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HGG – 09/05/07

 

 

 

 

 

 

PURCHASE AGREEMENT

BY AND AMONG

MISTRAL VENTURES, INC.

AND

THE SHAREHOLDERS OF CYPHEREDGE TECHNOLOGIES, INC.

Dated as of September 7, 2007

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TABLE OF CONTENTS

  1.1 The Acquisition 1   1.2 Effective Time; Payment 1   1.3 Payment of
Purchase Price 2 ARTICLE 2: REPRESENTATION AND WARRANTIES OF THE HOLDERS 2   2.1
Holder Representations 2 ARTICLE 3: REPRESENTATIONS AND WARRANTIES OF THE
COMPANY AND THE COMPANY INDEMNIFYING OFFICER 2   3.1 Organization and
Qualification 2   3.2 Authority Relative to this Agreement 3   3.3 Company
Capital Stock 3   3.4 Subsidiaries 4   3.5 No Conflicts 4   3.6 Organizational
Documents 4   3.7 Consents 5   3.8 Company Financials 5   3.9 No Undisclosed
Liabilities 5   3.10 Absence of Changes 5   3.11 Taxes 7   3.12 Reserved 9  
3.13 Legal Proceedings 9   3.14 Compliance with Laws, Orders, Approvals and
Contracts 9   3.15 Employment Matters 10   3.16 Title to Properties; Absence of
Liens and Encumbrances; Condition of Equipment 11   3.17 Intellectual Property
11   3.18 Agreements, Contracts and Commitments 14   3.19 Insurance 15   3.20
Interested Party Transactions 15   3.21 Governmental Authorizations and Permits
16   3.22 Brokers’ and Finders’ Fees 16   3.23 Disclosure 16 ARTICLE 4:
REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PARENT INDEMNIFYING OFFICER 16
  4.1 Authority Relative to this Agreement 16   4.2 Organization and
Qualification 17   4.3 No Conflict 17   4.4 Consents 17   4.5 Parent Capital
Stock 18   4.6 Issuance of Parent Common Stock 19   4.7 Parent Financial
Statements 19   4.8 No Undisclosed Liabilities 19   4.9 Absence of Certain
Changes 19   4.10 Dividends or Distributions 22   4.11 Registration Rights 22  
4.12 Legal Proceedings 22   4.13 Employment Matters 22   4.14 Patents and
Trademarks 22   4.15 Compliance with Other Instruments 22   4.16 Title to
Property and Assets 23   4.17 Organizational Documents 24   4.18 Disclosure 24

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  4.19 Brokers and Finders’ Fees 24   4.20 Tax Returns, Payments and Elections
24   4.21 Parent SEC Documents 24   4.22 Closing Cash Statement 24   4.23
Subsidiaries 25 ARTICLE 5: CONDUCT PRIOR TO THE EFFECTIVE TIME 25   5.1 Conduct
of Business 25 ARTICLE 6: ADDITIONAL AGREEMENTS 28   6.1 Restricted Shares;
Shareholders’ Representations Regarding Securities Law Matters 28   6.2 Company
Financial Statements 29   6.3 Access to Information 29   6.4 Confidentiality 30
  6.5 Expenses 30   6.6 Public Disclosure 30   6.7 Consents 30   6.8 Reasonable
Efforts 31   6.9 Notification of Certain Matters 31   6.10 Additional Documents
and Further Assurances; Cooperation 32   6.11 Private Placement 32   6.12 Bridge
Loans 32   6.13 Investor Representation Statement 32   6.14 Closing Cash
Statements 33   6.15 Releases 33 ARTICLE 7: CONDITIONS TO THE ACQUISITION 33  
7.1 Conditions to Obligations of Each Party to Effect the Acquisition 33   7.2
Additional Conditions to Obligations of the Company 34   7.3 Additional
Conditions to the Obligations of Parent 35 ARTICLE 8: SURVIVAL OF
REPRESENTATIONS AND WARRANTIES 37   8.1 Survival of Representations, Warranties
and Covenants 37   8.2 Indemnification 37   8.3 Method of Asserting Claims 38  
8.4 Exclusive Remedy 39 ARTICLE 9: TERMINATION, AMENDMENT AND WAIVER 39   9.1
Termination 39   9.2 Effect of Termination 40   9.3 Amendment 41   9.4
Extension; Waiver 41 ARTICLE 10: MISCELLANEOUS PROVISIONS 41   10.1 Notices 41  
10.2 Interpretation 42   10.3 Counterparts 42   10.4 Entire Agreement;
Assignment 42   10.5 Severability 42   10.6 Other Remedies 43   10.7 Governing
Law 43   10.8 Rules of Construction 43   10.9 Waiver of Jury Trial 43   10.10
Disclosure Schedule 43   10.11 Specific Performance 44   10.12 Waiver 44 ARTICLE
11: DEFINITIONS 44   11.1 Definitions 44

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PURCHASE AGREEMENT

          This PURCHASE AGREEMENT is made and entered into as of September __,
2007, by and among Mistral Ventures, Inc. (“Parent”), a Nevada corporation,
Cypheredge Technologies, Inc. (the “Company”), a Delaware corporation, all of
the holders of the Company’s capital stock (the “Company Capital Stock”) (each
such holder being hereinafter referred to as a “Holder” and all of such holders
being hereinafter collectively referred to as the “Holders”), James Linkous (the
“Company Indemnifying Officer”) and John Xinos (the “Parent Indemnifying
Officer”). Capitalized terms used and not otherwise defined herein have the
meanings given to them in Article 11.

RECITALS

          WHEREAS, Holders wish to sell to Parent, and Parent, wishes to
purchase from Holders, all of the issued and outstanding Company Capital Stock
upon the terms and conditions hereinafter set forth;

          WHEREAS, the Board of Directors of Parent deems it advisable and in
the best interests of Parent and its shareholders to engage in the transactions
contemplated hereby pursuant to which Parent will acquire all of the issued and
outstanding Company Capital Stock (the "Acquisition"); and

          WHEREAS, the respective parties desire to make certain
representations, warranties and agreements in connection with the Acquisition.

          NOW, THEREFORE, in consideration of the covenants, promises,
representations and warranties set forth herein, and for other good and valuable
consideration (the receipt and sufficiency of which are hereby acknowledged by
the parties), intending to be legally bound hereby, the parties agree as
follows:

ARTICLE 1: THE ACQUISITION

          1.1 The Acquisition. At the Effective Time, and upon the terms and
subject to the conditions of this Agreement, Holders agree to sell and deliver
to Parent, and Parent does hereby agree to purchase from Holders, the issued and
outstanding Company Capital Stock for the Acquisition Stock Consideration. As
used in this Agreement, “Acquisition Stock Consideration” means 83,000,000
(eighty three million) shares of Parent Common Stock equal to 83% of the Parent
Common Stock issued and outstanding after giving effect to this Agreement and
the transactions contemplated hereby.

          1.2 Effective Time; Payment. Unless this Agreement is earlier
terminated pursuant to Section 9.1, the closing of the Acquisition (the
“Closing”) will take place (the “Effective Time”) within two (2) days following
satisfaction or waiver of the conditions set forth in Article 6 (excluding those
conditions intended to be satisfied at the Closing), or such later time
following satisfaction or waiver of such conditions as Parent or Holders
determine, provided that such later time shall occur no later than December 31,
2007, at

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the offices of Hofheimer Gartlir & Gross, LLP, 530 Fifth Avenue, New York, New
York 10036, unless another place or time is agreed to by Parent and the Holders.
The date upon which the Closing actually occurs is herein referred to as the
“Closing Date.”

          1.3 Payment of Purchase Price. The Acquisition Stock Consideration
shall be paid to the Holders pro rata based on their respective Company Capital
Stock on the Closing, by the Parent’s delivery to each Holder of certificates of
Parent’s Common Stock registered in the name of each Holder for the appropriate
number of shares.

ARTICLE 2: REPRESENTATION AND WARRANTIES OF THE HOLDERS

          2.1 Holders Representations. Each Holder represents and warrants to
Parent that such Holder: Owns all of the Company Capital Stock listed opposite
Holder’s name in Sec. 3.3 (b) of the Disclosure Schedule (which is arranged in
sections corresponding to the numbered sections contained in Article 3 and is
dated the date hereof) supplied to Parent (the “Company Disclosure Schedule”),
free and clear of all Liens; has the full and complete right and power to
dispose of said Company Capital Stock in accordance with the terms of this
Agreement; has full power and authority to execute and deliver this Agreement
and the other agreements of which forms are attached as exhibits hereto (the
“Ancillary Agreements”) to which such Holder is a party, to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby; and this Agreement and the Ancillary Agreements
to which such Holder the Company is a party have been or will be, as applicable,
duly and validly executed and delivered by such Holder and, assuming the due
authorization, execution and delivery by the other parties hereto and thereto,
each constitutes or will upon such due execution and delivery constitute, as
applicable, a legal, valid and binding obligation of such Holder enforceable
against such Holder in accordance with its respective terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar Laws relating to the
enforcement of creditors’ rights generally and by general principles of equity.

ARTICLE 3: REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE COMPANY
INDEMNIFYING OFFICER

          Subject to such exceptions as are disclosed in the Company Disclosure
Schedule, the Company and the Company Indemnifying Officer represent and warrant
to their knowledge to Parent, as of the date hereof and as of the Closing Date
(except where the representation and warranty is expressly made as of another
date, in which case such representation or warranty is made only as of such
other date), as follows:

          3.1 Organization and Qualification. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Delaware, and has full power and authority to conduct its business as now
conducted and as currently proposed to be conducted and to own, use, license and
lease its Assets and Properties. The Company is duly qualified, licensed or
admitted to do business and is in good standing as a foreign corporation in each
jurisdiction in which the ownership, use,

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licensing or leasing of its Assets and Properties, or the conduct or nature of
its business, makes such qualification, licensing or admission necessary, except
for such failures to be so duly qualified, licensed or admitted and in good
standing as would not, individually or in the aggregate, have a Material Adverse
Effect on the Company. The Company is not in violation of any of the provisions
of its Certificate of Incorporation. Section 3.1(a) of the Company Disclosure
Schedule lists all of the directors and officers of the Company.

          3.2 Authority Relative to this Agreement. The Company has full power
and authority to execute and deliver this Agreement and the other agreements of
which forms are attached as exhibits hereto (the “Ancillary Agreements”) to
which the Company is a party, to perform its obligations hereunder and
thereunder and to consummate the transactions contemplated hereby and thereby.
The execution and delivery by the Company of this Agreement and the Ancillary
Agreements to which the Company is a party, the consummation by the Company of
the transactions contemplated hereby and thereby, and the performance by the
Company of its obligations hereunder and thereunder have been duly and validly
authorized by all necessary action of the Company and no further action is
required on the part of the Company to authorize this Agreement or the Ancillary
Agreements to which the Company is a party or the consummation of the
transactions contemplated hereby or thereby. This Agreement and the Ancillary
Agreements to which the Company is a party have been or will be, as applicable,
duly and validly executed and delivered by the Company and, assuming the due
authorization, execution and delivery by the other parties hereto and thereto,
each constitutes or will upon such due execution and delivery constitute, as
applicable, a legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its respective terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar Laws relating to the
enforcement of creditors’ rights generally and by general principles of equity.

          3.3 Company Capital Stock.

  (a)

All of the issued and outstanding capital stock of the Company (the "Company
Capital Stock") is duly authorized and validly issued, fully paid and
nonassessable, and has been issued in compliance with all applicable federal,
state and foreign securities Laws and has not been issued in violation of any
preemptive rights, right of first refusal or similar rights, the Certificate of
Incorporation or Bylaws of the Company or any agreement to which the Company is
a party or by which it is bound.

        (b)

The Company Common Stock is held of record, as of the date of this Agreement, by
those persons with the addresses of record (as provided by such person to the
Company) and in the amounts set forth on Section 3.3(b) of the Company
Disclosure Schedule.

        (c)

Except as set forth in Sec. 3.3 (c) of the Company Disclosure Schedule, there
are no outstanding Company Options, Company Warrants or other Equity Equivalents
of the Company, or Contracts to which the Company is a party

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(written or oral) to issue any Interests or any other security with respect to
the Company.

        (d)

There are no outstanding or authorized Interest appreciation, phantom, profit
participation, or other similar rights with respect to the Company.

        (e)

Except as set forth in Sec. 3.3 (e) of the Company Disclosure Schedule, there
are no registration rights or other Contracts to which the Company is a party or
by which the Company is bound with respect to the registration under federal or
state securities laws of any issuance or transfer of any equity security of any
class of the Company.

          3.4 Subsidiaries. Except as set forth in Section 3.4 of the Company
Disclosure Schedule, the Company does not have any Subsidiaries and does not
otherwise own any shares of capital stock or any interest in (or any interest
convertible, exchangeable or exercisable for any such interest), or control,
directly or indirectly, any other corporation, partnership, association, joint
venture or other business entity.

          3.5 No Conflicts. The execution and delivery by the Company of this
Agreement and the Ancillary Agreements to which the Company is a party, and the
consummation of the transactions contemplated hereby and thereby, will not (with
or without notice or lapse of time, or both) conflict with or result in any
violation of or default under or give rise to a right of termination,
cancellation, modification or acceleration of any obligation or loss of any
benefit (any such event, a “Conflict”) under (i) any provision of the
Certificate of Formation or Limited Liability Company Agreement of the Company,
(ii) any Contract to which the Company or any of its properties or assets
(including intangible assets), is subject (each, a “Company Contract,” and
collectively, the “Company Contracts”), or (iii) any Legal Requirement
applicable to the Company or any of its properties (tangible and intangible) or
assets except, in the case of (ii) above, for such Conflicts as are not
individually or in the aggregate material. There are no lists all necessary
consents, waivers and Approvals of parties to any Company Contract as are
required thereunder in connection with the Acquisition, or for any such Company
Contract to remain in full force and effect without limitation, modification or
alteration after the Effective Time (“Third-Party Consents”). Following the
Effective Time, the Company will be permitted to exercise all of its rights
under the Company Contracts without the payment of any additional amounts or
consideration other than ongoing fees, royalties or payments which the Company
would otherwise be required to pay pursuant to the terms of such Company
Contracts had the transactions contemplated by this Agreement not occurred.

          3.6 Organizational Documents. The Company has delivered to Parent or
its counsel for examination the following: (a) copies of the Certificate of
Incorporation and By-Laws of the Company as currently in effect; (b) all written
records of all proceedings, consents, actions, and meetings of the shareholders,
board of directors and any committees thereof of the Company; (c) stock ledger
and journal reflecting all issuances and transfers of the Company Capital Stock;
and (d) all Permits from Governmental Authorities issued to the Company by, and
filings by the Company with, any regulatory agency, and all applications for
such permits, orders, and consents. The written records of

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all proceedings, consents, actions, and meetings of the shareholders, board of
directors and any committees thereof of the Company made available to counsel
for Parent are the only minutes of the Company and contain accurate summaries of
all meetings or actions by written consent of the Board of Directors (or
committees thereof) of the Company and its shareholders since the time of
formation of the Company.

           3.7 Consents. No consent, waiver, Approval, order or authorization
of, or registration, declaration or filing with any Governmental Authority or
any third party, including a party to any agreement with the Company (so as not
to trigger any Conflict), is required by or with respect to the Company in
connection with the execution and delivery of this Agreement and any Ancillary
Agreement to which the Company is a party or the consummation of the
transactions contemplated hereby and thereby, except for such consents, waivers,
Approvals, orders authorizations registrations, declarations and filings the
lack of which, individually or in the aggregate, would not constitute a Material
Adverse Effect.

