Unassociated Document


    1

      

      

    

    AGREEMENT
      AND PLAN OF MERGER

    


    by
      and
      among

    


    CUSTOMER
      ACQUISITION NETWORKS HOLDINGS, INC., 

    


    OPTIONS
      ACQUISITION SUB, INC.,

    


    OPTIONS
      NEWSLETTER, INC.,

    


    and

    


    HAGAI
      SHECHTER 

    


    Dated
      as
      of December 18, 2007

     

    
      

      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      TABLE
        OF CONTENTS

      


      
        	
                ARTICLE
                  I DEFINITIONS

              	
                1

              
	 	 
	
                ARTICLE
                  II THE MERGER

              	
                8

              
	
                2.1

              	
                The
                  Merger

              	
                8

              
	
                2.2

              	
                Effective
                  Time

              	
                8

              
	
                2.3

              	
                Effects
                  of the Merger

              	
                8

              
	
                2.4

              	
                Articles
                  of Incorporation, Bylaws and Directors and Officers

              	
                9

              
	
                2.5

              	
                Conversion
                  of Shares

              	
                9

              
	
                2.6

              	
                Exchange
                  of Shares for Merger Consideration

              	
                9

              
	
                2.7

              	
                Buyer
                  Common Stock

              	
                9

              
	
                2.8

              	
                Delivery
                  of Certificates and Cash.

              	
                9

              
	
                2.9

              	
                Additional
                  Purchase Price

              	
                10

              
	
                2.10

              	
                The
                  Closing

              	
                11

              
	
                2.11

              	
                Closing
                  Deliveries by the Stockholders and the Company

              	
                11

              
	
                2.12

              	
                Closing
                  Deliveries by Parent and Buyer

              	
                13

              
	
                2.13

              	
                Upon
                  Escrowed Funds; Escrow Agreement

              	
                14

              
	
                2.14

              	
                Post
                  Closing Adjustment

              	
                14

              
	
                 

              	 	 
	
                ARTICLE
                  III REPRESENTATIONS AND WARRANTIES OF
                  STOCKHOLDERS

              	
                14

              
	
                3.1

              	
                Organization
                  and Qualification of the Company.

              	
                14

              
	
                3.2

              	
                Capitalization.

              	
                15

              
	
                3.3

              	
                Stock
                  Ownership by Stockholders

              	
                15

              
	
                3.4

              	
                Authorization;
                  Enforceability

              	
                15

              
	
                3.5

              	
                No
                  Conflict; Consents.

              	
                16

              
	
                3.6

              	
                Financial
                  Statements and Undisclosed Liabilities.

              	
                16

              
	
                3.7

              	
                Labor
                  Matters

              	
                17

              
	
                3.8

              	
                Absence
                  of Certain Changes or Events

              	
                17

              
	
                3.9

              	
                Taxes.

              	
                17

              
	
                3.10

              	
                Material
                  Contracts

              	
                19

              
	
                3.11

              	
                Real
                  and Personal Property; Title to Property; Leases.

              	
                21

              
	
                3.12

              	
                Condition
                  and Sufficiency of Tangible Assets

              	
                21

              
	
                3.13

              	
                Licenses,
                  Permits and Authorizations

              	
                22

              
	
                3.14

              	
                Intellectual
                  Property.

              	
                22

              
	
                3.15

              	
                Litigation;
                  Compliance with Laws.

              	
                23

              
	
                3.16

              	
                Insurance.

              	
                23

              
	
                3.17

              	
                Employee
                  Benefit Plans.

              	
                24

              
	
                3.18

              	
                Transactions
                  with Affiliates

              	
                25

              
	
                3.19

              	
                No
                  Brokers or Finders

              	
                25

              
	
                3.20

              	
                Accuracy
                  of Information

              	
                25

              
	
                3.21

              	
                Receivables

              	
                26

              
	
                3.22

              	
                Environmental.

              	
                26

              
	
                3.23

              	
                Restrictions
                  on Business Activities

              	
                26

              
	
                3.24

              	
                INTENTIONALLY
                  OMITTED

              	
                27

              
	
                3.25

              	
                Absence
                  of Certain Payments

              	
                27

              


      


      
        
          
          

        

        
          i

          
            

          

        

        
          
          

        

      

      


      
        	
                3.26

              	
                Bank
                  Accounts

              	
                27

              
	
                3.27

              	
                Change
                  of Control Payment.

              	
                27

              
	
                3.28

              	
                Disclosure

              	
                27

              
	 	 
	
                ARTICLE
                  IV REPRESENTATIONS AND WARRANTIES OF PARENT

              	
                27

              
	
                4.1

              	
                Organization
                  and Authority of Parent and Buyer.

              	
                27

              
	
                4.2

              	
                Capitalization.

              	
                28

              
	
                4.3

              	
                Sufficiency
                  of Funds

              	
                29

              
	
                4.4

              	
                No
                  Conflict; Governmental Consents.

              	
                29

              
	
                4.5

              	
                Financial
                  Statements; Undisclosed Liabilities.

              	
                29

              
	
                4.6

              	
                SEC
                  Reporting

              	
                29

              
	
                4.7

              	
                Officers
                  and Directors

              	
                30

              
	
                4.8

              	
                Registration
                  Rights; Lock Up

              	
                30

              
	 	 	 
	
                ARTICLE
                  V ADDITIONAL AGREEMENTS

              	
                30

              
	
                5.1

              	
                Notices
                  and Consents

              	
                30

              
	
                5.2

              	
                Taking
                  of Necessary Action; Further Action

              	
                31

              
	
                5.3

              	
                Directors’
                  and Officers’ Indemnification and Insurance.

              	
                31

              
	
                5.4

              	
                Further
                  Assurances

              	
                32

              
	
                5.5

              	
                Registration
                  of Securities

              	
                32

              
	
                5.6

              	
                Conduct
                  of the Business

              	
                32

              
	
                5.7

              	
                Software
                  Escrow Agreement

              	
                32

              
	 	 	
                 

              
	
                ARTICLE
                  VI TAX MATTERS

              	
                32

              
	
                6.1

              	
                Conveyance
                  Taxes

              	
                32

              
	
                6.2

              	
                Pre-Closing
                  Income Tax Returns

              	
                33

              
	
                6.3

              	
                Straddle
                  Period Tax Returns

              	
                33

              
	
                6.4

              	
                Straddle
                  Period Tax Allocation

              	
                34

              
	
                6.5

              	
                Tax
                  Cooperation

              	
                34

              
	
                6.6

              	
                Required
                  Notifications

              	
                34

              
	
                6.7

              	
                Section
                  368(a) Reorganization

              	
                35

              
	 	 	
                 

              
	
                ARTICLE
                  VII INDEMNIFICATION

              	
                35

              
	
                7.1

              	
                Obligations
                  of Stockholder.

              	
                35

              
	
                7.2

              	
                Obligations
                  of Parent

              	
                36

              
	
                7.3

              	
                Procedure

              	
                36

              
	
                7.4

              	
                Survival.

              	
                37

              
	
                7.5

              	
                Mitigation

              	
                37

              
	
                7.6

              	
                Consequential
                  and Other Damages

              	
                37

              
	 	 	 
	
                ARTICLE
                  VIII GENERAL

              	
                37

              
	
                8.1

              	
                Amendments;
                  Waivers

              	
                37

              
	
                8.2

              	
                Schedules;
                  Exhibits; Integration

              	
                38

              
	
                8.3

              	
                Governing
                  Law

              	
                38

              
	
                8.4

              	
                No
                  Assignment

              	
                38

              
	
                8.5

              	
                Headings

              	
                38

              
	
                8.6

              	
                Counterparts

              	
                38

              


      


      
        
          
          

        

        
          ii

          
            

          

        

        
          
          

        

      

      


      
        	
                8.7

              	
                Publicity
                  and Reports

              	
                38

              
	
                8.8

              	
                Parties
                  in Interest

              	
                38

              
	
                8.9

              	
                Notices

              	
                38

              
	
                8.10

              	
                Remedies;
                  Waiver

              	
                39

              
	
                8.11

              	
                Attorney’s
                  Fees

              	
                39

              
	
                8.12

              	
                Severability

              	
                40

              
	
                8.13

              	
                Entire
                  Agreement

              	
                40

              
	
                8.14

              	
                Time
                  is of the Essence

              	
                40

              
	
                8.15

              	
                Arbitration

              	
                40

              
	
                8.16

              	
                Expenses

              	
                40

              
	
                8.17

              	
                Disclosures

              	
                40

              


      


      
        
          
          

        

        
          iii

          
            

          

        

        
          
          

        

      


      Exhibits

       

      
        	
                Exhibit
                  A-1

              	
                Form
                  of Certificate of Merger

              
	
                Exhibit
                  A-2

              	
                Form
                  of Articles of Merger

              
	
                Exhibit
                  B

              	
                Form
                  of Employment Agreement

              
	
                Exhibit
                  C

              	
                Form
                  of Stockholder Release

              
	
                Exhibit
                  D

              	
                Form
                  of Lock-Up Agreement

              
	
                Exhibit
                  E

              	
                Form
                  of Invention Assignment Agreement

              
	
                Exhibit
                  F

              	
                Form
                  of Broker Release

              
	
                Exhibit
                  G

              	
                Form
                  of Escrow Agreement

              


      

       

      Schedules

      


      
        	
                Schedule
                  2.5

              	
                Merger
                  Consideration

              
	
                Schedule
                  2.11(l)

              	
                Obligations
                  and Liabilities of the Company

              
	
                Schedule
                  2.11(q)

              	
                Employees
                  Signing Invention Assignment Agreements

              
	
                Schedule
                  3.1

              	
                Foreign
                  Qualifications

              
	
                Schedule
                  3.2

              	
                Capitalization

              
	
                Schedule
                  3.5

              	
                No
                  Conflict; Consents

              
	
                Schedule
                  3.6

              	
                Financial
                  Statements and Undisclosed Liabilities

              
	
                Schedule
                  3.8

              	
                Absence
                  of Certain Changes or Events

              
	
                Schedule
                  3.9

              	
                Taxes

              
	
                Schedule
                  3.10

              	
                Material
                  Contracts

              
	
                Schedule
                  3.11

              	
                Real
                  and Personal Property; Title to Property; Lease

              
	
                Schedule
                  3.14

              	
                Intellectual
                  Property

              
	
                Schedule
                  3.15

              	
                Litigation;
                  Compliance with Laws

              
	
                Schedule
                  3.16

              	
                Insurance

              
	
                Schedule
                  3.17

              	
                Employee
                  Benefit Plans

              
	
                Schedule
                  3.18

              	
                Transactions
                  with Affiliates

              
	
                Schedule
                  3.22

              	
                Environmental

              
	
                Schedule
                  3.26

              	
                Bank
                  Account

              
	
                Schedule
                  3.27

              	
                Change
                  of Control Payments

              
	
                Schedule
                  4.8

              	
                Registration
                  Rights; Lock-Up

              


      


      
        
          
          

        

        
          iv

          
            

          

        

        
          
          

        

      


      AGREEMENT
        AND PLAN OF MERGER

       

      This
        Agreement and Plan of Merger is entered into as of December 18, 2007, by
        and among CUSTOMER ACQUISITION NETWORK HOLDINGS, INC., a Delaware corporation
        (“Parent”);
        OPTIONS ACQUISITION SUB, INC., a Delaware corporation (“Buyer”);
        OPTIONS
        NEWSLETTER, INC.,
        a
        Florida corporation (the “Company”);
        and
        HAGAI SHECHTER, the holder of all of the capital stock of the Company (the
        “Stockholder”).
        Parent,
        Buyer, Company and the Stockholder is a “party”
        and
        together are “parties”
        to this
        Agreement.

       

      R
        E C I T A L S

       

      WHEREAS,
        the Boards of Directors of Parent, Buyer and the Company have each approved
        the
        merger of the Company with and into Buyer, with Buyer surviving such merger,
        upon the terms and subject to the conditions set forth in this Agreement,
        whereby the issued and outstanding shares of the capital stock of the Company
        will be canceled and retired or converted into the right to receive the Merger
        Consideration (as defined herein); 

       

      WHEREAS,
        it is intended that, for federal income tax purposes, the transactions
        contemplated by this Agreement shall qualify as a tax-free reorganization
        under
        the provisions of Section 368(a) of the Internal Revenue Code of 1986, as
        amended, and the rules and regulations promulgated thereunder (the “Code”);
        and


       

      WHEREAS,
        Parent, Buyer, the Company and the Stockholder desire to make certain
        representations, warranties, covenants and agreements in connection with
        the
        Merger (as defined below) and also to prescribe various conditions to the
        Merger.

       

      A
        G R E E M E N T

       

      NOW,
        THEREFORE, in consideration of the mutual promises contained herein and other
        good and valuable consideration, the receipt and sufficiency of which is
        hereby
        acknowledged, and intending to be legally bound the parties agree as
        follows:

       

      ARTICLE
        I

      DEFINITIONS

       

      For
        all
        purposes of this Agreement, except as otherwise expressly provided,


       

      (a) the
        terms
        defined in this Article I have the meanings assigned to them in this
        Article I and include the plural as well as the singular, 

       

      (b) all
        accounting terms not otherwise defined herein have the meanings assigned
        under
        GAAP, 

       

      (c) all
        references in this Agreement to designated “Articles,” “Sections” and other
        subdivisions are to the designated Articles, Sections and other subdivisions
        of
        the body of this Agreement, 


      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      


      (d) pronouns
        of either gender or neuter shall include, as appropriate, the other pronoun
        forms, and

       

      (e)
        the
        words “herein,” “hereof” and “hereunder” and other words of similar import refer
        to this Agreement as a whole and not to any particular Article, Section or
        other
        subdivision. 

       

      As
        used
        in this Agreement and the schedules delivered pursuant to this Agreement,
        the
        following definitions shall apply:

       

      “AAA
        Rules”
        has the
        meaning set forth in Section
        8.15.

       

      “Action”
        means
        any action, complaint, claim, charge, petition, investigation, suit or other
        proceeding, whether civil or criminal, in law or in equity, or before any
        mediator, arbitrator or Governmental Entity.

       

      “Additional
        Purchase Price”
        has the
        meaning set forth in Section 2.9(a).

       

      “Adjustment
        Amount”
has
        the
        meaning set forth in Section 2.14.

       

      “Adjustment
        Date”
has
        the
        meaning set forth in Section 2.14.

       

      “Affiliate”
        means
        with respect to any specified Person, any other Person that directly, or
        indirectly through one or more intermediaries, controls, or is controlled
        by, or
        is under common control with, such specified Person.

       

      “Agreement”
        means
        this Agreement and Plan of Merger, as amended or supplemented, together with
        all
        exhibits and schedules attached or incorporated by reference.

       

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

       

      “Articles
        of Merger” has
        the
        meaning set forth in Section
        2.2.

       

      “Assets” has
        the
        meaning set forth in Section
        3.11(c).

       

      “Benefit
        Plans”
        has the
        meaning set forth in Section
        3.17(a).

       

      “Broker”
        has the
        meaning set forth in Section 3.19.

       

      “Business”
        means
        the business of the Company, and shall be deemed to include any of the following
        incidents of such business: income, cash flow, operations, condition (financial
        or other), assets, anticipated revenues, prospects, liabilities and
        personnel.

       

      “Business
        Day”
        means
        any day that is not a Saturday, a Sunday or other day on which banks are
        required or authorized by law to be closed in the New York, New
        York.


      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      


      “Buyer”
        has the
        meaning set forth in the preamble to this Agreement.

       

      “Calculation
        Date”
        has the
        meaning set forth in Section
        2.9(a).

       

      “Cash
        Portion of Merger Consideration”
        means
        any cash payable to the Stockholders as Merger Consideration.

