Exhibit 10.1

 

AGREEMENT AND PLAN OF MERGER

 

This AGREEMENT AND PLAN OF MERGER (this “Agreement”) is made and entered into as
of November 7, 2007, by and among Shea Development Corp., a Nevada corporation
(“Parent”), Shea Development Acquisition No. 4 Corp., a Nevada corporation and a
wholly-owned subsidiary of Parent (“Merger Sub”), CRI Advantage, Inc., an Idaho
corporation (the “Company”), and certain holders of the majority of the
outstanding capital stock of the Company, as listed on Schedule 1 hereto
(“Certain Company Shareholders”). Holders of capital stock of the Company are
collectively referred to herein as the “Company Shareholders,” and individually
as a “Company Shareholder”. Capitalized terms used and not otherwise defined
herein have the meanings set forth in Article 10.

 

RECITALS

 

A.                                   The respective Boards of Directors of
Parent, Merger Sub and the Company each have approved and declared advisable
this Agreement and the merger of Merger Sub with and into the Company (the
“Merger”), upon the terms and subject to the conditions set forth in this
Agreement, whereby each issued and outstanding share of Class A Common Stock, no
par value and Class B Common Stock, no par value, (collectively “Common Stock”) 
(“Company Common Stock”), will be converted into the right to receive common
stock, par value $.001 per share, of Parent (“Parent Common Stock”) and cash as
provided herein.

 

B.                                     The respective shareholders of Parent,
Merger Sub and the Company have, or will have, prior to the Closing Date, by the
legally required vote, approved and adopted the Merger.

 

C.                                     In connection with the Merger, the
parties desire to make certain representations, warranties, covenants and
agreements and also to prescribe various conditions to the Merger, upon the
terms and subject to the conditions contained herein.

 

NOW, THEREFORE, in consideration of the covenants, promises, representations and
warranties set forth herein, and for other good and valuable consideration,
intending to be legally bound hereby the parties agree as follows:

 

ARTICLE 1
THE MERGER

 

1.1                                 Merger. At the Effective Time as defined
below, in accordance with this Agreement and applicable law, Merger Sub will be
merged with and into the Company, the separate corporate existence of Merger Sub
will cease and the Company will continue as the surviving corporation in the
Merger and shall become a wholly-owned Subsidiary of Parent. The Company, as the
surviving corporation after the Merger, is sometimes referred to herein as the
“Surviving Corporation.”

 

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1.2                                 Closing. Subject to the terms and conditions
of this Agreement, the closing of the Merger (the “Closing”) will take place at
the offices of Dunnington, Bartholow & Miller, LLP located at 477 Madison
Avenue, New York, NY 10022 or at such other place as Parent and the Company
mutually agree, at 10:00 a.m. local time on December 15, 2007 or the second
Business Day after the day on which the last of the closing conditions set forth
in Article 6 below has been satisfied or waived, or such other date as Parent
and the Company mutually agree upon in writing (the “Closing Date”). On the
Closing Date: (a) the parties hereto will cause the Merger to be consummated by
filing with the Secretaries of State of the State of Idaho and the State of
Nevada a certificate of merger and any required related documents, in such form
or forms as are required by, and executed in accordance with, applicable law
(the date and time of such filing being the “Effective Time” and the date upon
which the Effective Time occurs, being the “Effective Date”); (b) Parent will
deliver the merger consideration to the Company Shareholders in accordance with
Section 1.6; and (c) Merger Sub, Company and Parent will cross-deliver the
certificates and other documents and instruments to be cross-delivered pursuant
to Article 6 below.

 

1.3                                 Effect of the Merger. At the Effective Time,
the effect of the Merger will be as provided in this Agreement and under
applicable law. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time all the property, rights, privileges, powers and
franchises of Merger Sub and the Company will vest in the Surviving Corporation,
and all debts, liabilities and duties of Merger Sub and the Company will become
the debts, liabilities and duties of the Surviving Corporation. As of the
Effective Time, the Surviving Corporation will be a wholly-owned subsidiary of
Parent.

 

1.4                                 Effect of Merger on Capital Stock of the
Parent. Each share of capital stock of Parent issued and outstanding immediately
prior to the Effective Time shall remain issued and outstanding from and after
the Effective Time.

 

1.5                                 Effect of Merger on Capital Stock of Merger
Sub. At the Effective Time, each share of common stock, par value $.001 per
share, of Merger Sub issued and outstanding immediately prior to the Effective
Time shall, by virtue of the Merger and without any action on the part of the
holders thereof, be converted into and become one validly issued, fully paid and
non-assessable share of Class A and Class B Common Stock, no par value, of the
Surviving Corporation.

 

1.6                                 Effect of Merger on Capital Stock of
Company.

 

(A)                                  COMPANY COMMON STOCK. AT THE EFFECTIVE
TIME, EACH PARTICIPATING COMPANY SHARE SHALL, BY VIRTUE OF THE MERGER AND
WITHOUT ANY ACTION ON THE PART OF THE HOLDERS THEREOF, BE CONVERTED INTO THE
RIGHT TO RECEIVE THE FOLLOWING (THE “MERGER CONSIDERATION”):

 

(I)                                     A PRO RATA SHARE OF 5,900,000 SHARES OF
PARENT COMMON STOCK (REFERRED TO COLLECTIVELY HEREIN AS THE “PARENT’S SHARES”)
AS SET FORTH ON SCHEDULE 1.6(A)(I), WHICH SHARES SHALL NOT HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT AND SHALL BE “RESTRICTED SECURITIES” AS THAT TERM IS
DEFINED IN RULE 144 UNDER THE SECURITIES ACT.

 

(II)                                  A PRO RATA SHARE OF $3,500,000 PAYABLE IN
CASH AS SET FORTH ON SCHEDULE 1.6(A)(II) BY WIRE TRANSFER OF SAME DAY FUNDS TO
THE ACCOUNT DESIGNATED BY EACH HOLDER OF

 

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PARTICIPATING COMPANY SHARES POST THE PAYMENT MADE TO THE IRS AND STATE OF IDAHO
FOR ALL PAST TAX LIABILITIES, PENALTIES AND INTEREST DUE AT TIME OF CLOSING.

 

(III)                               AT THE EFFECTIVE DATE, THERE WILL BE
WITHHELD AND HELD IN ESCROW WITH FIRST AMERICAN TITLE, BOISE, IDAHO (“ESCROW
AGENT”), AS OUTLINED IN SCHEDULE 1.6 (A)(III), $350,000 IN CASH AND 1,500,000
SHARES OF PARENT COMMON STOCK. SUCH ESCROWED CASH AND SHARES WILL BE RELEASED
AFTER CLOSING TO THE COMPANY SHAREHOLDERS NO LATER THAN JANUARY 31, 2009 BASED
ON 2008 EBITDA ACHIEVEMENT AS FOLLOWS:

 

(A)                              IF THE SURVIVING CORPORATION EBITDA IS LESS
THAN $1,400,000 (THE “2008 FLOOR”) FOR CALENDAR YEAR 2008 (JAN-DEC), THEN THE
ESCROW AGENT WILL RELEASE ALL ESCROWED CASH AND STOCK TO THE PARENT.

 

(B)                                IF THE SURVIVING CORPORATION EBITDA IS
$1,400,000 OR MORE BUT LESS THAN $1,800,000 (THE “2008 TARGET”) FOR CALENDAR
YEAR 2008 (JAN-DEC), THEN THE ESCROW AGENT WILL RELEASE TO THE COMPANY
SHAREHOLDERS FIFTY CENTS ($.50) AND 2.00 SHARES FOR EACH DOLLAR ($1.00) THE
SURVIVING CORPORATION’S 2008 EBITDA EXCEEDS $1,400,000. ALL OTHER ESCROW CASH
AND STOCK WILL BE RETURNED TO THE PARENT.

 

(C)                                If the If the Surviving Corporation EBITDA is
$1,800,000 or more for calendar year 2008 (Jan-Dec), then the escrow agent will
release to the Company shareholders all of the escrow cash and stock.

 

(B)                                 COMPANY OPTIONS. AT THE EFFECTIVE TIME, EACH
OUTSTANDING OPTION TO PURCHASE SHARES OF COMPANY CLASS A COMMON STOCK GRANTED
UNDER THE COMPANY’S STOCK OPTION PLAN (“OPTION PLAN”), WHICH HAS NOT PREVIOUSLY
EXPIRED OR BEEN EXERCISED IN FULL (EACH SUCH OPTION, AN “ELIGIBLE OPTION”),
WHETHER OR NOT VESTED OR EXERCISABLE ON THE CLOSING DATE, SHALL BE DEEMED TO
HAVE BEEN EXERCISED IMMEDIATELY PRIOR TO THE EFFECTIVE TIME FOR THE NUMBER OF
SHARES OF COMPANY CLASS A COMMON STOCK ISSUABLE UPON EXERCISE OF SUCH ELIGIBLE
OPTION AND SHALL BE EXCHANGED FOR THE RIGHT TO RECEIVE THE MERGER CONSIDERATION
FOR EACH RESULTING PARTICIPATING COMPANY SHARE PURSUANT TO SECTION 1.6(A),
SUBJECT TO THE DEDUCTION OF APPLICABLE WITHHOLDING TAXES AND PROVIDED THE CASH
PORTION OF THE MERGER CONSIDERATION PAYABLE WITH RESPECT TO EACH SUCH
PARTICIPATING COMPANY SHARES PURSUANT TO SECTION 1.6(A)(II) SHALL BE REDUCED BY
AN AMOUNT EQUAL TO (X) THE PER SHARE EXERCISE PRICE OF SUCH ELIGIBLE OPTION
MULTIPLIED BY (Y) THE NUMBER OF SHARES OF COMPANY COMMON STOCK ISSUABLE UNDER
SUCH ELIGIBLE OPTION. NO PAYMENT OF MERGER CONSIDERATION WITH RESPECT TO AN
ELIGIBLE OPTION SHALL BE MADE TO THE HOLDER OF SUCH ELIGIBLE OPTION UNTIL
RECEIPT BY THE PARENT OF AN OPTION CANCELLATION AGREEMENT, SUBSTANTIALLY IN THE
FORM SET FORTH AT EXHIBIT A (“OPTION CANCELLATION AGREEMENT”), WITH RESPECT TO
ALL ELIGIBLE OPTIONS SIGNED BY THE HOLDER OF SUCH ELIGIBLE OPTION. THE PARENT
SHALL DELIVER TO THE SURVIVING CORPORATION ALL SUCH EXECUTED OPTION CANCELLATION
AGREEMENTS PROMPTLY AFTER RECEIPT.

 

(C)                                  AS A RESULT OF THE MERGER AND WITHOUT ANY
ACTION ON THE PART OF THE HOLDERS OF COMPANY COMMON STOCK, AT THE EFFECTIVE
TIME, ALL SHARES OF COMPANY COMMON STOCK SHALL CEASE TO BE OUTSTANDING AND SHALL
BE CANCELLED AND RETIRED AND SHALL CEASE TO EXIST, AND EACH HOLDER OF A SHARE OF
COMPANY COMMON STOCK (OTHER THAN THE COMPANY, THE PARENT, AND THE MERGER SUB)
SHALL THEREAFTER CEASE TO HAVE ANY RIGHTS WITH RESPECT TO SUCH SHARES OF COMPANY
COMMON STOCK, EXCEPT

 

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THAT HOLDERS OF PARTICIPATING COMPANY SHARES SHALL HAVE THE RIGHT TO RECEIVE,
WITHOUT INTEREST, THE MERGER CONSIDERATION IN ACCORDANCE WITH SECTION 1.6(A)
UPON THE SURRENDER OF THE CERTIFICATE OR CERTIFICATES REPRESENTING SUCH SHARES
OF COMPANY COMMON STOCK, OR AN OPTION CANCELLATION AGREEMENT, IF APPLICABLE, .

 

(D)                                 AT THE EFFECTIVE TIME, EACH SHARE OF COMPANY
COMMON STOCK HELD BY THE PARENT OR THE MERGER SUB OR HELD IN THE COMPANY’S
TREASURY AT THE EFFECTIVE TIME, IF ANY, SHALL, BY VIRTUE OF THE MERGER AND
WITHOUT ANY ACTION ON THE PART OF THE HOLDER THEREOF, CEASE TO BE OUTSTANDING
AND SHALL BE CANCELLED AND RETIRED WITHOUT PAYMENT OF ANY MERGER CONSIDERATION
OR ANY OTHER CONSIDERATION THEREFOR.

 

(E)                                  AT OR PRIOR TO THE EFFECTIVE TIME,  THE
COMPANY STOCK OPTION PLAN SHALL BE TERMINATED AND ALL COMPANY OPTIONS AND
AGREEMENTS OR CERTIFICATES REPRESENTING COMPANY OPTIONS, IF ANY, SHALL NO LONGER
BE OUTSTANDING AND SHALL AUTOMATICALLY BE CANCELED AND RETIRED AND SHALL CEASE
TO EXIST, AND EACH HOLDER OF A COMPANY OPTION (AND OF A CERTIFICATE REPRESENTING
A COMPANY OPTION, IF ANY) SHALL CEASE TO HAVE ANY RIGHTS WITH RESPECT THERETO,
OTHER THAN AND SUBJECT TO THE RIGHTS OF HOLDERS OF ELIGIBLE OPTIONS TO RECEIVE
THE MERGER CONSIDERATION PURSUANT TO SECTION 1.6(B).

 

1.7                                 Delivery of Certificates and Option
Cancellation Agreements. At or prior to and after the Effective Time, Parent
will make available, and each holder of Participating Company Shares will be
entitled to receive, (i) upon surrender to Parent or its representatives of any
certificates evidencing Company Common Stock (the “Certificates”) for
cancellation and a letter of transmittal or assignment separate from certificate
in customary form and as agreed to by the Company Shareholder (which will be in
such form and have such other provisions as Parent will reasonably specify) (the
“Transmittal Letter”); or (ii) delivery to Parent or its representatives of
Option Cancellation Agreements, the pro-rata Merger Consideration into which
such Participating Company Shares have been converted into pursuant to the
Merger, and upon such surrender of each Certificate and/or Option Cancellation
Agreement and delivery by Parent of the aggregate Merger Consideration in
exchange therefor, such Participating Company Shares will forthwith be
cancelled. Until surrendered or delivered as contemplated by this Section 1.7,
each Certificate or Option Cancellation Agreement, as applicable, will be deemed
at any time after the Effective Time for all purposes to evidence only the right
to receive upon such surrender the corresponding pro rata portion of the Merger
Consideration.

 

1.8                                 Stock Transfer Books. From and after the
Effective Time, the stock transfer books of the Company will be closed, and
there will be no further registration or transfers of capital stock thereafter
on the records of the Company.

 

1.9                                 No Further Ownership Rights. The Merger
Consideration delivered upon the surrender for exchange of Certificates or the
delivery of Option Cancellation Agreements in accordance with the terms hereof
will be deemed to have been issued in full satisfaction of all rights pertaining
to such Participating Company Shares, and there will be no further registration
of transfers of such shares which were outstanding immediately prior to the
Effective Time on the records of the Surviving Corporation. If, after the
Effective Time, Certificates or Option Cancellation Agreements are presented to
the Surviving Corporation, they will be cancelled and exchanged as provided in
this Article 1.

 

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1.10               Lost, Stolen or Destroyed Certificates. In the event any
Certificates are lost, stolen or destroyed, Parent will issue in exchange for
such lost, stolen or destroyed Certificates, upon the making of an affidavit of
that fact by the holder thereof and the other deliveries required above, the
applicable Merger Consideration; provided, however, that the Surviving
Corporation may, in its sole discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
Certificates to deliver an indemnity or bond in such sum as it may reasonably
direct as indemnity against any claim that may be made against it with respect
to the Certificates alleged to have been lost, stolen or destroyed.

 

1.11                           Charter Documents; Directors and Officers. Unless
otherwise agreed by the Company and Parent prior to the Closing, at and as of
the Effective Time, without any further action on the part of Parent, Merger Sub
or the Company: (i) the Articles of Incorporation and the Bylaws of the Company
as in effect immediately prior to the Effective Time will be the Articles of
Incorporation and Bylaws of the Surviving Corporation at and after the Effective
Time until thereafter amended as provided by applicable law; (ii) the directors
and officers of the Company immediately prior to the Effective Time shall serve
as directors and officers of the Surviving Corporation from and after the
Effective Time, until their successors are elected or appointed and qualified or
until their resignation or removal. Prior to the Effective Time, the Company
Shareholders will elect Francis E. Wilde to the Surviving Corporation’s Board of
Directors. The Board of Directors of the Company will as of the Effective Time
electing E. Joseph Vitetta, Jr. as Secretary of the Surviving Corporation.

 

1.12                           Employment Agreements. At the Effective Time, the
Surviving Corporation will offer employment to and will employ the senior
management team listed in Schedule 1.12 Part I (the “Senior Management Team”)
under the terms and conditions of agreements set forth at Schedule 1.12 Part II,
such employment agreement to be accepted and executed respectively concurrently
with the Closing.

 

1.13                           Stock Options.  Parent established the 2007 Stock
Option and Performance Awards Plan in which employees of the Surviving
Corporation will be eligible to participate (the “Stock Award Plan”). The
attached Schedule 1.13 lists the Certain Company Shareholders’ and eligible
Company employees that will be eligible to participate in the Stock Award Plan. 
It is understood by the parties that the timing, quantity, exercise price,
vesting schedules and all other terms and conditions of any stock award are at
the sole discretion and approval of the Parent’s Board of Directors and that the
Parent’s Board of Directors shall, in its sole discretion, finally determine
those Surviving Corporation employees to whom stock awards may be granted.  The
Parent’s Board of Directors will also have sole discretion to determine the type
of award that may be granted including stock options, restricted stock or other
types of awards authorized under the Stock Award Plan.

 

1.14                           Company Tax Liability. As set forth on Schedule
1.14, the Company currently owes for the years 2006 and 2007 (a) the Internal
Revenue Service $336,184.84 and (b) the Idaho State Tax Commission $238,259.08
for unpaid withholding and payroll taxes (“Tax Liability”). All such amounts,
plus any additional penalties and interest, due at Closing will be paid by the
Company  contemporaneously with Closing. Other than as set forth in this Section
1.14 the Company will have no outstanding tax liability at Closing for Calendar
years 2004, 2005 and 2006.

 

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1.15                           Taking of Necessary Action; Further Action. Each
of Parent, Merger Sub and the Company will take all such reasonable lawful
action as may be necessary or appropriate in order to effect the Merger in
accordance with this Agreement as promptly as practicable. If, at any time after
the Effective Time, any such further action is necessary or desirable to carry
out the purposes of this Agreement and to vest the Surviving Corporation with
full right, title and possession to all the property, rights, privileges, power
and franchises of the Company and Merger Sub, the officers and directors of the
Company and Merger Sub immediately prior to the Effective Time are fully
authorized in the name of their respective corporations or otherwise to take,
and will take, all such lawful and necessary action.

 

ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE
COMPANY AND CERTAIN COMPANY SHAREHOLDERS

 

The Company and each of the Certain Company Shareholders hereby represent and
warrant, jointly and severally, to Parent subject to such exceptions as are
disclosed in the corresponding Schedules with respect to specific sections of
this Article 2 and subject to the right of the Company and the Certain Company
Shareholders to update, revise, supplement and/or correct such Schedules through
the Closing Date, as follows:

 

2.1                                 Organization and Qualification. The Company
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Idaho, and has full corporate power and authority to
conduct its business as now conducted and to own, use, license and lease its
Assets and Properties. The Company has no Subsidiaries. The Company 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 jurisdictions in which the
failure to be so qualified would not have a Material Adverse Effect on the
Company. Schedule 2.1(a) sets forth each jurisdiction where the Company is so
qualified, licensed or admitted to do business.

 

2.2                                 Authority Relative to this Agreement. The
Company has full corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery by the Company of
this Agreement and the consummation by the Company of the transactions
contemplated hereby, and the performance by the Company of its obligations
hereunder, have been duly and validly authorized by all necessary action by the
Board of Directors of the Company, and no other action on the part of the Board
of Directors of the Company is required to authorize the execution, delivery and
performance of this Agreement and the consummation by the Company of the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by the Company and, assuming the due authorization,
execution and delivery hereof by Parent and Merger Sub, constitutes a legal,
valid and binding obligation of the Company enforceable against the Company in
accordance with its 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.

