bpo_ex1049.htm


    
      

    


    Exhibit
      10.49

    


    


    STOCK
      PURCHASE AGREEMENT

    


    


    


    


    among

    


    


    


    BPO
      MANAGEMENT SERVICES, INC.

    


    


    and

    


    MR.
      EVERETT HUNTOON

    


    and

    


    MR.
      HOWARD ANDREWS

    


    


    


    


    


    


    October
      10, 2007


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    
      	
              ARTICLE
                1

            	
              DEFINITIONS

            	
              1

            
	
              1.1

            	
              Definitions
                and Interpretation

            	
              1

            
	
              1.2

            	
              Other
                Definitional and Interpretive Matters

            	
              6

            
	
              ARTICLE
                2

            	
              PURCHASE
                AND SALE OF THE COMPANY SHARES

            	
              8

            
	
              2.1

            	
              Basic
                Transaction

            	
              8

            
	
              2.2

            	
              Purchase
                Price

            	
              8

            
	
              2.3

            	
              Security

            	
              8

            
	
              2.4

            	
              Closing
                Date

            	
              9

            
	
              2.5

            	
              Withholding

            	
              9

            
	
              ARTICLE
                3

            	
              REPRESENTATIONS
                AND WARRANTIES CONCERNING THE TRANSACTION

            	
              10

            
	
              3.1

            	
              Representations
                and Warranties of the Sellers

            	
              10

            
	
              3.2

            	
              Representations
                and Warranties of the Buyer

            	
              11

            
	
              ARTICLE
                4

            	
              REPRESENTATIONS
                AND WARRANTIES CONCERNING THE COMPANY

            	
              13

            
	
              4.1

            	
              Representations
                and Warranties concerning the Company

            	
              13

            
	
              ARTICLE
                5

            	
              COVENANTS

            	
              37

            
	
              5.1

            	
              Special
                Payments

            	
              37

            
	
              5.2

            	
              Post
                Closing Covenants

            	
              38

            
	
              ARTICLE
                6

            	
              CONDITIONS

            	
              42

            
	
              6.1

            	
              Conditions
                for the Benefit of the Buyer

            	
              42

            
	
              6.2

            	
              Conditions
                for the Benefit of the Sellers

            	
              43

            
	
              6.3

            	
              Waiver
                of Conditions

            	
              44

            
	
              ARTICLE
                7

            	
              DELIVERIES
                AT CLOSING

            	
              44

            
	
              7.1

            	
              Closing

            	
              44

            
	
              7.2

            	
              Documents
                Delivered to Buyer

            	
              44

            
	
              7.3

            	
              Documents
                Delivered to Sellers

            	
              45

            
	
              ARTICLE
                8

            	
              REMEDIES
                FOR BREACHES OF THIS AGREEMENT

            	
              46

            
	
              8.1

            	
              Survival
                of Representations and Warranties

            	
              46

            
	
              8.2

            	
              Indemnification
                Provisions for Benefit of the Buyer

            	
              46

            
	
              8.3

            	
              Indemnification
                Provisions for Benefit of the Sellers

            	
              47

            
	
              8.4

            	
              Deemed
                Adjustments

            	
              47

            
	
              8.5

            	
              Claim
                Notice; Notice of a Disputed Claim

            	
              47

            
	
              8.6

            	
              Other
                Indemnification Provisions

            	
              47

            
	
              ARTICLE
                9

            	
              LIMITATIONS
                ON INDEMNIFICATION

            	
              48

            
	
              9.1

            	
              Limitations
                on Indemnification

            	
              48

            
	
              ARTICLE
                10

            	
              MISCELLANEOUS

            	
              49

            
	
              10.1

            	
              Press
                Releases and Public Announcements

            	
              49

            


    

     

    
 

    
      
        
          
          

        

        
          i

          
            

          

        

        
          
          

        

      

    

    

 

    
      	
              10.2

            	
              No
                Third-Party Beneficiaries

            	
              49

            
	
              10.3

            	
              Entire
                Agreement

            	
              49

            
	
              10.4

            	
              Succession
                and Assignment

            	
              49

            
	
              10.5

            	
              Counterparts

            	
              49

            
	
              10.6

            	
              Headings

            	
              49

            
	
              10.7

            	
              Notices

            	
              50

            
	
              10.8

            	
              Governing
                Law

            	
              51

            
	
              10.9

            	
              Amendments
                and Waivers

            	
              51

            
	
              10.10

            	
              Severability

            	
              51

            
	
              10.11

            	
              Expenses

            	
              52

            


    

     

     

    
 

    
      
        
          
          

        

        
          ii

          
            

          

        

        
          
          

        

      

    

    


     

    STOCK
      PURCHASE AGREEMENT

    


    


    THIS
      STOCK PURCHASE AGREEMENT entered into as of  10, 2007 by and
      among BPO MANAGEMENT SERVICES, INC., a Delaware corporation with its principal
      place of business located at 1290 North Hancock, Street, Suite 202, Anaheim,
      California (the “Buyer”) and MR. EVERETT HUNTOON, an individual
      domiciled at 111 Orchard Road, Mt. Kisco, New York, and MR. HOWARD
      ANDREWS, an individual domiciled at 10 Quail Hollow Lane, West
      Nyack, New York, (Mr. Huntoon and Mr. Andrews together being hereinafter
      referred to as the “Sellers” and individually as a
“Seller”).  The Buyer and the Sellers are referred
      to
      collectively herein as the “Parties”.   The
      Parties hereto agree as follows:

    


    RECITALS

    


    
      	
              A.

            	
              The
                Sellers own all of the outstanding capital stock of Blue Hill Data
                Services, Inc. (the “Company”), (after taking into
                account the purchase by the Company, concurrent with the completion
                of the
                Transaction hereunder, of all shares of the Company held by
                Markowitz);

            


    

     

    
      	
              B.

            	
              This
                Agreement contemplates a transaction in which the Buyer will purchase
                from
                the Sellers, and the Sellers will sell to the Buyer, all of the
                outstanding capital stock of the Company (after the acquisition by
                the
                Company of the shares held by Markowitz) in return for cash on closing,
                an
                additional deferred cash payment, and the issuance of stock of the
                Buyer,
                in accordance with the terms and conditions
                herein;

            


    

     

    
      	
              C.

            	
              Concurrent
                with the completion of the Transaction hereunder, the Buyer has advanced
                to the Company the amount required to complete the acquisition
                from  Markowitz pursuant to the Markowitz
                Agreement

            


    

     

    NOW,
      THEREFORE, in consideration of the premises and the mutual promises
      herein made, and in consideration of the representations, warranties, and
      covenants herein contained, the Parties agree as follows.

     

    ARTICLE
      1

    DEFINITIONS

     

    
      	
              1.1

            	
              Definitions
                and Interpretation

            


    

     

    In
      this
      Agreement, the following terms shall have the following meanings:

     

    “Accredited
      Investor” has the meaning set forth in Regulation D promulgated under
      the Securities Act.

     

    “Adverse
      Consequences” means all actions, suits, proceedings, hearings,
      investigations, charges, complaints, claims, demands, injunctions, judgments,
      orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
      in settlement, liabilities, obligations, Taxes, liens, losses, expenses, and
      fees, including court costs and reasonable attorneys’ fees and
      expenses.

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    “Affiliate”
      has the meaning set forth in Rule 12b 2 of the regulations promulgated under
      the
      Securities Exchange Act.

     

    “Basis”
      means any past or present fact, situation, circumstance, status, condition,
      activity, practice, plan, occurrence, event, incident, action, failure to act,
      or transaction that forms or could reasonably be expected to form the basis
      for
      any specified consequence.

     

    “Business”
      means the provision of information technology services on an outsource basis,
      including mainframe outsourcing, open systems outsourcing, server hosting,
      co-location and disaster recovery services.

     

    “Business
      Day” means any day other than a Saturday, Sunday, statutory holiday or
      day on which banks in the cities of New York or Los Angeles are not generally
      open for business.

     

    “Buyer
      Stock” means the stock issued by the Buyer as provided for in §2.2(c)
      herein.

     

    “Closing”
      has the meaning set forth in §2.4 below.

     

    “Closing
      Date” has the meaning set forth in §2.4 below.

     

    “Closing
      Time” means 2:00 pm on the Closing Date.

     

    “Company
      Employee and Contractor Disclosure Document” means that certain
      document dated the date hereof and delivered by the Company to the Buyer setting
      out the information described in §4.1(y) hereof.

     

    “Company
      Employees” means individuals currently employed or retained by the
      Company on a full-time, part-time or temporary basis, including those employees
      on disability leave, parental leave or other absence.

     

    “Company
      Shares” means shares of the Company’s common stock.

     

    “Company
      Transaction Expenses” means, except as otherwise expressly set forth in
      this Agreement, the aggregate amount of all out-of-pocket fees and expenses,
      incurred by or on behalf of, or paid or to be paid by, the Company in connection
      with the process of selling the Company Shares or otherwise relating to the
      negotiation, preparation or execution of this Agreement or any documents or
      agreements contemplated hereby or the performance or consummation of the
      transactions contemplated hereby, including (A) any fees and expenses associated
      with obtaining necessary or appropriate waivers, consents or approvals of any
      Governmental Body or third parties on behalf of the Company, (B) any fees or
      expenses associated with obtaining the release and termination of any Security
      Interests; (C) all Company- or Seller-retained brokers’ or finders’ fees; (D)
      fees and expenses of counsel, advisors, consultants, investment bankers,
      accountants, and auditors and experts retained by the Company or the Sellers,
      and (E) all sale, “stay-around,” retention, or similar bonuses or payments to
      current or former directors, officers, employees and consultants whom the
      Company or the Sellers agreed to pay as a result of or in connection with the
      transactions contemplated hereby.

     


    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    


    “Confidential
      Information” means any information concerning the Business and affairs
      of the Company that is not already generally available to the
      public.

     

    “Consulting
      Agreements” means agreements in the form of the draft agreement
      attached hereto as Exhibit B.

     

    “Disclosure
      Schedule” has the meaning set forth in §4.1 below.

     

    “Employee
      Benefit Plan” means any benefit plan, program, agreement or arrangement
      maintained, contributed to or provided by the Company or any Affiliate for
      the
      benefit of any of the Company’s employees, former employees or dependent or
      independent contractors or their respective dependents or beneficiaries, whether
      written or unwritten, including all bonus, deferred compensation, incentive
      compensation, share purchase, stock option, stock appreciation, phantom stock,
      savings, profit sharing, severance or termination pay, health or other medical,
      life, disability or other insurance (whether insured or self-insured),
      supplementary unemployment benefit, pension, retirement and supplementary
      retirement plans, programs, agreements and arrangements, except for any
      statutory plans to which the Company is obligated to contribute or comply or
      plans administered pursuant to applicable federal or state health, workers
      compensation and employment insurance legislation.

     

    “Environmental,
      Health, and Safety Requirements” shall mean all federal, state, local
      and foreign statutes, regulations, ordinances and other provisions having the
      force or effect of law, all judicial and administrative orders and
      determinations, all contractual obligations and all common law concerning public
      health and safety, worker health and safety, and pollution or protection of
      the
      environment, including without limitation all those relating to the presence,
      use, production, generation, handling, transportation, treatment, storage,
      disposal, distribution, labelling, testing, processing, discharge, release,
      threatened release, control, or cleanup of any hazardous materials, substances
      or wastes, chemical substances or mixtures, pesticides, pollutants,
      contaminants, toxic chemicals, petroleum products or by-products, asbestos,
      polychlorinated biphenyls, noise or radiation, each as amended and as now in
      effect and applicable to the Company.

     

    “ERISA”
      means the Employment Retirement Income Security Act of 1974, as
      amended.

     

    “Escrow
      Agent” means U.S. Bank National Association.

     

    “Escrow
      Terms” means the agreement in the form of the draft attached hereto as
      Exhibit 2.5(a).

     

    “Exception”
      has the meaning provided by §3.1(a) hereof.

     

     “Excluded
      Liabilities” means all of the debts, guarantees and obligations of the
      Company that were not incurred in the Ordinary Course of Business, including
      without limitation, the following: (A) loans or other debts or obligations
      owed
      to Sellers, including, without limitation, accrued but unpaid bonuses and
      dividends payable to Sellers and accrued vacation pay, and (B) all obligations
      of the Company under the Markowitz Agreement.

     

    “Financial
      Statements” has the meaning set forth in §4.1(g) below.

     


    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    


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

     

    “Governmental
      Body” means any government or governmental or regulatory body thereof,
      or political subdivision thereof, whether federal, state, local or foreign,
      or
      any agency, instrumentality or authority thereof, or any court or arbitrator
      (public or private).

     

    “Indemnified
      Party” has the meaning set forth in §8.5 below.

     

    “Indemnifying
      Party” has the meaning set forth in §8.5 below.

     

    “Intellectual
      Property” means (a) all inventions (whether patentable or unpatentable
      and whether or not reduced to practice), all improvements thereto, and all
      patents, patent applications, and patent disclosures, together with all
      reissuances, continuations, continuations in part, revisions, extensions, and
      re-examinations thereof, (b) all trademarks, service marks, trade dress, logos,
      trade names, and corporate names, together with all translations, adaptations,
      derivations, and combinations thereof and including all goodwill associated
      therewith, and all applications, registrations, and renewals in connection
      therewith, (c) all copyrightable works, all copyrights, and all applications,
      registrations, and renewals in connection therewith, (d) all mask works and
      all
      applications, registrations, and renewals in connection therewith, (e) all
      trade
      secrets and confidential business information (including ideas, research and
      development, know how, formulas, compositions, manufacturing and production
      processes and techniques, technical data, designs, drawings, specifications,
      customer and supplier lists, pricing and cost information, and business and
      marketing plans and proposals), (f) all computer software (including data and
      related documentation), (g) all website content and domain names, (h) all other
      proprietary rights, and (i) all copies and tangible embodiments thereof (in
      whatever form or medium).

     

    “Interim
      Period” means the period commencing on July 1, 2007 and terminating on
      the Closing Date.

     

    “IRS”
      means the Internal Revenue Service.

     

    “June
      30 Balance Sheet” means the balance sheet contained within the June 30
      Statements.

     

    “June
      30 Statements” has the meaning set forth in §4.1(g) below.

     

    “Knowledge”
      of a certain matter means the actual knowledge of the Sellers of that matter
      and
      the knowledge which the Sellers would have if they conducted such reasonable
      inquiry that a prudent person in similar circumstances would consider necessary
      as to that matter.  Inquiry by either of the Sellers made to the
      appropriate one or more of the following persons shall be deemed reasonable:
      Wendi Joseph (Vice President); Tom Laudati (Chief Technical Officer, working
      as
      a independent consultant); Randall Jones (Director of Facilities and Client
      Services); Ralph Horne (Director of Information Technology Open Systems); Nigel
      Jhagroo (Operations Manager) or any of their replacements if any of them is
      no
      longer employed or retained as a consultant by the Company at the time of
      inquiry.

     


    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    


    “Legal
      Proceeding” means any judicial, administrative or arbitral actions,
      suits, mediation, investigation, inquiry, proceedings or claims (including
      counterclaims) by or before a Governmental Body.

     

    “Liability”
      means any liability (whether known or unknown, whether asserted or unasserted,
      whether absolute or contingent, whether accrued or unaccrued, whether liquidated
      or unliquidated, and whether due or to become due), including any liability
      for
      Taxes.

     

    “Limitation
      of Liability” will have the meaning provided by §9.1(b)
      hereof.

     

    “Markowitz
      Agreement” means the agreement made the 12th
      day of January 2006
      between the Sellers, the Company and Scott Markowitz
      (“Markowitz”).

     

    “Material”
      or “Material Adverse Effect” or “Material Adverse
      Change” means a material adverse effect on or change in the business,
      assets (including intangible assets), financial condition, prospects, or results
      of operations of the Company, which is individually in excess of $50,000, or,
      in
      the aggregate with other individual items, in excess of $100,000.

     

    “Most
      Recent Fiscal Year End” has the meaning set forth in §4.1(g)
      below.

     

    “Note”
      has the meaning provided by §2.3 hereof.

     

    “Ordinary
      Course of Business” means the ordinary course of the business of the
      Company, consistent with past custom and practice (including with respect to
      quantity and frequency).

     

    “Permitted
      Distribution” means the aggregate of the $84,765 distribution paid by
      the Company to Mr. Huntoon and the $76,072 distribution paid by the Company
      to
      Mr. Andrews on October 5, 2007.

     

    “Person”
      means an individual, a partnership, a corporation, an association, a joint
      stock
      company, a trust, a joint venture, an unincorporated organization, or a
      governmental entity (or any department, agency, or political subdivision
      thereof).

     

     “Privacy
      Laws” means all applicable privacy laws of the United States and of any
      applicable state or other governmental subdivision governing the collection,
      use, disclosure and retention of personal information about identifiable
      individuals including, without limitation, information regarding the Company’s
      employees, agents, customers and suppliers.

     

    “Purchase
      Price” has the meaning set forth in §2.2 below.

     

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

     

    “Securities
      Exchange Act” means the Securities Exchange Act of 1934, as
      amended.

     

    “Security
      Interest” means any mortgage, pledge, lien, encumbrance, charge, or
      other security interest, other than (a) mechanic’s, materialmen’s, and similar
      liens, (b) liens for Taxes not yet due and payable or for Taxes that the
      taxpayer is contesting in good faith through appropriate proceedings, (c)
      purchase money liens and liens securing rental payments under capital lease
      arrangements, and (d) other liens arising in the Ordinary Course of Business
      and
      not incurred in connection with the borrowing of money.

     


    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    


    


     

    “September
      30 Statements” has the meaning set forth in §4.1(g) below.

     

    “to/To
      the Knowledge of the Sellers” means to the extent of Sellers’
Knowledge.

