Document:

exv10w1

 

EXHIBIT 10.1

      

AGREEMENT AND PLAN OF MERGER

among

JK ACQUISITION CORP.,

MULTI-SHOT, INC.,

MULTI-SHOT, LLC,

CATALYST/HALL
GROWTH CAPITAL MANAGEMENT CO., LLC, as

MEMBERS’ REPRESENTATIVE,

And

THE MEMBERS OF MULTI-SHOT, LLC

Dated as of September 6, 2006

      

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	ARTICLE I THE MERGER
	 	 	2	 
	SECTION 1.01 The Merger
	 	 	2	 
	SECTION 1.02 Effective Time; Closing
	 	 	2	 
	SECTION 1.03 Effect of the Merger
	 	 	3	 
	SECTION 1.04 Certificate of Incorporation and Bylaws of the Surviving Corporation
	 	 	3	 
	SECTION 1.05 Directors and Officers
	 	 	3	 
	 
	 	 	 	 
	ARTICLE II MERGER CONSIDERATION; EXCHANGE OF CERTIFICATES
	 	 	4	 
	SECTION 2.01 Initial Merger Consideration
	 	 	4	 
	SECTION 2.02 Closing Balance Sheet; Indebtedness; Members’ Equity; Working Capital
	 	 	6	 
	SECTION 2.03 Post-Closing Adjustment
	 	 	7	 
	SECTION 2.04 Exchange of Certificates
	 	 	10	 
	SECTION 2.05 Membership Interest Transfer Books
	 	 	13	 
	SECTION 2.06 Earnout Awards
	 	 	13	 
	SECTION 2.07 Securities Laws Issues
	 	 	16	 
	SECTION 2.08 Redemption Shares Issuance
	 	 	17	 
	 
	 	 	 	 
	ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY
	 	 	20	 
	SECTION 3.01 Organization and Qualification
	 	 	20	 
	SECTION 3.02 Articles of Organization and Regulations
	 	 	21	 
	SECTION 3.03 No Subsidiaries
	 	 	21	 
	SECTION 3.04 Capitalization
	 	 	21	 
	SECTION 3.05 Authority Relative to This Agreement
	 	 	22	 
	SECTION 3.06 No Conflict; Required Filings and Consents
	 	 	23	 
	SECTION 3.07 Permits; Compliance
	 	 	24	 
	SECTION 3.08 Financial Statements
	 	 	24	 
	SECTION 3.09 Absence of Certain Changes or Events
	 	 	25	 
	SECTION 3.10 Absence of Litigation
	 	 	25	 
	SECTION 3.11 Employee Benefit Plans; Labor Matters
	 	 	26	 
	SECTION 3.12 Contracts
	 	 	29	 
	SECTION 3.13 Environmental Matters
	 	 	31	 
	SECTION 3.14 Intellectual Property
	 	 	33	 
	SECTION 3.15 Taxes
	 	 	36	 
	SECTION 3.16 Vote Required
	 	 	39	 
	SECTION 3.17 Assets; Absence of Liens and Encumbrances
	 	 	39	 
	SECTION 3.18 Real Property
	 	 	39	 
	SECTION 3.19 Certain Interests
	 	 	39	 
	SECTION 3.20 Insurance Policies
	 	 	40	 
	SECTION 3.21 Restrictions on Business Activities
	 	 	41	 
	SECTION 3.22 Brokers
	 	 	41	 
	SECTION 3.23 Intentionally Omitted
	 	 	41	 
	SECTION 3.24 Customers and Suppliers
	 	 	41	 
	SECTION 3.25 Inventory
	 	 	41	 

i 

 

	 	 	 	 	 
	SECTION 3.26 Accounts Receivable; Bank Accounts
	 	 	41	 
	SECTION 3.27 Intentionally Omitted
	 	 	42	 
	SECTION 3.28 Offers
	 	 	42	 
	SECTION 3.29 Warranties
	 	 	42	 
	SECTION 3.30 Books and Records
	 	 	42	 
	SECTION 3.31 Intentionally Omitted
	 	 	42	 
	SECTION 3.32 Proxy Statement
	 	 	42	 
	SECTION 3.33 No Misstatements
	 	 	43	 
	 
	 	 	 	 
	ARTICLE IV REPRESENTATIONS AND WARRANTIES OF MEMBERS
	 	 	43	 
	SECTION 4.01 Ownership
	 	 	43	 
	SECTION 4.02 Power; Authorization; Enforceability
	 	 	44	 
	 
	 	 	 	 
	ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
	 	 	44	 
	SECTION 5.01 Organization and Qualification
	 	 	44	 
	SECTION 5.02 Authority Relative to This Agreement
	 	 	45	 
	SECTION 5.03 Capital Structure
	 	 	46	 
	SECTION 5.04 No Conflict; Required Filings and Consents
	 	 	46	 
	SECTION 5.05 SEC Filings; Financial Statements
	 	 	47	 
	SECTION 5.06 Interim Operations of Merger Sub
	 	 	47	 
	SECTION 5.07 Board Approval
	 	 	47	 
	SECTION 5.08 Valid Issuance of Parent Shares
	 	 	47	 
	SECTION 5.09 Brokers
	 	 	48	 
	SECTION 5.10 Intentionally Omitted
	 	 	48	 
	SECTION 5.11 Financial Statements
	 	 	48	 
	SECTION 5.12 Absence of Certain Changes or Events
	 	 	48	 
	SECTION 5.13 Absence of Litigation
	 	 	49	 
	SECTION 5.14 Taxes
	 	 	49	 
	SECTION 5.15 Assets; Absence of Liens and Encumbrances
	 	 	51	 
	SECTION 5.16 Proxy Statement
	 	 	51	 
	SECTION 5.17 Registration Rights Agreement
	 	 	51	 
	SECTION 5.18 Offers
	 	 	52	 
	SECTION 5.19 No Misstatements
	 	 	52	 
	 
	 	 	 	 
	ARTICLE VI CONDUCT OF BUSINESSES PENDING THE MERGER
	 	 	52	 
	SECTION 6.01 Conduct of Business by the Company Pending the Merger
	 	 	52	 
	SECTION 6.02 Conduct of Business by Parent Pending the Merger
	 	 	55	 
	SECTION 6.03 Litigation
	 	 	58	 
	SECTION 6.04 Notification of Certain Matters
	 	 	58	 
	SECTION 6.05 Non-Back Up Transactions
	 	 	58	 
	 
