AGREEMENT
      AND PLAN OF MERGER

    


    BY
      AND AMONG

    


    IEC
      Electronics Corp.,

    


    VUT
      Merger Corp.

    


    and

    


    Val-U-Tech
      Corp.

    


    Dated
      as of May 23, 2008

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    AGREEMENT
      AND PLAN OF MERGER

    


    This
      AGREEMENT
      AND PLAN OF MERGER,
      dated
      as of May 23, 2008 (this “Agreement”),
      is
      entered into by and among IEC Electronics Corp., a corporation organized under
      the laws of the State of Delaware (“Parent”),
      VUT
      Merger Corp., a corporation organized under the laws of the State of New York
      (“Merger
      Sub”),
      Val-U-Tech Corp., a corporation organized under the laws of the State of New
      York (“Company”)
      and
      Kathleen Brudek, Michael Brudek and Nicholas Vaseliv (each, a “Company
      Shareholder”
and,
      together, the “Company
      Shareholders”)
      (“Parent,” “Merger Sub”, “Company” and the “Company Shareholders” individually
      hereinafter referred to as “Party”
and
      collectively hereinafter referred to as the “Parties”);

     

    WHEREAS,
      Merger
      Sub, upon the terms and subject to the conditions of this Agreement and in
      accordance with the New York Business Corporation Law (“NYBCL”),
      will
      merge with and into Company (the “Merger”);

     

    WHEREAS,
      the
      board of directors of Company has (i) determined that the Merger is
      advisable and fair to the holders of Company Common Stock (as defined in
      Section 3.04) and is in the best interests of such shareholders,
      (ii) advised, authorized, approved and adopted this Agreement and the
      transactions contemplated hereby and (iii) recommended approval and
      adoption of this Agreement by the shareholders of Company (the “Company
      Shareholders”);

     

    WHEREAS,
      Company
      Shareholders have advised, authorized, approved and adopted this Agreement
      and
      the transactions contemplated hereby; and

     

    WHEREAS,
      the
      Board of Directors of Parent has determined that the Merger is advisable and
      in
      the best interests of Parent and its shareholders and the boards of directors
      of
      Parent and Merger Sub and the sole shareholder of Merger Sub have advised,
      authorized, approved and adopted this Agreement and the transactions
      contemplated hereby.

     

    NOW,
      THEREFORE,
      in
      consideration of the foregoing and the respective representations, warranties,
      covenants and agreements set forth in this Agreement, and intending to be
      legally bound hereby, the Parties agree as follows.

     

    ARTICLE
      I

     

    THE
      MERGER

     

    SECTION
      1.01 The Merger

     

    Upon
      the
      terms and subject to the conditions set forth in this Agreement, and in
      accordance with the NYBCL, at the Effective Time (as defined in
      Section 1.02) Merger Sub shall be merged with and into Company, with
      Company being the surviving corporation (hereinafter sometimes called
“Surviving
      Corporation”)
      in the
      Merger. Upon consummation of the Merger, the separate corporate existence of
      Merger Sub shall cease, and Surviving Corporation shall continue to exist as
      a
      New York corporation.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SECTION
      1.02 Closing Date; Effective Time

     

    (a) Subject
      to the terms and conditions of this Agreement, including the satisfaction or,
      if
      permissible, waiver of the conditions set forth in Article VII of this
      Agreement, the closing of the Merger (the “Closing”
and
      the
      date of such Closing, the “Closing
      Date”)
      will
      take place on May 29, 2008, at 10:00 a.m. local time at the offices of Boylan,
      Brown, Code, Vigdor & Wilson, LLP, 2400 Chase Square, Rochester, New York,
      unless another date or place is agreed to in writing by the Parties

     

    (b) The
      Parties shall cause the Merger to be consummated on the Closing Date by filing
      the Certificate of Merger, in the form attached hereto as Exhibit
      A
      (the
“Certificate
      of Merger”)
      and
      any other appropriate documents with the New York Department of State, in such
      form as required by, and executed in accordance with the relevant provisions
      of,
      the NYBCL (the date and time of such filing being the “Effective
      Time”).

     

    SECTION
      1.03 Effect of the Merger

     

    At
      the
      Effective Time, the effect of the Merger shall be as provided in the applicable
      provisions of the NYBCL. Without limiting the generality of the foregoing,
      and
      subject thereto, at the Effective Time, all the property, rights, privileges,
      powers and franchises of Company and Merger Sub shall vest in Surviving
      Corporation, and all debts, liabilities and duties of Company and Merger Sub
      shall become the debts, liabilities and duties of Surviving
      Corporation.

     

    SECTION
      1.04 Certificate of Incorporation; Bylaws

     

    (a) Unless
      otherwise determined by Parent prior to the Effective Time, at the Effective
      Time, the certificate of incorporation of Company shall be the certificate
      of
      incorporation of Surviving Corporation until thereafter amended as provided
      by
      Law and such certificate of incorporation, except that Company’s certificate of
      incorporation shall be amended and restated at the Effective Time to have the
      same form and substance as the certificate of incorporation of Merger Sub except
      that the name of the Surviving Corporation shall be Val-U-Tech
      Corp.

     

    (b) Unless
      otherwise determined by Parent prior to the Effective Time, at the Effective
      Time, the bylaws of Merger Sub shall continue unchanged and shall be the bylaws
      of Surviving Corporation until thereafter amended as provided by Law, the
      certificate of incorporation of Surviving Corporation and such
      bylaws.

     

    SECTION
      1.05 Directors and Officers

     

    At
      the
      Effective Time, the initial officers and directors of Surviving Corporation
      shall be the persons listed on Exhibit
      B,
      each to
      hold office in accordance with the certificate of incorporation and bylaws
      of
      Surviving Corporation, in each case until their respective successors are duly
      elected or appointed and qualified. 

     

    
      
        
        

      

      
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    SECTION
      1.06 Classes and Series

     

    As
      to
      Company and Merger Sub, the designation and number of outstanding shares of
      each
      class and series, the specification of the classes and series entitled to vote
      on this Agreement, and the specification of each class and series entitled
      to
      vote as a class on this Agreement, is as follows: 

     

    (a) Company:

     

    
      
        	
                Designation of 

              	
                Number of 

              	
                Designation 

              	
                Classes and

              
	
                each outstand- 

              	
                outstanding

              	
                of class and

              	
                series enti-

              
	
                ing class and

              	
                shares of

              	
                series enti-

              	
                tled to vote

              
	
                series of shares

              	
                each class

              	
                tled to vote

              	
                as a class

              


      


      
        	
                Common Stock

              	
                100

              	
                Common
                  Stock

              	
                Common Stock

              


      

    

    


    (b) Merger Sub:

     

    
      
        	
                Designation of 

              	
                Number of 

              	
                Designation

              	
                Classes and

              
	
                each outstand- 

              	
                outstanding 

              	
                of class and

              	
                series enti-

              
	
                ing class and 

              	
                shares of

              	
                series enti-

              	
                tled to vote

              
	
                series of shares

              	
                each class

              	
                tled to vote

              	
                as a class

              


      


      
        	
                Common Stock

              	
                100

              	
                Common Stock

              	
                Common Stock

              


      

    

     

    ARTICLE II

     

    CONVERSION OF SECURITIES; EXCHANGE OF
      CERTIFICATES

     

    SECTION
      2.01 The Merger

     

    At
      the
      Effective Time, by virtue of the Merger and without any action on the part
      of
      Parent, Merger Sub, Company or the holders of any of the securities referred
      to
      in this Section 2.01:

     

    (a) Common
      Stock.
      

     

    (i) Subject
      to Section 2.01(a)(ii), each share of Company Common Stock (excluding any shares
      described in Section 2.01(b)) issued and outstanding immediately prior to
      the Effective Time shall cease to be outstanding and shall be converted into
      and
      exchanged for the right to receive the same proportion of (a) (1) Five Million
      Five Hundred Thousand Dollars (US$5,500,000) (the “Cash
      Purchase Price”),
      (2)
      Five Hundred Thousand (500,000) shares of common stock, par value $0.01, of
      Parent, (“Parent
      Common Stock”),
      and
      (3) "Purchase Notes" (as that term is hereinafter defined) that is (b) in the
      same as proportion as such share of Company Common Stock is of all shares of
      Company Common Stock outstanding on the Closing Date. The Purchase Notes shall
      be in the form of Exhibit 2.01(a)(i) (hereinafter collectively referred to
      as
      "Purchase Notes" and individually referred to as "Purchase Note") and shall
      be
      in an aggregate principal amount equal to (x) 4,500,000, less (y) $1,050,000,
      (c) subject to adjustment as provided herein. The shares of Parent Common Stock
      issuable to the holders of Company Common Stock pursuant hereto, the Cash
      Purchase Price and the Purchase Notes, together with the amount of cash in
      lieu
      of fractional shares of Parent Common Stock payable pursuant to
      Section 2.01(e), are sometimes referred to herein, collectively, as the
“Merger
      Consideration”.
      All
      such shares of Company Common Stock shall cease to be outstanding and shall
      automatically be canceled and retired and shall cease to exist, and each
      certificate previously evidencing any such shares shall thereafter represent
      only the right to receive the Merger Consideration. Except as otherwise provided
      herein or by applicable law, the holders of certificates previously evidencing
      such shares of Company Common Stock outstanding immediately prior to the
      Effective Time shall cease to have any rights with respect to such shares of
      Company Common Stock. Each such certificate previously evidencing such shares
      of
      Company Common Stock shall be exchanged for the Merger Consideration applicable
      thereto.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (ii) The
      Purchase Price and the Purchase Notes shall be increased or decreased, as the
      case may be, in accordance with the following

     

    (a) The
      Purchase Price and the Purchase Notes will be increased by one-half of the
      amount by which, as of the Closing Date, the following are greater than, or
      decreased by one-half of the amount by which the following are less than (as
      the
      case may be), the amounts shown on the Balance Sheet of the Company as of
      December 31, 2007 as audited by Rotenberg & Co. attached to this Agreement
      as Exhibit 2.01(a)(ii) (the “Company
      Balance Sheet”):

     

    i. cash
      and
      cash equivalents; 

     

    ii. net
      inventory, which shall not include any inventory that is (x) more than one
      (1)
      year old, (y) damaged or (z) not useable or saleable in the ordinary course
      of
      the Company’s business within one (1) year after the Closing Date;
      and

     

    iii. accounts
      receivable, which shall not include any account receivable as to which the
      Company has received any notice of dispute, whether verbal or written, or which
      is more than ninety (90) days old as of the Closing Date;

     

    (b) The
      Purchase Price and the Purchase Notes will be decreased by one-half of the
      amount by which, as of the Closing Date, the following are greater than, or
      increased by one-half of the amount by which the following are less than (as
      the
      case may be), the amounts shown on the Company Balance Sheet:

     

    i. accounts
      payable;

     

    ii. accrued
      payroll and vacation; and

     

    iii. other
      current liabilities.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (c) The
      Purchase Price and the Purchase Notes will be decreased by the amount of any
      liabilities as of the Closing Date that are not shown on the Company Balance
      Sheet.

     

    (iii) The
      Purchase Price and the Purchase Notes shall be increased by one-half of the
      amount by which the Company’s revenues from sales of its products and services
      in the ordinary course of its business for the calendar year 2008 (determined
      in
      accordance with Subsection 2.01(a)(vii)) exceed $18,000,000.

     

    (iv) The
      Purchase Price and the Purchase Notes shall be decreased (but not by more than
      the amount of the Purchase Notes, after adjustment as provided elsewhere in
      this
      Agreement) by the amount, if any, by which the Company’s revenues from sales of
      its products and services in the ordinary course of its business for the
      calendar year 2008 (determined in accordance with Subsection 2.01(a) (vii))
      are
      less than $14,000,000.

     

    (v) If
      sales
      by the Company to Harris Corporation of products and services for the calendar
      year 2009 are less than $5,500,000, then the Purchase Price and the Purchase
      Notes shall be reduced by one-half of (a) $5,500,000 less sales of products
      and
      services to Harris Corporation during the calendar year 2009, less (b) the
      amount, if any, by which all of the Company’s revenues from sales of its
      products and services in the ordinary course of its business for the calendar
      year 2009 (excluding the amount of its sales to Harris Corporation, ASML, ViaSat
      and Telephonics) exceed $7,100,000.

     

    As
      an
      example of the application of the foregoing formula, assume:

     

    
      	
               

            	
              (x)
                the Company’s sales to Harris Corporation for the calendar year 2009 are
                $4,000,000 and 

            


    

     

    (y)
      the
      Company’ total sales for the calendar year 2009 (other than sales to Harris
      Corporation, ASML, ViaSat and Telephonics) are $8,100,000

     

    Applying
      the foregoing, the Purchase Price and the Purchase Notes will be reduced by
      one-half of 

     

    (xx)
      $1,500,000 (the excess of $5,500,000 over $4,000,000) less 

     

    (yy)
      $1,000,000 (the excess of $8,100,000 over $7,100,000)

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    The
      reduction in the Purchase Price and the Purchase Notes will be 1⁄2 x ($1,500,000 -
      $1,000,000), or $250,000.

     

    (vi) Promptly,
      but in no event more than forty-five (45) days, after the Closing Date, the
      Parent shall cause its regularly engaged firm of independent certified public
      accountants to conduct an audit the Company’s books and records as of the
      Closing Date, and shall cause them to prepare a balance sheet of the Company
      as
      of the Closing Date in accordance with GAAP (subject to the specific definitions
      contained in Subsection 2.01(a)(ii)). Such balance sheet, shall be used in
      determining the adjustments, if any, that the Parent believes to be required
      by
      subsection 2.01(a)(ii). Parent shall deliver a copy of such balance sheet
      together with a statement of the adjustments, if any, that the Parent believes
      should be made to the Purchase Price and the Purchase Notes to the Shareholder
      Representative (the “Parent
      Notice”),
      promptly after Parent has received such balance sheet from its accountants.
      Following the delivery of the Parent Notice to the Shareholder Representative,
      the Parent shall give and shall cause the Company to give the Shareholder
      Representative and its representatives reasonable access to all of the books
      and
      records of the Company, on reasonable notice and during normal business hours,
      for so long and so often as reasonably required by them, so that the Shareholder
      Representative can determine whether or not the balance sheet and the proposed
      adjustments as set forth in the Parent Notice are accurate. If the Shareholder
      Representative determines that the Parent Notice (and the adjustments indicated
      thereon) was inaccurate, it shall give notice (the “Shareholder
      Notice”)
      of
      such finding to the Parent no later than thirty (30) days after delivery to
      the
      Shareholder Representative of the Parent Notice. Such Shareholder Notice shall
      specify any items or amounts as to which the Shareholder Representative
      disagrees and a detailed statement of the basis of each of the Shareholder
      Representative’s objections. If no such Shareholder Notice is given in
      accordance with this Subsection 2.01(a)(vi), the Parent Notice (and the
      adjustments indicated thereon) shall be conclusive and binding upon the
      parties.

     

    If
      a
      Shareholder Notice is given and the parties are unable to resolve any
      disagreements as to the adjustments required to the Purchase Price and the
      Purchase Notes within thirty (30) days after the Shareholder Notice has been
      given, the items or amounts in dispute shall be referred for resolution to
      the
      Independent Accountants. Promptly, but no later than 20 days after acceptance
      of
      the appointment as Independent Accountants, the Independent Accountants shall
      determine, based primarily on written submissions by Parent and the Shareholder
      Representative, which may be confirmed by independent review if the Independent
      Accountants deem such review to be necessary, only those issues in dispute
      and
      shall render a written report as to the resolution of the dispute and the
      resulting adjustments to the Purchase Price and the Purchase Notes, which shall
      be conclusive and binding on the parties. Parent shall permit the Independent
      Accountants to review the books and records of the Company that relate to the
      items in dispute, during normal business hours and upon reasonable notice.
      In
      resolving any disputed item, the Independent Accountants (x) shall be bound
      by the provisions of this Section 2.01 and (y) may not assign a value to
      any item greater than the greatest value for such items claimed by either party
      or less than the smallest value for such items claimed by either party. Parent
      and the Shareholders (in the aggregate) shall each be responsible for one-half
      (1⁄2) of the fees and expenses charged by the Independent Accountants for their
      services.

     

    
      
        
        

      

      
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    No
      later
      than the third (3rd) business day following the date of final determination
      of
      the adjustments, if any, required to the Purchase Notes in accordance with
      this
      Subsection 2.01(a)(vi), the Shareholder Representative shall deliver to the
      Parent the Purchase Notes delivered at the Closing and the Parent shall deliver
      to the Shareholder Representative replacement Purchase Notes, identical to
      the
      original Purchase Notes but adjusted as to principal amount as provided
      herein.

     

    (vii) In
      connection with the audit of the Parent’s financial statements for its fiscal
      year ended November 30, 2008, the Parent shall cause its auditors to determine
      and certify the Company’s revenues from sales of its products and services in
      the ordinary course of its business for the calendar year 2008, net of
      allowances, discounts, returns, shipping charges and similar costs, in
      accordance with GAAP, and shall deliver a copy of such determination to the
      Shareholder Representative. For purposes of making such determination, (A)
      except as provided in the immediately following subsection (B), all revenues
      from the performance of cable harness work from and after the Closing Date
      by
      either Parent or the Company shall be included in determining the sales of
      the
      Company, it being the intention of the Parties that all such work shall be
      performed by the Company and not by Parent from and after the Closing Date,
      and
      (B) notwithstanding the foregoing, no revenues from the performance of cable
      harness work by either Parent or the Company for ASML, ViaSat and Telephonics
      shall be included in determining the gross sales of the Company. 

     

    Parent
      shall deliver a copy of such auditor’s determination with a statement of the
      adjustments, if any, that the Parent believes should be made to the Purchase
      Price and the Purchase Notes pursuant to Subsection 2(a)(iv) to the Shareholder
      Representative (the “Second Parent
      Notice”),
      promptly after Parent has received such determination from its accountants.
      Following the delivery of the Second Parent Notice to the Shareholder
      Representative, the Parent shall give and shall cause the Company to give the
      Shareholder Representative and its representatives reasonable access to such
      of
      the books and records of the Company, on reasonable notice and during normal
      business hours, for so long and so often as reasonably required by them, to
      the
      extent necessary to verify such determination and the proposed adjustments
      as
      set forth in the Second Parent Notice are accurate. If the Shareholder
      Representative determines that Second Parent Notice (and the adjustments
      indicated thereon) was inaccurate, it shall give notice (the “Second
Shareholder
      Notice”)
      of
      such finding to the Parent no later than thirty (30) days after delivery to
      the
      Shareholder Representative of the Second Parent Notice. Such Second Shareholder
      Notice shall specify any items or amounts as to which the Shareholder
      Representative disagrees and a detailed statement of the basis of each of the
      Shareholder Representative’s objections. If no such Second Shareholder Notice is
      given in accordance with this Subsection 2.01(a)(viii), the Second Parent Notice
      (and the adjustments indicated thereon) shall be conclusive and binding upon
      the
      parties.

     

    If
      a
      Second Shareholder Notice is given and the parties are unable to resolve any
      disagreements as to the adjustments required to the Purchase Price and the
      Purchase Notes within thirty (30) days after the Second Shareholder Notice
      has
      been given, the items or amounts in dispute shall be referred for resolution
      to
      the Independent Accountants. Promptly, but no later than 20 days after
      acceptance of the appointment as Independent Accountants, the Independent
      Accountants shall determine, based primarily on written submissions by Parent
      and the Shareholder Representative, which may be confirmed by independent review
      if the Independent Accountants deem such review to be necessary, only those
      issues in dispute and shall render a written report as to the resolution of
      the
      dispute and the resulting adjustments to the Purchase Price and the Purchase
      Notes, which shall be conclusive and binding on the parties. Parent shall permit
      the Independent Accountants to review the books and records of the Company
      that
      relate to the items in dispute, during normal business hours and upon reasonable
      notice. In resolving any disputed item, the Independent Accountants
      (x) shall be bound by the provisions of this Section 2.01 and (y) may
      not assign a value to any item greater than the greatest value for such items
      claimed by either party or less than the smallest value for such items claimed
      by either party. Parent and the Shareholders (in the aggregate) shall each
      be
      responsible for one-half (1⁄2) of the fees and expenses charged by the Independent
      Accountants for their services.