       

      “Certificates”
        has the
        meaning set forth in Section
        2.6.

       

      “Certificate
        of Merger”
        has the
        meaning set forth in Section
        2.2.
        

       

      “Claim”
        has the
        meaning set forth in Section
        7.3.

       

      “Claim
        Notice”
        has the
        meaning set forth in Section
        7.3.

       

      “Closing”
        has the
        meaning set forth in Section
        2.10.

       

      “Closing
        Date”
        means
        the date of the Closing as set forth in Section
        2.10.

       

      “Code”
        has the
        meaning set forth on the preamble to this Agreement.

       

      “Common
        Stock”
        means
        the common stock, par value $0.01 per share, of the Company.

       

      “Company”
        has the
        meaning set forth on the preamble to this Agreement.

       

      “Company
        Financial Statements”
        means
        the (a) unaudited balance sheets of the Company as of December 31, 2005 and
        2006, and the related unaudited statements of income, changes in Stockholder’
equity, and cash flow for each of the fiscal years then ended; and (b) unaudited
        balance sheet of the Company as of September 30, 2007 (the “Company
        Interim Balance Sheet”)
        and
        the related unaudited statement of income for the nine (9) months then ended.
        

       

      “Company
        Group”
        means
        any “affiliated group” (as defined in Section 1504(a) of the Code without regard
        to the limitations contained in Section 1504(b) of the Code) that, at any
        time
        before the Closing Date, includes or has included the Company or any predecessor
        of or successor to the Company (or another such predecessor or successor),
        or
        any other group of corporations that, at any time on or before the Closing
        Date,
        files or has filed Tax Returns on a combined, consolidated or unitary basis
        with
        the Company or any predecessor of or successor to the Company (or another
        such
        predecessor or successor).

       

      “Company
        Interim Balance Sheet”
has
        the
        meaning set forth in the definition of the Company Financial
        Statements.

       

      “Contract”
        means
        any agreement, contract, arrangement, bond, loan commitment, franchise,
        indemnity, indenture, instrument, lease, license or understanding, whether
        or
        not in writing.


      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      


      “December
        31, 2006 Company Balance Sheet”
        has the
        meaning set forth in Section
        3.6(b).

       

      “DGCL”
        has the
        meaning set forth in Section
        2.1.

       

      “DOL”
has
        the
        meaning set forth in Section
        3.17(k).

       

      “Effective
        Time”
        has the
        meaning set forth in Section
        2.2.
        

       

      “Equity
        Plans”
has
        the
        meaning set forth in Section
        4.2.

       

      “Employee”
        or
        “Employees”
        means
        any individual who is (a) an employee of the Company immediately prior to
        the Closing Date and (b) employees of the Company on any authorized leave
        of absence, including, without limitation, short- or long-term disability
        leave,
        worker’s compensation leave or vacation leave as of the Closing
        Date.

       

      “Employment
        Agreement”
        has the
        meaning set forth in Section
        2.11(d).

       

      “Encumbrance”
        means
        any claim, charge, easement, encumbrance, lease, covenant, security interest,
        lien, option, pledge, rights of others, or restriction (whether on voting,
        sale,
        transfer, disposition or otherwise), whether imposed by agreement,
        understanding, law, equity or otherwise, except for any restrictions on transfer
        generally arising under any applicable federal or state securities
        law.

       

      “Environmental
        Defect”
        shall
        mean a condition with respect to the Assets that constitutes a violation
        of
        Environmental Law; provided that an Environmental Defect shall not be deemed
        to
        exist for the purposes of this Agreement unless the estimated Lowest Cost
        Response for remedying such Environmental Defect exceeds $25,000.

       

      “Environmental
        Laws”
        shall
        mean all Laws relating to (a) the control of any potential pollutant or
        protection of the air, water, land or protected species, (b) solid, gaseous
        or
        liquid waste generation, handling, treatment, storage, disposal or
        transportation and (c) the regulation of or exposure to hazardous, toxic
        or
        other substances alleged to be harmful. 

       

      “ERISA”
        means
        the Employee Retirement Income Security Act of 1974, as amended, and the
        related
        regulations and published interpretations. 

       

      “ERISA
        Affiliate”
has
        the
        meaning set forth in Section
        3.17(a).

       

      “Escrowed
        Funds”
has
        the
        meaning set forth in Section
        2.13.

       

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

       

      “FS”
        has
        the
        meaning set forth in Section
        2.1.

       

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


      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      


      “Governmental
        Entity”
        means
        any government or any agency, bureau, board, commission, court, department,
        official, political subdivision, tribunal or other instrumentality of any
        government, whether federal, state or local, domestic or foreign.

       

      “Hazardous
        Materials”
        means
        any “hazardous substance,” “pollutant or contaminant,” and “petroleum” and
“natural gas liquids” as those terms are defined or used in section 101 of the
        Comprehensive Environmental Response, Compensation and Liability Act, and
        any
        other material regulated under any Environmental Law because of its effect
        or
        potential effect on public health and the environment, including without
        limitation, PCBs, lead paint, asbestos, urea formaldehyde, radioactive materials
        and wastes generated during the production of oil and gas.

       

      “Indemnified
        Party”
        has the
        meaning set forth in Section
        7.3.

       

      “Indemnifying
        Party”
        has the
        meaning set forth in Section
        7.3.

       

      “Intellectual
        Property”
        has the
        meaning set forth in Section
        3.14(a).

       

      “IRS”
        means
        the United States Internal Revenue Service or any successor entity, and to
        the
        extent relevant, the United States Department of Treasury. 

       

      “Knowledge”
        or
“Known”
        shall
        mean, with respect to Stockholder, the actual knowledge (without investigation)
        of the Stockholder.

       

      “Law”
        means
        any constitutional provision, statute or other law, rule, regulation, or
        interpretation of any Governmental Entity and any Order.

       

      “Letter
        of Intent”
means
        the letter of intent dated October 24, 2007 by and among the Parent, the
        Company and the Stockholder.

       

      “Loss”
        means
        any action, cost, damage, disbursement, expense, liability, loss, deficiency,
        diminution in value, obligation, penalty or settlement of any kind or nature,
        whether foreseeable or unforeseeable, including but not limited to, interest
        or
        other carrying costs, penalties, legal, accounting and other professional
        fees
        and expenses incurred in the investigation, collection, prosecution and defense
        of claims and amounts paid in settlement, that may be imposed on or otherwise
        incurred or suffered by the specified Person.

       

      “Lowest
        Cost Response”
shall
        mean the response required or allowed under Environmental Laws that addresses
        the condition present at the lowest cost (considered as a whole taking into
        consideration
        any
        material negative impact such response may have on the operations of the
        relevant assets and any potential material additional costs or liabilities
        that
        may likely arise a result of such response) as compared to any other response
        that is consistent with Environmental Laws.

       

      “Material
        Adverse Effect”
        means,
        with respect to any Person, (i) a material adverse effect on the condition
        (financial or otherwise), business, prospects, assets, liabilities, or
        results of operations of such Person in an amount individually or in the
        aggregate equal to or greater than $10,000; or (ii) a material adverse effect
        on
        the ability of such Person to consummate the transactions contemplated by
        this
        Agreement.


      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

    

    “Material
      Contract”
      means
      any Contract deemed material by Section 3.10.

     

    “Merger”
      has
      the
      meaning set forth in Section
      2.1.

     

    “Merger
      Consideration”
      has the
      meaning set forth in Section
      2.5.

     

    “Order”
      means
      any
      decree, injunction, judgment, order, ruling, assessment or writ of any
      Governmental Entity. 

     

    “Parent”
      has the
      meaning set forth on the preamble to this Agreement.

     

    “Parent
      Financial Statements”
      means
      the unaudited consolidated balance sheet of Parent as of September 30, 2007
      and
      the related unaudited consolidated statement of income for the nine (9) month
      period then ended. 

     

    “Parent
      Indemnified Party”
      has the
      meaning set forth in Section
      7.1.

     

    “Parent
      Indemnifying Party”
      has the
      meaning set forth in Section
      7.2.

     

    “Parent
      Shares”
      shall
      mean shares of common stock, par value $0.01 per share, of Parent delivered
      to
      the Stockholders as part of the Merger Consideration.

     

    “Payment
      Date” has
      the
      meaning set forth in Section
      2.14.

     

    “PBGC”
      has
      the
      meaning set forth in Section
      3.17(k).

     

    “Permit”
      means
      any license, permit, franchise, certificate of authority, or order, or any
      waiver of the foregoing, required to be issued by any Governmental
      Entity.

     

    “Permitted
      Encumbrances”
shall
      mean, with respect to the Assets, any or all of the following: (a) Encumbrances
      securing payment of taxes or assessments that are, in either case, not yet
      delinquent; and (b) Encumbrances set forth in the Company Interim Balance
      Sheet.

     

    “Person”
      means an
      association, a corporation, an individual, a partnership, a limited liability
      company, a trust or any other entity or organization, including a Governmental
      Entity.

     

    “Principal
      Market”
shall
      mean the OTC Bulletin Board, or if the Parent’s common stock is listed on
      another national securities exchange, the “Principal
      Market”
shall
      mean such national securities exchange.

     

    “Qualified
      Plan”
      has the
      meaning set forth in Section
      3.17(b).

     

    “Real
      Property”
      has the
      meaning set forth in Section
      3.11(a).

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    “Release”
      means
      any release, spill, emission, leaking, pumping, injection, deposit, disposal,
      discharge, dispersal, leaching or migration into the indoor or outdoor
      environment, including, without limitation, the movement of Hazardous Materials
      through air, soil, surface water, ground water, wetlands, land or subsurface
      strata.

     

    “Revenue
      Target” has
      the
      meaning set forth in Section
      2.9(a).

     

    “SEC”
      means
      the
      United States Securities and Exchange Commission.

     

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

     

    “Share”
      and
“Shares”
      has the
      meaning set forth in Section
      2.5.

     

    “Stockholder”
      has
      the
      meaning set forth in the preamble to this Agreement.

     

    “Stockholder
      Indemnified Party”
      has the
      meaning set forth in Section
      7.2.

     

    “Stockholder
      Indemnifying Party”
      has the
      meaning set forth in Section
      7.1.

     

    “Stock
      Portion of Merger Consideration”
      means
      that portion of the Merger Consideration that is evidenced by the Parent Shares
      issued to the Stockholders as set forth in Schedule
      2.5.

     

    “Subsidiary”
means,
      with respect to any Person, (a) any corporation 50% or more of whose stock
      of
      any class or classes having by the terms thereof ordinary voting power to elect
      a majority of the directors of such corporation (irrespective of whether or
      not
      at the time stock of any class or classes of such corporation have or might
      have
      voting power by reason of the happening of any contingency) is at the time
      owned
      by such Person, directly or indirectly through Subsidiaries; and (b) any
      partnership, limited liability company, association, joint venture, trust or
      other entity in which such Person, directly or indirectly through Subsidiaries,
      is either a general partner, has a 50% or greater equity interest at the time
      or
      otherwise owns a controlling interest. 

     

    “Surviving
      Entity”
      has the
      meaning set forth in Section
      2.1.

     

    “Tax”
      (and,
      with correlative meaning, “Taxes”)
      means:
      (i) any federal, state, local or foreign net income, gross income, gross
      receipts, windfall profit, severance, property, production, sales, use, license,
      excise, franchise, escheat, employment, payroll, withholding, alternative or
      add-on minimum, ad valorem, value added, transfer, stamp, or environmental
      tax,
      or any other tax, custom, duty, governmental fee or other like assessment or
      charge of any kind whatsoever, together with any interest or penalty, addition
      to tax or additional amount imposed by any governmental authority; and
      (ii) any liability of the Company for the payment of amounts with respect
      to payments of a type described in clause (i) as a result of being a member
      of
      an affiliated, consolidated, combined or unitary group, or as a result of any
      obligation of the Company under any Tax Sharing Arrangement or Tax Indemnity
      Agreement.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    “Tax
      Indemnity Agreement”
      means
      any written or unwritten agreement or arrangement pursuant to which the Company
      may be required to indemnify or reimburse another party for any liability
      relating to Taxes.

     

    “Tax
      Return”
      means
      any return, report or similar statement required to be filed with respect to
      any
      Tax (including any attached schedules), including any information return, claim
      for refund, amended return or declaration of estimated Tax.

     

    “Tax
      Sharing Arrangement”
      means
      any written or unwritten agreement or arrangement for the allocation or payment
      of Tax liabilities or payment for Tax benefits with respect to a consolidated,
      combined or unitary Tax Return which includes the Company.

     

    “Threshold”
      has the
      meaning set forth in Section
      7.1(b).

     

    “Third
      Party Intellectual Rights”
      has the
      meaning set forth in Section
      3.14(b).
      

     

    ARTICLE
      II

    THE
      MERGER

     

    2.1 The
      Merger. At
      the
      Effective Time and upon the terms and subject to the conditions of this
      Agreement and in accordance with Section 252 of the Delaware Business
      Corporation Act (the “DGCL”)
      and
      Section 607.1105 of the Florida Statutes (the “FS”),
      the
      Company shall be merged with and into Buyer (the “Merger”).
      Following the Merger, Buyer shall continue as the surviving entity (the
“Surviving
      Entity”)
      and
      the separate corporate existence of the Company shall cease. Parent, as the
      sole
      owner of Buyer, hereby approves the Merger and this Agreement.   

     

    2.2 Effective
      Time.
      Subject
      to the terms and conditions set forth in this Agreement, on the Closing Date,
      the Certificate of Merger substantially in the form of Exhibit A-1
      (the
“Certificate
      of Merger”)
      and
      the Articles of Merger substantially in the form of Exhibit
      A-2
      (the
“Articles
      of Merger”)
      shall
      each be duly executed and acknowledged by the Company and Buyer and thereafter
      delivered to the Secretary of State of Delaware and the Secretary of State
      of
      Florida, respectively, for filing. The Merger shall become effective at such
      time as a properly executed copy of the Certificate of Merger and Articles
      of
      Merger is duly filed with the Secretary of State of Delaware and the Secretary
      of State of Florida, respectively, or such later time as Parent and the
      Stockholders may agree upon and as set forth in the Certificate of Merger and
      Articles of Merger, respectively (the time the Merger becomes effective being
      referred to herein as the “Effective
      Time”).
      

     

    2.3 Effects
      of the Merger.
      The
      Merger shall have the effects set forth in the DGCL and the FS. Without limiting
      the generality of the foregoing and subject thereto, at the Effective Time,
      all
      the properties, rights, privileges, powers and franchises of the Company and
      Buyer shall vest in the Surviving Entity, and all debts, liabilities and
      obligations of the Company and Buyer shall become the debts, liabilities and
      obligations of the Surviving Entity. 

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    2.4 Articles
      of Incorporation, Bylaws and Directors and Officers.
      The
      articles of incorporation of the Company shall, without further action, be
      terminated, and the organizational documents of Buyer in effect at the Effective
      Time shall be the organizational documents of the Surviving Entity until amended
      in accordance with applicable law. From and after the Effective Time, until
      successors are duly elected or appointed and qualified in accordance with
      applicable law, the directors and the officers of Buyer at the Effective Time
      shall become the directors and the officers of the Surviving Entity and the
      officers and directors of the Company shall cease to act as such effective
      as of
      the Effective Time.

     

    2.5 Conversion
      of Shares. At
      the
      Effective Time, by virtue of the Merger (and without any action on the part
      of
      Buyer or the Company), each
      share of common stock, par value $0.01 per share, of the Company (each a
“Share”
and,
      collectively, the “Shares”)
      issued
      and outstanding immediately prior to the Effective Time shall be converted
      into
      the right to receive a pro rata portion of the Merger Consideration.
The
      “Merger
      Consideration”
is
      as
      set forth on Schedule
      2.5 attached
      hereto, which Merger Consideration is comprised of (i) the Cash Portion of
      Merger Consideration, (ii) the Stock Portion of Merger Consideration, (iii)
      the
      Additional Purchase Price. 

