Mount Knowledge Holdings, Inc.: Form 10.1 - Filed by newsfilecorp.com






Exhibit 10.1

LETTER OF INTENT 

September 10, 2010 

Mr. Dirk Haddow, CEO 
The Language Key Ltd. 
10/F, China
Merchants Commercial Building 
15-16 Connaught Road West 
Sheung Wan, Hong
Kong 


Dear Mr. Haddow: 

This letter confirms our amended non-binding mutual intentions
with respect to the potential transaction described herein between MOUNT
KNOWLEDGE HOLDINGS, INC., a fully reporting public Nevada corporation (the
“Purchaser and/or Company”) and LANGUAGE KEY TRAINING LTD, a British Virgin
Islands Corporation (the “Seller”), and its Shareholders (the “Shareholders”),
hereinafter Seller and the Shareholders shall be collectively referred to as
(the “Sellers”). This document, in and of itself, does not represent an
enforceable legal contract. This amended Letter of Intent, when executed by both
parties, shall supersede any and all of the terms and conditions set forth in
the previously executed amended Letter of Intent on or about June 28, 2010.

1.     Definitive Agreement. All of the terms and
conditions of the proposed transaction shall be set forth in a definitive
agreement (the “Definitive Agreement”) to be executed on or before September 30,
2010, with a subsequent date of closing (the “Closing Date”), to be mutually
agreed to by Sellers and Purchaser. Neither party intends to be bound by any
oral or written statements nor may correspondence concerning the proposed
Definitive Agreement arising during the course of negotiations, notwithstanding
that the same be expressed in terms signifying a partial, preliminary or interim
agreement between the parties. 

2.     Purchase of Stock. Sellers have agreed,
subject to the final approval by its shareholders and the execution of any
subsequent and/or required documentation, to sell to the Purchaser and the
Purchaser has agreed, subject to the completion of its due diligence and the
execution of a Definitive Agreement, to purchase from the Sellers on or before
the Closing Date shares of Common Stock in a newly formed corporation domiciled
in Hong Kong (“LANGUAGE KEY ASIA”) consisting of approximately ninety-five (95%)
percent or more of the beneficial Common and Preferred Stock ownership of
Language Key Asia. The purpose of Language Key Asia is to own and hold any and
all of the issued and outstanding shares of Common and Preferred Stock,
including any applicable Warrants, Options, and/or another issued securities of
The Language Key China, Ltd, a Hong Kong Corporation (the “LK Training Asia”)
and its wholly-owned subsidiary in China, The Language Key China Ltd., a China
Corporation (the “China Subsidiary”) and The Language Key Training, Ltd., a Hong
Kong Corporation, currently an independent corporation owned by the Seller which
is to be acquired as a wholly-owned subsidiary of the LK Training Asia in this
proposed transaction (the “HK Subsidiary”), collectively referred to as (the “LK
Entities”). The proposed purchase of stock transaction would make all the LK
Entities wholly-owned and operated subsidiaries of the Company as set forth
herein below. 

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3.     Closing Conditions. In conjunction with the
terms and a condition of the contemplated Purchase of Stock set forth in Section
2 hereinabove, Sellers agree to the following closing conditions (the “Closing
Conditions”): 

(a)   Formation of MOUNT KNOWLEDGE ASIA. On or
before the Closing Date, the Purchaser shall incorporate a new Hong Kong
corporation (“MOUNT KNOWLEDGE ASIA”) to be owned 100% by the Purchaser for the
purposes of facilitating the purchase of stock as set forth in Section 2
hereinabove and to operate the LK Entities as wholly-owned subsidiaries of the
Purchaser. 

(b)   Formation of LANGUAGE KEY ASIA. On or before
the Closing Date, the Seller shall incorporate LANGUAGE KEY ASIA to be owned
100% initially by the Sellers prior to the purchase of stock by the Company
through MOUNT KNOWLEDGE ASIA. 

(c)   Formation of LANGUAGE KEY Publishing. On or
before the Closing Date, the Seller shall incorporate a new Hong Kong
corporation (“LANGUAGE KEY PUBLISHING”) to be owned 100% by LANGUAGE KEY ASIA,
for the purposes of owning all of the LANGUAGE KEY ASIA’s Licenses, Trademarks,
and other Intellectual Property (the “LANGUAGE KEY IP”). 