          3.8 Company Financials. The Company’s Financials (including the notes
thereto) to be provided pursuant to Section 6.2 below by the Company to Parent
on or before Closing will have been prepared in accordance with GAAP applied on
a consistent basis throughout the periods indicated therein and present fairly
in all material respects the financial position and operating results of the
Company as of the dates and during the periods indicated therein, subject, in
the case of the Company Interim Financial Statements, to normal year-end
adjustments, which adjustments will not be material in amount or significance.
The Company Financials will be at the time of presentation correct and complete
in all material respects and there has been no material change in any accounting
policies, principles, methods or practices of the Company, including any change
with respect to reserves (whether for bad debts, contingent liabilities or
otherwise), since its inception. The Company’s unaudited consolidated balance
sheet as of June 30, 2007 is referred to herein as the “Current Balance Sheet.”

          3.9 No Undisclosed Liabilities. Except as reflected or reserved
against in the Company Financials (including the notes thereto) or as disclosed
in Section 3.9 of the Company Disclosure Schedule, there are no Liabilities of,
relating to or affecting the Company or any of its Assets and Properties, other
than Liabilities incurred (a) in the ordinary course of business consistent with
past practice since the date of the Current Balance Sheet which, individually
and in the aggregate, are not material to the business or condition of the
Company or (b) in connection with and in accordance with the provisions of this
Agreement.

          3.10 Absence of Changes. Since June 30, 2007, except as set forth in
Section 3.10 of the Company Disclosure Schedule:

  (a)

the Company has not entered into any Contract, commitment or transaction or
incurred any Liabilities other than in the ordinary course of business;

        (b)

the Company has not acquired an interest in or made any capital investment in,
altered or entered into any Contract or other commitment to alter its interest
in,

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any corporation, association, joint venture, partnership or business entity in
which the Company directly or indirectly holds any interest;

        (c)

there has not been any or violation of the terms of, any of the Contracts set
forth or described in the Company Disclosure Schedule, except as described
therein;

        (d)

the Company has not entered into any transaction with any officer, director,
shareholder, Affiliate or Associate of the Company, other than pursuant to any
Contract in effect as of the date of the Current Balance Sheet and disclosed to
Parent and identified on the Company Disclosure Schedule.

        (e)

no Action or Proceeding has been commenced or, to the knowledge of the Company,
threatened by or against the Company and no Action or Proceeding has been
settled or compromised by the Company;

        (f)

there has not been any transfer (by way of a license or otherwise) to any Person
of rights to any Intellectual Property other than in the ordinary course of
business;

        (g)

the Company has not made or agreed to make any disposition or sale, license or
lease of, or incurrence of any Lien in an amount exceeding $10,000 individually
or $20,000 in the aggregate, on, any Assets and Properties, other than sales of
products or services, or grants of nonexclusive licenses (to object code only)
of products, to customers in the ordinary course of business;

        (h)

the Company has not made or agreed to make any purchase of any Assets and
Properties of any Person other than in the ordinary course of business;

        (i)

the Company has not guaranteed any Indebtedness in an aggregate amount exceeding
$20,000, or issued or sold any debt securities, or extended or otherwise
modified the terms of any Indebtedness;

        (j)

the Company has not granted or approved (i) any severance or termination pay to,
(ii) any increase of greater than five percent (5%) in salary, rate of
commissions, rate of consulting fees or any other compensation of, (iii) the
payment of any consideration of any nature whatsoever (other than salary,
commissions or consulting fees and customary benefits paid to any current or
former officer, director, shareholder, employee or consultant) to, (iv) any loan
or extension of credit to, or (v) any discretionary or stay bonus to, any
director, current or former officer, employee, shareholder or consultant, except
payments made pursuant to written Contracts outstanding on the date hereof,
copies of which have been delivered to Parent and which are disclosed in Section
3.10(j) of the Company Disclosure Schedule;

        (k)

there has been no filed claim or written notice to the Company of wrongful
discharge or other unlawful labor practice or action with respect to the
Company;

        (l)

the Company has not made any change in accounting policies, principles, methods,
practices or procedures;

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(m)

the Company has not failed to renew any insurance policy; no insurance policy of
the Company has been cancelled or materially amended; and the Company has given
all notices and presented all claims (if any) under all such policies in a
timely fashion;

  (n)

there has been no material amendment or non-renewal of any Approvals, and the
Company has used commercially reasonable efforts to maintain such Approvals and
has observed in all material respects all Laws and Orders applicable to the
business or Assets and Properties of the Company;

        (o)

there has been no physical damage, destruction or other casualty loss (whether
or not covered by insurance) affecting any of the real or personal property or
equipment of the Company individually or in the aggregate in an amount exceeding
$20,000, other than ordinary wear and tear;

        (p)

the Company has not waived or released any material right or claim of the
Company, including any write-off or other compromise of any material account
receivable of the Company;

        (q)

the Company has not suffered any adverse change or any threat of any adverse
change in its relations with, or any loss or threat of loss of, any of its
licensors, distributors, suppliers or other business partners except for such
changes or losses and threatened changes or losses (assuming for this purpose
that such threats are realized) as would not individually or in the aggregate
have or be reasonably expected to have a Material Adverse Effect; and

        (r)

the Company has not entered into or approved any contract, arrangement or
understanding or acquiesced in respect of any arrangement or understanding, to
do, engage in or cause or having the effect of any of the foregoing items
described in the preceding clauses (a) through (r) of this Section 3.10.

          3.11 Taxes.

  (a)

Definition of Taxes. For the purposes of this Agreement, the term “Tax” or,
collectively, “Taxes” shall mean (i) any and all federal, state, local and
foreign taxes, assessments and other governmental charges, duties, impositions
and Liabilities, including taxes based upon or measured by gross receipts,
income, profits, sales, use and occupation, and value added, ad valorem,
transfer, franchise, withholding, payroll, recapture, employment, excise and
property taxes as well as public imposts, fees and social security charges
(including but not limited to health, unemployment, workers’ compensation and
pension insurance), together with all interest, penalties and additions imposed
with respect to such amounts, (ii) any liability for the payment of any amounts
of the type described in clause (i) of this Section 3.11(a) as a result of being
a member of an affiliated, consolidated, combined or unitary group for any
period, and (iii) any liability for the payment of any amounts of the type
described in clauses (i) or (ii) of this Section 3.11(a) as a result of any
express or implied obligation to indemnify any other person or as a result of
any obligation under any agreement or arrangement

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with any other person with respect to such amounts and including any liability
for taxes of a predecessor entity.

        (b)

Tax Returns and Audits.

  (i)

The Company has prepared and timely filed all required federal, state, local and
foreign returns, estimates, information statements and reports (“Returns”)
relating to any and all material Taxes concerning or attributable to the Company
or its operations and such Returns are true and correct in all material respects
and have been completed in accordance with applicable law.

  (ii)

The Company has timely paid all material Taxes it is required to pay and has
timely paid or withheld with respect to its Employees all federal, state and
foreign income taxes and social security charges and similar fees, Federal
Insurance Contribution Act, Federal Unemployment Tax Act and other Taxes
required to be paid or withheld.

  (iii)

The Company is not currently delinquent in the payment of any Tax, nor is there
any Tax deficiency outstanding, assessed or proposed against the Company, nor
has the Company executed any waiver of any statute of limitations on or
extending the period for the assessment or collection of any Tax, except as
noted on the Company Disclosure Schedule.

        (iv)

No audit or other examination of any Return of the Company is presently in
progress, nor has the Company been notified of any request for such an audit or
other examination.

        (v)

As of the date of the Current Balance Sheet, the Company did not have any
Liabilities for unpaid Taxes which have not been accrued or reserved on the
Current Balance Sheet, whether asserted or unasserted, contingent or otherwise,
and the Company has not incurred any liability for Taxes since the date of the
Current Balance Sheet other than in the ordinary course of business.

        (vi)

The Company has made available to Parent or its legal counsel, copies of all
foreign, federal, state and local income and all state and local sales and use
Returns for the Company filed for all periods since its inception.

        (vii)

No adjustment relating to any Return filed by the Company has been proposed
formally or, to the Knowledge of the Company, informally by any tax authority to
the Company or any representative thereof.

  (c)

Executive Compensation Tax. There is no contract, agreement, plan or arrangement
to which the Company is a party, including, without limitation, the provisions
of this Agreement, covering any employee or former employee of the

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Company, which, individually or collectively, could give rise to the payment of
any amount that would not be deductible pursuant to Sections 280G, 404 or 162(m)
of the Code.

          3.12 Reserved.

          3.13 Legal Proceedings. Except as set forth in Section 3.13 of the
Company Disclosure Schedule:

  (i)

there are no pending Actions or Proceedings against or relating to the Company,
any of its Assets and Properties or any of the Company’s officers or directors
in such capacities;

        (ii)

to the knowledge of the Company, there are, and since June 30, 2007 there have
been, no Actions or Proceedings overtly threatened against or relating to the
Company, any of its Assets and Properties or any of the Company’s officers or
directors in such capacities;

        (iii)

there are no facts or circumstances known to the Company that would reasonably
be expected to give rise to any Action or Proceeding against or relating to the
Company, any of its Assets and Properties or any of the Company’s officers or
directors in such capacities which Action or Proceeding would, if determined
against the Company, result in material damages, costs or expenses;

        (iv)

the Company has no knowledge of facts or circumstances that constitute
reasonable grounds to believe that any Governmental Authority intends to conduct
an Action or Proceeding; and

        (v)

the Company has not received notice or otherwise has knowledge of any Orders
outstanding or threatened against the Company.

          3.14 Compliance with Laws, Orders, Approvals and Contracts.

  (a)

To the knowledge of the Company, the Company has not violated, and is not
currently in default or violation under, any Legal Requirement or Approval
applicable to the Company or any of its Assets and Properties, except for such
defaults or violations which are not, individually or in the aggregate, material
and the Company has no knowledge of any claim of violation, or of any actual
violation, of any such Legal Requirement or Approval by the Company.

        (b)

To the knowledge of the Company, the Company is in compliance with and has not
breached, violated or defaulted under, or received notice that it has breached,
violated or defaulted under, any of the terms or conditions of any Company
Contract, nor is the Company aware of any event that would constitute such a
breach, violation or default with the lapse of time, giving of notice or both,
except for such breaches, violations and defaults (including breaches,
violations and defaults that would arise upon lapse of time following, and/or
notice of, such events) which are not, individually or in the aggregate,
material. Each material

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Company Contract is in full force and effect and the Company is not subject to
any default thereunder. To the knowledge of the Company, no party obligated to
the Company pursuant to any such Company Contract is subject to any default
thereunder.

          3.15 Employment Matters.

  (a)

Employment Matters. The Company: (i) is in compliance in all material respects
with all applicable foreign, federal, state and local laws, rules and
regulations respecting employment, employment practices, terms and conditions of
employment and wages and hours, in each case, with respect to Employees; (ii)
has withheld and reported all amounts required by law or by agreement to be
withheld and reported with respect to wages, salaries and other payments to
Employees; (iii) is not liable for any arrears of wages or any taxes or any
penalty for failure to comply with any of the foregoing; and (iv) is not liable
for any payment to any trust or other fund governed by or maintained by or on
behalf of any governmental authority, with respect to unemployment compensation
benefits, social security or other benefits or obligations for Employees (other
than routine payments to be made in the normal course of business and consistent
with past practice). There are no pending, threatened or reasonably anticipated
claims or actions against the Company under any worker’s compensation policy or
long- term disability policy. Neither the Company nor any Affiliate has direct
or indirect liability with respect to any misclassification of any person as an
independent contractor rather than as an employee.

        (b)

Labor. No work stoppage or labor strike against the Company or any Affiliate is
pending, threatened or reasonably anticipated. The Company does not know of any
activities or proceedings of any labor union to organize any Employees. There
are no actions, suits, claims, labor disputes or grievances pending, or, to the
knowledge of the Company, threatened or reasonably anticipated relating to any
labor, safety or discrimination matters involving any Employee, including,
without limitation, charges of unfair labor practices or discrimination
complaints. The Company has not engaged in any unfair labor practices within the
meaning of the National Labor Relations Act. The Company is not presently, nor
has it been in the past, a party to, or bound by, any collective bargaining
agreement or union contract with respect to Employees and no collective
bargaining agreement is being negotiated by the Company. Neither the Company nor
any Affiliate has incurred any material liability or material obligation under
the Worker Adjustment and Retraining Notification Act or any similar state or
local law that remains unsatisfied.

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          3.16 Title to Properties; Absence of Liens and Encumbrances; Condition
of Equipment.

  (a)

The Company does not own any real property, nor has the Company ever owned any
real property. Section 3.16(a) of the Company Disclosure Schedule sets forth a
list of all real property currently leased by the Company, the name of the
lessor, the date of the lease and each amendment thereto and, with respect to
any current lease, the aggregate annual rental payable under any such lease
(and, with respect to any property subleased out by the Company, the name of the
sublessee, the duration of the sublease and the aggregate annual rental payable
to the Company). All such current leases are in full force and effect, are valid
and effective in accordance with their respective terms, and there is not, under
any of such leases, any existing default or event of default (or event which
with notice or lapse of time, or both, would constitute a default), except for
such defaults (including defaults that would arise upon lapse of time following,
and/or notice of, such events) which are not, individually or in the aggregate,
material.

        (b)

The Company has good and valid title to, or, in the case of leased properties
and assets, valid leasehold interests in, all of its tangible properties and
assets, real, personal and mixed, used or held for use in its business, free and
clear of any Liens, except (i) as reflected in the Current Balance Sheet, (ii)
such imperfections of title and encumbrances, if any, which do not detract from
the value or interfere with the present use of the property subject thereto or
affected thereby and (iii) Liens in favor of Parent. All such current leases are
in full force and effect, are valid and effective in accordance with their
respective terms, and there is not, under any of such leases, any existing
default or event of default (or event which with notice or lapse of time, or
both, would constitute a default), except for such defaults (including defaults
that would arise upon lapse of time following, and/or notice of, such events)
which are not, individually or in the aggregate, material.

        (c)

All material items of equipment (the “Equipment”) owned or leased by the Company
are (i) adequate for the conduct of the business of the Company, as applicable,
as currently conducted and as currently contemplated to be conducted, and (ii)
in good operating condition, regularly and properly maintained, subject to
normal wear and tear.

          3.17 Intellectual Property.

  (a)

Definitions. For all purposes of this Agreement, the following terms shall have
the following respective meanings:

          (i)

“Intellectual Property” shall mean any or all of the following and all rights
in, arising out of, or associated therewith: (i) all United States,
international and foreign patents and applications therefor and all reissues,
divisions, renewals, extensions, provisionals, continuations and
continuations-in-part thereof (“Patents”); (ii) all inventions (whether
patentable or not), invention disclosures, improvements; (iii) trade secrets,
confidential or proprietary information, know how, technology, technical data
and customer lists, and all documentation relating to any of the foregoing
(“Trade Secrets”); (iv) all

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copyrights, copyrights registrations and applications therefor, and all other
rights corresponding thereto throughout the world (“Copyrights”); (v) all domain
names, universal resource locators (“URLs”) and other names and locators
associated with the Internet; (vi) all industrial designs and any registrations
and applications therefor throughout the world; (vii) all trade names, logos,
common law trademarks and service marks, trademark and service mark
registrations and applications therefor throughout the world; (viii) all
databases and data collections and all rights therein throughout the world; (ix)
all moral and economic rights of authors and inventors, however denominated,
throughout the world, (x) all Software (defined below), and (xi) any similar or
equivalent rights to any of the foregoing anywhere in the world.