     

    
      
        
        

      

      
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    No
      later
      than the third (3rd) business day following the date of final determination
      of
      the adjustments, if any, required to the Purchase Notes in accordance with
      this
      Subsection 2.01(a)(vii), the Shareholder Representative shall deliver to the
      Parent the Purchase Notes previously delivered to the Shareholders and the
      Parent shall deliver to the Shareholder Representative replacement Purchase
      Notes, identical to the original Purchase Notes but adjusted as to principal
      amount as provided herein.

     

    (vii) On
      or
      before January 31, 2010, the Parent shall deliver to the Shareholder
      Representative its calculation of any adjustments required to be made to the
      Purchase Price and the Purchase Notes pursuant to Subsection 2.01(a) (v) (the
      “Third Parent
      Notice”).
      Following the delivery of the Third Parent Notice to the Shareholder
      Representative, the Parent shall give and shall cause the Company to give the
      Shareholder Representative and its representatives reasonable access to such
      of
      the books and records of the Company, on reasonable notice and during normal
      business hours, for so long and so often as reasonably required by them, to
      the
      extent necessary to verify such calculation and the data upon which it is
      based.. If the Shareholder Representative determines that Third Parent Notice
      (and the adjustments indicated thereon) was inaccurate, it shall give notice
      (the “Third Shareholder
      Notice”)
      of
      such finding to the Parent no later than thirty (30) days after delivery to
      the
      Third Representative of the Third Parent Notice. Such Third Shareholder Notice
      shall specify any items or amounts as to which the Shareholder Representative
      disagrees and a detailed statement of the basis of each of the Shareholder
      Representative’s objections. If no such Third Shareholder Notice is given in
      accordance with this Subsection 2.01(a)(viii), the Third Parent Notice (and
      the
      adjustments indicated thereon) shall be conclusive and binding upon the
      parties.

     

    If
      a
      Third Shareholder Notice is given and the parties are unable to resolve any
      disagreements as to the adjustments required to the Purchase Price and the
      Purchase Notes within thirty (30) days after the Third Shareholder Notice has
      been given, the items or amounts in dispute shall be referred for resolution
      to
      the Independent Accountants. Promptly, but no later than 20 days after
      acceptance of the appointment as Independent Accountants, the Independent
      Accountants shall determine, based primarily on written submissions by Parent
      and the Shareholder Representative, which may be confirmed by independent review
      if the Independent Accountants deem such review to be necessary, only those
      issues in dispute and shall render a written report as to the resolution of
      the
      dispute and the resulting adjustments to the Purchase Price and the Purchase
      Notes, which shall be conclusive and binding on the parties. Parent shall permit
      the Independent Accountants to review the books and records of the Company
      that
      relate to the items in dispute, during normal business hours and upon reasonable
      notice. In resolving any disputed item, the Independent Accountants
      (x) shall be bound by the provisions of this Section 2.01 and (y) may
      not assign a value to any item greater than the greatest value for such items
      claimed by either party or less than the smallest value for such items claimed
      by either party. Parent and the Shareholders (in the aggregate) shall each
      be
      responsible for one-half (1⁄2) of the fees and expenses charged by the Independent
      Accountants for their services.

     

    
      
        
        

      

      
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    No
      later
      than the third (3rd) business day following the date of final determination
      of
      the adjustments, if any, required to the Purchase Notes in accordance with
      this
      Subsection 2.01(a)(viii), the Shareholder Representative shall deliver to the
      Parent the Purchase Notes previously delivered to the Shareholders and the
      Parent shall deliver to the Shareholder Representative replacement Purchase
      Notes, identical to the original Purchase Notes but adjusted as to principal
      amount as provided herein.

     

    (b) Treasury
      Stock.
      All
      shares of capital stock of Company held in the treasury of Company immediately
      prior to the Effective Time shall be canceled and extinguished without any
      conversion thereof and no amount shall be delivered or deliverable in exchange
      therefor.

     

    (c) Merger
      Sub Stock.
      Each
      share of common stock, par value $.01 per share, of Merger Sub issued and
      outstanding immediately prior to the Effective Time (“Merger
      Sub Stock”)
      shall
      be converted into and exchanged for one (1) duly and validly issued, fully
      paid
      and non-assessable share of common stock of the Surviving
      Corporation.

     

    (d) No
      Fractional Shares.
      No
      certificate or scrip representing any fractional shares of Parent Common Stock
      shall be issued pursuant to Section 2.01(a), and other than the right to
      receive the cash payment pursuant to this Section 2.01(d) any such
      fractional interests shall not entitle the owner thereof to any rights as a
      security holder of Parent. Notwithstanding any other provision hereof, all
      holders of Company Common Stock otherwise entitled to receive fractional shares
      of Parent Common Stock pursuant to Section 2.01(a) shall be entitled to
      receive, in lieu thereof, cash (without interest) in an amount equal to the
      product of (i) such fractional part of a share of Parent Common Stock to
      which the holder of Company Common Stock would otherwise be entitled under
      Sections 2.01(a) multiplied by the Average Parent Trading Price as of the
      Closing Date. As promptly as possible after the determination of the amount
      of
      cash to be paid to holders of fractional interests, Parent shall forward
      payments to holders of such fractional interests subject to and in accordance
      with the terms hereof.

     

    SECTION
      2.02 Exchange of Certificates
      and Merger Consideration

     

    (a) Payment
      Procedures.
      At the
      Closing, upon surrender to Parent by each Company Shareholder of the certificate
      or certificates (each a “Certificate”
and
      collectively, the “Certificates”)
      representing all of the shares of Company Common Stock owned by such Company
      Shareholder immediately prior to the Effective Time, together with any other
      documents required by Parent, Parent shall issue and deliver to each such
      Company Shareholder his, her or its pro rata share of the Merger Consideration,
      which shall consist of (i) a certificate for Parent Common Stock which shall
      be
      registered in the name of such Company Shareholder which shall bear legends
      as
      set forth on Exhibit 2.02(a), (ii) a Purchase Note payable to such Company
      Shareholder; and (iii) the Cash Purchase Price payable to such Company
      Shareholder, which together shall represent the entire Merger Consideration.
      Until surrendered in accordance with the provisions of this Section 2.02,
      each Certificate shall represent for all purposes only the right to receive
      the
      applicable consideration set forth in Section 2.01, without any interest
      thereon.

     

    
      
        
        

      

      
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    (b) No
      Further Rights in Stock.
      All
      shares of Parent Common Stock issued upon the surrender for exchange of
      Certificates in accordance with the terms of Sections 2.01 and 2.02
      (including any cash paid pursuant to this Article II) shall be deemed to
      have been issued (and paid) in full satisfaction of all rights pertaining to
      the
      shares of Company Common Stock theretofore represented by such Certificates,
      and
      there shall be no further registration of transfer on the stock transfer books
      of the Surviving Corporation of the shares of Company Common Stock represented
      by such Certificates which were outstanding immediately prior to the Effective
      Time. If, after the Effective Time, any such Certificates are presented to
      Parent or the Surviving Corporation for any reason, they shall be canceled
      and
      exchanged as provided in this Article II, except as otherwise provided by
      Law.

     

    (c) Withholding
      of Tax.
      Parent
      shall be entitled to deduct and withhold from the applicable amount of the
      Merger Consideration otherwise issuable to, and any cash payment in lieu of
      fractional shares otherwise payable pursuant to this Agreement to, any former
      holder of Company Common Stock such amounts as Parent (or any Affiliate thereof)
      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 that amounts are so withheld by Parent (or any Affiliate thereof), such
      withheld amounts shall be treated for all purposes of this Agreement as having
      been paid to the former holder of Company Common Stock in respect of whom such
      deduction and withholding was made by Parent (or any Affiliate
      thereof).

     

    (d) Lost,
      Stolen or Destroyed Certificates.
      In the
      event any Certificate evidencing shares of Company Common Stock shall have
      been
      lost, stolen or destroyed, upon the making of an affidavit setting forth that
      fact by the Person claiming such lost, stolen or destroyed Certificate 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 Parent or the Surviving Corporation with respect to such Certificate,
      Parent shall pay to such Person the applicable Merger Consideration and any
      cash
      in lieu of fractional shares with respect to such lost, stolen or destroyed
      Certificate.

     

    (e) Distributions
      With Respect to Unexchanged Shares of Parent Common Stock.
      No
      dividends or other distributions declared or made after the Effective Time
      with
      respect to Parent Common Stock with a record date after the Effective Time
      shall
      be paid to the holder of any unsurrendered Certificate with respect to the
      shares of Parent Common Stock evidenced thereby until the holder of such
      Certificate shall properly surrender such Certificate in accordance with the
      requirements of Section 2.02(a). Subject to the effect of escheat, tax or other
      applicable Laws, following surrender of any such Certificate, there shall be
      paid to the holder of the Certificates evidencing whole shares of Parent Common
      Stock issued in exchange therefor, without interest, (i) promptly, the amount
      of
      dividends or other distributions with a record date after the Effective Time
      and
      theretofore paid with respect to such whole shares of Parent Common Stock,
      and
      (ii) at the appropriate payment date, the amount of dividends or other
      distributions, with a record date after the Effective Time but prior to
      surrender and a payment date occurring after surrender, payable with respect
      to
      such whole shares of Parent Common Stock. 

     

    
      
        
        

      

      
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    SECTION
      2.03 Certain Adjustments

     

    If
      between the date hereof and the Effective Time, the outstanding shares of
      Company Common Stock or of Parent Common Stock shall be changed into a different
      number of shares by reason of any reclassification, recapitalization, split-up,
      combination or exchange of shares, or any dividend payable in stock or other
      securities shall be declared thereon with a record date within such period,
      the
      Merger Consideration per share of Company Common Stock shall be adjusted
      accordingly to provide the same economic effect as contemplated by this
      Agreement prior to such reclassification, recapitalization, split-up,
      combination, exchange or dividend.

     

    SECTION
      2.04 Shareholders’ Representative

     

    The
      Shareholder Representative shall, by virtue of the Merger, be appointed
      attorney-in-fact and authorized and empowered to act, for and on behalf of
      any
      or all of Company Shareholders (with full power of substitution in the
      premises), in connection with the provisions of Article IX as they relate to
      Company and Company Shareholders generally, and such other matters as are
      reasonably necessary for the consummation of the transactions contemplated
      hereby including, without limitation, (i) to compromise on their behalf
      with Parent any claims asserted thereunder, (ii) to execute and deliver on
      behalf of Company Shareholders any documents or agreements contemplated by
      or
      necessary or desirable in connection with this Agreement, (iii) to administer
      and resolve any disputes with respect to the computation of any adjustments
      to
      the Purchase Price and the Purchase Notes and (iv) to take such further
      actions including coordinating and administering post-closing matters related
      to
      the rights and obligations of Company Shareholders (including exchanges of
      the
      Purchase Notes) as are authorized in this Agreement (the above named
      representative, as well as any subsequent representative of Company Shareholders
      appointed by Company Shareholders being referred to herein as the “Shareholders’
      Representative”).
      The
      Shareholders’ Representative shall not be liable to any Company Shareholder,
      Parent, the Surviving Corporation or their respective Affiliates or any other
      Person with respect to any action taken or omitted to be taken by the
      Shareholders’ Representative in his role as Shareholders’ Representative under
      or in connection with this Agreement unless such action or omission results
      from
      or arises out of fraud, gross negligence, willful misconduct or bad faith on
      the
      part of the Shareholders’ Representative. Parent, Merger Sub and the Surviving
      Corporation shall be entitled to rely on such appointment and treat such
      Shareholders’ Representative as the duly appointed attorney-in-fact of each
      Company Shareholder. Each Company Shareholder who votes in favor of the Merger
      pursuant to the terms hereof, by such vote and without any further action,
      and
      each Company Shareholder who receives Merger Consideration in connection with
      the Merger, by acceptance thereof and without any further action, confirms
      such
      appointment and authority.

     

    
      
        
        

      

      
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    ARTICLE
      III

    


    REPRESENTATIONS
      AND WARRANTIES OF COMPANY 

    AND
      COMPANY SHAREHOLDERS

     

    Except
      as
      specifically set forth in this Agreement, Company and each of the Company
      Shareholders hereby jointly and severally represents, warrants to and agrees
      with Parent and Merger Sub as follows, in each case as of the date of this
      Agreement and as of the Closing Date:

     

    SECTION
      3.01 Organization and Qualification

     

    Company
      is a corporation duly organized, validly existing and in good standing under
      the
      laws of the State of New York, and has the full and unrestricted corporate
      power
      and authority to own, operate and lease its Assets, to carry on its business
      as
      currently conducted, to execute and deliver this Agreement and to carry out
      the
      transactions contemplated hereby. Company is duly qualified to conduct business
      as a foreign corporation and is in good standing in the states, countries and
      territories listed in Schedule 3.01, which are the only jurisdictions where
      the
      nature of its business or the ownership, operation or leasing of its Assets
      makes such qualification necessary.

     

    SECTION
      3.02 No Subsidiaries;
      Other Interests

     

    Company
      has no Subsidiaries. Company has no equity investment or other interest in,
      nor
      has Company made advances or loans to, any Person.

     

    SECTION
      3.03 Certificate of Incorporation and Bylaws

     

    Company
      has furnished to Parent a true and complete copy of the certificate of
      incorporation of Company, as currently in effect on the date of this Agreement,
      and a true and correct copy of Company’s bylaws, as currently in effect on the
      date of this Agreement, in each case certified by the corporate secretary of
      Company. Company is not in violation of any of the provisions of its certificate
      of incorporation or bylaws.

     

    SECTION
      3.04 Capitalization

     

    The
      authorized capital stock of Company consists of two hundred (200) shares of
      common stock, no par value per share, of which one hundred (100) shares of
      common stock (the “Company
      Common Stock”)
      are
      issued and outstanding, all of which are duly authorized, validly issued, fully
      paid and non-assessable except as provided in Section 630 of the NYBCL. No
      shares of common stock are held in the treasury of Company. Schedule 3.04 sets
      forth the names and addresses of all holders of record of Company Common Stock
      and the number and class of shares held by each such shareholder. No other
      shares of Company Common Stock have been reserved for any purpose. There are
      no
      outstanding securities convertible into or exchangeable for Company Common
      Stock, any other securities of any Company and no outstanding options, rights
      (preemptive or otherwise), or warrants to purchase or to subscribe for any
      shares of such stock or other securities of Company. There are no outstanding
      Agreements affecting or relating to the voting, issuance, purchase, redemption,
      registration, repurchase or transfer of Company Common Stock or any other
      securities of Company. Each of the outstanding shares of Company Common Stock
      was issued in compliance with all applicable federal and state Laws concerning
      the issuance of securities. There are no obligations, contingent or otherwise,
      of Company to provide funds to, make any investment (in the form of a loan,
      capital contribution or otherwise) in, or provide any guarantee with respect
      to,
      any Person. There are no Agreements pursuant to which any Person (other than
      Company) is or may be entitled to receive any of the revenues or earnings,
      or
      any payment based thereon or calculated in accordance therewith, of
      Company.

     

    
      
        
        

      

      
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    SECTION
      3.05 Authority; Binding Obligation

     

    The
      execution and delivery by Company of this Agreement, the execution and delivery
      by Company of all other Agreements, documents, certificates or other instruments
      contemplated hereby, and the consummation by Company of the transactions
      contemplated hereby and thereby, have been duly authorized by all necessary
      corporate action, and no other corporate proceedings on the part of Company
      are
      necessary to authorize this Agreement and the other Agreements, documents,
      certificates or other instruments contemplated hereby, or to consummate the
      transactions contemplated hereby and thereby. This Agreement has been duly
      executed and delivered by Company and the Company Shareholder and constitutes
      the legal, valid and binding obligation of Company and the Company Shareholder,
      enforceable against each of them in accordance with its terms, except as such
      enforceability may be subject to the effects of any applicable bankruptcy,
      insolvency, fraudulent conveyance, reorganization, moratorium or similar Laws
      affecting creditors’ rights generally and subject to the effects of general
      equitable principles (whether considered in a proceeding in equity or at
      law).

     

    SECTION
      3.06 No Conflict; Required Filings and Consents

     

    (a) The
      execution, delivery and performance by Company and the Company Shareholders
      of
      this Agreement and all other Agreements, documents, certificates or other
      instruments contemplated hereby, the fulfillment of and compliance with the
      respective terms and provisions hereof and thereof, and the consummation by
      Company and the Company Shareholders of the transactions contemplated hereby
      and
      thereby, do not and will not: (i) conflict with, or violate any provision
      of, the certificate of incorporation or bylaws of Company; (ii) conflict
      with or violate any Law applicable to Company, its Assets or the Company
      Shareholders; (iii) conflict with, result in any breach of, or constitute a
      default (or an event that with notice or lapse of time or both would become
      a
      default) or result in the termination or acceleration, or create in another
      Person, a put right, purchase obligation or similar right under any Agreement
      to
      which Company or the Company Shareholders is a party or by which any of them,
      or
      any of the Company’s Assets, may be bound; or (iv) result in or require the
      creation or imposition of, or result in the acceleration of, any indebtedness
      or
      any Encumbrance of any nature upon, or with respect to, Company or any of the
      Assets now owned or hereafter acquired by Company.

     

    
      
        
        

      

      
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    (b) Except
      as
      set forth on Schedule 3.06, the execution, delivery and performance by Company
      and the Company Shareholders of this Agreement and all other Agreements,
      documents, certificates or other instruments contemplated hereby, the
      fulfillment of and compliance with the respective terms and provisions hereof
      and thereof, and the consummation by Company of the transactions contemplated
      hereby and thereby, do not and will not: (i) require any consent, approval,
      authorization or permit of, or filing with or notification to, any Person not
      party to this Agreement, except (A) the filing and recordation of the
      Certificate of Merger as required by the NYBCL and (B) where the failure to
      obtain any consent, approval, authorization or permit or to make any filing
      or
      notification otherwise required to be disclosed hereunder would not have a
      Company Material Adverse Effect; or (ii) result in or give rise to any penalty,
      forfeiture, Agreement termination, right of termination, amendment or
      cancellation, or restriction on business operations of Company that would have
      a
      Company Material Adverse Effect.

     

    (c) All
      returns, reports, statements and other documents required to be filed by Company
      with any Governmental Entity have been filed in a timely manner and complied
      with and are true, correct and complete in all material respects (and any
      related fees required to be paid have been paid in full). All material records
      of every type and nature relating to the business, operations or Assets of
      Company have been maintained in all material respects in accordance with good
      business practices and the rules of any Governmental Entity and are maintained
      at Company.

     

    (d) No
      Governmental Entity or any other Person has notified Company that such
      Governmental Entity or other Person intends to object to the transactions
      contemplated hereunder which shall include for this purpose any objection to
      the
      operations of the business of Company as part of Parent. Company is not aware
      of
      any fact or circumstance related to it that would reasonably be expected to
      (i) cause the filing of any objection to any application for any
      Governmental consent required hereunder, (ii) lead to any delay in processing
      such application or (iii) require any waiver of any Governmental rule,
      policy or other applicable law.

     

    SECTION
      3.07 Intellectual Property

     

    (a) Schedule
      3.07 identifies each item of Intellectual Property (i) owned by Company, (ii)
      owned by any third party and used by Company pursuant to license, sublicense
      or
      other Agreement or (iii) otherwise used by Company and not otherwise
      generally used by Persons similarly situated (including, in each case,
      specification of whether each such item is owned, licensed or used by Company).
      In addition, Company has not licensed (as licensor), sublicensed (as
      sublicensor) or entered into any other agreement with respect to the use of
      any
      Intellectual Property. 

     

    (b) Company
      either owns or has adequate rights to use all of the Intellectual Property
      that
      is necessary to, and currently used for, its business as now conducted or
      currently proposed to be conducted, and such Intellectual Property is free
      and
      clear of Encumbrances. Company has previously furnished to Parent evidence
      of
      either ownership by Company of or license rights to use its Intellectual
      Property.

