**TABLE OF CONTENTS**             **Page**       **I** Representations and Warranties of the Company and Shareholders 1  **1.01** Organization and Qualification 2  **1.02** Authorization 2  **1.03** Capitalization 2  **1.04** Financial Condition 2  **1.05** Tax Liabilities 3  **1.06** Legal Proceedings and Compliance with Legal Requirements 5  **1.07** Properties and Assets 6  **1.08** Contracts 7  **1.09** ERISA 9  **1.10** Patents and Other Intellectual Property 10  **1.11** Questionable Payments 11  **1.12** Consents and Approvals 12  **1.13** Subsidiaries and Investments 12  **1.14** Sales 12  **1.15** Liabilities 12  **1.16** Insurance 12  **1.17** Employee Relations 13  **1.18** Warranties 13  **1.19** Customers, Distributors and Suppliers 13  **1.20** Finder’s Fees 13  **1.21** Transactions with Certain Persons 13  **1.22** INTENTIONALLY OMITTED 14  **1.23** Accuracy of Information 14       **II** Representations and Warranties of the Stockholders 14  **2.01** Authorization 14  **2.02** Ownership of Company Common Stock and Related Matters 14  **2.03** S Corporation Status 15  **2.04** Consents and Approvals 15       **III** Representations and Warranties of the Purchaser 15  **3.01** Organization and Qualification 15  **3.02** Authority 15  **3.03** Consents and Approvals 16  **3.04** SEC Documents 16  **3.05** INTENTIAONALLY OMMITTED 16  **3.06** Representations of the Company and the Stockholders 16  **3.07** Finder’s Fees 16       **IV** Purchase and Sale of the Company Common Stock 17  **4.01** Terms of the Purchase and Sale 17
i

 
             **Page**         **4.02** The Closing 17  **4.03** Purchase Price Adjustment 18  **4.04** INTENTIAONALLY OMMITTED 19       **V** Conditions to Obligations of the Purchaser 19  **5.01** Accuracy of Representations and Compliance with Conditions 19  **5.02** Opinions of Counsel 20  **5.03** Other Closing Documents 20  **5.04** Legal Action 20  **5.05** No Governmental Action 20  **5.06** No Claims Regarding Stock Ownership or Sale Proceeds 20  **5.07** Financing 20  **5.08** Tangible Net Worth 20  **5.09** Required Consents 20  **5.10** Resignations 20  **5.11** INTENTIONALLY OMITTED 21  **5.12** Employment Agreement.  The Purchaser shall have received      at or prior to the closing from David Johnston and Vivian      Alvarez an Employment Agreement 21       **VI** Conditions to the Obligations of the Company and the Stockholders 21  **6.01** Accuracy of Representations and Compliance with Conditions 21  **6.02** No Injunction; Legal Action 21  **6.03** Employment Agreement.  The Purchaser shall have entered      into and Employment Agreement with David Johnston and      Vivian Alvarez 21  **6.04** INTENTIONALLY OMITTTED 21  **6.05** Secretary’s Certificate 21  **6.06** INTENTIONALLY OMITTED 22       **VII** Covenants and Agreements of the Company and the Stockholders 22  **7.01** Access 22  **7.02** Conduct of Business 23  **7.03** Advice of Changes 23  **7.04** Confidentiality 23  **7.05** Public Statements 24  **7.06** Other Proposals 24  **7.07** Consents Without Any Condition 24  **7.08** Release by the Stockholders 25  **7.09** Noncompetition 25  **7.10** Voting by the Stockholders 26  **7.11** INTENTIONALLY OMITTED 26  **7.12** Company Tax Returns 26  **7.13** INTENTIONALLY OMITTED 26  **7.14** Inventory Value Adjustment 27  **7.15** Reasonable Efforts 27       **VIII** Covenants and Agreements of the Purchaser 28
ii

 
             **Page**         **8.01** Financing 28  **8.02** Employee Matters 28  **8.03** Reasonable Efforts 28  **8.04** INTENTIONALLY OMITTED  28       **IX** Termination 29  **9.01** Termination Events 29  **9.02** Effect of Termination 30       **X** Indemnification; Remedies 30  **10.01** Survival; Right to Indemnification Not Affected by Knowledge 30  **10.02** Indemnification and Payment of Damages by the Stockholders for the      Obligations of the Company and Shareholders 30  **10.03** Indemnification and Payment of Damages by the Stockholders 31  **10.04** Indemnification and Payment of Damages by the Purchaser 31  **10.05** Limitations on Amount, Time and Remedies 31  **10.06** Limitations on Amount -- Purchaser 31  **10.07** Procedure for Indemnification -- Third Party Claims 32  **10.08** Procedure for Indemnification -- Other Claims 33       **XI** Miscellaneous 33  **11.01** Further Actions 33  **11.02** Availability of Equitable Remedies 33  **11.03** Appointment of Agent 33  **11.04** Modification 33  **11.05** Notices 33  **11.06** Expenses 35  **11.07** Waiver 35  **11.08** Binding Effect 36  **11.09** No Third Party Beneficiaries 36  **11.10** Separability 36  **11.11** Headings 36  **11.12** Counterparts; Governing Law 36       **XII** Definitions 36
iii

 
**List of Exhibits:****Schedule 1 JAS Diagnostics, Inc. Stockholders****Schedule 2 Purchase Price****Schedule 3 JAS Customers and Products****Schedule 4 Company Announcement****Schedule 5 Opinion of Counsel****Schedule 6 Closing Documents**
iv

 
**STOCK PURCHASE AGREEMENT**     Agreement dated as of May  , 2008 among Drew Scientific, Inc., a Texas Corporation (the“Purchaser”) and Subsidiary of Escalon Medical Corp., a Pennsylvania corporation; JAS Diagnostics,Inc., a Florida corporation (the “Company”); and the stockholders of the Company listed on ScheduleI hereto (such persons, including Shareholders, being hereinafter sometimes referred toindividually as a “Stockholder” and collectively as the “Stockholders”).**Recitals:**     The Stockholders desire to sell to the Purchaser, and the Purchaser desires to purchase fromthe Stockholders, all of the issued and outstanding capital stock of the Company for theconsideration and on the terms and conditions set forth in this Agreement and the concurrentlyexecuted Transaction Documents expressly listed hereunder:The Company Disclosure Schedule.The Purchaser and Company acknowledge that Maria Sanchez and Francisco Perez did not participate inthe negotiation or execution of prior proposed agreements between Purchaser and the Company relatedto this transaction and therefore, any and all such prior proposed agreements or contracts betweenPurchase and the Company related to this proposed stock sale transaction shall be considered voidand unenforceable. Except for the Company Disclosure Schedule and this Stock Purchase Agreement,Purchaser, the Company and each Stockholder hereby acknowledges and agrees that there are no validor enforceable documents contracts, warranties or agreements of any sort whatsoever betweenPurchaser and the Company which serve to bind Purchaser or the Company to this proposed stockpurchase transaction or otherwise relates thereto, all prior alleged agreements, contracts andwritings between the Purchaser and the Company on the subject matter hereof being null and void.This Agreement and the Company Disclosure Schedule sets forth the entire understanding of theparties with respect to the subject matter hereof, shall supersede all existing agreements betweenPurchaser and the Company concerning such subject matter and may be modified only by a writteninstrument duly executed by each party hereto.     Certain capitalized terms used herein are defined in Article XII of this Agreement.     NOW, THEREFORE, in consideration of the premises, covenants and agreements set forth herein,and intending to be legally bound hereby, the parties agree as follows:**I. Representations and Warranties of the Company and Shareholders**     Except to the extent set forth on the Company Disclosure Schedule entered concurrentlyherewith, the Company and Shareholders to the best of their knowledge jointly and severallyrepresent and warrant to the Purchaser as follows:
I-1

 
     **1.01 Organization and Qualification.**The Company is a corporation duly organized, validlyexisting and in good standing under the laws of the State of Florida, and has all requisitecorporate power and authority to own or lease and operate its properties and carry on its businessas it is now being conducted, and to execute, deliver and perform this Agreement and to consummatethe transactions contemplated hereby. The Company is qualified to do business as a foreigncorporation and is in good standing in the jurisdictions listed in Section 1.01 of the CompanyDisclosure Schedule, which are the only jurisdictions where the Company is required to be soqualified, except where the failure to so qualify would not have a Material Adverse Effect. TheCompany has no subsidiaries.     **1.02 Authorization.**The Company has the requisite power and authority to execute and deliverthe Transaction Documents to which the Company is or will be a party and to perform theTransactions to be performed by the Company. Such execution, delivery and performance by theCompany has been duly authorized by all necessary corporate action. The Transaction Documentsexecuted by the Company on or before the date hereof constitute, and the Transaction Documents tobe executed unanimously by all Company Stockholders, the Company and Purchaser related to thisstock purchase transaction, after the date hereof shall constitute, the sole and exclusive validand binding obligations of the Company and Stockholders related to this transaction (except for anyemployment or consulting agreements also entered into by Purchaser with any individual Stockholderscommencing after the successful completion of this stock purchase transaction), enforceable againstthe Company in accordance with their terms, except as such enforceability may be limited by generalequitable principles and by bankruptcy, moratorium, insolvency, fraudulent conveyance or similarlaws. Any and all documents or purported agreements which may have been previously entered intorelated to this stock purchase transaction but which have not been unanimously signed by allStockholders are hereby acknowledged to be void and unenforceable.     **1.03 Capitalization.**The authorized capital stock of the Company consists of 2,500 shares ofcommon stock, par value $1.00 per share (the “Company Common Stock”). The shares of Company CommonStock shown on Schedule I hereto constitute all of the issued and outstanding shares of capitalstock of the Company. All shares of Company stock are subject to the sale restrictions containedunder the January 25, 2001 Shareholder Agreement entered into between the Stockholders and theCompany, as a result whereof the unanimous approval of all Stockholders is hereby required to enterinto, as well as to permit any and all amendments of this Stock Purchase Agreement with Purchaser.Each outstanding share of Company Common Stock is validly authorized, and was validly issued to theStockholders listed in Schedule I hereto and fully paid and nonassessable, has not been issued andis not owned or held in violation of any preemptive right of stockholders, and is owned of recordby the Stockholders as shown on Schedule I hereto. There is no commitment, plan or arrangement toissue, and no outstanding option, warrant or other right calling for the issuance of, any share ofcapital stock of the Company or any security or other instrument convertible into, exercisable foror exchangeable for capital stock of the Company. There are no outstanding instruments convertibleinto or exchangeable for capital stock of the Company.     **1.04 Financial Condition.**
I-2

 
     (a) The Company has delivered to the Purchaser true and correct copies of the unauditedbalance sheet of the Company as of May 28, 2008 (the “Last Balance Sheet”). The Last BalanceSheet, including any notes thereto, presents fairly the financial condition, assets, liabilitiesand stockholders’ equity of the Company as of its date; each such statement of income andconsolidated statement of retained earnings presents fairly the results of operations of theCompany for the period indicated; and each such statement of cash flows presents fairly theinformation purported to be shown therein, except, with respect to any unaudited statement, theabsence of footnotes, necessary interim accounting practices and procedures and year-end auditadjustments. The financial statements referred to in this Section 1.04 have been prepared inaccordance with GAAP consistently applied throughout the periods involved and were prepared inaccordance with the books and records of the Company, except, with respect to any unauditedstatement, the absence of footnotes, necessary interim accounting practice and procedures andyear-end audit adjustments.     (b) Except as set forth on Section 1.04 of the Company Disclosure Schedule, since the date ofthe Last Balance Sheet (the “Last Balance Sheet Date”):          (i) There has at no time been a change in the financial condition, results of operations,business, properties, assets or liabilities of the Company that has had a Material Adverse Effect.          (ii) The Company has not authorized, declared, paid or effected any dividend or liquidating orother distribution in respect of its capital stock or any direct or indirect redemption, purchaseor other acquisition of any stock of the Company.          (iii) The operations and business of the Company have been conducted only in the ordinarycourse, consistent with past practices of the Company.          (iv) There has been no accepted purchase order or quotation, arrangement or understanding forfuture sale of the products or services of the Company that was outside the ordinary course ofbusiness or not consistent with the past practices of the Company.          (v) The Company has not suffered an extraordinary loss (whether or not covered by insurance)or waived any right of substantial value.     (c) Except as set forth in Section 1.04(c) of the Company Disclosure Schedule, there is nofact known to the Company or Shareholders that materially adversely affects or in the future (asfar as the Company or Shareholders can reasonably foresee) is reasonably likely to materiallyadversely affect the financial condition, results of operations, business, properties, assets,liabilities or future prospects of the Company; provided, however, that the Company andShareholders express no opinion as to changes or effects relating to United States or foreigneconomic conditions or financial markets in general or to the Company’s industry in general.     **1.05 Tax Liabilities.**Except as otherwise set forth in Section 1.05 of the Company DisclosureSchedule:
I-3