(d)   LK Restructuring Plan. On or before the
Closing Date, the Sellers shall effect a series corporate actions in order to
complete a corporate restructuring of the LK Entities (the “LK Restructuring
Plan”), including, but not limited to the execution of certain corporate
documents and government filings pertaining to change of ownership and corporate
name of the LK Entities, the cancellation of existing agreements and the
exchange of any and all shares of Common and Preferred Stock in each respective
LK entity (collectively referred to as the LK Entities in Section 2), under a
“parent-subsidiary” relationship consisting of LANGUAGE KEY ASIA as the parent
(holding company) and the other LK Entities subsidiaries thereof. Some of the
corporate actions required under the LK Restructuring Plan, subject to
modification in the Definitive Agreement, are as follows: 

	 	1. 	
      Change of Company Name. Sellers shall
      complete the necessary documents and filings to change the company name of
      THE LANGUAGE KEY CHINA, LTD, a Hong Kong Corporation (the “LK Training
      Asia”) to LANGUAGE KEY TRAINING ASIA, LTD;

	 	 	 
	 	2. 	
      Purchase of Subsidiary. Sellers shall
      effect the purchase of any and all shares of common stock (and, any other
      issued series of capital stock) of THE LANGUAGE KEY TRAINING LTD, a Hong
      Kong Corporation (the “HK Subsidiary”) by LK Training Asia, representing
      one hundred (100%) percent transfer of the ownership of the HK Subsidiary
      from the Sellers to LK Training Asia;

	 	 	 
	 	3. 	
      Cancellation of Royalty Agreement. Sellers
      shall cause the cancellation of the Trademark Royalty Agreement (the
      “Royalty Agreement”) with FOXGLOVE INTERNATIONAL ENTERPRISES LTD, a
      British Virgin Islands Corporation (the “Licensor”) and provide a full
      release and assignment to the LK Publishing to the full and unencumbered
      rights to the “Language Key” name, trademarks, service marks, and
    any other intellectual property rights owned by Licensor with
      no limitations and free and clear any claims against the LK Publishing,
      and/or its operation subsidiaries, now or in the future;



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	 	4. 	
      Cancellation of Sub-Licensing Agreements.
      Sellers shall cause the cancellation of any and all sub-licensing
      agreements by and between the Sellers, Licensor, and/or any other
      affiliated companies relating the Royalties granted to Sellers as a result
      of the Royalty Agreement executed with Licensor.

	 	 	 
	 	5. 	
      Release Agreement. Sellers shall cause the
      execution of a Release Agreement with the LK Training Asia and its
      subsidiaries and/or affiliated companies, to release said entities,
      jointly and severally, from any and all claims the Seller may have now or
      in the future against said entities as a result of this transaction,
      except otherwise defined herein.

	 	 	 
	 	6. 	
      Sellers Share Exchange. Upon the completion
      of any and all of the necessary items required to complete the LK
      Restructuring Plan before the Closing Date, Sellers shall effect by
      corporate resolution from the Board of Directors of LANGUAGE KEY ASIA the
      authorization for the creation of class of Preferred Stock, including the
      creation of a Series A Convertible Preferred Stock (the “LK Asia
      Preferred”). The LK Asia Preferred shall have certain rights and
      preferences, including, but not limited to, the right to convert a portion
      of or all of the LK Asia Preferred into shares of Common Stock of LANGUAGE
      KEY ASIA under a predetermined conversion schedule (the “Conversion
      Rights”).

	 	 	 
	 		
      Simultaneously, LANGUAGE KEY ASIA shall issue to the
      Sellers, on a pro-rated basis of Sellers’ ownership, shares of LK Asia
      Preferred stock in an amount equal to eight hundred thousand (800,000)
      shares or such other mutually agreed upon amount of shares in LANGUAGE KEY
      ASIA in exchange for the cancellation of shares of Common Stock owned and
      held by the Sellers in LANGUAGE KEY ASIA at the date of issuance, subject
      to the terms and conditions mutually agreed to by Purchaser and Sellers
      set forth in a Stock Purchase Share Exchange between LANGUAGE KEY ASIA and
      Sellers (the “LK Asia Stock Purchase Share Exchange Agreement), executed
      on or before the Closing Date.

