
Article VI.

 

2.32      Subsidiary means a subsidiary of the Company within the meaning of
Section 424(f) of the Code.

 

2.33.    Termination of Service means the voluntary or involuntary termination
of a Participant's service as an employee, director or consultant with the
Company or a Subsidiary for any reason, including death, disability, retirement
or as the result of the divestiture of the Participant's employer or any similar
transaction in which the Participant's employer ceases to be the Company or one
of its Subsidiaries. Whether entering military or other government service shall
constitute Termination of Service, or whether and when a Termination of Service
shall occur as a result of disability, shall be determined in each case by the
Committee in its sole discretion.

 

ARTICLE III

 

ADMINISTRATION

 

 

3.01.

Committee.

 

(a)         Duties and Authority. The Plan shall be administered by the
Compensation committee of the Board ("Committee") comprised of at least two
persons. The Committee shall have exclusive and final authority in each
determination, interpretation or other action affecting the Plan and its
Participants. The Committee shall have the sole discretionary authority to
interpret the Plan, to establish and modify administrative rules for the Plan,
to impose such conditions and restrictions on Awards as it determines
appropriate, and to take such steps in connection with the Plan and Awards
granted hereunder as it may deem necessary or advisable. The Committee shall
not, however, have or exercise any discretion that would disqualify amounts
payable under Article X as performance-based compensation for purposes of
Section 162(m) of the Code. The Committee may delegate such of its powers and
authority under the Plan as it deems appropriate to a subcommittee of the
Committee and/or designated officers or employees of the Company. In addition,
the full Board may exercise any of the powers and authority of the Committee
under the Plan. In the event of such delegation of authority or exercise of
authority by the Board, references in the Plan to the Committee shall be deemed
to refer, as appropriate, to the delegate of the Committee or the Board. Actions
taken by the Committee or any subcommittee thereof, and any delegation by the
Committee to designated officers or employees, under this Section 3.01 shall
comply with Section 16(b) of the Exchange Act, the performance-based provisions
of Section 162(m) of the Code, and the regulations promulgated under each of
such statutory provisions, or the respective successors to such statutory
provisions or regulations, as in effect from time to time, to the extent
applicable.

 

 

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(b)        Indemnification. Each person who is or shall have been a member of
the Board or the Committee, or an officer of the Company to whom authority was
delegated in accordance with the Plan shall be indemnified and held harmless by
the Company against and from any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by him or her in connection with or
resulting from any claim, action, suit, or proceeding to which he or she may be
a party or in which he or she may be involved by reason of any action taken or
failure to act under the Plan and against and from any and all amounts paid by
him or her in settlement thereof, with the Company’s approval, or paid by him or
her in satisfaction of any judgment in any such action, suit, or proceeding
against him or her, provided he or she shall give the Company an opportunity, at
its own expense, to handle and defend the same before he or she undertakes to
handle and defend it on his or her own behalf; provided, however, that the
foregoing indemnification shall not apply to any loss, cost, liability, or
expense that is a result of his or her own willful misconduct. The foregoing
right of indemnification shall not be exclusive of any other rights of
indemnification to which such persons may be entitled under the Company’s
Certificate of Incorporation or Bylaws, conferred in a separate agreement with
the Company, as a matter of law, or otherwise, or any power that the Company may
have to indemnify them or hold them harmless.

 

ARTICLE IV

 

SHARES

 

4.01.    Number of Shares Issuable. The total number of shares initially
authorized to be issued under the Plan shall be ___________________ of Common
Stock. No more than ___________________ shares of Common Stock may be issued
under the Plan as Incentive Stock Options. No more than ___________________
shares of Common Stock may be issued under the Plan as Awards under Articles
VII, VIII and IX. The foregoing share limits shall be subject to adjustment in
accordance with Section 10.07. The shares to be offered under the Plan shall be
authorized and unissued Common Stock, or issued Common Stock that shall have
been reacquired by the Company.

4.02.    Shares Subject to Terminated Awards. Common Stock covered by any
unexercised portions of terminated or forfeited Options (including canceled
Options) granted under Article VI, Common Stock forfeited as provided in Section
7.02(a), Stock Units and other stock-based Awards terminated or forfeited as
provided in Article IX, and Common Stock subject to any Awards that are
otherwise surrendered by the Participant may again be subject to new Awards
under the Plan. Shares of Common Stock surrendered to or withheld by the Company
in payment or satisfaction of the Purchase Price of an Option or tax withholding
obligation with respect to an Award shall be available for the grant of new
Awards under the Plan. In the event of the exercise of Stock Appreciation
Rights, whether or not granted in tandem with Options, only the number of shares
of Common Stock actually issued in payment of such Stock Appreciation Rights
shall be charged against the number of shares of Common Stock

 

 

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available for the grant of Awards hereunder, and any Common Stock subject to
tandem Options, or portions thereof, which have been surrendered in connection
with any such exercise of Stock Appreciation Rights shall not be charged against
the number of shares of Common Stock available for the grant of Awards
hereunder. .

 

ARTICLE V

 

PARTICIPATION

 

5.01.    Eligible Participants. Participants in the Plan shall be such
employees, directors and consultants of the Company and its Subsidiaries as the
Committee, in its sole discretion, may designate from time to time. The
Committee's designation of a Participant in any year shall not require the
Committee to designate such person to receive Awards or grants in any other
year. The designation of a Participant to receive Awards or grants under one
portion of the Plan does not require the Committee to include such Participant
under other portions of the Plan. The Committee shall consider such factors as
it deems pertinent in selecting Participants and in determining the type and
amount of their respective Awards. Subject to adjustment in accordance with
Section 10.07, in any calendar year, no Participant shall be granted Awards in
respect of more than ___________________ shares of Common Stock (whether through
grants of Options or Stock Appreciation Rights or other Awards of Common Stock
or rights with respect thereto) or cash-based Awards for more than
$___________________.