     

    
      
        
        

      

      
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    (c) There
      are
      no pending or, to Company’s knowledge, threatened claims against Company
      alleging that the conduct of its business infringes any Intellectual Property
      rights of others that would have a Company Material Adverse Effect. The business
      of Company as now conducted or proposed to be conducted does not infringe any
      third-party Intellectual Property rights.

     

    (d) To
      Company’s knowledge, no third party is infringing upon any of Company’s
      Intellectual Property, and Company has not notified any third party that it
      believes such third party is interfering with, infringing, or misappropriating
      any of Company’s Intellectual Property or engaging in any act of unfair
      competition. Company has the right to bring an action for the infringement
      of
      all of its Intellectual Property that is owned by Company.

     

    (e) Except
      as
      set forth in the next sentence, Company has taken all steps that are customary
      in its industry to protect Company’s rights in confidential information and
      trade secrets of Company or provided by any other Person to Company. Company
      does not require each employee, director, consultant or contractor to execute
      a
      confidentiality and non-disclosure agreement. The names of those of its present
      and former employees who have executed such agreements are listed on Schedule
      3.07, and copies of such agreements have been provided to Parent.

     

    (f) To
      Company's Knowledge, the operation of the business of Company as it currently
      is
      conducted or currently proposed to be conducted by Company does not and will
      not
      and will not when conducted by Parent or the Surviving Corporation in
      substantially the same manner following the Closing, infringe or misappropriate
      any Intellectual Property right of any person, violate any right of any person
      (including any right to privacy or publicity), or constitute unfair competition
      or trade practices under the laws of any jurisdiction.

     

    (g) Neither
      this Agreement nor the transactions contemplated by this Agreement, will result
      in (i) either Parent or the Surviving Corporation granting to any third
      party any right to or with respect to any Intellectual Property right owned
      by,
      or licensed to, either of them, (ii) either Parent’s or the Surviving
      Corporation’s being
      bound by, or subject to, any non-compete or other restriction on the operation
      or scope of their respective businesses, or (iii) either Parent’s or the
      Surviving Corporation’s being
      obligated to pay any royalties or other amounts to any third party in excess
      of
      those payable by Parent or the Surviving Corporation, respectively, prior to
      the
      Closing.

     

    SECTION 3.08
      Financial Statements
      and Condition

     

    (a) Company
      has prepared (i) the balance sheets of Company as of the end of the fiscal
      year
      ending on December 31, 2005 and the statements of income, equity and changes
      in
      financial position for fiscal year, compiled by Davie, Kaplan, Chapman &
Braverman, PC, (ii) the balance sheet of Company as of the end of the fiscal
      year ending on December 31, 2006 and the statements of income, equity and
      changes in financial position for such fiscal year, audited by Rotenberg &
Co., (iii) the balance sheet of Company as of October 31, 2007 and the
      statements of income, equity and changes in financial position for the period
      of
      the fiscal year then ended, reviewed by Davie, Kaplan, Chapman & Braverman,
      PC, (iv) the balance sheet of Company as of the end of the fiscal year ending
      on
      December 31, 2007 and the statements of income, equity and changes in financial
      position for such fiscal year, audited by Rotenberg & Co., accompanied by
      the related report of Rotenberg & Co. dated April 18, 2008 ("Rotenberg
      Management Letter"), (iii) the unaudited balance sheet of the Company as of
      March 31, 2008, and the unaudited statements of income, Company’s equity and
      changes in financial position for the three-month period ended March 31, 2008
      (collectively, the “Company
      Financial Statements”).
      A
      true and complete copy of Company Financial Statement has been delivered to
      Parent and is attached as Schedule 3.08.

     

    
      
        
        

      

      
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    (b) Company
      Financial Statements, including, without limitation, the notes thereto, (i)
      have
      been prepared in accordance with the books and records of Company and
      (ii) present fairly the financial position of Company and its results of
      operations and cash flows in accordance with GAAP applied on a basis consistent
      with prior accounting periods, subject in the case of unaudited statements,
      to
      normal year-end adjustments.

     

    (c) Company
      does not expect any year-end audit adjustments for the current fiscal year
      ending December 31, 2008. To the knowledge of Company, there are no anticipated
      material charges or write-offs of a non-recurring nature for the fiscal year
      ending December 31, 2008.

     

    (d) Except
      as
      set forth in the Rotenberg Management Letter, Company maintains a system of
      internal accounting controls sufficient to provide reasonable assurance that
      (i)
      transactions are executed in accordance with management’s general or specific
      authorizations; (ii) transactions are recorded as necessary to permit
      preparation of financial statements in conformity with GAAP and to maintain
      asset accountability; (iii) access to assets is permitted only in accordance
      with management’s general or specific authorization; and (iv) the recorded
      accountability for assets is compared with the existing assets at reasonable
      intervals and appropriate action is taken with respect to any
      differences.

     

    (e) Schedule
      3.08 lists all of the changes in the methods of accounting or accounting
      practices or policies of Company since its inception.

     

    SECTION
      3.09 Absence
      of Certain Developments

     

    Since
      December 31, 2007:

     

    (a) the
      business of Company has been conducted in all material respects only in the
      Ordinary Course of Business; 

     

    (b) Company
      has not become liable in respect of any guarantee nor has it incurred or
      otherwise become liable in respect of any debt, except for borrowings, letters
      of credit and bankers’ acceptances in the Ordinary Course of Business under
      credit facilities in existence on December 31, 2007;

     

    (c) Company
      has not mortgaged, pledged or subjected to any lien any of its property,
      business or assets, except for purchase money or similar security interests
      granted in connection with the purchase of equipment or supplies in the Ordinary
      Course of Business in an amount not exceeding $10,000 in the
      aggregate;

     

    
      
        
        

      

      
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    (d) Company
      has not made any declaration, setting aside or payment of any dividend or other
      distribution with respect to, or repurchase of, any of its capital stock or
      other equity interests;

     

    (e) Company
      has not (i) acquired or leased from any other Person any material assets, or
      sold or leased to any other Person or otherwise disposed of any material assets
      (in each case except for assets acquired or sold in the Ordinary Course of
      Business in connection with goods and services provided to customers); (ii)
      entered into any contractual obligation relating to (A) the purchase or sale
      of
      any capital stock, partnership interest or other equity interest in any Person,
      (B) the purchase of assets constituting a business or (C) any merger,
      consolidation or other business combination; (iii) entered into or amended
      any
      lease of real property or material personal property (whether as lessor or
      lessee); (iv) canceled or compromised any debt or claim other than accounts
      receivable in the Ordinary Course of Business; (v) sold, transferred, licensed
      or otherwise disposed of any material intangible assets other than in the
      Ordinary Course of Business; (vi) waived or released any right of substantial
      value; (vii) instituted, settled or agreed to settle any material action; or
      (viii) entered into or consummated any transaction with any
      Affiliate;

     

    (f) there
      has
      been no loss, destruction or damage to any material item of property of Company,
      whether or not insured, which has had or could reasonably be expected to have
      a
      Company Material Adverse Effect;

     

    (g) other
      than in the Ordinary Course of Business and consistent with past practices,
      Company has not made any changes in the rate of compensation payable or paid,
      or
      agreed or orally promised to pay, conditionally or otherwise, any extra
      compensation, or severance or vacation pay, to any director, officer, employee,
      consultant or agent of Company;

     

    (h) there
      has
      been no material labor trouble (including any work slowdown, stoppage or strike)
      involving Company or any material change in any of its personnel or the terms
      and conditions of the employment of such personnel;

     

    (i) Company
      has not made any change in (x) its methods of accounting or accounting
      practices, except as required by GAAP, or (y) its pricing policies or payment
      or
      credit practices or failed to pay any creditor any amount owed to such creditor
      when due or granted any extensions or credit other than in the Ordinary Course
      of Business;

     

    (j) Company
      has not made any loan, advance or capital contributions to, or any other
      investment in, any Person;

     

    (k) Company
      has not adopted or increased any benefits under any Plan in any material
      manner;

     

    (l) Company
      has not written up or written down any of its material Assets;

     

    
      
        
        

      

      
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    (m) Company
      has not terminated or amended, or failed in any material respect to perform
      obligations or suffered the occurrence of any default under any material
      contractual obligation; and

     

    (n) Company
      has not entered into any contractual obligation to do any of the things referred
      to elsewhere in this Section 3.09.

     

    SECTION
      3.10 Absence of Undisclosed Liabilities

     

    There
      are
      no material liabilities or obligations (whether absolute or contingent, matured
      or unmatured, known or unknown) of Company, including but not limited to
      liabilities for Taxes and that are not reflected, or reserved against, in the
      audited balance sheet of Company as of December 31, 2007, except for those
      that
      may have been incurred after December 31, 2007 in the Ordinary Course of
      Business or that are not material in amount either individually or collectively.
      Since December 31, 2007, Company has not incurred any material liabilities
      or
      obligations (whether absolute or contingent, matured or unmatured, known or
      unknown) other than in the Ordinary Course of Business. All bonuses and
      incentive compensation (including, without limitation, all compensation-related
      expenses) have been accrued on Company Financial Statements based on GAAP and
      consistent with past practices.

     

    SECTION
      3.11 Litigation;
      Disputes

     

    (a) Company
      has not received notice of, and there is no pending, or, to the knowledge of
      Company or the Company Shareholders, threatened, action, suit, claim,
      arbitration, proceeding or investigation against, affecting or involving Company
      or its business or Assets, or the transactions contemplated by this Agreement,
      at law or in equity, or before or by any domestic or foreign court, arbitrator
      or Governmental Entity. Company is not (i) operating under or subject to
      any order, award, writ, injunction, decree or judgment of any court, arbitrator
      or Governmental Entity or (ii) in default with respect to any order, award,
      writ, injunction, decree or judgment of any court, arbitrator or Governmental
      Entity.

     

    (b) Company
      has complied and is in compliance in all material respects with all Laws,
      awards, orders, judgments, decrees and injunctions applicable to Company and
      its
      business or Assets, including all federal, state and local Laws and orders
      pertaining to employment or labor, safety, health, zoning and other matters.
      Company has obtained and holds all permits, licenses and approvals (none of
      which has been materially modified or rescinded and all of which are in full
      force and effect) from all government authorities necessary in order to own,
      use
      and maintain its Assets and to conduct its business as presently conducted.
      None
      of such permits, licenses or approvals will be terminated or modified as a
      result of the consummation of the merger.

     

    SECTION
      3.12 Real Property

     

    (a) Schedule
      3.12
      lists each real property lease under which Company is the lessee or lessor.
      Company is the owner and holder of the leasehold estates purported to be granted
      to it by the leases listed in Schedule
      3.12.
      Each such lease is in full force and effect and, to the knowledge of Company,
      constitutes a legal, valid and binding obligation of, and is legally enforceable
      in all material respects against, the respective parties thereto. Company has
      in
      all material respects performed all material obligations thereunder required
      to
      be performed by any of them to date. To the knowledge of Company and the Company
      Shareholders, no party is in default in any material respect under any of the
      foregoing, and there has not occurred any event which (whether with or without
      notice, lapse of time or the happening or occurrence of any other event) would
      constitute such a material default. 

     

    
      
        
        

      

      
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    (b) Company
      does not own or hold interests (other than leasehold interests) in any Real
      Property.

     

    SECTION
      3.13 Other Agreements; No Default

     

    Schedules
      3.12 and 3.13 list each Agreement to which Company is a party or by which
      Company, or any of its Assets, is bound, and which (i) involves expenditures
      or
      receipts by Company (other than contracts, commitments or Agreements which
      do
      not require payments or yield receipts of more than $10,000 in any twelve (12)
      month period or more than $25,000 in the aggregate); or (ii) contain covenants
      that limit the freedom of Company to engage in a line of business or to compete
      with any third party (Agreements listed pursuant to clauses (i) and (ii) above,
      collectively the “Company
      Contracts”).
      Each
      Company Contract is in full force and effect, constitutes a valid and binding
      obligation of and is legally enforceable in accordance with its terms against
      Company and, to the knowledge of Company and the Company Shareholders, all
      Company Contracts are valid, binding and enforceable obligations of the other
      parties thereto, except as such enforceability may be subject to the effects
      of
      any applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
      moratorium or similar Laws affecting creditors’ rights generally or subject to
      the effects of general equitable principles (whether considered in a proceeding
      in equity or at law). Company has complied with all of the provisions of such
      Company Contracts and is not in default thereunder, and there has not occurred
      any event which (whether with or without notice, lapse of time, or the happening
      or occurrence of any other event) would constitute such a default, and the
      execution of this Agreement by Company and its performance hereunder will not
      cause, or result in, a breach or default under any Company Contract. There
      has
      not been (A) any failure by Company or, to the knowledge of Company and the
      Company Shareholders, any other party to any such Company Contract to comply
      with all material provisions thereof, (B) any default by Company or, to the
      knowledge of Company and the Company Shareholders, any other party thereunder,
      or (C) to the knowledge of Company and the Company Shareholders (X) any
      threatened cancellation thereof or (Y) any outstanding dispute thereunder.
      Company is not a guarantor or otherwise liable for any liability or obligation
      (including indebtedness) of any other Person.

     

    SECTION
      3.14 Labor Relations

     

    There
      are
      no collective bargaining or other labor union Agreements to which Company is
      a
      party. There are, and for the past two (2) years have been, no strikes, work
      stoppages, union organization efforts or lawsuits (other than grievance
      proceedings) pending or, to the knowledge of Company and the Company
      Shareholders, threatened or reasonably anticipated between Company and
      (a) any current or former employees of Company or (b) any union or
      other collective bargaining unit representing such employees. There is no unfair
      labor practice charge or complaint, or other proceeding, against the Company
      pending, or to the knowledge of the Company and the Company Shareholders,
      threatened before the National Labor Relations Board or any similar state or
      foreign agency. Company has complied and is in compliance with all Laws relating
      to employment, labor, or the workplace, including, without limitation, Laws
      relating to wages, hours, collective bargaining, safety and health, work
      authorization, equal employment opportunity, immigration, withholding,
      unemployment compensation, worker’s compensation, employee privacy and right to
      know, except where the failure so to comply would not have a Company Material
      Adverse Effect. Company has not incurred any liability under, and has complied
      in all respects with, the Worker Adjustment Retraining Notification Act and
      the
      regulations promulgated thereunder and does not reasonably expect to incur
      any
      such liability as a result of actions taken or not taken prior to the
      consummation of the transactions contemplated hereunder.

     

    
      
        
        

      

      
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    SECTION
      3.15 Pension and Benefit Plans

     

    (a) Company
      has delivered to Parent prior to the execution of this Agreement true and
      complete copies of the plan documents, summary plan descriptions, summaries
      of
      material modification, all related trust agreements, insurance contracts, or
      other funding arrangements, all related service provider agreements, annual
      financial or actuarial valuation reports, the three most recent Forms 5500
      or
      5500C/R (with accompanying schedules), registration statements, and prospectuses
      for all pension, retirement, profit-sharing, deferred compensation, stock option
      (including accompanying form agreements), employee stock ownership, severance
      pay, vacation, bonus or other incentive plans, employment or change in control
      agreements, medical, vision, dental or other health plans, life insurance plans
      and other employee benefit plans or fringe benefit plans, programs, arrangements
      or Agreements, including, without limitation, all Company Benefit Plans. No
      Company Benefit Plan is or has been a multiemployer plan within the meaning
      of
      Section 3(37) of ERISA or has any withdrawal liability pursuant to ERISA
      Sections 4201 through 4225 with respect to any such multiemployer plan. Company
      has set forth in Schedule 3.15 (i) a list of all of Company Benefit Plans,
      (ii)
      a list of Company Benefit Plans that are Company Pension Plans, (iii) a list
      of
      Company Benefit Plans that are Company Stock Plans, and (iv) a list of the
      number of shares covered by, exercise prices for, and holders of, all stock
      options granted and available for grant under Company Stock Plans.

     

    (b) From
      their inception, all Company Benefit Plans have been and are in material
      compliance (in form and in operation) with the applicable terms of ERISA and
      the
      Code and any other applicable Laws, including the terms of such plans. All
      required reports, returns, and descriptions (including annual reports (Forms
      5500), summary annual reports, and summary plan descriptions have been timely
      filed and/or distributed in accordance with the applicable requirements of
      ERISA
      and the Code with respect to each Company Benefit Plan.

     

    (c) All
      liabilities (contingent or otherwise) under any Company Benefit Plan are fully
      accrued or reserved against in Company Financial Statement in accordance with
      GAAP. Each Company Pension Plan that is subject to Title IV of ERISA or Section
      412 of the Code satisfies the minimum funding standards (without regard to
      any
      waiver) provided for in Section 412 of the Code. 

     

    
      
        
        

      

      
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    (d) Company
      has no obligations for retiree health or other welfare benefits under any
      Company Benefit Plan or otherwise (other than continuation coverage to the
      extent required by Law), and there are no restrictions on the rights of Company
      to unilaterally amend or terminate any such Company Benefit Plan at any time
      without incurring any material liability thereunder.

     

    (e) Neither
      the execution and delivery of this Agreement nor the consummation of the
      transactions contemplated hereby will (i) result in any payment (including,
      without limitation, severance, golden parachute or otherwise) becoming due
      to
      any person under any Company Benefit Plan or otherwise, (ii) increase any
      benefits otherwise payable under any Company Benefit Plan or (iii) result in
      any
      acceleration of the time of payment or vesting of any such benefits. No Company
      Benefit Plan, individually or collectively, provides for any payment by Company
      any employee or independent contractor that is not deductible under Section
      162(a)(1) or 404 of the Code or that is an "excess parachute payment" pursuant
      to Section 280G of the Code.

     

    (f) Each
      Company Benefit Plan which is intended to be qualified under Section 401(a)
      of
      the Code and exempt from taxation under Section 501(a) of the Code has received
      a favorable determination letter from the IRS that it is so qualified and so
      exempt, the Company has delivered to Parent true and complete copies of all
      such
      determination letters, and no fact or event has occurred that could adversely
      affect such qualified or exempt status.

     

    (g) No
      Company Benefit Plan is a Voluntary Employees’ Beneficiary Association
      (“VEBA”)
      within
      the meaning of Section 501(c)(9) of the Code.

     

    (h) Company
      has made or reserved all contributions (including employer contributions and
      employee salary reduction contributions) and other payments and paid all
      premiums required to be made or paid for each Company Benefit Plan within the
      time periods prescribed by ERISA.

     

    (i) Company
      is not now or has ever been a “substantial employer” as defined in Section
      4001(a)(2) of ERISA and no Company Benefit Plan has subjected or does subject
      the Company to any liability under ERISA Sections 4063 or 4064.

     

    (j)
        There
      have been no “prohibited transactions” (as such term is defined in ERISA Section
      406 and Code Section 4975) with respect to any Company Benefit Plan. No
      fiduciary of any Company Benefit Plan has breached any of the responsibilities
      or obligations imposed upon fiduciaries under Title I of ERISA which shall
      subject Company, directly or indirectly, to any penalty or liability for breach
      of fiduciary duty. 

     

    (k) No
      Company Benefit Plan has experienced a "reportable event" (as such term is
      defined in Section 4043(b) of ERISA) that is not subject to an
      administrative or statutory waiver from the reporting requirement.

     

    
      
        
        

      

      
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    SECTION
      3.16 Taxes and Tax Matters

     

    (a) Company
      has paid all Taxes due and payable by it for or with respect to all periods
      up
      to and including the date hereof (without regard to whether or not such Taxes
      are or were disputed), whether or not shown on any Tax Return.

     

    (b) Company
      has filed on a timely basis all Company Tax Returns that it was required to
      file. All such Company Tax Returns were accurate and complete in all material
      respects. Company is not the beneficiary of any extension of time within which
      to file any Tax Return. No claim has ever been made by an authority in a
      jurisdiction where Company does not file Company Tax Returns that any one of
      them is or may be subject to taxation by that jurisdiction. Company has not
      given any currently effective waiver of any statute of limitations in respect
      of
      Taxes or agreed to any currently effective extension of time with respect to
      a
      Tax assessment or deficiency. There are no security interests on any of the
      assets of Company that arose in connection with any failure (or alleged failure)
      to pay any Tax.

     

    (c) Company
      has withheld and paid all Taxes required to have been withheld and paid in
      connection with amounts paid or owing to any employee, independent contractor,
      creditor, shareholder or other third party.