	 	 	 
	 	7. 	
      Purchaser Share Exchange with Sellers.
      Subject to the Conversion Rights set forth in the LK Asia Preferred, the
      Sellers would, from time to time, have the right to convert a portion of
      or all of the LK Asia Preferred into shares of Common Stock in LANGUAGE
      KEY ASIA. Upon the conversion of the LK Asia Preferred to shares of Common
      Stock of LANGUAGE KEY ASIA, MOUNT KNOWLEDGE ASIA shall exchange said
      shares of Common Stock in LANGUAGE KEY ASIA for shares of Common Stock in
      MOUNT KNOWLEDGE ASIA in the same equivalent number of shares (one-to-one
      (1:1) basis) in the same series and/or class of stock as owned and held by
      Sellers in LANUGAGE KEY ASIA or such other mutually agreed upon amount of
      shares, upon the terms and conditions mutually agreed to by Purchaser and
      Sellers set forth in an executed Stock  Purchase and Share Exchange Agreement
between MOUNT KNOWLEDGE ASIA and Sellers (the “MTK ASIA Stock Purchase and Share
Exchange Agreement”), executed on or before the Closing Date. 



3 




Subsequently, the Purchaser shall
immediately exchange said shares of Common Stock of MOUNT KNOWLEDGE ASIA issued
to and held by the Sellers for shares of Common Stock in MOUNT KNOWLEDGE
HOLDINGS, INC (the Purchaser) in the same equivalent number of shares
(one-to-one (1:1) basis) in the same series and/or class of stock as owned and
held by the Sellers in MOUNT KNOWLEDGE ASIA or such other mutually agreed upon
amount of shares, upon the terms and conditions mutually agreed to by Purchaser
and Sellers set forth in an executed Stock Purchase and Share Exchange Agreement
between the Purchaser and Sellers (the “MKHD Stock Purchase and Share Exchange
Agreement”), executed on or before the Closing Date. 

4.     Consideration. In consideration for the
purchase by the Purchaser from Sellers as set forth in Section 2 and Section 3
hereinabove, the Purchaser shall agree to the following consideration: 

(a) Capital Commitment. Purchaser shall commit to
provide a capital investment (the “Paid-in Capital”) into the LANGUAGE KEY ASIA
in an amount equal to one million (USD $1,000,000) dollars within twelve (12)
months from the Closing Date disbursed as follows: (i) a payment in the amount
of $200,000 at the Closing Date, (ii) ten (10) subsequent payments in the amount
of $75,000 per month payable on the first day of each month beginning sixty (60)
days after the Closing Date, and (iii) a final payment in the amount of $50,000
in the twelfth (12th) month after the Closing Date. The Paid-in Capital invested
into LANGUAGE KEY ASIA shall be in the form of a purchase of stock as set forth
in the Definitive Agreement on or before the Closing Date as set forth in
Section 2 hereinabove. 

(b) Additional Expense Payments. Purchaser has
requested that certain corporate restructuring items relating to the LK Entities
(LK Restructuring Plan) be completed prior to the execution of a Definitive
Agreement which would require additional expenses to be incurred by the Sellers,
including, but not limited to legal, accounting, government filing fees and/or
travel (the “Additional Expenses”), which were not anticipated in the context of
the previously executed Letter of Intent, on or about May 6, 2010. 

Upon the execution of this amended Letter of Intent, the
Purchaser has agreed to advance funds for Additional Expenses to be incurred by
the Sellers as described herein, in the an amount up to, but not to exceed USD
$20,000.00 (the “Additional Expense Limit”) with such amount to be disbursed
within ten (10) business days from the date of execution of this amended Letter
of Intent. Said Additional Expense payments shall be applied to the Paid-in
Capital of the Purchaser in the Definitive Agreement on the Closing Date, with
that portion not related to either the Formation of LANGUAGE KEY ASIA or the LK
Restructuring Plan to be deducted from the total amount due by Purchaser as set
forth in Section 4(a). Any amount greater than the expense limit, must be
pre-approved by Purchaser in writing as a supplement to this expense approval
provided herein prior to being incurred. 

If a Definitive Agreement is not executed due to the decision
of the Sellers, then the payments made to the Sellers by the Purchaser for
Additional Expenses shall promptly be reimbursed to Purchaser with ten (10) business days of such time as the parties mutually agree
not to proceed with the Definitive Agreement. If a Definitive Agreement is not
executed due to the sole decision of the Purchaser, then the funds advanced to
the Sellers for Additional Expense shall be forfeited.

4 




5.    Due Diligence Review and Access. Promptly
following the execution of this Letter of Intent, Sellers shall immediately
arrange for the Purchaser to have complete access to Sellers’s facilities and
any and all books and records, and shall cause the directors, employees,
accountants, and other agents and representatives (collectively,
"Representatives") of Sellers, including the LK Entities to cooperate fully with
Purchaser and/or Purchaser’s representatives in connection with the performance
of any required due diligence, including, but not limited to a complete
examination of LK Entities’ assets and liabilities, financials, accounting
controls and procedures, business records, contracts, legal documents,
shareholder agreements, offering documentation or memorandums and/or any other
materials deem necessary by Purchaser generally required to complete a due
diligence of the LK Entities as set forth in the Due Diligence Check List
attached hereto as Exhibit A. Any information obtained by Purchaser as a result
thereof will be maintained by Purchaser in confidence. The parties will
cooperate to complete due diligence expeditiously. 