	 	 	 	 
	ARTICLE VII ADDITIONAL AGREEMENTS
	 	 	59	 
	SECTION 7.01 Proxy Statement; Stockholder Approval. Proxy Statement; Parent Stockholders’ Meeting; Name Change
	 	 	59	 
	SECTION 7.02 Members Approval; Exemption from Registration
	 	 	60	 
	SECTION 7.03 Access to Information; Confidentiality
	 	 	61	 

ii 

 

	 	 	 	 	 
	SECTION 7.04 No Solicitation of Transactions
	 	 	62	 
	SECTION 7.05 Employee Benefits Matters
	 	 	62	 
	SECTION 7.06 Further Action; Consents; Filings
	 	 	64	 
	SECTION 7.07 Intentionally Omitted
	 	 	65	 
	SECTION 7.08 No Public Announcement
	 	 	65	 
	SECTION 7.09 Expenses
	 	 	65	 
	SECTION 7.10 Affiliate Agreements
	 	 	66	 
	SECTION 7.11 Services Agreement
	 	 	66	 
	SECTION 7.12 AMEX Listing
	 	 	66	 
	SECTION 7.13 Section 16 Relief
	 	 	66	 
	SECTION 7.14 Key Employees
	 	 	66	 
	SECTION 7.15 WARN Act
	 	 	67	 
	SECTION 7.16 Conversion Schedule
	 	 	67	 
	SECTION 7.17 Litigation Support
	 	 	67	 
	SECTION 7.18 Director and Officer Insurance
	 	 	68	 
	SECTION 7.19 Disclosure Schedules Bring Down
	 	 	68	 
	 
	 	 	 	 
	ARTICLE VIII CONDITIONS TO THE MERGER
	 	 	69	 
	SECTION 8.01 Conditions to the Obligations of Each Party
	 	 	69	 
	SECTION 8.02 Conditions to the Obligations of Parent and Merger Sub
	 	 	69	 
	SECTION 8.03 Conditions to the Obligations of the Company
	 	 	73	 
	 
	 	 	 	 
	ARTICLE IX TERMINATION, AMENDMENT AND WAIVER
	 	 	75	 
	SECTION 9.01 Termination
	 	 	75	 
	SECTION 9.02 Effect of Termination
	 	 	77	 
	SECTION 9.03 Amendment
	 	 	77	 
	SECTION 9.04 Waiver
	 	 	77	 
	 
	 	 	 	 
	ARTICLE X INDEMNIFICATION
	 	 	77	 
	SECTION 10.01 Survival of Representations and Warranties
	 	 	77	 
	SECTION 10.02 Indemnification by the Members
	 	 	78	 
	SECTION 10.03 Indemnification by Parent and Merger Sub
	 	 	79	 
	SECTION 10.04 Indemnification Procedures
	 	 	80	 
	SECTION 10.05 Members’ Representative
	 	 	82	 
	SECTION 10.06 Taxes
	 	 	83	 
	SECTION 10.07 Reduction of Indemnified Amounts
	 	 	83	 
	SECTION 10.08 Exclusive Rights and Remedies
	 	 	84	 
	 
	 	 	 	 
	ARTICLE XI GENERAL PROVISIONS
	 	 	84	 
	SECTION 11.01 Notices
	 	 	84	 
	SECTION 11.02 Certain Definitions
	 	 	85	 
	SECTION 11.03 Severability
	 	 	91	 
	SECTION 11.04 Assignment; Binding Effect; Benefit
	 	 	91	 
	SECTION 11.05 Incorporation of Exhibits
	 	 	91	 
	SECTION 11.06 Specific Performance
	 	 	91	 
	SECTION 11.07 Governing Law; Forum
	 	 	92	 
	SECTION 11.08 Time of the Essence
	 	 	92	 

iii 

 

	 	 	 	 	 
	SECTION 11.09 Waiver of Jury Trial
	 	 	92	 
	SECTION 11.10 Construction and Interpretation
	 	 	92	 
	SECTION 11.11 Further Assurances
	 	 	93	 
	SECTION 11.12 Headings
	 	 	93	 
	SECTION 11.13 Counterparts
	 	 	93	 
	SECTION 11.14 Entire Agreement
	 	 	93	 

	 	 	 
	Schedule 2.03(h)

	 	Target Working Capital Calculation
	Schedule 2.04(a)

	 	Holders of Escrow Securities
	Schedule 2.06(d)

	 	Earnout Award Calculation – Example
	Schedule 6.01(k)

	 	Conduct of Business by the Company
	Schedule 7.05(b)

	 	Individuals Entering Into Employment Agreement
	Schedule 7.05(c)

	 	Individuals Entering Into Non-Solicitation Agreement
	Schedule 8.02(r)

	 	Company
Employees to be Employed at Closing

	Schedule 8.02(t)

	 	Existing Employment Agreements
	 
	 	 
	Exhibit A

	 	Form of Parent Warrant
	Exhibit B

	 	Form of Escrow Agreement
	Exhibit C

	 	Form of Registration Rights Agreement
	Exhibit D

	 	Form of Company Counsel Legal Opinion
	Exhibit E

	 	Form of Parent Counsel Legal Opinion
	 
	 	 
	Company
Disclosure Schedules

	Parent
Disclosure Schedules

iv 

 

AGREEMENT AND PLAN OF MERGER

     AGREEMENT AND PLAN OF MERGER, dated as of September 6, 2006 (this “Agreement”), among
JK ACQUISITION CORP., a Delaware corporation (“Parent”), MULTI-SHOT, INC., a Delaware
corporation and a wholly owned subsidiary of Parent (“Merger Sub”), MULTI-SHOT, LLC, a
Texas limited liability company (the “Company”),
CATALYST/HALL GROWTH CAPITAL MANAGEMENT CO.,
LLC, as Members’ Representative (as defined in Section 10.05 hereof), and the Members (as defined
below) of the Company.