     

    “Tax”
      or “Taxes” means any federal, state,  local, or
      foreign income, gross receipts, license, payroll, employment, excise, severance,
      stamp, occupation, premium, windfall profits, environmental, customs duties,
      capital stock, franchise, profits, withholding, social security (or similar),
      unemployment, disability, real property, personal property, sales, use,
      transfer, registration, value added, alternative or add on minimum, estimated,
      or other tax of any kind whatsoever, including any interest, penalty, or
      addition thereto, whether disputed or not.

     

    “Tax
      Return” means any return, declaration, report, claim for refund, or
      information return or statement relating to Taxes, including any schedule or
      attachment thereto, and including any amendment thereof.

     

     “Transaction”
      means the purchase and sale of the Company Shares hereunder, including payment
      of the Cash Purchase Price and issuance of the Note and the Buyer
      Stock.

     

    
      	
              1.2

            	
              Other
                Definitional and Interpretive
                Matters

            


    

     

    
      	
               

            	
              (a)

            	
              Unless
                otherwise expressly provided, for purposes of this Agreement, the
                following rules of interpretation shall
                apply:

            


    

     

    
      	
               

            	
              (i)

            	
              Calculation
                of Time Period.  When calculating the period of time before
                which, within which or following which any act is to be done or step
                taken
                pursuant to this Agreement, the date that is the reference date in
                calculating such period shall be excluded.  If the last day of
                such period is a non-Business Day, the period in question shall end
                on the
                next succeeding Business Day.

            


    

     

    
      	
               

            	
              (ii)

            	
              Dollars.  Any
                reference in this Agreement to dollars or $ shall mean United States
                dollars.

            


    

     

    
      	
               

            	
              (iii)

            	
              Exhibits/Schedules.  The
                Annexes, Exhibits and Schedules to this Agreement are hereby incorporated
                and made a part hereof and are an integral part of this
                Agreement.  All Exhibits and Schedules annexed hereto or
                referred to herein are hereby incorporated in and made a part of
                this
                Agreement as if set forth in full herein.  Any capitalized terms
                used in any Annexes, Schedule or Exhibit but not otherwise defined
                therein
                shall be defined as set forth in this Agreement.  The Annexes,
                Exhibits and Schedules are as
                follow:

            


    

     


    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    


    


     

    
      	
              Exhibit
                2.3

            	
              Note

            
	
              Schedule
                2.5(a)

            	
              Escrow
                Terms

            
	
              Annex
                1

            	
              Exceptions
                to Sellers Representations and Warranties in §3.1

            
	
              Schedule
                4.1

            	
              Disclosure
                Schedule re: Sellers Representations and Warranties in
                §4.1

            
	 	
              Company
                Employee and Contractor Disclosure Document (separately
                Delivered

            
	
              Exhibit
                A

            	
              Financial
                Statements

            
	
              Exhibit
                B

            	
              Consulting
                Agreements

            
	
              Exhibit
                C

            	
              Legal
                Opinion of Sellers’ Counsel

            
	
              Exhibit
                D

            	
              Legal
                Opinion of Buyer’s Counsel

            


    

    


     

    
      	
               

            	
              (iv)

            	
              Gender
                and Number.  Any reference in this Agreement to gender shall
                include all genders, and words imparting the singular number only
                shall
                include the plural and vice versa.

            


    

     

    
      	
               

            	
              (v)

            	
              Headings.  The
                provision of a Table of Contents, the division of this Agreement
                into
                Articles, Sections and other subdivisions and the insertion of headings
                are for convenience of reference only and shall not affect or be
                utilized
                in construing or interpreting this Agreement.  All references in
                this Agreement to any “Section” are to the corresponding Section of this
                Agreement unless otherwise
                specified.

            


    

     

    
      	
               

            	
              (vi)

            	
              Herein.  The
                words such as “herein,” “hereinafter,”
                “hereof,” and “hereunder” refer to this
                Agreement as a whole and not merely to a subdivision in which such
                words
                appear unless the context otherwise
                requires.

            


    

     

    
      	
               

            	
              (vii)

            	
              Including.  The
                word “including” or any variation thereof means
                “including, without limitation” and shall not be
                construed to limit any general statement that it follows to the specific
                or similar items or matters immediately following
                it.

            


    

     

    
      	
               

            	
              (b)

            	
              The
                parties hereto have participated jointly in the negotiation and drafting
                of this Agreement and, in the event an ambiguity or question of intent
                or
                interpretation arises, this Agreement shall be construed as jointly
                drafted by the parties hereto and no presumption or burden of proof
                shall
                arise favouring or disfavouring any party by virtue of the authorship
                of
                any provision of this Agreement.

            


    

     


    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    


    


     

    ARTICLE
      2

    PURCHASE
      AND SALE OF THE COMPANY SHARES

     

    
      	
              2.1

            	
              Basic
                Transaction.

            


    

     

    On
      and
      subject to the terms and conditions of this Agreement, the Buyer agrees to
      purchase from each of the Sellers, and each of the Sellers agrees to and hereby
      does sell to the Buyer, all of his Company Shares for the consideration
      specified in §2.2.

     

    
      	
              2.2

            	
              Purchase
                Price.

            


    

     

    In
      consideration for the sale and transfer of the Company Shares, the Buyer agrees
      to pay and issue to the Sellers the following (the “Purchase
      Price”):

     

    
      	
               

            	
              (a)

            	
              The
                sum of Six million five hundred and seventy-three thousand eight
                hundred
                and fifty-eight dollars and twenty-eight cents
                ($6,573,858.28) minus any Excluded Liabilities
                existing as of the Closing Date and minus any Company Transaction
                Expenses
                incurred by the Company and existing as of the Closing Date (the
                net
                amount being called the “Closing Payment”), payable by
                wire transfer or delivery of other immediately available funds at
                the
                Closing;

            


    

     

    
      	
               

            	
              (b)

            	
              One
                Million Dollars ($1,000,000) (the “Second Installment”)
                which will be due and payable on January 1, 2009 by wire transfer
                or other
                immediately available funds, together with interest thereon from
                the due
                date at the rate of 9% per annum if the Second Installment is not
                paid on
                that date, subject to §2.5 hereof; (the Closing Payment and the Second
                Installment together are hereinafter called the “Cash Purchase
                Price”); plus

            


    

     

    
      	
               

            	
              (c)

            	
              The
                issuance of and delivery to Sellers of 2,666,666 shares of common
                stock of
                Buyer (the “Buyer Stock”).  The Buyer Stock
                will be restricted in relation to sale, exchange or transfer (or
                offers to
                sell, exchange or transfer) as provided under U.S. securities
                laws.

            


    

     

    The
      Cash
      Purchase Price and the Buyer Stock shall be allocated between the Sellers
      equally.

     

    
      	
              2.3

            	
              Security.

            


    

     

    In
      order
      to evidence the Buyer’s obligation to pay the Second Installment, at the Closing
      the Buyer will issue and deliver to the Sellers a promissory note (the
“Note”) in the form attached hereto as Exhibit 2.3 in the
      principal amount of $1,000,000, which will bear interest at the rate of nine
      percent (9%) per annum from January 1, 2009 if the amount of such Note is not
      paid on that date, subject to §2.5 hereof. If the Buyer fails to pay the Second
      Installment when due, then, subject to §2.5 hereof, the Sellers will be
      entitled, at their option, exercised by notice given to the Buyer within 30
      days
      after the due date, to (i) enforce the Note and the associated Confession of
      Judgment (in the form which has been agreed upon by the parties and which will
      be held by the Escrow Agent and released to the Sellers according to the Escrow
      Terms), or (ii) provided that both Sellers or their representatives agree,
      to
      convert the Note into shares of Common Stock of Buyer having an aggregate value
      of $1,500,000, based on the volume-weighted average of the

     


    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    


    OTC
      Bulletin Board closing bid price of the Buyer’s Common Stock during the ten (10)
      consecutive trading days immediately preceding, but not including, the date
      on
      which this conversion right is exercised.  The shares will be
      restricted in relation to sale, exchange or transfer (or offers to sell,
      exchange or transfer) as provided under U.S. securities laws.  The
      Buyer will at all times reserve and keep available for issuance pursuant to
      this
      section such shares of Common Stock and, if the Note is not paid when due and
      the Sellers give notice within the 30 day period of their election to convert
      the Note into shares of Common Stock, then the Buyer will, subject to existing
      registration rights previously granted by the Buyer, use reasonable commercial
      efforts to register such shares of Common Stock within twelve (12) months after
      the due date.  Upon surrender by the Sellers of the Note, the Company
      shall simultaneously issue to the Sellers certificates representing $1.5 million
      of Common Stock of the Buyer, one-half to each Seller.

     

    
      	
              2.4

            	
              Closing
                Date.  

            


    

     

    The
      closing of the transactions contemplated by this Agreement (the
“Closing” or “Closing Date”) shall take place
      contemporaneously with the execution of this Agreement.

     

    
      	
              2.5

            	
              Withholding.  

            


    

     

    
      	
               

            	
              (a)

            	
              If
                the Buyer delivers to the Sellers a notice seeking indemnification
                (referred to as a “Claim Notice” in Article 8 herein) in
                accordance with Article 8 of this Agreement, then the Buyer may deduct
                from the Second Installment such amount or amounts (which shall be
                specified in such notice(s) to the Sellers) as is reasonably necessary
                to
                satisfy the claim(s) seeking indemnification set forth in such Claim
                Notice (including costs and attorneys fees and disbursements in respect
                of
                those indemnification claims) and deposit such amount in trust with
                the
                Escrow Agent to be held according to the Escrow Terms, pending final
                resolution of such indemnification claim (“Claim”) (which
                shall mean, unless otherwise agreed among the parties hereto, a final
                arbitral award or, if appealed, a final judgment or order of a court
                of
                competent jurisdiction not subject to any further appeals adjudicating
                Buyer’s claim for the indemnification sought in the Claim Notice, which
                in
                no event shall exceed the Limitation of
                Liability).

            


    

     

    
      	
               

            	
              (b)

            	
              Upon
                the final resolution of a Claim:

            


    

     

    
      	
               

            	
              (i)

            	
              if
                the amount deducted and deposited in trust with the Escrow Agent
                by the
                Buyer as to that Claim Notice exceeds the amount of the Claim awarded
                to
                the Buyer, then the Escrow Agent shall pay to the Sellers any such
                excess,
                together with interest at 9% per annum for the period of time between
                the
                date that the payment of the amount that was withheld would otherwise
                have
                been due and the date that the payment of that amount is actually
                made to
                the Sellers,

            


    

     

    
      	
               

            	
              (ii)

            	
              if
                the amount deducted and deposited in trust with the Escrow Agent
                by the
                Buyer as to that Claim Notice is less than or equal to the amount
                of the
                Claim awarded to the Buyer, then the Buyer shall not be obligated
                to pay
                the amount to the Seller, and the same shall be treated as a reduction
                in
                the purchase price reflecting a commensurate reduction in value received
                by the Buyer, and

            


    

     


    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    


    


     

    
      	
               

            	
              (iii)

            	
              nothing
                in this §2.5 shall impair the rights of the Buyer set forth in Article 8
                or any other provision of this Agreement, and notwithstanding anything
                to
                the contrary in this Agreement, the liability of the Sellers in the
                aggregate for any breach or breaches of this Agreement shall not
                exceed
                the Limitation
                of  Liability.

            


    

     

    ARTICLE
      3

    REPRESENTATIONS
      AND WARRANTIES CONCERNING THE TRANSACTION

     

    
      	
              3.1

            	
              Representations
                and Warranties of the
                Sellers.

            


    

     

    Except
      as
      set forth in Annex I attached hereto, each of the Sellers, severally and not
      jointly, represents and warrants to the Buyer as of or contemporaneously with
      the Closing as follows.

     

    
      	
               

            	
              (a)

            	
              Authorization
                of Transaction.

            


    

     

    Such
      Seller has full power and authority to execute and deliver this Agreement and
      to
      perform his obligations hereunder.  This Agreement constitutes the
      valid and legally binding obligation of such Seller, enforceable in accordance
      with its terms and conditions, except that the enforceability of the Agreement
      (A) may be subject to or limited by bankruptcy, insolvency, reorganization,
      arrangement, moratorium or other similar laws relating to or affecting the
      rights of creditors and (B) is subject to general principles of equity
      (including the possibility of unavailability of specific performance or
      injunctive relief), regardless of whether considered in a proceeding in equity,
      at law, or otherwise (such limitations on enforceability being hereinafter
      called the “Exception”).  Such Seller need not give
      any notice to, make any filing with, or obtain any authorization, consent,
      or
      approval of any third party, including any government or Governmental Body
      in
      order to consummate the transactions contemplated by this
      Agreement.

     

    
      	
               

            	
              (b)

            	
              Non-contravention.

            


    

     

    Neither
      the execution and the delivery of this Agreement by such Seller, nor the
      consummation of the transactions contemplated hereby by such Seller, will (A)
      violate any constitution, statute, regulation, rule, injunction, judgment,
      order, decree, ruling, charge, or other restriction of any government,
      governmental agency, or court to which such Seller is subject, or (B) conflict
      with, result in a breach of, constitute a default under, result in the
      acceleration of, create in any party the right to accelerate, terminate, modify,
      or cancel, or require any notice under any agreement, contract, lease, license,
      instrument, or other arrangement to which such Seller is a party or by which
      he
      is bound.

     


    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    


    


     

    
      	
               

            	
              (c)

            	
              Brokers’
                Fees.

            


    

     

    Such
      Seller has not engaged nor is obligated to pay any commissions or brokers fees
      in connection with the transactions contemplated by this Agreement.

     

    
      	
               

            	
              (d)

            	
              Company
                Shares.

            


    

     

    Such
      Seller holds of record and owns beneficially the number of Company Shares set
      forth next to his name in Annex I, free and clear of any restrictions on
      transfer (other than under applicable securities laws), Taxes, Security
      Interests, options, warrants, purchase rights, contracts, commitments, equities,
      claims, and demands. Such Seller is not a party to any option, warrant, purchase
      right, or other contract or commitment that could require such Seller to sell,
      transfer, or otherwise dispose of any capital stock of the Company (other than
      this Agreement).  Subject to the Company’s Shareholders Agreement
      dated March 15, 1997 which is being terminated as of the date hereof, such
      Seller is not a party to any voting trust, proxy, or other agreement or
      understanding with respect to the voting of any capital stock of the
      Company.

     

    
      	
               

            	
              (e)

            	
              Investment.

            


    

     

    Such
      Seller (A) is acquiring the Buyer Stock solely for his own account for
      investment purposes, and not with a view to the distribution thereof, (B) is
      a
      sophisticated investor with knowledge and experience in business and financial
      matters, (C) has received certain information concerning the Buyer and has
      had
      the opportunity to obtain additional information as desired in order to evaluate
      the merits and the risks inherent in holding the Buyer Stock, (D) is able to
      bear the economic risk and lack of liquidity inherent in holding the Buyer
      Stock, and (E) is an Accredited Investor.

     

    
      	
              3.2

            	
              Representations
                and Warranties of the
                Buyer.

            


    

     

    The
      Buyer
      represents and warrants to the Sellers that the statements contained in this
      §3.2 are correct and complete.

     

    
      	
               

            	
              (a)

            	
              Organization
                of the Buyer.

            


    

     

    The
      Buyer
      is a corporation duly organized, validly existing, and in good standing under
      the laws of the state of Delaware, and is qualified to do business as a foreign
      corporation and in good standing under the laws of the State of
      California.  The Buyer has full corporate power and authority and all
      licenses, permits, and authorizations necessary to carry on the businesses
      in
      which it is engaged and to own and use the properties owned and used by
      it.  Correct and complete copies of the Buyer’s certificate of
      incorporation and bylaws (as amended to date) are filed as exhibits to the
      Buyer’s periodic and/or current reports filed with the U.S. Securities and
      Exchange Commission (“SEC”), copies of which have been
      delivered to the Sellers.

     


    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    


    


     

    
      	
               

            	
              (b)

            	
              Authorization
                of Transaction.

            


    

     

    The
      Buyer
      has full power and authority (including full corporate power and authority)
      to
      execute and deliver this Agreement, the Note, the Confession of Judgment and
      the
      Buyer Stock, and to perform its obligations hereunder.  This Agreement
      and the Note have been duly executed and delivered by the Buyer and constitute
      the valid and legally binding obligations of the Buyer, enforceable in
      accordance with their terms and conditions, subject only to the
      Exception.   The Buyer need not give any notice to, make any
      filing with, or obtain any authorization, consent, or approval of any government
      or Governmental Body in order to consummate the transactions contemplated by
      this Agreement.

     

    
      	
               

            	
              (c)

            	
              Non-contravention.

            


    

     

    Neither
      the execution and the delivery of this Agreement nor of the Note, nor the
      consummation of the transactions contemplated hereby and thereby, will (A)
      violate any constitution, statute, regulation, rule, injunction, judgment,
      order, decree, ruling, charge, or other restriction of any government,
      governmental agency, or court to which the Buyer is subject or any provision
      of
      its charter or bylaws, or (B) conflict with, result in a breach of, constitute
      a
      default under, result in the acceleration of, create in any party the right
      to
      accelerate, terminate, modify, or cancel, or require any notice under any
      agreement, contract, lease, license, instrument, or other arrangement to which
      the Buyer is a party or by which it is bound or to which any of its assets
      is
      subject.

     

    
      	
               

            	
              (d)

            	
              Investment.

            


    

     

    The
      Buyer
      understands that the Company Shares have not been, prior to the date hereof,
      registered under the Securities Act, or under any state securities laws, and
      are
      being offered and sold in reliance upon exemptions for transactions not
      involving any public offering.  The Buyer: (A) is acquiring the
      Company Shares solely for its own account for investment purposes, and not
      with
      a view to the distribution thereof, (B) is a sophisticated investor with
      knowledge and experience in business and financial matters, (C) has received
      certain information concerning the Sellers and the Company and has had the
      opportunity to obtain additional information as desired in order to evaluate
      the
      merits and the risks inherent in holding the Company Shares, and (D) is able
      to
      bear the economic risk and lack of liquidity inherent in holding the Company
      Shares and is an Accredited Investor.