 

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2.3                                 Capital Stock. As of the date hereof, the
authorized capital stock of the Company consists of five million (5,000,000)
shares of Class A Common Stock and twenty million (20,000,000) shares of Class B
Common Stock, both without par value, of which 20,000,000 Class B shares are
issued and outstanding. There are options exercisable or convertible into
3,023,933 Class A shares of Company Common Stock (“Company Options”), the
holders of which are set forth on Schedule 2.3 (the “Company Option Holders”).]
All of the issued and outstanding shares of Company Common Stock are validly
issued, fully paid and nonassessable, and have been issued in compliance with
all applicable federal, state and foreign securities Laws. No shares of Company
Common Stock are held as treasury stock. Schedule 1 lists the name and state of
residence of each holder of Company Common Stock provided to the Company by such
holder and the number of shares of Company Common Stock held by each such
holder. Except for the Company Options, there are no Equity Equivalents,
commitments or agreements of any character (whether created by statute, the
Articles of Incorporation or Bylaws of the Company, or any agreement or
otherwise) to which the Company is a party or by which it is bound, obligating
the Company to issue, deliver, sell, repurchase or redeem, or cause to be
issued, delivered, sold, repurchased or redeemed, any shares of capital stock of
the Company or obligating the Company to grant, extend, accelerate the vesting
of, change the price or otherwise amend or enter into any such option, warrant,
call, right, commitment or agreement. Except as set forth in Schedule 2.3(a),
the Company is not a party or subject to any agreement or understanding, and, to
the Company’s knowledge, there is no agreement, arrangement or understanding
between or among any Persons, which affects, restricts or relates to voting,
giving of written consents, dividend rights or transferability of shares with
respect to the shares of Company Common Stock, including without limitation any
voting trust agreement or proxy.

 

2.4                                 No Conflicts. Except as set forth in
Schedule 2.4, the execution and delivery by the Company of this Agreement and
the consummation by the Company of the transactions contemplated hereby do not
and will not:

 

(A)                                  CONFLICT WITH OR RESULT IN A VIOLATION OR
BREACH OF ANY TERMS, CONDITIONS OR PROVISIONS OF THE ARTICLES OF INCORPORATION
OR BYLAWS, AS AMENDED, OR EQUIVALENT DOCUMENTS OF THE COMPANY EXCEPT FOR ANY OF
THE FOREGOING WHICH WOULD NOT REASONABLY BE EXPECTED TO GIVE RISE TO A MATERIAL
ADVERSE EFFECT;

 

(B)                                 CONFLICT WITH OR RESULT IN A VIOLATION OR
BREACH OF ANY LAW OR ORDER APPLICABLE TO THE COMPANY OR BY WHICH ANY OF ITS
ASSETS AND PROPERTIES IS BOUND OR AFFECTED, EXCEPT FOR ANY OF THE FOREGOING
WHICH WOULD NOT REASONABLY BE EXPECTED TO GIVE RISE TO A MATERIAL ADVERSE
EFFECT; OR

 

(C)                                  (I) CONFLICT WITH OR RESULT IN A VIOLATION
OR BREACH OF, (II) CONSTITUTE A DEFAULT (OR AN EVENT THAT, WITH OR WITHOUT
NOTICE OR LAPSE OF TIME OR BOTH, WOULD CONSTITUTE A DEFAULT) UNDER, (III)
REQUIRE THE COMPANY TO OBTAIN ANY CONSENT, APPROVAL OR ACTION OF, MAKE ANY
FILING WITH OR GIVE ANY NOTICE TO ANY PERSON AS A RESULT OR UNDER THE TERMS OF,
(IV) RESULT IN OR GIVE TO ANY PERSON ANY RIGHT OF TERMINATION, CANCELLATION,
ACCELERATION OR MODIFICATION IN OR WITH RESPECT TO, (V) RESULT IN OR GIVE TO ANY
PERSON ANY ADDITIONAL RIGHTS OR ENTITLEMENT TO INCREASED, ADDITIONAL,
ACCELERATED OR GUARANTEED PAYMENTS OR PERFORMANCE UNDER, (VI) RESULT IN THE
CREATION OR IMPOSITION OF (OR THE OBLIGATION TO CREATE OR IMPOSE) ANY LIEN UPON
THE COMPANY OR ANY OF ITS ASSETS AND PROPERTIES UNDER OR (VII) RESULT IN THE
LOSS OF A MATERIAL BENEFIT UNDER, ANY OF THE TERMS, CONDITIONS OR PROVISIONS OF
ANY CONTRACT OR LICENSE TO WHICH THE COMPANY IS A PARTY OR BY WHICH THE COMPANY
OR ITS ASSETS

 

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AND PROPERTIES IS BOUND OR AFFECTED, EXCEPT (X) WHERE THE COMPANY HAS OBTAINED
OR WILL OBTAIN PRIOR TO THE CLOSING THE NECESSARY WRITTEN AGREEMENTS, WAIVERS OR
CONSENTS OF THE OTHER PARTIES TO ANY COMPANY CONTRACTS OR LICENSES TO AVOID,
RELEASE OR WAIVE ANY SUCH DEFAULT, CONFLICT, BREACH, VIOLATION, TERMINATION,
RIGHT TO TERMINATE OR ACCELERATE, OR TRIGGERING OF PAYMENT WITH RESPECT TO SUCH
COMPANY CONTRACTS OR LICENSES, OR (Y) WHERE ANY SUCH DEFAULT, CONFLICT, BREACH,
VIOLATION, TERMINATION, RIGHT TO TERMINATE OR ACCELERATE, OR TRIGGERING OF
PAYMENT WITH RESPECT TO SUCH COMPANY CONTRACTS OR LICENSES WOULD NOT CONSTITUTE
A MATERIAL ADVERSE EFFECT.

 

2.5                                 Books and Records; Organizational Documents.
The minute books, including the share registers, and other similar records of
the Company that have been provided or made available to Parent, its
representatives or its counsel prior to the execution of this Agreement, are
complete and correct in all material respects and have been maintained in
accordance with sound business practices. Such minute books contain a true and
complete record of all material actions taken at all meetings and by all written
consents in lieu of meetings of the directors, shareholders and committees of
the Board of Directors of the Company through the date hereof. The Company has
delivered a true, correct and complete copy of its Articles of Incorporation, as
set forth in Schedule 2.5(a), and its Bylaws, as set forth in Schedule 2.5(b),
or other charter documents, as applicable, of the Company as amended to date, to
Parent. To Company’s knowledge, the Company is not in violation of any
provisions of its Articles of Incorporation or equivalent documents.

 

2.6                                 Company Financial Statements.

 

The Company Financials, as set forth in Schedule 2.6(a), have been delivered to
the Parent. The Company Financials for the 2005 and 2006 fiscal years delivered
to Parent will have been audited on or before December 30, 2007 and, to
Company’s knowledge, were correct and complete in all material respects as at
the dates thereof.  The Company’s financial statements for the nine months ended
September 30, 2007 will have been reviewed by an independent registered and
certified public accountant to insure that the financial statement for the nine
months ended September 30, 2007 are prepared on a consistent basis with the
Company Financials for the fiscal years 2005 and 2006. The Company Financials
present fairly and accurately the financial condition and operating results of
the Company as of the dates and during the periods indicated therein, subject,
in the case of any interim financial statements, to normal year-end adjustments,
which adjustments will not be material in amount or significance and except that
any interim financial statements may not contain footnotes. Except as set forth
in Schedule 2.6(b), since the Financial Statement Date, there has been no change
in any accounting policies, principles, methods or practices, including any
change with respect to reserves (whether for bad debts, contingent liabilities
or otherwise), of the Company that would be likely to have a Material Adverse
Effect.

 

(B)                                 NEITHER THE COMPANY NOR, TO THE KNOWLEDGE OF
COMPANY, THE COMPANY’S INDEPENDENT ACCOUNTANTS HAS IDENTIFIED OR BEEN MADE AWARE
OF (I) ANY FRAUD, WHETHER OR NOT MATERIAL, THAT INVOLVES THE MANAGEMENT OF THE
COMPANY OR OTHER EMPLOYEES OF THE COMPANY WHO HAVE A ROLE IN THE PREPARATION OF
FINANCIAL STATEMENTS OR THE INTERNAL ACCOUNTING CONTROLS UTILIZED BY THE COMPANY
OR (II) ANY CLAIM OR ALLEGATION REGARDING ANY OF THE FOREGOING.

 

(c)                                  The Company has maintained and utilized an
information system and set of financial and accounting tools that have
substantiated the information gathered in connection with

 

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the preparation of the Company Financials in accordance with GAAP, including
policies and procedures that the Company deems appropriate for a company of its
size that:  a) require the maintenance of records that in reasonable detail
accurately and fairly reflect the transactions and disposition of the assets of
the company, b) provide reasonable assurances that the transactions are recorded
as necessary to permit the preparation of financial statements in accordance
with GAAP, and that receipts and expenditures of the Company are being made with
appropriate authorizations of management and the Board of Directors of the
Company and c) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of the assets of the
Company, except where the failure to maintain or utilize any of the foregoing
would not reasonably be expected to give rise to a Material Adverse Effect.

 

2.7                                 Absence of Changes. Since the Financial
Statement Date, there has not been any Material Adverse Change in the Business
or Condition of the Company or any occurrence or event, which, individually or
in the aggregate could be reasonably expected to have any Material Adverse
Change in the Business or Condition of the Company. In addition, without
limiting the foregoing, except as expressly contemplated hereby, there has not
occurred, on the part of the Company, during the period commencing on the
Financial Statement Date and terminating on the date hereof:

 

(A)                                  THE ENTERING INTO OF ANY CONTRACT IN
CONNECTION WITH ANY TRANSACTION INVOLVING A BUSINESS COMBINATION OTHER THAN THIS
AGREEMENT AND THE TRANSACTIONS RELATED TO THE MERGER;

 

(B)                                 THE ALTERATION, OR ENTERING INTO OF ANY
CONTRACT OR OTHER COMMITMENT TO ALTER, ITS INTEREST IN ANY PERSON IN WHICH THE
COMPANY DIRECTLY OR INDIRECTLY HOLDS A GREATER THAN 1% INTEREST ON THE DATE
HEREOF;

 

(C)                                  THE ENTERING INTO OF ANY STRATEGIC
ALLIANCE, JOINT DEVELOPMENT OR JOINT MARKETING CONTRACT OTHER THAN JOINT
MARKETING OR DEVELOPMENT EFFORTS IN THE ORDINARY COURSE OF BUSINESS CONSISTENT
WITH THE COMPANY’S PAST PRACTICE;

 

(D)                                 ANY MATERIAL AMENDMENT OR OTHER MODIFICATION
(OR AGREEMENT TO DO SO), EXCEPT IN THE ORDINARY COURSE OF BUSINESS CONSISTENT
WITH THE COMPANY’S PAST PRACTICE, OR VIOLATION OF A MATERIAL TERM OF, ANY OF THE
CONTRACTS SET FORTH OR DESCRIBED HEREIN;

 

(E)                                  THE ENTERING INTO OF ANY MATERIAL
TRANSACTION WITH ANY OFFICER, DIRECTOR, SHAREHOLDER, AFFILIATE OR ASSOCIATE OF
THE COMPANY, OTHER THAN PURSUANT TO ANY CONTRACT IN EFFECT ON THE FINANCIAL
STATEMENT DATE AND DISCLOSED TO PARENT PURSUANT TO THE SCHEDULES OR OTHERWISE
CONTEMPLATED BY THIS AGREEMENT OR ANY AGREEMENT OR INSTRUMENT RELATED TO THIS
AGREEMENT;

 

(F)                                    THE ENTERING INTO OR AMENDMENT OF ANY
CONTRACT PURSUANT TO WHICH ANY OTHER PERSON IS GRANTED MANUFACTURING, MARKETING,
DISTRIBUTION, LICENSING OR SIMILAR RIGHTS OF ANY TYPE OR SCOPE WITH RESPECT TO
ANY PRODUCTS OF THE COMPANY OR COMPANY INTELLECTUAL PROPERTY OTHER THAN AS
CONTEMPLATED BY THE CONTRACTS OR LICENSES OF THE COMPANY DISCLOSED HEREIN OR
OTHERWISE IN THE ORDINARY COURSE OF BUSINESS CONSISTENT WITH THE COMPANY’S PAST
PRACTICE OR WHICH WOULD NOT HAVE A MATERIAL ADVERSE EFFECT;

 

9

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(G)                                 TO THE COMPANY’S KNOWLEDGE, THE COMMENCEMENT
OF ANY ACTION OR PROCEEDING;

 

(H)                                 EXCEPT AS SET FORTH IN SCHEDULE 2.7(H), THE
DECLARATION, SETTING ASIDE OR PAYMENT OF ANY DIVIDENDS ON OR MAKING OF ANY OTHER
DISTRIBUTIONS (WHETHER IN CASH, STOCK OR PROPERTY) IN RESPECT OF ANY COMPANY
COMMON STOCK, OR ANY SPLIT, COMBINATION OR RECLASSIFICATION OF ANY SHARES OF
COMPANY COMMON STOCK OR ISSUANCE OR AUTHORIZATION OF THE ISSUANCE OF ANY OTHER
SECURITIES IN RESPECT OF, IN LIEU OF OR IN SUBSTITUTION FOR SHARES OF COMPANY
COMMON STOCK, OR THE REPURCHASE, REDEMPTION OR OTHER ACQUISITION, DIRECTLY OR
INDIRECTLY, OF ANY SHARES OF COMPANY COMMON STOCK BY THE COMPANY;

 

(I)                                     EXCEPT AS SET FORTH IN SCHEDULE 2.7(I),
THE ISSUANCE, GRANT, DELIVERY, SALE OR AUTHORIZATION OF OR PROPOSAL TO ISSUE,
GRANT, DELIVER OR SELL, OR PURCHASE OR PROPOSAL TO PURCHASE, ANY SHARES OF
COMPANY COMMON STOCK OR MODIFICATION OR AMENDMENT OF THE RIGHTS OF ANY HOLDER OF
ANY OUTSTANDING SHARES OF COMPANY COMMON STOCK, NOR HAVE THERE BEEN ANY
AGREEMENTS, ARRANGEMENTS, PLANS OR UNDERSTANDINGS WITH RESPECT TO ANY SUCH
MODIFICATION OR AMENDMENT EXCEPT AS CONTEMPLATED BY THIS AGREEMENT;

 

(J)                                     EXCEPT AS SET FORTH IN SCHEDULE 2.7(J),
ANY AMENDMENTS TO THE COMPANY’S ARTICLES OF INCORPORATION OR BYLAWS;

 

(K)                                  ANY TRANSFER (BY WAY OF A LICENSE OR
OTHERWISE) TO ANY PERSON OF RIGHTS TO ANY COMPANY INTELLECTUAL PROPERTY OTHER
THAN NON-EXCLUSIVE TRANSFERS TO THE COMPANY’S CUSTOMERS, DISTRIBUTORS OR OTHER
LICENSEES IN THE ORDINARY COURSE OF BUSINESS CONSISTENT WITH THE COMPANY’S PAST
PRACTICE;

 

(L)                                     TO THE COMPANY’S KNOWLEDGE, ANY
DISPOSITION OR SALE OF, WAIVER OF RIGHTS TO, LICENSE OR LEASE OF, OR INCURRENCE
OF ANY LIEN ON, ANY ASSETS AND PROPERTIES (OTHER THAN COMPANY INTELLECTUAL
PROPERTY) OF THE COMPANY, OTHER THAN DISPOSITIONS OF INVENTORY, OR LICENSES OF
PRODUCTS TO PERSONS IN THE ORDINARY COURSE OF BUSINESS OF THE COMPANY CONSISTENT
WITH THE COMPANY’S PAST PRACTICE;

 

(M)                               ANY PURCHASE OR LEASE OF ANY ASSETS AND
PROPERTIES OF ANY PERSON OR THE MAKING OF ANY CAPITAL EXPENDITURES, LEASE
COMMITMENTS OR OTHER CAPITAL COMMITMENTS BY THE COMPANY OTHER THAN IN THE
ORDINARY COURSE OF BUSINESS OF THE COMPANY, CONSISTENT WITH COMPANY’S PAST
PRACTICE AND IN AN AMOUNT NOT IN EXCESS OF FIFTY THOUSAND DOLLARS ($50,000)
UNLESS OTHERWISE APPROVED BY PARENT;

 

(N)                                 THE MAKING OF ANY CAPITAL EXPENDITURES OR
COMMITMENTS BY THE COMPANY FOR ADDITIONS TO PROPERTY, PLANT OR EQUIPMENT OF THE
COMPANY CONSTITUTING CAPITAL ASSETS INDIVIDUALLY OR IN THE AGGREGATE IN AN
AMOUNT EXCEEDING TWENTY-FIVE THOUSAND DOLLARS ($25,000) EXCEPT IN THE ORDINARY
COURSE OF BUSINESS CONSISTENT WITH THE COMPANY’S PAST PRACTICE;

 

(O)                                 EXCEPT AS SET FORTH IN SCHEDULE 2.7(O), THE
WRITE-OFF OR WRITE-DOWN OR MAKING OF ANY DETERMINATION TO WRITE OFF OR
WRITE-DOWN, OR REVALUE, ANY OF THE ASSETS AND PROPERTIES OF THE COMPANY, OR
CHANGE IN ANY RESERVES OR LIABILITIES ASSOCIATED THEREWITH;

 

10

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(P)                                 EXCEPT AS SET FORTH IN SCHEDULE 2.7(P), THE
PAYMENT, DISCHARGE OR SATISFACTION OF ANY MATERIAL CLAIM OR LIABILITY, OTHER
THAN THE PAYMENT, DISCHARGE OR SATISFACTION IN THE ORDINARY COURSE OF BUSINESS
OF LIABILITIES REFLECTED OR RESERVED AGAINST IN THE COMPANY FINANCIALS OR
INCURRED IN THE ORDINARY COURSE OF THE COMPANY’S BUSINESS SINCE THE FINANCIAL
STATEMENT DATE;

 

(Q)                                 EXCEPT AS SET FORTH IN SCHEDULE 2.7(Q), THE
FAILURE TO PAY OR OTHERWISE SATISFY MATERIAL LIABILITIES OF THE COMPANY OR ITS
SUBSIDIARIES WHEN DUE;

 

(R)                                    THE INCURRENCE OF ANY INDEBTEDNESS OR
GUARANTEE OF ANY SUCH INDEBTEDNESS OR ISSUANCE OR SALE OF ANY DEBT SECURITIES OF
THE COMPANY OR GUARANTEE OF ANY DEBT SECURITIES OF OTHERS, EXCEPT AS OTHERWISE
INCURRED IN THE ORDINARY COURSE OF THE COMPANY’S BUSINESS;

 

(S)                                  THE GRANT OF ANY SEVERANCE OR TERMINATION
PAY TO ANY DIRECTOR, OFFICER EMPLOYEE OR CONSULTANT, EXCEPT PAYMENTS MADE AS
REQUIRED BY LAW OR PURSUANT TO WRITTEN CONTRACTS OUTSTANDING ON THE DATE HEREOF,

 

(T)                                    EXCEPT AS SET FORTH IN SCHEDULE 2.7(T), A
CHANGE TO SALARY, RATE OF COMMISSIONS, RATE OF CONSULTING FEES OR ANY OTHER
COMPENSATION OF ANY CURRENT OFFICER, DIRECTOR, SHAREHOLDER, EMPLOYEE,
INDEPENDENT CONTRACTOR OR CONSULTANT OF THE COMPANY EXCEPT IN THE ORDINARY
COURSE OF BUSINESS CONSISTENT WITH THE COMPANY’S PAST PRACTICE;

 

(U)                                 EXCEPT AS SET FORTH IN SCHEDULE 2.7(U), THE
PAYMENT OF ANY CONSIDERATION OF ANY NATURE WHATSOEVER (OTHER THAN, IN THE
ORDINARY COURSE OF BUSINESS, SALARY, BONUS, COMMISSIONS OR CONSULTING FEES AND
CUSTOMARY BENEFITS AND OUT OF POCKET EXPENSES PAID TO ANY CURRENT OR FORMER
OFFICER, DIRECTOR, SHAREHOLDER, EMPLOYEE OR CONSULTANT OF THE COMPANY) TO ANY
CURRENT OR FORMER OFFICER, DIRECTOR, SHAREHOLDER, EMPLOYEE, INDEPENDENT
CONTRACTOR OR CONSULTANT OF THE COMPANY;

 

(V)                                 THE ESTABLISHMENT OR MODIFICATION OF (I)
TARGETS, GOALS, POOLS OR SIMILAR PROVISIONS UNDER ANY EMPLOYMENT CONTRACT OR
OTHER EMPLOYEE COMPENSATION ARRANGEMENT OR INDEPENDENT CONTRACTOR CONTRACT OR
OTHER COMPENSATION ARRANGEMENT OR (II) SALARY RANGES, INCREASED GUIDELINES OR
SIMILAR PROVISIONS IN RESPECT OF ANY EMPLOYMENT CONTRACT OR OTHER EMPLOYEE
COMPENSATION ARRANGEMENT OR INDEPENDENT CONTRACTOR CONTRACT OR OTHER
COMPENSATION ARRANGEMENT, EXCEPT FOR THOSE MADE IN THE ORDINARY COURSE OF THE
COMPANY’S BUSINESS;

 

(W)                               THE ADOPTION, ENTERING INTO, AMENDMENT,
MODIFICATION OR TERMINATION (PARTIAL OR COMPLETE) OF ANY BENEFIT PLAN;

 

(X)                                   THE PAYMENT OF ANY DISCRETIONARY OR STAY
BONUS EXCEPT IN THE ORDINARY COURSE OF BUSINESS CONSISTENT WITH THE COMPANY’S
PAST PRACTICE;

 

