Exhibit 10.1

     

    FIRST
AMENDED AND RESTATED

     

    AGREEMENT
AND PLAN OF MERGER

     

    by
and among

     

    NEAH
POWER SYSTEMS, INC.,

     

    NEAH
POWER ACQUISITION CORP.,

     

    SOLCOOL
ONE, LLC, AND

     

    MARK
WALSH


     

    Dated
as of July 27, 2009

     

    
      

      

    

    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      TABLE
OF CONTENTS

    

     

    
      
        
          
            
              
                	 
      	 
      	 
      	
                        Page

                      
	 
      	 
      	 
      	 
      
	
                        ARTICLE
      I

                      	THE
      MERGER	
                        1

                      
	 
      	 
      	 
      	 
      
	
                        Section
      1.1

                      	 
      	
                        The
      Merger

                      	
                        1

                      
	 
      	 
      	 
      	 
      
	
                        Section
      1.2

                      	 
      	
                        Effect
      of the Merger; Closing

                      	
                        1

                      
	 
      	 
      	 
      	 
      
	
                        Section
      1.3

                      	 
      	
                        Articles
      of Incorporation

                      	
                        2

                      
	 
      	 
      	 
      	 
      
	
                        Section
      1.4

                      	 
      	
                        Bylaws

                      	
                        2

                      
	 
      	 
      	 
      	 
      
	
                        Section
      1.5

                      	 
      	
                        Board
      of Directors and Officers

                      	
                        2

                      
	 
      	 
      	 
      	 
      
	
                        Section
      1.6

                      	 
      	
                        Conversion
      of Membership Interests

                      	
                        2

                      
	 
      	 
      	 
      	 
      
	
                        Section
      1.7

                      	 
      	
                        Surrender
      of Membership Interests; Transfer Books.

                      	
                        2

                      
	 
      	 
      	 
      	 
      
	
                        Section
      1.8

                      	 
      	
                        The
      Financing

                      	
                        3

                      
	 
      	 
      	 
      	 
      
	
                        ARTICLE
      II

                      	REPRESENTATIONS
      AND WARRANTIES OF COMPANY AND MEMBERS	
                        3

                      
	 
      	 
      	 
      	 
      
	
                        Section
      2.1

                      	 
      	
                        Organization,
      Qualification and Corporation Power

                      	
                        3

                      
	 
      	 
      	 
      	 
      
	
                        Section
      2.2

                      	 
      	
                        Membership
      Interests; Subsidiaries.

                      	
                        4

                      
	 
      	 
      	 
      	 
      
	
                        Section
      2.3

                      	 
      	
                        Ownership
      of Membership Interests.

                      	
                        4

                      
	 
      	 
      	 
      	 
      
	
                        Section
      2.4

                      	 
      	
                        Authority
      Relative to this Agreement

                      	
                        5

                      
	 
      	 
      	 
      	 
      
	
                        Section
      2.5

                      	 
      	
                        No
      Conflict; Required Filings and Consents.

                      	
                        5

                      
	 
      	 
      	 
      	 
      
	
                        Section
      2.6

                      	 
      	
                        Financial
      Statements; Debt.

                      	
                        6

                      
	 
      	 
      	 
      	 
      
	
                        Section
      2.7

                      	 
      	
                        Absence
      of Certain Changes

                      	
                        6

                      
	 
      	 
      	 
      	 
      
	
                        Section
      2.8

                      	 
      	
                        Tax
      Matters.

                      	
                        8

                      
	 
      	 
      	 
      	 
      
	
                        Section
      2.9

                      	 
      	
                        Title
      to Properties

                      	
                        9

                      
	 
      	 
      	 
      	 
      
	
                        Section 2.10

                      	 
      	
                        Environmental
      Matters.

                      	
                        9

                      
	 
      	 
      	 
      	 
      
	
                        Section 2.11

                      	 
      	
                        Intellectual
      Property.

                      	
                        10

                      
	 
      	 
      	 
      	 
      
	
                        Section 2.12

                      	 
      	
                        Material
      Agreements.

                      	
                        11

                      
	 
      	 
      	 
      	 
      
	
                        Section 2.13

                      	 
      	
                        Insurance.

                      	
                        13

                      
	 
      	 
      	 
      	 
      
	
                        Section 2.14

                      	 
      	
                        Litigation.

                      	
                        14

                      
	 
      	 
      	 
      	 
      
	
                        Section 2.15

                      	 
      	
                        Employees.

                      	
                        14

                      
	 
      	 
      	 
      	 
      
	
                        Section 2.16

                      	 
      	
                        Employee
      Benefits.

                      	
                        15

                      
	 
      	 
      	 
      	 
      
	
                        Section 2.17

                      	 
      	
                        Permits

                      	
                        16

                      
	 
      	 
      	 
      	 
      
	
                        Section 2.18

                      	 
      	
                        Broker’s
      Fees

                      	
                        16

                      
	 
      	 
      	 
      	 
      
	
                        Section 2.19

                      	 
      	
                        Books
      and Records.

                      	
                        16

                      


              

            

          

        

      

    


    
      
         


      

      
        -i-

        
          

        

      

      
         


      

    


    TABLE
OF CONTENTS

    
      (continued)

    

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            	 
      	 
      	 
      	
                                    Page

                                  
	 
      	 
      	 
      	 
      
	
                                    Section 2.20

                                  	 
      	
                                    Banking
      Relationships and Investments

                                  	
                                    16

                                  
	 
      	 
      	 
      	 
      
	
                                    Section 2.21

                                  	 
      	
                                    Disclosure

                                  	
                                    17

                                  
	 
      	 
      	 
      	 
      
	
                                    Section 2.22

                                  	 
      	
                                    Investment
      Representations of Members

                                  	
                                    17

                                  
	 
      	 
      	 
      	 
      
	
                                    ARTICLE
      III

                                  	REPRESENTATIONS
      AND WARRANTIES OF BUYER AND BUYER SUB	
                                    18

                                  
	 
      	 
      	 
      	 
      
	
                                    Section
      3.1

                                  	 
      	
                                    Organization,
      Qualification and Corporation Power

                                  	
                                    18

                                  
	 
      	 
      	 
      	 
      
	
                                    Section
      3.2

                                  	 
      	
                                    Authority
      Relative to this Agreement

                                  	
                                    18

                                  
	 
      	 
      	 
      	 
      
	
                                    Section
      3.3

                                  	 
      	
                                    No
      Conflict; Required Filings and Consents.

                                  	
                                    19

                                  
	 
      	 
      	 
      	 
      
	
                                    Section
      3.4

                                  	 
      	
                                    Broker’s
      Fees

                                  	
                                    19

                                  
	 
      	 
      	 
      	 
      
	
                                    Section
      3.5

                                  	 
      	
                                    Section
      3.25 Disclosure

                                  	
                                    19

                                  
	 
      	 
      	 
      	 
      
	
                                    ARTICLE
      IV

                                  	CONDITIONS
      OF MERGER	
                                    24

                                  
	 
      	 
      	 
      	 
      
	
                                    Section
      4.1

                                  	 
      	
                                    Conditions
      to Obligations of Buyer and Buyer Sub to Effect the Merger

                                  	
                                    24

                                  
	 
      	 
      	 
      	 
      
	
                                    Section
      4.2

                                  	 
      	
                                    Conditions
      to Obligations of the Company and the Members to Effect the
      Merger

                                  	
                                    25

                                  
	 
      	 
      	 
      	 
      
	
                                    ARTICLE
      V

                                  	FURTHER
      ASSURANCES AND COVENANTS	
                                    25

                                  
	 
      	 
      	 
      	 
      
	
                                    Section
      5.1

                                  	 
      	
                                    Non-Competition
      and Other Covenants.

                                  	
                                    26

                                  
	 
      	 
      	 
      	 
      
	
                                    Section
      5.2

                                  	 
      	
                                    Escrow
      of Common Stock Shares

                                  	
                                    26

                                  
	 
      	 
      	 
      	 
      
	
                                    Section
      5.3

                                  	 
      	
                                    Adjustment
      for Dilutive Issuances

                                  	
                                    26

                                  
	 
      	 
      	 
      	 
      
	
                                    Section
      5.4

                                  	 	Spin-off
      of the Company	
                                    27

                                  
	 
      	 
      	 
      	 
      
	
                                    ARTICLE
      VI

                                  	SURVIVAL
      AND INDEMNIFICATION	
                                    27

                                  
	 
      	 
      	 
      	 
      
	
                                    Section
      6.1

                                  	 
      	
                                    Survival
      of Representations

                                  	
                                    27

                                  
	 
      	 
      	 
      	 
      
	
                                    Section
      6.2

                                  	 
      	
                                    Indemnification
      of Buyer and Buyer Sub

                                  	
                                    27

                                  
	 
      	 
      	 
      	 
      
	
                                    Section
      6.3

                                  	 
      	
                                    Indemnification
      of Members and Company

                                  	
                                    28

                                  
	 
      	 
      	 
      	 
      
	
                                    Section
      6.4

                                  	 
      	
                                    Limitations
      on Indemnity Obligations.

                                  	
                                    29

                                  
	 
      	 
      	 
      	 
      
	
                                    Section
      6.5

                                  	 
      	
                                    Escrow

                                  	
                                    29

                                  
	 
      	 
      	 
      	 
      
	
                                    ARTICLE
      VII

                                  	COVENANTS
      OF THE COMPANY PRIOR TO CLOSING	
                                    29

                                  
	 
      	 
      	 
      	 
      
	
                                    Section
      7.1

                                  	 
      	
                                    Access
      and Investigation

                                  	
                                    29

                                  
	 
      	 
      	 
      	 
      
	
                                    Section
      7.2

                                  	 
      	
                                    Operation
      of the Business of Seller

                                  	
                                    30

                                  
	 
      	 
      	 
      	 
      
	
                                    Section
      7.3

                                  	 
      	
                                    Negative
      Covenant

                                  	
                                    31

                                  


                          

                        

                      

                    

                  

                

              

            

          

        

      

    


    
      
         


      

      
        -ii-

        
          

        

      

      
         


      

    


    TABLE
OF CONTENTS

    
      (continued)

    

     

    
      
        
          
            	 
      	 
      	 
      	
                    Page

                  
	 
      	 
      	 
      	 
      
	
                    Section
      7.4

                  	 
      	
                    Notification

                  	
                    31

                  
	 
      	 
      	 
      	 
      
	
                    Section
      7.5

                  	 
      	
                    No
      Negotiation

                  	
                    31

                  
	 
      	 
      	 
      	 
      
	
                    Section
      7.6

                  	 
      	
                    Best
      Efforts

                  	
                    32

                  
	 
      	 
      	 
      	 
      
	
                    Section
      7.7

                  	 
      	
                    Payment
      of Liabilities

                  	
                    32

                  
	 
      	 
      	 
      	 
      
	
                    ARTICLE
      VIII

                  	GENERAL
      AND MISCELLANEOUS PROVISIONS	
                    32

                  
	 
      	 
      	 
      	 
      
	
                    Section
      8.1

                  	 
      	
                    Notices

                  	
                    32

                  
	 
      	 
      	 
      	 
      
	
                    Section
      8.2

                  	 
      	
                    Expenses

                  	
                    33

                  
	 
      	 
      	 
      	 
      
	
                    Section
      8.3

                  	 
      	
                    Amendment

                  	
                    33

                  
	 
      	 
      	 
      	 
      
	
                    Section
      8.4

                  	 
      	
                    Entire
      Agreement

                  	
                    33

                  
	 
      	 
      	 
      	 
      
	
                    Section
      8.5

                  	 
      	
                    Public
      Announcements

                  	
                    33

                  
	 
      	 
      	 
      	 
      
	
                    Section
      8.6

                  	 
      	
                    No
      Third-Party Beneficiaries

                  	
                    33

                  
	 
      	 
      	 
      	 
      
	
                    Section
      8.7

                  	 
      	
                    Assignment

                  	
                    33

                  
	 
      	 
      	 
      	 
      
	
                    Section
      8.8

                  	 
      	
                    Severability

                  	
                    34

                  
	 
      	 
      	 
      	 
      
	
                    Section
      8.9

                  	 
      	
                    Governing
      Law

                  	
                    34

                  
	 
      	 
      	 
      	 
      
	
                    Section 8.10

                  	 
      	
                    Consent
      to Jurisdiction

                  	
                    34

                  
	 
      	 
      	 
      	 
      
	
                    Section 8.11

                  	 
      	
                    Headings;
      Interpretation

                  	
                    34

                  
	 
      	 
      	 
      	 
      
	
                    Section 8.12

                  	 
      	
                    Construction

                  	
                    34

                  
	 
      	 
      	 
      	 
      
	
                    Section 8.13

                  	 
      	
                    Counterparts

                  	
                    34

                  
	 
      	 
      	 
      	 
      
	
                    Section 8.14

                  	 
      	
                    Confidentiality

                  	
                    35

                  
	 
      	 
      	 
      	 
      
	
                    Section 8.15

                  	 
      	
                    Termination

                  	
                    35

                  


          

        

      

    

     

    
      
         


      

      
        -iii-

        
          

        

      

      
         


      

    


    FIRST
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER

     

    THIS FIRST AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER (this “Agreement”),
dated as of July 27, 2009 (the “Closing
Date”), is made
by and among Neah Power Systems, Inc., a Nevada corporation (“Buyer”),
Neah Power Acquisition Corp., a Nevada corporation, a direct and wholly owned
subsidiary of Buyer (“Buyer
Sub”), SolCool One, LLC, a California limited liability company (the
“Company”),
and Mark Walsh (“Walsh”),
Manager and founder of the Company, and a resident of the State of
California.