     

    
      	
               

            	
              (e)

            	
              Buyer
                Stock.

            


    

     

    All
      shares of Buyer Stock issued to Sellers upon the Closing will have been duly
      authorized, be validly issued, fully paid and non-assessable, and be free and
      clear of any restrictions on transfer (other than any restrictions under the
      Securities Act and state securities laws).

     


    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    


    


     

    
      	
               

            	
              (f)

            	
              Capitalization.

            


    

     

    The
      entire authorized capital stock of the Buyer consists of: (i)
      150,000,000 shares of Common Stock, par value $0.01 per share, of which
      9,004,368 are issued and outstanding, and (ii) 29,795,816 shares of Preferred
      Stock, par value $0.01 per share, of which (A) 1,608,612 shares are designated
      Series A Preferred Stock, of which 1,605,598 are issued and outstanding, (B)
      1,449,204 shares are designated Series B Preferred Stock, of which
      1,449,204  are issued and outstanding, (C) 21,738,000 shares of Series
      C Preferred Stock, of which 916,667 are issued and outstanding, (D) 1,500,000
      shares of Series D Convertible Preferred Stock, of which 1,458,333.60
      shares  are issued and outstanding, 1,500,000 shares of Series D-2
      Convertible Preferred Stock, of which 729,167 are issued or outstanding, and
      (E)
      2,000,000 shares are undesignated Preferred Stock, none of which are issued
      and
      outstanding.  Except as disclosed in any reports filed by the Buyer
      with the SEC since December 15, 2006, there are no outstanding or authorized
      options, warrants, purchase rights, subscription rights, conversion rights,
      exchange rights, or other contracts or commitments that could require the Buyer
      to issue, sell, or otherwise cause to become outstanding any of its capital
      stock, and no outstanding or authorized stock appreciation, phantom stock,
      profit participation, or similar rights with respect to the
      Buyer.  The Buyer’s common stock is registered under Section 12(b) or
      12(g) of the Securities Act.

     

    
      	
               

            	
              (g)

            	
              SEC
                Reporting.

            


    

     

    The
      Buyer
      is in material compliance with all reporting requirements under the Securities
      Act and the Securities Exchange Act.  All documents filed by the Buyer
      with the SEC on or after December 15, 2006 are in material compliance with
      such
      Acts and SEC regulations promulgated thereunder, and do not contain any untrue
      statement of a material fact or omit to state any material fact necessary in
      order to make the statements and information contained therein not
      misleading.

     

    
      	
               

            	
              (h)

            	
              Disclosure.

            


    

     

    The
      representations and warranties contained in this Section 3.2 do not contain
      any
      untrue statement of a material fact.  No representation or warranty
      contained in this Section 3.2 omits to state any material fact necessary in
      order to make the statements therein, in light of the circumstances in which
      they were made, not misleading.

     

    ARTICLE
      4

    REPRESENTATIONS
      AND WARRANTIES CONCERNING THE COMPANY

     

    
      	
              4.1

            	
              Representations
                and Warranties concerning the
                Company

            


    

     

    Except
      as
      set forth in the disclosure schedule delivered by the Sellers to the Buyer
      at
      Closing (the “Disclosure Schedule”), the Sellers jointly and
      severally represent and warrant to the Buyer as of or contemporaneously with
      the
      Closing as follows:

     


    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    


    


     

    
      	
               

            	
              (a)

            	
              Organization,
                Qualification, and Corporate
                Power.

            


    

     

    The
      Company is a corporation duly organized, validly existing, and in good standing
      under the law of New York, the jurisdiction of its incorporation.  The
      Company neither owns or leases any property or premises, nor has operations
      or
      personnel based outside New York, except as described in §4.1(a) of the
      Disclosure Schedule.  The Company has full corporate power and
      authority and, all  licenses, permits, and authorizations issued by
      any Governmental Body necessary to carry on the businesses in which it is
      engaged and in which it presently proposes to engage and to own and use the
      properties owned and currently being used by it.  §4.1(a) of the
      Disclosure Schedule lists the directors and officers of the
      Company.  The Sellers have delivered to the Buyer correct and complete
      copies of the charter and bylaws and all other organizational documents of
      the
      Company as amended to date, (a copy of which is attached as §4.1(b) of the
      Disclosure Schedule).  The minute books (containing the records of
      meetings of the stockholders, the board of directors, and any committees of
      the
      board of directors), the stock certificate books, and the stock record books
      of
      the Company (a copy of which is attached as §4.1(b) of the Disclosure Schedule)
      are correct and complete in all material respects.  The Company is not
      in material default under or in violation of any provision of its charter or
      bylaws or any other organizational document.

     

    
      	
               

            	
              (b)

            	
              Capitalization.

            


    

     

    The
      authorized and issued capital stock of the Company is as described in §4.1(b) of
      the Disclosure Schedule.  All of the issued and outstanding Company
      Shares have been duly authorized, are validly issued, fully paid, and
      non-assessable, and, are held of record by the Sellers as set forth in §4.1(b)
      of the Disclosure Schedule.  Subject to the Company’s Shareholders
      Agreement dated March 15, 1997 which the Sellers hereby agree is being
      terminated as of the Closing , there are no outstanding or authorized options,
      warrants, purchase rights, subscription rights, conversion rights, exchange
      rights, or other contracts or commitments that could require the Company to
      issue, sell, or otherwise cause to become outstanding any of its capital
      stock.  There are no outstanding or authorized stock appreciation,
      phantom stock, profit participation, or similar rights with respect to the
      Company.  There are no voting trusts, proxies, or other agreements or
      understandings with respect to the voting of the capital stock of the Company.
      Listed in §4.1(b) of the Disclosure Schedule are all predecessor companies of
      the Company, the names of any Persons from which, since January 1, 2004, the
      Company acquired material properties or assets, and the changes in the Company’s
      capital structure and capital stock ownership since January 1,
      2004.

     

    
      	
               

            	
              (c)

            	
              Non-contravention.

            


    

     

    Neither
      the execution and the delivery of this Agreement, nor the
      consummation  of the transactions contemplated hereby,
      will:

     


    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    


    


     

    
      	
               

            	
              (i)

            	
              violate
                any constitution, statute, regulation, rule, injunction, judgment,
                order,
                decree, ruling, charge, or other restriction of any government,
                Governmental Body, or court to which the Company  is subject or
                any provision of the charter or bylaws of the
                Company  or

            


    

     

    
      	
               

            	
              (ii)

            	
              subject
                to obtaining the consents specified in §4.1(c) of the Disclosure Schedule,
                conflict with, result in a breach of, constitute a default under,
                result
                in the acceleration of, create in any party the right to accelerate,
                terminate, modify, or cancel, or require any notice under any agreement,
                contract, lease, license, instrument, or other arrangement to which
                the
                Company  is a party or by which it is bound or to which any of
                its assets is subject (or result in the imposition of any Security
                Interest upon any of its assets).

            


    

     

    The
      Company does not need to give any notice to, make any filing with, or obtain
      any
      authorization, consent, or approval of any government or Governmental Body
      in
      order for the Company and the Sellers to consummate the transactions
      contemplated by this Agreement.

     

    
      	
               

            	
              (d)

            	
              Brokerage
                Fees.

            


    

     

    The
      Company has not engaged and is not obligated to pay any commissions or brokers
      fees in connection with the transactions contemplated by this
      Agreement.

     

    
      	
               

            	
              (e)

            	
              Title
                to Assets.

            


    

     

    Except
      as
      to properties and assets owned, leased or provided by  a customer of
      the Company, the Company has good and marketable title to, or a valid leasehold
      interest in, the properties and assets used by them and located on the Company’s
      premises, or shown on the June 30 Balance Sheet or acquired by the Company
      after
      the date thereof, except for properties and assets disposed of in the Ordinary
      Course of Business since June 30, 2007 and, except as disclosed in §4.1(e) of
      the Disclosure Schedule. The parties acknowledge that §4.1(e) of the Disclosure
      Schedule will describe, in general terms, properties and assets located at
      the
      Company’s premises which are owned by customers of the Company, but the
      Disclosure Schedule will not contain a comprehensive list of such properties
      and
      assets.  All such property and assets which are owned by the Company
      are owned free of Security Interests except as disclosed in §4.1(e) of the
      Disclosure Schedule.

     

    
      	
               

            	
              (f)

            	
              Excluded
                Liabilities.

            


    

     

    The
      Company has satisfied or terminated all Excluded Liabilities.

     

    
      	
               

            	
              (g)

            	
              Financial
                Statements and Books and
                Records.

            


    

     

    Attached
      hereto as Exhibit A are the following financial statements:

     


    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    


    


     

    
      	
               

            	
              (i)

            	
              unaudited,
                reviewed financial statements for the Company as of and for the fiscal
                years ended December 31, 2004, December 31, 2005 and December 31,
                2006
                (the “Most Recent Fiscal Year
                End”);

            


    

     

    
      	
               

            	
              (ii)

            	
              unaudited,
                compiled statement of income, balance sheet, changes in stockholders
                equity and cash flow as of and for the 6 month period ended June
                30, 2007
                for the Company (the “June 30 Statements”);
                and.

            


    

     

    
      	
               

            	
              (iii)

            	
              unaudited,
                compiled statement of income, balance sheet, changes in stockholders
                equity and cash flow as of and for the 9 month period ended September
                30,
                2007 for the Company (the “September 30
                Statements”).

            


    

     

    (Such
      financial statements are hereinafter called the “Financial
      Statements”).

     

    It
      was
      the Sellers’ intention when, on behalf of the Company, engaging the accounting
      firm of Korn, Rosenbaum, Phillips & Jauntig, LLP, acting through Kathleen
      Haubner, C.P.A., that the Financial Statements be prepared in accordance with
      GAAP, consistently applied.  To the Knowledge of the Sellers, there
      are no entries contained in the Financial Statements which are not in accordance
      with GAAP, consistently applied.  Each of the Financial Statements
      presents fairly the financial condition of the Company as of such dates and
      the
      results of operations of the Company for such periods.  Except for
      distributions to shareholders up to September 30, 2007 as reflected in the
      September 30 Statements and except for the Permitted Distribution (as to both
      of
      which the Buyer hereby waives any objection), the financial condition of the
      Company is now approximately the same as the financial condition reflected
      in
      the Financial Statements for the Most Recent Fiscal Year End and as reflected
      in
      the June 30 Statements, when such financial condition is taken as a
      whole.

     

    It
      was
      the Seller’s intention when, on behalf of the Company, engaging the accounting
      firm of Korn, Rosenbaum, Phillips & Jauntig, LLP, acting through Kathleen
      Haubner, C.P.A., that the financial and other books, records, files and accounts
      of the Company be maintained in accordance with GAAP on a basis consistent
      with
      prior years.  To the Knowledge of the Sellers, there are no entries
      contained in the Company’s financial and other books, records, files and
      accounts which are not in accordance with GAAP, consistently
      applied.

     

    The
      Company’s financial and other books, records, files and accounts in all material
      respects:

     

    
      	
               

            	
              (i)

            	
              are
                complete, in reasonable detail and accurately and fairly reflect
                the
                financial transactions of the Company,
                and

            


    

     

    
      	
               

            	
              (ii)

            	
              are
                fairly reflected in the financial statements for the Most Recent
                Fiscal
                Year End, June 30 Statements and September 30 Statements, as
                applicable.

            


    

     


    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    


    


     

    It
      was
      the Seller’s intention when, on behalf of the Company, engaging the accounting
      firm of Korn, Rosenbaum, Phillips & Jauntig, LLP, acting through Kathleen
      Haubner, C.P.A., that the Company maintain systems of internal accounting
      controls sufficient to provide reasonable assurances as to the following matters
      (and the Sellers have no Knowledge of any specific circumstances in which the
      Company’s accounting control systems do not provide reasonable assurance with
      respect to such matters):  (i) transactions are executed in accordance
      with management’s general or specific authorization; (ii) transactions are
      recorded as necessary to permit the preparation of financial statements in
      conformity with GAAP and to maintain accountability for assets;
      (iii) access to assets is permitted only in accordance with management’s
      general or specific authorization; and (iv) the recorded accountability for
      assets is compared with the actual levels at reasonable intervals and
      appropriate action is taken with respect to any differences.

     

    
      	
               

            	
              (h)

            	
              Events
                Subsequent to Most Recent Fiscal Year
                End.

            


    

     

    Except
      as
      indicated in §4.1(h) of the Disclosure Schedule, to the Sellers’ Knowledge,
      since the Most Recent Fiscal Year End, there has not been any Material Adverse
      Change.  In addition, and without limiting the generality of the
      foregoing, since that date, except as indicated in the Disclosure
      Schedule:

     

    
      	
               

            	
              (i)

            	
              the
                Company has not sold, leased, transferred, or assigned any of its
                assets,
                tangible or intangible, other than for a fair consideration in the
                Ordinary Course of Business;

            


    

     

    
      	
               

            	
              (ii)

            	
              the
                Company has not entered into any agreement, contract, lease, or license
                (or series of related agreements, contracts, leases, and licenses)
                outside
                the Ordinary Course of Business;

            


    

     

    
      	
               

            	
              (iii)

            	
              no
                party (including the Company) has accelerated, terminated, modified,
                or
                cancelled any agreement, contract, lease, or license (or series of
                related
                agreements, contracts, leases, and licenses) involving more than
                $1,000,000 to which the Company is a
                party;

            


    

     

    
      	
               

            	
              (iv)

            	
              the
                Company has not imposed any Security Interest upon any of its assets,
                tangible or intangible, outside the Ordinary Course of
                Business;

            


    

     

    
      	
               

            	
              (v)

            	
              the
                Company has not made any capital expenditure (or series of related
                capital
                expenditures) either involving singly or in the aggregate more than
                $1,000,000 or outside the Ordinary Course of
                Business;

            


    

     

    
      	
               

            	
              (vi)

            	
              the
                Company has not made any capital investment in, any loan to, or any
                acquisition of the securities or all or substantially all of the
                assets
                of, any other Person (or series of related capital investments, loans,
                and
                acquisitions) either involving singly or in the aggregate more than
                $1,000,000 or outside the Ordinary Course of
                Business;

            


    

     


    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    


    


     

    
      	
               

            	
              (vii)

            	
              the
                Company has not issued any note, bond, or other debt security or
                created,
                incurred, assumed, or guaranteed any indebtedness for borrowed money
                or
                capitalized lease obligation involving more than $1,000,000 singly
                or in
                the aggregate;

            


    

     

    
      	
               

            	
              (viii)

            	
              the
                Company has not delayed or postponed the payment of accounts payable
                and
                other Liabilities outside the Ordinary Course of
                Business;

            


    

     

    
      	
               

            	
              (ix)

            	
              the
                Company has not intentionally and knowingly cancelled, compromised,
                waived, or released any right or claim (or series of related rights
                and
                claims) either involving singly or in the aggregate more than $100,000
                or
                outside the Ordinary Course of
                Business;

            


    

     

    
      	
               

            	
              (x)

            	
              except
                in the Ordinary Course of Business, the Company  has not granted
                any license or sublicense of any rights under or with respect to
                any
                Intellectual Property;

            


    

     

    
      	
               

            	
              (xi)

            	
              there
                has been no change made or authorized in the charter or bylaws of
                the
                Company;

            


    

     

    
      	
               

            	
              (xii)

            	
              the
                Company has not issued, sold, or otherwise disposed of any of its
                capital
                stock, or granted any options, warrants, or other rights to purchase
                or
                obtain (including upon conversion, exchange, or exercise) any of
                its
                capital stock;

            


    

     

    
      	
               

            	
              (xiii)

            	
              except
                as to dividends paid to the Sellers up to September 30, 2007 which
                are
                reflected in the September 30 Statements, and except for the Permitted
                Distribution, the Company has not declared, set aside, or paid any
                dividend or made any distribution with respect to its capital stock
                (whether in cash or in kind) and, except as to payments made to Markowitz
                pursuant to the Markowitz Agreement prior to September 30, 2007 (as
                reflected in the September 30 statements) and as of the date hereof
                (as
                referred to in Section 5.1(e)) (all of which are disclosed in §4.1(h) of
                the Disclosure Schedule), redeemed, purchased, or
                otherwise acquired any of its capital
                stock;

            


    

     

    
      	
               

            	
              (xiv)

            	
              the
                Company has not experienced any material damage, destruction, or
                loss
                (whether or not covered by insurance) to its property, ordinary wear
                and
                tear excepted;

            


    

     

    
      	
               

            	
              (xv)

            	
              other
                than Excluded Liabilities, an accurate and complete list of which
                is
                attached to §4.1(h) of the Disclosure Schedule, and which Excluded
                Liabilities shall all be paid in full or otherwise satisfied by the
                Company or the Sellers prior to the Closing, the Company has not
                made any
                loan to, or entered into any other transaction with, any of its directors,
                officers, and employees outside the Ordinary Course of Business except
                as
                identified in §4.1(h) of the Disclosure
                Schedule;

            


    

     


    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    


    


     

    
      	
               

            	
              (xvi)

            	
              the
                Company has not hired any new employees, entered into any employment
                contract or collective bargaining agreement, written or oral, or
                modified
                the terms of any existing such contract or agreement or terminated
                the
                employment of any employee, outside the Ordinary Course of Business
                except
                as identified in §4.1(h) of the Disclosure
                Schedule;

            


    

     

    
      	
               

            	
              (xvii)

            	
              the
                Company has not granted any increase in the base compensation of
                any of
                its directors, officers, and employees, outside the Ordinary Course
                of
                Business except as identified in §4.1(h) of the Disclosure
                Schedule;

            


    

     

    
      	
               

            	
              (xviii)

            	
              other
                than as disclosed in this Agreement, the Company has not adopted,
                amended,
                modified, or terminated any bonus, profit sharing, incentive, severance,
                or other plan, contract, or commitment for the benefit of any of
                its
                directors, officers, and employees (or taken any such action with
                respect
                to any other Employee Benefit Plan) , outside the Ordinary Course
                of
                Business;

            


    

     

    
      	
               

            	
              (xix)

            	
              the
                Company has not made any other change in employment terms for any
                of its
                directors, officers, and employees, outside the Ordinary Course of
                Business;

            


    

     

    
      	
               

            	
              (xx)

            	
              the
                Company has not made or pledged to make any charitable
                contribution;

            


    

     

    
      	
               

            	
              (xxi)

            	
              there
                has not been any other material occurrence, event, incident, action,
                failure to act, or transaction outside the Ordinary Course of Business
                involving the Company; and

            


    

     

    
      	
               

            	
              (xxii)

            	
              as
                referred to in this Section, the Company has not committed to any
                of the
                foregoing.