     

    2.6 Exchange
      of Shares for Merger Consideration. At
      the
      Effective Time, each Share issued and outstanding immediately prior to the
      Effective Time shall no longer be outstanding and shall automatically be
      cancelled and retired and shall cease to exist, and each certificate previously
      evidencing any such Shares (the “Certificates”)
      shall
      thereafter represent the right to receive only the amount of Merger
      Consideration set forth opposite the Stockholder’s name as set forth on
Schedule
      2.5.
      Each
      share of any class of Company capital stock issued and outstanding immediately
      prior to the Effective Time that is owned by the Company (other than shares
      in
      trust accounts, security accounts, custodial accounts and similar holdings
      like
      that are beneficially owned by third parties), shall automatically be canceled
      and retired and shall cease to exist, and no cash or other consideration shall
      be delivered or deliverable in exchange therefor.

     

    2.7 Buyer
      Common Stock.
      Each
      share of Buyer common stock, par value $0.001 per share, held by Parent
      immediately prior to the Effective Time will remain issued and outstanding
      and
      will be deemed to be validly issued, outstanding and non-assessable shares
      of
      the Surviving Entity. 

     

    2.8 Delivery
      of Certificates and Cash. 

     

    (a) Delivery.
      At the
      Closing, the Stockholder shall deliver the Stockholder’s Certificate(s) to
      Parent. Upon delivery of a Certificate for cancellation to Parent, Parent shall
      deliver in exchange therefor payment of the Merger Consideration determined
      in
      accordance with Section
      2.5
      and the
      Cash Portion of Merger Consideration shall be paid by check or by wire transfer
      to the respective accounts designated by the Stockholder and the Certificate(s)
      so surrendered by the Stockholder shall forthwith be canceled. If any cash
      is to
      be paid to a name other than that which the Certificate(s) surrendered in
      exchange therefor is registered, or in the event of a transfer of ownership
      of
      Shares that is not registered in the transfer records of the Company, it shall
      be a condition of payment of the Merger Consideration that the Certificate
      so
      surrendered shall be properly endorsed or shall be otherwise in proper form
      for
      transfer and that the Person requesting such payment shall have paid any
      transfer and other taxes required by reason of the payment of the Merger
      Consideration to a Person other than the registered holder of the Certificate
      surrendered or shall have established to the satisfaction of Parent that such
      tax either has been paid or is not applicable. Parent reserves the right in
      its
      sole discretion to pay Merger Consideration only to the Person whose name is
      on
      the Certificate(s) surrendered in exchange therefor and registered on the
      transfer records of the Company. Until surrendered as contemplated by this
      Section 2.8,
      each
      Certificate shall be deemed at any time after the Effective Time to represent
      only the right to receive upon such surrender the Merger Consideration as
      contemplated by this Section 2.8.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    (b) No
      Further Registration.
      The
      Merger Consideration paid upon the surrender of Shares in accordance with the
      terms hereof shall be deemed to have been paid in full satisfaction of all
      rights pertaining to such Shares. From and after the Effective Time, there
      shall
      be no further registration of transfers on the transfer books of the Surviving
      Entity of the Shares that were outstanding immediately prior to the Effective
      Time. 

     

    (c) Withholding
      Taxes.
      Parent
      shall be entitled to deduct and withhold from the Merger Consideration otherwise
      payable to a holder of Shares pursuant to the Merger such amounts as Parent
      is
      required to deduct and withhold with respect to the making of such payment
      under
      the Code or any provision of state, local or foreign tax law. To the extent
      amounts are so withheld by Parent, the withheld amounts shall be (i) timely
      paid
      to the appropriate Governmental Entity to whom such taxes are owed and (ii)
      treated for all purposes of this Agreement as having been paid to the holder
      of
      the Shares in respect of which the deduction and withholding was made.


     

    (d) Certificates.
      If any
      Certificate shall have been lost, stolen or destroyed, upon the making of an
      affidavit of that fact by the person claiming such Certificate to be lost,
      stolen or destroyed and, if required by Parent, the posting by such person
      of a
      bond in such reasonable amount as Parent may direct as indemnity against any
      claim that may be made against it with respect to such Certificate, Parent
      shall
      deliver in exchange for such lost, stolen or destroyed Certificate the
      applicable Merger Consideration with respect thereto.

     

    2.9 Additional
      Purchase Price.
      

     

    (a) (1)  If
      at any time prior to the one-year anniversary of the Closing, minimum aggregate
      gross revenues (calculated by the Company in accordance with GAAP) of $2,626,000
      (the “Revenue Target”) has been earned by the operations of the Business, then
      the Stockholder shall be paid $1,000,000 (the “Additional
      Purchase Price”)
      in
      accordance with Section 2.9(a)(ii) and 2.9(b) below.

     

     

     
      (ii) On
      each
      of the three, six, nine and twelve month anniversaries of the Closing (as
      defined below) (each, a “Calculation Date”), the Stockholder shall receive the
      same percentage of the Additional Purchase Price as the actual revenues achieved
      from the Business bears to the Revenue Target (less any portion of Additional
      Purchase Price previously paid to the Stockholder); provided, however, that
      to
      the extent that any portion of Additional Purchase Price shall have been paid
      and a portion of the Revenue Target upon which such payment was based shall
      subsequently be written-off as a bad debt in accordance with the requirements
      under GAAP the amount of such write-off shall be deducted from the calculation
      of the percentage of the Revenue Target achieved on the immediately ensuing
      Calculation Date.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    (b) The
      Stockholder shall have the full authority to conduct the Business, including
      the
      management of day-to-day affairs thereof, through the period during which any
      Additional Purchase Price may be payable, in a manner consistent with the
      conduct of the Business before the Closing; provided such Business is conducted
      in accordance with applicable Laws. Within 30 days after the end of any
      Calculation Date, the Chief Financial Officer of the Parent shall calculate
      and
      provide a written report to the Stockholder disclosing the actual results and
      the amount of gross revenue achieved, and pay any amount that is due and owing
      to the Stockholder hereunder no later than 60 days after the end of the date
      of
      such calculation. Unless written objection is received by the Parent within
      30
      days, the report of the Chief Financial Officer shall be final and binding
      on
      the parties, absent manifest error. All amounts and calculations required shall
      in each case be determined in accordance with GAAP. Notwithstanding the
      foregoing, the Chief Executive Officer or Chief Financial Officer of the Parent
      may accelerate the Additional Purchase Price payment to the extent that the
      Revenue Target has been achieved and sufficient cash has been collected by
      the
      Parent to pay the applicable portion of the Additional Purchase
      Price.

     

    (c) In
      the
      event that, at any time prior to the one-year anniversary of the Closing, the
      Stockholder is terminated without “Cause” as defined in the Employment Agreement
      (as defined below) or in the event that the Stockholder resigns for “Good
      Reason” as defined in the Employment Agreement, then any unpaid amount of
      Additional Purchase Price shall be deemed to be earned, regardless of any
      remaining Revenue Target or the passing of any Calculation Date, and any unpaid
      Additional Purchase Price may be payable, shall be paid by the Parent to the
      Stockholder within 60 days from the date of such termination or resignation,
      as
      the case may be.

     

    2.10 The
      Closing.
      Upon
      the terms and subject to the conditions of this Agreement, the transactions
      contemplated by this Agreement shall take place at a closing (the “Closing”)
      to be
      held on or before Friday, January 4, 2008, at the offices of Haynes and Boone,
      LLP, legal counsel to Parent and Buyer, located at 153 E. 53rd Street, Suite
      4900, New York, New York 10022, or at such other place or at such time as the
      Stockholder and Parent may mutually agree upon in writing. The parties
      acknowledge and agree that, as of the date hereof, all diligence to be conducted
      by the parties has been completed, all conditions to closing have been satisfied
      and closing deliveries required of the parties in this Article II have been
      delivered (the day on which the Closing takes place being the “Closing
      Date”).
      The
      Closing may, with the consent of all parties, take place by delivering an
      exchange of documents by facsimile transmission or electronic mail with
      originals to follow by overnight mail service courier. 

     

    2.11 Closing
      Deliveries by the Stockholders and the Company.
      At the
      Closing, against delivery of, among other things, the Merger Consideration,
      the
      Stockholder shall deliver or cause to be delivered to Parent:

     

    (a) the
      Certificate in accordance with Section
      2.8;

     

    (b) each
      in
      form and substance satisfactory to Parent in its reasonable discretion, all
      Approvals of all Governmental Entities and officials which are necessary for
      the
      consummation of the transactions contemplated by this Agreement and all third
      party consents and estoppel certificates identified on Schedule 3.5;

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    (c) an
      employment agreement with the Surviving Entity duly executed by Hagai Shechter
      in the form attached hereto as Exhibit
      B
      (the
“Employment
      Agreement”);

     

    (d) a
      non-foreign status certificate that would exempt the transactions contemplated
      by this Agreement from withholding pursuant to the provisions of Sections 897
      and 1445 of the Code and the Treasury Regulations promulgated
      thereunder;

     

    (e) All
      minute books, seals and other records of the Company;

     

    (f) certificates
      of the Secretary of State and the taxing authorities of the State of Florida,
      dated not more than five (5) days prior to the Closing Date, attesting to the
      incorporation and good standing of the Company as a corporation in its
      jurisdiction of incorporation, and to the payment of all state taxes due and
      owing thereby;

     

    (g) copies,
      certified by the Secretary of State of Florida, dated not more than five (5)
      days prior to the Closing Date, of the Articles of Incorporation of the Company,
      and all amendments thereto;

     

    (h) copies,
      certified the by Secretary or Assistant Secretary of the Company as of the
      Closing Date, of the bylaws of the Company, and all amendments
      thereto;

     

    (i) a
      release
      duly executed by the Stockholder in the form of Exhibit
      C
      attached
      hereto;

     

    (j) any
      Permits necessary to the operations of the Business amended to adequately
      reflect any change of control or other amendment necessary to reflect the
      Merger;

     

    (k) a
      lease
      in a form mutually agreeable to the parties hereto; 

     

    (l) written
      evidence of the termination or cancellation of all guaranties, reimbursements,
      “hold harmless,” indemnities and similar obligations and liabilities of the
      Company on behalf of any Person other than the Company, including without
      limitation those obligations listed on Schedule
      2.11(l);
      

     

    (m) resignations
      of each of the officers and directors of the Company other than Hagai Shechter;
      

     

    (n) written
      direction to the Company’s banks removing the officers of the Company as an
      authorized signatory on the Company’s bank accounts and appointing Bruce
      Kreindel as an authorized signatory; 

     

    (o) the
      Lock-Up Agreement in the form of Exhibit
      D
      duly
      executed by Hagai Shechter;

     

    (p) minimum
      net working capital in the Company’s primary bank account of $40,000.00 which is
      sufficient to cover any outstanding liabilities of the Company on the Closing
      Date; 

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    (q) the
      execution and delivery of invention assignment agreement in the form of Exhibit
      E duly executed by the individuals listed on Schedule 2.11(q); and

     

    (r) the
      release from the Broker (as defined below) in the form of Exhibit
      F
      annexed
      hereto; and

     

    (s) written
      evidence of the termination of the Company’s credit facility with SunTrust Bank
      and the filing of a related UCC termination statement. 

     

    2.12 Closing
      Deliveries by Parent and Buyer.
      At the
      Closing, against delivery of, among other things, the Certificates, Buyer and
      Parent shall deliver to the applicable Stockholder:

     

    (a) the
      Merger Consideration;

     

    (b) stock
      certificates evidencing the Stock Portion of Merger Consideration; 

     

    (c) the
      Employment Agreement duly executed by the Parent;

     

    (d) certificates
      of the Secretary of State and the taxing authorities of the State of Delaware
      dated not more than five (5) days prior to the Closing Date, attesting to the
      incorporation and good standing of Parent as a corporation in its jurisdiction
      of incorporation, and to the payment of all state taxes due and owing
      thereby;

     

    (e) a
      copy,
      certified as of the Closing Date by the Secretary or Assistant Secretary of
      Parent, of the bylaws of Parent and all amendments thereto and resolutions
      of
      the Board of Directors of Parent authorizing Parent’s execution, delivery and
      performance of this Agreement, the consummation of the transactions contemplated
      herein, and the taking of all such other corporate action as shall have been
      required as a condition to, or in connection with the consummation of the
      contemplated transactions; 

     

    (f) certificates
      of the Secretary of State and the taxing authorities of the State of Delaware
      dated not more than five (5) days prior to the Closing Date, attesting to the
      incorporation and good standing of Buyer as a corporation in its jurisdiction
      of
      incorporation, and to the payment of all state taxes due and owing
      thereby;

     

    (g) a
      copy,
      certified as of the Closing Date by the Secretary or Assistant Secretary of
      Buyer, of the resolutions of the Board of Directors of Buyer authorizing Buyer’s
      execution, delivery and performance of this Agreement, the consummation of
      the
      transactions contemplated herein, and the taking of all such other corporate
      action as shall have been required as a condition to, or in connection with
      the
      consummation of the contemplated transactions;

     

    (h) copies,
      certified by the Secretary of State of Delaware, dated not more than five (5)
      days prior to the Closing Date, of the Certificate of Incorporation of Buyer,
      and all amendments thereto;

     

    (i) copies,
      certified the by Secretary or Assistant Secretary of Buyer as of the Closing
      Date, of the bylaws of Buyer, and all amendments thereto; and

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    (j) the
      Certificate of Merger and Articles of Merger duly executed by Buyer.


     

    2.13 Upon
      Escrowed Funds; Escrow Agreement.
      At the
      closing, Parent shall wire $150,000 of the Cash Portion of Merger Consideration
      (the “Escrowed
      Funds”)
      to a
      mutually agreed escrow account to secure the Stockholder’s indemnification
      obligations hereunder. An escrow agreement, in the form attached hereto as
      Exhibit
      G,
      will
      govern all aspects of the Escrowed Funds, including the release thereof.
 

     

    2.14 Post
      Closing Adjustment.

     

    (a) Upon
      the
      later of (i) the expiration of the Lock-Up Agreement and (ii) the twelve month
      anniversary of the Closing Date (the “Adjustment
      Date”),
      in
      the event that the average closing price for the Parent’s common stock as quoted
      on the Principal Market for ten (10) consecutive trading days prior thereto
      shall be less than $2.50 per share, then within thirty (30) days after the
      Adjustment Date (the “Payment
      Date”)
      the
      Parent shall pay the Stockholder the Adjustment Amount (as defined below).
      As
      used herein, the “Adjustment
      Amount”
shall
      be an amount equal to the difference between (i) $2.5 million and (ii) the
      product of (A) 1,000,000 multiplied by (B) the average closing price
      for the Parent’s common stock as quoted on the Principal Market between the
      Adjustment Date and the ten (10) consecutive trading days prior
      thereto.

     

    (b) The
      Adjustment Amount shall be payable by the Parent to the Stockholder, at the
      option of the Parent, in cash, shares of the Parent’s common stock or a
      combination thereof. For the purpose of this Section 2.14(b), the fair
      market value of the Parent’s common stock on the Payment Date will be based upon
      the average closing price of the Parent’s common stock on the Principal Market
      during the 10 trading days immediately preceding the Adjustment
      Date.