        (ii)

“Company Intellectual Property” shall mean any Intellectual Property, including
the Company Registered Intellectual Property (as defined below) that is owned
by, or exclusively licensed to, the Company.

        (iii)

“Registered Intellectual Property Rights” shall mean all United States,
international and foreign: (i) Patents, including applications therefor; (ii)
registered trademarks, applications to register trademarks, including intent-
to-use applications, or other registrations or applications related to
trademarks; (iii) Copyright registrations and applications to register
Copyrights; and (iv) any other Intellectual Property that is the subject of an
application, certificate, filing, registration or other document issued by,
filed with, or recorded by, any private, state, government or other public or
quasi- public legal authority at any time

        (iv)

“Software” means any and all computer software and code, including assemblers,
applets, compilers, source code, object code, data (including image and sound
data), design tools and user interfaces, in any form or format, however fixed.
Software shall include source code listings and documentation.

  (b)

Section 3.17(b) of the Company Disclosure Schedule lists all Registered
Intellectual Property Rights owned by, filed in the name of, or applied for, by
the Company (the “Company Registered Intellectual Property”) and lists any
Actions or Proceedings before any court, tribunal (including the United States
Patent and Trademark Office (the “PTO”) or equivalent authority anywhere in the
world) in which any of the Company Registered Intellectual Property or Company
Intellectual Property is the express subject of the Action or Proceeding and to
which Company is a party and has been noticed or served or which is otherwise
known to Company.

        (c)

All Company Intellectual Property that is owned by the Company and that is used
in or necessary to the conduct of Company’s business as presently conducted was
written and created solely by either (i) employees of the Company acting within
the scope of their employment who have assigned (to the maximum extent permitted
under applicable law) their rights, including all Intellectual Property

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rights therein, to the Company or (ii) by third parties who have assigned (to
the maximum extent permitted under applicable law) their rights, including all
Intellectual Property rights therein, to the Company.

        (d)

To the extent that any Intellectual Property has been developed or created by a
third party for Company and is incorporated into any of the Company Products,
the Company has a written agreement with such third party with respect thereto
and Company thereby either (i) has obtained ownership of, and is the exclusive
owner of (with assignments sufficient to irrevocably transfer (to the maximum
extent permitted by law) all rights in and to such Intellectual Property to the
Company including, in the case of Patent and Copyright assignments, the right to
seek past and future damages with respect thereto), or (ii) has obtained a
perpetual, nonterminable license sufficient for the conduct of its business as
currently conducted and as currently planned or contemplated to be conducted to
all such third party’s Intellectual Property in, such work, material or
invention by operation of law or by assignment, to the fullest extent it is
legally possible to do so.

        (e)

The Company Intellectual Property constitutes all the material Intellectual
Property that is used in, or any Intellectual Property that is necessary, to the
conduct of the business of the Company as it currently is conducted and as it is
currently planned or contemplated to be conducted by the Company, including,
without limitation, the design, development, manufacture, use, import and sale
of Company Products.

        (f)

No person who has licensed any material Intellectual Property to the Company has
ownership rights or license rights to improvements made by or for the Company in
such Intellectual Property.

        (g)

The Company has the right to use all Software development tools, library
functions, compilers and all other third-party Software that are required to
create, modify, compile, operate or support any Software that is material
Company Intellectual Property or is incorporated into any Company Product.

        (h)

No government funding, facilities of a university, college, other educational
institution or research center or funding from third parties was used by Company
in the development of any Company Intellectual Property. To Company’s knowledge,
no current or former employee, consultant or independent contractor of Company,
who was involved in, or who contributed to, the creation or development of any
Company Intellectual Property, has performed services for the government,
university, college, or other educational institution or research center during
a period of time during which such employee, consultant or independent
contractor was also performing services for Company.

        (i)

To the knowledge of the Company, there are no contracts, licenses or agreements
between the Company and any other person with respect to Company Intellectual
Property under which there is any material dispute regarding the scope of such

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agreement, or performance under such agreement, including with respect to any
payments to be made or received by the Company thereunder.

        (j)

To the Company’s knowledge, no person is infringing or misappropriating any
Company Intellectual Property.

          3.18 Agreements, Contracts and Commitments.

  (a)

Section 3.18(a) of the Company Disclosure Schedule, lists all of the following
to which the Company is a party or bound by:

          (i)

any employment or consulting contract with an employee or individual consultant
or salesperson, or consulting or sales agreement, contract, or commitment with a
firm or other organization (other than offer letters, employee invention
assignment agreements and option agreements pursuant to the Company’s standard
form previously provided to Parent; provided that there are no substantive
modifications from such form; and provided, further, in the case of employee
invention assignment agreements, that the employee has not excepted any
inventions that are related to any Intellectual Property used in connection with
Company Products);

          (ii)

any Contract or plan, including, without limitation, any stock option plan,
stock appreciation rights plan or stock purchase plan, any of the benefits of
which will be increased, or the vesting of benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated by this
Agreement or any subsequent event or the value of any of the benefits of which
will be calculated on the basis of any of the transactions contemplated by this
Agreement;

          (iii)

any fidelity or surety bond or completion bond;

          (iv)

any lease of personal property having a value in excess of $25,000 individually
or $50,000 in the aggregate;

          (v)

any agreement, contract or commitment relating to capital expenditures and
involving future payments in excess of $25,000 individually or $50,000 in the
aggregate;

          (vi)

any agreement, contract or commitment with customers of the Company that
individually accounts for five percent (5%) or more of the Company’s revenues;

          (vii)

any agreement, contract or commitment relating to the disposition or acquisition
of assets or any interest in any business enterprise outside the ordinary course
of the Company’s business;

          (viii)

any mortgages, indentures, guarantees, loans or credit agreements, security
agreements or other agreements or instruments relating to the borrowing of money
or extension of credit;

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  (ix)

any purchase order or contract for the purchase of materials or services
involving single source suppliers, custom manufacturers or involving in excess
of $25,000 individually or $50,000 in the aggregate;

        (x)

any construction contracts;

        (xi)

any dealer, distribution, joint marketing or development agreement;

        (xii)

any sales representative, original equipment manufacturer, value added,
remarketer, distributor, reseller, or independent software vendor, or other
agreement for distribution of the Company’s products, technology or services by
a third party;

  (xiii)

any Contract of indemnification or any guaranty other than any Contract of
indemnification entered into in connection with the sale, license, distribution
and development of Intellectual Property and advertising in the ordinary course
of business;

  (xiv)

any Contract currently in force to provide source code to any third party for
any product or technology;

        (xv)

any material settlement agreement entered into prior to the date of this
Agreement pursuant to which the Company has continuing obligations or rights;

        (xvi)

any Contract not listed in Section 3.18 (a) through (xv) of the Company’s
Disclosure Statement under which the consequences of a default or termination
would reasonably be anticipated to have a Material Adverse Effect on the
Company;

(xvii)

any executory agreement under which the Company has advanced or loaned any
amount to any of its directors, officers, and employees;

(xviii)

any revenue or profit participation Contract which involves aggregate annual
payments of more than $20,000; or

  (xix)

any other Contract that involves $25,000 individually or $50,000 in the
aggregate or more and is not cancelable without penalty within thirty (30) days,
and any other Contract that is not cancelable without penalty within twelve (12)
months.

          3.19 Insurance. The Company has no insurance policies or fidelity
bonds covering the assets, business, equipment, properties, operations,
employees, officers and directors of the Company or any Affiliate.

          3.20 Interested Party Transactions. Except as disclosed in the
Company’s financial statements, no officer, director or shareholder of the
Company (nor any ancestor, sibling, descendant or spouse of any of such persons,
or any trust, partnership or corporation in which any of such persons has or has
had an interest), has or has had, directly or indirectly, (i) an interest in any
entity which furnished or sold, or furnishes or

15

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sells, services, products or technology that the Company furnishes or sells, or
proposes to furnish or sell, or (ii) any interest in any entity that purchases
from or sells or furnishes to the Company, any goods or services, or (iii) a
beneficial interest in any Contract to which the Company is a party; provided,
however, that ownership of no more than one percent (1%) of the outstanding
voting stock of a publicly traded corporation shall not be deemed to be an
“interest in any entity” for purposes of this Section 3.20.

          3.21 Governmental Authorizations and Permits. To the Company’s
knowledge each Approval (i) pursuant to which the Company currently operates or
holds any interest in any of its properties, or (ii) which is required for, or
material to, the operation of the Company’s business as currently conducted or
the holding of any such interest (collectively, “Company Authorizations”) has
been issued or granted to the Company. The Company Authorizations are in full
force and effect and constitute all Company Authorizations required to permit
the Company to operate or conduct its business or hold any interest in its
properties or assets.

          3.22 Brokers’ and Finders’ Fees. The Company has not incurred, nor
will it incur, directly or indirectly, any liability for brokerage or finders’
fees or agents’ commissions or any similar charges in connection with the
Agreement or any transaction contemplated hereby.

          3.23 Disclosure. The representations and warranties of the Company
contained in this Agreement, together with the Company Disclosure Schedule and
any certificate furnished to Parent pursuant to any provision of this Agreement
do not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. The Company has
delivered or made available true and complete copies of each document (or
summaries of same) that has been requested in writing by Parent or its counsel.
The Company has not failed to disclose to Parent any fact or circumstance that
would reasonably be expected to have a Material Adverse Effect on the Company.

ARTICLE 4: REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PARENT INDEMNIFYING
OFFICER

          The Parent Indemnifying Officer and Parent hereby jointly and
severally represent and warrant to the Company and the Holders, subject to such
exceptions as are disclosed with respect to this Article 4 in the disclosure
schedule (the “Parent Disclosure Schedule”) delivered herewith and dated as of
the date hereof, as follows:

          4.1 Authority Relative to this Agreement. Parent has full corporate
power and authority to execute and deliver this Agreement and the Ancillary
Agreements to which it is a party, to perform its obligations hereunder and
thereunder and to consummate the transactions contemplated hereby and thereby.
Parent’s Board of Directors has unanimously approved this Agreement and the
Ancillary Agreements to which the Parent is a party. The execution and delivery
by Parent of this Agreement and the Ancillary Agreements to which it is a party
and, the consummation by Parent of the transactions contemplated hereby and
thereby and the performance by Parent of its obligations

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hereunder and thereunder have been duly and validly authorized by all necessary
corporate action on the part of Parent and no further action is required on the
part of Parent to authorize this Agreement or the Ancillary Agreements to which
it is a party or the consummation of the transactions contemplated hereby or
thereby. This Agreement and the Ancillary Agreements have been or will be, as
applicable, duly and validly executed and delivered by Parent and, assuming the
due authorization, execution and delivery hereof by the Company and/or the other
parties hereto and thereto, each constitutes or will constitute, as applicable,
a legal, valid and binding obligation of Parent enforceable against Parent in
accordance with its respective terms, except as the enforceability thereof may
be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar Laws relating to the enforcement of creditors’
rights generally and by general principles of equity.

          4.2 Organization and Qualification. Parent is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
Nevada. Parent has full corporate power and authority to conduct its business as
presently conducted and to own, use, license and lease its Assets and
Properties. Parent is duly qualified, licensed or admitted to do business and is
in good standing in each jurisdiction in which the ownership, use, licensing or
leasing of its Assets and Properties, or the conduct or nature of its business,
makes such qualification, licensing or admission necessary, except for such
failures to be so duly qualified, licensed or admitted and in good standing as
would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on Parent.

          4.3 No Conflict. The execution and delivery of this Agreement or any
of the Ancillary Documents to which Parent is a party do not, and, the
consummation of the transactions contemplated hereby will not, conflict with, or
result in any violation of, or default under (with or without notice or lapse of
time, or both), or give rise to a Conflict under (i) any provision of the
articles of incorporation, as amended, and bylaws of Parent, (ii) any mortgage,
indenture, lease, contract or other agreement or instrument, permit, concession,
franchise or license to which Parent or any of its properties or assets are
subject or (iii) any Legal Requirement applicable to Parent or its properties or
assets, except in each case where such Conflict will not have a Material Adverse
Effect or will not affect the legality, validity or enforceability of this
Agreement.

          4.4 Consents. No consent, waiver, Approval, order or authorization of,
or registration, declaration or filing with, any Governmental Authority, or any
third party is required by or with respect to Parent in connection with the
execution and delivery of this Agreement and any Ancillary Agreements to which
Parent is a party or the consummation of the transactions contemplated hereby
and thereby, except for (i) such consents, waivers, Approvals, orders,
authorizations, registrations, declarations and filings as may be required under
applicable securities laws, and (ii) such consents, waivers, Approvals, orders,
authorizations, registrations, declarations and filings which, if not obtained
or made, would not, individually or in the aggregate, have a Material Adverse
Effect.

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          4.5 Parent Capital Stock.

  (a)

The authorized capital stock of Parent consists of 450,000,000 shares of Common
Stock with a par value $0.001 per share (“Parent Common Stock”), of which
16,140,000 shares of Parent Common Stock are issued and outstanding; and as of
the Closing Date Parent’s issued and outstanding capital stock shall consist of
17,000,000 shares of Parent Common Stock on a fully-diluted basis, including the
shares of Parent Common Stock to be issued on close of the Private Placement (as
defined in Section 6.11 below) but excluding the Acquisition Stock
Consideration. All outstanding shares of Parent Common Stock have been duly
authorized, validly issued, fully paid and non-assessable, are not subject to
preemptive rights created by statute, the Certificate of Incorporation or Bylaws
of Parent or any agreement to which Parent is a party or by which it is bound
and have been issued in compliance with federal and state securities laws.
Except as set forth in Section the 4.5 of the Parent Disclosure Schedule, there
are no outstanding rights, options, warrants, preemptive rights, redemption
rights, rights of first refusal or similar rights for the purchase or
acquisition from Parent of any securities of Parent. Section 4.5 of the Parent
Disclosure Schedule sets forth Parent’s capitalization as of the date of this
Agreement and pro forma as of the Closing Date on a fully diluted basis assuming
the consummation of the transactions contemplated by this Agreement, the
Ancillary Agreements and the exercise on the Closing Date of all securities
convertible into or exchangeable for Parent’s Common Stock, among other things.

        (b)

There are no Contracts of any character, written or oral, to which Parent is a
party or by which it is bound obligating Parent to repurchase or redeem, or
cause to be repurchased or redeemed, any shares of Parent Capital Stock, or
obligating the Parent to grant, extend, accelerate the Vesting of, change the
price of, otherwise amend or enter into any such option, warrant, call, right,
commitment or agreement. There are no outstanding or authorized stock
appreciation, phantom stock, profit participation, or other similar rights with
respect to the Parent.

        (c)

Except as set forth in Section 4.5(c) of the Parent Disclosure Schedule, there
are no preemptive rights or agreements, arrangements or understandings to issue
preemptive rights with respect to the issuance or sale of Parent Capital Stock
created by statute, the articles of incorporation or bylaws of the Company, or
any agreement or other arrangement to which the Parent is a party (written or
oral) or by which it is bound and there are no agreements, arrangements or
understandings to which the Parent is a party (written or oral) pursuant to
which the Parent has the right to elect to satisfy any Liabilities by issuing
Parent Capital Stock or Equity Equivalents.