     

    WHEREAS, the Board of
Directors of Buyer, Buyer Sub and the Company have determined that it is in the
best interests of their respective companies and their stockholders to amend and
restate the Agreement and Plan of Merger dated November 26, 2008 among the
parties hereto pursuant to which the Company will, subject to the terms and
conditions set forth herein, merge with and into the Buyer Sub, with the Buyer
Sub being the surviving entity (the “Merger”) ;
and

     

    WHEREAS, the parties desire to
make certain representations, warranties and agreements in connection with the
Merger and also to prescribe certain conditions to the Merger.

     

    NOW, THEREFORE, in
consideration of the premises and the mutual covenants, warranties and
agreements contained herein, and intending to be legally bound hereby, the
parties hereto agree as follows:

     

    ARTICLE
I

    The
Merger

     

    Section
1.1           The
Merger.  Subject to the terms and conditions of this Agreement,
in accordance with the General Corporation Law of the State of Nevada (the
“Nevada
Law”) and the Beverly-Killea Limited Liability Company Act of the State
of California (the “California
Law”), upon the execution of this Agreement and concurrent with the
filing of the Articles of Merger (the “Articles of
Merger”) with the Secretary of State of the State of Nevada and the
Certificate of Merger (the “Certificate of
Merger”) with the Secretary of State of the State of California (in
accordance with the relevant provisions of Nevada Law and California Law,
respectively), the Company shall merge with and into the Buyer
Sub.  The separate corporate existence of the Company will cease upon
the filing of the Articles of Merger and the Certificate of Merger (the “Effective
Time”), and the Buyer Sub will continue as the surviving corporation
(hereinafter sometimes referred to as the “Surviving
Corporation”) in the Merger.  The Buyer Sub, as the surviving
corporation after the Merger, will be governed by the laws of the State of
Nevada.

     

    For
purposes of this Agreement, the actions taken in connection with the execution
of this Agreement and the filing of the Articles of Merger and the Certificate
of Merger shall be known as the “Closing.”

     

    Section
1.2            Effect of
the Merger; Closing.  At and after the Effective Time, the
Merger shall have the effects set forth in this Agreement and the applicable
provisions of California Law and Nevada Law.  Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time all the
property, rights, privileges, powers and franchises of the Company and Buyer Sub
will vest in the Surviving Corporation, and all debts, liabilities and duties of
the Company and Buyer Sub (including any personal guarantees of the Members
executed in the ordinary course of business prior to Closing and identified on
Schedule 1.2) will become the debts, liabilities and duties of the Surviving
Corporation.


    
      
         


      

      
        -1-

        
          

        

      

      
         


      

    

     

    Section
1.3            Articles
of Incorporation.  At the Effective Time, the Articles of
Incorporation of the Buyer Sub, as in effect immediately prior to the Effective
Time and set forth on Exhibit A, shall be
the Articles of Incorporation of the Surviving Corporation, provided, however, that Article
I of the Articles of Incorporation of the Surviving Corporation will be amended
to reflect that the name of the Surviving Corporation will be “SolCool, One,
Inc.”

     

    Section
1.4            Bylaws.  At
the Effective Time, the bylaws of Buyer Sub, as in effect immediately prior to
the Effective Time and set forth on Exhibit B, shall be
the Bylaws of the Surviving Corporation, provided, however, that the
bylaws of the Surviving Corporation will be amended to reflect that the name of
the Surviving Corporation will be “SolCool, One, Inc.”

     

    Section
1.5            Board of
Directors and Officers.  The directors and corporate officers
of Buyer Sub immediately prior to the Effective Time, shall be the directors and
corporate officers of the Surviving Corporation.

     

    Section
1.6            Conversion
of Membership Interests.  At the Closing, by virtue of the
Merger and without any action on the part of the holder of any membership
interests of the Company, the Buyer shall issue to the Company the aggregate sum
of $500,000 in the form of common stock, par value $.001 per share (“Common
Stock”), or 4,166,166 shares of Common Stock, at a price of $.12 per
share (the “Common Stock
Consideration” or the “Merger
Consideration”).  The Common Stock shall vest as follows: 50%
upon execution and the remaining 50% 24 months from date of this Agreement;
provided, however, that such
vesting shall be subject to Mark Walsh remaining an employee of the Company and
using his best efforts to achieve the Company’s business plan.

     

    Section
1.7        Surrender
of Membership Interests; Transfer Books.

     

    (a)           At
the Closing, the Members will surrender Members’ Certificate(s) to
Buyer.  Until so surrendered, such Certificates will represent solely
the right to receive the Merger Consideration relating thereto.

     

    (b)           At
the Effective Time, the transfer books of the Company will be closed and there
will not be any further registration of transfers of any membership interests or
options thereafter on the records of the Company.  If, at or after the
Effective Time, Certificates are presented to the Surviving Corporation for
transfer, they will be canceled and exchanged for Merger Consideration as
provided in Section 1.6.

     

    For
purposes of this Agreement, the term “Person”
shall mean any individual, firm, corporation, partnership, limited liability
company, trust, joint venture, Governmental Entity or other
entity.


    
      
         


      

      
        -2-

        
          

        

      

      
         


      

    

     

     Section
1.8            The
Financing.  The Buyer shall provide to the Surviving
Corporation a minimum of $100,000 to fund only operations and shipments. This
funding will be made within fourteen (14) days from the Closing
Date.

     

    ARTICLE
III

    Representations
and Warranties of Company and Members

     

    Except as
set forth in the Company Disclosure Letter which is attached to and incorporated
into this Agreement for all purposes (the “Company
Disclosure Letter”), the Company and Walsh, jointly and severally,
represent and warrant to the Buyer as of the Closing Date as
follows:

     

    Section
2.1            Organization,
Qualification and Corporation Power.  The Company (a) is a
limited liability company duly formed, validly existing and in good standing
under the Laws of California and has the requisite power and authority to own,
operate or lease its properties and to carry on its business as is now being
conducted and proposed to be conducted, except where the failure to be so
organized, existing and in good standing or to have such power and authority
would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect (as defined below) on the Company, and (b) is duly
qualified and in good standing to do business in each jurisdiction in which the
nature of its business or the ownership or leasing of its properties makes such
qualification necessary, other than in such jurisdictions where the failure so
to qualify or to be in good standing would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the
Company.  The Company has furnished to Buyer true, correct and
complete copies of its Articles of Organization, Operating Agreement and
bylaws.

     

    For
purposes of this Agreement, the term “Material Adverse
Effect” when used in connection with an entity means any change, event,
circumstance or effect whether or not such change, event, circumstance or effect
is caused by or arises in connection with a breach of a representation,
warranty, covenant or agreement of such entity in this Agreement that is or is
reasonably likely to be materially adverse to the business, assets (including
intangible assets), capitalization, financial condition, operations or results
of operations, employees or prospects of such entity taken as a whole with its
subsidiaries, except to the extent that any such change, event, circumstance or
effect is caused by results from (i) changes in general economic
conditions, (ii) changes affecting the industry generally in which such
entity operates (provided that such changes do not affect such entity in a
substantially disproportionate manner) or (iii) changes in the trading
prices for such entity’s capital stock.

     

    For
purposes of this agreement, the term “Law” shall
mean any applicable foreign, federal, state or local law, statute, code,
ordinance, regulation, rule, principle of common law or  other legally
enforceable obligation imposed by a court or other Governmental Entity (as
defined in Section 2.5 below) in the applicable jurisdiction.


    
      
         


      

      
        -3-

        
          

        

      

      
         


      

    

     

    Section
2.2            Membership
Interests; Subsidiaries.

     

    (a)           The
membership interest ownership of the Company (the “Membership
Interests”) is set forth on Schedule 2.2 (collectively, the “Members”).  The
Members hold good and valid title to such Membership Interests, free and clear
of all liens, agreements, voting trusts, proxies and other arrangements or
restrictions of any kind whatsoever (other than normal restrictions on transfer
under applicable federal and state securities laws).  All issued and
outstanding Membership Interests have been duly authorized and were validly
issued, are fully paid and nonassessable, are not subject to any right of
rescission, are not subject to preemptive rights by statute, the Articles of
Organization, Operating Agreement or bylaws of the Company, or any agreement or
document to which the Company is a party or by which it is bound and have been
offered, issued, sold and delivered by the Company in compliance with all
registration or qualification requirements (or applicable exemptions therefrom)
of applicable federal and state securities laws.  The Company is not
under any obligation to register under the Securities Act of 1933, as amended
(the “Securities
Act”) or the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), any of its presently outstanding Membership Interests or any
securities that may be subsequently issued.  There is no liability for
dividends or distribution of profits accrued but unpaid with respect to the
Company’s outstanding Membership Interests.

     

    (b)           There
are no existing (i) options, warrants, calls, preemptive rights (except for the
claim by Michael Kinsey for 10% of any payments made by GreenCore Air, Inc. .in
the cases styled SolCool One, LLC v.
GreenCore Air, Inc., No. CIVRS 802866  (Cal. Super. Ct., San
Bernardino County) and GreenCore Air, Inc.,
Chapter 7, Case No. 08-1262 (Bankr. D. Del.), subscriptions or other rights,
convertible securities, agreements or commitments of any character obligating
the Company to issue, transfer or sell any membership interests or other equity
interest in, the Company or securities convertible into or exchangeable for such
membership interests or equity interests, (ii) contractual obligations of the
Company to repurchase, redeem or otherwise acquire any membership interests of
the Company or (iii) voting trusts or similar agreements to which the Company is
a party with respect to the voting of the membership interests of the
Company.

     

    (c)           The
Company does not have any direct or indirect Subsidiaries or any interest,
direct or indirect, in any corporation, partnership, joint venture or other
business entity.

     

    For
purposes of this Agreement, the term “Subsidiary”
of a Person means any corporation or other legal entity of which such Person
(either alone or through or together with any other Subsidiary) owns, directly
or indirectly, more than 50% of the membership interests or other equity
interests the holders of which are generally entitled to vote for the election
of the board of managers or other governing body of such corporation or other
legal entity.

     

    Section
2.3            Ownership
of Membership Interests.

     

    (a)           The
Members are the record and beneficial owner of, and have good and valid title
to, all of the Membership Interests, which Membership Interests (i) are free and
clear of all liens, mortgages, encumbrances, pledges, claims, options, charges,
easements, restrictions, covenants, conditions of record, encroachments,
security interests and claims of every kind and character (each, a “Lien”) and
(ii) are free of any other restriction (including any restriction on the right
to vote, sell or otherwise dispose of such membership interests or other
ownership interests).  Except for those Members’ Certificates
surrendered in accordance with 0 there are no other Members’ Certificates issued
or outstanding.


    
      
         


      

      
        -4-

        
          

        

      

      
         


      

    

     

    (b)           There
are no outstanding existing (i) options, warrants, calls, preemptive rights,
subscriptions or other rights, convertible securities, agreements or commitments
of any character to which such Members are a party obligating the Members to
issue, transfer or sell any Membership Interests or other equity interest in the
Company or securities convertible into or exchangeable for such membership
interests or equity interests or (ii) voting trusts, members’ agreements or
similar agreements to which such Members are a party with respect to the voting
of the Membership Interests owned by such Members.

     

    Section
2.4            Authority
Relative to this Agreement.  The Company has the necessary
power and authority to enter into this Agreement and, subject to the filing of
the Articles of Merger and the Certificate of Merger, to carry out its
obligations hereunder.  The Members have the necessary competency,
power and authority to enter into this Agreement and carry out the obligations
hereunder.  The execution and delivery of this Agreement by the
Company and the consummation by the Company of the transactions contemplated
hereby have been duly authorized by all necessary action on the part of the
Company and the Members and, subject to the filing of the Articles of Merger and
the Certificate of Merger, no other corporate proceeding is necessary for the
execution and delivery of this Agreement by the Company, the performance by the
Company of its obligations hereunder and the consummation by the Company of the
transactions contemplated hereby.  This Agreement has been duly
executed and delivered by the Company and the Members and, assuming the due
authorization, execution and delivery of this Agreement by Buyer and Buyer Sub,
constitutes a legal, valid and binding obligation of the Company and the
Members, enforceable against them in accordance with its terms, except that (a)
the enforceability hereof may be subject to applicable bankruptcy, insolvency or
other similar Laws, now or hereinafter in effect, affecting creditors’ rights
generally, and (b) the general principles of equity (regardless of whether
enforceability is considered at a proceeding at Law or in equity).