     

    ARTICLE
      III

    REPRESENTATIONS
      AND WARRANTIES OF STOCKHOLDERS

     

    The
      Stockholder, represents and warrants to Parent and agrees as follows:


     

    3.1 Organization
      and Qualification of the Company.

     

    (a) The
      Company is a corporation duly organized, validly existing and in good standing
      under the laws of the State of Florida. The Company has all necessary corporate
      power and authority to own, operate or lease the properties and assets now
      owned, operated or leased by it and to carry on the Business as it has been
      and
      is currently conducting. The Company is duly licensed or qualified to do
      business and is in good standing in each jurisdiction in which the properties
      owned or leased by it or the operation of its business makes such licensing
      or
      qualification necessary. Schedule
      3.1
      correctly lists with respect to the Company its jurisdiction of incorporation,
      each jurisdiction in which it is qualified to do business as a foreign
      corporation, and its directors and executive officers. The Stockholder has
      delivered to Parent complete and correct copies of the charter and bylaws of
      the
      Company as now in effect as of the Closing Date.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    (b) The
      Company owns all assets and rights necessary to conduct the Business of the
      Company as presently conducted. 

     

    3.2 Capitalization. 

     

    (a) The
      authorized capital stock of the Company consists of 15,000,000 shares of Common
      Stock. As of the date hereof, 1,000 shares of Common Stock are issued and
      outstanding and each record owner of Shares and the number of Shares held by
      each record owner is set forth on Schedule 3.2.
      Except
      as set forth on Schedule
      3.2,
      there
      are no shares of capital stock of the Company issued and outstanding. All of
      the
      Shares have been duly authorized and validly issued and are fully paid and
      non-assessable. None of the Shares was issued in violation of any preemptive
      rights or is subject to any preemptive rights of any Person. All of the Shares
      have been issued and granted in all material respects in compliance with
      applicable securities Laws and other requirements of Law. No legend or other
      reference to any Encumbrance appears upon any certificate representing the
      Shares, except for customary legends with respect to transfer restrictions
      for
      restricted securities under federal and Delaware securities Law.

     

    (b) There
      are
      no outstanding options, warrants, agreements, conversion rights, preemptive
      rights or other rights to subscribe for or purchase from any of the Stockholder,
      the Company, or any plans, contracts or commitments providing for the issuance
      of, or the granting of rights to acquire, (i) any capital stock or other
      ownership interests of the Company, including, but not limited to the Shares;
      or
      (ii) any securities convertible into or exchangeable for any such capital
      stock or other ownership interests. There are no outstanding contractual
      obligations or plans of the Stockholder and/or, the Company to transfer, issue,
      repurchase, redeem or otherwise acquire any outstanding shares of capital stock
      or other ownership interests of the Company, including, but not limited to
      the
      Shares. The
      Company neither owns nor has any contract, agreement or understanding to
      acquire, any equity securities or other securities of any Person or any direct
      or indirect equity or ownership interest in any other business. 

     

    3.3 Stock
      Ownership by Stockholders.
      The
      Stockholder has good and marketable title to, and sole record and beneficial
      ownership of, the Shares as listed on Schedule
      3.2
      and the
      Shares are free and clear of any and all covenants, conditions, marital property
      rights or other Encumbrances. Upon consummation of the transactions contemplated
      by this Agreement, Parent will own all the issued and outstanding capital stock
      of the Surviving Entity free and clear of all Encumbrances, and such capital
      stock will be fully paid and non-assessable. There are no voting trusts,
      stockholder agreements, proxies or other agreements or understandings in effect
      with respect to the voting or transfer of any of the Shares.

     

    3.4 Authorization;
      Enforceability.
      The
      execution, delivery and performance of this Agreement by the Stockholder and
      the
      Company and
      the
      consummation by the Stockholder and the Company of the transactions contemplated
      hereby have been duly authorized by all requisite action on the part of the
      Stockholder and the Company. This Agreement has been duly executed and delivered
      by the Stockholder and the Company, and assuming due authorization, execution
      and delivery by Buyer and Parent, this Agreement constitutes a valid and binding
      obligation of the Stockholder and the Company enforceable against each of the
      Stockholders and the Company in accordance with its terms, except to the extent
      that the enforceability may be limited by bankruptcy, insolvency,
      reorganization, moratorium or similar Laws, or by equitable principles relating
      to the rights of creditors generally.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    3.5 No
      Conflict; Consents. 

     

    (a) The
      execution, delivery and performance of this Agreement by the Stockholder and
      the
      Company do not and will not (i) violate, conflict with or result in the breach
      of any provision of the charter or by-laws of the Company, (ii) except as set
      forth in Schedule
      3.5,
      conflict with or violate in any material respect any Law or Order applicable
      to
      the Stockholder or the Company, or (iii) except as set forth in Schedule
      3.5,
      conflict with, result in any breach of, constitute a default (or event which
      with the giving of notice or lapse of time, or both, would become a default)
      under, require any consent under, or give to others any rights of termination,
      amendment, acceleration, suspension, revocation or cancellation of, or result
      in
      the creation of any Encumbrance on any of the Shares or on any of the assets
      or
      properties of the Stockholder or the Company pursuant to, any note, bond,
      mortgage, indenture, license, permit, lease, sublease or other Contract to
      which
      the Stockholder or the Company is a party or by which any of the Stock or any
      of
      such assets or properties is bound or affected.

     

    (b) The
      execution, delivery and performance of this Agreement by the Stockholder and
      the
      Company do not and will not require any Approval or Order of any Governmental
      Entity.

     

    3.6 Financial
      Statements and Undisclosed Liabilities.

     

    (a) The
      Stockholder has delivered to Parent true, correct and complete copies of the
      Company Financial Statements. To the Knowledge of the Stockholder, any
      adjustment to the Company Financial Statements to conform with GAAP applied
      on a
      consistent basis would not result in a Material Adverse Effect on either the
      balance sheet or the cumulative profits and losses of the Company. Such
      statements of operations and cash flow present fairly in all material respects
      the results of operations and cash flows of the Company for the respective
      periods covered, and the balance sheets present fairly in all material respects
      the financial condition of the Company as of their respective dates. Except
      as
      disclosed on Schedule
      3.6,
      since
      January 1, 2007, there has been no change in any of the significant accounting
      policies, practices or procedures of the Company.

     

    (b) The
      Company has no liabilities or obligations of any nature (whether known or
      unknown and whether absolute, accrued, contingent, or otherwise), except for
      liabilities or obligations reflected or reserved against the December 31, 2006
      balance sheet of the Company (the “December
      31, 2006 Company Balance Sheet”),
      current liabilities incurred in the ordinary course of business and consistent
      with past practice since December 31, 2006 and liabilities that would not be
      reasonably expected to result in a Material Adverse Effect on the
      Company.

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    3.7 Labor
      Matters.
      The
      Company has not entered into any collective bargaining agreements. With respect
      to the Company’s employees, there are no presently pending, or to the Knowledge
      of the Stockholder, threatened (x) arbitration proceedings, labor strikes,
      slowdowns or stoppages, grievances or other labor disputes; (y) Actions related
      to an alleged material violation pertaining to labor relations or employment
      matters, including but not limited to claims for unpaid wages or penalties,
      discrimination, harassment, or retaliation, or wrongful discharge in violation
      of public policy; or (z) any scheduled vote or application for certification
      of
      a collective bargaining agent or, to the Knowledge of the Stockholder, any
      organizing campaign. The Company is not delinquent in any material respect
      in
      payments to any of its employees for any wages, salaries, commissions, bonuses
      or other direct compensation for any services performed for it or amounts
      required to be reimbursed to such employees. There are no pending claims against
      the Company under any workers’ compensation plan or policy or for long term
      disability. To the Knowledge of the Stockholder, no employee of the Company
      is
      in any material respect in violation of any term of any employment contract,
      non-disclosure agreement, non-competition agreement, or any restrictive covenant
      to a former employee relating to the right of any such employee to be employed
      by the Company because of the nature of the business conducted by it or to
      the
      use of trade secrets or proprietary information of others.

    


    3.8 Absence
      of Certain Changes or Events. Since
      January 1, 2007, except as specifically contemplated by this Agreement and
      set
      forth in Schedule
      3.8,
      the
      Company has conducted its businesses only in the ordinary course and in a manner
      consistent with past practice, and since such date there has not been any state
      of facts, change, development, event, effect, condition or occurrence that,
      individually or in the aggregate, could reasonably be expected to result in
      a
      Material Adverse Effect. 

     

    3.9 Taxes. Except
      as
      set forth in Schedule
      3.9
      (with
      subsection references corresponding to those set forth below):

     

    (a) All
      Tax
      Returns required to be filed by or with respect to the Company have been timely
      filed, and all such Tax Returns are complete and correct in all material
      respects. The Company has paid (or there has been paid on its behalf) all Taxes,
      whether shown on any Tax Returns, that are due from or with respect to it for
      the periods covered by such Tax Returns (whether or not disputed and whether
      or
      not due) and also with respect to all taxable periods or portions thereof ending
      on or before the Closing Date, and has made all required estimated payments
      of
      Tax sufficient to avoid any penalties for underpayment. The Company has not
      incurred any liability for Taxes subsequent to the date of the Company Interim
      Balance Sheet other than in the ordinary course of the Company’s business or in
      connection with transactions contemplated by this Agreement;

     

    (b) To
      the
      Knowledge of the Stockholder, no claim has ever been made by an authority in
      a
      jurisdiction where the Company does not file a Tax Return that the Company
      may
      be subject to taxation in that jurisdiction and no basis exists for any such
      claim. There is no proposed assessment and no audit, examination, suit,
      investigation or similar proceeding pending or to the Knowledge of the
      Stockholder, proposed or threatened with respect to Taxes of the Company and,
      to
      the Knowledge of the Stockholder, no basis exists therefor;

     

    (c) There
      are
      no outstanding waivers extending the statutory period of limitation relating
      to
      the payment of Taxes due from the Company which are expected to be outstanding
      as of the Closing Date;

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    (d) The
      Company is not, and has never been, a party to any Tax Sharing Arrangement,
      Tax
      Indemnity Agreement or similar agreement and the Company will have no liability
      thereunder on or after the Closing Date;

     

    (e) There
      are
      no Encumbrances for Taxes upon the assets of the Company except Encumbrances
      relating to current Taxes not yet due and payable;

     

    (f) No
      power
      of attorney granted by or with respect to the Company relating to Taxes is
      currently in force;

     

    (g) To
      the
      Knowledge of the Stockholder, no closing agreement pursuant to Section 7121
      of
      the Code or any similar provision of any state, local or foreign law has been
      entered into by or with respect to the Company which could reasonably be
      expected to have an effect on the Company’s liability for or reporting of Taxes
      in any period ending after the Closing Date;

     

    (h) All
      Taxes
      which the Company is required by Law to withhold or to collect for payment
      have
      been duly withheld and collected, and have been paid or accrued, reserved
      against and added on the books of the Company. The Company has complied with
      all
      information reporting and backup withholding requirements, including maintenance
      of required records with respect thereto, in connection with amounts owing
      to
      any employee, independent contractor, creditor, stockholder or other third
      party; 

     

    (i) The
      Company has not been a member of any Company Group and the Company has not
      had
      any direct or indirect ownership in any limited liability company, partnership,
      joint venture or other “pass-through” entity for Tax purposes;

     

    (j) Since
      January 1, 2007, the Company has not prepared or filed any Tax Return
      inconsistent with past practice or, on any such Tax Return, taken any position,
      made any election, or adopted any method that is inconsistent with positions
      taken, elections made or methods used in preparing or filing similar Tax Returns
      in prior periods (including, without limitation, positions, elections or methods
      which would have the effect of deferring income to periods after the Closing
      Date or accelerating deductions to periods on or prior to the Closing
      Date);

     

    (k) INTENTIONALLY
      OMITTED. 

     

    (l) There
      is
      no contract or arrangement, plan or agreement by or with Company covering any
      Person as to which payment or vesting thereunder (including any payment or
      vesting as a result of the transactions contemplated by this Agreement), could
      give rise to the payment of any amount that would not be deductible by the
      Company by reason of Sections 280G or 162(m) of the Code or an excise tax to
      the
      beneficiary of such payment or vesting pursuant to Section 4999 of the
      Code;

     

    (m) INTENTIONALLY
      OMITTED.

     

    (n) No
      Tax
      rulings have been requested by the Company; or

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    (o) The
      Company has never (i) entered into any installment sale transactions, (ii)
      changed its accounting method, or (iii) been party to a “listed transaction” as
      defined in Treasury Regulation 1.6011-4(b)(2). The Stockholder has delivered
      to
      Parent (i) a schedule of the filing dates of all Tax Returns required to be
      filed by the Company, and (ii) a list of the countries, states, territories
      and
      jurisdictions (whether foreign or domestic) to which any Tax is properly payable
      by the Company. The Company has retained all supporting and backup papers,
      receipts, spreadsheets and other information necessary for (i) the preparation
      of all Tax Returns that have not yet been filed, and (ii) the defense of all
      Tax
      audits involving taxable periods either ending on or during the six (6) years
      prior to the Closing Date or from which there are unutilized net operating
      losses, capital losses or investment tax credit carryovers. The Company has
      disclosed on its U.S. federal income Tax Returns all positions taken therein
      that could give rise to a substantial understatement of federal income Tax
      within the meaning of IRC Section 6662. 

     

    (p) The
      Company has not been a party to any distribution occurring during the last
      two
      years in which the parties to such distribution treated the distribution as
      one
      to which Section 355 of the Code is applicable.

     

    3.10 Material
      Contracts.
      The
      following shall be deemed to be Material Contracts and identified on
Schedule
      3.10,
      and each
      such Contract was entered into in the ordinary course of business by the
      Company: 

     

    (a) any
      Contract for the furnishing of services to or by the Company or otherwise
      related to the Business under the terms of which the Company: (A) is likely
      to pay or otherwise give consideration of more than $50,000 in the aggregate
      during the calendar year ended December 31, 2006, (B) is likely to pay or
      otherwise give consideration of more than $50,000 in the aggregate over the
      remaining term of such Contract or (C) cannot be canceled by the Company
      without penalty or further payment and without more than thirty (30) days’
notice;

     

    (b) any
      Contract that represents a contract upon which the Business is substantially
      dependent or which is otherwise material to the Business;

     

    (c) any
      Contract that limits or restricts the ability of Company to compete or otherwise
      to conduct its Business in any manner or place;

     

    (d) any
      Contract for the employment, severance or retention of any director, officer,
      employee, agent, Stockholder, consultant or advisor or any other Contract with
      any director, officer, employee, agent, Stockholder, consultant or advisor
      that
      does not provide for termination at will by the Company without further cost
      or
      liability to the Company as of or at any time after the date of this
      Agreement;

     

    (e) any
      Contract in the nature of a profit sharing, bonus, stock option, stock purchase,
      pension, deferred compensation or retirement, severance, hospitalization,
      insurance or other plan or contract providing benefits to any Person or former
      director, officer, employee, agent, Stockholder, consultant or advisor or such
      Persons’ dependents, beneficiaries or heirs;

     

    (f) any
      Contract in an amount exceeding $50,000 or with a value exceeding $50,000 in
      the
      nature of an indenture, mortgage, promissory note, loan or credit agreement
      or
      other Contract relating to the borrowing of money or a line of credit by or
      from
      the Company or to the direct or indirect guaranty or assumption by the Company
      of obligations of others;

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    (g) any
      Contract for capital expenditures in an amount exceeding $50,000 in any
      individual case or in the aggregate;

     

    (h) any
      Contract that is a joint venture, partnership, or other agreement (however
      named) involving a sharing of profits, losses, costs, or liabilities involving
      an amount exceeding $50,000 individually or in the aggregate;

     

    (i) any
      Contracts that are leases, rental or occupancy agreements, licenses,
      installments and conditional sale agreements, and other agreements affecting
      the
      ownership of, leasing of, title to, use of, or any leasehold or other interest
      in, any real or personal property (except personal property leases and
      installment and conditional sales agreements having a value per item or
      aggregate payments of less than $50,000 and with terms of less than one (1)
      year);

     

    (j) any
      Contracts that are licensing agreements or other agreements with respect to
      patents, trademarks, copyrights, or other Intellectual Property, including
      agreements with current or former employees, consultants, or contractors
      regarding the appropriation or the non-disclosure of any of the Intellectual
      Property; 

     

    (k) any
      Contracts in an amount exceeding or with a value exceeding $50,000 to which
      the
      Company is a party with any Governmental Entity;

     

    (l) any
      Contracts between or among the Company and the Stockholder or any Affiliate
      of
      the Stockholder; and

     

    (m) any
      Contract that was not made in the ordinary course of business, including
      agreements with:

     

    (i) consequential
      or liquidated damages or other indemnity provisions that are not based upon
      the
      Company’s negligence in the performance of its services;

    


    (ii) fitness
      for purpose warranties or process, efficacy or similar guarantees; 

    


    (iii) lump
      sum
      turn key, or similar contract risks or arrangements; or

    


    (iv) provisions
      relating to the testing, discovery, removal, remediation or disposal of any
      Hazardous Substance.