(Y)                                 TO COMPANY’S KNOWLEDGE, ANY ACTION WHICH
WOULD BE REASONABLY LIKELY TO INTERFERE IN A MATERIAL WAY WITH PARENT’S ABILITY
TO ACCOUNT FOR OR COMPLETE THE TRANSACTIONS CONTEMPLATED HEREBY;

 

(Z)                                   THE MAKING OR CHANGING OF ANY ELECTION IN
RESPECT OF TAXES, ADOPTION OR CHANGE IN ANY ACCOUNTING METHOD IN RESPECT OF
TAXES, THE ENTERING INTO OF 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, OR CONSENT TO ANY EXTENSION OR WAIVER

 

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OF THE LIMITATION PERIOD APPLICABLE TO ANY CLAIM OR ASSESSMENT IN RESPECT OF
TAXES WITH ANY TAXING AUTHORITY OR OTHERWISE, EXCEPT FOR ANY OF THE FOREGOING
WHICH WOULD NOT REASONABLY BE EXPECTED TO GIVE RISE TO A MATERIAL ADVERSE
EFFECT;

 

(AA)                            EXCEPT AS SET FORTH IN SCHEDULE 2.7(AA), THE
MAKING OF ANY CHANGE IN THE ACCOUNTING POLICIES, PRINCIPLES, METHODS, PRACTICES
OR PROCEDURES OF THE COMPANY (INCLUDING WITHOUT LIMITATION FOR BAD DEBTS,
CONTINGENT LIABILITIES OR OTHERWISE, RESPECTING CAPITALIZATION OR EXPENSE OF
RESEARCH AND DEVELOPMENT EXPENDITURES, DEPRECIATION OR AMORTIZATION RATES OR
TIMING OF RECOGNITION OF INCOME AND EXPENSE), EXCEPT FOR ANY OF THE FOREGOING
WHICH WOULD NOT REASONABLY BE EXPECTED TO GIVE RISE TO A MATERIAL ADVERSE
EFFECT;

 

(BB)                          OTHER THAN IN THE ORDINARY COURSE OF THE COMPANY’S
BUSINESS, THE MAKING OF ANY REPRESENTATION OR PROPOSAL TO, OR ENGAGEMENT IN
SUBSTANTIVE DISCUSSIONS WITH, ANY OF THE HOLDERS (OR THEIR REPRESENTATIVES) OF
ANY INDEBTEDNESS, OR TO OR WITH ANY PARTY WHICH HAS ISSUED A LETTER OF CREDIT
WHICH BENEFITS THE COMPANY;

 

(CC)                            THE COMMENCEMENT OR TERMINATION OF, OR CHANGE
IN, ANY LINE OF BUSINESS OF THE COMPANY OTHER THAN IN THE ORDINARY COURSE OF
BUSINESS;

 

(DD)                          THE CANCELLATION, AMENDMENT OR FAILURE TO RENEW
ANY INSURANCE POLICY OTHER THAN IN THE ORDINARY COURSE OF BUSINESS CONSISTENT
WITH PAST PRACTICE, OR FAILURE TO USE COMMERCIALLY REASONABLE EFFORTS TO GIVE
ALL NOTICES AND PRESENT ALL CLAIMS UNDER ALL SUCH POLICIES IN A TIMELY FASHION,
EXCEPT FOR ANY OF THE FOREGOING WHICH DO NOT GIVE RISE TO A MATERIAL ADVERSE
EFFECT;

 

(EE)                            ANY AMENDMENT, FAILURE TO RENEW, OR FAILURE TO
USE COMMERCIALLY REASONABLE EFFORTS TO MAINTAIN, ITS EXISTING APPROVALS OR
FAILURE TO OBSERVE ANY LAW OR ORDER APPLICABLE TO THE CONDUCT OF THE BUSINESS OF
THE COMPANY OR THE ASSETS AND PROPERTIES OF THE COMPANY, EXCEPT FOR ANY OF THE
FOREGOING WHICH WOULD NOT REASONABLY BE EXPECTED TO GIVE RISE TO A MATERIAL
ADVERSE EFFECT;

 

(FF)                                TO COMPANY’S KNOWLEDGE, ANY FAILURE TO PAY
OR OTHERWISE SATISFY ANY OBLIGATIONS TO PROCURE, MAINTAIN, RENEW, EXTEND OR
ENFORCE ANY COMPANY INTELLECTUAL PROPERTY, INCLUDING, BUT NOT LIMITED TO,
SUBMISSION OF REQUIRED DOCUMENTS OR FEES DURING THE PROSECUTION OF PATENT,
TRADEMARK OR OTHER APPLICATIONS FOR REGISTERED INTELLECTUAL PROPERTY RIGHTS
OTHER THAN IN THE ORDINARY COURSE OF BUSINESS OR WHICH WOULD NOT REASONABLY BE
EXPECTED TO GIVE RISE TO A MATERIAL ADVERSE EFFECT;

 

(GG)                          ANY 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 FIFTEEN THOUSAND DOLLARS ($15,000);

 

(HH)                          THE REPURCHASE, CANCELLATION OR MODIFICATION OF
THE TERMS OF ANY COMPANY COMMON STOCK, OR OTHER FINANCIAL INSTRUMENT THAT
DERIVES THE MAJORITY OF ITS VALUE FROM ITS CONVERTIBILITY INTO COMPANY COMMON
STOCK, OTHER THAN TRANSACTIONS ENTERED INTO IN THE ORDINARY COURSE OF BUSINESS
AND PURSUANT TO CONTRACTUAL PROVISIONS IN EFFECT AT THE DATE OF THIS AGREEMENT;
OR

 

(II)                                  ANY ENTERING INTO ANY AGREEMENT TO DO ANY
OF THE FOREGOING.

 

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2.8                                 No Undisclosed Liabilities. Except as set
forth in Schedule 2.8, the Company has no obligations or liabilities of any
nature (matured or unmatured, fixed or contingent) other than (i) those set
forth or reserved against in the Company Financials, (ii) those incurred in
connection with this Agreement or the transactions contemplated hereby, (iii)
those incurred in the ordinary course of business consistent with the Company’s
past practice, and (iv) those set forth in this Agreement or the Schedules
hereto.

 

2.9                                 Restrictions on Business Activities. Except
as set forth in Schedule 2.9, there is no agreement or Order binding upon the
Company, or any of its assets or properties which has had or could reasonably be
expected to have the effect of prohibiting or impairing any current or future
business practice of the Company, any acquisition of property by the Company or
the conduct of business by the Company as currently conducted or as proposed to
be conducted by the Company other than in the ordinary course of business or
which would not reasonably be expected to give rise to a Material Adverse
Effect.

 

2.10                     Taxes.  Subject to Section 1.14 as it relates to the
Tax Liability:

 

(A)                                  SUBJECT TO SECTION 1.14 AND SECTION 2.10(P)
BELOW, AT CLOSING, THE COMPANY WILL HAVE TIMELY FILED AND PAID ANY AND ALL
FEDERAL, STATE, LOCAL AND FOREIGN TAXES DUE, ASSESSED OR ESTIMATED FOR ANY OPEN
TAX RETURN YEARS DUE THROUGH THE TAX YEAR ENDED DECEMBER 31, 2006 AND THROUGH
THE CLOSING DATE.  THE COMPANY HAS PREPARED AND MAINTAINED ADEQUATE RECORDS SO
AS TO FACILITATE THE PROMPT FILING OF TAX RETURNS WHEN THEY BECOME DUE

 

(B)                                 SUBJECT TO SECTION 2.10(P) BELOW, THE
COMPANY HAS NOT INCURRED ANY MATERIAL LIABILITY FOR TAXES OTHER THAN AS
REFLECTED ON THE COMPANY FINANCIALS PURSUANT TO GAAP.  THE UNPAID TAXES OF THE
COMPANY (I) DID NOT, THROUGH THE CLOSING DATE EXCEED BY ANY MATERIAL AMOUNT THE
RESERVE FOR LIABILITY FOR INCOME TAX (OTHER THAN THE RESERVE FOR DEFERRED TAXES
ESTABLISHED TO REFLECT TIMING DIFFERENCES BETWEEN BOOK AND TAX INCOME) SET FORTH
ON THE FACE OF THE COMPANY’S MOST RECENT BALANCE SHEET AND (II) WILL NOT, TO
COMPANY’S KNOWLEDGE, EXCEED BY ANY MATERIAL AMOUNT THAT RESERVE AS ADJUSTED FOR
OPERATIONS AND TRANSACTIONS THROUGH THE CLOSING DATE.

 

(C)                                  EXCEPT AS DISCLOSED IN SCHEDULE 2.10(C),
THE COMPANY IS NOT PRESENTLY A PARTY TO ANY AGREEMENT EXTENDING THE TIME WITHIN
WHICH TO FILE ANY TAX RETURN.  TO COMPANY’S KNOWLEDGE, NO CLAIM HAS EVER BEEN
MADE BY A TAXING AUTHORITY OF ANY JURISDICTION IN WHICH THE COMPANY DOES NOT
FILE TAX RETURNS THAT IT IS OR MAY BE SUBJECT TO TAXATION BY THAT JURISDICTION.

 

(D)                                 SUBJECT TO SECTION 2.10(P) BELOW, TO
COMPANY’S KNOWLEDGE, THE COMPANY OR ITS AGENTS, IF APPLICABLE AT CLOSING, HAVE
COLLECTED OR WITHHELD ALL AMOUNTS REQUIRED TO BE COLLECTED OR WITHHELD BY IT ON
ACCOUNT OF TAXES OR OTHERWISE, AND HAVE REMITTED THE SAME TO THE APPROPRIATE
GOVERNMENTAL AUTHORITY IN THE MANNER AND WITHIN THE TIME REQUIRED UNDER ANY
APPLICABLE LEGISLATION OR, IF IT IS NOT YET DUE, HAVE SET IT ASIDE IN
APPROPRIATE ACCOUNTS FOR PAYMENT WHEN DUE.

 

(E)                                  SUBJECT TO SECTION 2.10(P) BELOW, EXCEPT AS
DISCLOSED IN SCHEDULE 2.10(E), THE COMPANY DOES NOT HAVE KNOWLEDGE OF ANY
ACTIONS BY ANY TAXING AUTHORITY IN CONNECTION WITH ASSESSING A MATERIAL AMOUNT
OF ADDITIONAL TAXES AGAINST AND IN RESPECT OF THE COMPANY FOR ANY PAST PERIOD. 
SUBJECT TO SECTION 2.10(P) BELOW, THERE IS NO DISPUTE OR CLAIM CONCERNING ANY
TAX LIABILITY OF THE COMPANY (I) THREATENED, CLAIMED OR RAISED BY ANY TAXING
AUTHORITY AND (II) OF WHICH THE

 

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COMPANY IS AWARE.  SUBJECT TO SECTION 2.10(P) BELOW, THERE WILL BE NO LIENS FOR
TAXES UPON THE ASSETS AND PROPERTIES OF THE COMPANY OTHER THAN LIENS FOR TAXES
NOT YET DUE OR WHICH ARE BEING CONTESTED BY THE COMPANY IN GOOD FAITH. THERE ARE
NO OUTSTANDING AGREEMENTS OR WAIVERS EXTENDING THE STATUTORY PERIOD OF
LIMITATION APPLICABLE TO ANY TAX RETURNS REQUIRED TO BE FILED BY, OR WHICH
INCLUDE OR ARE TREATED AS INCLUDING, THE COMPANY WITH RESPECT TO ANY TAX
ASSESSMENT OR DEFICIENCY AFFECTING THE COMPANY.

 

(F)                                    THE COMPANY HAS NOT RECEIVED ANY WRITTEN
RULING RELATED TO TAXES OR SUBJECT TO SECTION2.10(P) BELOW ENTERED INTO ANY
AGREEMENT WITH A TAXING AUTHORITY RELATING TO TAXES.

 

(G)                                 THE COMPANY HAS NO MATERIAL LIABILITY FOR
THE TAXES OF ANY PERSON OTHER THAN THE COMPANY OR (I) AS A TRANSFEREE OR
SUCCESSOR, OR (II) BY CONTRACT OR (III) OTHERWISE.

 

(H)                                 THE COMPANY HAS NOT AGREED TO MAKE AND IS
NOT REQUIRED TO MAKE ANY ADJUSTMENT UNDER SECTION 481 OR 263A OF THE CODE OR ANY
COMPARABLE PROVISION UNDER STATE LAWS BY REASON OF A CHANGE IN ACCOUNTING METHOD
OR AS A RESULT OF TRANSACTIONS OR EVENTS PRIOR TO THE DATE HEREOF.

 

(I)                                     THE COMPANY IS NOT A PARTY TO OR BOUND
BY ANY OBLIGATIONS UNDER ANY TAX SHARING, TAX ALLOCATION, TAX INDEMNITY OR
SIMILAR AGREEMENT OR ARRANGEMENT.

 

(J)                                     THE COMPANY IS NOT INVOLVED IN, SUBJECT
TO, OR A PARTY TO ANY JOINT VENTURE, PARTNERSHIP, CONTRACT OR OTHER ARRANGEMENT
THAT IS TREATED AS A PARTNERSHIP FOR FEDERAL, STATE, LOCAL OR FOREIGN INCOME TAX
PURPOSES.

 

(K)                                  THE COMPANY WAS NOT INCLUDED AND IS NOT
INCLUDIBLE IN THE TAX RETURN OF ANY PARENT CORPORATION OTHER THAN SUCH A RETURN
OF WHICH THE COMPANY IS THE COMMON PARENT CORPORATION.

 

(L)                                     EXCEPT AS SET FORTH IN SCHEDULE 2.10(L),
THE COMPANY HAS NOT:

 

(I)                                     ACQUIRED OR HAD THE USE OF ANY PROPERTY
FROM A PERSON WITH WHOM IT WAS NOT DEALING AT ARM’S LENGTH OTHER THAN AT FAIR
MARKET VALUE; OR

 

(II)                                  DISPOSED OF ANY MATERIAL ASSET TO A PERSON
WITH WHOM IT WAS NOT DEALING AT ARM’S LENGTH FOR PROCEEDS LESS THAN THE FAIR
MARKET VALUE THEREOF.

 

(M)                               THE COMPANY IS NOT NOR HAS IT EVER BEEN A
UNITED STATES REAL PROPERTY HOLDING CORPORATION WITHIN THE MEANING OF SECTION
897(C)(1)(A)(II) OF THE CODE.

 

(N)                                 THE COMPANY IS NOT A PERSONAL HOLDING
COMPANY.

 

(O)                                 TO COMPANY’S KNOWLEDGE, THE COMPANY IS IN
FULL COMPLIANCE WITH ALL TERMS AND CONDITIONS OF ANY TAX EXEMPTIONS OR OTHER
TAX-SHARING AGREEMENT OR ORDER OF A FOREIGN GOVERNMENT AND THE CONSUMMATION OF
THE TRANSACTIONS CONTEMPLATED HEREBY WILL NOT HAVE ANY MATERIAL ADVERSE EFFECT
ON THE CONTINUED VALIDITY AND EFFECTIVENESS OF ANY SUCH TAX EXEMPTIONS OR OTHER
TAX-SHARING AGREEMENT OR ORDER.

 

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(P)                                 OUTSTANDING TAX LIABILITIES.

 

(I)                               NOTWITHSTANDING ANY CONTRARY REPRESENTATION
AND/OR WARRANTY IN THIS SECTION 2.10, THE INTERNAL REVENUE SERVICE (“IRS”) HAS
ISSUED NOTICES OF DEFICIENCY TO THE COMPANY AND HAS AN UNRECORDED, GENERAL TAX
LIEN FOR CERTAIN UNPAID IRS FORM 941 EMPLOYMENT TAXES, INTEREST AND PENALTIES
ASSESSED AGAINST THE COMPANY FOR TAX PERIODS THIRD QUARTER 2006, FOURTH QUARTER
2006 AND FIRST QUARTER 2007 (“FEDERAL TAX LIABILITY”). THE COMPANY AND THE IRS
HAVE ENTERED INTO AN INSTALLMENT AGREEMENT DATED APRIL 23, 2007 WHEREBY THE
COMPANY HAS AGREED TO PAY THE IRS $4,000 PER WEEK COMMENCING APRIL 27, 2007 AND
CONTINUING EACH WEEK THEREAFTER UNTIL THE 2006 TAX LIABILITY IS PAID IN FULL.
THE COMPANY HAS BEEN IN FULL COMPLIANCE WITH SAID INSTALLMENT AGREEMENT,
CONTEMPORANEOUS WITH CLOSING, THE FEDERAL TAX LIABILITY WILL BE PAID IN FULL BY
THE COMPANY. OTHER THAN THE SPECIFIC TAXES IDENTIFIED IN THIS SECTION 2.10(P),
ALL OTHER TAXES INCLUDING PAYROLL AND WITHHOLDING AMOUNTS HAVE BEEN PAID AND ARE
CURRENT THROUGH THE DATE OF CLOSING.

 

(ii)                            Notwithstanding any contrary representation
and/or warranty of this Section 2.10, as disclosed on Schedule 1.14, the State
of Idaho (“State”) has issued notices of deficiency to the Company and has an
recorded tax lien for certain unpaid taxes, interest and penalties assessed
against the Company (“State Tax Liability”). Contemporaneous with Closing, the
State Tax Liability will be paid in full by the Company.

 

2.11               Legal Proceedings.

 

(A)                                  EXCEPT AS SET FORTH IN SCHEDULE 2.11:

 

(I)                                     THERE ARE NO ACTIONS OR PROCEEDINGS
BROUGHT OR, TO THE KNOWLEDGE OF THE COMPANY, PENDING OR THREATENED AGAINST THE
COMPANY OR ITS ASSETS AND PROPERTIES;

 

(II)                                  THERE ARE NO FACTS OR CIRCUMSTANCES KNOWN
TO THE COMPANY THAT COULD REASONABLY BE EXPECTED TO GIVE RISE TO ANY MATERIAL
ACTION OR PROCEEDING AGAINST THE COMPANY; AND

 

(III)                               THE COMPANY HAS NOT RECEIVED NOTICE OF, AND
DOES NOT OTHERWISE HAVE KNOWLEDGE OF, ANY ORDERS OUTSTANDING AGAINST THE
COMPANY.

 

(B)                                 PRIOR TO THE EXECUTION OF THIS AGREEMENT,
THE COMPANY HAS DELIVERED TO PARENT UPON PARENT’S WRITTEN REQUEST, ALL RESPONSES
OF COUNSEL FOR THE COMPANY TO AUDITOR’S REQUESTS FOR INFORMATION (TOGETHER WITH
ANY UPDATES PROVIDED BY SUCH COUNSEL) FOR THE LAST THREE (3) YEARS REGARDING
ACTIONS OR PROCEEDINGS PENDING OR, TO THE KNOWLEDGE OF THE COMPANY, THREATENED
AGAINST, RELATING TO OR AFFECTING THE COMPANY. SCHEDULE 2.11 SETS FORTH ALL
ACTIONS OR PROCEEDINGS AGAINST OR BY THE COMPANY DURING THE LAST THREE (3)
YEARS.

 

2.12                           Compliance With Laws and Orders. To Company’s
knowledge, the Company has not violated, and is not currently in violation or
default under, any material Law or Order applicable to the Company or any of its
Assets and Properties.

 

2.13                           Benefit Plans. The Company has provided to the
Parent summary information regarding its Benefit Plans as set forth in Schedule
2.13.

 

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2.14                           Title to Property. At Closing, the Company will
have good and marketable title to all of its properties, interests in properties
and assets, real and personal, reflected in the Company Financials or acquired
after the Financial Statement Date (except properties, interests in properties
and assets sold or otherwise disposed of since the Financial Statement Date in
the ordinary course of business), or with respect to leased properties and
assets, valid leasehold interests in, free and clear of all mortgages, liens,
pledges, charges or encumbrances of any kind or character, except (i) the lien
of current Taxes not yet due and payable or which are being contested by the
Company in good faith, (ii) such imperfections of title, liens and easements as
do not and will not materially detract from or interfere with the use of the
properties subject thereto or affected thereby, or otherwise materially impair
business operations involving such properties, (iii) liens securing debt which
is reflected on the Company Financials and (iv) Liens listed on Schedule 2.14.
The property and equipment of the Company that are used in the operations of its
business are in good operating condition subject to normal wear and tear. All
material properties used in the operations of the Company are reflected in the
Company Financials. The Company owns no real property.

 

2.15                           Intellectual Property.

 

(A)                                  EXCEPT AS SET FORTH ON SCHEDULE 2.15(A),
THE COMPANY OWNS, OR IS LICENSED OR OTHERWISE POSSESSES LEGALLY ENFORCEABLE
RIGHTS TO USE, ALL INTELLECTUAL PROPERTY THAT IS USED OR CURRENTLY PROPOSED TO
BE USED IN THE BUSINESS OF THE COMPANY AS CURRENTLY CONDUCTED OR AS PRESENTLY
PROPOSED BY THE COMPANY TO BE CONDUCTED IN THE IMMEDIATE FUTURE.