 

ARTICLE VI

 

STOCK OPTIONS AND STOCK APPRECIATION RIGHTS

 

 

6.01.

Option Awards.

 

(a)       Grant of Options. The Committee may grant, to such Participants as the
Committee may select, Options entitling the Participant to purchase shares of
Common Stock from the Company in such number, at such price, and on such terms
and subject to such conditions, not inconsistent with the terms of this Plan, as
may be established by the Committee. The terms of any Option granted under this
Plan shall be set forth in an Award Agreement.

 

(b)         Purchase Price of Options. The Purchase Price of each share of
Common Stock which may be purchased upon exercise of any Option granted under
the Plan shall be determined by the Committee; provided, however, that in no
event shall the Purchase Price be less than the Fair Market Value on the Date of
Grant.

 

(c)         Designation of Options. The Committee shall designate, at the time
of the grant of each Option, the Option as an Incentive Stock Option or a
Non-Qualified Stock Option.

 

 

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(d)        Incentive Stock Option Share Limitation. No Participant may be
granted Incentive Stock Options under the Plan (or any other plans of the
Company and its Subsidiaries) that would result in shares with an aggregate Fair
Market Value (measured on the Date of Grant) of more than $100,000 first
becoming exercisable in any one calendar year.

 

(e)        Rights As a Stockholder. A Participant shall have no rights as a
stockholder with respect to Common Stock covered by an Option until the
Participant shall have become the holder of record of any such shares, and no
adjustment shall be made for dividends in cash or other property or
distributions or other rights with respect to any such Common Stock for which
the record date is prior to the date on which the Participant or a transferee of
the Option shall have become the holder of record of any such shares covered by
the Option; provided, however, that Participants are entitled to share
adjustments to reflect capital changes under Section 10.07.

 

(f)          Restoration Options Upon the Exercise of a Non-Qualified Stock
Option. In the event that any Participant delivers to the Company, or has
withheld from the shares otherwise issuable upon the exercise of a Non-Qualified
Stock Option, shares of Common Stock in payment of the Purchase Price of any
Non-Qualified Stock Option granted hereunder in accordance with Section 6.04,
the Committee shall have the authority to grant or provide for the automatic
grant of a Restoration Option to such Participant. The grant of a Restoration
Option shall be subject to the satisfaction of such conditions or criteria as
the Committee in its sole discretion shall establish from time to time. A
Restoration Option shall entitle the holder thereof to purchase a number of
shares of Common Stock equal to the number of such shares so delivered or
withheld upon exercise of the original Option and, in the discretion of the
Committee, the number of shares, if any, delivered or withheld to the
Corporation to satisfy any withholding tax liability arising in connection with
the exercise of the original Option. A Restoration Option shall have a per share
Purchase Price of not less than 100% of the per share Fair Market Value of the
Common Stock on the date of grant of such Restoration Option, a term not longer
than the remaining term of the original Option at the time of exercise thereof,
and such other terms and conditions as the Committee in its sole discretion
shall determine.

 

(g)         Dividend Equivalents. For any Option (with or without alternative
Stock Appreciation Rights) granted under the Plan, the Committee shall have the
discretion, upon the grant of the Option or thereafter, to establish a Dividend
Equivalent Account with respect to the Option, and the applicable Award
Agreement or an amendment thereto shall confirm such establishment. If a
Dividend Equivalent Account is established, the following terms apply.

 

(i)          Subject to such conditions, limitations and restrictions as shall
be established by the Committee, from the Date of Grant of the Option or, if
later, the date of establishment of the Dividend Equivalent Account, to the
earlier of (i) the date of payment of such Dividend Equivalent Account or (ii)
the date of

 

 

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cancellation, termination or expiration of the Option, the Dividend Equivalent
Account shall be credited as of the record date of each cash dividend on the
Common Stock with an amount equal to the cash dividends which would be paid with
respect to the Common Stock then covered by the Option if the Option had been
exercised and such Common Stock had been held of record on such record date. The
Participant or other holder of such Option shall be entitled to receive from the
Company in cash the balance credited to the Dividend Equivalent Account at such
time, or from time to time, as shall be determined by the Committee and set
forth in the applicable Award Agreement or an amendment thereto; provided,
however, that if the applicable Award Agreement shall so provide, the Committee
may determine that the balance credited to a Participant’s Dividend Equivalent
Account be paid in the form of shares of Common Stock having a fair market value
equal to such balance, or a combination of cash and shares.

 

(ii)         To the extent that an Option and any alternative Stock Appreciation
Rights granted in conjunction with the Option are canceled, terminate or expire
without the exercise of the Option or the alternative Stock Appreciation Rights,
if any, granted in conjunction with the Option, the Dividend Equivalent Account
with respect to the Option shall be eliminated, and no payment with respect to
the Dividend Equivalent Account shall be made by the Company. Dividend
Equivalent Accounts shall be established and maintained only on the books and
records of the Company and no assets or funds of the Company shall be set aside,
placed in trust, removed from the claims of the Company's general creditors, or
otherwise made available until such amounts are actually payable as provided
hereunder.

 

 

6.02.

Stock Appreciation Rights.

 

(a)         Stock Appreciation Right Awards. The Committee is authorized to
grant to any Participant one or more Stock Appreciation Rights. Such Stock
Appreciation Rights may be granted either independent of or in tandem with
Options granted to the same Participant. Stock Appreciation Rights granted in
tandem with Options may be granted simultaneously with, or, in the case of
Non-Qualified Stock Options, subsequent to, the grant to such Participant of the
related Option; provided however, that: (i) any Option covering any share of
Common Stock shall expire and not be exercisable upon the exercise of any Stock
Appreciation Right with respect to the same share, (ii) any Stock Appreciation
Right covering any share of Common Stock shall expire and not be exercisable
upon the exercise of any related Option with respect to the same share, and
(iii) an Option and Stock Appreciation Right covering the same share of Common
Stock may not be exercised simultaneously. Upon exercise of a Stock Appreciation
Right with respect to a share of Common Stock, the Participant shall be entitled
to receive an amount equal to the excess, if any, of (A) the Fair Market Value
of a share of Common Stock on the date of exercise over (B) the Exercise Price
of such Stock Appreciation Right established in the Award Agreement, which
amount shall be payable as provided in Section 6.02(c).