6.    Conduct in Ordinary Course. In addition to the
conditions discussed herein and any others to be determined after the due
diligence process shall be contained in a Definitive Agreement, subject to
Sellers having conducted its business(s) in the ordinary course during the
period between the date hereof and the Closing Date and there having been no
material adverse change in the business(s), financial condition or prospects.
Sellers shall promptly notify Purchaser of any conduct of the Company or
material event, circumstance, or impairment to the Company’s business or
continuing operation and of any extraordinary transactions that may have an
effect on the value of the Company or its underlying assets and/or liabilities.


7.      Expediency. All the parties would use all
reasonable efforts to complete and sign a Definitive Agreement on or before
September 30, 2010 and to close the transaction as promptly as practicable
thereafter. 

8.    Expenses. The parties agree that each party is
responsible for the payment of their respective expenses associated with the
execution, duties and responsibilities and enforcement of this Letter of Intent,
the Definitive Agreement and the transactions contemplated hereby and thereby,
except for the Additional Expense Payments provided by the Purchaser as set
forth in Section 4(b). 

9.     Broker’s Fee. All parties have represented to
each other that no brokers or finders have been employed who would be entitled
to a fee from Sellers by reason of the transaction contemplated by this letter
of intent and that if any such fee is required in the future, it shall be the
responsibility of the Sellers to make such payment(s). 

10.    Public Announcements. Neither Sellers nor
Purchaser will make any announcement of the proposed transaction contemplated by
this Letter of Intent prior to the execution of the Definitive Agreement without
the prior written approval of the other, which approval will not be unreasonably
withheld or delayed, unless otherwise required by rules and regulations imposed
on Purchaser as a publicly traded company as set forth by the Securities and
Exchange Commission of the United States of America. The foregoing shall not restrict in any respective ability to
communicate hereby to any of our respective affiliates’, officers, directors,
employees and professional advisors, and, to the extent relevant, to third
parties whose consent is required in connection with the transaction
contemplated by this Letter of Intent. 

5 




11.    Exclusive Negotiating Rights. In order to
induce Purchaser to commit the resources, forego other potential opportunities,
and incur the legal, accounting and incidental expenses necessary properly to
evaluate the possibility of acquiring the assets and business described above,
and to negotiate the terms of, and consummated, the transaction contemplated
hereby, Sellers agree that for a period of ninety [90] days after the date
hereof, Sellers nor its affiliates and their respective officers, directors,
employees and agents shall not initiate, solicit, encourage, directly or
indirectly, or accept any offer or proposal, regarding the possible acquisition
of the LK Entities by any other person other than Purchaser, including, without
limitation, by way of a purchase of shares, assets or otherwise. Purchase of
assets or merger, of all or any substantial part of the LK Entities equity
securities or assess, and shall not (other than in the ordinary course of
business as heretofore conducted) provide any confidential information regarding
collective assets or business(s) to any person other than Purchaser and our
representatives. 

12.    Consents. Unless and until this Letter of
Intent has been terminated, Purchaser and Sellers and/or representatives of each
respective company as directed shall cooperate with each other and proceed, as
promptly as reasonably possible, to prepare and file the notifications required
by the SEC, or any other applicable Authority, and any other regulatory
governing body and will further seek to obtain all necessary consents and
approvals wherever needed or required from all other third parties, as may be
applicable, and to endeavor to comply with all other legal or contractual
requirements for or preconditions to the execution of a Definitive Agreement.


13.    Confidentiality. Except as and
to the extent required by law, Purchaser shall not disclose or use, and shall
direct its representatives not to disclose or use, any Confidential Information
(as defined below) obtained from the Sellers and/or representatives of the
Company by Purchaser or its representatives in connection herewith at any time
or in any manner other than in connection with its evaluation of the transaction
proposed in this Letter of Intent.

