Execution Copy

ASSET PURCHASE AGREEMENT

BY AND AMONG

ZANETT COMMERCIAL SOLUTIONS, INC.

PS GOLIVE LLC

and

MICHAEL JOHNSON

Dated as of November 25, 2008
 

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ASSET PURCHASE AGREEMENT
 
This ASSET PURCHASE AGREEMENT (this “Agreement”) is made and entered into this
25th day of November, 2008 by and among ZANETT COMMERCIAL SOLUTIONS, INC., a
Delaware corporation (“Buyer”), a wholly-owned subsidiary of Zanett, Inc.
(“Zanett”), PS GOLIVE LLC, a Florida limited liability company (“Seller”), and
MICHAEL JOHNSON, an individual residing in the state of Florida and owner of all
of the outstanding equity interests of Seller (the “Owner”).

WHEREAS, Seller is an Oracle Partner and authorized Oracle software reseller
engaged in the business of, among other things, providing upper end services for
PeopleSoft Enterprise products and business processes.

WHEREAS, the parties hereto desire to provide for the sale of substantially all
of the assets of Seller to Buyer, and for certain other matters, all on the
terms and subject to the conditions set forth in this Agreement.

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

ARTICLE I.
 
DEFINITIONS AND CONSTRUCTION
 
1.1 Definitions.
 
“Actual Net Working Capital” shall mean (i) Current Assets including cash, minus
(ii) Current Liabilities, in each case as of the Closing Date, all as recorded
on the Closing Financial Statements.
 
“Adjusted Income” shall mean for any period, earnings of Seller and its
subsidiaries before deductions for Taxes, depreciation and amortization subject
to the provisions, qualifications and other provisions of this Agreement, in
accordance with GAAP as applied on a basis consistent with Seller’s past
practices. In determining such Adjusted Income:
 
(i) Adjusted Income shall not include any gains, losses or profits realized from
the sale of any assets other than in the ordinary course of business;
 
(ii) No deduction shall be made for any management fees, general overhead
expenses or other intercompany charges, of whatever kind or nature, charged by
Buyer or any of its Affiliates to Seller; and
 
(iii) No deduction shall be made for legal or accounting fees and expenses
arising out of, or payments made pursuant to this Agreement or any agreement
contemplated hereby.
 
“Adjusted Income Target” shall mean (i) for the first One-Year Performance
Period, $990,000, (ii) for the second One-Year Performance Period, $1,158,000
and (iii) for the third One-Year Performance Period, $1,284,000.
 

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“Affiliate” shall mean, as to any Person, any other Person controlled by, under
the control of, or under common control with, such Person. As used in this
definition, “control” shall mean possession, directly or indirectly, of the
power to direct or cause the direction of management or policies (whether
through ownership of securities or partnership or other ownership interests, by
contract or otherwise).
 
“American Express Debt” shall mean all amounts due under Seller’s American
Express Cash Rebate Card and American Express Blue Cash for Business Credit Card
(collectively the “American Express Debt”).
 
“Authority” means the United States of America or any other nation, any state,
or other political subdivision thereof, or any entity, agency, or authority
(foreign, federal, state, or local) exercising executive, legislative, judicial,
regulatory, or administrative functions of government.
 
“Authorizations” means any federal, foreign, state, local, regulatory and other
governmental consents, licenses, certificates permits, franchises, approvals,
notifications, numbers, identifiers, grants, and other authorizations issued,
granted, given, or otherwise made available by or under the authority of any
Authority or pursuant to any Law.
 
“Benefit Plans” shall mean any profit sharing, group insurance, medical, dental
and/or hospitalization, stock option, pension, retirement, bonus, deferred
compensation, stock bonus or stock purchase plan, or collective bargaining
agreements, contracts or other arrangements under which pensions, deferred
compensation or other retirement benefits are being paid or may become payable
by a party, or any other employee welfare or benefit agreements, plans or
arrangements, as defined in Section 3(3) of ERISA, any plan created in
accordance with Section 125 of the Code, or any nonqualified employee benefit
plans or deferred compensation, bonus, stock or incentive plans, or other
employee benefit or fringe benefit programs, established for the benefit of a
party’s former or current officers, directors or employees, including each trust
or other agreement with any custodian or any trustee for funds held under any
such agreement plan or agreement.
 
“Books and Records” shall mean (i) the minute books of Seller containing the
minutes of all meetings and written consents of the members and board of
managers (or similar governing body) and (ii) all other books and records of
Seller prior to the Closing Date, including customer lists, reports, plans,
projections and advertising and marketing materials and financial and accounting
books and records.
 
“Business” shall mean the business currently carried on by Seller, including,
without limitation, acting as an Oracle Partner and an authorized Oracle
software reseller providing upper end servers for People Soft Enterprise
products and business processes.
 
“Business Day” shall mean any day other than a Saturday, Sunday or legal holiday
in the State of New York or Florida.
 
“Closing” shall mean the purchase of the assets by Buyer as set forth herein.
 
“Closing Balance Sheet” shall mean the balance sheet of Seller included in the
Closing Financial Statements.
 
“Closing Date” shall mean the date on which the Closing is completed.
 
“Code” shall mean the Internal Revenue Code of 1986, as amended.
 
“Competitors” shall mean those entities other than Seller engaged in the
Business.
 
“Current Assets” shall mean, in respect of any period, (i) all assets expected
to be converted into cash or otherwise realized in the twelve months following
the balance sheet date and recorded as current assets in Seller’s Financial
Statements and the Closing Financial Statements in accordance with GAAP, as
applied on a basis consistent with Seller’s past practices, including, but not
limited to, cash and cash equivalents, accounts receivable, notes receivable,
interest receivable, prepaid expenses, and current assets and any provisions
recorded thereon and (ii) those items identified as “Current Assets” on Schedule
1.1.
 
“Current Liabilities” shall mean, in respect of any period, (i) all liabilities
expected to be settled in the twelve months following the balance sheet date and
recorded as current liabilities in Seller’s Financial Statements and the Closing
Financial Statements in accordance with GAAP, as applied on a basis consistent
with Seller’s past practices, including, but not limited to, accounts payable,
accrued expenses, accrued payroll liabilities, interest payable, deferred
revenue and the current portion of any debt obligations, and (ii) those items
identified as “Current Liabilities” on Schedule 1.1.
 

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“Deposit” shall have the meaning given to it in the Letter of Intent dated
September 22, 2008 by and between Zanett and Seller.
 
“Effective Date” shall mean 11:59 P.M. on the Closing Date.
 
“Encumbrance” shall mean a mortgage, charge, pledge, lien, option, restriction,
claim, right of first refusal, right of preemption, third party right or
interest or other encumbrance or security interest of any kind or similar right
or any other matter affecting title.
 
“Environmental Laws” means all federal, state and local, provincial and foreign,
civil and criminal laws, regulations, rules, ordinances, codes, decrees,
judgments, directives or judicial or administrative orders, agreements or
settlements relating to pollution or protection of the environment, natural
resources or human health and safety, including, without limitation, laws
relating to releases or threatened releases of Hazardous Substances (including,
without limitation, releases or threatened releases to ambient air, surface
water, groundwater, land, surface and subsurface strata) or otherwise relating
to the manufacture, processing, distribution, use, treatment, storage, release,
transport, disposal or handling of Hazardous Substances. “Environmental Laws”
include, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. §§ 9601 et seq.), the Hazardous
Materials Transportation Law (49 U.S.C. §§ 5101 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. §§ 6901 et seq.), the Federal Water
Pollution Control Act (33 U.S.C. §§ 1251 et seq.), the Clean Air Act (42 U.S.C.
§§ 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. §§ 2601 et seq.),
the Oil Pollution Act (33 U.S.C. §§ 2701 et seq.), the Emergency Planning and
Community Right-to-Know Act (42 U.S.C. §§ 11001 et seq.), the Occupational
Safety and Health Act (29 U.S.C. §§ 651 et seq.), each as amended to date and
all other state laws similar to any of the above.
 
“Environmental Liabilities” means all liabilities of Seller that (i) arise under
or relate to violations of Environmental Laws or arise in connection with or
related to any matter disclosed or required to be disclosed on Schedule 4.19 and
(ii) are attributable to actions or omissions occurring or conditions existing
on or prior to the Closing Date.
 
“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended.
 
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended,
together with all rules and regulations promulgated thereunder.
 
“Financial Statements” shall mean Seller’s audited balance sheets as of December
31, 2005, 2006 and 2007 and related statements of income, statements of changes
in shareholder’s equity and statements of cash flows for such years and Seller’s
unaudited balance sheet as of September 30, 2008 and the related statements of
income, statements of changes in shareholder’s equity and statements of cash
flows for the nine months then ended
 
“GAAP” shall mean, at any particular time, accounting principles generally
accepted in the United States of America, consistently applied on a going
concern basis.
 
“Hazardous Substances” means: (i) all Materials or Substances (whether or not
wastes, contaminants or pollutants) that are or become regulated by any of the
Environmental Laws, (ii) all Materials or Substances that are or become defined
or described by any of the Environmental Laws as “hazardous” or “toxic” or a
“pollutant,” “contaminant,” “hazardous substance,” “hazardous waste,” “extremely
hazardous waste,” “acutely hazardous waste” or “acute hazardous waste,” and
(iii) petroleum, including crude oil or any fraction thereof, asbestos,
including asbestos containing materials, and polychlorinated biphenyls.
 
“Inventory” means, all assets of Seller, wherever located, which are finished
goods or work in process of the Business, and raw materials, spare parts and all
other materials and supplies held by Seller that were acquired for use or
consumption by Seller in the production of finished goods for the Business,
including all rights related to consignment inventory.
 

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“Key Employees” shall mean Michael Johnson, Joseph Shobe, Lisa Edwards, John
Simeone, Paul Grossman, Kelly Hewitt, John Gunnigle, Arnold Radwich, DeAnn Zier,
Kristina Smallwood, Keerthi Byri, and Dhanraj Biyani.
 
“Law” means any law (including principles of common law), statute, regulation,
rule, permit, license, certificate, judgment, order, award, or other decision or
requirement of any arbitrator, court, government or governmental agency,
instrumentality, or other Authority (domestic or foreign).
 
“Liens” means any mortgage, pledge, security interest, encumbrance, lien, or
charge of any kind, including any conditional sale or other title retention
agreement, any lease in the nature thereof, and the filing of or agreement to
give any financing statement under the Uniform Commercial Code of any
jurisdiction and including any lien or charge arising by statute or other laws,
which secures the payment of a debt (including any Tax) or the performance of an
obligation.
 
“Materials or Substances” shall mean all elements, compounds, substances,
matrices or mixtures that are hazardous, toxic, ignitable, reactive or
corrosive.
 
“Membership Unit” shall mean the limited liability company interest of Seller.
 
“One-Year Performance Period” shall mean each of the three successive annual
periods commencing on December 1, 2008 and ending on November 30, 2011.
 
“Performance Period” shall mean each of the One-Year Performance Periods.
 
“Person” shall mean an individual, company, partnership, limited liability
company, limited liability partnership, joint venture, trust or unincorporated
organization, joint stock corporation or other similar organization, government
or any political subdivision thereof, or any other legal entity.
 
“Receivables” shall mean the accounts receivable, trade receivables, notes
receivable and other receivables arising out of or related to Seller’s
operations, in each case determined in accordance with GAAP.
 
“Related Agreements” shall mean all instruments, agreements and other documents
executed and delivered or to be executed and delivered pursuant to this
Agreement including without limitation the Bill of Sale, the Confidentiality,
Non-Competition, and Non-Solicitation Agreements, and the Lock-up Agreement.
 
“Related Party” means any officer, director, stockholder, member, or Affiliate
of either Seller or Owner or any individual related by blood or marriage to any
such Person.
 
“Reserves” shall mean those reserves for bad debts, contractual adjustments and
disallowances, self-insured risks, risk management and unspecified uninsured
liabilities, established and maintained by Seller and reflected in the Financial
Statements.
 
“Revenue” shall mean gross revenue, calculated in accordance with GAAP, as
applied on a basis consistent with Seller’s past practices.
 
“Revenue Target” means (i) for the first One-Year Performance Period,
$3,400,000, (ii) for the second One-Year Performance Period, $3,900,000 and
(iii) for the third One-Year Performance Period, $4,300,000.
 
“Schedules” shall mean the disclosure schedules delivered by Seller to Buyer
pursuant to this Agreement.
 
“Target Net Working Capital” shall mean $0.
 
“Taxes” shall mean all taxes, assessments, charges, duties, fees, levies or
other governmental charges, including but not limited to, all federal, state,
local, foreign, or other income, profits, unitary, business, franchise, capital
stock, real property, personal property, intangible taxes, withholding, FICA,
Medicare, unemployment compensation, disability, transfer, sales, use, excise
and other taxes, assessments, charges, duties, fees, or levies of any kind
whatsoever (whether or not requiring the filing of Tax Returns) and all
deficiency assessments, additions to tax, penalties and interest.
 

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“Tax Returns” shall mean any return, amended return or other report (including
but not limited to elections, declarations, disclosures, schedules, estimates
and information returns) required to be filed with any Tax authority or other
governmental authority.
 
“Wachovia Bank” shall mean Wachovia Bank, National Association.
 
“Wachovia Debt” shall mean that certain Promissory Note for a line of credit in
the amount of $300,000 between Seller and Wachovia Bank dated April 25, 2008.
 
“Zanett Stock” shall mean the common stock of Zanett, $0.001 par value per
share.
 
1.2 Location of Certain Defined Terms. The following terms used in this
Agreement are defined in the Section indicated.
 
Additional Contingent Payment
   
3.2(b
)
Additional Contingent Payment Cap
   
3.2(b
)
Adjustment Payment
   
3.4(c
)
Advance Amount
   
3.5
 
Assumed Liabilities
   
2.4
 
Audit
   
8.7
 
Balance Sheet
   
4.4(e
)
Balance Sheet Date
   
4.5(e
)
Buyer Indemnified Parties
   
7.2(a
)
Buyout Payment
   
3.2(c
)
Claim
   
4.9
 
Closing
   
2.7
 
Closing Date
   
2.7
 
Closing Financial Statements
   
3.5(a
)
Confidential Information
   
8.2
 
Consent
   
2.2
 
Consideration
   
3.1
 
Contingent Payment
   
3.2(a
)
Contract
   
2.1(c
)
Damages
   
7.2(a
)
Debt Repayment
   
8.5(a
)
Default
   
4.10(i
)
Disputed Amounts
   
8.6
 
Excluded Assets
   
2.3
 
Excluded Liabilities
   
2.5
 
Indemnifying Party
   
7.3
 
Indemnified Party
   
7.3
 
Independent Accounting Firm
   
8.7
 
Intellectual Property
   
4.15(a
)
IRCA
   
4.12(f
)
IRS
   
4.1(d
)
Lock Up Agreement
   
9.2(m
)
Performance Period Financial Statements
   
8.6
 
Performance Period Requirements
   
3.2(a
)
Permitted Encumbrances
   
4.5(f
)
Pre-Closing Receivables
   
8.5(a
)
Purchased Assets
   
2.1
 
Seller Indemnified Parties
   
7.2(b
)

1.3 Construction.
 
(a) The headings and captions used herein are intended for convenience of
reference only, and shall not modify or affect in any manner the meaning or
interpretation of any of the provisions of this Agreement.
 

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(b) As used herein, the singular shall include the plural, the masculine and
feminine genders shall include the neuter, and the neuter gender shall include
the masculine and feminine, unless the context otherwise requires.
 
(c) The words “hereof,” “herein” and “hereunder”, and words of similar import,
when used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement.
 
(d) All references herein to Sections, Schedules or Exhibits shall be deemed to
refer to Sections of and Schedules or Exhibits to this Agreement, unless
specified to the contrary. All Exhibits and Schedules to this Agreement are
integral parts of this Agreement as if fully set forth herein.
 
(e) The words “include,” “includes” and “including” when used herein shall be
deemed in each case to be followed by the words “without limitation.”
 
(f) “To the knowledge of Seller,” “to the best knowledge, information and belief
of Seller” or any similar phrase shall be deemed to mean that (i) a Seller
Responsible Person (as defined below) is actually aware of a particular fact or
matter or (ii) a prudent individual in such Seller Responsible Person’s capacity
could reasonably be expected to discover or otherwise become aware of that fact
or matter in the ordinary course of performing his functions on behalf of Seller
or in the ordinary course of conducting a reasonable investigation regarding the
accuracy of any representation or warranty contained in this Agreement. For
purposes of this definition, the term Seller Responsible Person consists of all
directors and executive officers of Seller, including Owner.
 