 

 

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(b)       Exercise Price. The Exercise Price established under any Stock
Appreciation Right granted under this Plan shall be determined by the Committee,
but in the case of Stock Appreciation Rights granted in tandem with Options
shall not be less than the Purchase Price of the related Option. Upon exercise
of Stock Appreciation Rights granted in tandem with options, the number of
shares subject to exercise under any related Option shall automatically be
reduced by the number of shares of Common Stock represented by the Option or
portion thereof which are surrendered as a result of the exercise of such Stock
Appreciation Rights.

 

(c)        Payment of Incremental Value. Any payment which may become due from
the Company by reason of a Participant's exercise of a Stock Appreciation Right
may be paid to the Participant as determined by the Committee (i) all in cash,
(ii) all in Common Stock, or (iii) in any combination of cash and Common Stock.
In the event that all or a portion of the payment is made in Common Stock, the
number of shares of Common Stock delivered in satisfaction of such payment shall
be determined by dividing the amount of such payment or portion thereof by the
Fair Market Value on the Exercise Date. No fractional share of Common Stock
shall be issued to make any payment in respect of Stock Appreciation Rights; if
any fractional share would be issuable, the combination of cash and Common Stock
payable to the Participant shall be adjusted as directed by the Committee to
avoid the issuance of any fractional share.

 

 

6.03.

Terms of Stock Options and Stock Appreciation Rights.

 

(a)         Conditions on Exercise. An Award Agreement with respect to Options
and/or Stock Appreciation Rights may contain such waiting periods, exercise
dates and restrictions on exercise (including, but not limited to, periodic
installments) as may be determined by the Committee at the time of grant.

 

(b)         Duration of Options and Stock Appreciation Rights. Options and Stock
Appreciation Rights shall terminate upon the first to occur of the following
events:

 

(i)          Expiration of the Option or Stock Appreciation Right as provided in
the Award Agreement; or

 

(ii)         Termination of the Award in the event of a Participant's
disability, Retirement, death or other Termination of Service as provided in the
Award Agreement; or

 

(iii)        In the case of an Incentive Stock Option, ten years from the Date
of Grant; or

 

(iv)        Solely in the case of a Stock Appreciation Right granted in tandem
with an Option, upon the expiration of the related Option.

 

 

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(c)         Acceleration or Extension of Exercise Time. The Committee, in its
sole discretion, shall have the right (but shall not be obligated), exercisable
on or at any time after the Date of Grant, to permit the exercise of an Option
or Stock Appreciation Right (i) prior to the time such Option or Stock
Appreciation Right would become exercisable under the terms of the Award
Agreement, (ii) after the termination of the Option or Stock Appreciation Right
under the terms of the Award Agreement, or (iii) after the expiration of the
Option or Stock Appreciation Right.

 

6.04.    Exercise Procedures. Each Option and Stock Appreciation Right granted
under the Plan shall be exercised prior to the close of business on the
expiration date of the Option or Stock Appreciation Right by written notice to
the Company or by such other method as provided in the Award Agreement or as the
Committee may establish or approve from time to time. The Purchase Price of
shares purchased upon exercise of an Option granted under the Plan shall be paid
in full in cash by the Participant pursuant to the Award Agreement; provided,
however, that the Committee may (but shall not be required to) permit payment to
be made by delivery to the Company of either (a) Common Stock (which may include
Restricted Shares or shares otherwise issuable in connection with the exercise
of the Option, subject to such rules as the Committee deems appropriate) or (b)
any combination of cash and Common Stock, or (c) such other consideration as the
Committee deems appropriate and in compliance with applicable law (including
payment in accordance with a cashless exercise program under which, if so
instructed by the Participant, Common Stock may be issued directly to the
Participant's broker or dealer upon receipt of an irrevocable written notice of
exercise from the Participant). In the event that any Common Stock shall be
transferred to the Company to satisfy all or any part of the Purchase Price, the
part of the Purchase Price deemed to have been satisfied by such transfer of
Common Stock shall be equal to the product derived by multiplying the Fair
Market Value as of the date of exercise times the number of shares of Common
Stock transferred to the Company. The Participant may not transfer to the
Company in satisfaction of the Purchase Price any fractional share of Common
Stock. Any part of the Purchase Price paid in cash upon the exercise of any
Option shall be added to the general funds of the Company and may be used for
any proper corporate purpose. Unless the Committee shall otherwise determine,
any Common Stock transferred to the Company as payment of all or part of the
Purchase Price upon the exercise of any Option shall be held as treasury shares.

 

6.05.   Change in Control. Unless otherwise provided by the Committee in the
applicable Award Agreement, in the event of a Change in Control, all Options
outstanding on the date of such Change in Control, and all Stock Appreciation
Rights shall become immediately and fully exercisable. The provisions of this
Section 6.05 shall not be applicable to any Options or Stock Appreciation Rights
granted to a Participant if any Change in Control results from such
Participant's beneficial ownership (within the meaning of Rule 13d-3 under the
Exchange Act) of Common Stock or Company Voting Securities.

 

ARTICLE VII

 

 

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RESTRICTED SHARES

 

7.01.    Restricted Share Awards. The Committee may grant to any Participant an
Award of Common Stock in such number of shares, and on such terms, conditions
and restrictions, whether based on performance standards, periods of service,
retention by the Participant of ownership of purchased or designated shares of
Common Stock or other criteria, as the Committee shall establish. With respect
to performance-based Awards of Restricted Shares to "covered employees" (as
defined in Section 162(m) of the Code), performance targets will be limited to
specified levels of one or more of the Performance Goals. The terms of any
Restricted Share Award granted under this Plan shall be set forth in an Award
Agreement which shall contain provisions determined by the Committee and not
inconsistent with this Plan.