For purposes of this Paragraph, "Confidential Information"
means any information about the Sellers and/or the Company stamped
"confidential", or identified in writing as such to Purchaser by the Sellers
and/or Company; provided that it does not include information which; (i) is or
becomes generally available to or known by the public other than as a result of
improper disclosure by Purchaser or (ii) is obtained by Purchasers from a source
other than Sellers and/or representatives of the Company, provided that
Purchaser is unaware that such source was not bound by a duty of confidentiality
to Company or another party with respect to such information. If the Binding
Provisions of this Letter are terminated, Purchaser shall promptly return to
Company any Confidential Information in its possession and certify in writing to
Company that it has done so. Purchaser and Company acknowledge and affirm a Non
Disclosure and Non Circumvent Agreement was executed between the parties prior
to or on the date of this Letter of Intent. 

14.     Non-Circumvention. Both parties to this
Letter of Intent shall not directly or indirectly circumvent, avoid, bypass, or
in any way obviate each other’s rights under this Letter of Intent, including
but not limited
to the right to enter into any type of contractual relationship or otherwise with relationships brought to or developed by the other and/or together in this transaction without prior written consent by the other unless authorization is otherwise
provided for under a provision in the proposed Definitive Agreement. 

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15.    Indemnifications. Purchaser and Sellers agree that on or before the date of execution of the Definitive Agreement, Sellers will insure, hold harmless and indemnify Purchaser against any and all claims, liens, judgments
and/or any other obligation against the Company prior to the execution of the Definitive Agreement and that the Company will be free and clear of any liens, claims and or encumbrances whatsoever, except those disclosed and accepted by Purchaser.


16.    Disclaimer of Liabilities. No party to this Letter of Intent shall have any liability to any other party for any liabilities, losses, damages (whether special, incidental or consequential), costs, or expenses incurred by the
party in the event either party decides to terminate this Letter as provided in paragraph 17. Each party shall be solely responsible for its own expenses, legal fees and consulting fees related to their respective obligations of this Letter of
Intent, whether or not any of the transaction contemplated in this Letter of Intent is consummated. 


17.    Termination. Each party hereby reaffirms its intention that this Letter of Intent as a whole or in part, is not intended to constitute, and shall not constitute, a legal and binding obligation, contract or agreement between any of
the parties, and is not intended to be relied upon by any party as constituting such. Accordingly, the parties agree that any party to this Letter of Intent may unilaterally withdraw from negotiation or dealing at any time for any or no reason at
the withdrawing party’s sole discretion by notifying the other party of the withdrawal in writing. If a Definitive Agreement is not executed by the parties to this Letter on or before the September 30, 2010, then this Letter of Intent shall
terminate and all the terms and conditions set forth herein shall be null and void, unless an extension of this Letter of Intent is mutually agreed to by both parties in writing prior to the termination date.  


18.    Miscellaneous. This letter shall be governed by the substantive laws of the State of Nevada without regard to conflict of laws principles. This letter constitutes the entire understanding and agreement between the parties hereto
and their affiliates with respect to its subject matter and supersede all prior or contemporaneous agreements, representations, warranties and understandings of such parties (whether oral or written). No promise, inducement, representation or
agreement, other than as expressly set forth herein, has been made to or by the parties hereto. This letter may be amended only by written agreement, signed by the parties to be bound by the amendment. Evidence shall be inadmissible to show
agreement by and between such parties to any term or condition contrary to or in addition to the terms and conditions contained in this letter. This letter shall be construed according to its fair meaning and not strictly for or against either
party. 


19.    No Binding Obligation. Except for Section 1 and
Section 5 though 20, THIS LETTER OF INTENT DOES NOT CONSTITUTE OR CREATE, AND
SHALL NOT BE DEEMED TO CONSTITUTE OR CREATE, ANY LEGALLY BINDING OR ENFORCEABLE
OBLIGATION ON THE PART OF EITHER PARTY TO THIS LETTER OF INTENT. NO SUCH
OBLIGATION SHALL BE CREATED, EXCEPT BY THE EXECUTION AND DELIVERY OF THE
DEFINITIVE AGREEMENT CONTAINING SUCH TERMS AND CONDITIONS OF THE PROPOSED
TRANSACTION AS SHALL BE AGREED UPON BY THE PARTIES, AND THE ONLY IN ACCORDANCE
WITH THE TERMS AND CONDITIONS OF SUCH DEFINITIVE AGREEMENT. The Confidentiality
Agreement is hereby ratified and confirmed as a separate agreement between the
parties thereto. 