W I T N E S S E T H

     WHEREAS, upon the terms and subject to the conditions of this Agreement, Parent and the
Company will enter into a business combination transaction pursuant to which the Company will merge
with and into the Merger Sub (the “Merger”);

     WHEREAS, the Board of Managers of the Company has (i) determined that the Merger is fair to,
and in the best interests of, the Company and the Members, and (ii) approved and adopted this
Agreement, the Merger, and the other transactions contemplated by this Agreement;

     WHEREAS, the Boards of Directors of each of Parent and Merger Sub have (i) determined that the
Merger is consistent with and in furtherance of the long-term business strategy of Parent and fair
to, and in the best interests of, Parent, Merger Sub and their respective stockholders, (ii)
unanimously approved and adopted this Agreement, the Merger, and the other transactions
contemplated by this Agreement, and (iii) determined to unanimously recommend that the stockholders
of Parent approve and adopt this Agreement and the Merger;

     WHEREAS, the members of the Company own the membership interests of the Company (the
“Company Interests”) as is set forth opposite each such member’s name in Section 1.01 of
the Company Disclosure Schedule (as defined in Article III) (such members being referred to herein
as the “Members”);

     WHEREAS, pursuant to the Merger, each outstanding share of Company Interest shall be converted
into the right to receive cash, shares of Parent’s authorized common stock, par value $0.0001 per
share (“Parent Common Stock”) and Parent Warrants (as defined herein), at the rate
determined in this Agreement;

     WHEREAS, Parent has agreed to grant the Members the registration rights set forth in the
Registration Rights Agreement (as defined herein);

     WHEREAS, all of the Parent Common Stock otherwise issuable by Parent in connection with the
Merger shall be placed in escrow by Parent, as well as $1,000,000, the release of which amount
shall be contingent upon certain events and conditions, all as set forth in this Agreement and the
Escrow Agreement (as defined in Section 2.04(b));

 

 

     WHEREAS, as a condition and inducement to Parent’s willingness to enter into this Agreement,
each individual listed on Schedule 7.05(b) shall enter into an Employment Agreement (as defined in
Section 7.05(b));

     WHEREAS, as a condition and inducement to Parent’s willingness to enter into this Agreement,
each individual listed on Schedule 7.05(c) shall enter into a Non-Solicitation Agreement (as
defined in Section 7.05(c)); and

     WHEREAS,
certain capitalized terms used in this Agreement are defined in Section 11.02(b) of
this Agreement.

     NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements
herein contained, and intending to be legally bound hereby, Parent, Merger Sub, the Company, the
Members’ Representative and the Members hereby agree as follows:

ARTICLE I

THE MERGER

     SECTION 1.01 The Merger. Upon the terms of this Agreement and subject to the
conditions set forth in this Agreement, and in accordance with the Delaware General Corporation Law
(“DGCL”) and Texas Limited Liability Company Act (“TLLCA”), at the Effective Time
(as defined in Section 1.02), Company shall be merged with and into the Merger Sub. As a result of
the Merger, the separate legal existence of Company shall cease, and the Merger Sub shall continue
as the surviving corporation of the Merger (the “Surviving Corporation”).

     SECTION 1.02 Effective Time; Closing. As promptly as practicable following the
satisfaction or, if permissible by the express terms of this Agreement, waiver of the conditions
set forth in Article VIII (or such other date as may be agreed by each of the parties hereto), the
parties hereto shall cause the Merger to be consummated by (i) filing a certificate of merger (the
“Certificate of Merger”) with the Secretary of States of (A) the State of Delaware and (B)
the State of Texas in such forms as is required by, and executed in accordance with, the relevant
provisions of the DGCL and the TLLCA, respectively, and (ii) making all other filings and
recordings required under the DGCL and the TLLCA, respectively, including proxy materials in
accordance with Schedule 14A under the Exchange Act that set forth, among other things, the
proposed officers and directors of Parent and Merger Sub after the Closing. The term
“Effective Time” means the date and time of the filing of the Certificate of Merger (or
such later time as may be agreed by each of the parties hereto and specified in the Certificate of
Merger). Immediately prior to the filing of the Certificate of Merger, a closing (the
“Closing”) will be held at the offices of Patton Boggs LLP (“Patton Boggs”), 2001
Ross Avenue, Suite 3000, Dallas, Texas (or such other place as the parties may agree). The date on
which the Closing shall occur is referred to herein as the “Closing Date.” The parties
hereby agree to use their commercially reasonable best efforts to
satisfy all conditions to Closing set forth in Article VIII and timely consummate the Merger
contemplated herein.

2

 

     SECTION 1.03 Effect of the Merger. At and after the Effective Time, the Merger shall
have the effects as set forth in the applicable provisions of the DGCL and TLLCA. Without limiting
the generality of the foregoing, and subject thereto, at the Effective Time, all the property,
rights, privileges, powers and franchises of each of the Company and Merger Sub shall vest in the
Surviving Corporation, and all debts, liabilities, obligations, restrictions, disabilities and
duties of each of the Company and Merger Sub shall become the debts, liabilities, obligations,
restrictions, disabilities and duties of the Surviving Corporation.

     SECTION 1.04 Certificate of Incorporation and Bylaws of the Surviving Corporation.

          (a) At the Effective Time, the Certificate of Incorporation of Merger Sub as in effect
immediately prior to the Effective Time shall be the Certificate of Incorporation of the Surviving
Corporation, except that Section 1 of the amended and restated Certificate of Incorporation of the
Surviving Corporation, instead of reading the same as Section 1 of the Certificate of Incorporation
of Merger Sub, shall read as follows: “The name of this corporation is “Multi-Shot, Inc.”

          (b) At the Effective Time, the Bylaws of the Surviving Corporation shall be the same as the
Bylaws of Merger Sub as in effect immediately prior to the Effective Time, except that all
references to Merger Sub in the Bylaws of the Surviving Corporation shall be changed to refer to
Multi-Shot, Inc.

     SECTION 1.05 Directors and Officers.

          (a) The directors of Merger Sub immediately prior to the Effective Time shall be the initial
directors of the Surviving Corporation, each to hold office in accordance with the Certificate of
Incorporation and Bylaws of the Surviving Corporation, and the officers of Merger Sub immediately
prior to the Effective Time shall be the initial officers of the Surviving Corporation, in each
case until their respective successors are duly elected or appointed and qualified.