            


    

     

    
      	
               

            	
              (i)

            	
              Undisclosed
                Liabilities.

            


    

     

    The
      Company does not have any Liabilities except for (A) Liabilities set forth
      on
      the face of the June 30 Balance Sheet, (B) Liabilities which have arisen after
      June 30, 2007 in the Ordinary Course of Business, and (C) Liabilities which
      are
      not required by GAAP to be included in the Financial Statements and which,
      to
      the extent Material, are set forth in §4.1(i) of the Disclosure
      Schedule.

     

    
      	
               

            	
              (j)

            	
              Legal
                Compliance.

            


    

     

    The
      Company and its predecessors have complied with all applicable laws (including
      rules, regulations, codes, plans, injunctions, judgments, orders, decrees,
      rulings, and charges thereunder) of federal, state, local, and foreign
      governments (and all agencies thereof), and no investigation, charge, complaint,
      claim, has been filed or commenced against any of them alleging any failure
      so
      to comply. Further, no action, suit, proceeding, hearing, demand, or notice
      has
      been filed or commenced against any of them alleging any failure so to
      comply.

     


    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    


    


     

    
      	
               

            	
              (k)

            	
              Tax
                Matters.

            


    

     

    Except
      as
      indicated in the Disclosure Schedule:

     

    
      	
               

            	
              (i)

            	
              the
                Company has filed all Tax Returns that it was required to
                file.  All such Tax Returns were correct and complete in all
                material respects.  All Taxes owed by the Company and due and
                payable (whether or not shown on any Tax Return) have been
                paid.  The Company currently is not the beneficiary of any
                extension of time within which to file any Tax Return.  No claim
                has ever been made by an authority in a jurisdiction where the Company
                does not file Tax Returns that it is or may be subject to taxation
                by that
                jurisdiction.  There are no Security Interests on any of the
                assets of the Company that arose in connection with any failure (or
                alleged failure) to pay any Tax;

            


    

     

    
      	
               

            	
              (ii)

            	
              the
                Company has withheld and paid all Taxes required to have been withheld
                and
                paid in connection with amounts paid or owing to any
                employee;

            


    

     

    
      	
               

            	
              (iii)

            	
              the
                Sellers do not expect the IRS or any other taxing authority to assess
                any
                additional Taxes for any period for which Tax Returns have been
                filed.  There is no dispute or claim concerning any Tax
                Liability of the Company either (A) claimed or raised by the IRS
                or any
                other taxing authority in writing or (B) as to which the Sellers
                and the
                directors and officers (and employees responsible for Tax matters)
                of the
                Company have Knowledge based upon personal contact with the IRS or
                any
                agent of such authority.  §4.1(k)(iii) of the Disclosure
                Schedule lists all federal, state, local, and foreign income Tax
                Returns
                filed with respect to the Company  for taxable periods ended on
                or after 2004, indicates those Tax Returns that have been audited,
                and
                indicates those Tax Returns that currently are the subject of
                audit.  The Sellers have delivered to the Buyer correct and
                complete copies of all federal income Tax Returns, examination reports,
                and statements of deficiencies assessed against or agreed to by the
                Company since 2003;

            


    

     

    
      	
               

            	
              (iv)

            	
              the
                Company has not waived any statute of limitations in respect of Taxes
                or
                agreed to any extension of time with respect to a Tax assessment
                or
                deficiency.

            


    

     

    
      	
               

            	
              (l)

            	
              Real
                Property and Leases.

            


    

     

    The
      Company does not own any real property.  §4.1(l) of the Disclosure
      Schedule contains a list of all leases and subleases for real property to which
      the Company is a party, the square footage leased with respect to each lease
      and
      the expiration date of each lease and sublease.  These leases and
      subleases are valid and enforceable and are not in default.  The
      Sellers are unaware of any condition or situation that does or would render
      the
      real property leased or occupied by the

     


    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    


    Company,
      the improvements located thereon, and the furniture, fixtures and equipment
      relating thereto (including plumbing, heating, air conditioning and electrical
      systems), to be out of conformance with any and all applicable health, fire,
      safety, zoning, land use and building laws, ordinances and
      regulations.  There are no outstanding contracts made by the Company
      for any improvements made to the real property leased or occupied by the Company
      that have not been paid for or as to which payments are not current
      (e.g., diesel generator).  §4.1(l) of the Disclosure Schedule
      also contains correct and complete copies of the leases and subleases listed
      therein.  With respect to each lease and sublease listed in §4.1(l) of
      the Disclosure Schedule:

     

    
      	
               

            	
              (i)

            	
              the
                lease or sublease is legal, valid, binding, enforceable, and in full
                force
                and effect, according to its terms, subject to the
                Exception;

            


    

     

    
      	
               

            	
              (ii)

            	
              the
                lease or sublease will continue to be legal, valid, binding, enforceable,
                and in full force and effect according to its terms following the
                consummation of the transactions contemplated hereby, subject to
                the
                Exception;

            


    

     

    
      	
               

            	
              (iii)

            	
              the
                Company is not in breach or default and, to the Knowledge of the
                Sellers,
                no other party to the lease or sublease 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
                thereunder;

            


    

     

    
      	
               

            	
              (iv)

            	
              the
                Company has not repudiated and, to the Knowledge of the Sellers,
                no other
                party to the lease or sublease has repudiated any provision
                thereof;

            


    

     

    
      	
               

            	
              (v)

            	
              to
                the Knowledge of the Sellers, there are no disputes, oral agreements,
                or
                forbearance programs in effect as to the lease or
                sublease;

            


    

     

    
      	
               

            	
              (vi)

            	
              with
                respect to each sublease, the representations and warranties set
                forth in
                subsections (i) through (v) above are true and correct with respect
                to the
                underlying lease; and

            


    

     

    
      	
               

            	
              (vii)

            	
              the
                Company has not assigned, transferred, conveyed, mortgaged, deeded
                in
                trust, or encumbered any interest in the leasehold or
                subleasehold.

            


    

     

    
      	
               

            	
              (m)

            	
              Intellectual
                Property.

            


    

     

    
      	
               

            	
              (i)

            	
              Except
                as separately disclosed in writing by the Sellers to the Buyer, and
                except
                as to PCs, as to which the Company has made reasonable efforts to
                ensure
                that all standard shrink-wrap or click-wrap installed software is
                completely and currently licensed, the Company owns, or has the right
                to
                use pursuant to license, sublicense, agreement or other valid permission,
                all Intellectual Property used in the operation of the Business of
                the
                Company as presently conducted.  Each item of Intellectual
                Property owned or used by the Company immediately prior to the Closing
                hereunder will be owned or available for use by the Company on identical
                terms and conditions immediately subsequent to the Closing
                hereunder.

            


    

     


    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    


    


     

    
      	
               

            	
              (ii)

            	
              (A)

            	
              To
                the Knowledge of the Sellers, the Company has not interfered with,
                infringed upon, misappropriated, or otherwise come into conflict
                with any
                Intellectual Property rights of third
                parties;

            


    

     

    
      	
               

            	
              (B)

            	
              To
                the Knowledge of the Sellers, the Company has not received any charge,
                complaint, claim, demand, or notice alleging any such interference,
                infringement, misappropriation, or violation (including any claim
                that the
                Company must license or refrain from using any Intellectual Property
                rights of any third party).  The Sellers are unaware of any fact
                or condition that would cause the Sellers to believe that a third
                party
                has interfered with, infringed upon, misappropriated, or otherwise
                come
                into conflict with any Intellectual Property rights of the
                Company.

            


    

     

    
      	
               

            	
              (iii)

            	
              With
                respect to all Intellectual Property owned by the Company (the
                “Owned Intellectual Property”), §4.1(m) of the Disclosure
                Schedule identifies each Intellectual Property registration which
                has been
                issued to the Company and identifies each pending application or
                application for registration which the Company has made with respect
                to
                any of its Owned Intellectual Property.   §4.1(m) of the
                Disclosure Schedule also identifies each license, agreement, or other
                permission which the Company has granted to any third party with
                respect
                to any of its Owned Intellectual Property (together with any exceptions),
                other than licenses granted in the Ordinary Course of Business. The
                Sellers have delivered to the Buyer correct and complete copies of
                all
                such registrations and applications, and all such licenses, agreements,
                and permissions granted by the Company to any third party with respect
                to
                Owned Intellectual Property (excluding licenses granted by the Company
                in
                the Ordinary Course of Business).  The parties acknowledge that
                §4.1(m) of the Disclosure Schedule will describe, in general terms,
                such
                licenses, agreements and other
                permissions.

            


    

     

    
      	
               

            	
              (iv)

            	
              With
                respect to each item of Owned Intellectual Property, the Sellers
                do not
                have Knowledge of any fact or condition that would cause the Sellers
                to
                believe that the following is not
                true:

            


    

     

    
      	
               

            	
              (A)

            	
              the
                Company  possess all right, title, and interest in and to the
                item, free and clear of any Security Interest, license, or other
                restriction;

            


    

     

    
      	
               

            	
              (B)

            	
              the
                item is not subject to any outstanding injunction, judgment, order,
                decree, ruling, or charge;

            


    

     

    
      	
               

            	
              (C)

            	
              no
                action, suit, proceeding, hearing, investigation, charge, complaint,
                claim, or demand is pending or, to the Knowledge of the Sellers,
                is
                threatened which challenges the legality, validity, enforceability,
                use,
                or ownership of the item;

            


    

     


    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    


    


     

    
      	
               

            	
              (D)

            	
              except
                as may be provided in each of the Company’s contracts for services to its
                customers, the Company has not agreed to indemnify any Person for
                or
                against any interference, infringement, misappropriation, or other
                conflict with respect to the item;
                and

            


    

     

    
      	
               

            	
              (E)

            	
              each
                software program and script developed by the Company, including the
                source
                code and object code thereof and the design documents in connection
                therewith, is an original work of persons employed by or contracted
                to the
                Company.

            


    

     

    
      	
               

            	
              (v)

            	
              No
                past or present employee, independent contractor or agent has any
                right,
                title or interest in or to any of the Company’s owned Intellectual
                Property.

            


    

     

    
      	
               

            	
              (vi)

            	
              Except
                as to standard shrink-wrap or click-wrap software licenses, §4.1(m) of the
                Disclosure Schedule identifies each item of Intellectual Property
                that any
                third party owns and that the Company uses pursuant to license,
                sublicense, agreement or permission (the “Licensed Intellectual
                Property”).  The Sellers have delivered to the Buyer
                correct and complete copies of all such licenses with respect to
                the
                Licensed Intellectual Property or the software which is licensed
                is
                referred to in one or more contracts between the Company and its
                customers.   With respect to each item of Licensed
                Intellectual Property required to be identified in §4.1(m) of the
                Disclosure Schedule, the Sellers do not have Knowledge of any fact
                or
                condition that would cause the Sellers to believe that the following
                is
                not true:

            


    

     

    
      	
               

            	
              (A)

            	
              the
                license, sublicense, agreement, or permission covering the item is
                legal,
                valid, binding, enforceable, and in full force and
                effect;

            


    

     

    
      	
               

            	
              (B)

            	
              the
                license, sublicense, agreement, or permission will continue to be
                legal,
                valid, binding, enforceable, and in full force and effect on identical
                terms immediately following the consummation of the transactions
                contemplated hereby;

            


    

     

    
      	
               

            	
              (C)

            	
              no
                party to the license, sublicense, agreement, or permission 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 thereunder;

            


    

     

    
      	
               

            	
              (D)

            	
              no
                party to the license, sublicense, agreement, or permission has repudiated
                any provision thereof;

            


    

     


    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    


    


     

    
      	
               

            	
              (E)

            	
              with
                respect to each sublicense, the representations and warranties set
                forth
                in subsections (A) through (D) above are true and correct with respect
                to
                the underlying license;

            


    

     

    
      	
               

            	
              (F)

            	
              the
                underlying item of Licensed Intellectual Property is not subject
                to any
                outstanding injunction, judgment, order, decree, ruling, or
                charge;

            


    

     

    
      	
               

            	
              (G)

            	
              no
                action, suit, proceeding, hearing, investigation, charge, complaint,
                claim, or demand is pending or, to the Knowledge of the Sellers,
                is
                threatened, which challenges the legality, validity, or enforceability
                of
                the underlying item of Licensed Intellectual Property;
                and

            


    

     

    
      	
               

            	
              (H)

            	
              the
                Company has not granted any sublicense or similar right with respect
                to
                the license, sublicense, agreement, or
                permission.

            


    

     

    
      	
               

            	
              (vii)

            	
              The
                Sellers do not have Knowledge of any fact or circumstance that would
                cause
                them to believe that the following is not true: the Company’s software is
                reasonably free of computer viruses and does not contain any contaminants
                or time bombs, including any codes or instructions, that may be used
                to
                access, modify, delete, damage or disable any computer
                system.

            


    

     

    
      	
               

            	
              (viii)

            	
              The
                Sellers do not have Knowledge of any fact or circumstance that would
                cause
                them to be believe that the following is not true: the documentation
                possessed by Company in respect of software developed by or for the
                Company will be sufficient to allow Buyer and the Company’s existing
                staff, with the assistance of skilled software professionals possessing
                experience in this industry, to operate such software and to further
                develop and maintain it.

            


    

     

    
      	
               

            	
              (ix)

            	
              §4.1(m)
                of the Disclosure Schedule lists all open source software used and
                licensed by the Company.  The Sellers are unaware of any fact or
                circumstance that would cause them to be believe that the following
                is not
                true: the Company has complied with all applicable open source licences
                by
                which it is bound.

            


    

     

    
      	
               

            	
              (x)

            	
              The
                Company has used reasonable commercial efforts to take precautions
                and to
                protect its proprietary information from unauthorized access or
                disclosure.

            


    

     

    
      	
               

            	
              (n)

            	
              Tangible
                Assets.

            


    

     

    Except
      as
      to any of the following provided by a customer, the Company owns or leases
      all
      premises, machinery, equipment, and other tangible assets necessary for the
      conduct of the Company’s businesses as presently conducted.  To the
      Knowledge of the Sellers, each such tangible asset owned or leased by it has
      been maintained in accordance with the Company’s normal practice, and is in good
      operating condition and repair (subject to normal wear and tear).

     


    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    


    


     

    
      	
               

            	
              (o)

            	
              Inventory.

            


    

     

    The
      current inventory of consumables of the Company, subject to a reasonable
      allowance for obsolete inventory consistent with the allowance reflected in
      the
      June 30 Statements, is good and usable and is capable of being sold in the
      Ordinary Course of Business. The Company’s inventory level is consistent with
      past practice.

     

    
      	
               

            	
              (p)

            	
              Contracts.

            


    

     

    §4.1(p)
      of the Disclosure Schedule lists the following contracts and other agreements
      to
      which the Company is a party:

     

    
      	
               

            	
              (i)

            	
              any
                agreement (or group of related agreements) for the lease of personal
                property (including without limitation software) to or from any Person
                providing for lease payments in excess of $100,000 per
                annum;

            


    

     

    
      	
               

            	
              (ii)

            	
              any
                agreement (or group of related agreements) for the purchase or sale
                of
                supplies, products or other personal property, or for the furnishing
                or
                receipt of services, the performance of which will extend over a
                period of
                more than one year, result in a material loss to the Company or,
                except
                for Contracts made in the Ordinary Course of Business, involve
                consideration in excess of
                $100,000;

            


    

     

    
      	
               

            	
              (iii)

            	
              any
                agreement concerning a partnership or joint venture or arrangement
                to
                share profits;

            


    

     

    
      	
               

            	
              (iv)

            	
              any
                agreement (or group of related agreements) under which it has created,
                incurred, assumed, or guaranteed any indebtedness for borrowed money,
                or
                any capitalized lease obligation, in excess of $100,000 or under
                which it
                has imposed a Security Interest on any of its assets, tangible or
                intangible;

            


    

     

    
      	
               

            	
              (v)

            	
              any
                agreement concerning confidentiality or
                non-competition;

            


    

     

    
      	
               

            	
              (vi)

            	
              any
                agreement with any of the Sellers and their Affiliates (other than
                the
                Company) or any members of their immediate
                families;

            


    

     

    
      	
               

            	
              (vii)

            	
              any
                profit sharing, stock option, stock purchase, stock appreciation,
                deferred
                compensation, severance, or other  plan or arrangement for the
                benefit of its current or former directors, officers, and
                employees;

            


    

     

    
      	
               

            	
              (viii)

            	
              any
                collective bargaining agreement;

            


    

     

    
      	
               

            	
              (ix)

            	
              any
                agreement under which it has advanced or loaned any amount to any
                of its
                directors, officers, and employees or any members of their immediate
                families, excluding claims for reimbursement of expenses incurred
                in the
                Ordinary Course of Business;

            


    

     


    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    


    


     

    
      	
               

            	
              (x)

            	
              any
                agreement under which the consequences of a default or termination
                could
                have a Material Adverse Effect; or

            


    

     

    
      	
               

            	
              (xi)

            	
              any
                other agreement (or group of related agreements) which was not entered
                into in the Ordinary Course of the
                Business.