     

    (d) Company
      and the Company Shareholders have no knowledge of any facts or circumstances
      which could give rise to a reasonable expectation that any authority may assess
      any additional Taxes for any period for which Company Tax Returns have been
      filed. There is no dispute or claim concerning any liability for taxes of
      Company either (i) claimed or raised by any authority in writing or
      (ii) as to which Company or any Company Shareholders has knowledge based
      upon personal contact with any agent of such authority. Company has delivered
      to
      Parent copies of, and Schedule 3.16 sets forth a complete and accurate list
      of,
      Company Tax Returns filed with respect to the taxable periods of Company ended
      on or after December 31, 2005; indicates those Company Tax Returns that have
      been audited; and indicates those Company Tax Returns that currently are the
      subject of an audit.

     

    (e) Except
      as
      set forth on Schedule 3.16(e), the unpaid Taxes of Company (i) did not, as
      of the date of any financial statements of Company furnished to Parent pursuant
      to Section 3.08, exceed the reserve for any Tax Liability (rather than any
      reserve for deferred Taxes established to reflect timing differences between
      book and Tax income) set forth on the face of the such financial statements
      (rather than in any notes thereto) and (ii) do not exceed that reserve as
      adjusted for the passage of time through the Closing Date in accordance with
      the
      past custom and practice of Company in filing their Company Tax
      Returns.

     

    (f) Company
      has not filed a consent under Section 341(f) of the Code, concerning
      collapsible corporations. Company has not been a United States real property
      holding corporation within the meaning of Section 897(c)(2) of the Code
      during the applicable period specified in Section 897(c)(1)(A)(ii) of the
      Code. Except as set forth on Schedule 3.16(e), the Company has disclosed on
      its
      federal income Company Tax Returns all positions taken therein that could
      reasonably be expected to give rise to a substantial understatement of federal
      income Tax within the meaning of Section 6662 of the Code. Company is not a
      party to any Tax allocation or sharing agreement. Company (A)  has not been
      a member of an “affiliated group,” as defined in Section 1504(a) of the
      Code, filing a consolidated federal income Tax Return (other than a group the
      common parent of which was Company) and (B) does not have any Liability for
      the
      Taxes of any Person (other than any of Company) under Treas. Reg.
      Section 1.1502-6 (or any similar provision of state, local, or foreign
      law), as a transferee or successor, by contract or otherwise.

     

    
      
        
        

      

      
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    (g) Schedule
      3.16 sets forth the following information with respect to Company as of the
      date
      hereof: (i) the tax basis of Company in its assets; (ii) the amount of any
      net
      operating loss, net capital loss, unused investment, foreign tax or other
      credit, or excess charitable contribution allocable to Company; and (iii) the
      amount of any deferred gain or loss allocable to Company arising out of any
      “deferred intercompany transaction” as defined in Treas. Reg. Section
      1.1502-13(a)(2).

     

    (h) Company
      (and any predecessor of Company) has been a validly electing S corporation
      within the meaning of Code §§ 1361 and 1362 at all times during its
      existence and Company will be an S corporation up to and including the day
      before the Closing Date.

     

    (j) Company
      shall not be liable for any Tax under Code §1374 in connection with the deemed
      sale of Company’s assets caused by the §338(h)(10) Election. Company has not, in
      the past 10 years (A) acquired assets from another corporation in a transaction
      in which Company’s Tax basis for the acquired assets was determined, in whole or
      in part, by reference to the Tax basis of the acquired assets (or any other
      property) in the hands of the transferor or (B) acquired the stock of any
      corporation which is a qualified subchapter S subsidiary.

     

    SECTION
      3.17 Insurance

     

    Schedule
      3.17 lists all policies of title, asset, fire, hazard, casualty, liability,
      life, worker’s compensation and other forms of insurance of any kind owned or
      held by Company. All such policies: (a) are with insurance companies
      reasonably believed by Company to be financially sound and reputable;
      (b) are in full force and effect; (c) are sufficient for compliance by
      Company with all requirements of Law and of all Agreements to which Company
      is a
      party; (d) are valid and outstanding policies enforceable against the
      insurer; (e) insure against risks of the kind customarily insured against
      and in amounts customarily carried by companies similarly situated and by
      companies engaged in similar businesses and owning similar Assets; and
      (f) have the policy expiration dates set forth in
      Schedule 3.17.

     

    SECTION
      3.18 Arrangements With Related Parties

     

    No
      present or former officer, director, shareholder or Person known by Company
      or
      any Company Shareholder to be an Affiliate of Company, nor any Person known
      by
      them to be an Affiliate of such Person, is currently a party to any transaction
      or agreement with Company, including any agreement providing for any loans,
      advances, the employment of, furnishing of services by, rental of its Assets
      from or to, or otherwise requiring payments to, any such officer, director,
      shareholder or Affiliate; provided, however that Michael Brudek and Nicholas
      Vaseliv, who are Company Shareholders, are employees of the
      Company.

     

    
      
        
        

      

      
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    SECTION
      3.19 Books and Records

     

    Except
      as
      set forth in the Rotenberg Management Letter, the books of account, stock
      records, minute books and other corporate and financial records of Company
      are
      complete and correct and have been maintained in accordance with reasonable
      business practices for companies similar to Company, and Company will have
      prior
      to Closing prepared and made available to Parent the minutes for all meetings,
      and all written consents in lieu of such meetings, of the Board of Directors
      and/or shareholders of Company held as of the date thereof.

     

    SECTION
      3.20 Assets

     

    Company
      has good, valid and marketable title to all Assets owned by it, including,
      without limitation, all material Assets reflected in Company Financial Statement
      and all Assets acquired by Company since December 31, 2007 (except for Assets
      reflected in Company Financial Statement or acquired since such date which
      have
      been sold or otherwise disposed of in the Ordinary Course of Business), free
      and
      clear of all Encumbrances other than Permitted Encumbrances. All personal
      property of Company is in operating condition and repair and is suitable and
      adequate for the uses for which it is intended or is being used. All Inventory
      of Company (i) consists of items which are good and merchantable and of a
      quality and quantity presently usable and salable in the Ordinary Course of
      Business within one (1) year from the Closing Date; and (ii) has been reflected
      in Company Financial Statement in accordance with GAAP.

     

    SECTION
      3.21 Board Recommendation; Shareholder Approval

     

    The
      Board
      of Directors of Company has unanimously adopted, in compliance with the NYBCL,
      a
      resolution advising, authorizing, approving and adopting this Agreement and
      the
      transactions contemplated hereby, and recommending approval and adoption of
      this
      Agreement and the transactions contemplated hereby by Company Shareholders.
      Company Shareholders have unanimously adopted by written consent, in compliance
      with the NYBCL, a resolution authorizing, approving and adopting this Agreement
      and the transactions contemplated hereby.

     

    SECTION
      3.22 Directors and Officers

     

    Schedule
      3.22
      lists all current directors and officers of Company, showing each such person’s
      name, positions, and annual remuneration, bonuses and fringe benefits paid
      by
      Company for the current fiscal year and the most recently completed fiscal
      year.

     

    SECTION
      3.23 State Takeover Statutes

     

    No
      state
      takeover statute or similar statute or regulation of the State of New York
      (and,
      to the knowledge of Company and the Company Shareholders after due inquiry,
      of
      any other state or jurisdiction) applies or purports to apply to this Agreement
      or the transactions contemplated hereby and no provision of the certificate
      of
      incorporation, bylaws or other governing instruments of Company or the terms
      of
      any rights plan or agreement of Company would, directly or indirectly, restrict
      or impair the ability of Parent to vote, or otherwise to exercise the rights
      of
      a shareholder with respect to, securities of Company that may be acquired or
      controlled by Parent or permit any shareholder to acquire securities of Company
      or of Parent or any of its Subsidiaries on a basis not available to Parent
      in
      the event that Parent were to acquire securities of Company

     

    
      
        
        

      

      
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    SECTION
      3.24 Environmental Matters

     

    Company
      is in material compliance with all Environmental Laws. Company has no material
      liability under any Environmental Law and to its Knowledge the Company is not
      responsible for any liability of any other person under any Environmental Law.
      There are no pending or, to the knowledge of Company and the Company
      Shareholders, threatened actions, suits, claims, legal proceedings or other
      proceedings based on, and Company has not directly or indirectly received any
      notice of any complaint, order, directive, citation, notice of responsibility,
      notice of potential responsibility, or information request from any Governmental
      Entity or any other person arising out of or attributable to: (i) the
      current or past presence at any part of the real property owned or leased by
      Company (the “Real
      Property”)
      of
      Hazardous Materials or any substances that pose a hazard to human health or
      an
      impediment to working conditions; (ii) the current or past release or
      threatened release into the environment from the Real Property (including,
      without limitation, into any storm drain, sewer, septic system or publicly
      owned
      treatment works) of any Hazardous Materials or any substances that pose a hazard
      to human health or an impediment to working conditions; (iii) the off-site
      disposal of Hazardous Materials originating on or from the Real Property; or
      (iv) any violation of Environmental Laws at any part of the Real Property
      or otherwise arising from Company’s activities involving Hazardous
      Materials.

     

    SECTION
      3.25 Government Contracts and Other Commitments

     

    The
      Company has no contracts or subcontracts (at any tier) under prime contracts
      with Governmental Entities, None of the Company’s Business activities require
      that it or any of its employees obtain a security clearance from .any
      Governmental Entity.

     

    SECTION
      3.26 Relations with Governments

     

    Neither
      Company, nor to the knowledge of Company and the Company Shareholders, any
      of
      Company’s officers, directors, employees or agents (or shareholders,
      distributors, representatives or other persons acting on the express, implied
      or
      apparent authority of Company) have paid, given or received or have offered
      or
      promised to pay, give or receive, any bribe or other unlawful payment of money
      or other thing of value, any unlawful discount, or any other unlawful
      inducement, to or from any person or Governmental Entity in the United States
      or
      elsewhere in connection with or in furtherance of the business of Company
      (including, without limitation, any offer, payment or promise to pay money
      or
      other thing of value (a) to any foreign official, political party (or
      official thereof) or candidate for political office for the purposes of
      influencing any act, decision or omission in order to assist Company in
      obtaining business for or with, or directing business to, any person, or
      (b) to any person, while knowing that all or a portion of such money or
      other thing of value will be offered, given or promised to any such official
      or
      party for such purposes). The business of Company is not in any manner dependent
      upon the making or receipt of such payments, discounts or other inducements.
      Company has not otherwise taken any action that would cause Company to be in
      violation of the Foreign Corrupt Practices Act of 1977, as amended, or any
      applicable Laws of similar effect.

     

    
      
        
        

      

      
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    SECTION 3.27
      Broker’s Fees

     

    Company
      has no any liability or obligation to pay any fees or commissions to any broker,
      finder, or similar agent with respect to the transactions contemplated by this
      Agreement.

     

    SECTION
      3.28 Product Warranties

     

    All
      products and services provided by Company are sold, licensed or otherwise
      provided pursuant to the terms contained in the form of Quotation set forth
      on
      Schedule 3.28. The name of any person or firm to which any additional or
      different terms have been provided, together with a copy of such terms, are
      set
      forth on Schedule 3.28.

     

    SECTION
      3.29 Investment Representations

     

    (a)
       Each
      Company Shareholder is an “accredited investor” within the meaning of Rule 501
      promulgated under the Securities Act. By reason of such Company Shareholder’s
      business and financial experience, and the business and financial experience
      of
      those persons retained by such Company Shareholder to advise such Company
      Shareholder with respect to such Company Shareholder’s investment in the shares
      of Parent Common Stock to be received by such Company Shareholder in the Merger,
      such Company Shareholder, together with such advisors, has such knowledge,
      sophistication and experience in business and financial matters as to be capable
      of evaluating the merits and risks of the prospective investment, and is able
      to
      bear the economic risk of such investment and is able to afford a complete
      loss
      of such investment. Such Company Shareholder acknowledges that such Company
      Shareholder has been granted the opportunity to ask questions of, and receive
      answers from, representatives of Parent concerning Parent and the Parent Common
      Stock that such Company Shareholder is receiving in the Merger and to obtain
      any
      additional information that such Company Shareholder deems necessary to verify
      the accuracy of the answers such Company Shareholder received from such
      representatives.

     

    (b) Each
      Company Shareholder acknowledges that the shares of Parent Common Stock to
      be
      received in the Merger have not been registered under the Act. Such Company
      Shareholder is familiar with the provisions of Rule 144 and understands that
      in
      the event all of the applicable requirements of Rule 144 are not satisfied,
      registration under the Act or some other exemption from the registration
      requirements of the Act will be required in order to dispose of the Parent
      Common Stock to be received in the Merger, and that such Company Shareholder
      may
      be required to hold such shares of Parent Common Stock for a significant period
      of time prior to reselling them. 

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

    (c) Each
      Company Shareholder is acquiring the shares of Parent Common Stock to be
      received in the Merger for such Company Shareholder’s own account and not with a
      view to distribution in violation of any securities laws. Such Company
      Shareholder has no present intention to sell such Parent Common Stock in
      violation of federal or state securities laws and such Company Shareholder
      has
      no present arrangement (whether or not legally binding) to sell such shares
      of
      Parent Common Stock to or through any person or entity; provided,
      however, that by making the representations herein, such Company Shareholder
      does not agree to hold such shares of Parent Common Stock for any minimum or
      other specific term and reserves the right to dispose of such shares of Parent
      Common Stock at any time in accordance with federal and state securities laws
      applicable to such disposition.

     

    (d) Each
      Company Shareholder acknowledges and understands that the terms of issuance
      have
      not been reviewed by the SEC or by any state securities authorities and that
      the
      shares of Parent Common Stock to be issued in the Merger will be issued in
      reliance on the certain exemptions for non-public offerings under the Act,
      which
      exemptions depend upon, among other things, the representations made and
      information furnished by such Investor, including the bona fide nature of such
      Investor’s investment intent as expressed above.

     

    (e) Each
      Company Shareholder understands that the shares of Parent Common Stock to be
      issued in the Merger will be offered and sold in reliance on a transactional
      exemptions from the registration requirements of federal and state securities
      laws and Parent is relying upon the truth and accuracy of the representations,
      warranties, agreements, acknowledgments and understandings of such Company
      Shareholder set forth herein in order to determine the applicability of such
      exemptions and the suitability of such Investor to acquire the shares of Parent
      Common Stock to be issued in the Merger. 

     

    SECTION
      3.30 Disclosure

     

    Neither
      this Agreement nor any written statement, report or other document furnished
      or
      to be furnished by Company or Company Shareholders pursuant to this Agreement
      or
      in connection with the transactions contemplated hereby contains, or will
      contain, any statement which is false or misleading with respect to any material
      fact or omits to state a material fact necessary to make the statements herein
      or therein, in light of the circumstances in which they were made, not false
      or
      misleading. There is no fact known to Company or Company Shareholders which
      has
      not been disclosed to Parent in this Agreement or the Schedules hereto that
      could reasonably be expected to have a Company Material Adverse Effect.
 

     

    ARTICLE
      IV

     

    REPRESENTATIONS
      AND WARRANTIES

    OF
      PARENT AND MERGER SUB

     

    SECTION
      4.01 Organization and Qualification

     

    Parent
      is
      a corporation duly organized, validly existing and in good standing under the
      Laws of the State of Delaware, and has the full and unrestricted corporate
      power
      and authority to own, operate and lease its Assets, to carry on its business
      as
      currently conducted, to execute and deliver this Agreement and to carry out
      the
      transactions contemplated hereby. Merger Sub is a corporation duly organized,
      validly existing and in good standing under the laws of the State of New York,
      and has full and unrestricted corporate power and authority to own, operate
      and
      lease its Assets, to carry on its business as currently conducted, to execute
      and deliver this Agreement and to carry out the transactions contemplated
      hereby. Each of Parent and Merger Sub is duly qualified to conduct business
      as a
      foreign corporation and is in good standing in the states, countries and
      territories in which the nature of the business conducted by it or the character
      of the Assets owned, leased or otherwise held by it makes such qualification
      necessary, except where the failure to be so qualified would not have a Parent
      Material Adverse Effect.

     

    
      
        
        

      

      
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    SECTION
      4.02 Authority; Binding Obligation

     

    Each
      of
      Parent and Merger Sub has the full and unrestricted corporate power and
      authority to execute and deliver this Agreement and to carry out the
      transactions contemplated hereby. The execution and delivery by Parent and
      Merger Sub of this Agreement and all other Agreements, documents, certificates
      or other instruments contemplated hereby, and the consummation by Parent and
      Merger Sub of the transactions contemplated hereby and thereby, have been duly
      authorized by all necessary corporate action, and no other corporate proceedings
      on the part of Parent or Merger Sub are necessary to authorize this Agreement
      and the other Agreements, documents, certificates or other instruments
      contemplated hereby, or to consummate the transactions contemplated hereby
      and
      thereby. This Agreement has been duly executed and delivered by Parent and
      Merger Sub and constitutes a legal, valid and binding obligation of Parent
      and
      Merger Sub, enforceable in accordance with its terms, except as such
      enforceability may be subject to the effect of any applicable bankruptcy,
      insolvency, fraudulent conveyance, reorganization, moratorium or similar Laws
      affecting creditors’ rights generally and subject to the effect of general
      equitable principles (whether considered in a proceeding in equity or at
      law).

     

    SECTION
      4.03 No Conflict; Required Filings and Consents

     

    (a) The
      execution, delivery and performance by Parent and Merger Sub of this Agreement
      and all other Agreements, documents, certificates or other instruments
      contemplated hereby, the fulfillment of and compliance with the respective
      terms
      and provisions hereof and thereof, and the consummation by Parent and Merger
      Sub
      of the transactions contemplated hereby and thereby, do not and will not:
      (i) conflict with, or violate any provision of, the certificate of
      incorporation or the bylaws of Parent, or the certificate of incorporation
      or
      the bylaws of Merger Sub; (ii) subject to the filing and recordation of the
      Certificate of Merger as required by the NYBCL, conflict with or violate any
      Law
      applicable to Parent or Merger Sub or any of their respective Assets;
      (iii) conflict with, result in any breach of, constitute a default (or an
      event that with notice or lapse of time or both would become a default) under
      any Agreement to which Parent or Merger Sub is a party or by which Parent or
      Merger Sub or any of their respective Assets may be bound; or (iv) result
      in or require the creation or imposition of, or result in the acceleration
      of,
      any indebtedness or any Encumbrance of any nature upon, or with respect to,
      Parent or Merger Sub; except for any such conflict or violation described in
      clause (ii) above, any such conflict, breach or default described in clause
      (iii) above, or any such creation, imposition or acceleration described in
      clause (iv) above that would not have a Parent Material Adverse Effect and
      that would not prevent Parent or Merger Sub from consummating the Merger on
      a
      timely basis.

     

    
      
        
        

      

      
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    (b) The
      execution, delivery and performance by Parent and Merger Sub of this Agreement
      and all other Agreements, documents, certificates or other instruments
      contemplated hereby, the fulfillment of and compliance with the respective
      terms
      and provisions hereof and thereof, and the consummation by Parent and Merger
      Sub
      of the transactions contemplated hereby and thereby, do not and will not:
      (i) require any consent, approval, authorization or permit of, or filing
      with or notification to, any Person not party to this Agreement, except
      (A) the filing and recordation of the Certificate of Merger as required by
      the NYBCL; and (B) where the failure to obtain any consent, approval,
      authorization or permit or to make any filing or notification otherwise required
      to be disclosed hereunder would not have a Parent Material Adverse Effect;
      or
      (ii) result in or give rise to any penalty, forfeiture, Agreement
      termination, right of termination, amendment or cancellation, or restriction
      on
      business operations of Parent or Surviving Corporation that would have a Parent
      Material Adverse Effect.

     

    (c) Subject
      to the filing and recordation of the Certificate of Merger as required by the
      NYBCL, all returns, reports, statements and other documents required to be
      filed
      by Parent and Merger Sub with any Governmental Entity with respect to this
      agreement and the transaction contemplated hereby have been or will be filed
      in
      a timely manner and are or will be, as the case may be, true, correct and
      complete in all material respects (and any related fees required to be paid
      have
      been paid or will be in full). All material records of every type and nature
      relating to the business, operations or assets of Parent and Merger Sub have
      been maintained in all material respects in accordance with good business
      practices and are maintained at Parent.