 

(a)        Issuance of Restricted Shares. As soon as practicable after the Date
of Grant of a Restricted Share Award by the Committee, the Company shall cause
to be transferred on the books of the Company, or its agent, Common Stock,
registered on behalf of the Participant, evidencing the Restricted Shares
covered by the Award, but subject to forfeiture to the Company as of the Date of
Grant if an Award Agreement with respect to the Restricted Shares covered by the
Award is not duly executed by the Participant and timely returned to the
Company. All Common Stock covered by Awards under this Article VII shall be
subject to the restrictions, terms and conditions contained in the Plan and the
Award Agreement entered into by the Participant. Until the lapse or release of
all restrictions applicable to an Award of Restricted Shares, the share
certificates representing such Restricted Shares may be held in custody by the
Company, its designee, or, if the certificates bear a restrictive legend, by the
Participant. Upon the lapse or release of all restrictions with respect to an
Award as described in Section 7.01(d), one or more share certificates,
registered in the name of the Participant, for an appropriate number of shares
as provided in Section 7.01(d), free of any restrictions set forth in the Plan
and the Award Agreement shall be delivered to the Participant.

 

(b)         Stockholder Rights. Beginning on the Date of Grant of the Restricted
Share Award and subject to execution of the Award Agreement as provided in
Section 7.01(a), the Participant shall become a stockholder of the Company with
respect to all shares subject to the Award Agreement and shall have all of the
rights of a stockholder, including, but not limited to, the right to vote such
shares and the right to receive dividends; provided, however, that any Common
Stock distributed as a dividend or otherwise with respect to any Restricted
Shares as to which the restrictions have not yet lapsed, shall be subject to the
same restrictions as such Restricted Shares and held or restricted as provided
in Section 7.01(a).

 

(c)        Restriction on Transferability. None of the Restricted Shares may be
assigned or transferred (other than by will or the laws of descent and
distribution, or to an inter vivos trust with respect to which the Participant
is treated as the owner under Sections 671 through 677 of the Code, except to
the extent that Section 16 of the

 

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Exchange Act limits a Participant's right to make such transfers), pledged or
sold prior to lapse of the restrictions applicable thereto.

 

(d)         Delivery of Shares Upon Vesting. Upon expiration or earlier
termination of the forfeiture period without a forfeiture and the satisfaction
of or release from any other conditions prescribed by the Committee, or at such
earlier time as provided under the provisions of Section 7.03, the restrictions
applicable to the Restricted Shares shall lapse. As promptly as administratively
feasible thereafter, subject to the requirements of Section 10.05, the Company
shall deliver to the Participant or, in case of the Participant's death, to the
Participant's Beneficiary, one or more share certificates for the appropriate
number of shares of Common Stock, free of all such restrictions, except for any
restrictions that may be imposed by law.

 

 

7.02.

Terms of Restricted Shares.

 

(a)         Forfeiture of Restricted Shares. Subject to Sections 7.02(b) and
7.03, all Restricted Shares shall be forfeited and returned to the Company and
all rights of the Participant with respect to such Restricted Shares shall
terminate unless the Participant continues in the service of the Company or a
Subsidiary as an employee until the expiration of the forfeiture period for such
Restricted Shares and satisfies any and all other conditions set forth in the
Award Agreement. The Committee shall determine the forfeiture period (which may,
but need not, lapse in installments) and any other terms and conditions
applicable with respect to any Restricted Share Award.

 

(b)        Waiver of Forfeiture Period. Notwithstanding anything contained in
this Article VII to the contrary, the Committee may, in its sole discretion,
waive the forfeiture period and any other conditions set forth in any Award
Agreement under appropriate circumstances (including the death, disability or
Retirement of the Participant or a material change in circumstances arising
after the date of an Award) and subject to such terms and conditions (including
forfeiture of a proportionate number of the Restricted Shares) as the Committee
shall deem appropriate.

 

7.03.    Change in Control. Unless otherwise provided by the Committee in the
applicable Award Agreement, in the event of a Change in Control, all
restrictions applicable to the Restricted Share Award shall terminate fully and
the Participant shall immediately have the right to the delivery of share
certificate or certificates for such shares in accordance with Section 7.01(d).

 

ARTICLE VIII

 

PERFORMANCE AWARDS

 

 

8.01.

Performance Awards.

 

 

 

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(a)         Award Periods and Calculations of Potential Incentive Amounts. The
Committee may grant Performance Awards to Participants. A Performance Award
shall consist of the right to receive a payment (measured by the Fair Market
Value of a specified number of shares of Common Stock, increases in such Fair
Market Value during the Award Period and/or a fixed cash amount) contingent upon
the extent to which certain predetermined performance targets have been met
during an Award Period. The Award Period shall be two or more fiscal or calendar
years as determined by the Committee. The Committee, in its discretion and under
such terms as it deems appropriate, may permit newly eligible Participants, such
as those who are promoted or newly hired, to receive Performance Awards after an
Award Period has commenced.

 

(b)         Performance Targets. The performance targets may include such goals
related to the performance of the Company or, where relevant, any one or more of
its Subsidiaries or divisions and/or the performance of a Participant as may be
established by the Committee in its discretion. In the case of Performance
Awards to "covered employees" (as defined in Section 162(m) of the Code), the
targets will be limited to specified levels of one or more of the Performance
Goals. The performance targets established by the Committee may vary for
different Award Periods and need not be the same for each Participant receiving
a Performance Award in an Award Period. Except to the extent inconsistent with
the performance-based compensation exception under Section 162(m) of the Code,
in the case of Performance Awards granted to employees to whom such section is
applicable, the Committee, in its discretion, but only under extraordinary
circumstances as determined by the Committee, may change any prior determination
of performance targets for any Award Period at any time prior to the final
determination of the Award when events or transactions occur to cause the
performance targets to be an inappropriate measure of achievement.

