exv10w45



 






EXHIBIT
10.45




STOCK PURCHASE AGREEMENT




     THIS STOCK PURCHASE AGREEMENT (this “Agreement”) is made effective as of April 10, 2003,
between Neoterik Health Technologies, Inc., a Maryland corporation (the “Company”), Kenneth
V. Vaughan (“Vaughan”) and James R. Wiggins (“Wiggins” and Vaughan and Wiggins, jointly and
severally the “Principals”) and GlobalSecure Ltd., a Delaware corporation (the
“Purchaser”).



RECITALS




     The Company desires to sell to the Purchaser and the Purchaser desires to purchase from the
Company up to 5,000,000 shares of Common Stock, $0.015 par value, of the Company (the
“Shares”). Principals are substantial shareholders of the Company and are, and for a
substantial period of time have been, executive officers of the Company and therefore will derive
substantial benefit from the transactions herein contemplated.



     NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein and
other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged,
the parties hereto agree as follows:



ARTICLE I

AUTHORIZATION AND SALE OF THE SECURITIES





	1.1	 	Authorization.





     The Company will have authorized before the Closing (as defined below) the sale and issuance
of up to 5,000,000 Shares which shall have the rights, preferences, privileges, and restrictions as
set forth in the Company’s Articles of Incorporation.




	1.2	 	Sale of the Shares.





     Subject to the terms and conditions hereof, the Company shall sell and issue to Purchaser, and
Purchaser shall purchase from the Company, the Shares for a purchase price of up to $500,000 ($0.10
per share).



ARTICLE II

CLOSING DATES; DELIVERY





	2.1	 	Initial and Additional Closings.





          (a) The initial closing of the purchase and sale of $250,000 of Shares hereunder (the
“Initial Closing”) shall take place at the offices of Purchaser, 110 Wall Street, New York,
New York 10005, at 10:00 a.m. on the third business day on which the last conditions in Articles V
and VI to be fulfilled or waived (other than those conditions that by their nature are to be
satisfied at the Initial Closing, but subject to the fulfillment or waiver of those conditions)
shall be satisfied or waived in accordance with this Agreement (the “Closing Date”) or at
such other place or time upon which the Company and the Purchaser shall agree.




 









 








          (b) Additional closings (each, an “Additional Closing”; and the Initial Closing and each
Additional Closing being referred to as a “Closing”) pursuant to which the Company will issue and
sell to the Purchaser, and the Purchaser will purchase, additional Shares (up to an additional
2,500,000 Shares) may take place at such date and time prior to September 30, 2003 as requested
from time to time by the Company or the Purchaser and as specified in a notice (a “Sales Notice”)
delivered by the Company or Purchaser to the other, as the case may be, at least ten (10) business
days in advance of such Additional Closing. Purchaser shall not be obligated to, but may, satisfy
a Sales Notice for a greater amount, or earlier, than is contemplated by the Projections, as
hereinafter defined. If the Sales Notice is given by Purchaser, the condition in the foregoing
sentence shall not be applicable. It is the intention of the parties that the Purchaser shall have
the right to acquire the Shares to be issued on the Additional Closings at its option even if the
Company has not requested that it do so.





	2.2	 	Delivery.





     At the Initial Closing and at any Additional Closing, the Company shall deliver to Purchaser
the appropriate certificate(s) representing the Shares purchased by Purchaser at the Closing, which
shall be delivered against payment of the purchase price therefor, (i) by certified check or wire
transfer of same day funds (or any combination thereof) or (ii) by the surrender of one or more
promissory notes issued by the Company to the Purchaser (with the face value of such promissory
note(s) and all accrued interest payable thereon to be credited toward such Purchaser’s purchase of
Shares).



ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY




     The Company and the Principals, jointly and severally, hereby represent and warrant to and, in
the case of Section 3.31, also covenant to and agree with Purchaser that, except as set forth on
the disclosure schedule attached hereto as Exhibit A (the “Disclosure Schedule”)
(which specifically identifies the relevant subparagraph(s) hereof which Disclosure Schedule shall
be deemed to be part of the representations and warranties as if made hereunder).




	3.1	 	Organization and Qualification.





     Each of the Company and its subsidiaries is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of organization, and has the requisite
corporate power and authority to own, lease and operate its assets, properties and business and to
carry on its business as it is now being conducted or proposed to be conducted. Each of the
Company and its subsidiaries is duly qualified as a foreign corporation to transact business, and
is in good standing, in each jurisdiction where it owns or leases real property or maintains
employees or where the nature of its activities makes each qualification necessary, except where
the failure to be so qualified is not reasonably likely to have a material adverse change in or
effect on the business, assets, properties, operations, results of operations or condition
(financial or otherwise) or prospects of the Company and its subsidiaries taken as a whole, the
legality or validity as to the Company and its subsidiaries, the enforceability as against the
Company of, or the ability of the Company to perform its obligations under this Agreement, any
Ancillary Agreement or its Articles of Incorporation (a “Material Adverse Effect”).



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	3.2	 	Articles of Incorporation and By-laws.





     The Company has delivered to the Purchaser true, correct, and complete copies of the Company’s
and its subsidiaries’ (i) Certificates of Incorporation and (ii) By-laws, each as amended through
the date hereof.




	3.3	 	Corporate Power.





     The Company has all requisite legal and corporate power and authority to execute and deliver
this Agreement and each of the Ancillary Agreements (as defined in Section 3.6), to sell and issue
the Shares hereunder and to carry out and perform its obligations in accordance with the respective
terms of this Agreement, the Articles of Incorporation and each of the Ancillary Agreements.




	3.4	 	Subsidiaries.





     Except as set forth on Section 3.4 of the Disclosure Schedule, neither the Company nor any of
its subsidiaries has direct or indirect subsidiaries. Except as set forth on Section 3.4 of the
Disclosure Schedule, neither the Company nor any of its subsidiaries, directly or indirectly, owns
or controls or has any capital or other equity interest or participation in (or any interest
convertible into or exchangeable or exercisable for, any capital or other equity interest or
participation in), nor is the Company or any of its subsidiaries, directly or indirectly, subject
to any obligation or requirement to provide funds to or invest in, any Person. The Company owns
100% of the outstanding equity and voting interests in each of its subsidiaries and each of its
subsidiaries owns 100% of the outstanding equity and voting interest in each of its respective
subsidiaries.




	3.5	 	Capitalization.





          (a) The authorized capital stock of the Company consists of 20,000,000 shares all of which
presently are designated Common Stock, par value $0.015 per share (“Common Stock”). Immediately
prior to the Closing, 1,754,765 shares of Common Stock will be issued and outstanding. Of the
authorized shares of Common Stock, 550,939 shares are reserved for issuance upon conversion of
stock options issued pursuant to the Company’s stock option plan. All issued and outstanding
shares of the Company’s capital stock have been duly authorized and validly issued, are fully paid
and nonassessable, and were issued in compliance with all applicable federal and state securities
laws and are owned of record and, to the best knowledge of the Company, beneficially, by the
stockholders and in the amounts set forth in Section 3.5 of the Disclosure Schedule. Each of the
outstanding shares of capital stock of each of the Company’s subsidiaries has been duly authorized
and is validly issued, fully paid and nonassessable and is owned by the Company or a direct or
indirect wholly owned subsidiary of the Company, free and clear of any lien, pledge, security
interest, clam or other encumbrance. The relative rights, privileges and preferences of each class
or series of the Company’s capital stock are as stated in the Articles of Incorporation. Set forth
on Section 3.5 of the Disclosure Schedule is a limited capitalization table of the Company as of
February 28, 2003;




          (b) Except as set forth in Section 3.5 of the Disclosure Schedule, there are no outstanding
options, warrants, conversion or exchange privileges, stock appreciation rights,




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phantom equity or similar rights, or preemptive or other rights or agreements of any kind
relating to the capital stock of the Company or any of its subsidiaries, including any commitment
to purchase or otherwise acquire any authorized but unissued shares of the capital stock or other
securities of the Company or any of its subsidiaries;




          (c) Except as set forth in Section 3.5 of the Disclosure Schedule or as contemplated hereby
and by the Ancillary Agreements, neither the Company nor any of its subsidiaries are a party to or
are subject to any agreement or understanding, and, to the Company’s and Principals’ knowledge,
there is no agreement or understanding that affects or relates to the voting or giving of written
consents with respect to (i) any security of the Company or any of its subsidiaries or (ii) the
voting by a director of the Company or any of its subsidiaries.




          (d) Except as set forth in Exhibit B hereto (the “Registration Rights
Agreement”), no Person has any right to cause the Company to effect the registration of any
shares of its capital stock under the Securities Act of 1933, as amended (the “Securities
Act”). To the Company’s and Principals’ knowledge, no stockholder has granted options or other
rights to purchase any shares of Common Stock or other equity securities of the Company or any of
its subsidiaries from such stockholder. Neither the Company nor any of its subsidiaries holds any
shares of its capital stock in its treasury.





