AGREEMENT AND PLAN OF MERGER

by and among

CLEAN ENERGY PATHWAYS, INC.,
ATLAS HOLDINGS MERGER SUB
and
ATLAS CAPITAL HOLDINGS, INC.

Dated as of May 10, 2011 

 
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AGREEMENT AND PLAN OF MERGER, dated as of May 10, 2011 (the “Agreement”), among
Atlas Capital Holdings, Inc., a Nevada corporation (“Parent”), Atlas Holdings
Merger Sub, a Nevada corporation to be organized as a direct wholly-owned
subsidiary of Parent (“Merger Sub”) and Clean Energy Pathways, Inc., a Nevada
corporation (the “Company”).

WHEREAS, the parties intend that Merger Sub be merged with and into the Company
(the “Merger”), with the Company surviving the Merger as a wholly-owned
subsidiary of Parent;

WHEREAS, the Board of Directors of the Company (the “Company Board”) has
(a) determined that it is in the best interests of the Company and its
stockholders (which term, as used herein, shall include members or partners, as
the case may be), and declared it advisable, to enter into this Agreement,
(b) adopted this Agreement and approved the consummation of the transactions
contemplated hereby, including the Merger, upon the terms and subject to the
conditions set forth herein and (c) resolved to recommend approval of this
Agreement and the transactions contemplated hereby by the stockholders of the
Company;

WHEREAS, the Board of Directors of Parent (the “Parent Board”) has
(a) determined that it is in the best interests of Parent and its stockholders,
and declared it advisable, to enter into this Agreement, (b) approved the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby, including the Merger, and (c) resolved to
recommend to its stockholders approval of the Certificate of Amendment and the
Stock Issuance;

WHEREAS, Parent, as the sole stockholder of Merger Sub, has approved this
Agreement and the transactions contemplated hereby, including the Merger;

WHEREAS, for Federal income tax purposes, it is intended that the Merger shall
qualify as a “reorganization” within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the “Code”), and that this Agreement
will be, and hereby is, adopted as a plan of reorganization; and

WHEREAS, Parent, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements specified herein in
connection with this Agreement.

NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements contained herein, and intending to be
legally bound hereby, Parent, Merger Sub and the Company agree as follows:

ARTICLE I
THE MERGER

1.1           The Merger.  At the Effective Time, upon the terms and subject to
the conditions set forth in this Agreement and in accordance with the applicable
provisions of the Nevada Statutes governing mergers (the “Merger Statutes”),
Merger Sub shall be merged with and into the Company, whereupon the separate
corporate existence of Merger Sub shall cease, and the Company shall continue
its corporate existence as the surviving corporation in the Merger and a direct
wholly-owned subsidiary of Parent.  (When referred to as the surviving
corporation in the Merger, the Company is called the “Surviving Corporation.”)
 
 
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1.2           Closing.  The closing of the Merger (the “Closing”) shall take
place at the offices of Parent, 2234 N. Federal Highway, Suite 330, Boca Raton,
Florida 33431, at 10:00 A.M., local time, on a date to be specified by the
parties (the “Closing Date”) which shall be no later than the second business
day after the satisfaction or waiver (to the extent permitted by applicable Law)
of the conditions set forth in Article VI (other than those conditions that by
their nature are to be satisfied at the Closing, but subject to the satisfaction
or waiver of such conditions), or at such other place, date and time as the
Company and Parent may agree in writing.

1.3           Effective Time.  On the Closing Date, the Company and Merger Sub
shall file the articles of merger (the “Articles of Merger”), executed in
accordance with, and containing such information as is required by, the relevant
provisions of the Merger Statutes with the Secretary of State of the State of
Nevada. The Merger shall become effective at such time as the Articles of Merger
are duly filed with the Secretary of State of the State of Nevada, or at such
later time as is agreed between the parties and specified in the Articles of
Merger in accordance with the applicable provisions of the Merger Statutes (such
date and time is hereinafter referred to as the “Effective Time”).

1.4           Effects of the Merger.  The effects of the Merger shall be as
provided in this Agreement and in the applicable provisions of the Merger
Statutes. Without limiting the generality of the foregoing, and subject thereto,
at the Effective Time, all of the property, rights, privileges, powers and
franchises of the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and Merger Sub
shall become the debts, liabilities and duties of the Company as the Surviving
Corporation, all as provided under the Merger Statutes.

1.5           Articles of Incorporation and By-laws of the Surviving
Corporation.  

(a)           At the Effective Time, the articles of incorporation of the
Company, in the form attached hereto as Exhibit A, shall be the Articles of
Incorporation of the Surviving Corporation unless thereafter amended in
accordance with applicable Law.

(b)           At the Effective Time, the Bylaws of the Company, in the form
attached hereto as Exhibit B shall be the Bylaws of the Surviving Corporation
unless thereafter amended in accordance with the provisions thereof and hereof
and applicable Law.

1.6           Directors.  Directors of the Company, being J. Michael Parsons,
Harrison Parish, David Poston, Greg Clemons and Christopher Davies shall be the
directors of the Parent and of the Surviving Corporation and shall hold office
until their respective successors are duly elected and qualified; or their
earlier death, resignation or removal.

1.7           Officers.  The officers of the Company immediately prior to the
Effective Time shall be the officers of the Parent and the Surviving
Corporation, provided that Christopher K. Davies shall be elected Secretary and
General Counsel of Parent, and all such persons shall hold office until their
respective successors are duly elected and qualified, or their earlier death,
resignation or removal.
 
 
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ARTICLE II
CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES

2.1           Effect on Capital Stock.  At the Effective Time, by virtue of the
Merger and without any action on the part of the Company, Merger Sub or the
holders of any securities of the Company or Merger Sub:

(a)           Conversion of Company Common Stock.  Subject to Section 2.1(c),
the issued and outstanding common shares, par value $0.001, of the Company
outstanding immediately prior to the Effective Time (such shares, collectively,
“Company Common Stock,” and each, a “Company Common Share”), other than any
Cancelled Shares, shall thereupon be converted automatically into and shall
thereafter represent the right to receive two (2) shares of the Parent’s common
stock, par value $0.0001 per share (“Parent Common Stock”), and all of the
issued and outstanding preferred stock of the Company outstanding immediately
prior to the Effective Time (such shares, collectively, the “Company Preferred
Stock,” and each, a “Company Preferred Share,” and together, with the Company
Common Stock, a “Share” or the “Shares”), other than any Cancelled Shares, shall
thereupon be converted automatically into and shall thereafter represent the
right to receive that number of fully paid and non-assessable preferred shares
of the Parent, par value $.001 (“Parent Preferred Stock”), as shall constitute
54% of the voting rights of the holders of the Parent Preferred Stock and Parent
Common Stock, so that upon completion of the Merger the Parent shall have issued
and outstanding 235,132,324 shares of Parent Common Stock, of which 27,974,000
shares shall be owned by the current shareholders of the Parent and 207,158,324
shares shall be owned by the current shareholders of the Company and that number
of Parent Preferred Shares which shall constitute 54% of the voting rights and
power of all shares of any class  of the Parent, then to be outstanding,
determined on a fully-diluted basis (the “Merger Consideration”) .  As a result
of the Merger, at the Effective Time, each holder of Shares shall cease to have
any rights with respect thereto, except the right to receive the Merger
Consideration payable in respect of such Shares which are issued and outstanding
immediately prior to the Effective Time, any cash in lieu of fractional shares
of Parent Common Stock or Parent Preferred Stock payable pursuant to
Section 2.1(c) and any dividends or other distributions payable pursuant to
Section 2.2(b), all to be issued or paid, without interest, in consideration
therefor upon the surrender of such Shares.

(b)           Conversion of Merger Sub Common Stock.  At the Effective Time, by
virtue of the Merger and without any action on the part of the holder thereof,
each share of common stock, par value $0.001 per share, of Merger Sub issued and
outstanding immediately prior to the Effective Time shall be converted into and
become one validly issued, fully paid and nonassessable Share of the Surviving
Corporation and shall constitute the only outstanding shares of capital stock of
the Surviving Corporation. From and after the Effective Time, all certificates
representing the common stock of Merger Sub shall be deemed for all purposes to
represent the number of Shares of the Surviving Corporation into which they were
converted in accordance with the immediately preceding sentence.
 
 
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(c)           Fractional Shares.  No fractional shares of Parent Common Stock or
Parent Preferred Stock shall be issued in the Merger, but in lieu thereof each
holder of Shares otherwise entitled to a fractional share of Parent Common or
Preferred Stock will be entitled to receive, from the Parent in accordance with
the provisions of this Section 2.1(c), a cash payment in lieu of such fractional
share equal to the product obtained by multiplying (A) such fractional share
interest to which such holder (after taking into account all fractional share
interests then held by such holder, and rounding such fractional share interest
to four decimal places) would otherwise be entitled by (B) the per share value
calculated as the average of the closing sale prices of one share of Parent
Common Stock for the five most recent days that the Parent Common Stock has
traded ending on the last full trading day immediately prior to the Effective
Time. The parties acknowledge that payment of cash in lieu of fractional shares
of Parent Stock is solely for the purpose of avoiding the expense and
inconvenience to Parent of issuing fractional shares and does not represent
separately bargained-for consideration. As promptly as practicable after the
determination of the aggregate amount of cash, if any, to be paid to holders of
Shares that would otherwise receive fractional shares of Parent Stock, Parent
shall forward payments to such holders without interest, subject to and in
accordance with the terms of Section 2.2.

(d)           Adjustments to the Exchange Ratio.  If at any time during the
period between the date of this Agreement and the Effective Time, any change in
the outstanding shares of capital stock of the Company or Parent shall occur as
a result of any reclassification, stock split (including a reverse stock split)
or combination, exchange or readjustment of shares, or any stock dividend or
stock distribution with a record date during such period, the Exchange Ratio,
the Merger Consideration and any other similarly dependent items shall be
equitably adjusted to reflect such change.

2.2           Exchange of Shares.  

(a)           Exchange Agent.  The Parent shall act as the exchange agent (the
“Exchange Agent”) for the purpose of exchanging Shares for the Merger
Consideration. At the Effective Time, Parent shall direct the Parent’s transfer
agent to issue Parent Common Stock or Parent Preferred Stock, as the case may
be, to the Company’s shareholders in accordance with instructions provided by
the Company to the Parent at Closing.  Following the Effective Time, Parent
agrees to make available, from time-to-time as needed, cash sufficient to pay
any dividends and other distributions pursuant to Section 2.2(c). All
certificates representing shares of Parent Common or Preferred Stock (including
the amount of any dividends or other distributions payable with respect thereto
pursuant to Section 2.2(c) and cash in lieu of fractional shares of Parent
Common Stock to be paid pursuant to Section 2.1(c)) are hereinafter referred to
as the “Exchange Fund.”
 
 
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(b)           Exchange Procedures.  As soon as reasonably practicable after the
Effective Time and in any event not later than the third business day following
the Effective Time, Parent shall cause its transfer agent to mail to each holder
of Shares, which at the Effective Time were converted into the right to receive
the Merger Consideration pursuant to Section 2.1, (i) a letter of transmittal
(which shall specify that delivery shall be effected, only upon delivery of the
Shares to the Parent and which shall be in form and substance reasonably
satisfactory to Parent and the Company) and (ii) instructions for use in
effecting the surrender of the Shares in exchange for certificates representing
whole shares of Parent Common Stock or Preferred Stock, as the case may be (or
appropriate alternative arrangements shall be made by Parent if uncertificated
shares of Parent Common Stock will be issued), cash in lieu of any fractional
shares of Parent Common Stock or Preferred Stock pursuant to Section 2.1(c) and
any dividends or other distributions payable pursuant to Section 2.2(c). Upon
surrender of Shares for cancellation to the transfer agent, together with such
letter of transmittal, duly completed and validly executed in accordance with
the instructions thereto, and such other documents as may reasonably be required
by the Parent or its transfer agent, the holder of such Shares shall be entitled
to receive in exchange therefor that number of whole shares of Parent Common
Stock or Preferred Stock, as the case may be (after taking into account all
Shares surrendered by such holder) to which such holder is entitled pursuant to
Section 2.1 (which shall be in uncertificated book entry form unless a physical
certificate is requested), payment by cash or check in lieu of fractional shares
of Parent Common Stock or Preferred Stock which such holder is entitled to
receive pursuant to Section 2.1(c) and any dividends or distributions payable
pursuant to Section 2.2(b), and the Shares so surrendered shall forthwith be
cancelled. If any portion of the Merger Consideration is to be registered in the
name of a person other than the person in whose name the applicable surrendered
Share is registered, it shall be a condition to the registration thereof that
the surrendered Share be in proper form for transfer and that the person
requesting such delivery of the Merger Consideration pay any transfer or other
similar Taxes required as a result of such registration in the name of a person
other than the registered holder of such Share or establish to the satisfaction
of the Exchange Agent that such Tax has been paid or is not payable. Until
surrendered as contemplated by this Section 2.2(b), each Share shall be deemed
at any time after the Effective Time to represent only the right to receive the
Merger Consideration (and any amounts to be paid pursuant to Section 2.1(c) or
Section 2.2(c)) upon such surrender. No interest shall be paid or shall accrue
on any amount payable pursuant to Section 2.1(b) or Section 2.2(c). If any
certificate representing any Share(s) shall have been lost, stolen or destroyed,
Parent may, in its discretion and as a condition precedent to the issuance of
any certificate or evidence of shares in book-entry form representing Parent
Common Stock or Preferred Stock, require the owner of such lost, stolen or
destroyed certificate representing any Share(s) to provide a customary affidavit
and to deliver a bond in a reasonable amount as Parent may reasonably direct as
indemnity against any claim that may be made against the Exchange Agent, Parent
or the Surviving Corporation with respect to such certificate representing such
Share(s).

(c)           Distributions with Respect to Unexchanged Shares.  No dividends or
other distributions with respect to shares of Parent Common Stock or Preferred
Stock with a record date after the Effective Time shall be paid to the holder of
any unsurrendered Share with respect to the shares of Parent Common Stock or
Preferred Stock represented thereby, and no cash payment in lieu of fractional
shares of Parent Common Stock shall be paid to any such holder pursuant to
Section 2.1(c), until in either case, such Share has been surrendered in
accordance with this Article II. Following surrender of any such Share, there
shall be paid to the recordholder thereof, without interest, (i) promptly after
such surrender, the number of whole shares of Parent Common Stock or Preferred
Stock issuable in exchange therefor pursuant to this Article II, together with
any cash payable in lieu of a fractional share of Parent Common Stock or
Preferred Stock to which such holder is entitled pursuant to Section 2.1(c) and
the amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such whole shares of Parent
Common Stock or Preferred Stock and (ii) at the appropriate payment date, the
amount of dividends or other distributions with a record date after the
Effective Time and a payment date subsequent to such surrender payable with
respect to such whole shares of Parent Common Stock or Preferred Stock. The
Parent or the Surviving Corporation, as applicable, shall be entitled to deduct
and withhold from the consideration otherwise payable under this Agreement to
any holder of Shares or holder of Restricted Shares, such amounts as are
required to be withheld or deducted under the Code or any provision of
U.S. state or local Tax Law with respect to the making of such payment. To the
extent that amounts are so withheld or deducted and paid over to the applicable
Governmental Entity, such withheld or deducted amounts shall be treated for all
purposes of this Agreement as having been paid to the person in respect of which
such deduction and withholding were made.
 
 
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(d)           No Further Ownership Rights in Company Common Stock or Preferred
Stock; Closing of Transfer Books.  All shares of Parent Common Stock or
Preferred Stock issued upon the surrender for exchange of Shares in accordance
with the terms of this Article II and any cash paid pursuant to Section 2.1(c)
or Section 2.2(c) shall be deemed to have been issued (or paid) in full
satisfaction of all rights pertaining to the Shares previously represented by
such Shares. After the Effective Time, the stock transfer books of the Company
shall be closed, and there shall be no further registration of transfers on the
stock transfer books of the Surviving Corporation of the Shares which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Shares are presented to the Company or the Parent for any reason, they
shall be cancelled and exchanged as provided in this Article II.

(e)           Termination of Exchange Fund.  Any portion of the Exchange Fund
(including the proceeds of any investments thereof) that remains undistributed
to the former holders of Shares for one year after the Effective Time shall be
delivered to the Company upon demand, and any holders of Shares who have not
theretofore complied with this Article II shall thereafter look only to Parent
for payment of their claim for the Merger Consideration, any cash in lieu of
fractional shares of Parent Common Stock or Preferred Stock pursuant to
Section 2.1(c) and any dividends or distributions pursuant to Section 2.2(c),
subject to applicable abandoned property, escheat or similar Law. If any
certificate representing any Share shall not have been surrendered prior to five
years after the Effective Time (or immediately prior to such earlier date on
which any shares of Parent Common Stock or Preferred Stock or any dividends or
other distributions payable to the holder of such certificate representing any
Share would otherwise escheat to or become the property of any Governmental
Entity), any such shares of Parent Common Stock or Preferred Stock , dividends
or other distributions in respect of such certificate representing any Share
shall, to the extent permitted by applicable Law, become the property of Parent,
free and clear of all claims or interest of any person previously entitled
thereto.

(f)           No Liability.  Notwithstanding anything in this Agreement to the
contrary, none of the Company, Parent or Merger Sub, or any other person shall
be liable to any former holder of Shares for any amount properly delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar Law.
 
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Except as disclosed in the disclosure schedule to be delivered by the Company to
Parent immediately prior to the Closing of this Agreement (the “Company
Disclosure Schedule”), the Company represents and warrants to Parent and Merger
Sub as follows:
 
 
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3.1           Qualification; Organization, Subsidiaries, etc.

(a)           Each of the Company and its Subsidiaries is a legal entity duly
organized, validly existing and in good standing under the Laws of its
respective jurisdiction of organization and has all requisite corporate or
similar power and authority to own, lease and operate its properties and assets
and to carry on its business as presently conducted and is qualified to do
business and is in good standing as a foreign legal entity in each jurisdiction
where the ownership, leasing or operation of its assets or properties or conduct
of its business requires such qualification, except where the failure to be so
organized, validly existing, qualified or in good standing, or to have such
power or authority, is not having or would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect. As used in
this Agreement, a “Company Material Adverse Effect” means an event, change,
effect, development, state of facts, condition, circumstance or occurrence that
is materially adverse to the business, financial condition or continuing results
of operations of the Company and its Subsidiaries, taken as a whole, but shall
not be deemed to include any event, change, effect, development, state of facts,
condition, circumstance or occurrence: (i) in or affecting economic conditions
generally (including changes in interest rates) or the financial, mortgage or
securities markets in the United States or elsewhere in the world, (ii) in or
affecting the industries in which the Company or its Subsidiaries operate
generally or in any specific jurisdiction or geographical area or
(iii) resulting from or arising out of (A) the announcement or the existence of,
or compliance with, or taking any action required or permitted by this Agreement
or the transactions contemplated hereby, (B) any taking of any action at the
written request of Parent or Merger Sub, (C) any litigation arising from
allegations of a breach of fiduciary duty or other violation of applicable Law
relating to this Agreement or the transactions contemplated hereby, (D) any
adoption, implementation, promulgation, repeal, modification, reinterpretation
or proposal of any rule, regulation, ordinance, order, protocol or any other Law
of or by any national, regional, state or local Governmental Entity, (E) any
changes in accounting standards or interpretations thereof, (F) any
weather-related or other force majeure event or outbreak or escalation of
hostilities or acts of war or terrorism, except to the extent that the Company
and its Subsidiaries are adversely affected in a disproportionate manner
relative to other participants in the industries in which the Company or its
Subsidiaries operate, or (G) any changes in the share price or trading volume of
the Shares, in the Company’s credit rating or in any analyst’s recommendations,
or the failure of the Company to meet projections or forecasts (including any
analyst’s projections) (provided that the event, change, effect, development,
condition or occurrence underlying such change shall not be excluded to the
extent such event, change, effect, development, condition or occurrence would
otherwise constitute a Company Material Adverse Effect).