 
     (a) The Company has duly and timely filed all Returns that it was required to file on or priorto the date hereof. All such Returns were true, complete and correct. All Taxes owed orrequired to be remitted by the Company (whether or not shown on any Return) have been paid orremitted, or are being contested and adequately reserved in accordance with GAAP on the financialstatements of the Company. The Company is not currently the beneficiary of any extension of timewithin which to file any Return. The most recent financial statements delivered to the Purchaserby the Company hereunder reflect an adequate reserve in accordance with GAAP for all Taxes of theCompany for all taxable periods and portions thereof through the date of such financial statements.The Company has maintained and will continue to maintain reserves in accordance with GAAP for allTaxes for the period from the date of the most recent financial statements through the ClosingDate.     (b) The Company has satisfied all federal, state, local and foreign withholding taxrequirements, including but not limited to income, social security and employment tax.     (c) None of the assets of the Company (i) is property that is required to be treated as ownedby another person pursuant to the “safe harbor lease” provisions of former Section 168(f)(8) of theCode, (ii) is “tax-exempt use property” within the meaning of Section 168(h) of the Code or (iii)directly or indirectly secures any debt the interest of which is tax-exempt under Section 103(a) ofthe Code.     (d) There are no liens for Taxes on any of the assets of the Company.     (e) The Company is not a party to any tax allocation, tax sharing or tax benefit transferagreement. The Company (i) has not been a member of an affiliated, combined or unitary groupfiling a consolidated, combined or unitary Return (other than a group the common parent of whichwas the Company) and (ii) has no liability for the Taxes of any Person under regulation § 1.1502-6(or any similar provision of state, local, or foreign law), as a transferee or successor, bycontract, or otherwise.     (f) Except as set forth in Section 1.05(f) of the Company Disclosure Schedule, no claim hasever been made by a Governmental Body in a jurisdiction where the Company does not file Returnsthat the Company is or may be subject to taxation by that jurisdiction.     (g) There is no dispute or claim now pending concerning any Tax Liability of the Companyeither (i) claimed or raised by any Governmental Body in writing or (ii) as to which the Company orShareholders has knowledge based upon personal contact with any agent of such Governmental Body.No Governmental Body is now asserting or, to the knowledge of the Company or Shareholders,threatening to assert, any deficiency or assessment for additional Taxes of the Company or hasnotified the Company or Shareholders of its intent to examine or audit the Company. The Companyhas not (i) waived any statute of limitations in respect of Taxes or agreed to any extension oftime with respect to a Tax assessment or deficiency or (ii) received any notice of deficiency ofassessment from any Governmental Body with respect to Liability for Taxes that has not been fullypaid or finally settled.
I-4

 
     (h) The Company has delivered to the Purchaser correct and complete copies of all federalincome tax Returns, examination reports and statements of deficiencies assessed against or agreedto by the Company since 2001.     (i) The Company has not filed a consent under Code Section 341(f) concerning collapsiblecorporations.     (j) For all tax periods from and after 2001 up to and including the Closing (collectively the“S Corporation Tax Period”), the Company has elected, in compliance with all applicable legalrequirements, to be taxed under Subchapter S of the Code and corresponding provisions under FloridaState laws, and such elections are in effect for the Company. No action has been taken by theCompany or, to the knowledge of the Company or Shareholders, any Stockholder that may result in therevocation of any such elections and, with respect to the S Corporation Tax Period, the Company hasno Liability, absolute or contingent, for the payment of any income Taxes under the Code or underthe laws of such states or localities which afford tax treatment similar to that under Subchapter Sof the Code, except as set forth in Section 1.05(j) of the Company Disclosure Schedule.     **1.06 Legal Proceedings and Compliance with Legal Requirements.**     (a) Except as disclosed in Section 1.06 of the Company Disclosure Schedule, there (i) is noLitigation that is pending against the Company and (ii) to the knowledge of the Company andShareholders, there is no Litigation threatened against the Company that, in either case, relatesto or could have a Material Adverse Effect on the operations of the Company. To the knowledge ofthe Company and Shareholders, there has been no Default under any Legal Requirements applicable tothe Company, including Legal Requirements relating to pollution or protection of the environment orLegal Requirements promulgated by the FDA. There has been no Default with respect to any CourtOrder applicable to the Company, except for any Defaults that would not have a Material AdverseEffect.     (b) Except as disclosed in Section 1.06 of the Company Disclosure Schedule, to the knowledgeof the Company and Shareholders, the Company has complied in all material respects with all LegalRequirements and Court Orders applicable to the business of the Company and the sale of theCompany’s products. The Company has obtained and, to the knowledge of the Company andShareholders, is in compliance in all material respects with all federal, state, local and foreigngovernmental permits, licenses, registrations, certificates of occupancy, approvals and otherauthorizations (the “Governmental Permits”). All of the Governmental Permits are listed in Section1.06 of the Company Disclosure Schedule along with their respective expiration dates, and, to theKnowledge of the Company and Shareholders, such Governmental Permits constitute all GovernmentalPermits required for the operation of the Company’s business as currently operated. All of theGovernmental Permits are currently valid and in full force, and to the knowledge of the Company andShareholders, no violations of a material nature are or have been recorded in respect of any of theGovernmental Permits and no revocation, cancellation or withdrawal thereof has been threatened.The Company has filed such timely and complete renewal applications as may be required with respectto its Governmental Permits, except as set forth in Section 1.06(b) of the Company DisclosureSchedule.
I-5

 
     (c) Notwithstanding anything to the contrary that may be interpreted by this Section 1.06(c),Purchaser hereby agrees and acknowledges that Maria Sanchez and Francisco Perez did not have aspart of their duties on behalf of Company any of the responsibilities related to the subject matterof this Section 1.06(c) and thus they do not make any warranties orrepresentations to Purchaser related to this Section 1.06(c), other than from an extremelylimited actual knowledge perspective based upon information actually shared with them by otherStockholders which may or may not adequately reflect the status of the subject matter hereof.Section 1.06(c) of the Company Disclosure Schedule sets forth a list of all of the products of theCompany. Except as set forth in Section 1.06(c) of the Company Disclosure Schedule, to the best ofthe actual knowledge of the Maria Sanchez and Francisco Perez or the knowledge of the Company DavidJohnson and Vivian Alvarez: (1) the Company has not received any written complaints or, any othercomplaints, from any customer or distributor concerning any of the Company’s products, which hasnot been resolved or withdrawn, or where the failure to resolve the same would have a MaterialAdverse Effect; (2) there are no defects in design, construction or manufacture of its productsthat could adversely affect performance or create an usual risk of injury to persons or property;(3) all products of the Company are and have been in all material respects in compliance with allapplicable Legal Requirements of the FDA applicable to such products; (4) There is no reasonablebasis known to the Company for the FDA, the ISO or any other Governmental Body to deny or rescindany approval or clearance to market any of the Company’s commercially distributed products for thepurpose or indication for which they are being manufactured, assembled, marketed or sold; (5).None of the Company’s products is or has been the subject of any replacement, field fix, retrofit,modification or recall campaign and, no facts or conditions exist that could reasonably be expectedto result in such a recall campaign; (6) The Company’s products have been designed andmanufactured so as to meet and comply in all material respects with all applicable governmental andregulatory standards and specifications currently in effect in North America, South America andEurope, and have received all governmental and regulatory approvals necessary to allow their saleand use in all jurisdictions where they are currently being sold in North America and Europe; (7)Neither the Company nor Shareholders has any reason to believe that the Company’s products fail tomeet any standards or specifications or do not have any necessary governmental or regulatoryapproval necessary for the sale or use of such products in any jurisdiction other than in NorthAmerica, South America or Europe (8) There are no outstanding notices of Defaults or warningletters received by the Company from the FDA or the ISO nor are there outstanding goodmanufacturing practice warning notices received by the Company from the FDA or the ISO; (9) TheCompany has previously provided to the Purchaser access to the Company’s complete file with respectto all FDA and other Governmental Body approvals and certifications of the Company’s products andthe facility in which they are being manufactured.     **1.07 Properties and Assets.**     (a) Except as disclosed in Section 1.07 of the Company Disclosure Schedule, the Company hasgood and marketable title to all properties and assets used in its business or owned by it, freeand clear of all Encumbrances.     (b) All accounts and notes receivable reflected on the Last Balance Sheet, or arising sincethe Last Balance Sheet Date, have been collected, or are and will be good and collectible,
I-6

 
in each case at the aggregate recorded amounts thereof less any reserves therefor reflected in the LastBalance Sheet in accordance with GAAP without right of recourse, defense, deduction, return ofgoods, counterclaim, offset or set off on the part of the obligor, and, if not collected, to theknowledge of the Company and Shareholders, can reasonably be anticipated to be paid within 120 daysof the date incurred.     (c) Section 1.07(c) of the Company Disclosure Schedule sets forth a true and complete list ofall real property owned or leased by the Company, a list of all personal property leased by theCompany and a list of the properties and assets owned by the Company (but not including inventoryor Intellectual Property) as set forth on the Depreciation Projections dated as of February 2008attached to Section 1.07(c) of the Company Disclosure Schedule, which contains a statement of cost,book value and (except for land) reserve for depreciation of each item for tax purposes, and netbook value of each item for financial reporting purposes. Except as set forth in Section 1.07(c)of the Company Disclosure Schedule, all such real and other properties and assets (includingIntellectual Property) owned by the Company are reflected on the Last Balance Sheet (except foracquisitions and dispositions in the ordinary course of business subsequent to the Last BalanceSheet Date and prior to the Closing or that are either disclosed in Section 1.07 of the CompanyDisclosure Schedule or are approved in writing by the Purchaser).     (d) Except as set forth in Section 1.07(d) of the Company Disclosure Schedule, to theknowledge of the Company or Shareholders: no real property or Facility owned, leased or licensedby the Company lies in an area which is or will be subject to zoning, use or building coderestrictions that would prohibit, and no state of facts relating to the actions or inaction ofanother Person or its ownership, leasing, licensing or use of any real or personal property existsor will exist, that would prevent the continued effective ownership, leasing, licensing or use ofsuch real property in the business in which the Company is now engaged.     (e) The real and other properties and assets (including Intellectual Property) owned by theCompany or leased or licensed by the Company from a third party constitute all such properties andassets that are necessary to the business of the Company as presently conducted or as it currentlycontemplates conducting.     (f) Except as set forth in Section 1.07(f) of the Company Disclosure Schedule, the Company hasnot caused nor permitted its business, Facilities, properties or assets to be used to generate,manufacture, refine, transport, treat, store, handle, dispose of, transfer, produce or process anyHazardous Substance (as hereinafter defined) except in compliance with all applicable laws, rules,regulations, orders, judgments and decrees, except where the failure to so comply could notindividually or in the aggregate have a Material Adverse Effect, and has not caused nor permittedthe Release (as hereinafter defined) of any Hazardous Substance on or off the site of any propertyor Facilities of the Company that individually or in the aggregate could have a Material AdverseEffect. The term “Hazardous Substance” shall mean any hazardous waste, as defined by 42 U.S.C.6903(5), any hazardous substance, as defined by 42 U.S.C. 9601(14), any pollutant or contaminant,as defined by 42 U.S.C. 9601(33), and all toxic substances, hazardous materials, or other chemicalsubstances regulated by any other law, rule, or regulation. The term “Release” shall have themeaning set forth in 42 U.S.C. 9601(22).
I-7

