MERGER AGREEMENT

by and among

North Country Hospitality, Inc.,

Christopher Swartz,

and

Seaway Valley Capital Corporation

Dated as of April 1, 2008

MERGER AGREEMENT

Merger Agreement (the “Agreement”) dated as of April 1, 2008 by and among Seaway
Valley Capital Corporation, a corporation formed under the laws of the State of
Delaware (“SVCC”), North Country Hospitality Inc., a corporation formed under
the laws of the State of Nevada (“North Country”) and Christopher Swartz, an
individual residing in Watertown, New York (“Principal Shareholder”).   Each of
SVCC North Country and the Principal Shareholder is referred to herein
individually as a “Party,” and all are referred to collectively as the
“Parties.”

PREAMBLE

WHEREAS, North Country owns and operates certain restaurants, hotels and other
real and personal property assets;

WHEREAS, SVCC and North Country have determined that a business combination
between them is advisable and in the best interests of their respective
companies and stockholders and presents an opportunity for their respective
companies to achieve long-term strategic and financial benefits;

WHEREAS, SVCC has proposed to acquire the business operations of North Country
pursuant to a two-step transaction in which North Country will transfer its
assets to a wholly-owned subsidiary (North Country Operating Corp.”), which
shall assume responsibility for the liabilities of North Country, and North
Country Operating Corp. will then become a wholly owned subsidiary of SVCC
through the merger of North Country Operating Corp. with and into Seaway Valley
Hospitality Corp., a Delaware corporation to be formed as a wholly-owned
subsidiary of SVCC (the “Merger Sub”); and

WHEREAS, in the merger of North Country Operating Corp. into the Merger Sub (the
“Merger”), all issued and outstanding shares of capital stock of North Country
Operating Corp shall be cancelled and converted into the right to receive shares
of Series D Convertible Preferred Stock of SVCC having a liquidation preference
of Five Million, Two Hundred and Fifty Thousand Dollars ($5,250,000) (the
“Merger Shares”);

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

CERTAIN DEFINITIONS

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

“Applicable Law” means any domestic or foreign law, statute, regulation, rule or
ordinance applicable to the businesses of the Parties or the Merger.

“DGCL” means Delaware General Corporation Law.

“Knowledge” means, in the case of SVCC or North Country, a particular fact or
other matter of which its Chief Executive Officer or Chief Financial Officer is
actually aware or which a prudent individual serving in such capacity could be
expected to discover or otherwise become aware of in the course of conducting a
reasonable review or investigation of the corporation and its business and
affairs.  

“Lien” means, with respect to any property or asset, any mortgage, lien, pledge,
charge, security interest, claim, encumbrance, royalty interest, any other
adverse claim of any kind in respect of such property or asset.

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“Material Adverse Effect” with respect to any entity or group of entities means
any event, change or effect that has or would have a materially adverse effect
on the financial condition, business or results of operations of such entity or
group of entities, taken as a whole.

“Person” means any individual, corporation, limited liability company,
partnership, trust or unincorporated organization or a government or any agency
or political subdivision thereof.

“Surviving Entity” shall mean Merger Sub as the surviving entity in the Merger
as provided in Section 1.05.

“Tax” (and, with correlative meaning, “Taxes” and “Taxable”) means:

(i) any income, alternative or add-on minimum tax, gross receipts tax, sales
tax, use tax, ad valorem tax, transfer tax, franchise tax, profits tax, license
tax, withholding tax, payroll tax, employment tax, excise tax, severance tax,
stamp tax, occupation tax, property tax, environmental or windfall profit tax,
custom, duty or other tax, impost, levy, governmental fee or other like
assessment or charge of any kind whatsoever together with any interest or any
penalty, addition to tax or additional amount imposed with respect thereto by
any governmental or Tax authority responsible for the imposition of any such tax
(domestic or foreign), and

(ii) any liability for the payment of any amounts of the type described in
clause (i) above as a result of being a member of an affiliated, consolidated,
combined or unitary group for any Taxable period, and

(iii) any liability for the payment of any amounts of the type described in
clauses (i) or (ii) above as a result of any express or implied obligation to
indemnify any other person.

“Tax Return” means any return, declaration, form, claim for refund or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.

ARTICLE I

THE MERGER

SECTION 1.01

ORGANIZATION OF SUBSIDIARIES

(a)  Merger Sub.  Prior to the Closing Date, SVCC shall organize Seaway Valley
Hospitality Corp. (“Merger Sub”) as a Delaware corporation.  SVCC shall be the
sole shareholder of Merger Sub.  Merger Sub shall not engage in any business nor
acquire any assets or liabilities prior to the Closing Date.

(b)   North Country Operating Corp.  Prior to the Closing Date, North Country
shall organize North Country Operating Corp. as a Delaware corporation.  North
Country shall be the sole shareholder of North Country Operating Corp.  

(c)    Assignment and Assumption Agreement.  Prior to the Closing Date, North
Country and North Country Operating Corp. shall (i) enter into an Assignment and
Assumption Agreement in the form annexed hereto as Appendix A, and (ii) shall
effect the transfers of assets called for in the Assignment and Assumption
Agreement.

SECTION 1.02

MERGER SHARES

Prior to the Closing Date, SVCC shall file with the Secretary of State a
Certificate of Designation of Series D Convertible Preferred Stock, in the form
annexed hereto as Appendix B.  The Certificate of Designations shall authorize
the issuance of 1,050,000 shares of Series D Preferred Shares, each of which
shall have a liquidation preference of Five Dollars ($5.00), and shall entitle
the holder to convert the Series D

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shares into SVCC Common Stock with a market value (as defined in the Certificate
of Designations, equal to $5.00.  The shares of Series D Convertible Preferred
Stock are herein identified as the “Merger Shares.”

SECTION 1.03

STRUCTURE OF MERGER

Upon the terms and subject to the conditions set forth in this Agreement and in
accordance with Applicable Law, at the Effective Time (as hereinafter defined),
all North Country Operating Corp. Shares (as hereinafter defined) shall be
cancelled and converted into the right to receive the Merger Shares.  In
connection therewith, the following terms shall apply:

(a)

Exchange Agent.   Robert Brantl, Esq., counsel to SVCC, shall act as the
exchange agent (the “Exchange Agent”) solely for the purpose of exchanging North
Country Operating Corp. Shares for the Merger Shares.   At or prior to the
Closing, SVCC shall deliver to the Exchange Agent the Merger Shares.

(b)

Conversion of Securities.  

(i)

Conversion of North Country Securities.  At the Effective Time, by virtue of the
Merger and without any action on the part of SVCC, North Country or the Merger
Sub, or the holders of any of their respective securities:

(A)

Each of the issued and outstanding shares of common stock of North Country (the
“North Country Operating Corp. Shares”) immediately prior to the Effective Time
shall be converted into and represent the right to receive, and shall be
exchangeable for, that number of the Merger Shares as shall be determined by
dividing 1,050,000 by the number of then issued and outstanding North Country
Operating Corp. Shares.  

(B)

All North Country Operating Corp. Shares shall no longer be outstanding and
shall automatically be canceled and retired and shall cease to exist, and the
holder of a certificate representing any such shares shall cease to have any
rights with respect thereto, except the right to receive the Merger Shares to be
issued pursuant to Section 1.03(b)(i)(A) upon the surrender of such certificate
in accordance with Section 1.08, without interest.  

(ii)

Conversion of Merger Sub Stock.  At the Effective Time, by virtue of the Merger
and without any action on the part of North Country, SVCC, the Merger Sub, or
the holders of any of their respective securities, each share of capital stock
of Merger Sub outstanding immediately prior to the Effective Time shall be
converted into one share of the common stock of the Surviving Entity and the
shares of common stock of the Surviving Entity so issued in such conversion
shall constitute the only outstanding shares of capital stock of the Surviving
Entity, and the Surviving Entity shall be a wholly owned subsidiary of SVCC.  

   

SECTION 1.04

CLOSING.

The closing of the Merger (the “Closing”) will take place at the offices of SVCC
within one (1) business day following the satisfaction or waiver of the
conditions precedent set forth in Article V or at such other date as SVCC and
North Country shall agree (the “Closing Date”), but in any event no later than
April 1, 2008 unless extended by a written agreement of SVCC and North Country.

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SECTION 1.05

MERGER; EFFECTIVE TIME.

At the Effective Time and subject to and upon the terms and conditions of this
Agreement, North Country Operating Corp. shall, and North Country shall cause
North Country Operating Corp.to, merge with and into Merger Sub in accordance
with the provisions of the DGCL, the separate corporate existence of North
Country Operating Corp. shall cease and Merger Sub shall continue as the
Surviving Entity.  The Effective Time shall occur upon the filing with the
Secretary of State of the State of Delaware a Certificate of Merger, executed in
accordance with the provisions of the DGCL (the “Effective Time”).  The date on
which the Effective Time occurs is referred to as the “Effective Date.”
 Provided that this Agreement has not been terminated pursuant to Article VI,
the Parties will cause the Certificate of Merger to be filed in Delaware as soon
as practicable after the Closing.

SECTION 1.06

EFFECT OF THE MERGER.

The Merger shall have the effect set forth in Title 8, Section 259 of the DGCL.
 Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time, all the properties, rights, privileges, powers and franchises of
North Country Operating Corp. and Merger Sub shall vest in the Surviving Entity,
and all debts, liabilities and duties of North Country Operating Corp. and
Merger Sub shall become the debts, liabilities and duties of the Surviving
Entity.

SECTION 1.07

CERTIFICATE OF INCORPORATION AND BYLAWS; DIRECTORS AND OFFICERS.

Pursuant to the Merger:

(a)

The Certificate of Incorporation and Bylaws of the Merger Sub as in effect
immediately prior to the Effective Time shall be the Certificate of
Incorporation and Bylaws of the Surviving Entity immediately following the
Merger, and the name of the Surviving Entity shall be North Country Hospitality
Corp.  

(b)

The directors and officers of North Country Operating Corp. immediately prior to
the Merger shall be the directors and officers of the Surviving Entity
subsequent to the Merger.  Those officers and directors will be:

Thomas Scozzafava

-

Director

Christopher Swartz

-

Director, Chief Executive Officer

Gary Baker

-

Chief Operating Officer

Dan Patterson

-

Secretary

 SECTION 1.08

EXCHANGE OF CERTIFICATES.

(a)

Exchange of Certificates.  After the Effective Time, North Country shall be
required to surrender all certificates for North Country Operating Corp. Shares
to the Exchange Agent, and North Country shall be entitled upon such surrender
to receive in exchange therefor certificates representing the Merger Shares.   

(b)

Full Satisfaction of Rights; Appraisal Rights.  All Merger Shares for which the
North Country Operating Corp. Shares shall have been exchanged pursuant to this
Article I shall be deemed to have been issued in full satisfaction of all rights
pertaining to the North Country Operating Corp. Shares.  North Country hereby
waives all appraisal rights that it may have by reason of the Merger.  

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(c)

Closing of Transfer Books.  On the Effective Date, the stock transfer book of
North Country Operating Corp. shall be deemed to be closed and no transfer of
North Country Operating Corp. Shares shall thereafter be recorded thereon.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF SVCC

SVCC and Thomas Scozzafava hereby represent and warrant, jointly and severally,
to North Country, as of the date of this Agreement, as of the Closing Date and
as of the Effective Time, as follows:

SECTION 2.01

ORGANIZATION, STANDING AND POWER.

SVCC is a corporation duly incorporated, validly existing and in good standing
under the laws of the State of Delaware, and has corporate power and authority
to conduct its business as presently conducted by it and to enter into and
perform this Agreement and to carry out the transactions contemplated by this
Agreement.    Merger Sub will be a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware, with
corporate power and authority to carry out the transactions contemplated by this
Agreement.  

SECTION 2.02

BUSINESS OF MERGER SUB

   Prior to and through the Effective Date, Merger Sub shall not conduct any
operating business, become a party to any agreements, or incur any liabilities
or obligations. None of the warranties made herein with respect to the authority
of SVCC to enter into this agreement and its compliance with the procedural
requirements attendant thereto will be untrue with respect to Merger Sub as of
the Closing Date.

SECTION 2.03

 CAPITALIZATION.

(a)

There are Two Billion, Five Hundred and Five Million (2,505,000,000) shares of
capital stock of SVCC authorized, consisting of Two Billion, Five Hundred
Million (2,500,000,000) shares of Common Stock,  par value $.0001 per share (the
“SVCC Common Shares”) , One Hundred Thousand (100,000) shares of Series A
(non-convertible) Preferred Stock, par value $.0001 per share, One Hundred
Thousand (100,000) shares of Series B Convertible Preferred Stock, $.0001 per
share, par value $.0001, One Million, Six Hundred Thousand (1,600,000) shares of
Series C Convertible Preferred Stock, par value $.0001, and Three Million, Two
Hundred Thousand (3,200,000) shares of Preferred Stock, par value $.0001 per
share (“SVCC Preferred Shares”).  As of the date of this Agreement, there are
997,941,917 SVCC Common Shares, 100,000 Series B Preferred Shares, and 1,458,236
Series C Preferred Shares issued and outstanding.  The Series B Preferred Shares
are entitled to cast 80% of the votes at any meeting of the SVCC shareholders.