            


    

     

    The
      Sellers have delivered to the Buyer a correct and complete copy of each written
      agreement listed in §4.1(p) of the Disclosure Schedule (as amended to date), and
      to the Knowledge of the Sellers, a written summary of the terms of all oral
      agreements referred to in §4.1(p) of the Disclosure Schedule.  With
      respect to each such agreement: (A) the agreement is legal, valid, binding,
      enforceable, and in full force and effect, subject to the Exception;
      (B)  subject to obtaining the consents indicated in §4.1(c) of the
      Disclosure Schedule, the agreement will continue to be legal, valid, binding,
      enforceable, and in full force and effect on identical terms immediately
      following the consummation of the transactions contemplated hereby except for
      the Exception; (C) the Company is not in breach or default and, to the Knowledge
      of the Sellers, no other party is in breach or default of the agreement; (D)
      to
      the Knowledge of the Sellers, 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 agreement; and (E) to the Knowledge
      of
      the Sellers, no party has repudiated any provision of the
      agreement.  Without limiting the generality of the foregoing, the
      Company is in compliance with all covenants under all agreements with its bank
      and other lenders.

     

    
      	
               

            	
              (q)

            	
              Customers
                and Receivables.

            


    

     

    
      	
               

            	
              (i)

            	
              The
                Company has delivered to the Buyer a true and complete list of all
                customers of the Business as of the date hereof.  Such customer
                list reasonably accurately summarizes with respect to each customer
                all
                information required by §4.1(q) of the Disclosure
                Schedule.  Except as disclosed in §4.1(q) of the Disclosure
                Schedule, neither the customer list nor any information relating
                to the
                customers of the Business have, within three (3) years prior to the
                date
                hereof, been made available to any person other than the
                Buyer.

            


    

     

    
      	
               

            	
              (ii)

            	
              The
                Sellers have no Knowledge of any facts or circumstances arising outside
                the Ordinary Course of Business which could reasonably be expected
                to
                result in the loss of any customers or sources of revenue of the
                Business
                or any reduction in volume of purchases from the Business prior to
                the end
                of their contract term by any customer which, in the aggregate, could
                be
                Material to the Business.

            


    

     


    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    


    


     

    
      	
               

            	
              (iii)

            	
              All
                accounts receivable of the Company are fairly reflected on the Company’s
                books and records.  All accounts receivable of the Company arose
                from bona fide transactions in the Ordinary Course of the Business
                and are
                valid, enforceable and to the Knowledge of the Sellers fully collectable
                accounts (subject to a reasonable allowance, consistent with past
                practice
                for doubtful accounts as reflected in the June 30 Statements, and
                subject
                to the disclosure made in §4.1(q) of the Disclosure Schedule).  Such
                accounts receivable are not subject to any set-off or counterclaim
                rights
                of which Sellers are aware.

            


    

     

     

    
      	
               

            	
              (r)

            	
              Suppliers.

            


    

     

    Listed
      in
§4.1(r) of the Disclosure Schedule are the names and addresses of the ten (10)
      largest suppliers (measured by dollar volume of the Company’s purchases) from
      which the Company ordered services, materials, supplies, telecommunications
      capacity, merchandise and other goods during the twelve-month period ended
      December 31, 2006.  Except as disclosed in §4.1(r) of the Disclosure
      Schedule, the Company has not received any notice that any such supplier will
      not sell services, raw materials, supplies, merchandise and other goods to
      the
      Company at any time, on terms and conditions substantially similar to those
      used
      in its current sales to the Company, subject only to general and customary
      price
      increases.

     

    
      	
               

            	
              (s)

            	
              Telecommunications
                Infrastructure.

            


    

     

    Listed
      in
§4.1(s) of the Disclosure Schedule are:

     

    
      	
               

            	
              (i)

            	
              all
                the rights of way, tower locations, regen hut locations, and rights
                for
                lit and unlit fiber owned or licensed in favor of the Company;
                and

            


    

     

    
      	
               

            	
              (ii)

            	
              a
                list of all contracts, licences, agreements and understandings relating
                to
                telecommunications infrastructure to which the Company is a
                party.

            


    

     

    
      	
               

            	
              (t)

            	
              Powers
                of Attorney.

            


    

     

    §4.1(t)
      of the Disclosure Schedule lists all outstanding powers of attorney executed
      on
      behalf of the Company.

     

    
      	
               

            	
              (u)

            	
              Insurance.

            


    

     

    §4.1(u)
      of the Disclosure Schedule sets forth the following information with respect
      to
      each insurance policy (including policies providing property, casualty,
      liability, and workers’ compensation coverage and bond and surety arrangements)
      to which the Company has been a party, a named insured, or otherwise the
      beneficiary of coverage at any time within the past 5 years:

     

    
      	
               

            	
              (i)

            	
              the
                name, address, and telephone number of the
                agent;

            


    

     


    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    


    


     

    
      	
               

            	
              (ii)

            	
              the
                name of the insurer, the name of the policyholder, and the name of
                each
                covered insured;

            


    

     

    
      	
               

            	
              (iii)

            	
              the
                policy number and the period of coverage;
                and

            


    

     

    
      	
               

            	
              (iv)

            	
              a
                description of any retroactive premium adjustments or other loss
                sharing
                arrangements.

            


    

     

    The
      Seller has delivered to the Buyer the insurance policies, brokers certificates
      or other information in the Company’s possession concerning insurance covering
      the Company.  With respect to each insurance policy, the Sellers are
      unaware of any fact or circumstance that would cause the following to be untrue:
      (A) if unexpired, the policy is legal, valid, binding, enforceable, and in
      full
      force and effect in accordance with its terms, (B) the policy will continue
      to
      be legal, valid, binding, enforceable, and in full force and effect on identical
      terms immediately following the consummation of the transactions contemplated
      hereby; (C) neither the Company  nor any other party to the policy is
      in breach or default (including with respect to the payment of premiums or
      the
      giving of notices), 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 the policy; and (D) no party to the policy
      has repudiated any provision thereof.  §4.1(u) of the Disclosure
      Schedule describes any self insurance arrangements affecting the
      Company.

     

    
      	
               

            	
              (v)

            	
              Litigation.

            


    

     

    §4.1(v)
      of the Disclosure Schedule sets forth each instance in which the
      Company  (i) is subject to any outstanding injunction, judgment,
      order, decree, ruling, or charge or (ii) is a party or, to the Knowledge of
      the
      Sellers, is threatened to be made a party to any action, suit, proceeding,
      hearing, or investigation of, in, or before any court or quasi judicial or
      administrative agency of any federal, state, local, or foreign jurisdiction
      or
      before any arbitrator.  There is presently no Basis of which Sellers
      are aware for the commencement of any Material action, suit or proceeding
      against the Company with any reasonable likelihood of success.

     

    
      	
               

            	
              (w)

            	
              Product
                and Service Warranties.

            


    

     

    Each
      product or service sold, licensed or delivered by the Company has been in
      material conformity with all applicable contractual commitments, all express
      warranties, and all warranties, if any, that are implied as a matter of the
      law
      governing the contract at issue. The Company does not have any existing
      Liability of which Sellers are aware for replacement or repair of any product
      or
      re-performance of any service or other damages in connection therewith, subject
      only to the reserve for warranty claims, if any, set forth in the June 30
      Balance Sheet as adjusted for the passage of time through the Closing Date
      in
      accordance with the normal, past custom and practice of the
      Company.  To the Sellers’ Knowledge, no product or service
      manufactured, sold, licensed or delivered by

     


    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    


    the
      Company is subject to any guaranty, warranty, or other indemnity beyond the
      warranties described in §4.1(w) of the Disclosure Schedule.  §4.1(w)
      of the Disclosure Schedule describes the normal terms and conditions of sale
      or
      lease or licensing of or providing of services by or for the Company (including
      applicable guarantee, warranty and indemnity provisions).

     

    
      	
               

            	
              (x)

            	
              Product
                and Service Liabilities.

            


    

     

    The
      Sellers are unaware of any Liability or any Basis of Liability for the Company
      arising out of any injury to individuals or damage to property as a result
      of
      the ownership, possession, use or license of any product or service
      manufactured, sold, leased, licensed or delivered by the Company prior to the
      date hereof.

     

    
      	
               

            	
              (y)

            	
              Employees.

            


    

     

    §4.1(y)
      of the Disclosure Schedule sets out:

     

    
      	
               

            	
              (i)

            	
              a
                complete list of all Company Employees;
                and

            


    

     

    
      	
               

            	
              (ii)

            	
              their
                position/title.

            


    

     

    The
      Company Employee and Contractor Disclosure Document also sets out with respect
      to the Company Employees as of the date hereof, in a non-individually
      identifiable format:

     

    
      	
               

            	
              (iii)

            	
              their
                status (i.e., full time, part time, temporary, casual, seasonal,
                co-op student);

            


    

     

    
      	
               

            	
              (iv)

            	
              their
                total annual remuneration, including a breakdown of (A) salary and
                (B)
                bonus or other incentive compensation, if
                any;

            


    

     

    
      	
               

            	
              (v)

            	
              other
                terms and conditions of their employment (other than Employee Benefit
                Plans), including accrued vacation, car allowance or lease;
                and

            


    

     

    
      	
               

            	
              (vi)

            	
              their
                total length of employment including any prior employment that would
                affect the calculation of years of service for any
                purpose.

            


    

     

    The
      Company has no written employment contracts with any Company Employee other
      than
      those of which copies are included in the Company Employee and Contractor
      Disclosure Document.  The Company Employee and Contractor Disclosure
      Document sets out, as of the date hereof, a list of all independent contractors
      and consultants who provide services to the Company in connection with the
      key
      business functions of the Company, including:

     

    
      	
               

            	
              (vii)

            	
              name;

            


    

     

    
      	
               

            	
              (viii)

            	
              title;

            


    

     


    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    


    


     

    
      	
               

            	
              (ix)

            	
              current
                compensation;

            


    

     

    
      	
               

            	
              (x)

            	
              eligibility
                to participate in any Employee Benefit
                Plans;

            


    

     

    
      	
               

            	
              (xi)

            	
              length
                of relationship with the Company.

            


    

     

    Except
      as
      set out in the Company Employee and Contractor Disclosure Document, the Company
      is not a party to or bound by any contract or commitment to pay any management
      or consulting fee.  Sellers are unaware of any plans by any executive,
      key employee or group of employees, not including the Sellers, to terminate
      employment with the Company at or following Closing.  The Company is
      not a party to or bound by any collective bargaining agreement.  The
      Company has not experienced any strikes, grievances, claims of unfair labor
      practices, or other collective bargaining disputes by any existing employee
      within the twelve (12) month period preceding Closing.  The Sellers
      are unaware of any unfair labor practice committed by the Company within the
      twelve (12) month period preceding Closing.  The Sellers are unaware
      of any instance in which the Company is not in compliance with all applicable
      workers compensation law and employee regulations of the State of New
      York.  The Sellers are unaware of any organizational effort presently
      being made or threatened by or on behalf of any labor union with respect to
      employees of the Company.

     

    
      	
               

            	
              (z)

            	
              Employee
                Benefits Plans.

            


    

     

    
      	
               

            	
              (i)

            	
              §4.1(z)
                of the Disclosure Schedule sets forth a correct and complete list
                of:  (i) all “employee benefit plans” (as defined in Section
                3(3) of ERISA), and all other employee benefit plans, programs,
                agreements, policies, arrangements or payroll practices, including
                bonus
                plans, employment, consulting or other compensation agreements, collective
                bargaining agreements, incentive, equity or equity-based compensation,
                or
                deferred compensation arrangements, change in control, termination
                or
                severance plans or arrangements, stock purchase, severance pay, sick
                leave, vacation pay, salary continuation for disability, hospitalization,
                medical insurance, life insurance and scholarship plans and programs
                maintained by the Company or to which the Company contributed or
                is
                obligated to contribute thereunder for current or former employees
                of the
                Company, and (ii) all “employee pension plans” (as defined in Section
                3(2) of ERISA, subject to Title IV of ERISA or Section 412 of the
                Code,
                maintained by the Company and any trade or business (whether or not
                incorporated) that is or has ever been under common control, or that
                is or
                has ever been treated as a single employer, with any of them under
                Section
                414(b), (c), (m) or (o) of the Code (each, an “ERISA
                Affiliate”) or to which the Company or any ERISA Affiliate
                contributed or has ever been obligated to contribute thereunder (the
                “Title IV Plans”).  §4.1(z) of the Disclosure
                Schedule sets forth each Employee Benefit Plan and Title IV Plan
                that is a
                “multiemployer plan” (as defined in Section 3(37) of ERISA (a
                “Multiemployer Plan”)), or is or has been subject to
                Sections 4063 or 4064 of ERISA.

            


    

     


    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    


    


     

    
      	
               

            	
              (ii)

            	
              Correct
                and complete copies of the following documents, with respect to each
                of
                the Employee Benefit Plans (other than a Multiemployer Plan), have
                been
                made available or delivered to Buyer by the Company (and the Buyer
                has
                acknowledged receipt) are attached as §4.1(z) of the Disclosure Schedule,
                to the extent applicable:  (i) any plans, all amendments
                thereto and related trust documents, insurance contracts or other
                funding
                arrangements, and amendments thereto; (ii) the most recent Forms 5500
                and all schedules thereto and the most recent actuarial report, if
                any;
                (iii) the most recent IRS determination letter; (iv) summary
                plan descriptions; (v) written communications to employees relating
                to the Employee Benefit Plans; and (vi) written descriptions of all
                non-written agreements relating to the Employee Benefit
                Plans.

            


    

     

    
      	
               

            	
              (iii)

            	
              Sellers
                are unaware of any respect in which the Employee Benefit Plans have
                not
                been maintained in all material respects in accordance with their
                terms
                and with all provisions of ERISA, the Code (including rules and
                regulations thereunder) and other applicable Federal and state Laws
                and
                regulations, and neither the Company  nor any “party in
                interest” or “disqualified person” with respect to the Employee Benefit
                Plans has engaged in a non-exempt “prohibited transaction” within the
                meaning of Section 4975 of the Code or Section 406 of
                ERISA.  Sellers are unaware of any instance in
                which  any fiduciary has any liability for breach of fiduciary
                duty or any other failure to act or comply in connection with the
                administration or investment of the assets of any Employee Benefit
                Plan.

            


    

     

    
      	
               

            	
              (iv)

            	
              Sellers
                are unaware of any respect in which the Employee Benefit Plans intended
                to
                qualify under Section 401 of the Code are not so qualified and any
                trusts
                intended to be exempt from Federal income taxation under Section
                501 of
                the Code are not so exempt, and Sellers are unaware that anything
                that has
                occurred with respect to the operation of the Employee Benefit Plans
                could
                cause the loss of such qualification or exemption or the imposition
                of any
                liability, penalty or tax under ERISA or the
                Code.

            


    

     

    
      	
               

            	
              (v)

            	
              Sellers
                are unaware of any respect in which each Employee Benefit Plan that
                is
                intended to meet the requirements for tax-favored treatment under
                Subchapter B of Chapter 1 of Subtitle A of the Code fails to meets
                such
                requirements.

            


    

     

    
      	
               

            	
              (vi)

            	
              Neither
                the Company nor any ERISA Affiliate has withdrawn in a complete or
                partial
                withdrawal from any Multiemployer Plan prior to the Closing Date,
                nor has
                any of them incurred any liability due to the termination or
                reorganization of a Multiemployer Plan.  The Company does not
                have (i) any obligation to make any contribution to any Multiemployer
                Plan or (ii) any withdrawal liability from any Multiemployer Plan
                under Section 4201 of ERISA, which it would not have had but for
                the
                consummation of the transactions contemplated by this
                Agreement

            


    

     


    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    


    


     

    
      	
               

            	
              (vii)

            	
              Sellers
                are unaware of any respect in which §4.1(z) of the Disclosure Schedule
                does not set forth on a plan by plan basis, the present value of
                benefits
                payable presently or in the future to Company Employees under each
                unfunded Employee Benefit Plan.

            


    

     

    
      	
               

            	
              (viii)

            	
              To
                the Knowledge of the Sellers all contributions (including all employer
                contributions and employee salary reduction contributions) required
                to
                have been made under any of the Employee Benefit Plans (including
                workers
                compensation) or Title IV Plans or by law (without regard to any
                waivers
                granted under Section 412 of the Code), to any funds or trusts established
                thereunder or in connection therewith have been made by the due date
                thereof (including any valid extension), and contributions for any
                period
                ending on or before the Closing Date that are not yet due will have
                been
                paid or sufficient accruals for such contributions and other payments
                in
                accordance with GAAP are duly and fully provided for on the June
                30
                Balance Sheet.  Sellers are unaware of any accumulated funding
                deficiencies existing in any of the Employee Benefit Plans or Title
                IV
                Plans subject to Section 412 of the
                Code.

            


    

     

    
      	
               

            	
              (ix)

            	
              To
                the Knowledge of the Sellers,  there is no “amount of unfunded
                benefit liabilities” (as defined in Section 4001(a)(18) of ERISA) in any
                of the Title IV Plans.  To the Knowledge of the Sellers the
                Title IV Plans are fully funded in accordance with the actuarial
                assumptions used by the Pension Benefit Guaranty Corporation
                (“PBGC”) to determine the level of funding required in
                the event of the termination of a Title IV Plan and the “benefit
                liabilities” (as defined in Section 4001(a)(16) of ERISA) of such Title IV
                Plan using such PBGC assumptions do not exceed the assets of such
                Title IV
                Plan.