	3.6	 	Authorization.





     All corporate action on the part of the Company, its officers, directors, and its stockholders
necessary for the authorization, execution, deliver, and performance of this Agreement, the
Articles of Incorporation, the Registration Rights Agreement, to be dated as of the Closing Date,
by and among the Company, the Purchaser and the other parties thereto, and substantially in the
form of Exhibit B, and all other agreements executed in connection with the transactions
contemplated hereby (the Registration Rights Agreement, the Articles of Incorporation, and such
other agreements contemplated hereby being sometimes hereinafter referred to individually as an
“Ancillary Agreement” and collectively as the “Ancillary Agreements”) by the
Company, the authorization, sale, issuance and delivery of the Shares have been taken or will be
taken prior to the Closing. This Agreement constitutes, and each of the Ancillary Agreements, when
executed and delivered by the Company, will constitute, a valid and legally binding obligation of
the Company, enforceable against the Company in accordance with its respective terms, subject to
applicable bankruptcy, reorganization, insolvency and similar laws affecting creditors’ rights
generally and to general principles of equity. When issued in accordance with this Agreement, the
Shares will be duly authorized, validly issued, fully paid, and nonassessable. The Shares when
issued, will be free of any liens, claims, encumbrances or restrictions on transfer, except as
specifically set forth herein. The Shares are not being issued in violation of any preemptive
rights or rights of first refusal. None of the issuance and sale of the Shares to the Purchaser
pursuant to this Agreement shall require or result in any adjustment in the number of shares of
Common Stock or the kinds or amounts of other securities or property deliverable upon the exercise,
conversion or exchange of any of the options, warrants, convertible securities or other rights to
acquire Common Stock outstanding as of the Closing, or in kind or amount of consideration payable
by the holders thereof upon such exercise, conversion or exchange.



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	3.7	 	Title to Properties and Assets.





     Each of the Company and its subsidiaries has good and marketable title to all of its owned
real property (including fixtures), good, valid and legal title to all its personal property and
assets, and has good title to all its leasehold interests, in each case subject to no mortgage,
pledge, lien, lease, conditional sale agreement, security interest, encumbrance, or charge, except
as set forth in Section 3.7 of the Disclosure Schedule, other than (i) liens for current taxes not
yet due and payable, (ii) as reflected in the Financials (as defined below) and (iii) possible
minor liens and encumbrances which have arisen in the ordinary course of business (not in respect
of indebtedness for borrowed money) and which do not, in any one case or in the aggregate, detract
in any material respect from the value of the property subject thereto or impair in any material
respect the operations of the Company and its subsidiaries individually or taken as a whole
(clauses (i)-(iii), “Permitted Liens”). With respect to property it leases, each of the
Company and its subsidiaries is in compliance with such leases in all material respects and holds a
valid leasehold interest, free of any liens, claims or encumbrances, subject to clauses (i), (ii)
and (iii) above.




	3.8	 	Financial Statements.





          (a) The unaudited consolidated balance sheets of the Company and its subsidiaries as of May
31, 2000, 2001 and 2002 and the related consolidated statements of income and retained earnings and
statement of cash flows for the years then ended, and the unaudited consolidated balance sheet of
the Company and its subsidiaries as of February 28, 2003, and the related consolidated unaudited
statements of income and retained earnings, and consolidated statement of cash flows for the 9
month period then ended, which have been delivered to the Purchaser, fairly present the financial
position of the Company and its subsidiaries at such dates and the results of operations and
retained earnings and the cash flows of the Company and its subsidiaries for the periods then ended
in accordance with generally accepted accounting principles applied on a consistent basis (except
that the unaudited balance sheet as of February 28, 2003, omits footnotes and is subject to normal
year end adjustments, which adjustments are not reasonably likely, either individually, or in the
aggregate, to have a Material Adverse Effect) and show all liabilities, absolute or contingent, of
the Company as at such dates which are required by generally accepted accounting principles to be
reflected thereon. The foregoing financial statements are hereinafter referred to collectively, as
the “Financials”; the balance sheet as at May 31, 2002, included in the Financials is
hereinafter referred to as the “Balance Sheet”; and May 31, 2002, is hereinafter referred
to as the “Balance Sheet Date”.




          (b) Except as set forth in Section 3.8(b) of the Disclosure Schedule, neither the Company nor
the Principals’ are aware, after a reasonable investigation, of any material liabilities, absolute
or contingent, of the Company or any of its subsidiaries other than those reflected on the
Financials and the Disclosure Schedule.




          (c) Since the Balance Sheet Date, except as set forth in Section 3.8(c) of the Disclosure
Schedule, each of the Company and its subsidiaries has conducted its business in the ordinary
course of business and there has not been any event or condition of any character that has resulted
or might be expected to result in a change in the assets, liabilities, financial




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condition, operating results or business of the Company and its subsidiaries taken as a whole
from that reflected in the Financials, except changes in the ordinary course of business and that
have not had and could not reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect.




          (d) Neither the Company nor any of its subsidiaries has any liabilities, absolute or
contingent, which are, individually or in the aggregate, material to the assets, liabilities,
business, condition (financial or otherwise) or operating results of the Company and its
subsidiaries taken as a whole which are not reflected on the Financials or in Section 3.8(d) of the
Disclosure Schedule. Except as set forth in Section 3.8(d) of the Disclosure Schedule, neither the
Company nor any of its subsidiaries has any indebtedness for borrowed money that the Company or its
subsidiaries has directly or indirectly created, incurred, assumed, or guaranteed, or with respect
to which the Company or its subsidiaries has otherwise become directly or indirectly liable which
are not reflected on the Financials.




          (e) To the best knowledge of the Company and Principals’, the Financials are capable of being
audited.





	3.9	 	Related-Party Transactions.





     No employee, stockholder, officer, director or consultant of the Company or member of his or
her immediate family is indebted to the Company, and, except as set forth in Section 3.9 of the
Disclosure Schedule, the Company is not indebted (or committed to make loans or extend or guarantee
credit) to and has no obligation to any of them, other than (i) for payment of salary for services
rendered, (ii) reimbursement for reasonable expenses incurred on behalf of the Company, and (iii)
for other standard employee benefits made generally available to all employees under the Company’s
Stock option plan (including stock option agreements outstanding under any stock option plan
approved by the Board of Directors of the Company). To the best knowledge of the Company and the
Principals, no employee, officer, director or consultant of the Company or member of his or her
immediate family has any direct or indirect ownership interest in any firm or corporation with
which the Company is affiliated or with which the Company has a business relationship, or any firm
or corporation that competes with the Company except passive stock ownership (not in excess of 1%
thereof) by employees, stockholders, officers, or directors of the Company and members of their
immediate families in publicly traded companies. No stockholder, officer or director or any member
of their immediate families has any direct or indirect interest in any material contract with the
Company (other than such contracts related to any such person’s ownership of capital stock of or
employment with the Company).




	3.10	 	Permits.





     Each of the Company and its subsidiaries has all franchises, permits, licenses,
authorizations, approvals and any similar authority (“Permits”) necessary for the conduct of its
business as now being conducted by it and believes it can obtain, without undue burden or expense,
any similar authority for the conduct of its business as planned by it to be conducted unless such
absence or failure is not reasonably likely to have a Material Adverse Effect.



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Neither the Company nor any of its subsidiaries is in violation, in any material respect of or
in default in, under any Permits.





	3.11	 	Intellectual Property.





          (a) Set forth in Section 3.11 of the Disclosure Schedule is a list and brief description of
all domestic and foreign patents, patent applications, registered trademarks, trademark
applications, registered service marks, service mark applications, trade names, registered
copyrights and copyright applications which are in the process of being prepared, owned by or
registered in the name of the Company or any of its subsidiaries, of which the Company or its
subsidiaries is a licensee. Each of the Company and its subsidiaries is the sole and exclusive
owner or a licensee of all Intellectual Property (as defined below) material to the conduct of its
business as presently or proposed to be conducted (the “Company Intellectual Property”),
free and clear of any liens, claims, encumbrances or adverse interests, except that one or more
lenders to the Company or its subsidiaries may have a security interest in such Company
Intellectual Property. Each of the Company and its subsidiaries owns or possesses adequate
licenses or other rights to use and license its customers the right to use (in the manner and to
the extent presently or proposed to be used or licensed) all Intellectual Property currently or
proposed to be used in its business unless such absence or failure is not reasonably likely to have
a Material Adverse Effect. None of the Intellectual Property that the Company or any of its
subsidiaries owns or purports to own, or, to the knowledge of the Company, any of the other Company
Intellectual Property infringes or conflicts with, and neither the Company nor any of its
subsidiaries has interfered with, infringed upon, misappropriated, or otherwise come into conflict
with, any Intellectual Property Rights (as defined below) of third parties and, to the knowledge of
the Company, no third party has interfered with, infringed upon, misappropriated, or otherwise come
into conflict with any Intellectual Property Rights of the Company or any of its subsidiaries. No
claim is pending or, to the best of the Company’s or Principals’ knowledge, threatened to the
effect that the operations of the Company or any of its subsidiaries or the use by the Company’s or
any of its subsidiaries’ customers of any of the Company Intellectual Property licensed to them as
provided in such license infringe upon or conflict with the asserted rights of any other Person.
No claim is pending, or to the best of the Company’s or Principals’ knowledge, threatened to the
effect that any such Intellectual Property owned or licensed by the Company or any of its
subsidiaries, or which the Company or any of its subsidiaries otherwise has the right to use, is
invalid or unenforceable by the Company. All prior art known to the Company which may be or may
have been pertinent to the examination of any United States patent or patent application listed in
Section 3.11 of the Disclosure Schedule has been cited to the United States Patent and Trademark
Office. Each of the Company and its subsidiaries uses reasonable measures to safeguard any
confidential technical information developed by and belonging to the Company and such subsidiary.