 

(c)         Earning Performance Awards. The Committee, at or as soon as
practicable after the Date of Grant, shall prescribe a formula to determine the
percentage of the Performance Award to be earned based upon the degree of
attainment of the applicable performance targets.

 

(d)         Payment of Earned Performance Awards. Subject to the requirements of
Section 10.05, payments of earned Performance Awards shall be made in cash or
Common Stock, or a combination of cash and Common Stock, in the discretion of
the Committee. The Committee, in its sole discretion, may define, and set forth
in the applicable Award Agreement, such terms and conditions with respect to the
payment of earned Performance Awards as it may deem desirable.

 

8.02.    Termination of Service. In the event of a Participant’s Termination of
Service during an Award Period, the Participant’s Performance Awards shall be
forfeited except as may otherwise be provided in the applicable Award Agreement.

 

8.03.    Change in Control. Unless otherwise provided by the Committee in the
applicable Award Agreement, in the event of a Change in Control, all Performance
Awards for all Award Periods shall immediately become fully vested and payable
to all

 

 

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Participants and shall be paid to Participants in accordance with Section
8.02(d), within 30 days after such Change in Control.

 

ARTICLE IX

 

OTHER STOCK-BASED AWARDS

 

9.01.    Grant of Other Stock-Based Awards. Other stock-based awards, consisting
of stock purchase rights (with or without loans to Participants by the Company
containing such terms as the Committee shall determine), Awards of Common Stock,
or Awards valued in whole or in part by reference to, or otherwise based on,
Common Stock, may be granted either alone or in addition to or in conjunction
with other Awards under the Plan. Subject to the provisions of the Plan, the
Committee shall have sole and complete authority to determine the persons to
whom and the time or times at which such Awards shall be made, the number of
shares of Common Stock to be granted pursuant to such Awards, and all other
conditions of the Awards. Any such Award shall be confirmed by an Award
Agreement executed by the Committee and the Participant, which Award Agreement
shall contain such provisions as the Committee determines to be necessary or
appropriate to carry out the intent of this Plan with respect to such Award.

 

9.02.    Terms of Other Stock-Based Awards. In addition to the terms and
conditions specified in the Award Agreement, Awards made pursuant to this
Article IX shall be subject to the following:

 

(a)         Any Common Stock subject to Awards made under this Article IX may
not be sold, assigned, transferred, pledged or otherwise encumbered prior to the
date on which the shares are issued, or, if later, the date on which any
applicable restriction, performance or deferral period lapses; and

 

(b)        If specified by the Committee in the Award Agreement, the recipient
of an Award under this Article IX shall be entitled to receive, currently or on
a deferred basis, interest or dividends or dividend equivalents with respect to
the Common Stock or other securities covered by the Award; and

 

(c)         The Award Agreement with respect to any Award shall contain
provisions dealing with the disposition of such Award in the event of a
Termination of Service prior to the exercise, realization or payment of such
Award, whether such termination occurs because of Retirement, disability, death
or other reason, with such provisions to take account of the specific nature and
purpose of the Award.

 

ARTICLE X

 

 

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ARTICLE 12TERMS APPLICABLE GENERALLY TO AWARDS

GRANTED UNDER THE PLAN

 

10.01.  Plan Provisions Control Award Terms. Except as provided in Section
10.16, the terms of the Plan shall govern all Awards granted under the Plan, and
in no event shall the Committee have the power to grant any Award under the Plan
which is contrary to any of the provisions of the Plan. In the event any
provision of any Award granted under the Plan shall conflict with any term in
the Plan as constituted on the Date of Grant of such Award, the term in the Plan
as constituted on the Date of Grant of such Award shall control. Except as
provided in Section 10.03 and Section 10.07, the terms of any Award granted
under the Plan may not be changed after the Date of Grant of such Award so as to
materially decrease the value of the Award without the express written approval
of the holder.

 

10.02.              Award Agreement. No person shall have any rights under any
Award granted under the Plan unless and until the Company and the Participant to
whom such Award shall have been granted shall have executed and delivered an
Award Agreement or received any other Award acknowledgment authorized by the
Committee expressly granting the Award to such person and containing provisions
setting forth the terms of the Award.

 

10.03.  Modification of Award After Grant. No Award granted under the Plan to a
Participant may be modified (unless such modification does not materially
decrease the value of the Award) after the Date of Grant except by express
written agreement between the Company and the Participant, provided that any
such change (a) shall not be inconsistent with the terms of the Plan, and (b)
shall be approved by the Committee.

 

10.04.  Limitation on Transfer. Except as provided in Section 7.01(c) in the
case of Restricted Shares, a Participant's rights and interest under the Plan
may not be assigned or transferred other than by will or the laws of descent and
distribution, and during the lifetime of a Participant, only the Participant
personally (or the Participant's personal representative) may exercise rights
under the Plan. The Participant's Beneficiary may exercise the Participant's
rights to the extent they are exercisable under the Plan following the death of
the Participant.

 

10.05.  Taxes. The Company shall be entitled, if the Committee deems it
necessary or desirable, to withhold (or secure payment from the Participant in
lieu of withholding) the amount of any withholding or other tax required by law
to be withheld or paid by the Company with respect to any amount payable and/or
shares issuable under such Participant's Award, or with respect to any income
recognized upon a disqualifying disposition of shares received pursuant to the
exercise of an Incentive Stock Option, and the Company may defer payment or
issuance of the cash or shares upon exercise or vesting of an Award unless
indemnified to its satisfaction against any liability for any such tax. The
amount of such withholding or tax payment shall be determined by the Committee
and shall be payable by the Participant at such time as the Committee determines
in accordance with the following rules:

 

 

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(a)        The Participant shall have the right to elect to meet his or her
withholding requirement (i) by having withheld from such Award at the
appropriate time that number of shares of Common Stock, rounded up to the next
whole share, whose Fair Market Value is equal to the amount of withholding taxes
due, (ii) by direct payment to the Company in cash of the amount of any taxes
required to be withheld with respect to such Award or (iii) by a combination of
shares and cash.