        (d)

Except as set forth in Section 4.5(d) of the Parent Disclosure Schedule, the
Parent is not a party or subject to any agreement or understanding, and, to the
Parent’s knowledge, there is no agreement, arrangement or understanding between
or among any Persons which affects, restricts or relates to voting or giving of
written consents with respect to the Parent Capital Stock, including any voting
trust

18

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agreement or proxy. Except as set forth in Section 4.5(d) of the Parent
Disclosure Schedule, no debt securities of the Parent are issued and
outstanding.

          4.6 Issuance of Parent Common Stock. The shares of Parent Common Stock
to be issued as the Acquisition Stock Consideration, when issued, will be duly
authorized, validly issued, fully paid, and non-assessable and will be free of
liens, charges, encumbrances and restrictions on transfer other than
restrictions on transfer under this Agreement or the Ancillary Agreements and
applicable state and federal securities laws and will be, subject to the truth
and accuracy of the representations made by the Company in Section 3.3 and by
the Holders in their Holder Certificates, issued in compliance with applicable
federal and state securities laws, and are not subject to any preemptive rights
or rights of first refusal or other similar rights that have not been
effectively waived. Immediately, prior to the Closing there shall be no Parent
Common Stock reserved for issuance.

          4.7 Parent Financial Statements. Parent has delivered to the Company
(a) the audited consolidated balance sheets of the Parent as of December 31,
2006 and 2005, and the related audited statements of operations, changes in
holders’ equity and cash flows, respectively, for the fiscal years ended
December 31, 2006 and 2005 (the “Parent Annual Financial Statements”) and (b)
the unaudited consolidated balance sheet of Parent as of June 30, 2007, and the
related unaudited statement of operations for the three month period ended on
such date (the “Parent Interim Financial Statements” and, together with Parent
Annual Financial Statements, the “Parent Financials”). The Parent Financials
(including the notes to the Parent Annual Financial Statements) have been
prepared in accordance with GAAP applied on a consistent basis throughout the
periods indicated therein and present fairly in all material respects the
financial position and operating results of Parent as of the dates and during
the periods indicated therein, subject (1) to adjustments in compensation
expense required by the Securities and Exchange Commission in connection with
equity compensation, (2) to adjustments resulting from changes in accounting
standards and emerging interpretive guidance relating to standards of financial
accounting and reporting, and (3) in the case of the Parent Interim Financial
Statements, to normal quarter-end and year-end adjustments, and except that the
Parent Interim Financial Statements may not contain footnotes. The Parent’s
unaudited consolidated balance sheet as of June 30, 2007 is referred to herein
as the “Parent Current Balance Sheet.”

          4.8 No Undisclosed Liabilities. Except as reflected or reserved
against in Parents’ Financials (including the notes thereto) or as disclosed in
Section 3.9 of the Parent Disclosure Schedule, there are no Liabilities of,
relating to or affecting the Parent or any of its Assets and Properties, other
than Liabilities incurred (a) in the ordinary course of business consistent with
past practice since the date of the Current Balance Sheet which, individually
and in the aggregate, are not material to the business or condition of the
Parent or (b) in connection with and in accordance with the provisions of this
Agreement.

          4.9 Absence of Certain Changes. Since June 30, 2007, except as set
forth in Section 4.9 of the Parent Disclosure Schedule Parent has operated its
business in the ordinary course consistent with past practice, and since such
date:

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  (a)

there has not occurred any change, event or condition that has resulted in a
Material Adverse Effect;

  (b)

there has not occurred any amendment or change in its articles of incorporation
or bylaws;

        (c)

there has not occurred any material change in accounting methods or practices;

  (d)

the Parent has not made any declaration, setting aside or payment of a dividend
on, or made any other distribution in respect of, the capital stock of Parent,
or any split, combination or recapitalization of the capital stock of Parent or
any direct or indirect redemption, purchase or other acquisition of any capital
stock of Parent or any change in any rights, preferences, privileges or
restrictions on any outstanding security of Parent

  (e)

the Parent has not entered into any transaction with any officer, director,
shareholder, Affiliate or Associate of the Parent, other than pursuant to any
Contract in effect as of the date of the Current Balance Sheet and disclosed to
Parent and identified on the Parent Disclosure Schedule.

        (f)

no Action or Proceeding has been commenced, threatened, settled or compromised
by the Parent and, to the knowledge of the Parent, no facts or circumstances
exist that would give rise to any Action or Proceeding (including without
limitation, an Action or Proceeding arising out of Parent’s mining property or
search for mineral deposits);

        (g)

the Parent has not: (A) issued, granted, delivered, sold or authorized or
proposed to issue, grant, deliver or sell, or purchased or proposed to purchase,
any shares of Parent Capital Stock or Equity Equivalents, (B) modified or
amended the rights of any holder of any outstanding shares of Parent Capital
Stock or Equity Equivalents (including to reduce or alter the consideration to
be paid to the Parent upon the exercise of any outstanding options, warrants,
stock purchase rights or other Equity Equivalents); and (C) not granted any
options with an exercise price of less than the fair market value of the
Parent’s Common Stock on the date the option was granted.

        (h)

the Parent has not made or agreed to make any disposition or sale, license or
lease of, or incurrence of any Lien in an amount exceeding $5,000 individually
or $10,000 in the aggregate, on, any Assets and Properties;

        (i)

the Parent has not made or agreed to make any purchase of any Assets and
Properties of any Person other than (i) acquisitions of inventory, or licenses
of products, in the ordinary course of business consistent with past practice
and (ii) other acquisitions in an amount not exceeding $5,000 in the case of any
individual item or $10,000 in the aggregate;

        (j)

the Parent has not made or agreed to make any capital expenditures or
commitments for additions to property, plant or equipment constituting capital
assets individually or in the aggregate in an amount exceeding $5,000;

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  (k)

the Parent has not made or agreed to make any write-off or write-down, or any
determination to write off or write-down, or revalue, any of its Assets and
Properties, or change any reserves or liabilities associated therewith in an
amount exceeding $5,000;

        (l)

the Parent has not made or agreed to make payment, discharge or satisfaction, in
an amount in excess of $5,000 in any one case, or $10,000 in the aggregate, of
any claim, Liability or obligation (whether absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment, discharge or
satisfaction in the ordinary course of business of Liabilities reflected or
reserved against in the Parent Financials;

(m)

the Parent has not failed to pay or otherwise satisfy any Liabilities when due
and payable, except such Liabilities which are being contested in good faith by
appropriate means or procedures and which, individually and in the aggregate,
are immaterial in amount;

  (n)

the Parent has not created, incurred, assumed or guaranteed any Indebtedness in
an aggregate amount exceeding $5,000, or issued or sold any debt securities, or
extended or otherwise modified the terms of any Indebtedness;

        (o)

the Parent has not granted or approved (i) any severance or termination pay to,
(ii) any increase of greater than five percent (5%) in salary, rate of
commissions, rate of consulting fees or any other compensation of, (iii) the
payment of any consideration of any nature whatsoever (other than salary,
commissions or consulting fees and customary benefits paid to any current or
former officer, director, shareholder, employee or consultant) to, (iv) any loan
or extension of credit to, or (v) any discretionary or stay bonus to, any
director, current or former officer, employee, shareholder or consultant;

        (p)

the Parent has not adopted, entered into, amended, modified or terminated
(partially or completely) any Employee Plan (as defined in Section 3.15(a)(vi));

        (q)

there has been no filed claim or written notice to the Parent, and Parent has no
knowledge of facts or circumstances that would give rise to a claim of wrongful
discharge or other unlawful labor practice or action with respect to the Parent;

        (r)

the Parent has not made or changed any material election in respect of Taxes,
adopted or changed any accounting method in respect of Taxes, entered into any
tax allocation agreement, Tax sharing agreement, Tax indemnity agreement or
closing agreement, settlement or compromise of any claim or assessment in
respect of Taxes, nor has it consented to any extension or waiver of the statute
of limitations period applicable to any claim or assessment in respect of Taxes;

        (s)

the Parent has not failed to renew any insurance policy; no insurance policy of
the Parent has been cancelled or materially amended; and the Parent has given
all notices and presented all claims (if any) under all such policies in a
timely fashion;

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  (t)

there has been no material amendment or non-renewal of any Approvals, and the
Parent has used commercially reasonable efforts to maintain such Approvals and
has observed in all material respects all Laws and Orders applicable to the
business or Assets and Properties of the Parent;

        (u)

there has been no physical damage, destruction or other casualty loss (whether
or not covered by insurance) affecting any of the real or personal property or
equipment of the Parent individually or in the aggregate in an amount exceeding
$5,000, other than ordinary wear and tear;

        (v)

the Parent has not entered into any employment Contract, or modified the terms
of any existing such Contract;

        (w)

the Parent has not entered into or approved any contract, arrangement or
understanding or acquiesced in respect of any arrangement or understanding, to
do, engage in or cause or having the effect of any of the foregoing items
described in the preceding clauses of this Section 4.9.

          4.10 Dividends or Distributions. Parent has not declared or paid any
dividends or authorized or made any distribution upon or with respect to any
class or series of its capital stock.

          4.11 Registration Rights. Except as provided in the Registration
Rights Agreement attached as Exhibit C, Parent is presently not obligated and
has not granted any rights to register under the Securities Act or to register
or qualify under any state securities any of its presently outstanding
securities or any of its securities that may subsequently be issued.

          4.12 Legal Proceedings. There are, and since the date of the Parent
Current Balance Sheet, have been, no material Actions or Proceedings pending or,
to the knowledge of the Parent, threatened against, relating to or affecting the
Parent or any of its Assets and Properties and Parent has not received notice or
otherwise has knowledge of any Orders outstanding against the Parent.

          4.13 Employment Matters. Parent has no employees. There are no pending
material claims or actions against the Parent under any worker’s compensation
policy or long-term disability policy.

          4.14 Patents and Trademarks. To Parent’s knowledge, Parent owns, or
has the right to use (or will be able to obtain the right to use on reasonable
commercial terms), all patents, trademarks, service marks, trade names,
copyrights, licenses, trade secrets or other proprietary rights necessary to its
business as now conducted and as proposed to be conducted without conflicting
with or infringing upon the right or claimed right of any person under or with
respect to the forgoing, except as would not have a Material Adverse Effect on
Parent.

          4.15 Compliance with Other Instruments. Parent is not in violation or
default of any provision of its articles of incorporation or bylaws, each as
amended and in effect on and as of the date hereof. Parent is not in violation
or default of any material provision of

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any instrument, mortgage, deed of trust, loan, contract, commitment, judgment,
decree, order or obligation to which it is a party or by which it or any of its
properties or assets are bound which would, individually or in the aggregate, be
reasonably likely to result in a Material Adverse Effect or of any provision of
any federal, state or, to its knowledge, local statute, rule or governmental
regulation which would, individually or in the aggregate, be reasonably likely
to result in a Material Adverse Effect. The execution, delivery and performance
of and compliance with this Agreement and the Ancillary Agreements to which the
Parent is a party, and the exchange and delivery of the Acquisition Stock
Consideration will not result in any such violation, be in Conflict with or
constitute, with or without the passage of time or giving of notice, a default
under any such provision, require any consent or waiver under any such provision
(other than any consents or waivers that have been obtained), or result in the
creation of any mortgage, pledge, lien, encumbrance or charge upon any of the
Assets and Properties of Parent pursuant to any such provision.

          4.16 Title to Property and Assets. Parent owns its Assets and Property
free and clear of all mortgages, liens, loans and encumbrances, except such
encumbrances and liens which arise in the ordinary course of business and do not
materially impair Parent’s ownership or use of such Assets and Property. With
respect to the Assets and Property it leases, Parent is in compliance with such
leases in all material respects and, to its knowledge, holds a valid leasehold
interest free of any liens, claims or encumbrances.

          4.17 Organizational Documents.

  (a)

The Parent has devised and maintains a system of internal accounting controls
sufficient to provide reasonable assurances that: (i) transactions are executed
in accordance with management’s general or specific authorization; (ii)
transactions are recorded as necessary (A) to permit preparation of financial
statements in conformity with GAAP or any other criteria applicable to such
statements, and (B) to maintain accountability for assets; and (iii) the amounts
recorded for assets and liabilities on the books and records of the Parent are
in accordance with GAAP.

        (b)

The Parent has delivered to Parent or its counsel for examination the following:
(a) copies of the articles of incorporation and bylaws of the Parent as
currently in effect; (b) all written records of all proceedings, consents,
actions, and meetings of the shareholders, board of directors and any committees
thereof of the Parent; (c) stock ledger and journal reflecting all stock
issuances and transfers of the Parent; and (d) all Permits from Governmental
Authorities issued to the Parent by, and filings by the Parent with, any
regulatory agency, and all applications for such permits, orders, and consents.
The written records of all proceedings, consents, actions, and meetings of the
shareholders, board of directors and any committees thereof of the Parent made
available to counsel for Parent are the only minutes of the Parent and contain
accurate summaries of all meetings or actions by written consent of the Board of
Directors (or committees thereof) of the Parent and its shareholders since the
time of incorporation of the Parent.

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          4.18 Disclosure. The representations and warranties of the Parent
contained in this Agreement, together with the Parent Disclosure Schedule and
any certificate furnished to Company pursuant to any provision of this Agreement
do not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. Parent has not
failed to disclose to the Company any fact or circumstances that would
reasonably be expected to have a Material Adverse Effect on Parent.

          4.19 Brokers and Finders’ Fees. Parent has not incurred, nor will it
incur, directly or indirectly, any liability for brokerage or finders’ fees or
agents’ commissions or any similar charges in connection with the Agreement or
any transaction contemplated hereby.

          4.20 Tax Returns, Payments and Elections. The Parent has prepared and
timely filed all required federal, state, local and foreign returns, estimates,
information statements and reports (“Returns”) and such Returns are true and
correct in all material respects and have been completed in accordance with
applicable law. The provisions for Taxes of Parent as shown in the Parent
Financials are adequate in all material respects for Taxes due or accrued as of
the date hereof. Since the date of the Parent Interim Financial Statements,
Parent has not incurred any material Taxes, assessments or governmental charges
other than in the ordinary course of business and Parent has made adequate
provisions on its books of account for all material Taxes, assessments and
governmental charges with respect to its business, properties and operations for
such period.

          4.21 Parent SEC Documents. Parent has filed with the SEC on a timely
basis all the documents that Parent was required to file with the SEC in
accordance with Sections 13, 14 and 15(d) of the Securities Exchange Act on or
after the effective date of its registration statement on Form SB-2 (as amended,
the “Parent SEC Documents”). As of their respective filing dates, or in the case
of the Form SB-2 registration statement, its effective time, none of the
documents (including all exhibits and schedules thereto and documents
incorporated by reference therein) contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, and the Parent SEC Documents
complied when filed, or in the case of registration statements, as of its
effective time, in all material respects with the then applicable requirements
of the Securities Act or the Securities Exchange Act, as the case may be, and
the rules and regulations promulgated by the SEC thereunder. To the knowledge of
Parent and the Parent Indemnifying Person, there is no Person required to file a
Schedule 13D or Form 3 by virtue of having beneficial ownership of more than 5%
of Parent Common Stock who has not made such a filing, and the information
contained in all filed Form 3 and Schedule 13D is true and correct in all
material respects.

          4.22 Closing Cash Statement. The Closing Cash Statement delivered by
Parent pursuant to Section 6.15 will state the amount of Parent’s cash and cash
equivalents (within the meanings of such terms under GAAP) on the Closing Date,
which shall not be less than One Million(US$ 1,000,000) United States Dollars.