          (b) None of the Intellectual Property that the Company or any of its subsidiaries owns or
purports to own, is subject to any outstanding judgment or contract restricting the use thereof by
the Company or such subsidiary. Neither the Company nor any of its subsidiaries has entered into
or become subject to any agreement to indemnify any other Person against any charge of infringement
of any Intellectual Property Rights, except for infringement indemnification obligations incurred
in the ordinary course of business.




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          (c) All licenses, sublicenses or other rights of use that the Company or any of its
subsidiaries has or purports to have granted to customers are valid and authorized by the terms
under which the Company or such subsidiary licenses or otherwise uses such rights. Neither the
Company nor any of its subsidiaries is in default in the payment of any royalties, license fees or
other consideration to any owner or licensor of any Intellectual Property used in or necessary for
the conduct of its business as now conducted and/or as proposed to be conducted or to any agent or
representative of any such owner or licensor by reason of the use thereof by the Company or any of
its subsidiaries nor otherwise is in default in any material respect in the performance of any of
its obligations to any such owner or licensor, and no such owner or licensor, nor any such agent or
representative thereof, has notified the Company or any of its subsidiaries in writing of any claim
of any such default.




          (d) “Intellectual Property” means (i) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto, and all patents,
patent applications, and patent disclosures, (ii) all trademarks, service marks, trade dress,
logos, trade names and corporate names, including all goodwill associated therewith, and all
applications, registrations, and renewals in connection therewith, (iii) all copyrightable works,
all copyrights, and all applications, registrations, and renewals in connection therewith, (iv) all
trade secrets and confidential business information (including ideas, research and development,
know-how, formulas, compositions, manufacturing and production processes and techniques, technical
data, designs, drawings, specifications, customer and supplier lists, pricing and cost information,
and business and marketing plans and proposals), (v) all computer software (including data and
related documentation), (vi) all other proprietary rights, and (vii) all copies and tangible
embodiments thereof (in whatever form or medium). Such term, when used with reference to the
Company or any of its subsidiaries, includes, without limitation, the Information Technology.




               “Intellectual Property Rights” means, with reference to any Intellectual Property, any
or all of the legally enforceable rights (including any or all inchoate rights, whether such rights
are perfected or not perfected) and moral rights, if any, with respect to such Intellectual
Property under the laws of any jurisdiction, including (i) any and all patents, patents pending,
inventor’s certificates, trademarks, service marks, copyrights, any and all applications therefor
or for registration thereof, and any and all substitutions, extensions, reissues, renewals,
divisions, continuations, or continuations-in-art thereof and (ii) any rights under laws relating
to trade secrets.




	3.12	 	Material Contracts.





     Except as set forth in Section 3.12 of the Disclosure Schedule, the Company does not have any
contract, agreement, lease, commitment or proposed transaction, written or oral, absolute or
contingent, other than (i) contracts for the purchase of supplies and services that were entered
into in the ordinary course of business and that do not involve more than $50,000 (ii) sales and
license contracts entered into in the ordinary course of business that do not involve more than
$50,000 and (iii) contracts terminable at will by the Company on no more than thirty (30) days’
notice without cost or liability to the Company and that do not involve any employment or
consulting arrangement and are not material to the conduct of the Company’s business. For the
purpose of this paragraph, employment and consulting contracts and contracts with labor unions, and
license agreements and any other agreements relating to the acquisition or



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disposition of the Company’s technology (other than standard end user license agreements)
shall not be considered to be contracts entered into in the ordinary course of business. True and
complete copies of such contracts, agreements, and instruments have been provided to the Purchaser
or their counsel. Section 3.12 of the Disclosure Schedule lists all such contracts, agreements and
instruments (collectively the “Material Contracts”).





	3.13	 	Compliance with Other Instruments.





     Neither the Company nor any of its subsidiaries is in violation or breach in any material
respect of any term of its Articles of Incorporation or by-laws (each as amended through the date
hereof), or, in any material respect, any judgment, order or decree, nor has it received or
delivered notice concerning a breach of any Material Contract (nor, to the best of the Company’s
and Principals’ knowledge is there any reasonable basis therefor), and it is not in violation in
any material respect of any order, statute or other law, rule, or regulation (collectively,
“Laws”) applicable to the Company or any of its subsidiaries. The execution, delivery,
performance of and compliance with this Agreement and the Ancillary Agreements, the issuance of the
Shares and the consummation of the transactions contemplated hereby and thereby, have not and will
not (i) violate, conflict with or result in a breach of any provision of or constitute a default
(or an event which, with notice or lapse of time or both, would constitute a default) under, or
result in the termination of, or accelerate the performance required by, or result in a creation of
any lien, claim or encumbrance upon any of the assets, properties or business of the Company or any
of its subsidiaries under, any of the terms, conditions or provisions of (x) the Articles of
Incorporation or the by-laws of the Company (each as amended through the date hereof) or any of its
subsidiaries; or (y) any Material Contract; or (ii) violate any judgment, ruling, order, writ,
injunction, award, decree, or, to its knowledge, law of any court or foreign, federal, state,
county or local government or any other governmental, regulatory or administrative agency or
authority which is applicable to the Company or any of its subsidiaries or any of their respective
assets, properties or businesses; or (iii) to its knowledge, result in the suspension, revocation,
impairment, forfeiture, or non-renewal of any franchise, permit, license, authorization or approval
material to the Company or any of its subsidiaries.




	3.14	 	Litigation.





     Except as set forth in Section 3.14 of the Disclosure Schedule, there are no actions, suits,
proceedings, or investigations pending or, to the best of the Company’s and Principals’ knowledge,
threatened against the Company or any of its subsidiaries or any of their respective properties or
assets before any court or governmental agency (nor, to the best of the Company’s or Principals’
knowledge, is there any reasonable basis therefor). Neither the Company nor any of its
subsidiaries is a party to, or to the best of the Company’s and Principals’ knowledge, named in any
order, writ, injunction, judgment, or decree of any court, government agency, or instrumentality.
Except as set forth in Section 3.14 of the Disclosure Schedule, there is no action, suit or
proceeding by the Company or its subsidiaries currently pending or that the Company or any of its
subsidiaries currently intends to initiate.



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	3.15	 	Registration Rights.





     Except as set forth in the Registration Rights Agreement, neither the Company nor any of its
subsidiaries is under any obligation to register any of its presently outstanding securities or any
of its securities, which may hereafter be issued.




	3.16	 	Governmental Consent.





     No consent, approval, or authorization of, or designation, declaration, notification or filing
with any governmental authority on the part of the Company or any of its subsidiaries is required
in connection with the valid execution, delivery and performance of this Agreement or any of the
Ancillary Agreements, the offer, sale or issuance of the Shares or the consummation of any other
transaction contemplated hereby or by the Ancillary Agreements except the qualification (or the
taking of such action as may be necessary to secure an exemption from qualification, if available)
of the offer and sale of the Shares under applicable blue sky laws, which filings and
qualifications, if required, will be accomplished in a timely manner.




	3.17	 	Employees.





     To the best of the Company’s or Principals’ knowledge, no officer or key employee of the
Company is or will be in violation of any judgment, decree, or order, or any term of any employment
contract, patent disclosure agreement, or other contract or agreement relating to the relationship
of any such officer or key employee with the Company, or any other party because of the nature of
the business conducted or proposed to be conducted by the Company or the use by any such officer or
key employee of his best efforts with respect to such business. Except as set forth in Section
3.17 of the Disclosure Schedule, the Company is not a party to or bound by any currently effective
employment contract, deferred compensation agreement, bonus plan, incentive plan, profit sharing
plan, retirement plan or agreement or other employee compensation agreement. To the best of the
Company’s and Principals’ knowledge, no officer or key employee, or any group of key employees,
intends to terminate his or their employment with the Company, nor does the Company have a present
intention to terminate the employment of any of the foregoing. Subject to general principles
related to wrongful termination of employees and except as set forth in Section 3.17 of the
Disclosure Schedule, the employment of each officer and employee of the Company is terminable at
the will of the Company. No contract exists between the employees of the Company (or a union
representing any of such employees) and the Company and, to the best of the Company’s and
Principals’ knowledge, no union has attempted to organize or represent the labor force of the
Company. Except as set forth in Section 3.17 of the Disclosure Schedule, to the best of the
Company’s and Principals’ knowledge, no person (including, but not limited to, any foreign,
federal, state, county or local government or other governmental, regulatory or administrative
agency or authority) has any claim or basis for any suit, action, claim, proceeding or
investigation against the Company arising out of any statute, law, ordinance, code, rule or
regulation relating to discrimination in employment or employment practices or occupational safety
and health standards (including, without limitation, the Fair Labor Standards Act, as amended,
Title VII of the Civil Rights Act of 1964, as amended, the Rehabilitation Act of 1973, as amended,
the Age Discrimination in Employment Act of 1967, as amended, or the Americans with Disabilities
Act of 1990) which, in each case, if upheld, is reasonably likely to have a Material Adverse
Effect.