 

(b)        The Committee shall have the discretion as to any Award, to cause the
Company to pay to tax authorities for the benefit of any Participant, or to
reimburse such Participant for the individual taxes which are due on the grant,
exercise or vesting of any share Award, or the lapse of any restriction on any
share Award (whether by reason of a Participant's filing of an election under
Section 83(b) of the Code or otherwise), including, but not limited to, Federal
income tax, state income tax, local income tax and excise tax under Section 4999
of the Code, as well as for any such taxes as may be imposed upon such tax
payment or reimbursement.

 

(c)       In the case of Participants who are subject to Section 16 of the
Exchange Act, the Committee may impose such limitations and restrictions as it
deems necessary or appropriate with respect to the delivery or withholding of
shares of Common Stock to meet tax withholding obligations.

 

10.06.  Surrender of Awards. Any Award granted under the Plan may be surrendered
to the Company for cancellation on such terms as the Committee and the holder
approve. With the consent of the Participant, the Committee may substitute a new
Award under this Plan in connection with the surrender by the Participant of an
equity compensation award previously granted under this Plan or any other plan
sponsored by the Company; provided, however, that no such substitution shall be
permitted without the approval of the Company’s stockholders if such approval is
required by the rules of any applicable stock exchange.

 

 

10.07.

Adjustments to Reflect Capital Changes.

 

(a)        Recapitalization. The number and kind of shares subject to
outstanding Awards, the Purchase Price or Exercise Price for such shares, the
number and kind of shares available for Awards subsequently granted under the
Plan and the maximum number of shares in respect of which Awards can be made to
any Participant in any calendar year shall be appropriately adjusted to reflect
any stock dividend, stock split, combination or exchange of shares, merger,
consolidation or other change in capitalization with a similar substantive
effect upon the Plan or the Awards granted under the Plan. The maximum number of
shares in respect of which Awards can be made to any Participant in any calendar
year shall be proportionately adjusted to reflect any other event that results
in an increase in the number of issued and outstanding shares of Common Stock.
The Committee shall have the power and sole discretion to determine the amount
of the adjustment to be made in each case.

 

 

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(b)        Merger. After any Merger in which the Company is the surviving
corporation, each Participant shall, at no additional cost, be entitled upon any
exercise of all Options or receipt of other Award to receive (subject to any
required action by stockholders), in lieu of the number of shares of Common
Stock receivable or exercisable pursuant to such Award, the number and class of
shares or other securities to which such Participant would have been entitled
pursuant to the terms of the Merger if, at the time of the Merger, such
Participant had been the holder of record of a number of shares equal to the
number of shares receivable or exercisable pursuant to such Award. Comparable
rights shall accrue to each Participant in the event of successive Mergers of
the character described above. In the event of a Merger in which the Company is
not the surviving corporation, the surviving, continuing, successor, or
purchasing corporation, as the case may be (the "Acquiring Corporation"), shall
either assume the Company's rights and obligations under outstanding Award
Agreements or substitute awards in respect of the Acquiring Corporation's stock
for such outstanding Awards. In the event the Acquiring Corporation fails to
assume or substitute for such outstanding Awards, the Board shall provide that
any unexercisable and/or unvested portion of the outstanding Awards shall be
immediately exercisable and vested as of a date prior to such Merger, as the
Board so determines. The exercise and/or vesting of any Award that was
permissible solely by reason of this Section 10.07(b) shall be conditioned upon
the consummation of the Merger. Any Options which are neither assumed by the
Acquiring Corporation nor exercised as of the date of the Merger shall terminate
effective as of the effective date of the Merger.

 

(c)         Options to Purchase Shares or Stock of Acquired Companies. After any
Merger in which the Company or a Subsidiary shall be a surviving corporation,
the Committee may grant substituted options under the provisions of the Plan,
pursuant to Section 424 of the Code, replacing old options granted under a plan
of another party to the Merger whose shares or stock subject to the old options
may no longer be issued following the Merger. The foregoing adjustments and
manner of application of the foregoing provisions shall be determined by the
Committee in its sole discretion. Any such adjustments may provide for the
elimination of any fractional shares which might otherwise become subject to any
Options.

 

10.08.  No Right to Continued Service. No person shall have any claim of right
to be granted an Award under this Plan. Neither the Plan nor any action taken
hereunder shall be construed as giving any Participant any right to be retained
in the service of the Company or any of its Subsidiaries.

 

10.09.  Awards Not Includable for Benefit Purposes. Payments received by a
Participant pursuant to the provisions of the Plan shall not be included in the
determination of benefits under any pension, group insurance or other benefit
plan applicable to the Participant which is maintained by the Company or any of
its Subsidiaries, except as may be provided under the terms of such plans or
determined by the Board.

 

 

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10.10.  Governing Law. All determinations made and actions taken pursuant to the
Plan shall be governed by the laws of Delaware and construed in accordance
therewith.

 

10.10.  No Strict Construction. No rule of strict construction shall be implied
against the Company, the Committee, or any other person in the interpretation of
any of the terms of the Plan, any Award granted under the Plan or any rule or
procedure established by the Committee.

 

10.12.  Compliance with Rule 16b-3. It is intended that, unless the Committee
determines otherwise, Awards under the Plan be eligible for exemption under Rule
16b-3. The Board is authorized to amend the Plan and to make any such
modifications to Award Agreements to comply with Rule 16b-3, as it may be
amended from time to time, and to make any other such amendments or
modifications as it deems necessary or appropriate to better accomplish the
purposes of the Plan in light of any amendments made to Rule 16b-3.