(g) “Material adverse change” or “material adverse effect” means, with respect
to a specified party, any change or effect, as the case may be, that has, or is
reasonably likely to have, individually or in the aggregate, a material adverse
impact on the assets, business, prospects or condition (financial or otherwise)
of such party and its subsidiaries taken as a whole.
 
(h) As all parties participated in negotiating and drafting this Agreement, no
rule of construction shall apply to this Agreement which construes ambiguous
language in favor of or against any party by reason of that party’s role in
drafting this Agreement.
 
ARTICLE II.
 
THE SALE AND TRANSFER OF ASSETS
 
2.1 Purchase and Sale of Assets. Subject to the terms and conditions of, and on
the basis of and in reliance upon, the covenants, agreements, and
representations and warranties set forth in this Agreement, at the Closing,
Seller shall sell, assign, transfer, and convey to Buyer, free and clear of any
Liens other than Permitted Encumbrances, and Buyer shall purchase from Seller,
all of Seller’s right, title, and interest in and to all assets, properties,
goodwill, rights, and claims of every kind and description, personal and mixed,
tangible and intangible, known and unknown, actual and contingent, and wherever
situated, which are owned, leased, licensed, held, or used by Seller in the
Business (excluding only the Excluded Assets) (the “Purchased Assets”). The
transfer of the Purchased Assets shall not include the assumption of any
liability by Buyer whatsoever unless Buyer expressly assumes such liability
pursuant to Section 2.4. Without limiting the foregoing, the Purchased Assets
shall include the following assets relating to the Business as they exist on the
Closing Date and to the extent of Seller’s right, title, and interest therein,
except to the extent they are Excluded Assets:
 
(a) all Inventory;
 
(b) all tangible personal property, including all furniture, equipment,
computers and peripherals (including installed software), supplies, packaging,
office materials, tools, parts, fixtures, machinery, and the tangible property
listed on Schedule 2.1(b);
 

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(c) all rights in, to, and under each purchase order (including open purchase
orders for inventory), policy sheet, sales agreement, equipment lease,
distribution agreement, licensing agreement, franchise, guaranty, release,
instrument, contract, agreement, commitment, and arrangement (in every case,
oral or written) to which Seller is a party or by which the Business or the
Purchased Assets are otherwise bound (each, a “Contract”), including those
Contracts listed on Schedule 2.1(c);
 
(d) all Intellectual Property used primarily in the Business;
 
(e) all Authorizations, including those Authorizations listed on Schedule 2.1(e)
that are not identified as non-transferable;
 
(f) with respect to the Business, all books and records (including such books
and records as are contained in computerized storage media), including all
Inventory, purchasing, accounting, sales, export, import, manufacturing, and
shipping records, all customer, supplier, and vendor lists, files, records,
literature, and correspondence, all advertising, marketing, and public relations
materials, and, subject to applicable Law, copies of all personnel records of
Seller;
 
(g) all unperformed commitments or obligations owing to Seller which pertain to
the Business or any of the Purchased Assets, (except those relating exclusively
to Excluded Liabilities);
 
(h) all other tangible and intangible rights and property of Seller, including
the telephone and telecopy numbers of Seller which are held, or used in, or
necessary to, the operation of the Business;
 
(i) all insurance benefits, including rights and proceeds, arising from or
relating to the Purchased Assets or the Assumed Liabilities prior to the
Effective Date;
 
(j) all claims of Seller against third parties relating to the Purchased Assets
or the Business, whether choate or inchoate, known or unknown, contingent or
non-contingent, including all causes of action, rights of action, contract
rights, and warranty and product liability claims against third parties (except
those relating exclusively to Excluded Liabilities);
 
(k) all rights of Seller in and to any and all security deposits in respect of
any Purchased Asset; and
 
(l) all of the goodwill associated with the Business as a going concern.
 
2.2 Nonassignability. Notwithstanding anything in this Agreement to the
contrary, if any Contract or Authorization included in the Purchased Assets may
not be transferred without the consent, approval, or waiver (“Consent”) of a
third party (including any Authority), such transfer or attempted transfer would
constitute a breach thereof or a violation of any Law and such Consent is listed
in Schedule 4.2(b), nothing in this Agreement or any Related Agreement shall
constitute a transfer or attempted transfer thereof. To the extent that any
Consent is not obtained by the Effective Date, Seller (a) shall cooperate with
Buyer at its request in endeavoring to obtain such Consent promptly with Buyer
and Seller each paying their own costs in connection therewith and (b) if any
such Consent is unobtainable, shall cooperate with Buyer in any arrangement
(provided that such arrangement is not a breach or violation of such Contract or
Authorization) designed to provide for Buyer the benefits under the applicable
Contract or Authorization (provided that such arrangement is not a breach or
violation of such Contract or Authorization) as if such Contract and
Authorization had been duly assigned to Buyer, including enforcement for the
benefit of Buyer of any and all rights of Seller against any other party
thereto. Buyer shall be responsible only for the liabilities or obligations
arising out of the Contracts and Authorizations to the extent they are assigned
or transferred to Buyer pursuant to the terms of this Agreement or Buyer is
provided the benefits, claims, and rights under such Contracts and
Authorizations.
 

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2.3 Excluded Assets. Notwithstanding anything to the contrary in this Agreement,
the following specified rights, properties, and assets of Seller shall not be
included in the Purchased Assets (the “Excluded Assets”):
 
(a) cash and cash equivalents and marketable securities;
 
(b) all Receivables (other than any Pre-Closing Receivables transferred to Buyer
pursuant to Section 8.5(b));
 
(c) seals, minute books, and Books and Records relating to the membership
interests of Seller, bank accounts and taxpayer identification numbers;
 
(d) those assets specifically listed on Schedule 2.3(i);
 
(e) all casualty, liability, or other policies of insurance of Seller (except to
extent set forth in Sections 2.1(i) and 2.1 (j)) and all claims and rights of
Seller with respect to refunds related to such policies solely (and only to the
extent) due to overpayments made by Seller prior to the Effective Date;
 
(f) all Benefit Plans of Seller and all assets owned or held by any such Benefit
Plans;
 
(g) all claims and rights of Seller to any Tax refunds, Tax credits, or other
Tax benefits; and
 
(h) Seller’s rights under this Agreement.
 
2.4 Assumed Liabilities. Subject to the terms and conditions of, and on the
basis of and in reliance upon the covenants, agreements, and representations and
warranties set forth in this Agreement, at the Effective Date, Buyer shall
assume and agree to discharge the liabilities and obligations of Seller to be
performed or discharged after Closing pursuant to the Contracts included in the
Purchased Assets (other than any liability or obligation for a breach or default
that occurred prior to Closing or to pay money that accrued prior to the
Effective Date) and listed on Schedule 2.4(a) Seller (collectively, the “Assumed
Liabilities”).
 
2.5 Excluded Liabilities. Except for the Assumed Liabilities, Buyer shall not
assume, or in any way be liable or responsible for, any direct or indirect
liabilities, obligations, or debts of Seller or the Business of any type or
nature, fixed or unfixed, known or unknown, accrued or unaccrued, asserted or
unasserted, choate or inchoate, liquidated or unliquidated, secured or
unsecured, contingent or otherwise (collectively, the “Excluded Liabilities”),
including the liabilities listed below, that are based on acts or omissions of
Seller or any Affiliate of Seller occurring on, before or after the Effective
Date. Seller shall retain all Excluded Liabilities and agrees to pay or
discharge when due all of the Excluded Liabilities. Without limiting the
foregoing, the Excluded Liabilities shall include all of the following:
 
(a) any obligation or liability relating to or arising out of the Excluded
Assets;
 
(b) any obligation or liability relating to or arising out of the Wachovia Debt;
 
(c) any product warranty or product liability, negligence, or other claim of any
nature in respect of products or services sold, manufactured, installed, or
provided by or for Seller prior to the Effective Date;
 
(d) any obligation or liability for Taxes that have been or may be incurred as a
result of Seller’s operation of the Business or ownership of the Purchased
Assets on or before the Effective Date, including (i) any liability for deferred
Taxes of any nature; and (ii) any Taxes of any Person for which Seller is
liable, arising out of any tax sharing agreement as a transferee or successor,
or by reason of membership in any affiliated group of corporations;
 

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(e) any Environmental Liabilities arising or related to the operation of Seller
and the Business, or arising or relating to the acts or omissions of any Person
or Authority, or from any conditions, whether known or unknown, naturally
occurring or otherwise, or any events, facts, or circumstances whatsoever, in
each case first occurring before the Effective Date;
 
(f) any obligation or liability arising under any Contract that (i) is not
transferred to Buyer as part of the Purchased Assets or (ii) relates to any
breach or default (or an event which might, with the passing of time or the
giving of notice or both, constitute a default) under any Contract or to any
goods or services provided or to be provided by Seller under any such Contract
arising out of or relating to periods prior to the Effective Date;
 
(g) any obligation or liability of Seller to indemnify its officers, directors,
employees, or agents;
 
(h) any obligation or liability of the Business to any Affiliate or Related
Party;
 
(i) any obligation or liability relating to any Benefit Plan, pension or
retirement benefits (including any 401(k) plan) and health care or other
employee benefits or employee stock option plans for employees or former
employees;
 
(j) any obligation or liability under any employment, severance, retention,
termination, or similar agreement with any employee of Seller or any of its
Affiliates;
 
(k) any obligation or liability arising out of or related to any employee of
Seller, including employee grievances, arising out of or relating to periods
prior to the Effective Date;
 
(l) any obligation or liability of Seller to distribute to its member or
otherwise to apply all or any part of the consideration received under this
Agreement;
 
(m) any obligation or liability of Seller to the extent that Seller has the
right to be indemnified by an insurer or other third party under the policies in
force immediately preceding the Effective Date;
 
(n) any obligation or liability of Seller arising out of existing or pending
claims, actions, suits, proceedings (arbitration or otherwise), litigations or
investigations arising out of, or relating to, an occurrence or event happening
before the Effective Date, whether or not set forth in the Disclosure Schedule;
 
(o) any obligation or liability arising out of any “bulk sale” type of Law or
successor liability protection Law, including any Law regarding notice of the
transactions contemplated hereby to be given to any Tax Authority or imposing
Damages on Buyer or Buyer Parent or Liens on the Purchased Assets if such notice
is not given;
 
(p) any obligation or liability arising under the WARN Act or any similar Law,
to the extent caused by any action of Seller before the Effective Date;
 
(q) any obligation or liability (including any fees, expenses, or other
payments) of Seller or Owner to any brokers, financial advisors, or comparable
other Persons retained or employed by any of them in connection with the
Agreement or the transactions contemplated hereunder;
 
(r) any obligation or liability of Seller for infringement associated with the
use of any trademarks prior to the Effective Date; and
 

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(s) all capital lease obligations of Seller and other outstanding debt of
Seller, except as set forth on Schedule 2.5(r).
 
2.6 Certain Taxes. Seller and Owner shall be responsible for the payment of all
Taxes imposed on Seller or Johnson that are payable or arise as a result of this
Agreement or any related Agreements; provided, however, that Seller and Buyer
shall share equally any transfer Taxes that are payable or arise as a result of
the transactions contemplated by this Agreement.
 
2.7 Closing. Subject to the terms and conditions hereof, the closing of the
transactions contemplated by this Agreement (the “Closing”) will take place on
the first business day after the satisfaction or waiver of the conditions set
forth in Article IX (other than any such conditions that by their terms cannot
be satisfied until the Closing Date, which conditions shall be required to be so
satisfied or waived on the Closing Date), unless another time or date is agreed
to by the parties hereto (the actual time and date of the Closing, the “Closing
Date”). The Closing shall be held at the offices of Drinker Biddle & Reath LLP,
One Logan Square, 18th and Cherry Streets, Philadelphia, PA 19103-6996 fax:
(215) 988-2757, or at such other place as the parties hereto may agree.
 
2.8 Deliveries at the Closing At the Closing, in addition to the other actions
contemplated elsewhere herein:
 
(a) Owner shall deliver, or shall cause to be delivered, to Buyer the following:
 
(i) a certificate, dated as of the Closing Date and duly executed by such Owner,
to the effect set forth in Section 9.2(a) and 9.2(b) hereof;
 
(ii) a certificate from such Owner substantially in the form set forth in
Treasury Regulation Section 1.1445-2(b); and
 
(iii) such other documents and instruments as Buyer may reasonably request to
effectuate or evidence the transactions contemplated by this Agreement.
 
(b) Seller shall deliver to Buyer the following:
 
(i) a certificate of an authorized officer of Seller, provided pursuant to the
requirements of Treasury Regulation Sections 1.1445-2(c)(3) and 1.897-2(h);
 
(ii) a certificate, dated as of the Closing Date and duly executed by an
authorized officer of Seller, to the effect set forth in Section 9.2(a) and
9.2(b) hereof;
 
(iii) a certificate from the Secretary of State of Florida as to Seller’s
formation, valid existence and good standing as a domestic limited liability
company in the State of Florida, together with a certificate of good standing
from the Secretary of State or other appropriate governmental official of each
jurisdiction in which Seller is qualified to conduct its business as a foreign
entity, all dated no more than five days prior to the Closing Date;
 
(iv) the third party consents and documents evidencing the termination of the
agreements, in each case as specified in Schedule 2.7(b);
 
(v) an assignment, bill of sale, and assumption agreement in the form of Exhibit
A (the “Bill of Sale”) executed by Seller;
 
(vi) an intellectual property assignment in the form of Exhibit B (the
“Intellectual Property Assignment”) executed by Seller;
 

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(vii) a certificate of the secretary of Seller in form and substance
satisfactory to Buyer, dated as of the Closing Date, attaching (A) the
certificate of formation of Seller and all amendments thereto, certified as of a
recent date by the Secretary of State of the State of Florida, (B) the operating
agreement of Seller, (C) incumbency, authority, and specimen signatures of each
of the officers of Seller executing this Agreement and any other Related
Agreement executed on behalf of Seller and certifying the authenticity of such
signatures and (D) the resolutions duly adopted by the board of managers (or
similar governing body) of Seller and by the sole member of Seller, authorizing
and approving the execution, delivery, and performance of this Agreement and the
consummation of the transactions contemplated hereunder;
 
(viii) copies of executed payoff letters for all outstanding indebtedness of
Seller, if any (other than the Wachovia Debt), along with duly executed releases
or terminations of financing statements, or other evidence satisfactory to Buyer
that all Liens on any Purchased Asset (other than Permitted Encumbrances) have
been released and terminated; and
 
(ix) such other documents and instruments as Buyer may reasonably request to
effectuate or evidence the transactions contemplated by this Agreement.
 
(c) Buyer shall deliver, or shall cause to be delivered, to Seller the
following:
 
(i) a certificate, dated as of the Closing Date and duly executed by an
authorized representative of Buyer, as applicable, to the effect set forth in
Sections 9.3(a), and 9.3(b) hereof;
 
(ii) the Bill of Sale executed by Buyer;
 
(iii) the Intellectual Property Assignment executed by Buyer; and
 
(iv) such other documents and instruments as Seller may reasonably request to
effectuate or evidence the transactions contemplated by this Agreement.
 
ARTICLE III.
 
CONSIDERATION
 
3.1 Consideration.
 
(a) The “Consideration” for the Purchased Assets, shall be up to $1,200,000
(plus the Additional Contingent Payment), subject to Section 3.2(c) and
adjustment as set forth in this Article III, payable to Seller as follows:
 
(i) in respect of each of the One-Year Performance Periods, an amount of cash or
Zanett Stock with a value (as described below) of up to $400,000, payable to the
Seller after the Closing in accordance with Section 3.2(a) (each such payment, a
“Contingent Payment”); and
 
(ii) such additional amount as Buyer may pay to the Seller after the Closing in
accordance with Section 3.2(b) (such additional payment, the “Additional
Contingent Payment”).
 
Buyer shall pay each Contingent Payment in cash, shares of Zanett Stock or a
combination of both, as Buyer shall determine in its sole discretion; provided,
however, that not less than 50% of any Contingent Payment shall be paid in cash.
In respect of any portion of a Contingent Payment paid with Zanett Stock, the
value of such Zanett Stock shall be calculated based on the average price for
Zanett Stock as reported on NASDAQ (or such other national securities exchange
or automated quotation system on which the Zanett Stock is listed or quoted) for
the three (3) consecutive trading days ending on the trading day immediately
prior to the last day of the corresponding One-Year Performance Period. In
connection with all stock issuances hereunder, Zanett shall not be required to
issue any fractional shares. All fractional shares shall be rounded up to the
nearest whole number of shares of Zanett Stock.  
 