 
     **1.08 Contracts.**     (a) Section 1.08(a) of the Company Disclosure Schedule lists each Contract of the followingtypes to which the Company currently is a party, or by which it is bound, that relates toor could affect the operations of the Company, except for (i) any Contract that is notmaterial to the Company or its business and that may be terminated by the Company on not more than30 days’ notice without any Liability to the Company and (ii) any Contract under which theexecutory obligation of the Company involves an amount less than $25,000 (such excepted Contractsare referred to collectively as “Minor Contracts”):          (i) Contracts with any present or former stockholder, director, officer, employee, partner orconsultant of the Company or Affiliate thereof;          (ii) Contracts for the future purchase of, or payment for, supplies or products, or for thelease of any asset from or the performance of services by a third party, in excess of $25,000 inany individual case, or any Contracts for the sale of inventory or products that involve an amountin excess of $25,000 with respect to any one supplier or other party;          (iii) Contracts to sell or supply products or to perform services that involve an amount inexcess of $25,000 in any individual case;          (iv) Contracts to lease to or to operate for any other party any asset that involve an amountin excess of $25,000 in any individual case;          (v) Any notes, debentures, bonds, conditional sale agreements, equipment trust agreements,letter of credit agreements, guaranty and other reimbursement agreements, loan agreements or otherContracts for the borrowing or lending of money (including loans to or from officers, directors,partners, stockholders or Affiliates of the Company or any members of their immediate families),agreements or arrangements for a line of credit or for a guarantee of, or other undertaking inconnection with, the indebtedness of any other Person;          (vi) Any Contracts under which any Encumbrances exist with respect to any assets of theCompany; and          (vii) Any other Contracts (other than Minor Contracts and those described in any ofsubsections (i) through (vi) above) not made in the ordinary course of business.     (b) Copies of all Contracts identified in Section 1.08(a) of the Company Disclosure Schedulehave been made available for inspection by the Purchaser. No outstanding purchase commitment bythe Company is in excess of its ordinary business requirements or at a price in excess of marketprice at the date thereof. Except as set forth in Section 1.08(b) of the Company DisclosureSchedule, none of such Contracts will expire or be terminated or be subject to any modification ofterms or conditions by reason of the consummation of the Transactions contemplated by thisAgreement, except where any such termination or modification will not have a Material AdverseEffect. With respect to the Contracts described in clause (iii)
I-8

 
hereinabove, none of the agentswho is party to any such agreement has terminated, threatened to terminate or given any notice ofan intention to terminate its agreement with the Company or to substantially reduce the volume ofbusiness placed with or through the Company, and neither the Company nor Shareholders knows of anycondition or state of facts or circumstances that would cause any such termination or reduction inthe foreseeable future. The Company is not in Default in any material respect under the terms ofany Contract nor is it in Default in the payment of any insurance premiums due to insurancecarriers nor any principal of or interest onany indebtedness for borrowed money nor, to the knowledge of the Company or Shareholders, hasany event occurred that, with the passage of time or giving of notice or both, would constitutesuch a Default by the Company and, to the knowledge of the Company and Shareholders, no other partyto any such contract is in Default in any material respect thereunder nor has any such eventoccurred with respect to such party, except that no representation is made with respect to anyContract that is not material to the Company or its business and that may be terminated by theCompany on not more than 30 days’ notice without any Liability to the Company.     **1.09 ERISA.**     (a) Section 1.09(a) of the Company Disclosure Schedule contains a complete list of all BenefitPlans currently sponsored or maintained by the Company or under which the Company may be obligated.The Company has made available to the Purchaser (i) accurate and complete copies of all BenefitPlan documents and all other material documents relating thereto of the Company, including allsummary plan descriptions and summary annual reports, if any, (ii) accurate and complete summariesof all unwritten Benefit Plans, (iii) accurate and complete copies of the most recent financialstatements and actuarial reports, if any, with respect to all Benefit Plans for which financialstatements or actuarial reports are required or have been prepared and (iv) accurate and completecopies of all annual reports, if any, for all Benefit Plans (for which annual reports are required)prepared within the last three years.     (b) All Benefit Plans conform (and at all times have conformed) in all material respects to,and are being administered and operated (and to the knowledge of the Company and Shareholders haveat all times been administered and operated) in material compliance with, the applicablerequirements of ERISA, the Code and all other applicable Legal Requirements, except where thefailure to comply would not have a Material Adverse Effect. All returns, reports and disclosurestatements required to be made under ERISA and the Code with respect to all Benefit Plans have beentimely filed or delivered. There have not been any “prohibited transactions,” as such term isdefined in Section 4975 of the Code or Section 406 of ERISA involving any of the Benefit Plans thatcould subject the Company to any material penalty or tax imposed under the Code or ERISA.     (c) None of the Benefit Plans is an employee pension benefit plan (as defined in Section 3(2)of ERISA). The Company has no current or contingent obligation to contribute to any multiemployerplan (as defined in Section 3(37) of ERISA).     (d) There are no pending or, to the knowledge of the Company or Shareholders, threatenedclaims by or on behalf of any Benefit Plans, or by or on behalf of any individual participants orbeneficiaries of any Benefit Plans, alleging any breach of fiduciary duty on the
I-9

 
part of theCompany or any of its stockholders, officers, directors or employees under ERISA or any otherapplicable regulations, or claiming benefit payments other than those made in the ordinaryoperation of such plans, nor is there, to the knowledge of the Company or Shareholders, anyreasonable basis for such claim.     (e) Except to the extent set forth in Section 1.09(e) of the Company Disclosure Schedule, theCompany has made all required contributions under the Benefit Plans on a timely basis.     (f) With respect to any Benefit Plan that is an employee welfare benefit plan (within themeaning of Section 3(l) of ERISA) (a “Welfare Plan”): (i) each Welfare Plan for which contributionsare claimed as deductions under any provision of the Code is in material compliance with allapplicable requirements pertaining to such deduction, except where the failure to comply would nothave a Material Adverse Effect, (ii) with respect to any welfare benefit fund (within the meaningof Section 419 of the Code) related to a Welfare Plan, there is no disqualified benefit (within themeaning of Section 4976(b) of the Code) that would result in the imposition of a tax under Section4976(a) of the Code and (iii) any Benefit Plan that is a group health plan (within the meaning ofSection 4980B(g)(2) of the Code) is in material compliance with all of the material requirements ofSection 4980B of the Code, Part 6 of Title I of ERISA and the applicable provisions of the SocialSecurity Act, except where the failure to comply would not have a Material Adverse Effect.     (g) Except as set forth in Section 1.09(g) of the Company Disclosure Schedule, the Company hasno Benefit Plans or agreements that, by their terms, would create liability for severance pay toany employee of the Company as a result of any of the Transactions.     (h) Except as disclosed in Section 1.09(h) of the Company Disclosure Schedule, no Benefit Planhas any liability of any material nature, accrued or contingent, including without limitationliabilities for Taxes, other than for routine payments to be made in due course to participants andbeneficiaries.     (i) The Company has provided the Purchaser with a true and correct summary of the names,relationship with the Company, present rates of compensation (whether in the form of salary,bonuses, commissions, or other supplemental compensation now or hereafter payable), and aggregatecompensation for the fiscal year ended 2007 and currently in effect for each director, officer, orother employee of the Company. Except as set forth in Section 1.09(i) of the Company DisclosureSchedule, since December 2007, the Company has not changed the rate of compensation of any of itsdirectors, officers or employees nor has any Benefit Plan or program been instituted or amended toincrease benefits thereunder.     **1.10 Patents and Other Intellectual Property.**     (a) Except as set forth in Section 1.10(a) of the Company Disclosure Schedule, the Company hasexclusive title to, owns, possesses, has the sole right to use or, where necessary, has made timelyand proper application for, all copyrights, trademarks, trade names, service marks, franchises,certificates of public convenience and necessity, patents, patent rights, licenses, trade secrets,information, proprietary rights and processes, intellectual property rights
I-10

 
listed on Section 1.10(a) of the Company Disclosure Schedule (the “Intellectual Property”). To the knowledge of theCompany and Shareholders, all of the Intellectual Property is owned or otherwise lawfully used bythe Company, and the Company is not infringing upon, conflicting with or unlawfully or wrongfullyusing any patent, trademark, trade name, service mark, copyright, trade secret or otherintellectual property right owned or claimed by another Person.Except as set forth in Section 1.10(a) of the Company Disclosure Schedule, the Company has notreceived any notice of any claim of infringement or any other Claim or proceeding, with respect toany such patent, trademark, trade name, service mark, copyright or trade secret which has not beenfavorably resolved. No current employee of the Company and, to the knowledge of the Company andShareholders, no other Person, including any former employee, owns or has any proprietary,financial or other interest, direct or indirect, in whole or in part, in any of the IntellectualProperty, or in any application therefor.     (b) The Company has taken appropriate measures to reasonably protect and preserve thesecurity, confidentiality and value of its Confidential Information, which measures are describedin Section 1.10(b) of the Company Disclosure Schedule. “Confidential Information” means thoseitems of the Intellectual Property that are confidential and any other proprietary or confidentialinformation owned or obtained on a confidential basis by the Company. Except as disclosed inSection 1.10(b) of the Company Disclosure Schedule, each of those employees and consultants of theCompany who are involved in the design, review, evaluation or development of products orIntellectual Property and are listed in Section 1.10(b) of the Company Disclosure Schedule hasexecuted a nondisclosure and assignment of inventions agreement in the form provided to thePurchaser. To the knowledge of the Company and Shareholders, all Confidential Information thatconstitutes Intellectual Property is currently valid and protectible and is not part of the publicdomain or knowledge, nor to the knowledge of the Company or Shareholders, has it been used,divulged or appropriated for the benefit of any Person other than the Company or otherwise to thedetriment of the Company, except as set forth in Section 1.10(b) of the Company DisclosureSchedule.     (c) The Company has all right, title and interest in and to all of the Intellectual Property,and the Company has not created or permitted any Encumbrance of any nature whatsoever. Except asset forth in Section 1.10(c) of the Company Disclosure Schedule, the Company has not granted anylicenses to its proprietary property and is not aware of any third parties who are claiming anyright, title or interest in or to such Intellectual Property or who are infringing or violating anyof such Intellectual Property. Except as set forth in Section 1.10(c) of the Company DisclosureSchedule, the Company is not bound by or a party to any option, license or agreement of any kindwith respect to patents, patent applications, inventions, trademarks, service marks, trade names,licenses, franchises, copyrights, trade secrets, information and other proprietary rights andprocesses or with respect to any such property and rights of any other person or entity relating tothe operation of the Company.     (d) Except as set forth in Section 1.10(d) of the Company Disclosure Schedule, no royalties,consulting or advisory fees or other payments are payable by the Company to any other person byreason of the ownership or use of the Intellectual Property.     **1.11 Questionable Payments.**To the knowledge of the Company and Shareholders, neither theCompany, any director, officer, agent, employee nor any other person associated with
I-11