(b)           The Company has made available to Parent prior to the date of this
Agreement a true and complete copy of the Company’s amended and restated
articles of incorporation and by-laws, each as amended through the date hereof
(collectively, the “Company Organizational Documents”).

3.2           Capital Stock.  

(a)           The authorized capital stock of the Company consists of
190,000,000 shares of common stock, with a stated par value of $0.001 per share,
and 100 shares of preferred stock, with a stated par value of $0.001 per share.
As of the close of business on May 10, 2011 (the “Company Capitalization Date”),
(i) 103,579,162  Company Common Shares were issued and outstanding, (ii) 100
Company Preferred Shares were issued and outstanding, (iii) no Shares were held
in treasury, (iv) no Shares were issuable pursuant to the Company Stock Plans in
respect of Company Stock Options, and (v) no Shares were issuable pursuant to
the Company Stock Plans. All outstanding Shares of the Company are, and all
Shares of Company reserved for issuance as noted in clauses (iv) and (v), when
issued in accordance with the respective terms thereof, will be duly authorized,
validly issued, fully paid and nonassessable and free of pre-emptive rights.

 
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(b)           From the close of business on the Company Capitalization Date
through the date of this Agreement, there have been no issuances of Shares of
the capital stock or equity securities of the Company or any other securities of
the Company other than issuances of Shares pursuant to the exercise of Company
Stock Options or the settlement of Restricted Stock Units outstanding as of the
Company Capitalization Date under the Company Stock Plans. Except as set forth
in Section 3.2(a), as of the date hereof, there are no outstanding
subscriptions, options, warrants, calls, convertible securities or other similar
rights, agreements or commitments relating to the issuance of capital stock to
which the Company or any of its Subsidiaries is a party obligating the Company
or any of its Subsidiaries to (i) issue, transfer or sell any Shares or other
equity interests of the Company or any Subsidiary of the Company or securities
convertible into or exchangeable or exercisable for such shares or equity
interests, (ii) grant, extend or enter into any such subscription, option,
warrant, call, convertible securities or other similar right, agreement or
commitment, (iii) redeem or otherwise acquire any such Shares or other equity
interests or (iv) provide a material amount of funds to, or make any material
investment (in the form of a loan, capital contribution or otherwise) in, any
Subsidiary.

(c)           Except for awards to acquire Shares under the Company Stock Plans,
neither the Company nor any of its Subsidiaries has outstanding bonds,
debentures, notes or other obligations, the holders of which have the right to
vote (or which are convertible into or exchangeable or exercisable for
securities having the right to vote) with the stockholders of the Company on any
matter.

(d)           There are no outstanding obligations of the Company or any of its
Subsidiaries restricting the transfer of, containing any right of first refusal
or granting any antidilution rights with respect to, any Shares or other
ownership interests of the Company or any of its Subsidiaries. There are no
voting trusts or other agreements or understandings to which the Company or any
of its Subsidiaries is a party with respect to the voting of the capital stock
or other equity interest of the Company or any of its Subsidiaries. No
Subsidiary of the Company owns any Shares.

3.3           Corporate Authority Relative to This Agreement; No Violation.  

(a)           The Company has the requisite corporate power and authority to
enter into this Agreement and, subject to receipt of the Company Stockholder
Approval, to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized by the Company Board, and the
Company Board has (i) determined that it is in the best interests of the Company
and its stockholders, and declared it advisable, to enter into this Agreement
and (ii) adopted this Agreement and approved the consummation of the
transactions contemplated hereby, including the Merger, upon the terms and
subject to the conditions set forth herein. Except for the Company Stockholder
Approval, no other corporate proceedings on the part of the Company are
necessary to authorize the consummation of the transactions contemplated hereby.
As of the date hereof, the Company Board has resolved to recommend that the
Company’s stockholders approve this Agreement and the transactions contemplated
hereby (the “Company Recommendation”) and directed that this Agreement be
submitted to the holders of Company Common Stock for approval. This Agreement
has been duly and validly executed and delivered by the Company and, assuming
this Agreement constitutes the legal, valid and binding agreement of Parent and
Merger Sub, constitutes the legal, valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms.

 
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(b)           Other than in connection with or in compliance with (i) the Merger
Statutes, (ii) the Securities Exchange Act of 1934 (the “Exchange Act”), and
(iii) the Securities Act of 1933 (the “Securities Act”), and, subject to the
accuracy of the representations and warranties of Parent and Merger Sub in
Article IV, no authorization, consent or approval of, or filing with, any United
States, state of the United States or foreign governmental or regulatory agency,
commission, court, body, entity or authority (each, a “Governmental Entity”) is
necessary, under applicable Law, for the consummation by the Company of the
transactions contemplated by this Agreement, except for such authorizations,
consents, approvals or filings that, if not obtained or made, would not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect.

(c)           The execution and delivery by the Company of this Agreement do
not, and, except as described in Section 3.3(b), the consummation of the
transactions contemplated hereby and compliance with the provisions hereof will
not (i) result in any violation of, or result in a default (with or without
notice or lapse of time, or both) under, or require any consent or approval
under, or give rise to a right of termination, cancellation, acceleration or
amendment of any material obligation under, or give rise to (except with respect
to any Company Benefit Plans or other compensatory programs or arrangements) any
vesting, guaranteed payment or loss of a material benefit under, any loan,
guarantee of indebtedness or credit agreement, note, bond, mortgage, indenture,
lease, agreement, contract, instrument, permit, concession, franchise, right or
license (each, a “Contract”) binding upon or inuring to the benefit of the
Company or any of its Subsidiaries or result in the creation of any liens,
claims, mortgages, encumbrances, pledges, security interests, equities or
charges of any kind (each, a “Lien”), other than any such Lien (A) for Taxes or
governmental assessments, charges or claims of payment not yet due, being
contested in good faith or for which adequate accruals or reserves have been
established, (B) which is a carriers’, warehousemen’s, mechanics’,
materialmen’s, repairmen’s or other similar lien arising in the ordinary course
of business or (C) which would not reasonably be expected to materially impair
the continued use of a Company Owned Real Property or a Company Leased Real
Property as currently operated, upon any of the properties or assets of the
Company or any of its Subsidiaries, (ii) conflict with or result in any
violation of any provision of the articles of incorporation or by-laws or other
equivalent organizational document, in each case as amended, of the Company or
any of its Subsidiaries or (iii) conflict with or violate any applicable Laws,
other than, in the case of clauses (i) and (iii), any such consent, approval,
violation, conflict, default, termination, cancellation, acceleration,
amendment, right, loss or Lien that would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect.

3.4           Reports and Financial Statements.   The consolidated financial
statements (including all related notes and schedules) of the Company for the
years ended December 31, 2010 and 2009, (i) have been prepared from, and are
based upon the books and records of the Company and its consolidated
subsidiaries and (ii) fairly present in all material respects the consolidated
financial position of the Company and its consolidated subsidiaries, as at the
respective dates thereof, and the consolidated results of their operations and
their consolidated cash flows for the respective periods then ended (subject, in
the case of the unaudited statements, to normal year-end audit adjustments and
to any other adjustments described therein, including the notes thereto) in the
case of the unaudited statements, as permitted by the SEC, applied on a
consistent basis during the periods involved (except as may be indicated therein
or in the notes thereto).

 
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To the knowledge of the Company, as of the date of this Agreement, there are no
SEC inquiries or investigations, other governmental inquiries or investigations
or internal investigations pending or threatened, in each case regarding any
accounting practices of the Company.

3.5           Internal Controls and Procedures.  The Company has established and
maintains disclosure controls and procedures and internal control over financial
reporting. The Company’s disclosure controls and procedures are reasonably
designed to ensure that all material information reported in its financial
statements is recorded, processed, summarized and reported on a timely basis,
and that all such material information is accumulated and communicated to the
Company’s management as appropriate. Based on the Company’s management’s most
recently completed evaluation of the Company’s internal control over financial
reporting prior to the date of this Agreement, (i) to the knowledge of the
Company, the Company had no significant deficiencies or material weaknesses in
the design or operation of its internal control over financial reporting that
would reasonably be expected to adversely affect the Company’s ability to
record, process, summarize and report financial information and (ii) the Company
does not have knowledge of any fraud, whether or not material, that involves
management or other employees who have a significant role in the Company’s
internal control over financial reporting.

3.6           No Undisclosed Liabilities.  Except (a) as reflected or reserved
against in the Company’s consolidated balance sheets (or the notes thereto)
included in the Company’s financial statements, (b) as permitted or contemplated
by this Agreement, (c) for liabilities and obligations incurred in the ordinary
course of business since December 31, 2010 and (d) for liabilities or
obligations which have been discharged or paid in full in the ordinary course of
business, as of the date hereof, neither the Company nor any Subsidiary of the
Company has any liabilities or obligations of any nature, whether or not
accrued, contingent or otherwise, that would be required to be reflected on a
consolidated balance sheet of the Company and its consolidated Subsidiaries (or
in the notes thereto), other than those which are not having or would not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect.

3.7           Compliance with Law; Permits.

(a)           The Company and each of its Subsidiaries are in compliance with
and are not in default under or in violation of any applicable federal, state,
local or foreign law, statute, ordinance, rule, regulation, judgment, order,
injunction, decree or agency requirement of any Governmental Entity
(collectively, “Laws” and each, a “Law”), except where such non-compliance,
default or violation is not having or would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect.

 
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(b)           The Company and its Subsidiaries are in possession of all
franchises, grants, authorizations, licenses, permits, easements, variances,
exceptions, consents, certificates, approvals and orders of any Governmental
Entity necessary for the Company and its Subsidiaries to own, lease and operate
their properties and assets or to carry on their businesses as they are now
being conducted (the “Company Permits”), except for any of the foregoing
franchises, grants, authorizations, licenses, permits, easements, variances,
exceptions, consents, certificates, approvals and orders related to the
residential construction activities of the Company and its Subsidiaries that the
Company or such Subsidiaries have applied for or are endeavoring to obtain in
the ordinary course of business and except where the failure to have any of the
Company Permits is not having or would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect. All Company
Permits are in full force and effect, except where the failure to be in full
force and effect is not having or would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect.

(c)           Notwithstanding anything contained in this Section 3.7, no
representation or warranty shall be deemed to be made in this Section 3.7 in
respect of the matters referenced in Section 3.4 or 3.5, or in respect of
environmental, Tax, employee benefits or labor Law matters.

3.8           Environmental Laws and Regulations.  

(a)           Except as is not having or would not reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect:
(i) since January 1, 2006, no notice, notification, demand, request for
information, citation, summons, complaint or order has been received, no penalty
has been assessed, no action, claim, suit or proceeding is pending, and, to the
knowledge of the Company, no action, claim, suit or proceeding is threatened nor
is any investigation or review pending or threatened, in each case, by any
Governmental Entity or other person relating to the Company or any of its
Subsidiaries and relating to or arising out of any Environmental Law; (ii) the
Company and its Subsidiaries are in compliance with all Environmental Laws with
respect to their properties and operations, and are in compliance with all
permits required under Environmental Laws for the conduct of their respective
businesses (“Environmental Permits”); (iii) neither the Company nor any of its
Subsidiaries is obligated to conduct or pay for, and is not conducting or paying
for, any response or corrective action under any Environmental Law at any
location; and (iv) neither the Company nor any of its Subsidiaries is party to
any order, judgment or decree that imposes any obligations under any
Environmental Law.

 
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(b)           For purposes of this Agreement:

(i)           “Environment” means any ambient air, surface water, drinking
water, groundwater, land surface (whether below or above water), wetlands,
subsurface strata, sediment, plant or animal life and natural resources.

(ii)           “Environmental Law” means any Law, any common law theory of
liability or any binding agreement issued or entered by or with any Governmental
Entity relating to: (A) the Environment, including pollution, contamination,
cleanup, preservation, protection, mitigation and reclamation of the
Environment; (B) any discharge, emission, release or threatened release of any
Hazardous Materials, including investigation, assessment, testing, monitoring,
mitigation, containment, removal, remediation and cleanup of any such emission,
discharge, release or threatened release or the protection of human health from
exposure to Hazardous Materials; (C) the management of any Hazardous Materials,
including the use, labeling, processing, disposal, storage, treatment, transport
or recycling of any Hazardous Materials; or (D) the presence of Hazardous
Materials in any building, physical structure, product or fixture.

(iii)           “Hazardous Materials” means any pollutant or contaminant
(including any constituent, raw material, product or by-product thereof),
petroleum, asbestos or asbestos-containing material, polychlorinated biphenyls,
lead paint, any hazardous, industrial or solid waste, any toxic, radioactive,
infectious or hazardous substance, material or agent, or any other substance or
waste regulated under or for which liability or standards of care are imposed by
any Environmental Law.

3.9           Employee Benefit Plans.  

(a)           Section 3.9(a) of the Company Disclosure Schedule lists all
material Company Benefit Plans. For purposes of this Agreement, “Company Benefit
Plans” means all compensation or employee benefit plans, programs, policies,
agreements or other arrangements, whether or not “employee benefit plans”
(within the meaning of Section 3(3) of the Employee Retirement Income Security
Act of 1974 (“ERISA”), whether or not subject to ERISA), providing cash- or
equity-based incentives, including bonus, profit-sharing, deferred compensation,
incentive compensation, stock ownership, stock purchase, stock options, phantom
stock, restricted stock, restricted stock units, performance stock, performance
stock units, stock appreciation rights, health, medical, dental, vision,
disability, accident or life insurance benefits or vacation, sick leave, holiday
pay, fringe benefit, severance, retirement, pension or savings benefits, that
are sponsored, maintained or contributed to by the Company or any of its
Subsidiaries for the benefit of current or former employees or directors of the
Company or its Subsidiaries and all employee agreements providing compensation,
vacation, holiday pay, severance or other benefits to any current or former
officer or employee of the Company or its Subsidiaries.
 
 
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(b)           Each Company Benefit Plan has been maintained and administered in
compliance with its terms and with applicable Law, including ERISA and the Code
to the extent applicable thereto, except for such non-compliance which is not
having or would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect. Any Company Benefit Plan intended
to be qualified under Section 401(a) or 401(k) of the Code has received a
determination letter from the Internal Revenue Service (the “IRS”) and, to the
knowledge of the Company, after consultation with employees of the Company who
are responsible for the day-to-day administration of such Company Benefit Plans,
(i) there are no circumstances likely to result in the revocation of any such
favorable determination letter and (ii) there are no circumstances indicating
that any such plan is not so qualified in operation. To the knowledge of the
Company, no prohibited transaction described in Section 406 of ERISA or
Section 4975 of the Code has occurred, except as is not having or would not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect. Neither the Company nor any of its Subsidiaries
maintains or contributes to any plan or arrangement which provides retiree
medical or welfare benefits nor has any liability or obligation to provide such
benefits, except as required by applicable Law. There is no pending, or to the
knowledge of the Company, threatened litigation or claims (other than routine
claims for benefits) relating to the Company Benefit Plans which are having or
would reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect.

(c)           None of the Company, any of its Subsidiaries or any other person
or entity that together with any other person or entity is treated as a single
employer under Section 414 of the Code or Section 4001 of ERISA (each, an “ERISA
Affiliate”) contributes to or maintains an “employee benefit plan” (within the
meaning of Section 3(3) of ERISA) (an “ERISA Plan”) subject to Title IV or
Section 302 of ERISA or Section 412 or 4971 of the Code or have contributed to
or maintained any such plan at any time during the past six years and no
liability has been or is expected to be incurred by the Company or any of its
Subsidiaries with respect to any such plan. None of the Company, any of its
Subsidiaries or any ERISA Affiliate of the Company or its Subsidiaries has
contributed, or been obligated to contribute, to any “multiemployer plan”
(within the meaning of Section 3(37) of ERISA) at any time during the past six
years and no liability has been or is expected to be incurred by the Company or
any Subsidiary with respect to any such plan.

(d)           The consummation of the transactions contemplated by this
Agreement will not, either alone or in combination with another event,
(i) entitle any current or former employee, consultant or officer of the Company
or any of its Subsidiaries to severance pay, unemployment compensation or any
other payment, except as expressly provided in this Agreement or as required by
applicable Law or (ii) accelerate the time of payment or vesting, or increase
the amount of compensation due any such employee, consultant or officer, except
as expressly provided in this Agreement.

3.10         Absence of Certain Changes or Events.   From December 31, 2010,
through the date of this Agreement, (i) the businesses of the Company and its
Subsidiaries have been conducted, in all material respects, in the ordinary
course of business, and (ii) there has not been any event, change, effect,
development, state of facts, condition, circumstance or occurrence that has had,
individually or in the aggregate, a Company Material Adverse Effect.

3.11         Investigations; Litigation.  Except as set forth in Company
Disclosure Schedule 3.11 (a) there is no investigation or review pending (or, to
the knowledge of the Company, threatened) by any Governmental Entity with
respect to the Company or any of its Subsidiaries, and (b) there are no actions,
suits, inquiries, investigations or proceedings pending (or, to the knowledge of
the Company, threatened) against or affecting the Company or any of its
Subsidiaries, or any of their respective properties at law or in equity before,
and there are no orders, judgments or decrees of, or before, any Governmental
Entity which, in the case of clause (a) or (b), are having or would reasonably
be expected to have, individually or in the aggregate, a Company Material
Adverse Effect.

 
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3.12         Information Supplied.  None of the information provided by the
Company to the Parent contains any untrue statement of a material fact or omits
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading or (b) the proxy statement relating to the
Company Stockholders’ Meeting will, at the date it is first mailed to the
Company’s stockholders or at the time of the Company Stockholders’ Meeting,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.