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20.    ACKNOWLEDGMENT AND ACCEPTANCE. If the terms
and conditions of this Letter of Intent are agreeable to LANGUAGE KEY TRAINING
LTD, please have the appropriate officer and/or director sign a copy of this
Letter of Intent and return a signed copy by facsimile to us at (248) 671-5080
by no later than 5pm on September 10, 2010, followed by a mailed original signed
copy to Mount Knowledge Holdings, Inc., 39555 Orchard Hill Place, Ste. 600 PMB
6096, Novi, Michigan 48375. This Letter of Intent may be executed in one or more
counterparts, each of which when so executed shall be deemed an original, but
all of which taken together shall constitute one and the same document. Upon
acceptance of the provisions of this Letter of Intent by each party, the parties
will in good faith prepare to execute a Definitive Agreement on the contemplated
transaction described herein on or before the September 30, 2010, subject to the
termination provisions set forth in paragraph 17. 

If the foregoing terms and conditions are acceptable to
LANGUAGE KEY TRAINING LTD, please so indicate by initialing each page and
signing the enclosed copy of this Letter of Intent and returning it to the
attention of the undersigned.

Sincerely, 

MOUNT KNOWLEDGE HOLDINGS, INC. 

By: /s/ Daniel A.
Carr                   
      
Daniel A. Carr,
       President and CEO



ACCEPTED AND AGREED 

LANGUAGE KEY TRAINING LTD. 

By: /s/ Dirk
Haddow                            
      
Dirk Haddow 
       President, CEO and
Director 


Date: September 10, 2010 

8 




Exhibit A 

Due Diligence Check List 

The Language Key China, Ltd, a Hong Kong Corporation,

The Language Key China Ltd., a China Corporation, and 
The
Language Key Training, Ltd., a Hong Kong Corporation, 
collectively
referred to as (the “LK Entities”) 

	Document/Information 	 	 	Provided 	 	 	None 	 	 	(Set Forth Reason)
    	 
	 	 	 	 	 	 	 	 	 	 	 
	CORPORATE INFORMATION
      	 	 	  	 	 	  	 	 	  	 
	 	 	 	 	 	 	 	 	 	 	 
	1. 	 	Articles of Incorporation, and any amendments thereto, of the Company.
      	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	2. 	 	Bylaws, as amended, of the Company.
      	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	3. 	 	All shareholders, board of directors and committee minutes of
      the Company during the last three years.
      	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	4. 	 	Schedule of all jurisdictions in
      which the Company is qualified to do business and certificates of such qualification. 	 	 		 	 		 	 		 



9




  

	 	 	 	 	 	 	 	 	 	 	 	 	 
	5. 	 	Names and addresses of the Company's
      shareholders, officers and directors, together with biographies. 	 	 		 	 		 	 		 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	6. 	 	Description of all classes of stock and
      ownership interests of all shareholders of the Company, including total
      number of issued and outstanding shares. 	 	 		 	 		 	 		 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	7. 	 	All voting trust agreements or other voting
      arrangements relating to any securities (with voting rights) of the
      Company. 	 	 		 	 		 	 		 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	8. 	 	All warrants, option agreements and other
      agreements or instruments creating or granting rights to acquire or
      dispose of the Company's securities, or containing anti-dilution
      provisions or providing for registration rights for the Company's
      securities. 	 	 		 	 		 	 		 



10






	 	 	 	 	 	 	 	 	 	 	 	 	 
	9. 	 	All documents relating to all underwritings and
      all major acquisitions or dispositions of the Company during last three
      years other than acquisitions or dispositions of the Company of property
      or goods in the ordinary course of business. 	 	 		 	 		 	 		 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	10. 	 	Schedule and description of the location of all
      offices and operations of the Company, including total land and operations
      areas, ownership and rights of use, condition of property, market value
      and space for expansion. 	 	 		 	 		 	 		 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	EMPLOYMENT INFORMATION 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	11. 	 	Schedule of all employees of the Company by
      location and department, job descriptions, salaries, bonuses and other
      compensation. 	 	 		 	 		 	 		 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	12. 	 	Biographies of all key employees of the
      Company. 	 	 		 	 		 	 		 



11






	 	 	 	 	 	 	 	 	 	 	 	 	 
	13. 	 	Appraisal of current labor relationships,
      description of any disputes with employees and grievance proceedings
      within the past three years. 	 	 		 	 		 	 		 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	14. 	 	A list of all employees of the the Company who
      have received stock or options (including appreciation rights) and the
      number of such securities received. 	 	 		 	 		 	 		 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	15. 	 	All written employment agreements, consulting
      agreements, severance, confidentiality and non-competition agreements, and
      any labor or collective bargaining agreements. Description of any verbal
      agreements, understanding or promises relating to employees. 	 	 		 	 		 	 		 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	16. 	 	All employee benefit plans, stock option plans
      and fringe benefit plans, including group health and life insurance plans,
      pension plans, cash bonus plans, employee stock purchase plans and salary
      plans. 	 	 		 	 		 	 		 