 
or acting on behalf of the Company has: (i) used any corporate funds for unlawful contributions, gifts,entertainment or other unlawful expenses relating to political activity; (ii) made any unlawfulpayment to foreign or domestic government officials or employees or to foreign or domesticpolitical parties or campaigns from corporate funds; (iii) violated any provision of the ForeignCorrupt Practices Act of 1977, as amended; (iv) established or maintained any unlawfulor unrecorded fund of corporate monies or other assets; (v) made any false or fictitious entryon the books or records of the Company; (vi) made any bribe, rebate, payoff, influence payment,kickback or other unlawful payment; or (vii) made any bribe, kickback or other payment of anunlawful nature to any person or entity, private or public whether in money, property, or services,to obtain favorable treatment in securing business or to obtain special concessions, or to pay forfavorable treatment for business secured or for special concessions already obtained.     **1.12 Consents and Approvals.**The unanimous written approval of all the Company’s Stockholdersis required for entry of this Agreement, any and all modifications to this Agreement, and any andall Transaction Documents to which the Company is or will be a party. Except for the consentsspecified herein (the “Required Consents”), and except as set forth in Section 1.12 of the CompanyDisclosure Schedule, neither the execution and delivery by the Company of the Transaction Documentsto which the Company is or will be a party, nor the performance of the Transactions to be performedby the Company, will require any additional notice, filing, consent, waiver or approval orconstitute a Default under (a) any Legal Requirement or Court Order to which the Company issubject, (b) the Charter Documents or by-laws of the Company or (c) any Contract, GovernmentalPermit or other document to which the Company is a party, except any Contract that is not materialto the Company or its business and that may be terminated by the Company on not more than 30 days’notice without any liability to the Company.     **1.13 Subsidiaries and Investments.**The Company does not own, directly or indirectly, anyinterest or investment (whether equity or debt) in any limited liability company, corporation,partnership, business, trust, joint venture or other legal entity.     **1.14 Sales.**The Company has provided the Purchaser with a schedule showing the revenuesgenerated by all products sold by the Company during each year commencing 2005.     **1.15 Liabilities.**Except as specified in Section 1.15 of the Company Disclosure Schedule,none of the assets of the Company is subject to any Liabilities, except: (a) Liabilities under anyContracts specifically disclosed on the Company Disclosure Schedule, (b) Liabilities under MinorContracts and (c) Liabilities reflected in the Last Balance Sheet or incurred in the ordinarycourse of business after the Last Balance Sheet Date and reflected in the books and records of theCompany.     **1.16 Insurance.**The Company has provided the Purchaser with a summary of all policies orbinders of insurance held by or on behalf of the Company specifying with respect to each policy theinsurer, the amount of the coverage, the type of insurance, the risks insured, the expiration date,the policy number and any pending claims thereunder. To the knowledge of the Company andShareholders, there is no Default with respect to any such policy or binder, nor has there been anyfailure to give any notice or present any claim under any such policy or binder in a timely fashionor in the manner or detail required by the policy or binder, except for any of the
I-12

 
foregoing that would not, individually or in the aggregate, have a Material Adverse Effect on the Company. Thereis no notice of nonrenewal or cancellation with respect to, or disallowance of any claim under, anysuch policy or binder that has been received by the Company, except for any of the foregoing thatwould not, individually or in the aggregate, have a Material Adverse Effect on the Company.     **1.17 Employee Relations.**Except as disclosed in Section 1.17 of the Company DisclosureSchedule, the Company is not (a) a party to, involved in or, to the knowledge of the Company andShareholders, threatened by, any labor dispute or unfair labor practice charge relating to theCompany or (b) currently negotiating any collective bargaining agreement with any employees of theCompany, and the Company has not experienced any work stoppage by any of its employees during thethree years immediately preceding the execution of this Agreement.     **1.18 Warranties.**All goods sold or distributed by the Company were of merchantable quality,and, except as set forth in Section 1.18 of the Company Disclosure Schedule, neither the Companynor Shareholders has any knowledge that the Company has breached any express or implied warrantiesin connection with the sale or distribution of such goods, except for breaches that have beenresolved without any further liability on the part of the Company and/or that, individually and inthe aggregate, would not have a Material Adverse Effect. The Company has provided the Purchaserwith a description of the Company’s warranties applicable to any goods that have been sold ordistributed by the Company.     **1.19 Customers, Distributors and Suppliers.**The Company uses commercially reasonable effortsto maintain, and currently maintains, good working relationships with its customers, distributorsand suppliers. Section 1.19 of the Company Disclosure Schedule lists any Contracts (excludingMinor Contracts) relating to the operation of the Company with customers or distributors or formercustomers or distributors of the Company that have been terminated or canceled during the two-yearperiod prior to the date hereof. Section 1.19 of the Company Disclosure Schedule also contains alist of the names of each of the Major Customers and Major Distributors of the Company. Except asdisclosed in Section 1.19 of the Company Disclosure Schedule, none of such Major Customers or MajorDistributors has given the Company notice terminating, canceling or threatening to terminate orcancel any Contract or relationship with the Company, and none of such customers or distributorsis, or has been during the two-year period immediately preceding the execution of this Agreement, arelated party to the Company. Section 1.19 of the Company Disclosure Schedule also contains a listof the names of the Major Suppliers of components of and materials used in the manufacture of theproducts of the Company. None of such Major Suppliers has given the Company written notice, or tothe knowledge of the Company or Shareholders, any other notice, terminating, canceling orthreatening to terminate or cancel any Contract or relationship with the Company.     **1.20 Finder’s Fees.**No Person retained by the Company is or will be entitled to anycommission or finder’s or similar fee in connection with the Transactions.     **1.21 Transactions with Certain Persons.**Except as set forth in Section 1.21 of the CompanyDisclosure Schedule, no officer or director of the Company or any of its Affiliates, no employee ofthe Company or any of its Affiliates and, to the knowledge of the Company and
I-13

 
Shareholders, nomember of any such person’s immediate family is presently a party to any material transaction withthe Company or any of its Affiliates relating to the businesses of the Company or any of itsAffiliates, including, without limitation, any contract, agreement or other arrangement (a)providing for the furnishing of services by, (b) providing for the rental of real or personalproperty from or (c) otherwise requiring payments to (other than for services as officers,directors or employees of the Company or its Affiliates) any such person or corporation,partnership, trust or other entity in which any such person has a substantial interest as astockholder, officer, director, trustee or partner.     **1.22 No Prior Agreements Relating to Sale.**Except for this Stock Purchase Agreement and theCompany Disclosure Schedule entered concurrently herewith, Purchaser, the Company and eachStockholder hereby acknowledges and agrees that there are no valid or enforceable documentscontracts, warranties or agreements of any sort whatsoever between Purchaser and the Company whichserve to bind Purchaser or the Company to this proposed stock purchase transaction or otherwiserelates thereto, all prior alleged agreements, contracts and writings between the Purchaser and theCompany on the subject matter hereof being null and void. This Agreement and the CompanyDisclosure Schedule sets forth the entire understanding of the parties with respect to the subjectmatter hereof, shall supersede all previously alleged existing agreements between Purchaser and theCompany concerning such subject matter and may be modified only by a written instrument dulyexecuted by each party hereto.     **1.23 Accuracy of Information.**No representation or warranty by the Company orShareholders in any Transaction Document expressly listed in this Agreement, and no informationcontained therein, is false or misleading in any material respect, contains any untrue statement ofa material fact or omits to state any material fact necessary in order to make the statementscontained herein or therein not misleading.**II. Representations and Warranties of the Stockholders.**     Each of the Stockholders, to the best of his or her knowledge, severally represents andwarrants to the Purchaser and to the other Stockholders with respect to himself/herself and theshares of Company Common Stock set forth opposite the name of such Stockholder on Schedule I asfollows:     **2.01 Authorization.**Such Stockholder has the requisite power and authority to execute anddeliver the Transaction Documents expressly listed in this Agreement to which such Stockholder isor will be a signing party and to perform the Transactions to be performed by such Stockholder.The Transaction Documents to be unanimously executed by all Stockholders after the date hereof willconstitute, valid and binding obligations of such Stockholder, enforceable against such Stockholderin accordance with their respective terms, except as such enforceability may be limited by generalequitable principles and by bankruptcy, moratorium, insolvency, fraudulent conveyance or similarlaws.     **2.02 Ownership of Company Common Stock and Related Matters.**Such Stockholder is the owner ofrecord and the sole beneficial owner of all shares of Company Common Stock set forth opposite thename of such Stockholder on Schedule I hereto and has good and marketable title to such shares,free and clear of all Encumbrances. No Person has any
I-14

 
right or option to purchase or acquire suchshares of Company Common Stock owned by such Stockholder, except as provided for in the January 25,2001 Shareholder Agreement and this Agreement.     **2.03 S Corporation Status.**No action has been taken by such Stockholder, or to the knowledgeof such Stockholder by any other Stockholder, that may result in the revocation of any Subchapter Selection made by the Company referred to in Section 1.05(j).     **2.04 Consents and Approvals.**The unanimous written approval of all the Company’s Stockholdersis required for entry of this Agreement, any and all modifications to this Agreement, and any andall Transaction Documents to which the Company is or will be a party. Neither the execution anddelivery by such Stockholder of the Transaction Documents expressly listed herein to which suchStockholder will be a party, nor the performance of said Transactions to be performed by suchStockholder, will require any additional filing, notice, consent, waiver or approval or constitutea Default under (a) any Legal Requirement or Court Order to which such Stockholder is subject, or(b) any Contract, Governmental Permit or other document to which such Stockholder is a party.**III. Representations and Warranties of the Purchaser.**     The Purchaser represents and warrants to the Company and the Stockholders as follows:     **3.01 Organization and Qualification.**The Purchaser is a corporation duly organized, validlyexisting and in good standing under the laws of the State of Texas and has all requisite corporatepower and authority to carry on its business as it is now being conducted, to own the shares ofCompany Common Stock and carry on the business of the Company as currently operated and to execute,deliver and perform this Agreement and to consummate the transactions contemplated hereby. TheCompany is qualified to do business as a foreign corporation and is in good standing in alljurisdictions in which the Company is required to be so qualified, except where the failure to soqualify would not have a Material Adverse Effect.     **3.02 Authority.**The Purchaser has the requisite power and authority as well as the ready andavailable closing Purchase Price proceeds to execute and deliver the Transaction Documents to whichit will be a party and to perform the Transactions to be performed by it. Such execution, deliveryand performance by the Purchaser has been duly authorized by all necessary corporate action. TheTransaction Documents to be executed unanimously by all Company Stockholders, the Company andPurchaser related to this stock purchase transaction after the date hereof shall constitute thesole and exclusive valid and binding obligations of the Company, Stockholders and Purchaserrelated to this transaction, (except for any employment or consulting agreements also entered intoby Purchaser with any individual Stockholders commencing in term after the successful completion ofthis stock purchase transaction), enforceable against it in accordance with their terms, except assuch enforceability may be limited by general equitable principles and by bankruptcy, moratorium,insolvency, fraudulent conveyance or similar laws. Any and all documents or purported agreementswhich may have been previously entered into related to this stock purchase transaction but whichhave not been unanimously signed by all Stockholders are hereby acknowledged to be void andunenforceable. Copies of the Certificate of Incorporation and the Bylaws, each as amended, of thePurchaser
I-15

 
(collectively, the “Purchaser Charter Documents”) have been made available to theCompany. The Purchaser is not in violation of any Purchaser Charter Documents.     **3.03 Consents and Approvals.**For this Agreement and the expressly listed TransactionDocuments to be valid and legally enforceable upon the Purchaser, neither the execution anddelivery by the Purchaser of the Transaction Documents to which the Purchaser will be a party, northe performance of the Transactions to be performed by the Purchaser, will require any additionalconsent or approval from the Purchaser, notice, filing, waiver or constitute a Default under (a)any Legal Requirement or Court Order to which the Purchaser is subject, (b) the Charter Documentsor by-laws of the Purchaser or (c) any Contract, Governmental Permit or other document to which thePurchaser is a party.     **3.04 SEC Documents.**     (a) The Purchaser has filed all forms, reports and documents required to be filed by it withthe Securities and Exchange Commission (the “SEC”) since June 30, 1997 (collectively, the“Purchaser Reports”). As of their respective dates, the Purchaser Reports, and any such reports,forms and other documents filed by the Purchaser with the SEC after the date of this Agreement: (i)complied, or will comply, as to form in all material respects with the applicable requirements ofthe Securities Act, the Exchange Act, and the rules and regulations thereunder and (ii) did notcontain any untrue statement of a material fact or omit to state a material fact required to bestated therein or necessary to make the statements made therein, in the light of the circumstancesunder which they were made, not misleading. The representation in clause (iii) of the precedingsentence shall not apply to any misstatement or omission in any Purchaser Report filed prior to thedate of this Agreement that was superseded by a subsequent Purchaser Report filed prior to the dateof this Agreement that specifically corrected such misstatement or omission in the applicablePurchaser Report.     (b) Each of the consolidated balance sheets included in or incorporated by reference into thePurchaser Reports (including the related notes and schedules) fairly presents the consolidatedfinancial position of the Purchaser and its subsidiaries as of its date, and each of theconsolidated statements of income, retained earnings and cash flows included in or incorporated byreference into the Purchaser Reports (including any related notes and schedules) fairly presentsthe results of operations, retained earnings or cash flows, as the case may be, of the Purchaserand its subsidiaries for the periods set forth therein (subject, in the case of unauditedstatements, to normal year-end audit adjustments that would not be material in amount or effect),in each case in accordance with generally accepted accounting principles consistently appliedduring the periods involved, except as may be noted therein.     **3.05 INTENTIONALLY OMITTED**.     **3.06 Representations of the Company and the Stockholders.**The Purchaser is not relying on anyrepresentations or warranties of the Company or any Stockholder, except for the representations andwarranties expressly set forth herein, as modified by the Company Disclosure Schedule. Purchaseragrees and acknowledges that this Agreement and all Transaction Documents associated therewithshall require the unanimous execution by all Stockholders.
I-16