3.13         Tax Matters.  

(a)           Except as would not reasonably be expected to have, individually
or in the aggregate, a Company Material Adverse Effect, (i) other than with
respect to matters contested in good faith or for which adequate reserves have
been established (A) the Company and each of its Subsidiaries have prepared and
timely filed (taking into account any extension of time within which to file)
all Tax Returns required to be filed by any of them and all such filed Tax
Returns are complete and accurate, and (B) the Company and each of its
Subsidiaries have paid all Taxes that are required to be paid by any of them,
(ii) all deficiencies asserted or assessed by a taxing authority against the
Company or any of its Subsidiaries have been paid in full or are adequately
reserved, (iii) as of the date of this Agreement, there are not pending or, to
the knowledge of the Company, threatened in writing any audits, examinations,
investigations or other proceedings in respect of income or franchise Taxes and
there are no currently effective waivers (or requests for waivers) of the time
to assess any Taxes, (iv) there are no Liens for income or franchise Taxes on
any of the assets of the Company or any of its Subsidiaries other than Company
Permitted Liens, and (v) neither the Company nor any of its Subsidiaries (A) is
a party to or is bound by any Tax sharing, allocation or indemnification
agreement with persons other than wholly owned Subsidiaries of the Company or
(B) has any liability for Taxes of any other person (other than the Company and
its Subsidiaries), as a transferee or successor, by contract or otherwise.

(b)           As used in this Agreement, “Taxes” means any and all domestic or
foreign, federal, state, local or other taxes of any kind (together with any and
all interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any Governmental Entity, including taxes on or with
respect to income, franchises, windfall or other profits, gross receipts,
property, sales, use, capital stock, payroll, employment, unemployment, social
security, workers’ compensation, margin or net worth, and taxes in the nature of
excise, withholding, ad valorem or value added.

(c)           As used in this Agreement, “Tax Return” means any return, report
or similar document (including any attached schedules) filed or required to be
filed with respect to Taxes, including any information return, claim for refund,
amended return or declaration of estimated Taxes.

 
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3.14         Employment and Labor Matters.  Except for such matters which are
not having or would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect, (a) (i) there are no strikes or
lockouts with respect to any employees of the Company or any of its Subsidiaries
(“Company Employees”), (ii) the Company and its Subsidiaries are not parties to
any collective bargaining agreement and, to the knowledge of the Company, there
is no union organizing effort pending or threatened against the Company or any
of its Subsidiaries, (iii) there is no labor dispute (other than routine
individual grievances) or labor arbitration proceeding pending or, to the
knowledge of the Company, threatened against the Company or any of its
Subsidiaries, (iv) there is no slowdown or work stoppage in effect or, to the
knowledge of the Company, threatened with respect to Company Employees, and
(v) to the knowledge of the Company, there is no charge, complaint, or
investigation pending or threatened by any Governmental Entity against the
Company or any of its Subsidiaries concerning any alleged violation of any
applicable Law respecting employment or employment practices, workplace health
and safety, terms and conditions of employment, wages and hours, or unfair labor
practices, and (b) the Company and its Subsidiaries are in compliance with all
applicable Laws respecting (i) employment and employment practices,
(ii) workplace health and safety, (iii) terms and conditions of employment and
wages and hours, and (iv) unfair labor practices.

3.15         Intellectual Property.  Except as is not having or would not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect, either the Company or a Subsidiary of the Company owns,
or is licensed or otherwise possesses legally enforceable rights to use, all
material trademarks, trade names, service marks, service names, mark
registrations, logos, assumed names, registered and unregistered copyrights,
patents or applications and registrations used in their respective businesses as
currently conducted (collectively, the “Intellectual Property”). Except as is
not having or would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect, (a) there are no pending or, to
the knowledge of the Company, threatened claims by any person alleging
infringement by the Company or any of its Subsidiaries for their use of the
Intellectual Property of the Company or any of its Subsidiaries, (b) to the
knowledge of the Company, the conduct of the business of the Company and its
Subsidiaries does not infringe any intellectual property rights of any person,
(c) neither the Company nor any of its Subsidiaries has any claim pending of a
violation or infringement by others of its rights to or in connection with the
Intellectual Property of the Company or any of its Subsidiaries and (d) to the
knowledge of the Company, no person is infringing any Intellectual Property of
the Company or any of its Subsidiaries.

 
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3.16         Real Property.  

(a)           The Company or its Subsidiaries owns of record or beneficially the
real property set forth in Section 3.16 of the Company Disclosure
Schedule.  With respect to the real property owned of record or beneficially by
the Company or any Subsidiary (such property collectively, the “Company Owned
Real Property”), except as is not having or would not reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect,
(i) either the Company or a Subsidiary of the Company has good and valid title
to such Company Owned Real Property, free and clear of all Liens other than any
such Lien (A) for Taxes or governmental assessments, charges or claims of
payment not yet due, being contested in good faith or for which adequate
accruals or reserves have been established, (B) which is a carriers’,
warehousemen’s, mechanics’, materialmen’s, repairmen’s, or other similar lien
arising in the ordinary course of business, (C) which is disclosed on the most
recent consolidated balance sheet of the Company or notes thereto included in
the Company SEC Documents filed prior to the date hereof or securing liabilities
reflected on such balance sheet, (D) which was incurred in the ordinary course
of business since the date of such recent consolidated balance sheet of the
Company or (E) which would not reasonably be expected to materially impair the
continued use of a Company Owned Real Property or a Company Leased Real Property
as currently operated (each of the foregoing, a “Company Permitted Lien”) (and
conditions, covenants, encroachments, easements, restrictions and other
encumbrances that do not materially adversely affect the use of the Company
Owned Real Property by the Company for residential home building), (ii) there
are no reversion rights, outstanding options or rights of first refusal in favor
of any other party to purchase, lease, occupy or otherwise utilize such Company
Owned Real Property or any portion thereof or interest therein that would
reasonably be expected to materially adversely affect the use by the Company for
residential home building of the Company Owned Real Property affected thereby
and (iii) neither the Company nor its Subsidiaries have collaterally assigned or
granted a security interest in the Company Owned Real Property except for
Company Permitted Liens. Neither the Company nor any of its Subsidiaries has
received notice of any pending, and to the knowledge of the Company there is no
pending or threatened condemnation or eminent domain proceeding with respect to
any Company Owned Real Property, except proceedings which are not having or
would not reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect.

(b)           Except as is not having or would not reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect,
(i) each material lease, sublease, license, easement and other agreement under
which the Company or any of its Subsidiaries uses or occupies or has the right
to use or occupy any material real property at which the material operations of
the Company and its Subsidiaries are conducted (the “Company Leased Real
Property”), is valid, binding and in full force and effect and (ii) no uncured
default of a material nature on the part of the Company or, if applicable, its
Subsidiary or, to the knowledge of the Company, the landlord or other parties to
such lease or other agreement thereunder exists with respect to any Company
Leased Real Property. Except as is not having or would not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect, the Company and each of its Subsidiaries has a good and valid leasehold
interest, subject to the terms of any lease, sublease or other agreement
applicable thereto, in each parcel of Company Leased Real Property, free and
clear of all Liens, except for Company Permitted Liens (and conditions,
covenants, encroachments, easements, restrictions and other encumbrances that do
not adversely affect the use of the Company Leased Real Property by the Company
for residential home building). Except as is not having or would not reasonably
be expected to have, individually or in the aggregate, a Company Material
Adverse Effect, neither the Company nor any of its Subsidiaries has (x) received
notice of any pending, and, to the knowledge of the Company, there is no
threatened, condemnation proceeding with respect to any Company Leased Real
Property, (y) collaterally assigned or granted a security interest in the
Company Leased Real Property except for Company Permitted Liens, or (z) received
any written notice of any default under lease or other agreement for a Company
Leased Real Property and, to the knowledge of Company, no event has occurred and
no condition exists that, with notice or lapse of time, or both, would
constitute a default by Company or any of its Subsidiaries, as applicable, under
any such leases and agreements.

 
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(c)           Except as is not having or would not reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect, no
judgment, injunction, order, decree, statute, ordinance, rule, regulation,
moratorium, or other action by or before a Governmental Entity exists or is
pending or threatened that restricts the development or sale of Company Owned
Real Property currently under development or all or a portion of which is being
held for sale by the Company or any of its Subsidiaries.

(d)           No developer-related charges or assessments imposed by any
Governmental Entity (or any other person) for public improvements (or otherwise)
against any Company Owned Real Property held for development, are unpaid (other
than those reflected on the most recent financial statements of the Company, and
those incurred since the date of such financial statements of the Company to the
extent in the ordinary course of the Company’s business and consistent with past
practices), except for such charges and assessments as, in the aggregate, are
not having or would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect.

3.17         Required Vote of the Company Stockholders.  The affirmative vote of
a majority of the outstanding Shares entitled to vote on this Agreement and the
Merger is the only vote of holders of securities of the Company which is
required to approve this Agreement and the Merger (the “Company Stockholder
Approval”).
 
 
3.18         Material Contracts.  

(a)           Section 3.18(a) of the Company Disclosure Schedule contains a
complete list as of the date hereof of the following types of Contracts, whether
written or oral, that are intended by the Company or any of its Subsidiaries, as
applicable, to be legally binding, and to which the Company or any of its
Subsidiaries is a party (such Contracts, being the “Company Material
Contracts”):

(i)           each “material contract” (as such term is defined in
Item 610(b)(10) of Regulation S-K of the SEC) with respect to the Company and
its Subsidiaries (other than compensatory contracts with, or which include as
participants, any current or former director or officer of the Company or any of
its Subsidiaries);

(ii)           all contracts and agreements evidencing indebtedness for borrowed
money in excess of $250,000 in principal amount; and

(iii)           all non-competition agreements or any other agreements or
arrangements (A) that materially limit or otherwise materially restrict the
Company and its Subsidiaries from conducting a material portion of the business
of the Company and its Subsidiaries, taken as a whole, or (B) that would, after
the Effective Time, materially limit or materially restrict Parent or any of its
Subsidiaries (other than the Surviving Corporation and its Subsidiaries) from
engaging or competing in any material line of business or in any material
geographic area, or that would materially limit or materially restrict a
material portion of the business of Parent and its Subsidiaries, taken as a
whole (including for purposes of such determination, the Surviving Corporation
and its Subsidiaries), after giving effect to the Merger.

 
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(b)           Neither the Company nor any Subsidiary of the Company is in breach
of or default under the terms of any Company Material Contract where such breach
or default is having or would reasonably be expected to have, individually or in
the aggregate, a Company Material Adverse Effect. To the knowledge of the
Company, no other party to any Company Material Contract is in breach of or
default under the terms of any Company Material Contract where such breach or
default is having or would reasonably be expected to have, individually or in
the aggregate, a Company Material Adverse Effect. Except as is not having or
would not reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect, each Company Material Contract is a legal,
valid and binding obligation of the Company or the Subsidiary of the Company
which is party thereto and, to the knowledge of the Company, of each other party
thereto, and is in full force and effect, except that (i) such enforcement may
be subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other similar Laws, now or hereafter in effect, relating to creditors’ rights
generally and (ii) equitable remedies of specific performance and injunctive and
other forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.

(c)           The Company has made available to Parent correct and complete
copies in all material respects of all Company Material Contracts, including any
material amendments or material waivers thereto.

3.19         Finders or Brokers.  Neither the Company nor any of its
Subsidiaries has employed any investment banker, broker or finder in connection
with the transactions contemplated by this Agreement who might be entitled to
any fee or any commission in connection with or upon consummation of the Merger.

3.20         Insurance.  Section 3.20 of the Company Disclosure Schedule sets
forth (i) a true and complete list of the material insurance policies covering
the Company and its Subsidiaries as of the date hereof and (ii) the last annual
premium paid by the Company for the Company’s directors’ and officers’ insurance
policy. Except as is not having or would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect, (a) each
insurance policy under which the Company or any of its Subsidiaries is an
insured or otherwise the principal beneficiary of coverage (collectively, the
“Company Insurance Policies”) is in full force and effect, all premiums due
thereon have been paid in full and the Company and its Subsidiaries are in
compliance with the terms and conditions of such Company Insurance Policy,
(b) neither the Company nor any of its Subsidiaries is in breach or default
under any Company Insurance Policy and (c) no event has occurred which, with
notice or lapse of time, would constitute such breach or default, or permit
termination or modification, under the policy.

3.21         Tax Treatment.  Neither the Company nor any of its Subsidiaries has
taken or agreed to take any action or knows of any fact that would prevent or
impede, or would be reasonably likely to prevent or impede, the Merger from
qualifying as a “reorganization” within the meaning of Section 368(a) of the
Code.

 
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3.22         Anti-Takeover Laws.   No “moratorium,” “control share,” “fair
price,” “business combination,” “supermajority,” “affiliate transactions” or
other anti-takeover Laws or any similar provisions under the Company
Organizational Documents are applicable to this Agreement or the transactions
contemplated hereby.

3.23         No Additional Representations.  The Company acknowledges that
neither Parent nor Merger Sub makes any representation or warranty as to any
matter whatsoever except as expressly set forth in this Agreement or in any
certificate delivered by Parent or Merger Sub to the Company in accordance with
the terms hereof, and specifically (but without limiting the generality of the
foregoing) that neither Parent nor Merger Sub makes any representation or
warranty with respect to (a) any projections, estimates or budgets delivered or
made available to the Company (or any of their respective affiliates or
Representatives) of future revenues, results of operations (or any component
thereof), cash flows or financial condition (or any component thereof) of Parent
and its Subsidiaries or (b) the future business and operations of Parent and its
Subsidiaries.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

Except as disclosed in the Parent SEC Documents filed or furnished with the SEC,
since April 1, 2011, but prior to the date hereof (but excluding any risk factor
disclosures contained under the heading “Risk Factors,” any disclosure of risks
included in any “forward-looking statements” disclaimer or any other statements
that are similarly predictive or forward-looking in nature, other than, in the
case of any such disclosures or other statements, any factual or historical
information contained therein) or in the disclosure schedule delivered by Parent
to the Company immediately prior to the execution of this Agreement (the “Parent
Disclosure Schedule”), Parent and Merger Sub represent and warrant to the
Company as follows:

4.1           Qualification; Organization, Subsidiaries, etc.

(a)           Each of Parent and Merger Sub is a legal entity duly organized,
validly existing and in good standing under the Laws of its respective
jurisdiction of organization and has all requisite corporate or similar power
and authority to own, lease and operate its properties and assets and to carry
on its business as presently conducted and is qualified to do business and is in
good standing as a foreign legal entity in each jurisdiction where the
ownership, leasing or operation of its assets or properties or conduct of its
business requires such qualification, except where the failure to be so
organized, validly existing, qualified or in good standing, or to have such
power or authority, is not having or would not reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect. As used in
this Agreement, a “Parent Material Adverse Effect” means an event, change,
effect, development, state of facts, condition, circumstance or occurrence that
is materially adverse to the business, financial condition or continuing results
of operations of Parent and its Subsidiaries, taken as a whole, but shall not be
deemed to include any event, change, effect, development, state of facts,
condition, circumstance or occurrence: (i) in or affecting economic conditions
generally (including changes in interest rates) or the financial, mortgage or
securities markets in the United States or elsewhere in the world, (ii) in or
affecting the industries in which Parent or its Subsidiaries operate generally
or in any specific jurisdiction or geographical area or (iii) resulting from or
arising out of (A) the announcement or the existence of, or compliance with, or
taking any action required or permitted by this Agreement or the transactions
contemplated hereby, (B) any taking of any action at the written request of the
Company, (C) any litigation arising from allegations of a breach of fiduciary
duty or other violation of applicable Law relating to this Agreement or the
transactions contemplated hereby, (D) any adoption, implementation,
promulgation, repeal, modification, reinterpretation or proposal of any rule,
regulation, ordinance, order, protocol or any other Law of or by any national,
regional, state or local Governmental Entity, (E) any changes in GAAP or
accounting standards or interpretations thereof, (F) any weather-related or
other force majeure event or outbreak or escalation of hostilities or acts of
war or terrorism, except to the extent that Parent and its Subsidiaries are
adversely affected in a disproportionate manner relative to other participants
in the industries in which Parent and its Subsidiaries operate or (G) any
changes in the share price or trading volume of the Parent Common Stock, in
Parent’s credit rating or in any analyst’s recommendations, or the failure of
Parent to meet projections or forecasts (including any analyst’s projections)
(provided that the event, change, effect, development, condition or occurrence
underlying such change shall not be excluded to the extent such event, change,
effect, development, condition or occurrence would otherwise constitute a Parent
Material Adverse Effect).

 
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(b)           Parent has made available to the Company prior to the date of this
Agreement a true and complete copy of the articles of incorporation and by-laws
of Parent and Merger Sub, each as amended through the date hereof (collectively,
the “Parent Organizational Documents”).

4.2           Capital Stock.  

(a)           The authorized capital stock of Parent consists of 100,000,000
shares of Parent Common Stock, par value $0.0001. As of the close of business on
May 10, 2011 (the “Parent Capitalization Date”), (i) 27,974,000 shares of Parent
Common Stock were issued and outstanding, (ii) there were no treasury shares,
and (iii) no shares of Parent Common Stock were reserved for issuance in respect
of outstanding Parent Stock Options. All outstanding shares of Parent Common
Stock are, and all shares of Parent Common Stock reserved for issuance as noted
in clause (iii), when issued in accordance with the respective terms thereof,
will be duly authorized, validly issued, fully paid and nonassessable and free
of pre-emptive rights. The parent does not have authorized any shares of Parent
Preferred Stock to pay the Merger Consideration and must amend its Articles of
Incorporation (the “Charter Amendment”) upon the approving vote of its
shareholders and compliance with Securities and Exchange Commission proxy rules
to authorize the Parent Preferred Stock.

(b)           From the close of business on the Parent Capitalization Date
through the date of this Agreement, there have been no issuances of shares of
the capital stock or equity securities of Parent or any other securities of
Parent other than issuances of shares of Parent Common Stock pursuant to the
exercise of Parent Stock Options under the employee and director stock plans of
Parent. Except as set forth in Section 4.2(a), as of the date hereof, there are
no outstanding subscriptions, options, warrants, calls, convertible securities
or other similar rights, agreements or commitments relating to the issuance of
capital stock to which Parent or any of its Subsidiaries is a party obligating
Parent or any of its Subsidiaries to (i) issue, transfer or sell any shares of
capital stock or other equity interests of Parent or any Subsidiary of Parent or
securities convertible into or exchangeable or exercisable for such shares or
equity interests, (ii) grant, extend or enter into any such subscription,
option, warrant, call, convertible securities or other similar right, agreement
or commitment, (iii) redeem or otherwise acquire any such shares of capital
stock or other equity interests or (iv) provide a material amount of funds to,
or make any material investment (in the form of a loan, capital contribution or
otherwise) in, any Subsidiary.

 
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(c)           Except for awards to acquire shares of Parent Common Stock under
the employee and director stock plans of Parent, neither Parent nor any of its
Subsidiaries has outstanding bonds, debentures, notes or other obligations, the
holders of which have the right to vote (or which are convertible or
exchangeable into or exercisable for securities having the right to vote) with
the stockholders of Parent on any matter.