12






	 	 	 	 	 	 	 	 	 	 	 	 	 
	17. 	 	Company policy manual. 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	LOAN AND FINANCIAL INFORMATION 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	18. 	 	All debt instruments, loan agreements,
      installment purchase agreements, indentures, security instruments or other
      obligations relating to indebtedness for borrowed money or money loaned to
      others, and all guaranties of obligations therefor to which the Company is
      a party, obligor or beneficiary. 	 	 		 	 		 	 		 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	19. 	 	All correspondence with principal lenders for
      the past 18 months. 	 	 		 	 		 	 		 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	20. 	 	Descriptions of any loans to or from officers,
      directors or employees of the Company. 	 	 		 	 		 	 		 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	21. 	 	Files of correspondence with any reports from
      the Company's accountants during the past five years. 	 	 		 	 		 	 		 



13






	 	 	 	 	 	 	 	 	 	 	 	 	 
	22. 	 	All annual and subsequent interim financial
      statements of the Company and any unconsolidated subsidiaries, whether
      audited or unaudited, within the last five years, and all information
      relating to significant or material changes in accounting methods or
      standards used by the Company or its accountants to prepare such financial
      statements. 	 	 		 	 		 	 		 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	23. 	 	Current balance sheet of the Company 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	24. 	 	All deeds to, and other documents, other than
      leases, representing interests in real property owned by the Company. 	 	 		 	 		 	 		 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	25. 	 	All appraisals, independent or otherwise, made
      within the last three years, as to the value of the Company or any
      property thereof. 	 	 		 	 		 	 		 



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	26. 	 	Copies of all tax returns filed by the Company
      within the last five years with the IRS and all state and local tax
      authorities. 	 	 		 	 		 	 		 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	27. 	 	Description of accounting policies, method of
      crediting sales, allowances and returns, bad debts, inventory valuation,
      depreciation methods and rates for different structures and equipment, and
      internal reporting and control procedures. 	 	 		 	 		 	 		 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	28. 	 	Copies of all accounts receivable aging reports
      for the last three years and at the end of the most recent month. 	 	 		 	 		 	 		 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	MATERIAL AGREEMENTS 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	29. 	 	All leases, subleases or options to lease or
      sublease for personal or real property to which the Company is or intends
      to become a party (whether as lessor, lessee, sublessor or sublessee). 	 	 		 	 		 	 		 



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	30. 	 	All material contracts, agreements
      arrangements, commitments, understandings or obligations of the Company,
      any current or former Officer, Director or Affiliate not otherwise called
      for herein, including but not limited to: 	 	 		 	 		 	 		 



	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	(a) 	 	any agreements relating to the acquisition or
      disposition of assets not in the ordinary course of business; 	 	 		 	 		 	 		 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	(b) 	 	any partnership or joint venture in which the
      Company is involved; 	 	 		 	 		 	 		 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	(c) 	 	agreements with significant customers (a
      significant customer is any customer accounting for 5% or more of the
      Company's gross revenues); 		 		 	 		 	 		 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	(d) 	 	agreements with significant suppliers (a
      significant supplier is any supplier accounting for 5% or more of the costs of goods
      sold to the Company); 	 	 		 	 		 	 		 



16






	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	(e) 	 	any management, advisory, investment banking,
      marketing, franchise or agency agreements; and 	 	 		 	 		 	 		 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	(f) 	 	any consulting contracts with engineering firms
      or other consultants. 	 	 		 	 		 	 		 



	 	 	 	 	 	 	 	 	 	 	 	 	 
	31. 	 	A list of all transactions, or copies of all
      agreements, between the Company and its present or former officers,
      directors or other affiliated parties (or members of their immediate
      family - which should include spouses, parents, children, siblings,
      mothers and fathers and all in- laws), including indemnity arrangements.
    	 	 		 	 		 	 		 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	32. 	 	Copies of all standard form sales agreements,
    form of general invoices, and warranties given to customers. 	 	 	 	 	 	 	 	 	 	 



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	33. 	 	A description of any actual or
      likely defaults in any agreement to which the Company is a party. 	 	 		 	 		 	 		 