(b)

No SVCC Common Shares or SVCC Preferred Shares have been reserved for issuance
to any Person, and there are no outstanding rights, warrants, options or
agreements for the purchase of SVCC Common or Preferred Shares except (i) as
provided in this Agreement, (ii) as provided for in the instruments in favor of
YA Global Investments, LP granting the right to convert certain debentures into
shares of common stock, (iii) as provided for in the instruments in favor of
Golden Gate Investors, Inc. granting the right to convert certain debentures
into shares of common stock, and (iv) as provided to the holders of the Series B
and Series C Preferred Stock.   

(c)

All outstanding SVCC Common Shares are validly issued, fully paid,
non-assessable, not subject to pre-emptive rights and have been issued in
compliance with all state and federal securities laws or other Applicable Law.
 The Merger Shares issuable to North Country pursuant to the Merger will, when
issued pursuant to this Agreement, be duly and validly authorized and issued,
fully paid and non-assessable.

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SECTION 2.04

AUTHORITY FOR AGREEMENT.

The execution, delivery, and performance of this Agreement by SVCC have been
duly authorized by all necessary corporate and shareholder action, and this
Agreement, upon its execution by the Parties, will constitute the valid and
binding obligation of SVCC, enforceable against it in accordance with and
subject to its terms, except as enforceability may be affected by bankruptcy,
insolvency or other laws of general application affecting the enforcement of
creditors’ rights.  The execution and consummation of the transactions
contemplated by this Agreement and compliance with its provisions by SVCC and
Merger Sub will not violate any provision of Applicable Law and will not (a)
violate any provision of Applicable Law, (b) conflict with or result in any
breach of any of the terms, conditions, or provisions of, or constitute a
default under, SVCC’s Certificate of Incorporation or Bylaws, or under any
operating agreement of any subsidiary, in each case as amended, (c) conflict
with, or result in a breach or violation or loss of any benefit under, any
indenture, franchise agreement, service agreement, license agreement, lease,
loan agreement or other agreement instrument to which SVCC or any subsidiary is
a party or by which any of them  or any of their respective properties are bound
or any decree, judgment, order, statute, rule or regulation applicable to SVCC
or any subsidiary; (d) conflict with, or result in any violation of or default
or loss of any benefit under, any permit, concession, grant, franchise, law,
rule or regulation to which SVCC or any subsidiary is a party or to which any of
its property is subject; or (iv) result in the suspension, revocation,
impairment, forfeiture or nonrenewal of any material permit, license,
authorization or approval applicable to SVCC or any subsidiary, its business or
operations or any of its assets or properties.

SECTION 2.05

FINANCIAL CONDITION

The financial statements of SVCC and the additional information regarding the
financial condition of SVCC contained in the Annual Report on Form 10-KSB filed
by SVCC for the year ending on December 31, 2006, the Quarterly Report filed by
SVCC for the quarter ended September 30, 2007, and the Current Report on Form
8-K dated October 23, 2007 (as subsequently amended),  the Current Report on
Form 8-K dated November 7, 2007 (as subsequently amended), the Current Report on
Form 8-K dated December 7, 2007, and the Current Report on Form 8-K dated
January 4, 2008 (collectively, the “SVCC Filings”)  are true, correct and
complete in all material respects, are not misleading and do not omit to state
any material fact which is necessary to make the statements and information
contained in the SVCC Filings not misleading in any material respect.  The
financial statements included in the SVCC Filings were prepared in accordance
with generally accepted accounting principles and fairly reflect the financial
condition of SVCC as of the dates stated and the results of its operations for
the periods presented.

SECTION 2.06

ABSENCE OF CERTAIN CHANGES OR EVENTS.  

Since September 30, 2007, except as reported in Current Reports on Form 8-K
filed with the Securities and Exchange Commission, and except as contemplated by
this Agreement:

(a)

there has not been any Material Adverse Change in the business, operations,
properties, assets, or condition of SVCC; and

(b)

SVCC has not (i) amended its Certificate of Incorporation;  (ii) declared or
made, or agreed to declare or make, any payment of dividends or distributions of
any assets of any kind whatsoever to stockholders or purchased or redeemed, or
agreed to purchase or redeem, any outstanding capital stock; (iii) made any
material change in its method of management, operation, or accounting; (iv)
entered into any material transaction; or (v) made any accrual or arrangement
for payment of bonuses or special compensation of any kind or any severance or
termination pay to any present or former officer or employee.

(c)

Neither SVCC nor any subsidiary has (i) borrowed or agreed to borrow any funds
or incurred, or become subject to, any material obligation or liability
(absolute or contingent) except liabilities

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incurred in the ordinary course of business; (ii) paid any material obligation
or liability (absolute or contingent) other than current liabilities reflected
in or shown on the most recent SVCC balance sheet, and current liabilities
incurred since that date in the ordinary course of business; (iii) sold,
transferred or otherwise disposed of, or pledged, mortgaged or encumbered in any
way any of its assets or rights or any revenues derived therefore, other than
sales of products and services in the ordinary course of business; (iv) canceled
any material debts or claims;  (v) made or permitted any material amendment or
termination of any contract, agreement, or license to which it is a party; (vi)
adopted or amended any employee benefit plan, compensation commitment, severance
agreement or employment contract (other than employment at-will arrangements
that do not require severance or termination payments) to which any director,
officer or employee of SVCC or any subsidiary is a party or a participant; (vii)
accepted the resignation of or terminated the employment of any director,
officer or employee of SVCC or any subsidiary; (viii) made any material change
in any accounting principle or method or election for federal income tax
purposes used by SVCC; (ix) acquired any assets or property or made any capital
expenditures, additions or improvements or commitments for the same, except
those which do not exceed $50,000 in the aggregate; or (x) agreed  to do any of
the foregoing.

SECTION 2.07

GOVERNMENTAL AND THIRD PARTY CONSENTS

No consent, waiver, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or commission or
other federal, state, county, local or other foreign governmental authority,
instrumentality, agency or commission or any third party, including a party to
any agreement with SVCC or Merger Sub, is required by or with respect to SVCC or
Merger Sub in connection with the execution and delivery of this Agreement or
the consummation of the transactions contemplated hereby, except for such
consents, waivers, approvals, orders, authorizations, registrations,
declarations and filings as may be required under (i) applicable securities
laws, or (ii) the DGCL.

SECTION 2.08

LITIGATION

There are no legal actions, lawsuits, proceedings or investigations,
administrative or judicial, pending or, to SVCC’s Knowledge, threatened, against
or affecting SVCC or any subsidiary or against SVCC or any subsidiary’s
Managers, Officers, or Directors that arose out of their operation of such
company’s business.  Neither SVCC, any subsidiary,  nor any of SVCC’s or any
subsidiary’s Managers, Officers or Directors are subject to any order, writ,
judgment, injunction, decree, determination or award of any court, arbitrator or
administrative, governmental or regulatory authority or body which would be
likely to have a Material Adverse Effect on the business of SVCC or the
subsidiary.   There is no action, suit or proceeding by SVCC or any subsidiary
currently pending or that SVCC or any subsidiary intends to initiate.

SECTION 2.09

INTERESTED PARTY TRANSACTIONS

Except as set forth in Schedule 2.09, SVCC is not indebted to any officer or
director of SVCC, and no such person is indebted to SVCC.

SECTION 2.10

COMPLIANCE WITH APPLICABLE LAWS.

SVCC’s and each subsidiary’s operations have been conducted in all material
respects in accordance with all applicable statutes, laws, rules and
regulations.  Neither SVCC nor any subsidiary is in violation of any law,
ordinance or regulation of any other jurisdiction, the violation of which would
be likely to have a Material Adverse Effect.  

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SECTION 2.11

TAX RETURNS AND PAYMENT

SVCC has duly and timely filed all material Tax Returns required to be filed by
it and has duly and timely paid all Taxes shown thereon to be due.  There is no
material claim for Taxes that is a Lien against the property of SVCC other than
Liens for Taxes not yet due and payable, none of which is material.  SVCC has
not received written notification of any audit of any Tax Return of SVCC being
conducted or pending by a Tax authority, no extension or waiver of the statute
of limitations on the assessment of any Taxes has been granted by SVCC which is
currently in effect, and SVCC is not a party to any agreement, contract or
arrangement with any Tax authority or otherwise, which may result in the payment
of any material amount in excess of the amount reflected on the above referenced
SVCC financial statements.

SECTION 2.12

INTELLECTUAL PROPERTY

(a)

All Patent Rights, Trademark Rights and copyright registrations or applications
therefor that are now or were at any time in the past registered, issued or
filed in the name of SVCC or any of its subsidiaries, alone or jointly with
others, or that were assigned to SVCC or any subsidiary (the "SVCC Registered
Intellectual Property”) is valid, enforceable and subsisting.  All issuance,
renewal, maintenance and other payments that are or have become due with respect
to the Registered Intellectual Property have been timely paid.  

(b)

Each of SVCC and its subsidiaries owns or has the right to use all Intellectual
Property that is used in its business as now conducted and as currently proposed
to be conducted.  No Person has any ownership interest, royalty interest,
security interest, license right or other interest in or to, or any Lien
against, any SVCC Owned Intellectual Property.

(c)

To SVCC's Knowledge, SVCC's and each subsidiary’s business as now conducted, or
as currently proposed to be conducted, does not infringe or violate, or
constitute a misappropriation of, any Intellectual Property rights of any
Person.  There are no complaints, claims and notices and threats thereof
alleging any such infringement, violation or misappropriation.  No Person is
infringing, violating or misappropriating any SVCC Owned Intellectual Property.

(d)

Neither SVCC nor any subsidiary has licensed, distributed or otherwise granted
any rights to any Person with respect to any Intellectual.

(e)

With respect to SVCC Licensed Intellectual Property, the licenses or agreements
granting SVCC or any subsidiary the right to use such Intellectual Property are
in full force and effect on the date hereof and valid and enforceable by the
licensee in accordance with their respective terms.

(f)

For purposes of this Agreement, the following terms shall have the following
meanings:

"Intellectual Property" means the following subsisting throughout the world: (1)
patents, patent applications, and registrations thereof (the "Patent Rights");
(2) registered or common law trademarks and service marks, trade dress, Internet
domain names, logos, trade names and corporate names and all registrations and
applications for registration of the foregoing (the "Trademark Rights"), and all
goodwill in the foregoing; (3) copyrights, data and database rights and
registrations and applications for registration thereof; (4) mask works and
registrations and applications for registration thereof; (5) inventions,
designs, trade secrets and confidential business information, whether patentable
or nonpatentable and whether or not reduced to practice, and know-how;  (6)
other proprietary rights relating to any of the foregoing (including remedies
against infringement thereof and rights of protection of interest therein under
the laws of all jurisdictions); and  (7) copies and tangible embodiments
thereof.

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"SVCC Intellectual Property" shall mean SVCC or subsidiary Owned Intellectual
Property and SVCC or subsidiary Licensed Intellectual Property.

"SVCC Licensed Intellectual Property" shall mean all Intellectual Property that
is licensed to SVCC or any subsidiary by third parties.

"SVCC Owned Intellectual Property" shall mean all Intellectual Property owned or
purported to be owned by SVCC or any subsidiary, in whole or in part.

SECTION 2.13

EMPLOYEES AND EMPLOYEE MATTERS.  

Each of SVCC and its subsidiaries has complied with all federal, state and local
laws relating to the hiring of employees, consultants and advisors and the
employment of labor, including provisions thereof relating to wages, hours,
equal opportunity, collective bargaining and the payment of social security and
other taxes.  There are no collective bargaining agreements or other labor union
or guild contracts governing the relationship between SVCC or any subsidiary and
any of its employees.  Neither SVCC nor any subsidiary is delinquent in payments
to any of its employees for any wages, salaries, commissions, bonuses or other
direct compensation for any services performed by them to date or amounts
required to be reimbursed to such employees or upon any termination of the
employment of any such employees.  Neither SVCC nor any subsidiary has breached
or otherwise failed to comply with any provision of any collective bargaining
agreement or other labor union contract applicable to any of its employees.  No
consent of any union (or any similar group or organization) is required in
connection with the consummation of the transactions contemplated hereby.

Schedule 2.13 sets forth a list of the names of all of SVCC's and each
subsidiary’s officers, directors and employees and the position and compensation
of each such person.

SECTION 2.14

TITLE TO PROPERTY AND ASSETS.

 Schedule 2.14 contains a list of the real property owned by SVCC or any of its
subsidiaries, including street address and block and lot.  Except as set forth
on Schedule 2.14, SVCC and each Subsidiary has good and marketable title to all
of its property and assets and owns such property and assets free and clear of
any Liens, except for Liens reflected in the Financial Statements and, with
respect to real property owned by SVCC or any subsidiary, except for
encumbrances, defects, restrictions and reservations of record.  With respect to
the property and assets it leases, SVCC or the subsidiary which is a party to
each such lease is in compliance with such lease and holds a valid leasehold
interest free and clear of any Lien.

SECTION 2.15

ENVIRONMENTAL AND SAFETY LAWS.  