    


    True
      and
      complete copies of the Contracts appearing on Schedule 3.10,
      including all amendments and supplements, have been delivered to Parent. Each
      Material Contract is valid and legally binding and the Company has duly
      performed all its obligations thereunder to the extent that such obligations
      to
      perform have accrued. No breach or default, alleged breach or default, or event
      which would (with the passage of time, notice or both) constitute a breach
      or
      default thereunder by the Company or, to the Knowledge of the Stockholder,
      any
      other party or obligor with respect thereto, has occurred or as a result of
      this
      Agreement or performance thereof will occur. Consummation of the transactions
      contemplated by this Agreement will not (and will not give any person a right
      to) terminate or modify any rights of, or accelerate or augment any obligation
      of, the Company under any of those agreements to the extent such termination,
      modification, acceleration or augmentation could be reasonably expected to
      have
      a Material Adverse Effect on the Company.

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    3.11 Real
      and Personal Property; Title to Property; Leases. 

     

    (a) Schedule
      3.11
      accurately identifies by street address, or other identifying information,
      all
      real property leased by the Company (the “Real Property”). The Company does not
      currently own any real property. The Company does not currently occupy the
      Real
      Property pursuant to any Contract, deed or other instrument; however, at
      Closing, the Company will deliver and the parties will enter into a Lease for
      the Real Property. The Real Property is in good condition, except for ordinary
      wear and tear. 

    


    (b) The
      Company owns, leases or has the legal right to use all the properties and
      assets, including, without limitation, the Intellectual Property and the Real
      Property, used or intended to be used in the conduct of the Business or
      otherwise owned, leased or used by the Company (all such properties and assets
      being the “Assets”). 

    


    (c) The
      Assets constitute all of the properties, assets and rights forming a part of,
      used, held or intended to be used in, and all such properties, assets and rights
      as are necessary in the conduct of, Company’s business as it is currently
      conducted as of the date hereof. 

    


    (d) Immediately
      following the consummation of the transactions contemplated by this Agreement,
      the Company will continue to own, or lease, under valid and subsisting
      Contracts, or otherwise retain its respective interest in the Assets without
      incurring any penalty or other adverse consequence, including, without
      limitation, any increase in rentals (except as contemplated by the Lease),
      royalties, or licenses or other fees imposed as a result of, or arising from,
      the consummation of the transactions contemplated by this Agreement, except
      for
      Permitted Encumbrances. Immediately following the Closing, the Parent shall
      own
      and possess all documents, books, records, agreements and financial data of
      any
      sort used by the Company in the conduct of its business. 

    


    3.12 Condition
      and Sufficiency of Tangible Assets.
      To the
      Knowledge of the Stockholder, the buildings, plants, structures, and equipment
      of the Company are structurally sound, are in good operating condition and
      repair, except for ordinary wear and tear, and are adequate for the uses to
      which they are being put, and none of such buildings, plants, structures, or
      equipment is in need of maintenance or repairs except for ordinary, routine
      maintenance and repairs that are not material in nature or cost. To the
      Knowledge of the Stockholder, the building, plants, structures, and equipment
      of
      the Company are sufficient for the continued conduct of the Business after
      the
      Closing in substantially the same manner as conducted prior to the
      Closing.

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    3.13 Licenses,
      Permits and Authorizations.
      The
      Company holds all licenses, permits, franchises and other authorizations
      required by any Governmental Entity that are necessary for the Business as
      presently conducted or, in the case of such Employees, to carry out their duties
      on behalf of the Company. Such licenses, permits, franchises and other
      authorizations of the Company are valid and in full force and effect and will
      remain so upon consummation of the transactions contemplated by this Agreement.
      The Stockholder does not know of any threatened suspension, cancellation or
      invalidation of, or challenge to, any such license, permit, franchise or other
      authorization.

     

    3.14 Intellectual
      Property. 

     

    (a) To
      the
      Knowledge of the Stockholder, the Company owns, or is licensed or otherwise
      possesses legally enforceable rights to use, all patents, trademarks, trade
      names, service marks, domain names, copyrights, and any applications therefor,
      trade secrets, and computer software programs or applications (collectively,
      the
“Intellectual
      Property”)
      that
      are used in the Business as currently conducted. Schedule
      3.14
      sets
      forth each item of Intellectual Property and lists the owners of all right,
      title and interest in and to any item of Intellectual Property not solely owned
      by the Company. All requisite renewals and affidavits of use have been filed
      with respect to each of the registrations set forth in Schedule
      3.14,
      and
      each is presently in full force and effect and each of the trade names and
      trademarks is valid, and is in good standing and active use and none has been
      abandoned.

     

    (b) To
      the
      Knowledge of the Stockholder, there is no unauthorized use, disclosure,
      infringement or misappropriation of any Intellectual Property rights of the
      Company, or any third party patents, trademarks or copyrights, including
      software (collectively, the “Third
      Party Intellectual Property Rights”)
      to the
      extent licensed by or through the Company, by any third party.

     

    (c) To
      the
      Knowledge of the Stockholder, the Company is not in breach of any license or
      other agreement relating to the Intellectual Property of the Company or any
      Third Party Intellectual Property Rights.

     

    (d) Within
      the last three (3) years, the Company (i) has not been a party to, or to
      the Knowledge of the Stockholder, been notified or advised of, any suit, action
      or proceeding that involves a claim of infringement of any patents, trademarks,
      service marks, copyrights or violation of any trade secret or other proprietary
      right of any third party; or (ii) has not brought any action, suit or
      proceeding for infringement of Intellectual Property or breach of any license
      agreement involving Intellectual Property against any third party. To the
      Knowledge of the Stockholder, the design, development, distribution, marketing,
      licensing or sale of products or services of the Company does not infringe
      on
      any patent, trademark, service mark or copyright of any third
      party.

     

    (e) To
      the
      Knowledge of the Stockholder, the Company has secured valid written assignments
      or work for hire agreements from all consultants and employees who contributed
      to the creation and development of Intellectual Property of the rights to such
      contributions that the Company does not already own by operation of
      law.

     

    (f) To
      the
      Knowledge of the Stockholder, the Company has taken reasonable steps to protect
      their respective rights in its confidential information and trade secrets that
      reasonably require protection. 

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    3.15 Litigation;
      Compliance with Laws. 

     

    (a) Except
      as
      set forth on Schedule
      3.15,
      there
      is no Action pending or, to the Knowledge of the Stockholder, threatened against
      or affecting the Stockholder, the Company, or any of their respective
      Assets.

     

    (b) Except
      as
      disclosed on Schedule
      3.15,
      neither
      the Stockholders nor the Company is (i) to the Knowledge of the
      Stockholder, in violation of any applicable Law or (ii) subject to or in
      default with respect to any Order to which any of them, or any of their
      respective properties or assets (owned or used), is subject. To the Knowledge
      of
      the Stockholder, at all times since February 22, 2000, the Company has been
      in
      full compliance with each Law that is or was applicable to it or to the conduct
      or operation of the Business or the ownership or use of any of its
      Assets.

     

    (c) To
      the
      Knowledge of the Stockholder, no event has occurred or circumstance exists
      that
      (with or without notice or lapse of time) may constitute or result in a
      violation by the Company of, or a failure on its part, to comply with, any
      Law.

     

    (d) Except
      as
      provided in Schedule
      3.15,
      neither
      the Stockholder nor the Company has received, at any time since February 22,
      2000, any notice or other communication (whether oral or written) from any
      Governmental Entity or any other Person regarding (i) any actual, alleged,
      possible, or potential violation of, or failure to comply with, any Law or
      (ii) any actual, alleged, possible, or potential obligation on the part of
      the Company to undertake, or to bear all or any portion of the cost of, any
      remedial action of any nature.

     

    3.16 Insurance. 

     

    (a) Schedule
      3.16
      sets
      forth the following information with respect to each insurance policy under
      which the Company has been an insured, a named insured or otherwise the
      principal beneficiary of coverage at any time within the past year:

     

    (i) the
      name,
      address and telephone number of the agent or broker;

     

    (ii) the
      name
      of the insurer and the names of the principal insured and each named insured;
      and

     

    (iii) the
      policy number, general description of coverage and the period of
      coverage.

     

    The
      Company has delivered to Parent copies of all such insurance
      policies.

     

    (b) Except
      as
      set forth in Schedule
      3.16,
      there
      is no actual, pending, or, to the Knowledge of the Stockholder, threatened
      claims against Company that would come within the scope of such coverage listed
      on Schedule
      3.16,
      nor has
      any current carrier provided notice to Company that it intends to terminate
      any
      policy or to deny coverage with respect to any claim. There are no actual,
      pending or, to the Knowledge of the Stockholder, threatened claims against
      the
      Company that would not come within the scope of the insurance coverage of the
      Company listed in Schedule
      3.16.

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    (c) The
      Company has maintained during the past three (3) years and currently maintains
      (i) insurance on all of the Assets used in connection with the Business of
      a type that the Stockholder reasonably believes is adequate to cover property
      damage and loss of income by fire or other casualty, and (ii) adequate
      insurance protection (subject to the deductible amounts and dollar limits of
      coverage set forth in Schedule
      3.16)
      against
      all errors and omissions and other liabilities, claims, and risks, which it
      is
      customary and reasonable to insure with respect to the Business. The Company
      has, within the past three (3) years, not allowed any insurance policy to lapse
      for failure to renew or for any other reason. The Company has not failed to
      give
      any notice or present any claim under any insurance policy in due and timely
      fashion under the applicable insurance policy.

     

    (d) The
      Stockholder has no Knowledge of (i) any proposed material increases in the
      premiums for insurance or for contributions for worker’s compensation or
      unemployment insurance applicable to the Company, (ii) any conditions or
      circumstances applicable to the Business as currently conducted that could
      reasonably be expected to result in such increase, or (iii) any material
      decrease in coverage or other policy benefits. Further, the Stockholder has
      no
      Knowledge that any existing insurer of the Company has denied the Company
      coverage on any claim or refused to approve any proposed settlement.


     

    3.17 Employee
      Benefit Plans.

     

    (a) Schedule
      3.17
      sets
      forth with respect to all employees of the Company the terms of any compensation
      arrangement, oral or written, with any employee including, without limitation,
      pursuant to any employment agreement. True and complete copies of any employment
      agreement, including all amendments and supplements, have been delivered to
      Parent. Schedule
      3.17
      sets
      forth a true and complete list of all employee benefit plans. The Company has
      no
      "employee benefit plans" as defined by Section 3(3) of ERISA ("Benefit
      Plans").
      All
      employees of the Company and outside consultants are terminable at
      will.

     

    (b) The
      Company does not maintain and is not obligated to provide benefits under any
      life, medical, or health plan (other than as an incidental benefit under any
      Benefit Plan intended to be “qualified” within the meaning of Section 401(a) of
      the Code (“Qualified
      Plan”))
      which
      provides benefits to retirees or other terminated employees other than benefit
      continuation rights under the Consolidated Omnibus Budget Reconciliation Act
      of
      1985, as amended. No Benefit Plan is a “multiple employer welfare arrangement”
within the meaning of Section 3(40) of ERISA. 

     

    (c) No
      Benefit Plan is a “multiemployer plan,” as that term is defined in Section 4001
      of ERISA or an “employee benefit plan” (as defined in Section 3(3) of ERISA)
      that is subject to Title IV of ERISA or Section 412 of the Code.

     

    (d) The
      Company has performed all of its obligations under all Benefit Plans, and all
      contributions and other payments required to be made by the Company to any
      Benefit Plan have been made or reserves adequate for such contributions or
      other
      payments have been set aside therefore and have been reflected in the Company
      Financial Statements.

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    (e) Each
      Benefit Plan can be terminated without payment of any additional contribution
      or
      amount and, except for any vesting of benefits of a Qualified Plan, without
      the
      vesting or acceleration of any benefits promised by such Benefit
      Plan.

     

    (f) To
      the
      Knowledge of the Stockholder, the Company has the right to modify and terminate
      benefits as to retirees (other than pensions) with respect to both retired
      and
      active employees.

     

    (g) To
      the
      Knowledge of the Stockholder, the Company has not filed or been required to
      file
      any notices, forms or reports with the IRS, the Pension Benefit Guaranty
      Corporation (the “PBGC”)
      or
the
      Department of Labor (“DOL”),
      pursuant to statute, other than annual reports, within the four (4) years
      preceding the date hereof.

     

    (h) The
      Company has not received any notice from the IRS, the PBGC, or the DOL relating
      to any Benefit Plan regarding an audit of any Benefit Plan or the assessment
      of
      a material penalty.

     

    (i) To
      the
      Knowledge of the Stockholder, neither the execution of this Agreement nor the
      consummation of the transactions contemplated herein will result in the payment,
      vesting, or acceleration of any benefit under any Benefit Plan, assuming that
      no
      employee incurs a termination of employment or reduction in hours in connection
      with the transactions contemplated herein. 

     

    3.18 Transactions
      with Affiliates.
      To the
      Knowledge of the Stockholder, except (i) for employment and benefit
      arrangements, (ii) arrangements on arm’s length terms in the ordinary
      course of business and (iii) agreements set forth on Schedule
      3.18,
      no
      director, officer or Affiliate of the Company or, to the Knowledge of the
      Stockholder, any Person with whom any such director, officer or Affiliate has
      any direct or indirect relation by blood, marriage or adoption, or any entity
      in
      which any such director, officer or Affiliate owns any beneficial interest
      (other than a publicly held corporation whose stock is traded on a national
      securities exchange or in the over-the-counter market and less than one percent
      (1%) of the stock of which is beneficially owned by all such Persons), has
      any
      interest in (a) any Contract with the Company or relating to the Business,
      including any Contract for or relating to indebtedness of the Company; or
      (b) any property, including Intellectual Property and Real Property, used
      or currently intended to be used in, the Business.

     

    3.19 No
      Brokers or Finders.
      Except
      for Hakan Koyuncu (the “Broker”) no agent, broker, finder, or investment or
      commercial banker, or other Person or firm engaged by or acting on behalf of
      the
      Stockholder, the Company, or any of their respective Affiliates, in connection
      with the negotiation, execution or performance of this Agreement or the
      transactions contemplated by this Agreement, is or will be entitled to any
      brokerage or finder’s or similar fee or other commission as a result of this
      Agreement or such transactions.

     

    3.20 Accuracy
      of Information.
      To the
      Knowledge of the Stockholder, none of the information supplied in writing by
      or
      on behalf the Stockholder or the Company, to Parent or its Affiliates, agents
      or
      representatives in connection with the transactions contemplated in this
      Agreement, this Agreement or the negotiations leading up to this Agreement
      contain, or at the respective times such information was delivered, contained
      any untrue statement of a material fact, or omit or omitted to state any
      material fact required to be stated therein or necessary in order to make the
      statements therein not misleading.