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3.2 Payment of Consideration.
 
(a) Contingent Payment. In respect of each Performance Period, upon complete
satisfaction of the Performance Period Requirements set forth below, Buyer shall
pay to Seller the applicable Contingent Payment. The Contingent Payment shall be
determined as follows:
 
(i) If the Performance Multiple (defined below) for the Performance Period is
less than one, the Contingent Payment shall be equal to the product of the
Performance Multiple and the maximum Contingent Payment payable for the
Performance Period; and
 
(ii) If the Performance Multiple for the Performance Period is equal to or
greater than one, the Contingent Payment shall be equal to the maximum
Contingent Payment payable for the Performance Period.
 
In respect of each Performance Period, the applicable Performance Multiple shall
be calculated as follows:

PM = ((AI/AIT) + (R/RT))/2
Where

PM
=
the Performance Multiple;
     
AI
=
the Adjusted Income for the Performance Period;
     
AIT
=
the Adjusted Income Target for the Performance Period;
     
R
=
the Revenue for the Performance Period; and
     
RT
=
the Revenue Target for the Performance Period.

With respect to each Performance Period, the requirements set forth in
paragraphs 1-4 below (the “Performance Period Requirements”) must be satisfied
as a condition precedent to Buyer’s obligation to pay the applicable Contingent
Payment to the Owners for such Performance Period:

1. The Adjusted Income of Buyer for the Performance Period must be equal to or
exceed eighty-five percent (85%) of that Performance Period’s Adjusted Income
Target; and
 
2. The Revenue of Buyer for the Performance Period must be equal to or exceed
eighty-five percent (85%) of that Performance Period’s Revenue Target; and
 
3. During the Performance Period, Owner’s employment shall not have been
terminated by Buyer, Seller or an Affiliate of Seller as applicable, and Owner
shall not have terminated his employment with Buyer, Seller or an Affiliate of
Seller as applicable; and
 
4. Each Key Employee shall be in compliance with all non-competition sections of
any employment agreement or non-competition agreement to which he is a party
(including the Confidentiality, Non-Competition, and Non-Solicitation Agreement
referenced in Section 9.2(j) hereof). For purposes of this Section 3.2(a), any
attempt by an Owner to have the above referenced agreements to which he is a
party deemed void or unenforceable by a court of law or equity shall be deemed
to be a violation of the Performance Period Requirements with respect to such
Owner.
 

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(b) Additional Contingent Payment. In the event that the Performance Multiple
for each Performance Period is greater than one, following the completion of the
third Performance Period and upon complete satisfaction of the Performance
Period Requirements for each Performance Period, in addition to the payments
called for by Section 3.2(a), Buyer shall pay Owner an amount equal to the sum
of the maximum Contingent Payment payable for each Performance Period multiplied
by the difference between the Performance Multiple for the applicable
Performance Period and one; provided that the aggregate amount of the Contingent
Payments and the Additional Contingent Payment payable for all Performance
Periods, shall not exceed, in the aggregate, $1,500,000 (the “Additional
Contingent Payment Cap”). Buyer shall pay the Additional Contingent Payment in
cash, shares of Zanett Stock or a combination of both, as Buyer shall determine
in its sole discretion; provided, however, that not less than 50% of the
Additional Contingent Payment shall be paid in cash.
 
(c) Buyout Payment. Notwithstanding Section 3.1 or Section 3.2(a) and (b), Buyer
shall have the option of paying the Buyout Payment, as defined below, prior to
the one year anniversary of the Closing Date. If Buyer shall elect to make the
Buyout Payment, such Buyout Payment shall be deemed to be the “Consideration”
for purposes of this Agreement, and Buyer shall have no further obligation to
make any Contingent Payment or the Additional Contingent Payment to Seller. The
Buyout Payment shall be calculated as follows:
 
(i) If Buyer elects to pay the Buyout Payment on or prior to the six month
anniversary of the Closing Date, the Buyout Payment shall be a lump sum cash
payment of $750,000.
 
(ii) If Buyer elects to pay the Buyout Payment after the six month anniversary
of the Closing Date, but on or prior to the one year anniversary of the Closing
Date, the Buyout Payment shall be a lump sum cash payment of $1,000,000.
 
3.3 Accounting Procedures of the Company. Unless otherwise agreed to in writing
by the parties, all financial statements for the Business for all times from and
after the Closing shall be prepared separately in accordance with GAAP applied
on a basis consistent with Seller’s past practices in a manner such that
Adjusted Income, Revenue, any Contingent Payment, Additional Contingent Payment,
and all matters relating to the calculation of Adjusted Income, Revenue and any
Contingent Payment, Additional Contingent Payment (including the determination
with respect to capitalization or expense of various items and related
depreciation or amortization periods, reserve methods for accounts receivable
and inventory, and the treatment of other unusual or extraordinary items) shall
be determined in accordance with Seller’s past practices. The parties agree that
any changes in GAAP accounting rules from and after the date hereof shall not
affect the calculation of any contingent payment. The parties shall use the GAAP
rules, regulations and standards in effect as of the date hereof as a basis for
calculation of all contingent payments.
 
3.4 Determination of Working Capital Adjustment.
 
(a) As promptly as practicable after the Closing Date, but in no way more than
ninety (90) days after the Closing Date, Buyer shall prepare, or cause to be
prepared at its sole expense, and deliver to Owner balance sheets for Seller as
of the Closing Date, and related statements of income, statements of change in
Membership Unit holders’ equity and statements of cash flows, each prepared in
accordance with GAAP, as applied on a basis consistent with Seller’s past
practices (“Closing Financial Statements”) to determine the Actual Net Working
Capital of Seller.
 
(b) In connection with the delivery of the Closing Financial Statements, Buyer
shall deliver a calculation of Actual Net Working Capital and a notice (the
“Buyer’s Notice of Adjustment”) setting forth its proposed adjustment, if any,
of the Consideration contemplated hereby. Upon reasonable notice from Owner,
Buyer will make available to Seller and its representatives all books, records,
personnel, including auditors work papers, used in connection with the Actual
Net Working Capital determination.
 

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(c) The Consideration shall be decreased by any difference between the Target
Net Working Capital and the Actual Net Working Capital (the “Adjustment
Payment”). The amount of any Contingent Payment or Additional Contingent Payment
payable to Seller shall be reduced, on a dollar-for-dollar basis, by an amount
equal to the Adjustment Payment until the aggregate amount of such reductions
equals the Adjustment Payment. If Buyer elects to make the Buyout Payment
pursuant to Section 3.2(c), such Buyout Payment will be reduced, on a
dollar-for-dollar basis, by an amount equal to the Adjustment Payment.
 
3.5 Advance Amount Adjustment The Consideration shall be further decreased by an
amount equal to the sum of (i) the Deposit and (ii) the American Express Debt
paid by Buyer pursuant to Section 8.6 (such sum, the “Advance Amount”). The
amount of any Contingent Payment or Additional Contingent Payment payable to
Seller shall be reduced, on a dollar-for-dollar basis by an amount equal to the
Advance Amount until the aggregate amount of reductions equals the Advance
Amount. If Buyer elects to make the Buyout Payment pursuant to Section 3.2(c),
such Buyout Payment will be reduced, on a dollar-for-dollar basis, by an amount
equal to the Advance Amount.
 
ARTICLE IV.
 
REPRESENTATIONS AND WARRANTIES REGARDING SELLER
 
As a material inducement for Buyer to enter into this Agreement and to
consummate the transactions contemplated hereby, Seller and the Owner hereby
jointly and severally make the following representations and warranties as of
the date hereof, each of which is relied upon by Buyer regardless of any
investigation made or information obtained by or on behalf of Buyer.
 
4.1 Organization; Qualification; Corporate Records.
 
(a) Seller is a limited liability company duly organized, validly existing and
in good standing under the laws of the State of Florida and has the power to own
all of its property and assets, to incur all of its liabilities and to carry on
its Business as now being conducted.
 
(b) Seller is duly qualified to do business and in good standing in each
jurisdiction in which the nature or conduct of the Business or the character or
location of its properties makes such qualification necessary, except where any
such failure would not have a material adverse effect on Seller. Schedule 4.1(b)
lists each jurisdiction in which Seller is authorized to do business.
 
(c) The names of the managers and officers of Seller, together with the offices
they hold, are set forth on Schedule 4.1(c). Seller has delivered to Buyer true
and complete copies of (i) the certificate of formation of Seller, together with
all amendments thereto and (ii) the operating agreement of Seller, together with
all amendments thereto, as currently in effect.
 
(d) Except as set forth on Schedule 4.1(d), since January 1, 2008, Seller has
not (i) made or permitted any change in the authorized, issued, or treasury
shares of its equity securities, or (ii) taken any action which, if taken after
the date of this Agreement, would require the prior written consent of Buyer
pursuant to this Agreement. There is no liability for accumulated but unpaid
distributions of cash or other property with respect to any equity interest in
Seller.
 
(e) Except as set forth on Schedule 4.1(e) Seller has not made any distributions
to any holders of Membership Units or participated in or effected any issuance,
exchange or retirement of Membership Units, or otherwise changed the equity
interests of holders of Membership Units within the one year immediately
preceding the date of this Agreement.
 
(f) Except as set forth on Schedule 4.1(f), Seller has not conducted business
under any name other than its own. Schedule 4.1(f) includes a list of all of
Seller’s fictitious name registrations.
 

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(g) Subject to the satisfaction of the conditions precedent set forth herein,
Seller has the power to execute, deliver and perform this Agreement and the
Related Agreements to which Seller is a party, and, subject to the satisfaction
of the conditions precedent set forth herein, has taken all action required by
its certificate of formation, operating agreement or otherwise, to authorize the
execution, delivery and performance of this Agreement and the Related
Agreements. The execution and delivery of this Agreement has been approved by
the members and operating manager of Seller. This Agreement is a valid
obligation of Seller, legally binding upon it and enforceable in accordance with
its terms.
 
(h) All books and financial records included in the Books and Records of Seller
are complete and correct in all material respects and have been maintained in
accordance with good business practice. True and complete copies of all minutes,
resolutions, Membership Unit certificates and transfer ledgers of Seller are
contained in the minute books and transfer ledgers that have been delivered to
Buyer for inspection.
 
4.2 No Violations of Laws or Agreements, Consents or Defaults.
 
(a) The execution and delivery of this Agreement by Seller and the consummation
by Seller of the transactions contemplated by this Agreement and the Related
Agreements will not result in any breach or violation of any of the terms or
provisions of, or constitute a default under, (i) the certificate of formation,
limited liability company agreement or other operating agreement of Seller or
(ii) any statute, order, decree, proceeding, rule, or regulation of any court or
governmental agency or body, United States or foreign, having jurisdiction over
Seller, any assets of Seller.
 
(b) Except as set forth in Schedule 4.2(b), the delivery by Seller of this
Agreement, the Related Agreements and the consummation by Seller of the
transactions contemplated hereby and thereby will not result in a breach or
violation of the term of, or constitute a default under, or require notice to
any third party under, any agreement, instrument, or commitment to which Seller
is party, by which Seller is bound, or to which any of Seller’s assets are
subject (including, without limitation, any agreement, instrument or commitment
related to or arising from the Wachovia Debt), and no consent or approval is
required from any third party for the transactions contemplated by this
Agreement and the Related Agreements other than such consents or approvals that
the failure to receive which are not reasonably expected to have a material
adverse effect on the transactions contemplated by this Agreement or the Related
Agreements, the Business, or the assets of Seller, including the Purchased
Assets .
 
(c) Seller is not in default under, or in violation of any provision of, its
certificate of formation, operating agreement, any promissory note, indenture or
any evidence of indebtedness or security thereto, lease, purchase contract or
other commitment, or any other agreement that is material to the business of
Seller.
 
4.3 No Subsidiaries. Seller does not own any interest in and does not control,
directly or indirectly, any other corporation, association or business
organization. Seller is not a party to any joint venture or partnership.
 
4.4 Financial Information.
 
(a) Attached hereto as Schedule 4.4(a) are true and complete copies of the
Financial Statements. The Financial Statements (except as may be disclosed
therein), fairly present the financial position and the results of operations of
Seller as of the dates and for the periods indicated. The Financial Statements
provide for all bad and doubtful debts, material liabilities (actual,
contingent, deferred or otherwise) and material financial commitments existing
as of the respective dates thereof.

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(b) Except for obligations incurred in the ordinary course of business since
December 31, 2007 or as set forth on Schedule 4.4(b), (i) there are no
liabilities or obligations of Seller whether known or unknown, asserted or
unasserted, absolute or contingent, accrued or unaccrued, liquidated or
unliquidated, due or to become due, required in accordance with GAAP or
otherwise to be reserved against or disclosed in the Financial Statements, which
are not so reserved or disclosed, (ii) to the knowledge of Seller, there is not
any past or present fact, situation, circumstance, condition or other basis for
any present or future action, suit or proceeding, hearing, charge, complaint,
claim or demand against Seller giving rise to any such liability or obligation
and (iii) Seller has no liability or obligation, singularly or in the aggregate,
whether accrued, absolute, contingent or otherwise, as of the respective dates
of the Financial Statements not required to be reflected or disclosed in the
Financial Statements.
 
(c) Except as disclosed on Schedule 4.4(c), the Financial Statements do not
reflect any income or expense that was unusual in nature, nonrecurring,
extraordinary, or otherwise not in the ordinary course of Seller’s Business,
consistent with past practices.
 
(d) All tangible assets used by Seller in the Business are reflected in the
Financial Statements except those sold, transferred or otherwise disposed of, or
purchased or otherwise acquired, in the ordinary course of business.
 
4.5 Absence of Certain Changes. Since December 31, 2007, except as set forth on
Schedule 4.5, and except for transactions contemplated by this Agreement, Seller
has conducted the Business only in the ordinary course and consistent with past
practice, and has not:
 
(a) suffered any material adverse change;
 
(b) incurred any liabilities or obligations (absolute, accrued, contingent or
otherwise) except current liabilities incurred and liabilities under contracts
entered into in the ordinary course of business and consistent with past
practice (including obligations or liabilities arising from one transaction or a
series of related or similar transactions, and all periodic installments or
payments under any lease or other agreement providing for periodic installments
or payments, as a single obligation or liability), or increased, or experienced
any change in any assumptions underlying or methods of calculating any bad debt,
contingency or other reserves;
 
(c) declared, set aside or paid any dividend or distribution in respect of any
Membership Units or other equity interest of Seller or redeemed, purchased or
otherwise acquired any Seller equity interest;
 
(d) issued, delivered, or sold, or authorized the issuance, delivery or sale of,
any securities or any option or rights with respect thereto, or modification or
amendment of any right of any holder of outstanding securities with respect
thereto;
 
(e) paid, discharged or satisfied any claims, liabilities or obligations
(absolute, accrued, contingent, known or unknown, or otherwise) other than the
payment, discharge or satisfaction in the ordinary course of business and
consistent with past practice of liabilities and obligations reflected or
reserved against in the balance sheet dated as of (the “Balance Sheet Date”)
included in the Financial Statements (the “Balance Sheet”) or incurred in the
ordinary course of business and consistent with past practice since the Balance
Sheet Date;
 
(f) permitted or allowed any of the assets or properties of Seller to be
subjected to any Encumbrance, restriction or charge of any kind, except for (a)
Encumbrances related to Taxes not yet due and payable, (b) Encumbrances for
landlord’s warehouseman’s, mechanic’s, materialmen’s and other similar liens for
sums not overdue, (c) pledges or deposits to secure obligations under workmen’s
compensation laws or similar legislation, and (d) those Encumbrances listed on
Schedule 4.5(f) (collectively, “Permitted Encumbrances”);
 
(g) written down the value of any inventory or written off as uncollectible any
notes or accounts receivable;
 
(h) canceled any debts, or waived any claims or rights of substantial value;

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(i) sold, transferred or otherwise disposed of any of its properties or assets,
except in the ordinary course of business and consistent with past practice;
 
(j) disposed of or permitted to lapse any rights to the use of any patent,
trademark, trade name or copyright, or disposed of or disclosed to any Person
other than an Affiliate any invention, discovery, know-how, trade secret,
formula, process or other intellectual property not theretofore a matter of
public knowledge that is material to the Business;
 
(k) granted any general increase in the compensation of employees of Seller
(including any such increase pursuant to any bonus, pension, profit sharing or
other plan or commitment) or any increase in the compensation payable or to
become payable to any employee of Seller in excess of merit increases consistent
with past practice, and no such increase is customary on a periodic basis or
required by agreement or understanding;
 
(l) made any capital expenditure or commitment for capital expenditures other
than those capital expenditures or commitments that have been paid in full;
 
(m) made any change in any method of accounting or accounting practice or failed
to maintain the books and records of Seller in the ordinary course of business
and consistent with past practice;
 
(n) failed to maintain any of its properties or equipment in good operating
condition and repair, subject to ordinary wear and tear;
 
(o) failed to maintain in full force and effect all existing policies of
insurance at least at such levels as were in effect prior to such date or
canceled any such insurance or, to its knowledge, taken or failed to take any
action that would enable the insurers under such policies to avoid liability for
claims arising out of occurrences prior to the Closing;
 
(p) entered into any transaction or made or entered into any material contract
or commitment, or terminated or amended any material contract or commitment,
except in the ordinary course of business and consistent with past practice, and
not in excess of current requirements;
 
(q) taken any action that could reasonably be expected to have a material
adverse effect on the business organization of Seller or Seller’s current
relationships with its customers, employees, suppliers, distributors,
advertisers, subscribers or others having business relationships with Seller; or
 
(r) agreed in writing or otherwise to take any action with respect to any of the
matters described in this Section 4.5.
 