(a) Neither SVCC nor any subsidiary (each a “Company Owner”) has generated,
used, transported, treated, stored, released or disposed of, and has not
suffered or permitted anyone else to generate, use, transport, treat, store,
release or dispose of any Hazardous Substance (as defined below) in violation of
any Environmental Laws (as defined below); (b) there has not been any
generation, use, transportation, treatment, storage, release or disposal of any
Hazardous Substance resulting from the conduct of the Company Owner or the use
of any property or facility by the Company Owner or, to SVCC's Knowledge, any
nearby or adjacent properties or facilities, that has created or could
reasonably be expected to create any liability on the part of the Company Owner
under the Environmental Laws or that would require reporting to or notification
by the Company Owner to any local, state or federal governmental authority; and
(c) any Hazardous Substance handled or dealt with in any way in connection with
the business of any Company Owner, whether before or during such Company
ownership, has been and is being handled or dealt with in all respects in
compliance with the Environmental Laws in effect at the time such activities
were being conducted.  "Environmental Laws" shall mean all laws, rules,
regulations, statutes, ordinances, decrees or orders of any local, state or
federal governmental authority relating to (i) the control of any

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potential pollutant or protection of the air, water or land, (ii) solid, gaseous
or liquid waste generation, handling, treatment, storage, disposal or
transportation and (iii) exposure to Hazardous Substances and includes, without
limitation, final and binding requirements related to the foregoing imposed by
(A) the terms and conditions of any license, permit, approval or other
authorization by any local, state or federal governmental authority and (B)
applicable judicial, administrative or other regulatory decrees, judgments and
orders of any local, state or federal governmental authority.    "Hazardous
Substances" shall mean any toxic or hazardous materials or substances, solid
wastes, including asbestos, buried contaminants, chemicals, flammable or
explosive materials, radioactive materials, petroleum wastes and spills or
releases of petroleum products and any other chemical, pollutant, contaminant,
substance or waste that is regulated by any local, state or federal governmental
authority under any Environmental Law.

SECTION 2.16

SECURITY LISTING

SVCC is a fully compliant reporting company under the Securities Exchange Act of
1934, as amended (the “Exchange Act”), and all SVCC public filings required
under the Exchange Act have been made.  The common stock of SVCC is listed for
quotation on the OTC Bulletin Board.  To the Knowledge of SVCC, SVCC has not
been threatened and is not subject to removal of its common stock from the OTC
Bulletin Board.   

SECTION 2.17

FINDERS’ FEES

SVCC has not incurred, nor will it incur, directly or indirectly, any liability
for brokers’ or finders’ fees or agents’ commissions or investment bankers’ fees
or any similar charges in connection with this Agreement or any transaction
contemplated hereby.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF NORTH COUNTRY

North Country and the Principal Shareholder hereby represent and warrant,
jointly and severally, to SVCC, as of the date of this Agreement and as of the
Effective Time (except as otherwise indicated), as follows:

SECTION 3.01

ORGANIZATION, STANDING AND POWER.

North Country is a publicly held corporation duly incorporated, validly existing
and in good standing under the laws of the State of Nevada, and has full
corporate power and authority to conduct its business as presently conducted by
it and to enter into and perform this Agreement and to carry out the
transactions contemplated by this Agreement.    North Country is duly qualified
to transact business and is in good standing in the State of New York and in
each other jurisdiction in which the failure to so qualify could have a Material
Adverse Effect.  

SECTION 3.02

SUBSIDIARIES.

 Schedule 3.02, attached hereto, sets forth the legal names and jurisdictions of
existence of all Persons (collectively, the “Subsidiaries” or each individually
a “Subsidiary”) in which North Country owns of record or beneficially, directly
or indirectly, (i) any shares of capital stock, securities convertible into
capital stock or any other equity interest or debt security of any corporation
or (ii) any equity interest or debt security in any partnership, limited
liability company, joint venture or other non-corporate Person or which North
Country controls, directly or indirectly.  Each of the Subsidiaries is duly
formed, validly existing and in good standing under the laws of the state of its
existence, and has full corporate or other power and

10

authority to conduct its business as presently conducted.  Each Subsidiary is
duly qualified to transact business and is in good standing in each other
jurisdiction in which the failure to so qualify could have a Material Adverse
Effect.   North Country is the registered and beneficial owner of that
percentage of the capital stock or other equity interest of each Subsidiary
stated on Schedule 3.02; and North Country owns such stock or other equity
interest free and clear of all Liens and restrictions whatsoever.   No Person
has any right to acquire capital stock or other equity interests of any
Subsidiary, whether by tender of consideration or otherwise.  

SECTION 3.03

AUTHORITY FOR AGREEMENT.   

The execution, delivery and performance of this Agreement by North Country have
been duly authorized by all necessary corporate action, and this Agreement
constitutes the valid and binding obligation of North Country, enforceable
against North Country in accordance with its terms, except as enforceability may
be affected by bankruptcy, insolvency or other laws of general application
affecting the enforcement of creditors' rights.  The execution and consummation
of the transactions contemplated by this Agreement and compliance with its
provisions by North Country will not (a) violate any provision of Applicable
Law, (b) conflict with or result in any breach of any of the terms, conditions,
or provisions of, or constitute a default under, North Country’s Certificate of
Incorporation or Bylaws, or under any operating agreement of any Subsidiary, in
each case as amended, (c) conflict with, or result in a breach or violation or
loss of any benefit under, any indenture, franchise agreement, service
agreement, license agreement, lease, loan agreement or other agreement
instrument to which North Country or any Subsidiary is a party or by which any
of them  or any of their respective properties are bound or any decree,
judgment, order, statute, rule or regulation applicable to North Country or any
Subsidiary; (d) conflict with, or result in any violation of or default or loss
of any benefit under, any permit, concession, grant, franchise, law, rule or
regulation to which North Country or any Subsidiary is a party or to which any
of its property is subject; or (iv) result in the suspension, revocation,
impairment, forfeiture or nonrenewal of any material permit, license,
authorization or approval applicable to North Country or any Subsidiary, its
business or operations or any of its assets or properties.

SECTION 3.04

GOVERNMENTAL OR THIRD PARTY CONSENT

No consent, waiver, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or commission or
other federal, state, county, local or other foreign governmental authority,
instrumentality, agency or commission or any third party, including any manager
or member of any limited liability company, any franchisor or lessor, or any
other  party to any agreement with North Country or with any Subsidiary, is
required by or with respect to North Country or such Subsidiary in connection
with the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby, except for such consents, waivers, approvals,
orders, authorizations, registrations, declarations and filings as may be
required under (i) applicable securities laws, (ii) the DGCL, or (iii) the
Nevada Revised Statutes.

SECTION 3.05

FINANCIAL STATEMENTS

North Country has delivered to SVCC (a) its audited balance sheet as at
October 31, 2006 and its audited statement of income and cash flows for the
twelve months ending October 31, 2006, and (b) its audited balance sheet as at
October 31, 2007 and its audited consolidated statement of income and cash flows
for the twelve-month period ended on October 31, 2007 (collectively, the
"Financial Statements").  The Financial Statements are complete and correct and
have been prepared in accordance with United States generally accepted
accounting principles applied on a consistent basis throughout the periods
indicated and with each other except that the unaudited Financial Statements do
not reflect all normal year-end adjustments.  

SECTION 3.06.

CORPORATE RECORDS.  

All of the books and records of North Country and each of the Subsidiaries
including, without limitation, its or such Subsidiary’s books of account,
corporate records, minute book, stock certificate books and other

11

records are up-to-date, complete and reflect accurately and fairly the conduct
of its business in all material respects since its date of incorporation or
formation.  All reports, returns and statements currently required to be filed
by either North Country or any Subsidiary with any government agency with
respect to the business and operations of North Country or such Subsidiary have
been filed or valid extensions have been obtained in accordance with normal
procedures and all governmental reporting requirements have been complied with.
 North Country has delivered to SVCC true, correct and complete copies of the
Operating Agreement of each Subsidiary that is a limited liability company
(each, an “LLC Operating Agreement”), and each such LLC Operating Agreement is
legal, valid and binding and  in full force and effect.

SECTION 3.07

.

ABSENCE OF CERTAIN CHANGES OR EVENTS.  

Since October 31, 2007, except as set forth in Schedule 3.07 here of and except
as contemplated by this Agreement:

(a)

there has not been any Material Adverse Change in the business, operations,
properties, assets, or condition of North Country or any Subsidiary;

(b)

North Country has not amended its Certificate of Incorporation, and neither
North Country nor any Subsidiary has  (i) declared or made, or agreed to declare
or make, any payment of dividends or distributions of any assets of any kind
whatsoever to stockholders (other than the payment of upstream dividends to
North Country) or purchased or redeemed, or agreed to purchase or redeem, any
outstanding capital stock; (iii) made any material change in its method of
management, operation, or accounting; (iv) entered into any material
transaction; or (v) made any accrual or arrangement for payment of bonuses or
special compensation of any kind or any severance or termination pay to any
present or former officer or employee;

(c)

Neither North Country nor any Subsidiary has (i) borrowed or agreed to borrow
any funds or incurred, or become subject to, any material obligation or
liability (absolute or contingent) except liabilities incurred in the ordinary
course of business; (ii) paid any material obligation or liability (absolute or
contingent) other than current liabilities reflected in or shown on the most
recent North Country balance sheet, and current liabilities incurred since that
date in the ordinary course of business; (iii) sold, transferred or otherwise
disposed of, or pledged, mortgaged or encumbered in any way any of its assets or
rights or any revenues derived therefore, other than sales of products and
services in the ordinary course of business; (iv) canceled any material debts or
claims;  (v) made or permitted any material amendment or termination of any
contract, agreement, or license to which it is a party; (vi) adopted or amended
any employee benefit plan, compensation commitment, severance agreement or
employment contract (other than employment at-will arrangements that do not
require severance or termination payments) to which any director, officer or
employee of North Country or any Subsidiary is a party or a participant; (vii)
accepted the resignation of or terminated the employment of any director,
officer or employee of North Country or any Subsidiary; (viii) made any material
change in any accounting principle or method or election for federal income tax
purposes used by North Country; (ix) acquired any assets or property or made any
capital expenditures, additions or improvements or commitments for the same,
except those which do not exceed $50,000 in the aggregate; or (x) agreed  to do
any of the foregoing.

SECTION 3.08

TAXES.  

Except where provided in Section 3.09 below, North Country and each Subsidiary
has filed all Tax Returns that it is required to file with all governmental
agencies, wherever situate, and has paid or accrued for payment all Taxes as
shown on such returns except for Taxes being contested in good faith.  There is
no material claim for Taxes that is a Lien against the property of North Country
or any Subsidiary other than Liens for Taxes not yet due and payable.  All Taxes
due and owing by either North Country or any Subsidiary have been paid.  Neither
North Country nor any Subsidiary is the beneficiary of any extension of time
within which to file any tax return.  North Country and each Subsidiary has
withheld and paid all taxes

12

required to have been withheld and paid in connection with amounts paid or owing
to any employee, independent contractor, creditor, stockholder or other third
party.

  

SECTION 3.09

PENDING ACTIONS.  

Except three distinct situations discussed between the two principals, there are
no legal actions, lawsuits, proceedings or investigations, administrative or
judicial, pending or, to North Country’s Knowledge, threatened, against or
affecting North Country or any Subsidiary or against North Country or any
Subsidiary’s Managers, Officers, or Directors that arose out of their operation
of such company’s business.  Neither North Country, any Subsidiary,  nor any of
North Country’s or any Subsidiary’s Managers, Officers or Directors are subject
to any order, writ, judgment, injunction, decree, determination or award of any
court, arbitrator or administrative, governmental or regulatory authority or
body which would be likely to have a Material Adverse Effect on the business of
North Country or the Subsidiary.   There is no action, suit or proceeding by
North Country or any Subsidiary currently pending or that North Country or any
Subsidiary intends to initiate.

SECTION 3.10.

COMPLIANCE WITH LAWS.  

North Country’s and each Subsidiary’s operations have been conducted in all
material respects in accordance with all applicable statutes, laws, rules and
regulations.  Neither North Country nor any Subsidiary is in violation of any
law, ordinance or regulation of any other jurisdiction, the violation of which
would be likely to have a Material Adverse Effect.  

SECTION 3.11

INTELLECTUAL PROPERTY

(a)

Schedule 3.11 sets forth all Patent Rights, Trademark Rights (including names
for beer and ale, even if not registered as trademarks) and copyright
registrations or applications therefor that are now or were at any time in the
past registered, issued or filed in the name of North Country or any Subsidiary,
alone or jointly with others, or that were assigned to North Country or any
Subsidiary (the "Registered Intellectual Property"), enumerating specifically
the applicable filing or registration number, date of filing or issuance, name
of all inventors, applicant(s), registrant(s) and/or assignee(s), as applicable,
and status of any required issuance, renewal, maintenance or other payments.
 All Registered Intellectual Property is valid, enforceable and subsisting.  All
issuance, renewal, maintenance and other payments that are or have become due
with respect to the Registered Intellectual Property have been timely paid.  

(b)

Each of North Country and the Subsidiaries owns or has the right to use all
Intellectual Property that is used in its business as now conducted and as
currently proposed to be conducted.  No Person has any ownership interest,
royalty interest, security interest, license right or other interest in or to,
or any Lien against, any Company Owned Intellectual Property.  Schedule 3.11
identifies the location of each formula for beer or ale currently or within the
past five (5) years used by any of the North Country subsidiaries.  Each such
formula is owned by SVCC or one of its subsidiaries, free of Liens.  