(d)           There are no outstanding obligations of Parent or any of its
Subsidiaries restricting the transfer of, containing any right of first refusal
or granting any antidilution rights with respect to, any shares of capital stock
or other ownership interests of Parent or any of its Subsidiaries. There are no
voting trusts or other agreements or understandings to which Parent or any of
its Subsidiaries is a party with respect to the voting of the capital stock or
other equity interest of Parent or any of its Subsidiaries.

(e)           As of the date of this Agreement, the authorized capital stock of
Merger Sub consists of 1,000 shares of common stock, par value $0.01 per share,
all of which are validly issued and outstanding. All of the issued and
outstanding capital stock of Merger Sub is, and at the Effective Time all of the
issued and outstanding capital stock of the Surviving Corporation will be, owned
by Parent or a direct or indirect wholly owned Subsidiary of Parent. Merger Sub
has outstanding no option, warrant, right or any other agreement pursuant to
which any person other than Parent may acquire any equity security of Merger
Sub. Merger Sub has not conducted any business prior to the date hereof and has,
and prior to the Effective Time will have, no assets, liabilities or obligations
of any nature other than those incident to its formation and pursuant to this
Agreement and the Merger and the other transactions contemplated by this
Agreement.

4.3           Corporate Authority Relative to This Agreement; No Violation.  

(a)           Each of Parent and Merger Sub has the requisite corporate power
and authority to enter into this Agreement and, subject to receipt of the Parent
Stockholder Approvals, to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Boards of Directors of Parent and Merger Sub and by Parent, as the sole
stockholder of Merger Sub, and, except for the Parent Stockholder Approvals, no
other corporate proceedings on the part of Parent or Merger Sub are necessary to
authorize the consummation of the transactions contemplated hereby. As of the
date hereof, the Parent Board has resolved to recommend that Parent’s
stockholders (A) approve an amendment to Parent’s Articles of Incorporation to
authorize that number of shares of Preferred Stock as set forth on
Section 4.3(a) of the Parent Disclosure Schedule (the “Charter Amendment”) and
(B), if necessary under Nevada Statutes,  approve the issuance of shares of
Parent Common Stock in connection with the Merger (the “Stock Issuance”)
(collectively, the “Parent Recommendation”), and has directed that the Charter
be submitted to the holders of Parent Common Stock for approval. This Agreement
has been duly and validly executed and delivered by Parent and Merger Sub, and,
assuming this Agreement constitutes the legal, valid and binding agreement of
the Company, this Agreement constitutes the legal, valid and binding agreement
of each of Parent and Merger Sub, enforceable against Parent and Merger Sub in
accordance with its terms.

 
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(b)           Other than in connection with or in compliance with (i) the Merger
Statutes, and particularly those provisions relating to an increase in the
Parent’s authorized stock, (ii) the Exchange Act, and (iii) the Securities Act,
no authorization, consent or approval of, or filing with, any Governmental
Entity is necessary, under applicable Law, for the consummation by Parent or
Merger Sub of the transactions contemplated by this Agreement, except for such
authorizations, consents, approvals or filings that, if not obtained or made,
would not reasonably be expected to have, individually or in the aggregate, a
Parent Material Adverse Effect.

(c)           The execution and delivery by Parent and Merger Sub of this
Agreement do not, and, except as described in Section 4.3(b), the consummation
of the transactions contemplated hereby and compliance with the provisions
hereof will not (i) result in any violation of, or result in a default (with or
without notice or lapse of time, or both) under, or require any consent or
approval under, or give rise to a right of termination, cancellation,
acceleration or amendment of any material obligation under, or give rise to
(except with respect to any Parent Benefit Plans or other compensatory programs
or arrangements) any vesting, guaranteed payment or loss of a material benefit
under, any Contract binding upon or inuring to the benefit of Parent or any of
its Subsidiaries or result in the creation of any Lien, other than any such Lien
(A) for Taxes or governmental assessments, charges or claims of payment not yet
due, being contested in good faith or for which adequate accruals or reserves
have been established, (B) which is a carriers’, warehousemen’s, mechanics’,
materialmen’s, repairmen’s or other similar lien arising in the ordinary course
of business or (C) which would not reasonably be expected to materially impair
the continued use of a Parent Owned Real Property or a Parent Leased Real
Property as currently operated, upon any of the properties or assets of Parent
or any of its Subsidiaries, (ii) conflict with or result in any violation of any
provision of the articles of incorporation or by-laws or other equivalent
organizational document, in each case as amended, of Parent or any of its
Subsidiaries or (iii) conflict with or violate any applicable Laws, other than,
in the case of clauses (i) and (iii), any such consent, approval, violation,
conflict, default, termination, cancellation, acceleration, amendment, right,
loss or Lien that would not reasonably be expected to have, individually or in
the aggregate, a Parent Material Adverse Effect.

4.4           Reports and Financial Statements.  

(a)           Through the date of this Agreement, Parent has filed or furnished
all forms, documents and reports required to be filed or furnished by it with
the SEC (the “Parent SEC Documents”). None of Parent’s Subsidiaries is required
to make any filings with the SEC. As of their respective dates, or, if amended
prior to the date hereof, as of the date of the last such amendment, the Parent
SEC Documents complied in all material respects with the requirements of the
Securities Act and the Exchange Act, as the case may be, and the applicable
rules and regulations promulgated thereunder, and none of the Parent SEC
Documents contained any untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.

 
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(b)           The consolidated financial statements (including all related notes
and schedules) of Parent included in the Parent SEC Documents (i) have been
prepared from, and are based upon the books and records of Parent and its
consolidated subsidiaries and (ii) fairly present in all material respects the
consolidated financial position of Parent and its consolidated subsidiaries, as
at the respective dates thereof, and the consolidated results of their
operations and their consolidated cash flows for the respective periods then
ended (subject, in the case of the unaudited statements, to normal year-end
audit adjustments and to any other adjustments described therein, including the
notes thereto) in conformity with GAAP (except, in the case of the unaudited
statements, as permitted by the SEC) applied on a consistent basis during the
periods involved (except as may be indicated therein or in the notes thereto).

(c)           To the knowledge of Parent, as of the date of this Agreement,
there are no SEC inquiries or investigations, other governmental inquiries or
investigations or internal investigations pending or threatened, in each case
regarding any accounting practices of Parent.

4.5           Internal Controls and Procedures.  Parent has established and
maintains disclosure controls and procedures and internal control over financial
reporting (as such terms are defined in paragraphs (e) and (f), respectively, of
Rule 13a-15 under the Exchange Act) as required by Rule 13a-15 under the
Exchange Act. Parent’s disclosure controls and procedures are reasonably
designed to ensure that all material information required to be disclosed by
Parent in the reports that it files or furnishes under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified
in the rules and forms of the SEC, and that all such material information is
accumulated and communicated to Parent’s management as appropriate to allow
timely decisions regarding required disclosure and to make the certifications
required pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act. Parent’s
management has completed an assessment of the effectiveness of Parent’s
disclosure controls and procedures in accordance with Rule 13a-15 and, to the
extent required by applicable Law, presented in any applicable Parent SEC
Document that is a report on Form 10-K or Form 10-Q its conclusions about the
effectiveness of the disclosure controls and procedures as of the end of the
period covered by such report based on such evaluation. Based on Parent’s
management’s most recently completed evaluation of Parent’s internal control
over financial reporting prior to the date of this Agreement, (i) to the
knowledge of Parent, Parent had no significant deficiencies or material
weaknesses in the design or operation of its internal control over financial
reporting that would reasonably be expected to adversely affect Parent’s ability
to record, process, summarize and report financial information and (ii) Parent
does not have knowledge of any fraud, whether or not material, that involves
management or other employees who have a significant role in Parent’s internal
control over financial reporting.

4.6           No Undisclosed Liabilities.  Except (a) as reflected or reserved
against in Parent’s consolidated balance sheets (or the notes thereto) included
in the Parent SEC Documents filed with the SEC prior to the date hereof, (b) as
permitted or contemplated by this Agreement, (c) for liabilities and obligations
incurred in the ordinary course of business since December 31, 2008 and (d) for
liabilities or obligations which have been discharged or paid in full in the
ordinary course of business, as of the date hereof, neither Parent nor any
Subsidiary of Parent has any liabilities or obligations of any nature, whether
or not accrued, contingent or otherwise, that would be required by GAAP to be
reflected on a consolidated balance sheet of Parent and its consolidated
Subsidiaries (or in the notes thereto), other than those which are not having or
would not reasonably be expected to have, individually or in the aggregate, a
Parent Material Adverse Effect.

 
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4.7           Compliance with Law; Permits.  

(a)           Parent and each of its Subsidiaries are in compliance with and are
not in default under or in violation of any applicable Law, except where such
non-compliance, default or violation is not having or would not reasonably be
expected to have, individually or in the aggregate, a Parent Material Adverse
Effect.

(b)           Parent and its Subsidiaries are in possession of all franchises,
grants, authorizations, licenses, permits, easements, variances, exceptions,
consents, certificates, approvals and orders of any Governmental Entity
necessary for Parent and its Subsidiaries to own, lease and operate their
properties and assets or to carry on their businesses as they are now being
conducted (the “Parent Permits”), except for any of the foregoing franchises,
grants, authorizations, licenses, permits, easements, variances, exceptions,
consents, certificates, approvals and orders related to the residential
construction activities of Parent and its Subsidiaries that Parent or such
Subsidiaries have applied for or are endeavoring to obtain in the ordinary
course of business and except where the failure to have any of the Parent
Permits is not having or would not reasonably be expected to have, individually
or in the aggregate, a Parent Material Adverse Effect. All Parent Permits are in
full force and effect, except where the failure to be in full force and effect
is not having or would not reasonably be expected to have, individually or in
the aggregate, a Parent Material Adverse Effect.

(c)           Notwithstanding anything contained in this Section 4.7, no
representation or warranty shall be deemed to be made in this Section 4.7 in
respect of the matters referenced in Section 4.4 or 4.5, or in respect of
environmental, Tax, employee benefits or labor Law matters.

4.8           Environmental Laws and Regulations.  Except as is not having or
would not reasonably be expected to have, individually or in the aggregate, a
Parent Material Adverse Effect: (a) since April 1, 2011, no notice,
notification, demand, request for information, citation, summons, complaint or
order has been received, no penalty has been assessed, no action, claim, suit or
proceeding is pending, and, to the knowledge of Parent, no action, claim, suit
or proceeding is threatened nor is any investigation or review pending or
threatened, in each case, by any Governmental Entity or other person relating to
Parent or any of its Subsidiaries and relating to or arising out of any
Environmental Law; (b) Parent and its Subsidiaries are in compliance with all
Environmental Laws with respect to their properties and operations, and are in
compliance with all Environmental Permits; (c) neither Parent nor any of its
Subsidiaries is obligated to conduct or pay for, and is not conducting or paying
for, any response or corrective action under any Environmental Law at any
location; and (d) neither Parent nor any of its Subsidiaries is party to any
order, judgment or decree that imposes any obligations under any Environmental
Law.

4.9           Employee Benefit Plans.  

(a)           Section 4.9(a) of the Parent Disclosure Schedule lists all
material Parent Benefit Plans. For purposes of this Agreement, “Parent Benefit
Plans” means all compensation or employee benefit plans, programs, policies,
agreements or other arrangements, whether or not “employee benefit plans”
(within the meaning of Section 3(3) of ERISA, whether or not subject to ERISA),
providing cash- or equity-based incentives, including bonus, profit-sharing,
deferred compensation, incentive compensation, stock ownership, stock purchase,
stock options, phantom stock, restricted stock, restricted stock units,
performance stock, performance stock units, stock appreciation rights, health,
medical, dental, vision, disability, accident or life insurance benefits or
vacation, sick leave, holiday pay, fringe benefit, severance, retirement,
pension or savings benefits, that are sponsored, maintained or contributed to by
Parent or any of its Subsidiaries for the benefit of current or former employees
or directors of Parent or its Subsidiaries and all employee agreements providing
compensation, vacation, holiday pay, severance or other benefits to any current
or former officer or employee of Parent or its Subsidiaries.

 
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(b)           Each Parent Benefit Plan has been maintained and administered in
compliance with its terms and with applicable Law, including ERISA and the Code
to the extent applicable thereto, except for such non-compliance which is not
having or would not reasonably be expected to have, individually or in the
aggregate, a Parent Material Adverse Effect. Any Parent Benefit Plan intended to
be qualified under Section 401(a) or 401(k) of the Code has received a
determination letter from the IRS and, to the knowledge of Parent, after
consultation with employees of Parent who are responsible for the day-to-day
administration of such Parent Benefit Plans, (i) there are no circumstances
likely to result in the revocation of any such favorable determination letter
and (ii) there are no circumstances indicating that any such plan is not so
qualified in operation. To the knowledge of Parent, no prohibited transaction
described in Section 406 of ERISA or Section 4975 of the Code has occurred,
except as is not having or would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect. Neither
Parent nor any of its Subsidiaries maintains or contributes to any plan or
arrangement which provides retiree medical or welfare benefits nor has any
liability or obligation to provide such benefits, except as required by
applicable Law. There is no pending, or to the knowledge of Parent, threatened
litigation or claims (other than routine claims for benefits) relating to the
Parent Benefit Plans which are having or would reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect.

(c)           None of Parent, any of its Subsidiaries or any of its ERISA
Affiliates contributes to or maintains an ERISA Plan subject to Title IV or
Section 302 of ERISA or Section 412 or 4971 of the Code or have contributed to
or maintained any such plan at any time during the past six years and no
liability has been or is expected to be incurred by Parent or any of its
Subsidiaries with respect to any such plan. None of Parent, any of its
Subsidiaries or any ERISA Affiliate of Parent or its Subsidiaries has
contributed, or been obligated to contribute, to any “multiemployer plan”
(within the meaning of Section 3(37) of ERISA) at any time during the past six
years and no liability has been or is expected to be incurred by Parent or any
Subsidiary with respect to any such plan.

(d)           The consummation of the transactions contemplated by this
Agreement will not, either alone or in combination with another event,
(i) entitle any current or former employee, consultant or officer of Parent or
any of its Subsidiaries to severance pay, unemployment compensation or any other
payment, except as expressly provided in this Agreement or as required by
applicable Law or (ii) accelerate the time of payment or vesting, or increase
the amount of compensation due any such employee, consultant or officer, except
as expressly provided in this Agreement.

4.10         Absence of Certain Changes or Events.  From December 31, 2010,
through the date of this Agreement, (i) the businesses of Parent and its
Subsidiaries have been conducted, in all material respects, in the ordinary
course of business, and (ii) there has not been any event, change, effect,
development, state of facts, condition, circumstance or occurrence that has had,
individually or in the aggregate, a Parent Material Adverse Effect.

 
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4.11         Investigations; Litigation.  (a) There is no investigation or
review pending (or, to the knowledge of Parent, threatened) by any Governmental
Entity with respect to Parent or any of its Subsidiaries, and (b) there are no
actions, suits, inquiries, investigations or proceedings pending (or, to the
knowledge of Parent, threatened) against or affecting Parent or any of its
Subsidiaries, or any of their respective properties at law or in equity before,
and there are no orders, judgments or decrees of, or before, any Governmental
Entity, which in the case of clause (a) or (b), are having or would reasonably
be expected to have, individually or in the aggregate, a Parent Material Adverse
Effect.

4.12         Information Supplied.  None of the information provided by Parent
in its SEC Reports contains any untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading and (b) the Proxy or Information Statement
will, at the date it is first mailed to Parent’s stockholders or at the time of
the Company Stockholder’s Meeting, if any , contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Proxy or
Information Statement (other than the portion thereof relating solely to the
Company Stockholders’ Meeting) will comply as to form in all material respects
with the requirements of the Securities Act and the Exchange Act.
Notwithstanding the foregoing provisions of this Section 4.12, no representation
or warranty is made by Parent with respect to information or statements made or
incorporated by reference in the Proxy or Information Statement which were not
supplied by or on behalf of Parent.

4.13         Tax Matters.  Except as would not reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect, (a) other
than with respect to matters contested in good faith or for which adequate
reserves have been established in accordance with GAAP (i) Parent and each of
its Subsidiaries have prepared and timely filed (taking into account any
extension of time within which to file) all Tax Returns required to be filed by
any of them and all such filed Tax Returns are complete and accurate, and
(ii) Parent and each of its Subsidiaries have paid all Taxes that are required
to be paid by any of them, (b) all deficiencies asserted or assessed by a taxing
authority against Parent or any of its Subsidiaries have been paid in full or
are adequately reserved, in accordance with GAAP, (c) as of the date of this
Agreement, there are not pending or, to the knowledge of Parent, threatened in
writing, any audits, examinations, investigations or other proceedings in
respect of income or franchise Taxes and there are no currently effective
waivers (or requests for waivers) of the time to assess any Taxes, (d) there are
no Liens for income or franchise Taxes on any of the assets of Parent or any of
its Subsidiaries other than Parent Permitted Liens, (e) Parent has not been a
“controlled corporation” or a “distributing corporation” in any distribution
occurring during the three-year period ending on the date hereof (or otherwise
as part of a “plan (or series of related transactions)” within the meaning of
Section 355(e) of the Code of which the Merger is also a part) that was
purported or intended to be governed by Section 355 of the Code, (f) neither
Parent nor any of its Subsidiaries (I) is a party to or is bound by any Tax
sharing, allocation or indemnification agreement with persons other than wholly
owned Subsidiaries of Parent or (II) has any liability for Taxes of any other
person (other than Parent and its Subsidiaries) pursuant to Treasury
Regulation Section 1.1502-6 (or any similar provision of state, local or foreign
Law), as a transferee or successor, by contract or otherwise, (g) as of the date
hereof, neither Parent nor any of its Subsidiaries is required to include in
income any adjustment pursuant to Section 481(a) of the Code, no such adjustment
has been proposed by the IRS and no pending request for permission to change any
accounting method has been submitted by Parent or any of its Subsidiaries,
(h) neither Parent nor any of its Subsidiaries has participated in any “listed
transaction” within the meaning of Treasury Regulation Section 1.6011-4(b)(2)
and (i) to the knowledge of Parent, as of the date hereof and without regard to
this Agreement, Parent has not undergone an “ownership change” within the
meaning of Section 382 of the Code.
 