          (b) Effective as of the Effective Time, the directors of Parent and the Surviving Corporation
shall be James P. Wilson, Keith D. Spickelmier, Herbert C. Williamson, Rick Herrman, Ron Nixon and
Allen Neel, each to hold office in accordance with the Certificate of Incorporation, as amended,
and Bylaws, as amended, of Parent and the Surviving Corporation, and the initial officers of the
Surviving Corporation shall be Allen Neel – Chief Executive Officer, President and Secretary; David
Cudd – Vice President; and Paul Culbreth – Vice President. Effective as of the Effective Time, the
officers of Parent shall be Allen Neel – Chief
Executive Officer and President, and Scott Bork — Secretary. In each case, the foregoing
officers shall serve until their respective successors are duly elected or appointed and qualified.

3

 

ARTICLE II

MERGER CONSIDERATION; EXCHANGE OF CERTIFICATES

     SECTION 2.01 Initial Merger Consideration.

          (a) At the Effective Time, by virtue of the Merger and without any action on the part of
Parent, Merger Sub, the Company or the holders of any of the following securities:

               (i) each unit of Company Interest issued and outstanding immediately prior to the Effective
Time shall be converted into the right to receive:

                    (1) such number of shares of Parent Common Stock equal to the Company Interest Exchange Ratio
(as defined in Section 2.01(b)(xii)) (“Parent Shares”),

                    (2) two Parent Warrants, substantially in the form attached hereto as Exhibit A, for
each Parent Share issued pursuant to Section 2.01(a)(i)(1); and

                    (3) a portion of the Cash Consideration equal to the Company Interest Exchange Cash Ratio (as
defined in Section 2.01(b)(xiii) (the “Per Company Interest Cash Consideration”); and

               (ii) each share of common stock, par value $0.001 per share, of Merger Sub issued and
outstanding immediately prior to the Effective Time, all of which shall be held by Parent, shall be
converted into and exchanged for one validly issued, fully paid and nonassessable share of common
stock, par value $0.001 per share, of the Surviving Corporation. The stock certificate evidencing
shares of common stock of Merger Sub shall then evidence ownership of the outstanding shares of
common stock of the Surviving Corporation.

          (b) As used in this Agreement, the following terms have the following meanings (except as
noted in this Agreement):

               (i) “Gross Enterprise Value” means $105,700,000.

               (ii) “Estimated Net Enterprise Value” means Gross Enterprise Value less Estimated
Third Party Indebtedness as of the Closing Date.

               (iii) “Estimated Third Party Indebtedness” means the Indebtedness (as defined in
Section 2.01(b)(iv)) less the Members’ Subordinated Debt.

               (iv) “Indebtedness” means all indebtedness or other obligations of the Company for
borrowed money, including, without limitation, all obligations under capital
leases which under GAAP are required to be shown as a liability, and all indebtedness of a
third party for which the Company is liable pursuant to a guaranty or otherwise.

4

 

               (v) “Members’ Subordinated Debt” means $2,000,000, as presently outstanding and
payable by the Company to the Members plus any accrued interest thereon.

               (vi) “Cash Consideration” means (A) seventy-five percent of the Estimated Net
Enterprise Value less (B) the Escrow Amount, paid by wire transfer of immediately available funds
to an account or accounts designated by the Members’ Representative.

               (vii) “Parent Stock Consideration” means twenty-five percent of the Estimated Net
Enterprise Value, which shall be placed in the Escrow Account pursuant to Section 2.04(b).

               (viii) “Parent Shares” means the number of shares of Parent Stock equal to the
quotient of (A) Parent Stock Consideration divided by (B) $5.40, rounded to the nearest whole
share.

               (ix) “Parent Warrant” means the warrants issued by Parent pursuant to Section
2.01(a)(i)(2), subject to the provisions in Section 2.06 hereof.

               (x) “Escrow Amount” means $1,000,000.

               (xi) “Escrow Shares” means all of the Parent Shares issued as Parent Stock
Consideration pursuant to Section 2.01 hereto, all of the Redemption Liability Shares, if any,
issued pursuant to Section 2.08, and any Parent Common Stock issued pursuant to the exchange of any
Escrow Warrants.

               (xii) “Company Interest Exchange Ratio” means the quotient (calculated to five decimal
places) obtained by dividing (x) the Parent Shares by (y) the Fully Diluted Company Interest Amount
(as defined below).

               (xiii) “Company Interest Exchange Cash Ratio” means the quotient (calculated to five
decimal places) obtained by dividing (x) the Cash Consideration by (y) the Fully Diluted Company
Interest Amount (as defined below).

               (xiv) “Fully Diluted Company Interest Amount” means a number of units of Company
Interests equal to the sum of (x) the number of units of Company Interests issued and outstanding
immediately prior to the Effective Time and (y) the number of units of Company Interests issuable
upon exercise, conversion and/or exchange of all securities issued and outstanding immediately
prior to the Effective Time that are exercisable, convertible and/or exchangeable for units of
Company Interests.

          (c) If, during the period between the date hereof and the Effective Time, any change in the
capital stock of Parent shall occur by reason of reclassification,
recapitalization, stock split or combination, exchange or readjustment of shares, or any stock
dividend thereon with a record date during such period or any similar event, all of the stock-based
items that require adjustment so as to properly reflect the action taken, including, but not
limited to, the Initial Merger Consideration, the Parent Shares, the Company Interest Exchange

5

 

Ratio, the Parent Warrants, the Redemption Liability Shares (as defined in Section 2.08) and
Redemption Warrants (as defined in Section 2.08) shall be correspondingly adjusted to the extent
appropriate to reflect such stock dividend, subdivision, reclassification, recapitalization, split,
combination, exchange or readjustment of shares. The Parties recognize that the 2004 Incentive
Plan will give rise to a Transaction-Related Members’ Equity Charge (defined below). For the
purposes of this Agreement, the Estimated Members’ Equity and the Closing Members’ Equity will not
include the one time, transaction-related charge to Company earnings and then Estimated Members’
Equity or Closing Members’ Equity or directly charged to Estimated Members’ Equity or Closing
Members’ Equity as required by GAAP (the “Transaction-Related Members’ Equity Charge”) set
forth in the Estimated Members’ Equity and the Closing Members’ Equity.

          (d) If any units of Company Interests outstanding immediately prior to the Effective Time are
unvested or are subject to a repurchase option, risk of forfeiture or other condition under any
applicable restricted stock purchase agreement, stock option exercise agreement or other agreement
with the Company, then the Parent Shares issued in exchange for such units of Company Interests
will also be unvested and/or subject to the same repurchase option, risk of forfeiture or other
condition, and the certificates representing such Parent Shares may accordingly be marked with
appropriate legends.