10









 






	3.18	 	Tax Returns, Payments, and Elections.





     Each of the Company and its subsidiaries has filed all tax returns and reports as required by
law. To the best of the Company’s and the Principals’ knowledge these returns and reports are true
and correct in all material respects. Each of the Company and its subsidiaries has paid all taxes
and other assessments due. The Company has not elected pursuant to Section 1362(a) of the Internal
Revenue Code of 1986, as amended (the “Code”), and applicable provisions of state law, to be
treated as an S corporation. The Company has not elected to be treated as a collapsible
corporation pursuant to Section 341(f) of the Code, nor has it made any other elections pursuant to
the Code (other than elections that relate solely to methods of accounting, depreciation, or
amortization) that are reasonably likely to have a Material Adverse Effect. The Company has never
had any tax deficiency assessed, or, to the best of the Company’s and Principals’ knowledge,
proposed, against it and has not executed any waiver of any statute of limitations on the
assessment or collection of any tax or governmental charge. Except as set forth in Section 3.18 of
the Disclosure Schedule, none of the Company’s federal income tax returns and none of its state
income or franchise tax or sales or use tax returns have ever been audited by governmental
authorities. The Company has withheld or collected from each payment made to each of its
employees, the amount of all taxes, including, but not limited to, federal income taxes, Federal
Insurance Contribution Act taxes and Federal Unemployment Tax Act taxes required to be withheld or
collected therefrom, and had paid the same to the proper tax receiving officers or authorized
depositories. Since the date of the Financials, each of the Company and its subsidiaries has made
adequate provision on its books or account for all taxes, assessments, and governmental charges
with respect to its business, properties, and operations for such period.




	3.19	 	Environmental and Safety Laws.





     Neither the Company nor any of its subsidiaries has caused or allowed, or contracted with any
party for, the generation, use, transportation, treatment, storage or disposal of any Hazardous
Substances (as defined below) in violation of any applicable Environmental Law (as defined below)
in connection with the operation of its business or otherwise. Each of the Company and its
subsidiaries, the operation of its business, and any real property that it owns, leases or
otherwise occupies or uses (collectively, the “Premises”) are in compliance in all material
respects with all applicable Environmental Laws and orders or directives of any governmental
authorities having jurisdiction under such Environmental Laws, including, without limitation, any
Environmental Laws or orders or directives with respect to any cleanup or remediation of any
release or threat of release of Hazardous Substances. Neither the Company nor any of its
subsidiaries has received any written notice, citation, directive, letter or other communication
about any proceeding, claim or lawsuit, from any Person concerning the ownership or occupation of
the Premises, or the conduct of its operations in material violation of any applicable
Environmental Laws. Each of the Company and its subsidiaries has obtained and is maintaining in
full force and effect all necessary permits, licenses and approvals required by all Environmental
Laws applicable to the Premises and the business operations conducted thereon (including operations
conducted by tenants on the Premises), and is in compliance in all material respects with all such
permits, licenses and approvals. Neither the Company nor any of its subsidiaries has caused or
allowed a release, or, to the best of the Company’s and Principals’ knowledge, a threat of release,
of any Hazardous Substance into, at or near the Premises, and the



11









 




Premises have not been subject to a release, or, to the best of the Company’s and Principals’
knowledge, a threat of release, of any Hazardous Substance. For the purposes of this Agreement,
the term “Environmental Laws” shall mean any Federal, state or local law or ordinance or
regulation pertaining to the protection of human health or the environment, including, without
limitation, the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
Sections 9601, et seq., the Emergency Planning and Community Right-to-Know Act, 42 U.S.C. Sections
11001, et seq., and the Resource Conservation and Recovery Act, 42, U.S.C. Sections 6901, et seq.
For purposes of this Agreement, the term “Hazardous Substances” shall include oil and
petroleum products, asbestos, polychlorinated biphenyls, urea formaldehyde and any other materials
classified as hazardous or toxic under any Environmental Laws.





	3.20	 	Marketing Rights.





     Except as set forth in Section 3.20 of the Disclosure Schedule, the Company has not granted
rights to license, market or sell its products to any other person or entity and is not bound by
any agreement that affects the Company’s exclusive right to develop, manufacture, assemble,
distribute, market or sell its products.




	3.21	 	Brokers or Finders.





     Except as set forth in Section 3.21 of the Disclosure Schedule, the Company has not incurred,
and will not incur, directly or indirectly, as a result or any action taken by the Company, any
liability for brokerage or finders’ fees or agents’ commissions or any similar charges in
connection with this Agreement or any transaction contemplated hereby.




	3.22	 	ERISA.





     (a) Neither the Company nor any entity required to be aggregated with the Company under
Sections 414(b), (c), (m), (n) or (o) of the Code sponsors, maintains, has any obligation to
contribute to, has any liability under, or is otherwise a party to, any Benefit Plan. For purposes
of this Agreement, “Benefit Plan” shall mean any plan, fund, program, policy, arrangement
or contract whether formal or informal, which is in the nature of (i) an employee pension benefit
plan (as defined in Section 3(2) of the Employment Retirement Income Security Act of 1974, as
amended (“ERISA”)) or (ii) an employee welfare benefit plan (as defined in Section 3(1) of ERISA).




	3.23	 	Disclosure.





     Neither this Agreement, nor the Disclosure Schedule, nor any Exhibit to this Agreement, nor
any due diligence materials, nor other information furnished by or on behalf of the Company to any
Purchaser contains an untrue statement of a material fact or omits a material fact necessary to
make the statements contained herein or therein, in light of the circumstances in which they were
made, not misleading. None of the Ancillary Agreements or certificates prepared or supplied by the
Company with respect to the transactions contemplated hereby or thereby contains an untrue
statement of a material fact or omits a material fact necessary to make the statements contained
therein, in light of the circumstances in which they were made, not misleading. There is no fact
which the Company has not disclosed to the Purchaser and their counsel in writing and of which the
Company or its Principals’ is aware, which materially and



12









 




adversely affects the business, financial condition, operations, prospects, property or assets
of the Company. The financial projections provided by or on behalf of the Company to Purchaser
(collectively, “Projections”) were prepared in good faith based on the experience of the Company in
the industry and on reasonable assumptions of fact and opinion as to future events. As of the date
hereof no facts have come to the attention of the Company which would, in its opinion, require the
Company to revise the assumptions underlying such projections and other estimates or the
conclusions derived therefrom.





	3.24	 	Securities Act.





     Subject to the accuracy of the Purchaser’s representations in Section 4, the offer, sale and
issuance of the Shares in conformity with the terms of this Agreement constitute transactions
exempt from the registration requirements of Section 5 of the Securities Act.




	3.25	 	Insurance.





     The Company has in full force and effect fire and casualty insurance policies, with extended
coverage, which it reasonably believes are sufficient in amount (subject to reasonable deductibles)
to allow it to replace any of its properties that might be damaged or destroyed, and such other
policies of insurance in such amounts as in the Company’s best judgment, after advice from its
insurance broker, is acceptable for the nature and extent of the business of the Company and its
subsidiaries as currently being conducted, and as currently proposed to be conducted.




	3.26	 	Confidentiality and Noncompetition Agreements.





     Each officer of the Company set forth in Section 3.26 of the Disclosure Schedules has executed
a Proprietary Information and Confidentiality Agreement substantially in form or forms, which have
been delivered to the Purchaser. Each officer of the Company set forth in Section 3.26 of the
Disclosure Schedule has executed an agreement with noncompetition provisions which have been
delivered to the Purchaser.




	3.27	 	Proprietary Information of Third Parties.





     To the best of the Company’s and Principals’ knowledge, no third party has claimed or has
reason to claim that any person employed or engaged by the Company or any of its subsidiaries has
(a) violated or may be violating any of the terms or conditions of his employment, non-competition
or non-disclosure agreement with such third party, (b) disclosed or may be disclosing or utilized
or may be utilizing any trade secret or proprietary information or documentation of such third
party or (c) interfered or may be interfering in the employment relationship between such third
party and any of its present or former employees. No third party has requested information from
the Company or any of its subsidiaries which suggests that such a claim might be contemplated. To
the best of the Company’s and Principals’ knowledge, no person employed by or affiliated with the
Company or any of its subsidiaries has employed or proposes to employ any trade secret or any
information of documentation proprietary to any former employer, and to the best of the Company’s
and Principals’ knowledge, no person employed by or affiliated with the Company or any of its
subsidiaries has violated any confidential relationship which such person may have had with any
third party, in connection with the development or sale of any service or proposed service of the
Company or any of its



13









 




subsidiaries, and the Company has no reason to believe there will be any such employment or
violation.





