Filed by Automated Filing Services Inc. (604) 609-0244 - Mistral Ventures, Inc. - Exhibit 10.1






HGG – 09/05/07

 

 

 

 

 

 

PURCHASE AGREEMENT 

BY AND AMONG 

MISTRAL VENTURES, INC. 

AND 

THE SHAREHOLDERS OF CYPHEREDGE TECHNOLOGIES, INC. 

Dated as of September 7, 2007




TABLE OF CONTENTS 

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


i





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


ii




PURCHASE AGREEMENT 

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

RECITALS 

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

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

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

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

ARTICLE 1: THE ACQUISITION

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

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




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

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

ARTICLE 2: REPRESENTATION AND WARRANTIES OF THE HOLDERS


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

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

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

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

2




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

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

          3.3
Company Capital Stock.

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

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

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



3





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

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

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



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

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

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

4




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

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

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

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

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

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

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



5





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

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

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

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

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

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

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

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

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

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

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



6





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





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

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

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

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

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



          3.11
Taxes.

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



7





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

	 	 	 
	 	(b) 	
      Tax Returns and
Audits.




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




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




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

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

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

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

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




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



8




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

          3.12
Reserved.

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

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

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

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

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

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



          3.14
Compliance with Laws, Orders, Approvals and Contracts.

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

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



9




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

          3.15
Employment Matters.

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

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



10




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

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

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

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



          3.17
Intellectual Property.

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

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



11





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

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

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

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




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

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



12





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

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

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

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

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

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

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



13





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

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



          3.18
Agreements, Contracts and Commitments.

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

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

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

	 	 	 	 
	 		(iii) 	
      any fidelity or surety bond or completion bond;

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

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

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

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

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



14





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

	 	 	 
	 	(x) 	
      any construction contracts;

	 	 	 
	 	(xi) 	
      any dealer, distribution, joint marketing or development
      agreement;

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




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




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

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

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




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




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




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



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

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

15




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

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

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

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

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

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

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

16




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

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

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

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

17




          4.5
Parent Capital Stock.

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

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

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

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



18




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

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

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

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

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

19





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




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

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




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




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

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

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

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

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

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



20





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

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




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




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

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

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

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

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

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



21





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

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

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

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



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

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

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

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

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

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

22




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

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

          4.17
Organizational Documents.

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

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



23




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

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

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

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

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


24




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

ARTICLE 5: CONDUCT PRIOR TO THE EFFECTIVE TIME

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

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

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



25





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

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

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

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

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

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

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



26





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

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

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

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





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




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

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

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

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

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

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



27





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

	 	 	 
	 	(t) 	
      Acquisitions: acquire or agree to acquire by
      merging or consolidating with, or by purchasing any assets or equity
      securities of, or by any other manner, any business or any corporation,
      partnership, association or other business organization or division
      thereof, or otherwise acquire or agree to acquire any assets which are
      material, individually or in the aggregate, to the respective party’s
      business;

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

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



ARTICLE 6: ADDITIONAL AGREEMENTS

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

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

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

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



28





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

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



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

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


29




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

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

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

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

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

30




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

          6.8
Reasonable Efforts.

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

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



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

31




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

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

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

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

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

32




          6.14
Closing Cash Statements. 

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


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

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

ARTICLE 7: CONDITIONS TO THE ACQUISITION

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

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

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

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



33





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

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



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

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

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

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

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

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

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



34





	 	(g) 	
      Private Placement. Parent shall have closed its
      Private Placement of Parent Common Stock.

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

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

	 	 	 
	 	(j) 	
      Indebtedness. Parent shall have no
      Indebtedness.

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

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




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




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

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

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



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

35





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

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

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

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

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

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

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

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

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

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



36




ARTICLE 8: SURVIVAL OF REPRESENTATIONS AND
WARRANTIES

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

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

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

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

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



37





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

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



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


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

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



38





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

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



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

ARTICLE 9: TERMINATION, AMENDMENT AND WAIVER

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

39





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

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

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

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

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



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

40




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

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

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

ARTICLE 10: MISCELLANEOUS PROVISIONS

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

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



41





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


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

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

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

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

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

42




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

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

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

          10.8
Rules of Construction. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefor, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document.

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

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

43




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

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

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

ARTICLE 11: DEFINITIONS

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

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

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

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

44




Exhibit A: Holder Certificate

Exhibit B: Release 
Exhibit C: Registration Rights Agreement
Exhibit
D: Piggyback Registration Rights Agreement 

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

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

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

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

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

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

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

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

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

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

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

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

45




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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

46




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

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

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

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

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

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

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

47




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

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

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

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

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

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

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

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

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

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

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

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

48




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

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

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

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

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

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

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

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

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

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

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

49




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

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

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

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

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

[SIGNATURE PAGES FOLLOW]

50




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

CYPHEREDGE TECHNOLOGIES, INC.


 

By:/s/ James Linkous

Name: James Linkous 
Title: President and Chief Executive
Officer 

 

MISTRAL VENTURES, INC. 

 

By: /s/ John Xinos

Name: John Xinos 
Title: President and Chief Executive
Officer 

 

HOLDERS: 

NEXUSEDGE, INC. 

 

By:/s/ James Linkous

Name: James Linkous 
Title: President and Chief Executive
Officer 

 

 


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



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