(c)

To North Country's Knowledge, North Country's and each Subsidiary’s business as
now conducted, or as currently proposed to be conducted, does not infringe or
violate, or constitute a misappropriation of, any Intellectual Property rights
of any Person.  Schedule 3.11 sets forth all complaints, claims and notices and
threats thereof alleging any such infringement, violation or misappropriation;
and North Country has provided to SVCC complete and accurate copies of all
written documentation relating to any such complaint, claim, notice or threat.
 No Person is infringing, violating or misappropriating any Company Owned
Intellectual Property.

(d)

Schedule 3.11 sets forth each license or other agreement pursuant to which North
Country or any Subsidiary has licensed, distributed or otherwise granted any
rights to any Person with respect to any

13

Intellectual Property and each agreement pursuant to which North Country or any
Subsidiary has transferred or assigned ownership of any Intellectual Property.

(e)

Schedule 3.11 sets forth each item of Company Licensed Intellectual Property and
the license or agreement pursuant to which North Country or any Subsidiary uses
or has access to it (excluding off the shelf software programs licensed by North
Country or any Subsidiary pursuant to "shrink wrap" licenses).  With respect to
Company Licensed Intellectual Property, the licenses or agreements granting
North Country or any Subsidiary the right to use such Intellectual Property are
in full force and effect on the date hereof and valid and enforceable by the
licensee in accordance with their respective terms.

(f)

Except as otherwise noted on Schedule 3.11, the Company Owned Intellectual
Property includes the exclusive right to grant franchises in each and every one
of the business enterprises conducted by SVCC and its Subsidiaries.   

(g)

For purposes of this Agreement, the following terms shall have the following
meanings:

"Intellectual Property" means the following subsisting throughout the world: (1)
patents, patent applications, and registrations thereof (the "Patent Rights");
(2) registered or common law trademarks and service marks, trade dress, Internet
domain names, logos, trade names and corporate names and all registrations and
applications for registration of the foregoing (the "Trademark Rights"), and all
goodwill in the foregoing; (3) copyrights, data and database rights and
registrations and applications for registration thereof; (4) mask works and
registrations and applications for registration thereof; (5) inventions,
designs, trade secrets and confidential business information, whether patentable
or nonpatentable and whether or not reduced to practice, and know-how;  (6)
other proprietary rights relating to any of the foregoing (including remedies
against infringement thereof and rights of protection of interest therein under
the laws of all jurisdictions); and  (7) copies and tangible embodiments
thereof.

"Company Intellectual Property" shall mean North Country or Subsidiary Owned
Intellectual Property and North Country or Subsidiary Licensed Intellectual
Property.

"Company Licensed Intellectual Property" shall mean all Intellectual Property
that is licensed to North Country or any Subsidiary by third parties.

"Company Owned Intellectual Property" shall mean all Intellectual Property owned
or purported to be owned by North Country or any Subsidiary, in whole or in
part.

SECTION 3.12

EMPLOYEES AND EMPLOYEE MATTERS.  

Each of North Country and the Subsidiaries has complied with all federal, state
and local laws relating to the hiring of employees, consultants and advisors and
the employment of labor, including provisions thereof relating to wages, hours,
equal opportunity, collective bargaining and the payment of social security and
other taxes.  There are no collective bargaining agreements or other labor union
or guild contracts governing the relationship between North Country or any
Subsidiary and any of its employees.  Neither North Country nor any Subsidiary
is delinquent in payments to any of its employees for any wages, salaries,
commissions, bonuses or other direct compensation for any services performed by
them to date or amounts required to be reimbursed to such employees or upon any
termination of the employment of any such employees.  Neither North Country nor
any Subsidiary has breached or otherwise failed to comply with any provision of
any collective bargaining agreement or other labor union contract applicable to
any of its employees.  No consent of any union (or any similar group or
organization) is required in connection with the consummation of the
transactions contemplated hereby.

Schedule 3.12 sets forth a list of the names of all of North Country's and each
Subsidiary’s officers, directors and employees and the position and compensation
of each such person.

14

Schedule 3.12 sets forth a true, correct and complete list of all employment,
severance, non-competition, deferred compensation and similar arrangements
between each of North Country and the Subsidiaries and their respective
officers, employees and consultants and all such arrangements with former
officers, employees and consultants pursuant to which North Country or any
Subsidiary is obligated to make any payments or provide any benefits.

Schedule 3.12 sets forth a true, correct and complete list of all "employee
benefit plans" (as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended) and any other plan, program, arrangement or
agreement with respect to which North Country or any Subsidiary is obligated to
provides bonuses, incentive compensation, vacation pay, severance pay, insurance
or any other perquisite or benefit to officers, employees or consultants of
North Country or any Subsidiary.

North Country does not have knowledge that any officer, or that any group of
employees, intends to terminate his, her or their employment with North Country
or any Subsidiary, nor does North Country or any Subsidiary have a present
intention to terminate the employment of any officer or group of employees.

SECTION 3.13

AGREEMENTS.  

Except for this Agreement and except as set forth on Schedule 3.13:

(a)

There are no agreements, understandings or proposed transactions between North
Country or any Subsidiary and any of their respective officers, directors,
stockholders, employees, members, managers, or Affiliates (as defined below), or
any Affiliate or Family Member (as defined below) thereof, other than oral
agreements cancellable at will with North Country's or the Subsidiary’s
officers, managers and employees (A) for payment of salary for services rendered
and (B) for reimbursement of reasonable expenses incurred on behalf of the
company.   " Affiliate " means, with respect to North Country or any Subsidiary
or other specified Person, any Person directly or indirectly controlling,
controlled by or under direct or indirect common control with North Country or
such Subsidiary or other specified Person and shall also include, in the case of
a specified Person who is an individual, any Family Member of such Person.  
"Family Member " means, with respect to any individual, such individual's
parents, spouse, and descendants (whether natural or adopted) and any trust or
other vehicle formed for the benefit of any one or more of them.

(b)

There are no agreements, understandings, instruments, contracts, proposed
transactions, judgments, orders, writs or decrees (whether oral or written) to
which North Country or any Subsidiary (each, a “Company Party”) is a party or by
which it or any of its assets is bound that may involve (A) obligations
(contingent or otherwise) of, or payments by or to, the Company Party in excess
of $20,000 (B) the issuance of equity securities of the Company Party or the
Company Party’s  incurrence of indebtedness or the pledge or grant of any
security interest or encumbrance on the Company Party’s assets, (C) restrictions
on the development, provision or distribution of the Company Party’s products or
services, (D) the manufacturing, production, assembling, marketing, development,
testing or distribution of the Company Party’s products or services or supplying
the Company Party with any products or services necessary for the development or
manufacture of its products, (E) any employment, severance or consulting
agreement, employee benefit, bonus, pension, profit-sharing, stock option, stock
purchase or similar plan or arrangement, (F) the grant or purchase of a
franchise, (G) the disposition of a material portion of the Company Party’s
assets or the acquisition of the business or securities or other ownership
interests of another Person, (H) any agreement under which the Company Party is
restricted from carrying on any line of business or carrying on any business in
any geographic location, (I) any fees or payments to any Person (including any
broker, investment bank or other finder) relating to any financing (public or
private) or the sale of the enterprise value of the Company Party  (through
merger, consolidation, asset transfer, equity transfer, license or otherwise),
(J) any lease of real property, (K) the operation of any franchise, or (L) any
other agreement that is material to the business, operations, prospects, assets
or condition (financial or otherwise) of the Company Party (the "Company
Contracts").

15

(c)

Schedule 3.13 contains a complete list of all Company Contracts.  With respect
to each Company Contract: (A) such Company Contract is legal, valid, binding,
enforceable and in full force and effect against the Company Party; (B) such
Company Contract will continue to be legal, valid, binding, enforceable and in
full force and effect (in each case, as against the Company Party and, to the
Knowledge of North Country, each other party thereto) in accordance with its
terms; (C) neither the Company Party nor, to the Knowledge of North Country, any
other party thereto, is in breach or default in any material respect, and no
event has occurred that with notice or lapse of time would constitute a material
breach or default on the part of the Company Party or, to the knowledge of North
Country, any other party thereto, or permit termination, modification or
acceleration, under such Company Contract; (D) neither the Company Party nor, to
the knowledge of North Country, any other party thereto has repudiated any
provision of such Company Contract; and (E) a true and correct copy of such
Company Contract has been provided to SVCC.  There are no negotiations pending
or in progress to revise any material term of any Company Contract.

SECTION 3.14

PERMITS AND LICENSES

 Schedule 3.14 contains a complete list of all liquor licenses used in
connection with the business of North Country or any of its Subsidiaries.  Each
liquor license is held free of liens and encumbrances, except as disclosed on
Schedule 3.14.  North Country and each Subsidiary has all franchises, permits
and licenses necessary for the conduct of its business as now being conducted by
it (including, without limitation, owning and leasing its property and assets).
Neither North Country nor any Subsidiary is in default under any of such
franchises, permits, licenses, or other similar authority and none of such
franchises, permits, licenses, or other similar authority limit the full
operation of North Country's or such Subsidiary’s business as presently
conducted and to be conducted.

SECTION 3.15

TITLE TO PROPERTY AND ASSETS.

 Schedule 3.15 contains a list of the real property owned by North Country or
any of its Subsidiaries, including street address and block and lot.  Except as
set forth on Schedule 3.15, North Country and each Subsidiary has good and
marketable title to all of its property and assets and owns such property and
assets free and clear of any Liens, except for Liens reflected in the Financial
Statements and, with respect to real property owned by North Country or any
Subsidiary, except for encumbrances, defects, restrictions and reservations of
record.  With respect to the property and assets it leases, North Country or the
Subsidiary which is a party to each such lease is in compliance with such lease
and holds a valid leasehold interest free and clear of any Lien.

SECTION 3.16

ENVIRONMENTAL AND SAFETY LAWS.  

(a) Neither North Country nor any Subsidiary (each a “Company Owner”) has
generated, used, transported, treated, stored, released or disposed of, and has
not suffered or permitted anyone else to generate, use, transport, treat, store,
release or dispose of any Hazardous Substance (as defined below) in violation of
any Environmental Laws (as defined below); (b) there has not been any
generation, use, transportation, treatment, storage, release or disposal of any
Hazardous Substance resulting from the conduct of the Company Owner or the use
of any property or facility by the Company Owner or, to North Country's
Knowledge, any nearby or adjacent properties or facilities, that has created or
could reasonably be expected to create any liability on the part of the Company
Owner under the Environmental Laws or that would require reporting to or
notification by the Company Owner to any local, state or federal governmental
authority; and (c) any Hazardous Substance handled or dealt with in any way in
connection with the business of any Company Owner, whether before or during such
Company ownership, has been and is being handled or dealt with in all respects
in compliance with the Environmental Laws in effect at the time such activities
were being conducted.  "Environmental Laws" shall mean all laws, rules,
regulations, statutes, ordinances, decrees or orders of any local, state or
federal governmental authority relating to (i) the control of any potential
pollutant or protection of the air, water or land, (ii) solid, gaseous or liquid
waste generation, handling, treatment, storage, disposal or transportation and
(iii) exposure to Hazardous Substances and includes, without limitation, final
and binding requirements related to the foregoing imposed by (A) the

16

terms and conditions of any license, permit, approval or other authorization by
any local, state or federal governmental authority and (B) applicable judicial,
administrative or other regulatory decrees, judgments and orders of any local,
state or federal governmental authority.    "Hazardous Substances" shall mean
any toxic or hazardous materials or substances, solid wastes, including
asbestos, buried contaminants, chemicals, flammable or explosive materials,
radioactive materials, petroleum wastes and spills or releases of petroleum
products and any other chemical, pollutant, contaminant, substance or waste that
is regulated by any local, state or federal governmental authority under any
Environmental Law.

SECTION 3.17

INSURANCE.

Schedule 3.17 sets forth a list of all policies or binders of fire, casualty,
liability, product liability, clinical trial, worker's compensation, vehicular
or other insurance held by North Country or any Subsidiary (specifying for each
such insurance policy the insurer, the policy number or covering note number
with respect to binders, and each pending claim thereunder and setting forth the
aggregate amounts paid out under each such policy through the date hereof).  All
such binders are in full force and effect.   Neither North Country nor any
Subsidiary is in default with respect to any provision contained in any such
policy or binder and neither has failed to give any notice or present any claim
of which it has notice under any such policy or binder in a timely fashion.
 Neither North Country nor any Subsidiary has received or given a notice of
cancellation or nonrenewal with respect to any such policy or binder.  None of
the applications for such policies or binders contain any material inaccuracy,
and all premiums for such policies and binders have been paid when due.  There
is no state of facts or the occurrence of any event that is reasonably likely to
form the basis for any claim against it in an amount exceeding $20,000 not fully
covered by such insurance policies, and neither North Country nor any Subsidiary
has received written notice from any of its insurance carriers that any existing
insurance coverage will not be available after the Closing on substantially the
same terms as now in effect.

SECTION 3.18

SUPPLIERS.