 
     **3.07 Finder’s Fees.**No Person retained by the Purchaser is or will be entitled to anycommission or finder’s or similar fee in connection with the Transactions.     3.08 The Purchaser and Company hereby agree that they shall not contractually preclude any oftheir supplier, customers or vendors from transacting business with Maria Sanchez or Fransico Perez(either in their own name or in the name of any business employing them) in this same industry,consistent with Section 7.09**.****IV. Purchase and Sale of the Company Common Stock.**     **4.01 Terms of the Purchase and Sale.**On the basis of the representations, warranties,covenants, and agreements contained in this Agreement and subject to the terms and conditions ofthis Agreement:     (a) Each Stockholder, based upon the same agreement entered hereby unanimously by all otherCompany Stockholders, agrees to sell, assign, transfer and convey to the Purchaser at the Closingall of the shares of Company Common Stock set forth opposite the name of the respective Stockholderon Schedule I hereto. A material provision of this Agreement is that all Company stock shares arebeing sold to Purchaser at closing by all Company Stockholders. Each Stockholder shall deliver tothe Purchaser at the Closing certificates representing the shares of Company Common Stock owned bysuch Stockholder, duly endorsed in blank or accompanied by stock powers duly endorsed in blank, ineach case in proper form for transfer. Purchaser shall be solely responsible for payment of stocktransfer documentary stamp taxes, if any.     (b) In consideration for the purchase of the shares of Company Common Stock referred to inSection 4.01(a), the Purchaser agrees to pay to the Stockholders the Purchase Price for theirCompany stock shares in the combined aggregate amount of TWO MILLION ONE HUDRED THOUSAND DOLLARS($2,100,000.00) U.S., in the specific division of Purchase Price payments to each Stockholder asexpressly listed on Schedule 2. The time for payment to each Stockholder of the Stockholder’srespective Purchase Price shall be as expressly stated in Schedule 2 hereof. The Purchase Priceshall be subject to adjustment in accordance with Section 4.03 hereof. Notwithstanding, thepreceding sentence or anything else contained in this Agreement or any other Transaction Document,under no circumstances shall this Stock Purchase Agreement be completed and any stock transferredby any Stockholder, unless Stockholders Maria Sanchez (“M. Sanchez”) and Francisco Perez (“F.Perez”) receive at or prior to closing of this transaction from Purchaser the net amount of thePurchase Price owed to M. Sanchez and F. Perez after the expresssly allowed adjustment of theentire Purchase Price permitted under Section 4.03 hereof. The Purchase Price payment to M.Sanchez and F. Perez shall be delivered no later than the Closing Date, in U.S. cash or viaconfirmed wire transfer of immediately available funds to the bank account designated in writing byM. Sanchez and F. Perez, along with payment to them on the Closing Date in cash or cash equivalentof any other compensation for future services pursuant to a Consulting Agreement agreed to byPurchaser. Time is of the essence to all of the terms of this Agreement, and particularly inrespect to the Purchase Price payment provisions and Closing Date provisions of this Agreement.
I-17

 
     **4.02 The Closing Date.**The closing of the transactions contemplated by Sections 4.01(a) and4.01(b) shall take place at the offices of Jas Diagnostics Inc., local time, no later thanMay 30, 2008 (the “Closing Date”). The closing of the transactions contemplated by Section4.02 is herein called the “Closing,” and the date of the Closing is herein called the “ClosingDate.” Any and all extensions of time for the Closing Date must first be approved in writing byeach and every Company Stockholder, which approval may not be unreasonably withheld andnotwithstanding anything to the contrary contained in this Agreement, the parties hereby agree thatthere shall be no extensions of the Closing Date beyond June 3, 2008.     **4.03 Purchase Price Adjustment.**     (a) Purchaser shall be obligated to close this transaction on or before the Closing Date. Theaggregate Purchase Price of $2,100,000.00 shall be subject to adjustment on the Closing Date byreduction of the Purchase Price solely in the amount of the Company’s Unpaid Liabilities as of May28, 2008 (as that term is expressly defined in Schedule 2, strictly limited to the accounts ortypes of accounts listed under Section 1.22 of the Company Disclosure Schedule). Purchaser’sfailure to close this transaction on the Closing Date shall, at the election of the Company and/orany individual Stockholder, serve to void this entire stock purchase transaction, this Agreementand all Transaction Documents entered concurrently or subsequently by the parties relating hereto,except for the confidentiality obligations contained in Section 8.04 hereof, pursuant to the termsof Section 4.02 above.     **4.04 Indemnification of Stockholders Subsequent to Closing for Company’s Liabilities.**     The parties hereby agree and acknowledge that Purchaser will perform Purchaser’s due diligenceduring the Due Diligence Period through the Closing Date and that Purchaser is a sophisticated andknowledgeable participant in the business industry. The Purchase Price is subject to adjustmentstrictly and exclusively pursuant to the terms specified in Section 4.03 above, based uponPurchaser’s agreement that the amounts being deducted from the Purchase Price shall be the solepayment responsibility of the Company. Purchaser and the Company hereby agree and warrant to eachStockholder that Purchaser and the Company shall ensure full payment on the Closing Date of any andall Company debts and liabilities which are personally guaranteed by Maria Sanchez and/or FranciscoPerez, including the Company’s Bank Atlantic $100,000.00 Line of Credit, having a balance owing inthe amount of $17,581.96 as of May 28, 2008 (the “Bank Atlantic Line of Credit Debt”). Purchaserand Company shall provide at Closing confirmed wire transfer confirmation of the full payment ofthe Bank Atlantic Line of Credit Debt and the President of Company shall deliver at the Closing viaconfirmed fax delivery to the Company’s Bank Atlantic bank Officer written confirmation on behalfof the Company requiring the immediate termination of the Bank Atlantic Line of Credit Debt and nofurther debt shall be incurred on that closed account. Likewise, on the Closing Date Purchaser andCompany shall diligently proceed to obtain the full and unconditional release from any and allguarantees, debts and liability of each Stockholder arising from the lease agreement (and allmodifications thereof) between Company and the Company’s landlord for the commercial space used byCompany (hereafter, the “Landlord’s Release”). Purchaser and Company hereby warrant that
I-18

 
theyshall deliver to each Stockholder written confirmation of the Landlord’s Release no later than 30days from the Closing Date. All other debts and liabilities of the Company which arenot personally guaranteed by a Stockholder, shall be timely paid by the Company in the normalcourse of the Company’s business. Purchaser and the Company agree and warrant that they shallrelieve and fully indemnify Francisco Perez and Maria Sacnchez of all debts and liabilitiesexisting for the Company’s Unpaid Liabilities. Accordingly, notwithstanding anything to thecontrary contained or which may be interpreted in any other provision to this Agreement or anyTransaction Documents entered in connection therewith, as a material portion of the considerationbeing provided hereby to each Stockholder for closing this transaction, Purchaser herebyadditionally agrees and warrants to fully and completely indemnify and hold each Stockholderharmless from any and all Company liabilities existing and unpaid by the Company as of the ClosingDate and arising at any time in the future thereafter, with the sole and exclusive exception fromthis indemnification obligation of the Company and Purchaser as to each respective Stockholder for:(1) any Company liability which was known to exist but undisclosed by the Stockholder to Purchaser;or (2) a knowing and intentional violation of any representation or warranty made by the respectiveStockholder in this Agreement. Purchaser’s and the Company’s indemnification obligations providedto Stockholders following the Closing Date under this Section 4.04, shall include but not belimited to any and all claims, damages, (including incidental and consequential damages), expense(including costs of investigation and defense and reasonable attorneys’ fees) or diminution ofvalue, liabilities, lawsuits, administrative proceedings, costs of defense incurred by Stockholdersfor any indemnified third-party claims raised against the Stockholder (including attorneys fees andcourt costs and expenses), costs, court costs, attorneys fees, pre-judgment interest at theprevailing prime market rate, post-judgment interest and all post-judgment collection costs,attorneys fees and expenses, through trial and all levels of appeal. The obligations under thisSection 4.04 shall survive the closing of this transaction.INTENTIONALLY OMITTED.INTENTIONALLY OMITTED     **4.05 INTENTIONALLY OMITTED.****V. Conditions to Obligations of the Purchaser.**     Except for the confidentiality obligations contained in Section 8.04 hereof (whichconfidentiality obligations shall survive any termination of this Agreement),the obligation of thePurchaser under this Agreement to close this transaction are subject, at the option of thePurchaser, to the following conditions:     **5.01 Accuracy of Representations and Compliance with Conditions.**All representations andwarranties of the Company and each Stockholder as contained in this Agreement shall be accurate inall material respects when made and, in addition, unless the
I-19

 
context otherwise requires, shall beaccurate as made as of the Closing as though such representations and warranties were then made inexactly the same language by the Companyand each respective Stockholder. As of the Closing, the Company and each of the Stockholdersshall have performed and complied in all material respects with all covenants and agreements andsatisfied all conditions required by this Agreement and the other Transaction Documents to beperformed and complied with by any of them at or before such time, all of the Transaction Documentsshall have been duly authorized, executed and delivered by the parties thereto and, upon executionthereof by the Purchaser, shall be in full force and effect, and the Purchaser shall have receivedcertificates executed by the chief executive officer of the Company and by the Stockholders datedthe Closing Date, to those effects, in form and substance stated in this Section 5.01.     **5.02 Opinions of Counsel.**An opinion of counsel letter on behalf of the Company shall beprovided to Purchaser on the Closing Date in the form attached hereto as Schedule 5.     **5.03 Other Closing Documents.**The Stockholders shall have delivered to the Purchaser at orprior to the Closing such other documents (including certificates of the secretary and otherofficers of the Company) as contained in Schedule 6 hereof.     **5.04 Legal Action.**There shall not have been instituted or threatened any legal proceedingrelating to, or seeking to prohibit or otherwise challenge the consummation of, the Transactionscontemplated by this Agreement and the other Transaction Documents, or to obtain substantialdamages with respect thereto.     **5.05 No Governmental Action.**There shall not have been any action taken, or any law, rule,regulation, order or decree proposed, promulgated, enacted, entered, enforced or applicable to theTransactions contemplated by this Agreement and the other Transaction Documents by any GovernmentalBody, including the entry of a preliminary or permanent injunction, which: (a) makes any of theTransactions contemplated by this Agreement illegal, (b) requires the divestiture by the Purchaserof any of the shares of the Company Common Stock to be sold pursuant to this Agreement or of amaterial portion of the business of the Purchaser or of the Company or (c) otherwise prohibits orrestricts the consummation of any of the Transactions contemplated by this Agreement.     **5.06 No Claims Regarding Stock Ownership or Sale Proceeds.**There shall not have been made orthreatened by any Person any Claim asserting that such Person (a) is the holder or the beneficialowner of, or has the right to acquire or to obtain beneficial ownership of, any stock of, or anyother voting, equity or ownership interest in the Company or (b) is entitled to all or any portionof the purchase price payable to the Stockholders hereunder.     **5.07 INTENTIONALLY OMITTED.**     **5.08 Tangible Net Worth.**The Company and the Stockholders shall have delivered the ClosingBalance Sheet to the Purchaser.     **5.09 Required Consents.**Each of the Required Consents contained in Schedule 7 hereof shallhave been obtained and shall be in full force and effect.
I-20