     

    Section
2.5            No
Conflict; Required Filings and Consents.

     

    (a)           The
execution and delivery of this Agreement by the Company and the Members does
not, and the consummation by the Company and the Members of the transactions
contemplated hereby will not, (i) conflict with or violate any Law, court
order, judgment or decree applicable to the Company, its Subsidiaries or the
Members or by which any of their property is bound, (ii) violate or
conflict with the Articles of Organization, Operating Agreement or Bylaws (or
comparable organizational documents) of the Company or its Subsidiaries, or
(iii) result in any breach of or constitute a default (or an event which
with notice or lapse of time of both would become a default) under, or give to
others any rights of termination or cancellation of, or result in the creation
of a Lien on any of the properties or assets of the Company or its Subsidiaries
pursuant to, any contract, instrument, Permit or license to which the Company or
its Subsidiaries is a party or by which the Company or its Subsidiaries or any
of their property is bound, except in the case of clauses (i) and (iii) for
conflicts, violations, breaches or defaults which, individually or in the
aggregate, would not have or result in a Material Adverse Effect on the
Company.

     


    
      
         


      

      
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    (b)           Except
for the filing of the Articles of Merger and the Certificate of Merger and
applicable requirements, if any, under “takeover” or “blue sky” Laws of various
states, neither the Company nor any of its Subsidiaries is required to submit
any notice, report or other filing with any federal, state or local or foreign
government, political subdivision thereof, any court, administrative, regulatory
or other governmental agency, commission or authority or any non-governmental
United States or foreign self-regulatory agency, commission or authority or any
arbitral tribunal (each, a “Governmental
Entity”) in connection with the execution, delivery or performance of
this Agreement or the consummation of the transactions contemplated hereby the
failure of which to submit would, individually or in the aggregate, have or
result in a Material Adverse Effect on the Company.  No waiver,
consent, approval or authorization of any Governmental Entity or any third party
is required to be obtained or made by the Company or its Subsidiaries in
connection with its execution, delivery or performance of this Agreement the
failure of which to obtain or make, individually or in the aggregate, would have
or result in a Material Adverse Effect on the Company.

     

    Section
2.6            Financial
Statements; Debt.

     

    (a)           Attached
as Section 2.6(a) of the Company Disclosure Letter are (i) the Company’s
unaudited balance sheet, and statement of cash flows and income statement for
the year ending December 31, 2008 and (ii) the Company’s unaudited balance sheet
(the “Company Balance
Sheet”), statement of cash flows and income statement each dated as of
June 30, 2009 (the “Balance Sheet
Date”) (all such financial statements being collectively referred to
herein as the “Company Financial
Statements”).  The Company Financial Statements (a) are in
accordance with the books and records of the Company and (b) fairly present the
financial condition of the Company at the date therein indicated and the results
of operation for the period therein specified.

     

    (b)           The
Company has no material debt, liability or obligation of any nature, whether
accrued, absolute, contingent or otherwise, and whether due or to become due,
that is not reflected or reserved against in the Company Financial Statements in
the ordinary course of its business, consistent with past practice and that are
material in amount either individually or collectively.

     

    Section
2.7            Absence
of Certain Changes.  Since the Balance Sheet Date, there has
not been with respect to the Company or any Subsidiary:

     

    (a)           any
change in the financial condition, properties, assets, liabilities, business or
operations thereof which change by itself or in conjunction with all other such
changes, whether or not arising in the ordinary course of business, has had or
will have a material adverse effect thereon;

     


    
      
         


      

      
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    (b)           any
material loss of customers.  Set forth on Section 2.7(b) of the
Company Disclosure Letter is a true, correct and complete list of all customers
lost in the preceding twelve (12) months, including the billing address and
phone number for the respective customer;

     

    (c)           any
notice of impending cancellation, or a material price increase, from any
supplier or vendor;

     

    (d)           any
contingent liability incurred thereby as guarantor or otherwise with respect to
the obligations of others;

     

    (e)           any
mortgage, encumbrance or lien placed on any of the properties
thereof;

     

    (f)           any
material obligation or liability incurred thereby other than obligations and
liabilities incurred in the ordinary course of business;

     

    (g)           any
purchase or sale or other disposition, or any agreement or other arrangement for
the purchase, sale or other disposition, of any of the properties or assets
thereof other than in the ordinary course of business;

     

    (h)           any
damage, destruction or loss, whether or not covered by insurance, materially and
adversely affecting the properties, assets or business thereof;

     

    (i)           any
declaration, setting aside or payment of any dividend on, or the making of any
other distribution in respect of, the membership interests thereof, any split,
combination or recapitalization of the membership interests thereof or any
direct or indirect redemption, purchase or other acquisition of the membership
interests thereof;

     

    (j)           any
labor dispute or claim of unfair labor practices, any change in the compensation
payable or to become payable to any of its officers, employees or agents, or any
bonus payment or arrangement made to or with any of such officers, employees or
agents;

     

    (k)           any
change with respect to the management, supervisory or other key personnel
thereof;

     

    (l)           any
payment or discharge of a material lien or liability thereof which lien was not
either shown on the Company Balance Sheet or incurred in the ordinary course of
business thereafter; or

     

    (m)           any
obligation or liability incurred thereby to any of its officers, managers or
members or any loans or advances made thereby to any of its officers, managers
or members except normal compensation and expense allowances payable to
officers.

     


    
      
         


      

      
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    Section
2.8            Tax
Matters.


     

    (a)           The
Company and its Subsidiaries have timely filed all Tax Returns that they were
required to file, and all such Tax Returns were correct and complete in all
material respects.  All Tax liabilities of the Company and its
Subsidiaries for all taxable periods or portions thereof ending on or prior to
the Effective Time have been, or will be prior to the Effective Time, timely
paid or are adequately reserved for in the Company Financial Statements, other
than such Tax liabilities as are being contested in good faith by the Company or
its Subsidiaries.  There are no ongoing federal, state, local or
foreign audits or examination of any Tax Return of the Company or its
Subsidiaries.  Neither the Company nor its Subsidiaries has waived any
statute of limitations in respect of Taxes or agreed to any extension of time,
nor has any such waiver or extension been required with respect to a Tax
assessment or deficiency.  No claim has ever been made by an authority
in a jurisdiction where the Company and its Subsidiaries do not file Tax Returns
that it is or may be subject to taxation by that jurisdiction.  There
are no Liens on any of the assets of the Company or its Subsidiaries that arose
in connection with any failure (or alleged failure) to pay any Tax.

     

    (b)           The
Company and its Subsidiaries have withheld or collected and paid or deposited in
accordance with law all Taxes required to have been withheld or collected and
paid or deposited by the Company or its Subsidiaries in connection with amounts
paid or owing to any employee, independent contractor, creditor, members, or
other third party.

     

    (c)           There
is no dispute or claim concerning any Tax liability of the Company or its
Subsidiaries either (i) claimed or raised by any authority in writing or (ii) as
to which the Company has Knowledge.

     

    (d)           For
purposes of this Agreement:

     

    (i)           “Knowledge”
or words of similar import means all information that is actually known,
following reasonable investigation, and in the case of the Company by the
individuals set forth on Section 2.15 of the Company Disclosure
Letter.

     

    (ii)           “Taxes”
means all taxes, charges, fees, levies or other similar assessments or
liabilities, including income, gross receipts, ad valorem, premium, value-added,
excise, real property, personal property, sales, use, transfer, withholding,
employment, payroll and franchise taxes imposed by a Governmental Entity, and
any interest, fines, penalties, assessments or additions to tax resulting from,
attributable to or incurred in connection with any tax or any contest or dispute
thereof, and any amounts of Taxes of a third Person that a Person or any
Subsidiary of such Person is liable to pay by law or otherwise; and

     

    (iii)           “Tax
Returns” means all reports, returns, declarations, statements or other
information supplied or required to be supplied to a taxing authority in
connection with Taxes including any schedules, attachments or amendments
thereto.


    
      
         


      

      
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    Section
2.9            Title to
Properties.  The Company has good and marketable title to all
of its assets as shown on the Company Balance Sheet, free and clear of all
liens, charges, restrictions or encumbrances (other than for Taxes not yet due
and payable).  All machinery and equipment included in such properties
is in good condition and repair, normal wear and tear excepted, and all leases
of real or personal property to which Company or any its Subsidiaries is a party
are fully effective and afford Company or its Subsidiaries peaceful and
undisturbed possession of the subject matter of the lease.  Neither
Company nor any of its Subsidiaries is in violation of any zoning, building,
safety or environmental ordinance, regulation or requirement or other law or
regulation applicable to the operation of owned or leased properties (the
violation of which would have a material adverse effect on its business), or has
received any notice of violation with which it has not complied.

     

    Section
2.10          Environmental
Matters.

     

    (a)           During
the period that the Company has leased or owned its properties or owned or
operated any facilities, there have been no disposals, releases or threatened
releases of Hazardous Materials (as defined below) on, from or under such
properties or facilities.  The Company has no Knowledge of any
presence, disposals, releases or threatened releases of Hazardous Materials on,
from or under any of such properties or facilities, which may have occurred
prior to the Company having taken possession of any of such properties or
facilities.  For the purposes of this Agreement, the terms “disposal,”
“release,”
and “threatened
release” shall have the definitions assigned thereto by the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C.
§ 9601 et seq., as amended (“CERCLA”).  For
the purposes of this Agreement “Hazardous
Materials” shall mean any hazardous or toxic substance, material or waste
which is or becomes prior to the Closing regulated under, or defined as a
“hazardous substance,” “pollutant,” “contaminant,” “toxic chemical,” “hazardous
materials,” “toxic substance” or “hazardous chemical” under (1) CERCLA;
(2) any similar federal, state or local law; or (3) regulations
promulgated under any of the above laws or statutes.

     

    (b)           None
of the properties or facilities of the Company is in violation of any federal,
state or local law, ordinance, regulation or order relating to industrial
hygiene or to the environmental conditions on, under or about such properties or
facilities, including, but not limited to, soil and ground water
condition.  During the time that the Company has owned or leased its
properties and facilities, to the Company’s Knowledge, no third party, has used,
generated, manufactured or stored on, under or about such properties or
facilities or transported to or from such properties or facilities any Hazardous
Materials.

     

    (c)           During
the time that the Company has owned or leased its properties and facilities,
there has been no litigation brought or threatened against the Company by, or
any settlement reached by the Company with, any party or parties alleging the
presence, disposal, release or threatened release of any Hazardous Materials on,
from or under any of such properties or facilities.


    
      
         


      

      
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    Section
2.11          Intellectual
Property.


     

    (a)           The
term “Intellectual
Property” means any (i) patents, (ii) trademarks, service marks, trade
names, brand names, trade dress, slogans, logos and internet domain names, (iii)
inventions, discoveries, ideas, processes, formulae, designs, models, industrial
designs, know-how, proprietary information, trade secrets, and confidential
information (including customer lists, training materials and related matters,
research and marketing and sales plans), whether or not patented or patentable,
(iv) copyrights, writings and other copyrightable works and works in progress,
databases and software, (v) all other intellectual property rights and foreign
equivalent or counterpart rights and forms of protection of a similar or
analogous nature or having similar effect in any jurisdiction throughout the
world, (vi) all registrations and applications for registration of any of the
foregoing, (vii) all common law trademarks and service marks used by the Company
or its Subsidiaries and (viii) any renewals, extensions, continuations,
divisionals, reexaminations or reissues or equivalent or counterpart of any of
the foregoing in any jurisdiction throughout the world.  The term
“Company
IP” means any Intellectual Property used or held for use by the Company
or its Subsidiaries, in the conduct of their businesses as currently conducted
and currently proposed to be conducted.

     

    (b)           Section
2.11(b) of the Company Disclosure Letter sets forth a true, correct and complete
list (including, the owner, title, registration or application number and
country of registration or application, as applicable) of all of the following
Company IP:  (i) registered trademarks, (ii) applications for
trademark registration, (iii) domain names, (iv) patents, (v) applications
for patents, (vi) registered copyrights (vii) applications for copyright
registration and (viii) licenses of all Intellectual Property (other than
off-the-shelf business productivity software that is the subject of a shrink
wrap or click wrap software license agreement (“Desktop
Software”)) to or from the Company.  The Company has delivered
or made available to Buyer prior to the execution of this Agreement true,
complete and correct copies of all licenses of Company IP both to and from the
Company and its Subsidiaries, except Desktop Software.