     

    (d) No
      Governmental Entity or any other Person has notified Parent or Merger Sub that
      such Governmental Entity or other Person intends to object to the transactions
      contemplated hereunder which shall include for this purpose any objection to
      the
      operations of the business of Company as part of Parent. Neither Parent nor
      Merger Sub are aware of any fact or circumstance related to them with respect
      to
      this Agreement and the transactions contemplated hereby that would reasonably
      be
      expected to (i) cause the filing of any objection to any application for
      any Governmental consent required hereunder, (ii) lead to any delay in
      processing such application or (iii) require any waiver of any Governmental
      rule, policy or other applicable law.

     

    SECTION
      4.04 No Prior Activities of Merger Sub

     

    Merger
      Sub was formed solely for the purpose of engaging in the transactions
      contemplated by this Agreement and has engaged in no other business activities
      and has conducted its operations only as contemplated hereby.

     

    
      
        
        

      

      
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    SECTION
      4.05 SEC Filings; Financial Statements

     

    (a) All
      statements, reports, schedules, forms and other documents required to have
      been
      filed by Parent with the SEC since December 31, 2006 (the “Parent
      SEC Documents”)
      have
      been so filed. As of their respective dates (or, if amended or superseded by
      a
      filing prior to the date of this Agreement, then on the date of such amendment
      or superseding filing): (i) each of the Parent SEC Documents complied in all
      material respects with the applicable requirements of the Securities Act or
      the
      Exchange Act (as the case may be); and (ii) none of the Parent SEC Documents
      contained any untrue statement of a material fact or omitted to state a material
      fact required to be stated therein or necessary in order to make the statements
      therein, in the light of the circumstances under which they were made, not
      misleading.

     

    (b) The
      financial statements (including any related notes) contained in the Parent
      SEC
      Documents (the “Parent
      Financial Statements”):
      (i)
      complied as to form in all material respects with the published rules and
      regulations of the SEC applicable thereto; (ii) were prepared in accordance
      with
      GAAP applied on a consistent basis throughout the periods covered (except as
      may
      be indicated in the notes to such financial statements or, in the case of
      unaudited statements, as permitted by Form 10-Q of the SEC, and except that
      the
      unaudited financial statements may not have contained footnotes and were subject
      to normal and recurring year-end adjustments which were not, or are not
      reasonably expected to be, individually or in the aggregate, material in
      amount), and (iii) fairly presented in all material respects the consolidated
      financial position of Parent and its consolidated subsidiaries as of the
      respective dates thereof and the consolidated results of operations and cash
      flows of Parent and its consolidated subsidiaries for the periods covered
      thereby.

     

    SECTION
      4.06 Brokers

     

    Except
      for any investment banking firm engaged by Parent to deliver a fairness opinion
      as contemplated by Section 7.02, no broker, finder or investment banker is
      entitled to any brokerage, finder’s or other fee or commission in connection
      with the transactions contemplated by this Agreement based upon arrangements
      made by or on behalf of Parent.

     

    ARTICLE
      V

     

    PRE-CLOSING
      COVENANTS

     

    SECTION
      5.01 Conduct of Business of Company Until Effective Time

     

    Company
      and the Company Shareholders hereby covenant and agree that, from the date
      of
      this Agreement until the Effective Time, Company, unless otherwise expressly
      contemplated by this Agreement or consented to in writing by Parent, will carry
      on its businesses only in the Ordinary Course of Business, use its best efforts
      to preserve intact its business organizations and Assets, maintain its rights
      and franchises, retain the services of its officers and employees and maintain
      its relationships with customers, suppliers, licensors, licensees and others
      having business dealings with it, and use its best efforts to keep in full
      force
      and effect liability insurance and bonds comparable in amount and scope of
      coverage to that currently maintained. Without limiting the generality of the
      foregoing, Company will not:

     

    
      
        
        

      

      
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    (a) (i) increase
      in any manner the compensation or fringe benefits of, or pay any bonus to,
      any
      director, officer or employee; (ii) grant any severance or termination pay
      (other than pursuant to the normal severance practices or existing agreements
      of
      Company in effect on the date of this Agreement) to, or enter into any severance
      agreement with, any director, officer or employee, or enter into any employment
      agreement with any director, officer or employee or otherwise without the prior
      written consent of Parent; (iii) establish, adopt, enter into or amend any
      Company Benefit Plan or other arrangement, except as may be required to comply
      with applicable Law; (iv) pay any benefit not provided for under any
      Company Benefit Plan or other arrangement; (v) grant any awards under any
      bonus, incentive, performance or other compensation plan or arrangement or
      Company Benefit Plan or other arrangement (including the grant of stock options,
      stock appreciation rights, stock-based or stock-related awards, performance
      units or restricted stock, or the removal of existing restrictions in any
      Company Benefit Plan or other arrangement or agreement or awards made
      thereunder), (vi) take any action to fund or in any other way secure the
      payment of compensation or benefits under any agreement or (vii) promote or
      fire
      any director, officer or employee;

     

    (b) declare,
      set aside or pay any dividend on, or make any other distribution in respect
      of,
      outstanding shares of capital stock;

     

    (c) (i) redeem,
      purchase or otherwise acquire any shares of capital stock of Company or any
      securities or obligations convertible into or exchangeable for any shares of
      capital stock of Company, or any options, warrants or conversion or other rights
      to acquire any shares of capital stock of Company or any such securities or
      obligations, or any other securities thereof; (ii) effect any
      reorganization, recapitalization, merger or share exchange; or (iii) split,
      combine or reclassify any of its capital stock or issue or authorize or propose
      the issuance of any other securities in respect of, in lieu of or in
      substitution for, shares of its capital stock;

     

    (d) issue,
      deliver, award, grant or sell, or authorize the issuance, delivery, award,
      grant
      or sale (including the grant of any limitations in voting rights or other
      Encumbrances) of, any shares of any class of its capital stock (including shares
      held in treasury but excluding shares issuable upon the exercise of options
      outstanding on the date hereof in accordance with their terms as of the date
      hereof), any securities convertible into or exercisable or exchangeable for
      any
      such shares, or any rights, warrants or options to acquire, any such shares,
      or
      amend or otherwise modify the terms of any such rights, warrants or options
      the
      effect of which shall be to make such terms more favorable to the holders
      thereof;

     

    (e) acquire
      or agree to acquire, by merging or consolidating with, by purchasing an equity
      interest in or a portion of the Assets of, or by any other manner, any business
      or any corporation, partnership, association or other business organization
      or
      division thereof, or otherwise acquire or agree to acquire any Assets of any
      other person (other than the purchase of assets from suppliers or vendors in
      the
      Ordinary Course of Business);

     

    
      
        
        

      

      
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    (f) sell,
      lease, exchange, mortgage, pledge, transfer or otherwise subject to any
      Encumbrance or dispose of, or agree to sell, lease, exchange, mortgage, pledge,
      transfer or otherwise subject to any Encumbrance or dispose of, any of its
      Assets, except for sales, dispositions or transfers in the Ordinary Course
      of
      Business;

     

    (g) propose
      or adopt any amendments to its certificate of incorporation, bylaws or other
      comparable charter or organizational documents;

     

    (h) make
      or
      rescind any express or deemed election relating to Taxes, settle or compromise
      any claim, action, suit, litigation, proceeding, arbitration, investigation,
      audit or controversy relating to Taxes which would reasonably be expected to
      result in a Company Material Adverse Effect, or change any of its methods of
      reporting income or deductions for federal income tax purposes from those
      employed in the preparation of the federal income tax returns;

     

    (i) make
      or
      agree to make any new capital expenditures;

     

    (j) (i) incur
      any indebtedness for borrowed money or guarantee any such indebtedness of
      another person, issue or sell any debt securities or warrants or other rights
      to
      acquire any debt securities of Company, guarantee any debt securities of another
      person, enter into any “keep well” or other agreement to maintain any financial
      statement condition of another person or enter into any agreement having the
      economic effect of any of the foregoing, except for borrowings incurred in
      the
      Ordinary Course of Business, or (ii) make any loans, advances or capital
      contributions to, or investments in, any other person other than travel and
      payroll advances made to employees in the Ordinary Course of
      Business;

     

    (k) pay,
      discharge, settle or satisfy any claims, liabilities or obligations (whether
      absolute or contingent, matured or unmatured, known or unknown), other than
      the
      payments, discharges or satisfactions, in the Ordinary Course of Business which
      are materially in accordance with their terms, of liabilities reflected or
      reserved against in, or contemplated by, Company Financial Statement or waive
      any material benefits of, or agree to modify in any material respect, any
      confidentiality, standstill or similar agreements to which Company is a
      party;

     

    (l) waive,
      release or assign any rights or claims, or modify, amend or terminate any
      agreement to which Company is a party;

     

    (m) make
      any
      change in any method of accounting or accounting practice or policy other than
      those required by GAAP or a Governmental Entity;

     

    (n) take
      any
      action or fail to take any action that would have a Company Material Adverse
      Effect prior to or after the Effective Time or a material adverse effect after
      the Effective Time, or that would adversely affect the ability of Company prior
      to the Effective Time, or Parent or any of its Subsidiaries after the Effective
      Time, to obtain consents of third parties or approvals of Government Entities
      required to consummate the transactions contemplated in this Agreement;
      or

     

    
      
        
        

      

      
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    (o) authorize,
      or commit or agree to do any of the foregoing.

     

    SECTION
      5.02 Efforts to Satisfy Conditions

     

    Parent
      and Company shall use their respective reasonable efforts to cause all
      conditions to the obligations of Parent and Company set forth in Article VII
      to
      be satisfied on or before the Closing Date.

     

    SECTION
      5.03 Other Actions

     

    Parent
      and Company shall not, and shall not permit any of their respective Affiliates
      to, take any action that would, or that could reasonably be expected to, result
      in (a) any of the representations and warranties of such Party set forth in
      this Agreement becoming untrue, or (b) any of the conditions to the Merger
      set forth in Article VII not being satisfied.

     

    SECTION
      5.04 Certain Tax Matters

     

    From
      the
      date hereof until the Effective Time, Company (a) will prepare and timely
      file with the relevant Taxing authority all Company Tax Returns required to
      be
      filed during such period (“Post-Signing
      Returns”),
      which
      Post-Signing Returns shall be accurate in all material respects, or permitted
      extensions with respect thereto, (b) will timely pay all Taxes due and
      payable with respect to such Post-Signing Returns, (c) will pay or
      otherwise make adequate provision for all Taxes payable by Company for which
      no
      Post-Signing Return is due prior to the Effective Time, and (d) will
      promptly notify Parent of any action, suit, proceeding, claim or audit pending
      against or with respect to Company in respect of any Taxes. 

     

    SECTION
      5.05 Access and Information

     

    For
      so
      long as this Agreement is in effect, and subject to applicable Laws, Company
      shall (a) afford to Parent and its officers, employees, accountants,
      consultants, legal counsel and other representatives reasonable access during
      normal business hours, subject to reasonable advance notice, to all of their
      respective properties, Agreements, books, records and personnel and
      (b) furnish promptly to Parent (i) a copy of each Agreement, document,
      certificate or other instrument filed with, or received from any Governmental
      Entity and (ii) all other information concerning its respective business,
      operations, prospects, conditions (financial or otherwise), Assets, liabilities
      and personnel as Parent may reasonably request.

     

    SECTION
      5.06 Access to Company Information

     

    From
      the
      date hereof and through the Closing Date, Company shall, and shall cause its
      accountants, counsel, investment bankers, financial advisors, consultants and
      other representatives, to provide Parent and Parent’s accountants, counsel,
      investment bankers, financial advisors, consultants and other representatives,
      upon reasonable notice, access to, and make available, all books, contracts,
      records, reports, properties and commitments of Company, including, without
      limitation, Company’s Tax Returns and financial statements, for Parent’s use in
      connection with Parent’s financing.

     

    
      
        
        

      

      
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    SECTION
      5.7 No Solicitation.

     

    From
      the
      date of this Agreement until the Effective Time or the termination of this
      Agreement pursuant to the terms of this Agreement, Company and the Company
      Shareholders shall not and shall not permit any of their Affiliates, directors,
      officers, employees, agents or representatives, including, without limitation,
      any investment banker, attorney or accountant of Company (collectively,
“Representatives”)
      directly or indirectly, to (i) initiate, solicit, encourage or otherwise
      facilitate (including by way of furnishing information), any inquiries or the
      making of any proposal or offer that constitutes, or may reasonably be expected
      to lead to, an Acquisition Proposal, (ii) enter into or maintain or
      continue discussions or negotiate with any Person in furtherance of such
      inquiries or to obtain an Acquisition Proposal, (iii) agree to, approve,
      recommend, or endorse any Acquisition Proposal, (iv) disclose any non-public
      information relating to Company or afford access to the properties, books or
      records of Company to any person that has made or may reasonably be expected
      to
      make a proposal regarding a Acquisition Proposal or that has advised Company
      that it is or may be interested in making a proposal regarding a Acquisition
      Proposal, or (v) authorize or permit any of its or their Subsidiaries or
      Representatives to take any such action and Company and Company Shareholders
      shall promptly notify Parent of any such inquiries and proposals received by
      any
      of them or their Representatives, relating to any of such matters

     

    SECTION
      5.8 Tax Matters

     

    (a) It
      is
      intended by the parties hereto that the Merger shall constitute a taxable
      transaction and shall not constitute a tax-free reorganization within the
      meaning of Section 368 of the Code. Each Party hereto and each Company
      Shareholder agrees not to take any position contrary to such intention with
      any
      Government Entity, including, without limitation, on any Tax returns or other
      filings.

     

    (b) At
      Parent’s option, Company and each Company Shareholder shall join with Parent in
      making an election under Code § 338(h)(10) (and any corresponding election
      under state, local, and foreign tax law) with respect to the purchase and sale
      of Company Common Stock pursuant to the Merger hereunder (collectively, a
“338(h)(10)
      Election”).
      Company Shareholders shall include any income, gain, loss, deduction, or other
      tax items resulting from the § 338(h)(10) Election on their Tax Returns to
      the extent required by applicable law. Company Shareholders shall also pay
      any
      Tax imposed on Company attributable to the making of the § 338(h)(10)
      Election, including (i) any Tax imposed under Code § 1374, (ii) any tax
      imposed under Code § 338 and the regulations thereunder, or (iii) any
      state, local or foreign Tax imposed on Company’s gain, and Company Shareholders
      shall indemnify Parent and the Surviving Corporation against any Loss arising
      out of any failure to pay any such Taxes.

     

    (c) Parent,
      Company and Company Shareholders agree that the Merger Consideration and the
      liabilities of Company (plus other relevant items) will be allocated to the
      assets of Company for all purposes (including Tax and financial accounting)
      in a
      manner consistent with Code §§ 338 and 1060 and the regulations thereunder.
      Parent, Company and Company Shareholders shall file all Tax Returns (including
      amended returns and claims for refund) and information reports in a manner
      consistent with such allocation.

     

    
      
        
        

      

      
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    ARTICLE
      VI

     

    ADDITIONAL
      AGREEMENTS

     

    SECTION
      6.01 Appropriate Action; Consents; Filings

     

    (a) Upon
      the
      terms and subject to the conditions set forth in this Agreement, the Parties
      shall use their reasonable best efforts to take, or cause to be taken, all
      appropriate action, and do, or cause to be done, all things necessary, proper
      or
      advisable under applicable Law or otherwise to consummate and make effective
      the
      transactions contemplated by this Agreement as promptly as practicable,
      including without limitation (i) executing and delivering any additional
      instruments necessary, proper or advisable to consummate the transactions
      contemplated by, and to carry out fully the purposes of, this Agreement,
      (ii) obtaining from any Governmental Entities any material Licenses
      required to be obtained or made by Parent, or Company, in connection with the
      authorization, execution and delivery of this Agreement and the consummation
      of
      the transactions contemplated herein, including, without limitation, the Merger,
      and (iii) making all necessary filings, and thereafter making any other
      required submissions, with respect to this Agreement and the Merger required
      any
      applicable Law; provided
      that
      Parent and Company shall cooperate with each other in connection with the making
      of all such filings, including providing copies of all such documents to the
      non-filing Party and its advisors prior to filing and discussing all reasonable
      additions, deletions or changes suggested in connection therewith. Company
      and
      Parent shall furnish to each other all information required for any application
      or other filing to be made pursuant to the rules and regulations of any
      applicable Law in connection with the transactions contemplated by this
      Agreement.

     

    (b) (i) Except
      as
      the Parties may otherwise agree, Company, any Company Shareholder and Parent
      shall each give any notices to third parties, and use their reasonable best
      efforts to obtain any third-party consents, approvals or waivers
      (A) necessary, proper or advisable to consummate the transactions
      contemplated in this Agreement; or (B) required to prevent a Company
      Material Adverse Effect or a Parent Material Adverse Effect.

     

    (ii) In
      the
      event that any of Company, any Company Shareholder or Parent shall fail to
      obtain any third-party consent, approval or waiver described in Section
      6.01(b)(i) of this Agreement, such Party shall use its reasonable best efforts,
      and shall take any such actions reasonably requested by the other Parties,
      to
      minimize any adverse effect upon Company and Parent and their respective
      businesses resulting, or which could reasonably be expected to result after
      the
      Effective Time, from the failure to obtain such consent, approval or
      waiver.

     

    (c) From
      the
      date of this Agreement until the Effective Time, Company and Parent shall
      promptly notify each other in writing of any pending or, to the knowledge of
      Company, Company Shareholders or Parent, threatened action, proceeding or
      investigation by any Governmental Entity or any other Person
      (i) challenging or seeking damages in connection with the Merger or the
      conversion of Company Common Stock into the Merger Consideration pursuant to
      the
      Merger or the transactions contemplated hereunder or (ii) seeking to
      restrain or prohibit the consummation of the Merger or the transactions
      contemplated hereunder or otherwise limit the right of Parent to own or operate
      all or any portion of the business or Assets of Company. Company and Parent
      shall cooperate with each other in defending any such action, proceeding or
      investigation, including seeking to have any stay or temporary restraining
      order
      entered by any court or other Governmental Entity vacated or
      reversed.

     

    
      
        
        

      

      
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    SECTION
      6.02 Disclosure

     

    Prior
      to
      the Effective Time, each Party shall notify the other Parties in writing of
      (i) any representation or warranty made by it in connection with this
      Agreement becoming untrue or inaccurate, (ii) the occurrence or
      non-occurrence of any event, the occurrence or non-occurrence of which would
      be
      likely to cause any condition to the obligations of any Party to effect the
      Merger and the other transactions contemplated by this Agreement not to be
      satisfied or (iii) the failure of Company, Parent or Merger Sub, as the
      case may be, to comply with or satisfy any covenant, condition or Agreement
      to
      be complied with or satisfied by it pursuant to this Agreement which would
      be
      likely to result in any condition to the obligations of any Party to effect
      the
      Merger and the other transactions contemplated by this Agreement not to be
      satisfied; provided,
      however,
      the
      delivery of any notice pursuant to this Section 6.02(a) shall not cure any
      breach of any representation or warranty requiring disclosure of such matter
      as
      of the date of this Agreement or otherwise limit or affect the rights and
      remedies available hereunder to the Party receiving such notice.

     

    SECTION
      6.03 Public Announcements

     

    Parent,
      Merger Sub and Company shall consult with each other before issuing or making,
      and shall give each other the opportunity to review and comment upon, any press
      release or other public statement with respect to the Merger and the other
      transactions contemplated in this Agreement, and shall not issue any such press
      release or make any such public statement prior to such consultation, except
      as
      may be required by Law.

     

    SECTION
      6.04 Obligations of Merger Sub

     

    Parent
      shall take all action necessary to cause Merger Sub to perform its obligations
      under this Agreement and to consummate the Merger on the terms and conditions
      set forth in this Agreement.