4.6 Licenses; Regulatory Approvals. Seller holds all Authorizations required or
necessary to be applied for or obtained in connection with the Business as
presently conducted by Seller, except where the failure to obtain such
Authorizations would not have a material adverse effect. All such Authorizations
are listed on Schedule 4.6. Except as set forth on Schedule 4.6, all such
Authorizations relating to the Business, operations and facilities of Seller are
in full force and effect and will remain in full force and effect following the
consummation of the transactions contemplated hereby. Any and all past
litigation concerning such Authorizations, and all claims and causes of action
raised therein, have been finally adjudicated, and, in the case of such
litigation finally adjudicated since the Balance Sheet Date such adjudication
has not had a material adverse effect on Seller. Except as set forth on Schedule
4.6, no such Authorization has been revoked, conditioned (except as may be
customary) or restricted, and no action (equitable, legislative or
administrative), arbitration or other process is pending, or to the knowledge of
Seller, threatened, which in any way challenges the validity of, or seeks to
revoke, condition or restrict any such Authorization.
 

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4.7 Regulatory Matters.
 
(a) Except as may be disclosed in Schedule 4.7(a), (i) Seller is not the subject
of any outstanding, nor, to the knowledge of Seller, any threatened,
investigation, audit, review or other examination of Seller by any Authority
with respect to Seller or the Business, and (ii) Seller is not subject to, nor
has Seller received any notice or advice that it may become subject to, any
order, agreement, memorandum of understanding or other regulatory enforcement
action or proceeding with any Authority with respect to Seller or the Business.
 
(b) To the knowledge of Seller, there is no proposed or pending change in any
law or regulation affecting the Business which would have a material adverse
effect on Seller.
 
4.8 Tax Matters.
 
(a) Seller has timely prepared and filed in accordance with applicable laws,
rules and regulations all federal, state and local income, franchise, excise,
sales, use, real and personal property and other Tax Returns, information
statements and reports, required to be filed by it, or Seller has prepared and
filed appropriate requests for extensions to file such Tax Returns and all such
requests have been granted and have not expired in accordance with applicable
Tax laws, rules and regulations. Complete and correct copies of all Tax Returns
of Seller for the last three (3) years have been delivered to Buyer and are
listed on Schedule 4.8(a).
 
(b) All such Tax Returns correctly and completely reflect the information
required to be presented therein in all respects. Seller has not paid any
penalty, surcharge, fine or interest in connection with any alleged underpayment
of Taxes.
 
(c) Except as disclosed on Schedule 4.8(c) (which lists good faith tax
disputes), Seller has paid all Taxes that have become due and payable to (or
claimed to be due and payable by) the appropriate Tax Authorities. Seller has
made full provision or reserve in the Financial Statements for all Taxes for
which Seller is or may be accountable on or before the dates thereof, including
distributions made on or before such dates or provided for in such Financial
Statements, and adequate provision has been made in such Financial Statements
for deferred Tax for which Seller is or may be accountable on or before the
dates thereof in accordance with GAAP and in the aggregate do not materially
fail to provide for potential Tax liabilities. All estimated Tax payments of
Seller that have become due and payable prior to the date of this Agreement have
been paid. No claim has ever been made by an Authority in a jurisdiction where
Seller does not file Tax Returns that it is or may be subject to taxation by
that jurisdiction. There are no liens for Taxes (other than Taxes not yet due
and payable) upon any of the assets of Seller.
 
(d) Seller has properly withheld all Taxes from the salaries, wages or other
compensation paid to officers, employees or other persons, and has paid such Tax
to the appropriate Tax Authorities.
 
(e) No event, transaction, act or omission has occurred which could result in
Seller becoming liable for any Tax which is primarily or directly chargeable
against or attributable to a Person other than Seller or which is charged by
reference to the income or gains of another Person. In the event that Seller has
been part of a consolidated group of taxpayers, Seller is not liable for any Tax
obligations of the other members of the group.
 
(f) To Seller’s knowledge, no Tax Return (or item in a Tax Return) is currently
under audit by any Tax Authority, and there are no agreements for the waiver of
any statute of limitations in respect of any Taxes or for the extension of time
for the assessment or payment of any Tax. Seller is not, and does not expect to
be, involved in any dispute in relation to any Tax matters, and to Seller’s
knowledge no Tax Authority has investigated or indicated that it intends to
investigate Seller’s Tax matters. Seller is not aware of any facts which may
constitute the basis for the proposal of any Tax deficiencies for any unexamined
year.

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(g) Seller is not a party to any agreement, contract, arrangement or plan that
could result, separately or in the aggregate, in the payment of (i) any “excess
parachute payment” within the meaning of Code §280G (or any corresponding
provision of state, local or foreign Tax law) or (ii) any amount that would not
be fully deductible as a result of Code 162(m) (or any corresponding provision
of state, local or foreign Tax law). Seller is not a party to or bound by any
Tax allocation or sharing agreement (other than Seller’s limited liability
company agreement). Seller (i) has at all times been classified as a
partnership, and not as a corporation, for federal income tax purposes and (ii)
has no liability for the Taxes of any Person under Reg. §1.1502-6 (or any
similar provision of state, local, or foreign law), as a transferee or
successor, by contract, or otherwise.
 
(h) Seller has not entered into any transaction or course of conduct (other than
legitimate, good faith Tax planning) designed in whole or in part to evade Taxes
contrary to applicable Tax Law.
 
4.9 Litigation Claims.
 
(a) There is no action, suit, claim, investigation or proceeding, whether at law
or in equity (a “Claim”), pending or, to the knowledge of Seller, threatened
that questions the validity of this Agreement or the Related Agreements or any
action taken or to be taken by Seller or Seller in connection with the
consummation of the transactions contemplated hereby or thereby or which seeks
to prohibit, enjoin or otherwise challenge any of the transactions contemplated
hereby or thereby.
 
(b) Schedule 4.9(b) sets forth an accurate and complete list, and a brief
description (setting forth the names of the parties involved, the court or other
governmental or mediating entity involved, the relief sought and the substantive
allegations and the status thereof), of each Claim pending or, to the knowledge
of Seller, threatened against or affecting Seller. None of the pending or
threatened Claims set forth on Schedule 4.9(b), if adversely determined, would
individually or in the aggregate, result in a material adverse effect on Seller.
To the knowledge of Seller, no event has occurred and no circumstance, matter or
set of facts exist which would constitute a valid basis for the assertion by any
third party of any Claim, other than those listed on Schedule 4.9(b). Except as
set forth in Schedule 4.9(b), there is no outstanding or, to the knowledge of
Seller, threatened judgment, injunction, order or consent or similar decree or
agreement (including, without limitation, any consent or similar decree or
agreement with any governmental entity) against, affecting or naming Seller.
 
(c) Except as disclosed in Schedule 4.9(c), there is no Claim (whether based on
statute, negligence, breach of warranty, strict liability or any other theory)
pending, or to the knowledge of Seller, threatened, relating directly or
indirectly to any product manufactured or sold, or any services performed, by
Seller.
 
4.10 Properties, Contracts; Leases and Other Agreements; Bank Accounts.
 
(a) Seller does not own any real property.
 
(b) All leasehold interests for real property and any material personal property
used by Seller in the Business are held pursuant to lease agreements which are
valid and enforceable in accordance with their terms, the agreements for which
are listed on Schedule 4.10(b). All such properties comply in all material
respects with all applicable private agreements, zoning requirements and other
governmental laws and regulations relating thereto and there are no condemnation
proceedings pending or threatened with respect to such properties. Seller has
not assigned or subleased its interests under such leases or the assets covered
thereby. Each such lease has been duly and validly executed, is in full force
and effect and constitutes the valid and binding agreement of the parties
thereto. Any additional business offices maintained by Seller during the past
two (2) years are also listed by location on Schedule 4.10(b).

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(c) Except as set forth on Schedule 4.10(c), and excluding trade accounts
payable incurred in the ordinary course of business and payable to Persons other
than Affiliates of Seller, Seller does not have any liabilities for borrowed
funds, extensions of credit or other advances that are subject to repayment
whether pursuant to a written agreement, oral understanding or course of
conduct, and whether reflected on the Financial Statements as indebtedness,
accounts payable or otherwise, and any such liability set forth on Schedule
4.10(c) may be prepaid at any time without premium or penalty.
 
(d) Except as set forth in Schedule 4.10(d), Seller is not a party to any
agreements, contracts or commitments relating to the acquisition of the assets
or capital stock of any other business enterprise.
 
(e) Except as set forth in Schedule 4.10(e), Seller is not a party to any
agreements, loans, contracts, leases, guarantees, letters of credit, lines of
credit or commitments of Seller not referred to elsewhere in this Agreement
which:
 
(i) involve potential payments by Seller or incurring by Seller of costs or
obligations, of more than $5,000 in the aggregate;
 
(ii) involve payments based on profits of Seller;
 
(iii) relate to the future purchase of goods or services in excess of the
requirements of the Business at current levels or for normal operating purposes;
 
(iv) include powers of attorney or grants of agency by Seller;
 
(v) cannot be canceled by Seller without penalty or premium on no more than
thirty (30) days’ notice;
 
(vi) were not made in the ordinary course of business; or
 
(vii) otherwise materially affect the Business or financial condition of Seller.
 
(f) Except as set forth in Schedule 4.10(f), no contracts material to the
Business or financial condition of Seller are terminable or are subject to
modification by reason of the consummation of the transactions contemplated by
this Agreement and the Related Agreements, and Seller has not received notice of
any potential termination or modification of such contracts.
 
(g) Except as set forth in Schedule 4.10(g), neither Seller, nor any other
party, is in default, technical or otherwise, of any real estate lease,
equipment lease, loan or credit agreement, or any other contract or agreement to
which Seller is a party, and no event or condition has occurred or exists which,
with the passage of time, giving of notice or both, would cause Seller, or, to
the knowledge of Seller, any other party, to be in default thereunder.
 
(h) Set forth on Schedule 4.10(h) is an accurate and complete list showing the
name and address of each bank, securities broker, mutual fund, investment
company, investment adviser or other financial institution or similar Person
with which Seller has an account, including the account or box number and the
names of all persons and entities authorized to draw thereon or have access
thereto.
 
(i) All material Contracts to which Seller is a party, including, without
limitation, any contract or agreement disclosed on Schedules 4.10(b), 4.10(d)
and 4.10(e) (i) are valid and enforceable in accordance with their respective
terms; (ii) no Default (as defined below) exists under any Contract either by
Seller or, to the knowledge of Seller, by any other party thereto; (iii) Seller
is not aware of the assertion by any third party of any claim of Default or
breach under any of the Contracts; and (iv) Seller has no knowledge of any
present intention on the part of any significant customer or supplier or other
business partner of Seller to either (A) terminate or significantly change its
existing business relationship with Seller either now or in the foreseeable
future, or (B) fail to renew or extend its existing business relationship with
Seller at the end of the term of any existing contractual arrangement such
entity may have with Seller. For purposes of this Agreement, the term “Default”
means, with respect to any Contract, (x) any breach of or default under such
Contract, or (y) any event, other than the normal passage of time, which would
(either with or without notice or lapse of time or both) give rise to any right
of full or partial termination, cancellation or acceleration of any obligation
with respect to such Contract.

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(j) Set forth on Schedule 4.10(j) is an accurate and complete list showing all
Contracts to which Seller is a party or by which it is bound.
 
(k) Set forth on Schedule 4.10(k) is an accurate and complete list showing (i)
each vehicle, item of machinery, equipment, tools, and other tangible asset
(other than real property) of Seller used in the Business and the location
thereof and (ii) each vehicle, item of machinery, equipment, tools, and other
tangible asset (other than real property) leased to or by Seller with respect to
the Business under agreement, together with the location of such asset, the
identities of the lessor and lessee, the annual rental, and the unexpired term
of the lease.
 
(l) Except as set forth on Schedule 4.10(k) and those which are no longer in
effect, Seller has not granted any right of first refusal or similar right in
favor of any third party with respect to any material portion of its properties
or assets or entered into any non-competition agreement or similar agreement
restricting its ability to engage in any business in any location.
 
4.11 Employee Matters; Benefit Plans; ERISA.
 
(a) Except as may be disclosed in Schedule 4.11(a), Seller has not entered into
any collective bargaining agreement with any labor organization with respect to
any group of employees of Seller and, to the knowledge of Seller, there is no
present effort nor existing proposal to attempt to unionize any group of
employees of Seller.
 
(b) Except as may be disclosed in Schedule 4.11(b):
 
(i) Seller is and has been in material compliance with all applicable laws
relating to employment and employment practices, terms and conditions of
employment and wages and hours, including, without limitation, any such laws
respecting employment discrimination and occupational safety and health
requirements, and Seller is not engaged in any unfair labor practices;
 
(ii) There is no unfair labor practice complaint against Seller pending or, to
the knowledge of Seller, threatened before the National Labor Relations Board;
 
(iii) There is no labor dispute, strike, slowdown or stoppage pending or, to the
knowledge of Seller, threatened against or directly relating to Seller; and
 
(iv) Seller has not experienced any work stoppage or other material labor
difficulty during the past year.
 
(c) Except as described and attached to Schedule 4.11(c), Seller is not a party
to any agreement for the employment, retention or engagement or severance of any
officer, employee, agent, advisor or consultant.
 
(d) Schedule 4.11(d) contains a correct and complete list of all Benefit Plans
maintained by Seller or to which Seller or any ERISA Affiliate (as defined
below) contributes. Seller has delivered or made available to Buyer, with
respect to all such Benefit Plans, complete and correct copies of the following:
all plan documents, handbooks, manuals, collective bargaining agreements and
similar documents governing employment policies, practices and procedures; the
most recent summary plan descriptions and any subsequent summaries of material
modifications and all other material employee communications discussing any
employee benefit; Forms series 5500 as filed with the IRS for the three most
recent plan years (including all attachments thereto); the most recent report of
the enrolled actuary for any plans requiring actuarial valuation; all trust
agreements with respect to the Benefit Plans; plan contracts with service
providers or insurers providing benefits for participants or liability insurance
for fiduciaries and other parties in interest or bonding; the most recent annual
audit and accounting of plan assets for all funded plans; and the most recent
Internal Revenue Service (“IRS”) determination letter or opinion letter for all
plans qualified under Section 401(a) of the Code.

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(e) Neither Seller nor any ERISA Affiliate participates in or maintains or has
ever maintained or been obligated to contribute to a multi-employer plan (as
defined in Section 3(37) of ERISA), and neither Seller nor any ERISA Affiliate
has withdrawal liability with respect to any multi-employer plan.
 
(f) Neither Seller nor any ERISA Affiliate maintains or has ever maintained or
been obligated to contribute to an employee pension benefit plan (as defined in
Section 3(2) of ERISA) subject to Title IV of ERISA.
 
(g) Seller has made full payment of all amounts it is required, under applicable
law or the terms of each Benefit Plan, to have contributed thereto before the
Closing Date for all periods through and including the close of the last plan
year ending prior to the Closing Date, or proper accruals for such contributions
have been made and are reflected on its balance sheet and books and records.
Seller will pay such contributions to the Benefit Plans for the current plan
year prior to the Closing Date, or, if any such contributions will not be due
prior to the Closing Date, has made adequate provision for reserves therefor.
All such contributions are fully deductible by Seller for purposes of Seller’s
federal income taxes, and Seller has no actual or potential liability for the 10
percent tax imposed by section 4972 of the Code.
 