     

    (c)           The
Company IP set forth on Section 2.11(b) of the Company Disclosure Letter
constitutes all of the Intellectual Property used by and necessary for the
Company and its Subsidiaries to operate their respective business as currently
conducted and currently proposed to be conducted.  The Company or its
Subsidiaries owns all legal and beneficial right, title and interests in the
Company IP, and the Company or its Subsidiaries has the valid, sole and
exclusive right to use, assign, transfer and license all such Company IP for the
life thereof for any purpose, free from (i) any Liens, and (ii) any
requirement of any past, present or future royalty payments, license fees,
charges or other payments, or conditions or restrictions
whatsoever.

     

    (d)           All
patent, trademark, service mark, copyright, patent and domain name registrations
or applications set forth on Section 2.11(b) of the Company Disclosure Letter
are in full force and effect and have not been abandoned, dedicated, disclaimed
or allowed to lapse for non-payment of fees or taxes or for any other
reason.


    
      
         


      

      
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    (e)           None
of the Company IP owned by the Company or its Subsidiaries has been declared or
adjudicated invalid, null or void, unpatentable or unregistrable in any judicial
or administrative proceeding.  To the Knowledge of the Company, none
of the Company IP used (but not owned) by the Company or its Subsidiaries has
been declared or adjudicated invalid, null or void, unpatentable or
unregistrable in any judicial or administrative proceeding.

     

    (f)           Neither
the Company nor its Subsidiaries has received any written notices of, or has
Knowledge of, any infringement or misappropriation by or of, or conflict with,
any third party with respect to the Company IP or Intellectual Property owned by
any third party.  Neither the Company nor its Subsidiaries has
infringed, misappropriated or otherwise violated or conflicted with any
Intellectual Property of any third party.  The operation of the
Company and its Subsidiaries does not, as currently conducted and currently
proposed to be conducted, infringe, misappropriate or otherwise violate or
conflict with the Intellectual Property of any third party.

     

    (g)           The
transactions contemplated by this Agreement will not affect the right, title and
interest of the Company or its Subsidiaries in and to the Company IP, and each
of the Company and its Subsidiaries has taken all necessary action to maintain
and protect the Company IP set forth on Section 2.11(b) of the Company
Disclosure Letter and, until the Effective Time, will continue to maintain and
protect such Company IP so as to not materially adversely affect the validity or
enforceability of such Company IP.

     

    (h)           To
the Knowledge of the Company, no officer, employee or manager or the Company or
its Subsidiaries is obligated under any contract (including any license,
covenant or commitment of any nature) or other agreement, or subject to any
judgment, decree or order of any court or administrative agency, that would
conflict or interfere with the performance of such person’s duties as an
officer, employee or manager of the Company or its Subsidiaries, the use of such
person’s best efforts to promote the interests of the Company and its
Subsidiaries or the Company’s or its Subsidiary’s business as conducted or as
currently proposed to be conducted by the Company and its
Subsidiaries.  No prior employer of any current or former employee of
the Company or its Subsidiaries has any right, title or interest in the Company
IP and to the Knowledge of the Company, no person or entity has any right, title
or interest in any Company IP.  It is not and will not be with respect
to the business as currently proposed to be conducted necessary for the Company
or its Subsidiaries to use any inventions of any of its
employees  made prior to their employment by the Company or its
Subsidiaries.

     

    Section
2.12          Material
Agreements.

     

    (a)           Section
2.12 of the Company Disclosure Letter sets forth a true, correct and complete
list of the following agreements (whether written or oral and including all
amendments thereto) to which the Company or its Subsidiaries is a party or a
beneficiary or by which the Company or its Subsidiaries or any of their
respective assets are bound (collectively, the “Material
Agreements”):

     

    (i)           any
real estate leases;.


    
      
         


      

      
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    (ii)           any
other agreement for the provision of services by the Company or its Subsidiaries
that have accounted for revenues of more than $5,000.00 per annum during any
month since the Balance Sheet Date;

     

    (iii)          any
agreement creating, evidencing, securing, assuming, guaranteeing or otherwise
relating to any debt for which the Company or its Subsidiaries is liable or
under which it has imposed (or may impose) a Lien on any of the assets, tangible
or intangible, of the Company or its Subsidiaries;

     

    (iv)         any
capital or operating leases or conditional sales agreements relating to personal
property of the Company or its Subsidiaries;

     

    (v)          any
supply or manufacturing agreements or arrangements pursuant to which the Company
or its Subsidiaries is entitled or obligated to acquire any assets from a third
party with a fair market value in excess of $5,000;

     

    (vi)         
any insurance policies;

     

    (vii)         any
employment, consulting, noncompetition, or separation agreements or
arrangements;

     

    (viii)       any
agreement with or for the benefit of any Members, officer, manager or employee
of the Company, or any Affiliate of the Company, or any Person controlled by
such individual or family member thereof;

     

    (ix)          any
license to which the Company or its Subsidiaries is a party;

     

    (x)           any
agreement in which the Company or its Subsidiaries has granted rights to
license, sublicense or copy, “most favored nation” pricing provisions or
exclusive marketing or distribution rights relating to any products or territory or
has agreed to purchase a minimum quantity of goods or services or has agreed to
purchase goods or services exclusively from a certain party;

     

    (xi)          any
written arrangement establishing a partnership or joint venture;

     

    (xii)         a
list of all parties to any written arrangement concerning confidentiality,
non-disclosure or noncompetition;

     

    (xiii)        any
written arrangement under which the consequences of a default or termination
could have a Material Adverse Effect on the Company; and

     

    (xiv)        any
other agreement or arrangement pursuant to which the Company or its Subsidiaries
could be required to make or entitled to receive aggregate payments in excess of
$5,000.00 or entered into outside of the ordinary course of
business.

     

    
      
        
        

      

      
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    For
purposes of this Agreement, “Affiliate”
means another Person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with, any
Person.

     

    (b)           The
Company has delivered to or made available to Buyer a true, correct and complete
copy of each Material Agreement and a written summary of each oral Material
Agreement.  With respect to each Material Agreement:

     

    (i)           each
Material Agreement is legal, valid, binding and enforceable and in full force
and effect with respect to the Company or its Subsidiaries and, to the Knowledge
of the Company, the written arrangement is legal, valid, binding and is
enforceable and in full force and effect with respect to each other party
thereto (in each case except as enforceability may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other similar
laws affecting the enforcement of creditor’s rights generally, and except that
the availability of equitable remedies, including specific performance, is
subject to the discretion of the court before which any proceeding therefor may
be brought);

     

    (ii)           each
Material Agreement will continue to be legal, valid, binding and enforceable and
in full force and effect against the Company, and to the Knowledge of the
Company against each other party thereto, immediately following the Closing in
accordance with the terms thereof (in each case except as enforceability may be
limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar laws affecting the enforcement of creditor’s rights
generally, and except that the availability of equitable remedies, including
specific performance, is subject to the discretion of the court before which any
proceeding therefor may be brought) as in effect prior to the Closing;
and

     

    (iii)          neither
the Company nor its Subsidiaries is in breach or default, and, to the Knowledge
of the Company, no other party thereto is in breach or default, and no event has
occurred which with notice or lapse of time would constitute a breach or default
or permit termination, modification, or acceleration, under the written
arrangement.

     

    Section
2.13         Insurance.

     

    (a)           Section
2.13 of the Company Disclosure Letter sets forth a true, correct and complete
list of each insurance policy (including fire, theft, casualty, general
liability, director and officer, workers compensation, business interruption,
environmental, product liability and automobile insurance policies and bond and
surety arrangements) to which the Company is a party, a named insured, or
otherwise the beneficiary of coverage at any time within the past
year.  Section 2.13 of the Company Disclosure Letter sets forth a
true, correct and complete list of each person or entity required to be listed
as an additional insured under each such policy.  Each such policy is
in full force and effect and by its terms and with the payment of the requisite
premiums thereon will continue to be in full force and effect following the
Closing.

     

    
      
        
        

      

      
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    (b)           The
Company is not in breach or default, and does not anticipate being in breach or
default after Closing (including with respect to the payment of premiums or the
giving of notices) under any such policy, and no event has occurred which, with
notice or the lapse of time, would constitute such a breach or default or permit
termination, modification or acceleration, under such policy; and the Company
has not received any written notice or, to the Knowledge of the Company, oral
notice, from the insurer disclaiming coverage or reserving rights with respect
to a particular claim or such policy in general.  The Company has not
incurred any material loss, damage, expense or liability covered by any such
insurance policy for which it has not properly asserted a claim under such
policy.

     

    Section
2.14         Litigation.

     

    (a)           Except
as set forth and described Section 2.14 of the Company Disclosure Letter, there
are no claims, actions, suits, proceedings or investigations of any nature
pending or, to the Knowledge of the Company, threatened against the Company or
any properties or rights of the Company, before any court, administrative,
governmental or regulatory authority or body.  The Company is not
subject to any order, judgment, injunction or decree.

     

    (b)           There
are no agreements or other documents or instruments settling any material claim,
complaint, action, suit or other proceeding against the Company.

     

    Section
2.15         Employees.

     

    (a)           Set
forth on Section 2.15(a) of the Company Disclosure Letter is a true, correct and
complete list of all current employees of Company and its Subsidiaries,
including date of employment, current title and compensation (including
commissions, bonus and other compensation), and date and amount of last increase
in compensation.  None of the Company’s employees are members of a
labor union.  The Company is not a party to any collective bargaining,
union or labor agreements, contracts or other arrangements with any group of
employees, labor union or employee representative and to the Knowledge of the
Company, there is no organization effort currently being made by or on behalf of
any labor union with respect to employees of the Company or its
Subsidiaries.  The Company has not experienced, and to the Knowledge
of the Company, there is no basis for, any strike, grievances, claims of unfair
labor practices, material labor trouble, work stoppage, slow down or other
interference with or impairment of the business of Company.

     

    (b)           To
the Knowledge of the Company, no employee has any plans to terminate employment
with the Company within six months of the date hereof.

     

    (c)           The
Company is in compliance in all material respects with all currently applicable
laws and regulations respecting wages, hours, occupational safety, or health,
fair employment practices, and discrimination in employment terms and
conditions, and is not engaged in any unfair labor practice.  There
are no pending claims against the Company under any workers compensation plan or
policy or for long term disability.  There are no proceedings pending
or, to the Knowledge of the Company, threatened, between the Company and its
employees.

     

    
      
        
        

      

      
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    (d)           Section
2.15(d) of the Company Disclosure Letter sets forth a true, correct and complete
list of Persons whose employment has been terminated by the Company in the 90
days prior to Closing.

     

    Section
2.16         Employee
Benefits.

     

    (a)           Neither
the Company, its Subsidiaries nor any predecessor in interest thereof has
maintained, or currently maintain, any Employee Benefit Plan.  At no
time has the Company, its Subsidiaries or any ERISA Affiliate been obligated to
contribute to any “multi-employer plan” (as defined in Section 4001(a)(3) of
ERISA).  Neither the Company its Subsidiaries nor any predecessor in
interest thereof has any liabilities or obligations with respect to any Employee
Benefit Plan.

     

    (b)           Section
2.16(b) of the Company Disclosure Letter discloses each: (i) agreement with
any manager, executive officer or other key employee of the Company or its
Subsidiaries, including (A) the benefits of which are contingent, or the terms
of which are altered, upon the occurrence of a transaction involving the Company
or its Subsidiaries of the nature of any of the transactions contemplated by
this Agreement, (B) providing any term of employment or compensation guarantee
or (C) providing severance benefits or other benefits after the termination of
employment of such manager, executive officer or key employee; (ii) agreement,
plan or arrangement under which any person may receive payments from the Company
or its Subsidiaries that may be subject to the tax imposed by Section 4999
of the Internal Revenue Code of 1986, as amended (the “Code”) or
included in the determination of such person’s “parachute payment” under Section
280G(b)(1) of the Code; and (iii) agreement or plan binding the Company or its
Subsidiaries, including any option plan, stock appreciation right plan,
restricted stock plan, stock purchase plan, severance benefit plan, or any
Employee Benefit Plan, any of the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated, by the occurrence of any
of the transactions contemplated by this Agreement or the value of any of the
benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement.

     

    (c)           For
purposes of this Agreement:

     

    (i)           “Employee Benefit
Plan” means any “employee pension benefit plan” (as defined in Section
3(2) of the Employee Retirement Income Security Act of 1974, as amended), any
“employee welfare benefit plan” (as defined in Section 3(1) of ERISA), and any
other written or oral plan, agreement or arrangement involving direct or
indirect compensation, including insurance coverage, severance benefits,
disability benefits, deferred compensation, bonuses, options, or other forms of
incentive compensation or post-retirement compensation; and

     

    
      
        
        

      

      
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    (ii)           “ERISA
Affiliate” means any entity which is a member of (i) a controlled group
of corporations (as defined in Section 414(b) of the Code), (ii) a group of
trades or businesses under common control (as defined in Section 414(c) of the
Code), or (iii) an affiliated service group (as defined under Section 414(m) of
the Code or the regulations under Section 414(o) of the Code), any of which
includes the Company or its Subsidiaries.