     

    SECTION
      6.05 Transaction Expenses

     

    Each
      Party to this Agreement shall bear their own expenses in connection herewith,
      including, without limitation, the fees of each Party’s respective legal
      counsel, financial advisors, accountants, brokers, finders or investment
      bankers, but in no event shall such fees and expenses (including, without
      limitation, the fees and expenses described in Section 3.27) incurred by or
      on
      behalf of Company. Company shall make a good faith effort to pay all of its
      expenses in connection with the Agreement and the transactions contemplated
      hereby prior to Closing. In the event any of the foregoing expenses are not
      paid
      prior to Closing or have not reduced the Transaction Value, Parent shall be
      entitled to offset such excess expenses against the Purchase Notes (as if such
      excess expenses were a Loss).

     

    
      
        
        

      

      
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    SECTION
      6.06 Director Resignations

     

    Company
      shall deliver to Parent prior to the Closing the resignation of each director
      and officer of Company, effective as of the Effective Time.

     

    SECTION
      6.07 Tax Advance

     

    Within
      fifteen (15) days after filing the tax return of the Company for the period
      January 1, 2008 through the Effective Time, Parent shall, or shall cause the
      Surviving Company to, pay to the Company Shareholders (pro rata to the number
      of
      shares of Company Stock owned by them as of the Closing Date) and amount equal
      to forty-two percent (42%) of (a) the taxable income to be allocated to each
      of
      them on Forms K-1 to be provided to them by the Surviving Corporation with
      respect to such period, less (b) Four Hundred Forty-Eight Thousand Two Hundred
      Thirty-six Dollars (448,236). The amount of such payments shall be applied
      against the payments next becoming due under the Purchase Notes after the date
      such payments are made to the Company Shareholders.

     

    ARTICLE
      VII

     

    CONDITIONS
      PRECEDENT

     

    SECTION
      7.01 Conditions to Obligations of Each Party Under This
      Agreement

     

    The
      respective obligations of each Party to effect the Merger and the other
      transactions contemplated herein shall be subject to the satisfaction at or
      prior to the Effective Time of the following conditions, any or all of which
      may
      be waived by agreement of Parent and Company, in whole or in part, to the extent
      permitted by applicable Law:

     

    (a) No
      Order.
      No
      Governmental Entity or federal or state court of competent jurisdiction shall
      have enacted, issued, promulgated, enforced or entered any statute, rule,
      regulation, executive order, decree, judgment, injunction or other order
      (whether temporary, preliminary or permanent), in any case which is in effect
      and which prevents or prohibits consummation of the Merger; provided,
      however,
      that
      the Parties shall use their reasonable best efforts to cause any such decree,
      judgment, injunction or other order to be vacated or lifted; provided,
      further,
      that
      the failure to obtain a required consent or approval of a Governmental Entity
      shall not form the basis for an assertion that this condition is not
      satisfied.

     

    
      
        
        

      

      
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    SECTION
      7.02 Additional Conditions to Obligations of Parent and Merger
      Sub

     

    The
      obligations of Parent and Merger Sub to effect the Merger and the other
      transactions contemplated in this Agreement are also subject to the satisfaction
      at or prior to the Effective Time of the following conditions, any or all of
      which may be waived by Parent, in whole or in part, to the extent permitted
      by
      applicable Law:

     

    (a) Representations
      and Warranties.
      Each of
      the representations and warranties of Company and the Company Shareholders
      contained in this Agreement shall be true and correct as of the date of this
      Agreement and shall be true and correct (except that where any statement in
      a
      representation or warranty expressly includes a standard of materiality, such
      statement shall be true and correct in all respects giving effect to such
      standard) as of the Effective Time as though made as of the Effective Time,
      except for (i) representations and warranties which address matters only as
      of a
      particular date, which representations and warranties shall be true and correct
      in all material respects (except that where any statement in a representation
      or
      warranty expressly includes a standard of materiality, such statement shall
      be
      true and correct in all respects giving effect to such standard) as of such
      date
      and (ii) changes permitted by or consistent with this
      Agreement.

     

    (b) Agreements
      and Covenants.
      Company
      shall have performed or complied in all respects with all Agreements and
      covenants required by this Agreement to be performed or complied with by Company
      on or prior to the Effective Time.

     

    (c) Opinion
      of Counsel.
      Parent
      shall have received from Olver Korts LLP, counsel to Company, an opinion dated
      the Closing Date, which is reasonable and customary for transactions of the
      type
      contemplated by this Agreement.

     

    (d) No
      Challenge.
      There
      shall not be pending any enforcement action or similar proceeding by any state
      or federal Governmental Entity that is likely to have a Company Material Adverse
      Effect or, if such action arises in connection with the transactions
      contemplated hereby, a Parent Material Adverse Effect.

     

    (e) Company
      Material Adverse Effect.
      There
      shall not have occurred a Company Material Adverse Effect (or any development
      that, insofar as reasonably can be foreseen, is reasonably likely to result
      in
      any Company Material Adverse Effect).

     

    (f) No
      Litigation.
      There
      shall be no pending or threatened suit, action, proceeding or investigation:
      (i)
      challenging or seeking to restrain or prohibit the consummation of the Merger
      or
      any of the other transactions contemplated by this Agreement, (ii) relating
      to
      the Merger and seeking to obtain from Parent or Merger Sub any damages that
      may
      be material to Parent, (iii) seeking to prohibit or limit in any respect
      Parent's ability to vote, receive dividends with respect to or otherwise
      exercise ownership rights with respect to the stock of the Surviving
      Corporation; (iv) which would materially and adversely affect the right of
      the
      Surviving Corporation to own the assets or operate the business of Company;
      or
      (v) which, if adversely determined, could have a Company Material Adverse Effect
      or Parent Adverse Effect.

     

    
      
        
        

      

      
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    (g) Consents.
      Company
      shall have procured all consents of third-parties and Governmental Entities
      specified in Schedule 3.06. Parent
      shall have received the approval of its primary lender to the consummation
      of
      the Merger and the transactions contemplated by this Agreement.

     

    (h) Bank
      Financing. Parent shall have entered into a loan agreement with a commercial
      lender reasonably acceptable to Parent including, among other things, the
      agreement of such lender to provide Parent with funds sufficient to pay or
      cause
      to be paid the Cash Purchase Price and the Company Shareholders shall have
      agreed to subordinate the Purchase Notes to the obligations of the Parent to
      such lender on terms and conditions satisfactory to such lender, in its sole
      discretion.

     

    (i) Benefit
      Plans Termination.
      Company
      shall have terminated each of the Benefit Plans on terms reasonably satisfactory
      to Parent, shall have provided evidence reasonably satisfactory to Parent to
      ensure that no employee or former employee of Company has any right under such
      plans and that all Liabilities of Company under the Benefits Plans (including
      any Liabilities relating to services performed prior to the Closing) are fully
      extinguished at no cost, and with no Liability, to Company except for funding
      of
      retirement plans for fiscal 2008 and for termination or rollover payments
      incident to termination of the Benefit Plans. 

     

    (j) Dissenting
      Shareholders.
      There
      shall be no Dissenting Shareholders.

     

    (k) Non-competition
      Agreements.
      Each of
      Company Shareholders shall have executed and delivered to Parent a
      non-competition agreement in the form attached hereto as Exhibit
      F.

     

    (l) Employment
      Agreements.
      Each of
      Michael Brudek and Nicholas Vaseliv shall have executed and delivered to Parent
      an employment agreement in the form attached hereto as Exhibit
      G.

     

    (m) Lease.
      Parent
      or the Surviving Corporation (at the option of Parent) having entered into
      a
      lease agreement for the premises in which the Company currently conducts its
      business, on terms (including term and rental payments) and conditions
      satisfactory to Parent.

     

    (n) Due
      Diligence Investigation.
      Parent
      shall not have identified anything during its continuing business and legal
      due
      diligence investigation of Company that has or in the reasonable judgment of
      Parent could be expected to have a Company Material Adverse Effect.

     

    (o) Fairness
      Opinion.
      If
      Parent elects, it shall have received an opinion from a reputable investment
      banking firm selected by Parent as to the fairness, from a financial point
      of
      view, to Parent of the aggregate Merger Consideration to be paid to Company
      Shareholders pursuant to this Agreement.

     

    (p) Officer’s
      Certificate.
      Parent
      shall have received a certificate, dated as of the Closing Date, signed on
      behalf of Company by the its chief executive officer and by each of the Company
      Shareholders (i) representing and warranting after reasonable investigation
      that
      the conditions set forth in Section 7.02(a) and Section 7.02(b) have
      been duly satisfied, (ii) certifying that Company Financial Statement have
      been
      prepared in accordance with GAAP and fairly present, in all material respects,
      the financial condition and results of operation of Company.

     

    
      
        
        

      

      
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    (q) Secretary’s
      Certificate.
      Parent
      shall have received a certificate, dated as of the Closing Date, signed by
      the
      Secretary of Company (i) attaching copies of Company’s certificate of
      incorporation and bylaws, and any amendments thereto, (ii) attaching a good
      standing certificate of Company, duly certified by the New York Department
      of
      State, (iii) certifying that attached thereto are true and correct copies
      of action by written consent or resolutions duly adopted by the board of
      directors and shareholders of Company which authorize and approve the execution,
      delivery and performance of this Agreement and the consummation of the
      transactions contemplated thereby, (iv) certifying that there are no
      proceedings for the dissolution or liquidation of Company and
      (v) certifying the incumbency, signature and authority of the officers of
      Company authorized to execute, deliver and perform this Agreement and all other
      documents, instruments or agreements related thereto executed or to be executed
      by Company.

     

    SECTION
      7.03 Additional Conditions to Obligations of Company

     

    The
      obligations of Company to effect the Merger and the other transactions
      contemplated by this Agreement are also subject to the satisfaction at or prior
      to the Effective Time of the following conditions, any or all of which may
      be
      waived by Company, in whole or in part, to the extent permitted by applicable
      Law:

     

    (a) Representations
      and Warranties.
      Each of
      the representations and warranties of Parent and Merger Sub contained in this
      Agreement shall be true and correct as of the date of this Agreement and shall
      be true and correct (except that where any statement in a representation or
      warranty expressly includes a standard of materiality, such statement shall
      be
      true and correct in all respects giving effect to such standard) as of the
      Effective Time as though made as of the Effective Time, except for
      (i) representations and warranties which address matters only as of a
      particular date, which representations and warranties shall be true and correct
      in all material respects (except that where any statement in a representation
      or
      warranty expressly includes a standard of materiality, such statement shall
      be
      true and correct in all respects giving effect to such standard) as of such
      date
      and (ii) changes permitted by or consistent with this Agreement. Company
      shall have received a certificate of the chief executive officer or chief
      financial officer of Parent to the foregoing effect.

     

    (b) Guarantees.
      Parent
      and Merger Sub shall have obtained the release of each of the Company
      Shareholders from all personal guarantees of obligations of the Company
      included, but not limited to, the lease by the Company of the premises occupied
      by the Company for the conduct of its business.

     

    (c) Agreements
      and Covenants.
      Parent
      and Merger Sub shall have performed or complied in all respects with all
      Agreements and covenants required by this Agreement to be performed or complied
      with by them on or prior to the Effective Time except for such noncompliance
      that does not have a Parent Material Adverse Effect. Company shall have received
      a certificate of the chief executive officer or chief financial officer of
      Parent and Merger Sub to that effect.

     

    
      
        
        

      

      
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    (d) Opinion
      of Counsel.
      Company
      and Shareholders shall have received from Boylan, Brown, Code, Vigdor &
Wilson, LLP, counsel to Parent and Merger Sub, an opinion dated the Closing
      Date, which is reasonable and customary for transactions of the type
      contemplated by this Agreement.

     

    (e) No
      Challenge.
      There
      shall not be pending any enforcement action or similar proceeding by any state
      or federal Governmental Entity that is likely to have a Parent Material Adverse
      Effect.

     

    (f) Parent
      Material Adverse Effect.
      There
      shall not have occurred a Parent Material Adverse Effect (or any development
      that, insofar as reasonably can be foreseen, is reasonably likely to result
      in
      any Parent Material Adverse Effect).

     

    (g) No
      Litigation.
      There
      shall be no pending or threatened suit, action, proceeding or investigation:
      (i)
      challenging or seeking to restrain or prohibit the consummation of the Merger
      or
      any of the other transactions contemplated by this Agreement or (ii) which,
      if
      adversely determined, could have a Parent Material Adverse Effect.

     

    (h) Consents.
      Parent
      shall have received the approval of its primary lender to the consummation
      of
      the Merger and the transactions contemplated by this Agreement.

     

    (i) Secretary’s
      Certificate.
      Company
      and Shareholders shall have received a certificate, dated as of the Closing
      Date, signed by the Secretary of Parent and Merger Sub (i) attaching copies
      of Parent’s and Merger Sub's certificate of incorporation and bylaws, and any
      amendments thereto, (ii) attaching a good standing certificate of Parent
      and Merger Sub, duly certified by the Delaware Secretary of State and New York
      Department of State, respectively (iii) certifying that attached thereto
      are true and correct copies of action by written consent or resolutions duly
      adopted by the board of directors of Parent and Merger Sub which authorize
      and
      approve the execution, delivery and performance of this Agreement and the
      consummation of the transactions contemplated thereby, and (iv) certifying
      the incumbency, signature and authority of the officers of Parent and Merger
      Sub
      authorized to execute, deliver and perform this Agreement and all other
      documents, instruments or agreements related thereto executed or to be executed
      by Parent and Merger Sub.

     

    
      
        
        

      

      
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    ARTICLE
      VIII

     

    TERMINATION,
      AMENDMENT AND WAIVER

     

    SECTION
      8.01 Termination

     

    This
      Agreement may be terminated at any time (except where otherwise indicated)
      prior
      to the Effective Time, whether before or after approval of this Agreement and
      the Merger by Company Shareholders:

     

    (a) by
      mutual
      written consent of Parent and Company;

     

    (b) (i) by
      Parent, if any of the conditions provided in Section 7.02 have not been met
      as
      of July 31, 2008 and such failure has not been cured within twenty (20) business
      days following receipt by Company of written notice of such failure describing
      the extent and nature thereof in reasonable detail, or to the extent permitted
      by applicable Law, such conditions have not been waived in writing by
      Parent;

     

    (ii) by
      Company, if any of the conditions provided in Section 7.03 have not been met
      as
      of the July 31, 2008 and such failure has not been cured within twenty (20)
      business days following receipt by Parent of written notice of such failure
      describing the extent and nature thereof in reasonable detail, or, to the extent
      permitted by applicable law, such conditions have not been waived in writing
      by
      Company.

     

    (c) by
      either
      Parent or Company if any decree, permanent injunction, judgment, order or other
      action by any court of competent jurisdiction or any other federal or state
      (but
      not county or municipal) Governmental Entity preventing or prohibiting
      consummation of the Merger shall have been filed or in effect; 

     

    (d) by
      either
      Parent or Company if the Merger shall not have been consummated by July 31,
      2008; provided however,
      that
      the right to terminate this Agreement under this Section 8.01(e) shall not
      be available to (i) Parent, where Parent’s failure to fulfill any
      obligation under this Agreement has been the cause of, or resulted in, the
      failure of the Effective Time to occur on or before such date, or
      (ii) Company, where Company’s failure to fulfill any obligation under this
      Agreement has been the cause of, or resulted in, the failure of the Effective
      Time to occur on or before such date; 

     

    (e) by
      either
      Parent or Company if any of the conditions provided in Section 7.01 have not
      been met as of July 31, 2008, or to the extent permitted by applicable law,
      have
      not been waived by both Parties; and

     

    (f) by
      Parent, if Company or the Company Shareholders breach their obligations under
      Section 5.7. 

     

    
      
        
        

      

      
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    SECTION
      8.02 Effect of Termination

     

    In
      the
      event of termination of this Agreement by either Parent or Company as provided
      in Section 8.01, this Agreement shall forthwith become void and there shall
      be no liability or obligation on the part of Parent, Merger Sub or Company
      or
      any of their respective directors or officers except (i) nothing herein
      shall relieve any Party from liability for any breach hereof, (ii) each
      Party shall be entitled to any remedies at law or in equity for such breach
      and
      (iii) Sections 8.02 and 8.03 and Article IX shall remain in full force and
      effect and survive any termination of this Agreement.

     

    SECTION
      8.03 Expenses; Termination Fees

     

    Except
      as
      otherwise set forth in this Agreement, all costs and expenses incurred by the
      parties hereto shall be borne solely and entirely by the party that has incurred
      such costs and expenses, whether or not the Merger is consummated. 

     

    SECTION
      8.04 Amendment

     

    Subject
      to applicable Law, this Agreement may be amended by the Parties at any time
      prior to the Effective Time. This Agreement may not be amended except by an
      instrument in writing signed by the Parties.

     

    SECTION
      8.05 Extension; Waiver

     

    At
      any
      time prior to the Effective Time, the Parties may (a) extend the time for
      the performance of any of the obligations or other acts of the other Parties,
      (b) waive any inaccuracies in the representations and warranties contained
      herein or in any Agreements, documents, certificates or other instruments
      delivered pursuant hereto and (c) waive compliance with any of the
      Agreements or conditions contained in this Agreement. Any such extension or
      waiver shall be valid if set forth in an instrument in writing signed by the
      Party or Parties to be bound thereby. The failure of any Party to assert any
      of
      its rights under this Agreement or otherwise shall not constitute a waiver
      of
      such rights.

     

    ARTICLE
      IX

     

    SURVIVAL
      OF REPRESENTATIONS; REMEDIES

     

    SECTION
      9.01 Survival of Representations

     

    All
      representations, warranties, covenants, indemnities and other agreements made
      by
      any party to this Agreement herein, shall be deemed made on and as of the
      Effective Time as though such representations, warranties, covenants,
      indemnities and other agreements were made on and as of such date, and all
      such
      representations, warranties, covenants, indemnities and other agreements shall
      survive the two-year anniversary of the Closing Date; provided,
      however,
      that
      (a) the representations set forth in Section 3.05 (Authority; Binding
      Obligation) shall survive in perpetuity, (b) the representations set forth
      in
      Section 3.01 (Organization and Qualification), Section 3.02 (No
      Subsidiaries), Section 3.04 (Capitalization), Section 3.15 (Pension
      and Benefit Matters), Section 3.16 (Tax and Tax Matters) and
      Section 3.24 (Environmental Matters) shall survive until the expiration of
      the applicable statute of limitations. Notwithstanding
      anything herein to the contrary, any representation, warranty, covenant,
      agreement or indemnity which is the subject of a claim which is asserted in
      writing prior to the expiration of the applicable period set forth above shall
      survive solely with respect to such claim until the final resolution
      thereof.

     

    
      
        
        

      

      
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    SECTION
      9.02 Indemnification by Company Shareholders

     

    (a) Company
      Shareholders hereby agree to severally indemnify, defend and hold Parent, the
      Surviving Corporation and their respective officers and directors, and each
      person, if any, who controls or may control Parent or the Surviving Corporation
      within the meaning of the Securities Act (all such persons hereinafter are
      referred to individually as a “Parent
      Indemnified Person”
and
      collectively as “Parent
      Indemnified Persons,”
but
      in
      no event shall any Company Shareholder prior to the Effective Time be such
      a
      Parent Indemnified Person) harmless against all Losses resulting from, imposed
      upon or incurred by any Parent Indemnified Person, directly or indirectly,
      as a
      result of any of the following, anything in this Agreement to the contrary
      notwithstanding:

     

    (i)  any
      inaccuracy or breach of a representation or warranty of Company or the Company
      Shareholder given or made by Company or the Company Shareholder in this
      Agreement, in the Certificate of Merger, in any of the schedules to this
      Agreement or in any certificate, document or agreement delivered by or on behalf
      of Company or the Company Shareholders pursuant hereto; and

     

    (ii) any
      failure by Company or the Company Shareholders to perform or comply with any
      covenant or agreement contained in this Agreement, in the Certificate of Merger
      or in any certificate, document or agreement delivered by or on behalf of
      Company or the Company Shareholder pursuant hereto.

     

    (b) Notwithstanding
      anything in this Agreement to the contrary, Company Shareholders shall not
      be
      responsible for any Loss pursuant to this Section 9.02 unless and until the
      aggregate amount of all of such Losses shall exceed $100,000 in
      which
      case Company Shareholders jointly and severally shall be liable for the amount
      by which the entire Loss exceeds $100,000.