	3.28	 	Officers.





     Set forth in Section 3.28 of the Disclosure Schedule is a list of the officers of the Company,
together with the title or job classification of each such person and the total compensation paid
to each such person by the Company in 2001 and 2002, and if different, the total compensation
currently agreed to be paid in 2003. Except as set forth in Section 3.17 of the Disclosure
Schedule, none of such persons has an employment agreement or understanding, whether oral or
written, with the Company, which is not terminable on thirty (30) days’ notice by the Company
without cost or other liability to the Company.




	3.29	 	U.S. Real Property Holding Corporation.





     Neither the Company nor any of its subsidiaries is now or has ever been a “United States real
property holding corporation,” as defined in Section 897(c)(2) of the Code and Section 1.897-2(b)
of the Regulations promulgated by the Internal Revenue Service.




	3.30	 	Foreign Corrupt Practices Act.





     Neither the Company nor any of its subsidiaries has taken any action which would cause it to
be in violation of the Foreign Corrupt Practices Act of 1977, as amended, or any rules or
regulations thereunder. To the best of the Company’s and Principals’ knowledge, there is not now,
and there has never been, any employment by the Company or any of its subsidiaries of, or
beneficial ownership in the Company or any of its subsidiaries by, any governmental or political
official in any country in the world.




	3.31	 	Use of Proceeds.





     The Company covenants and agrees with Purchaser that it shall use the funds from the purchase
of Shares by the Purchaser to fund capital expenditures, working capital and other general
corporate purposes as shown on the Projections.




	3.32	 	Books and Records.





     The books of account, ledgers, order books and records of the Company accurately and
completely reflect all material information relating to the business of the Company, the nature,
acquisition, maintenance, location and collection of the assets of the Company, and the nature of
all transactions giving rise to the obligations or accounts receivable of the Company.




	3.33	 	Customers.





     Section 3.33 of the Disclosure Schedule identifies the ten largest customers (or group of
affiliated customers) of the Company’s products and services (based on total sales volume for the
latest full fiscal year), indicating for each the total sales volume for the latest full fiscal
year. None of such Persons has cancelled or otherwise terminated, purported to or made any threat
to cancel or otherwise terminate or given any notice of intended cancellation or termination of its



14









 




relationship with the Company, nor has any such Person indicated in writing an intent or
desire to materially decrease its purchase volume or change its relationship or the terms of its
relationship with the Company.





	3.34	 	Events Subsequent to Most Recent Fiscal Period End.





     Since the Balance Sheet Date, there has not been any Material Adverse Effect or any
development that can reasonably be expected to result in a Material Adverse Effect and each of the
Company and its subsidiaries has conducted its business in the ordinary course, consistent with
past practices, including with respect to quantity and frequency (“Ordinary Course of
Business”). Without limiting the generality of the foregoing, except as set forth in Section
3.34 of the Disclosure Schedule, since the Balance Sheet Date:



          (a) neither the Company nor any of its subsidiaries has sold, leased, transferred, or assigned
any of its assets, other than immaterial assets sold, leased, transferred or assigned in the
Ordinary Course of Business;




          (b) neither the Company nor any of its subsidiaries has entered into any agreement, contract
or license (or series of related contracts) either involving more than $50,000 or outside the
Ordinary Course of Business;




          (c) no party (including the Company or any of its subsidiaries) has accelerated, terminated
(other than upon the expiration of its term), modified, or canceled any Contract (or series of
related contracts) involving more than $25,000 to which the Company or any of its subsidiaries is
or was a party or by which it is or was bound;




          (d) neither the Company nor any of its subsidiaries has imposed or suffered to exist any lien
upon any of its assets, other than Permitted Liens;




          (e) neither the Company nor any of its subsidiaries has purchased, leased or acquired any
assets or made any capital or operating expenditure (or series of related capital or operating
expenditures), capital addition or improvement, in either case, outside of the Ordinary Course of
Business involving more than $25,000;




          (f) neither the Company nor any of its subsidiaries has made any capital investment in, any
loan to, or any acquisition of the securities or assets of, any other Person (or series of related
capital investments, loans, and acquisitions) either involving more than $10,000 or outside the
Ordinary Course of Business;




          (g) neither the Company nor any of its subsidiaries has issued any note, bond or other debt
security or redeemable equity or created, incurred, assumed, or guaranteed any indebtedness for
borrowed money or capitalized lease obligations involving more than $10,000 singly or $25,000 in
the aggregate;




          (h) there has been no change made or authorized in the Articles of Incorporation or by-laws of
the Company or any of its subsidiaries;




15









 








          (i) neither the Company nor any of its subsidiaries has declared, set aside, or paid any
dividend or made any distribution with respect to its capital stock (whether in cash, securities,
property or otherwise) or redeemed, purchased, or otherwise acquired any of its capital stock;




          (j) neither the Company nor any of its subsidiaries has experienced any damage, destruction,
or loss (whether or not covered by insurance) to any material amount of the assets of the Company
and its subsidiaries taken as a whole;




          (k) neither the Company nor any of its subsidiaries has made any loan to, or entered into any
other transaction with or for the benefit of, any of the Company’s or its subsidiaries’
stockholders, directors, officers, or employees (except for payment of compensation to officers and
employees in the Ordinary Course of Business);




          (l) neither the Company nor any of its subsidiaries has entered into any employment contract
or collective bargaining agreement, written or oral, or modified the terms of any existing such
contract or agreement or adopted, amended, modified, or terminated any Benefit Plan;




          (m) neither the Company nor any of its subsidiaries has discharged or satisfied any lien, or
paid, canceled, compromised or otherwise satisfied any obligation, indebtedness or liability
(absolute or contingent) other than the payment in the Ordinary Course of Business of current
liabilities shown on the Balance Sheet or incurred since the date thereof in the Ordinary Course of
Business;




          (n) neither the Company nor any of its subsidiaries has made any material change in any method
of accounting or any accounting practice;




          (o) except as expressly contemplated by this Agreement there has not been any other
transaction outside of the Ordinary Course of Business involving the Company or any of its
subsidiaries;




          (p) neither the Company nor any of its subsidiaries has (i) increased the rate of compensation
payable or to become payable by it to any of its officers, directors, employees or agents, except
for increases in the Ordinary Course of Business or required under the terms of employment
agreements, (ii) granted, made or accrued any bonus, incentive compensation, service award or other
like benefit, contingently or otherwise, to or for the credit of any of its officers, directors,
employees or agents, other than in the Ordinary Course of Business, or made any employee welfare,
pension, retirement, profit sharing or similar payment except pursuant to regularly scheduled
payments required pursuant to the existing plans and arrangements described in the Disclosure
Schedule or (iii) paid or granted any right to receive any material (either individually or in the
aggregate) severance or termination pay to any officer, director, employee or agent outside the
Ordinary Course of Business; and




          (q) neither the Company nor any of its subsidiaries has entered into or made any contract,
agreement or commitment to do any of the foregoing.




16









 








     The Company covenants and agrees that from the date hereof through the Closing Date, it will
not, and it will cause its subsidiaries not to, take any action inconsistent with this Section
3.34.




	3.35	 	Business Activity Restriction.





     There is no non-competition or other similar agreement, commitment, judgment, injunction,
order or decree to which the Company is a party or subject to that has or could reasonably be
expected to have the effect of prohibiting or impairing the conduct of business by the Company.
The Company has not entered into any agreement under which the Company is restricted from selling,
licensing or otherwise distributing any of its technology or products to, or providing services to,
customers or potential customers or any class of customers, in any geographic area, during any
period of time or in any segment of the market or line of business.



ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE PURCHASER




     Purchaser hereby represents and warrants to the Company with respect to the purchase of the
Shares as follows:




	4.1	 	Organization and Qualification.





     Purchaser is a corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization, and has the requisite corporate power and authority to
own, lease and operate its assets, properties and business and to carry on its business as it is
now being conducted or proposed to be conducted. Purchaser is duly qualified as a foreign
corporation to transact business, and is in good standing, in each jurisdiction where it owns or
leases real property or maintains employees or where the nature of its activities makes each
qualification necessary, except where the failure to be so qualified is not reasonably likely to
have a Material Adverse Effect.




	4.2	 	Corporate Power.





     Purchaser has all requisite legal and corporate power and authority to execute and deliver
this Agreement and each of the Ancillary Agreements, to purchase the Shares hereunder and to carry
out and perform its obligations in accordance with the respective terms of this Agreement, the
Articles of Incorporation and each of the Ancillary Agreements.