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

    3.21 Receivables.
      All
      receivables of the Company, whether reflected on the Company Interim Balance
      Sheet or otherwise and including “work in process” inventory and accrued and
      unbilled revenues, represent actual revenues invoiced or expected to be invoiced
      in the ordinary course of business, and are, or when invoiced, will be, to
      the
      Knowledge of the Stockholder, fully collectible net of any reserves shown on
      the
      Company Interim Balance Sheet. The Stockholder has delivered to Parent a
      complete and accurate aging list of all receivables of the Company.


     

    3.22 Environmental. 

     

    (a) Except
      as
      set forth in Schedule
      3.22,
      to the
      Stockholder’s Knowledge, the Assets and the Company are free of any
      Environmental Defects, except as would not reasonably be expected to have a
      Material Adverse Effect on the Company or the Assets. 

     

    (b) With
      respect to the Assets, except as set forth in Schedule
      3.22,
      the
      Company has not entered into, and is not subject to, any agreements, consents,
      orders, decrees, judgments or other directives of Governmental Entities in
      existence at this time based on any Environmental Laws.

     

    (c) Except
      as
      set forth in Schedule
      3.22,
      to the
      Stockholder’s Knowledge, the Company has not received written notice from any
      Person of, and no investigation or written claim is pending regarding, any
      Release, disposal, event, condition, circumstance, activity, practice or
      incident concerning the Company, the Assets, the Company’s current or prior
      operations or any land, facility, asset or property currently or formerly owned
      or leased by any of the Company and alleging either (i) a violation of
      Environmental Law, including common law, or (ii) obligations, including
      remediation or other liabilities under Environmental Law, except, in the case
      of
      either clause (i) or (ii) hereof, as would not reasonably be expected to have
      a
      Material Adverse Effect on the Company or the Assets.

     

    (d) Except
      as
      set forth in Schedule
      3.22,
      to the
      Stockholder’s Knowledge, there has been no Release on or from the Assets or on
      or from any property currently or formerly owner, or operated by the Company
      of
      any Hazardous Materials in any substantial amount or concentration that is
      reasonably likely to have a Material Adverse Effect on the Company or the
      Assets. 

     

    (e) Except
      as
      set forth in Schedule
      3.22,
      the
      Company or, to the Stockholder’s Knowledge, any operator of the Assets, holds
      those licenses, permits, or other authorizations necessary under Environmental
      Laws to carry on operations connected with the Assets to the extent of and
      as
      currently conducted, except where the failure to obtain such licenses, permits,
      or other authorizations could not reasonably be expect to have a Material
      Adverse Effect on any of the Company or the Assets. 

     

    3.23 Restrictions
      on Business Activities.
      To the
      Knowledge of the Stockholder, there is no agreement, judgment, injunction,
      order
      or decree binding upon Company that has, or could reasonably be expected to
      have, the effect of prohibiting or materially impairing the conduct of the
      Business as presently conducted.

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

    3.24 INTENTIONALLY
      OMITTED.

     

    3.25 Absence
      of Certain Payments. Neither
      the Stockholder, the Company, nor, to the Knowledge of the Stockholder, any
      director, officer, agent, employee or Affiliate of any of them, has used any
      corporate funds for unlawful contributions, gifts, entertainment or other
      unlawful expenses relating to political activity, or made any direct or indirect
      unlawful payments to government officials or employees from corporate funds,
      or
      established or maintained any unlawful or unrecorded funds.

     

    3.26 Bank
      Accounts. Schedule 3.26
      sets
      forth an accurate list of each bank, trust company, savings institution or
      other
      financial institution with which the Company has an account or safe deposit
      box
      and the names and identification of all Persons authorized to draw thereon
      or to
      have access thereto, and sets forth the names of each Person holding powers
      of
      attorney or agency authority from the Company and a summary of the terms
      thereof.

     

    3.27 Change
      of Control
      Payment. Schedule 3.27
      sets
      forth the amount of any compensation or remuneration which is or may become
      payable to any Company Employee by the Company pursuant to any agreement or
      plan
      by reason, in whole or in part, of the execution and delivery of this Agreement
      or the consummation of the Merger and the other transactions contemplated by
      this Agreement. 

     

    3.28 Disclosure.
      Except
      as specifically noted above, the representations made by the Stockholder in
      this
      Agreement and the schedules furnished contemporaneously herewith (taken as
      a
      whole) do not contain any untrue statement of a material fact or omit to state
      a
      material fact necessary to make such representations, in light of the
      circumstances in which they were made, not misleading. 

     

    ARTICLE
      IV

    REPRESENTATIONS
      AND WARRANTIES OF PARENT

     

    Parent
      represents and warrants to the Stockholder and agrees as follows:

     

    4.1 Organization
      and Authority of Parent and Buyer. 

     

    (a) Parent
      is
      a corporation duly organized, validly existing and in good standing under the
      laws of the State of Delaware and the execution, delivery and performance of
      this Agreement by the Parent and the consummation by Parent of the transactions
      contemplated hereby have been duly authorized by all requisite action on the
      part of Parent. The Parent Shares to be issued to the Stockholder as part of
      the
      Merger Consideration have been duly authorized by all necessary corporate action
      on the part of Parent and, upon receipt of the Shares from the Stockholder,
      will
      be validly issued, fully paid and non-assessable. This Agreement has been duly
      executed and delivered by Parent, and assuming due authorization, execution
      and
      delivery by the Stockholder, the Company and Buyer, this Agreement constitutes
      a
      valid and binding obligation of Parent enforceable against Parent in accordance
      with its terms, except to the extent that the enforceability may be limited
      by
      bankruptcy, insolvency, reorganization, moratorium or similar laws, or by
      equitable principles relating to the rights of creditors generally.

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

    (b) Buyer
      is
      a corporation duly organized, validly existing and in good standing under the
      laws of the State of Delaware and the execution, delivery and performance of
      this Agreement by the Buyer and the consummation by Buyer of the transactions
      contemplated hereby have been duly authorized by all requisite action on the
      part of Buyer. This Agreement has been duly executed and delivered by Buyer,
      and
      assuming due authorization, execution and delivery by the Stockholder, the
      Company and the Parent, this Agreement constitutes a valid and binding
      obligation of Buyer enforceable against Buyer in accordance with its terms,
      except to the extent that the enforceability may be limited by bankruptcy,
      insolvency, reorganization, moratorium or similar laws, or by equitable
      principles relating to the rights of creditors generally.

     

    4.2 Capitalization. 

     

    (a) The
      authorized capital stock of the Parent consists of:

     

    (i) 10,000,000
      shares of preferred stock, of which no shares are issued and
      outstanding;

     

    (ii) 140,000,000
      shares of common stock, of which:

     

    (A) 34,313,000
      shares are issued and outstanding;

     

    (B) 5,500,000
      shares are reserved for issuance pursuant to the Parent’s stock option,
      restricted stock and employee stock purchase plans  (the “Equity Plans”),
      including 4,071,000 shares issuable pursuant to outstanding awards under the
      Equity Plans;

     

    (C) 500,000
      shares are reserved for issuance pursuant to outstanding warrants.

     

    No
      shares
      of preferred stock are issued and outstanding. All of the shares of Parent
      common stock have been duly authorized and validly issued and are fully paid
      and
      non-assessable. None of the Parent shares was issued in violation of any
      preemptive rights or is subject to any preemptive rights of any Person. No
      legend or other reference to any Encumbrance appears upon any certificate
      representing the Stock Portion of the Merger Consideration, except for customary
      legends with respect to transfer restrictions for restricted securities under
      federal and Delaware securities Law. 

     

    (b) Except
      as
      described above, there are no outstanding options, warrants, agreements,
      conversion rights, preemptive rights or other rights to subscribe for or
      purchase from the Parent, or any plans, contracts or commitments providing
      for
      the issuance of, or the granting of rights to acquire, (i) any capital stock
      or
      other ownership interests of the Parent, including, but not limited to the
      Parent shares; or (ii) any securities convertible into or exchangeable for
      any
      such capital stock or other ownership interests. There are no outstanding
      contractual obligations or plans of the Parent to transfer, issue, repurchase,
      redeem or otherwise acquire any outstanding shares of capital stock or other
      ownership interests of the Parent.

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

     

    4.3 Sufficiency
      of Funds.
      The
      Parent and Buyer have cash on hand, and will continue to have cash on hand,
      in
      an amount sufficient to consummate the transaction described in this Agreement
      and pay the Merger Consideration, including the Additional Purchase Price
      payment,
      if
      any.

     

    4.4 No
      Conflict; Governmental Consents.

     

    (a) The
      execution, delivery and performance of this Agreement by the Parent and Buyer
      does not and will not (i) violate, conflict with or result in the breach of
      any
      provision of the charter or by-laws of the Parent or Buyer, (ii) conflict with
      or violate in any material respect any Law or Order applicable to any of the
      Parent or Buyer, or (iii) conflict with, result in any breach of, constitute
      a
      default (or event which with the giving of notice or lapse of time, or both,
      would become a default) under, require any consent under, or give to others
      any
      rights of termination, amendment, acceleration, suspension, revocation or
      cancellation of, or result in the creation of any Encumbrance on any of the
      assets or properties of the Parent or Buyer pursuant to, any note, bond,
      mortgage, indenture, license, permit, lease, sublease or other Contract to
      which
      the Parent or Buyer is a party or by which any of its assets or properties
      is
      bound or affected, except as would not reasonably expected to result in a
      Material Adverse Effect on the Parent or Buyer.

     

    (b) The
      execution, delivery and performance of this Agreement by the Parent does not
      and
      will not require any Approval or Order of any Governmental Entity.

     

    4.5 Financial
      Statements; Undisclosed Liabilities. 

     

    (a) To
      the
      knowledge of the Parent, the financial statements of the Parent included in
      the
      Parent SEC Reports (the “Parent
      Financial Statements”)
      have
      been prepared in accordance with the books and records of the Parent and present
      fairly in all material respects the results of operations and cash flows of
      the
      Parent for the respective periods covered, and the balance sheets present fairly
      in all material respects the financial condition of the Parent as of their
      respective dates, except in each instance where the failure to so present would
      not reasonably be expected to result in a Material Adverse Effect on the
      Parent.

     

    (b) To
      the
      knowledge of the Parent, the Parent has no liabilities or obligations of any
      nature (whether known or unknown and whether absolute, accrued, contingent,
      or
      otherwise), except for liabilities or obligations reflected or reserved against
      on the September 30, 2007 balance sheet of the Parent, current liabilities
      incurred in the ordinary course of business and consistent with past practice
      since the date of such balance sheet and liabilities that would not be
      reasonably expected to result in a Material Adverse Effect on the
      Parent.

     

    4.6 SEC
      Reporting.
      To the
      Knowledge of Parent, Parent has filed all forms, reports, statements,
      certifications and other documents (including all exhibits, amendments and
      supplements thereto) required to be filed by it with the SEC pursuant to the
      Exchange Act (all such forms, reports, statements, certificates and other
      documents, together with any amendments thereto, collectively, the “Parent
      SEC Reports”),
      each
      of which, including any Parent Financial Statements or schedules included
      therein, as finally amended prior to the date of this Agreement and has complied
      as to form in all material respects with the applicable requirements of the
      Exchange Act as of the date filed with the SEC. None of the Parent’s
      subsidiaries is required to file periodic reports with the SEC. To the knowledge
      of the Parent, none of the Parent SEC Reports contained, when filed with the
      SEC
      or, if amended, as of the date of such amendment, any untrue statement of a
      material fact or omitted to state a material fact required to be stated or
      incorporated by reference therein or necessary in order to make the statements
      therein, in light of the circumstances under which they were made, not
      misleading. To the knowledge of the Parent, no investigation by the SEC with
      respect to the Parent or any of its subsidiaries is pending or
      threatened.

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

     

    4.7 Officers
      and Directors.
      To the
      Parent’s knowledge, none of the officers or directors of Parent or any of its
      subsidiaries: (i) has been convicted of any felony or misdemeanor or named
      as a
      subject of a criminal proceeding within the past ten (10) years (excluding
      traffic violations and other minor offenses but including in connection with
      the
      purchase or sale of any security, involving the making of a false filing with
      the SEC, or arising out of the conduct of the business of an underwriter,
      broker, dealer, municipal securities dealer, or investment adviser); (ii) is
      subject to any order, judgment, or decree of any court of competent jurisdiction
      temporarily or preliminarily enjoining or restraining, or is subject to any
      order, judgment, or decree of any court of competent jurisdiction, entered
      within the past five (5) years, permanently enjoining or restraining such person
      from engaging in or continuing any conduct or practice in connection with the
      purchase or sale of any security, involving the making of a false filing with
      the SEC, or arising out of the conduct of the business of an underwriter,
      broker, dealer, municipal securities dealer, or investment adviser; (iii) is
      subject to an order of the SEC entered pursuant to Sections 15(b), 15B(a),
      or
      15B(c) of the Exchange Act, or Section 203(e) or (f) of the Investment Advisers
      Act of 1940; (iv) is suspended or expelled from membership in, or suspended
      or
      barred from association with a member of, a national securities exchange
      registered under Section 6 of the Exchange Act or a national securities
      association registered under Section 15A of the Exchange Act for any act or
      omission to act constituting conduct inconsistent with just and equitable
      principles of trade; or (v) is subject to a United States Postal Service false
      representation order entered under 39 U.S.C. Section 3005 within the past five
      (5) years or is subject to a restraining order or preliminary injunction entered
      under 39 U.S.C. Section 3007 with respect to conduct alleged to have violated
      39
      U.S.C. Section 3005.

     

    4.8 Registration
      Rights; Lock Up.
      Other
      than the registration rights described on Schedule
      4.8
      attached
      hereto, Parent is not under any obligation to register under the Securities
      Act
      any of its currently outstanding securities, or any securities issuable upon
      exercise or conversion of its currently outstanding securities. All securities
      held by the current officers and directors of the Parent are subject to a
      lock-up agreement of not less than 12 months following the date of
      issuance.

     

    ARTICLE
      V

    ADDITIONAL
      AGREEMENTS

     

    5.1 Notices
      and Consents.
      The
      Stockholder and Parent agree that, in the event any Approval necessary to
      preserve for the Business or the Company any right or benefit under any Contract
      to which the Company is a party, is not obtained prior to the Closing, the
      Stockholder will, subsequent to the Closing, on the reasonable request of Parent
      and at Parent’s sole cost and expense, cooperate with the Surviving Entity,
      Parent and their Subsidiaries in attempting to obtain such Approval as promptly
      thereafter as practicable. 

     

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

     

    5.2 Taking
      of Necessary Action; Further Action.
      If, at
      any time after the Closing Date, any further action is necessary or desirable
      to
      carry out the purposes of this Agreement and to vest the Surviving Entity with
      full right, title and possession to all assets, property, rights, privileges,
      powers and franchises of the Company, the officers and directors of the
      Surviving Entity are fully authorized in the name of the Surviving Entity or
      otherwise to take and will take, all such actions at Parent’s expense. The
      Stockholder shall take all requisite action to transition the books and records
      of the Company to the Parent.

     

    5.3 Directors’
      and Officers’ Indemnification and Insurance.

     

    (a) Parent
      shall, or shall cause the Surviving Entity to, fulfill and honor the obligations
      of the Company to the individuals serving in their capacity as officers and
      directors (the “Indemnified
      Directors and Officers”)
      pursuant to the terms of the Company’s Articles of Incorporation and By-Laws,
      each as in effect as of the date of this Agreement.