 
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4.14         Employment and Labor Matters.  Except for such matters which are
not having or would not reasonably be expected to have, individually or in the
aggregate, a Parent Material Adverse Effect, (a) (i) there are no strikes or
lockouts with respect to any employees of Parent or any of its Subsidiaries
(“Parent Employees”), (ii) Parent and its Subsidiaries are not parties to any
collective bargaining agreement and, to the knowledge of Parent, there is no
union organizing effort pending or threatened against Parent or any of its
Subsidiaries, (iii) there is no labor dispute (other than routine individual
grievances) or labor arbitration proceeding pending or, to the knowledge of
Parent, threatened against Parent or any of its Subsidiaries, (iv) there is no
slowdown or work stoppage in effect or, to the knowledge of Parent, threatened
with respect to Parent Employees, and (v) to the knowledge of Parent, there is
no charge, complaint, or investigation pending or threatened by any Governmental
Entity against Parent or any of its Subsidiaries concerning any alleged
violation of any applicable Law respecting employment or employment practices,
workplace health and safety, terms and conditions of employment, wages and
hours, or unfair labor practices, and (b) Parent and its Subsidiaries are in
compliance with all applicable Laws respecting (i) employment and employment
practices, (ii) workplace health and safety, (iii) terms and conditions of
employment and wages and hours, and (iv) unfair labor practices. Neither Parent
nor any of its Subsidiaries has any liabilities or is in breach of any
obligations under the WARN Act or any similar state or local Law as a result of
any action taken by Parent that would reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect. It is agreed
and understood that no representation or warranty is made by Parent or Merger
Sub in respect of labor matters in any section of this Agreement other than this
Section 4.14.

4.15         Intellectual Property.  Except as is not having or would not
reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect, either Parent or a Subsidiary of Parent owns, or is
licensed or otherwise possesses legally enforceable rights to use, all material
Intellectual Property. Except as is not having or would not reasonably be
expected to have, individually or in the aggregate, a Parent Material Adverse
Effect, (a) there are no pending or, to the knowledge of Parent, threatened
claims by any person alleging infringement by Parent or any of its Subsidiaries
for their use of the Intellectual Property of Parent or any of its Subsidiaries,
(b) to the knowledge of Parent, the conduct of the business of Parent and its
Subsidiaries does not infringe any intellectual property rights of any person,
(c) neither Parent nor any of its Subsidiaries has any claim pending of a
violation or infringement by others of its rights to or in connection with the
Intellectual Property of Parent or any of its Subsidiaries and (d) to the
knowledge of Parent, no person is infringing any Intellectual Property of Parent
or any of its Subsidiaries.
 
 
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4.16        Real Property.

(a)           With respect to the real property owned by Parent or any
Subsidiary (such property collectively, the “Parent Owned Real Property”),
except as is not having or would not reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect, (i) either
Parent or a Subsidiary of Parent has good and valid title to such Parent Owned
Real Property, free and clear of all Liens other than any such Lien (A) for
Taxes or governmental assessments, charges or claims of payment not yet due,
being contested in good faith or for which adequate accruals or reserves have
been established, (B) which is a carriers’, warehousemen’s, mechanics’,
materialmen’s, repairmen’s, or other similar lien arising in the ordinary course
of business, (C) which is disclosed on the most recent consolidated balance
sheet of Parent or notes thereto included in the Parent SEC Documents filed
prior to the date hereof or securing liabilities reflected on such balance
sheet, (D) which was incurred in the ordinary course of business since the date
of such recent consolidated balance sheet of Parent or (E) which would not
reasonably be expected to materially impair the continued use of a Parent Owned
Real Property or a Parent Leased Real Property as currently operated (each of
the foregoing, a “Parent Permitted Lien”) (and conditions, covenants,
encroachments, easements, restrictions and other encumbrances that do not
materially adversely affect the use of the Parent Owned Real Property by Parent
for residential home building), (ii) there are no reversion rights, outstanding
options or rights of first refusal in favor of any other party to purchase,
lease, occupy or otherwise utilize such Parent Owned Real Property or any
portion thereof or interest therein that would reasonably be expected to
materially adversely affect the use by Parent for residential home building of
the Parent Owned Real Property affected thereby and (iii) neither Parent nor its
Subsidiaries have collaterally assigned or granted a security interest in the
Parent Owned Real Property except for Parent Permitted Liens. Neither Parent nor
any of its Subsidiaries has received notice of any pending, and to the knowledge
of Parent there is no pending or threatened condemnation or eminent domain
proceeding with respect to any Parent Owned Real Property, except proceedings
which are not having or would not reasonably be expected to have, individually
or in the aggregate, a Parent Material Adverse Effect.

(b)           Except as is not having or would not reasonably be expected to
have, individually or in the aggregate, a Parent Material Adverse Effect, (i)
each material lease, sublease, license, easement and other agreement under which
Parent or any of its Subsidiaries uses or occupies or has the right to use or
occupy any material real property at which the material operations of Parent and
its Subsidiaries are conducted (the “Parent Leased Real Property”), is valid,
binding and in full force and effect and (ii) no uncured default of a material
nature on the part of Parent or, if applicable, its Subsidiary or, to the
knowledge of Parent, the landlord or other parties to such lease or other
agreement thereunder exists with respect to any Parent Leased Real Property.
Except as is not having or would not reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect, Parent and
each of its Subsidiaries has a good and valid leasehold interest, subject to the
terms of any lease, sublease or other agreement applicable thereto, in each
parcel of Parent Leased Real Property, free and clear of all Liens, except for
Parent Permitted Liens (and conditions, covenants, encroachments, easements,
restrictions and other encumbrances that do not adversely affect the use of the
Parent Leased Real Property by Parent for residential home building). Except as
is not having or would not reasonably be expected to have, individually or in
the aggregate, a Parent Material Adverse Effect, neither Parent nor any of its
Subsidiaries has (x) received notice of any pending, and, to the knowledge of
Parent, there is no threatened, condemnation proceeding with respect to any
Parent Leased Real Property, (y) collaterally assigned or granted a security
interest in the Parent Leased Real Property except for Parent Permitted Liens,
or (z) received any written notice of any default under lease or other agreement
for a Parent Leased Real Property and, to the knowledge of Parent, no event has
occurred and no condition exists that, with notice or lapse of time, or both,
would constitute a default by Parent or any of its Subsidiaries, as applicable,
under any such leases and agreements.

 
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(c)           Except as is not having or would not reasonably be expected to
have, individually or in the aggregate, a Parent Material Adverse Effect, no
judgment, injunction, order, decree, statute, ordinance, rule, regulation,
moratorium, or other action by or before a Governmental Entity exists or is
pending or threatened that restricts the development or sale of Parent Owned
Real Property currently under development or all or a portion of which is being
held for sale by Parent or any of its Subsidiaries.

(d)           No developer-related charges or assessments imposed by any
Governmental Entity (or any other person) for public improvements (or otherwise)
against any Parent Owned Real Property held for development, are unpaid (other
than those reflected on the most recent financial statements of Parent, and
those incurred since the date of such financial statements of Parent to the
extent in the ordinary course of Parent’s business and consistent with past
practices), except for such charges and assessments as, in the aggregate, are
not having or would not reasonably be expected to have, individually or in the
aggregate, a Parent Material Adverse Effect.

4.17        Required Vote of Parent Stockholders; Merger Sub Approval.

(a)           The affirmative vote of (i) holders of a majority of the
outstanding shares of Parent Common Stock entitled to vote at the Parent
Stockholders’ Meeting, if one is held in lieu of an action by written
consent,  is the only vote of the holders of any class or series of Parent
capital stock necessary to approve the Charter Amendment authorizing Parent
Preferred Stock, (the “Parent Stockholder Approvals”) and (ii) Parent, as the
sole stockholder of Merger Sub, is the only vote of the holders of any class or
series of Merger Sub’s capital stock necessary to approve the Merger, and no
other vote of the holders of any class or series of Parent or Merger Sub capital
stock is necessary to approve the Charter Amendment or the Stock Issuance or to
approve this Agreement or the transactions contemplated hereby, including the
Merger.

(b)           The Board of Directors of Merger Sub, by written consent duly
adopted prior to the date hereof, (i) determined that this Agreement and the
Merger are advisable and in the best interests of Merger Sub and its
stockholder, (ii) duly approved this Agreement, the Merger and the other
transactions contemplated hereby, which approval has not been rescinded or
modified and (iii) submitted this Agreement for approval by Parent, as the sole
stockholder of Merger Sub and recommended Parent approve the same. Parent, as
the sole stockholder of Merger Sub, has duly approved this Agreement and the
Merger.

4.18        Material Contracts.

(a)           Section 4.18(a) of the Parent Disclosure Schedule contains a
complete list as of the date hereof of the following types of Contracts, whether
written or oral, that are intended by Parent or any of its Subsidiaries, as
applicable, to be legally binding, and to which Parent or any of its
Subsidiaries is a party (such Contracts, being the “Parent Material Contracts”):

 
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                                (i)         each “material contract” (as such
term is defined in Item 610(b)(10) of Regulation S-K of the SEC) with respect to
Parent and its Subsidiaries (other than compensatory contracts with, or which
include as participants, any current or former director or officer of Parent or
any of its Subsidiaries);

(ii)           all contracts and agreements evidencing indebtedness for borrowed
money in excess of $250,000 in principal amount; and

(iii)          all non-competition agreements or any other agreements or
arrangements that materially limit or otherwise materially restrict Parent and
its Subsidiaries from conducting a material portion of the business of Parent
and its Subsidiaries, taken as a whole.

(b)           Neither Parent nor any Subsidiary of Parent is in breach of or
default under the terms of any Parent Material Contract where such breach or
default is having or would reasonably be expected to have, individually or in
the aggregate, a Parent Material Adverse Effect. To the knowledge of Parent, no
other party to any Parent Material Contract is in breach of or default under the
terms of any Parent Material Contract where such breach or default is having or
would reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect. Except as is not having or would not reasonably be
expected to have, individually or in the aggregate, a Parent Material Adverse
Effect, each Parent Material Contract is a legal, valid and binding obligation
of Parent or the Subsidiary of Parent which is party thereto and, to the
knowledge of Parent, of each other party thereto, and is in full force and
effect, except that (i) such enforcement may be subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other similar Laws, now or
hereafter in effect, relating to creditors’ rights generally and (ii) equitable
remedies of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.

(c)           Parent has made available to the Company correct and complete
copies in all material respects of all Parent Material Contracts, including any
material amendments or material waivers thereto.

4.19        Finders or Brokers.  Neither Parent nor any of its Subsidiaries has
employed any investment banker, broker or finder in connection with the
transactions contemplated by this Agreement who might be entitled to any fee or
any commission in connection with or upon consummation of the Merger.

4.20        Lack of Ownership of Company Common Stock.  Neither Parent nor any
of its Subsidiaries beneficially owns directly or indirectly, any shares of
Company Common Stock or other securities convertible into, exchangeable for or
exercisable for shares of Company Common Stock or any Securities of any
Subsidiary of the Company, and neither Parent nor any of its Subsidiaries has
any rights to acquire any Shares except pursuant to this Agreement. There are no
voting trusts or other agreements or understandings to which Parent or any of
its Subsidiaries is a party with respect to the voting of the capital stock or
other equity interest of the Company or any of its Subsidiaries.

 
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4.21        Insurance.  Section 4.21 of the Parent Disclosure Schedule sets
forth a true and complete list of the material insurance policies covering
Parent and its Subsidiaries as of the date hereof. Except as is not having or
would not reasonably be expected to have, individually or in the aggregate, a
Parent Material Adverse Effect, (a) each insurance policy under which Parent or
any of its Subsidiaries is an insured or otherwise the principal beneficiary of
coverage (collectively, the “Parent Insurance Policies”) is in full force and
effect, all premiums due thereon have been paid in full and Parent and its
Subsidiaries are in compliance with the terms and conditions of such Parent
Insurance Policy, (b) neither Parent nor any of its Subsidiaries is in breach or
default under any Parent Insurance Policy and (c) no event has occurred which,
with notice or lapse of time, would constitute such breach or default, or permit
termination or modification, under the policy.

4.22        Tax Treatment.  Neither Parent nor any of its Subsidiaries has taken
or agreed to take any action or knows of any fact that would prevent or impede,
or would be reasonably likely to prevent or impede, the Merger from qualifying
as a “reorganization” within the meaning of Section 368(a) of the Code.

4.23        No Additional Representations.  Parent and Merger Sub acknowledge
that the Company makes no representations or warranties as to any matter
whatsoever except as expressly set forth in this Agreement or in any certificate
delivered by the Company to Parent or Merger Sub in accordance with the terms
hereof, and specifically (but without limiting the generality of the foregoing)
that the Company makes no representations or warranties with respect to (a) any
projections, estimates or budgets delivered or made available to Parent or
Merger Sub (or any of their respective affiliates or Representatives) of future
revenues, results of operations (or any component thereof), cash flows or
financial condition (or any component thereof) of the Company and its
Subsidiaries or (b) the future business and operations of the Company and its
Subsidiaries.

ARTICLE V
COVENANTS AND AGREEMENTS

5.1          Conduct of Business by the Company.

(a)           From and after the date hereof and prior to the Effective Time or
the date, if any, on which this Agreement is earlier terminated pursuant to
Section 7.1 (the “Termination Date”), and except (i) as may be required by
applicable Law, (ii) as may be consented to in writing by Parent (which consent
shall not be unreasonably withheld, delayed or conditioned), (iii) as may be
contemplated or required by this Agreement or (iv) as set forth in Section 5.1
of the Company Disclosure Schedule, the Company covenants and agrees with Parent
that the business of the Company and its Subsidiaries shall be conducted in, and
such entities shall not take any action except in, the ordinary course of
business, and the Company and its Subsidiaries shall use their reasonable best
efforts to (A) keep available the services of current officers, key employees
and consultants of the Company and each of its Subsidiaries, (B) preserve the
Company’s business organization intact and maintain its existing relations and
goodwill with customers, suppliers, distributors, creditors and lessors, (C)
maintain insurance policies or replacement or revised policies in such amounts
and against such risks and losses of the Company and its Subsidiaries as are
currently in effect and (D) comply in all material respects with all applicable
Laws; provided, however, that no action by the Company or its Subsidiaries with
respect to matters specifically addressed by any provision of Section 5.1(b)
shall be deemed a breach of this sentence unless such action would constitute a
breach of such other provision.

 
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(b)           The Company agrees with Parent, on behalf of itself and its
Subsidiaries, that between the date hereof and prior to the earlier of the
Effective Time and the Termination Date, without the prior written consent of
Parent (which consent shall not be unreasonably withheld, delayed or
conditioned), the Company:

(i)           shall not, and shall not permit any of its Subsidiaries that is
not directly or indirectly wholly owned by the Company to, authorize or pay any
dividends on or make any distribution with respect to its outstanding shares of
capital stock (whether in cash, assets, stock or other securities of the Company
or its Subsidiaries), except dividends and distributions paid or made on a pro
rata basis by Subsidiaries;

(ii)          except for transactions between the Company and its wholly owned
Subsidiaries or among the Company’s wholly owned Subsidiaries, the Company shall
not, and shall not permit any of its Subsidiaries, to redeem, repurchase,
defease or otherwise cancel any indebtedness for borrowed money of the Company
or any Subsidiary, other than (x) at stated maturity, (y) any required
amortization payments and mandatory prepayments (including mandatory prepayments
arising from any change of control put rights to which holders of such
indebtedness for borrowed money may be entitled), and (z) indebtedness for
borrowed money either (A) not in excess of $100,000 or (B) arising under the
agreements disclosed in Section 5.1(b)(ii) of the Company Disclosure Schedule,
in each case in accordance with the terms of the instrument governing such
indebtedness as in effect on the date hereof;

(iii)         shall not, and shall not permit any of its Subsidiaries to, make
any acquisition of any other person or business or make any capital
expenditures, loans, advances or capital contributions to, or investments in,
any other person with a value in excess of $100,000 in the aggregate;

(iv)         shall not, and shall not permit any of its Subsidiaries to, (A)
split, combine, reclassify, subdivide or amend the terms of any of its capital
stock or issue or authorize or propose the issuance or authorization of any
other securities in respect of, in lieu of or in substitution for shares of its
capital stock, except for any such transaction by a wholly owned Subsidiary of
the Company which remains a wholly owned Subsidiary after consummation of such
transaction or (B) enter into any agreement with respect to voting of any of its
capital stock or any securities convertible or exchangeable for such shares;

(v)          except as required by existing written agreements or Company
Benefit Plans, as otherwise required by applicable Law, or as permitted under
Section 5.6(b)(v) and Section 5.6(b)(vi), shall not, and shall not permit any of
its Subsidiaries to, (A) increase the compensation or other benefits payable or
provided to the Company’s directors, executive officers or other employees, (B)
enter into any employment, change of control, severance or retention agreement
with any employee of the Company (except (1) for agreements entered into with
any newly-hired employees or replacements or as a result of promotions, (2) for
employment agreements terminable on less than thirty days’ notice without
penalty, and (3) for severance agreements entered into with employees who are
not executive officers, in the ordinary course of business in connection with
terminations of employment) or (C) establish, adopt, enter into or amend any
plan, policy, program or arrangement for the benefit of any current or former
directors, officers or employees or any of their beneficiaries, except (x) as
permitted pursuant to clause (B) above, or (y) for entering into or amending
collective bargaining agreements in the ordinary course of business;

 
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(vi)         shall not, and shall not permit any of its Subsidiaries to,
materially change financial accounting policies or procedures or any of its
methods of reporting income, deductions or other material items for financial
accounting purposes, except as required by GAAP, SEC rule or policy or
applicable Law;

(vii)        except as required by a change in Law, make, change or revoke any
material Tax election, file any material amended Tax Return, or settle or
compromise any material Tax liability or refund, in each case, if such action
could have an adverse effect that, individually or in the aggregate, is material
to the Company and its Subsidiaries;

(viii)       shall not, and shall not permit any of its Subsidiaries to, adopt
or propose to adopt any material amendments to its articles of incorporation or
by-laws or similar applicable charter documents;

(ix)          except for transactions among the Company and its wholly-owned
Subsidiaries or among the Company’s wholly-owned Subsidiaries, shall not, and
shall not permit any of its Subsidiaries to, issue, sell, pledge, dispose of,
grant, transfer or encumber, or authorize the issuance, sale, pledge,
disposition, grant, transfer or encumbrance of, any shares of its capital stock
or other ownership interest in the Company or any Subsidiaries or any securities
convertible into or exchangeable for any such shares or ownership interest, or
any rights, warrants or options to acquire or with respect to any such shares of
capital stock, ownership interest or convertible or exchangeable securities or
take any action to cause to be exercisable any otherwise unexercisable option
under any existing stock option plan (except as otherwise provided by the terms
of this Agreement or the terms of any unexercisable or unexercised options or
warrants outstanding on the date hereof), other than (A) issuances of shares of
Company Common Stock in respect of any exercise of Company Stock Options or the
vesting or settlement of Restricted Stock Units outstanding on the date hereof
or as may be granted after the date hereof as permitted under this Section
5.1(b), (B) the sale of shares of Company Common Stock pursuant to the exercise
of options to purchase Company Common Stock if necessary to effectuate an
optionee direction upon exercise or for withholding of Taxes and (C) the grant
of equity compensation awards in the ordinary course of business in accordance
with the Company’s customary long-term compensation award practices in
accordance with Section 5.6(b)(vi);