 

(B)                                 EXCEPT AS SET FORTH IN SCHEDULE 2.15(B), THE
COMPANY HAS NOT (I) LICENSED ANY COMPANY INTELLECTUAL PROPERTY IN SOURCE CODE
FORM TO ANY THIRD PARTY OR (II) ENTERED INTO ANY EXCLUSIVE AGREEMENTS RELATING
TO ANY COMPANY INTELLECTUAL PROPERTY WITH ANY THIRD PARTY.

 

(C)                                  SCHEDULE 2.15(C) LISTS (I) ALL PATENTS AND
PATENT APPLICATIONS AND ALL REGISTERED TRADEMARKS, TRADE NAMES AND SERVICE
MARKS, REGISTERED COPYRIGHTS, DOMAIN NAMES, AND MASKWORKS, INCLUDED IN THE
COMPANY INTELLECTUAL PROPERTY, INCLUDING THE JURISDICTIONS IN WHICH EACH SUCH
INTELLECTUAL PROPERTY RIGHT HAS BEEN ISSUED OR REGISTERED OR IN WHICH ANY
APPLICATION FOR SUCH ISSUANCE AND REGISTRATION HAS BEEN FILED, (II) ALL
LICENSES, SUBLICENSES AND OTHER AGREEMENTS AS TO WHICH THE COMPANY IS A PARTY
AND PURSUANT TO WHICH ANY OTHER PERSON IS AUTHORIZED TO USE ANY INTELLECTUAL
PROPERTY, AND (III) ALL LICENSES, SUBLICENSES AND OTHER AGREEMENTS AS TO WHICH
THE COMPANY IS A PARTY AND PURSUANT TO WHICH THE COMPANY IS AUTHORIZED TO USE
ANY THIRD-PARTY INTELLECTUAL PROPERTY (“THIRD PARTY INTELLECTUAL PROPERTY
RIGHTS”) WHICH ARE INCORPORATED IN, ARE, OR FORM A PART OF ANY COMPANY PRODUCT
OR WHICH ARE OTHERWISE USED (OR CURRENTLY PROPOSED TO BE USED) BY THE COMPANY IN
THE BUSINESS OF THE COMPANY AS CURRENTLY CONDUCTED OR AS PROPOSED TO BE
CONDUCTED BY THE COMPANY, OTHER THAN OFF-THE-SHELF SOFTWARE PROGRAMS LICENSED
UNDER STANDARD SHRINK WRAP LICENSE AGREEMENTS.

 

(D)                                 TO COMPANY’S KNOWLEDGE, NO PERSON (INCLUDING
EMPLOYEES AND FORMER EMPLOYEES OF THE COMPANY) IS INFRINGING, MISAPPROPRIATING
OR OTHERWISE MAKING ANY UNAUTHORIZED USE OR DISCLOSURE OF ANY INTELLECTUAL
PROPERTY RIGHTS OF THE COMPANY OR ANY THIRD PARTY INTELLECTUAL PROPERTY RIGHTS
TO THE EXTENT LICENSED BY OR THROUGH THE COMPANY. THE COMPANY HAS NOT ENTERED
INTO ANY AGREEMENT TO INDEMNIFY ANY OTHER PERSON AGAINST ANY CHARGE OF
INFRINGEMENT OF ANY COMPANY INTELLECTUAL PROPERTY, EXCEPT AS SET FORTH IN
SCHEDULE 2.15(D).

 

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(E)                                  TO COMPANY’S KNOWLEDGE, THE COMPANY IS NOT,
NOR WILL IT BE AS A RESULT OF THE EXECUTION AND DELIVERY OF THIS AGREEMENT OR
THE PERFORMANCE OF ITS OBLIGATIONS UNDER THIS AGREEMENT, IN BREACH OF ANY
LICENSE, SUBLICENSE OR OTHER AGREEMENT RELATING TO THE COMPANY INTELLECTUAL
PROPERTY OR THIRD PARTY INTELLECTUAL PROPERTY RIGHTS.

 

(F)                                    TO COMPANY’S KNOWLEDGE, ALL PATENTS,
REGISTERED TRADEMARKS, DOMAIN NAMES, SERVICE MARKS AND COPYRIGHTS HELD BY THE
COMPANY ARE VALID AND SUBSISTING, AND THE MANUFACTURING, MARKETING, LICENSING OR
SALE OF ITS PRODUCTS, TO THE KNOWLEDGE OF THE COMPANY, DOES NOT INFRINGE ANY
PATENT, TRADEMARK, SERVICE MARK, COPYRIGHT, TRADE SECRET OR OTHER PROPRIETARY
RIGHT OF ANY THIRD PARTY. EXCEPT AS SET FORTH ON SCHEDULE 2.15(F), DURING THE
LAST THREE (3) YEARS, THE COMPANY (I) HAS NOT BEEN SUED IN ANY SUIT, ACTION OR
PROCEEDING WHICH INVOLVES A CLAIM OF INFRINGEMENT OF ANY PATENTS, TRADEMARKS,
SERVICE MARKS, COPYRIGHTS OR VIOLATION OF ANY TRADE SECRET OR OTHER PROPRIETARY
RIGHT OF ANY THIRD PARTY; AND (II) HAS NOT BROUGHT ANY ACTION, SUIT OR
PROCEEDING FOR INFRINGEMENT OF INTELLECTUAL PROPERTY OR BREACH OF ANY LICENSE OR
AGREEMENT INVOLVING INTELLECTUAL PROPERTY AGAINST ANY THIRD PARTY.

 

(G)                                 THE COMPANY HAS SECURED VALID WRITTEN
ASSIGNMENTS AND WAIVER OF ANY MORAL RIGHTS FROM CONSULTANTS AND EMPLOYEES WHO
CONTRIBUTED TO THE CREATION OR DEVELOPMENT OF COMPANY INTELLECTUAL PROPERTY OF
THE RIGHTS TO SUCH CONTRIBUTIONS THAT THE COMPANY DOES NOT ALREADY OWN BY
OPERATION OF LAW.

 

(H)                                 THE COMPANY HAS TAKEN REASONABLY NECESSARY
AND APPROPRIATE STEPS TO PROTECT AND PRESERVE THE CONFIDENTIALITY OF ALL COMPANY
INTELLECTUAL PROPERTY NOT OTHERWISE PROTECTED BY PATENTS, PATENT APPLICATIONS OR
COPYRIGHT (“CONFIDENTIAL INFORMATION”). ALL USE, DISCLOSURE OR APPROPRIATION OF
CONFIDENTIAL INFORMATION BY THE COMPANY BY OR TO A THIRD PARTY HAS BEEN PURSUANT
TO THE TERMS OF A WRITTEN AGREEMENT BETWEEN THE COMPANY AND SUCH THIRD PARTY,
EXCEPT WHERE THE FAILURE TO DO SO WOULD NOT CONSTITUTE A MATERIAL ADVERSE
EFFECT.

 

2.16                           Contracts.

 

(A)                                  SCHEDULE 2.16(A) CONTAINS A TRUE AND
COMPLETE LIST OF EACH OF THE MATERIAL CONTRACTS (TRUE AND COMPLETE COPIES OR, IF
NONE, REASONABLY COMPLETE AND ACCURATE WRITTEN DESCRIPTIONS OF WHICH, TOGETHER
WITH ALL AMENDMENTS AND SUPPLEMENTS THERETO AND ALL CONTINUING WAIVERS OF ANY
MATERIAL TERMS THEREOF, HAVE BEEN MADE AVAILABLE TO PARENT PRIOR TO THE
EXECUTION OF THIS AGREEMENT) OF THE COMPANY. SCHEDULE 2.16(A) CONTAINS A TRUE
AND COMPLETE LIST OF EACH CONTRACT (DENOTED WITH AN ASTERISK) OF THE COMPANY NOT
TERMINABLE BY THE COMPANY UPON 30 DAYS (OR LESS) NOTICE BY THE COMPANY WITHOUT
PENALTY OR OBLIGATION TO MAKE PAYMENTS BASED ON SUCH TERMINATION.

 

(B)                                 EACH CONTRACT DISCLOSED IN SCHEDULE 2.16(A),
UNLESS OTHERWISE STATED THEREIN, IS IN FULL FORCE AND EFFECT AND CONSTITUTES, TO
COMPANY’S KNOWLEDGE, A LEGAL, VALID AND BINDING AGREEMENT, ENFORCEABLE IN
ACCORDANCE WITH ITS TERMS, AND, TO THE KNOWLEDGE OF THE COMPANY, NO PARTY TO
SUCH CONTRACT IS, NOR HAS RECEIVED NOTICE THAT IT IS, IN VIOLATION OR BREACH OF
OR DEFAULT UNDER ANY SUCH CONTRACT (OR WITH NOTICE OR LAPSE OF TIME OR BOTH,
WOULD BE IN VIOLATION OR BREACH OF OR DEFAULT UNDER ANY SUCH CONTRACT).

 

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(C)           EXCEPT AS SET FORTH ON SCHEDULE 2.16(C), THE COMPANY IS NOT A
PARTY TO OR BOUND BY ANY CONTRACT THAT (I) AUTOMATICALLY TERMINATES OR ALLOWS
TERMINATION BY THE OTHER PARTY THERETO UPON CONSUMMATION OF THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT OR (II) CONTAINS ANY COVENANT OR OTHER PROVISION
WHICH LIMITS THE ABILITY OF THE COMPANY TO COMPETE WITH ANY PERSON IN ANY LINE
OF BUSINESS OR IN ANY AREA OR TERRITORY.

 

2.17         Insurance. The Company’s current insurance policies, if any, are
listed on Schedule 2.17.

 

2.18         Affiliate Transactions.

 

(A)           EXCEPT AS DISCLOSED IN SCHEDULE 2.18(A) OR AS OTHERWISE DISCLOSED
OR DISCUSSED HEREIN OR CONTEMPLATED HEREBY, (I) THERE ARE NO CONTRACTS OR
LIABILITIES BETWEEN THE COMPANY, ON THE ONE HAND, AND (1) ANY CURRENT OR FORMER
OFFICER, DIRECTOR, SHAREHOLDER, OR TO THE KNOWLEDGE OF THE COMPANY, ANY
AFFILIATE OR ASSOCIATE OF THE COMPANY OR (2) ANY PERSON WHO, TO THE KNOWLEDGE OF
THE COMPANY, IS AN ASSOCIATE OF ANY SUCH OFFICER, DIRECTOR, SHAREHOLDER OR
AFFILIATE, ON THE OTHER HAND, (II) THE COMPANY DOES NOT PROVIDE OR CAUSE TO BE
PROVIDED ANY ASSETS, SERVICES OR FACILITIES TO ANY CURRENT OR FORMER OFFICER,
DIRECTOR, SHAREHOLDER, AFFILIATE OR ASSOCIATE OF THE COMPANY, (III) NO CURRENT
OR FORMER OFFICER, DIRECTOR, SHAREHOLDER, AFFILIATE OR ASSOCIATE OF THE COMPANY
PROVIDES OR CAUSES TO BE PROVIDED ANY ASSETS, SERVICES OR FACILITIES TO THE
COMPANY AND (IV) THE COMPANY DOES NOT BENEFICIALLY OWN, DIRECTLY OR INDIRECTLY,
ANY INVESTMENT ASSETS OF ANY CURRENT OR FORMER OFFICER, DIRECTOR, SHAREHOLDER,
AFFILIATE OR ASSOCIATE OF THE COMPANY.

 

(B)           EACH OF THE CONTRACTS AND LIABILITIES LISTED IN SCHEDULE 2.18(A),
IF ANY, WAS ENTERED INTO OR INCURRED, AS THE CASE MAY BE, ON TERMS NO LESS
FAVORABLE TO THE COMPANY (IN THE REASONABLE JUDGMENT OF THE COMPANY) THAN IF
SUCH CONTRACT OR LIABILITY WAS ENTERED INTO OR NEGOTIATED ON AN ARM’S LENGTH
BASIS ON COMPETITIVE TERMS. ANY CONTRACT TO WHICH THE COMPANY IS A PARTY AND IN
WHICH ANY DIRECTOR OF THE COMPANY HAS A FINANCIAL INTEREST IN SUCH CONTRACT WAS
APPROVED IN ACCORDANCE WITH APPLICABLE LAW.

 

2.19         Employees; Labor Relations.

 

(A)           TO COMPANY’S KNOWLEDGE, THE COMPANY IS IN COMPLIANCE IN ALL
MATERIAL RESPECTS WITH ALL CURRENTLY APPLICABLE LAWS AND REGULATIONS RESPECTING
EMPLOYMENT, DISCRIMINATION IN EMPLOYMENT, TERMS AND CONDITIONS OF EMPLOYMENT,
WAGES, HOURS AND OCCUPATIONAL SAFETY AND HEALTH AND EMPLOYMENT PRACTICES, AND IS
NOT ENGAGED IN ANY MATERIAL RESPECT IN ANY UNFAIR LABOR PRACTICE EXCEPT WHERE
NON-COMPLIANCE WITH ANY OF THE FOREGOING BY THE COMPANY WILL NOT CONSTITUTE A
MATERIAL ADVERSE EFFECT. TO COMPANY’S KNOWLEDGE, THE AT CLOSING, THE COMPANY IS
NOT LIABLE FOR ANY PAYMENT TO ANY TRUST OR OTHER FUND OR TO ANY GOVERNMENTAL OR
ADMINISTRATIVE AUTHORITY, WITH RESPECT TO EMPLOYMENT INSURANCE, SOCIAL SECURITY,
WORKERS COMPENSATION, HEALTH 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 CLAIMS AGAINST THE COMPANY
UNDER ANY WORKERS COMPENSATION PLAN OR POLICY OR FOR LONG TERM DISABILITY WHICH
CONSTITUTES A MATERIAL ADVERSE EFFECT. THERE ARE NO CONTROVERSIES PENDING OR, TO
THE KNOWLEDGE OF THE COMPANY, THREATENED, BETWEEN THE COMPANY AND ANY OF ITS
EMPLOYEES, WHICH CONTROVERSIES HAVE OR COULD REASONABLY BE EXPECTED TO RESULT IN
AN ACTION, SUIT, PROCEEDING, CLAIM, ARBITRATION OR INVESTIGATION BEFORE ANY
AGENCY, COURT OR TRIBUNAL, FOREIGN OR DOMESTIC, WHICH, IN ANY OF THE FOREGOING
CASES,

 

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CONSTITUTES A MATERIAL ADVERSE EFFECT. THE COMPANY IS NOT A PARTY TO ANY
COLLECTIVE BARGAINING AGREEMENT OR OTHER LABOR UNION CONTRACT NOR DOES THE
COMPANY KNOW OF ANY ACTIVITIES OR PROCEEDINGS OF ANY LABOR UNION TO ORGANIZE ANY
SUCH EMPLOYEES. TO THE BEST OF THE COMPANY’S KNOWLEDGE, NO EMPLOYEES OF THE
COMPANY ARE IN VIOLATION OF ANY TERM OF ANY EMPLOYMENT CONTRACT, PATENT
DISCLOSURE AGREEMENT, NON-COMPETITION AGREEMENT, OR ANY RESTRICTIVE COVENANT TO
A FORMER EMPLOYER RELATING TO THE RIGHT OF ANY SUCH EMPLOYEE TO BE EMPLOYED BY
THE COMPANY BECAUSE OF THE NATURE OF THE BUSINESS CONDUCTED OR PROPOSED TO BE
CONDUCTED BY THE COMPANY OR TO THE USE OF TRADE SECRETS OR PROPRIETARY
INFORMATION OF OTHERS. NO EMPLOYEES OF THE COMPANY HAVE GIVEN NOTICE TO THE
COMPANY, NOR IS THE COMPANY OTHERWISE AWARE, THAT ANY SUCH EMPLOYEE INTENDS TO
TERMINATE HIS OR HER EMPLOYMENT WITH THE COMPANY.

 

(B)           EXCEPT AS SET FORTH IN SCHEDULE 2.19(B), ALL EMPLOYEES OF THE
COMPANY ARE TERMINABLE BY THE COMPANY UPON REASONABLE NOTICE IN ACCORDANCE WITH
APPLICABLE LAW, COPIES OF WHICH HAVE BEEN PROVIDED TO PARENT. SCHEDULE 2.19(B)
SETS FORTH, INDIVIDUALLY AND BY CATEGORY, THE NAME OF EACH OFFICER, EMPLOYEE AND
CONSULTANT, TOGETHER WITH SUCH PERSON’S POSITION OR FUNCTION, ANNUAL BASE SALARY
OR WAGE AND ANY INCENTIVE, SEVERANCE OR BONUS ARRANGEMENTS WITH RESPECT TO SUCH
PERSON. THE COMPLETION OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT WILL
NOT RESULT IN ANY PAYMENT OR INCREASED PAYMENT BECOMING DUE FROM THE COMPANY TO
ANY OFFICER, DIRECTOR, OR EMPLOYEE OF, OR CONSULTANT TO, THE COMPANY OTHER THAN
AS SET FORTH IN ARTICLE 1 HEREOF. TO COMPANY’S KNOWLEDGE, THE COMPANY IS NOT A
PARTY TO ANY AGREEMENT FOR THE PROVISION OF LABOR FROM ANY OUTSIDE AGENCY THAT
WOULD RESULT IN TREATMENT OF SUCH PROVIDERS OF LABOR AS AN EMPLOYEE OF THE
COMPANY. TO COMPANY’S KNOWLEDGE, THERE HAVE BEEN NO CLAIMS BY EMPLOYEES OF SUCH
OUTSIDE AGENCIES, IF ANY, WITH REGARD TO EMPLOYEES ASSIGNED TO WORK FOR THE
COMPANY, AND NO CLAIMS BY ANY GOVERNMENTAL AGENCY WITH REGARD TO SUCH EMPLOYEES.

 

(C)           EXCEPT AS DISCLOSED ON SCHEDULE 2.19(C), DURING THE LAST THREE (3)
YEARS, THERE HAVE BEEN NO FEDERAL OR STATE CLAIMS BASED ON EMPLOYMENT EQUITY,
SEX, SEXUAL OR OTHER HARASSMENT, AGE, DISABILITY, RACE OR OTHER DISCRIMINATION
OR COMMON LAW CLAIMS, INCLUDING CLAIMS OF WRONGFUL DISMISSAL, SEVERANCE PAY,
PAYMENT IN LIEU OF NOTICE OR BAD FAITH TERMINATION, BY ANY EMPLOYEES OF THE
COMPANY OR BY ANY OF THE EMPLOYEES PERFORMING WORK FOR THE COMPANY BUT PROVIDED
BY AN OUTSIDE EMPLOYMENT AGENCY, AND THERE ARE NO FACTS OR CIRCUMSTANCES KNOWN
TO THE COMPANY THAT COULD REASONABLY BE EXPECTED TO GIVE RISE TO SUCH COMPLAINT
OR CLAIM.

 

(D)           THE COMPANY HAS WRITTEN EMPLOYMENT POLICIES AND/OR EMPLOYEE
HANDBOOKS OR MANUALS TO THE EXTENT REQUIRED BY LAW. TO THE KNOWLEDGE OF THE
COMPANY, NO OFFICER, EMPLOYEE OR CONSULTANT OF THE COMPANY IS OBLIGATED UNDER
ANY CONTRACT OR OTHER AGREEMENT OR SUBJECT TO ANY ORDER OR LAW THAT WOULD
INTERFERE WITH THE COMPANY’S BUSINESS AS CURRENTLY CONDUCTED.

 

2.20         Environmental Matters. The Company does not now own, and has never
owned, any fee simple interest in real property.

 

2.21         Substantial Customers and Suppliers. Schedule 2.21 lists the 15
largest customers of the Company, collectively, on the basis of revenues
collected or accrued for the most recent completed fiscal year. Schedule 2.21
also lists the 15 largest suppliers of the Company on the basis of cost of goods
or services purchased for the most recent fiscal year ended. To the knowledge of
the Company, no such customer or supplier is threatened with bankruptcy or
insolvency.

 

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2.22         Accounts Receivable. To Company’s knowledge, except as set forth in
Schedule 2.22 the accounts and notes receivable of the Company reflected on the
Company Financials, and all accounts and notes receivable arising subsequent to
the Financial Statement Date, (a) arose from bona fide sales transactions in the
ordinary course of business, consistent with past practice, and are payable on
ordinary trade terms, (b) are legal, valid and binding obligations of the
respective debtors enforceable in accordance with their respective terms, (c)
are not subject to any valid set-off or counterclaim and (d) do not represent
obligations for goods sold on consignment, on approval or on a sale-or-return
basis or subject to any other repurchase or return arrangement.

 

2.23         Inventory. The Company maintains no inventory. The Company
maintains small quantities of immaterial office supplies inventory in its
offices in Boise, Idaho at the Company’s headquarters.