(h) All Taxes, penalties, interest charges and other financial obligations to
federal, state and local governments and to participants or beneficiaries under
the Benefit Plans with respect to any period ending on or before the Closing
Date have been or will be met in full on or before the Closing Date.
 
(i) All reports, returns, notices and similar documents with respect to the
Benefit Plans required to be filed with any governmental agency or distributed
to any Benefit Plan participant or beneficiary have been duly and timely filed
or distributed.
 
(j) Each Benefit Plan required to be listed on Schedule 4.11(d) that is intended
to be qualified under Section 401 of the Code is (and from its establishment has
been) the subject of a favorable determination letter or opinion letter issued
by the IRS, and no such determination letter or opinion letter has been revoked
nor, to Seller’s knowledge, has revocation been threatened, nor has any Benefit
Plan been amended since the date of its most recent determination letter or
application therefor in any respect which would adversely affect its
qualification or materially increase its cost, and no Benefit Plan has been
amended in a manner that would require security to be provided in accordance
with Section 401(a)(29) of the Code. Each trust maintained under any such
Benefit Plan is (and from its establishment has been) exempt from federal income
tax under Section 501 of the Code.
 
(k) Each Benefit Plan required to be listed on Schedule 4.11(d) complies, in
both form and operation, with the applicable requirements of ERISA, the Code and
other applicable law. There are no pending investigations by any governmental
agency involving such Benefit Plans, no termination proceedings involving the
Benefit Plans, and, to Seller’s knowledge, no threatened or pending claims
(except for routine claims for benefits), suits or proceedings against any
Benefit Plan or asserting any rights or claims to benefits under any Benefit
Plan which could give rise to any liability nor, to Seller’s knowledge, are
there any facts which could give rise to any liability in the event of any such
investigation, claim, suit or proceeding.
 
(l) Neither Seller nor any “party in interest” (as defined in section 3(14) of
ERISA) or “disqualified person” (as defined in section 4975(e)(2) of the Code)
with respect to any Benefit Plan has engaged in a “prohibited transaction” (as
defined in Section 4975 of the Code or Section 406 of ERISA) for which a
statutory, administrative, or regulatory exemption is not available. No Benefit
Plan has been (or will be as a result of the transactions contemplated hereby)
completely or partially terminated or has been (or will be as a result of the
transactions contemplated hereby) subject to a “reportable event” (as defined in
section 4043 of ERISA) or to any event requiring disclosure under section
4062(e) or 4063(a) of ERISA.

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(m) Seller is in full compliance with the continuation coverage requirements of
the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, and the
health insurance obligations (sometimes referred to as “HIPAA”) imposed by
section 9801 of the Code and Part 7 of Subtitle B of Title I of ERISA.
 
(n) Other than the group health plan continuation coverage requirements required
by applicable law (as described in subsection (m) above), the cost of which is
fully paid by the former employee or his or her dependent, Seller does not
maintain retiree life or retiree health plans providing for continuing coverage
for any employee or any beneficiary of an employee after the employee’s
termination of employment.
 
(o) Except as set forth on Schedule 4.11(o), Seller is not a party to any oral
or written agreement with any director, executive, officer or other key
employee, the benefits of which are contingent or the terms of which are
materially altered or permit termination, upon the occurrence of a transaction
of the nature contemplated by this Agreement and the Related Agreements, or
agreement or plan, including any stock option plan, stock appreciation rights
plan, restricted stock plan or stock purchase plan, any of the benefits of which
will be increased, or the vesting of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement and the
Related Agreements or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement and the Related Agreements.
 
4.12 Personnel.
 
(a) Schedule 4.12(a) contains a true and complete list of the following
information for all persons employed by Seller, including each employee on leave
of absence or layoff status:
 
(i) Name
 
(ii) Job title
 
(iii) Department (if applicable)
 
(iv) Location of Employment
 
(v) Indicate Billable/Non Billable
 
(vi) Hourly Rate
 
(vii) Annual Salary (Current)
 
(viii) Gross Salary 2007 and Year to Date 2008
 
(ix) Bonus paid 2007 and Year to Date 2008
 
(x) Hire date
 
(xi) Vacation accrued
 
(xii) Service credited for purposes of vesting and eligibility to participate
under any pension, retirement, profit-sharing, option, cash bonus, ownership
plan
 
(xiii) Severance pay

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(xiv) Any assignment of inventions or similar agreement
 
(xv) Social Security Number
 
(xvi) Copies of performance reports
 
(xvii) All disciplinary records
 
(b) Schedule 4.12(b) contains a correct and complete description of Seller’s
performance measurement and compensation policies and procedures as they relate
to employees in effect as of the Closing Date and for the year prior to the
Closing Date.
 
(c) Schedule 4.12(c) lists all Persons who are currently performing services for
Seller who are classified as “consultants” or “independent contractors” the
compensation of each such Person and whether Seller is party to an agreement
with such Person (whether or not in writing). Any such agreements are listed on
Schedule 4.12(c) and have been delivered (or, in the case of agreements that are
not in writing, a summary thereof has been delivered) to Buyer. All Persons
engaged by Seller as independent contractors, rather than employees, have been
properly classified as such and have been engaged in accordance with all
applicable Laws.
 
(d) Except as disclosed in Schedule 4.12(d), (i) none of the employees of Seller
has notified or otherwise indicated to Seller that he or she intends to
terminate his or her employment with Seller, or not to continue employment after
the Closing, (ii) Seller does not have a present intention to terminate the
employment of any employee, (iii) to the knowledge of Seller, no employee of
Seller has since January 1, 2008 received an offer of an employment from any
other Person, (iv) to the knowledge of Seller, no employee of Seller is a party
to or is bound by any employment contract, patent disclosure agreement,
noncompetition agreement or other restrictive covenant or other contract with
any Person that would be likely to affect in any way (A) the performance by such
employee of any of his or her duties or responsibilities as a employee or
(B) the business or operations of Seller, (v) to the knowledge of Seller, no
employee of Seller is in violation of any term of any employment contract,
patent disclosure agreement, noncompetition agreement, or any other restrictive
covenant with or to a former employer relating to the right of any such employee
to be employed by Seller, and (vi) Seller is not and never has been engaged in
any dispute or litigation with an employee or former employee.
 
(e) Seller is in compliance, and has complied, in all material respects with all
applicable laws respecting employment and employment practices, terms and
conditions of employment and wages and hours. Seller is not liable for the
payment of material Taxes, fines, penalties or other amounts, however
designated, for failure to comply with any of the foregoing laws. Seller is not
engaged, and to the knowledge of Seller has never engaged, in any unfair labor
practice of any nature. The employees of Seller have been, and currently are,
properly classified under the Fair Labor Standards Act of 1938, as amended, and
under any applicable state law. Except as set forth on Schedule 4.12(e), Seller
has not failed to pay any of its employees, consultants or contractors for any
wages (including overtime), salaries, commissions, bonuses, benefits or other
direct compensation for any services performed by them to the date hereof or
amounts required to be reimbursed to such individuals.
 
(f) Seller, and, to the knowledge of Seller, each of its employees, is in
compliance with all applicable visa and work permit requirements, and no visa or
work permit held by an employee of Seller will expire during the six-month
period following the date of this Agreement. Schedule 4.12(f) sets forth (i) a
true and complete list of all current employees of Seller, if any, who are
employed in the United States, but are not citizens of the United States or who
are not permanent residents of the United States, together with a listing of
each such employee’s visa status and visa expiration date, and (ii) each
employee regarding whom Seller has received a notice challenging or otherwise
relating to such employee’s authorization to work in the United States. Seller
has not received any written notice of any inspection or investigation relating
to any alleged noncompliance with or violation of the Immigration Reform and
Control Act of 1986, as amended, and all regulations promulgated thereunder
(collectively, “IRCA”), nor has it been warned, fined or otherwise penalized by
reason of any failure to comply with IRCA.

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4.13 Ownership Sufficiency and Condition of Properties.
 
(a) Seller owns and has good and valid title to each and all of the Purchased
Assets, free and clear of any Lien, other than Permitted Encumbrances.
 
(b) There are no agreements affecting the right of Seller to convey the
Purchased Assets to Buyer or any other right of Seller with respect to the
Purchased Assets, and Seller has the absolute right, authority, power, and
capacity to sell, assign, and transfer the Purchased Assets to Buyer free and
clear of any Encumbrance, other than Permitted Encumbrances.
 
(c) Upon execution and delivery to Buyer of the Bill of Sale and the
Intellectual Property Assignment, Buyer will acquire good and valid title to the
Purchased Assets, free and clear of any Encumbrances other than Permitted
Encumbrances.
 

(d) The Purchased Assets constitute all of the rights, properties, and assets
necessary for Buyer to operate the Business in the same manner operated by
Seller prior to Closing. The Purchased Assets and the Excluded Assets constitute
all of the assets of Seller.
 
(e) Except for inventory that is excess, damaged or obsolete, for which Seller
has established in the aggregate an adequate reserve in the Balance Sheet in
accordance with GAAP, the inventory reflected in the Balance Sheet, if any, and
not disposed of or reserved since such date is of good and merchantable quality,
of a quantity and quality saleable in the ordinary course of the Business, in
accordance with past practices and is adequate as of the date hereof for the
Business as conducted as of such date.
 
4.14 Product and Service Warranties. Except as set forth on Schedule 4.14, each
product or service delivered or licensed by Seller has been in conformity in all
material respects with all applicable federal, state, local or foreign laws and
regulations, contractual commitments and all express and implied warranties,
and, to the knowledge of Seller, Seller has no liability for replacement or
repair thereof or other damages in connection therewith, except for liabilities
incurred in the ordinary course of business, and no product or service delivered
or licensed by Seller is subject to any guaranty, warranty, or other indemnity.
 
4.15 Intellectual Property.
 
(a) Except as set forth on Schedule 4.15(a), Seller owns, free and clear of all
Encumbrances of every nature, kind and description, except for Permitted
Encumbrances, and has good and merchantable title to, or holds adequate licenses
or otherwise possesses all rights necessary to use, all patents, trademarks,
service marks, trade names, copyrights (including any applications for any of
the foregoing), domain names (including www.psgolive.com), all other names
embodying business or product goodwill (or both), inventions, discoveries and
improvements, processes, know-how, trade secrets, scientific, technical,
engineering and marketing data, computer programs, software, including all
object and source codes, programming tools and all other techniques used or
necessary for the conduct of the Business as now conducted (collectively, the
“Intellectual Property”).
 
(b) Schedule 4.15(b) contains an accurate and complete list of (i) all such
patents, trademarks, trade names, service marks, assumed names and copyrights,
and all applications therefor, and, with respect to registered items, contains a
list of all jurisdictions in which such items are registered and all
registration numbers, (ii) all licenses, permits and other agreements relating
thereto, and (iii) all agreements relating to any of such Intellectual Property
that Seller is licensed or authorized to use by others. The patents, trademarks,
service marks and copyrights, licenses, permits and other agreements
constituting a part of such Intellectual Property and solely owned by Seller, if
any, are valid, subsisting and enforceable, and are duly recorded in the name of
Seller.

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(c) All software, other than generally available software such as Microsoft
Office, and other standard “off-the-shelf” software, and generally available
system development tools, that is either marketed to customers of Seller as a
program or as part of a service to support the Business is owned by Seller or
Seller has the right to use, modify, copy, sell, distribute, sublicense and make
derivative works free and clear of any limitations or Encumbrance, except for
Permitted Encumbrances and as may be set forth in any license agreement listed
in Schedule 4.15(c). To the extent third party software is marketed to customers
of Seller together with the Intellectual Property solely owned by Seller, the
third party rights have been identified in Schedule 4.15(c), all necessary
licenses have been obtained and no royalties or payments are due from Seller to
third parties except as identified on Schedule 4.15(c).
 
(d) Except as set forth on Schedule 4.15(d), to the knowledge of Seller, Seller
has the sole and exclusive right to use the patents, service marks and
copyrights listed in Schedule 4.15(b) and the trademarks and trade names listed
in Schedule 4.15(b), in each case, in all jurisdictions in which the Business is
conducted or in which any products of the Business are distributed, and the
consummation of the transactions contemplated hereby will not alter or impair
any such rights.
 
(e) No claims have been asserted by any Person challenging or questioning the
ownership, validity, enforceability or use by Seller of any of the Intellectual
Property and, to the knowledge of Seller, there is no valid basis for any such
claim, and, to the knowledge of Seller, the use or other exploitation of the
Intellectual Property by Seller does not infringe on or dilute the rights of any
Person; and, to the knowledge of Seller, no Person is infringing on the rights
of Seller with respect to any of the Intellectual Property.
 
(f) Seller has taken all reasonable security measures to protect the secrecy,
confidentiality and value of the Intellectual Property of Seller, including
computer programs, trade secrets and other confidential information. Except as
disclosed in Schedule 4.15(f), no Person has any marketing rights to the
Intellectual Property of Seller. To the knowledge of Seller, no Person listed in
such schedule is in breach or default under its obligations.
 
(g) Seller has made available to Buyer all documents in Seller’s custody,
possession or control with respect to any invention, discovery, process, design,
computer program or other know-how or trade secret included in the Intellectual
Property, which documents shall be accurate in all material respects and
reasonably sufficient in detail and content to identify and explain such
invention, discovery, process, design, computer program or other know-how or
trade secret and to facilitate its full and proper use.
 
4.16 Insurance. Schedule 4.16 lists all policies of insurance owned or held by
Seller or insuring its assets. All current premiums and any other obligations
under such insurance have been paid, and all such policies are valid and
enforceable and in full force and effect on the date hereof. Seller has not
received any notice of cancellation or of premium increase under any such
policies within the last ninety (90) days.
 
4.17 Relationships.
 
(a) Other than general economic conditions, Seller has no knowledge of any
present or future conditions or state of facts or circumstances which would
materially adversely affect Seller after the Closing Date.
 
(b) Schedule 4.17(b) lists the 10 largest customers of Seller as a percentage of
revenues for fiscal year 2007, as well as year-to-date 2008. Seller’s
relationships with its customers, clients and vendors are satisfactory, and
Seller has no knowledge of any facts or circumstances, including a change of
control in the ownership of Seller, that might materially alter, negate, impair
or in any way materially adversely affect the continuity of any such
relationships and the Business.

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(c) Except as disclosed in Schedule 4.17(c), Seller has no knowledge of and has
not received notice of any complaints, claims or threats, plans or intentions to
discontinue commercial relations or transactions from any customer of Seller,
any purchaser of goods or services from Seller, any employee or independent
contractor significant to the conduct or operation of Seller or any party to any
agreement to which Seller is a party.
 
(d) Seller has no knowledge of any present or future condition or state of facts
or circumstances, including a change of control in the ownership of Seller
(except as contemplated by this Agreement), that would materially prevent the
Business of Seller from being carried on after the Closing Date in essentially
the same manner as it is presently being carried on.
 
4.18 Compliance With Laws.
 
(a) Except as set forth in Schedule 4.18(a), the operations and activities of
Seller has previously and continues to comply with all applicable Laws as in
effect on or before the date of this Agreement, including without limitation,
all rules and regulations of the Occupational Safety and Health Administration.
The conduct of the Business of Seller as presently conducted does not conflict
with the rights of any other Person or violate or, with or without the giving of
notice or the passage of time, or both, will not violate, conflict with or
result in a default, right to accelerate or loss of rights under, any terms or
provisions of its certificate of formation or operating agreement as presently
in effect or, to the knowledge of Seller, any Encumbrance, lease, license,
agreement, Laws or understanding to which Seller is a party or by which it may
be bound or affected. Seller has received no notice or communication from any
Person asserting a failure to comply with any Laws, nor has Seller received any
notice that any authority or third party intends to seek enforcement against
Seller to compel compliance with any such Laws.
 
(b) (i) Seller has not made, and, to the knowledge of Seller, no officer,
director, employee, agent or other representative of any of them acting on
behalf thereof has made, directly or indirectly, with respect to the business of
Seller, any illegal bribes, kickbacks or other illegal payments of a similar
nature, or illegal political contributions with corporate funds not recorded in
the corporate records of Seller, illegal payments from Seller funds to
governmental officials, or illegal payments from corporate funds to obtain or
retain business either within the United States, the Philippines or elsewhere,
and (ii) neither Seller nor, to the knowledge of Seller, any officer, employee
or agent of Seller acting on its behalf, nor any other Person acting on its
behalf has, directly or indirectly, within the past three (3) years given or
agreed to give any gift or similar benefit to any customer, supplier,
governmental employee or other Person who is or may be in a position to help or
hinder Seller (or assist Seller in connection with any actual or proposed
transaction) which (A) might subject Seller to any damage or penalty in any
civil, criminal or governmental litigation or proceeding, (B) if not given in
the past might have had a material adverse effect to Seller, or (C) if not
continued in the future, might result in a material adverse effect to Seller.
 