     

    Section
2.17         Permits.  Section
2.17 of the Company Disclosure Letter sets forth a true, correct and complete
list of all material permits, licenses, registrations, certificates, orders or
approvals from any Governmental Entity (including those issued or required under
applicable export laws or regulations) (“Permits”)
issued to or held by the Company and its subsidiaries.  Such listed
Permits are the only Permits that are required for the Company and its
subsidiaries to conduct their business as presently conducted.  Each
such Permit is in full force and effect and to the Knowledge of the Company, no
suspension or cancellation of such Permit is threatened and there is no basis
for believing that such Permit will not be renewable upon
expiration.  Each such Permit will continue in full force and effect
following the Closing.

     

    Section
2.18         Broker’s
Fees.  Neither the Company nor any of its subsidiaries has any
liability or obligation to pay any fees or commissions to any broker, investment
banking firm, finder or agent with respect to the transactions contemplated by
this Agreement.

     

    Section
2.19         Books and
Records.

     

    (a)           The
books, records and accounts of the Company (a) are in all material respects
true, complete and correct, (b) have been maintained in accordance with
good business practices on a basis consistent with prior years, (c) are
stated in reasonable detail and accurately and fairly reflect the transactions
and dispositions of the assets of the Company, and (d) accurately and
fairly reflect the basis for the Financial Statements.

     

    (b)           The
Company has devised and maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (a) transactions are
executed in accordance with management’s general or specific authorization;
(b) transactions are recorded as necessary (i) to permit preparation
of financial statements in conformity with generally accepted accounting
principles or any other criteria applicable to such statements, and (ii) to
maintain accountability for assets, and (c) the amount recorded for assets
on the books and records of the Company is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.

     

    Section
2.20         Banking
Relationships and Investments.  Section 2.20 of the Company
Disclosure Letter sets forth sets forth a true, correct and complete list of all
banks and financial institutions in which the Company has an account, deposit,
safe-deposit box or borrowing relationship, factoring arrangement or other loan
facility or relationship, including the names of all persons authorized to draw
on those accounts or deposits, or to borrow under loan facilities, or to obtain
access to such boxes.  Section 2.20 of the Company Disclosure Letter
sets forth a true, correct and complete list of all certificates of deposit,
debt or equity securities and other investments owned, beneficially or of
record, by the Company (the “Investments”).  The
Company has good and legal title to all Investments.

     

    
      
        
        

      

      
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    Section
2.21         Disclosure.  No
representation or warranty by the Company contained in this Agreement, including
any statement contained in the Company Disclosure Letter or any document
delivered in connection herewith, contains any untrue statement of a material
fact or omits to state any material fact necessary, in light of the
circumstances under which it was made, in order to make the statements herein
not misleading.

     

    Section
2.22         Investment
Representations of Members.  Each Member hereby represents and
warrants only with respect to himself:

     

    (a)           The
Common Stock (the “Issuable
Securities”) will be acquired for investment for Member’s own account in
accordance with the percentage ownership set forth in Schedule 2.22, not as a
nominee or agent, and not with a view to the resale or distribution of any part
thereof, and the Member has no present intention of selling, granting any
participation in, or otherwise distributing the same.  The Member does
not have any contract, undertaking, agreement or arrangement with any person to
sell, transfer or grant participation in any of the Securities to such person or
to any third person.

     

    (b)           The
Investor has had an opportunity to ask questions and receive answers from Buyer
regarding the terms and conditions of the offering and sale of the
Securities.

     

    (c)           The
Member acknowledges that he has (i) such knowledge and experience in financial
and business matters that he is capable of evaluating the merits and risks of
the investment in the Securities, (ii) had such risks explained to him and has
determined that such investment is suitable for him in view of his financial
circumstances and available investment opportunities, (iii) sufficient net worth
and income to bear the economic risk of this investment, and (iv) no need for
liquidity of the investment and no reason to anticipate any change in the his
financial circumstances which may cause or require any sale, transfer or other
distribution of the Securities.

     

    (d)           The
Member is an “accredited investor” within the meaning of the Securities and
Exchange Rule 501(a) of Regulation D, as presently in effect.

     

    (e)           The
Member understands that the Securities it is acquiring are characterized as
“restricted securities” under the federal securities laws inasmuch as they are
being acquired from Buyer in a transaction not involving a public offering and
that, under such laws and applicable regulations, such securities may be resold
without registration under the Securities Act only in certain limited
circumstances.  In this connection, the Member is familiar with Rule
144, as presently in effect, and understands the resale limitations imposed
thereby and by the Securities Act.  The Member understands that
reliance by Buyer on such exemptions is predicated in part on the Member’s
representations contained in this Agreement.

     

    (f)           The
Member understands and agree that the certificates evidencing the Securities may
bear a one or all of the following legends:

     

    (i)           A
legend in substantially the following form:

     

    
      
        
        

      

      
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    (ii)           “THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND
NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF, AND
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY
NOT BE SOLD,  TRANSFERRED OR ASSIGNED UNLESS COVERED BY AN EFFECTIVE
REGISTRATION STATEMENT UNDER SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY TO
THE ISSUER TO THE EFFECT THAT ANY SUCH TRANSFER IS EXEMPT FROM SUCH
REGISTRATION.”

     

    (iii)           Any
additional legend required by the laws of the State of California or any other
applicable state.

     

    ARTICLE
III

    Representations
and Warranties of Buyer and Buyer Sub

     

    Except as
set forth in the Buyer Disclosure Letter which is attached to and incorporated
into this Agreement for all purposes (the “Buyer Disclosure
Letter”), Buyer and Buyer Sub, jointly and severally, represent and
warrant to the Company and the Members as of the Closing Date as
follows:

     

    Section
3.1           Organization,
Qualification and Corporation Power.  Each of Buyer and Buyer
Sub as of the Effective Time (a) is a corporation duly organized, validly
existing and in good standing under the Laws of the jurisdiction in which it is
organized and has the requisite corporate power and authority and any necessary
governmental authority to own, operate or lease the properties that it purports
to own, operate or lease and to carry on its business as it is now being
conducted and proposed to be conducted, and (b) is duly qualified as a
foreign corporation to do business, and is in good standing, in each other
jurisdiction where the character of its properties owned, operated or leased or
the nature of its activities makes such qualification necessary, except in the
case of clause (b) for failures which, when taken together with all other
such failures, would not have a Material Adverse Effect on
Buyer.  Buyer Sub is a wholly owned Subsidiary of Buyer.

     

    Section
3.2           Authority
Relative to this Agreement.  Each of Buyer and Buyer Sub has
the necessary corporate power and authority to enter into this Agreement and,
subject to the filing of the Articles of Merger and the Certificate of Merger,
to carry out its obligations hereunder.  The execution and delivery of
this Agreement by Buyer and Buyer Sub and the consummation by them of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Buyer and Buyer Sub and, subject to the filing
of the filing of the Articles of Merger and the Certificate of Merger, no other
corporate proceeding is necessary for the execution and delivery of this
Agreement by Buyer and Buyer Sub, the performance by them of their respective
obligations hereunder and the consummation by them of the transactions
contemplated hereby.  As of the Effective Time this Agreement has been
duly executed and delivered by Buyer and Buyer Sub and, assuming the due
authorization, execution and delivery of this Agreement by the Company and the
Members, constitutes a legal, valid and binding obligation of each of Buyer and
Buyer Sub, enforceable against each in accordance with its terms, except that
(a) the enforceability hereof may be subject to applicable bankruptcy,
insolvency or other similar Laws, now or hereinafter in effect, affecting
creditors’ rights generally, and (b) the general principles of equity
(regardless of whether enforceability is considered at a proceeding at Law or in
equity).

     

    
      
        
        

      

      
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    Section
3.3           No
Conflict; Required Filings and Consents.

     

    (a)           The
execution and delivery of this Agreement by each of Buyer and Buyer Sub do not,
and the consummation by each of them of the transactions contemplated hereby
will not, (i) conflict with or violate any Law, court order, judgment or
decree applicable to Buyer or Buyer Sub or by which any of their respective
property is bound, (ii) violate or conflict with the

    Articles
of Incorporation or Bylaws (or comparable organizational documents) of either
Buyer or Buyer Sub, or (iii) result in any breach of, or constitute a
default (or an event which with notice or lapse of time of both would become a
default) under, or give to others any rights of termination or cancellation of,
or result in the creation of a Lien on any of the properties or assets of Buyer
or any of its Subsidiaries pursuant to, any contract, instrument, Permit or
license to which Buyer or any of its Subsidiaries is a party or by which Buyer
or any of its Subsidiaries or their respective property is bound, except in the
case of clauses (i) and (iii) for conflicts, violations, breaches or defaults
which, individually or in the aggregate, would not have or result in a Material
Adverse Effect on Buyer.

     

    (b)           Except
for the filing of the Articles of Merger and the Certificate of Merger, and
applicable requirements, if any, under “takeover” or “blue sky” Laws of various
states, neither Buyer nor Buyer Sub is required to submit any notice, report or
other filing with any Governmental Entity in connection with the execution,
delivery or performance of this Agreement or the consummation of the
transactions contemplated hereby the failure of which to submit would,
individually or in the aggregate, have or result in a Material Adverse Effect on
Buyer.  No waiver, consent, approval or authorization of any
Governmental Entity or any third party is required to be obtained or made by
Buyer or Buyer Sub in connection with its execution, delivery or performance of
this Agreement the failure of which to obtain or make, individually or in the
aggregate, would have or result in a Material Adverse Effect on
Buyer.

     

    Section
3.4           Broker’s
Fees.  Neither Buyer nor Buyer Sub has any liability or
obligation to pay any fees or commissions to any broker, investment banking
firm, finder or agent with respect to the transactions contemplated by this
Agreement other than fees and commissions to Jesup & Lamont Securities
Corporation in connection with the Financing.

     

    Section
3.5           Issuance
of the Issuable Securities. The Issuable Securities are duly authorized
and, when issued and paid for in accordance with the terms hereof and thereof,
will be duly and validly issued, fully paid and nonassessable, free and clear of
all liens other than restrictions on transfer provided for in this Agreement or
the Escrow Agreement attached as Exhibit D hereto
imposed by applicable securities laws and shall not be subject to preemptive or
similar rights of stockholders.  Assuming the accuracy of the
representations and warranties of the Purchasers, the Issuable Securities will
be issued in compliance with all applicable federal and state securities
laws.  The issue and sale of the Issuable Securities will not,
immediately or with the passage of time, obligate the Buyer to issue shares of
its securities to any person other than the Purchasers and will not result in a
right of any holder of Buyer’s securities to adjust the exercise, conversion,
exchange or reset price under such securities.

     

    
      
        
        

      

      
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    Section
3.6           Capitalization.  The
approximate aggregate number of shares and type of all authorized, issued and
outstanding classes of capital stock, options and other securities of the Buyer
(whether or not presently convertible into or exercisable or exchangeable for
shares of capital stock of the Buyer) is specified in the SEC Reports (as
defined below).  Except as specified in the SEC Reports, no securities
of the Buyer are entitled to preemptive or similar rights, and no person has any
right of first refusal, preemptive right, right of participation, or any similar
right to participate in the transactions contemplated hereby; except as
specified in the SEC Reports, the Buyer has not issued any other options,
warrants or scrip rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities, rights or obligations convertible into or
exchangeable for, or entered into any agreement giving any person any right to
subscribe for or acquire, any shares of Common Stock; except as specified in the
SEC Reports, there are no contracts, commitments, understandings, or
arrangements by which the Buyer is or may become bound to issue additional
shares of the capital stock of the Buyer or options, securities or rights
convertible into shares of capital stock of the Buyer; except for customary
adjustments as a result of stock dividends, stock splits, combination of shares,
reorganizations, recapitalizations, reclassifications or other similar events,
there are no anti-dilution or price adjustment provisions contained in any
security issued by Buyer (or in any agreement providing rights to security
holders) and the issuance and sale of the shares of Common Stock will not
obligate Buyer to issue securities to any person (other than the Purchasers) and
will not result in a right of any holder of securities to adjust the exercise,
conversion, exchange or reset price under such securities; Buyer is not a party
to, and it has no knowledge of, any agreement restricting the voting or transfer
of any shares of the capital stock of Buyer.

     

    Section
3.7           SEC
Reports.  The Common Stock of Buyer is registered pursuant to
Section 12(g) of the Exchange Act.  Buyer has filed all reports
required to be filed by it under the Exchange Act, including pursuant to Section
13(a) or 15(d) thereof, for the calendar year prior to the Closing Date (the
foregoing materials being collectively referred to herein as the “SEC
Reports” and
together with this Agreement, the “Disclosure
Materials”).  As of their respective dates, or to the extent
corrected by a subsequent restatement, the SEC Reports complied in all material
respects with the requirements of the Securities Act and the Exchange Act and
the rules and regulations of the Commission promulgated thereunder, and none of
the SEC Reports, when filed, 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 light of the circumstances under
which they were made, not misleading.