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          4.23 Subsidiaries. The Parent does not have any Subsidiaries and does
not otherwise own any shares of capital stock or any interest in (or any
interest convertible, exchangeable or exercisable for any such interest), or
control, directly or indirectly, any other corporation, partnership,
association, joint venture or other business entity. The Parent has not agreed
and is not obligated to make any future investment in or capital contribution to
any Person.

ARTICLE 5: CONDUCT PRIOR TO THE EFFECTIVE TIME

          5.1 Conduct of Business. During the period from the date of this
Agreement and continuing until the earlier to occur of the termination of this
Agreement pursuant to Article 9 hereof and the Effective Time, each of the
Parent and the Company agree (unless such party is required to take such action
pursuant to this Agreement or such other party shall give its prior consent in
writing), subject to the prohibitions set forth in this Section 5.1 and in
Section 5.2, to carry on its business in the usual, regular and ordinary course
consistent with past practice, to pay its Liabilities, Taxes and other
obligations consistent with its past practices (and in any event when due), and,
to the extent consistent with such business, to preserve intact its present
business organization, keep available the services of its present officers and
key employees and preserve its relationships with customers, suppliers,
distributors, licensees, independent contractors and other Persons having
business dealings with it, all with the express purpose and intent of preserving
unimpaired its goodwill and ongoing businesses at the Effective Time. Except as
expressly contemplated by this Agreement, none of the parties shall, without the
prior written consent of such other party, take or agree in writing or otherwise
to take, any action that would result in the occurrence of any of the changes
described in Section 3.10 or Section 4.9 or any other action that would make any
of its representations or warranties contained in this Agreement untrue or
incorrect in any material respect (individually or in the aggregate) or prevent
such party from performing or cause it not to perform its agreements and
covenants hereunder or cause any condition to any other party’s closing
obligations in Article 6 not to be satisfied. Without limiting the generality of
the foregoing, during the period from the date of this Agreement until the
earlier to occur of the termination of this Agreement pursuant to Article 9
hereof, or the Effective Time, the respective party or parties shall not, except
as set forth in such party’s respective Disclosure Schedule, cause or permit any
of the following which is not within the scope of the operations of such party’s
ordinary course of business consistent with past practice, without the prior
written consent of the respective other party:

  (a)

Stock Option Plans: accelerate, amend or change the period of exercisability or
vesting of Options or other rights granted under its stock plans or otherwise,
authorize cash payments in exchange for any Options or other rights granted
under any of such plans, grant any additional Options or waive any repurchase
rights with respect to any Restricted Stock;

        (b)

Intellectual Property: (i) sell, license or transfer to any person or entity any
rights to any Company Intellectual Property or enter into any Contract with
respect to any Company Intellectual Property with any person or entity;
provided, that the Company may enter into non-exclusive licenses of Company
Intellectual Property

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with licensees (A) in the ordinary course of the Company’s business consistent
with past practice and (B) outside of the ordinary course of the Company’s
business consistent with past practice with the prior written consent of Parent,
which consent shall not be unreasonably withheld or delayed), (ii) buy or
license any Intellectual Property or enter into any agreement with respect to
the Intellectual Property of any person or entity, other than with respect to
off-the- shelf software pursuant to “shrink wrap” or “click wrap” license
agreements, (iii) enter into any agreement with respect to the development of
any Intellectual Property with a third party, or (iv) change pricing or
royalties charged by the Company to its customers or licensees, or agree to any
change in the pricing or royalties set or charged by persons who have licensed
Intellectual Property to the Company;

        (c)

Product and Technology Rights: enter into or amend any Contract, commitment or
transaction pursuant to which any other party is granted marketing,
distribution, development or other similar rights of any type or scope with
respect to any of products or technology of the Company;

        (d)

Contracts: amend or otherwise modify (or agree to do so), or violate the terms
of, any of the Contracts set forth or described in the respective Disclosure
Schedule;

        (e)

Capital Stock: declare, set aside, or pay any dividends on or make any other
distributions (whether in cash, stock or property) in respect of any Capital
Stock, or split, combine or reclassify any Capital Stock or issue or authorize
the issuance of any other securities in respect of, in lieu of or in
substitution for shares of Capital Stock, or repurchase, redeem or otherwise
acquire, directly or indirectly, any shares of Capital Stock (or options,
warrants or other rights exercisable therefor);

        (f)

Issuances of Capital Stock: issue, grant, deliver or sell or authorize or
propose the issuance, grant, delivery or sale of, or purchase or propose the
purchase of, any shares of Capital Stock or any securities convertible into, or
subscriptions, rights, warrants or Options to acquire, or other agreements or
commitments of any character obligating it to issue or purchase any such shares
or other convertible securities, other than pursuant to or in support of this
Agreement;

        (g)

Amendments to Articles: cause or permit any amendments to such party’s articles
of incorporation or bylaws;

        (h)

Dispositions: sell, lease, license or otherwise dispose of or encumber any
Assets or Property, except for Assets or Property that are not Company
Intellectual Property in the ordinary course of business consistent with past
practice; provided, that the Company may enter into non-exclusive licenses of
Company Intellectual Property with licensees (A) in the ordinary course of the
Company’s business consistent with past practice and (B) outside of the ordinary
course of the Company’s business consistent with past practice with the prior
written consent of Parent, which consent shall not be unreasonably withheld or
delayed;

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  (i)

Indebtedness: incur any indebtedness for borrowed money or guarantee any such
indebtedness, issue or sell any debt securities or options, warrants, calls or
other rights to acquire any debt securities or guarantee any debt securities of
others, enter into any “keep well” or other agreement to maintain any financial
statement condition, or enter into any arrangement having the economic effect of
any of the foregoing other than in connection with the financing of ordinary
course trade payables and capital equipment leases consistent with past practice
and other than the Bridge Loan;

        (j)

Loans: grant any loans to others or purchase debt securities of others or amend
the terms of any outstanding loan agreement, other than the Bridge Loan;

        (k)

Payment of Obligations: pay, discharge or satisfy any claim or Liability arising
other than in the ordinary course of business, other than the payment, discharge
or satisfaction of Liabilities reflected or reserved against in such respective
party’s Financials or incurred since the date of the Current Balance Sheet in
the ordinary course of business and reasonable expenses incurred in connection
with the transactions contemplated by this Agreement;

        (l)

Expenditures: make any expenditures or enter into any commitment or transaction
exceeding $25,000 individually or $50,000 in the aggregate as to the Company and
$2,500 individually or $5,000 in the aggregate as to the Parent;

(m) Insurance: reduce the amount of any insurance coverage provided by existing
insurance policies;

  (n)

Employees: encourage any Company Employees to resign from the Company, other
than Non-Continuing Employees;

        (o)

Severance Arrangements: grant or increase or modify in favor of any Employee any
severance or termination pay to any Employee except payments made pursuant to
standard written agreements or plans outstanding on the date hereof and
disclosed in the respective party’s Disclosure Schedule;

        (p)

Employee Contracts: enter into or amend any Contract with any officer, director
or employee;

        (q)

Employee Plans: adopt or amend any Employee Plan, enter into any employment
Contract, pay or agree to pay any special bonus or special remuneration to any
director, officer or Employee, or increase the salaries, wage rates, or other
compensation of its Employees except payments made pursuant to standard written
agreements in place on the date hereof and disclosed in the respective party’s
Disclosure Schedule;

        (r)

Litigation: commence any litigation (other than a lawsuit for breach of this
Agreement);

        (s)

Taxes: make or change any material election in respect of Taxes, adopt or change
any accounting method in respect of Taxes, enter into any closing agreement,
settle or compromise any claim or assessment in respect of Taxes, or consent to

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any extension or waiver of the limitation period applicable to any claim or
assessment in respect of Taxes;

        (t)

Acquisitions: acquire or agree to acquire by merging or consolidating with, or
by purchasing any assets or equity securities of, or by any other manner, any
business or any corporation, partnership, association or other business
organization or division thereof, or otherwise acquire or agree to acquire any
assets which are material, individually or in the aggregate, to the respective
party’s business;

        (u)

Revaluation: revalue any of its assets, including, without limitation, writing
down the value of inventory or writing off notes or accounts receivable; or

        (v)

Other: take or agree in writing or otherwise to take, any of the actions
described in Section 5.1(a) through Section 5.1(s) above, or any other action
that would prevent the respective party from performing, or cause the respective
party not to perform, its covenants and agreements hereunder.

ARTICLE 6: ADDITIONAL AGREEMENTS

          6.1 Restricted Shares; Shareholders’ Representations Regarding
Securities Law Matters.

  (a)

The parties hereto acknowledge and agree that the shares of Parent Common Stock
issuable to the Holders pursuant to Section 1.1 hereof shall constitute
“restricted securities” within the meaning of Rule 144 of the Securities Act and
will be issued in a private placement transaction in compliance with Section
4(2) of the Securities Act and Regulation D promulgated thereunder. The
certificates evidencing the shares of Parent Common Stock to be issued in the
Acquisition shall bear appropriate legends to identify such privately placed
shares as being “restricted securities” under the Securities Act, to comply with
state and federal securities laws and, if applicable, to notice the restrictions
on transfer of such shares.

          (b)

Each Holder, by virtue of the Acquisition, shall be bound by the following
provisions regarding the Parent Common Stock included in the Acquisition Stock
Consideration received at the Closing hereunder:

          (i)

Such shareholder will not offer, sell, transfer or otherwise dispose of any
shares of Parent Common Stock unless (A) such sale, transfer or other
disposition is within the limitations of and in compliance with the Securities
Act and the rules and regulations thereunder, including without limitation Rule
144 promulgated by the SEC under the Securities Act, and the shareholder
furnishes Parent with reasonable proof of compliance with such Rule, (B) in the
opinion of counsel, reasonably satisfactory to Parent and its counsel, some
other exemption from registration under the Securities Act is available with
respect to any such proposed sale, transfer, or other disposition of Parent
Common Stock, or (C) the offer and sale of Parent Common Stock is registered
under the Securities Act. Notwithstanding the

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foregoing, no such registration statement or opinion of counsel shall be
necessary for the following transfers for no consideration (1) a transfer by a
shareholder that is a partnership or limited liability company to a partner of
such partnership or a member of such limited liability company or a retired
partner of such partnership who retires after the date hereof or a retired
member of such limited liability company who retires after the date hereof, or
to the estate of any such partner, retired partner, member or retired member;
(2) a transfer by a corporation to its subsidiaries or stock holders; or (3) the
transfer by gift, will or intestate succession by any shareholder or any partner
or member (current or retired) of a shareholder to his or her spouse or to the
siblings, lineal descendants or ancestors of such shareholder, partner or member
(current or retired) or his or her spouse, if the transferee agrees in writing
to be subject to the terms hereof.

        (ii)

Provided that each officer and director of Parent who owns stock or options to
purchase stock of Parent and all one-percent security holders and all other
persons with registration rights also agrees to such restrictions, each Holder
agrees that, if, in connection with a public offering of Parent’s securities
completed within twelve (12) months from Closing, Parent or the underwriters
managing the offering so request, the Holder shall not sell, make any short sale
of, loan, grant any option for the purchase of, or otherwise dispose of any
securities of Parent (other than those included in the registration) without the
prior written consent of Parent or such underwriters, as the case may be, for 90
days from the effective date of such registration in the case of any other
public offering of the Parent’s securities. This Section 5.2(b)(iii) shall be
binding on all transferees or assignees of Parent Common Stock issued to each
Company Shareholder in the Acquisition.

          6.2 Company Financial Statements. The Company shall, at its sole cost
and expense, deliver to Parent, at the earliest possible date, audited financial
statements for the Company’s fiscal year ended December 31, 2006 and 2005 (the
“Company Year End Financials”), and unaudited quarterly financial period for the
quarter ended June 30, 2007 (the “Company Quarterly Statements”) which shall be
in form suitable for filing with the SEC and for which the auditors for the
Company shall have consented to the inclusion of the SEC filings of Parent.

          6.3 Access to Information. Each party shall afford the other party and
its accountants, counsel and other representatives, reasonable access during the
period from the date hereof and prior to the earlier of (a) the Effective Time
and (b) the termination of this Agreement pursuant to Article 9 hereof, to (i)
all of the party’s properties, books, contracts, commitments and records, (ii)
all other information concerning the business, properties and personnel (subject
to restrictions imposed by applicable law) of a party as such other party may
reasonably request, and (iii) all Employees. Each party agrees to provide to the
other and its accountants, counsel and other representatives copies of internal
financial statements (including Tax returns and supporting documentation)
promptly upon reasonable request. No information or knowledge obtained in any

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investigation pursuant to this Section 6.3 shall affect or be deemed to modify
any representation or warranty contained herein or the conditions to the
obligations of the parties to consummate the Acquisition in accordance with the
terms and provisions hereof.

          6.4 Confidentiality. Except as required by law, each party and its
representatives will hold in strict confidence all documents and information
concerning the other party furnished in connection with the transactions
contemplated by this Agreement (except to the extent that such information can
be shown to have been (a) in the public domain through no action by the party in
violation of this Section 6.4, (b) in the party's possession at the time of
disclosure and not acquired by the party directly or indirectly from the other
party on a confidential basis or (c) disclosed by the other party to others on
an unrestricted, non-confidential basis) and will not, without the consent of
the other party, (i) release or disclose any such documents or information to
any other person or (ii) use or permit others to use such documents or
information except in connection with this Agreement and the transactions
contemplated hereby. In the event of the termination of this Agreement, each
party shall return to the other parties all documents, work papers and other
material so obtained by it, or on its behalf, and all copies, digests, abstracts
or other materials relating thereto, whether so obtained before or after the
execution hereof, and will comply with the terms of the confidentiality
provisions set forth herein.

          6.5 Expenses: Whether or not the Acquisition is consummated, all fees
and expenses incurred in connection with the Acquisition including, without
limitation, all legal, accounting, financial advisory, consulting and all other
fees and expenses of third parties (“Third Party Expenses”) incurred by a party
in connection with the negotiation and effectuation of the terms and conditions
of this Agreement and the transactions contemplated hereby, shall be the
obligation of the respective party incurring such fees and expenses. The fees of
Clark Wilson LLP, counsel to the Parent, incurred in connection the negotiation
and effectuation of the terms and conditions of this Agreement and the
transactions contemplated hereby, shall be paid by the Parent at the Closing
(which payment shall not exceed for legal services shall not exceed $50,000
without the prior approval of the Company).

          6.6 Public Disclosure. None of the parties nor any officer, director,
employee or agent of such party (and each party shall cause each of them to be
aware of and comply with this prohibition) shall issue any statement or
communication to any third party (other than their respective representatives or
agents) regarding the subject matter of this Agreement or the transactions
contemplated hereby, including, if applicable, the termination of this Agreement
and the reasons therefor, without the consent of the other party, which consent
shall not be unreasonably withheld; provided, however, that Parent shall make a
timely filing with the SEC of a Special Report on Form 8-K reporting the
execution and delivery of this Agreement, and filing this Agreement and all
required exhibits.

     6.7 Consents. The Company shall use commercially reasonable efforts to
obtain the consents, waivers and Approvals under any of the Contracts to which
the Company is a party deemed appropriate or necessary by any party in
connection with the Acquisition, including all consents, waivers and Approvals
set forth in the Company Disclosure

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Schedule, so as to preserve all rights of, and benefits to, the Company
thereunder from and after the Effective Time.