(x)           except for transactions among the Company and its wholly-owned
Subsidiaries or among the Company’s wholly owned Subsidiaries, shall not, and
shall not permit any of its Subsidiaries to, directly or indirectly, purchase,
redeem or otherwise acquire any shares of the capital stock of any of them, or
any securities convertible into or exchangeable for any such shares or ownership
interest, or any rights, warrants or options to acquire or with respect to any
such shares, ownership interest or convertible or exchangeable securities;

 
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(xi)           shall not, and shall not permit any of its Subsidiaries to,
incur, assume, guarantee, prepay or otherwise become liable for any indebtedness
for borrowed money (directly, contingently or otherwise), except for (A) any
indebtedness for borrowed money among the Company and its wholly owned
Subsidiaries or among the Company’s wholly owned Subsidiaries, (B) indebtedness
for borrowed money incurred to replace, renew, extend, refinance or refund any
existing indebtedness for borrowed money, (C) guarantees by the Company of
indebtedness for borrowed money of Subsidiaries of the Company or guarantees by
the Company’s Subsidiaries of indebtedness for borrowed money of the Company or
any Subsidiary of the Company, which indebtedness is incurred in compliance with
this Section 5.1(b) and (D) indebtedness incurred in the ordinary course of
business pursuant to funding facilities for the Company’s financial services
Subsidiaries, provided that nothing contained herein shall prohibit the Company
and its Subsidiaries from making guarantees or obtaining letters of credit or
surety bonds for the benefit of commercial counterparties in the ordinary course
of business;

(xii)          shall not, and shall not permit any of its Subsidiaries to, sell,
pledge, lease, license, transfer, guarantee, exchange or swap, mortgage
(including securitizations), or otherwise dispose of any material portion of its
material properties or material assets, including the capital stock of
Subsidiaries (it being understood that the foregoing shall not prohibit the
sales of land or homes in the ordinary course of business), except (A) for
transactions among the Company and its wholly owned Subsidiaries or among the
Company’s wholly owned Subsidiaries, (B) pursuant to existing agreements in
effect prior to the execution of this Agreement and that are set forth in
Section 5.1(b)(xii) of the Company Disclosure Schedule or (C) as may be required
by applicable Law or any Governmental Entity in order to permit or facilitate
the consummation of the transactions contemplated hereby;

(xiii)         shall not, and shall not permit any of its Subsidiaries to, (A)
adopt a plan of complete or partial liquidation or resolutions providing for a
complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of the Company or any of
its Subsidiaries (other than the Merger and consolidations, mergers or
reorganizations among the Company and its wholly owned Subsidiaries or among the
Company’s wholly owned Subsidiaries that would not result in material adverse
tax consequences or material loss of tax benefits or loss of any material asset
(including Intellectual Property)) or (B) vote in support of, consent to or
approve a plan of complete or partial liquidation or resolutions providing for a
complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of any joint venture or
similar entity to which the Company or any of its Subsidiaries is a party that
is not a Subsidiary of the Company (other than consolidations, mergers or
reorganizations that would not result in material adverse tax consequences or
material loss of tax benefits or loss of any material asset (including
Intellectual Property));

(xiv)        shall not, and shall not permit any of its Subsidiaries to, enter
into any Contract that would materially restrict, after the Effective Time,
Parent and its Subsidiaries (including the Surviving Corporation and its
Subsidiaries) with respect to engaging or competing in any line of business or
in any geographic area;

(xv)         shall not, and shall not permit any of its Subsidiaries to, settle
or compromise any litigation, or release, dismiss or otherwise dispose of any
claim, liability, obligation or arbitration, other than settlements or
compromises of litigation or releases, dismissals or dispositions of claims,
liabilities, obligations or arbitration that involve the payment of monetary
damages not in excess of $10,000 individually or $50,000 in the aggregate by the
Company and do not involve any material injunctive or other non-monetary relief
or impose material restrictions on the business or operations of the Company;

 
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(xvi)        shall not, and shall not permit any of its Subsidiaries to, enter
into interest rate swaps and other similar hedging arrangements other than for
purposes of offsetting a bona fide exposure (including counterparty risk);

(xvii)       shall not, and shall not permit any of its Subsidiaries to, issue
or forgive any loans to directors, officers, employees, contractors or any of
their respective affiliates, except for any such issuances that would not
violate the Sarbanes-Oxley Act; and

(xviii)      shall not, and shall not permit any of its Subsidiaries to, agree
or commit to do any of the foregoing.

5.2          Conduct of Business by Parent.

(a)           From and after the date hereof and prior to the earlier of the
Effective Time and the Termination Date, and except (i) as may be required by
applicable Law, (ii) as may be consented to in writing by the Company (which
consent shall not be unreasonably withheld, delayed or conditioned), (iii) as
may be contemplated or required by this Agreement or (iv) as set forth in
Section 5.2 of the Parent Disclosure Schedule, Parent covenants and agrees with
the Company that the business of Parent and its Subsidiaries shall be conducted
in, and such entities shall not take any action except in, the ordinary course
of business, and Parent and its Subsidiaries shall use their reasonable best
efforts to (A) keep available the services of current officers, key employees
and consultants of Parent and each of its Subsidiaries, (B) preserve Parent’s
business organization intact and maintain its existing relations and goodwill
with customers, suppliers, distributors, creditors and lessors, (C) maintain
insurance policies or replacement or revised policies in such amounts and
against such risks and losses of Parent and its Subsidiaries as are currently in
effect and (D) comply in all material respects with all applicable Laws;
provided, however, that no action by Parent or its Subsidiaries with respect to
matters specifically addressed by any provision of Section 5.2(b) shall be
deemed a breach of this sentence unless such action would constitute a breach of
such other provision.

(b)           Parent agrees with the Company, on behalf of itself and its
Subsidiaries, that between the date hereof and prior to the earlier of the
Effective Time and the Termination Date, without the prior written consent of
the Company (which consent shall not be unreasonably withheld, delayed or
conditioned), Parent:

(i)           except in the ordinary course of business, shall not, and shall
not permit any of its Subsidiaries that is not directly or indirectly wholly
owned by Parent to, authorize or pay any dividends on or make any distribution
with respect to its outstanding shares of capital stock (whether in cash,
assets, stock or other securities of Parent or its Subsidiaries), except
dividends and distributions paid or made on a pro rata basis by Subsidiaries;

(ii)          shall not, and shall not permit any of its Subsidiaries to,
acquire or agree to acquire by merger or consolidation, or by purchasing a
substantial equity interest in or a substantial portion of the assets of, or by
any other manner, any business or any corporation, partnership, association or
other business organization or division thereof or otherwise acquire or agree to
acquire any assets, other than acquisitions that could not reasonably be
expected to make it materially more difficult to obtain any authorization,
consent or approval required in connection with the Merger and that could not
reasonably be expected to prevent or materially delay or impede the consummation
of the transactions contemplated by this Agreement, including the Merger;

 
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(iii)         shall not, and shall not permit any of its Subsidiaries to, (A)
split, combine, reclassify, subdivide or amend the terms of any of its capital
stock or issue or authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock,
except for any such transaction by a wholly owned Subsidiary of Parent which
remains a wholly owned Subsidiary after consummation of such transaction or (B)
enter into any agreement with respect to voting of any of its capital stock or
any securities convertible or exchangeable for such shares;

(iv)         except as noted, the adoption of an amendment to Parent’s Articles
of Incorporation as contemplated in Parent’s proxy statement for its 2009 Annual
Meeting of Shareholders shall not, and shall not permit any of its Subsidiaries
to, adopt or propose to adopt any material amendments to its articles of
incorporation or by-laws or similar applicable charter documents;

(v)          except for transactions among Parent and its wholly-owned
Subsidiaries or among Parent’s wholly owned Subsidiaries, shall not, and shall
not permit any of its Subsidiaries to, issue, sell, pledge, dispose of, grant,
transfer or encumber, or authorize the issuance, sale, pledge, disposition,
grant, transfer or encumbrance of, any shares of its capital stock or other
ownership interest in Parent or any Subsidiaries or any securities convertible
into or exchangeable for any such shares or ownership interest, or any rights,
warrants or options to acquire or with respect to any such shares of capital
stock, ownership interest or convertible or exchangeable securities or take any
action to cause to be exercisable any otherwise unexercisable option under any
existing stock option plan (except as otherwise provided by the terms of this
Agreement or the terms of any unexercisable or unexercised options or warrants
outstanding on the date hereof), other than (A) issuances of shares of Parent
Common Stock in respect of any exercise of Parent Stock Options outstanding on
the date hereof or as may be granted after the date hereof as permitted under
this Section 5.2(b), (B) the sale of shares of Parent Common Stock pursuant to
the exercise of options to purchase Parent Common Stock if necessary to
effectuate an optionee direction upon exercise or for withholding of Taxes and
(C) the grant of equity compensation awards in the ordinary course of business
in accordance with Parent’s customary schedule;

(vi)         shall not, and shall not permit any of its Subsidiaries to, (A)
adopt a plan of complete or partial liquidation or resolutions providing for a
complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of Parent or any of its
Subsidiaries (other than the Merger and consolidations, mergers or
reorganizations among Parent and its wholly owned Subsidiaries or among Parent’s
wholly owned Subsidiaries that would not result in material adverse tax
consequences or material loss of tax benefits or loss of any material asset
(including Intellectual Property)) or (B) vote in support of, consent to or
approve a plan of complete or partial liquidation or resolutions providing for a
complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of any joint venture or
similar entity to which Parent or any of its Subsidiaries is a party that is not
a Subsidiary of Parent (other than consolidations, mergers or reorganizations
that would not result in material adverse tax consequences or material loss of
tax benefits or loss of any material asset (including Intellectual Property));
and

 
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(vii)        shall not, and shall not permit any of its Subsidiaries to, agree
or commit to do any of the foregoing.

5.3           Investigation.

(a)           Each of the Company and Parent shall afford the other party and to
the officers, employees, accountants, consultants, legal counsel, financial
advisors and agents and other representatives (collectively, “Representatives”)
of such other party reasonable access during normal business hours, throughout
the period prior to the earlier of the Effective Time and the Termination Date,
to its and its Subsidiaries’ personnel, properties, contracts, commitments,
books and records and any report, schedule or other document filed or received
by it pursuant to the requirements of applicable Laws for purposes of
integration planning. Notwithstanding the foregoing, neither the Company nor
Parent shall be required to afford such access if it would (i) unreasonably
disrupt the operations of such party or any of its Subsidiaries, (ii) cause a
violation of any agreement to which such party or any of its Subsidiaries is a
party (provided that Parent or the Company, as the case may be, shall use
reasonable best efforts to implement procedures to provide the access or
information contemplated by this Section 5.3 without violating such agreement),
or (iii) cause a risk of a loss of privilege to such party or any of its
Subsidiaries or would constitute a violation of any applicable Law.

(b)           The parties hereby agree that all information provided to them or
their respective Representatives in connection with this Agreement and the
consummation of the transactions contemplated hereby shall be deemed to be
Evaluation Material, as such term is used in, and shall be treated in accordance
with, the Confidentiality Agreement, dated as of May 10, 2011, between the
Company and Parent (the “Confidentiality Agreement”) and subject to confidential
treatment.  Accordingly, each of them agrees that it shall not disclose any such
material to any person insider or outside of the Company who does not have
responsibility for examining such material in connection with this Agreement and
the transactions proposed hereby, including, without limitation, outside
professionals.

 
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5.4          Filings; Other Actions.

(a)           As promptly as practicable following the date of this Agreement,
the Parent shall prepare and file with the SEC a proxy or information statement
on Schedule 14A or 14C to authorize the amendment of the Parent’s Articles of
Incorporation to authorized Parent Preferred Stock in an amount necessary to pay
the Merger Consideration and, if necessary,  to approve the Merger (the “Proxy
Statement”). The Company and Parent shall provide the other with the opportunity
to review and comment on such documents prior to their filing with the SEC. Each
of Parent and the Company shall use reasonable best efforts to make such
additional federal, state and foreign filings as may be necessary to comply with
any registration requirement, or available exemption or exemptions from
registration, governing the issuance of Parent Common or Preferred Stock to the
Company’s Shareholders. Parent will cause the Proxy Statement to be mailed to
Parent’s stockholders, as promptly as reasonably practicable. Parent shall also
take any action required to be taken under any applicable state securities laws
in connection with the issuance and reservation of shares of Parent Preferred
and Common Stock in the Merger and the conversion of Company Stock Options into
options to acquire Parent Common Stock, and the Company shall furnish all
information concerning the Company and the holders of Company Common Stock as
may be reasonably requested in connection with any such action. Parent will
advise the Company promptly after it receives written notice or any oral or
written request by the SEC for amendment of the Proxy Statement or comments
thereon and responses thereto or requests by the SEC for additional information,
and will promptly provide the other with copies of any written communication
from the SEC. If at any time prior to the Effective Time any information
relating to Parent or the Company, or any of their respective affiliates,
officers or directors, is discovered by Parent or the Company which should be
set forth in an amendment or supplement to the Proxy Statement, so that any of
such documents would not include any misstatement of a material fact or omit to
state any material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, the party which
discovers such information shall promptly notify the other party and an
appropriate amendment or supplement describing such information shall be
promptly filed with the SEC, after the other party has had a reasonable
opportunity to review and comment thereon, and, to the extent required by
applicable Law, disseminated to the respective stockholders of Parent and the
Company.

(b)           Each of the Company and Parent shall, as promptly as practicable,
take all action necessary in accordance with applicable Laws and the Company
Organizational Documents, in the case of the Company, and the Parent
Organizational Documents, in the case of Parent, to duly give notice of, convene
and hold a meeting of its stockholders, respectively, to be held as promptly as
practicable to consider, in the case of Parent, the Charter Amendment and, if
necessary, the Stock Issuance (the “Parent Stockholders’ Meeting”) and, in the
case of the Company, the approval of this Agreement and the approval of the
transactions contemplated hereby, including the Merger (the “Company
Stockholders’ Meeting”). The Company will, through the Company Board, recommend
that its stockholders approve this Agreement and will use reasonable best
efforts to solicit from its stockholders, proxies in favor of the approval of
this Agreement and to take all other action necessary or advisable to secure the
vote or consent of its stockholders required by applicable Laws to obtain such
approvals. Parent will, through the Parent Board, recommend that its
stockholders approve the Charter Amendment and the Stock Issuance, and will use
reasonable best efforts to solicit from its stockholders proxies in favor of the
Charter Amendment and if necessary, the Stock Issuance and to take all other
action necessary or advisable to secure the vote or consent of its stockholders
required by applicable Laws to obtain such approval.

(c)           The Parent Board may not withdraw or, in a manner adverse to the
Company, modify or qualify the Parent Recommendation (any such actions being a
“Parent Change of Recommendation”), except to the extent that the Parent Board
is required to do so under applicable Law; provided, that the Parent Board shall
not make a Parent Change of Recommendation pursuant to this Section 5.4(c)
unless Parent has three business days in advance provided a written notice to
the Company advising the Company of its intent to make a Parent Change of
Recommendation as required under applicable Law.

(d)           Each of the Company and Parent will use reasonable best efforts to
hold the Company Stockholders’ Meeting and the Parent Stockholders’ Meeting,
respectively, on the same date as the other party and as soon as reasonably
practicable after the date of this Agreement.

 
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5.5          Stock Options and Other Stock-Based Awards; Employee Matters.

(a)          Stock Options and Other Stock-Based Awards.

(i)           Each option to purchase shares of Company Common Stock (each, a
“Company Stock Option”) granted under the employee and director stock plans of
the Company (the “Company Stock Plans”), whether vested or unvested, that is
outstanding immediately prior to the Effective Time shall, as of the Effective
Time, automatically and without any action on the part of the holders thereof,
be converted into a vested option to purchase shares of Parent Common Stock (a
“Parent Stock Option”), on the same terms and conditions (except as provided in
this Section 5.5(a)(i)) as were applicable under such Company Stock Option
immediately prior to the Effective Time, to purchase that number of shares of
Parent Common Stock equal to the product of (A) the total number of shares of
Company Common Stock subject to such Company Stock Option and (B) the Exchange
Ratio, rounded down to the nearest whole number of shares of Parent Common
Stock. The per-share exercise price for the shares of Parent Common Stock
issuable upon exercise of such Parent Stock Options will be equal to the
quotient determined by dividing (x) the exercise price per share of Company
Common Stock at which the Company Stock Options were exercisable immediately
prior to the Effective Time by (y) the Exchange Ratio, and rounding the
resulting per-share exercise price up to the nearest whole cent.

(ii)          At the Effective Time, each award of restricted Company Common
Stock granted under a Company Stock Plan that is outstanding immediately prior
to the Effective Time (the “Restricted Shares”) and each restricted or deferred
stock unit based on shares of Company Common Stock granted under a Company Stock
Plan that is outstanding immediately prior to the Effective Time (the
“Restricted Stock Units”) shall, automatically and without any action on the
part of the holders thereof, vest and be converted, on the same terms and
conditions (except as provided in this Section 5.5(a)(ii)) as were applicable
under such Restricted Shares and Restricted Stock Units, as applicable,
immediately prior to the Effective Time, into a number of shares of Parent
Common Stock or units with respect to Parent Common Stock equal to the product
of (A) the total number of shares of Company Common Stock subject to such grant
of Restricted Shares or Restricted Stock Units, as applicable, and (B) the
Exchange Ratio.

(iii)         Immediately prior to the Effective Time, each award of performance
units with respect to shares of Company Common Stock under a Company Stock Plan
that is outstanding immediately prior to the Effective Time (collectively, the
“Company Performance Units”) shall, automatically and without any action on the
part of the holders thereof, vest and be converted, into the right to receive,
immediately prior to the Effective Time, an amount in cash equal to the product
of (i) the total number of shares of Company Common Stock subject to such
Company Performance Unit, assuming the achievement of all performance goals
applicable to such Company Performance Unit at target levels and (ii) the fair
market value of Company Common Stock on the day immediately prior to the
Effective Time.

(iv)         At the Effective Time, Parent shall assume all the obligations of
the Company under the Company Stock Plans, each outstanding Company Stock Option
and the agreements evidencing the grants thereof. As soon as practicable after
the Effective Time, Parent shall deliver to the holders of Company Stock Options
appropriate notices setting forth such holders’ rights pursuant to the
respective Company Stock Plans, and the agreements evidencing the grants of such
Company Stock Options shall continue in effect on the same terms and conditions
(subject to the adjustments required by this Section 5.5(a)).

 
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(v)          Parent shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of Parent Common Stock for delivery upon
exercise of the Parent Stock Options resulting from the conversion of Company
Stock Options assumed by Parent in accordance with this Section 5.5(a).
 
(b)          Employee Matters.