     

    Section
3.8          Financial
Statements.  The financial statements of Buyer included in the
SEC Reports comply in all material respects with applicable accounting
requirements and the rules and regulations of the Commission with respect
thereto as in effect at the time of filing (or to he extent corrected by a
subsequent restatement).  Such financial statements have been prepared
in accordance with GAAP applied on a consistent basis during the periods
involved, except as may be otherwise specified in such financial statements or
the notes thereto and except that unaudited financial statements may not contain
all footnotes required by GAAP, and fairly present in all material respects the
financial position of Buyer and its consolidated subsidiaries as of and for the
dates thereof and the results of operations and cash flows for the periods then
ended, subject, in the case of unaudited statements, to normal, year-end audit
adjustments.

     

    
      
        
        

      

      
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    Section
3.9           Tax
Matters.  Buyer (i) has accurately and timely prepared and
filed all foreign, federal and state income and all other tax returns, reports
and declarations required by any jurisdiction to which it is subject,
(ii) has paid all material taxes and other governmental assessments and
charges that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith,
with respect to which adequate reserves have been set aside on the books of
Buyer and (iii) has set aside on its books provision reasonably adequate
for the payment of all taxes for periods subsequent to the periods to which such
returns, reports or declarations apply.  There are no unpaid taxes in
any material amount claimed to be due by the taxing authority of any
jurisdiction, and the officers of Buyer know of no basis for such
claim.  Buyer has not waived or extended any statute of limitations at
the request of any taxing authority.  There are no outstanding tax
sharing agreements or other such arrangements between Buyer and any other
corporation or entity and Buyer is not presently undergoing any audit by a
taxing authority.

     

    Section
3.10        Environmental
Matters. To Buyer’s knowledge, Buyer (i) is not in violation of any
statute, rule, regulation, decision or order of any governmental agency or body
or any court, domestic or foreign, relating to the use, disposal or release of
hazardous or toxic substances or relating to the protection or restoration of
the environment or human exposure to hazardous or toxic substances
(collectively, “Environmental
Laws”), (ii) does not own or operate any real property contaminated with
any substance in violation of any Environmental Laws, (iii) is not liable
for any off-site disposal or contamination pursuant to any Environmental Laws,
and (iv) is not subject to any claim relating to any Environmental Laws;
which violation, contamination, liability or claim has had or could reasonably
be expected to have a Material Adverse Effect, individually or in the aggregate;
and there is no pending or, to Buyer’s knowledge, threatened investigation that
might lead to such a claim.

     

    Section
3.11         Litigation.
There is no pending action which adversely affects or challenges the legality,
validity or enforceability of any of the Transaction Documents or the
Shares.

     

    Section
3.12        Employment
Matters. To Buyer’s knowledge, Buyer is in compliance with all federal,
state, local and foreign laws and regulations respecting labor, employment and
employment practices and benefits, terms and conditions of employment and wages
and hours, except where the failure to be in compliance would not, either
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect.  Buyer is not a party to any collective bargaining
agreement.

     

    Section
3.13         Compliance.  Buyer,
except in each case as, individually or in the aggregate, has not and could not
reasonably be expected to result in a Material Adverse Effect (i)  is in
violation of any order of any court, arbitrator or governmental body having
jurisdiction over Buyer or its properties or assets, or (ii) to Buyer’s
knowledge, is or has been in violation of any statute, rule or regulation of any
governmental authority applicable to Buyer.

     

    
      
        
        

      

      
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    Section
3.14         Regulatory
Permits.
To Buyer’s knowledge, Buyer possesses all certificates, authorizations and
permits issued by the federal, state, local or foreign regulatory authorities
necessary to conduct their respective businesses as described in the SEC
Reports, except where the failure to possess such permits, individually or in
the aggregate, has not and could not reasonably be expected to result in a
Material Adverse Effect (“Material
Permits”), and Buyer has not received any notice of proceedings relating
to the revocation or modification of any such Material Permit.

     

    Section
3.15         Title to
Assets. Buyer has good and marketable title in all personal property
owned by it that is material to the business of Buyer, in each case free and
clear of all Liens, except for Liens that do not, individually or in the
aggregate, have or result in a Material Adverse Effect.

     

    Section
3.16         Patents
and Trademarks.  To Buyer’s knowledge, Buyer owns, possesses,
licenses or has other rights to use all foreign and domestic patents, patent
applications, trade and service marks, trade and service mark registrations,
trade names, copyrights, licenses, inventions, trade secrets, technology,
Internet domain names, know-how and other intellectual property (collectively,
the “Intellectual
Property”) necessary for the conduct of its business as now conducted or
as proposed to be conducted; except as set forth in the SEC Reports and except
where such violations or infringements would not reasonably be expected to
result in a Material Adverse Effect, and (a) to Buyer’s knowledge, there
are no rights of third parties to any such Intellectual Property; (b) to
Buyer’s knowledge, there is no infringement by third parties of any such
Intellectual Property; (c) there is no pending or, to Buyer’s knowledge,
threatened action, suit, proceeding or claim by others challenging Buyer’s
rights in or to any such Intellectual Property, and Buyer is unaware of any
facts which would form a reasonable basis for any such claim; (d) there is
no pending or, to Buyer’s knowledge, threatened action, suit, proceeding or
claim by others challenging the validity or scope of any such Intellectual
Property; and (e) there is no pending or, to Buyer’s knowledge, threatened
action, suit, proceeding or claim by others that Buyer infringes or otherwise
violates any patent, trademark, copyright, trade secret or other proprietary
rights of others, and Buyer is unaware of any other fact which would form a
reasonable basis for any such claim.  All of the licenses and
sublicenses and consent, royalty or other agreements concerning Intellectual
Property which are necessary for the conduct of Buyer’s business as currently
conducted to which Buyer is a party or by which any of its material assets are
bound (other than generally commercially available, non-custom, off the shelf
software application programs having a retail acquisition price of less than
$10,000 per license) (collectively, “License
Agreements”) are valid and binding obligations of Buyer and, to Buyer’s
knowledge, the other parties thereto, enforceable in accordance with their
respective terms, except to the extent that enforcement thereof may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar laws affecting the enforcement of creditors’ rights
generally, and there exists no event or condition which will result in a
material violation or breach of or constitute (with or without due notice or
lapse of time or both) a default by Buyer under such License
Agreement.

     

    Section
3.17         Insurance.
Buyer is insured by insurers of recognized financial responsibility against such
losses and risks and in such amounts as are prudent and customary in the
businesses and location in which Buyer is engaged.  To Buyer’s
knowledge, it will be able to renew existing insurance coverage for Buyer as and
when such coverage expires or to obtain similar coverage from similar insurers
as may be necessary to continue its business without a significant increase in
cost.

     

    
      
        
        

      

      
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    Section
3.18         Transactions
With Affiliates and Employees.  Except as set forth in the SEC
Reports made on or prior to the date hereof, none of the officers or directors
of Buyer and, to Buyer’s knowledge, none of the employees of Buyer is presently
a party to any transaction with Buyer or to a presently contemplated transaction
(other than for services as employees, officers and directors) that would be
required to be disclosed pursuant to Item 404 of Regulation S-K
promulgated under the Securities Act.

     

    Section
3.19        Sarbanes
Oxley Act.  Buyer is in compliance with applicable requirements
of the Sarbanes Oxley Act of 2002 and applicable rules and regulations
promulgated by the Commission thereunder, except where such noncompliance would
not have, individually or in the aggregate, a Material Adverse
Effect.

     

    Section
3.20        Private
Placement. Assuming the accuracy of the Members’ representations and
warranties set forth in Section 2, no registration under the Securities Act
is required for the offer and sale of the Issuable Securities by Buyer to the
Purchasers hereunder and thereunder.  Buyer’s Common Stock is
registered pursuant to Section 12(g) of the Exchange Act, and Buyer has taken no
action designed to, or which to its knowledge is likely to have the effect of
terminating the registration of Buyer’s Common Stock under the Exchange Act, nor
has Buyer received any notification that the Commission is contemplating
terminating such registration.

     

    Section
3.21        No
Directed Selling Efforts or General Solicitation.  Neither
Buyer nor any of its affiliates, nor any person acting on its or their behalf
has conducted any “general solicitation” or “general advertising” (as those
terms are used in Regulation D) in connection with the offer or sale of any
of the Shares.

     

    Section
3.22        Investment
Company.  Buyer is not required to be registered as, and is not
an affiliate of, and immediately following the Closing will not be required to
register as, an “investment company” within the meaning of the Investment
Company Act of 1940, as amended.

     

    Section
3.23        Questionable
Payments.  Neither Buyer nor, to Buyer’s knowledge, directors,
officers, employees, agents or other persons acting on behalf of Buyer has, in
the course of its actions for, or on behalf of, Buyer:  (a) used
any corporate funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to foreign or domestic political activity;
(b) made any direct or indirect unlawful payments to any foreign or
domestic governmental officials or employees from corporate funds;
(c) violated in any material respect any provision of the Foreign Corrupt
Practices Act of 1977, as amended or (d) made any other unlawful bribe,
rebate, payoff, influence payment, kickback or other unlawful payment to any
foreign or domestic government official or employee.

     

    Section
3.24         Application
of Takeover Protections.  Except as described in the SEC
Reports, there is no control share acquisition, business combination, poison
pill (including any distribution under a rights agreement) or other similar
anti-takeover provision under Buyer’s charter documents or the laws of the State
of Nevada that is or could reasonably be expected to become applicable to
Purchasers as a result of the parties fulfilling their obligations or exercising
their rights under the Transaction Documents, including without limitation
Buyer’s issuance of the Shares and the Purchaser’s ownership of the
Shares.

     

    
      
        
        

      

      
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    Section
3.25     Disclosure.  No
representation or warranty by Buyer or Buyer Sub contained in this Agreement,
including any statement contained in the Buyer Disclosure Letter or any document
delivered in connection herewith, contains any untrue statement of a material
fact or omits to state any material fact necessary, in light of the
circumstances under which it was made, in order to make the statements herein
not misleading.

     

    ARTICLE
IV

    Conditions
of Merger

     

    Section
4.1            Conditions
to Obligations of Buyer and Buyer Sub to Effect the
Merger.  The obligations of Buyer and Buyer Sub to effect the
Merger will be subject to the satisfaction or waiver of the following conditions
prior to the Effective Time:

     

    (a)           Representations and
Warranties.  Those representations and warranties of the
Company and the Members set forth in this Agreement will be true and correct as
of the Closing Date (except to the extent such representations and warranties
expressly relate to a specific date in which case such representations and
warranties will be true and correct as of such date).  Buyer shall
receive a certificate to such effect executed by the Company’s
Manager.

     

    (b)           Agreements and
Covenants.  The Company and the Members shall have performed in
all material respects all obligations and complied in all material respects with
all of their respective agreements and covenants required to be performed or
complied with under this Agreement.  The Buyer shall receive a
certificate to such effect executed by the Company’s Manager.

     

    (c)           Certificate of
Secretary.  Buyer will have received from the Company’s
Secretary or another authorized officer or manager of the Company, a certificate
(i) certifying the Company’s Articles of Organization, (ii) certifying the
Company’s Operating Agreement, (iii) certifying the bylaws of the Company, (iv)
certifying the resolutions of the board of managers of the Company, (v)
certifying the resolutions of the Members and (vi) attesting to the incumbency
of the officers of the Company.

     

    (d)           Required
Consents.  Any consent, authorization, order or approval of (or
filing or registration with) any third party identified by Buyer on Schedule
4.1(d) will have been obtained or made.

     

    (e)           Legal
Opinion.  Buyer will have received an opinion, dated the
Closing Date, of counsel to the Company, in substantially the form of Exhibit C attached
hereto.

     

    
      
        
        

      

      
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    Section
4.2           Conditions
to Obligations of the Company and the Members to Effect the
Merger.  The obligations of the Company and the Members to
effect the Merger will be further subject to the satisfaction or waiver of the
following conditions prior to the Effective Time:

     

    (a)           Representations and
Warranties.  Those representations and warranties of Buyer and
Buyer Sub set forth in this Agreement will be true and correct as of the Closing
Date (except to the extent such representations and warranties expressly relate
to a specific date in which case such representations will be true and correct
as of such date).  The Company shall receive a certificate to such
effect executed by the Buyer’s Chief Executive Officer.

     

    (b)           Agreements and
Covenants.  Buyer and Buyer Sub shall have performed in all
material respects all obligations and complied in all material respects with all
agreements and covenants of Buyer and Buyer Sub required to be performed or
complied with by them under this Agreement.  The Company shall receive
a certificate to such effect executed by the Buyer’s Chief Executive
Officer.