          6.8 Reasonable Efforts.

  (a)

Subject to the terms and conditions provided in this Agreement, each of the
parties hereto shall use commercially reasonable efforts to take promptly, or
cause to be taken, all actions, and to do promptly, or cause to be done, all
things necessary, proper or advisable under applicable Legal Requirements to
consummate and make effective the transactions contemplated hereby, to obtain
all necessary waivers, consents and approvals and to effect all necessary
registrations and filings and to remove any injunctions or other impediments or
delays, legal or otherwise, in order to consummate and make effective the
transactions contemplated by this Agreement for the purpose of securing to the
parties hereto the benefits contemplated by this Agreement, including, without
limitation, the following: (a) the taking of all acts necessary to cause the
conditions precedent set forth in Section 7.3 to be satisfied (other than
obtaining consents, approvals or waivers which are governed by Section 6.7), (b)
the defending of any suits, claims, actions, investigations or proceedings,
whether judicial or administrative, challenging this Agreement or the
consummation of the transactions contemplated hereby, including seeking to have
any stay or temporary restraining order entered by any court or other
Governmental Authority vacated or reversed and (c) the execution or delivery of
any additional instruments necessary to consummate the transactions contemplated
by, and to fully carry out the purposes of, this Agreement.

        (b)

Subject to the terms and conditions provided in this Agreement, each of Parent
and the Company will take all reasonable actions necessary to comply promptly
with all legal requirements which may be imposed on such party with respect to
the Acquisition and will promptly cooperate with and furnish information to any
other party hereto in connection with any such requirements imposed upon such
other party in connection with the Acquisition. Each party will take all
reasonable actions to obtain (and will cooperate with the other parties in
obtaining) any consent, authorization, order or approval of or any registration,
declaration or filing with, or an exemption by, any Governmental Authority
required to be obtained or made by such party or its subsidiaries in connection
with the Acquisition or the taking of any action contemplated thereby or by this
Agreement; provided, however, that no party shall be required to agree to any
divestiture by Parent or the Company or any of Parent’s subsidiaries or
affiliates of shares of capital stock or of any business, Assets or Property of
Parent or its subsidiaries or affiliates or of the Company or its affiliates or
the imposition of any material limitation on the ability of any of them to
conduct their businesses or to own or exercise control of such assets,
properties and stock.

          6.9 Notification of Certain Matters. The Company shall give prompt
notice to Parent, and Parent shall give prompt notice to the Company, of (a) the
occurrence or non-occurrence of any event, the occurrence or non-occurrence of
which is reasonably likely to cause any representation or warranty of the
Company or Parent, respectively,

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contained in this Agreement to be untrue or inaccurate at or prior to the
Effective Time, and (b) any failure of the Company or Parent, as the case may
be, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder; provided, however, that the delivery
of any notice pursuant to this Section 6.9 shall not limit or otherwise affect
any remedies available to the Parent or the Company. No disclosure by the
Company pursuant to this Section 6.9 shall be deemed to amend or supplement the
Company Disclosure Schedule, or prevent or cure and misrepresentations, breach
of warranty or breach of covenant. No disclosure by Parent pursuant to this
Section 6.9 shall be deemed to amend or supplement Parent Disclosure Schedule,
or prevent or cure and misrepresentations, breach of warranty or breach of
covenant.

          6.10 Additional Documents and Further Assurances; Cooperation. Each
party hereto, at the reasonable request of the other party hereto, shall execute
and deliver such other instruments and do and perform such other acts and things
(including all action reasonably necessary to seek and obtain any and all
consents, waivers and Approvals of any Governmental Authority or Person required
in connection with the Acquisition) as may be necessary or desirable for
effecting completely the consummation of the transactions contemplated by this
Agreement. Each party agrees to use commercially reasonable efforts to cause the
conditions set forth in Article 7 to be satisfied, where the satisfaction of
such conditions depends on action or forbearance from action by such party, as
soon as practicable following the date hereof.

          6.11 Private Placements. On or before the Closing, Parent will
complete one or more private placements raising an aggregate of One Million (US
$1,000,000) United States Dollars (collectively, the “Private Placement”). In
the Private Placement the Parent shall sell shares of Parent Common Stock at a
purchase price of $.50 per share. The subscribers to the Private Placement will
have registration rights as set out in the Registration Rights Agreement
attached as Exhibit C this Agreement.

          6.12 Bridge Loan. Within two business days after the execution and
delivery of this Agreement, Parent shall provide the Company with a bridge loan
of Nine Hundred Seventy Five Thousand (US$ 975,000) United States Dollars (the
“Bridge Loan”). The parties acknowledge the Bridge Loan forms part of the One
Million (US$ 1,000,000) Cash requirement of Parent pursuant to this Agreement
and will be eliminated as an intercompany transaction as of the Closing.

          6.13 Investor Representation Statement. The Company shall use its
reasonable best efforts to secure, prior to the Closing, from each Holder an
executed Holder Certificate.

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          6.14 Closing Cash Statements.

          (a)      The Company shall prepare and deliver to the Parent, at least
one (1) Business Day prior to the Closing, a statement (the “Closing Cash
Statement”), reasonably acceptable to the Parent, which states the amount of
cash and cash equivalents (within the meanings of such terms under GAAP) of the
Company as of that date, which shall not be less than Two Million (US$2,000,000)
United States Dollars.

          (b)      The Parent shall prepare and deliver to the Company, at least
one (1) Business Day prior to the Closing, a statement (the “Closing Cash
Statement”), reasonably acceptable to the Company, which states that on the
Closing Date the amount of cash and cash equivalents (within the meanings of
such terms under GAAP) of the Parent shall be not less than the difference
between One Million (US$ 1,000,000) United States Dollars and the sum of (a)
principal and accrued interest on the Bridge Loan and (b) up to $50,000 of its
legal fees payable pursuant to Section 6.5(f), net of provision for payment of
Parent’s Indebtedness and accrued liabilities (other than those under Section
6.5(f)) .

          6.15 Releases. Each shareholder of the Company’s controlling
shareholder shall execute and deliver to the Company a release in the form
attached hereto as Exhibit B.

ARTICLE 7: CONDITIONS TO THE ACQUISITION

          7.1 Conditions to Obligations of Each Party to Effect the Acquisition.
The respective obligations of the Company and Parent to effect the Acquisition
shall be subject to the satisfaction at or prior to the Closing of the following
conditions:

  (a)

No Order. No Governmental Authority shall have enacted, issued, promulgated,
enforced or entered any statute, rule, regulation, executive order, decree,
injunction or other order (whether temporary, preliminary or permanent) which is
in effect and which has the effect of making the Acquisition illegal or
otherwise prohibiting consummation of the Acquisition.

        (b)

No Injunctions or Regulatory Restraints; Illegality. No temporary restraining
order, preliminary or permanent injunction or other Order issued by any court of
competent jurisdiction or Governmental Authority or other legal or regulatory
restraint or prohibition preventing the consummation of the Acquisition shall be
in effect; nor shall any proceeding brought by any Governmental Authority,
seeking any of the foregoing, be pending.

        (c)

Resignation and Appointment of Directors. Parent shall have received a written
resignation from the current director of Parent and an executed resolution
appointing nominees of the Company to the Board of Directors of Parent effective
as of the Effective Time.

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  (d)

No Material Adverse Change. There shall not have occurred any event, series of
events or condition of any character that, individually or in the aggregate, has
had or is reasonably likely to have a Material Adverse Effect on the Parent or
the Company since the date of this Agreement.

        (e)

Litigation. There shall be no action, suit, claim, or proceeding of any nature
pending, or overtly threatened, against Parent or the Company, their respective
Assets and Properties or any of their respective officers or directors arising
out of, or in any way connected with, the Acquisition or the other transactions
contemplated by the terms of this Agreement.

          7.2 Additional Conditions to Obligations of the Company. The
obligations of the Company to consummate the Acquisition and the transactions
contemplated by this Agreement shall be subject to the satisfaction at or prior
to the Closing of each of the following conditions, any of which may be waived,
in writing, exclusively by the Company:

  (a)

Representations and Warranties. The representations and warranties of Parent
contained in this Agreement that are qualified by “materiality” or “material
adverse change” or contain other materiality exceptions or qualifications shall
be accurate in all respects, and the representations and warranties of Parent
contained in this Agreement that are not so qualified shall be accurate in all
material respects, in each case as of the date of this Agreement and as of the
Closing Date (other than representations and warranties which by their express
terms are made solely as of a specified earlier date, which shall be accurate to
such extent as of such specified earlier date). Company shall have received a
certificate to such effect signed on behalf of Parent by a duly authorized
officer of Parent.

        (b)

Performance. Parent shall have performed and complied in all material respects
with each agreement, covenant and obligation required by this Agreement to be so
performed or complied with by it at or before the Closing. The Company shall
have received a certificate to such effect signed on behalf of Parent by a duly
authorized officer of Parent.

        (c)

Governmental Approval. Approvals from any Governmental Authority (if any) deemed
reasonably appropriate or necessary by the Company shall have been timely
obtained.

        (d)

Legal Opinion. The Company shall have received a legal opinion from Clark Wilson
LLP legal counsel to Parent, in form and substance reasonably satisfactory to
it.

        (e)

Certificate of Good Standing. The Company shall have received a certificate of
good standing of Parent from the Secretary of State of the State of Nevada dated
within a reasonable period prior to Closing.

        (f)

Anti-Dilution and Participation Waivers. Any participation rights and anti-
dilution protection benefiting Parent’s shareholders that are applicable to or
triggered by the Acquisition shall have been effectively waived.

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  (g)

Private Placement. Parent shall have closed its Private Placement of Parent
Common Stock.

        (h)

Closing Cash Statement. The Closing Cash Statement provided by Parent to the
Company will confirm Parent has in cash or cash equivalents on Closing not less
than the difference between One Million (US$ 1,000,000,000) United States
Dollars and the sum of (i) the principal and accrued interest on the Bridge Loan
and (ii) up to $50,000 of its legal fees payable under Section 6.5(f), net of
provision for payment of Parent’s Indebtedness and Parent’s accrued liabilities
(other than its legal fees under Section 6.5(f)).

        (i)

SEC Filings of Parent. Parent shall have filed with the SEC all forms,
statements, reports and documents (including all exhibits, amendments and
supplements thereto) required to be filed by it pursuant to the Exchange Act.

        (j)

Indebtedness. Parent shall have no Indebtedness.

        (k)

No Material Adverse Change. There shall not have occurred any event, series of
events or condition of any character that, individually or in the aggregate, has
had or is reasonably likely to have a Material Adverse Effect on Parent since
the date of this Agreement.

        (l)

Purchaser Representative. Each Company Shareholder that is not an “accredited
investor” (as defined in Regulation 501 under the Securities Act) shall have
acknowledged in writing the identity of their “purchaser representative” within
the meaning of Regulation 501(h) under the Securities Act (the “Purchaser
Representative”) and their reliance on such Purchaser Representative to satisfy
the requirements of Regulation 506(b)(2)(ii) under the Securities Act.

(m)

Financial Statements. The Parent shall have delivered to Company the Parent
Financial Statements as required by Company pursuant to the terms of Section
6.3.

  (n)

Registration Rights Agreement. Parent and the Private Placement subscribers
shall have executed and delivered the Registration Rights Agreement attached
hereto as Exhibit C.

        (o)

Directors. The individuals designated by the Company shall have been elected the
directors of Parent, each to hold office in accordance with the Certificate of
Incorporation and Bylaws thereof.

        (p)

Parent Options. All Parent Options, including without limitation, all of
Parent’s Common Stock purchase warrants, outstanding as of the date hereof shall
have ceased to be outstanding.

          7.3 Additional Conditions to the Obligations of Parent. The
obligations of Parent to consummate the Acquisition and the transaction
contemplated by this Agreement shall be subject to the satisfaction at or prior
to the Closing of each of the following conditions, any of which may be waived,
in writing, exclusively by Parent:

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  (a)

Representations and Warranties. The representations and warranties of the
Company contained in this Agreement that are qualified by “materiality” or
“material adverse change” or contain other materiality exceptions or
qualifications shall be accurate in all respects, and the representations and
warranties of the Company contained in this Agreement that are not so qualified
shall be accurate in all material respects, in each case as of the date of this
Agreement and as of the Closing Date (other than representations and warranties
which by their express terms are made solely as of a specified earlier date,
which shall be accurate to such extent as of such specified earlier date).
Parent shall have received a certificate to such effect signed on behalf of
Company by a duly authorized officer of Company.

        (b)

Performance. Company shall have performed and complied in all material respects
with each agreement, covenant and obligation required by this Agreement to be so
performed or complied with by it at or before the Closing. Parent shall have
received a certificate to such effect signed on behalf of Company by a duly
authorized officer of Company.

        (c)

Indebtedness. Except as set forth in its Disclosure Schedule, the Company shall
have no additional material Indebtedness.

        (d)

Governmental Approval. Approvals from any Governmental Authority (if any) deemed
reasonably appropriate or necessary by Parent shall have been timely obtained.

        (e)

Legal Opinion. Parent shall have received a legal opinion from Hofheimer Gartlir
& Gross LLP, legal counsel to the Company, in form and substance reasonably
satisfactory to it.

        (f)

Certificate of Good Standing. Parent shall have received a certificate of good
standing of the Company from the Secretary of State of the State of Delaware
dated within a reasonable period prior to Closing.

        (g)

No Material Adverse Change. There shall not have occurred any event, series of
events or condition of any character that, individually or in the aggregate, has
had or is reasonably likely to have a Material Adverse Effect on Company since
the date of this Agreement.

        (h)

Releases. Each of the individuals listed on Sec. 3.3 (b) of the Company
Disclosure Schedule shall have executed and delivered to the Company a release
in the form attached hereto as Exhibit B.

        (i)

Closing Cash Statement. The Closing Cash Statement provided by Company to Parent
to confirm whether or not the Company has more than Two Million (US$2,000,000)
United States Dollars cash balance on Closing.

        (j)

Piggyback Registration Rights Agreement. Parent and certain of the Holders shall
have executed and delivered the Piggyback Registration Rights Agreement attached
hereto as Exhibit D.

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ARTICLE 8: SURVIVAL OF REPRESENTATIONS AND WARRANTIES

          8.1 Survival of Representations, Warranties and Covenants. The
representations and warranties of the Company and the Parent and their
respective Indemnifying Officers contained in this Agreement, or in any
certificate or other instrument delivered pursuant to this Agreement, shall
survive the Acquisition and continue until 5:00 p.m., Eastern Standard Time, on
the date which is the nine months anniversary of the Closing Date (the
“Expiration Date”); provided, however, that (i) the representations and
warranties of the Holders, of the Parent set forth in Sections 4.5, 4.7, 4.9(f),
4.20 and 4.21 and of the Company set forth in Sections 3.3, 3.8 and 3.11 of this
Agreement shall survive until the expiration of the applicable statutes of
limitation, and (ii) only the relevant specific representations and warranties
of the Parent and the Company contained in this Agreement, or in any certificate
or other instrument delivered pursuant to this Agreement, shall not terminate
with respect to any claims specified in any Claim Notice or Indemnity Notice
delivered to the Shareholder Representative prior to the Expiration Date until
such claims are finally resolved pursuant to the terms of this Article 8, and
(iii) in the case of any knowing, intentional or fraudulent breaches of the
representations and warranties of the Parent or the Company contained in this
Agreement, or in any certificate or other instrument delivered pursuant to this
Agreement (each a “Fraudulent Breach” and collectively “Fraudulent Breaches”),
the representations and/or warranties that are the subject of such knowing,
intentional or fraudulent breaches shall not terminate until the expiration of
the applicable statute of limitations.