(i)           From and after the Effective Time, Parent shall honor all Company
Benefit Plans in accordance with their terms as in effect immediately before the
Effective Time. During the period beginning at the Effective Time and ending on
December 31, 2009, Parent shall provide, or shall cause to be provided, to each
current and former Company Employee, other than such employees covered by
collective bargaining agreements, compensation and benefits that are no less
favorable, in the aggregate, than the compensation and benefits provided to
Company Employees immediately before the Effective Time (except that the
Company’s Salary Continuation Plan shall be disregarded for purposes of this
sentence). Thereafter, it is the intention of Parent that over the long term
Company Employees and similarly situated employees of Parent, taking into
account the job responsibilities, scope of duties, performance and geographic
location of such employees, will be treated alike in terms of compensation and
benefits. Without limiting the generality of the foregoing, during the period
beginning on January 1, 2010 and ending on December 31, 2010, any change made in
the salary or annual incentive bonus of any Company Employee, other than any
such employee covered by collective bargaining agreements, shall not affect such
Company Employee in a manner which is disproportionate, taking into account the
market pay, job responsibilities, scope of duties, performance and geographic
location of such employees, to any change in the salary or annual incentive
bonus of any similarly situated employee of Parent. From and after December 31,
2009, Parent shall provide, or shall cause to be provided, to each current and
former Company Employee, other than such employees covered by collective
bargaining agreements, pension and welfare benefits including medical, dental,
pharmaceutical and vision benefits that are no less favorable, in the aggregate,
than the pension and welfare benefits provided to similarly situated employees
of Parent.

 
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(ii)          For all purposes (including purposes of vesting, eligibility to
participate, accrual of benefits and level of benefits) under the “employee
benefit plans” (as such term is defined in section 3(3) of ERISA, but without
regard to whether the applicable plan is subject to ERISA) and programs of
Parent and its Subsidiaries providing benefits to any Company Employees after
the Effective Time (the “New Plans”), each Company Employee shall be credited
for his or her years of service with the Company and its Subsidiaries and their
respective predecessors before the Effective Time, to the same extent as such
Company Employee was entitled, before the Effective Time, to credit for such
service under any similar Company employee benefit plan or program in which such
Company Employee participated or was eligible to participate immediately prior
to the Effective Time, provided, however, that the foregoing shall not apply
with respect to benefit accrual under any defined benefit pension plan or to the
extent that its application would result in a duplication of benefits and,
provided, further, that Company Employees’ years of service with the Company and
its Subsidiaries and their respective predecessors before the Effective Time
shall not be included for purposes of determining whether a Company Employee
satisfies the requirements of the “Seventy Year Rule” (within the meaning of
Parent’s equity incentive plans and option award agreements thereunder), unless
the Company Employee terminates employment after December 31, 2011. In addition,
and without limiting the generality of the foregoing, (A) each Company Employee
shall be immediately eligible to participate, without any waiting time, in any
and all New Plans to the extent coverage under such New Plan is comparable to a
Company Benefit Plan in which such Company Employee participated immediately
before the Effective Time (such plans, collectively, the “Old Plans”) and (B)
for purposes of each New Plan providing medical, dental, pharmaceutical and/or
vision benefits to any Company Employee, Parent shall cause all pre-existing
condition exclusions and actively-at-work requirements of such New Plan to be
waived for such employee and his or her covered dependents, unless such
conditions would not have been waived under the comparable plans of the Company
or its Subsidiaries in which such employee participated immediately prior to the
Effective Time, and Parent shall cause any eligible expenses incurred by such
employee and his or her covered dependents during the portion of the plan year
of the Old Plan ending on the date such employee’s participation in the
corresponding New Plan begins to be taken into account under such New Plan for
purposes of satisfying all deductible, coinsurance and maximum out-of-pocket
requirements applicable to such employee and his or her covered dependents for
the applicable plan year as if such amounts had been paid in accordance with
such New Plan.

(iii)         Parent hereby acknowledges that a “change of control” (or similar
phrase) within the meaning of the Company Stock Plans and the Company Benefit
Plans, as applicable, will occur at or prior to the Effective Time, as
applicable.

(iv)         Notwithstanding anything in this Agreement to the contrary, during
the period beginning at the Effective Time and ending on December 31, 2010,
Parent shall provide (A) severance benefits on an individual-by-individual basis
that are no less favorable to the applicable Company Employee than the severance
benefits provided to such Company Employee under the Company’s severance plans,
programs and agreements as of immediately prior to the Effective Time (except
that the Company’s Salary Continuation Plan shall be disregarded for purposes of
this Section 5.5(b)(iv)(A)) and (B) paid time-off benefits on an
individual-by-individual basis that are no less favorable to the applicable
Company Employee than the paid time-off programs provided to such Company
Employee under the Company’s paid time-off programs as of immediately prior to
the Effective Time.

5.6          Reasonable Best Efforts.

(a)           Subject to the terms and conditions set forth in this Agreement,
each of the parties shall use its reasonable best efforts (subject to, and in
accordance with, applicable Law), including with respect to the matters set
forth in Section 5.6 of the Parent Disclosure Schedule, to take promptly, or
cause to be taken, all actions, and to do promptly, or cause to be done, and to
assist and cooperate with the other parties in doing, all things necessary,
proper or advisable under applicable Laws to consummate and make effective the
Merger and the other transactions contemplated by this Agreement, including (i)
the obtaining of all necessary actions or nonactions, waivers, consents and
approvals from Governmental Entities and the making of all necessary
registrations and filings and the taking of all steps as may be necessary to
obtain an approval or waiver from, or to avoid an action or proceeding by, any
Governmental Entity, (ii) the obtaining of all necessary consents, approvals or
waivers from third parties, (iii) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging this Agreement or
the consummation of the transactions contemplated by this Agreement and (iv) the
execution and delivery of any additional instruments necessary to consummate the
transactions contemplated by this Agreement; provided, however, that in no event
shall Parent, Merger Sub or the Company or any of their respective Subsidiaries
be required to pay, prior to the Effective Time, any fee, penalty or other
consideration to any third party for any consent or approval required for the
consummation of the transactions contemplated by this Agreement under any
contract or agreement.

 
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(b)           Subject to the terms and conditions herein provided and without
limiting the foregoing, the Company and Parent shall (i) use reasonable best
efforts to cooperate with each other in (A) determining whether any filings are
required to be made with, or consents, permits, authorizations, waivers or
approvals are required to be obtained from, any third parties or other
Governmental Entities in connection with the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby and (B)
timely making all such filings and timely seeking all such consents, permits,
authorizations or approvals and (ii) use reasonable best efforts to take, or
cause to be taken, all other actions and do, or cause to be done, all other
things necessary, proper or advisable to consummate and make effective the
transactions contemplated hereby, including taking all such further action as
may be necessary to resolve such objections, if any, as any Governmental Entity
may assert under Regulatory Law with respect to the transactions contemplated
hereby. In furtherance of the foregoing, the parties shall take all actions
necessary to avoid or eliminate each and every impediment under any Law that may
be asserted by any Governmental Entity with respect to the Merger so as to
enable the Closing to occur as soon as reasonably possible (and in any event no
later than the End Date), including (A) proposing, negotiating, committing to
and effecting, by consent decree, hold separate order or otherwise, the sale,
divestiture or disposition of such assets or businesses of Parent or its
Subsidiaries or affiliates or of the Company or its Subsidiaries and (B)
otherwise taking or committing to take actions that after the Closing Date would
limit Parent’s or its Subsidiaries’ (including the Surviving Corporation’s) or
its affiliates’ freedom of action with respect to, or its or their ability to
retain, one or more of its or its Subsidiaries’ (including the Surviving
Corporation’s) businesses, product lines or assets, in each case as may be
required in order to avoid the entry of, or to effect the dissolution of, any
injunction, temporary restraining order or other order in any suit or proceeding
which would otherwise have the effect of preventing or materially delaying the
Closing, provided that any such agreement or action by the Company shall be
conditioned on the consummation of the Merger. Each of the Company and Parent
agrees not to participate in any meeting or discussion (other than relating to
the scheduling of any meetings or of any discussions), either in person or by
telephone, with any Governmental Entity in connection with the proposed
transactions unless it consults with the other party in advance and, to the
extent not prohibited by such Governmental Entity, gives the other party the
opportunity to attend and participate. The Company and Parent shall furnish the
other with such necessary information and reasonable assistance as the other may
reasonably request in connection with its preparation of necessary filings or
submissions of information to any Governmental Entity. Either Parent or the
Company may designate any competitively sensitive information provided to the
other under this Agreement as “outside counsel only”. Such materials and the
information contained therein shall be given only to outside legal counsel of
the other and will not be disclosed by such outside counsel to employees,
officers or directors of their client unless express written permission is
obtained in advance from the disclosing party or its legal counsel.

 
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(c)           In furtherance and not in limitation of the covenants of the
parties contained in this Section 5.6, if any administrative or judicial action
or proceeding, including any proceeding by a private party, is instituted (or
threatened to be instituted) challenging any transaction contemplated by this
Agreement as violative of any Regulatory Law, each of the Company and Parent
shall cooperate in all respects with each other and shall use their respective
reasonable best efforts to contest and resist any such action or proceeding and
to have vacated, lifted, reversed or overturned any decree, judgment, injunction
or other order, whether temporary, preliminary or permanent, that is in effect
and that prohibits, prevents or restricts consummation of the transactions
contemplated by this Agreement. Notwithstanding the foregoing or any other
provision of this Agreement, nothing in this Section 5.6 shall limit a party’s
right to terminate this Agreement pursuant to Section 7.1(b) or 7.1(c) so long
as such party has, prior to such termination, complied with its obligations
under this Agreement, including this Section 5.6.

(d)           For purposes of this Agreement, “Regulatory Law” means all
federal, state or foreign statutes, rules, regulations, orders, decrees,
administrative and judicial doctrines and other Laws.

5.7           Takeover Statute.  If any “fair price,” “moratorium,” “control
share acquisition” or other form of antitakeover statute or regulation shall
become applicable to the transactions contemplated hereby, each of the Company
and Parent, to the extent permissible under applicable Law, shall grant such
approvals and take such actions, in accordance with the terms of this Agreement,
as are reasonably necessary so that the transactions contemplated hereby may be
consummated as promptly as practicable, and in any event prior to the End Date,
on the terms contemplated hereby and otherwise, to the extent permissible under
applicable Law, act to eliminate or minimize the effects of such statute or
regulation on the transactions contemplated hereby.

5.8           Public Announcements.  So long as this Agreement is in effect, the
parties shall use reasonable efforts to consult with each other before issuing
any press release or making any public announcement primarily relating to this
Agreement or the transactions contemplated hereby and, except for any press
release or public announcement as may be required by applicable Law, court
process or any listing agreement with any national securities exchange, shall
use reasonable efforts not to issue any such press release or make any such
public announcement without consulting the other parties. Parent and the Company
agree to issue a mutually acceptable joint press release announcing this
Agreement.

 
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5.9          Indemnification and Insurance.

(a)           Parent and Merger Sub agree that all rights to exculpation,
indemnification and advancement of expenses now existing in favor of the current
or former directors, officers or employees, as the case may be, of the Company
or its Subsidiaries as provided in their respective articles of incorporation or
by-laws or other organization documents or in any agreement to which the Company
or any of its Subsidiaries is a party shall survive the Merger and shall
continue in full force and effect. For a period of two (2) years from the
Effective Time, Parent and the Surviving Corporation shall maintain in effect
the exculpation, indemnification and advancement of expenses provisions of the
Company’s and any Company Subsidiary’s articles of incorporation and by-laws or
similar organization documents in effect immediately prior to the Effective Time
or in any indemnification agreements of the Company or its Subsidiaries with any
of their respective directors, officers or employees in effect immediately prior
to the Effective Time, and shall not amend, repeal or otherwise modify any such
provisions or the exculpation, indemnification or advancement of expenses
provisions of the Surviving Corporation’s articles of incorporation and by-laws
set forth in Exhibit A and Exhibit B in any manner that would adversely affect
the rights thereunder of any individuals who immediately before the Effective
Time were current or former directors, officers or employees of the Company or
any of its Subsidiaries; provided, however, that all rights to indemnification
in respect of any Action pending or asserted or any claim made within such
period shall continue until the disposition of such Action or resolution of such
claim. From and after the Effective Time, Parent shall assume, be jointly and
severally liable for, and honor, guaranty and stand surety for, and shall cause
the Surviving Corporation and its Subsidiaries to honor, in accordance with
their respective terms, each of the covenants contained in this Section 5.9
without limit as to time.

(b)           At and after the Effective Time, each of Parent and the Surviving
Corporation shall, to the fullest extent permitted under applicable Law,
indemnify and hold harmless each current and former director, officer or
employee of the Company or any of its Subsidiaries and each person who served as
a director, officer, member, trustee or fiduciary of another corporation,
partnership, joint venture, trust, pension or other employee benefit plan or
enterprise if such service was at the request or for the benefit of the Company
or any of its Subsidiaries (each, together with such person’s heirs, executors
or administrators, an “Indemnified Party”) against any costs or expenses
(including advancing attorneys’ fees and expenses in advance of the final
disposition of any claim, suit, proceeding or investigation to each Indemnified
Party to the fullest extent permitted by law), judgments, fines, losses, claims,
damages, liabilities and amounts paid in settlement in connection with any
actual or threatened claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative (an “Action”), arising out of,
relating to or in connection with any action or omission occurring or alleged to
have occurred whether before or after the Effective Time (including acts or
omissions in connection with such persons serving as an officer, director or
other fiduciary in any entity if such service was at the request or for the
benefit of the Company). In the event of any such Action, Parent and the
Surviving Corporation shall cooperate with the Indemnified Party in the defense
of any such Action.

(c)           For a period of two (2) years from the Effective Time, Parent
shall cause to be maintained in effect (i) the coverage provided by the policies
of directors’ and officers’ liability insurance and fiduciary liability
insurance in effect as of immediately prior to the Effective Time maintained by
the Company and its Subsidiaries with respect to matters arising on or before
the Effective Time or (ii) a “tail” policy (which the Company may purchase at
its option prior to the Effective Time, and, in such case, Parent shall cause
such policy to be in full force and effect, and shall cause all obligations
thereunder to be honored by the Surviving Corporation) under the Company’s
existing directors’ and officers’ insurance policy that covers those persons who
are currently covered by the Company’s directors’ and officers’ insurance policy
in effect as of the date hereof for actions and omissions occurring on or prior
to the Effective Time, is from a carrier with comparable credit ratings to
Company’s existing directors’ and officers’ insurance policy carrier and
contains terms and conditions that are no less favorable to the insured than
those of the Company’s directors’ and officers’ insurance policy in effect as of
the date hereof; provided, however, that, after the Effective Time, Parent shall
not be required to pay annual premiums in excess of 300% of the last annual
premium paid by the Company prior to the date hereof in respect of the coverages
required to be obtained pursuant hereto, but in such case shall purchase as much
coverage as reasonably practicable for such amount.

 
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(d)           Parent shall pay all reasonable expenses, including reasonable
attorneys’ fees, that may be incurred by any Indemnified Party in enforcing the
indemnity and other obligations provided in this Section 5.9.

(e)           The rights of each Indemnified Party hereunder shall be in
addition to, and not in limitation of, any other rights such Indemnified Party
may have under the articles of incorporation or by-laws or other organization
documents of the Company or any of its Subsidiaries or the Surviving
Corporation, any other indemnification arrangement, the Merger Statutes (or any
other applicable Law) or otherwise. The provisions of this Section 5.9 shall
survive the consummation of the Merger and expressly are intended to benefit,
and are enforceable by, each of the Indemnified Parties.

5.10        Control of Operations.  Nothing contained in this Agreement shall
give Parent, directly or indirectly, the right to control or direct the
Company’s operations prior to the Effective Time. Prior to the Effective Time,
the Company shall exercise, consistent with the terms and conditions of this
Agreement, complete control and supervision over its operations.

5.11        Certain Transfer Taxes.  The Company and Parent shall cooperate in
the preparation, execution and filing of all returns, questionnaires,
applications or other documents regarding any real property transfer or gains,
sales, use, transfer, value added, stock transfer and stamp Taxes, any transfer,
recording, registration and other fees and any similar Taxes which are payable
under applicable Law in connection with the transactions contemplated by this
Agreement. Any liability arising out of any real estate transfer Tax with
respect to interests in real property owned directly or indirectly by the
Company or any of its Subsidiaries immediately prior to the Merger, if
applicable and due with respect to the Merger, shall be borne by the Surviving
Corporation and expressly shall not be a liability of stockholders of the
Company.

5.12        Section 16 Matters.  Prior to the Effective Time, Parent and the
Company shall take all such steps as may be required to cause any dispositions
of Company Common Stock (including derivative securities with respect to Company
Common Stock) or acquisitions of Parent Common Stock (including derivative
securities with respect to Parent Common Stock) resulting from the transactions
contemplated by this Agreement by each individual who is subject to the
reporting requirements of Section 16(a) of the Exchange Act with respect to the
Company or will become subject to such reporting requirements with respect to
Parent, to be exempt under Rule 16b-3 promulgated under the Exchange Act.

5.13        Tax Matters.  Neither Parent nor the Company shall take any action
or knowingly fail to take any action, which action or failure to act would
prevent or impede, or would be reasonably likely to prevent or impede, the
Merger from qualifying as a “reorganization” within the meaning of Section
368(a) of the Code.

 
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5.14         Board of Directors of Parent.  Parent shall take all actions as may
be necessary to cause, as of the Effective Time, the Parent Board to be
comprised of that number of current directors of the Parent Board and current
directors of the Company Board designated by the Company (each a “Company
Designee”). At the first annual meeting of Parent following the Closing, Parent
shall nominate each of the Company Designees, and use reasonable best efforts to
cause each Company Designee, to be reelected to the Parent Board.  If, prior the
expiration of the term to which the relevant Company Designee is or was
reelected pursuant to the immediately preceding sentence, any Company Designee
dies, resigns or is removed from the Company Board, then a successor to such
Company Designee shall be chosen by a majority of the other Company Designees
(or their successors chosen pursuant to this sentence) then serving on the
Parent Board.

5.15        Officers of Parent.  The Chief Executive Officer of the Company
shall be the Chief Executive Officer of Parent following the Effective Time.
Additional members of the senior management of Parent shall be designated prior
to the Effective Time by the Company to the extent not otherwise provided in
this Agreement.

 
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ARTICLE VI
CONDITIONS TO THE MERGER

6.1          Conditions to Each Party’s Obligation to Effect the Merger.  The
respective obligations of each party to effect the Merger shall be subject to
the fulfillment (or, to the extent permitted by Law, waiver by all parties) at
or prior to the Effective Time of the following conditions:

(a)           Each of the Company Stockholder Approval and require Parent
Stockholder Approval shall have been obtained.

(b)           No temporary restraining order or preliminary or permanent
injunction issued by any court of competent jurisdiction shall be in effect that
prohibits or prevents the consummation of the Merger (provided, that prior to
asserting this condition, the party asserting this condition shall have used its
reasonable best efforts to prevent the entry of any such order or injunction and
to appeal as promptly as practicable any order or injunction that may be
entered).