 

2.24         Other Negotiations; Brokers; Third Party Expenses. Except as set
forth in Schedule 2.24, neither the Company nor, to the knowledge of the
Company, any of its Affiliates (nor any investment banker, financial advisor,
attorney, accountant or other Person retained by, and in connection with its
actions, for or on behalf of the Company or any such Affiliate) (i) has entered
into any Contract that conflicts with any of the transactions contemplated by
this Agreement or (ii) has entered into any Contract or had any discussions with
any Person regarding any transaction involving the Company which could result in
the Company’s being subject to any claim for liability to said Person as a
result of entering into this Agreement or consummating the transactions
contemplated hereby. Without limiting the foregoing, except as set forth in
Schedule 2.24, no finder, broker, agent, financial advisor, or other
intermediary has acted on behalf of the Company in connection with the Merger or
the negotiation or consummation of this Agreement or any of the transactions
contemplated hereby. Schedule 2.24 sets forth a reasonable estimate of all Third
Party Expenses expected to be incurred by the Company through the Closing Date
in connection with the negotiation of the terms and conditions of this Agreement
and the Closing of the transactions contemplated hereby.

 

2.25         Warranty Obligations; Maintenance Contracts.

 

(A)           SCHEDULE 2.25 SETS FORTH (A) A LIST OF ALL FORMS OF WRITTEN
WARRANTIES, GUARANTEES AND WRITTEN WARRANTY POLICIES OF THE COMPANY IN RESPECT
OF ANY OF THE COMPANY’S PRODUCTS AND SERVICES, WHICH ARE CURRENTLY IN EFFECT
(THE “WARRANTY OBLIGATIONS”), AND THE DURATION OF EACH SUCH WARRANTY OBLIGATION,
(B) EACH OF THE WARRANTY OBLIGATIONS WHICH IS SUBJECT TO ANY DISPUTE OR, TO THE
KNOWLEDGE OF THE COMPANY, THREATENED DISPUTE AND (C) A BRIEF DESCRIPTION OF ANY
CLAIMS DURING THE LAST THREE (3) YEARS MADE UNDER OR WITH RESPECT TO WARRANTIES,
GUARANTEES AND WARRANTY POLICIES OF OR RELATING TO THE COMPANY’S PRODUCTS AND
SERVICES. TRUE AND CORRECT COPIES OF THE WARRANTY OBLIGATIONS HAVE BEEN
DELIVERED TO PARENT PRIOR TO THE EXECUTION OF THIS AGREEMENT. TO COMPANY’S
KNOWLEDGE, THERE HAVE NOT BEEN ANY MATERIAL DEVIATIONS FROM THE WARRANTY
OBLIGATIONS, AND SALESPERSONS, EMPLOYEES AND AGENTS OF THE COMPANY ARE NOT
AUTHORIZED TO UNDERTAKE OBLIGATIONS TO ANY CUSTOMER OR OTHER PERSON IN EXCESS OF
SUCH WARRANTY OBLIGATIONS. ALL PRODUCTS MANUFACTURED, DESIGNED, LICENSED,
LEASED, RENTED OR SOLD BY THE COMPANY (I) WERE, WHEN SOLD BY THE COMPANY, FREE
FROM MATERIAL DEFECTS IN CONSTRUCTION AND DESIGN AND (II) SATISFY ANY AND ALL
CONTRACT OR OTHER SPECIFICATIONS RELATED THERETO TO THE EXTENT STATED IN WRITING
IN SUCH CONTRACTS OR SPECIFICATIONS, IN EACH CASE, IN ALL MATERIAL RESPECTS, IN
EACH CASE OTHER THAN AS A RESULT OF SOFTWARE “BUGS” THAT ARE REMEDIABLE IN THE
ORDINARY COURSE WITHOUT MATERIAL COST TO THE COMPANY.

 

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(B)           THE COMPANY HAS NO PREPAID MAINTENANCE CONTRACTS.

 

2.26         Foreign Corrupt Practices Act. Neither the Company, nor to the
knowledge of the Company, any agent, employee or other Person acting on behalf
of the Company has, directly or indirectly, used any corporate funds for
unlawful contributions, gifts, entertainment or other unlawful expenses relating
to political activity, made any unlawful payment to any government official or
employee or to any political party or campaign from corporate funds, violated
any provision of the Foreign Corrupt Practices Act of 1977, as amended, or made
any bribe, rebate, payoff, influence payment, kickback or other similar unlawful
payment which will would reasonably be expected to give rise to a Material
Adverse Effect.

 

2.27         Financial Projections. Any and all financial projections discussed
in presentations to investors, bankers and Parent, if any, made by the Company
with respect to the Company’s business were prepared for internal use only.

 

2.28         Approvals.

 

(A)           NO APPROVALS OF GOVERNMENTAL OR REGULATORY AUTHORITIES RELATING TO
THE BUSINESS CONDUCTED BY THE COMPANY ARE REQUIRED TO BE GIVEN TO OR OBTAINED BY
THE COMPANY FROM ANY AND ALL GOVERNMENTAL OR REGULATORY AUTHORITIES IN
CONNECTION WITH THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT, EXCEPT (I) APPROVALS RELATED TO THE FILINGS CONTEMPLATED BY SECTION
1.2 OR (II) WHERE THE FAILURE TO OBTAIN SUCH APPROVAL WOULD NOT CONSTITUTE A
MATERIAL ADVERSE EFFECT.

 

(B)           EXCEPT AS SET FORTH IN SCHEDULE 2.28(B), NO NON-GOVERNMENTAL OR
REGULATORY AUTHORITY APPROVALS ARE REQUIRED TO BE GIVEN TO OR OBTAINED BY THE
COMPANY FROM ANY THIRD PARTIES IN CONNECTION WITH THE CONSUMMATION OF THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, EXCEPT WHERE THE FAILURE TO OBTAIN
SUCH APPROVALS WOULD NOT CONSTITUTE A MATERIAL ADVERSE EFFECT.

 

(C)           TO COMPANY’S KNOWLEDGE, THE COMPANY HAS OBTAINED ALL APPROVALS
FROM GOVERNMENTAL OR REGULATORY AUTHORITIES NECESSARY TO CONDUCT THE BUSINESS
CONDUCTED BY THE COMPANY IN THE MANNER AS IT IS CURRENTLY BEING CONDUCTED,
EXCEPT WHERE THE FAILURE TO OBTAIN SUCH APPROVALS WOULD NOT CONSTITUTE A
MATERIAL ADVERSE EFFECT, AND, DURING THE LAST THREE (3) YEARS, THERE HAS BEEN NO
WRITTEN NOTICE RECEIVED BY THE COMPANY OF ANY VIOLATION OR NON-COMPLIANCE WITH
ANY SUCH APPROVALS. ALL APPROVALS FROM GOVERNMENTAL OR REGULATORY AUTHORITIES
NECESSARY TO CONDUCT THE BUSINESS CONDUCTED BY THE COMPANY AS IT IS CURRENTLY
BEING CONDUCTED ARE SET FORTH IN SCHEDULE 2.28(C).

 

2.29         Leases in Effect. The Company has real property leases or subleases
as set forth in Schedule 2.29 relating to premises which accommodate not less
than 67 employees in the Boise, Idaho facility and 2 employees in the Idaho
Falls facility.

 

2.30         Disclosure. No representation or warranty contained in this
Agreement or any related Schedule or in any certificate, list or other writing
furnished to Parent pursuant to any provision of this Agreement (including the
Company Financials and the notes thereto) contains any untrue statement of a
material fact or omits a material fact necessary in order to make the statements
herein or therein, in the light of the circumstances under which they were made,
not misleading.

 

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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

 

Parent and Merger Sub hereby represent and warrant to the Company and the
Company Shareholders, subject to such exceptions as are disclosed in the
corresponding Schedules with respect to specific sections of this Article 3, and
subject to the right of the Parent and Merger Sub to update, revise, supplement
and/or correct such Schedules through the Closing Date, as follows:

 

Parent represents and warrants and Merger Sub represents and warrants to the
Company as follows:

 

3.1           Organization and Good Standing. Each of the Parent and Merger Sub
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Nevada and has the corporate power and authority to own,
operate and lease its properties and to carry on its business as now conducted
and as presently proposed to be conducted. Each of the Parent and Merger Sub is
duly qualified or licensed to do business, and is in good standing (to the
extent that such concept is applicable), in each jurisdiction where the
character of the properties owned, leased or operated by it or the nature of its
activities makes such qualification or licensing necessary, except where the
failure to be so qualified or licensed would not individually or in the
aggregate be material to Parent’s or Merger Sub’s ability to consummate the
Merger or to perform their respective obligations under this Agreement. Parent
or Merger Sub has made available to the Company true and complete copies of the
currently effective Certificate of Incorporation and Bylaws of Parent and Merger
Sub, each as amended to date. Neither Parent nor Merger Sub is in violation of
its Certificate of Incorporation or Bylaws, each as amended to date.

 

3.2       Capital Structure of Parent and Merger Sub. The authorized capital
stock of Parent consists of 800,000,000 shares of Parent Common Stock and
60,000,000 shares of Parent Preferred Stock, all par value $0.001 per share.
10,000,000 shares of Parent Preferred Stock are designated Series A Preferred
Stock and 20,000,000 shares of Parent Preferred Stock are designated Series B
Preferred Stock. 60,609,441 shares of Parent Common Stock, 2,800,000 shares of
Parent Series A Preferred Stock and 3,600,000 shares of Parent Series B
Preferred Stock are currently outstanding. All outstanding shares of Parent
Common Stock have been duly authorized, validly issued, fully paid and are
nonassessable and free of any liens or encumbrances other than any liens or
encumbrances created by or imposed upon the holders thereof. The shares of
Parent Common Stock to be issued pursuant to the transactions contemplated
herein will, upon issuance pursuant to the terms hereof, be duly authorized,
validly issued, fully paid, and non-assessable shares of Parent Common Stock.
The authorized capital stock of Merger Sub consists solely of 1000 shares of
Common Stock, $0.001 par value per share, of which 1,000 shares are issued and
outstanding and all of which are owned by Parent. All issued and outstanding
shares of capital stock of Merger Sub have been duly authorized and validly
issued and are fully paid and are nonassessable and free of any liens or
encumbrances. Each of Parent and Merger Sub has delivered a true, correct and
complete copy of its Articles of Incorporation, as set forth in Schedule 3.2(a),
and its Bylaws, as set forth in Schedule 3.2(b), and every other similar
governing document or agreement, as applicable, as amended to date, to Company.

 

3.3       Authority. Parent and Merger Sub each has full corporate power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the

 

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transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Parent and Merger Sub, and, assuming the due
authorization, execution and delivery hereof by the Company and Certain Company
Shareholders, constitutes a legal, valid and binding obligation of Parent and
Merger Sub enforceable against Parent and Merger Sub 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. Merger Sub has been recently formed for the
purpose of effecting the Merger and has not conducted any business except in
connection with preparation for the Merger. Parent owns all of the issued and
outstanding capital stock of Merger Sub. The execution, delivery and performance
of each of this Agreement and any agreements contemplated hereby to which it is
a party have been duly authorized by all necessary action on the part of each of
Parent and Merger Sub, their respective boards of directors, and the sole
stockholder of Merger Sub. A vote of Parent’s stockholders will be required to
approve the Merger and the related transactions contemplated hereby.

 

3.4           Financial Statements of Parent.

 

(A)       ALL FINANCIAL STATEMENTS OF PARENT, ON THE EDGAR DATABASE ON
WWW.SEC.GOV, WERE PREPARED IN ACCORDANCE WITH GAAP ON A CONSISTENT BASIS
THROUGHOUT THE PERIODS INDICATED (EXCEPT AS MAY BE INDICATED IN THE NOTES
THERETO), ARE CORRECT AND COMPLETE IN ALL MATERIAL RESPECTS AND EACH PRESENT
FAIRLY, IN ALL MATERIAL RESPECTS, THE FINANCIAL POSITION OF PARENT AS AT THE
RESPECTIVE DATES THEREOF AND FOR THE RESPECTIVE PERIODS INDICATED THEREIN,
EXCEPT AS OTHERWISE NOTED THEREIN (SUBJECT, IN THE CASE OF UNAUDITED STATEMENTS,
TO NORMAL AND RECURRING IMMATERIAL YEAR-END ADJUSTMENTS). THE PARENT’S FINANCIAL
STATEMENTS HAVE BEEN FILED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION.
SINCE THE DATE OF THE LAST FINANCIAL STATEMENTS OF PARENT, THERE HAS BEEN NO
CHANGE IN ANY ACCOUNTING POLICIES, PRINCIPLES, METHODS OR PRACTICES, INCLUDING
ANY CHANGE WITH RESPECT TO RESERVES (WHETHER FOR BAD DEBTS, CONTINGENT
LIABILITIES OR OTHERWISE), OF PARENT.

 

3.5           No Conflicts. The consummation by the Parent and Merger Sub of the
transactions contemplated hereby do not and will not:

 

(A)       CONFLICT WITH OR RESULT IN A VIOLATION OR BREACH OF ANY TERMS,
CONDITIONS OR PROVISIONS OF THE ARTICLES OF INCORPORATION OR BYLAWS, AS AMENDED,
OR EQUIVALENT DOCUMENTS OF THE PARENT AND MERGER SUB;

 

(B)       CONFLICT WITH OR RESULT IN A VIOLATION OR BREACH OF ANY LAW OR ORDER
APPLICABLE TO THE PARENT AND MERGER SUB OR BY WHICH ANY OF THEIR ASSETS AND
PROPERTIES ARE BOUND OR AFFECTED; OR;

 

(C)       (I) CONFLICT WITH OR RESULT IN A VIOLATION OR BREACH OF, (II)
CONSTITUTE A DEFAULT (OR AN EVENT THAT, WITH OR WITHOUT NOTICE OR LAPSE OF TIME
OR BOTH, WOULD CONSTITUTE A DEFAULT) UNDER, (III) REQUIRE THE PARENT OR MERGER
SUB TO OBTAIN ANY CONSENT, APPROVAL OR ACTION OF, MAKE ANY FILING WITH OR GIVE
ANY NOTICE TO ANY PERSON AS A RESULT OR UNDER THE TERMS OF (EXCEPT FOR FILINGS
WITH THE NEVADA SECRETARY OF STATE AND THE SECURITIES AND EXCHANGE COMMISSION,
AS NECESSITATED BY THIS TRANSACTION AND DESCRIBED ON SCHEDULE 3.5(C)), (IV)
RESULT IN OR GIVE TO ANY PERSON ANY RIGHT OF TERMINATION, CANCELLATION,
ACCELERATION OR MODIFICATION IN OR WITH RESPECT TO, (V) RESULT IN OR GIVE TO ANY
PERSON ANY ADDITIONAL RIGHTS OR ENTITLEMENT TO INCREASED, ADDITIONAL,
ACCELERATED OR GUARANTEED

 

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PAYMENTS OR PERFORMANCE UNDER, (VI) RESULT IN THE CREATION OR IMPOSITION OF (OR
THE OBLIGATION TO CREATE OR IMPOSE) ANY LIEN UPON THE PARENT OR MERGER SUB OR
ANY OF THEIR ASSETS AND PROPERTIES UNDER OR (VII) RESULT IN THE LOSS OF A
MATERIAL BENEFIT UNDER, ANY OF THE TERMS, CONDITIONS OR PROVISIONS OF ANY
CONTRACT OR LICENSE TO WHICH THE PARENT OR MERGER SUB ARE A PARTY OR BY WHICH
THE PARENT OR MERGER SUB OR THEIR ASSETS AND PROPERTIES ARE BOUND OR AFFECTED.

 

3.6           Other Negotiations; Brokers; Third Party Expenses. Neither the
Parent nor Merger Sub, to the knowledge of the Parent and Merger Sub, or any of
their Affiliates (nor any investment banker, financial advisor, attorney,
accountant or other Person retained by or acting for or on behalf of the Parent
and Merger Sub or any such Affiliate) (i) has entered into any Contract that
conflicts with any of the transactions contemplated by this Agreement or (ii)
has entered into any Contract or had any discussions with any Person regarding
any transaction involving the Parent and Merger Sub which could result in the
Parent or Merger Sub’s being subject to any claim for liability to said Person
as a result of entering into this Agreement or consummating the transactions
contemplated hereby. Without limiting the foregoing, except as set forth in
Schedule 3.6, no finder, broker, agent, financial advisor, or other intermediary
has acted on behalf of Parent or Merger Sub in connection with the Merger or the
negotiation or consummation of this Agreement or any of the transactions
contemplated hereby.

 

3.7           Warranty Obligations. Neither the Parent nor Merger Sub is subject
to any warranty obligations.

 

3.8           Disclosure. No representation or warranty contained in this
Agreement or any related document, list or other writing furnished to Company
pursuant to any provision of this Agreement (including the Parent and Merger
Sub’s financial statements and the notes thereto) contains any untrue statement
of a material fact or omits a material fact necessary in order to make the
statements herein or therein, in the light of the circumstances under which they
were made, not misleading.

 

ARTICLE 4
CONDUCT PRIOR TO THE CLOSING

 

4.1           Conduct of Business of the Company. All parties mutually agree
that during the period from the date of this Agreement and continuing until the
earlier of the termination of this Agreement pursuant to the provisions of
Section 8.1 hereof or the Closing, the Company, Parent and Merger Sub each shall
(unless otherwise required by this Agreement or Company has given its prior
written consent to Parent or Merger Sub or Parent has given its prior written
consent to the Company, as the case may be) carry on its business in the
ordinary course consistent with past practice, to pay its Liabilities and Taxes
consistent with its past practices, to pay or perform other obligations when due
consistent with its past practices, subject to any good faith disputes over such
Liabilities, Taxes and other obligations and, to the extent consistent with such
business, to use reasonable efforts and institute all policies to preserve
intact its present business organization, keep available the services of its
present officers and key employees, preserve its relationships with customers,
suppliers, distributors, licensors, licensees, independent contractors and other
Persons having business dealings with it and to cause its Subsidiaries to do the
same, all with the express purpose and intent of preserving unimpaired its
goodwill and ongoing businesses at the Closing.

 

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Except as expressly contemplated by this Agreement or disclosed in Schedules,
neither (1) Company, on the one hand, nor (2) Parent or Merger Sub on the other
hand, will, without the prior written consent of the other, voluntarily take or
agree in writing or otherwise to take, or agree to:

 

(A)           ANY OF THE ACTIONS DESCRIBED IN SECTION 2.7;

 

(B)           ANY OTHER ACTION THAT WOULD MAKE ANY OF ITS REPRESENTATIONS OR
WARRANTIES CONTAINED IN THIS AGREEMENT UNTRUE OR INCORRECT OR PREVENT THE
APPLICABLE PARTY (OR PARTIES) FROM PERFORMING OR CAUSE THE APPLICABLE PARTY (OR
PARTIES) NOT TO PERFORM ITS AGREEMENTS AND COVENANTS HEREUNDER;

 

(C)           THE COMPANY WILL NOT ISSUE ADDITIONAL SHARES OF ITS CAPITAL STOCK
OR GRANT ANY WARRANTS, OPTIONS OR OTHER RIGHTS TO ACQUIRE SHARES OF ITS CAPITAL
STOCK;

 

(D)           THE COMPANY WILL NOT MAKE ANY CAPITAL EXPENDITURES OR COMMITMENTS
FOR ADDITIONS TO PROPERTY, PLANT OR EQUIPMENT OF THE COMPANY CONSTITUTING
CAPITAL ASSETS INDIVIDUALLY IN AN AMOUNT EXCEEDING TWENTY-FIVE THOUSAND DOLLARS
($25,000) UNLESS PARENT AGREES OTHERWISE.

 

4.2           Solicitation            Until the earlier of the Closing or the
date of termination of this Agreement pursuant to the provisions of Section 8.1
hereof, neither Company nor Parent or Merger Sub, nor any Certain Company
Shareholders, officers, directors, agents, investment bankers or other
representatives of any of them (collectively, the “Representatives”) will,
directly or indirectly, (i) solicit, engage in discussions or negotiate with any
Person (regardless of who initiates such discussions or negotiations), or take
any other action intended or designed to facilitate the efforts of any Person,
other than the parties hereto, relating to the possible acquisition of the
Company, Parent or Merger Sub (whether by way of purchase of capital stock,
purchase of assets or otherwise) or any significant portion of its capital stock
or assets by any Person other than the parties hereto (an “Alternative
Acquisition”), (ii) provide information with respect to the Company, Parent or
Merger Sub to any Person relating to a possible Alternative Acquisition by any
Person, (iii) enter into an agreement with any Person providing for a possible
Alternative Acquisition, or (iv) make or authorize any statement, recommendation
or solicitation in support of any possible Alternative Acquisition by any
Person. The Company, Parent, or Merger Sub, as the case may be, shall cause its
Representatives to immediately cease and cause to be terminated all existing
discussions or negotiations with any Person heretofore conducted with respect to
any possible Alternative Acquisition.

 

Each of the Company, Certain Company Shareholders, Parent and Merger Sub
acknowledge that the terms of this Section 4.2 are a significant inducement for
the Company, Certain Company Shareholders, Parent and Merger Sub to enter into
this Agreement and the absence of such provision would have resulted in either
(i) a material change in the terms hereof or (ii) a failure to induce the
parties hereto to enter into this Agreement.