 

10.13.  Captions. The captions (i.e., all Section headings) used in the Plan are
for convenience only, do not constitute a part of the Plan, and shall not be
deemed to limit, characterize or affect in any way any provisions of the Plan,
and all provisions of the Plan shall be construed as if no captions have been
used in the Plan.

 

10.14.  Severability. Whenever possible, each provision in the Plan and every
Award at any time granted under the Plan shall be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of the Plan
or any Award at any time granted under the Plan shall be held to be prohibited
by or invalid under applicable law, then (a) such provision shall be deemed
amended to accomplish the objectives of the provision as originally written to
the fullest extent permitted by law and (b) all other provisions of the Plan and
every other Award at any time granted under the Plan shall remain in full force
and effect.

 

 

10.15.

Amendment and Termination.

 

(a)         Amendment. The Board shall have complete power and authority to
amend the Plan at any time; provided, however, that the Board shall not, without
the requisite affirmative approval of stockholders of the Company, make any
amendment which requires stockholder approval under the Code or under any other
applicable law or rule of any stock exchange which lists Common Stock or Company
Voting Securities. No termination or amendment of the Plan may, without the
consent of the Participant to whom any Award shall theretofore have been granted
under the Plan, adversely affect the right of such individual under such Award.

 

(b)        Termination. The Board shall have the right and the power to
terminate the Plan at any time. No Award shall be granted under the Plan after
the termination of the Plan, but the termination of the Plan shall not have any
other effect and any Award outstanding at the time of the termination of the
Plan may be exercised

 

 

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after termination of the Plan at any time prior to the expiration date of such
Award to the same extent such Award would have been exercisable had the Plan not
terminated.

 

10.16.  Foreign Qualified Awards. Awards under the Plan may be granted to such
employees of the Company and its Subsidiaries who are residing in foreign
jurisdictions as the Committee in its sole discretion may determine from time to
time. The Committee may adopt such supplements to the Plan as may be necessary
or appropriate to comply with the applicable laws of such foreign jurisdictions
and to afford Participants favorable treatment under such laws; provided,
however, that no Award shall be granted under any such supplement with terms or
conditions inconsistent with the provision set forth in the Plan.

 

10.17   Section 409A of the Code. Notwithstanding anything in this Plan to the
contrary, any Award granted under the Plan shall contain terms that (i) are
designed to avoid application of Section 409A of the Code to the Award or (ii)
are designed to avoid adverse tax consequences under Section 409A of the Code
should that section apply to the Award. If any Plan provision or Award under the
Plan would result in the imposition of an applicable tax under Section 409A of
the Code and related regulations and pronouncements, the Company shall take
commercially-reasonable efforts to reform that Plan provision or Award to avoid
imposition of the applicable tax and no action taken to comply with Section 409A
of the Code shall be deemed to adversely affect the Participant's rights to an
Award or to require the Participant's consent.

 

 

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SCHEDULE "L"

FORM OF TARGET’S STOCK OPTION AGREEMENT

 

SKIN SHOES, INC.

2005 INCENTIVE PLAN

INCENTIVE/NON-QUALIFIED STOCK OPTION AGREEMENT

NOTICE OF STOCK OPTION GRANT

Optionee:                                              

The Optionee has been granted an Option to purchase a number of shares of Skin
Shoes, Inc. Common Stock as designated below (“Shares”), subject to the terms
and conditions of the Skin Shoes 2005 Incentive Plan, as amended from time to
time (the “Plan”), and this Option Agreement, as follows:

Date of Grant: ____________

Type of Option: [Incentive/Non-Qualified] Stock Option

Exercise Price per Share: $____

Expiration Date: ____________

Total Number of
Shares Granted: _______

Total Exercise Price: $______

Vesting Schedule:

[Vesting is accelerated upon a termination following a Change in Control under
Section 2(c).]

Exercise After Termination of Employment:

Termination of Employment for any reason: any non-vested portion of the Option
expires immediately.

Termination of Employment due to death or Disability: vested portion of the
Option is exercisable by the Optionee (or, in the event of the Optionee’s death,
the Optionee’s Beneficiary) for one year after the Optionee’s Termination.

Termination of Employment for any reason other than death or Disability: vested
portion of the Option is exercisable for a period of ninety days following the
Optionee’s Termination.

In no event may this Option be exercised after the Expiration Date as provided
above.

 

 

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I.       AGREEMENT

1.          Grant of Option. The Option granted to the Optionee and described in
the Notice of Grant is subject to the terms and conditions of the Plan, which is
incorporated by reference in its entirety into this Option Agreement. In the
event of a conflict between the terms and conditions of the Plan and this Option
Agreement, the terms and conditions of the Plan shall prevail. Capitalized terms
not otherwise defined in this Agreement shall have the meaning given to the
terms in the Plan.

If designated in the Notice of Grant as an Incentive Stock Option (“ISO”), this
Option is intended to qualify as an Incentive Stock Option as defined in Section
422 of the Code. Nevertheless, to the extent that the Option fails to meet the
requirements of an ISO under Section 422 of the Code, this Option shall be
treated as a Non-Qualified Stock Option (“NSO”).

 

2.

Exercise of Option.

(a)          Right to Exercise. This Option shall be exercisable, in whole or in
part, during its term in accordance with the Vesting Schedule set out in the
Notice of Grant and with the applicable provisions of the Plan and this Option
Agreement. No Shares shall be issued pursuant to the exercise of an Option
unless the issuance and exercise comply with applicable laws. Assuming such
compliance, for income tax purposes the Shares shall be considered transferred
to the Optionee on the date on which the Option is exercised with respect to
such Shares. The Board may, in its discretion, (i) accelerate vesting of the
Option, or (ii) extend the applicable exercise period to the extent permitted
under Section 6.03 of the Plan.