4.19 Environmental Matters.
 
(a) Seller has not obtained and is not required to obtain, any permits, licenses
or other authorizations under any applicable Environmental Laws.
 
(b) Except as set forth on Schedule 4.19, Seller is, to its knowledge, in
material compliance with all limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained in
the Environmental Laws. Except as set forth on Schedule 4.19, since Seller’s
formation, no written notice, demand, request for information, citation, summons
or complaint has been received or order has been issued, no complaint has been
filed, no suit or action has been instituted, no penalty has been assessed and
no investigation or review is pending or, to the knowledge of Seller, threatened
by any governmental entity or other Person with respect to any (i) alleged
violation by Seller of any Environmental Law or liability thereunder, (ii)
alleged failure by Seller to have any permit, certificate, license, approval,
registration or authorization required under any Environmental Law, (iii)
release of Hazardous Substances by or on behalf of Seller, or (iv) any
Environmental Liabilities attributed to Seller.

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(c) Except as set forth on Schedule 4.19, there are no Environmental Liabilities
that have had, or could reasonably be expected to have individually, or in the
aggregate, a material adverse effect with respect to Seller.
 
(d) Except as set forth on Schedule 4.19, to the knowledge of Seller, no state
of facts exists as to environmental matters or Hazardous Substances that
involves the reasonable likelihood of a material capital expenditure by Seller
or a material fine or penalty imposed on or attributable to Seller, or that may
otherwise have a material adverse effect with respect to Seller or does or could
interfere with or prevent compliance with any Environmental Laws or give rise to
any common law or other legal liability.
 
(e) No Hazardous Substances have been manufactured, treated, stored, transported
or disposed of by Seller, or otherwise deposited by Seller, in or on or are
present beneath properties currently or formerly owned, leased or used by Seller
in violation of, or which may be required to be investigated or remediated
under, any applicable Environmental Laws.
 
(f) There has been no disposal, escape, seepage, leakage, spillage, discharge,
emission, release or threatened release of any Hazardous Substance as a result
of the actions or omissions of Seller (i) on, from or affecting any properties
owned, leased or used by Seller, or (ii) for which Seller is, is alleged or may
be held to be, responsible as a result of conduct occurring or conditions
existing at or before Closing. 
 
4.20 Records. The books of account of Seller are sufficient, in all material
respects, to prepare the Financial Statements in accordance with GAAP. The Books
and Records of Seller accurately and fairly reflect, in all material respects,
Seller’s income, expenses, assets and liabilities. Seller maintains internal
accounting controls which provide reasonable assurance that: (i) transactions
are recorded as necessary to permit preparation of financial statements in
conformity with GAAP and (ii) all intercompany transactions, charges and
expenses (x) are at fair arms length value and (y) are accurately reflected in
all Financial Statements.
 
4.21 Receivables. Schedule 4.21 sets forth a true and complete list of all
Receivables and the aging thereof as of September 30, 2008. All Receivables
represent sales actually made or services actually performed in the ordinary
course of business with no additional services required to entitle Seller to
collect such Receivables, and have been fully collected or are fully collectible
as of the Closing Date or are fully reserved against in the Balance Sheet.
 
4.22 Related Party Transactions. Except as set forth on Schedule 4.22, there
have been no transactions or contractual relationships during the two (2) fiscal
years ended December 31, 2007 or between December 31, 2007 and the date hereof,
and no agreement or understanding to enter into or consummate any transactions
or contractual relationships between Seller on the one hand and any Related
Party directly or indirectly, on the other hand. All such transactions have been
on terms and conditions no less favorable to Seller than could have been
obtained from any independent party after arms-length negotiations.
 
4.23 Vote Required. The affirmative vote of the holders of a majority of the
outstanding Membership Interests is the only vote of the holders of any class or
series of Seller equity interests necessary to approve this Agreement and the
transactions contemplated hereby.
 
4.24 Brokers. No Person will have, as a result of the transactions contemplated
by this Agreement, any valid right to, interest in or claim upon Buyer or Seller
for any commission, fee or other compensation as a finder or broker because or
any act or omission by Seller or Seller.

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4.25 Disclosure. No representation or warranty by Seller contained in this
Agreement, and no representation or warranty contained in any document, list
(including, without limitation, the Schedules), certificate or other
communication furnished or to be furnished by or on behalf of Seller to Buyer or
any of its representatives in connection with the transactions contemplated
hereby, contains or will contain any untrue statement of a material fact, or
omits or will omit to state any material fact necessary, in light of the
circumstances under which it was or will be made, in order to make the
statements herein or therein not misleading. The financial projections relating
to Seller delivered to Buyer by Seller have been prepared in good faith based on
assumptions that management of Seller are reasonable, and neither the Owner nor
Seller is aware of any fact or information that would lead them or it to believe
that such projections are materially incorrect or misleading in any material
respect.
 
4.26 Securities Matters. Seller understands that none of the shares of Zanett
Stock included in the Consideration (including the shares of Zanett Stock
underlying any option grants pursuant to Section 3.2(b)) has been registered
under the Securities Act, on the grounds that the issuance thereof in connection
with the transactions contemplated by this Agreement and the Related Agreements
is exempt from registration pursuant to Section 4(2) of the Securities Act
and/or Regulation D promulgated under the Securities Act (“Regulation D”), and
that the reliance of Buyer on such exemptions is predicated in part on the
representations, warranties, covenants and acknowledgements set forth in this
Section 4.26.
 
(a) The Zanett Stock will be acquired by Seller for its own account, not as a
nominee or agent, for investment and without a view to resale or other
distribution within the meaning of the Securities Act, and Seller will not
distribute or transfer any of the Zanett Stock in violation of the Securities
Act.
 
(b) Seller: (i) acknowledges that the Zanett Stock to be issued as part of the
Consideration is not registered under the Securities Act and must be held
indefinitely by Seller unless the Zanett Stock is subsequently registered under
the Securities Act or an exemption from registration is available, (ii) is aware
that any routine sales of the Zanett Stock made under Rule 144 of the Securities
and Exchange Commission under the Securities Act may be made only in limited
amounts and in accordance with the terms and conditions of that Rule and that in
such cases where the Rule is not applicable, registration or compliance with
some other registration exemption will be required, (iii) is aware that Rule 144
is not now and for a period of at least one year following the Closing Date
hereof will not be, available for use by the Seller for resale of the Zanett
Stock, and (iv) is aware that Buyer is not obligated to register any sale,
transfer or other disposition of the Zanett Stock.
 
(c) Seller is an “accredited investor” (as such term is defined in Rule 501(a)
of Regulation D) and has such knowledge and experience in financial and business
matters that it is fully capable of evaluating the risks and merits of its
investment in the Zanett Stock.
 
(d) Seller acknowledges and agrees that the certificates representing the Zanett
Stock issuable as Consideration will contain a restrictive legend noting the
restrictions on transfer described in this Section and under federal and
applicable state securities laws, and that appropriate “stop-transfer”
instructions will be given to Zanett’s stock transfer agent.

 
ARTICLE V.
 
REPRESENTATIONS AND WARRANTIES OF Owner
 
As a material inducement for Buyer to enter into this Agreement and to
consummate the transactions contemplated hereby, Owner hereby makes the
following representations and warranties as of the date hereof, each of which is
relied upon by Buyer regardless of any investigation made or information
obtained by or on behalf of Buyer:

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5.1 Power and Authority; Ownership.
 
(a) Owner is an adult individual with full power and authority to own his
properties, to manage his fiscal affairs and to enter into this Agreement and
each of the Related Agreements to which he is a party and to agree to the
transactions contemplated hereby and thereby and to perform all of his
obligations hereunder and thereunder. Owner is not subject to any legal
disability which would prevent him from performing under this Agreement or any
Related Agreement, and no order has been entered appointing a receiver for
Owner or any of his assets. There is no claim, action, suit or proceeding
(including, without limitation, current investigations by governmental agencies)
pending against Owner seeking to enjoin the execution and delivery of this
Agreement, the Related Agreements or consummation of the transactions
contemplated hereby or thereby.
 
(b) This Agreement and each of the Related Agreements to which Owner is a party
constitute the legal, valid and binding obligations of him, enforceable against
him, in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors’ rights and remedies generally and
subject, as to enforceability, to general principles of equity (regardless of
whether enforceability is considered in a proceeding at law or in equity).
 
(c) Owner owns all of the issued and outstanding equity interests of Seller.
Owner has good and marketable title to all of the outstanding Membership Units,
free and clear of all Encumbrances and restrictions, legal or equitable, of
every kind. Owner has full and unrestricted legal right, power, and authority to
sell, assign, and transfer the Membership Units held by him without obtaining
the consent or approval of any other person, entity, or governmental authority.
 
5.2 No Violations of Laws or Agreements, Consents or Defaults.
 
(a) The execution and delivery of this Agreement by Owner and the consummation
by Owner of the transactions contemplated by this Agreement and the Related
Agreements will not result in any breach or violation of any of the terms or
provisions of, or constitute a default under any statute, order, decree,
proceeding, rule, or regulation of any court or governmental agency or body,
United States or foreign, having jurisdiction over Owner, or any assets of
Owner.
 
(b) Except as set forth in Schedule 5.2(b), the delivery by the Owner of this
Agreement, the Related Agreements and the consummation by Owner of the
transactions contemplated hereby and thereby will not result in a breach or
violation of the term of, or constitute a default under, or require notice to
any third party under, any agreement, instrument, or commitment to which he is
party, by which he is bound, or to which any of his assets are subject, and no
consent or approval is required from any third party for the transactions
contemplated by this Agreement and the Related Agreements other than such
consents or approvals that the failure to receive which would not reasonably be
expected to have a material adverse effect on the transactions contemplated by
this Agreement or the Related Agreements, the Business, or the assets of Seller.
 
5.3 Brokers. No Person will have, as a result of the transactions contemplated
by this Agreement, any valid right to, interest in or claim upon Buyer or Seller
for any commission, fee or other compensation as a finder or broker because or
any act or omission by Owner.
 
ARTICLE VI.
 
REPRESENTATIONS AND WARRANTIES OF Buyer
 
As a material inducement for Seller and Owner to enter into this Agreement and
to consummate the transactions contemplated hereby, Buyer hereby makes the
following representations and warranties as of the date hereof, each of which is
relied upon by Seller and the Owner regardless of any investigation made or
information obtained by Seller and the Owner:
 
6.1 Organization, Existence and Capital Stock.
 
(a) Buyer is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware.
 

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(b) All of the shares of Zanett Stock issued in connection with the transactions
contemplated by this Agreement will be, when issued in accordance with this
Agreement, duly authorized, validly issued, fully paid, nonassessable, and free
of all preemptive rights. The shares of Zanett Stock issued to Seller in
connection with the transactions contemplated by this Agreement will be issued
in the name of Seller, with Seller as record holders of such shares, and Seller
shall have good and marketable title to such shares of Zanett Stock, free of any
liens and Encumbrances, other than those created by or through Seller pursuant
to the Lock Up Agreement or otherwise.
 
6.2 Power and Authority. Subject to the satisfaction of the conditions precedent
set forth herein, Buyer has the corporate power to execute, deliver and perform
this Agreement and the Related Agreements and to consummate the transactions
contemplated hereby, and, subject to the satisfaction of the conditions
precedent set forth herein, has taken all action required by law, its
certificate of incorporation, its by-laws or otherwise, to authorize the
execution and delivery of this Agreement and such related documents. This
Agreement is a valid obligation Buyer and is legally binding on Buyer in
accordance with its terms.
 
6.3 No Violations of Laws.
 
(a) The execution and delivery of this Agreement and the consummation of the
transactions contemplated by this Agreement and the Related Agreements will not
result in any breach or violation of any of the terms or provisions of, or
constitute a default under, (i) the certificate of incorporation or by-laws of
Buyer or (ii) any statute, order, decree, proceeding, rule, or regulation of any
court or governmental agency or body, United States or foreign, having
jurisdiction Buyer or any of its assets.
 
(b) The delivery by Buyer of this Agreement, the Related Agreements and the
consummation by Buyer of the transactions contemplated hereby and thereby will
not result in a material breach or violation of the term of, or constitute a
material default under, any agreement, instrument, or commitment to which Buyer
is a party, by which is bound, or to which any of Buyer’s assets are subject,
and no consent or approval is required from any third party for the transactions
contemplated by this Agreement and the Related Agreements other than such
consents, or approvals, that are not reasonably expected to have a material
adverse effect on the transactions contemplated by this Agreement or the Related
Agreements.
 
(c) Buyer, is not in material default under, or in violation of any provision
of, its certificate of incorporation or bylaws, any promissory note, indenture
or any evidence of indebtedness or security thereto, lease, purchase contract or
other commitment, or any other agreement that is material to the business of
Buyer.
 
6.4 Brokers. No Person will have, as a result of the transactions contemplated
by this Agreement, any valid right to, interest in or claim upon Buyer for any
commission, fee or other compensation as a finder or broker because or any act
or omission by Buyer or its Affiliates.
 
6.5 Litigation Claims. There is no Claim pending or, to the knowledge of Buyer,
threatened that questions the validity of this Agreement or the Related
Agreements or any action taken or to be taken by Buyer in connection with the
consummation of the transactions contemplated hereby or thereby or which seeks
to prohibit, enjoin or otherwise challenge any of the transactions contemplated
hereby or thereby.

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ARTICLE VII.
 
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
 
7.1 Survival of Representations. All representations and warranties made by any
party to this Agreement or pursuant hereto, as modified by any Schedule,
exhibit, certificate or other document executed and delivered pursuant hereto,
shall survive the Closing and any investigation made by or on behalf of any
party hereto for a period of 24 months following the Closing Date; provided,
however, that the representations and warranties contained in Section 4.1
(Organization; Qualification; Corporate Records), Section 6.1 (Organization,
Existence and Capital Stock), and Section 5.1 (Power and Authority; Ownership)
shall survive closing indefinitely and the representations and warranties
contained in, Section 4.8 (Tax Matters), 4.11 (Employee Matters; Benefit Plans;
ERISA) and 4.19 (Environmental Matters) shall survive the Closing and any
investigations made by or on behalf of the relevant party until 60 days
following the expiration of the applicable statute of limitations. All
representations and warranties contained herein or in any schedule, exhibit,
certificate or other document executed and delivered pursuant hereto shall be
deemed representations and warranties for purposes of Sections 9.2(a), 9.3(a)
and this Section 7.1. Notwithstanding the foregoing, the covenants and
agreements of Buyer, Seller and Owner made herein shall survive the Closing and
shall continue in full force and effect indefinitely. The right to
indemnification or other remedy based upon such representations and warranties
shall not be affected by any investigation conducted with respect to, or any
knowledge acquired at any time, whether before or after execution and delivery
of this Agreement or the Closing Date, with respect to the accuracy or
inaccuracy of any such representation or warranty. Each of Buyer, Seller and
Owner shall notify the other parties in writing of the discovery of any
inaccuracy in any representation or warranty of any party hereto.
 
7.2 Indemnification.
 
(a) Subject to the terms and conditions of this Article VII, following the
Closing, Seller and Owner shall jointly and severally, indemnify, defend and
hold harmless Buyer (and its respective officers, directors, employees,
Affiliates, successors or assigns other than the Owner) (collectively, the
“Buyer Indemnified Parties”), from and against all Claims, assessments, losses,
damages, liabilities, deficiencies, judgments, settlements, costs and expenses,
including interest, penalties and reasonable attorneys’ fees and expenses
incurred in enforcing this indemnification or in any litigation between the
parties or with third parties (collectively, “Damages”) asserted against,
resulting to, imposed upon, suffered or incurred by a Buyer Indemnified Party,
directly or indirectly, by reason of or resulting from (i) any failure of Seller
or Owner to duly perform or observe any covenant or agreement to be performed or
observed by any of them, pursuant to this Agreement or any Related Agreement
and/or (ii) a breach of any representation, warranty, covenant or agreement of
Seller or Owner contained in or made pursuant to this Agreement or any of the
Related Agreements.
 