 

ARTICLE 5

 

ADDITIONAL AGREEMENTS

 

5.1       Access to Information. Between the date of this Agreement and the
earlier of the Closing or the termination of this Agreement, upon reasonable
advance notice given to the

 

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Company, the Company will (i) give Parent and its respective officers,
employees, accountants, counsel, financing sources and other agents and
representatives reasonable access to all buildings, offices, and other
facilities of the Company and to the extent permitted by law to all Books and
Records of the Company, regardless of where located; (ii) permit Parent to make
such inspections as it may require; (iii) cause its officers to furnish Parent
such financial, operating, technical and product data and other information with
respect to the business and Assets and Properties of the Company as Parent from
time to time may reasonably request to verify the representations and warranties
provided herein and for integration planning purposes, including without
limitation financial statements and schedules; (iv) allow Parent the opportunity
to interview non-clerical employees and other personnel and Affiliates of the
Company during normal business hours with the Company’s prior written consent,
which consent will not be unreasonably withheld or delayed; and (v) assist and
cooperate with Parent in the development of integration plans for implementation
by Parent and the Company following the Closing; provided, however, that no
investigation pursuant to this Section 5.1 will affect or be deemed to modify
any representation or warranty made by the Company herein.

 

5.2           Confidentiality. Parent, Merger Sub and Company acknowledge and
agree that the terms and conditions described in this Agreement, including its
existence, as well as the non-public information and data furnished to them or
their respective Representatives from the first introduction of the parties and
throughout the negotiation and drafting of this Agreement is confidential and
will not be disclosed to any third party, or used for any purpose not
specifically contemplated herein, without prior written consent of the other
party, unless otherwise required by Law or unless it ceases to be confidential
through no breach of the receiving party.

 

5.3      Expenses.  Whether or not the transactions contemplated hereby are
consummated, each of Parent, Merger Sub and Company will be responsible for
their own fees and expenses incurred in connection with this Agreement including
all legal, accounting, financial advisory, consulting and all other fees and
expenses of third parties (“Third Party Expenses”) that may be engaged by
Parent, Merger Sub and Company, incurred by a third party in connection with the
negotiation and effectuation of the terms and conditions of the transactions
contemplated hereby, including this Agreement, and the transactions contemplated
hereby, and will be the obligation of the respective party incurring such Third
Party Expenses.

 

5.4           Approvals. The Company and Parent will cooperate and use
commercially reasonable efforts to obtain the Approvals, if any, from
Governmental or Regulatory Authorities or under any of the Contracts or other
agreements as may be required in connection with the transactions contemplated
hereby as to preserve all rights of and benefits to the Company thereunder.
Parent will provide the Company with such assistance and information as is
reasonably required to obtain such Approvals.

 

5.5           Notification of Certain Matters. The Company will give prompt
notice to Parent and Merger Sub, and Parent and Merger Sub will give prompt
notice to the Company, of (i) the occurrence or non-occurrence of any event, the
occurrence or nonoccurrence of which is likely to cause any representation or
warranty of the Company, Certain Company Shareholders, or the Parent or Merger
Sub, respectively, contained in this Agreement to be untrue or inaccurate at or
prior to the Closing Date and (ii) any failure of the Company, Certain Company
Shareholders, or Parent or Merger Sub, as the case may be, to comply with or
satisfy any covenant, condition or agreement to

 

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be complied with or satisfied by it hereunder; provided, however, that the
delivery of any notice pursuant to this Section 5.5 will not limit or otherwise
affect any remedies available to the party receiving such notice.

 

5.6           Additional Documents and Further Assurances. Each party hereto, at
the request of the other party hereto, will execute and deliver such other
instruments and documents and do and perform such other acts and things
(including, but not limited to, all action reasonably necessary to seek and
obtain any and all consents and approvals of any Government or Regulatory
Authority or Person, if any are necessary hereunder; provided, however, that
Parent will not be obligated to consent to any divestitures or operational
limitations or activities in connection therewith and no party will be obligated
to make a payment of money as a condition to obtaining any such condition or
approval) as may be necessary or desirable for effecting completely the
consummation of this Agreement and the transactions contemplated hereby.

 

5.7           Company’s Accountants.  If the Closing Date occurs before December
31, 2007, the Company will use commercially reasonable efforts to cause its
management and its accountants to facilitate on a timely basis (i) the
preparation of audited financial statements prepared in accordance with GAAP for
the years ended December 31, 2005 and 2006, (ii) the review,  pursuant to the
requirements promulgated by the Public Company Accounting Oversight Board of the
Company’s financial statements for the nine months ended September 30, 2007
(iii) the delivery of such reports from the Company’s independent accountants to
Parent prior to December 31, 2007. If the Closing Date occurs on or after
December 31, 2007  the Company will use commercially reasonable efforts to cause
its management and its accountants to facilitate on a timely basis (i) the
preparation of audited financial statements prepared in accordance with GAAP for
the years ended and ending December 31, 2006 and 2007 respectively and (ii) the
delivery of such reports from the Company’s independent accountants to Parent
prior to March 1, 2008.  In addition if the Closing Date occurs prior to
December 31, 2007 for the purposes of the requirements of Internal Revenue
Service Revenue Ruling 59-60 and the accounting requirements pursuant to the
accounting for business combinations, the Company shall deliver no later than
December 31, 2007 a balance sheet of the Company as of the Closing Date (the
“Closing Date Balance Sheet”) that has been reviewed and approved by its
independent accounting firm. If the Closing Date occurs on December 31, 2007 or
later the Closing Date Balance Sheet will be delivered to Parent no later than
ten (10) days following the Closing Date.

 

5.8           Conveyance Taxes. Parent, Merger Sub, and the Company will
cooperate in the preparation, execution and filing of all returns,
questionnaires, applications or other documents regarding any sales, use,
transfer, value added, and stock transfer, any transfer, recording, registration
and other fees, and any similar Taxes which become payable in connection with
the transactions contemplated hereby that are required or permitted to be filed
on or before the Closing.

 

5.9           Commercially Reasonable Efforts. Each party hereto will use its
commercially reasonable efforts to perform and fulfill all obligations to be
performed and fulfilled under this Agreement, and to cause all conditions
precedent to the consummation of the transactions to be timely satisfied, to the
end that the transactions contemplated by this Agreement will be consummated
substantially in accordance with its terms.

 

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5.10         Breach of Representations, Warranties, Agreements and Covenants.
Subject to its rights under Section 8.1, each party hereto will not voluntarily
take, or fail to take, any action which from the date hereof through the Closing
would cause or constitute a material breach of any of its representations,
warranties, agreements and covenants set forth in this Agreement. In the event
of, and promptly after becoming aware of, the actual, pending or threatened
occurrence of any event which would cause or constitute such a breach or
inaccuracy, such party will give detailed notice thereof to the other parties
hereto and will use its commercially reasonable efforts to prevent or promptly
remedy such breach or inaccuracy.

 

5.11         Agreement to Defend and Indemnify.

 

(A)           PARENT WILL CAUSE ALL RIGHTS TO INDEMNIFICATION BY THE COMPANY IN
FAVOR OF EACH PRESENT AND FORMER OFFICER OR DIRECTOR OF THE COMPANY (HEREINAFTER
REFERRED TO AS THE “COMPANY INDEMNIFIED PARTIES”) AS PROVIDED IN THE COMPANY’S
ARTICLES OF INCORPORATION OR BYLAWS (OR BOTH) OR SIMILAR CONSTITUTIVE DOCUMENTS
OR PURSUANT TO OTHER INSTRUMENTS OR AGREEMENTS, INCLUDING INSURANCES, IN EFFECT
ON THE DATE HEREOF, TO SURVIVE THE CLOSING AND TO CONTINUE IN FULL FORCE AND
EFFECT FOLLOWING THE CLOSING DATE UNTIL THE EXPIRATION OF THE APPLICABLE STATUTE
OF LIMITATIONS.

 

(B)           SUBJECT TO THE TERMS SET FORTH HEREIN, PARENT WILL, AS AN ABSOLUTE
AND UNCONDITIONAL GUARANTOR OF PERFORMANCE AND PAYMENT, AND WILL CAUSE THE
COMPANY TO, INDEMNIFY AND HOLD HARMLESS, TO THE FULLEST EXTENT PERMITTED UNDER
APPLICABLE LAW (AND WILL ALSO ADVANCE EXPENSES AS INCURRED BY A COMPANY
INDEMNIFIED PARTY TO THE FULLEST EXTENT PERMITTED UNDER APPLICABLE LAW), EACH
COMPANY INDEMNIFIED PARTY AGAINST ANY COSTS OR EXPENSES (INCLUDING REASONABLE
LEGAL FEES AND EXPENSES) JUDGMENTS, FINES, LOSSES, CLAIMS, DAMAGES, LIABILITIES
AND AMOUNTS PAID IN SETTLEMENT IN CONNECTION WITH ANY CLAIM, ACTION, SUIT,
PROCEEDING OR INVESTIGATION, WHETHER CIVIL, CRIMINAL, ADMINISTRATIVE OR
INVESTIGATIVE, ARISING OUT OF OR PERTAINING TO ANY ACTION, ALLEGED ACTION,
OMISSION OR ALLEGED OMISSION BY SUCH COMPANY INDEMNIFIED PARTY ON OR PRIOR TO
THE CLOSING DATE (INCLUDING ANY CLAIMS, ACTION, SUITS, PROCEEDINGS AND
INVESTIGATIONS WHICH ARISE OUT OF OR RELATE TO THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT) UNTIL THE EXPIRATION OF THE APPLICABLE STATUTE OF LIMITATIONS;
PROVIDED THAT, IN THE EVENT ANY CLAIM, ACTION, SUIT, PROCEEDING OR INVESTIGATION
IS ASSERTED OR MADE OR OTHERWISE BECOMES KNOWN TO PARENT OR THE COMPANY OR IS
COMMENCED PRIOR TO THE EXPIRATION OF THE APPLICABLE STATUTE OF LIMITATIONS, ALL
RIGHTS TO INDEMNIFICATION IN RESPECT OF ANY SUCH CLAIM, ACTION, SUIT, PROCEEDING
OR INVESTIGATION WILL CONTINUE UNTIL THE FINAL DISPOSITION THEREOF.

 

(C)           THE COVENANTS CONTAINED IN THIS SECTION 5.11 WILL SURVIVE THE
CLOSING DATE UNTIL FULLY DISCHARGED AND ARE INTENDED TO BENEFIT THE COMPANY
SHAREHOLDERS AND EACH OF THE COMPANY INDEMNIFIED PARTIES.

 

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ARTICLE 6

 

CONDITIONS TO THE ACQUISITION

 

6.1           Conditions to Obligations of Each Party to Effect the Merger. The
respective obligations of each party to this Agreement to effect the
transactions contemplated hereby will be subject to the satisfaction at or prior
to the Closing of the following conditions:

 

(A)           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 OR REGULATORY AUTHORITY OR
OTHER LEGAL OR REGULATORY RESTRAINT OR PROHIBITION PREVENTING THE CONSUMMATION
OF THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE IN EFFECT; NOR SHALL THERE BE
ANY ACTION TAKEN, OR ANY LAW OR ORDER ENACTED, ENTERED, ENFORCED OR DEEMED
APPLICABLE TO THE TRANSACTIONS CONTEMPLATED HEREBY OR THE OTHER TRANSACTIONS
CONTEMPLATED BY THE TERMS OF THE AGREEMENT THAT WOULD PROHIBIT THE CONSUMMATION
OF THE TRANSACTIONS CONTEMPLATED HEREBY OR WHICH WOULD PERMIT CONSUMMATION OF
THE TRANSACTIONS CONTEMPLATED HEREBY ONLY IF CERTAIN DIVESTITURES WERE MADE OR
IF PARENT AND MERGER SUB WERE TO AGREE TO LIMITATIONS ON ITS BUSINESS ACTIVITIES
OR OPERATIONS.

 

(B)           EXISTENCE OF BOARD APPROVAL. EACH PARTY WILL PROVIDE TO THE OTHER
PARTY CERTIFIED COPIES OF BOARD MINUTES OR CONSENTS, OR CERTIFIED EXTRACTS
THEREOF, INDICATING BOARD APPROVAL HAS BEEN GRANTED ON OR PRIOR TO THE DATE
HEREOF FOR THE SATISFACTION OF ALL OBLIGATIONS HEREUNDER AND THE CONSUMMATION OF
THE TRANSACTION.

 

(C)           TAX LIABILITIES. THE TAX LIABILITIES DISCLOSED IN SECTION 2.10(P)
ABOVE ARE PAID IN FULL PRIOR TO OR CONTEMPORANEOUS WITH CLOSING.

 

(D)           LOAN. THE DEBT RESTRUCTURING AND LOAN AS SET FORTH IN SECTION
6.3(N) IS IN PLACE AS OF CLOSING.

 

6.2       Additional Conditions to Obligations of the Company and Certain
Company Shareholders. The obligations of the Company and Certain Company
Shareholders to effect the transactions contemplated hereby will be subject to
the satisfaction at or prior to the Closing Date of each of the following
conditions, any of which may be waived, in writing, exclusively by the Company
and Certain Company Shareholders:

 

(A)           REPRESENTATIONS AND WARRANTIES. EACH OF THE REPRESENTATIONS AND
WARRANTIES MADE BY PARENT AND MERGER SUB IN THIS AGREEMENT SHALL BE MATERIALLY
TRUE AND CORRECT WHEN MADE AND ON AND AS OF THE CLOSING DATE AS THOUGH SUCH
REPRESENTATION OR WARRANTY WAS MADE ON AND AS OF THE CLOSING DATE, EXCEPT THAT
ANY REPRESENTATION OR WARRANTY THAT EXPRESSLY SPEAKS AS OF A SPECIFIED DATE
EARLIER THAN THE CLOSING DATE SHALL HAVE BEEN TRUE AND CORRECT ON AND AS OF SUCH
EARLIER DATE, AND FURTHER PROVIDED THAT PARENT AND MERGER SUB SHALL BE PERMITTED
TO UPDATE, REVISE, SUPPLEMENT AND/OR CORRECT THE SCHEDULES THROUGH THE CLOSING
DATE.

 

(B)           PERFORMANCE. PARENT AND MERGER SUB SHALL HAVE PERFORMED AND
COMPLIED WITH EACH AGREEMENT, COVENANT AND OBLIGATION REQUIRED BY THIS AGREEMENT
TO BE SO PERFORMED OR COMPLIED WITH BY PARENT AND MERGER SUB AT OR BEFORE THE
CLOSING DATE.

 

(C)           OFFICERS’ CERTIFICATES. EACH OF PARENT AND MERGER SUB WILL HAVE
DELIVERED TO THE COMPANY A CERTIFICATE OR CERTIFICATES, DATED THE CLOSING DATE
AND EXECUTED BY ITS RESPECTIVE

 

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PRESIDENT AND/OR ITS CHIEF EXECUTIVE OFFICER, CERTIFYING AS TO THE RESOLUTIONS
DELIVERED PURSUANT TO SECTION 6.1(B) AND PARENT’S AND MERGER SUB’S COMPLIANCE
WITH THE CONDITION SET FORTH IN SECTION 6.2(A).

 

(D)           NON-COMPETITION AND EMPLOYMENT AGREEMENTS. PARENT AND/OR THE
COMPANY SHALL HAVE EXECUTED AND DELIVERED TO EACH MEMBER OF THE SENIOR
MANAGEMENT TEAM AS LISTED SCHEDULE 1.16 PART II, AN EMPLOYMENT AND
NON-COMPETITION AGREEMENT (EACH, A “NON COMPETITION AND EMPLOYMENT AGREEMENT”).

 

(E)           LEGAL PROCEEDINGS. NO GOVERNMENTAL OR REGULATORY AUTHORITY WILL
HAVE NOTIFIED ANY PARTY TO THIS AGREEMENT THAT IT INTENDS TO COMMENCE
PROCEEDINGS TO RESTRAIN OR PROHIBIT THE TRANSACTIONS CONTEMPLATED HEREBY OR
FORCE RESCISSION, UNLESS SUCH GOVERNMENTAL OR REGULATORY AUTHORITY WILL HAVE
WITHDRAWN SUCH NOTICE AND ABANDONED ANY SUCH PROCEEDINGS PRIOR TO THE TIME WHICH
OTHERWISE WOULD HAVE BEEN THE CLOSING DATE.

 

(F)            PROCEEDINGS AND DOCUMENTS. ALL CORPORATE AND OTHER PROCEEDINGS IN
CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY AND ALL DOCUMENTS AND
INSTRUMENTS INCIDENT TO SUCH TRANSACTIONS WILL BE IN FORM AND SUBSTANCE
REASONABLY SATISFACTORY TO THE COMPANY AND ITS COUNSEL, AND THE COMPANY WILL
HAVE RECEIVED ALL SUCH COUNTERPART ORIGINALS OR CERTIFIED OR OTHER COPIES OF
SUCH DOCUMENTS AS THEY MAY REASONABLY REQUEST.

 

6.3           Additional Conditions to the Obligations of Parent and Merger Sub.
The obligations of Parent and Merger Sub to effect the transactions contemplated
hereby will be subject to the satisfaction at or prior to the Closing Date of
each of the following conditions, any of which may be waived, in writing,
exclusively by Parent and Merger Sub:

 

(A)           REPRESENTATIONS AND WARRANTIES. EACH OF THE REPRESENTATIONS AND
WARRANTIES MADE BY THE COMPANY AND CERTAIN COMPANY SHAREHOLDERS IN THIS
AGREEMENT SHALL BE MATERIALLY TRUE AND CORRECT WHEN MADE AND ON AND AS OF THE
CLOSING DATE AS THOUGH SUCH REPRESENTATION OR WARRANTY WAS MADE ON AND AS OF THE
CLOSING DATE, EXCEPT THAT ANY REPRESENTATION OR WARRANTY THAT EXPRESSLY SPEAKS
AS OF A SPECIFIED DATE EARLIER THAN THE CLOSING DATE SHALL HAVE BEEN TRUE AND
CORRECT ON AND AS OF SUCH EARLIER DATE, AND FURTHER PROVIDED THAT COMPANY AND
THE CERTAIN COMPANY SHAREHOLDERS SHALL BE PERMITTED TO UPDATE, REVISE,
SUPPLEMENT AND/OR CORRECT THE SCHEDULES THROUGH THE CLOSING DATE.

 

(B)           PERFORMANCE. THE COMPANY SHALL HAVE PERFORMED AND COMPLIED WITH
EACH AGREEMENT, COVENANT AND OBLIGATION REQUIRED BY THIS AGREEMENT TO BE SO
PERFORMED OR COMPLIED WITH BY THE COMPANY ON OR BEFORE THE CLOSING DATE.

 

(C)           OFFICERS’ CERTIFICATES. THE COMPANY AND CERTAIN COMPANY
SHAREHOLDERS SHALL HAVE DELIVERED TO PARENT AND MERGER SUB A CERTIFICATE OR
CERTIFICATES, DATED THE CLOSING DATE AND EXECUTED BY THE PRESIDENT AND/OR THE
CHIEF EXECUTIVE OFFICER OF THE COMPANY, CERTIFYING AS TO THE RESOLUTIONS
DELIVERED PURSUANT TO SECTION 6.1(B) AND COMPANY’S AND THE CERTAIN COMPANY
SHAREHOLDERS’ COMPLIANCE WITH THE CONDITION SET FORTH IN SECTION 6.3(A).

 

(D)           THIRD PARTY CONSENTS. PARENT AND MERGER SUB WILL HAVE BEEN
FURNISHED WITH EVIDENCE SATISFACTORY TO THEM THAT THE COMPANY HAS OBTAINED THE
CONSENTS, APPROVALS AND WAIVERS, IF ANY, LISTED IN SCHEDULE 2.28(B).

 

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(E)           NON-COMPETITION AND EMPLOYMENT AGREEMENTS. EACH OF THE MEMBERS OF
THE SENIOR MANAGEMENT TEAM SHALL HAVE EXECUTED AND DELIVERED TO PARENT, COMPANY,
AND/OR MERGER SUB A NON-COMPETITION AND EMPLOYMENT AGREEMENT.

 

(F)            NO MATERIAL ADVERSE CHANGE. THERE WILL HAVE OCCURRED NO MATERIAL
ADVERSE CHANGE IN THE BUSINESS OR CONDITION OF THE COMPANY SINCE THE DATE
HEREOF.

 

(G)           LEGAL PROCEEDINGS. NO GOVERNMENTAL OR REGULATORY AUTHORITY WILL
HAVE NOTIFIED ANY PARTY TO THIS AGREEMENT THAT IT INTENDS TO COMMENCE
PROCEEDINGS TO RESTRAIN OR PROHIBIT THE TRANSACTIONS CONTEMPLATED HEREBY OR
FORCE RESCISSION, UNLESS SUCH GOVERNMENTAL OR REGULATORY AUTHORITY WILL HAVE
WITHDRAWN SUCH NOTICE AND ABANDONED ANY SUCH PROCEEDINGS PRIOR TO THE TIME WHICH
OTHERWISE WOULD HAVE BEEN THE CLOSING DATE.