 
     **5.10 Resignations.**All directors of the Company shall have resigned at or prior to theClosing as directors and members of all committees of the Board of Directors in writing effectiveimmediately after the Closing. All officers of the Company shall have resigned at or prior tothe Closing in writing effective immediately after the Closing subject to acceptance by thePurchaser.     **5.11 INTENTIONALLY OMITTED**     **5.12 Employment and Consulting Agreements.**The Purchaser shall have received at or prior tothe closing from David Johnston and Vivian Alvarez an Employment Agreement. Maria Sanchez andFrancisco Perez shall have received at or prior to the closing from Purchaser a fully executedConsulting Agreement and payment therefore.**VI. Conditions to the Obligations of the Company and the Stockholders.**     The obligations of the Company and each Stockholder under this Agreement to close thistransaction are subject, at the option of the Company and the Stockholders, to the followingconditions:     **6.01 Accuracy of Representations and Compliance with Conditions.**All representations andwarranties of the Purchaser contained in this Agreement shall be accurate in all material respectswhen made and, in addition, unless the context otherwise requires, shall be accurate as of theClosing as though such representations and warranties were then made in exactly the same languageby the Purchaser. As of the Closing, the Purchaser shall have performed and complied in allmaterial respects with all covenants and agreements and satisfied all conditions required by thisAgreement and the other Transaction Documents to be performed and complied with by it at or beforesuch time, all of the Transaction Documents shall have been duly authorized, executed and deliveredby the parties thereto and, upon the execution thereof by the Company and the Stockholders, will bein full force and effect, and the Company and the Representative shall have received a certificateexecuted by the chief executive officer of the Purchaser, dated the Closing Date, to those effects,in form and substance reasonably satisfactory to the Company and the Representative on behalf ofthe Stockholders.     **6.02 Legal Action.** There shall not have been instituted or threatened any legal proceedingrelating to, or seeking to prohibit or otherwise challenge the consummation of, the Transactionscontemplated by this Agreement and the other Transaction Documents, or to obtain substantialdamages with respect thereto.     **6.04 Employment and Consulting Agreements. David Johnston and Vivian Alvarez shall have receivedat or prior to the closing from Purchaser a mutually agreeable fully executed Employment Agreement.Maria Sanchez and Francisco Perez shall have received at or prior to the closing from Purchaser amutually agreeable fully executed Consulting Agreement and full payment therefore. This is amaterial provision to this entire Agreement.**     **6.05 Other Closing Documents.**The Purchaser and/or Company shall have delivered to theStockholders at or prior to the Closing such other documents (including but not limited to
I-21

 
confirmation of wire transfer payments required herein, confirmation of Company’s closure of theBank Atlantic Credit Line, correspondence to the Company’s Landlord seeking full release fromliability for all Stockholders from Company commercial lease, certificates of the secretaryand other officers of the Purchaser) as the Stockholders may reasonably request in order tocarry out the provisions of this Agreement.     **6.06 Secretary’s Certificate.**The Purchaser shall have delivered to the Company at or priorto the Closing a certificate of the secretary or assistant secretary of the Company certifying theresolutions of the Board of Directors approving the Transactions.     **6.07 Payment by Seller.**The Purchaser shall have paid all sums required from Purchaser underArticle IV (Purchase and Sale of Company Stock) of this Agreement, the Company shall have paid allliabilities required to be paid as of Closing and closed the Bank Atlantic Line of Credit requiredunder Section 4.04 and the release of personal liabilities of the Stockholders to the Company’scommercial lease has been requested in writing from the Landlord (with Purchaser and Company toprovide actual releases from the Landlord within 30 days of the Closing).     6.08 Satisfaction of other Covenants. The covenants and obligations of the parties containedin Sections 7.05 and 7.08 are satisfied at Closing**VII. Covenants and Agreements of the Company and the Stockholders.**     The Company and the Stockholders covenant and agree as follows:     **7.01 Access.**Strictly subject to the terms of the confidentiality provisions contained hereinunder Section 8.04, which provisions shall survive any termination of this Agreement, until theearlier of the Closing Date or the termination of this Agreement pursuant to Article IX orotherwise (the “Release Time”), the Company will afford, upon reasonable notice during normalbusiness hours, and Shareholders will cause the Company to afford, expressly mutually agreed todesignated officers, employees, counsel, agents, investment bankers, accountants and otherrepresentatives of the Purchaser and lenders, investors and prospective lenders and investors free(subject to the confidentiality provisions) and full access to the plants, properties, books andrecords of the Company, will permit them to make extracts from and copies of such books and recordsand will from time to time furnish the Purchaser with such additional financial and operating dataand other information as to the financial condition, results of operations, businesses, properties,assets, liabilities or future prospects of the Company as the Purchaser from time to time mayreasonably request, subject to the terms of the confidentiality provisons under Section 8.04.Until the Release Time, the Company and Shareholders will use all reasonable efforts to cause theindependent certified public accountants of the Company to make available to the Purchaser and itsindependent certified public accountants the work papers relating to the audits of the Companyreferred to in Section 1.04. HOWEVER, NOTWITHSTANDING ANYTHING TO THE CONTRARY THAT MAY BEINTERPRETED IN THIS SECTION 7.01 OR ELSEWHERE IN THIS AGREEMENT, PURCHASER HEREBY AGREES ANDACKNOWLEDGES THAT:
I-22

 
          (1) Maria Sanchez shall be required to be present at all times during the disclosure of anyand all Company books and records or to have actually pre-approved information being inspected byPurchaser;          (2) If Purchaser and Maria Sanchez disagree respecting the release of any specific Companybooks and records, then Purchaser shall make written request therefore, specifically identifyingwhat records it seeks to review, for further consideration by all the Stockholders. Purchaser’ssole and exclusive remedy if it is unable to obtain the unanimous written agreement of allStockholders as to the release of any specific information, is to terminate this transaction.Purchaser is a sophisticated commercial actor in the subject industry and it is cable ofdetermining whether it possesses sufficient information to proceed with the transaction, withoutcomplaint or reservation as to information which purchaser is provided to inspect. Purchaseracknowledges that these reservations are intended to protect the Company’s trade secrets andConfidential Information from disclosure, even to Purchaser.          (3) Purchaser has already been presented lists of the Company’s accounts receivables andaccounts payable, which information shall be treated as the Company’s Confidential Information.The Company’s trade secrets and most Confidential Information may not be further released toPurchaser, absent CONCURRENT AND EXPRESS WRITTEN WAIVER thereof as to specific information byStockholders Maria Sanchez and David Johnston. Any inforation so released shall be strictlysubject to the confidentiality provisions under Section 8.04 of this Agreement. No copieswhatsoever, via electronic form, paper or otherwise, shall be made by or for Purchaser of theCompany’s product formulas or formulation process until and unless a successful closing iscompleted pursuant to the terms of this Agreement. Notwithstanding anything to the contrary thatmay be interpreted in this Agreement, the Company’s formulas and formulation process shall not bedisclosed to Purchaser for Purchaser’s review (without copying) until the parties are ready toclose on the Closing Date.     **7.02 Conduct of Business.**Except as otherwise reasonably requested by the Purchaser inwriting, until the Release Time, the Company will, consistent with past practice, use allreasonable efforts to preserve the business operations of the Company intact, to keep available theservices of the Company’s present personnel, to preserve in full force and effect the Contracts,agreements, instruments, leases, Governmental Permits, arrangements and understandings of theCompany, and to preserve the good will of the Company’s suppliers, customers, employees and othershaving business relations with the Company. Until the Release Time, the Company will conduct itsbusiness and operations in all respects only in the ordinary course consistent with past practices.     **7.03 Advice of Changes.**Until the Release Time, the Company and Shareholders will promptlyadvise the Purchaser in a written notice of any fact or occurrence or any pending or threatenedoccurrence of which any of them obtains knowledge and which (if existing and known at the date ofthe execution of this Agreement) would have been required to be set forth or disclosed in orpursuant to this Agreement or any of the Transaction Documents that (if existing and known at anytime prior to or at the Closing) would make the performance by any party of a covenant contained inthis Agreement impossible or make such performance materially more difficult than in the absence ofsuch fact or occurrence, or which (if existing and
I-23

 
known at the time of the Closing) would cause a condition to any party’s obligations underthis Agreement not to be fully satisfied.     **7.04 Confidentiality.**Through the Closing Date, the Company and Shareholders shall takeappropriate measures, consistent with legal requirements for the protection of the Company’s tradesecrets and Confidential Information (as further defined in Section 8.04 below and the CompanyDisclosure Schedule 1.23, to ensure that all Confidential Information of the Company shall not bepublished, disclosed or made accessible by any of them to any other person or entity at any time orused by any of them except in the business and for the benefit of the Company. Subsequent to thesuccessful completion of this stock purchase transaction on the Closing Date, the Shareholdersshall govern themselves in accordance with the terms of the Noncompetition provisions contained inSection 7.09 below.     **7.05 Public Statements.**Before the Purchaser, the Company or Shareholders shall release anyinformation concerning this Agreement or any of the Transaction Documents or the transactionscontemplated by this Agreement that is intended for or may result in public dissemination thereof,they shall cooperate with each other, shall furnish drafts of all documents or proposed oralstatements to each other for comments, and shall not release any such information without thewritten consent of the other, except to the extent that the other party may be obligated to do sounder law. Nothing contained herein shall prevent any party from releasing any information to anyGovernmental Body if required to do so by law. However, that the party subject to such requirementshall give the other party prompt written notice in order to allow that party to take whateveraction it deems necessary to protect its information. Notwithstanding anything that may beinterpreted to the contrary in this Section 7.05, nothing contained herein shall be interpreted asan agreement for any party to forebear from utilizing the documents related to this Agreement forpurposes of bringing any claim in a competent court of law upon any dispute which cannot beamicably resolved. Immediately following the Closing, the Company shall deliver on Companyletterhead correspondence to the Company’s stakeholders, including its customers, vendors andsuppliers, which notifies the stakeholders of the consummated sale and the fact that Maria Sanchezand Francisco Perez have left the Company in order to pursue other opportunities, as stated in theattached Schedule 4.     **7.06 Other Proposals.**Until the Release Time, the Company and the Stockholders shall not, andshall not authorize or permit any officer, director, employee, counsel, agent, investment banker,accountant, or other representative of any of them, to: (a) initiate contact with any person orentity in an effort to solicit any Takeover Proposal (as hereinafter defined); (b) cooperate with,or furnish or cause to be furnished any non-public information concerning the business, properties,or assets of the Company to, any person or entity in connection with any Takeover Proposal; (c)negotiate with any person or entity with respect to any Takeover Proposal; or (d) enter into anyagreement or understanding with the intent to effect a Takeover Proposal. The Company andShareholders will promptly give written notice to the Purchaser of the details of any TakeoverProposal of which either of them becomes aware. Failure to close this transaction by the ClosingDate shall fully relieve the Company and the Shareholders of the restraints under this Section7.06.     **7.07 Consents Without Any Condition.**Neither the Company nor Shareholders shall make anyagreement or reach any understanding that could have a Material Adverse Effect on
I-24

 
the Company or the Purchaser as a condition for obtaining any consent, authorization,approval, order, certificate or Governmental Permit required for the consummation of theTransactions contemplated by this Agreement, unless such agreement or understanding is approved inwriting by the Purchaser, which approval shall not be unreasonably withheld or delayed.     **7.08 Mutual General Release by the Parties.**If the Closing takes place as expressed in thisAgreement, effective upon the Closing, each party hereto (each Stockholder, the Company andPurchaser) fully and unconditionally releases and discharges all claims and causes of action whicheach party has against each other party, or such other party’s heirs, personal representatives,successors or assigns ever had, now have, or hereafter may have through the Closing Date, whicharose on or prior to the Closing Date, against the other parties to this transaction, and, whenacting as such, their respective officers, directors, employees, counsel, agents and stockholders,in each case past, present, or as they may exist for any claims arising through the Closing Dateand each person, if any, who controls, controlled, or will control any of them within the meaningof Section 15 of the Securities Act or Section 20(a) of the Securities Exchange Act of 1934, exceptclaims and causes of action arising out of, based upon, or in connection with this Agreement or anyof the other Transaction Documents.     **7.09 Noncompetition**. If the Closing takes place, the Stockholders agree, in considerationof the obligations of the Purchaser hereunder:     (a) For a period of two years after the date of the Closing He/she will not solicit or sell toany existing JAS customers any of the products that JAS already manufactures (“JAS ManufacturedProducts”). A list of the existing customers and the JAS Manufactured Products is attached to theAgreement as Schedule 3.     (b)If a company that he/she chooses to work for is already selling products (which may besimilar in type or purpose to JAS Manufactured Products but which shall not be the same formulationas JAS Manufactured Products) to JAS customers, he/she will nevertheless be free to sell such otherproducts for that company to any JAS customers.     (c) He/she will only not be permitted to sell the specific JAS Manufactured Products to theexisting JAS customers. This provision takes into account the fact that competing companies infact already do sell similar products to JAS customers.     (d)He/she and any company which employs them will be free to sell any and all other types ofproducts to anyone, including but not limited to JAS customers.     (f) He/she will be entitled to sell even JAS Manufactured Products which he/she (or theirfuture employer) manufacture, without any participation of or compensation to JAS, to any customerswho are not current JAS customers.     (g)Participate In (as hereinafter defined) any other business or organization that at anytime during the two-year period after the date of the Closing uses a name containing either theword “JAS” or words similar to or susceptible of confusion with the word “JAS” or any combinationor abbreviation thereof;
I-25