No customer or supplier that was significant to North Country or any Subsidiary
during calendar year 2007 has terminated, materially reduced or threatened to
terminate or materially reduce its purchases from, or provision of products or
services to, North Country or the Subsidiary, as the case may be.  Each of the
material components, products and services used in and necessary for the conduct
of North Country's and each Subsidiary’s business as now conducted and presently
proposed to be conducted is either (a) subject to a legally binding and
enforceable agreement with the supplier of such material component, product or
service or (b) could be obtained through one or more alternate suppliers without
material disruption to the business of North Country or the Subsidiary.

SECTION 3.19

DEBTS

Schedule 3.19 hereto sets forth (a) the aggregate liabilities of North Country
and its subsidiaries as of the end of the most recent month, and (b) with
respect to any creditor to whom more than $50,000 is owed, the identity of the
creditor, the amount of liability, and a description of any written instrument
governing the liability.

SECTION 3.20

BANKING

Schedule 3.20 hereto identifies each bank account maintained by SVCC or any of
its subsidiaries, and states the cash balance as of a recent date.

17

SECTION 3.21

FINDERS’ FEES

North Country has not incurred, nor will it incur, directly or indirectly, any
liability for brokers’ or finders’ fees or agents’ commissions or investment
bankers’ fees or any similar charges in connection with this Agreement or any
transaction contemplated hereby.

ARTICLE IV

CERTAIN COVENANTS AND AGREEMENTS

SECTION 4.01

CONDUCT OF BUSINESS

Each of North Country and SVCC, for itself and on behalf of each of its
subsidiaries, covenants and agrees that, during the period from the date of this
Agreement until the Closing Date, it and each subsidiary shall, except as
otherwise disclosed in this Agreement and other than as contemplated by this
Agreement or for the purposes of effecting the Closing pursuant to this
Agreement, conduct its business as presently operated and solely in the ordinary
course, and consistent with such operation, and, in connection therewith,
without the written consent of the other Party:

(a)

shall not amend its Certificate of Incorporation or Bylaws;

(b)

shall not pay or agree to pay to any employee, officer or director compensation
that is in excess of the current compensation level of such employee, officer or
director other than salary increases or payments made in the ordinary course of
business or as otherwise provided in any contracts or agreements with any such
employees;

(c)

shall not merge or consolidate with any other entity or acquire or agree to
acquire any other entity;

(d)

shall not sell, transfer, or otherwise dispose of any assets required for the
operations of its or any Subsidiary’s business, except in the ordinary course of
business consistent with past practices;

(e)

shall not create, incur, assume, or guarantee any indebtedness for money
borrowed except in the ordinary course of business, or create or suffer to exist
any Lien on any of  its material assets;

(f)

shall not make any material capital expenditure or series of capital
expenditures except in the ordinary course of business;

(g)

shall not grant any severance or termination pay to any director, manager,
officer or any other employee.

(h)

shall not declare or pay any dividends on or make any distribution of any kind
with respect to its Shares or to any membership interest in any Subsidiary which
is a limited liability company, except for distributions to the parent company;
and

(i)

shall use commercially reasonable efforts to comply with and not be in default
or violation under any known law, regulation, decree or order applicable to its
business, operations or assets where such violation would have a Material
Adverse Effect.

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SECTION 4.02

COVENANTS OF THE PARTIES

(a)

Tax-free Reorganization.  The Parties intend that the Merger qualify as a
Tax-free “reorganization” under Sections 368(a) of the Code, as amended, and the
Parties will take the position for all purposes that the Merger shall qualify as
reorganization under such Section.  In addition, the Parties covenant and agree
that they will not engage in any action, or fail to take any action, which
action or failure to take action would reasonably be expected to cause the
Merger to fail to qualify as a Tax-free “reorganization” under Section 368(a) of
the Code, whether or not otherwise permitted by the provisions of this
Agreement;

(b)

Announcement.  Neither North Country nor SVCC shall issue any press release or
otherwise make any public statement with respect to this Agreement or the
transactions contemplated hereby without the prior consent of the other Party
(which consent shall not be unreasonably withheld), except as may be required by
applicable law or securities regulation.  Upon execution of this Agreement, SVCC
shall issue a press release, after approval thereof by North Country, and file a
Current Report on Form 8-K reporting the execution of the Agreement.

(c)

Notification of Certain Matters.  North Country shall give prompt written notice
to SVCC, and SVCC shall give prompt written notice to North Country, of:

(i)

The occurrence or nonoccurrence of any event the occurrence or nonoccurrence of
which would be reasonably likely to cause any representation or warranty
contained in this Agreement to be untrue or inaccurate in any material respect
at or prior to the Effective Time; and

(ii)

Any material failure of North Country or the Principal Shareholder, on the one
hand, or SVCC, on the other hand, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder.

(d)

Reasonable Best Efforts.  Before Closing, upon the terms and subject to the
conditions of this Agreement, the Parties agree to use their respective
reasonable best efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, all things necessary, proper or advisable (subject to
applicable laws) to consummate and make effective the Merger and other
transactions contemplated by this Agreement as promptly as practicable
including, but not limited to:

(i)

The preparation and filing of all forms, registrations and notices required to
be filed to consummate the Merger, including without limitation, any approvals,
consents, orders, exemptions or waivers by any third party or governmental
entity; and

(ii)

The satisfaction of the Party's conditions precedent to Closing.

(e)

Access to Information

(i)

Inspection by North Country.  SVCC will, if requested, make available for
inspection by North Country, during normal business hours and in a manner so as
not to interfere with normal business operations, all of SVCC’s records
(including tax records), books of account, premises, contracts and all other
documents in SVCC’s possession or control that are reasonably requested by North
Country to inspect and examine the business and affairs of SVCC.  SVCC will
cause its managerial employees and regular independent accountants to be
available upon reasonable advance notice to answer questions of North Country
concerning the business and affairs of SVCC.  North Country will treat and hold
as confidential any information it receives from SVCC in the course of the
reviews contemplated by this Section 4.03(f).  No examination by North Country
will, however, constitute a waiver or relinquishment by North Country of its
rights to rely on SVCC’s covenants, representations and warranties made herein
or pursuant hereto.

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(ii)

Inspection by SVCC.  North Country will, if requested, make available for
inspection by SVCC, during normal business hours and in a manner so as not to
interfere with normal business operations, all of North Country’s records
(including tax records), books of account, premises, contracts and all other
documents in North Country’s possession or control that are reasonably requested
by SVCC to inspect and examine the business and affairs of North Country and the
Subsidiaries.  North Country will cause its managerial employees and regular
independent accountants to be available upon reasonable advance notice to answer
questions of SVCC concerning the business and affairs of North Country and the
Subsidiaries.  SVCC will treat and hold as confidential any information it
receives from North Country in the course of the reviews contemplated by this
Section 4.03(f).  No examination by SVCC will, however, constitute a waiver or
relinquishment by SVCC of its rights to rely on North Country’s covenants,
representations and warranties made herein or pursuant hereto.

SECTION 4.03

SHAREHOLDER MEETING

North Country shall call a special meeting of its shareholders to be held as
soon as practicable after the execution of this Merger Agreement for the purpose
of voting to approve the Assignment and Assumption Agreement and the Merger. At
the shareholders meeting, the Board of Directors of North Country shall
recommend that shareholders vote in favor of the Merger, it being understood
that the failure of the Board of Directors of North Country to make such
recommendations shall not be deemed a breach of this Agreement if the Board of
Directors of North Country determines, after consultation with and advice from
counsel, that it cannot, consistent with its fiduciary duties, make such
recommendations.

 

ARTICLE V

CONDITIONS PRECEDENT

SECTION 5.01  

CONDITIONS PRECEDENT TO THE PARTIES' OBLIGATIONS.

The obligations of the Parties as provided herein shall be subject to each of
the following conditions precedent, unless waived in writing by both SVCC and
North Country:

(a)

Consents, Approvals.  The Parties shall have obtained all necessary consents and
approvals of their respective boards of directors, and all consents, approvals
and authorizations required under their respective charter documents, and all
material consents, including any material consents and waivers by the Parties’
respective lenders and other third parties, if necessary, to the consummation of
the transactions contemplated by this Agreement.

(b)

Shareholder Approval.  This Agreement and the transactions contemplated hereby
shall have been approved by the shareholders of North Country in accordance with
the applicable provisions of the Nevada Revised Statutes and its bylaws.

(c)

Share Exchange Agreement.  The transactions contemplated by the Share Exchange
Agreement shall be effectuated simultaneous with the Closing under this Merger
Agreement.

(d)

Absence of Certain Litigation.  No action or proceeding shall be threatened or
pending before any governmental entity or authority which, in the reasonable
opinion of counsel for the Parties, is likely to result in a restraint,
prohibition or the obtaining of damages or other relief in connection with this
Agreement or the consummation of the transactions contemplated hereby.

(e)

Appraisal Rights.  It shall not have occurred that the holders of more than
three percent of the outstanding shares of North Country common stock shall have
exercised appraisal rights in connection with the transactions contemplated by
this Agreement.

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(f)

Purchase and Sale of Certain Interests.  North Country, North Country Operating
Corp., SVCC and the Principal Shareholder shall have entered into an agreement
providing for the purchase by North Country Operating Corp. of membership
interests owned by the Principal Shareholder in 1812 South, LLC, which interests
shall constitute 8% of the outstanding membership interests therein and shall be
transferred to North Country Operating Corp. free and clear of all Liens and
rights of others, for a cash purchase price payable by SVCC in the amount of
$75,000.00; and the closing of such purchase and sale shall be conditioned upon,
and shall occur simultaneously with, the Closing of the transactions
contemplated herein.

(g)

Employment Agreement.  SVCC and the Principal Shareholder shall have entered
into an employment agreement in the form annexed hereto as Appendix C.  

SECTION 5.02

CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SVCC

The obligations of SVCC on the Closing Date as provided herein shall be subject
to the satisfaction, on or prior to the Closing Date, of the following
conditions precedent, unless waived in writing by SVCC:

(a)

Consents and Approvals.  North Country shall have obtained all material
consents, including, without limitation, any material consents and waivers by
North Country's lenders, lessors, franchisors, co-owners of membership interests
in Subsidiaries, and other third parties, if necessary, to the consummation of
the transactions contemplated by this Agreement.  In addition, the holders of
the debt instruments identified on Schedule 5.02(a) hereto shall have agreed to
exchange the debt instruments issued by North Country for debt instruments
issued by SVCC, effective on the Closing Date.

(b)

Assignment and Assumption Agreement.  The Assignment and Assumption Agreement
shall be in full force and effect.  All of the transfers of assets contemplated
by the Assignment and Assumption Agreement shall have been completed, and North
Country shall have delivered to SVCC documentary evidence satisfactory to SVCC
that North Country Operating Corp. has acquired full title to all of the assets
of North Country owned on this date or hereafter acquired, except such as shall
have been disposed of after this date in the ordinary course of business.

  

(c)

Representations and Warranties.  The representations and warranties by North
Country in Article III herein shall be true and accurate in all material
respects on and as of the Closing Date with the same force and effect as though
such representations and warranties had been made at and as of the Closing Date,
except to the extent that any changes therein are specifically contemplated by
this Agreement.  The Chief Executive Officer of North Country shall have
delivered a signed certification to SVCC, dated as of the Closing Date,
attesting to the foregoing statement.  

(d)

Performance.  North Country shall have performed and complied in all material
respects with all agreements to be performed or complied with by it pursuant to
this Agreement at or prior to the Closing.

(e)

Financial Statements.  North Country shall have delivered to SVCC the financial
statements necessary for inclusion in the Current Report on Form 8-K required to
be filed by SVCC to report the Merger, including financial statements of North
Country for the year ended December 31, 2007 with an audit report provided by an
independent accountant registered with the PCAOB.

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(f)

Proceedings and Documents.  All corporate, company and other proceedings in
connection with the transactions contemplated by this Agreement and all
documents and instruments incident to such transactions shall be reasonably
satisfactory in substance and form to SVCC and its counsel, and SVCC and its
counsel shall have received all such counterpart originals (or certified or
other copies) of such documents as they may reasonably request.

(g)

Certificate of Good Standing.  North Country shall have delivered to SVCC a
certificate as to the good standing of North Country certified by the Secretary
of State of the State of Nevada, and a certificate as to the good standing of
each Subsidiary, including North Country Operating Corp., in its jurisdiction of
existence, each on or within fourteen (14) business days prior to the Closing
Date.

(h)

Material Changes.  Except as contemplated by this Agreement, since the date
hereof, neither North Country nor any Subsidiary shall have suffered a Material
Adverse Effect, and, without limiting the generality of the foregoing, there
shall be no pending litigation to which North Country or any Subsidiary is a
party which is reasonably likely to have a Material Adverse Effect on North
Country or such Subsidiary.

(i)

Resignations.  On the Closing Date, all of the officers and members of the board
of directors of North Country Operating Corp. and each Subsidiary, as well as
the managers of each Subsidiary that is a limited liability company, shall
tender their resignations as such officers, directors and managers, and the
vacancies created shall be filled by persons designated by the Board of
Directors of SVCC.

(j)

Name Change.  On the Closing Date, North Country shall file with the Secretary
of State of Nevada articles of amendment of its articles of incorporation
changing its corporate name to one which is substantially dissimilar to North
Country Hospitality.