            


    

     

    
      	
               

            	
              (x)

            	
              Sellers
                are unaware of any “reportable event” (as defined in Section 4043 of
                ERISA) with respect to the Title IV Plans that would require the
                giving of
                notice or any event requiring disclosure under Section 4041(c)(3)(C)
                or
                4063(a) of ERISA.

            


    

     

    
      	
               

            	
              (xi)

            	
              Neither
                the Company nor any ERISA Affiliate has terminated any Title IV Plan,
                or
                incurred any outstanding liability under Section 4062 of ERISA to
                the PBGC
                or to a trustee appointed under Section 4042 of ERISA.  All
                premiums due the PBGC with respect to the Title IV Plans have been
                paid.

            


    

     

    
      	
               

            	
              (xii)

            	
              To
                the Knowledge of the Sellers, the Company has no liability under
                any
                Employee Benefit Plan or Title IV Plan that has not been funded nor
                that
                has any such obligation been satisfied with the purchase of a contract
                from an insurance company that is not rated AA by Standard & Poor’s
                Corporation or the equivalent by any other nationally recognized
                rating
                agency.

            


    

     


    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    


    


     

    
      	
               

            	
              (xiii)

            	
              Sellers
                are unaware of any instance in which the Company or any ERISA Affiliate
                or
                any organization to which the Company or any ERISA Affiliate is a
                successor or parent corporation within the meaning of Section 4069(b)
                of
                ERISA has engaged in any transaction within the meaning of Section
                4069 or
                4212(c) of ERISA.

            


    

     

    
      	
               

            	
              (xiv)

            	
              Sellers
                are unaware of any pending actions, claims or lawsuits that have
                been
                asserted or instituted against the Employee Benefit Plans, the assets
                of
                any of the trusts under the Employee Benefit Plans or the sponsor
                or
                administrator of any of the Employee Benefit Plans, or against any
                fiduciary of the Employee Benefit Plans with respect to the operation
                of
                any of the Employee Benefit Plans (other than routine benefit claims),
                nor
                do or the Sellers have any Knowledge of facts that could form the
                basis
                for any such claim or lawsuit.

            


    

     

    
      	
               

            	
              (xv)

            	
              To
                the Knowledge of the Sellers, there is no material violation of ERISA
                or
                the Code with respect to the filing of applicable reports, documents
                and
                notices regarding the Employee Benefit Plans with the Secretary of
                Labor
                or the Secretary of the Treasury or the furnishing of such documents
                to
                the participants in or beneficiaries of the Employee Benefit
                Plans.  All amendments and actions required to bring the
                Employee Benefit Plans into conformity in all material respects with
                all
                of the applicable provisions of the Code, ERISA and other applicable
                Laws
                have been made or taken.  Any bonding required with respect to
                the Employee Benefit Plans in accordance with applicable provisions
                of
                ERISA has been obtained and is in full force and
                effect.

            


    

     

    
      	
               

            	
              (xvi)

            	
              Sellers
                are unaware of any Employee Benefit Plan that  provides for
                post-employment life or health insurance, benefits or coverage for
                any
                participant or any beneficiary of a participant, except as may be
                required
                under the Consolidated Omnibus Budget Reconciliation Act of 1985,
                as
                amended (“COBRA”), and at the expense of the participant
                or the participant’s beneficiary.  Sellers are unaware of any
                instance in which any of the Company and any ERISA Affiliate which
                maintains a “group health plan” within the meaning of Section 5000(b)(1)
                of the Code has not complied with the notice and continuation requirements
                of Section 4980B of the Code, COBRA, Part 6 of Subtitle B of Title
                I of
                ERISA and the regulations
                thereunder.

            


    

     

    
      	
               

            	
              (xvii)

            	
              To
                the Knowledge of the Sellers, neither the execution and delivery
                of this
                Agreement nor the consummation of the transactions contemplated hereby
                will (i) result in any payment becoming due to any Company Employee,
                (ii)
                increase any benefits otherwise payable under any Employee Benefit
                Plan or
                Title IV Plan or (iii) result in the acceleration of the time of
                payment
                or vesting of any such benefits under any Employee Benefit Plan or
                Title
                IV Plan.

            


    

     


    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    


    


     

    
      	
               

            	
              (xviii)

            	
              The
                Company does not have any contract, plan or commitment, whether legally
                binding or not, to create any additional Employee Benefit Plan or
                to
                modify any existing Employee Benefit
                Plan.

            


    

     

    
      	
               

            	
              (xix)

            	
              No
                stock or other security issued by Company forms or has formed a material
                part of the assets of any Employee Benefit
                Plan.

            


    

     

    
      	
               

            	
              (xx)

            	
              Sellers
                are unaware of any individual who performs services for the Company
                (other
                than through a contract with an organization other than such individual)
                and who is not treated as an employee of any Company for Federal
                income
                tax purposes by is not an employee for such
                purposes.

            


    

     

    
      	
               

            	
              (xxi)

            	
              Notwithstanding
                anything to the contrary in this Agreement, an account payable for
                the
                Company’s minimum “Safe Harbor” contribution has been established and
                appears on the Company’s books and records as of the effective date of the
                Closing, and the Sellers shall have no liability for any contribution
                to
                the Company’s 401(k), pension or profit-sharing plan as to any portion of
                2007.

            


    

     

    
      	
               

            	
              (aa)

            	
              Guaranties.

            


    

     

    The
      Company is not a guarantor or otherwise liable for any Liability or obligation
      (including indebtedness) of any other Person.

     

    
      	
               

            	
              (bb)

            	
              Environmental,
                Health, and Safety Matters.

            


    

     

    Sellers
      are unaware of any manner in which the following are not true:

     

    
      	
               

            	
              (i)

            	
              the
                Company and its predecessors and Affiliates have complied and are
                in
                compliance in all material respects with all Environmental, Health,
                and
                Safety Requirements;

            


    

     

    
      	
               

            	
              (ii)

            	
              without
                limiting the generality of the foregoing, the Company has obtained
                and
                complied with, and is in compliance in all material respects with,
                all
                permits, licenses and other authorizations that are required pursuant
                to
                Environmental, Health, and Safety Requirements for the occupation
                of its
                facilities and the operation of its business.  A list of all
                such permits, licenses and authorizations is contained in the Disclosure
                Schedule, as well as and copies of all such permits, licenses and
                authorizations have been provided by the Company to the
                Buyer;

            


    

     

    
      	
               

            	
              (iii)

            	
              neither
                the Company nor its predecessors or Affiliates has received any written
                or
                oral notice, report or other information regarding any actual or
                alleged
                violation of Environmental, Health, and Safety Requirements, or any
                liabilities or potential liabilities (whether accrued, absolute,
                contingent, unliquidated or otherwise), including any investigatory,
                remedial or corrective obligations, relating to any of them or its
                facilities arising under Environmental, Health, and Safety
                Requirements;

            


    

     


    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    


    


     

    
      	
               

            	
              (iv)

            	
              neither
                the Company nor its predecessors or Affiliates has treated, stored,
                disposed of, arranged for or permitted the disposal of, transported,
                handled, or released any substance, including without limitation
                any
                hazardous substance, or owned or operated any property or facility
                (and no
                such property or facility is contaminated by any such substance)
                in a
                manner that has given or would give rise to liabilities, including
                any
                liability for response costs, corrective action costs, personal injury,
                property damage, natural resources damages or attorney fees, pursuant
                to
                any other Environmental, Health, and Safety
                Requirements;

            


    

     

    
      	
               

            	
              (v)

            	
              neither
                the Company nor any of its predecessors or Affiliates has, either
                expressly or by operation of law, assumed or undertaken any liability,
                including without limitation any obligation for corrective or remedial
                action, of any other Person relating to Environmental, Health, and
                Safety
                Requirements;

            


    

     

    
      	
               

            	
              (vi)

            	
              no
                facts, events or conditions relating to the past or present facilities,
                properties or operations of the Company or any of its predecessors
                or
                Affiliates will prevent, hinder or limit continued compliance by
                the
                Company with Environmental, Health, and Safety Requirements, give
                rise to
                any investigatory, remedial or corrective obligations pursuant to
                Environmental, Health, and Safety Requirements, or give rise to any
                other
                liabilities (whether accrued, absolute, contingent, unliquidated
                or
                otherwise) pursuant to Environmental, Health, and Safety Requirements,
                including without limitation any relating to onsite or offsite releases
                or
                threatened releases of hazardous materials, substances or wastes,
                personal
                injury, property damage or natural resources
                damage.

            


    

     

    
      	
               

            	
              (cc)

            	
              Licenses,
                Agency and Distribution
                Agreements.

            


    

     

    §4.1(cc)
      of the Disclosure Schedule lists all agreements to which the Company is a party
      or by which it is bound under which the right to manufacture, process, market
      or
      use any product, service or other property of the Company has been granted,
      licensed or otherwise provided by the Company to any agent, distributor, dealer,
      licensee or other person.  The Disclosure Schedule also lists all
      agreements to which the Company is a party or by which it is bound under which
      the right to market, manufacture, process or use any product, service or other
      product has been granted to the Company by any other person or by which the
      Company has been appointed as an agent, distributor, licensee or
      franchisee.  Complete and correct copies of all of the agreements
      referred to in this paragraph have been provided by the Company to the
      Buyer.  None of the agreements listed in the Disclosure Schedule grant
      to any third person any authority to incur any liability or obligation or enter
      into any agreement on behalf of the Company.  The Sellers have no
      Knowledge of the intention of the other parties to any of the agreements
      referred to in this paragraph to terminate such agreements.

     


    
      
        
        

      

      
        35

        
          

        

      

      
        
        

      

    


    


     

    
      	
               

            	
              (dd)

            	
              Subsidiaries.

            


    

     

    The
      Company has no subsidiaries.

     

    
      	
               

            	
              (ee)

            	
              Related
                Party Matters.

            


    

     

    The
      Company is not a party to or bound by any agreement with, is not indebted to,
      and no amount is owing to the Company by, any of the Sellers or any officers,
      former officers, directors, former directors, shareholders, former shareholders,
      or any members of the immediate family of any of the foregoing persons or any
      entity controlled by any of the foregoing persons.  Without limiting
      the generality of the foregoing, none of the foregoing persons (i) is involved
      in any business arrangement or other relationship with the Company, (ii) owns
      any property or right, tangible or intangible, that is used by the Company,
      (iii) has any claim or cause of action against the Company, or (iv) owns any
      direct or indirect interest of any kind in, or is a director, officer or
      employee of, or consultant to, or has the right to participate in the profits
      of
      any Person who is a competitor, supplier, customer, landlord, creditor or debtor
      of the Company.

     

    
      	
               

            	
              (ff)

            	
              Compliance
                with Privacy Laws.

            


    

     

    Except
      as
      disclosed in §4.1(ff) of the Disclosure Schedule, Sellers are unaware of any
      manner in which the collection, use and retention of personal information by
      the
      Company and the disclosure or transfer of personal information by the Company
      to
      any third parties has not complied with all Privacy Laws and is not consistent
      with the Company’s own privacy practices.  Sellers are unaware of any
      restrictions on the Company’s collection, use, disclosure and retention of
      personal information except as provided by Privacy Laws and, in some cases,
      contracts with clients.

     

    
      	
               

            	
              (gg)

            	
              Accounts;
                Lockboxes; Safe Deposit Boxes.

            


    

     

    
      	
               

            	
              (i)

            	
              §4.1(gg)
                of the Disclosure Schedule contains a true and complete list
                of:

            


    

     

    
      	
               

            	
              (A)

            	
              the
                names of each bank, savings and loan association, securities or
                commodities broker or other financial institution in which the Company
                has
                an account, including cash contribution accounts, and the names of
                all
                persons authorized to draw thereon or have access thereto;
                and

            


    

     

    
      	
               

            	
              (B)

            	
              the
                location of all lockboxes and safe deposit boxes of the Company and
                the
                names of all persons authorized to draw thereon or have access
                thereto.

            


    

     


    
      
        
        

      

      
        36

        
          

        

      

      
        
        

      

    


    


     

    
      	
               

            	
              (ii)

            	
              The
                Sellers have not commingled monies or accounts of Company with other
                monies or accounts of the Sellers or relating to their other activities
                and affairs nor, except as to distributions to Sellers, have the
                Sellers
                transferred monies or accounts of the Company other than to an account
                of
                the Company.

            


    

     

    
      	
               

            	
              (hh)

            	
              Restrictions
                on Doing Business.

            


    

     

    
      	
               

            	
              (i)

            	
              Except
                as to the Markowitz Agreement (which is being terminated concurrently
                with
                the closing of the transactions hereunder), the Company is not a
                party to
                or bound by any agreement which would restrict or limit the Company’s
                right to carry on any business or activity or to solicit business
                from any
                person or in any geographical area or otherwise to conduct the Business
                as
                the Company may determine from time to
                time.

            


    

     

    
      	
               

            	
              (ii)

            	
              Sellers
                are unaware of any legislation or any judgment, order or requirement
                of
                any court or Governmental Body which is not a general application
                to
                persons carrying on a business similar to the Business to which the
                Company is subject.

            


    

     

    ARTICLE
      5

    COVENANTS

     

    
      	
              5.1

            	
              Special
                Payments

            


    

     

    The
      parties covenant or acknowledge that, prior to or concurrent with the Closing,
      the Company has made or will make the following payments :

     

    
      	
               

            	
              (a)

            	
              The
                Company has paid the Permitted Distribution  to the Sellers,
                being an amount equal to the estimated New York State and federal
                income
                taxes (“Shareholder Taxes”) payable by the Sellers solely
                 with respect to their  respective shares of the net income
                (“NI”) of the Company for the fiscal tax period ending
                through September 30, 2007 (the “Period”), as reasonably determined by the
                Company’s outside CPA;

            


    

     

    
      	
               

            	
              (b)

            	
              the
                Shareholder Taxes do not include Taxes with respect to compensation
                earned
                by the Sellers during the Period or any other matters other than
                the
                NI;

            


    

     

    
      	
               

            	
              (c)

            	
              the
                amount of the Shareholder Taxes are based on the September 30 Statements
                and a calculation to support such determination of Shareholder Taxes
                has
                been provided by the Sellers to the Buyer prior to the date
                hereof;

            


    

     

    
      	
               

            	
              (d)

            	
              except
                as referred to in paragraph 5.1(a) hereof, the Company has not paid
                or
                declared any dividend or otherwise become obligated to pay any other
                distributions to the Sellers since September 30,
                2007;

            


    

     

    
      	
               

            	
              (e)

            	
              concurrent
                with the Closing hereunder: (i) the Sellers have caused the Company
                to pay
                all amounts owing to Markowitz under the Markowitz Agreement and
                to
                acquire all shares in the capital stock of the Company held by Markowitz;
                (ii) the Sellers have delivered to the Buyer copies of all documents
                made
                and exchanged with Markowitz in connection with the Markowitz Agreement;
                and (iii) the Buyer has advanced to the Company (as the Company has
                directed) the sum of $1,426,141.72 to fund the purchase of shares
                from
                Markowitz .

            


    

     


    
      
        
        

      

      
        37

        
          

        

      

      
        
        

      

    


    


     

    
      	
              5.2

            	
              Post
                Closing Covenants.

            


    

     

    The
      Parties agree as follows with respect to the period following the
      Closing.

     

    
      	
               

            	
              (a)

            	
              General.

            


    

     

    In
      case
      at any time after the Closing any further action is necessary to carry out
      the
      purposes of this Agreement, each of the Parties will take such further action
      (including the execution and delivery of such further instruments and documents)
      as any other Party reasonably may request, all at the sole cost and expense
      of
      the requesting Party (unless the requesting Party is entitled to indemnification
      therefor under Article 8 below).  Notwithstanding the foregoing,
      requests made by the Sellers of the Buyer or the Company, or vice
      versa, in the context of an arbitration or litigation shall not come within
      the ambit of this sub-paragraph.

     

    
      	
               

            	
              (b)

            	
              Litigation
                Support.

            


    

     

    In
      the
      event and for so long as any Party actively is contesting or defending against
      any action, suit, proceeding, hearing, investigation, charge, complaint, claim,
      or demand not involving one Party or the Company claiming against another Party
      or the Company, in connection with (i) any transaction contemplated under this
      Agreement or (ii) any fact, situation, circumstance, status, condition,
      activity, practice, plan, occurrence, event, incident, action, failure to act,
      or transaction on or prior to the Closing Date involving the Company, each
      of
      the other Parties will cooperate with him or it and his or its counsel in the
      contest or defense, make available their personnel, and provide such testimony
      and access to their books and records as shall be necessary in connection with
      the contest or defense, all at the sole cost and expense of the contesting
      or
      defending Party (unless the contesting or defending Party is entitled to
      indemnification therefor under Article 8 below).

     

    
      	
               

            	
              (c)

            	
              Confidentiality.

            


    

     

    Except
      as
      provided by §5.2(d) hereof, each of the Sellers will treat and hold as such all
      of the Confidential Information, refrain from using any of the Confidential
      Information except in connection with this Agreement, and deliver promptly
      to
      the Buyer all tangible embodiments (and all copies) of the Confidential
      Information which are in his possession.

     


    
      
        
        

      

      
        38

        
          

        

      

      
        
        

      

    


    


     

    
      	
               

            	
              (d)

            	
              Disclosure
                of Confidential Information.