	4.3	 	Experience.





     Purchaser has such experience in evaluating and investing in private placement transactions of
securities in companies similar to the Company so as to be capable of evaluating the merits and
risks of such Purchaser’s investment in the Company and has the capacity to protect such
Purchaser’s own interests. Such Purchaser represents and warrants to the Company that it is aware
that the purchase of Shares involves substantial risk and that its financial condition and
investments are such that it is in a financial position to hold such shares for an indefinite
period of time and to bear the economic risk of and withstand a complete loss of such investment.



17









 






	4.4	 	Investment.





     Purchaser is acquiring the Shares for investment for such Purchaser’s own account, not as a
nominee or agent, and not with the view to, or for resale in connection with, any distribution
thereof. Purchaser understands that the Shares have not been, and will not be, registered under
the Securities Act or the securities laws of any state by reason of exemptions from the
registration provisions of the Securities Act and such state laws which depend upon, among other
things, the bona fide nature of the investment intent and the accuracy of Purchaser’s
representations as expressed herein, and the Company’s reliance on such exemption is predicated on
Purchaser’s representations set forth herein.




	4.5	 	Rule 144.





     Purchaser acknowledges that the Shares must be held indefinitely unless subsequently
registered under the Securities Act or an exemption from such registration is available. Such
Purchaser is aware of the provisions of Rule 144 promulgated under the Securities Act which permit
the limited resale of shares purchased in a private placement subject to the satisfaction of
certain conditions, including, among other things, (i) the existence of a public market for the
shares, (ii) the availability of certain current public information about the Company, (iii) the
resale occurring not less than one year after a party (who is not an “affiliate”) has purchased and
fully paid for the shares to be sold, (iv) the sale being effected through a “broker’s transaction”
or in transactions directly with a “market maker” (as provided by Rule 144(f)) and (v) the number
of shares being sold during any three-month period not exceeding specified limitations.




	4.6	 	No Public Market.





     Purchaser understands that a only a limited public market now exists for any of the securities
issued by the Company, the Company does not file periodic reports under the Securities Exchange Act
of 1934 and that there is no assurance that any public market will continue to exist for the
Shares.




	4.7	 	Access to Data.





     Purchaser has had an opportunity to discuss the Company’s business, management, and financial
affairs with the Company’s management and the opportunity to review the Company’s facilities and
business plan. Purchaser has also had an opportunity to ask questions of officers of the Company.




	4.8	 	Authorization.





     This Agreement and the Ancillary Agreements to which Purchaser is a party, when executed and
delivered by Purchaser, will constitute valid and legally binding obligations of Purchaser,
enforceable against Purchaser in accordance with their respective terms, subject to applicable
bankruptcy, reorganization, insolvency, and similar laws affecting creditors’ rights generally and
to general principles of equity. Purchaser has full corporate power and authority to enter into
and to perform its obligations under this Agreement and the Ancillary Agreements to which it is a
party in accordance with their respective terms. Purchaser represents that it has not



18









 




been organized, reorganized or recapitalized for the purpose of investing in the Company
specifically.





	4.9	 	Brokers or Finders.





     The Purchaser has not incurred, and will not incur, directly or indirectly, as a result of any
action taken by such Purchaser, any liability for brokerage or finders’ fees or agents’ commissions
or any similar charges in connection with this Agreement or any transaction contemplated hereby.




	4.10	 	Sophisticated Investor.





     Purchaser (i) has no need for liquidity in its investment in the Shares, and (ii) is able to
bear the economic risk of losing its entire investment in Shares. Purchaser is an “accredited
investor” as such term is defined in Rule 501(a) of Regulation D promulgated under the Securities
Act.



ARTICLE V

CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER





	 	 	The obligations of Purchaser to purchase the Shares at the Initial Closing is, at the option
of Purchaser, subject to the fulfillment or waiver on or prior to the Closing Date of the following
conditions:






	5.1	 	Representations and Warranties.





     All representations and warranties of the Company contained in this Agreement shall have been
true and correct when made, and shall be true and correct as of the Closing Date as though made at
such time.




	5.2	 	Covenants.





     All covenants, agreements, and conditions contained in this Agreement to be performed by the
Company on or prior to the Closing shall have been fully performed or complied with in all
respects.




	5.3	 	Compliance Certificate.





     The Company shall have delivered to the Purchaser (i) a Compliance Certificate executed by an
executive officer of the Company, dated the Closing Date, certifying to the fulfillment of the
conditions specified herein, (ii) certified copies of the resolutions adopted by the Company’s
board of directors and stockholders, if required authorizing the execution, delivery and
performance of the transactions contemplated by this Agreement, (iii) certified copies of the
Company’s Articles of Incorporation and by-laws as in effect at the Closing, and (iv) a certificate
of incumbency identifying and showing the signature of each officer of the Company as of the
Closing.



19









 






	5.4	 	Consents.





     The Company shall have obtained, or shall obtain within the time periods required by
applicable law, all necessary blue sky law permits and qualifications, or secured exemptions
therefrom, required by any state for the offer and sale of the Shares at the Closing and shall have
obtained all other approvals, consents, permits and waivers necessary to consummate the
transactions contemplated by this Agreement, including any consents required under any agreements,
licenses, leases or commitments of the Company, and any and all other permits and approvals from
any governmental or regulatory body required for the lawful consummation of the transactions
contemplated by this Agreement shall have been obtained and delivered to Purchaser.




	5.5	 	Articles of Incorporation.
	 
	 	 	The Articles of Incorporation shall be in full force and effect.
	 
	5.6	 	Due Diligence Review.





     The Purchaser shall have completed its due diligence investigation of the Company, including,
but not limited to confirmation of the Company’s capital structure, which shall be satisfactory to
the Purchaser in its sole discretion.




	5.7	 	Proceedings and Documents.





     All corporate and other proceedings in connection with the transactions contemplated hereby
and all documents and instruments incident to such transactions shall be reasonably satisfactory in
substance and form to counsel for the Purchaser, and they shall have received all such counterpart
originals or certified or other copies of such documents as they may reasonably request.




	5.8	 	Related Transactions.





     The transactions contemplated by the memorandum attached to the letter of intent dated March
31, 2003 between the Company and Purchaser, and relating to the transactions contemplated herein,
shall have been consummated as provided therein or on other terms satisfactory to the Purchaser.




	5.9	 	No Litigation.





     No action, suit or other proceeding shall be pending or threatened before any court, tribunal,
or government or regulatory authority, or instituted or threatened by any governmental or
regulatory authority, seeking or threatening to restrain, modify or prohibit the consummation of
the transactions contemplated hereby, or seeking to obtain damages in respect thereof or which is
otherwise reasonably likely to have a material adverse change or effect on the business, assets,
properties, operations, results of operations, prospects or condition (financial or otherwise) of
the Company and its subsidiaries taken as a whole.



20









 






	5.10	 	Compromise of Indebtedness.





     The Company’s indebtedness to Alex Goren in the approximate amount of $105,000 shall have been
settled or discharged on terms acceptable to Purchaser in its sole discretion.




	5.11	 	Registration Rights Agreement.





     The Company, Purchaser and the other parties thereto shall have entered into the Registration
Rights Agreement satisfactory in form and substance to the Purchaser and his counsel.




	5.12	 	Stockholders’ Voting Agreement.





     The Company, Purchaser and the other parties thereto shall have entered into the Stockholders’
Voting Agreement dated as of the Closing date (substantially in the form of Exhibit C hereto), and
satisfactory in form and substance to the Purchaser and his counsel.




	5.13	 	Compliance with Laws.





     The offer, purchase and sale of the Shares to the Purchaser shall be legally permitted by all
laws and regulations to which the Purchaser or the Company are subject, and there shall not be in
effect any injunction, order or decree of a court of competent jurisdiction prohibiting,
restraining or delaying the consummation of the transactions contemplated hereby.




	5.14	 	Material Adverse Effect.





     There shall not have occurred any Material Adverse Effect and there shall not exist any facts
or circumstances that, individually or in the aggregate, are reasonably likely to have a Material
Adverse Effect.




	5.15	 	Employee Matters.





     The stock options previously granted by the Company to Principals shall have been terminated
with the agreement of the optionee and the Principals shall have entered into amended and restated
employment agreements with the Company in the form attached hereto as Exhibit D (“Employment
Agreement(s)”.




	5.16	 	Approval of Budget.





     Purchaser shall have approved Company’s budget and projections for the fiscal year ending May
31, 2004.



21









 





ARTICLE V-A

CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER

TO ADDITIONAL CLOSINGS




     The obligations of Purchaser to purchase Shares at an Additional Closing is, at the option of
Purchaser (and in addition to the other conditions thereto set forth herein), subject to the
fulfillment or waiver on or prior to such Additional Closing of the following condition:




	5-A.1	 	Representations and Warranties.





     All representations and warranties of the Company contained in this Agreement shall have been
true and correct when made, and shall be true and correct as of the Additional Closing as though
made at such time.




	5-A.2	 	Material Adverse Effect.