 

(H)           EMPLOYEES. NOT LESS THAN 95% OF THOSE EMPLOYEES LISTED IN SCHEDULE
2.19(B), WILL BE EMPLOYED BY THE COMPANY AT THE CLOSING (AND WILL HAVE NOT GIVEN
ANY NOTICE OR OTHER INDICATION THAT THEY WILL NOT CONTINUE TO BE WILLING TO BE
EMPLOYED BY THE COMPANY AS A WHOLLY-OWNED SUBSIDIARY OF PARENT FOLLOWING THE
TRANSACTIONS CONTEMPLATED HEREBY). EACH EMPLOYEE OF THE COMPANY TO BE EMPLOYED
BY COMPANY AS A WHOLLY-OWNED SUBSIDIARY OF PARENT FOLLOWING THE CLOSING SHALL
HAVE EXECUTED PARENT’S STANDARD FORM PROPRIETARY RIGHTS AND INVENTIONS
ASSIGNMENT AGREEMENT, SUBSTANTIALLY IN THE FORM SET FORTH IN EXHIBIT B HERETO.

 

(I)            PROCEEDINGS AND DOCUMENTS. ALL CORPORATE AND OTHER PROCEEDINGS IN
CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY AND ALL DOCUMENTS AND
INSTRUMENTS INCIDENT TO SUCH TRANSACTIONS WILL BE IN FORM AND SUBSTANCE
REASONABLY SATISFACTORY TO PARENT AND MERGER SUB AND THEIR COUNSEL, AND PARENT
AND MERGER SUB WILL HAVE RECEIVED ALL SUCH COUNTERPART ORIGINALS OR CERTIFIED OR
OTHER COPIES OF SUCH DOCUMENTS AS THEY MAY REASONABLY REQUEST.

 

(J)            EQUITY EQUIVALENTS. THERE WILL BE NO UN-EXPIRED AND UNEXERCISED
EQUITY EQUIVALENTS OF THE COMPANY OUTSTANDING AS OF THE CLOSING.

 

(K)           SUB-S ELECTION.  COMPANY SHALL HAVE FILED A TIMELY TERMINATION OF
ITS ELECTION TO BE TREATED AS AN S CORPORATION WITH THE APPROPRIATE OFFICE OF
THE INTERNAL REVENUE SERVICE.

 

(L)            AUDIT COMPLETION.  THE COMPANY WILL DELIVER TO PARENT THE AUDIT
FINANCIALS FOR YEAR ENDING DECEMBER 31, 2006 NO LATER THAN DECEMBER 15, 2007.

 

(M)          WORKING CAPITAL AND THIRD PARTY DEBT.  THE COMPANY WILL HAVE
MINIMUM WORKING CAPITAL ON HAND OF $500,000 (BASED ON THE COMPANY’S UNAUDITED
9-30-2007 FINANCIAL STATEMENT AND BASED ON RESTRUCTURING OF COMPANY DEBT AS OF
CLOSING) AND NO MORE THAN $2,339,000 OF THIRD PARTY DEBT. IF EITHER OF THESE
CONDITIONS ARE VIOLATED, THEN THERE WILL BE A DOLLAR FOR DOLLAR REDUCTION IN THE
CASH CONSIDERATION TO BE PAID FROM THE $3,500,000 AS PURSUANT IN 1.6(A)(II) BY
REDUCING SUCH CONSIDERATION BY A DOLLAR FOR (I) EACH DOLLAR UNDER $478,928 (AS
ADJUSTED PER ABOVE) OF WORKING CAPITAL AND BY (II) EACH DOLLAR OVER $2,339,000
OF THIRD-PARTY DEBT, ALL AS OF CLOSING. PARENT ACKNOWLEDGES AND AGREES THAT
COMPANY WILL NOT MEET THE WORKING CAPITAL THRESHOLD REQUIRED HEREIN AT CLOSING
WITHOUT DEBT RESTRUCTURING FACILITATED BY PARENT AT CLOSING.

 

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(N)           RESTRUCTURE OF DEBT.  THE COMPANY’S DEBT AS OUTLINED IN THE
COMPANY FINANCIALS, SCHEDULE 2.6(A), WILL BE RESTRUCTURED BY THE CLOSING DATE
THROUGH A LOAN FROM PARENT OR AN AFFILIATE OF PARENT OF $2,339,000.

 

(O)           NOTE TO SHAREHOLDER.  ONE HALF OF THE CRI SHAREHOLDER DEBT
($416,312) WILL BE CONVERTED TO PARENT COMMON STOCK AND SUCH SHARES ARE DEEMED
TO BE INCLUDED IN THE 5,900,000 EQUIVALENT SHARES OF PARENT COMMON STOCK
IDENTIFIED IN THE MERGER CONSIDERATION AND THE REMAINING ONE HALF OF THE
SHAREHOLDER DEBT ($416,312) WILL BE RENEGOTIATED TO A WEIGHTED AVERAGE COST OF
DEBT OF 5% REQUIRE PAYBACK TO THE SHAREHOLDER(S) ENTITLED TO PAYMENT FOR SUCH
DEBT WITH INTEREST AT THE RATE OF 5% PER ANNUM, INTEREST ONLY PAYMENTS FOR 18
MONTHS AND THEN AN ULTIMATE PAYMENT OF ALL INTEREST AND PRINCIPAL DUE AND OWING
TO THE SHAREHOLDER(S) UPON THE EXPIRATION OF 18 MONTHS FROM CLOSING.

 

(P)           NOTE FROM ACADEMIC ACCELERATOR.  THE INVESTMENT IN ACADEMIC
ACCELERATOR ASSET AS NOTED ON THE CRI BOOKS AT CLOSING WILL BE CONVERTED FROM A
RECEIVABLE FROM ACADEMIC ACCELERATOR TO AN UNSECURED NOTE FROM ACADEMIC
ACCELERATOR. SUCH NOTE WITH INTEREST ACCRUED BUT NOT PAID WILL INCLUDE A
PROVISION TO BE CONVERTED TO EQUITY IN ACADEMIC ACCELERATOR AT THE END OF THREE
YEARS AND THE NUMBER OF SHARES OR OWNERSHIP PERCENTAGE WILL BE BASED ON A FAIR
MARKET VALUATION OF THE ACADEMIC ACCELERATOR BUSINESS.

 

ARTICLE 7
SURVIVAL OF REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS; INDEMNIFICATION

 

7.1           Survival of Representations, Warranties, Covenants and Agreements.
The representations and warranties set forth in Articles 2 and 3 will survive
until the first anniversary of the Closing Date; provided, however that the
representations and warranties in (i) Sections 2.3, 2.15, 2.16, 2.21, 3.2, 3.16,
3.17, 3.22 and (ii) the representations and warranties contained in Sections
2.11 will survive until the expiration of the statute of limitations applicable
to claims with respect to the matters covered thereby. The one-year limitation
in this Section 7.1 will not apply under circumstances involving direct personal
participation in fraud or willful misconduct by such party, in which case a
limitation equal to the statute of limitations will apply.

 

7.2           Indemnification.

 

(A)           THE CERTAIN COMPANY SHAREHOLDERS WILL JOINTLY AND SEVERALLY
INDEMNIFY AND HOLD HARMLESS PARENT, MERGER SUB AND THEIR RESPECTIVE OFFICERS AND
DIRECTORS (HEREINAFTER REFERRED TO INDIVIDUALLY AS A “PARENT INDEMNIFIED PERSON”
AND COLLECTIVELY AS “PARENT INDEMNIFIED PERSONS”) FROM AND AGAINST ANY AND ALL
LOSSES ARISING OUT OF ANY MISREPRESENTATION OR BREACH OF THE REPRESENTATIONS,
WARRANTIES, COVENANTS AND AGREEMENTS GIVEN OR MADE BY THE COMPANY OR ANY CERTAIN
COMPANY SHAREHOLDER IN THIS AGREEMENT, OR ANY CERTIFICATE, INSTRUMENT OR
DOCUMENT DELIVERED BY THE COMPANY OR ANY CERTAIN COMPANY SHAREHOLDER PURSUANT TO
THIS AGREEMENT; PROVIDED, HOWEVER, THAT NO CERTAIN COMPANY SHAREHOLDER WILL BE
LIABLE FOR INDEMNIFICATION UNDER THIS SECTION 7.2 FOR FRAUD OR MISREPRESENTATION
COMMITTED BY ANY OTHER CERTAIN COMPANY SHAREHOLDER.

 

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(B)           PARENT SHALL INDEMNIFY AND HOLD HARMLESS EACH OF THE CERTAIN
COMPANY SHAREHOLDERS (EACH, A “CERTAIN COMPANY INDEMNIFIED PERSON” AND,
COLLECTIVELY, “CERTAIN COMPANY INDEMNIFIED PERSONS”) FROM AND AGAINST ANY AND
ALL LOSSES ARISING OUT OF ANY MISREPRESENTATION OR BREACH OF THE
REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS GIVEN OR MADE BY THE
PARENT OR MERGER SUB IN THIS AGREEMENT, OR ANY CERTIFICATE, INSTRUMENT OR
DOCUMENT DELIVERED BY THE PARENT OR MERGER SUB PURSUANT TO THIS AGREEMENT.

 

7.3           Third-Party Claims. In the event a Parent Indemnified Person(s) or
Certain Company Indemnified Person(s) (each, an “Indemnified Party” and,
collectively, the “Indemnified Parties”) becomes aware of a third-party claim
based on any misrepresentation or breach of or default in connection with any of
the representations, warranties, covenants and agreements given or made by the
other party in this Agreement (each, an “Indemnifying Party”), which the
Indemnified Party believes may result in a claim against it (a “Third Party
Claim”), the Indemnified Party will promptly notify the Indemnifying Party of
such Third Party Claim. By written notice to the Indemnified Party within twenty
(20) days after delivery of notice of such a claim, the Indemnifying Party’s
representative (on behalf of the Indemnifying Party) will be entitled, at the
Indemnifying Party’s expense, to participate in any defense of such claim by the
Indemnified Party, which will direct the defense and settlement of such claims.
Notwithstanding the foregoing, however, the Indemnified Party may consent to a
settlement or compromise of, or the entry of any judgment arising from, the
Third Party Claim without the prior written consent of the Indemnifying Party
if, and only if, the proposed settlement, compromise, or judgment: (a) does not
contain an admission of guilt or wrongdoing on the part of the Indemnifying
Party; and (b) does not provide for any remedy or sanction against the
Indemnifying Party other than the payment of money which the Indemnifying Party
agrees and is able to pay. In the event that the Indemnifying Party has
consented to any such settlement amount, the Indemnifying Party will have no
power or authority to object under any provision of this Article 7 to any claim
by the Indemnified Party for indemnity with respect to such settlement amount.

 

7.4           Recovery of Losses.

 

(A)           SUBJECT TO THE LIMITATIONS IN SECTION 7.6 BELOW: (I) A PARENT
INDEMNIFIED PERSON WILL RECOVER ANY CLAIM FOR INDEMNITY UNDER SECTIONS 7.2 OR
7.3 RELATING TO BREACHES OF REPRESENTATIONS OR WARRANTIES DIRECTLY FROM ANY
BREACHING CERTAIN COMPANY SHAREHOLDER, WHO WILL BE INDIVIDUALLY LIABLE FOR SUCH
AMOUNTS; (II) A PARENT INDEMNIFIED PERSON WILL RECOVER ALL CLAIMS FOR INDEMNITY
UNDER SECTIONS 7.2 OR 7.3, DIRECTLY FROM THE CERTAIN COMPANY SHAREHOLDERS, WHO
WILL BE JOINTLY AND SEVERALLY LIABLE FOR SUCH AMOUNTS.

 

(B)           NO CLAIM BY A PARENT INDEMNIFIED PERSON FOR INDEMNITY UNDER
SECTIONS 7.2 OR 7.3 RELATING TO BREACHES OF REPRESENTATIONS OR WARRANTIES WILL
BE RECOVERABLE UNLESS THE AGGREGATE AMOUNT OWING EXCEEDS TEN THOUSAND DOLLARS
($10,000) PER OCCURRENCE.

 

7.5           Contribution. To the extent that a Certain Company Shareholder,
pursuant to the provisions of Section 7.4(b), is required to pay more than his
pro rata interest in the Merger Consideration issued to all Company Shareholders
pursuant to this Agreement, such Certain Company Shareholder will be entitled to
seek and obtain proportional contribution from the other Certain Company
Shareholders.

 

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7.6           Limitations on Claims. Notwithstanding anything herein to the
contrary, the obligations of each Certain Company Shareholder arising under this
Article 7 will be limited to valid written claims received by the Certain
Company Shareholders within twelve (12) months of the Effective Time, and will
be deemed fully satisfied by surrender of that portion of Parent’s Shares
received by such Certain Company Shareholder in connection with the Merger,
valued at their then current fair market value, necessary to satisfy such
Certain Company Shareholder’s pro rata portion of such obligations but subject
to the following sentence. Notwithstanding anything herein to the contrary, in
no event will the total aggregate indemnification obligation for all claims
cumulatively arising under this Article 7 require the surrender of more than two
percent (2%) of the pro rata portion of Parent’s Shares received by such Certain
Company Shareholder pursuant to Section 1.6(a)(i), regardless of the then
current fair market value of such Parent’s Shares. The indemnification mechanism
provided for by this Article 7 shall be the sole remedy for breaches of
representations or warranties under this Agreement.

 

ARTICLE 8
TERMINATION, AMENDMENT AND WAIVER

 

8.1           Termination. Except as provided in Section 8.2 below, this
Agreement may be terminated and the transactions contemplated hereby abandoned
at any time prior to the Closing:

 

(A)           BY MUTUAL AGREEMENT OF THE COMPANY AND THE CERTAIN COMPANY
SHAREHOLDERS AND PARENT AND MERGER SUB;

 

(B)           BY PARENT AND MERGER SUB OR THE COMPANY (OR WITH RESPECT TO THE
OBLIGATIONS OF ANY PARTICULAR CERTAIN COMPANY SHAREHOLDER, SUCH CERTAIN COMPANY
SHAREHOLDER) IF (I) THE CLOSING HAS NOT OCCURRED BEFORE 10:00 AM (EASTERN
STANDARD TIME) ON THE DATE WHICH IS 60 DAYS AFTER THE DATE OF THIS AGREEMENT OR
ON SUCH LATER DATE AS THE PARTIES HERETO MAY MUTUALLY AGREE (PROVIDED, HOWEVER,
THAT THE RIGHT TO TERMINATE THIS AGREEMENT UNDER THIS SUB CLAUSE 8.1(B) (I) WILL
NOT BE AVAILABLE TO ANY PARTY WHOSE WILLFUL FAILURE TO FULFILL ANY OBLIGATION
HEREUNDER HAS BEEN THE CAUSE OF, OR RESULTED IN, THE FAILURE OF THE CLOSING TO
OCCUR ON OR BEFORE SUCH DATE); (II) THERE WILL BE A FINAL NONAPPEALABLE ORDER OF
UNITED STATES FEDERAL OR STATE COURT IN EFFECT PREVENTING CONSUMMATION OF THE
TRANSACTIONS CONTEMPLATED HEREBY; OR (III) THERE WILL BE ANY STATUTE, RULE,
REGULATION OR ORDER ENACTED, PROMULGATED OR ISSUED OR DEEMED APPLICABLE TO THE
TRANSACTIONS CONTEMPLATED HEREBY BY ANY GOVERNMENTAL OR REGULATORY AUTHORITY
THAT WOULD MAKE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY ILLEGAL;

 

(C)           BY PARENT AND MERGER SUB IF THERE SHALL BE ANY ACTION TAKEN, OR
ANY LAW OR ORDER ENACTED, PROMULGATED OR ISSUED OR DEEMED APPLICABLE TO THE
TRANSACTIONS CONTEMPLATED HEREBY, BY ANY GOVERNMENTAL OR REGULATORY AUTHORITY,
WHICH WOULD: (I) PROHIBIT PARENT’S OWNERSHIP OR OPERATION OF ALL OR ANY MATERIAL
PORTION OF THE BUSINESS OF THE COMPANY OR (II) COMPEL PARENT OR THE SURVIVING
CORPORATION TO DISPOSE OF OR HOLD SEPARATE ALL OR A SUBSTANTIAL PORTION OF THE
ASSETS AND PROPERTIES OF THE COMPANY AS A RESULT OF THE TRANSACTIONS
CONTEMPLATED HEREBY;

 

(D)           BY PARENT AND MERGER SUB IF THERE HAS BEEN A BREACH OF ANY
REPRESENTATION, WARRANTY, COVENANT OR AGREEMENT CONTAINED IN THIS AGREEMENT ON
THE PART OF THE COMPANY OR CERTAIN COMPANY SHAREHOLDERS AND (I) THE COMPANY OR
CERTAIN COMPANY SHAREHOLDERS, AS THE CASE MAY BE, HAVE NOT CURED SUCH BREACH
WITHIN THIRTY (30) DAYS FOLLOWING RECEIPT BY THE COMPANY OR

 

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CERTAIN COMPANY SHAREHOLDERS, AS THE CASE MAY BE, OF WRITTEN NOTICE OF SUCH
BREACH OR IS NOT USING ITS REASONABLE EFFORTS TO CURE SUCH BREACH AFTER WRITTEN
NOTICE OF SUCH BREACH TO THE COMPANY OR CERTAIN COMPANY SHAREHOLDERS, AS THE
CASE MAY BE, (PROVIDED, HOWEVER, THAT, NO CURE PERIOD WILL BE REQUIRED FOR A
BREACH WHICH BY ITS NATURE CANNOT BE CURED) AND (II) AS A RESULT OF SUCH BREACH
THE CONDITIONS SET FORTH IN SECTION 6.3(A) OR 6.3(B), AS THE CASE MAY BE, WOULD
NOT THEN BE SATISFIED;

 

(E)           BY THE COMPANY IF THERE HAS BEEN A BREACH OF ANY REPRESENTATION,
WARRANTY, COVENANT OR AGREEMENT CONTAINED IN THIS AGREEMENT ON THE PART OF
PARENT OR MERGER SUB AND (I) PARENT OR MERGER SUB HAVE NOT CURED SUCH BREACH
WITHIN THIRTY (30) DAYS FOLLOWING RECEIPT BY THE COMPANY OF WRITTEN NOTICE OF
SUCH BREACH OR IS NOT USING ITS REASONABLE EFFORTS TO CURE SUCH BREACH AFTER
WRITTEN NOTICE OF SUCH BREACH TO PARENT OR MERGER SUB (PROVIDED, HOWEVER, THAT
NO CURE PERIOD WILL BE REQUIRED FOR A BREACH WHICH BY ITS NATURE CANNOT BE
CURED), AND (II) AS A RESULT OF SUCH BREACH THE CONDITIONS SET FORTH IN SECTION
6.2(A) OR 6.2(B), AS THE CASE MAY BE, WOULD NOT THEN BE SATISFIED;

 

8.2           Effect of Termination. In the event of a valid termination of this
Agreement as provided in Section 8.1, this Agreement will forthwith become void
and there will be no liability or obligation on the part of Parent, Merger Sub,
Certain Company Shareholders, or the Company, or their respective officers,
directors or shareholders or Affiliates or Associates; provided, however, that
the provisions of Sections 5.2, 5.3, 5.4, 8.2, 9.6, 9.9, 9.10 and 9.11 of this
Agreement will remain in full force and effect and survive any termination of
this Agreement.

 

ARTICLE 9
MISCELLANEOUS PROVISIONS

 

9.1           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 or mailed by prepaid first class registered
or certified mail, return receipt requested, or sent by overnight courier
prepaid, to the parties at the following addresses or facsimile numbers:

 

If to Parent or Merger Sub to:

Francis E. Wilde, Chairman & CEO

Shea Development Corp.

3452 Lake Lynda Drive, #350

Orlando, Florida 32817

Telephone:   407-282-3545

Facsimile:    407-249-0089

 

with a copy to:

Francis J. Mooney, Jr. / Robert T. Lincoln

Dunnington, Bartholow & Miller LLP

477 Madison Avenue, 12th Floor

New York, NY 10022

Telephone:   212-682-8811

Facsimile:    212-661-7769

 

 

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If to the Company or Certain Company Shareholders to:

Mr. Gary Brookshier

CEO and President

CRI Advantage, Inc.

12754 W. LaSalle

Boise, ID 83713

 

with a copy to:

David P. McAnaney

McAnaney & Associates, PLLC

1101 W. River Street, Suite 100

Boise, Idaho 83702

Telephone:   208-344-7500
Facsimile:    208-344-7501

 

9.2           Entire Agreement. This Agreement supersedes all prior discussions
and agreements between the parties with respect to the subject matter hereof and
thereof and contains the sole and entire agreement between the parties hereto
with respect to the subject matter hereof and thereof. Except for the
representations and warranties contained in this Agreement or in any instrument
delivered pursuant to this Agreement, each of the parties to this Agreement
acknowledges that no other representations or warranties have been relied upon
by that party or made by any other party or its officers, directors, employees,
agents, financial and legal advisors or other representatives.

 

9.3           Further Assurances; Post-Closing Cooperation. At any time or from
time to time after the Closing, the parties will execute and deliver to the
other party such other documents and instruments, provide such materials and
information and take such other actions as the other party may reasonably
request to consummate the transactions contemplated by this Agreement and
otherwise to cause the other party to fulfill its obligations under this
Agreement and the transactions contemplated hereby. Each party agrees to use
commercially reasonable efforts to cause the conditions to its obligations to
consummate the transactions contemplated hereby to be satisfied.