          8.2 Indemnification. The parties hereto shall indemnify each other as
set forth below:

  (a)

The Holders and the Company Indemnifying Officer shall indemnify Parent and its
officers, directors, employees, agents and Affiliates (the “Parent Indemnified
Parties") in respect of, and hold each of them harmless from and against, any
and all Losses suffered, incurred or sustained by any of them or to which any of
them becomes subject, resulting from, arising out of or relating to any
misrepresentation, breach of warranty or nonfulfillment of or failure to perform
any covenant or agreement on the part of such Holders or the Company
Indemnifying Officer, respectively, contained in this Agreement.

        (b)

Parent and the Parent Indemnifying Officer jointly and severally shall indemnify
the Holders, and their respective officers, directors, employees, agents and
Affiliates (the “Company Indemnified Parties" and, together with the Parent
Indemnified Parties, the “Indemnified Parties”) in respect of, and hold each of
them harmless from and against, any and all Losses suffered, incurred or
sustained by any of them or to which any of them becomes subject, resulting
from, arising out of or relating to any misrepresentation, breach of warranty or
nonfulfillment of or failure to perform any covenant or agreement on the part of
Parent or the Parent Indemnifying Officer contained in this Agreement.

        (c)

No amounts of indemnity shall be payable as a result of any claim arising under
Section 8.2 in respect of a misrepresentation or breach of warranty unless and
until the Indemnified Party thereunder have suffered, incurred, sustained or

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become subject to Losses referred to in such Section in excess of US$100,000 in
the aggregate, in which event the Indemnified Party shall be entitled to seek
indemnity from the Indemnifying Party for the full amount of such Losses.

        (d)

No amounts of indemnity shall be payable as a result of any claim arising under
Section 8.2(a) in respect of a misrepresentation or breach of warranty by the
Holders and Company Indemnifying Officer if the aggregate amount of indemnity
that has been duly paid in full in respect of all claims under Section 10.2(a)
equals 10% of the Acquisition Stock Consideration issued by Parent to the
Holders pursuant to Section 1.6 of this Agreement.

          8.3. Method of Asserting Claims. All claims for indemnification by any
Indemnified Party under Section 8.2 will be asserted and resolved as follows:

  (a)

In the event any claim or demand in respect of which an Indemnifying Party might
seek indemnity under Section 8.2 is asserted against or sought to be collected
from such Indemnified Party by a Person other than the Company Shareholders or
the Indemnifying Officer, Parent or any Affiliate of any Company Shareholders,
Indemnifying Officer or Parent (a "Third Party Claim"), the Indemnified Party
shall deliver a Claim Notice with reasonable promptness to the Indemnifying
Party. If the Indemnified Party fails to provide the Claim Notice with
reasonable promptness after the Indemnified Party receives notice of such Third
Party Claim, the Indemnifying Party will not be obligated to indemnify the
Indemnified Party with respect to such Third Party Claim to the extent that the
Indemnifying Party's ability to defend has been irreparably prejudiced by such
failure of the Indemnified Party. The Indemnifying Party will notify the
Indemnified Party as soon as practicable within the Dispute Period whether the
Indemnifying Party disputes its liability to the Indemnified Party under Section
7.2 and whether the Indemnifying Party desires, at its sole cost and expense, to
defend the Indemnified Party against such Third Party Claim.

        (b)

In the event any Indemnified Party should have a claim under Section 8.2 against
any Indemnifying Party that does not involve a Third Party Claim, the
Indemnified Party shall deliver an Indemnity Notice with reasonable promptness
to the Indemnifying Party. The failure by any Indemnified Party to give the
Indemnity Notice shall not impair such party's rights hereunder except to the
extent that an Indemnifying Party demonstrates that it has been irreparably
prejudiced thereby. If the Indemnifying Party notifies the Indemnified Party
that it does not dispute the claim described in such Indemnity Notice or fails
to notify the Indemnified Party within the Dispute Period whether the
Indemnifying Party disputes the claim described in such Indemnity Notice, the
Loss in the amount specified in the Indemnity Notice will be conclusively deemed
a liability of the Indemnifying Party under Section 8.2 and the Indemnifying
Party shall pay the amount of such Loss to the Indemnified Party on demand. If
the Indemnifying Party has timely disputed its liability with respect to such
claim, the Indemnifying Party and the Indemnified Party will proceed in good
faith to negotiate a resolution of such dispute, and if not resolved through
negotiations within the

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Resolution Period, such dispute shall be resolved by arbitration in accordance
with paragraph (c) of this Section 8.3.

        (c)

Any dispute submitted to arbitration pursuant to this Section 8.3 shall be
finally and conclusively determined by the decision of a board of arbitration
consisting of three (3) Shareholders (hereinafter sometimes called the "Board of
Arbitration") selected as hereinafter provided. Each of the Indemnified Party
and the Indemnifying Party shall select one (1) member and the third member
shall be selected by mutual agreement of the other Shareholders, or if the other
Shareholders fail to reach agreement on a third member within twenty (20) days
after their selection, such third member shall thereafter be selected by the
American Arbitration Association upon application made to it for such purpose by
the Indemnified Party. The Board of Arbitration shall meet in New York or such
other place as a majority of the Shareholders of the Board of Arbitration
determines more appropriate, and shall reach and render a decision in writing
(concurred in by a majority of the Shareholders of the Board of Arbitration)
with respect to the amount, if any, which the Indemnifying Party is required to
pay to the Indemnified Party in respect of a claim filed by the Indemnified
Party. In connection with rendering its decisions, the Board of Arbitration
shall adopt and follow such rules and procedures as a majority of the
Shareholders of the Board of Arbitration deems necessary or appropriate. To the
extent practical, decisions of the Board of Arbitration shall be rendered no
more than thirty (30) calendar days following commencement of proceedings with
respect thereto. The Board of Arbitration shall cause its written decision to be
delivered to the Indemnified Party and the Indemnifying Party. Any decision made
by the Board of Arbitration (either prior to or after the expiration of such
thirty (30) calendar day period) shall be final, binding and conclusive on the
Indemnified Party and the Indemnifying Party and entitled to be enforced to the
fullest extent permitted by law and entered in any court of competent
jurisdiction. Each party to any arbitration shall bear its own expense in
relation thereto, including but not limited to such party's attorneys' fees, if
any, and the expenses and fees of the member of the Board of Arbitration
appointed by such party, provided, however, that the expenses and fees of the
third member of the Board of Arbitration and any other expenses of the Board of
Arbitration not capable of being attributed to any one member shall be borne in
equal parts by the Indemnifying Party and the Indemnified Party.

          8.4 Exclusive Remedy. Each party’s rights of indemnification contained
in this Article 8 shall, from and after the Closing Date, be its sole and
exclusive remedy for any Losses in connection with this Agreement and the
transactions contemplated hereby (including Losses in connection with Third
Party Claims), except for Losses arising from representations made with the
knowledge that such representations were false at the time they were made or
fraudulent acts or failures to act.

ARTICLE 9: TERMINATION, AMENDMENT AND WAIVER

          9.1 Termination. Except as provided in Section 9.2, this Agreement may
be terminated and the Acquisition abandoned at any time prior to the Effective
Time:

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  (a)

by mutual written agreement of the Company and Parent;

        (b)

by Parent or the Company by written notice if: (i) there shall be a final
nonappealable order of a federal or state court in effect preventing
consummation of the Acquisition; (ii) there shall be any statute, rule,
regulation or order enacted, promulgated or issued or deemed applicable to the
Acquisition by any Governmental Authority that would make consummation of the
Acquisition illegal; or (iii) the Effective Time has not occurred before 5:00
p.m. Eastern Standard Time on December 31, 2007 (the “Outside Date”); provided,
however, that the right to terminate this Agreement under this Section
9.1(b)(iii) shall not be available to any party whose willful failure to fulfill
any material obligation hereunder has been the cause of, or resulted in, the
failure of the Effective Time to occur on or before the Outside Date, but in
such case the other party must elect to either (A) terminate this Agreement by
the Outside Date (in which case such other party will be entitled to recover
damages from the breaching party for its breach of this Agreement (“Breach
Damages”)) or (B) consummate the Acquisition by no later than two (2) Business
Days after delivery of notice to the breaching party of the breaching party’s
breach, in which case such non-breaching party may, to the extent permitted by
Article 8, recover Breach Damages pursuant to a claim made pursuant to Article 8
of this Agreement.

        (c)

by Parent by written notice if there shall be any action taken, or any Law or
Order enacted, promulgated or issued or deemed applicable to the Acquisition, by
any Governmental Authority, which would: (i) prohibit Parent’s ownership or
operation of all or any portion of the business of the Company, or (ii) compel
Parent or Company to dispose of or hold separate all or any portion of the
Assets and Properties of the Company or Parent as a result of the Acquisition;

        (d)

by Parent by written notice if it is not in material breach of its obligations
under this Agreement and there has been a breach of any representation,
warranty, covenant or agreement of the Company or any Indemnifying Officer
contained in this Agreement such that the conditions set forth in Section 7.3
would not be satisfied and such breach has not been cured within ten calendar
days after written notice thereof to the Company; provided, however, that no
cure period shall be required for a breach which by its nature cannot be cured;
or

        (e)

by the Company by written notice if the Company is not in material breach of its
obligations under this Agreement and there has been a breach of any
representation, warranty, covenant or agreement contained in this Agreement such
that the conditions set forth in Section 7.2 would not be satisfied and such
breach has not been cured within ten calendar days after written notice thereof
to Parent; provided, however, that no cure period shall be required for a breach
which by its nature cannot be cured.

          9.2 Effect of Termination. In the event of a valid termination of this
Agreement as provided in Section 9.1, this Agreement shall forthwith become void
and there shall be no liability or obligation on the part of Parent or the
Company or their respective officers, directors or shareholders or Affiliates or
Associates; provided, however, that each party

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shall remain liable for any breaches of this Agreement prior to its termination;
and provided, further that, the provisions of Sections 6.5, 6.6 and 6.7,
Articles 9 and 10 (including as provided in Section 9.1(b)(iii)) and the
applicable definitions set forth in Article 11 shall remain in full force and
effect and survive any termination of this Agreement.

          9.3 Amendment. This Agreement may be amended by the parties hereto at
any time by execution of an instrument in writing signed on behalf of each of
the parties hereto.

          9.4 Extension; Waiver. At any time prior to the Effective Time, Parent
and the Company may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations of the other party hereto, (b) waive any
inaccuracies in the representations and warranties made to such party contained
herein or in any document delivered pursuant hereto, and (c) waive compliance
with any of the agreements, covenants or conditions for the benefit of such
party contained herein. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party.

ARTICLE 10: MISCELLANEOUS PROVISIONS

          10.1 Notices. All notices, requests and other communications hereunder
must be in writing and will be deemed to have been duly given only if delivered
personally against written receipt, by facsimile transmission against facsimile
confirmation, by electronic mail or mailed by internationally recognized
overnight courier prepaid, to the parties at the following addresses or
facsimile numbers:

  If to the Company CYPHERMETRIX, INC   or the Company 13810 SE Eastgate Way -
Suite 160   Indemnifying Officer: Bellevue, Washington 98005     Attn: James
Linkous, CEO         with a copy to: Hofheimer Gartlir & Gross LLP     530 Fifth
Avenue     New York, New York 10036     Attention: Craig Weiner     Fax No.
(212) 869-4930         If to any Holder: To such Holder at its address listed in
    Section 3.3(b) of the Company’s     Disclosure Schedule.         If to
Parent, Sub, or the Mistral Ventures, Inc.   Parent Indemnifying 809-4438 West
10th Avenue   Officer: Vancouver, British Columbia V6R 4R8     Attention: Kent
Carasquero, CFO

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  with copy to Clark Wilson LLP     800-885 W. Georgia Street     Vancouver,
British Columbia V6C 3H1     Attn: William L. Macdonald

          -All such notices, requests and other communications will (a) if
delivered personally to the address as provided in this Section 10.1, be deemed
given upon delivery, (b) if delivered by facsimile transmission to the facsimile
number as provided for in this Section 10.1, be deemed given upon facsimile
confirmation, (c) if delivered by overnight courier to the address as provided
in this Section 10.1, be deemed given on the earlier of the first Business Day
following the date sent by such overnight courier or upon receipt and (d) if by
electronic mail, when directed to an electronic mail address provided for in
this Section 10.1, be deemed given upon delivery (in each case regardless of
whether such notice, request or other communication is received by any other
Person to whom a copy of such notice is to be delivered pursuant to this Section
10.1) . Any party from time to time may change its address, facsimile number,
email address or other information for the purpose of notices to that party by
giving notice specifying such change to the other party hereto.

          10.2 Interpretation. The words “include,” “includes” and “including”
when used herein shall be deemed in each case to be followed by the words
“without limitation.” The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.

          10.3 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.

          10.4 Entire Agreement; Assignment. This Agreement, the Exhibits
hereto, the Company Disclosure Schedule, the Parent Disclosure Schedule and the
documents and instruments and other agreements among the parties hereto
referenced herein: (i) constitute the entire agreement among the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings both written and oral, among the parties with respect to the
subject matter hereof, (ii) are not intended to confer upon any other person any
rights or remedies hereunder, and (iii) shall not be assigned by operation of
law or otherwise, except that Parent may assign its rights and delegate its
obligations hereunder to its Affiliates as long as Parent remains ultimately
liable for all of Parent’s obligations hereunder.

          10.5 Severability. In the event that any provision of this Agreement
or the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties further

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agree to replace such void or unenforceable provision of this Agreement with a
valid and enforceable provision that will achieve, to the extent possible, the
economic, business and other purposes of such void or unenforceable provision.

          10.6 Other Remedies. Any and all remedies herein expressly conferred
upon a party will be deemed cumulative with and not exclusive of any other
remedy conferred hereby, or by law or equity upon such party, and the exercise
by a party of any one remedy will not preclude the exercise of any other remedy.

           10.7 Governing Law. THIS AGREEMENT AND THE VALIDITY AND
ENFORCEABILITY HEREOF SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO
CONFLICT OF LAWS RULES OR CHOICE OF LAWS RULES THEREOF. EXCEPT AS OTHERWISE
PROVIDED HEREIN, EACH PARTY AGREES THAT ALL LEGAL PROCEEDINGS CONCERNING THE
INTERPRETATIONS, ENFORCEMENT AND DEFENSE OF THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT (WHETHER BROUGHT AGAINST A PARTY HERETO OR ITS RESPECTIVE
AFFILIATES, DIRECTORS, OFFICERS, SHAREHOLDERS, EMPLOYEES OR AGENTS) SHALL BE
COMMENCED IN THE STATE AND FEDERAL COURTS SITTING IN CITY OF NEW YORK, BOROUGH
OF MANHATTAN (THE "NEW YORK COURTS"). EACH PARTY HERETO HEREBY IRREVOCABLY
SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE NEW YORK COURTS FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR WITH ANY
TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN (INCLUDING WITH RESPECT TO
THE ENFORCEMENT OF ANY TERM OF THE AGREEMENT), AND HEREBY IRREVOCABLY WAIVES,
AND AGREES NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS
NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, OR SUCH NEW YORK
COURTS ARE IMPROPER OR INCONVENIENT VENUE FOR SUCH PROCEEDING.

          10.8 Rules of Construction. The parties hereto agree that they have
been represented by counsel during the negotiation and execution of this
Agreement and, therefor, 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.

          10.9 Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY AND ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE ACTIONS OF ANY PARTY HERETO IN NEGOTIATION,
ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF.