 
     (h)For a period of two years after the date of the Closing, he/she will not directly orindirectly reveal to third parties for which the Stockholder is not employed, the name of,interfere with already existing Company contracts, or contractually and legally preclude from doingbusiness with the Company any of the Company’s existing suppliers, customers or employees.Notwithstanding the foregoing, nothing contained herein is intended to preclude Maria Sanchez orFrancisco Perez, from utilizing the Company’s suppliers and/or dealing with the Company’s customersas part of the future business endeavors of Maria Sanchez or Fransico Perez (either in their ownname or in the name of any business employing them) in this same industry, as long as such futurebusiness endeavors comply with the provisions contained under Section 7.09.     (i)For a period of two years after the date of the Closing, he/she will not directly orindirectly for any third party business which the Stockholder controls or has a controllinginterest in, employ any person who, at any time up to the date of the Closing, was an employee ofthe Company , except Maria Sanchez and Francisco Perez may work together.     7.10 The Stockholders agree that the provisions of this Section 7.09 are necessary andreasonable to protect the Company and the Purchaser in the conduct of their businesses. If anyrestriction contained in this Section 7.09 shall be deemed to be invalid, illegal or unenforceableby reason of the extent, duration, or geographical scope thereof, or otherwise, then the courtmaking such determination shall have the right to reduce such extent, duration, geographical scope,or other provisions hereof, and in its reduced form such restriction shall then be enforceable inthe manner contemplated hereby. Nothing set forth in this Section 7.09 shall prohibit activitiesengaged in or services performed for the Company. None of the above restrictions survive the end ofthe 2 year non-compete term.     **7.11 Voting by the Stockholders.**Each Stockholder agrees that until the Release Time, suchStockholder will vote all securities of the Company which he/she is entitled to vote against (a)any merger, consolidation, reorganization, other business combination, or recapitalizationinvolving the Company, (b) any sale of assets of the Company outside the ordinary course ofbusiness, (c) any stock split, stock dividend, or reverse stock split relating to any class orseries of the Company’s capital stock, (d) any issuance of any shares of capital stock of theCompany, any option, warrant or other right calling for the issuance of any such share of capitalstock, or any security convertible into or exchangeable for any such share of capital stock, (e)any authorization of any other class or series of stock of the Company, or (f) the amendment of theCharter Documents or the by-laws of the Company.     **7.12 INTENTIONALLY OMITTED.**     **7.13 Company Tax Returns.**     (a) The Stockholders and the Company’s Officers and Directors, shall cause to be prepared andtimely filed all Returns required to be filed by or on behalf of the Company for taxable periodsending on or before the Closing Date. Such returns will be prepared in a manner consistent withpast practice. The Stockholders shall deliver the originals of those returns to the
I-26

 
Purchaser for its review and approval (which shall not be unreasonably withheld). ThePurchaser shall cause each of the returns to be signed by an appropriate officer of the Company andshall then cause the signed returns to be returned to the Company within an appropriate amount oftime so as to permit the timely filing of such returns by the Company on behalf of the remainingStockholders. The Stockholders shall be responsible for the payment of any Taxes due with respectto such returns.     (b) The Purchaser shall cause to be prepared and timely filed all Returns required to be filedby or with respect to the Company for all taxable periods ending after the Closing Date and shallbe responsible for the payment of any Taxes due with respect to returns that begin and end afterthe Closing Date. With respect to any periods that begin on or before and end after the ClosingDate, the Stockholders will be responsible for the payment of any Taxes due that relate to theportion of the taxable period up to and including the Closing Date and the Purchaser will beresponsible for the payment of any Taxes due that relate to the portion of the taxable period afterthe Closing Date.     (c) (1) All Tax Returns of the Company described in Section 7.13(a) and (b) hereof shall beprepared and, where applicable, filed on the basis of a taxable period ending at the Closing Date,unless clearly otherwise required by applicable Tax law.          (2) Any Taxes for any such period that are measured or measurable in whole or in part byreference to net or gross income or receipts, capital expenses, or compensation expenses shall beallocated based on the net or gross income or receipts, capital expenses, or compensation expensesactually earned or incurred for the portion of such period before and including, and after, theClosing Date, respectively, as determined from the books and records of the Company, as if ataxable period ended on the Closing Date, so that (I) the portion of such Taxes so allocable to theportion of any such period from the beginning of such period up to and including the Closing Dateshall be for the account of the Stockholders and (II) the portion of such Taxes so allocable to theportion of such period after the Closing Date to the end of such period shall be for the account ofthe Purchaser.     (d) The Stockholders, on the one hand, and the Purchaser, on the other hand, shall providereasonable cooperation to each other in connection with (i) the preparation of and filing of anyReturn, Tax election, Tax consent or certification, or any claim for refund, (ii) any determinationof liability for Taxes, and (iii) any audit, examination or other proceeding in respect of (A)Taxes of the Company or (B) Taxes of the Stockholders resulting from the Subchapter S status of theCompany. The parties will preserve all information, records or documents relating to the liabilityfor Taxes of the Company or of a Stockholder (provided, however, as to a Stockholder, suchinformation, records or documents relate, in whole or in part, to the Company) until the expirationof any applicable statute of limitations or extensions thereof.     **7.14 INTENTIONALLY OMITTED**     **7.15 Inventory Value Adjustment.**Promptly after the completion of the observation of theCompany’s inventory the Company, Shareholders and the Purchaser shall mutually agree
I-27

 
on a value of the inventory as of the Closing Date and such amount shall be reflected on theClosing Balance Sheet as prepared in accordance with Section 4.03(a) of this Agreement.     **7.16 Reasonable Efforts.**Between the date of this Agreement and the Closing Date, the Companyand each of the Stockholders shall use all reasonable efforts to cause the conditions in Articles Vand VII hereof to be satisfied.**VIII. Covenants and Agreements of the Purchaser.**     The Purchaser covenants and agrees as follows:     **8.01 Financing.**The Purchaser has sufficient funds necessary to consummate the transactionscontemplated hereby in the aggregate amount of $2,100,000 at the Closing, for the Closing Date.     **8.02 Employee Matters.**The Purchaser agrees that it shall provide at Closing to **DavidJohnston and Vivian Alvarez fully executed mutually agreeable Employment Agreements and Purchasershall provide at Closing to**Maria Sanchez and Francisco Perez, mutually agreeable fully executedConsulting Agreements that shall be paid by the Company in full at the Closing.     **8.03 Reasonable Efforts.**Between the date of this Agreement and the Closing Date, thePurchaser will use all reasonable efforts to cause the conditions in Articles VI and VIII hereof tobe satisfied.     8.04 Confidentiality Obligations of Purchaser. Purchaser, on behalf of itself, all parentand subsidiary companies and affiliates of Purchaser and all officers, employees, shareholders,owners, partners, counsel, agents, investment bankers, accountants and other representatives of thePurchaser and lenders, investors and prospective lenders and investors (hereafter, “AffiliatedParties”), hereby warrants and covenants to Company and to each Stockholder that SOLELY ANDEXCLUSIVELY WITH THE EXCEPTION OF PURCHASER’S CONDUCTING PURCHASER’S DUE DILIGENCE PURSUANT TO THECONFIDENTIALITY TERMS CONTAINED IN THIS AGREEMENT, Purchaser and its Affiliated Parties shall notNOW OR EVER utilize or disclose or permit to be utilized or disclosed for any purpose whatsoever(financial gain or otherwise) any portion of the Company’s trade secrets and/or ConfidentialInformation, unless and until this stock purchase transaction is successful closed and theStockholders are paid pursuant to the payment terms contained in Section 4 and Schedule 2 hereof.Purchaser shall be contractually bound to the Company and each Stockholder for purposes ofPurchaser’s obligations to maintain the confidentiality of and to not in any wise ever profit fromthe Company’s trade secrets and Confidential Information, unless and until this stock purchasetransaction is successful completed. Notwithstanding anything to the contrary that may be statedin any other portion of this Agreement, any Transaction Documents or in any other writing, all ofthe Purchaser’s confidentiality and indemnification obligations pursuant to this Section 8.04 shallforever survive the termination of this Agreement, without any respect to any reason or basis forthe termination of this Agreement, with the exclusive exceptions that: (1) through no act orfailure to act on the part of Purchaser (including by not limited to any officers, employees,counsel, agents, investment bankers, accountants and other representatives of the
I-28

 
Purchaser and lenders, investors and prospective lenders and investors in any way affiliatedtherewith [hereafter, “Affiliated Persons”]), the subject Confidential Information becomes a partof the public domain; or (2) there exists conclusive evidence beyond a reasonable doubt that thesubject Confidential Information was completely independently developed by Purchaser, withoutknowledge of or reference to the Company’s Confidential Information . Upon any termination of thisAgreement for any reason whatsoever, Purchaser hereby covenants that it shall immediately return tothe Company or ensure the complete destruction of all documents and files (electronic or otherwise)of each and every copy of any and all Company trade secrets and Confidential Information. TheCompany’s trade secrets and Confidential Information shall conclusively and irrebutably include,but not necessarily be limited to those items listed or identified in the Company DisclosureSchedule 1.23. The Company’s Confidential Information shall also include any and all information,documents, compilations of information, formulas, product formulations know-how and/or knowledgeprovided to Purchaser and/or Purchaser’s Affiliated Parties pursuant to Section 7.01 hereof orotherwise by Company and/or any Company Stockholder, employee or agent, either before the date ofthis Agreement and/or during Purchaser’s due diligence period and/or through the Closing Date orRelease Date for this transaction. Purchaser hereby additionally agrees and warrants to fullyand completely indemnify, hold each Stockholder harmless and to fully recompense Company andStockholders from any and all damages suffered by Company and/or Stockholders directly orindirectly as a result of Purchaser’s violation of its obligations contained in this Section 8.04,whether or not the closing occurs, which damages shall include but not be limited to any and allclaims, lost profits, damages, (including incidental and consequential damages), expense (includingcosts of investigation and defense and reasonable attorneys’ fees) or diminution of value,liabilities, lawsuits, administrative proceedings, costs of prosecution/defense incurred by Companyand/or Stockholders (including attorneys fees and court costs and expenses), costs, court costs,attorneys fees, pre-judgment interest at the prevailing prime market rate, post-judgment interestand all post-judgment collection costs, attorneys fees and expenses, through trial and all levelsof appeal. The parites hereby acknowledge that irreparable harm may well result from a breach ofthese confidentiality provisions and so they agree to the waiver of the posting of any bond uponthe filing of a claim seeking temporary and/or permanent injunctive relief arising from a violationof this Section 8.04.**IX. Termination.**     **9.01 Termination Events.**This Agreement may, by notice given prior to or at the Closing, beterminated:     (a) by either the Purchaser, the Company or any Stockholder upon written notice if a materialBreach of any provision of this Agreement has been committed by the other party and such Breach hasnot been waived or cured within five business days after receipt of notice of such Breach, whichnotice shall specify the nature of the Breach;     (b) by (i) the Purchaser if any material conditions in Article V has not been satisfied by theClosing Date or (ii) strictly at the option of the Company or any Stockholder if any materialcondition in Article VI, VII or VIII hereof has not been satisfied by May 30, 2008 or
I-29