 

9.4           Amendment. This Agreement may be amended by the parties hereto at
any time before the Closing by execution of an instrument in writing signed on
behalf of each of the parties hereto and after the Closing by execution of an
instrument in writing signed on behalf of Parent, the Surviving Corporation and
each of the Certain Company Shareholders.

 

9.5           Extension. At any time prior to the Closing, Parent, Merger Sub,
Certain Company Shareholders and the Company may, to the extent legally allowed,
extend the time for the performance of any of the obligations of the other party
hereto.

 

9.6           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 will 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,
will 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. All remedies, either under
this Agreement or by Law or otherwise afforded, will be cumulative and not
alternative.

 

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9.7           Third Party Beneficiaries. The terms and provisions of this
Agreement are intended solely for the benefit of each party hereto and their
respective successors or permitted assigns, and it is not the intention of the
parties to confer third-party beneficiary rights, and this Agreement does not
confer any such rights, upon any other Person other than any Person entitled to
indemnity as described in Article 7.

 

9.8           No Assignment; Binding Effect. Neither this Agreement nor any
right, interest or obligation hereunder may be assigned (by operation of law or
otherwise) by any party without the prior written consent of the other parties
and any attempt to do so will be void. Subject to the preceding sentence, this
Agreement is binding upon, inures to the benefit of and is enforceable by the
parties hereto and their respective successors and assigns.

 

9.9           Headings. The headings and table of contents used in this
Agreement have been inserted for convenience of reference only and do not define
or limit the provisions hereof.

 

9.10         Invalid Provisions. If any provision of this Agreement is held to
be illegal, invalid or unenforceable under any present or future law, and if the
rights or obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby, (a) such provision will be fully
severable, (b) this Agreement will be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part hereof, (c) the
remaining provisions of this Agreement will remain in full force and effect and
will not be affected by the illegal, invalid or unenforceable provision or by
its severance herefrom and (d) in lieu of such illegal, invalid or unenforceable
provision, there will be added automatically as a part of this Agreement a
legal, valid and enforceable provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible.

 

9.11         Governing Law. This Agreement will be governed by and construed in
accordance with the domestic laws of the State of New York, without giving
effect to any choice of law or conflict of law provision. The parties hereto
expressly and irrevocably consent and submit to the exclusive jurisdiction of
the applicable local, federal, or appellate courts located in New York, New
York, in connection with any proceeding arising from or out of this Agreement.
Each party agrees that such courts shall be deemed to be a convenient forum in
any such legal proceeding, and agrees not to assert (by way of motion, as a
defense or otherwise) any claim that such party is not subject personally to the
jurisdiction of any such courts, that such legal proceeding has been brought in
an inconvenient forum, that the venue of such legal proceeding is improper or,
that this Agreement or the subject matter hereof may not be enforced in, or by,
any such courts.

 

9.12         Construction. The parties hereto agree that this Agreement is the
product of negotiation between sophisticated parties and individuals, all of
whom were represented by counsel, and each of whom had an opportunity to
participate in and did participate in, the drafting of each provision hereof.
Accordingly, ambiguities in this Agreement, if any, will not be construed
strictly or in favor of or against any party hereto but rather will be given a
fair and reasonable construction without regard to the rule of contra
proferentum.

 

9.13         Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.

 

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9.14                           Specific Performance. The parties hereto agree
that irreparable damage would occur in the event that Section 5.2 of this
Agreement were not performed in accordance with its specific terms or were
otherwise breached. It is agreed that the parties will be entitled to an
injunction or injunctions to prevent breaches of Section 5.2 of this Agreement
and to enforce specifically the terms and provisions thereof in any court having
jurisdiction, this being in addition to any other remedy to which they are
entitled at law or in equity.

 

ARTICLE 10
DEFINITIONS

 

10.1                           Definitions.

 

(A)                                  AS USED IN THIS AGREEMENT, THE FOLLOWING
DEFINED TERMS WILL HAVE THE MEANINGS INDICATED BELOW:

 

“$” means United States Dollars unless otherwise indicated.

 

“Actions or Proceedings” means any action, suit, petition, investigation,
proceeding, arbitration, litigation or Governmental or Regulatory Authority
investigation, audit or other proceeding, whether civil or criminal, in law or
in equity, or before any arbitrator or Governmental or Regulatory Authority.

 

“Affiliate” means, as applied to any Person, (a) any other Person directly or
indirectly controlling, controlled by or under common control with, that Person,
(b) any other Person that owns or controls 10% or more of any class of equity
securities of that Person or any of its Affiliates (including any equity
securities issuable upon the exercise of any option or convertible security) of
that Person or any of its Affiliates, or (c) any director, partner or officer of
such Person. For the purposes of this definition, “control” (including with
correlative meanings, the terms “controlling”, “controlled by”, and “under
common control with”) as applied to any Person, means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of that Person, whether through ownership of voting securities or
by contract or otherwise.

 

“Agreement” means this Agreement and Plan of Merger, the Schedules the Exhibits,
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.

 

“Alternative Acquisition” has the meaning ascribed to it in Section 4.2.

 

“Approval” means any approval, authorization, consent, permit, qualification or
registration, or any 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 or Regulatory 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

 

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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 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.

 

“Benefit Plan” means an employee benefit plan maintained by any of Company,
Parent or Merger Sub.

 

“Books and Records” means all files, documents, instruments, papers, books and
records relating to the Business or Condition of the Company, including
financial statements, internal reports, Tax Returns and related work papers and
letters from accountants, budgets, pricing guidelines, ledgers, journals, deeds,
title policies, minute books, stock certificates and books, stock transfer
ledgers, Contracts, Licenses, customer lists, computer files and programs
(including data processing files and records), retrieval programs, operating
data and plans and environmental studies and plans.

 

“Business Combination” means, with respect to any Person, (i) any amalgamation,
consolidation, merger or other business combination to which such Person is a
party, (ii) any sale or other disposition of any capital stock or other equity
interests of such Person, (iii) any tender offer (including a self tender),
exchange offer, recapitalization, restructuring, liquidation, dissolution or
similar or extraordinary transaction, (iv) any sale, dividend or other
disposition of all or a material portion of the Assets and Properties of such
Person or (v) the entering into of any agreement or understanding, the granting
of any rights or options, or the acquiescence of the Person, with respect to any
of the foregoing.

 

“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.

 

“Business or Condition of Parent or Merger Sub” means the business, condition
(financial or otherwise), results of operations, prospects or Assets and
Properties of Parent or Merger Sub and each of its Subsidiaries, taken as a
whole.

 

“Business or Condition of the Company” means the business, condition (financial
or otherwise), results of operations, prospects or Assets and Properties of the
Company, taken as a whole.

 

“Certain Company Indemnified Person(s)” has the meaning ascribed to it in
Section 7.2(b).

 

“Certain Company Shareholders” is defined as Gary Brookshier, Monte Brookshier
and Toby Tobaccowala who combined own all of the Company’s Class B Common
Shares.

 

“Certificates” has the meaning ascribed to it in Section 1.7.

 

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

 

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

 

“Code” means the Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder.

 

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

 

“Company Common Stock” has the meaning ascribed to it in the Recitals to this
Agreement.

 

 “Company Financials” means the audited financial statements (balance sheet and
statements of operations and cash flow, including schedules and notes thereto)
of the Company as of and for the periods ended December 31, 2004, December 31,
2005 and December 31, 2006.

 

“Company Indemnified Parties” has the meaning ascribed to it in Section 5.11(a).

 

“Company Intellectual Property” means any Intellectual Property of commercial
value that is (i) owned by; (ii) licensed to; or (iii) was developed or created
by or for the Company.

 

“Company Option(s)” has the meaning ascribed to it in Section 2.3.

 

“Company Option Holders” has the meaning ascribed to it in Section 2.3.

 

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

 

“Confidential Information” has the meaning ascribed to it in Section 2.15(h).

 

“Contract” means any material contract, including without limitation:

 

(I)                                     ANY DISTRIBUTOR, SALES, ADVERTISING,
AGENCY OR MANUFACTURER’S REPRESENTATIVE CONTRACT;

 

(II)                                  ANY CONTINUING CONTRACT FOR THE PURCHASE
OF MATERIALS, SUPPLIES, EQUIPMENT OR SERVICES INVOLVING IN THE CASE OF ANY SUCH
CONTRACT MORE THAN $5,000 OVER THE LIFE OF THE CONTRACT;

 

(III)                               ANY CONTRACT THAT EXPIRES OR MAY BE RENEWED
AT THE OPTION OF ANY PERSON OTHER THAN THE COMPANY SO AS TO EXPIRE MORE THAN ONE
YEAR AFTER THE DATE OF THIS AGREEMENT;

 

(IV)                              ANY TRUST INDENTURE, MORTGAGE, PROMISSORY
NOTE, LOAN AGREEMENT OR OTHER CONTRACT FOR THE BORROWING OF MONEY, ANY CURRENCY
EXCHANGE, COMMODITIES OR OTHER HEDGING ARRANGEMENT OR ANY LEASING TRANSACTION OF
THE TYPE REQUIRED TO BE CAPITALIZED IN ACCORDANCE WITH GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES;

 

(V)                                 ANY CONTRACT FOR CAPITAL EXPENDITURES IN
EXCESS OF $5,000 IN THE AGGREGATE;

 

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(VI)                              ANY CONTRACT LIMITING THE FREEDOM OF THE
COMPANY TO ENGAGE IN ANY LINE OF BUSINESS OR TO COMPETE WITH ANY OTHER PERSON;

 

(VII)                           ANY CONTRACT PURSUANT TO WHICH THE COMPANY IS A
LESSOR OF ANY MACHINERY, EQUIPMENT, MOTOR VEHICLES, OFFICE FURNITURE, FIXTURES
OR OTHER PERSONAL PROPERTY HAVING AN ORIGINAL COST OF MORE THAN $25,000;

 

(VIII)                        ANY CONTRACT WITH ANY PERSON WITH WHOM THE COMPANY
DOES NOT DEAL AT ARM’S LENGTH; OR

 

(IX)                                ANY AGREEMENT OF GUARANTEE, SUPPORT,
INDEMNIFICATION, ASSUMPTION OR ENDORSEMENT OF, OR ANY SIMILAR COMMITMENT WITH
RESPECT TO, THE OBLIGATIONS, LIABILITIES (WHETHER ACCRUED, ABSOLUTE, CONTINGENT
OR OTHERWISE) OR INDEBTEDNESS OF ANY OTHER PERSON.

 

“Effective Date” has the meaning ascribed to it in Section 1.2.

 

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

 

“Eligible Option” has the meaning ascribed to it in Section 1.6(b).

 

“Equity Equivalents” means securities (including Options) which, by their terms,
are or may be exercisable, convertible or exchangeable for or into common
shares, preferred shares, or other securities of the Company at the election of
the holder thereof.

 

“Financial Statement Date” means December 31, 2006.

 

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

 

“Governmental or Regulatory 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.

 

“Income Tax” means (i) any income, alternative or add-on minimum tax, gross
income, gross receipts, franchise, profits, including estimated taxes relating
to any of the foregoing, or other similar tax or other like assessment or charge
of similar kind whatsoever, excluding any Other Tax, together with any interest
and any penalty, addition to tax or additional amount imposed by any Taxing
Authority responsible for the imposition of any such Tax (domestic or foreign);
or (ii) any liability of a Person for the payment of any taxes, interest,
penalty, addition to tax or like additional amount resulting from the
application of Treas. Reg. § 1,1502-6.

 

“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 and (e) in the nature of guarantees of the obligations
described in clauses (a) through (d) above of any other Person.

 

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“Indemnified Party(ies)” has the meaning ascribed to it in Section 7.3.

 

“Intellectual Property” means all trademarks and trademark rights, trade names
and trade name rights, service marks and service mark rights, service names and
service name rights, patents and patent rights, utility models and utility model
rights, copyrights, mask work rights, brand names, trade dress, product designs,
product packaging, business and product names, logos, slogans, rights of
publicity, trade secrets, inventions (whether patentable or not), invention
disclosures, improvements, processes, formulae, industrial models, processes,
designs, specifications, technology, methodologies, computer software (including
all source code and object code), firmware, development tools, flow charts,
annotations, all Web addresses, sites and domain names, all data bases and data
collections and all rights therein, any other confidential and proprietary right
or information, whether or not subject to statutory registration, and all
related technical information, the information set forth in manufacturing,
engineering and technical drawings, know-how and all pending applications for
and registrations of patents, utility models, trademarks, service marks and
copyrights, and the right to sue for past infringement, if any, in connection
with any of the foregoing.

 

“Investment Assets” means all debentures, notes and other evidences of
Indebtedness, stocks, securities (including rights to purchase and securities
convertible into or exchangeable for other securities), interests in joint
ventures and general and limited partnerships, mortgage loans and other
investment or portfolio assets owned of record or beneficially by the Company.

 

“knowledge” or “known to” or any similar phrase means, when used with respect
to: (i) any Person who is an individual, the actual knowledge of such Person;
(ii) the Company, the actual knowledge of Gary Brookshier; and (iii) the Parent
or Merger Sub, the actual knowledge of Francis E. Wilde.

 

“Law” or “Laws” 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, province, county, city or other political subdivision or of any
Governmental or Regulatory 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.

 

“License” means any Contract that grants a Person the right to use or otherwise
enjoy the benefits of any Intellectual Property (including without limitation
any covenants not to sue with respect to any Intellectual Property).

 

“Lien” or “Liens” means any mortgage, pledge, assessment, security interest,
lease, lien, easement, charge or adverse claim 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, provincial or state securities law.

 

“Loss(es)” means any and all damages, fines, fees, Taxes, penalties,
deficiencies, losses and expenses, including interest, reasonable expenses of
investigation, court costs, reasonable fees and

 

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expenses of attorneys, accountants and other experts or other expenses of
litigation or other proceedings or of any claim, default or assessment (such
fees and expenses to include all fees and expenses, including fees and expenses
of attorneys, incurred in connection with (i) the investigation or defense of
any Third Party Claims or (ii) asserting or disputing any rights under this
Agreement against any party hereto or otherwise).

 

“Material Adverse Change” means, when used with respect to:

 

(a)                                  the Company, any change in the financial
condition and operation of the Company that would either individually or, if
aggregated with other effects on the financial condition of the Company, result
in a deterioration of the balance sheet of the Company by an amount equal or
greater than $250,000.00; or

 

(b)                                 the Parent, Merger Sub or any of their
respective Subsidiaries, any change in the financial condition and operation of
the Parent, Merger Sub or any of their respective Subsidiaries that would either
individually or, if aggregated with other effects on the financial condition of
the Parent, Merger Sub or any of their respective Subsidiaries, result in a
deterioration of the consolidated balance sheet of the Parent by an amount equal
or greater than $500,000.00;

 

(c)                                  provided, however, that none of the
following shall be taken into account in determining whether there has been or
would be a “Material Adverse Effect”: (i) any adverse change resulting from
conditions affecting any nation’s economy generally, (ii) any adverse change
resulting from or relating to financial, banking or securities markets
(including any disruption thereof and any decline in the price of any security
or any market index), (iii) any adverse change in applicable Laws or the
interpretation thereof, (iv) any adverse change arising primarily out of, or
resulting primarily from, actions taken by any party in connection with (but not
in breach of) this Agreement and the transactions contemplated hereunder, or
which is primarily attributable to the announcement of this Agreement and the
Merger (including any litigation, employee attrition or any loss or postponement
of business resulting from termination or modification of any vendor, customer
or other business relationships, delay of customer order or otherwise and any
corresponding change in the margins, profitability or financial condition of a
party), and (v) any adverse change in any Company business that is cured
(including by the payment of money), to the extent curable, by Company before
the earlier of (a) the Closing Date, or (b) the date on which this Agreement is
terminated pursuant to Article 8 hereof.

 

“Material Adverse Effect” means any event or condition of any character which
results in, has resulted in, or could reasonably be expected to result in, a
Material Adverse Change on the condition (financial or otherwise), results of
operations, assets, liabilities, properties, or business of a Person and its
Subsidiaries, taken as a whole, or would prevent or unreasonably delay
consummation of the transactions contemplated hereby.

 

“Merger” has the meaning ascribed to it in the Recitals to this Agreement.

 

“Merger Consideration” has the meaning ascribed to it in Section 1.6.

 

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

 

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“Non-Competition and Employment Agreement” has the meaning ascribed to it in
Section 6.2(d).

 

 “Officer’s Certificate” has the meaning ascribed to it in Sections 6.2 and 6.3
hereof.

 

“Option” with respect to any Person means any security, right, subscription,
warrant, option, “phantom” stock right or other Contract that gives the right to
(i) 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 (ii) 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.

 

“Option Cancellation Agreement” has the meaning ascribed to it in Section
1.6(b).

 

“Option Plan” has the meaning ascribed to it in Section 1.6(b).

 

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

 

“Other Tax” means any sales, use, ad valorem, business license, withholding,
payroll, employment, excise, stamp, transfer, recording, occupation, premium,
property, value added, custom duty, severance, windfall profit or license tax,
governmental fee or other similar assessment or charge, together with any
interest and any penalty, addition to tax or additional by any Taxing Authority
responsible for the imposition of any such tax (domestic or foreign).

 

“Outstanding Company Shares” means all issued and outstanding shares of Company
Common Stock immediately prior to the Effective Time plus all shares of Company
Common Stock deemed to be issued upon exercise of all Eligible Options.

 

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

 

“Parent Common Stock” has the meaning ascribed to it in the Recitals to this
Agreement.

 

“Parent Indemnified Person(s)” has the meaning ascribed to it in Section 7.2(a).

 

“Parent Preferred Stock” means the Preferred Stock, par value $.001 per share,
of Parent.

 

“Parent’s Shares” has the meaning ascribed to it in Section 1.6(a)(i).

 

“Participating Company Shares” shall mean any Outstanding Company Shares other
than shares of Company Common Stock, if any, cancelled pursuant to Section
1.6(d).

 

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

 

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“Registered Intellectual Property” will mean all United States, international
and foreign: (i) patents, patent applications (including provisional
applications); (ii) registered trademarks and service marks, applications to
register trademarks, intent-to-use applications, other registrations or
applications to trademarks or service marks, or trademarks or service marks in
which common law rights are owned or otherwise controlled; (iii) registered
copyrights and applications for copyright registration; (iv) any mask work
registrations and applications to register mask works; and (v) 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 state, government or other public legal authority.

 

“Representatives” has the meaning ascribed to it in Section 4.2.

 

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

 

“Senior Management Team” means those persons listed in Schedule 1.12(Part I).

 

“Shrink Wrap License Agreements” means the granting conditions and terms of use
that are presumed to be acknowledged and agreed to by breaking a thermoplastic
seal.

 

“Stock Award Plan” has the meaning ascribed to it in Section 1.13.

 

“Subsidiary” of any specified Person shall mean any corporation fifty percent
(50%) or more of the outstanding voting power of which, or any partnership,
joint venture, limited liability company or other entity fifty percent (50%) or
more of the total equity interest of which, is directly or indirectly owned by
such specified Person.

 

“Surviving Corporation” has the meaning ascribed to it in Section 1.1.

 

“Tax” or “Taxes” means all present and future taxes, surtaxes, duties, levies,
imposts, rates, fees, assessments, withholdings, dues and other charges of any
nature imposed by any Governmental or Regulatory Authority (including income,
capital (including large corporations), withholding, consumption, sales, use,
transfer, goods and services or other value-added, excise, customs,
anti-dumping, stumpage, countervail, net worth, stamp, registration, franchise,
payroll, employment, health, education, business, school, property, local
improvement, development, education development and occupation taxes, surtaxes,
duties, levies, imposts, rates, fees, assessments, withholdings, dues and
charges) together with all fines, interest, penalties on or in respect of, or in
lieu of or for non-collection of, those taxes, surtaxes, duties, levies,
imposts, rates, fees, assessments, withholdings, dues and other charges.

 

“Tax Liability” has the meaning ascribed to it in Section 1.14.

 

“Tax Returns” means any return, report, information return, schedule,
certificate, statement or other document (including any related or supporting
information) filed or required to be filed with, or, where none is required to
be filed with a Taxing Authority, the statement or other document issued by, a
Taxing Authority in connection with any Tax.

 

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“Taxing Authority” means any governmental agency, board, bureau, body,
department or authority of any United States federal, state or local
jurisdiction or any foreign jurisdiction, having or purporting to exercise
jurisdiction with respect to any Tax.

 

“Third Party Claim” has the meaning ascribed to it in Section 7.3.

 

“Third Party Expenses” has the meaning ascribed to it in Section 5.3.

 

“Third Party Intellectual Property Rights” has the meaning ascribed to it in
Section 2.15(c).

 

“Transmittal Letter” has the meaning ascribed to it in Section 1.7.

 

“Warranty Obligations” has the meaning ascribed to it in Section 2.25.

 

Signatures On Following Page

 

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