            


    

     

    In
      the
      event that any of the Sellers is requested or required (by oral question or
      request for information or documents in any legal proceeding, interrogatory,
      subpoena, civil investigative demand, or similar process) to disclose any
      Confidential Information, that Seller will notify the Buyer promptly of the
      request or requirement so that the Buyer may seek an appropriate protective
      order or waive compliance with the provisions of this §5.2(d).  If, in
      the absence of a protective order or the receipt of a waiver hereunder, any
      of
      the Sellers is, on the advice of counsel, compelled by law to disclose any
      Confidential Information , that Seller may disclose the Confidential Information
      as so compelled; provided, however, that the disclosing Seller shall use
      reasonable efforts to obtain, at the request of the Buyer, an order or other
      assurance that confidential treatment will be accorded to such portion of the
      Confidential Information required to be disclosed as the Buyer shall
      designate.  The foregoing provisions shall not apply to any
      Confidential Information which is generally available to the public immediately
      prior to the time of disclosure.  All expenses, fees and costs
      incurred by Sellers, including for the reasonable time and disbursements of
      attorneys, in complying with this section 5.2(d) shall be paid in full and
      in
      advance by Buyer as a condition precedent to Sellers’ obligations in this
      section 5.2(d).

     

    
      	
               

            	
              (e)

            	
              Covenant
                Not to Compete.

            


    

     

    
      	
               

            	
              (i)

            	
              Commencing
                on the Closing Date and for a period of three (3) years from the
                Closing
                Date, the Sellers individually but not jointly covenant not to engage
                directly or indirectly in any business competitive to the Business
                anywhere in the following States:  New Jersey, Delaware,
                Maryland, Pennsylvania, New York, Connecticut, Vermont, Rhode Island,
                Massachusetts, New Hampshire, Maine and Washington, DC; provided,
                however,
                that no owner of less than 1% of the outstanding stock of any
                publicly-traded corporation shall be deemed to engage solely by reason
                thereof in any of its businesses.

            


    

     

    
      	
               

            	
              (ii)

            	
              Without
                limiting the provisions of §5.2(e)(i) hereof, commencing on the Closing
                Date and for a period of 5 years from the Closing Date, the Sellers
                individually but not jointly covenant not to, directly or
                indirectly:

            


    

     

    
      	
               

            	
              (A)

            	
              solicit,
                endeavor to solicit or gain the business of any person that is a
                customer,
                or has been within three (3) years prior to the Closing Date, a customer
                of the Business or has been pursued as a prospective customer of
                the
                Business, for the purpose of selling to such customer or prospective
                customer any products or services which are competitive with those
                offered
                by the Company;

            


    

     

    
      	
               

            	
              (B)

            	
              induce
                or endeavor to induce any employee of the Business to leave his or
                her
                employment;

            


    

     


    
      
        
        

      

      
        39

        
          

        

      

      
        
        

      

    


    


     

    
      	
               

            	
              (C)

            	
              employ
                or attempt to employ or assist any person in employing any employee
                of the
                Business during the term of their employment;
                or

            


    

     

    
      	
               

            	
              (D)

            	
              solicit
                or endeavor to solicit any person that is a supplier or business
                partner
                of the Business at the time of Closing in a manner that would be
                competitive with the Business.

            


    

     

    
      	
               

            	
              (iii)

            	
              If
                the final judgment of a court of competent jurisdiction declares
                that any
                term or provision of this §5.2(e) is invalid or unenforceable, the Parties
                agree that the court making the determination of invalidity or
                unenforceability shall have the power to reduce the scope, duration,
                or
                area of the term or provision, to delete specific words or phrases,
                or to
                replace any invalid or unenforceable term or provision with a term
                or
                provision that is valid and enforceable and that comes closest to
                expressing the intention of the invalid or unenforceable term or
                provision, and this Agreement shall be enforceable as so modified
                after
                the expiration of the time within which the judgment may be
                appealed.

            


    

     

    
      	
               

            	
              (iv)

            	
              Sellers
                hereby expressly agree and acknowledge
                that:

            


    

     

    
      	
               

            	
              (A)

            	
              in
                this section, the words “directly or indirectly” include any action taken
                by either of the Sellers for his own benefit or for the benefit of
                any
                Person competing with the Business, either individually or in partnership
                or jointly or in conjunction with any other Person as principal,
                agent,
                trustee, employee or shareholder (except for the holding of less
                than 1%
                of the stock of a corporation as referred to in §5.2(e)(i) hereof
                );

            


    

     

    
      	
               

            	
              (B)

            	
              The
                Company has protectable business interests with respect to its suppliers,
                employees, customers and prospective customers, and that competition
                as
                proscribed above with and against such business interests would be
                harmful
                to the Company and Buyer;

            


    

     

    
      	
               

            	
              (C)

            	
              the
                covenants contained in this §5.2(e) above are reasonable as to time and
                geographical area and do not place any unreasonable burden upon Sellers’
                ability to earn a livelihood;

            


    

     

    
      	
               

            	
              (D)

            	
              the
                public will not be harmed as a result of enforcement of the covenants
                contained in this §5.2(e);

            


    

     

    
      	
               

            	
              (E)

            	
              the
                personal legal counsel for Sellers have reviewed the covenants contained
                in this §5.2(e);

            


    

     

    
      	
               

            	
              (F)

            	
              the
                parties have entered into the covenants contained herein in connection
                with and as a condition precedent to the consummation of this Agreement,
                pursuant to which Buyer shall acquire the outstanding shares of the
                Company; the agreements, actions, covenants, and promises contained
                herein
                are intended to protect

            


    

     


    
      
        
        

      

      
        40

        
          

        

      

      
        
        

      

    


    and
      ensure the value of the Company, including its goodwill, which actions,
      covenants, and promises are a material consideration to Buyer in connection
      with
      this Agreement; and, to the extent that the laws of any jurisdiction in which
      this Agreement shall be interpreted, construed, and/or enforced distinguish
      between covenants given in connection with the sale of a business and its
      goodwill and covenants given in connection with employment, this covenant will
      be given the broader interpretation customarily given to covenants in connection
      with the sale of a business and the transfer of goodwill to a buyer;
      and

     

    
      	
               

            	
              (G)

            	
              Sellers
                understand and agree to each and every term and condition contained
                in
                §5.2(e) of this Agreement.

            


    

     

    
      	
               

            	
              (v)

            	
              Sellers
                recognize and acknowledge that irreparable damage will result to
                Buyer in
                the event of a breach by Sellers of the provisions of this
                §5.2(e),  and, accordingly, in the event of such a breach, Buyer
                will be entitled, in addition to any other legal or equitable damages
                and
                remedies to which it may be entitled or which may be available, to
                an
                injunction to restrain the violation
                thereof.

            


    

     

    
      	
               

            	
              (f)

            	
              Filing
                Tax Returns.

            


    

     

    With
      respect to the taxable year of the Company ended December 31, 2006, the Sellers
      have previously caused the Company to prepare and file all necessary tax
      returns.  With respect to the short period beginning January 1, 2007
      ending as of the effective date of the Closing, the Sellers shall prepare the
      package of tax information materials in accordance with past practice, including
      past practice as to information schedules and work papers and as to the method
      of recognition of taxable income or other relevant measure of the income of
      the
      Company (the “Tax Package”).  The Buyer shall cause to be prepared the
      Company’s tax returns for the interim period ending as of the effective date of
      the Closing and shall file such Tax Returns on behalf of the
      Company.  Prior to filing such Tax Returns, the Buyer and the Sellers
      shall review such Tax Returns and the Tax Package.  The Buyer and the
      Sellers shall promptly notify the other in writing of any reasonable objections
      they may have to any item set forth on the Tax Returns reviewed by
      them.  In the event the Buyer and the Sellers cannot promptly resolve
      the dispute, then such dispute shall be referred to a designee chosen by the
      tax
      partner in charge of the New York office of an independent nationally recognized
      accounting firm mutually acceptable to the Sellers and the Buyer (the “Tax
      Arbitrator”) for resolution in time to allow the Company to file such Tax
      Returns on or before the deadline for their filing, including any extensions
      thereto.  The Tax Arbitrator shall resolve the issues raised in good
      faith, with recognition of the merits of the issues, within the bounds of
      reasonable judgment and so as not to unreasonably disadvantage the position
      of
      the Sellers or the Company in the Tax Returns.  The decision of the
      Tax Arbitrator shall be final and binding on the parties hereto.  The
      fees and expenses of the Tax Arbitrator shall be shared equally by the Buyer
      and
      the Sellers.  The term “Tax Return” shall mean any report, return or
      other information required to be supplied to a taxing authority in connection
      with Taxes.

     


    
      
        
        

      

      
        41

        
          

        

      

      
        
        

      

    


    


     

    With
      respect to any taxable period ending on or before the Closing Date, or which
      includes the Closing Date, the Sellers shall have the sole right to control
      any
      audit or other examination (“Audit”), by any taxing authority, initiate any
      claim for refund or amend any return, and contest, resolve and defend against
      any assessment for additional Taxes, notice of tax deficiency or the adjustment
      of Taxes of, or relating to, the Company.

     

    The
      Buyer
      and the Sellers shall promptly forward to the other party all written
      notifications and other communications from any taxing authority received by
      the
      Buyer or the Company, on the one hand, and the Sellers, on the other hand,
      relating to any Audit or any liabilities for Taxes with respect to which the
      Sellers have or may have any liability pursuant to this Agreement.

     

    The
      Buyer
      shall cause the Company to provide the Sellers with such assistance (without
      charge) as may be reasonably requested by the Sellers in connection with the
      preparation of any Tax Return, any Audit, or any judicial or administrative
      proceeding or determination relating to liability for Taxes of the Company
      and
      each party shall retain, for a reasonable period of time (but not less than
      (i)
      six years after the later of filing or the due date of the Tax Return for the
      period on or including the Closing Date or (ii) until expiration of all
      applicable statutes of limitation, whichever is later), and provide the Sellers
      with any record or information or any other assistance (including without
      limitation making employees available to the Sellers of a reasonable period
      of
      time) which may be relevant to such Tax Return, Audit, proceeding or
      determination.

     

    ARTICLE
      6

    CONDITIONS

     

    
      	
              6.1

            	
              Conditions
                for the Benefit of the
                Buyer.  

            


    

     

    The
      purchase by the Buyer of the Company Shares is subject to the following
      conditions, which are for the exclusive benefit of the Buyer and which are
      to be
      performed or complied with at or prior to the time of Closing:

     

    
      	
               

            	
              (a)

            	
              the
                representations and warranties set forth in §3.1 and §4 will be true and
                correct in all material respects (and for this purpose all materiality
                qualifications in such representations and warranties will be disregarded)
                as at the time of Closing with the same force and effect as if made
                at and
                as of such time;

            


    

     

    
      	
               

            	
              (b)

            	
              the
                Sellers will have performed or complied with all of the terms, covenants
                and conditions of this Agreement to be performed or complied with
                by the
                Sellers at or prior to the time of
                Closing;

            


    

     


    
      
        
        

      

      
        42

        
          

        

      

      
        
        

      

    


    


     

    
      	
               

            	
              (c)

            	
              there
                will have been obtained from all appropriate governmental authorities
                such
                approvals or consents as are required to permit the change of ownership
                of
                the Company Shares contemplated hereby and to permit the Business
                of the
                Company to be carried on by the Buyer as now
                conducted;

            


    

     

    
      	
               

            	
              (d)

            	
              the
                Sellers will have obtained any consents or waivers of third parties
                required to sell and transfer the Company Shares to the Buyer and
                to allow
                the Buyer to cause the Company to conduct the Business as it is conducted
                prior to the time of Closing; without limiting the generality of
                the
                foregoing, the Sellers shall have obtained consents to the change
                of
                control resulting from the Transaction under each of the contracts,
                if
                any, referred to in §4.1(c) of the Disclosure Schedule which specify that
                consent is required;

            


    

     

    
      	
               

            	
              (e)

            	
              no
                action or proceeding will be pending or threatened by any person
                or
                governmental authority to enjoin, restrict or prohibit the sale and
                purchase of the Shares contemplated hereby, or the right of the Buyer
                or
                the Company to conduct the Business of the
                Company;

            


    

     

    
      	
               

            	
              (f)

            	
              the
                Sellers shall have executed the Consulting
                Agreements;

            


    

     

    
      	
               

            	
              (g)

            	
              all
                directors of the Company shall resign and the elected officers, of
                which
                there are only two, those being each of the Sellers, of the Company
                shall
                resign their respective offices;

            


    

     

    
      	
               

            	
              (h)

            	
              the
                Sellers and all directors and officers of the Company shall release
                the
                Company from any and all possible claims against the Company arising
                from
                any act, matter or thing arising at or prior to the time of Closing;
                provided, however, except in respect of claims made against the Sellers
                by
                the Buyer pursuant to this Agreement, the Sellers may make a claim
                at any
                time against the Company for protection, defense and indemnification
                pursuant to the bylaws, any applicable law, and/or for defense, liability
                and indemnification coverage under any policy of insurance the benefits
                of
                which run directly or indirectly to the Sellers in their capacity
                as a
                former director, owner or employee of the Company and such claims
                shall
                not be released by the
                Sellers;  and

            


    

     

    
      	
               

            	
              (i)

            	
              all
                Excluded Liabilities shall have been fully discharged and the Company
                shall have been released therefrom to the satisfaction of the
                Buyer.

            


    

     

    
      	
              6.2

            	
              Conditions
                for the Benefit of the
                Sellers.

            


    

     

    The
      sale
      by the Sellers and the purchase by the Buyer of the Company Shares is subject
      to
      the following conditions, which are for the exclusive benefit of the Sellers
      and
      which are to be performed or complied with at or prior to the time of
      Closing:

     

    
      	
               

            	
              (a)

            	
              the
                representations and warranties of the Buyer set forth in §3.2 will be true
                and correct in all material respects (and for this purpose any materiality
                qualifications in such representations and warranties will be disregarded)
                as at the time of Closing with the same force and effect as if made
                at and
                as of such time;

            


    

     


    
      
        
        

      

      
        43

        
          

        

      

      
        
        

      

    


    


     

    
      	
               

            	
              (b)

            	
              the
                Buyer will have performed or complied with all of the terms, covenants
                and
                conditions of this Agreement to be performed or complied with by
                the Buyer
                at or prior to the time of Closing;

            


    

     

    
      	
               

            	
              (c)

            	
              the
                Company shall have executed the Consulting
                Agreements;

            


    

     

    
      	
               

            	
              (d)

            	
              the
                Sellers will be furnished with such certificates of officers of the
                Buyer
                as the Sellers or the Sellers’ counsel may reasonably require in order to
                establish that the terms, covenants and conditions contained in this
                Agreement to have been performed or complied with by the Buyer at
                or prior
                to the time of Closing have been performed or complied with in all
                material respects, and that the representations and warranties of
                the
                Buyer herein given are true and correct in all material respects
                at the
                time of Closing;

            


    

     

    
      	
               

            	
              (e)

            	
              the
                Company shall release the Sellers from any and all possible claims
                against
                the Sellers arising from any act, matter or thing arising at or prior
                to
                the time of Closing; and

            


    

     

    
      	
               

            	
              (f)

            	
              Sellers
                shall be released from all personal guarantees of any obligation
                of the
                Company executed by Sellers or either of them and the Buyer and the
                Company shall undertake to protect, hold harmless and indemnify the
                Sellers from all such liability.

            


    

     

    
      	
              6.3

            	
              Waiver
                of Conditions.

            


    

     

    The
      Buyer, in the case of a condition set out in §6.1, and the Sellers, in the case
      of a condition set out in §6.2, will have the exclusive right to waive the
      performance or compliance of such condition in whole or in part and on such
      terms as may be agreed upon without prejudice to any of its rights in the event
      of non-performance of or non-compliance with any other condition in whole or
      in
      part.  Any such waiver will not constitute a waiver of any other
      conditions in favor of the waiving party.

     

    ARTICLE
      7

    DELIVERIES
      AT CLOSING

     

    
      	
              7.1

            	
              Closing.

            


    

     

    The
      sale
      and purchase of the Company Shares will be completed at the Closing Time on
      the
      Closing Date at the offices of the Company.

     

    
      	
              7.2

            	
              Documents
                Delivered to Buyer.

            


    

     

    At
      Closing, Sellers shall deliver to Buyer, in addition to any other documents
      required by any provision of this Agreement, the following
      documents:

     

    
      	
               

            	
              (a)

            	
              stock
                certificates for each of the Sellers representing the Company Shares,
                duly
                endorsed in blank or accompanied by stock transfer powers sufficient
                to
                transfer the Company Shares to the Buyer free and clear of all Security
                Interests;

            


    

     


    
      
        
        

      

      
        44

        
          

        

      

      
        
        

      

    


    


     

    
      	
               

            	
              (b)

            	
              a
                certificate of good standing for the Company dated not more than
                3
                Business Days prior to the Closing Date certified by the appropriate
                governmental officials in the incorporating jurisdiction of the
                Company;

            


    

     

    
      	
               

            	
              (c)

            	
              all
                of the third party consents specified in §4.1(c)
                above;

            


    

     

    
      	
               

            	
              (d)

            	
              executed
                counterparts of the Consulting Agreements for the Sellers in form
                and
                substance as set forth in Exhibit B
                hereto;

            


    

     

    
      	
               

            	
              (e)

            	
              evidence
                reasonably satisfactory to the Buyer that the Excluded Liabilities
                have
                been fully satisfied or terminated and are no longer obligations
                of the
                Company;

            


    

     

    
      	
               

            	
              (f)

            	
              resignations,
                effective as of the Closing, of each director and elected officer
                of the
                Company;

            


    

     

    
      	
               

            	
              (g)

            	
              releases
                in the form acceptable to the Buyer, as contemplated by §6.1(h) hereof;
                and

            


    

     

    
      	
               

            	
              (h)

            	
              a
                legal opinion in form and substance as set forth in Exhibit C attached
                hereto, addressed to the Buyer, and dated as of the Closing
                Date.

            


    

     

    
      	
              7.3

            	
              Documents
                Delivered to Sellers.