     

    SECTION
      9.03 Procedure for Offset

     

    (a) In
      the
      event, from time to time, any Parent Indemnified Person determines that it
      has
      suffered a Loss for which indemnification is available pursuant to this
      Agreement, the following procedure shall be followed:

     

    (i) Parent
      Indemnified Person shall give written notice of any such claim (a “Loss
      Notice”)
      to the
      Shareholders’ Representative specifying in reasonable detail the amount of the
      claimed Loss (the “Loss
      Amount”)
      and
      the basis for such Loss and whether the Parent intends to offset against the
      Purchase Notes.

     

    
      
        
        

      

      
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    (ii) Within
      twenty (20) days after delivery of a Loss Notice, the Shareholders’
Representative shall provide to Parent and the Parent Indemnified Person (if
      not
      the same Person), a written response (a “Response
      Notice”)
      in
      which the Shareholders’ Representative will (i) agree that an offset in the
      full Loss Amount may be made against the Purchase Notes, (ii) agree that an
      offset in an amount equal to part, but not all, of the Loss Amount (the
“Agreed
      Amount”)
      may be
      made against the Purchase Notes or (iii) contest making any offset against
      the Purchase Notes. The Shareholders’ Representative may contest an offset
      against the Purchase Notes upon a good faith belief that all or such portion
      of
      such offset does not constitute a Loss for which the Parent Indemnified Person
      is entitled to indemnification under this Agreement. If no Response Notice
      is
      delivered by the Shareholders’ Representative within such twenty (20) day
      period, the Shareholders’ Representative shall be deemed to have agreed that an
      offset in the full Loss Amount may be made against the Purchase
      Notes.

     

    (iii) If
      the
      Shareholders’ Representative in the Response Notice agree (or are deemed to have
      agreed pursuant to clause (ii) above) that an offset may be made against the
      Purchase Notes in an amount equal to the Loss Amount, the Purchase Note of
      each
      Company Shareholder shall be reduced proportionately in the same percentage
      that
      each Company Shareholder’s Purchase Note bears to all Purchase
      Notes.

     

    (iv) If
      the
      Shareholders’ Representative in the Response Notice agrees that an offset in an
      Agreed Amount may be made against the Purchase Notes, the Purchase Note of
      each
      Company Shareholder shall be reduced proportionately in the same percentage
      that
      such Company Shareholder’s Purchase Note bears to all Purchase
      Notes.

     

    (v) If
      the
      Shareholders’ Representative in the Response Notice contests an offset against
      the Purchase
      Notes
      equal to
      all or any part of the Loss Amount (the “Contested
      Amount”),
      the
      Parent Indemnified Person and the Shareholders’ Representative shall negotiate
      in good faith to resolve any such dispute. During the period of such
      negotiation, and thereafter until the resolution of such dispute, Parent shall
      make any payments due on the Purchase Notes, up to the Contested Amount, to
      the
      Escrow Agent named in Subsection 9.03(a)(vi), to be held and disbursed in
      accordance with the provisions of that Subsection.. The Purchase
      Note of
      each
      Company Shareholder shall be reduced proportionately in the same percentage
      that
      such Company Shareholder’s Purchase
      Note
      bears to
      all Purchase
      Notes
      by an
      amount equal to the dollar amount of the award set forth in such
      determination.

     

    (vi) If
      the
      Parent claims that it is entitled to offset any Contested Sum against the
      Purchase Notes, it shall make each of the payments due with respect to the
      Purchase Notes coming due after the date of the Response Notice (up to, but
      not
      in excess of, the Contested Sum) (together, the “Escrow
      Sum”)
      to
      Olver Korts, LLP and Boylan, Brown, Code, Vigdor & Wilson, LLP, as Escrow
      Agent, to be held and disbursed in accordance with the following:

     

    (a) Retention
      of Escrow Sum.
      The
      Escrow Agent shall hold the Escrow Sum in an interest bearing account of its
      choosing in accordance with the provisions of this Subsection 9.03(a)(vi).
      Interest accumulated in such account shall be paid to Parent and the Company
      Shareholders in the same proportion as each of them shall become entitled to
      receive distribution of the Escrow Sum.

     

    
      
        
        

      

      
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    (b) Distribution
      of Escrow Sum.
      Escrow
      Agent shall retain the Escrow Sum until the resolution of dispute with respect
      to the Contested Sum in accordance with the provisions of Subsection 9.03(a)(v).
      The Escrow Agent shall distribute the Escrow Sum in accordance with the
      determination of a court of competent jurisdiction with respect to the disputes
      giving rise to the deposit in escrow of the Escrow Sum; provided, however,
      that
      if the Parent and the Shareholders Representative shall instruct the Escrow
      Agent in writing as to the manner in which it shall distribute the Escrow Sum,
      the Escrow Sum shall be distributed in accordance with such
      instructions.

     

    (c) Escrow
      Agent's Responsibility.
      The
      Escrow Agent may rely and shall be protected in acting upon any documents which
      may be submitted to them in connection with its duties hereunder and which
      it
      believes to be genuine and to have been signed or presented by the proper party
      or parties, and the Escrow Agent shall have no liability or responsibility
      with
      respect to the form, execution or validity thereof. The Escrow Agent shall
      not
      be responsible for any act or failure to act on their part except in the case
      of
      their own bad faith or gross negligence

     

    (d) Action
      By Escrow Agent.
      The
      Escrow Agent may act only jointly and not severally with respect to any matters
      relating to the Escrow Sum. The action by the Escrow Agent shall not preclude
      either of them from representing or continuing to represent its client is
      connection with this Agreement and the transactions contemplated hereby. The
      fees of Olver Korts, LLP for acting as Escrow Agent shall be paid by the Company
      Shareholders and the fees of Boylan, Brown, Code, Vigdor & Wilson, LLP for
      acting as Escrow Agent shall be paid by Parent.

     

    (b) The
      indemnity and other obligations of each Company Shareholder under this Agreement
      shall first be satisfied through the exercise by Parent of the right of offset
      against the aggregate outstanding amount of the Purchase Notes. Following its
      exhaustion of its offset rights as set forth above, Parent shall have the right
      to enforce the remaining indemnity obligations of Company Shareholders pursuant
      to Section 9.02 hereof against each Company Shareholder.

     

    (c) Provided
      that Parent makes payments of Contested Amounts to the Escrow Agent identified
      in Subsection 9.03(vi) in accordance with that Subsection, the exercise of
      any
      such right of offset or reimbursement by Parent in good faith, whether or not
      ultimately determined to be justified, will not constitute a breach of this
      Agreement or a default under any Purchase Note. Neither the exercise of nor
      the
      failure to exercise such right of offset or reimbursement will constitute an
      election of remedies or limit Parent in any manner in the enforcement of any
      other remedies available to Parent except as otherwise expressly set forth
      in
      this Agreement.

     

    
      
        
        

      

      
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    SECTION
      9.04 Third Party Claims.

     

    The
      obligations and liabilities of Company Shareholders with respect to their
      respective indemnities pursuant to this Article IX, resulting from any
      Third Party Claim shall be subject to the following terms and
      conditions:

     

    (a) The
      party
      seeking indemnification (the “Indemnified
      Party”)
      must
      give the party obligated to indemnify (the “Indemnifying
      Party”),
      notice of any Third Party Claim which is asserted against, resulting to, imposed
      upon or incurred by the Indemnified Party and which may give rise to liability
      of the Indemnifying Party pursuant to this Article IX, stating (to the
      extent known or reasonably anticipated) the nature and basis of such Third
      Party
      Claim and the amount thereof; provided
      that the
      failure to give such notice shall not affect the rights of the Indemnified
      Party
      hereunder except to the extent (i) that the Indemnifying Party shall have
      suffered actual damage by reason of such failure, or (ii) such failure or
      delay materially adversely affects the ability of the Indemnifying Party to
      defend, settle or compromise such Third Party Claim.

     

    (b) Subject
      to Section 9.04(c) below, if the Indemnifying Party assumes responsibility
      for Losses arising out of such Third Party Claim, then the Indemnifying Party
      shall have the right to undertake, by counsel or other representatives of its
      own choosing, the defense of such Third Party Claim at the Indemnifying Party’s
      risk and expense.

     

    (c) In
      the
      event that (i) the Indemnifying Party shall elect not to undertake such defense,
      (ii) within a reasonable time after notice from the Indemnified Party of any
      such Third Party Claim, the Indemnifying Party shall fail to undertake to defend
      such Third Party Claim, or (iii) there is a reasonable probability that such
      Third Party Claim may materially and adversely affect the Indemnified Party
      other than as a result of money damages or other money payments, then the
      Indemnified Party (upon further written notice to the Indemnifying Party) shall
      have the right to undertake the defense, compromise or settlement of such Third
      Party Claim, by counsel or other representatives of its own choosing, on behalf
      of and for the account and risk of the Indemnifying Party. In the event that
      the
      Indemnified Party undertakes the defense of a Third Party Claim under this
      Section 9.04, the Indemnifying Party shall pay to the Indemnified Party, in
      addition to the other sums required to be paid hereunder, the reasonable costs
      and expenses incurred by the Indemnified Party in connection with such defense,
      compromise or settlement as and when such costs and expenses are so
      incurred.

     

    (d) Anything
      in this Section 9.04 to the contrary notwithstanding, (i) neither the
      Indemnified Party nor the Indemnifying Party shall, without the other party’s
      written consent (which consent shall not be unreasonably withheld or delayed),
      settle or compromise such Third Party Claim or consent to entry of any judgment
      which does not include as an unconditional term thereof the giving by the
      claimant or the plaintiff to the Indemnified Party of a release from all
      liability in respect of such Third Party Claim in form and substance
      satisfactory to the Indemnified Party; (ii) in the event that a party
      hereto undertakes defense of such Third Party Claim in accordance with this
      Section 9.04, the other parties, by counsel or other representative of
      their own choosing and at their sole cost and expense, shall have the right
      to
      participate in the defense, compromise or settlement thereof and each party
      and
      its counsel and other representatives shall cooperate with the other party
      and
      its counsel and representatives in connection therewith; and (iii) the
      party that undertakes the defense of such Third Party Claim in accordance with
      this Section 9.04 shall have an obligation to keep the other parties
      informed of the status of the defense of such Third Party Claim and furnish
      the
      other parties with all documents, instruments and information that the other
      parties shall reasonably request in connection therewith.

     

    
      
        
        

      

      
        47

        
          

        

      

      
        
        

      

    

     

    SECTION
      9.05 No
      Recourse Against Company

     

    Company
      Shareholders hereby irrevocably waive any and all right to recourse against
      Company and the Surviving Corporation with respect to any misrepresentation
      or
      breach of any representation, warranty or indemnity, or noncompliance with
      any
      conditions or covenants, given or made by Company in this Agreement or any
      other
      agreements and documents executed or to be executed by the Parties hereto in
      order to consummate the transactions contemplated by this Agreement. No Company
      Shareholder shall be entitled to contribution from, subrogation to or recovery
      against Company or the Surviving Corporation with respect to any liability
      of
      any Company Shareholder that may arise under or pursuant to this Agreement
      or
      any of the other agreements and documents executed or to be executed by the
      Parties hereto in order to consummate the transactions contemplated by this
      Agreement or such other agreements and documents contemplated
      hereby.

     

    SECTION
      9.06 Specific Performance

     

    (a) In
      addition to any other remedies which Parent or Merger Sub may have at law or
      in
      equity, Company and the Company Shareholders hereby acknowledge that Company
      and
      the transactions contemplated under this Agreement are unique, and that the
      harm
      to Parent or Merger Sub resulting from breaches by Company or the Company
      Shareholders of their obligation cannot be adequately compensated by damages.
      Accordingly, Company and the Company Shareholders agree that Parent and Merger
      Sub shall have the right to have all obligations, undertakings, agreements,
      covenants and other provisions of this Agreement specifically performed by
      Company and the Company Shareholders and that Parent and Merger Sub shall have
      the right to obtain an order or decree of such specific performance in any
      of
      the courts of the United States of America or any state or other political
      subdivision thereof.

     

    (b) In
      addition to any other remedies which Company Shareholders may have at law or
      in
      equity, Parent and Merger Sub hereby acknowledge that the transactions
      contemplated under this Agreement are unique, and that the harm to Company
      Shareholders resulting from breaches by Parent or Merger Sub of their obligation
      cannot be adequately compensated by damages. Accordingly, Parent and Merger
      Sub
      agree that Company Shareholders shall have the right to have all obligations,
      undertakings, agreements, covenants and other provisions of this Agreement
      specifically performed by Parent and Merger Sub and that Company Shareholders
      shall have the right to obtain an order or decree of such specific performance
      in any of the courts of the United States of America or any state or other
      political subdivision thereof.

     

    SECTION
      9.07 Remedies Cumulative

     

    Subject
      to the limitations and qualifications set forth in this Article IX, the
      remedies provided herein shall be cumulative and shall not preclude the
      assertion by the parties hereto of any other rights or the seeking of any other
      remedies against the other parties, or their respective successors or
      assigns.

     

    
      
        
        

      

      
        48

        
          

        

      

      
        
        

      

    

     

    SECTION
      9.08 Indemnity by Parent

     

    Parent
      hereby agrees to indemnify, defend and hold Company Shareholders (“Company
      Shareholder
      Indemnified Person”
and
      collectively “Company Shareholder Indemnified
      Persons,”
but
      in
      no event shall any Company Shareholder prior to the Effective Time be such
      a
      Company Shareholder Indemnified Person) harmless against all Losses resulting
      from, imposed upon or incurred by any Company Shareholder Indemnified Person,
      directly or indirectly, as a result of any of the following, anything in this
      Agreement to the contrary notwithstanding:

     

    (a)  any
      inaccuracy or breach of a representation or warranty of Parent or Merger Sub
      given or made by Parent or Merger Sub in this Agreement, in the Certificate
      of
      Merger, or in any certificate or agreement delivered by or on behalf of Parent
      or Merger Sub pursuant hereto; and

     

    (b) any
      failure by Parent or Merger Sub to perform or comply with any covenant or
      agreement contained in this Agreement, in the Certificate of Merger or in any
      certificate or agreement delivered by or on behalf of Parent or Merger Sub
      pursuant hereto.

     

    ARTICLE
      X

     

    GENERAL
      PROVISIONS

     

    SECTION
      10.01 Notices

     

    All
      notices and other communications given or made pursuant hereto shall be in
      writing and shall be deemed to have been duly given or made as of the date
      delivered, mailed or transmitted if delivered personally, mailed by registered
      or certified mail (postage prepaid, return receipt requested) or sent by
      overnight courier (providing proof of delivery) to the Parties at the following
      addresses or sent by electronic transmission to the following facsimile numbers
      (or at such other address or facsimile number for a Party as shall be specified
      by like notice):

     

    
      	 	
              (a)

            	
              If
                to Parent or Merger Sub:

            


    

    


    IEC
      Electronics Corp.

    105
      Norton Street

    
      	 	 	
              Newark,
                New York 14513

            


    

    Facsimile: (315)332-4430

    Attention: Chief
      Executive Officer

     

    
      
        
        

      

      
        49

        
          

        

      

      
        
        

      

    

     

    
      	 	 	
              With
                a copy (which shall not constitute notice)
                to:

            


    

    


    Boylan,
      Brown, Code, Vigdor & Wilson, L.L.P.

    2400
      Chase Square

    Rochester,
      New York 14604

    
      	 	
              Facsimile:

            	
              (585)
                232-3528

            


    

    
      	 	
              Attention:

            	
              Robert
                F. Mechur, Esq.

            


    

     

    
      	 	
              (b)

            	
              If
                to Company prior to the Closing
                Date:

            


    

    


    Val-
      U-Tech Corp.

    115
      A
      Victor Heights Parkway

    
      	 	 	
              Victor,
                New York 14564

            


    

    Facsimile: (585)
      924-8584

    
      	 	
              Attention:

            	
              Michael
                Brudek, President

            


    

     

    With
      a
      copy (which shall not constitute notice) to:

    


    Olver
      Korts LLP

    Tobey
      Village Office Park

    100
      Office Park Way

    Pittsford,
      NY 14534

    Facsimile:
      (585) 387-5234

    Attention:
      Matthew M. Korona, Esq.

     

    If
      to
      Shareholders’ Representative:

    


    Michael
      Brudek

    127
      Amann
      Road

    Honeoye
      Falls, New York 14472

    


    With
      a
      copy (which shall not constitute notice) to:

    


    Olver
      Korts LLP

    Tobey
      Village Office Park

    100
      Office Park Way

    Pittsford,
      NY 14534

    Facsimile:
      (585) 387-9234

    Attention:
      Matthew M. Korona, Esq.

     

    SECTION
      10.02 Jurisdiction, Venue and Attorneys’ Fees

     

    (a) In
      the
      event that any legal proceedings are commenced in any court with respect to
      any
      matter arising under this Agreement, the Parties hereto specifically consent
      and
      agree that:

     

    
      
        
        

      

      
        50

        
          

        

      

      
        
        

      

    

     

    (i) the
      courts of the State of New York and/or the United States Federal Courts located
      in the State of New York shall have exclusive jurisdiction over each of the
      Parties and such proceedings; and

     

    (ii) the
      venue
      of any such action shall be in Monroe County, New York and/or the United States
      District Court for the Western District of New York

     

    (b) In
      the
      event that any legal proceedings are commenced in any court with respect to
      any
      matter arising under or relating to this Agreement or any of the agreements
      executed in connection herewith, the prevailing party in such proceeding shall
      be entitled to recover from the other party or parties its reasonable attorneys’
fees, disbursement and expenses incurred in connection with the investigation
      and prosecution or defense (as the case may be) in connection with such
      proceeding.

     

    SECTION
      10.02 Headings

     

    The
      headings contained in this Agreement are for reference purposes only and shall
      not affect in any way the meaning or interpretation of this
      Agreement.

     

    SECTION
      10.03 Severability

     

    If
      any
      term or other provision of this Agreement is invalid, illegal or incapable
      of
      being enforced by any rule of Law or public policy, all other conditions and
      provisions of this Agreement shall nevertheless remain in full force and effect
      so long as the economic or legal substance of the transactions contemplated
      hereby is not affected in any manner materially adverse to any Party. Upon
      such
      determination that any term or other provision is invalid, illegal or incapable
      of being enforced, the Parties shall negotiate in good faith to modify this
      Agreement so as to effect the original intent of the Parties as closely as
      possible in an acceptable manner to the end that transactions contemplated
      hereby are fulfilled to the extent possible.

     

    SECTION
      10.04 Entire Agreement

     

    This
      Agreement (together with the Exhibits, Schedules and the other documents
      delivered pursuant hereto) constitute the entire agreement of the Parties and
      supersede all prior agreements and undertakings, both written and oral, among
      the Parties, or any of them, with respect to the subject matter
      hereof.

     

    SECTION
      10.05 Assignment

     

    Neither
      this Agreement nor any of the rights, interests or obligations hereunder shall
      be assigned by any of the Parties hereto (whether by operation of Law or
      otherwise) without the prior written consent of the other Parties; provided,
      however,
      that
      Parent and Merger Sub shall have the right to assign this Agreement without
      the
      prior written consent of Company to a direct or indirect Subsidiary of the
      Parent, but no such assignment shall relieve Parent or Merger Sub, as the case
      may be, of its obligations hereunder. Subject to the preceding sentence, this
      Agreement shall be binding upon, inure to the benefit of and be enforceable
      by
      the Parties and their respective successors and assigns.

     

    
      
        
        

      

      
        51

        
          

        

      

      
        
        

      

    

     

    SECTION
      10.06 Parties in Interest

     

    This
      Agreement shall be binding upon and inure solely to the benefit of each Party,
      and nothing in this Agreement, express or implied, other than the right to
      receive the Merger Consideration pursuant to Article II and the rights of
      the Parent Indemnified Person pursuant to Article IX, is intended to or shall
      confer upon any other Person any right, benefit or remedy of any nature
      whatsoever under or by reason of this Agreement.