     Between the date of the Initial Closing and the date of the Additional Closing, there shall
not have occurred any Material Adverse Effect and there shall not exist any facts or circumstances
that, individually or in the aggregate, are reasonably likely to have a Material Adverse Effect.




	5-A.3	 	Effectiveness of Certain Agreements.





     The Articles of Incorporation and By-laws, amended as provided herein shall be in full force
and effect and unmodified. The Employment Agreements referred to in Exhibit D and the Registration
Rights Agreement referred to in Exhibit B shall be in full force and effect and unmodified.




	5-A.4	 	Compliance Certificate.





     The Company shall have delivered to the Purchaser, a Compliance Certificate executed by an
executive officer of the Company, dated the Closing Date certifying to the fulfillment of the
conditions to such Additional Closing have been satisfied.



     In the event the Additional Closing is being held as a result of a Sales Notice given by
Purchaser, and the Company believes it cannot satisfy the above conditions, the Company shall
notify the Purchaser of such fact, by written notice given promptly after the giving of the Sales
Notice, which shall specify the facts or circumstances forming the basis of the Company’s inability
to satisfy such conditions. Upon receipt of such notice, Purchaser shall have the right either to
(i) withdraw its Sales Notice, in which event the Additional Closing shall not occur or (ii) waive
the condition which cannot be satisfied, which waiver may be limited to the particular facts or
circumstances set forth in the Company’s notice.



22









 





ARTICLE VI

CONDITIONS TO OBLIGATIONS OF THE COMPANY




     The Company’s obligations to sell and issue any Shares at the Closing is, at the option of the
Company, subject to the fulfillment or waiver on or prior to the Closing Date of the following
conditions:




	6.1	 	Representations and Warranties.





     The representations and warranties made by Purchaser in Section 4 of this Agreement shall have
been true and correct when made, and shall be true and correct in all material respects as of the
Closing Date.




	6.2	 	Covenants.





     All covenants, agreements, and conditions contained in this Agreement to be performed by the
Purchaser on or prior to the Closing shall have been fully performed or complied with in all
material respects.




	6.3	 	Blue Sky Law.





     The Company shall have obtained all necessary blue sky law permits and qualifications, or
secured exemptions therefrom, required by any state for the offer and sale of the Shares at the
Closing.




	6.4	 	Employment Agreements.





     The Employment agreements referred to in Exhibit D shall have been executed and delivered by
the Company.




	6.5	 	Compromise of Indebtedness.





     Purchaser shall provide evidence of acceptance of the terms of settlement or discharge for the
Company’s indebtedness to Alex Goren in the approximate amount of $105,000.




	6.6	 	Approval of Budget.





     Purchaser shall provide evidence of approval of Company’s budget and projections for the
fiscal year ending May 31, 2004.




	6.7	 	No Litigation.





     No action, suit or other proceeding shall be pending or threatened before any court, tribunal,
or governmental authority seeking or threatening to restrain or prohibit the consummation of the
transactions contemplated hereby, or seeking to obtain substantial damages in respect thereof or
which would otherwise materially and adversely affect the Company, its business, assets, prospects
or financial condition.



23









 





ARTICLE VII

GENERAL PROVISIONS





	7.1	 	Governing Law.





     All or part of this Agreement and the legal relations between the parties hereto has been
negotiated in the State of New York and will be enforced under the laws of the State of New York
without regard to its conflicts of laws provisions.




	7.2	 	Successors and Assigns; Third Party Beneficiaries.





     Except as otherwise expressly limited herein, the provisions hereof shall inure to the benefit
of, and be binding upon, the successors (including successor trustees, in the case of a trustee),
assigns, heirs, executors, and administrators of the parties hereto. Except as expressly provided
in Article VII, nothing in this Agreement, expressed or implied, is intended to confer upon any
party other than the parties hereto and their respective successors and assigns any rights,
remedies, obligations or liabilities under or by reason of this Agreement.




	7.3	 	Entire Agreement; Amendment and Waiver.





     This Agreement and the Ancillary Agreements constitute the full and entire understanding and
agreement between the parties with regard to the subject matter hereof and thereof and supersede
all prior agreements among the parties. All prior negotiations and agreements shall be merged into
this Agreement.




	7.4	 	Survival of Representations and Warranties; Compliance.





     All representations and warranties contained in this Agreement or in the Ancillary Agreements
or in any certificate delivered pursuant hereto or thereto shall survive the Closing for a period
of thirty-six (36) months (the “Survival Period”), and shall not be deemed waived or otherwise
affected by any investigation made or any knowledge acquired with respect thereto, or by any notice
delivered pursuant to this Agreement; provided, however, that any claim based on
fraud shall survive the Closing indefinitely. The covenants and agreements contained in this
Agreement or in the Ancillary Agreements shall survive the Closing and shall continue until all
obligations with respect thereto shall have been performed or satisfied or shall have been
terminated in accordance with their terms. The waiver of any condition based on the accuracy of
any representation or warranty, or on the performance of or compliance with any covenant or
obligation, will not affect the right to indemnification or any other remedy based on such
representations, warranties, covenants and obligations.




	7.5	 	Indemnification by the Company and Principals.





     On the terms and conditions, and subject to the limitations, set forth in this Article VII,
from and after the Closing, each of the Company and the Principals (the “Seller Indemnifying
Parties”), jointly and severally, shall indemnify and hold Purchaser, its officers, directors,
employees, agents, representatives and Affiliates (the “Purchaser Indemnified Parties”) harmless
from and against, and shall reimburse the Purchaser Indemnified Parties for, any and all actual
losses, damages, debts, liabilities, obligations, judgments, orders, awards, writs, injunctions,



24









 




decrees, fines, penalties, Taxes, costs or expenses (including, but not limited to, any
reasonable legal or accounting fees or expenses (“Losses”) based upon, arising out of or related to
(i) any inaccuracy or misrepresentation in, or breach of, any representation or warranty made by
the Company and/or the Principals in this Agreement or in any Ancillary Agreement or (ii) any
failure by the Company or the Principals to perform or comply, in whole or in part, with any
covenant or agreement in this Agreement or in any Ancillary Agreement.





	7.6	 	Indemnification by the Purchaser.





     On the terms and conditions, and subject to the limitations set forth in this Article VII,
from and after the Closing, Purchaser (the “Purchaser Indemnifying Party”) shall indemnify and hold
the Company, its officers, directors, employees, agents, representatives and Affiliates and the
Principals (the “Seller Indemnified Parties”) harmless from and against, and shall reimburse the
Seller Indemnified Parties for, any and all Losses based upon, arising out of or related to (i) any
inaccuracy or misrepresentation in, or breach of, any representation or warranty made by Purchaser
in this Agreement or in any Ancillary Agreement or (ii) any failure by Purchaser to perform or
comply, in whole or in part, with any covenant or agreement in this Agreement or in any other
Ancillary Agreement.




	7.7	 	Matters Involving Third Parties.





          (a) For purposes of this Article VII, (i) the Purchaser Indemnifying Party and the Seller
Indemnifying Parties shall be referred to herein as the “Indemnifying Parties” or an “Indemnifying
Party” as the context requires and (ii) the Purchaser Indemnified Parties and the Seller
Indemnified Parties shall be referred to as the “Indemnified Parties” or an “Indemnified Party” as
the context requires.




          (b) if any third party shall notify an Indemnified Party with respect to any matter (a
“Third Party Claim”) which may give rise to a claim for indemnification against the Company
under this Article VII, then the Indemnified Party shall promptly notify each Indemnifying Party
thereof in writing; provided, however, that no delay on the part of the Indemnified Party in
notifying any Indemnifying Party shall relieve the Indemnifying Party from any obligation hereunder
unless (and then solely to the extent) the Indemnifying Party thereby is materially prejudiced; it
being understood and agreed that the failure of the Indemnified Party to so notify the Indemnifying
Party prior to settling a Third Party Claim (whether by paying a claim or executing a binding
settlement agreement with respect thereto) or the entry of a judgment or issuance of an award with
respect to a Third Party Claim shall constitute actual material prejudice to the Indemnifying
Party’s ability to defend against such Third Party Claim.




          (c) Any Indemnifying Party will have the right to defend the Indemnified Party against the
Third Party Claim with counsel of its choice reasonably satisfactory to the Indemnified Party so
long as (i) the Indemnifying Party notifies the Indemnified Party in writing within thirty (30)
calendar days after the Indemnified Party has given notice of the Third Party Claim that the
Indemnifying Party or Parties will indemnify the Indemnified Party from, arising out of, relating
to, in the nature of, or caused by the Third Party Claim (it being understood by the Parties that
the Indemnified Party may take such actions as are reasonable in connection with




25









 







its defense until it receives such notice from the Indemnifying Party), and (ii) the
Indemnifying Party conducts the defense of the Third Party Claim actively and diligently.