SECTION 5.03

CONDITIONS PRECEDENT TO THE OBLIGATIONS OF NORTH COUNTRY

The obligations of North Country on the Closing Date as provided herein shall be
subject to the satisfaction, on or prior to the Closing Date, of the following
conditions precedent, unless waived in writing by North Country:

(a)

Consents and Approvals.  Each of SVCC and the Merger Sub shall have obtained all
material consents, including any material consents and waivers of its respective
lenders and other third parties, if necessary, to the consummation of the
transactions contemplated by this Agreement.

(b)

Representations and Warranties.  The representations and warranties by SVCC in
Article II herein shall be true and accurate in all material respects on and as
of the Closing Date with the same force and effect as though such
representations and warranties had been made at and as of the Closing Date,
except to the extent that any changes therein are specifically contemplated by
this Agreement.  The Chief Executive Officer of SVCC shall have delivered a
signed certification to North Country, dated as of the Closing Date, attesting
to the foregoing statement

(c)

Performance.  SVCC and Merger Sub shall have performed and complied in all
material respects with all agreements to be performed or complied with by it
pursuant to this Agreement prior to or at the Closing.

(d)

Proceedings and Documents.  All corporate, company and other proceedings in
connection with the transactions contemplated by this Agreement and all
documents and instruments incident to such transactions shall be reasonably
satisfactory in substance and form to North Country and its counsel, and North
Country and its counsel shall have received all such counterpart originals (or
certified or other copies) of such documents as they may reasonably request.

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(e)

Certificates of Good Standing.  SVCC shall have delivered to North Country  a
certificate as to its good standing in the State of Delaware and as to the good
standing of Merger Sub in the State of Delaware, in each case certified by the
Secretary of State not more than fourteen (14) business days prior to the
Closing Date.

(f)

Material Changes.  Except as contemplated by this Agreement, since the date
hereof, neither SVCC nor the Merger Sub shall have suffered a Material Adverse
Effect and, without limiting the generality of the foregoing, there shall be no
pending litigation to which SVCC or the Merger Sub is a party which is
reasonably likely to have a Material Adverse Effect on SVCC or the Merger Sub.

(g)

Status of SVCC.  At the Effective Time of the Merger, SVCC shall be a fully
compliant reporting public company under the Exchange Act, and shall be current
in all of its reports required to be filed under the Exchange Act.

(h)

SVCC Indemnity.  SVCC shall have executed an undertaking, in form satisfactory
to counsel for North Country, in which SVCC will agree to indemnify North
Country and the Principal Shareholder against all loss or liability arising from
debts and liabilities assumed by North Country Operating Corp. in the Assignment
and Assumption Agreement (excluding, however, liabilities not disclosed to SVCC
prior to the Closing Date in breach of any representation in this Agreement).  

(i)

Board Representation.  SVCC shall have delivered to North Country certification
of a resolution of the SVCC Board of Directors electing Christopher Swartz to
serve as a member of the SVCC Board of Directors, effective on the Closing.  

ARTICLE VI

TERMINATION

SECTION 6.01

TERMINATION.  

This Agreement may be terminated and the Merger may be abandoned at any time
prior to the Effective Time by:

(a)

The mutual written consent of the Boards of Directors of SVCC and North Country;

(b)

Either SVCC, on the one hand, or North Country, on the other hand, if any
governmental entity or court of competent jurisdiction shall have issued an
order, decree or ruling or taken any other action (which order, decree, ruling
or other action the Parties shall use their commercially reasonable best efforts
to lift), which restrains, enjoins or otherwise prohibits the Merger or the
issuance of the Merger Shares as contemplated herein and such order, decree,
ruling or other action shall have become final and non-appealable;

(c)

North Country, if the Board of Directors of North Country has received a
proposal for an acquisition of North Country and determines that, consistent
with its fiduciary duties to North Country, it cannot recommend the Merger to
the shareholders of North Country.  

 

(d)

SVCC, if North Country shall have breached in any material respect any of its
 representations, warranties, covenants or other agreements contained in this
Agreement, and the breach cannot be or has not been cured within thirty (30)
calendar days after the giving of written notice by SVCC to North Country;

(e)

North Country, if SVCC shall have breached in any material respect any of its
representations, warranties, covenants or other agreements contained in this
Agreement, and the breach

23

cannot be or has not been cured within thirty (30) calendar days after the
giving of written notice by North Country to SVCC; or

(f)

Without any action on the part of the Parties if required by Applicable Law or
if the Closing shall not be consummated by April 30, 2008, unless extended by
written agreement of SVCC and North Country.

SECTION 6.02

EFFECT OF TERMINATION; REMEDY FOR BREACH.

(a)

If this Agreement is terminated as provided in Section 6.01, written notice of
such termination shall be given by the terminating Party to the other Party
specifying the provision of this Agreement pursuant to which such termination is
made, this Agreement shall become null and void and there shall be no liability
on the part of SVCC or North Country except as provided in Section 6.02(b),
below, provided, however, that  (a) the provisions of Articles VII and VIII
hereof shall survive the termination of this Agreement; and (b) termination
shall not affect accrued rights or liabilities of any Party at the time of such
termination.

(b)

If this Agreement is terminated under clause (c), (d) or (e) of Section 6.01,
the breaching party (or, in the case of termination pursuant to Section 6.01(c),
North Country) shall pay to the non-breaching party, in addition to any other
damages incurred,  the aggregate of the expenses incurred by the non-breaching
party in connection with the negotiation, preparation and execution of this
Agreement and preparations for closing, including legal fees, accounting fees,
and other disbursements.  

ARTICLE VII

CONFIDENTIALITY

SECTION 7.01

CONFIDENTIALITY

SVCC, on the one hand, and North Country, on the other hand, will keep
confidential all information and documents obtained from the other, including
but not limited to any information or documents provided pursuant to Section
4.02(f) hereof (except for any information disclosed to the public pursuant to a
press release authorized by the Parties); and in the event the Closing does not
occur or this Agreement is terminated for any reason, will promptly return such
documents and all copies of such documents and all notes and other evidence
thereof, including material stored on a computer, and will not use such
information for its own advantage, except to the extent that (i) the information
must be disclosed by law, (ii) the information becomes publicly available by
reason other than disclosure by the Party subject to the confidentiality
obligation, (iii) the information is independently developed without use of or
reference to the other Party’s confidential information, (iv) the information is
obtained from another source not obligated to keep such information
confidential, or (v) the information is already publicly known or known to the
receiving Party when disclosed as demonstrated by written documentation in the
possession of such Party at such time.

ARTICLE VIII

INDEMNIFICATION

SECTION 8.01

INDEMNIFICATION BY SVCC

SVCC shall indemnify, defend and hold harmless each of North Country, each
Subsidiary, and any affiliate of North Country, and each person who is now, or
has been at any time prior to the date hereof or who becomes prior to the
Closing, a shareholder, officer, director, member, or manager of North Country,
any subsidiary or affiliate thereof or an employee of North Country, any
subsidiary or affiliate thereof and their respective heirs, legal
representatives, successors and assigns (the “North Country Indemnified
Parties”) against all losses, claims, damages, costs, expenses (including
reasonable attorneys’ fees),

24

liabilities or judgments or amounts that are paid in settlement of or in
connection with any threatened or actual third party claim, action, suit,
proceeding or investigation based in whole or in part on or arising in whole or
in part out of (i) any  breach of this Agreement by SVCC or any subsidiary or
affiliate thereof, including but not limited to failure of any representation or
warranty to be true and correct at or before the Closing,  (ii) any willful or
grossly negligent act, omission or conduct of any officer, director or agent of
SVCC or any subsidiary or affiliate thereof prior to the Closing, whether
asserted or claimed prior to, at or after, the Closing, or any liability assumed
by North Country Operating Corp. in the Assignment and Assumption Agreement
(excluding, however, liabilities not disclosed to SVCC prior to the Closing Date
in breach of any representation in this Agreement).  Any North Country
Indemnified Party wishing to claim indemnification under this Section 8.01, upon
learning of any such claim, action, suit, proceeding or investigation, shall
notify SVCC in writing, but the failure to so notify shall not relieve SVCC from
any liability that it may have under this Section 8.01, except to the extent
that such failure would materially prejudice SVCC.  The remedies set forth in
this Section 8.01 shall be limited by the provisions of Section 6.02(b), when
applicable.

SECTION 8.02

INDEMNIFICATION BY NORTH COUNTRY

North Country and the Principal Shareholder shall, jointly and severally,
indemnify, defend and hold harmless each of SVCC, any subsidiary or affiliate
thereof and each person who is now, or has been at any time prior to the date
hereof or who becomes prior to the Closing, a shareholder, officer, director or
partner of SVCC, any subsidiary or affiliate thereof or an employee of SVCC, any
subsidiary or affiliate thereof and their respective heirs, legal
representatives, successors and assigns (the “SVCC Indemnified Parties”) against
all losses, claims, damages, costs, expenses (including reasonable attorneys’
fees), liabilities or judgments or amounts that are paid in settlement of or in
connection with any threatened or actual third party claim, action, suit,
proceeding or investigation based in whole or in part on or arising in whole or
in part out of (i) any material breach of this Agreement by North Country, any
Subsidiary or affiliate of North Country, or by the Principal Shareholder,
including but not limited to failure of any representation or warranty to be
true and correct at or before the Closing, or (ii) any willful or negligent act,
omission or conduct of any officer, director, manager or agent of North Country
or any Subsidiary or affiliate of North Country prior to the Closing, whether
asserted or claimed prior to, at or after, the Closing.  Any SVCC Indemnified
Party wishing to claim indemnification under this Section 8.02, upon learning of
any such claim, action, suit, proceeding or investigation, shall notify North
Country in writing, but the failure to so notify shall not relieve North Country
from any liability that it may have under this Section 8.02, except to the
extent that such failure would materially prejudice North Country.  The remedies
set forth in this Section 8.02 shall be limited by the provisions of Section
6.02(b), when applicable.

SECTION 8.03

LIMITATION ON ACTIONS

Notwithstanding the undertakings by the Parties in this Article VIII, no Party
shall be entitled to commence any legal proceeding against another Party for
indemnification or otherwise for damages, unless and until the aggregate claim
by the Party reasonably exceeds One Hundred Thousand Dollars ($100,000), at
which time the Party may take legal action for all damages and indemnifiable
amounts.

SECTION 8.04

INDEMNIFICATION OF EXCHANGE AGENT

SVCC and North Country (for the purposes of this Section 8.03, the
“Indemnitors”) agree to indemnify the Exchange Agent and his employees and
agents (collectively, the “Indemnitees”) against, and hold them harmless of and
from, any and all loss, liability, cost, damage and expense, including without
limitation, reasonable counsel fees, which the Indemnitees, or any of them, may
suffer or incur by reason of any action, claim or proceeding brought against the
Indemnitees, or any one of them, arising out of or relating in any way to the
Exchange Agent’s service in such capacity, unless such action, claim or
proceeding is the result of the willful misconduct or gross negligence of any of
the Indemnitees.

25

ARTICLE IX

MISCELLANEOUS

SECTION 9.01

EXPENSES

Except as contemplated by this Agreement, all costs and expenses incurred in
connection with this Agreement and the consummation of the transactions
contemplated by this Agreement shall be paid by the Party incurring such
expenses.    

SECTION 9.02

APPLICABLE LAW

Except to the extent that the laws of the State of Delaware mandatorily apply to
the transactions contemplated hereby, this Agreement shall be governed by the
laws of the State of New York, without giving effect to the principles of
conflicts of laws thereof, as applied to agreements entered into and to be
performed in such state.

SECTION 9.03

NOTICES.

All notices and other communications under this Agreement shall be in writing
and shall be deemed to have been duly given or made as follows:

(a)

If sent by reputable overnight air courier (such as Federal Express), 2 business
days after being sent;

(b)

If sent by facsimile transmission, with a copy mailed on the same day in the
manner provided in clause (a) above, when transmitted and receipt is confirmed
by the fax machine; or

(c)

If otherwise actually personally delivered, when delivered.

All notices and other communications under this Agreement shall be sent or
delivered as follows:

If to North Country, to:

Christopher Swartz, President

North Country Hospitality, Inc.

24685 NYS Route 37

Watertown, NY 13601

Telephone:  315-778-8007

Facsimile:   315-788-8954

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

If to SVCC, to:  

Mr. Tom Scozzafava, President

Seaway Valley Capital Corporation

10-18 Park Street, 2nd Floor

Gouverneur, NY 13642

Telephone:  (315) 771-3034

Facsimile:    (315) 287-7529

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

Robert Brantl, Esq.

52 Mulligan Lane

26

Irvington, NY 10533

Telephone:  914-693-3026

Facsimile:   914-693-1807

Each Party may change its address by written notice in accordance with this
Section.

SECTION 9.04

 ENTIRE AGREEMENT.

This Agreement (including the documents and instruments referred to in this
Agreement) contains the entire understanding of the Parties with respect to the
subject matter contained in this Agreement, and supersedes and cancels all prior
agreements, negotiations, correspondence, undertakings and communications of the
Parties, oral or written, respecting such subject matter including the Letter of
Intent made by North Country and SVCC dated December 3, 2007.

SECTION 9.05

ASSIGNMENT.