          (e) The aggregate consideration payable to the holders of Company Interests in accordance with
this Section 2.01(a) is referred to in this Agreement as the “Initial Merger
Consideration.” The Initial Merger Consideration is subject to adjustment in accordance with
Sections 2.02 and 2.03.

     SECTION 2.02 Closing Balance Sheet; Indebtedness; Members’ Equity; Working Capital.

          (a)

               (i) For purposes Section 2.02 hereof, “Members’ Equity” shall refer to the
total Members’ Equity as detailed on the Closing Balance Sheet of the Company.

               (ii) For purposes Section 2.02 hereof, “Working Capital” shall mean the amount that is
the difference between (i) Company’s Current Assets and (ii) Company’s Current Liabilities,
calculated in accordance with United States generally accepted accounting principles
(“GAAP”) and in a manner consistent with the Company’s Financial Statements (as defined in
Section 3.08(a)). “Current Assets” as used in the definition of Working Capital, shall
mean cash on hand or in deposit accounts, cash equivalents, accounts receivable (net of all
reserves), prepaid project costs, prepaid expenses, and any other current assets as defined under
GAAP. “Current Liabilities”, as used in the definition of Closing Working Capital, shall
mean accounts payable, accrued expenses, advanced customer payments
and any other current liabilities (excluding current portions of Indebtedness) as defined
under GAAP.

          (b) The Company will prepare and deliver to Parent at least one (1) business day before the
Closing Date an unaudited balance sheet of the Company prepared on an

6

 

estimated basis as of
midnight the day prior to day required to prepare and deliver the unaudited balance sheet on the
day prior to the close of business on the Closing Date (the “Estimated Closing Balance
Sheet”), which shall include detailed supporting calculations of (i) the estimated Indebtedness
of the Company as of the Closing Date (the “Estimated Indebtedness”); (ii) the estimated
Members’ Equity as of the Closing Date (the “Estimated Members’ Equity”), calculated
without regard to the Transaction Related Members’ Equity Charge; and (iii) the estimated Working
Capital of the Company at the Closing Date (the “Estimated Closing Working Capital”). The
Estimated Closing Balance Sheet will be prepared in accordance with GAAP, subject to reasonable
exceptions such as the absence of footnotes and customary year-end audit adjustments, in a manner
consistent with the methods and practices used to prepare the audited balance sheet as of December
31, 2005 (the “2005 Balance Sheet”). The Company will deliver with the Estimated Closing
Balance Sheet, including the Estimated Indebtedness, Estimated Members’ Equity and Estimated
Closing Working Capital, a certification executed by the Chief Executive Officer and the Chief
Financial Officer that the Estimated Closing Balance Sheet is being delivered in good faith and
fairly presents, in all material respects, the financial condition of the Company as of 12:01 a.m.
the day before the Closing Date, prepared in accordance with GAAP, subject to reasonable exceptions
such as the absence of footnotes and customary year-end audit adjustments. For example, assuming a
Closing Date of December 15, 2006, the Company shall deliver the Estimated Closing Balance Sheet on
the morning of December 14, 2006 reflecting business activities as of and through December 13,
2006.

     SECTION 2.03 Post-Closing Adjustment.

          (a) Within 75 days after the Closing Date, Parent will prepare and deliver to the Members’
Representative written notice (the “Adjustment Notice”) containing an unaudited
consolidated balance sheet of the Company as of the close of business on the Closing Date (the
“Closing Balance Sheet”), including detailed supporting calculations of (i) the
Indebtedness of the Company less Members’ Subordinated Debt as of the Closing Date (the
“Closing Indebtedness”), (ii) the Members’ Equity of the Company as of the Closing Date
(the “Closing Members’ Equity”), (iii) the Working Capital of the Company as of the Closing
Date (“Closing Working Capital”) and (iv) Parent’s calculation of the amount of any Initial
Merger Consideration adjustment required pursuant to Section 2.03(i) (“Adjustment Amount”),
if any. If Parent represents that no Adjustment Amount is due and required, the Adjustment Notice
shall so state. The Closing Balance Sheet, including the Closing Indebtedness, Closing Members’
Equity and Closing Working Capital, will be prepared in accordance with GAAP in a manner consistent
with the methods and practices used to prepare the Estimated Balance Sheet, Estimated Indebtedness,
Estimated Working Capital, and Estimated Members’ Equity.

          (b) Within 30 days after delivery of the Adjustment Notice, the Members’ Representative will
deliver to Parent a written response in which the Members’ Representative will either:

               (i) agree in writing with the Closing Balance Sheet as set forth in the Adjustment Notice, in
which case such calculations of Closing Indebtedness, Closing Members’ Equity, Closing Working
Capital and Adjustment Amount, if any, will be final and binding on the parties for purposes of
Section 2.03(i); or

7

 

               (ii) dispute Parent’s calculation of Closing Indebtedness, Closing Members’ Equity, Closing
Working Capital or Adjustment Amount, if any, as set forth in the Adjustment Notice by delivering
to Parent a written notice (a “Dispute Notice”) setting forth in reasonable detail the
basis for each such disputed item and certifying that all such disputed items are being disputed in
good faith.

          (c) If the Members’ Representative fails to take either of the foregoing actions within 30
days after delivery of the Adjustment Notice, then the Company will be deemed to have irrevocably
accepted Parent’s calculation of Closing Indebtedness, Closing Members’ Equity, Closing Working
Capital and/or Adjustment Amount, if any, as set forth in the Adjustment Notice, in which case such
calculation of Closing Indebtedness, Closing Members’ Equity, Closing Working Capital and
Adjustment Amount will be final and binding on the parties for purposes of Section 2.03(i).