          10.10 Disclosure Schedule. In the event of any inconsistency between
the statements in the body of this Agreement and those in the Disclosure
Schedule (other than an exception expressly set forth as such in the Disclosure
Schedule with respect to a

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specifically identified representation or warranty), the statements in the body
of this Agreement will control.

          10.11 Specific Performance. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. Except where this Agreement specifically provides for arbitration, it
is agreed that the parties shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement and to enforce specifically the terms and
provisions hereof in any court of the United States or any state having
jurisdiction, this being in addition to any other remedy to which they are
entitled at law or in equity.

          10.12 Waiver. Any term or condition of this Agreement may be waived at
any time by the party that is entitled to the benefit thereof, but no such
waiver shall be effective unless set forth in a written instrument duly executed
by or on behalf of the party waiving such term or condition. No waiver by any
party of any term or condition of this Agreement, in any one or more instances,
shall be deemed to be or construed as a waiver of the same or any other term or
condition of this Agreement on any future occasion. The fact that Parent may
waive a condition under Section 7.3 shall not constitute a waiver by Parent of
any other right or remedy hereunder or preclude the Parent from exercising any
remedy hereunder.

ARTICLE 11: DEFINITIONS

          11.1 Definitions. As used in this Agreement, the following defined
terms shall have the meanings indicated below: “Action or Proceeding” means any
action, suit, complaint, petition, investigation, proceeding, arbitration,
litigation, investigation, audit or other proceeding, whether civil or criminal,
in law or in equity, or before any arbitrator or Governmental Authority.

          “Affiliate” means (except for the purposes of Section 3.14), as
applied to any Person, (a) any other Person directly or indirectly controlling,
controlled by or under common control with, that Person, or (b) as to a
corporation, each director and officer thereof, and as to a partnership, each
general partner thereof, and as to a limited liability company, each managing
member or similarly authorized person thereof (including officers), and as to
any other entity, each Person exercising similar authority to those of a
director or officer of a corporation.

          “Agreement” means this Agreement, including (unless the context
otherwise requires) the Exhibits and the Disclosure Schedules and the
certificates and instruments delivered in connection herewith, or incorporated
by reference, as the same may be amended or supplemented from time to time in
accordance with the terms hereof.

          “Ancillary Agreements” has the meaning given to it in Section 3.2, and
shall include the following Exhibits:

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Exhibit A: Holder Certificate
Exhibit B: Release
Exhibit C: Registration Rights Agreement
Exhibit D: Piggyback Registration Rights Agreement

           “Approval” means any approval, authorization, consent, permit,
qualification or registration, or waiver of any of the foregoing, required to be
obtained from or made with, or any notice, statement or other communication
required to be filed with or delivered to, any Governmental Authority or any
other Person.

          “Assets and Properties” of any Person means all assets and properties
of every kind, nature, character and description (whether real, personal or
mixed, whether tangible or intangible, whether absolute, accrued, contingent,
fixed or otherwise and wherever situated), including the goodwill related
thereto, operated, owned, licensed or leased by such Person, including cash,
cash equivalents, investment assets, accounts and notes receivable, chattel
paper, documents, instruments, general intangibles, real estate, equipment,
inventory, goods and Intellectual Property.

          “Associate” means, with respect to any Person, any corporation or
other business organization of which such Person is an officer or partner or is
the beneficial owner, directly or indirectly, of ten percent (10%) or more of
any class of equity securities, any trust or estate in which such Person has a
substantial beneficial interest or as to which such Person serves as a trustee
or in a similar capacity and any relative or spouse of such Person, or any
relative of such spouse, who has the same home as such Person.

          “Bridge Loan” has the meaning given to it in Section 6.12.

           “Business Day” means a day other than Saturday, Sunday or any day on
which banks located in the State of New York are authorized or obligated to
close.

          “Claim Notice” means written notification pursuant to Section 8.3(a)
of a Third Party Claim as to which indemnity under Section 8.1 or 8.2 is sought
by an Indemnified Party, enclosing a copy of all papers served, if any, and
specifying the nature of such Third Party Claim and the basis for the
Indemnified Party's claim against the Indemnifying Party under Section 8.1 or
8.2, together with the amount or, if not then reasonably ascertainable, the
estimated amount, determined in good faith, of such Third Party Claim.

          “Closing” means the closing of the transactions contemplated by
Section 1.2.

           “Closing Cash Statement” has the meaning given to it in Section 6.14.

          “Closing Date” has the meaning given to it in Section 1.2.

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

          “Company” has the meaning given to it in the forepart of this
Agreement.

          “Company Year-End Financial Statements” means the audited consolidated
balance sheet of the Company as of the fiscal years ended December 31, 2006, and

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December 31, 2005, and the related audited statement of income, changes in
holders’ equity and cash flows for the periods ended December 31, 2006 and
December 31, 2005 in each case, together with the notes thereto and the
unqualified report of the Company’s independent accountants with respect
thereto.

           “Company Disclosure Schedule” means the schedules delivered to Parent
by or on behalf of the Company, containing all lists, descriptions, exceptions
and other information and materials as are required to be included therein in
connection with the representations and warranties made by the Company in
Article 3 or otherwise.

          “Company Financials” means the Company Year-End Financial Statements
and the Company Interim Financial Statements.

          “Company Indemnifying Officer” is James Linkous, President and Chief
Executive Officer of the Company.

           “Company Interim Financial Statements” means the unaudited
consolidated balance sheet of the Company as of June 30, 2007, and the related
unaudited statement of operations and statement of cash flows for the three
month period ended on such date.

          “Company Option(s)” means any Option to purchase Company Capital
Stock.

          “Conflict” has the meaning given to it in Section 3.5.

          “Contract” means any written, oral or other agreement, contract,
subcontract, lease, binding understanding, promise, instrument, note, option,
warranty, purchase order, license, sublicense, insurance policy, benefit plan,
commitment or undertaking of any nature, as of the date hereof or as may
hereafter be in effect.

           “Disclosure Schedules” means the Company Disclosure Schedule and the
Parent Disclosure Schedule.

          “Dispute Period” means the period ending thirty (30) calendar days
following receipt by an Indemnifying Party of either a Claim Notice or an
Indemnity Notice.

          “Effective Time” has the meaning given to it in Section 1.2.

           “Equity Equivalents” means securities (including Options to purchase
any Company Capital Stock or Parent Common Stock, as the case may be), which, by
their terms, are or may be exercisable, convertible or exchangeable for or into
common stock, preferred stock or other securities.

           “Exchange Act” means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the SEC thereunder.

          “Expiration Date” has the meaning given to it in Section 8.1.

         “GAAP” means generally accepted accounting principles in the United
States, as in effect from time to time.

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          “Governmental Authority” means any court, tribunal, arbitrator,
authority, agency, bureau, board, commission, department, official or other
instrumentality of the United States, any foreign country or any domestic or
foreign state, county, city or other political subdivision, or including any
stock exchange, quotation service and the National Association of Securities
Dealers.

           “Indebtedness” of any Person means all obligations of such Person (a)
for borrowed money, (b) evidenced by notes, bonds, debentures or similar
instruments, (c) for the deferred purchase price of goods or services (other
than trade payables or accruals incurred in the ordinary course of business),
(d) under capital leases, or (e) in the nature of guarantees of the obligations
described in clauses (a) through (d) above of any other Person.

           “Indemnity Notice” means written notification pursuant to Section
8.3(b) of a claim for indemnity under Article 8 by an Indemnified Party,
specifying the nature of and basis for such claim, together with the amount or,
if not then reasonably ascertainable, the estimated amount, determined in good
faith, of such claim.

          “IRS” means the United States Internal Revenue Service or any
successor entity.

          “Knowledge”, the phrases “to the knowledge of”, “to the best knowledge
of”, “known to” and “knows” means (A) in the case of the Company or Parent, the
actual knowledge of the Company’s or Parent’s, as the case may be, officers,
directors and other managers, provided that such persons shall be deemed to have
knowledge of such facts, circumstances and other information that such persons
would reasonably be expected to discover in the course of conducting such
person’s duties, including if such persons had made due and diligent inquiry of
those employees of the Company or Parent, as the case may be, whom such
officers, directors and managers reasonably believe would have actual knowledge
of the matters represented, and (B) in the case of an officer, director or
manager of Company or Parent, the actual knowledge such officer, director or
other manager, provided that such person shall be deemed to have knowledge of
such facts, circumstances and other information that such person would
reasonably be expected to discover in the course of conducting such person’s
duties, including if such persons had made due and diligent inquiry of those
employees of the Company or Parent, as the case may be, whom such officer,
director or manager reasonably believes would have actual knowledge of the
matters represented.

          “Legal Requirement” or “Legal Requirements” means any law, statute,
Order, decree, consent decree, judgment, rule, regulation, ordinance or other
pronouncement having the effect of law whether in the United States, any foreign
country, or any domestic or foreign state, county, city or other political
subdivision or of any Governmental Authority.

          “Liabilities” means all Indebtedness, obligations and other
liabilities of a Person, whether absolute, accrued, contingent (or based upon
any contingency), known or unknown, fixed or otherwise, or whether due or to
become due.

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          “Liens” means any mortgage, pledge, assessment, security interest,
lease, lien, easement, license, covenant, condition, restriction, adverse claim,
levy, charge, option, equity, adverse claim or restriction or other encumbrance
of any kind, or any conditional sale Contract, title retention Contract or other
Contract to give any of the foregoing, except for any restrictions on transfer
generally arising under any applicable federal or state securities law, other
than Permitted Liens.

          “Losses” means all losses, damages, liabilities and claims, and fees,
costs and expenses of any kind related thereto (whether or not resulting from a
Third-Party Claim) (including, without limitation, Legal Expenses).

          “Material Adverse Effect” with respect to Company or the Parent, means
any change, event or effect that is materially adverse to the business, assets
(including intangible assets), condition (financial or otherwise), results of
operations, or capitalization of such entity and its subsidiaries (if any),
taken as a whole; provided, however, that changes in worldwide economic
conditions that affect such Person (or the markets in which such Person
competes) in a manner not disproportionate to the manner in which such
conditions affect other companies in the industries or markets in which such
Person competes shall not constitute a “Material Adverse Effect.”

          “Option” with respect to any Person means any security, right,
subscription, warrant, option, “phantom” stock right or other Contract that
gives the right to (a) purchase or otherwise receive or be issued any shares of
capital stock or other equity interests of such Person or any security of any
kind convertible into or exchangeable or exercisable for any shares of capital
stock or other equity interests of such Person or (b) receive any benefits or
rights similar to any rights enjoyed by or accruing to the holder of shares of
capital stock or other equity interests of such Person, including any rights to
participate in the equity, income or election of directors or officers of such
Person.

           “Order” means any writ, judgment, decree, injunction or similar order
of any Governmental Authority (in each such case whether preliminary or final).

          “Parent Financials” has the meaning ascribed to it in Section 4.7.

          “Parent” has the meaning ascribed to it in the forepart of this
Agreement.

          “Parent Common Stock” means the shares of the common stock, par value,
$0.001 per share, of the Parent.

          “Parent Disclosure Schedule” has the meaning ascribed to it in the
forepart of Article 4.

          “Parent Indemnifying Officer” is John Xinos, President and CEO of the
Parent.

          “Parent Option(s)” means any Option to purchase Parent Capital Stock.

          “Permit” means any license, permit, franchise or authorization.

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          “Permitted Liens” means any of the following to the extent they arise
in the ordinary course of business of the Person whose property is subject to
the Lien: (a) any mechanic’s liens, landlord’s liens and liens to secure
importation/custom duties in connection with the importation of goods; (b) any
liens for Taxes, assessments, judgments and similar charges not yet due and
payable or which are being contested in good faith and for which any required
reserves have been established; and (c) purchase money liens and liens securing
rental payments under capital lease arrangements of the Company.

          “Person” means any natural person, corporation, general partnership,
limited partnership, limited liability company or partnership, proprietorship,
other business organization, trust, union, association or Governmental
Authority.

          “Private Placement” means the private placements of shares of Parent
Common Stock at a purchase price of US $.50 per share to investors outside of
the United States pursuant to the exemption from registration provided by
Regulation S under the Securities Act raising an aggregate total of One Million
(US$1,000,000) United States Dollars.

          “Purchaser Representative” has the meaning given to it by Section
7.2(m) .

          “Registration Rights Agreement” means that certain registration rights
agreement attached as Exhibit C of this Agreement to be entered into by and
among the Parent and the subscribers to the Private Placement, who will all be
signatories thereto.

          “Resolution Period” means the period ending thirty (30) calendar days
following receipt by an Indemnified Party of a Dispute Notice.

          “Restricted” means, with respect to outstanding shares of Company
Capital Stock or Acquisition Stock Consideration, that such shares or
Acquisition Stock Consideration are subject to a right of repurchase, forfeiture
or divestment in favor of either the party that issued such shares or paid or
issued such Acquisition Stock `Consideration, or both.

          “Restricted Stock Purchase Agreement” means a restricted stock
purchase agreement in pursuant to which the Company has sold Company Restricted
Stock, or any other agreement pursuant to which the Company is granted the right
to repurchase Company Restricted Stock.

          “SEC” means the Securities and Exchange Commission or any successor
entity.

          “Securities Act” means the Securities Act of 1933, as amended, and the
rules and regulations promulgated by the SEC thereunder.

          “Statement of Expenses” has the meaning given to it in Section 6.5.

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          “Subsidiary” or “Subsidiaries” means any Person or Persons in which
the Company or Parent, as the context requires, directly or indirectly through
Subsidiaries or otherwise, beneficially owns at least fifty percent (50%) of
either the equity interest in, or the voting control of, such Person, whether or
not existing on the date hereof.

          “Tax” has the meaning given to it by Section 3.11(a) .

          “Transfer Agent” means, with respect to Parent, Signature Stock
Transfer, Inc., the transfer agent of Parent having an address at 2301 Ohio
Drive, Suite 100, Plano, Texas, 75093, Phone: (972) 612-4120, Fax: (972)
612-4122.

          “Unrestricted” means, with respect to Shareholdership Interests or
Acquisition Stock Consideration, such Interests or Stock that is not Restricted.

          “Vest” or “Vesting” means (a) with respect to an Option, such Option
becoming vested and exercisable, and (b) with respect to shares of Parent Common
Stock that are Restricted, such shares becoming released from the applicable
risk of forfeiture or divestment or repurchase right; and “Vested” (a) with
respect to Options, refers to the maximum number of shares which may then be
issued upon exercise of such Option (and which upon such issuance will not be
Restricted), and (b) with respect to shares of Parent Common Stock that are
Restricted, refers to the number of shares which are released from the
applicable risk of forfeiture or divestment or repurchase right.

[SIGNATURE PAGES FOLLOW]

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          IN WITNESS WHEREOF, Parent, Sub, the Company, and the Indemnifying
Officers of the Parent and the Company, have caused this Agreement to be signed
by their duly authorized representatives, all as of the date first written
above.

CYPHEREDGE TECHNOLOGIES, INC.

 

By:/s/ James Linkous
Name: James Linkous
Title: President and Chief Executive Officer

 

MISTRAL VENTURES, INC.

 

By: /s/ John Xinos
Name: John Xinos
Title: President and Chief Executive Officer

 

HOLDERS:

NEXUSEDGE, INC.

 

By:/s/ James Linkous
Name: James Linkous
Title: President and Chief Executive Officer

 

 

/s/ James Linkous   /s/ Robert Harrop James Linkous   Robert Harrop          
/s/ Ashok Murthy   /s/ Anthony Bash Ashok Murthy   Anthony Bash             /s/
Eric Petersen     Eric Petersen    

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