(b) Subject to the terms and conditions of this Article VII, Buyer shall
indemnify, defend and hold harmless Seller and Owner (and Seller and Owner’s
respective heirs, representatives and assigns) (collectively, the “Seller
Indemnified Parties”) at any time after consummation of the Closing, from and
against all Damages asserted against, resulting to, imposed upon or incurred by
Seller Indemnified Parties, directly or indirectly, by reason of or resulting
from: (i) the assertion against Owner or Seller of any claim for payment or
performance of any obligation, debt, or liability in connection with Buyer’s
operation of the Business from and after the Closing, (ii) any failure of Buyer
to duly perform or observe any covenant or agreement to be performed or observed
by it, prior to the Closing, pursuant to this Agreement or any Related
Agreement; or (iii) a breach of any representation, warranty, covenant or
agreement of Buyer contained in or made pursuant to this Agreement or any
Related Agreement.
 
(c) Buyer’s maximum liability to the Seller Indemnified Parties under this
Section 7.2 shall not exceed the Consideration received by the Seller hereunder.
 
(d) No Indemnifying Party shall be liable to or obligated to indemnify any
Indemnified Party hereunder for any punitive or exemplary damages, or any
consequential, special or multiple damages, except to the extent such damages
have been recovered by a third person (including a Governmental Authority) and
are the subject of a third party claim for which indemnification is available
under this Article VII.
 
(e) Except as expressly provided in this Agreement, the remedies provided herein
shall be cumulative and shall not preclude assertion by any party hereto of any
other rights or the seeking of any other remedies against any other party
hereto.
 

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7.3 Conditions of Indemnification. The obligations and liabilities of Buyer, on
the one hand, and Seller and Owner, on the other hand, as indemnifying parties
(each, an “Indemnifying Party”) to indemnify Seller Indemnified Parties or Buyer
Indemnified Parties, as applicable (each, an “Indemnified Party”), under Section
7.2 with respect to Claims made by third parties shall be subject to the
following terms and conditions:
 
The Indemnified Party shall give written notice to the Indemnifying Party of any
Damages with respect to which it seeks indemnification promptly after the
discovery by such party of any matters giving rise to such Claim for
indemnification; provided, however, that the failure of any Indemnified Party to
give notice as provided herein shall not relieve the Indemnifying Party of its
obligations under Section 7.2 unless it shall have been prejudiced by the
omission to provide such notice. In case any Claim is brought against an
Indemnified Party, the Indemnifying Party shall be entitled to participate in
the defense thereof and, to the extent that it may wish, to assume the defense
thereof, with counsel reasonably satisfactory to the Indemnified Party, and
after notice from the Indemnifying Party of its election so to assume the
defense thereof, the Indemnifying Party will not be liable to the Indemnified
Party under Section 7.2 for any legal or other expense subsequently incurred by
the Indemnified Party in connection with the defense thereof; provided, however,
that (i) if the Indemnifying Party shall elect not to assume the defense of such
claim or action or (ii) if the Indemnified Party reasonably determines that
there may be a conflict between the positions of the Indemnifying Party and the
Indemnified Party in defending such Claim, then separate counsel shall be
entitled to participate in and conduct such defense, and the Indemnifying Party
shall be liable for any reasonable legal or other expenses incurred by the
Indemnified Party in connection with such defense (but not more than one
counsel). The Indemnifying Party shall not be liable for any settlement of any
Claim effected without its written consent, which consent shall not be
unreasonably withheld. The Indemnifying Party shall not, without the Indemnified
Party’s prior written consent, which consent shall not be unreasonably withheld,
settle or compromise any Claim to which the Indemnified Party is a party or
consent to entry of any judgment in respect thereof. The Indemnifying Party
further agrees that it will not, without the Indemnified Party’s prior written
consent, settle or compromise any claim or consent to entry of any judgment in
respect thereof in any pending or threatened Claim in respect of which
indemnification may be sought hereunder (whether or not the Indemnified Party is
an actual or potential party to such Claim) unless such settlement or compromise
includes an unconditional release of the Indemnified Party from all liability
arising out of such Claim.

ARTICLE VIII.
 
COVENANTS.
 
8.1 Public Disclosures. Buyer, Seller and Owner will consult with each other
before issuing any press release or otherwise making any public statement with
respect to the transactions contemplated by this Agreement, and shall not issue
any such press release or make any such public statement prior to such
consultation except as may be required by applicable law or requirements of any
national securities exchange or automated quotation system on which the Zanett
Stock is listed or quoted. The parties shall issue a joint press release,
mutually acceptable to Seller and Buyer, promptly upon execution and delivery of
this Agreement.

8.2 Confidentiality. Buyer, Seller and Owner shall hold, and shall use their
best efforts to cause their respective auditors, attorneys, financial advisors,
bankers and other consultants and advisors to hold in strict confidence, unless
compelled to disclose by judicial or administrative process or by other
requirements of law, all documents and information concerning the other party
furnished to it by the other party or its representatives in connection with the
transactions contemplated by this Agreement, including, without limitation, the
terms and conditions of the Agreement (except to the extent that such
information shall be shown to have been (a) already known by the party to which
it was furnished, (b) in the public domain through no fault of such party or (c)
later lawfully acquired from other sources by the party to which it was
furnished) (“Confidential Information”), and each party shall not release or
disclose such Confidential Information to any other Person, except its auditors,
attorneys, financial advisors, bankers and other consultants and advisors in
connection with the transactions contemplated by this Agreement.
 

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8.3 Affirmative Covenants of Seller. Prior to the Closing, unless Buyer agrees
otherwise in writing:
 
(a) Seller will maintain its existence as a limited liability company and will
conduct the Business and its operations in the usual and ordinary course of
business in accordance with past custom and practice, including, without
limitation, maintaining adequate working capital balances, collecting accounts
receivable, paying accounts payable, making repair and maintenance capital
expenditures and managing cash accounts generally, all in the usual and ordinary
course of business and in compliance in all material respects with all Laws,
authorizations, contracts and agreements (including those identified in the
Schedules).
 
(b) Seller will carry on the Business in substantially the same manner as
presently conducted and keep its business organizations and properties intact,
including its present business operations, physical facilities, working
conditions and employees and its present relationships with employees, lessors,
licensors, suppliers and customers and others having business relations with it.
 
(c) Seller shall maintain its Books and Records in accordance with past
practice, and use best efforts to maintain in full force all licenses,
certificates and other regulatory approvals required or necessary to be applied
for or obtained in connection with the Business (except where the failure to
maintain such licenses, certificates or other regulatory approvals would not
have a material adverse effect) and all insurance policies and binders.
 
(d) Seller shall promptly advise Buyer in writing of the threat or commencement
against Seller or Owner of any dispute, action, claim, investigation or
proceeding by, against or affecting Seller or any of its operations, assets or
prospects, or which questions or may affect the validity of this Agreement or
the Related Agreements or any action taken or to be taken by Seller or Owner in
connection with the consummation of the transactions contemplated hereby or
thereby or which seeks to prohibit, enjoin or otherwise challenge any of the
transactions contemplated hereby or thereby.
 
(e) Seller shall pay any and all amounts owed to any holder of Membership Units
and shall collect any and all amounts owed to Seller by any holder of Membership
Units. There shall be no receivables or payables to or from Owner on the Closing
Balance Sheet, other than reasonable reimbursable business expenses incurred in
the ordinary course within 30 days prior to the date of the Closing Balance
Sheet.
 
(f) Seller shall promptly advise Buyer in writing of any event or the existence
of any fact which makes untrue, or will make untrue as of the Closing, any
representation or warranty of Seller or Seller set forth in this Agreement or
the Related Agreements (including but not limited to any acquisitions, sale of
license of any material portion of its assets, or amendments to any material
distribution, licensing, or other material agreements).
 
(g) Seller shall cooperate with Buyer to obtain prior to Closing, searches (the
“Searches”), in all appropriate jurisdictions, for state and federal tax liens,
judgment liens, Uniform Commercial Code financing statements and pending
litigation against Seller or its assets; provided that, such Searches shall be
performed by a nationally recognized company satisfactory to Buyer, and Seller
shall be responsible for the cost thereof.
 
8.4 Negative Covenants of Seller. Prior to the Closing, unless Buyer agrees
otherwise in writing:
 
(a) Seller will not take any action or permit to occur any event within Seller’s
reasonable control which, if taken or occurring prior to the date hereof would
require any disclosure in the Schedules, or would breach any covenant of Seller
or Owner, or cause any representation or warranty of Seller or Owner to be
untrue as of the Closing.
 

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(b) Seller will not (i) make or permit any change in its authorized, issued or
treasury securities of its equity securities, (ii) grant any option or right to
purchase Seller’s securities, (iii) issue or make any commitment to issue any
security, including any security convertible into Membership Units, (iv) grant
any registration rights, (v) purchase, redeem, retire or make any other
acquisition of any securities, or (vi) declare, set aside or pay any dividends,
redeem or make any other distributions on or with regard to its equity.
 
(c) Seller will not amend its certificate of formation or operating agreement.
 
(d) Seller will not fail to pay or discharge when due any liability or
obligation of Seller.
 
(e) Seller will not (i) make any payments to officers, directors, partners,
managers, trustees or beneficiaries other then in the ordinary course of
business and in accordance with past custom and practice or (ii) make any loans
or enter into any transactions or contracts with any holder of Membership Units
or an Affiliate of any holder of Membership Units, other than in the ordinary
course of business and as contemplated by this Agreement.
 
(f) Seller will not, except as specifically contemplated by this Agreement, (i)
enter into any material contract, agreement or transaction, (including but not
limited to any acquisitions, sale of license of any material portion of its
assets, or amendments to any material distribution, licensing, or other material
agreements), (ii) change, accelerate or alter the payment terms of any existing
material Contracts, or (iii) incur any additional debt, other than in the
ordinary course of business in accordance with past custom and practice.
 
(g) Seller will not hire any employees, change any employee’s compensation, pay
any bonus or enter into any severance arrangements, or accelerate the vesting of
any restricted stock or stock options.
 
(h)  Seller shall deliver to Buyer all Tax clearance certificates necessary for
Buyer to avoid any potential successor liability for the Taxes of Seller, dated
as of the Closing or the most recent practical date before the Closing.
 
8.5 Payment of Wachovia Debt.
 
(a) Prior to and following the Closing, Seller shall use its best efforts to
collect Receivables for sales made or services performed prior to the Closing
Date (“Pre-Closing Receivables”) in a manner consistent with its past business
practice and without discounting payment of such Pre-Closing Receivables. Seller
shall immediately apply all Pre-Closing Receivables collected to repay the
Wachovia Debt in full (the “Debt Repayment”). Within 2 business days of the Debt
Repayment, Seller shall or shall cause Wachovia Bank to have all Encumbrances
affecting the Purchased Assets released and discharged and shall provide to
Buyer evidence reasonably satisfactory to Buyer (including, without limitation,
a UCC-3 termination statement) that such Encumbrances have been released and
discharged of record. 
 
(b)  Following the Debt Repayment, Seller shall take all necessary action to
promptly transfer the remaining Pre-Closing Receivables to Buyer. Any
Pre-Closing Receivables transferred to Buyer pursuant to this Section 8.5(b)
shall be deemed a Purchased Asset for purposes of this Agreement..
 
8.6 Payment of American Express Debt. Prior to or promptly following the
Closing, Buyer shall pay the American Express Debt on behalf of the Seller.
 
8.7 Performance Period Financial Statements; Annual Reports. Within 90 days
after the end of each Performance Period, Buyer shall deliver to Owner an income
statement for such Performance Period and a balance sheet as of the end of such
Performance Period. These financial statements (“Performance Period Financial
Statements”) shall (i) be prepared from monthly financial statements prepared by
Buyer in accordance with GAAP as applied on a basis consistent with Seller’s
past practices and (ii) set forth the Adjusted Income and Revenue of Buyer for
such Performance Period (including the figures used and calculations made to
determine the Adjusted Income and Revenue).
 

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8.8 Accounting Disputes. Notwithstanding anything to the contrary in this
Agreement, if Seller has any dispute relating to the determination of Actual Net
Working Capital or the amount of Adjusted Income or Revenue for any purpose
hereunder, then Seller will notify Buyer, in writing, of each disputed amount
(collectively, the “Disputed Amounts”), specifying the grounds for such dispute,
within 15 Business Days after delivery of the Closing Financial Statements, the
Performance Period Financial Statements or other notice containing such
determination, as the case may be. If Buyer and Seller cannot resolve any such
dispute within 10 Business Days after delivery of such notice, then such dispute
will be resolved by an independent accounting firm mutually acceptable to Buyer
and Seller (the “Independent Accounting Firm”). If Buyer and Seller do not agree
upon a mutually acceptable Independent Accounting Firm within the 10 Business
Day period after delivery of the notice, Buyer and Seller will each select an
independent accounting firm, and the Independent Accounting Firm will be
selected by the firms chosen by Buyer and Seller. The determination of the
Independent Accounting Firm (i) will be made as promptly as practicable, (ii)
will be prepared in accordance with GAAP and this Agreement, and (iii) will be
final and binding on the parties, absent manifest error, which error may only be
corrected by such Independent Accounting Firm. Any expenses relating to the
engagement of the Independent Accounting Firm will be allocated evenly between
Buyer and the Seller, provided, however, that if the determination of the
Independent Accounting Firm results in a restatement of more than 10% of the
Actual Net Working Capital, Adjusted Income or Revenue claimed by Seller, then
the Buyer shall pay all expenses related to the engagement of the Independent
Accounting Firm; provided further, however, that if the determination of the
Independent Accounting Firm results in a restatement of less than 10% of the
Actual Net Working Capital, Adjusted Income or Revenue claimed by Buyer, then
the Seller shall pay all expenses related to the engagement of the Independent
Accounting Firm.
 
8.9 Audit; Cooperation. Following the Closing, Owner and Seller shall cooperate
with Buyer in connection with Buyer’s preparation of financial statements, and,
if necessary, an audit (the “Audit”) of the financial performance of Seller, for
all periods required in connection with Buyer’s reporting obligations under the
United States securities laws. Such cooperation shall include, but not be
limited to, providing full access to the Books and Records, any work papers
generated in connection therewith, Seller personnel, Seller’s outside auditors
and assisting Buyer in obtaining any required consent of such outside auditors
in connection with Buyer’s reporting obligations under the United Stated
securities laws. From and after the Closing Date and until the end of the final
One-Year Performance Period, Buyer shall permit Seller and its counsel,
accountants, engineers, consultants and other authorized representatives to have
full and complete access to all documents, books, contracts and records relating
to the Business (but not to Zanett or Buyer generally) and to make copies
thereof during normal business hours in order to permit Seller to conduct
investigations and reviews relative to this Agreement. Seller and its
representatives shall conduct such investigations and reviews in such manner as
shall not interfere with or disrupt the conduct of business of Zanett or Buyer.
 
8.10 Acknowledgment Regarding Reorganizations and Similar Transactions. Seller
and Owner hereby acknowledge and agree that, notwithstanding anything to the
contrary set forth herein, Buyer shall be entitled to consummate any sale,
merger, reorganization, consolidation or other similar transaction involving
Seller, in each case to a Person that is an Affiliate of Buyer or Zanett,
without requiring any consent of Seller, and the consummation of such
transaction shall not be deemed to violate any provision of this Agreement;
provided, however, that such sale, merger, reorganization, consolidation or
other similar transaction shall not release Buyer from its obligations
hereunder.

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ARTICLE IX.
 
CONDITIONS TO CLOSING.
 
9.1 Mutual Conditions. The respective obligations of each party to effect the
transactions contemplated by this Agreement at the Closing shall be subject to
the satisfaction, at or prior to the Closing Date, of the following conditions
(any of which may be waived in writing by Buyer, Owner and Seller).
 
(a) None of Buyer, Owner or Seller nor any of their respective subsidiaries
shall be subject to any order, decree or injunction by a court of competent
jurisdiction which (i) prevents or materially delays the consummation of the
transactions contemplated by this Agreement or (ii) would impose any material
limitation on the ability of Buyer effectively to exercise full rights of
ownership of any material portion of the assets or Business of Seller, taken as
a whole.
 
(b) No statute, rule or regulation, shall have been enacted by the government
(or any governmental agency) of the United States or any state, municipality or
other political subdivision thereof that makes the consummation of the
transactions contemplated by this Agreement illegal.
 
(c) Buyer, Owner and Seller shall have received all consents, approvals and
authorizations of third parties (including governmental approvals) that are
required of such third parties prior to the consummation of the transactions
contemplated by this Agreement, in form and substance acceptable to Buyer or
Seller, as the case may be, except where the failure to obtain such consent,
approval or authorization would not have a material adverse effect on the
Business of Seller.
 