Neither this Agreement nor any of the rights, interests or obligations under
this Agreement shall be assigned by any of the Parties (whether by operation of
law or otherwise) without the prior written consent of the other Parties;
provided that in no event may the right to indemnification provided by Article
VIII hereto be assigned by any of the Parties, with or without consent, except
by operation of law.  Subject to the immediately foregoing sentence of this
Section 9.05, this Agreement will be binding upon, inure to the benefit of and
be enforceable by, the Parties and their respective successors, assigns, heirs
and representatives.

SECTION 9.06

COUNTERPARTS.

This Agreement may be executed in one or more counterparts, each of which shall
be deemed to be an original but all of which shall be considered one and the
same agreement.

SECTION 9.07  

NO THIRD PARTY BENEFICIARIES.

Except as expressly provided by this Agreement, nothing herein is intended to
confer upon any person or entity not a Party to this Agreement any rights or
remedies under or by reason of this Agreement.

SECTION 9.08  

RULES OF CONSTRUCTION.

The Parties agree that they have been represented by counsel during the
negotiation and execution of this Agreement and, therefore, waive the
application of any law, regulation, holding or rule of construction providing
that ambiguities in an agreement or other document will be construed against the
party drafting such agreement or document.

SECTION 9.09

REPAYMENT OF DEBT

North Country hereby assumes responsibility for repayment of the loan of
$200,000 made by SVCC to the Principal Shareholder, the proceeds of which were
contributed to North Country.  North Country covenants that it will repay the
loan from the net proceeds of any sale of the Merger Shares prior to any other
use of such funds.

27

IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the date
first above written.

SEAWAY VALLEY CAPITAL CORPORATION

By:

/s/ Thomas W. Scozzafava

Name:

Thomas W. Scozzafava

Title:

President and Chief Executive Officer

/s/ Thomas W. Scozzafava

THOMAS W. SCOZZAFAVA, as to Article II only.

NORTH COUNTRY HOSPITALITY INC.

By:      /s/ Christopher Swartz

Name:  Christopher Swartz

Title:

President and Chief Executive Officer

/s/ Christopher Swartz

CHRISTOPHER SWARTZ, Principal Shareholder

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APPENDIX A

ASSIGNMENT AND ASSUMPTION AGREEMENT

This Assignment and Assumption Agreement (this “Agreement) is made and entered
into on April 1, 2008 by and between the following parties (each, a “Party” and
collectively, the “Parties”):  North Country Hospitality, Inc., a Nevada
corporation (the “Company”) and North Country Operating Corp., a Delaware
corporation (the “Operating Corp.”), a wholly owned subsidiary of Seaway Valley
Capital Corporation.

WHEREAS, the Company has entered into a Merger Agreement with Seaway Valley
Capital Corporation (the “Merger Agreement”), which requires it to transfer all
of its assets and liabilities to a wholly-owned subsidiary of the Company; and

WHEREAS, for that purpose, the Company has caused the Operating Corp. to be
formed and organized as the Company’s wholly owned subsidiary; and

WHEREAS, the Company desires to transfer all of its assets to the Operating
Corp. and to cause the Operating Corp. to assume all liabilities and obligations
of the Company.

NOW, THEREFORE, it is agreed:  

ARTICLE 1:  TRANSFER AND ASSIGNMENT OF ASSETS

On the terms and subject to the conditions herein expressed, the Company hereby
sells, conveys, transfers, assigns, sets over and delivers to Operating Corp.,
and Operating Corp. assumes and accepts, all of the assets, rights and
interests, tangible and intangible, of every kind, nature and description, now
owned, possessed or operated by Company, wheresoever situate (collectively, the
“Assets”), including without limitation the following:

1.1

 

Equity Interests.  All of the equity interests in the name of, or beneficially
owned by, the Company, including, without limitation, (a) all capital stock
issued by any corporate subsidiary of the Company, (b) any membership interest
issued by any subsidiary of the Company that is a limited liability company or
similar entity, (c) any partnership interest in any subsidiary of the Company
that is a partnership or similar entity, and (d) any investment securities owned
by the Company;

1.2

      Real Property.  All real property owned or leased by the Company (the
“Premises”);.

1.3

      Machinery and Equipment.  All machinery, equipment, computers and computer
hardware, office furniture and fixtures, and other fixed or tangible assets;  

1.4

      Inventories.  All inventories, including without limitation merchandise,
materials, component parts, production and office supplies, stationery and other
imprinted material, promotional materials, and business records;

1.5

Licenses and Permits.  All licenses, permits and authorizations used by the
Company to own and operate all of the Assets , to carry on its business and to
occupy the Premises for the purpose of conducing business thereon;

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1.6

 Intangible Property.  All intangible assets of Company which are transferable
including, but not limited to, customer and supplier lists, privileges, permits,
licenses, software and software licenses, certificates, commitments, goodwill,
registered and unregistered patents, trademarks, service marks and trade names,
and applications for registration thereof and  the goodwill associated
therewith, franchise rights, and the right to receive mail related to the Assets
which is addressed to the Company;

1.7

Cash and Accounts Receivable.  All accounts receivable, deposit accounts, cash
and cash equivalents and securities owned by the Company;

1.8

Contract Rights.  All rights and benefits of or in favor of Company resulting or
arising from any contracts, franchise arrangements, purchase orders, sales
orders, forward commitments for goods or services, leases (including security
deposits held by the landlord pursuant to the lease of the Premises), franchise
or license agreements, beneficial interests in covenants not to compete or
confidentiality covenants, the rights of Company related to any other agreements
whatsoever which arise out of the operation of its business; and

1.9

Claims. Claims made in lawsuits and other proceedings filed by the Company,
judgments and settlements in the Company’s favor, rights to refunds, including
rights to and claims for federal and state income and franchise tax refunds and
refunds of other taxes paid based upon or measured by the income of the Business
prior to the Closing, and insurance policies and rights accrued thereunder.

ARTICLE 2:  ASSUMPTION OF LIABILITIES

2.1

Scope of Liabilities Assumed.   Upon the Closing Date specified in the Merger
Agreement, Seaway Valley Capital Corporation shall assume, pay, perform or
discharge any and all debts, liabilities or obligations of any nature of
Company, whether contingent or fixed and whether known or unknown, arising from
the ownership or operation of the Assets and the occupation of the Premises
which have accrued as of the date hereof, and Seaway Valley Capital Corporation
shall promptly provide for payment, performance and discharge of the same in
accordance with their terms.

ARTICLE 3:  COLLECTION OF ACCOUNTS RECEIVABLE

3.1

Right to Collect.  Following the closing, Operating Corp. shall have the right
to collect the accounts receivables of the Company and to settle, compromise,
sue for collection, or take any action whatsoever with respect to the
receivables.   Company shall cooperate with Operating Corp. in notifying
customers as to any payment instructions or change of address that Operating
Corp. may wish to communicate to the customers.  In the event Company receives
payment of any receivable transferred to the Operating Corp., it shall promptly
endorse such payment and deliver it over to the Operating Corp.

ARTICLE 4:  THE CLOSING

4.1

The Closing.  The closing of the transactions contemplated in this Agreement
(“Closing”) shall take place simultaneously with the closing of the transactions
contemplated under the Merger Agreement.    The effective time of closing is
referred to herein as the “Time of Closing.”

4.2

Deliveries by Company.  At or prior to the Closing, the Company shall deliver to
Operating Corp., in addition to all other items specified elsewhere in this
Agreement, the following:

2

(a)

Such instruments of sale, conveyance, transfer, assignment, endorsement,
direction or authorization as will be required or as may be desirable to vest in
Operating Corp., its successors and assigns, all right, title and interest in
and to the Assets, subject to any and all mortgages, pledges, liens,
encumbrances, equities, charges, conditional sale or other title retention
agreements, assessments, covenants, restrictions, reservations, commitments,
obligations, or other burdens or encumbrances of any nature whatsoever that
exist at the Time of Closing;

(b)

All of the files, documents, papers, agreements, books of account and records
pertaining to the Assets;

(c)

Actual possession and operating control of the Assets;  and

(d)

To the extent required, the consents of third parties to the assignment and
transfer of any of the Assets.  

4.3

Deliveries by Operating Corp..  At Closing, the Operating Corp. shall deliver to
the Company, any  instruments, in addition to this Agreement, as the Company
deems necessary or desirable fully to secure the assumption by the Operating
Corp., its successors and assigns, of all liabilities and obligations of the
Company, as described Section 2.1 hereof.

ARTICLE 5:  COVENANTS ON AND SUBSEQUENT TO THE CLOSING DATE

On and after the Closing Date, Operating Corp. and the Company (as the case may
be) covenant as follows:

5.1

Pay Creditors.  Following the Closing, Operating Corp. shall pay all payables
and other obligations of Company assumed hereunder by the Operating Corp., as
such obligations become due in the ordinary course of business.   

5.2

Lawsuits.  Without limiting the generality of Section 2.01, following the
Closing, the Operating Corp. shall continue the defense of any and all lawsuits
or other claims filed or threatened against the Company.

5.3

Insurance Policies.  Operating Corp. shall name the Company as an additional
insured on all insurance policies transferred by the Company or any other
insurance policies covering the period prior to the Time of Closing.

5.4

Execution of Further Documents.   Upon the request of either party, the other
party shall execute, acknowledge and deliver all such further acts, deeds, bills
of sale, assignments, assumptions, undertakings, transfers, conveyances, title
certificates, powers of attorney and assurances as may be required , in the case
of Operating Corp., to convey and transfer to, and vest in, Operating Corp. all
of Company’s right, title and interest in the Assets, and in the case of the
Company, to secure the assumption of the Company’s obligations and liabilities
arising as of the Time of Closing.  

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ARTICLE 6.    INDEMNIFICATION

6.1

Indemnification by Company.  From and after the Closing, the Company shall
indemnify and save Operating Corp., its officers and directors, and their
respective successors, assigns, heirs and legal representatives (“Operating
Corp. Indemnitees”) harmless from and against any and all losses, claims,
damages, liabilities, costs, expenses or deficiencies including, without
limitation, actual attorneys’ fees and other costs and expenses incident to
proceedings or investigations or the defense or settlement of any claim incurred
by or asserted against any Operating Corp. Indemnitee due to or resulting from a
violation or default by Company with respect to any of Company’s covenants,
obligations or agreements hereunder or  any losses or expenses incurred in
connection with, or payments by Operating Corp. of, any debts, obligations or
liabilities of Company arising after the Time of  Closing.

6.2

Indemnification by Operating Corp.  From and after the Closing, the Operating
Corp. shall indemnify and save Company, its officers and directors, and their
respective successors, assigns, heirs and legal representatives (“Company
Indemnitees”) harmless from and against any and all losses, claims, damages,
liabilities, costs, expenses or deficiencies including, without limitation,
actual attorneys’ fees and other costs and expenses incident to proceedings or
investigations or the defense or settlement of any claim, incurred by or
asserted against any Company Indemnitee due to or resulting from a violation or
default by Operating Corp. with respect to any of Operating Corp.’s covenants,
obligations or agreements hereunder and any losses or expenses incurred in
connection with, or payments by Company of the debts, liabilities and
obligations assumed by the Operating Corp. hereunder or the debts, liabilities
and obligations of, the Operating Corp. arising after the Time of Closing.  

6.3

Indemnification Procedures.  

(a)

The party seeking indemnification (“Indemnified Party”) shall give the
indemnifying party (“Indemnifying Party”) notice (a “Claim Notice”) of its
indemnification claim which notice shall (i) be in writing, (ii) include the
basis for the indemnification, and (iii) include the amount Indemnified Party
believes is the amount to be indemnified, if reasonably possible.

(b)

 Indemnifying Party shall be deemed to accept Indemnified Party’s claim unless,
within twenty (20) business days after receipt of any Claim Notice, Indemnifying
Party delivers to Indemnified Party notice of non-acceptance of the
indemnification claim, which must (a) be in writing and (b) include the basis
for the disagreement.  

(c)

 The parties shall attempt in good faith to resolve any issues concerning
liability and the amount of such claim and no legal action shall be commenced
with respect to any such issues until thirty (30) days after delivery of the
notice of non-acceptance pursuant to Section 6.3(b).   

ARTICLE 7:  MISCELLANEOUS

7.1

  Benefit.  This Agreement shall be binding upon, and inure to the benefit of,
the Parties hereto and their respective successors, assignees, heirs and legal
representatives.  

7.2

Governing Law.  This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.

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7.3

Amendment, Modification and Waiver.    Any Party hereto may waive in writing any
term or condition contained in this Agreement and intended to be for its
benefit; provided, however, that no waiver by any Party, whether by conduct or
otherwise, in any one or more instances, shall be deemed or construed as a
further or continuing waiver of any such term or condition.  Each amendment,
modification, supplement or waiver shall be in writing and signed by the Party
or Parties to be charged.

7.4

Entire Agreement.  This Agreement and the exhibits, schedules and other
documents expressly provided hereunder or delivered herewith represent the
entire understanding of the parties.

Each Party may change its address by written notice in accordance with this
Section.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
on April 1, 2008.

North Country Hospitality, Inc.

By:

       Christopher Swartz, Chief Executive Officer

North Country Operating Corp.