     

    (c)           Certificate of
Secretary.  The Company will have received from the corporate
secretary of each of Buyer and Buyer Sub a certificate (i) certifying Buyer’s
and Buyer Sub’s Articles of Incorporation and Articles of Incorporation,
respectively, (ii) certifying the bylaws of Buyer and Buyer Sub, (iii)
certifying the resolutions of the board of directors of Buyer and Buyer Sub, and
(iv) certifying the resolutions of the stockholder of Buyer Sub.

     

    (d)           Required
Consents.  Any consent, authorization, order or approval of (or
filing or registration with) any third party identified by the Company on
Schedule 4.2(d) will have been obtained or made.


    
      
         


      

      
        -25-

        
          

        

      

      
         


      

    

    

      ARTICLE
V

      Further
Assurances and Covenants

       

      Section
5.1           Non-Competition
and Other Covenants.

       

      (a)           Agreement Not to
Compete.  For a period of two (2) years after the Closing Date
none of the Members shall be engaged or interested in any business which
distributes energy efficient equipment.  Each of the Members shall be
deemed to be interested in a business if he or she is engaged or interested in
that business as a member, stockholder, manager, director, officer, employee,
salesman, sales representative, agent, partner, individual proprietor,
consultant or otherwise, but not if such interest is limited solely to ownership
of 2% or less of the equity or debt securities of any class of a corporation
whose shares are listed for trading on a national securities exchange or traded
in the over the counter market.

       

      (b)           Non-solicitation.  For
a period of five (5) years after the Closing Date, none of the Members shall,
directly or indirectly, (a) cause or attempt to cause any customer, client,
account or vendor, or prospective customer, client, account or vendor to divert,
terminate, limit or in any manner modify or fail to enter into any actual or
potential business relationship with the Surviving Corporation, or (b) divert,
solicit or employ, or attempt to divert, solicit or employ, any employees of the
Surviving Corporation except for those individuals identified on Schedule
5.2(b).  For purposes of this Section 5.2, a prospective customer,
client, account or vendor shall mean any customer, client, account or vendor
that any Member was involved with or had Knowledge of in his or her position
with the Company for the twelve month period prior to the Closing
Date.

       

      (c)           Necessary and
Reasonable.  Each Member agrees that the covenants provided for
in Section 5.2 hereof are necessary and reasonable in order to protect the
Surviving Corporation in the conduct of its business, to protect the trade
secrets and other proprietary information of the Surviving Corporation and to
protect the Surviving Corporation in the utilization of the assets, tangible and
intangible, including the goodwill of the Surviving Corporation.

       

      Section
5.2           Escrow of
Common Stock Shares.  The Common Stock
Shares shall be placed by Buyer with Seyfarth Shaw LLP to secure Seller’s
indemnification obligations under this Agreement, the departure of Mark Walsh
prior to two years from the Effective Date and any damages arising from
litigation between Seller and Green Core Technology as forth in the Company
Disclosure Letter.  The escrow agreement shall be in the form attached
hereto as Exhibit
E (the “Escrow
Agreement”).  

       

      Section
5.3           Adjustment
for Dilutive Issuances.  If Buyer, at any
time prior to conversion of the Common Stock Shares, shall issue any shares of
Common Stock or securities of Buyer convertible into shares of Common Stock at a
price per share of Common Stock less than $0.12 per share, other than an
Excluded Issuance (as hereinafter defined), then, and in each such case, the
Members shall be entitled to participate on the same terms in such additional
issuance of securities.

       

      
        
          
          

        

        
          -26-

          
            

          

        

        
          
          

        

      

       

      The
following shall be deemed “Excluded
Issuances” for the purpose of this Section 5.3:

       

      a.           Buyer’s
granting of stock options, and/or issuance of Common Stock upon exercise
thereof, to directors, officers, employees or consultants of Buyer pursuant to
any benefit plan approved by the holders of a majority of the shares of Common
Stock;

       

      b.           The
issuance or sale of shares of Common Stock issuable upon the exercise of
outstanding securities of the Buyer;

       

      c.           The
issuance of shares of Common Stock or securities convertible into or
exchangeable or exercisable for shares of Common Stock (and the shares of Common
Stock issuable upon the conversion, exercise or exchange thereof) in connection
with any future acquisition, merger or other business combination, purchase of
assets or of all or a portion of a business or other strategic relationship
entered, by the Company or any of its subsidiaries; and

       

      d.           the
current financing with Optimus Capital Partners.

       

      ARTICLE
VI

      Survival
and Indemnification

       

      Section
6.1           Survival
of Representations.  All representations, warranties and
covenants of the parties contained in this Agreement will remain operative and
in full force and effect, regardless of any investigation made by or on behalf
of the other parties to this Agreement, until the earlier of the termination of
this Agreement or two (2) years after the Closing Date (the “Survival
Period”), whereupon such representations, warranties and covenants will
expire (except for covenants that by their terms survive for a longer period).
The parties’ post-closing remedies for a breach are not limited by the
pre-closing discovery of a breach.

       

      Section
6.2           Indemnification
of Buyer and Buyer Sub.  Subject to the limitations set forth
in this ARTICLE VI, the Company and the Members agree to jointly and severally
indemnify and hold harmless Buyer, Buyer Sub and their respective officers,
directors, agents and employees, and each Person, if any, who controls or may
control Buyer within the meaning of the Securities Act (hereinafter referred to
individually as an “Indemnified
Person” and collectively as “Indemnified
Persons”) from and against any and all third party claims, demands,
actions, causes of actions, losses, costs, damages, liabilities and expenses
including, without limitation, reasonable legal fees (hereinafter referred to as
“Damages”):

       

      (a)           Arising
out of any misrepresentation or breach of or default in connection with any of
the representations, warranties and covenants given or made by the Company or
any Member in this Agreement or any certificate, document or instrument
delivered by or on behalf of the Company or any Member pursuant hereto (other
than with respect to changes in the truth or accuracy of the representations and
warranties of the Company or any Member under this Agreement after the date
hereof if the Company or such Member has advised Buyer and Buyer Sub of such
changes in an update to the Company’s Disclosure Letter delivered prior to the
Closing and Buyer and Buyer Sub have nonetheless proceeded with the Closing);
or

       

      
        
          
          

        

        
          -27-

          
            

          

        

        
          
          

        

      

       

      (b)           Resulting
from any failure of any Member to have good, valid and marketable title to the
issued and outstanding Membership Interests held by such Member, free and clear
of all liens, claims, pledges, options, adverse claims, assessments or charges
of any nature whatsoever, or to have full right, capacity and authority to vote
such Membership Interests in favor of the Merger and the other transactions
contemplated by the Agreement.

       

      Section
6.3           Indemnification
of Members and Company.  Subject to the limitations set forth
in this ARTICLE VI, the Buyer and Buyer Sub agree to jointly and severally
indemnify and hold harmless the Members and their respective heirs, successors
and assigns, and the Company and its officers, managers, agents and employees,
from and against any and all Damages:

       

      (a)           Arising
out of any misrepresentation or breach of or default in connection with any of
the representations, warranties and covenants given or made by the Buyer or
Buyer Sub in this Agreement or any certificate, document or instrument delivered
by or on behalf of the Buyer or Buyer Sub pursuant hereto (other than with
respect to changes in the truth or accuracy of the representations and
warranties of the Buyer or Buyer Sub under this Agreement after the date hereof
if the Buyer or Buyer Sub has advised the Members and Company of such changes in
an update to the Buyer Disclosure Letter delivered prior to the Closing and the
Members and Company have nonetheless proceeded with the Closing);

       

      (b)           Resulting
from any breach of any covenant, agreement or obligation of Buyer or Buyer Sub
in this Agreement or any certificate, document or instrument delivered by or on
behalf of the Buyer and Buyer Sub hereto (except where the breach has resulted
from an act or omission of the Company or the Members before the Closing);
or

       

      (c)           In
connection with any personal guarantees of the Members executed in the ordinary
course of business prior to Closing and identified on Schedule
1.2.


      
        
           


        

        
          -28-

          
            

          

        

        
           


        

      

       

      Section
6.4           Limitations
on Indemnity Obligations.

       

      (a)           Notwithstanding
anything to the contrary herein, in no event shall a party or person having the
indemnity obligation under this ARTICLE VI (“Indemnifying
Party”) have any liability for an indemnity obligation under this ARTICLE
VI unless and until the Damages relating to the party’s indemnity claims exceed
$10,000 in the aggregate.  From and after the time the aggregate
Damages for an Indemnified Party’s indemnity claims exceed $10,000, the
limitation set forth in this Section 6.4 shall be of no further force and effect
and the Indemnifying Party shall be liable for the entire amount of the Damages,
subject to the liability limitations set forth below;

       

      (b)           No
Indemnified Person shall be entitled to seek indemnification from any
Indemnifying Party pursuant to this ARTICLE VI with respect to any claim or
demand unless the Indemnified Party notifies such Indemnifying Party of such
claim or demand in writing within two years after the Closing Date;
and

       

      (c)           Notwithstanding
anything to the contrary herein, in no event will the Member’s indemnity
obligations under this ARTICLE VI exceed the aggregate amount of $500,000, (the
amount of the value of the Merger Consideration as of the Closing
Date).  In no event will the Buyer’s indemnity obligation under this
ARTICLE VI exceed the aggregate amount of $500,000.

       

      Section
6.5           Escrow.  Upon
notice to the Members specifying in reasonable detail the basis therefor, Buyer
may give notice of a claim in such amount under the Escrow Agreement. Neither
the exercise of nor the failure to give a notice of a claim under the Escrow
Agreement will constitute an election of remedies or limit Buyer in any manner
in the enforcement of any other remedies that may be available to
it.

       

      ARTICLE
VII

      Covenants
of The Company Prior to Closing

       

      Section
7.1           Access
and Investigation.  Between the date of this Agreement and the
Closing, and upon reasonable advance notice received from Buyer, the Company
shall (and the Members shall cause the Company to):

       

      (a)           afford
Buyer and its representatives and prospective lenders and their representatives
(collectively, “Buyer
Group”) full and free access, during regular business hours, to the
Company’s personnel, properties (including subsurface testing), contracts,
Permits, books and records and other documents and data, such rights of access
to be exercised in a manner that does not unreasonably interfere with the
operations of the Company; (b) furnish Buyer Group with copies of all such
contracts, Permits, books and records and other existing documents and data as
Buyer may reasonably request; (c) furnish Buyer Group with such additional
financial, operating and other relevant data and information as Buyer may
reasonably request; and

       

      
        
          
          

        

        
          -29-

          
            

          

        

        
          
          

        

      

       

      (b)           otherwise
cooperate and assist, to the extent reasonably requested by Buyer, with Buyer’s
investigation of the properties, assets and financial condition related to the
Company.

       

      Section
7.2           Operation
of the Business of Seller.  Between the date of this Agreement
and the Closing, the Company shall (and the Members shall cause the Company
to):

       

      (a)           conduct
its business only in the ordinary course of business, consistent with past
practice;

       

      (b)           except
as otherwise directed by Buyer in writing, and without making any commitment on
Buyer’s behalf, use its best efforts to preserve intact its current business
organization, keep available the services of its officers, employees and agents
and maintain its relations and good will with suppliers, customers, landlords,
creditors, employees, agents and others having business relationships with
it;

       

      (c)           confer
with Buyer prior to implementing operational decisions of a material
nature;

       

      (d)           otherwise
report periodically to Buyer concerning the status of its business, operations
and finances;

       

      (e)           make
no material changes in management personnel without prior consultation with
Buyer;

       

      (f)          
 maintain its assets in a state of repair and condition that complies with
Laws and is consistent with the requirements and normal conduct of the Company’s
business;

       

      (g)           keep
in full force and effect, without amendment, all material rights relating to the
Company’s business;

       

      (h)          comply
with all Laws and contractual obligations applicable to the operations of the
Company’s business;

       

      (i)           
continue in full force and effect the insurance coverage under the policies set
forth in Schedule 2.13 or substantially equivalent policies;

       

      (j)           
except as required to comply with ERISA or to maintain qualification under
Section 401(a) of the Code, not amend, modify or terminate any Employee Benefit
Plan without the express written consent of Buyer, and except as required under
the provisions of any Employee Benefit Plan, not make any contributions to or
with respect to any Employee Benefit Plan without the express written consent of
Buyer, provided that the Company shall contribute that amount of cash to each
Employee Benefit Plan necessary to fully fund all of the benefit liabilities of
such Employee Benefit Plan on a plan-termination basis as of the
Closing;

       

      
        
          
          

        

        
          -30-

          
            

          

        

        
          
          

        

      

       

      (k)           upon
request from time to time, execute and deliver all documents, make all truthful
oaths and do all other acts that may be reasonably necessary or desirable in the
opinion of Buyer to consummate the transactions contemplated by this Agreement,
all without further consideration; and

       

      (l)            maintain
all books and records of the Company relating to the Company’s business in the
ordinary course of business, consistent with past practice.