          (d) If the Members’ Representative delivers a Dispute Notice to Parent within 30 days after
delivery of the Adjustment Notice, then Parent and the Members’ Representative will attempt in good
faith, for a period of 30 days, to agree on the calculations of Closing Indebtedness, Closing
Members’ Equity, Closing Working Capital and Adjustment Amount for purposes of Section 2.03(i).
Any resolution by Parent and the Members’ Representative during such 30-day period as to any
disputed items will be final and binding on the parties for purposes of Section 2.03(i). If Parent
and the Members’ Representative do not resolve all disputed items by the end of 30 days after the
date of delivery of the Dispute Notice, then Parent and the Members’ Representative will submit the
remaining items in dispute to Hein & Associates, LLP, or if that firm is unwilling or unable to
serve, Parent and the Members’ Representative will engage another mutually agreeable independent
accounting firm of recognized national standing, which is not the regular auditing firm of Parent
or the Company. If Parent and the Members’ Representative are unable to jointly select such
independent accounting firm within 10 days after such 30-day period, Parent and the Members’
Representative will each select an independent accounting firm of recognized national standing and
each such selected accounting firm will select a third independent accounting firm of recognized
national standing, which is not the regular auditing firm of Parent or the Company (such selected
independent accounting firm, whether pursuant to this sentence or the preceding sentence, the
“Independent Accounting Firm”). The Independent Accounting Firm will act as arbitrator to
determine (based solely upon presentations made by Parent and the Members’ Representative and not
by independent audit or review) only those items still in dispute. The Purchaser and the Members’
Representative will instruct the Independent Accounting Firm to render its determination with
respect to the items in dispute in a written report that specifies the conclusions of the
Independent Accounting Firm as to each item in dispute and the resulting calculations and
determination of the Closing Indebtedness, Closing Members’ Equity, Closing Working Capital and the
Adjustment Amount. The Purchaser and the Members’ Representative will each use their commercially
reasonable efforts to cause the Independent Accounting Firm to render its
determination within 30 days after referral of the items to such firm or as soon thereafter as
reasonably practicable. The determinations of the Independent Accounting Firm with respect to the
Closing Indebtedness, Closing Members’ Equity, Closing Working Capital and Adjustment Amount will
be final and binding on the parties for purposes of Section 2.03(i). Parent will revise the
Closing Balance Sheet and the calculation of the Closing Indebtedness, Closing Members’ Equity,
Closing Working Capital and Adjustment Amount as appropriate to reflect the

8

 

resolution of the
issues in dispute pursuant to this Section 2.03 and Parent will provide instructions to the Escrow
Agent consistent with such resolution. Any payment from the Escrow Fund for an Adjustment Amount
shall be payable (i) 75% in cash from the Escrow Amount and the
cash proceeds from the sale of any
Escrow Shares or Escrow Warrants (the “Proceeds”) and (ii) 25% in Escrow Shares;
provided, that, the Members’ Representative may elect to have an Adjustment Amount
paid from the Escrow Amount or Proceeds in cash in lieu of
Escrow Shares in a percentage greater than 75% of such Adjustment Amount. The fees and expenses of
the Independent Accounting Firm will be shared by Parent and the Members in proportion to the
relative amounts of the disputed amount (as ultimately resolved) determined to be for the account
of Parent and the Members, respectively. For example, if the final Adjustment Amount is forty
percent (40%) of the Parent’s original Adjustment Amount as determined in accordance with Section
2.03(a), the Members shall pay forty percent (40%) of the fees and expenses of the Independent
Accounting Firm and Parent shall pay the remaining sixty percent (60%) of such fees and expenses.

          (e) For purposes of complying with this Section 2.03, Parent and the Members’ Representative
will furnish to each other and to the Independent Accounting Firm such work papers and other
documents and information relating to the disputed issues as the Independent Accounting Firm may
request and as are available to that party (or its independent public accountants) and each party
will be afforded the opportunity to present to the Independent Accounting Firm any material related
to the disputed items and to discuss the items with the Independent Accounting Firm. Parent must
require that the Independent Accounting Firm enter into a customary form of confidentiality
agreement with respect to the work papers and other documents and information regarding the
matters, including financial information contained in the Adjustment Notice and Dispute Notice,
provided to the Independent Accounting Firm pursuant to this Section 2.03.

          (f) If the Closing Indebtedness as finally determined in accordance with this Section 2.03 is
less than or equal to $13,500,000, then no adjustment shall be made. If the Closing Indebtedness
as finally determined pursuant to this Section 2.03 is greater than the $13,500,000, then the
Members will pay to Parent the amount of such difference pursuant to Section 2.03(i) below.

          (g) If the Closing Members’ Equity as finally determined in accordance with this Section 2.03
is greater than or equal to $14,200,000 (as determined without deducting the Transaction-Related
Members’ Equity Charge), then no adjustment shall be made. If the Closing Members’ Equity as
finally determined pursuant to this Section 2.03 is less than the $14,200,000, then the Members
will pay to Parent the amount of such difference pursuant to Section 2.03(i) below.

          (h) If the Closing Working Capital is less than 14.0% of the average annualized monthly
revenues of the Company using the three (3) completed months immediately preceding the Closing Date
(the “Target Working Capital”), an example of the calculation of which is set forth on
Schedule 2.03(h) for the period ending June 30, 2006, then the Members will pay to Parent the
amount of such difference pursuant to Section 2.03(i) below.

9

 

          (i) All payments required to be made by the Members, on a pro rata basis in proportion to each
Member’s share (carried to five decimal places) of the Company Interests, pursuant to Sections
2.03(f), 2.03(g) and 2.03(h) will first be satisfied by payment from the Escrow Amount and the
Escrow Shares (based on the Escrow Per Share Market Value (as defined below) of the Parent Common
Stock at such time) in accordance with the terms of the Escrow Agreement. The Members will be
severally liable for any amount by which any payments required under Sections 2.03(f), 2.03(g) or
2.03(h) exceed the Escrow Fund. All adjustments to the Initial Merger Consideration pursuant to
this Section 2.03 will be applied to the Initial Merger Consideration to be received by each Member
pro rata based in proportion to each Member's share (carried to five
decimal point places) of the Initial Merger Consideration. The term “Escrow Per Share Market Value” shall mean for
any date, the price determined by calculating the average of the closing per share prices of the
Parent Common Stock on the American Stock Exchange (“AMEX”) (as reported on AMEX) or such
other stock exchange on which Parent Common Stock may then be trading (based on a Trading Day
closing at 4:02 p.m. New York City time) for the twenty days prior to any distribution date as
described in the Escrow Agreement.

          (j) The payments pursuant to Sections 2.03(f), 2.03(g) and 2.03(h) will be treated by the
parties as an adjustment to the Initial Merger Consideration and the Initial Merger Consideration
as so adjusted is referred to in this Agreement as the “Merger Consideration.”