	 	 	 	 	 	 	 	 	 	 	 
	GENERAL BUSINESS INFORMATION 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	34. 	 	Schedule and description of all Products which
      generate at least 5% of gross revenue, including markets, sales by product
      for current and past two years, dollar and unit volume by product, trends
      in market shares, relative costs and profit margins by product, and
      breakdown of profits by product line. 	 	 		 	 		 	 		 
	 	 	 	 	 	 	 	 	 	 	 	 	 
		 	(a) Schedule and description of all significant
      customers who purchase Products described in question #34, Including
      annual volume of products purchased, payment history 	 	 		 	 		 	 		 



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		 	(b) Description of distribution systems,
      inventory control systems and sales systems, including names, locations,
      type of arrangements and pricing structure regarding products described in
      question #34. 	 	 		 	 		 	 		 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	35. 	 	Schedule and description of all significant
      customers, including annual volume of products purchased, payment history
      and contact person. 	 	 		 	 		 	 		 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	36. 	 	Description of distribution systems, inventory
      control systems and sales systems, including names, locations, type of
      arrangements and pricing structure regarding independent representatives.
    	 	 		 	 		 	 		 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	37. 	 	All budgets, plans, forecasts and other
      financial information (including backlog information) prepared during the
      past 12 months or prior thereto if relating to the Company's future. 	 	 		 	 		 	 		 



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	38. 	 	A schedule, with relevant coverage data, of all
      insurance policies maintained by the Company. 	 	 		 	 		 	 		 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	39. 	 	All consultants', engineers' and management
      reports and marketing studies relating to the Company 	 	 		 	 		 	 		 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	40. 	 	All press clippings and releases concerning the
      Company within the last three years. 	 	 		 	 		 	 		 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	41. 	 	All current price lists, advertising and
      promotional materials, sales literature and other brochures or similar
      information describing the Company or its products. 	 	 		 	 		 	 		 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	42. 	 	All documentation relating to trademarks,
      service marks, trade or brand names, patents and copyrights and
      applications therefor. All license, know-how and technical assistance
      agreements. All material franchises, permits, governmental certifications,
      concessions or other authorizations granted to, owned or used by the
      Company. 	 	 		 	 		 	 		 



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	43. 	 	All descriptive brochures and manuals and any
      other documents used with respect to the Company and/or their products or
      the marketing of such products. 	 	 		 	 		 	 		 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	44. 	 	All management reports prepared during the last
      three years. 	 	 		 	 		 	 		 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	45. 	 	All governmental policies and (to the extent
      known) informal or unwritten policies applicable to the business of the
      Company. 	 	 		 	 		 	 		 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	46. 	 	Description of principal competitors by product
      lines. 	 	 		 	 		 	 		 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	47. 	 	Description of all manufacturing systems,
      production schedules, software and hardware utilized, including special
      skills and know-how. 	 	 		 	 		 	 		 



21






	 	 	 	 	 	 	 	 	 	 	 	 	 
	48. 	 	Schedule of significant suppliers, including
      annual purchases, description of products and reliability of suppliers,
      relationship, payment terms and history, and contact person. 	 	 		 	 		 	 		 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	49. 	 	Description of typical inventories, valuation
      policy, maximum and minimum limits, return goods policy. 	 	 		 	 		 	 		 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	EXISTING AND POTENTIAL LIABILITIES AND
      ENCUMBRANCES 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	50. 	 	A schedule identifying all existing and
      potential environmental problems and liabilities, if any. 	 	 		 	 		 	 		 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	51. 	 	All material liens, claims, mortgages and
      encumbrances on real or personal property of the Company. 	 	 		 	 		 	 		 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	52. 	 	All attorney audit response letters and
      auditor's management letters. 	 	 		 	 		 	 		 



22 





	 	 	 	 	 	 	 	 	 	 	 	 	 
	53. 	 	All material court filings. 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	54. 	 	All Company material filed with any regulatory
      agencies, including the SEC, IRS (furnish only material filings), EPA,
      FDA, OSHA and any federal or state securities or environmental authorities
      within the last three years. 	 	 		 	 		 	 		 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	55. 	 	A list of all litigation or other proceedings
      existing, contemplated or threatened by or against the Company, including
      actions and inquiries by governmental agencies (SEC, IRS, EPA, EEOC, OSHA,
      Labor, etc.), with a brief description of the claims and amounts involved.
    	 	 		 	 		 	 		 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	56. 	 	A list of all contingent or unasserted claims
      or liabilities of or against the Company not described in its most recent
      balance sheet. 	 	 		 	 		 	 		 




	 	 	 	 	 	 	 	 	 	 	 	 	 
	57. 	 	A list of all proceedings to which officers,
      directors or employees of the Company have been subject to during the last
      five years brought by any foreign, U.S. state or federal governmental or
      other agencies. 	 	 		 	 		 	 		 



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