       

      Section
7.3           Negative
Covenant.  Except as otherwise expressly permitted herein,
between the date of this Agreement and the Closing Date, the Company shall not,
and the Members shall not permit the Company to, without the prior written
consent of Buyer:

       

      (a)           take
any affirmative action, or fail to take any reasonable action within its
control, the result of which would be likely constitute a Material Adverse
Effect on the Company;

       

      (b)           make
any modification to any material contract or Permit; or

       

      (c)           enter
into any compromise or settlement of any litigation, proceeding or governmental
investigation relating to the business of the Company or its assets, liabilities
or properties.

       

      Section
7.4           Notification.  Between
the date of this Agreement and the Closing, the Company and the Members shall
promptly notify Buyer in writing if any of them becomes aware of (a) any fact or
condition that causes or constitutes a breach of any of the Company’s or such
Member’s representations and warranties made as of the date of this Agreement or
(b) the occurrence after the date of this Agreement of any fact or condition
that would or be reasonably likely to (except as expressly contemplated by this
Agreement) cause or constitute a breach of any such representation or warranty
had that representation or warranty been made as of the time of the occurrence
of, or the Company’s or such Member’s discovery of, such fact or condition.
Should any such fact or condition require any change to the Company Disclosure
Letter, the Company and the Members shall promptly deliver to Buyer a supplement
to the Company Disclosure Letter specifying such change. Such delivery shall not
affect any rights of Buyer under this Agreement. During the same period, the
Company and the Members also shall promptly notify Buyer of the occurrence of
any breach of any covenant of the Company or such Member or of the occurrence of
any event that may make the satisfaction of the conditions to Closing impossible
or unlikely.

       

      Section
7.5           No
Negotiation.  Until such time as this Agreement shall be
terminated pursuant to the terms hereof, neither the Company nor any Member
shall directly or indirectly solicit, initiate, encourage or entertain any
inquiries or proposals from, discuss or negotiate with, provide any nonpublic
information to or consider the merits of any inquiries or proposals from any
Person (other than Buyer) relating to any business combination transaction
involving the Company, including the sale by Members of the Membership
Interests, the merger or consolidation of the Company or the sale of the
Company’s business or any of the the Company’s assets (other than in the
ordinary course of business). The Company and the Members shall notify Buyer of
any such inquiry or proposal within twenty-four (24) hours of receipt or
awareness of the same.

       

      
        
          
          

        

        
          -31-

          
            

          

        

        
          
          

        

      

       

      Section
7.6           Best
Efforts.  The Company and the Members shall use their best
efforts to cause the conditions in Section 4.1 to be satisfied.

       

      Section
7.7           Payment
of Liabilities.  The Company shall pay or otherwise satisfy in
the ordinary course of business, consistent with past practice, all of its
liabilities and obligations.

       

      ARTICLE
VIII

      General
and Miscellaneous Provisions

       

      Section
8.1           Notices.  All
notices and other communications given or made pursuant hereto will be in
writing and will be deemed to have been duly given or made (a) as of the
date delivered, if delivered personally or by overnight courier, (b) on the
third Business Day after deposit in the U.S. mail, if mailed by registered or
certified mail (postage prepaid, return receipt requested), or (c) when
successfully transmitted by facsimile (with a confirming copy of such
communication to be sent as provided in clauses (a) or (b) above), and, in each
case to the parties at the following addresses or facsimile number (or at such
other address for a party as will be specified by like notice, except that
notices of changes of address will be effective upon receipt):

       

      (a)           If
to Buyer or Buyer Sub:

       

      Neah
Power Systems, Inc.

      222118
20th
Avenue

      Suite
142

      Bothell,
Washington 98021

      Attention:       Gerard
C. D’Couto, President and CEO

      Facsimile:       (425)
483-8454

       

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

       

      Seyfarth
Shaw LLP

      975 F
Street, N.W.

      Washington,
D.C. 20004

      Attention:       Ernest
M. Stern, Esq.

      Facsimile:       (202)
641-9260

       

      (b)           If
to the Company or to the Members (prior to the Closing Date):

       

      SolCool
One, LLC

      1881
Commercenter E, Suite 216

      San
Bernardino, CA 92408

      Attention:       Mark
Walsh, Manager

      Facsimile:       (909)
806-3563

       

      
        
          
          

        

        
          -32-

          
            

          

        

        
          
          

        

      

       

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

       

      Anker,
Reed, Hymes, Schreiber & Cohen

      1901
Avenue of the Stars, 11th
Floor

      Los
Angeles, CA 90067

      Attention:  Martin
S. Reed, Esq.

      Facsimile:
(310) 286-7120

      


      For
purposes of this Agreement, a “Business Day” shall mean any day that is not a
Saturday, a Sunday or other day on which banking organizations in Washington,
D.C. are authorized or required by law to close.

       

      Section
8.2           Expenses.  All
fees, costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby will be paid by the party incurring such fees,
costs and expenses.

       

      Section
8.3           Amendment.  This
Agreement may not be amended except by an instrument in writing signed by the
parties hereto.

       

      Section
8.4           Entire
Agreement.  This Agreement and the schedules and exhibits
attached hereto, constitute the entire agreement and supersede any and all other
prior agreements and undertakings, both written and oral, among the parties, or
any of them, with respect to the subject matter hereof.  

       

      Section
8.5           Public
Announcements.  Buyer and the Company will consult with each
other before holding any press conferences, analyst calls or other meetings or
discussions and before issuing any press release or other public announcements
with respect to the transactions contemplated by this Agreement, including the
Merger.  The parties will provide each other the opportunity to review
and comment upon any press release or other public announcement or statement
with respect to the transactions contemplated by this Agreement, including the
Merger, and will not issue any such press release or other public announcement
or statement prior to such consultation, except as may be required by applicable
Law, court process or by obligations pursuant to any listing agreement with any
national securities exchange.  The parties agree that the initial
press release or releases to be issued with respect to the transactions
contemplated by this Agreement will be mutually agreed upon prior to the
issuance thereof.  In addition, the Company will, and will cause its
Subsidiaries to consult with Buyer regarding communications with customers,
members and employees relating to the transactions contemplated by this
Agreement.

       

      Section
8.6           No
Third-Party Beneficiaries.  Except for the parties hereto, this
Agreement is not intended to confer upon any other Person any rights or remedies
hereunder.

       

      Section
8.7           Assignment.  This
Agreement will not be assigned by operation of Law or otherwise, except that
Buyer and Buyer Sub may assign all or any of their rights hereunder to any
Affiliate of Buyer; provided, however, that no such
assignment will relieve the assigning party of its obligations
hereunder.  This Agreement will be binding upon, and will be
enforceable by and inure to the benefit of the parties hereto and their
respective successors and assigns.

       

      
        
          
          

        

        
          -33-

          
            

          

        

        
          
          

        

      

       

      Section
8.8           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 will 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 adverse to any party.  Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto will 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 maximum extent possible.

       

      Section
8.9           Governing
Law.  This Agreement will be governed by, and construed in
accordance with, the Laws of the State of Washington applicable to contracts
executed in and to be performed entirely within that State.

       

      Section
8.10         Consent
to Jurisdiction.  Any dispute arising under this Agreement
shall be submitted to arbitration administered by JAMS pursuant to its
Comprehensive Arbitration Rules and Procedures before a single arbitrator in
Bothell, Washington in the event that both Buyer and the Company agree to submit
such dispute to binding arbitration.  Judgment on the Award may be
entered in any court having jurisdiction.  Submission of a dispute
under this Agreement shall not preclude Buyer and the Company from seeking
provisional remedies in aid of arbitration from a court of appropriate
jurisdiction.  In the event that the parties do not agree to submit
such dispute to arbitration, each of the parties hereto (a) consents to submit
itself to the personal jurisdiction of any federal court located in the State of
Washington or any Washington state court in the event any dispute arises out of
this Agreement or any of the transactions contemplated by this Agreement; (b)
agrees that it will not attempt to deny or defeat such personal jurisdiction by
motion or other request for leave from any such court; and (c) agrees that it
will not bring any action relating to this Agreement or any of the transactions
contemplated by this Agreement in any court other than a federal court sitting
in the State of Washington or a Washington state court.

       

      Section
8.11         Headings;
Interpretation.  The headings contained in this Agreement are
for reference purposes only and will not affect in any way the meaning or
interpretation of this Agreement.  Whenever the words “include,”
“includes”
or “including”
are used in this Agreement, they will be understood to be followed by the words
“without
limitation.”

       

      Section
8.12         Construction.  In
the event of an ambiguity or question of intent or interpretation arises, this
Agreement will be construed as if drafted jointly by the parties and no
presumption or burden of proof will arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement.

       

      Section
8.13         Counterparts.  This
Agreement may be executed in one or more counterparts, and by the different
parties hereto in separate counterparts, each of which when executed will be
deemed to be an original but all of which will constitute one and the same
agreement.

       

      
        
          
          

        

        
          -34-

          
            

          

        

        
          
          

        

      

       

      Section
8.14         Confidentiality.  The
Company, Buyer and Buyer Sub each recognize that they have received and will
receive confidential information concerning the other during the course of the
Merger negotiations and preparations.  Accordingly, the Company, Buyer
and Buyer Sub each agree (a) to use its respective best efforts to prevent the
unauthorized disclosure of any confidential information concerning the other
that was or is disclosed during the course of such negotiations and
preparations, and is clearly designated in writing as confidential at the time
of disclosure, and (b) to not make use of or permit to be used any such
confidential information other than for the purpose of effectuating the Merger
and related transactions.  The obligations of this section will not
apply to information that (i) is or becomes part of the public domain, (ii) is
disclosed by the disclosing party to third parties without restrictions on
disclosure, (iii) is received by the receiving party from a third party without
breach of a nondisclosure obligation to the other party or (iv) is required to
be disclosed by law.

       

      Section
8.15         Termination.  This
Agreement may be terminated either (i) by the Company  in the event
that Buyer fails to meet either the funding date for $100,000 as set forth in
Section 1.8 or (ii) by Buyer or the Company upon written notice to the other, if
the Closing has not been consummated on or prior to 5:00 p.m. (Pacific time) on
July 31, 2009; provided,
however, that the right to terminate this Agreement under this
Section 8.15 shall not be available to any party whose failure to comply
with its obligations under this Agreement has been the cause of or resulted in
the failure of the Closing to occur on or before such time. Nothing in this
Section 8.15 shall be deemed to release any party from any liability for
any breach by such party of the terms and provisions of this Agreement or the
other Transaction Documents or to impair the right of any party to compel
specific performance by any other party of its obligations under this Agreement
or the other Transaction Documents.

       

      [REMAINDER
OF PAGE LEFT BLANK.]


      
        
           


        

        
          -35-

          
            

          

        

        
           


        

      


      IN WITNESS WHEREOF, Buyer,
Buyer Sub, the Company and the Members have executed this Agreement as of the
date first written above.

       

      
        
          
            
              	
                      NEAH
      POWER SYSTEMS, INC.

                    
	 
      	 
      
	
                      By:

                    	
                      /s/ Gerard C. D’Couto

                    
	
                      Name:

                    	
                      Gerard
      C. D’Couto

                    
	
                      Title:

                    	
                      President

                    
	 
      	 
      
	
                      NEAH
      POWER ACQUISITION CORP.

                    
	 
      	 
      
	
                      By:

                    	
                      /s/ Gerard C. D’Couto

                    
	
                      Name: 

                    	
                      Gerard
      C. D’Couto

                    
	
                      Title:

                    	
                      President

                    
	 
      	 
      
	
                      SOLCOOL
      ONE, LLC

                    
	 
      	 
      
	
                      By:

                    	
                      /s/ Mark Walsh

                    
	
                      Name:

                    	
                       Mark
      Walsh

                    
	
                      Title:

                    	
                      Manager

                    
	 
      	 
      
	
                      MEMBER:

                    
	 
      	 
      
	
                      /s/ Mark Walsh

                    
	
                      Mark
      Walsh

                    


            

          

        

      

       

      
        
           


        

        
           


          
            

          

        

        
           


        

      


      EXHIBIT
A

       

      Buyer
Sub Articles of Incorporation


      
        
           


        

        
          A-1

          
            

          

        

        
           


        

      


      EXHIBIT
B

       

      Buyer
Sub Bylaws


      
        
           


        

        
          B-1

          
            

          

        

        
           


        

      


      EXHIBIT
C

       

      Legal
Opinion


      
        
           


        

        
          C-1

          
            

          

        

        
           


        

      


      EXHIBIT
D

       

      Form
of Escrow Agreement


      
        
           


        

        
          D-1