     

    (b) This
      Section 5.3 (i) shall survive the consummation of the Merger, (ii) is intended
      to benefit the Indemnified Directors and Officers and their heirs and (iii)
      is
      in addition to, and not in substitution for, any other rights to indemnification
      or contribution that any such Person may have against Parent or the Surviving
      Entity first arising after the Closing Date by contract or otherwise. This
      Section 5.3 shall not be terminated or modified in such a manner as to adversely
      affect the rights of any Indemnified Director and Officer under this Section
      5.3
      without the consent of such affected Indemnified Director and
      Officer.

     

    (c) If
      Parent
      or the Surviving Entity or any of its successors or assigns shall
      (i) consolidate with or merge into any other Person and shall not be the
      continuing or surviving Person of such consolidation or merger or (ii) transfer
      all or substantially all of its properties and assets to any Person, then,
      in
      each such case, proper provisions shall be made so that the successors and
      assigns of Parent or the Surviving Entity, as applicable, assume all of the
      obligations of Parent and the Surviving Entity set forth in this Section 5.3.
      

     

    (d) As
      of the
      Effective Time, Parent or the Surviving Entity (with the election being at
      Parent’s option) shall have purchased and shall maintain in full force and
      effect for a period of three (3) years after the Closing Date (or, if any claim
      is asserted or made within such six-year period, Parent shall ensure that such
      insurance remains in effect until final disposition of such claim) a directors’
and officers’ liability insurance policy or policies from one or more reputable
      carriers and shall use commercially reasonable efforts to provide each
      Indemnified Director and Officer coverage for events occurring prior to the
      Effective Time (including acts or omissions relating to the approval of this
      Agreement and consummation of the transactions contemplated hereby) in the
      amount of at least $5 million and otherwise on terms and conditions reasonable
      and customary for companies comparable to Parent. Nothing herein shall require
      the Parent to provide insurance for any Indemnified Director and Officer with
      insurance coverage for any action by any such Indemnified Director and Officer
      constituting fraud (including fraud based on intentional or willful misstatement
      or omission) in connection with the transactions contemplated
      hereby.

     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

     

    5.4 Further
      Assurances.
      The
      Company, Parent, Buyer and the Stockholder shall provide reasonable cooperation
      to each other and their professional auditors with respect to any audit, legal
      or tax inquiries or procedures following the Closing Date including, without
      limitation, in order to permit Parent to have prepared, at its sole cost and
      expense, audited financial statements as required for filing with the Securities
      and Exchange Commission.

     

    5.5 Registration
      of Securities.
      If, at
      any time or from time to time, the Parent shall determine to register any of
      its
      equity securities for the account of a stockholder, the Parent shall promptly
      (but in no event less than thirty (30) days prior to registration) give the
      Stockholder written notice thereof, and shall include in such registration
      (and
      any related qualifications including compliance with Blue Sky laws), and in
      any
      underwriting involved therein, the Stock Portion of Merger Consideration
      received by the Stockholder as specified in a written response(s) by the
      Stockholder, made within twenty (20) days after receipt of the written notice
      of
      registration from the Parent. For ease of reference, this provision is to be
      construed as granting the Stockholder piggyback registration rights in
      conjunction with any secondary sale of securities that the Parent may wish
      to
      register. Notwithstanding any other provision to the contrary, if the
      registration by the Parent is for an underwritten public offering and the
      managing underwriter determines that marketing factors require a limitation
      of
      the number of shares to be underwritten, the percentage of shares of securities
      to be registered for sale by the Stockholder shall be reduced on a pro rata
      basis with all other shares of third-parties entitled to participate in such
      registration. If the registration by the Parent is for an underwritten public
      offering, the Stockholder agrees to provide upon request, customary lock-up
      agreements for himself and his affiliates by which they agree not to sell any
      of
      their shares of common stock, provided that the Stockholder is a selling
      stockholder in the offering and the terms of the requested lock-up are the
      same
      as the terms agreed to by all selling stockholders in the offering.

     

    5.6 Conduct
      of the Business.
      The
      Company and the Stockholder agree that from the date hereof through the Closing
      Date, the Company shall conduct its business solely in the ordinary course
      of
      business, consistent with past practice. Neither the Stockholder nor the Company
      shall make any material changes to the Company’s business from the date hereof
      through the Closing Date.

     

    5.7 Software
      Escrow Agreement. The
      Stockholder shall use his commercially reasonable best efforts on behalf of
      the
      Company to enter into an escrow agreement with Iron Mountain with respect to
      the
      escrow of source codes under the Shawan Tech Enterprise License
      Agreement.

     

    ARTICLE
      VI

    TAX
      MATTERS

     

    6.1 Conveyance
      Taxes.
      Parent
      and Buyer shall pay and be solely responsible for any sales, use, transfer,
      value added, stock transfer, and stamp taxes, any transfer, recording,
      registration, and other fees, and any similar Taxes which become payable in
      connection with the transactions contemplated by this Agreement, and shall
      file
      such applications and documents as shall permit any such Tax to be assessed
      and
      paid on or prior to the Closing Date in accordance with any available pre sale
      filing procedure. Each party hereto shall execute and deliver all instruments
      and certificates necessary to enable the other party or parties to comply with
      the foregoing.

     

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

     

    6.2 Pre-Closing
      Income Tax Returns.
      The
      Stockholder shall timely prepare or cause to be prepared all Tax Returns of
      the
      Company relating to Taxes imposed on net income (“Income
      Taxes”)
      for
      all periods ending on or prior to the Closing Date and the income that is
      taxable to the Stockholder as a result of the Company's status as an S
      corporation under Section 1361 of the Code or a similar provision of state
      or
      local Law (“Pre-Closing
      Income Tax Returns”).
      The
      cost of preparing all Pre-Closing Income Tax Returns shall be paid by the
      Stockholder. All such Pre-Closing Income Tax Returns shall be prepared and
      filed
      in a manner consistent with the past practice of the Company unless otherwise
      required by applicable Law. The Stockholder, the Buyer and the Parent will
      cooperate in good faith in connection with the exchange of information necessary
      for the preparation of all Pre-Closing Income Tax Returns. The Stockholder
      shall
      submit each of the Pre-Closing Income Tax Returns to the Buyer for review at
      least thirty (30) days prior to the due date for the filing of such Pre-Closing
      Income Tax Return (taking into account any extensions). The Buyer shall have
      the
      right to review and comment on each Pre-Closing Income Tax Return prior to
      the
      filing of such Pre-Closing Income Tax Return; provided, that if the Stockholder
      shall fail to submit any Pre-Closing Income Tax Return to the Buyer in
      accordance with this Section 6.2, the Buyer shall have the right to prepare
      and
      file such Pre-Closing Income Tax Return. The Stockholder and the Buyer agree
      to
      consult and resolve in good faith any issues and comments arising as a result
      of
      the review of each Pre-Closing Income Tax Return; provided, however, that in
      the
      event the parties are unable to agree on a resolution of any disputed item
      at
      least fifteen (15) days before the due date of any such Tax Return, then, upon
      providing a written opinion of an AmLaw 200 nationally recognized law firm
      mutually acceptable to the Buyer and the Stockholder, that the position the
      Stockholder wishes to take on such Pre-Closing Income Tax Return has a realistic
      possibility of success in a court with jurisdiction, (or, if any such standard
      is higher than the “realistic possibility of success” standard, the minimum
      standard required under the Code and the Treasury Regulations promulgated
      thereunder (or any corresponding provision of state or local law) required
      to
      avoid any penalties with respect to such position), then such Pre-Closing Income
      Tax Return shall be filed, as prepared by the Stockholder with the appropriate
      governmental agency. Otherwise the Pre-Closing Income Tax Return shall be
      changed as requested by the Buyer.

     

    6.3 Straddle
      Period Tax Returns.
      The
      Parent and Buyer shall timely prepare or cause to be prepared and file or cause
      to be filed any Tax Returns of the Company required to be filed by the Company
      with respect to a taxable period which includes the Closing Date (but does
      not
      begin or end on that day) (“Straddle
      Period Returns”).
      All
      Straddle Period Returns shall be prepared and filed in a manner consistent
      with
      the past practice of the Company unless otherwise required by applicable Law.
      The Stockholder shall have the right to review and comment on each Straddle
      Period Return prior to the filing of such return. The Stockholder and the Buyer
      agree to consult and resolve in good faith any issues and comments arising
      as a
      result of the review of each Straddle Period Return, and mutually to consent
      to
      filing as promptly as possible to each Straddle Period Return.

     

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

     

    6.4 Straddle
      Period Tax Allocation.
      In any
      case in which a Tax is assessed with respect to a taxable period that includes
      the Closing Date (but does not begin or end on that day) (a “Straddle
      Period”),
      the
      Taxes, if any, attributable to a Straddle Period shall be allocated (i) to
      the
      period up to and including the close of business on the Closing Date, on the
      one
      hand (which shall be a liability of the Stockholder), and (ii) to the period
      subsequent to the Closing Date (which shall be the liability of the Company
      and
      the Buyer) , on the other hand, by means of a closing of the books and records
      of Company as of the close of the Closing Date, provided that exemptions,
      allowances or deductions that are calculated on an annual basis (including,
      but
      not limited to, depreciation and amortization deductions) and Taxes that are
      assessed on a periodic basis (such as real and personal property Taxes) shall
      be
      allocated between the period ending on the Closing Date and the period after
      the
      Closing Date in proportion to the number of days in each such
      period.

     

    6.5 Tax
      Cooperation.
      The
      Stockholder and the Buyer shall, upon written request of the other, (i) each
      provide the other with such assistance as may be reasonably requested by any
      of
      them in connection with the preparation of any Tax Return, audit, or other
      examination by any taxing authority or judicial or administrative proceedings
      relating to liability for Taxes or such returns, (ii) each retain and provide
      the other with any records or other information that may be relevant to such
      Tax
      Returns, audit or examination, proceeding, or determination, and (iii) each
      provide the other with any final determination of any such audit or examination,
      proceeding, or determination that affects any amount required to be shown on
      any
      such Tax Returns. Without limiting the generality of the foregoing, the Buyer
      shall retain until the applicable statues of limitations (including any
      extensions) have expired, copies of all Pre-Closing Tax Returns and Straddle
      Period Returns, supporting work schedules, and other records or information
      that
      may be relevant to such returns, and shall not destroy or otherwise dispose
      of
      any such records without first providing the Stockholder with a reasonable
      opportunity to review and copy the same. Each party shall bear its own expenses
      in complying with the foregoing provisions.

     

    6.6 Required
      Notifications.
      The
      Buyer shall promptly notify the Stockholder in writing upon receipt by the
      Buyer
      or any of its Affiliates of notice of any audits, examinations, adjustments
      or
      assessments relating to Taxes with respect to any Pre-Closing Income Tax
      Returns, and with respect to amounts which would be paid by the Stockholder
      or
      for which any of the Buyer or its Affiliates may be entitled to receive
      indemnity under this Agreement (each, a “Tax
      Claim”).
      The
      Stockholder, in their sole discretion, may contest such Tax Claim in any
      permissible forum and shall otherwise have the sole right at their sole expense
      to direct, control and settle any administrative or judicial proceedings
      relating to such Tax Claim, provided that the Stockholder (i) notify the Buyer
      in writing within twenty (20) days (or if a response to such Tax Claim is
      required within thirty (30) days and the Internal Revenue Service (or any other
      applicable state or local tax authority) refuses to grant an extension of at
      least ten (10) days, fifteen (15) days; provided that the Buyer shall be
      required to use reasonable efforts to obtain such an extension) of the Buyer's
      notification of the Stockholder of such Tax Claim of their intent to exercise
      their right to direct, control, and settle such Tax Claim, (ii) the Buyer shall
      be entitled to participate at its sole expense in such administrative or
      judicial proceedings and (iii) to the extent any settlement of any such
      proceeding is reasonably expected to increase any Tax to the Buyer or its
      Affiliates in respect of any Tax not indemnified under this Agreement by the
      Stockholder at the time of such settlement, the Stockholder may not settle
      any
      such proceeding without the prior written consent of the Buyer.

     

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

     

    6.7 Section
      368(a) Reorganization.
      The
      parties hereby agree to report the Merger as a reorganization pursuant to
      Section 368(a)(1)(A) of the Code and any applicable similar state or local
      Law
      provisions (a “Reorganization”),
      to
      file all such forms and statements that are required or appropriate in
      furtherance thereof, or in connection therewith, to report the value of the
      Parent Shares at $1.00 per share in any such filings, and to take no action
      on,
      prior or subsequent to, the Closing Date that is reasonably likely to cause
      the
      Merger to fail to so qualify.

     

    ARTICLE
      VII

    INDEMNIFICATION

     

    7.1 Obligations
      of Stockholder. 

     

    (a) Subject
      to the limitations set forth this Section
      7.1
      and
      otherwise in this Article VII, the Stockholder (the “Stockholder
      Indemnifying Party”)
      agrees
      to indemnify and hold harmless Parent, the Surviving Entity and their respective
      directors, officers and Affiliates and their successors and assigns (each a
      “Parent
      Indemnified Party”)
      from
      and against any and all Losses of the Parent Indemnified Parties, to the extent
      directly or indirectly resulting or arising from or based upon:

     

    (i) breach
      of
      any representation or warranty set forth in Article III; and

     

    (ii) all
      Taxes
      to the extent resulting from or relating to the ownership, management or use
      of
      and the operation of the Business prior to and including the Closing
      Date.

     

    (b) The
      obligations of the Stockholder under this Section
      7.1
      shall be
      subject to the following limitations:

     

    (i) The
      Stockholder shall not have any liability to any Parent Indemnified Party with
      respect to Losses arising out of any of the matters referred to in Section
      7.1(a),
      until
      such time as the amount of all such liability shall collectively exceed $50,000
      (the “Threshold”),
      whereupon the Losses exceeding the Threshold shall be payable by the
      Stockholder;

     

    (ii) The
      maximum aggregate amount of Losses for which the Stockholder shall be liable
      pursuant to Section
      7.1(a)
      shall be
      equal to $1,500,000 (except for Losses incurred as a result of the Stockholder’s
      fraud for which the maximum aggregate amount of Losses for which the Stockholder
      shall be liable shall be equal to the amount of Merger Consideration actually
      received).

     

    (iii) In
      no
      event shall the Stockholder’s aggregate liability to any Indemnified Party under
Section
      7.1
      exceed
      the after tax amount of such Claim and all Claims shall be net of any insurance
      proceeds reasonably expected to be received in respect of Losses subject to
      such
      Claim. The Parent Indemnified Parties shall use all reasonable efforts to
      collect any amounts available under applicable insurance policies with respect
      to Losses subject to a Claim.

     

    
      
        
        

      

      
        35

        
          

        

      

      
        
        

      

    

     

    7.2 Obligations
      of Parent.
      Parent,
      Buyer and the Surviving Entity (collectively, the “Parent
      Indemnifying Parties”)
      agree
      to indemnify and hold harmless the Stockholder and his respective agents,
      representatives and Affiliates and their successors and assigns (the
“Stockholder
      Indemnified Party”)
      from
      and against any and all Losses of the Stockholder Indemnified Party, directly
      or
      indirectly, as a result of, or based upon or arising from: 

     

    (a) the
      ownership, management and operation of the Company, the Surviving Entity and
      the
      Business whether before, on or after the Closing Date, except (a) to the extent
      any such Losses are subject to indemnification by the Stockholder pursuant
      to
Section
      7.1
      or (b)
      to the extent any such Losses are the result of fraud committed by the
      Stockholder, in which case, the Parent Indemnifying Parties shall not be
      obligated to indemnify the Stockholder pursuant to this Section
      7.2
      ;
      and

     

    (b) Buyer
      shall not have any liability to any Stockholder Indemnified Party with respect
      to Losses arising out of any of the matters referred to in Section
      7.2,
      until
      such time as the amount of all such liability shall collectively exceed the
      Threshold, whereupon the Losses exceeding the Threshold shall be payable by
      Buyer. Also, in no event shall Buyer’s aggregate liability under Section
      7.2
      exceed
      the after-tax amount of such Claims.