(c)           The Parent’s registration statement for the issuance of Parent
Common Stock shall be declared effective by the Securities and Exchange
Commission and, if necessary,  the Parent’s shareholders shall have approved the
issuance of the Shares in connection with the Merger.

(d)           The Parent shall have filed and cleared all SEC comments on a
proxy or information statement with respect to the authorization of the Merger,
should any such shareholder vote be required, and the amendment of the Company’s
Articles of Incorporation to authorize Parent Preferred Stock for issuance in
connection with the Merger.

6.2          Conditions to Obligation of the Company to Effect the Merger.  The
obligation of the Company to effect the Merger is further subject to the
fulfillment of the following conditions:

(a)           The representations and warranties of Parent and Merger Sub set
forth in (i) this Agreement (other than Sections 4.2(a), 4.10(a)(ii) and
4.10(b)) that are qualified by Parent Material Adverse Effect shall be true and
correct at and as of the date of this Agreement and at and as of the Closing
Date as though made at and as of the Closing Date, (ii) this Agreement (other
than Sections 4.2(a), 4.10(a)(ii) and 4.10(b) and those representations and
warranties qualified by Parent Material Adverse Effect) shall be true and
correct at and as of the date of this Agreement and at and as of the Closing
Date as though made at and as of the Closing Date, except for such failures to
be true and correct as are not having or would not reasonably be expected to
have, individually or in the aggregate, a Parent Material Adverse Effect, (iii)
Section 4.2(a) shall be true and correct at and as of the date of this Agreement
and at and as of the Closing Date as though made at and as of the Closing Date,
except for  de minimis  inaccuracies, (iv) Section 4.10(a)(ii) shall be true and
correct at and as of the date of this Agreement and (v) Section 4.10(b) shall be
true and correct at and as of the Closing Date as though made at and as of the
Closing Date; provided, however, that representations and warranties that are
made as of a particular date or period shall be true and correct (in the manner
set forth in clauses (i), (ii) and (iii), as applicable) only as of such date or
period.

 
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(b)           Parent shall have in all material respects performed all
obligations and complied with all covenants required by this Agreement to be
performed or complied with by it prior to the Effective Time.

(c)           Parent shall have delivered to the Company a certificate, dated
the Effective Time and signed by its Chief Executive Officer or another senior
officer, certifying to the effect that the conditions set forth in Sections
6.2(a) and 6.2(b) have been satisfied.

The foregoing conditions are for the sole benefit of the Company and may,
subject to the terms of this Agreement, be waived by the Company, in whole or in
part at any time and from time to time, in the sole discretion of the Company.
The failure by the Company at any time to exercise any of the foregoing rights
shall not be deemed a waiver of any such right and each such right shall be
deemed an ongoing right which may be asserted at any time and from time to time
prior to the Effective Time.

6.3           Conditions to Obligation of Parent to Effect the Merger.  The
obligation of Parent to effect the Merger is further subject to the fulfillment
of the following conditions:

(a)           The representations and warranties of the Company set forth in (i)
this Agreement (other than Sections 3.2(a), 3.10(a)(ii) and 3.10(b)) that are
qualified by Company Material Adverse Effect shall be true and correct at and as
of the date of this Agreement and at and as of the Closing Date as though made
at and as of the Closing Date, (ii) this Agreement (other than Sections 3.2(a),
3.10(a)(ii) and 3.10(b) and those representations and warranties qualified by
Company Material Adverse Effect) shall be true and correct at and as of the date
of this Agreement and at and as of the Closing Date as though made at and as of
the Closing Date, except for such failures to be true and correct as are not
having or would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect, (iii) Section 3.2(a) shall be true
and correct at and as of the date of this Agreement and at and as of the Closing
Date as though made at and as of the Closing Date, except for  de
minimis  inaccuracies, (iv) Section 3.10(a)(ii) shall be true and correct at and
as of the date of this Agreement and (v) Section 3.10(b) shall be true and
correct at and as of the Closing Date as though made at and as of the Closing
Date; provided, however, that representations and warranties that are made as of
a particular date or period shall be true and correct (in the manner set forth
in clauses (i), (ii) or (iii), as applicable) only as of such date or period.

(b)           The Company shall have in all material respects performed all
obligations and complied with all covenants required by this Agreement to be
performed or complied with by it prior to the Effective Time.

(c)           The Company shall have delivered to Parent a certificate, dated
the Effective Time and signed by its Chief Executive Officer or another senior
officer, certifying to the effect that the conditions set forth in Sections
6.3(a) and 6.3(b) have been satisfied.

The foregoing conditions are for the sole benefit of Parent and may, subject to
the terms of this Agreement, be waived by Parent, in whole or in part at any
time and from time to time, in the sole discretion of Parent. The failure by
Parent at any time to exercise any of the foregoing rights shall not be deemed a
waiver of any such right and each such right shall be deemed an ongoing right
which may be asserted at any time and from time to time prior to the Effective
Time.

 
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ARTICLE VII
TERMINATION

7.1          Termination or Abandonment.  Notwithstanding anything in this
Agreement to the contrary, this Agreement may be terminated and abandoned at any
time prior to the Effective Time, whether before or after any approval of the
matters presented in connection with the Merger by the stockholders of the
Company or Parent:

(a)           by the mutual written consent of the Company and Parent;

(b)           by either the Company or Parent if the Effective Time shall not
have occurred on or before December 31, 2011 (the “End Date”), provided that the
right to terminate this Agreement pursuant to this Section 7.1(b) shall not be
available to a party that fails to perform or comply in all material respects
with the covenants and agreements of such party set forth in this Agreement;

(c)           by either the Company or Parent if a Governmental Entity of
competent jurisdiction shall have issued an order, judgment, decree or ruling
permanently enjoining or otherwise prohibiting the consummation of the Merger
and such order, judgment, decree or ruling shall have become final and
non-appealable, provided that the party seeking to terminate this Agreement
pursuant to this Section 7.1(c) shall have used its reasonable best efforts to
remove or prevent entry of such order, judgment, decree or ruling;

(d)           by either the Company or Parent if the Company Stockholders’
Meeting (including any adjournments or postponements thereof) shall have
concluded and the Company Stockholder Approval contemplated by this Agreement
shall not have been obtained; provided, however, that the right to terminate
this Agreement under this Section 7.1(d) shall not be available to the Company
where the failure to obtain the Company Stockholder Approval shall have been
caused by the action or failure to act of the Company and such action or failure
to act constitutes a material breach by the Company of this Agreement;

(e)           by either the Company or Parent if any stockholder approvals
contemplated by this Agreement shall not have been obtained; provided, however,
that the right to terminate this Agreement under this Section 7.1(e) shall not
be available to Parent where the failure to obtain the stockholder approvals
shall have been caused by the action or failure to act of a party and such
action or failure to act constitutes a material breach of this Agreement;

(f)           by the Company, if Parent shall have breached or failed to perform
in any material respect any of its representations, warranties, covenants or
other agreements contained in this Agreement, which breach or failure to perform
(i) would result in a failure of a condition set forth in Section 6.1 or 6.2 and
(ii) cannot be cured by the End Date, provided that the Company shall have given
Parent written notice, delivered at least thirty days prior to such termination,
stating the Company’s intention to terminate this Agreement pursuant to this
Section 7.1(f) and the basis for such termination; and

 
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(g)           by Parent, if the Company shall have breached or failed to perform
in any material respect any of its representations, warranties, covenants or
other agreements contained in this Agreement, which breach or failure to perform
(i) would result in a failure of a condition set forth in Section 6.1 or 6.3 and
(ii) cannot be cured by the End Date, provided that Parent shall have given the
Company written notice, delivered at least thirty days prior to such
termination, stating Parent’s intention to terminate this Agreement pursuant to
this Section 7.1(g) and the basis for such termination.

If this Agreement is terminated pursuant to this Section 7.1, then this
Agreement shall terminate (except for the provisions of Sections 7.2 and Article
VIII), and there shall be no other liability on the part of the Company or
Parent to the other except liability arising out of an intentional breach of
this Agreement, for fraud or as provided for in the Confidentiality Agreement,
in which case the aggrieved party shall be entitled to all rights and remedies
available at law or in equity.

ARTICLE VIII
MISCELLANEOUS

8.1          No Survival of Representations and Warranties.  None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Merger or the termination of this
Agreement.

8.2          Expenses.  Whether or not the Merger is consummated, all costs and
expenses incurred in connection with the Merger, this Agreement and the
transactions contemplated hereby shall be paid by the party incurring or
required to incur such expenses, except all costs and expenses incurred in
connection with the printing, filing and mailing of the Proxy Statement
(including applicable SEC filing fees) shall be borne 50% by Parent and 50% by
the Company.

8.3          Counterparts; Effectiveness.  This Agreement may be executed in two
or more counterparts (including by facsimile), each of which shall be an
original, with the same effect as if the signatures thereto and hereto were upon
the same instrument, and shall become effective when one or more counterparts
have been signed by each of the parties and delivered (by telecopy, e-mail or
otherwise) to the other parties.

8.4          Governing Law.  This Agreement shall be governed by and construed
in accordance with the laws of the State of Nevada, without giving effect to any
choice or conflict of law provision or rule (whether of the State of Nevada or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Nevada; provided, however, that issues
involving the consummation and effects of the Merger will be governed by the
laws of the State of Nevada to the extent the application of Nevada law is
mandatory.

 
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8.5          Jurisdiction; Enforcement.  The parties agree that irreparable
damage would occur if any of the provisions of this Agreement were not performed
in accordance with their specific terms or were otherwise breached. It is
accordingly agreed that each of the parties shall be entitled (in addition to
any other remedy that may be available to it, including monetary damages) to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement exclusively in the
Delaware Court of Chancery and any state appellate court therefrom within the
State of Delaware (or, if the Delaware Court of Chancery declines to accept
jurisdiction over a particular matter, any state or federal court within the
State of Delaware). In addition, each of the parties irrevocably agrees that any
legal action or proceeding with respect to this Agreement and the rights and
obligations arising hereunder, or for recognition and enforcement of any
judgment in respect of this Agreement and the rights and obligations arising
hereunder brought by the other party hereto or its successors or assigns, shall
be brought and determined exclusively in the Delaware Court of Chancery and any
state appellate court therefrom within the State of Delaware (or, if the
Delaware Court of Chancery declines to accept jurisdiction over a particular
matter, any state or federal court within the State of Delaware). The parties
further agree that no party to this Agreement shall be required to obtain,
furnish or post any bond or similar instrument in connection with or as a
condition to obtaining any remedy referred to in this Section 8.5 and each party
waives any objection to the imposition of such relief or any right it may have
to require the obtaining, furnishing or posting of any such bond or similar
instrument. Each of the parties hereby irrevocably submits with regard to any
such action or proceeding for itself and in respect of its property, generally
and unconditionally, to the personal jurisdiction of the aforesaid courts and
agrees that it will not bring any action relating to this Agreement or any of
the transactions contemplated by this Agreement in any court other than the
aforesaid courts. Each of the parties hereby irrevocably waives, and agrees not
to assert, by way of motion, as a defense, counterclaim or otherwise, in any
action or proceeding with respect to this Agreement, (a) any claim that it is
not personally subject to the jurisdiction of the above named courts for any
reason other than the failure to serve in accordance with this Section 8.6, (b)
any claim that it or its property is exempt or immune from jurisdiction of any
such court or from any legal process commenced in such courts (whether through
service of notice, attachment prior to judgment, attachment in aid of execution
of judgment, execution of judgment or otherwise) and (c) to the fullest extent
permitted by the applicable Law, any claim that (i) the suit, action or
proceeding in such court is brought in an inconvenient forum, (ii) the venue of
such suit, action or proceeding is improper or (iii) this Agreement, or the
subject matter hereof, may not be enforced in or by such courts. Each of the
Company, Parent and Merger Sub hereby consents to service being made through the
notice procedures set forth in Section 8.8 and agrees that service of any
process, summons, notice or document by registered mail (return receipt
requested and first-class postage prepaid) to the respective addresses set forth
in Section 8.8 shall be effective service of process for any suit or proceeding
in connection with this Agreement or the transactions contemplated by this
Agreement.

8.6          WAIVER OF JURY TRIAL.  EACH OF THE PARTIES HERETO KNOWINGLY,
INTENTIONALLY AND VOLUNTARILY WITH AND UPON THE ADVICE OF COMPETENT COUNSEL
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.

8.7          Notices.  Any notice required to be given hereunder shall be
sufficient if in writing, and sent by facsimile transmission (provided that any
notice received by facsimile transmission or otherwise at the addressee’s
location on any non-business day or any business day after 5:00 p.m.
(addressee’s local time) shall be deemed to have been received at 9:00 a.m.
(addressee’s local time) on the next business day), by reliable overnight
delivery service (with proof of service) or hand delivery, addressed as follows:

 
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To Parent or Merger Sub:
Atlas Capital Holdings, Inc.
 
2234 N. Federal Highway, Suite 330
 
Boca Raton, FL 33431
 
Fax: (561) 488-7624
 
Attention: Christopher Davies, President
   
with copies to:
Jonathan L. Shepard, Esquire
 
Siegel, Lipman, Dunay, Shepard & Miskel, LLP
 
5355 Town Center Road, Suite 801
 
Boca Raton, FL 33486
 
Fax: (561) 368-9274
   
To the Company:
Clean Energy Pathways, Inc.
 
1521 West Main Street
 
Dothan, AL 36301
 
Fax: (——) __________________
 
Attn: ______________________
   
with copies to:
                                                                         
 
                                                                          
 
                                                                           

Any party to this Agreement may modify the notification details specified in
this paragraph by delivering written notice of such modifications to each of the
other parties as provided in this Section 8.7; provided, however, that any such
modification shall only be effective on the date specified in such notice or
five business days after the notice is given, whichever is later.

8.8          Assignment; Binding Effect.  Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties (whether by operation of law or otherwise) without the prior written
consent of the other parties, and any attempted assignment of this Agreement or
any of such rights, interests or obligations without such consent shall be void
and of no effect. Subject to the preceding sentence, this Agreement shall be
binding upon and shall inure to the benefit of the parties and their respective
successors and assigns.

8.9          Severability.  Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement in any other jurisdiction. If any provision of this Agreement is so
broad as to be unenforceable, such provision shall be interpreted to be only so
broad as is enforceable.

8.10        Entire Agreement.  This Agreement (including the exhibits and
schedules hereto), and the Confidentiality Agreement executed concurrently
herewith constitute the entire agreement, and supersede all other prior
agreements and understandings, both written and oral, between the parties, or
any of them, with respect to the subject matter hereof and thereof, and this
Agreement is not intended to grant standing to any person other than the parties
except, following the Effective Time, for the provisions of Sections 2.1, 5.6(a)
and 5.10.

 
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8.11        Amendments; Waivers.  At any time prior to the Effective Time, any
provision of this Agreement may be amended or waived if, and only if, such
amendment or waiver is in writing and signed, in the case of an amendment, by
the Company, Parent and Merger Sub or, in the case of a waiver, by the party
against whom the waiver is to be effective; provided, however, that after
receipt of Company Stockholder Approval, if any such amendment or waiver shall
by applicable Law require further approval of the stockholders of the Company,
the effectiveness of such amendment or waiver shall be subject to the approval
of the stockholders of the Company. Notwithstanding the foregoing, no failure or
delay by the Company or Parent in exercising any right hereunder shall operate
as a waiver thereof nor shall any single or partial exercise thereof preclude
any other or further exercise of any other right hereunder.

8.12        Headings.  Headings of the Articles and Sections of this Agreement
are for convenience of the parties only and shall be given no substantive or
interpretive effect whatsoever. The table of contents to this Agreement is for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

8.13        Interpretation.  When a reference is made in this Agreement to an
Article or Section, such reference shall be to an Article or Section of this
Agreement unless otherwise indicated. Whenever the words “include,” “includes”
or “including” are used in this Agreement, they shall be deemed to be followed
by the words “without limitation.” 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. All
terms defined in this Agreement shall have the defined meanings when used in any
certificate or other document made or delivered pursuant thereto unless
otherwise defined therein. The definitions contained in this Agreement are
applicable to the singular as well as the plural forms of such terms and to the
masculine as well as to the feminine and neuter genders of such term. Any
agreement, instrument or statute defined or referred to herein or in any
agreement or instrument that is referred to herein means such agreement,
instrument or statute as from time to time amended, modified or supplemented,
including (in the case of agreements or instruments) by waiver or consent and
(in the case of statutes) by succession of comparable successor statutes and
references to all attachments thereto and instruments incorporated therein. Each
of the parties has participated in the drafting and negotiation of this
Agreement. If an ambiguity or question of intent or interpretation arises, this
Agreement must be construed as if it is drafted by all the parties, and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of authorship of any of the provisions of this Agreement.

8.14        Definitions.

(a)           References in this Agreement to “Subsidiaries” of any party shall
mean any corporation, partnership, association, trust or other form of legal
entity of which more than 50% of the voting power of the outstanding voting
securities are on the date hereof directly or indirectly owned by such party.
References in this Agreement (except as specifically otherwise defined) to
“affiliates” shall mean, as to any person, any other person which, directly or
indirectly, controls, or is controlled by, or is under common control with, such
person. As used in this definition, “control” (including, with its correlative
meanings, “controlled by” and “under common control with”) shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of management or policies of a person, whether through the ownership
of securities or partnership or other ownership interests, by contract or
otherwise. References in this Agreement (except as specifically otherwise
defined) to “person” shall mean an individual, a corporation, a partnership, a
limited liability company, an association, a trust or any other entity, group
(as such term is used in Section 13 of the Exchange Act) or organization,
including a Governmental Entity, and any permitted successors and assigns of
such person. As used in this Agreement, “knowledge” means (i) with respect to
Parent, the actual knowledge of the executive officers of Parent or the persons
listed in Section 8.15(a) of the Parent Disclosure Schedule and (ii) with
respect to the Company, the actual knowledge of the individuals listed on
Section 8.15(a) of the Company Disclosure Schedule. As used in this Agreement,
“business day” shall mean any day other than a Saturday, Sunday or a day on
which the banks in New York are authorized by law or executive order to be
closed. References in this Agreement to specific laws or to specific provisions
of laws shall include all rules and regulations promulgated thereunder. Any
statute defined or referred to herein or in any agreement or instrument referred
to herein shall mean such statute as from time to time amended, modified or
supplemented, including by succession of comparable successor statutes.

 
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(b)           Each other defined term shall have the definition provided above
in this Agreement.

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
and delivered as of the date first above written.

 
ATLAS CAPITAL HOLDINGS, INC.
       
By: 
/s/ Christopher K. Davies    
Christopher K. Davies, President
       
ATLAS HOLDINGS MERGER SUB
       
By: 
/s/ Christopher K. Davies    
Christopher K. Davies, President
       
CLEAN ENERGY PATHWAYS, INC.
       
By: 
/s/ J. Michael Parsons    
J. Michael Parsons, President

 
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