(b)          Method of Exercise. The Optionee may exercise the Option by
delivering an exercise notice in a form approved or otherwise acceptable to the
Company (the “Exercise Notice”) which shall state the election to exercise the
Option, the number of Shares with respect to which the Option is being
exercised, and such other representations and agreements as may be required by
the Company. The Exercise Notice shall be accompanied by payment of the
aggregate Exercise Price as to all Shares exercised. This Option shall be deemed
to be exercised upon receipt by the Company of such fully executed Exercise
Notice accompanied by the aggregate Exercise Price.

(c)          Acceleration of Vesting on Change in Control. Subject to the
exception contained in Section 6.05 of the Plan, in the event of the Optionee’s
Termination of Employment by the Company without cause within six (6) months
following a Change in Control, all Options outstanding on the date of the
Termination of Employment that have not previously vested or terminated under
the terms of the applicable Award Agreement shall be immediately and fully
vested and exercisable; provided, however, that the transactions contemplated by
that certain Share Exchange Agreement dated ___________, 2005 by and between the
Company and Logicom Inc., a Nevada corporation (“Logicom”), whereby Logicom
shall assume the Plan and all Awards then in existence (the “Share Exchange
Transaction”), shall not be deemed to constitute a Change in Control for
purposes hereof. Upon the closing of the Share Exchange Transaction, the
governing law reflected in Section 7 hereof shall change, with no further action

 

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by the Board or the stockholders of the Company or Logicom, to be governed by
the laws of Nevada and construed in accordance therewith.

3.           Method of Payment. If the Optionee elects to exercise the Option by
submitting an Exercise Notice under Section 2(b) of this Agreement, the
aggregate Exercise Price (as well as any applicable withholding or other taxes)
shall be paid by cash or check; provided, however, that the Board may consent,
in its discretion, to payment in any of the following forms, or a combination of
them:

 

(a)

cash or check;

(b)          consideration received by the Company under a formal cashless
exercise program adopted by the Company in connection with the Plan;

(c)          surrender of other Shares which (i) have been owned by the Optionee
for more than six (6) months on the date of surrender, and (ii) have a Fair
Market Value on the date of surrender equal to the aggregate Exercise Price of
the Exercised Shares; or

(d)          any other consideration that the Board deems appropriate and in
compliance with applicable law.

4.          Restrictions on Exercise. This Option may not be exercised until
such time as the Plan has been approved by the stockholders of the Company, or
if the issuance of the Shares upon exercise or the method of payment of
consideration for those shares would constitute a violation of any applicable
law or regulation.

5.           Non-Transferability of Option. This Option may not be transferred
in any manner otherwise than by will or by the laws of descent or distribution
and may be exercised during the lifetime of the Optionee only by the Optionee.
Following transfer, the Options shall continue to be subject to the same terms
and conditions as were applicable immediately prior to transfer. In the event an
Option is transferred as contemplated in this Section 5, such Option may not be
subsequently transferred by the transferee except by will or the laws of descent
and distribution. The terms of the Plan and this Option Agreement shall be
binding upon the executors, administrators, heirs, successors and assigns of the
Optionee.

6.          Term of Option. This Option may be exercised only within the term
set out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option Agreement.

7.          Entire Agreement, Amendment and Governing Law. The Plan and this
Option Agreement constitute the entire agreement of the parties with respect to
the subject matter hereof and supersede in their entirety all prior undertakings
and agreements of the Company and the Optionee with respect to the subject
matter hereof (but not agreements, if any, relating to other matters), and may
not be modified adversely to the Optionee’s interest except by means of a
writing signed by the Company and the Optionee. This Option Agreement is
governed by, and shall be construed and enforced in accordance with, the
internal laws of the State of Delaware.

 

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8.           Further Assurances. The Optionee agrees, upon demand of the Company
or the Board, to do all acts and execute, deliver and perform all additional
documents, instruments and agreements (including, without limitation, stock
powers with respect to shares of Common Stock issued upon exercise of the
Option) which may be reasonably required by the Company or the Board.

9.           No Guarantee of Continued Service. THE OPTIONEE ACKNOWLEDGES AND
AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE IS EARNED
ONLY BY CONTINUING AS AN EMPLOYEE AT THE WILL OF THE COMPANY (NOT THROUGH THE
ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER).
THE OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE
TRANSACTIONS CONTEMPLATED UNDER IT AND THE VESTING SCHEDULE DO NOT CONSTITUTE AN
EXPRESS OR IMPLIED PROMISE OF CONTINUED EMPLOYMENT FOR THE VESTING PERIOD, FOR
ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE IN ANY WAY WITH OPTIONEE’S RIGHT
OR THE COMPANY’S RIGHT TO TERMINATE OPTIONEE’S EMPLOYMENT AT ANY TIME, WITH OR
WITHOUT CAUSE.

The Optionee acknowledges receipt of a copy of the Plan and represents that he
or she is familiar with the terms and provisions of the Plan, and accepts this
Option subject to all of those terms and provisions. The Optionee has reviewed
the Plan and this Option Agreement in their entirety, has had an opportunity to
obtain the advice of counsel prior to executing this Option Agreement and fully
understands all provisions of the Option. The Optionee agrees to accept as
binding, conclusive and final all decisions or interpretations of the Board upon
any questions arising under the Plan or this Option Agreement. The Optionee
further agrees to notify the Company upon any change in the residence address
indicated below.

IN WITNESS WHEREOF, intending to be legally bound, the parties have signed this
Option Agreement as of the Date of Grant.

Optionee:

SKIN SHOES, INC.:

                                                                     

 

Signature

By

 

                                                                     

 

Print Name

Title

 

                                                                     

                                                                     

Residence Address

 

 

D/EPM/762545.9