 
Purchaser fails to pay to Stockholders on the Closing Date the full amount of the PurchasePrice required on said date according to the terms of Article IV hereof; or     (c) by mutual consent of the Purchaser, the Company and unanimous approval of the Stockholdersat any time.     **9.02 Effect of Termination.**Each party’s right of termination under Section 9.01 is inaddition to any other rights such party may have under this Agreement or otherwise, and theexercise of a right of termination shall not be an election of remedies. If this Agreement isterminated pursuant to Section 9.01, all further obligations of the parties under this Agreementshall terminate, except that the obligations in Section 8.04 and Section 11.06 shall survive;provided, however, that if this Agreement is terminated by a party because of the material breachof the Agreement by the other party or because one or more of the conditions to the terminatingparty’s obligations under this Agreement is not satisfied as a result of the other party’s failureto comply with its own obligations under this Agreement, the terminating party’s right to pursueall legal remedies shall survive such termination unimpaired.**X. Indemnification; Remedies.**     **10.01 Survival; Right to Indemnification.**All representations and warranties in thisAgreement, the Transaction Documents, the Company Disclosure Schedule and any other certificate ordocument delivered pursuant to this Agreement which is signed or expressly approved by allStockholders shall survive the Closing for a period of two years, except that: (a) therepresentations and warranties set forth in Sections 1.03, 1.07(a) and 2.02 shall survive theClosing for an indefinite period of time; (b) the representations and warranties set forth inSection 1.05, solely as they relate to federal, state and local income taxes, shall survive theClosing until the expiration of the applicable statutes of limitation relating thereto,respectively; (c) the covenants and warranties under Section 4.04 shall survive forever; and (d)the covenants and warranties under Section 8.04 shall survive forever. The right toindemnification, payment of Damages or other remedy based on such representations, warranties,covenants and obligations shall be affected by the actual knowledge of the respective partiesderived as the result of disclosure or failure to disclose to said parties of relevant materialinformation concerning such representations, warranties, covenants and obligations at any time,whether before or after the execution and delivery of this Agreement or the Closing Date, withrespect to the accuracy or inaccuracy of or compliance with, any such representation, warranty,covenant or obligation. The written waiver, by the authorized parties required for consent andapproval of this Agreement, of any condition based on the accuracy of any representation orwarranty, or on the performance of or compliance with any covenant or obligation, shall certainlyaffect the right to any indemnification or other remedy provided for in this Agreement.     10.02 **Mutual Indemnification and Payment of Damages by Each Respective Party to thisAgreement for that Respective Party’s Obligations Hereunder.**Subject to Section 10.05 hereof, eachrespective party to this Agreement shall indemnify and hold harmless the other parties to thisAgreement (collectively, the “Indemnified Persons”) for, and shall pay to the Indemnified Personsthe amount of, any loss, liability, claim, damage (including incidental and consequential damages),expense (including costs of investigation and defense and reasonable attorneys’ fees) or diminutionof value, whether or not involving a third party claim (collectively
I-30

 
“Damages”), arising, directly or indirectly, from or in connection with: (a) any materialBreach of any representation or warranty made by the respective party in this Agreement, any otherTransaction Document subsequently approved by all parties, the Company Disclosure Schedule or anyother certificate or document delivered by the respective party pursuant to this Agreement; (b) anymaterial Breach by the respective party of any covenant or obligation of the respective party inthis Agreement or any other Transaction Document; (c) INTENTIONALLY OMITED; or (d) any claim by anyPerson for brokerage or finder’s fees or commissions or similar payments based upon any agreementor understanding alleged to have been made by any such Person with the respective party (or anyPerson acting on behalf of either of them) in connection with any of the Transactions.     **10.02 Indemnification and Payment of Damages by the Purchaser.**The Purchaser shall indemnifyand hold harmless the Stockholders, and shall pay to the Stockholders the amount of any Damagesarising, directly or indirectly, from or in connection with: (a) any Breach of any representationor warranty made by the Purchaser in this Agreement, any other Transaction Document or in anycertificate delivered by the Purchaser pursuant to this Agreement, (b) any Breach by the Purchaserof any covenant or obligation of the Purchaser in this Agreement or in any other TransactionDocument, or (c) any claim by any Person for brokerage or finder’s fees or commissions or similarpayments based upon any agreement or understanding alleged to have been made by such Person withthe Purchaser (or any Person acting on its behalf) in connection with any of the Transactions.     **10.03 Limitations on Amount, Time and Remedies.**Notwithstanding anything to the contrary setforth in this Agreement or any of the other Transaction Documents, the Stockholders shall have noliability (for indemnification or otherwise) with respect to the matters described in Section 10.02hereof until the total of all Damages with respect to such matters exceeds $25,000, and then onlyfor the amount by which such Damages exceed $25,000. In addition, except with respect to breachesof representations and warranties set forth in Sections 1.03, 1.05 (solely as such representationsand warranties relate to federal, state and local income taxes), 1.07(a) and 2.02, with respect towhich no limits shall apply; (a) the maximum amount of Damages for which the Stockholders shall beobligated to indemnify the Indemnified Persons pursuant to Section 10.02 hereof shall not exceedthe net purchase price received by that Stockholder for his/her sale of stock to Pruchaser, (b)the Stockholders shall have no obligations or liability to indemnify any of the Indemnified Personsincluding the Purchaser for any Damages or Claims for which an Indemnification Notice shall nothave been delivered to the party from whom indemnification is sought at or prior to the secondanniversary date of the Closing Date, and (c) the right of any of the Indemnified Persons includingthe Purchaser to indemnification pursuant to Section 10.02 or to seek the equitable remedies ofrescission, injunctive relief or specific performance shall be the sole and exclusive remedies forany Damages or Claims arising under or in connection with this Agreement or any of the TransactionDocuments, and the sole and exclusive remedies of the Indemnified Persons including the Purchaserin respect thereof shall be to assert a claim and seek the equitable remedies of rescission,injunctive relief or specific performance.
I-31

 
     **10.03 Limitations on Amount — Purchaser.**The Purchaser shall have no liability (forindemnification or otherwise) with respect to the matters described in clause (a) or (b) of Section10.04 until the total of all Damages with respect to such matters exceeds $25,000, and then onlyfor the amount by which such Damages exceed $25,000; however, the limitations set forth in thisSection 10.06 shall not apply to any Breach of any of the Purchaser’s representations andwarranties of which the Purchaser had knowledge at any time prior to the date on which suchrepresentation and warranty is made or any intentional Breach by the Purchaser of any covenant orobligation, and the Purchaser shall be liable for all Damages with respect to such Breaches.     **10.04 Procedure for Indemnification — Third Party Claims.**     (a) Promptly after receipt by an indemnified party under any indemnification provisioncontained in this Agreement of notice of the commencement of any Litigation or other Claim againstit, such indemnified party shall, if a Claim is to be made against an indemnifying party under suchsection, give notice (an “Indemnification Notice”) to the indemnifying party of the commencement ofsuch Claim, but the failure to notify the indemnifying party will not relieve the indemnifyingparty of any liability that it may have to any indemnified party, except: (a) to the extent thatthe indemnifying party demonstrates that the defense of such action is prejudiced by theindemnifying party’s failure to give such notice; or (b) pursuant to the terms of Section 10.03 (b)above, relating to the obligation to deliver to Stockholders an Indemnification Notice prior to thesecond anniversary date of the Closing Date.     (b) If any Litigation or other Claim referred to in Section 10.04(a) is brought against anindemnified party and the indemnified party gives notice to the indemnifying party of thecommencement of such Litigation or Claim, the indemnifying party shall be entitled to participatein such Litigation or Claim and, to the extent that it wishes (unless (i) the indemnifying party isalso a party to such Litigation or Claim and the indemnified party determines in good faith thatjoint representation would be inappropriate, or (ii) the indemnifying party fails to providereasonable assurance to the indemnified party of its financial capacity to defend such Litigationor Claim and provide indemnification with respect to such Litigation or Claim), to assume thedefense of such Litigation or Claim with counsel reasonably satisfactory to the indemnified partyand, after notice from the indemnifying party to the indemnified party of its election to assumethe defense of such Litigation or Claim, the indemnifying party will not, as long as it diligentlyconducts such defense, be liable to the indemnified party under this Article X for any fees ofother counsel or any other expenses with respect to the defense of such Litigation or Claim, ineach case subsequently incurred by the indemnified party in connection with the defense of suchLitigation or Claim, other than reasonable costs of investigation. If the indemnifying partyassumes the defense of any Litigation or Claim, no compromise or settlement of such Claims may beeffected by the indemnifying party without the indemnified party’s consent, which shall not beunreasonably withheld. If notice is given to an indemnifying party of the commencement of anyLitigation or Claim and the indemnifying party does not, within 15 business days after theindemnified party’s notice is given, give notice to the indemnified party of its election to assumethe defense of such Litigation or Claim, the indemnifying party will be bound by any determinationmade in such Litigation or Claim or any compromise or settlement effected by the indemnified party.
I-32

 
     (c) Notwithstanding the foregoing, if an indemnified party determines in good faith that thereis a reasonable probability that any Litigation or Claim may adversely affect it or its Affiliatesother than as a result of monetary damages for which it would be entitled to indemnification underthis Agreement, the indemnified party may, by notice to the indemnifying party, assume theexclusive right to defend, compromise or settle such Litigation or Claim, but the indemnifyingparty will not be bound by any determination of any Litigation or Claim so defended or anycompromise or settlement effected without its consent (which may not be unreasonably withheld).     **10.05 Procedure for Indemnification — Other Claims.**A claim for indemnification for anymatter not involving a third party claim may be asserted by notice to the party from whomindemnification is sought.**XI. Miscellaneous.**     **11.01 Further Actions.**At any time and from time to time, each party agrees, at its or hisexpense, to furnish such information, to take such actions and to execute and deliver suchdocuments as any other party may reasonably request to effectuate the purposes and intent of thisAgreement, but any and all such documents, if they affect the rights of the Stockholders, must besigned according to the same consent and authorization requirements contained in this Agreement forthe unanimous written approval of all Stockholders.     **11.02 Availability of Equitable Remedies.**Because a material Breach of the provisions of thisAgreement could not adequately be compensated by money damages, any party shall be entitled, eitherbefore or after the Closing, in addition to any other right or remedy available to it, to aninjunction restraining such Breach or a threatened Breach and to specific performance of any suchprovision of this Agreement, and in either case no bond or other security shall be required inconnection therewith, and the parties hereby consent to the issuance of such an injunction and tothe ordering of specific performance.     **11.03 INTENTIONALLY OMITTED.**     **11.04 Modification.**This Agreement and the Company Disclosure Schedule executed concurrentlyherewith sets forth the entire understanding of the parties with respect to the subject matterhereof, constitute the sole and exclusive Transaction Documents relative to this transaction, shallsupersede all existing agreements among the Purchaser and the Company concerning such subjectmatter, and may be modified only by a written instrument duly executed by each party, except that,notwithstanding anything to the contrary set forth in this Agreement, the confidentialityprovisions under Section 8.04 of this Agreement shall survive the termination of this Agreement andremain in full force and effect.     **11.05 Notices.**Any notice or other communication required or permitted to be given hereundershall be in writing and shall be mailed by certified mail, return receipt requested or by overnightdelivery or courier service or delivered in person or by telecopy against receipt to the party towhom it is to be given at the address of such party set forth below (or to such other address asthe party shall have furnished in writing in accordance with the provisions of this Section 11.05)with a copy to each of the other parties hereto.
I-33

 
If to the Purchaser:Drew Scientific, Inc.