          (d) So long as the Indemnifying Party is conducting the defense of the Third Party Claim in
accordance with Section 7.6(b) above, (i) the Indemnified Party may retain separate co-counsel at
its sole cost and expense and participate in the defense of the Third Party Claim (provided that
the Indemnified Party will have the right to employ separate counsel to represent the Indemnified
Party (the fees and expenses of which will be borne by the Indemnifying Party) if, in the
Indemnified Party’s reasonable judgment, a conflict of interest between the Indemnified Party and
the Indemnifying Party exists with respect to such claim), (ii) the Indemnified Party will not
consent to the entry of any judgment or enter into any settlement with respect to the Third Party
Claim without the prior written consent of the Indemnifying Party (not to be withheld
unreasonably), and (iii) the Indemnifying Party will not, without the prior written consent of the
Indemnified Party, consent to the entry of any judgment or enter into any settlement with respect
to the Third Party Claim in which any relief other than the payment of money damages is sought
against any Indemnified Party, unless such settlement, compromise or consent (i) includes as an
unconditional term thereof the giving by the claimant, petitioner or plaintiff, as applicable, to
such Indemnified Party of a release from all liability with respect to such Third Party Claim and
(ii) does not include a statement as to or an admission of fault, culpability or a failure to act
by or on behalf of any Indemnified Party.




          (e) In the event any of the conditions in Section 7.6(b) is or becomes unsatisfied, however,
(i) the Indemnified Party may defend against, and consent to the entry of any judgment or enter
into any settlement with respect to, the Third Party Claim in any manner it reasonably may deem
appropriate (and the Indemnified Party need not consult with, or obtain any consent from, any
Indemnifying Party in connection therewith), (ii) the Indemnifying Parties will reimburse the
Indemnified Party promptly and periodically for the costs of defending against the Third-Party
Claim. The Parties will remain responsible for any Losses the Indemnified Party may suffer
resulting from, arising out of, relating to, in the nature of, or caused by the Third Party Claim
to the fullest extent provided in this Article VII.





	7.8	 	Notices, etc.





     All notices and other communications required or permitted hereunder shall be in writing and
shall be (i) mailed by registered or certified mail, postage prepaid, (ii) delivered by reliable
overnight courier service, or (iii) otherwise delivered by hand or by messenger, addressed (A) if
to Purchaser, at 110 Wall Street, New York, New York 10005, or at such other address as such
Purchaser shall have furnished to the Company in writing, with a copy to Frederic J. Gruder, Esq.
775 Park Avenue, Suite 255, Huntington, NY 11743, telecopier number (631) 614-4545, (B) if to the
Company Neoterik Center, Woodsboro, MD 21798 Attention: President, telecopier no. (301) 845-2213,
or at such other address as the Company shall have furnished to the Purchaser, with a copy to Sonia
Galindo, Esquire, Whiteford, Taylor & Preston L.L.P., 7 Saint Paul Street, Baltimore, Maryland
21202, telecopier number (410) 347-9414.



26









 






	7.9	 	Delays or Omissions.





     No delay or omission to exercise any right, power, or remedy accruing to any party upon any
breach or default under this Agreement, shall be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any party of any provisions or conditions of this Agreement, must be in
writing and shall be effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by law or otherwise afforded to any of the parties, shall
be cumulative and not alternative.




	7.10	 	References.





     Unless the context otherwise requires, any reference to a “Section” refers to a section of
this Agreement. Any references to “this Section” refers to the whole number section in which such
reference is contained.




	7.11	 	Severability.





     If any provision of this Agreement is held to be unenforceable under applicable law, then such
provision shall be excluded from this Agreement and the balance of this Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in accordance with its
terms. The court in its discretion may substitute for the excluded provision an enforceable
provision, which in economic substance reasonably approximates the excluded provision.




	7.12	 	Pronouns.





     All pronouns and any variations thereof refer to the masculine, feminine or neuter, singular
or plural, as the identity of the person or persons may require.




	7.13	 	Counterparts.





     This Agreement may be executed in any number of counterparts and via facsimile, each of which
shall be deemed an original and enforceable against the parties actually executing such
counterpart, and all of which, when taken together, shall constitute one instrument.




	7.14	 	Remedies.





     The parties to this Agreement acknowledge and agree that a breach of any of the covenants of
the Company or the Purchaser set forth in this Agreement may not be compensable by payment of money
damages and, therefore, that the covenants of the foregoing parties set forth in this Agreement may
be enforced in equity by a decree requiring specific performance.




	7.15	 	Certain Definitions.





     As used in this Agreement, the following terms shall have the meanings unless the context
otherwise required:



27









 




“Affiliate” shall mean a Person that, directly or indirectly, controls or is controlled by,
or is under common control with, any Person.



“Control” (including, with correlative meaning, the terms “controlled by” and “under common
control with”) as used with respect to any Person, means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of such Person, whether
through ownership of voting securities or by contract or otherwise.



“Person” means any individual, corporation, general or limited partnership, limited
liability company, firm, joint venture, association, enterprise, joint stock company, trust
unincorporated organization or other entity.



“Subsidiary” shall mean any Person as to which the Company, directly, or indirectly, owns
or has the power to vote, or to exercise a controlling influence with respect to, fifty percent
(50%) or more of the securities of any class of such Person, the holders of which class are
entitled to vote for the election of directors (or persons performing similar functions) of such
Person.





	7.16	 	Publicity.





     The Company shall not release any information to any third party (except its board members,
employees, consultants, agents, shareholders, accountants, lenders and legal counsel) with respect
to the financial terms of this Agreement or the transactions contemplated hereby without the prior
written consent of the Purchaser, other than as may be required by applicable law or court order.




	7.17	 	Access.





     The Company covenants and agrees, upon reasonable notice, and except as may otherwise be
required by applicable law, that the Company shall afford Purchaser’s officers, employees, counsel,
accountants and other authorized representatives reasonable access, during normal business hours
throughout the period prior to the Closing, to the Company’s and its subsidiaries’ properties,
books, contracts and records and, during such period, the Company shall furnish promptly to
Purchaser access to (and, where reasonable, copies of,) all information concerning the Company’s
and its subsidiaries’ business, properties and personnel as may reasonably be requested, provided
that no investigation pursuant to this Section 7.16 shall affect or be deemed to modify any
representation or warranty made by the Company herein.




	7.18	 	Further Assurances.





     The Company covenants and agrees that it shall execute such documents and papers, and perform
such further acts, as may be reasonably required or desirable to carry out the provisions hereof
and the transactions contemplated hereby before and after the Closing and that it shall use its
reasonable best efforts to fulfill or obtain the fulfillment of the conditions set forth in
Articles V and VI hereof, including, without limitation, the execution and delivery of any
documents or other papers, the execution and delivery of which are conditions precedent to Closing,
subject to the other provisions of this Agreement.



[SIGNATURE PAGE IMMEDIATELY FOLLOWS]




28









 








     IN WITNESS WHEREOF, the parties hereto have entered into and signed this Stock Purchase
Agreement as of the date and year first above written.



	 	 	 	 	 
	 	 	NEOTERIK HEALTH TECHNOLOGIES, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Kenneth V. Vaughan
	 

	 	 	 	 
	 

	 	 	 	Kenneth V. Vaughan, President & CEO
	 
	 	 	 	 
	 	 	PRINCIPALS:
	 
	 	 	 	 
	 	 	/s/ Kenneth V. Vaughan
	 	 	 
	 	 	Kenneth V. Vaughan
	 
	 	 	 	 
	 	 	/s/ James R. Wiggins
	 	 	 
	 	 	James R. Wiggins
	 
	 	 	 	 
	 	 	GLOBALSECURE, LTD.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Craig Bandes
	 

	 	 	 	 
	 

	 	 	 	Craig Bandes, President






29









 






EXHIBIT A




DISCLOSURE SCHEDULE




	 	 	 
	Section 3.4

	 	Subsidiaries.
	 
	 	 
	Section 3.5

	 	Capitalization
	 
	 	 
	Section 3.7

	 	Title to Property and Assets
	 
	 	 
	Section 3.8

	 	Financial Statements
	 
	 	 
	Section 3.9

	 	Related-Party Transactions
	 
	 	 
	Section 3.11

	 	Intellectual Property
	 
	 	 
	Section 3.12

	 	Material Contracts
	 
	 	 
	Section 3.14

	 	Litigation
	 
	 	 
	Section 3.17

	 	Employees
	 
	 	 
	Section 3.18

	 	Tax Returns, Payments, and Elections
	 
	 	 
	Section 3.20

	 	Marketing Rights
	 
	 	 
	Section 3.21

	 	Brokers and Finders
	 
	 	 
	Section 3.26

	 	Confidentiality and Noncompetition Agreements
	 
	 	 
	Section 3.28

	 	Officers
	 
	 	 
	Section 3.33

	 	Customers
	 
	 	 
	Section 3.34

	 	Events Subsequent to Most Recent Fiscal Period End






 









 






EXHIBIT B




FORM OF REGISTRATION RIGHTS AGREEMENT




 









 








EXHIBIT C




FORM OF STOCKHOLDERS’ VOTING AGREEMENT




 









 








EXHIBIT D




FORM OF EMPLOYMENT AGREEMENTS