     SECTION 2.04 Exchange of Certificates.

          (a) Exchange Procedures. From and after the Effective Time, a bank or trust company
to be designated by Parent shall act as exchange agent (the “Exchange Agent”) in effecting
the exchange of the applicable Parent Shares, Parent Warrants, Redemption Liability Shares, if any,
and Redemption Warrants, if any, for certificates which immediately prior to the Effective Time
represented outstanding membership interests of Company Interests (“Company Interest
Certificates”) and which were converted into the right to receive the applicable Parent Shares,
Parent Warrants, Redemption Liability Shares, if and, and Redemption Warrants, if any, pursuant to
Sections 2.01, 2.03 and 2.08. As promptly as practicable after the Effective Time, Parent and the
Exchange Agent shall mail to each record holder of Company Interest Certificates a letter of
transmittal (the “Letter of Transmittal”) in a form approved by Parent and the Company and
instructions for use in surrendering such Company Interest Certificates and receiving the
applicable Parent Shares, Parent Warrants, Redemption Liability Shares, if any, and Redemption
Warrants, if any, pursuant to Sections 2.01, 2.03 and 2.08. Promptly after the Effective Time, but
in no event later than ten (10) business days following the Effective Time, Parent shall cause to
be deposited in escrow with the Escrow Agent all of the Escrow Shares and Escrow Warrants in the
names set forth on Schedule 2.04(a) (collectively, the “Escrow 
Securities”). As used in this Agreement, “Escrow Warrants” shall refer to all
Parent Warrants and Redemption Warrants, if any, deposited in escrow with the Escrow Agent.

     Upon the surrender of each Company Interest Certificate for cancellation to the Exchange
Agent, together with a properly completed Letter of Transmittal and such other documents as may
reasonably be required by Parent:

10

 

               (i) Parent shall cause to be issued to the holder of such Company Interest Certificate in
exchange therefor separate certificates representing the Parent Shares, Parent Warrants, Redemption
Liability Shares, if any, and Redemption Warrants, if any, to which such holder is entitled
pursuant to Sections 2.01, 2.03 and 2.08;

               (ii) all Escrow Securities shall be delivered to the Escrow Agent to be held as Escrow Shares
pursuant to the Escrow Agreement; and

               (iii) the Company Interest Certificates so surrendered shall forthwith be cancelled.

          (b) Escrow Fund.

               (i) Prior to or simultaneously with the Closing, the Members’ Representative and Parent shall
enter into an escrow agreement substantially in the form of Exhibit B hereto (the
“Escrow Agreement”) with the Escrow Agent, or if the Escrow Agent is unwilling or unable to
serve, then such other financial institution of at least $500,000,000 in total assets mutually
acceptable to the Members’ Representative and Parent. Pursuant to the terms of the Escrow
Agreement, Parent shall deposit (i) one or more certificates in the name of the Escrow Agent
representing the Escrow Securities and (ii) the Escrow Amount into an escrow account, which account
is to be managed by the Escrow Agent (the “Escrow Account”). Any Escrow Securities, the
Escrow Amount and Proceeds in the Escrow Account are collectively referred to herein as the
“Escrow Fund”. The Escrow Agreement shall provide that so long as a bona fide, good faith
claim for indemnification has not been made by Parent, that (i) the entirety of the Escrow Fund
remain with the Escrow Agent for (18) eighteen months, (ii) after completion of (18) eighteen
months post Closing, the Escrow Amount and that portion of Escrow Shares (and/or any Proceeds or
common stock of Parent received by virtue of the exercise of Parent Warrants and Redemption
Warrants) in excess of $3,000,000 in value based on the Escrow Per Share Market Value be released
to the Members as well as the entirety of the Escrow Warrants, and (iii) upon completion of (60)
sixty months after Closing, the Escrow Account shall be closed and all remaining Escrow Shares
shall be released to the Members. In connection with such deposit of the Escrow Securities and
Escrow Amount with the Escrow Agent and as of the Effective Time, each holder of Company Interest
will be deemed to have constructively received and deposited with the Escrow Agent each Member’s
pro rata interest in the Escrow Fund as determined as of Closing by reference to such Member’s
ownership of Company Interests (plus any additional shares as may be issued upon any stock split,
stock dividend or recapitalization effected by Parent after the Effective Time with respect to
shares constituting the Escrow Fund) as reflected on the Company Interest Certificates, without any
further action by the Members. Distributions of any Escrow Securities or the Escrow Fund or
Proceeds from the Escrow Account shall be governed by the terms and conditions of the Escrow
Agreement, but shall occur no later than the end of the indemnity periods as set forth in
Section 10.01. The adoption of this Agreement and the approval of the Merger by the
Members shall constitute approval of the Escrow Agreement and of all the arrangements relating
thereto, including, without limitation, the placement of the Escrow Securities, Escrow Amount and
Proceeds in the Escrow Fund and the appointment of the Members’ Representative. No Escrow
Securities contributed to the Escrow Fund shall be unvested or subject to any right of repurchase,
risk of forfeiture or other condition in favor of Parent, the Surviving Corporation or other
entity.

11

 

               (ii) In the event of a claim relating to any claim for indemnification any Parent Indemnified
Person (as defined in Section 10.02) may have under Article X (“Indemnification Claim”),
Parent shall seek payment first out of the Escrow Fund. Such Indemnification Amounts shall be
payable (i) 75% in cash from the Escrow Amount and Proceeds and (ii) 25% in Escrow Shares; provided, that, the
Members’ Representative may elect to have an Indemnification
Amount paid from the Escrow Amount or Proceeds in
cash in lieu of Escrow Shares in a percentage greater than 75% of such Adjustment Amount. If the
Escrow Fund has been reduced to zero, Parent shall then be entitled to seek payment for
an unsatisfied Indemnification Amount directly from the Members, subject to the terms and conditions set forth in
Article X.

          (c) Distributions. No dividends or other distributions declared or made after the
Effective Time with respect to Escrow Shares comprising part of the Initial Merger Consideration
with a record date after the Effective Time shall be paid to the holder of any unsurrendered
Company Interest Certificate with respect to the Escrow Shares represented thereby until the holder
of such Company Interest Certificate shall surrender such Company Interest Certificate in
accordance with this Section 2.04. Dividends or other distributions declared or made after
the Effective Time with respect to Escrow Shares comprising part of the Merger Consideration with a
record date after the Effective Time shall be paid to the record owners of the Escrow Shares.