     

    SECTION
      10.07 Mutual Drafting

     

    Each
      Party has participated in the drafting of this Agreement, which each Party
      acknowledges is the result of extensive negotiations between the Parties.
      Consequently, this Agreement shall be interpreted without reference to any
      rule
      or precept of law that states that any ambiguity in a document be construed
      against the drafter.

     

    SECTION
      10.08 Governing Law

     

    This
      Agreement shall be governed by, and construed in accordance with, the Laws
      of
      the State of New York, regardless of the Laws that might otherwise govern under
      applicable principles of conflicts of law.

     

    SECTION
      10.09 Counterparts

     

    This
      Agreement may be executed and delivered in one or more counterparts, and by
      the
      different Parties in separate counterparts, each of which when executed and
      delivered shall be deemed to be an original but all of which taken together
      shall constitute one and the same agreement.

     

    SECTION
      10.10 Singular and Plural

     

    Any
      reference in this Agreement to the singular includes a reference to the plural
      and vice
      versa.

     

    ARTICLE
      XI

     

    DEFINITIONS

     

    For
      purposes of this Agreement, the following terms, and the singular and plural
      thereof, shall have the meanings set forth below:

     

    “Acquisition
      Proposal” shall mean any offer, proposal, letter of intent, inquiry or
      expression or indication of interest (other than an offer, proposal, letter
      of
      intent, inquiry or expression or indication of interest by Parent) contemplating
      or otherwise relating to any Acquisition Transaction.

     

    
      
        
        

      

      
        52

        
          

        

      

      
        
        

      

    

     

    “Acquisition
      Transaction” shall mean any transaction or series of related transactions
      involving:

     

    (a)
      any
      merger, consolidation, share exchange, business combination, issuance of
      securities, direct or indirect acquisition of securities, tender offer, exchange
      offer or other similar transaction in which (i) Company is a constituent
      corporation, (ii) a Person or “Group” (as defined in the Exchange Act and the
      rules promulgated thereunder) of Persons directly or indirectly acquires
      beneficial or record ownership of securities representing more than 10% of
      the
      outstanding securities of any class of voting securities of Company, or (iii)
      Company issues securities representing more than 10% of the outstanding
      securities of any class of voting securities of Company;

     

    (b)
      any
      direct or indirect sale, lease, exchange, transfer, license, acquisition or
      disposition of any business or businesses or of assets or rights that constitute
      or account for 10% or more of the net revenues, net income or assets of Company;
      or 

     

    (c)
      any
      liquidation or dissolution of Company.

     

    “Act”
      means the Securities Act of 1933, as amended.

     

    “Affiliate”
      means: (a) with respect to an individual, any member of such individual’s
      family; (b) with respect to an entity, any officer, director, shareholder,
      partner or investor of or in such entity or of or in any Affiliate of such
      entity; and (c) with respect to a Person, any Person which directly or
      indirectly, through one or more intermediaries, Controls, is Controlled by,
      or
      is under common Control with such Person or entity.

     

    “Agreement”
      means any agreement between or among two or more Persons with respect to their
      relative rights and/or obligations or with respect to a thing done or to be
      done, including, without limitation, agreements denominated as contracts,
      leases, promissory notes, covenants, easements, rights of way, commitments,
      arrangements and understandings.

     

    “Assets”
      means assets of every kind and everything that is or may be available for the
      payment of liabilities (whether inchoate, tangible or intangible), including,
      without limitation, real and personal property.

     

    “Average
      Parent Trading Price” for any date shall mean the average closing sales price on
      The Over the Counter Bulletin Board (as reported in The Wall Street Journal,
      or,
      if not reported therein, any other authoritative source) for the five (5)
      trading-day period ending on trading day that is immediately prior to such
      date.

     

    “business
      day” means a day other than a Saturday, a Sunday or any other day on which
      commercial banks in the City of New York are authorized or obligated to be
      closed.

     

    “Certificate”
      is defined in Section 2.02(a).

     

    “Certificate
      of Merger” is defined in Section 1.02.

     

    “Closing”
      is defined in Section 1.02.

     

    
      
        
        

      

      
        53

        
          

        

      

      
        
        

      

    

     

    “Closing
      Date” is defined in Section 1.02.

     

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

     

    “Company”
      is defined in the Preamble to this Agreement.

     

    “Company
      Balance Sheet” is defined in Section 2.01(a)(ii)(a).

     

    “Company
      Benefit Plans” means all “employee benefit plans” as that term is defined in
      Section 3(3) of ERISA, whether or not terminated, and trust agreements and
      insurance contracts under or with respect to which Company has or could have
      any
      liability, contingent, secondary or otherwise, and any other benefit plan,
      program, practice, arrangement, or agreement (including without limitation
      employment agreements) providing benefits of any kind to employees, officers,
      directors, or independent contractors.

     

    “Company
      Common Stock” is defined in Section 3.04.

     

    “Company
      Contracts” is defined in Section 3.13.

     

    “Company
      Financial Statement” is defined in Section 3.08(a).

     

    “Company
      Material Adverse Effect” means any event, change or effect that, individually or
      when taken together with any related events, is or is reasonably likely to
      be
      materially adverse to the business, prospects, operations, condition (financial
      or otherwise), Assets or liabilities of Company.

     

    “Company
      Pension Plan” means any Company Benefit Plans that is an “employee pension
      benefit plan,” as that term is defined in Section 3(2) of ERISA.

     

    “Company
      Share Amount” means the aggregate number of shares of Company Common Stock
      outstanding immediately prior to the Effective Time (including any such shares
      that are subject to a repurchase option or risk of forfeiture under any
      restricted stock purchase agreement or other agreement).

     

    “Company
      Shareholders” has the meaning set forth in the Preamble to this
      Agreement.

     

    “Company
      Stock Plan” means any Company Benefit Plan pursuant to which Company is or may
      become obligated to, or obligated to cause any other Person to, issue, deliver
      or sell shares of capital stock of Company, or grant, extend or enter into
      any
      option, warrant, call, right, commitment or agreement to issue, deliver or
      sell
      shares, or any other interest in respect of capital stock of
      Company.

     

    “Company
      Tax Returns” means all Tax Returns required to be filed by Company (without
      regard to extensions of time permitted by law or otherwise).

     

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

     

    
      
        
        

      

      
        54

        
          

        

      

      
        
        

      

    

     

    “Debt”
      shall mean without duplication (a) all outstanding indebtedness for borrowed
      money of Company to any Person (including all interest accrued thereon), (b)
      all
      obligations of Company arising from or incurred in connection with the
      acquisition or purchase of capital assets (including the deferred purchase
      price
      for such capital assets and all Capital Lease Obligations), (c) any amounts
      that
      are required to be accrued on the balance sheet of Company for bonuses payable
      to any employee, and (d) all accounts payable by Company other than those
      incurred by Company in the Ordinary Course of Business of Company. Normal
      accounts payables and accrued expenses incurred in the Ordinary Course of
      Business of Company shall be excluded from the definition of Debt.

     

    “Dissenting
      Shareholder” shall mean a shareholder of the Company who shall have duly
      demanded appraisal of his shares of Company Common stock pursuant to Section
      623
      of the NYBCL, complied with the provisions of such Section and not withdrawn,
      failed to perfect or otherwise lost his right to such appraisal..

     

    “Effective
      Time” is defined in Section 1.02.

     

    “Encumbrance”
      means any mortgage, lien, pledge, encumbrance, security interest, deed of trust,
      option, encroachment, reservation, order, decree, judgment, condition,
      restriction, charge, Agreement, claim or equity of any kind.

     

    “Environmental
      Laws” means any federal, state or local Law relating to public health or safety,
      worker health or safety, or pollution, damage to or protection of the
      environment including, without limitation, Laws relating to emissions,
      discharges, releases or threatened release of Hazardous Materials into the
      environment (including, without limitation, ambient air, surface water,
      groundwater, land surface or subsurface), or otherwise relating to the
      manufacture, processing, distribution, use, treatment, storage, generation,
      disposal, transport or handling of any Hazardous Material.

     

    “ERISA”
      means the Employee Retirement Income Security Act of 1974, as amended, and
      all
      Laws promulgated pursuant thereto or in connection therewith.

     

    “GAAP”
      means United States generally accepted accounting principles, consistently
      applied.

     

    “Government
      Property” means property or equipment in the possession of or directly acquired
      by a Governmental Entity and subsequently made available to Company or any
      other
      property or equipment otherwise acquired by Company to which a Governmental
      Entity has title.

     

    “Governmental
      Entities” (including the term “Governmental”) means any governmental,
      quasi-governmental or regulatory authority, whether domestic or
      foreign.

     

    “Hazardous
      Material” means (i) any “hazardous substance” as now defined pursuant to the
      Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
      §9601(14); (ii) any “pollutant or contaminant” as defined in 42 U.S.C.
§9601(33); (iii) any material now defined as “hazardous waste” pursuant to 40
      C.F.R. Part 261; (iv) any petroleum, including crude oil and any fraction
      thereof; (v) natural or synthetic gas usable for fuel; (vi) any “hazardous
      chemical” as defined pursuant to 29 C.F.R. Part 1910; and (vii) any asbestos,
      polychlorinated biphenyl (“PCB”), radium, or isomer of dioxin, or any material
      or thing containing or composed of such substance or substances.

     

    
      
        
        

      

      
        55

        
          

        

      

      
        
        

      

    

     

    “Independent
      Accountants” means the firm of Mengel Metzger Barr & Co., LLP. In the event
      that such firm declines or is unable to serve, “Independent Accountants means
      the firm of Eldredge, Fox & Porretti, LLP.

     

    “Intellectual
      Property” means (a) all inventions (whether patentable or unpatentable and
      whether or not reduced to practice), all improvements thereto, all patent
      disclosures, industrial designs, utility models and all patents and patent
      applications, together with all reissuances, continuations,
      continuations-in-part, divisions, revisions, extensions, renewals and
      reexaminations thereof, (b) all trademarks, service marks, trade dress,
      domain names, web site addresses, logos, trade names, and corporate names,
      together with all translations, adaptations, derivations, and combinations
      thereof and including all goodwill associated therewith, and all applications,
      registrations, and renewals in connection therewith, (c) all registered and
      unregistered copyrights, all rights to database information, and all
      applications, registrations, and renewals in connection therewith, (d) all
      mask works and all applications, registrations, and renewals in connection
      therewith, (e) all trade secrets and confidential business information
      (including research and development, know-how, formulas, compositions,
      manufacturing and production processes and techniques, technical data, software,
      databases, designs, drawings, specifications, customer and supplier lists,
      pricing and cost information, and business and marketing plans and proposals),
      (f) all rights, including rights of privacy and publicity, to use the names,
      likenesses and other personal characteristics of any individual, and
      (g) other proprietary rights and (h) all copies and tangible
      embodiments thereof (in whatever form or medium) existing in any part of the
      world (including all computer software and related data and
      documentation).

     

    “Inventory”
      means all new materials, work in progress, finished goods and inventoriable
      supplies.

     

    “Knowledge”
      will be deemed to be present with respect to Company when the matter in question
      is known, or upon reasonable investigation, should have been known, to Company.
      If the Company or any Company Shareholder has received written or oral notice
      of
      any event circumstance or claim, the Company shall be deemed to have Knowledge
      of such event circumstance or claim.

     

    “Laws”
      means all foreign, federal, state and local statutes, laws, ordinances,
      regulations, rules, resolutions, orders, tariffs, determinations, writs,
      injunctions, awards (including, without limitation, awards of any arbitrator),
      judgments and decrees applicable to the specified Person and to the businesses
      and Assets thereof (including, without limitation, Laws relating to the
      protection of classified information; the sale, leasing, ownership or management
      of real property; employment practices, terms and conditions, and wages and
      hours; building standards, land use and zoning; safety, health and fire
      prevention; and environmental protection, including Environmental
      Laws).

     

    
      
        
        

      

      
        56

        
          

        

      

      
        
        

      

    

     

    “License”
      means any franchise, grant, authorization, license, tariff, permit, easement,
      variance, exemption, consent, certificate, approval or order of any Governmental
      Entity.

     

    “Losses”
      means all demands, losses, claims, actions or causes of action, assessments,
      damages, liabilities, costs and expenses, including, without limitation,
      interest, penalties and reasonable attorneys’ fees and
      disbursements.

     

    “Merger”
      is defined in the Preamble to this Agreement. 

     

    “Merger
      Consideration” is defined in Section 2.01(a)(i).

     

    “Merger
      Sub” is defined in the Preamble to this Agreement.

     

    “Merger
      Sub Stock” is defined in Section 2.01(d).

     

    “Multiemployer
      Plan” means any “multiemployer plan” within the meaning of Section 4001(a)(3) of
      ERISA to which Company contributes, has an obligation to contribute, or has
      at
      any time since September 2, 1974, contributed or been obligated to
      contribute.

     

    “NYBCL”
      is defined in the Preamble to this Agreement.

     

    “Ordinary
      Course of Business” means ordinary course of business consistent with past
      practices and reasonable business operations.

     

    “Parent”
      is defined in the Preamble to this Agreement.

     

    “Parent
      Common Stock” is defined in Section 2.01(a).

     

    “Parent
      Material Adverse Effect” means any event, change or effect that, individually or
      when taken together with any related events, is or is reasonably likely to
      be
      materially adverse to the business, prospects, operations, condition (financial
      or otherwise), Assets or liabilities of Parent and its Subsidiaries, taken
      as a
      whole.

     

    “Parent
      Notice” is defined in Section 2.01(a)(v)).

     

    “Parent
      SEC Documents” is defined in Section 4.05.

     

    “Party”
      and “Parties” are defined in the Preamble to this Agreement.

     

    “Permitted
      Encumbrance” means (i) easements, rights of way, minor irregularities of title,
      and liens for taxes not yet due and payable, (ii) landlord, warehouse and
      materialmen’s liens and (ii) other Encumbrances similar to clauses (i) and (ii);
      provided, however, that any or all of the foregoing do not materially affect
      the
      utility or value of the Assets or other matters to which they
      relate.

     

    
      
        
        

      

      
        57

        
          

        

      

      
        
        

      

    

     

    “Person”
      means an individual, corporation, partnership, limited liability company, joint
      venture, trust, unincorporated organization or other entity, or a Governmental
      Entity.

     

    “Plan”
      means any plan, program or arrangement, whether or not written, that is or
      was
      an “employee benefit plan” as such term is defined in Section 3(3) of ERISA
      and (a) which was or is established or maintained by Company; (b) to
      which Company contributed or was obligated to contribute or to fund or provide
      benefits; or (c) which provides or promises benefits to any person who
      performs or who has performed services for Company and because of those services
      is or has been (i) a participant therein or (ii) entitled to benefits
      thereunder.

     

    “Post-Signing
      Returns” is defined in Section 5.04.

     

    “Representatives”
      is defined in Section 5.7.

     

    “Scheduled
      Closing Date” is defined in Section 2.04.

     

    “Shareholder
      Notice” is defined in Section 2.01(a)(v)).

     

    “Shareholders’
      Representative” means Michael Brudek. If Michael Brudek is unable or unwilling
      to serve as the Shareholders’ Representative, “Shareholders’ Representative”
means Kathleen Brudek. If both Michael Brudek and Kathleen Brudek are unable
      or
      unwilling to serve as the Shareholders’ Representative, “Shareholders’
Representative” means Nicholas Vaseliv.

     

    “Subsidiary”
      means a corporation, partnership, joint venture or other entity of which any
      Person owns, directly or indirectly, at least fifty percent (50%) of the
      outstanding securities or other interests the holders of which are generally
      entitled to vote for the election of the board of directors or other governing
      body or otherwise exercise Control of such entity.

     

    “Surviving
      Corporation” is defined in Section 1.01.

     

    “Taxes”
      (including the terms “Tax” and “Taxing”) means all federal, state, local and
      foreign taxes (including, without limitation, income, profit, franchise, sales,
      use, real property, personal property, ad
      valorem,
      excise,
      employment, social security and wage withholding taxes) and installments of
      estimated taxes, assessments, deficiencies, levies, imports, duties, license
      fees, registration fees, withholdings, or other similar charges of every kind,
      character or description imposed by any Governmental Entity, and any interest,
      penalties or additions to tax imposed thereon or in connection
      therewith.

     

    “Tax
      Liabilities” means any action, suit, proceeding, audit, investigation or claim
      pending or threatened in respect of any Taxes for which Company is or may become
      liable, or any deficiency or claim for any such Taxes that has been to Company’s
      knowledge proposed, asserted or threatened. 

     

    “Tax
      Returns” means all federal, state, local, foreign and other applicable returns,
      declarations, reports and information statements with respect to Taxes required
      to be filed with the United States Internal Revenue Service, and its successors,
      or any other Governmental Entity or Tax authority or agency, including, without
      limitation, consolidated, combined and unitary tax returns.

     

    
      
        
        

      

      
        58

        
          

        

      

      
        
        

      

    

     

    “Third
      Party Claim” means any claim or other assertion of liability by any third
      party.

     

    “Withdrawal
      Liability” means liability to a Multiemployer Plan as a result of a complete or
      partial withdrawal from such Multiemployer Plan, as those terms are defined
      in
      Part I of Subtitle E of Title IV of ERISA.

     

    [Remainder
      of Page Intentionally Left Blank; Signature Page Follows.]

     

    
      
        
        

      

      
        59

        
          

        

      

      
        
        

      

    


    IN
      WITNESS WHEREOF, the parties hereto have executed and delivered, this Agreement
      or have caused this Agreement to be duly executed and delivered, as of the
      date
      first set forth hereinabove.

     

    
      	
              IEC
                ELECTRONICS CORP.

            
	 	 
	
              By:
                

            	 
	
              Name:
                W. Barry Gilbert

            
	
              Title:
                Chief Executive Officer

            
	 	 
	
              VUT
                MERGER CORP.

            
	 	 
	
              By:
                

            	 
	
              Name:
                W. Barry Gilbert

            
	
              Title:
                President

            
	 	 
	
              VAL-U-TECH
                CORP.

            
	 	 
	
              By:
                

            	 
	
              Name:
                Michael Brudek

            
	
              Title:
                President

            
	 
	
              COMPANY
                SHAREHOLDERS:

            
	 	 
	 	 
	
              Name:
                Kathleen Brudek

            
	 
	 
	
              Name:
                Michael Brudek

            
	 
	 
	
              Name:
                Nicholas Vaseliv

            


    

    


    
      
        
        

      

      
        60

        
          

        

      

      
        
        

      

    

    


    The
      undersigned hereby acknowledges his appointment as the Shareholders’
Representative hereunder and his willingness to fulfill the duties of the
      Shareholders’ Representative as contemplated by this Agreement.

     

    
      	 
	
              Michael
                Brudek

            


    

    


    The
      undersigned hereby acknowledges her appointment as the Shareholders’
Representative hereunder if Michael Brudek is unable or unwilling to serve
      as
      the Shareholders’ Representative and her willingness to fulfill the duties of
      the Shareholders’ Representative as contemplated by this Agreement.

     

    
      	 
	
              Kathleen
                Brudek

            


    

    


    The
      undersigned hereby acknowledges his appointment as the Shareholders’
Representative hereunder if both Michael Brudek and Kathleen Brudek are unable
      or unwilling to serve as the Shareholders’ Representative and his willingness to
      fulfill the duties of the Shareholders’ Representative as contemplated by this
      Agreement.

     

    
      	 
	
              Nicholas
                Vaseliv

            


    

     

    
      
        
        

      

      
        61

        
          

        

      

      
        
        

      

    

    


    EXHIBIT
      A

    


    FORM
      OF

    


    CERTIFICATE
      OF MERGER

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    EXHIBIT
      B

     

    INITIAL
      OFFICERS AND DIRECTORS

    OF

    SURVIVING
      CORPORATION

    


    Initial
      Officers

    

      
        	
                Office

              	 	
                Officer

              
	
                Chairman

              	 	
                W.
                  Barry Gilbert

              
	
                President

              	 	
                Michael
                  Brudek

              
	
                Secretary

              	 	
                Robert
                  F. Mechur

              


      

    

     

    Initial
      Directors 


    
      
        	 
	 
	 


      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      F

    


    FORM
      OF

     

    NON-COMPETITION
      AGREEMENT 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    EXHIBIT
      G

    


    FORM
      OF

     

    EMPLOYMENT
      AGREEMENT