By:

        Christopher Swartz, Chief Executive Officer

Seaway Valley Capital Corporation

By:

        Thomas W. Scozzafava, Chief Executive Officer

5

1

APPENDIX B

CERTIFICATE OF DESIGNATION

SERIES D CONVERTIBLE PREFERRED STOCK

($.0001 Par Value)

of

SEAWAY VALLEY CAPITAL CORPORATION

Pursuant to Section 151 of the General Corporation Law

________________________________________

Seaway Valley Capital Corporation, a corporation organized and existing under
the law of the State of Delaware (the "Corporation"), in accordance with the
provisions of Section 151 of the General Corporation Law, DOES HEREBY CERTIFY as
follows:

     

That pursuant to the authority conferred upon the Board of Directors by the
Certificate of Incorporation of the Corporation, as amended (“Certificate of
Incorporation”), the Board of Directors of the Corporation by resolution adopted
by written consent in lieu of meeting dated April 1, 2008, adopted the following
resolution creating a series of 1,250,000 shares of Preferred Stock, $.0001 par
value per share, designated as Series D Convertible Preferred Stock:

Section 1.  Designation and Amount. The shares of such series shall be
designated as "Series D Convertible Preferred Stock" and the number of shares
constituting such series shall be 1,250,000. Such number of shares may be
increased or decreased by resolution of the Board of Directors; provided,
however, that no decrease shall reduce the number of shares of Series D
Convertible Preferred Stock to a number less than the number of shares then
outstanding plus the number of shares reserved for issuance upon the exercise of
outstanding options, rights or warrants or upon the conversion of any
outstanding securities issued by the Corporation convertible into Series D
Convertible Preferred Stock.

Section 2.  Dividends and Distributions.  

(A) Ordinary Dividends.  In the event the Corporation declares a dividend
payable to holders of any class of stock, the holder of each share of Series D
Convertible Preferred Stock shall be entitled to receive a dividend equal in
amount and kind to that payable to the holder of the number of shares of the
Corporation's Common Stock into which that holder's Series D Convertible
Preferred Stock could be converted on the record date for the dividend.

(B) Liquidation.  Upon the liquidation, dissolution and winding up of the
Corporation, the holders of the Series D Convertible Preferred Stock shall be
entitled to receive in cash out of the assets of the Corporation, whether from
capital or from earnings available for distribution to its stockholders, after
satisfaction of any preferential distribution due to the holders of the Series
A,

2

Series B or Series C preferred stock, but before any amount shall be paid to the
holders of common stock, the sum of Five Dollars ($5.00) per share (the
“Liquidation Preference Per Share”), after which the holders of Series D
Convertible Preferred Stock shall have no share in the distribution.   

Section 3.  Voting Rights. The holders of shares of Series D Convertible
Preferred Stock shall have the following voting rights:  Each share of Series D
Convertible Preferred Stock shall entitle the holder thereof to cast on all
matters submitted to a vote of the stockholders of the Corporation that number
of votes which equals the number of shares of Common Stock into which such
holder's shares of Series D Convertible Preferred Stock are convertible on the
record date for the stockholder action, as determined under Section 7 hereof.  

Section 4.  Reacquired Shares. Any shares of Series D Convertible Preferred
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and cancelled promptly after the acquisition
thereof. All such shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock and may be reissued as part of a new series
of Preferred Stock to be created by resolution or resolutions of the Board of
Directors, subject to the conditions and restrictions on issuance set forth
herein.

Section 5.  Voting on Amendment. The Certificate of Incorporation of the
Corporation shall not be further amended, nor shall any resolution of the
directors be adopted that in any manner would materially alter or change the
powers, preferences or special rights of the Series D Convertible Preferred
Stock so as to affect them adversely without the affirmative vote of the holders
of at least seventy-five percent of the outstanding shares of Series D
Convertible Preferred Stock, voting together as a single class.

Section 6. No Impairment. The Corporation will not, by amendment of its
Certificate of   Incorporation or adoption of a directors’ resolution or by any
other means or through any reorganization, recapitalization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Corporation but will at
all times in good faith assist in the carrying out of all the provisions of this
Certificate of Designation and in the taking of all such action as may be
 necessary  or  appropriate  in  order  to protect  the Conversion Rights of the
holder of the Series D Convertible Preferred Stock  against impairment.

Section 7. Conversion. Subject to and in compliance with the provisions of this
Section 7, any shares of Series D Convertible Preferred Stock may, at any time,
at the option of the holder, be converted into fully paid and nonassessable
shares of Common Stock (a “Conversion”).  The number of shares of Common Stock
to which a holder of Series D Convertible Preferred Stock shall be entitled upon
a Conversion shall equal the quotient obtained by dividing (a) the aggregate
Liquidation Preference Per Share of the shares of Series D Convertible Preferred
Stock being converted by (b) the Conversion Rate.  The Conversion Rate shall
equal eighty-five percent (85%) of the average of the Closing Prices on five (5)
Trading Days immediately

3

preceding the Conversion Date.  For this purpose, “Closing Price” shall mean the
last sale price reported on the OTC Bulletin Board (or the closing high bid
price, if the Common Stock ceases to be quoted on the OTC Bulletin Board).  For
this purpose, “Trading Day” shall mean any day during which the New York Stock
Exchange shall be open for business.  By way of example:  if on October 16, 2008
the Holder gives to the Corporation a Conversion Notice with respect to 200
shares of Series D Convertible Preferred Stock, and the last sale prices on
October 8,9,10,14 and 15 are $.20, $.22, $.18, $.26 and $.24 respectively, then
the Conversion Rate will be $.187, and the number of shares of common stock
issuable to the Holder will be 1000 (i.e. 200 x 5) divided by 0.187, or 5,375.  

7.1

Conversion Notice. The Holder of a share of Series D Convertible Preferred Stock
may exercise his conversion right by giving a written conversion notice (the
“Conversion Notice”) (x) by facsimile to the Corporation confirmed by a
telephone call or (y) by overnight delivery service, with a copy by facsimile to
the Corporation’s legal counsel, as designated by the Corporation from time to
time.  If such conversion will result in the conversion of all of such Holder’s
Series D Convertible Preferred Stock, the Holder shall also surrender the
certificate for the Series D Convertible Preferred Stock to the Corporation at
its principal office (or such other office or agency of the Corporation may
designate by notice in writing to the Holder) at any time during its usual
business hours on the date set forth in the Conversion Notice.

7.2

Issuance of Certificates; Time Conversion Effected.    Promptly, but in no event
more than five (5) Trading Days, after the receipt of the Conversion Notice
referred to in Subsection 7.1 and surrender of the Series D Convertible
Preferred Stock certificate (if required), the Corporation shall issue and
deliver, or the Corporation shall cause to be issued and delivered, to the
Holder, registered in such name or names as the Holder may direct, a certificate
or certificates for the number of whole shares of Common Stock into which the
Series D Convertible Preferred Stock has been converted.  In the alternative, if
the Corporation’s Transfer Agent is a participant in the electronic book
transfer program, the Transfer Agent shall credit such aggregate number of
shares of Common Stock to which the Holder shall be entitled to the Holder’s or
its designee’s balance account with The Depository Trust Corporation.  Such
conversion shall be deemed to have been effected, and the “Conversion Date”
shall be deemed to have occurred, on the date on which such Conversion Notice
shall have been received by the Corporation and at the time specified in such
Conversion Notice, which must be during the calendar day of such notice.  The
rights of the Holder of the Series D Convertible Preferred Stock shall cease,
and the person or persons in whose name or names any certificate or certificates
for shares of Common Stock shall be issuable upon such conversion shall be
deemed to have become the holder or holders of record of the shares represented
thereby, on the Conversion Date.  Issuance of shares of Common Stock issuable
upon conversion that are requested to be registered in a name other than that of
the registered Holder shall be subject to compliance with all applicable federal
and state securities laws.

7.3

Fractional Shares.  The Corporation shall not, nor shall it cause the Transfer
Agent to, issue any fraction of a share of Common Stock upon any conversion.
 All

4

shares of Common Stock (including fractions thereof) issuable upon conversion of
shares of Series D Convertible Preferred Stock by the Holder shall be aggregated
for purposes of determining whether the conversion would result in the issuance
of a fraction of a share of Common Stock.  If, after such aggregation, the
issuance would result in the issuance of a fraction of a share of Common Stock,
the Corporation shall round, or cause the Transfer Agent to round, such fraction
of a share of Common Stock up to the nearest whole share.

7.4.

Reorganization, Reclassification, Consolidation, Merger or Sale.  Any
recapitalization, reorganization, reclassification, consolidation, merger, sale
of all or substantially all of the Corporation's assets or other transaction
which is effected in such a way that holders of Common Stock are entitled to
receive (either directly or upon subsequent liquidation) stock, securities or
assets with respect to or in exchange for Common Stock is referred to herein as
an "Organic Change."  Prior to the consummation of any Organic Change, the
Corporation will make appropriate provision (in form and substance reasonably
satisfactory to the Holder) to insure that the Holder will thereafter have the
right to acquire and receive in lieu of or in addition to (as the case may be)
the shares of Common Stock otherwise acquirable and receivable upon the
conversion of this Series D Convertible Preferred Stock, such shares of stock,
securities or assets as would have been issued or payable in such Organic Change
with respect to or in exchange for the number of shares of Common Stock that
would have been acquirable and receivable had this Series D Convertible
Preferred Stock been converted into shares of Common Stock immediately prior to
such Organic Change (without taking into account any limitations or restrictions
on the timing of conversions).  In any such case, the Corporation will make
appropriate provision (in form and substance reasonably satisfactory to the
Holder) with respect to the Holder’s rights and interests to insure that the
provisions of this Section 7.4 will thereafter be applicable to the Series D
Convertible Preferred Stock.  The Corporation will not effect any such
consolidation, merger or sale, unless prior to the consummation thereof, the
successor entity (if other than the Corporation) resulting from consolidation or
merger or the entity purchasing such assets assumes, by written instrument (in
form and substance reasonably satisfactory to the holders of a more than
sixty-six and two-thirds percent (66-2/3%) of Series D Convertible Preferred
Stock then outstanding), the obligation to deliver to each holder of Series D
Convertible Preferred Stock such shares of stock, securities or assets as, in
accordance with the foregoing provisions, such holder may be entitled to
acquire.

Section 8. Notices of Record Date.  Upon (i) any taking by the Corporation of a
record of the holders of any  class of securities for the purpose of determining
the holders thereof who are entitled to receive any dividend or other
 distribution, or (ii) any sale of the Corporation, capital reorganization of
the Corporation, any reclassification or recapitalization of the capital stock
of  the Corporation, or  any voluntary or involuntary dissolution, liquidation
or winding up of the Corporation, the Corporation shall mail to each holder of
Series D Convertible Preferred Stock at least twenty (20) days prior to the
record date specified therein a notice specifying (A) the date on which any such
record is to be taken for the purpose of such  dividend or distribution and a
description of such dividend or distribution,  (B) the date on which any such
sale of the Corporation, reorganization, reclassification, recapitalization,
dissolution, liquidation or winding up is expected to become effective, and (C)
the date, if any, that is to be fixed as to when the

5

holders of record of Common Stock (or other securities) shall be entitled to
exchange their shares of Common Stock (or other  securities) for securities or
other property deliverable upon such sale of the Corporation, reorganization,
reclassification, recapitalization, dissolution, liquidation or winding up.

Section 9.  Notices.  Any notice required by the provisions of this Certificate
of Designation shall be in writing and shall be deemed effectively given:  (i)
upon personal delivery to the party to be notified, (ii) when sent by confirmed
facsimile if sent during normal business hours of the recipient; if not, then on
the next business day,  (iii) three (3) days after having been sent by regular
mail, postage prepaid,  or (iv) one (1) day after deposit with a nationally
recognized overnight courier, specifying next day delivery,  with written
verification of receipt. All notices shall be addressed to each holder of record
at the address of such holder appearing on the books of the Corporation.

IN WITNESS WHEREOF, the Corporation has caused this Certificate of Designation
to be signed by its duly authorized officer this 1st day of April, 2008.

SEAWAY VALLEY CAPITAL CORPORATION

________________________________

Thomas W. Scozzafava

Chief Executive Officer

6

Exhibit A

NOTICE OF CONVERSION

Reference is made to the Certificate of Designation of SERIES D CONVERTIBLE
PREFERRED STOCK dated March  _____ , 2008 (the "Certificate of Designation"), of
SEAWAY VALLEY CAPITAL CORPORATION, a Delaware corporation (the "Corporation").
 In accordance with and pursuant to the Certificate of Designation, the
undersigned hereby elects to convert the number of shares of Series D
Convertible Preferred Stock, par value $0.0001 per share (the "Preferred
Shares") indicated below into shares of Common Stock, par value $0.0001 per
share (the "Common Stock"), of the Company, by tendering the stock
certificate(s) representing the Preferred Shares specified below as of the date
specified below.

Date of Conversion:________________________________

Number of Preferred Shares to be converted:_________________________________

Please confirm the following information:

Number of shares of Common Stock to be issued:_____________________________

Please issue the Common Stock into which the Preferred Shares are being
converted in the following name and to the following address:

Issue to:__________________________________

Address:__________________________________

__________________________________

Facsimile Number:__________________________________

Authorization:__________________________________

By: ___________________________

Title: ___________________________

7