9.2 Conditions to the Obligations of Buyer. The obligations of Buyer under this
Agreement are subject to the satisfaction, at or before the Closing, of each of
the following conditions (any of which may be waived in writing by Buyer):
 
(a) The representations and warranties of Seller and Owner contained herein that
are qualified as to materiality shall be true in all respects on and as of the
Closing Date (except for the representations and warranties made as of a
specific date which shall be true in all material respects as of such date) with
the same force and effect as though made on and as of such date, and each of the
representations and warranties of Seller and Owner contained herein that are not
so qualified shall be true in all material respects as of such dates.
 
(b) Seller and the Owner shall have performed and complied in all material
respects with all covenants, agreements, obligations and conditions required by
this Agreement to be performed or complied with by them at or prior to the
Closing.
 
(c) There shall not be threatened, instituted or pending any suit, action,
investigation, inquiry or other proceeding by or before any court or
governmental or other regulatory or administrative agency or commission
requesting or looking toward an order, judgment or decree that (a) restrains or
prohibits the consummation of the transactions contemplated hereby, (b) could
reasonably be expected to have a material adverse effect on Buyer’s ability to
exercise control over or manage Seller after the Closing or (c) could reasonably
be expected to have a material adverse effect on the Business of Seller.
 
(d) On the Closing Date, there shall be no effective injunction, writ,
preliminary restraining order or other order issued by a court of competent
jurisdiction restraining or prohibiting the consummation of the transactions
contemplated hereby.
 
(e) Buyer shall have received an opinion of Jones, Foster, Johnston & Stubbs,
P.A., counsel to Seller, dated the Closing Date, in form and substance
reasonably satisfactory to Buyer.
 
(f) Buyer shall have received from Seller at least 2 business days prior to
Closing, payoff letters from American Express Company providing for the payoff
amount as of Closing, of the American Express Debt.
 
(g) Buyer shall have received reasonable evidence that all indebtedness of
Seller has been paid in full other than the Wachovia Debt.
 

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(h) Buyer shall have received satisfactory evidence that all debt owed by Seller
to Dana Johnson has been assigned as personal debt of Owner.
 
(i) Buyer shall have received the Searches in accordance with Section 8.3(g).
Seller shall have had all Encumbrances, other than Permitted Encumberances,
affecting Seller or its assets released and discharged (whether or not such
Encumbrances are reflected in the Searches or the Schedules). Buyer shall have
received evidence reasonably satisfactory to it (including, without limitation,
UCC-3 termination statements) that such Encumbrances have been released and
discharged of record.
 
(j) Buyer shall have received a consent from Wachovia Bank consenting to the
transactions contemplated by this agreement, in a form acceptable to Buyer in
its sole discretion.
 
(k) Each Key Employee shall have entered into a confidentiality,
non-competition, and non-solicitation agreement (the “Confidentiality,
Non-Competition, and Non-Solicitation Agreement”), substantially in the form of
Exhibit C.
 
(l) Each Key Employee shall have accepted Buyer’s offer of employment with Buyer
pursuant to an offer letter, in a form acceptable to Buyer in its sole
discretion.
 
(m) Seller and Owner shall have entered into a lock-up agreement with Zanett
(the “Lock-up Agreement”), substantially in the form of Exhibit D.
 
(n) The lease agreement between Seller, Dana Johnson and Owner for the property
located at 631 US Highway One, Suite 412, North Palm Beach, Florida, shall have
been assigned to Buyer.
 
(o) Zanett’s Executive Committee and Buyer’s Board of Directors shall have
approved the Agreement and the transactions contemplated hereby.
 
(p) Zanett’s lender, LaSalle Bank National Association, shall have approved the
Agreement and the transactions contemplated hereby, including the assumption of
the Wachovia Debt by Buyer.
 
(q) There shall have been no material adverse change to the Business from the
date hereof to the Closing.
 
9.3 Conditions to the Obligations of Seller and the Owner. The obligations of
Seller and the Owner under this Agreement at the Closing are subject to the
satisfaction, at or before the Closing, of each of the following conditions (any
of which may be waived in writing by Seller and the Owner):
 
(a) The representations and warranties of Buyer contained herein that are
qualified as to materiality shall be true in all respects on and as of the
Closing Date (except for the representations and warranties made as of a
specific date which shall be true in all material respects as of such date) with
the same force and effect as though made on and as of such date, and each of the
representations and warranties of Buyer contained herein that are not so
qualified shall be true in all material respects as of such dates.
 
(b) Buyer shall have performed and complied in all material respects with all
covenants, agreements, obligations and conditions required by this Agreement to
be so performed or complied with by Buyer at or prior to the Closing.
 
(c) There shall not be threatened, instituted or pending any suit, action,
investigation, inquiry or other proceeding by or before any court or
governmental or other regulatory or administrative agency or commission
requesting or looking toward an order, judgment or decree that (a) restrains or
prohibits the consummation of the transactions contemplated hereby or (b) could
reasonably be expected to have a material adverse effect on the business of
Buyer or Seller (following the Closing).
 

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(d) On the Closing Date, there shall be no effective injunction, writ,
preliminary restraining order or other order issued by a court of competent
jurisdiction restraining or prohibiting the consummation of the transactions
contemplated hereby.
 
ARTICLE X.
 
MISCELLANEOUS
 
10.1 Notices. Any communications required or desired to be given hereunder shall
be deemed to have been properly given if sent by hand delivery or by facsimile
and overnight courier or overnight courier to the parties hereto at the
following addresses, or at such other address as either party may advise the
other in writing from time to time:
 
If to Buyer:

Zanett Commercial Solutions, Inc.
c/o Zanett, Inc.
635 Madison Avenue
15th Floor
New York, NY 10022
Attention: President
Facsimile: (646) 502-1808

with a copy to (which shall not constitute notice):

Drinker Biddle & Reath LLP
One Logan Square
18th and Cherry Streets
Philadelphia, PA 19103
Attention: Stephen T. Burdumy, Esq.
Facsimile: (215) 988-2757

If to Seller:

PS GoLive LLC
631 US Highway One, Suite 412
North Palm Beach, FL 33401

with a copy to (which shall not constitute notice):
 
Jones, Foster, Johnston & Stubbs, P.A.
505 Flagler Drive, Suite 1100
West Palm Beach, FL 33401
Attention: John S. Trimper, Esq.
Facsimile: (561) 650-0490

If to Owner:

Michael Johnson
124 Satinwood Lane
Palm Beach Gardens, FL 33408

 
All such communications shall be deemed to have been delivered on the date of
hand delivery or facsimile or on the next Business Day following the deposit of
such communications with the overnight courier.
 

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10.2 Further Assurances. Each party hereby agrees to perform any further acts
and to execute and deliver any documents which may be reasonably necessary to
carry out the provisions of this Agreement.
 
10.3 Governing Law. This Agreement shall be interpreted, construed and enforced
in accordance with the laws of the State of New York, applied without giving
effect to any conflicts of law principles.
 
10.4 Right of Setoff. Notwithstanding any provision hereof to the contrary,
Buyer shall be entitled to set-off (i) any amounts due to Buyer from Owner
hereunder, whether by reason of overpayment of the Consideration or,
indemnification under Article VII, or otherwise, against (ii) amounts due from
Buyer to Seller or Owner hereunder. Any set-off shall be applied against amounts
payable to the Seller or Owner in the chronological order all amounts of every
kind payable to Seller or Owner are due until the set-off is complete.
Notwithstanding any provision hereof to the contrary, upon making a claim for
indemnification under Article VII, Buyer may withhold from amounts otherwise due
hereunder an amount equal to Buyer’s reasonable estimate of the amount of such
claim until such time as the actual amount of Buyer’s indemnification claim, and
right of set-off hereunder, is determined. Claims for indemnification for which
Buyer exercises its right of set-off hereunder shall be promptly submitted to
binding arbitration in New York in accordance with the rules and regulations of
the American Arbitration Association. The arbitrators will be selected by the
American Arbitration Association. The determination of the arbitrator(s) will be
conclusive and binding upon the parties, and any determination by the
arbitrator(s) of any award may be filed with the clerk of a court of competent
jurisdiction as a final adjudication of the claim involved, or application may
be made to such court for judicial acceptance of the award and an order of
enforcement. Each party will bear its own expenses with respect to such
arbitration. Any amount withheld by Buyer pursuant to the set-off right under
this Section 10.4 that the arbitrator(s) determines was in excess of the amount
that Seller or Owner was liable for under the indemnification claim brought to
such arbitration shall be returned forthwith to Seller or Owner. The arbitrator
may award reasonable attorneys’ fees and costs to the prevailing party.
 
10.5 Consent to Jurisdiction. Each of the parties hereto (a) consents to submit
itself to the personal jurisdiction of any Federal court located in the State of
New York in the event any dispute arises out of this Agreement or any of the
transactions contemplated by this Agreement, (b) agrees that it will not attempt
to deny or defeat such personal jurisdiction by motion or other request for
leave from any such court, and (c) agrees that it will not bring any action
relating to this Agreement or any of the transactions contemplated by this
Agreement in any court other than a Federal court sitting in the State of New
York.
 
10.6 Integration of Exhibits and Schedules. All Exhibits and Schedules to this
Agreement are integral parts of this Agreement as if fully set forth herein.
 
10.7 Entire Agreement. This Agreement, the Related Agreements, including all
Exhibits and Schedules attached hereto and thereto contain the entire agreement
of the parties and supersede any and all prior or contemporaneous agreements
between the parties, written or oral, with respect to the transactions
contemplated hereby. Such agreement may not be changed or terminated orally, but
may only be changed by an agreement in writing signed by the party or parties
against whom enforcement of any waiver, change, modification, extension,
discharge or termination is sought.
 
10.8 Expenses. Except as set forth on Schedule 4.4(b) or as expressly provided
otherwise, each party hereto will bear its own costs and expenses (including
fees and expenses of auditors, attorneys, financial advisors, bankers, brokers
and other consultants and advisors) incurred in connection with this Agreement,
the Related Agreements and the transactions contemplated hereby and thereby.
 
10.9 Counterparts. This Agreement may be executed in several counterparts, each
of which, when so executed, shall be deemed to be an original, and such
counterparts shall together constitute and be one and the same instrument.
 

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10.10 Binding Effect. This Agreement shall be binding on, and shall inure to the
benefit of, the parties hereto, and their respective successors and assigns, and
no other person shall acquire or have any right under or by virtue of this
Agreement. No party may assign any right or obligation hereunder without the
prior written consent of the other parties.
 
10.11 Termination Events. By notice given prior to or at the Closing, subject to
Section 11.2, this Agreement may be terminated as follows:
 
(a) by Buyer if a material breach of any provision of this Agreement has been
committed by Seller or Owner, such breach has not been cured within 10 days
following receipt by Seller of notice of such breach, and such breach has not
been waived by Buyer;
 
(b) by Seller if a material breach of any provision of this Agreement has been
committed by Buyer such breach has not been cured within 10 days following
receipt by Buyer of notice of such breach, and such breach has not been waived
by Seller;
 
(c) by either Buyer or Seller if the transactions contemplated hereby have not
been consummated by December 15, 2008; provided, however, that the right to
terminate this Agreement under this Section 10.11(c) shall not be available to
any party whose failure to fulfill any obligation under this Agreement has been
the cause of or resulted in the failure of such transaction to occur on or
before such date; or
 
(d) by mutual consent of Buyer, Seller, and the Owner.
 
10.12 Effect Of Termination. Each party’s right of termination under Section
10.11 is in addition to any other rights it may have under this Agreement or
otherwise, and the exercise of such right of termination will not be an election
of remedies. If this Agreement is terminated pursuant to Section 10.11, all
obligations of the parties under this Agreement will terminate, except that the
obligations of the parties in this Article X will survive; provided, however,
that if this Agreement is terminated because of a breach of this Agreement by
the non-terminating party or because one or more of the conditions to the
terminating party’s obligations under this Agreement is not satisfied as a
result of the party’s failure to comply with its obligations under this
Agreement, the terminating party’s right to pursue all legal remedies will
survive such termination unimpaired.
 
[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, Buyer, Seller and the Owner have caused this Asset Purchase
Agreement to be executed by their respective duly authorized officers, all as of
the day and year first above written.

ZANETT COMMERCIAL SOLUTIONS, INC.
   
By:
/s/ Claudio Guazzoni
 
Name: Claudio Guazzoni
 
Title: President
   
PS GOLIVE LLC
   
By:
/s/ Michael Johnson
 
Name: Michael Johnson
 
Title: Sole Member
   
/s/ Michael Johnson
Michael Johnson

 
 
 
 

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The following schedules to the agreement have been omitted. The registrant will
furnish a supplementary copy of any omitted schedule to the Securities and
Exchange Commission upon request.

 
Schedule 1.1
Current Assets and Current Liabilities
Schedule 2.1(b)
Seller’s Tangible Property
Schedule 2.1(c)
Seller’s Contracts
Schedule 2.1(e)
Seller’s Authorizations
Schedule 2.2(b)
Consents
Schedule 2.3(i)
Excluded Assets
Schedule 2.4(a)
Assumed Liabilities
Schedule 2.4(b)
Assumed Liabilities
Schedule 2.5(r)
Excluded Capital Lease Obligations
Schedule 2.7(b)
Third Party Consents
Schedule 4.1(b)
Jurisdiction in which Seller is Authorized to Do Business
Schedule 4.1(c)
Seller’s Managers and Officers
Schedule 4.1(d)
Change in Shares; Action Requiring Written Consent of Buyer
Schedule 4.1(e)
Changes to Equity Interests of Holders of Seller’s Membership Units
Schedule 4.1(f)
Seller’s Fictitious Name Registration
Schedule 4.2(b)
Violation or Breach of Agreements; Consents Required
Schedule 4.4(a)
Financial Statements
Schedule 4.4(b)
Liabilities
Schedule 4.4(c)
Unusual, Nonrecurring, Extraordinary or Not in Ordinary Course Income or Expense
Schedule 4.5
Occurrence of Certain Change
Schedule 4.5(f)
Permitted Encumbrances
Schedule 4.6
Seller’s Authorizations
Schedule 4.7(a)
Regulatory Matters
Schedule 4.8(a)
Tax Returns
Schedule 4.8(c)
Tax Disputes
Schedule 4.9(b)
Claims Against Seller
Schedule 4.9(c)
Legal Claims Against Seller Relating to Seller’s Products or Services
Schedule 4.10(b)
Leases
Schedule 4.10(c)
Loans, Extension of Credit and Advances
Schedule 4.10(d)
Acquisition of Assets or Capital Stock of Another Business
Schedule 4.10(e)
Other Agreements
Schedule 4.10(f)
Material Contracts Effected by APA or Related Agreements
Schedule 4.10(g)
Agreements Subject to Potential Default
Schedule 4.10(h)
Bank, Brokerage, Mutual Fund, Investment Company, Investment Advisor and other
Financial Institution Accounts
Schedule 4.10(j)
Contracts
Schedule 4.10(k)
Owned Leased Vehicles, Machinery, Equipment, Tools and other Tangible Assets
Schedule 4.11(a)
Collective Bargaining Agreements or Efforts
Schedule 4.11(b)
Employment Compliance and Employee Relations
Schedule 4.11(c)
Employee Agreements
Schedule 4.11(d)
Employee Benefit Plan
Schedule 4.11(o)
Change of Control Agreements
Schedule 4.12(a)
Employee Information
Schedule 4.12(b)
Employee Valuation Methods
Schedule 4.12(c)
Consultants and Independent Contractors
Schedule 4.12(d)
Employee Termination
Schedule 4.12(e)
Employee Compensation Dispute
Schedule 4.12(f)
Non-Resident Employees

 
 
 
 

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Schedule 4.14
Product and Service Warranties
Schedule 4.15(a)
Encumbrances on Intellectual Property
Schedule 4.15(b)
Intellectual Property
Schedule 4.15(c)
Software
Schedule 4.15(d)
Non-Exclusive Intellectual Property
Schedule 4.15(f)
Intellectual Property Marketing Rights
Schedule 4.16
Insurance
Schedule 4.17(b)
Top Ten Customers
Schedule 4.17(c)
Threats of Customer Discontinuance
Schedule 4.18(a)
Legality of the Business and Operations of Seller
Schedule 4.19
Environmental Liabilities
Schedule 4.21
Receivables
Schedule 5.2(b)
Breach of Agreements