     

    7.3 Procedure.
      The
      Stockholder Indemnified Party or a Parent Indemnified Party (each, an
“Indemnified
      Party”)
      shall
      give the Parent Indemnifying Party or Stockholder Indemnifying Party (each,
      an
“Indemnifying
      Party”),
      as
      applicable, notice (a “Claim
      Notice”)
      of any
      matter which an Indemnified Party has determined has given or could reasonably
      give rise to a right of indemnification under this Agreement (a “Claim”),
      within forty-five (45) days of such determination; provided, however, that
      any
      failure of the Indemnified Party to provide such Claim Notice shall not release
      the Indemnifying Party from any of its obligations under this Article VII except
      to the extent the Indemnifying Party is materially prejudiced by such failure
      and shall not relieve the Indemnifying Party from any other obligation or
      liability that it may have to any Indemnified Party otherwise than under this
      Article VII except to the extent the Indemnifying Party is materially prejudiced
      by such failure. Upon receipt of the Claim Notice, the Indemnifying Party shall
      be entitled to assume and control the defense of such Claim at its expense
      if it
      gives notice of its intention to do so to the Indemnified Party within ten
      (10)
      Business Days of the receipt of such Claim Notice from the Indemnified Party;
      provided, however, that (i) Indemnified Party must approve of the selection
      of
      legal counsel by Indemnifying Party, which approval shall not be unreasonably
      withheld, delayed or conditioned and (ii) if there exists or is reasonably
      likely to exist a conflict of interest that would make it inappropriate in
      the
      judgment of the Indemnified Party, in its reasonable discretion, for the same
      counsel to represent both the Indemnified Party and the Indemnifying Party,
      then
      the Indemnified Party shall be entitled to retain its own counsel, in each
      jurisdiction for which the Indemnified Party determines counsel is required,
      at
      the expense of the Indemnifying Party. In the event the Indemnifying Party
      exercises the right to undertake any such defense against any such Claim as
      provided above, the Indemnified Party shall cooperate with the Indemnifying
      Party in such defense and make available to the Indemnifying Party, at the
      Indemnifying Party’s expense, all witnesses, pertinent records, materials and
      information in the Indemnified Party’s possession or under the Indemnified
      Party’s control relating thereto as is reasonably required by the Indemnifying
      Party. Similarly, in the event the Indemnified Party is, directly or indirectly,
      conducting the defense against any such Claim, the Indemnifying Party shall
      cooperate with the Indemnified Party in such defense and make available to
      the
      Indemnified Party, at the Indemnifying Party’s expense, all such witnesses,
      records, materials and information in the Indemnifying Party’s possession or
      under the Indemnifying Party’s control relating thereto as is reasonably
      required by the Indemnified Party. No such Claim may be settled by the
      Indemnifying Party without the prior written consent of the Indemnified Party,
      which consent shall not be unreasonably withheld, delayed or conditioned so
      long
      as (a) there is no payment or other consideration required of the Indemnified
      Party and (b) such settlement does not require or otherwise involve any
      restrictions on the conduct of business by the Indemnified Party. 

     

    
      
        
        

      

      
        36

        
          

        

      

      
        
        

      

    

     

    7.4
      Survival. 

     

    (a) The
      representations and warranties of the Stockholder and Parent contained in this
      Agreement, including the Exhibits and the Schedules to this Agreement, shall
      survive the Closing until the first (1st) anniversary of the Closing Date.
      An
      Indemnifying Party is not required to make any indemnification payment hereunder
      unless a Claim is delivered to the Indemnifying Party on or before 5:00 p.m.
      ET
      of the one year anniversary of the Closing Date, except with respect to Claims
      of fraud committed by the Indemnifying Party. 

     

    (b) Any
      matter as to which a Claim has been asserted by a Claim Notice to the other
      party that is pending or unresolved at the end of any applicable limitation
      period shall continue to be covered by this Article VII notwithstanding any
      applicable statute of limitations (which the parties hereby waive) until such
      matter is finally terminated or otherwise resolved by the parties under this
      Agreement or by a final, nonappealable judgment of a court of competent
      jurisdiction and any amounts payable hereunder are finally determined and paid.
      

     

    (c) The
      Indemnifying Party agrees to notify the Indemnified Party of any liabilities,
      claims or misrepresentations, breaches or other matters covered by this Article
      VII upon discovery or receipt of notice thereof (other than such claims from
      the
      Indemnified Party).

     

    (d) Other
      than rights to equitable relief, to the extent available under applicable law,
      or Claims arising from the fraud of a party, each of the parties acknowledges
      and agrees that the sole and exclusive remedy for any Losses arising from Claims
      described in Sections
      7.1
      and
7.2
      or any
      other Claims of every nature arising in any manner in connection with this
      Agreement or any other document, agreement or instrument entered into in
      connection herewith, or the transactions contemplated hereby or thereby, shall
      be indemnification in accordance with this Article VII; provided, however,
      that
      nothing in this Section
      7.4
      shall
      limit the rights of the parties under the Release or the Employment
      Agreement.

     

    7.5 Mitigation.
      Prior
      to the resolution of any Claim for indemnification under this Agreement, the
      Indemnified Party shall utilize all commercially reasonable efforts, consistent
      with normal past practices and policies and good commercial practice, to
      mitigate such Losses. 

     

    7.6 Consequential
      and Other Damages.
      No
      party shall be liable for any lost profits or consequential, special, punitive,
      indirect or incidental Losses or damages in connection with this
      Agreement.

     

    ARTICLE
      VIII

    GENERAL

     

    8.1 Amendments;
      Waivers.
      This
      Agreement and any schedule or exhibit attached hereto may be amended only by
      agreement in writing of all parties. No waiver of any provision nor consent
      to
      any exception to the terms of this Agreement or any agreement contemplated
      hereby shall be effective unless in writing and signed by the party to be bound
      and then only to the specific purpose, extent and instance so provided.


     

    
      
        
        

      

      
        37

        
          

        

      

      
        
        

      

    

     

    8.2 Schedules;
      Exhibits; Integration.
      Each
      schedule and exhibit delivered pursuant to the terms of this Agreement shall
      be
      in writing and shall constitute a part of this Agreement, although schedules
      need not be attached to each copy of this Agreement. This Agreement, together
      with such schedules and exhibits, constitutes the entire agreement among the
      parties pertaining to the subject matter hereof and supersedes all prior
      agreements and understandings of the parties in connection therewith, including,
      without limitation, the Letter of Intent entered into between and the
      Stockholder.

     

    8.3 Governing
      Law.
      This
      Agreement, the legal relations between the parties and any Action, whether
      contractual or non-contractual, instituted by any party with respect to matters
      arising under or in connection with this Agreement, including but not limited
      to
      the negotiation, execution, interpretation, coverage, scope, performance,
      breach, termination, validity, or enforceability of this Agreement, shall be
      governed by and construed in accordance with the internal laws of the State
      of
      New York without reference to principles of conflicts of laws. 

     

    8.4 No
      Assignment.
      Neither
      this Agreement nor any rights or obligations under it are assignable without
      the
      express written consent of the Stockholder and Parent. 

     

    8.5 Headings.
      The
      descriptive headings of the Articles, Sections and subsections of this Agreement
      are for convenience only and do not constitute a part of this
      Agreement.

     

    8.6 Counterparts.
      This
      Agreement and any amendment hereto or any other agreement (or document)
      delivered pursuant hereto may be executed in one or more counterparts and by
      different parties in separate counterparts. All of such counterparts shall
      constitute one and the same agreement (or other document) and shall become
      effective (unless otherwise provided therein) when one or more counterparts
      have
      been signed by each party and delivered to the other party. 

     

    8.7 Publicity
      and Reports.
      The
      Stockholder and Parent shall coordinate all publicity relating to the
      transactions contemplated by this Agreement and, except as required by Law,
      no
      party shall issue any press release, publicity statement or other public notice
      relating to this Agreement, or the transactions contemplated by this Agreement,
      without obtaining the prior consent of the Stockholder and Parent. 

     

    8.8 Parties
      in Interest.
      This
      Agreement shall be binding upon and inure to the benefit of each party, and
      nothing in this Agreement, express or implied, is intended to confer upon any
      other person any rights or remedies of any nature whatsoever under or by reason
      of this Agreement. Nothing in this Agreement is intended to relieve or discharge
      the obligation of any third person to any party to this Agreement.

     

    8.9 Notices.
      Any
      notice or other communication hereunder must be given in writing and (a)
      delivered in person, (b) transmitted by facsimile or (c) mailed by certified
      mail, postage prepaid, return receipt requested as follows:

     

    
      
        
        

      

      
        38

        
          

        

      

      
        
        

      

    

     

    If
      to
      Parent, addressed to:

     

    
      Customer
        Acquisition Network Holdings, Inc.

      401
        E.
        Los Olas Blvd., Suite 1560

      Ft.
        Lauderdale, FL 33301

      Attention:
        Devon Cohen, Chief Operating Officer

      Facsimile:(866)
        744-8343

       

      With
        a
        copy to:

       

      Haynes
        and Boone, LLP

      153
        E.
        53rd Street, Suite 4900

      New
        York,
        NY 10022

      Attention:
        Harvey J. Kesner, Esq. 

      Facsimile:
        (212) 884-8233

       

      If
        to
        Stockholder, addressed to:

       

      Hagai
        Shechter

      240
        Old
        Federal Highway, Suite #100

      Hallandale
        Beach, Fl. 33009

      Facsimile:
        (954) 458-4334

       

      With
        a
        copy to:

       

      Carlton
        Fields

      Attorneys
        At Law

      4000
        International Place

      Miami,
        FL
        33131

      Attention:
        Linda C. Frazier, Esq.

      Facsimile:
        (305) 530-0055

    

     

    or
      to
      such other address or to such other person as either party shall have last
      designated by such notice to the other party. Each such notice or other
      communication shall be effective (i) if given by facsimile, when transmitted
      to
      the applicable number so specified in (or pursuant to) this Section
      8.9
      and an
      appropriate answerback is received, (ii) if given by mail, three (3) days after
      such communication is deposited in the mails by certified mail, return receipt
      requested, with postage prepaid and addressed as aforesaid or (iii) if given
      by
      any other means, when actually delivered at such address.

     

    8.10 Remedies;
      Waiver.
      To the
      extent permitted by Law, all rights and remedies existing under this Agreement
      are cumulative to and not exclusive of, any rights or remedies otherwise
      available under applicable Law. No failure on the part of any party to exercise
      or delay in exercising any right hereunder shall be deemed a waiver thereof,
      nor
      shall any single or partial exercise preclude any further or other exercise
      of
      such or any other right. 

     

    8.11 Attorney’s
      Fees.
      In the
      event of any Action by any party to enforce against another party a right or
      claim, the prevailing party shall be entitled to reasonable attorney’s fees,
      costs and expenses incurred in such Action. Attorney’s fees incurred in
      enforcing any judgment in respect of this Agreement are recoverable as a
      separate item. 

     

    
      
        
        

      

      
        39

        
          

        

      

      
        
        

      

    

     

    8.12 Severability.
      If any
      provision of this Agreement is determined to be invalid, illegal or
      unenforceable by any Governmental Entity, the remaining provisions of this
      Agreement to the extent permitted by Law shall remain in full force and effect;
      provided that the essential terms and conditions of this Agreement for all
      parties remain valid, binding and enforceable. In event of any such
      determination, the parties agree to negotiate in good faith to modify this
      Agreement to fulfill as closely as possible the original intents and purposes
      hereof. To the extent permitted by Law, the parties hereby to the same extent
      waive any provision of Law that renders any provision hereof prohibited or
      unenforceable in any respect.

     

    8.13 Entire
      Agreement.
      This
      Agreement constitutes and includes that entire agreement of the parties with
      reference to the subject matter hereof and supersedes all prior agreements
      and
      understandings relating to the subject matter hereof. No promise or
      representation of any kind has been made to any of the parties to this Agreement
      by any other party or parties to this Agreement or anyone acting for any of
      such
      parties, except as is expressly stated in this Agreement.

     

    8.14 Time
      is of the Essence.
      Time is
      of the essence in interpreting and enforcing this Agreement.

     

    8.15 Arbitration.
      Any
      controversy or claim arising out of or relating to this Agreement, or the breach
      thereof, shall be resolved by binding arbitration administered by the American
      Arbitration Association under its Commercial Arbitration Rules in effect on
      the
      date of this Agreement (herein the “AAA
      Rules”),
      and
      judgment on the award rendered by the arbitrator may be entered in any court
      having jurisdiction thereof. The arbitrator shall be selected pursuant to the
      AAA Rules and shall be a neutral and impartial lawyer with excellent academic
      and professional credentials (i) who is or has been practicing law for at least
      fifteen (15) years, specializing in general commercial litigation or general
      corporate and commercial matters and (ii) who has both training and experience
      as an arbitrator and is generally available to serve as an arbitrator. The
      arbitration shall be governed by the arbitration law of the Federal Arbitration
      Act and shall be held in New York, New York.

     

    8.16 Expenses.
      All
      fees incurred by any party hereto shall be paid by such party, except that
      Parent shall pay all fees payable to the Broker in the amount of $50,000.


     

    8.17 Disclosures.
      Each
      exception stated in the Schedules attached hereto shall be deemed to be
      disclosed under any Section of Article III or Article IV specifically identified
      therein and any other Section or Sections to which such disclosure relates.
      

     

    [Remainder
      of Page Left Intentionally Blank]

     

    
      
        
        

      

      
        40

        
          

        

      

      
        
        

      

    


    IN
      WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
      executed by its duly authorized officers as of the day and year first above
      written.

     

    
      
        	
                PARENT:

              
	 
	
                CUSTOMER
                  ACQUISITION NETWORK HOLDINGS, INC.

              
	 
	
                By:

              	
                /s/
                  Devon Cohen

              
	
                 

              	
                Name:

              	
                Devon
                  Cohen

              
	 	
                Title:

              	
                Chief
                  Operating Officer

              
	 	 	 
	
                BUYER:

              
	 
	
                OPTIONS
                  ACQUISITION SUB, INC.

              
	 	 	 
	
                By:

              	
                /s/
                  Michael Mathews

              
	
                 

              	
                Name:

              	
                Michael
                  Mathews

              
	 	
                Title:

              	
                President

              
	 	 	 
	
                COMPANY:

              
	 
	
                OPTIONS
                  NEWSLETTER, INC.

              
	 	 	 
	
                By:

              	
                /s/
                  Hagai Shechter

              
	
                 

              	
                Name:

              	
                Hagai
                  Shechter

              
	 	
                Title:

              	
                President

              
	 	 	 
	
                STOCKHOLDER:

              
	 
	
                
                  /s/
                    Hagai Shechter

                

              
	
                HAGAI
                  SHECHTER

              


      

    

    
       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

      SCHEDULE
        2.5

       

      Merger
        Consideration

       

      The
        total
        merger consideration to be paid for 100% of the Shares shall be as follows:
         

       

      Cash
        Portion of Merger Consideration
        - 

       

      $1.5
        million of which $150,000 shall be deposited into the escrow account on the
        Closing Date pursuant to Section 2.13 hereof and $1,350,000 shall be payable
        in
        cash at Closing. 

      


       

      Stock
        Portion of Merger Consideration
        - 

       

      1.0
        million Parent Shares. The Parent Shares shall be fully vested and will not
        be
        subject to any restriction other than a 12-month customary lock-up agreement
        with the Parent and restrictions on transfer imposed by federal securities
        laws. The
        Additional Purchase Price, if any, will be paid in accordance with Section
        2.9
        hereof.