            


    

     

    At
      Closing, Buyer shall deliver to the Sellers the following:

     

    
      	
               

            	
              (a)

            	
              a
                wire transfer to the IOLA trust account of MIRSKY & BLOCK, PLLC,
                attorneys for Sellers, in the amount of the Closing
                Payment;

            


    

     

    
      	
               

            	
              (b)

            	
              stock
                certificates in respect of the Buyer Stock issued in favor of the
                Sellers;

            


    

     

    
      	
               

            	
              (c)

            	
              executed
                counterparts of the Consulting Agreements in the form of the draft
                agreement attached hereto as Exhibit
                B;

            


    

     

    
      	
               

            	
              (d)

            	
              Board
                of Director resolution of Buyer authorizing the execution and performance
                of this Agreement;

            


    

     

    
      	
               

            	
              (e)

            	
              releases
                in form acceptable to the Sellers, as contemplated by
                §6.2(e);

            


    

     

    
      	
               

            	
              (f)

            	
              releases
                from personal guarantees in form acceptable to the Sellers, as
                contemplated by §6.2(f); and

            


    

     

    
      	
               

            	
              (g)

            	
              a
                legal opinion in form and substance as set forth in Exhibit D attached
                hereto, addressed to the Sellers and dated as of the Closing
                Date.

            


    

     


    
      
        
        

      

      
        45

        
          

        

      

      
        
        

      

    


    


     

    ARTICLE
      8

    REMEDIES
      FOR BREACHES OF THIS AGREEMENT

     

    
      	
              8.1

            	
              Survival
                of Representations and
                Warranties.

            


    

     

    All
      representations and warranties of the Sellers contained in §3.1 shall survive
      the Closing and continue in full force and effect for the applicable statute
      of
      limitations as representations and warranties of current condition as of the
      Closing.  All of the representations and warranties of the Sellers
      contained in §4.1 above shall, except as hereinafter provided, survive the
      Closing hereunder and continue in full force and effect for a period of fifteen
      (15) months thereafter as representations and warranties of current condition
      as
      of the Closing. In addition, any claim for breach of any representation or
      warranty which is based upon or relates to the tax liability of the Company
      for
      a particular taxation year may be made or brought by the Buyer at any time
      prior
      to the expiration of the period during which an assessment, reassessment or
      other form of recognized document assessing the liability for Tax, interest
      or
      penalties in respect of such taxation year under applicable tax legislation
      could be issued, assuming that the Company has not prior to Closing filed any
      waiver or similar document extending such period.  All of the
      representations and warranties of the Buyer contained in this Agreement shall
      survive the Closing hereunder and continue in full force and effect subject
      to
      the applicable statute of limitations.

     

    
      	
              8.2

            	
              Indemnification
                Provisions for Benefit of the
                Buyer.

            


    

     

    
      	
               

            	
              (a)

            	
              In
                the event any of the Sellers breaches any of their representations,
                warranties, and covenants contained herein and, if there is an applicable
                survival period pursuant to §8.1 above, provided that the Buyer makes a
                written claim for indemnification against any of the Sellers pursuant
                to
                §8.5 by delivering a Claim Notice below within such survival period,
                then,
                subject to Article 9 hereof, each of the Sellers agrees to indemnify
                the
                Buyer from and against the entirety of any Adverse Consequences the
                Buyer
                may suffer resulting from, arising out of, or caused by the
                breach;  provided, however, the Sellers’ liability for breaches
                of their representations and warranties in §3.1 hereof or for the breach
                of a covenant will be several as between them (and not joint or joint
                and
                several) and the liability of the Sellers for breaches of their
                representations and warranties in §4.1 hereof will be joint and
                several.

            


    

     

    
      	
               

            	
              (b)

            	
              The
                Sellers agree to jointly and severally indemnify the Company and
                the Buyer
                from and against the entirety of any Adverse Consequences which the
                Company or the Buyer may suffer resulting from, arising out of or
                caused
                by any Liability of the Company for any Taxes (other than taxes which
                are
                accrued for in the June 30 Statements or incurred in the Ordinary
                Course
                of the Business of the Company after June 30, 2007) with respect
                to any
                Tax period (or portions thereof) of the Company ending on or before
                the
                Closing Date.

            


    

     


    
      
        
        

      

      
        46

        
          

        

      

      
        
        

      

    


    


     

    
      	
              8.3

            	
              Indemnification
                Provisions for Benefit of the
                Sellers.  

            


    

     

    In
      the
      event the Buyer breaches any of its representations, warranties, and covenants
      contained herein, and, if there is an applicable survival period pursuant to
      §8.1 above, provided that any of the Sellers makes a written claim for
      indemnification against the Buyer pursuant to §8.5  below within such
      survival period by delivering a Claim Notice, then the Buyer agrees to indemnify
      each of the Sellers from and against the entirety of any Adverse Consequences
      the Sellers may suffer resulting from, arising out of, relating to, in the
      nature of, or caused by the breach.

     

    
      	
              8.4

            	
              Deemed
                Adjustments.

            


    

     

    All
      indemnification payments under this Article 8 shall be deemed adjustments to
      the
      Purchase Price.

     

    
      	
              8.5

            	
              Claim
                Notice; Notice of a Disputed
                Claim.

            


    

     

    
      	
               

            	
              (a)

            	
              A
                Party hereto (the “Indemnified Party”) may deliver to the
                other Party (the “Indemnifying Party”) a written notice
                (“Claim Notice”) that the Indemnified Party has suffered
                Adverse Consequences resulting from a breach of a representation,
                warranty
                or covenant and providing the facts alleged as the basis for such
                claim
                and the section or sections of this Agreement alleged to have been
                violated and the estimated total dollar amount of the Adverse Consequences
                claimed.  In the event that the Indemnifying Party disputes
                liability for or the amount of the Adverse Consequences set forth
                in the
                Claim Notice (a “Disputed Claim”), the Indemnifying Party
                shall notify the Indemnified Party in writing of such
                dispute  (“Notice of a Disputed Claim”) and
                specify the amount disputed and basis therefor and the amount the
                Indemnifying Party believes to be the correct amount, if any, within
                thirty (30) days after receipt of the Claim Notice.  The failure
                by the Indemnifying Party to deliver a Notice of a Disputed Claim
                to the
                Indemnified Party within thirty (30) days after receipt by the
                Indemnifying Party of the Claim Notice shall constitute the Indemnifying
                Party’s acceptance of the item(s) in the Claim
                Notice.

            


    

     

    
      	
               

            	
              (b)

            	
              If
                a written Notice of a Disputed Claim is sent pursuant to paragraph
                (a)
                above, the Parties shall during the thirty (30) days following the
                date of
                such delivery negotiate in good faith to resolve the Disputed Claim
                and
                reach a resolution of the matter on an expedited basis.  If,
                after such resolution period, the Parties are unable to reach agreement,
                the Indemnified Party may pursue such Disputed Claim pursuant to
                arbitration.

            


    

     

    
      	
              8.6

            	
              Other
                Indemnification
                Provisions.

            


    

     

    Each
      of
      the Sellers hereby agrees that he will not make any claim for indemnification
      against the Company  by reason of the fact that he was a director,
      officer, employee, partner or agent of the Company or was serving at the request
      of the Company as a director, officer, employee, or agent of another entity
      (whether such claim is for judgments, damages, penalties, fines, costs, amounts
      paid in settlement, losses, expenses, or otherwise and whether such claim is
      pursuant to any statute, charter document, bylaw, agreement, or otherwise)
      if
      and to the extent that such claim for indemnification arises out of any action,
      suit, proceeding, complaint, claim, or demand brought by the Buyer against
      such
      Seller pursuant to the specific terms of this Agreement (but the Sellers’ rights
      to indemnification by the Company are not otherwise restricted or impaired
      by
      this Agreement).

     


    
      
        
        

      

      
        47

        
          

        

      

      
        
        

      

    


    


     

    ARTICLE
      9

    LIMITATIONS
      ON INDEMNIFICATION

     

    
      	
              9.1

            	
              Limitations
                on Indemnification

            


    

     

    
      	
               

            	
              (a)

            	
              Except
                as hereinafter provided, the Buyer shall not be entitled to make
                any claim
                for indemnification against any of the Sellers pursuant to §8.2 unless and
                until the amount of the Adverse Consequences incurred by the Buyer
                as a
                result of all misrepresentations, breaches of warranties and breaches
                of
                covenants contained in this Agreement is equal to $50,000 (the
                “Threshold Amount”).  If the Buyer has incurred
                Adverse Consequences in an aggregate amount at least equal to the
                Threshold Amount, then the Sellers will be liable to the Buyer for
                the
                full amount of all Adverse Consequences that the Buyer may suffer
                resulting from or arising out of any such breaches, minus the Threshold
                Amount.  Provided however, the limitation on indemnification in
                this §9.1(a) shall not apply in respect of any claim for indemnification
                which is based on a breach of any of the representations and warranties
                in
                §3.1.

            


    

     

    
      	
               

            	
              (b)

            	
              Notwithstanding
                any other provision of this Agreement, the maximum aggregate liability
                of
                the Sellers for any and all claims by the Buyer for indemnification
                in
                respect of Adverse Consequences resulting from or arising out of
                any and
                all breaches of representations and warranties will be limited to
                the
                $1,000,000 (the “Limitation of Liability”), provided
                however, the limitation on indemnification in this §9.1(b) shall not apply
                in respect of, and the Limitation of Liability shall not
                include:

            


    

     

    
      	
               

            	
              (i)

            	
              any
                claim for indemnification which is based on a breach of any of the
                representations and warranties in
§3.1,

            


    

     

    
      	
               

            	
              (ii)

            	
              any
                claim for indemnification which is based on a breach of the
                representations and warranties in
§4.1(k),

            


    

     

    
      	
               

            	
              (iii)

            	
              any
                claim for indemnification pursuant to §8.2(b),
                or

            


    

     

    
      	
               

            	
              (iv)

            	
              any
                claim for indemnification which is based on any fraud or intentional
                misrepresentation by the Sellers.

            


    

     


    
      
        
        

      

      
        48

        
          

        

      

      
        
        

      

    


    


     

    ARTICLE
      10

    MISCELLANEOUS

     

    
      	
              10.1

            	
              Press
                Releases and Public
                Announcements.  

            


    

     

    No
      Party
      shall issue any press release or make any public announcement relating to the
      subject matter of this Agreement prior to the Closing without the prior written
      approval of the Buyer and the Sellers.  Provided however, the
      foregoing shall not apply to any press releases and public announcements which
      are required to be made by applicable law or any listing requirements of any
      securities exchanges.

     

    
      	
              10.2

            	
              No
                Third-Party
                Beneficiaries.  

            


    

     

    This
      Agreement shall not confer any rights or remedies upon any Person other than
      the
      Parties and their respective successors and permitted assigns.

     

    
      	
              10.3

            	
              Entire
                Agreement.  

            


    

     

    This
      Agreement (including the documents referred to herein) constitutes the entire
      agreement among the Parties and supersedes any prior understandings, agreements,
      or representations by or among the Parties, written or oral, to the extent
      they
      related in any way to the subject matter hereof.

     

    
      	
              10.4

            	
              Succession
                and
                Assignment.  

            


    

     

    This
      Agreement shall be binding upon and inure to the benefit of the Parties named
      herein and their respective successors and permitted assigns.  No
      Party may assign either this Agreement or any of his or its rights, interests,
      or obligations hereunder without the prior written approval of the Buyer and
      the
      Sellers; provided, however, that Buyer may assign this Agreement to an entity
      that is wholly owned by the Buyer or is controlled by the same persons that
      currently control the Buyer, or to a person or entity in connection with a
      merger, reorganization or sale of substantially all of the assets of the
      Buyer.  In the event of such assignment, BPO Management Services, Inc.
      will guarantee all obligations of the entity which becomes the Buyer hereunder,
      and will execute a guarantee agreement in form acceptable to the Sellers, acting
      reasonably.  Furthermore, notwithstanding any such assignment, the
      Buyer Stock will be issued to the Sellers by BPO Management Services, Inc.
      or by
      its successor.

     

    
      	
              10.5

            	
              Counterparts.

            


    

     

    This
      Agreement may be executed in one or more counterparts and by facsimile, each
      of
      which shall be deemed an original but all of which together will constitute
      one
      and the same instrument. The Parties agree to deliver signed originals of this
      Agreement to each other within five business days after the Closing if this
      Agreement is executed by facsimile counterparts.

     

    
      	
              10.6

            	
              Headings.

            


    

     

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

     


    
      
        
        

      

      
        49

        
          

        

      

      
        
        

      

    


    


     

    
      	
              10.7

            	
              Notices.  

            


    

     

    All
      notices, requests, demands, claims, and other communications hereunder will
      be
      in writing.  Any notice, request, demand, claim, or other
      communication hereunder shall be deemed duly given if (and then two business
      days after) it is sent by registered or certified mail, return receipt
      requested, postage prepaid, and addressed to the intended recipient as set
      forth
      below:

     

    If
      to Sellers:

     

    Mr.
      Everett Huntoon

    111
      Orchard Road

    Mt.
      Kisco, NY

     

    and

     

    Howard
      Andrews

    10
      Quail Hollow Lane

    West
      Nyack, NY 10994

     

    With
      a
      copy
      to :             
     MIRSKY & BLOCK, PLLC

    303
      South Broadway

    Suite
      222

    Tarrytown,
      NY 10591

    914-332-4700

    866-738-9412
      eFax

     

    Attention:
      Ellis R.
      Mirsky

     

    If
      to the
      Buyer:

     

    BPO
      Management Services,
      Inc.

    1290
      N.
      Hancock St., Ste. 202

    Anaheim,
      CA 92807

    USA

    


    Attention:
      Patrick Dolan and Jim Cortens

    


    With
      a
      copy
      to:                     Jack
      T. Cornman, Esq.

    Cornman
      & Swartz

    19800
      MacArthur Blvd., Suite 820

    Irvine,
      CA 92612

    Tel:
      (949) 224 1500

    Fax:
      (949) 224 1505


    
      
        
        

      

      
        50

        
          

        

      

      
        
        

      

    


    


    And
      a
      second copy
      to:                        D.L.
      West

    Aird
      & Berlis LLP

    1800
–
      181 Bay Street

    Toronto,
      ON   M5J 2T9

    Tel:  (416)
      865-7737

    Fax:
      (416) 863-1515

    


    Any
      Party
      may send any notice, request, demand, claim, or other communication hereunder
      to
      the intended recipient at the address set forth above using any other means
      (including personal delivery, expedited courier, messenger service, telecopy,
      ordinary mail, or electronic mail), but no such notice, request, demand, claim,
      or other communication shall be deemed to have been duly given unless and until
      it actually is received by the intended recipient.  Any Party may
      change the address to which notices, requests, demands, claims, and other
      communications hereunder are to be delivered by giving the other Parties notice
      in the manner herein set forth.

     

    
      	
              10.8

            	
              Governing
                Law.  

            


    

     

    This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      state of New York without giving effect to any choice or conflict of law
      provision or rule that would cause the application of the laws of any other
      jurisdiction.  The parties agree that in the event of a dispute
      arising under or in connection with this agreement or the performance thereof,
      that the parties shall not resort to litigation but, instead, will arbitrate
      their dispute before a single arbitrator otherwise in accordance with the rules
      for commercial arbitration in effect at the time, including the optional rules,
      of the American Arbitration Association (referred to hereafter as the “AAA”), in
      the County of New York.  The parties  irrevocably and
      unconditionally consent to the service of any and all process in any such
      proceeding by the mailing of copies of process by certified mail to the parties
      and their counsel at their respective addresses specified in §11.7 or in
      accordance with the rules of the AAA.  The parties further irrevocably
      and unconditionally agree that a final judgment in any such action or proceeding
      (after exhaustion of all appeals or expiration of the time for appeal) shall
      be
      conclusive and may be enforced in any jurisdiction by suit on the judgment
      or in
      any other manner provided by law.

     

    
      	
              10.9

            	
              Amendments
                and Waivers.  

            


    

     

    No
      amendment of any provision of this Agreement shall be valid unless the same
      shall be in writing and signed by the Buyer and the Sellers.  No
      waiver by any Party of any default, misrepresentation, or breach of warranty
      or
      covenant hereunder, whether intentional or not, shall be deemed to extend to
      any
      prior or subsequent default, misrepresentation, or breach of warranty or
      covenant hereunder or affect in any way any rights arising by virtue of any
      prior or subsequent such occurrence.

     

    
      	
              10.10

            	
              Severability.  

            


    

     

    Any
      term
      or provision of this Agreement that is invalid or unenforceable in any situation
      in any jurisdiction shall not affect the validity or enforceability of the
      remaining terms and provisions hereof or the validity or enforceability of
      the
      offending term or provision in any other situation or in any other
      jurisdiction.

     


    
      
        
        

      

      
        51

        
          

        

      

      
        
        

      

    


    


     

    
      	
              10.11

            	
              Expenses.  

            


    

     

    Each
      of
      the Parties will bear its costs and expenses (including legal fees and expenses)
      incurred in connection with this Agreement and the transactions contemplated
      hereby.

     

    IN
      WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
      the date first above written.

     

     

     

    
      	 	
              BPO
                MANAGEMENT SERVICES, INC.

               

              


               

              Per:       
                  /Patrick Dolan/       
                

              


               

              Per:        
                 /James Cortens/       
                

            


    

    


     

    
      	
              SIGNED,
                SEALED AND DELIVERED,

            	
              )

            	 
	
                              in
                the presence of

            	
              )

            	 
	 	
              )

            	 
	 	
              )

            	
                    
                /Everett
                Huntoon/                         
                

            
	 	
              )

            	
              MR.
                EVERETT HUNTOON

            
	 	
              )

            	 
	 	
              )

            	 
	 	
              )

            	
                    
                /Howard
                Andrews/                     
                

            
	 	
              )

            	
              MR.
                HOWARD ANDREWS

            


    

    


     

     

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