          (d) No Further Rights in Company Interests. Except as otherwise specifically provided
herein, the Parent Shares, the Parent Warrants, the Redemption Liability Shares and the Redemption
Warrants issued upon the conversion of Company Interests in accordance with the terms hereof,
including the registration rights applicable thereto, shall be deemed to have been issued in full
satisfaction of all rights pertaining to such Company Interests.

          (e) No Fractional Shares. Notwithstanding any other provision of this Agreement, no
fractional shares of Parent Common Stock shall be issued upon the conversion and exchange of
Company Interest Certificates, and no holder of Company Interest Certificates shall be entitled to
receive a fractional share of Parent Common Stock. In the event that any holder of Company
Interest would otherwise be entitled to receive a fractional share of Parent Common Stock (after
aggregating all shares and fractional shares of Parent Common Stock issuable to such holder), then
such holder will receive an aggregate number of shares of Parent Common Stock rounded up or down to
the nearest whole share (with amounts equal to 0.5 and greater being rounded up).

          (f) No Liability. Neither Parent nor the Surviving Corporation shall be liable to any
holder of shares of Company Interest for any such shares of Parent Common Stock (or dividends or
distributions with respect thereto) or cash properly and legally delivered to a public official
pursuant to any abandoned property, escheat or similar Law (as defined in Section 3.06(a));
provided, however, that Parent shall promptly give the Members’ Representative written
notice of any such occurrence and such holder of Company Interests shall have the opportunity to
dispute the abandonment and reclaim the shares of Parent Common Stock and all related rights as if
such occurrence had not occurred, provided such dispute is fairly determined for the benefit of the
Member or Members affected.

12

 

          (g) Withholding Rights. Each of the Exchange Agent, the Surviving Corporation and
Parent shall be entitled to deduct and withhold from the Merger Consideration otherwise payable
pursuant to this Agreement to any holder of shares of Company Interest such amounts as it is
required to deduct and withhold with respect to the making of such payment under the United States
Internal Revenue Code of 1986, as amended (the “Code”), or any provision of state, local or
foreign Tax (as defined in Section 3.15(c)) Law, including but not limited to federal and
state withholdings as related to the compensatory component of the Merger Consideration that
relates to the Company’s 2004 Incentive Plan. To the extent that amounts are so withheld by the
Exchange Agent, the Surviving Corporation or Parent, as the case may be, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the holder of the shares
of Company Interest in respect of which such deduction and withholding were made by the Exchange
Agent, the Surviving Corporation or Parent, as the case may be. Any amounts so withheld shall be
properly and timely transmitted to the appropriate parties.

          (h) Lost Certificates. If any Company Interest Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person claiming such
Company Interest Certificate to be lost, stolen or destroyed and, if required by the Surviving
Corporation, the posting by such person of a bond, in such reasonable amount as the Surviving
Corporation may direct, as indemnity against any claim that may be made against it with respect to
such Company Interest Certificate, Parent shall issue in exchange for such lost, stolen or
destroyed Company Interest Certificate, the applicable Parent Shares (and dividends or other
distributions pursuant to Section 2.04(c)), Parent Warrants, Redemption Liability Shares
(and dividends or other distributions pursuant to Section 2.04(c)), and Redemption Warrants
to which such person is entitled pursuant to the provisions of this Article II.

     SECTION 2.05 Membership Interest Transfer Books. Commencing on the date hereof, the
membership interest transfer books of the Company shall be closed and there shall be no further
registration or transfers of shares of Company Interest thereafter on the records of the Company
other than as required to comply with the terms of this Agreement and the Plans. From and after
the Effective Time, each holder of a Company Interest Certificate shall cease to have any rights as
a member of the Company, except as otherwise provided in this Agreement or by Law.

     SECTION 2.06 Earnout Awards.

          (a) From time to time after the Effective Time, the Members shall be entitled to an earnout
award payable in shares of Parent Common Stock (“Earnout Award”) pursuant to the terms of
Section 2.06 below.

          (b) On the date on which any holder (a “Warrant Holder”) of a warrant (other than a
Parent Warrant and a Redemption Warrant) to purchase Parent Common Stock (an “Index
Warrant”), elects to exercise such Index Warrant (each a “Measurement Date”), Parent
shall calculate and record the average Trading Price (each an “Earnout Per Share Market
Value”) of the Parent Common Stock for each of the 3 trading days prior to such Measurement
Date (each a “Measurement Period”). As used herein, the term “Trading Price” shall
mean the closing trading price per share of Parent Common Stock for such date (or the nearest
preceding date) on

13

 

the American Stock Exchange (as reported on AMEX) or such other stock exchange
on which the Parent Common Stock may then be trading.

          (c) On June 30, 2007 (the “Initial Determination Date”), Parent shall determine the
initial Earnout Award payable to the Members for the period beginning on the Closing Date and
ending on June 30, 2007 (the “Initial Determination Period”). Subsequent Earnout Awards
shall be determined on:

               (i) June 30, 2008 (the “Second Determination Date”) for the period beginning on July
1, 2007 and ending on June 30, 2008 (the “Second Determination Period”); and

               (ii) June 30, 2009 (the “Third Determination Date”) for the period beginning on July
1, 2008 and ending on June 30, 2009 (the “Third Determination Period”); and

               (iii) April 30, 2010 (unless extended to June 30, 2010 by the mutual written consent of the
parties hereto) (the “Fourth Determination Date”, and together with the Initial
Determination Date, the Second Determination Date and the Third Determination Date, each a
“Determination Date”) for the period beginning on July 1, 2009 and ending on April 30, 2010
(or June 30, 2010) (the “Fourth Determination Period”, and together with the Initial
Determination Period, the Second Determination Period and the Third Determination Period, each a
“Determination Period”).

          (d) On each Determination Date, Parent shall calculate the respective Earnout Award as follows
(an example of such calculation is set forth on Schedule 2.06(d) attached hereto):

               (i) first, for each exercise of an Index Warrant during such Determination Period, multiply
(A) the respective Earnout Per Share Market Value for such exercise by (B) the number of shares
issued pursuant to such Index Warrant exercise (the “Total Exercised Warrant Value”);

               (ii) second, calculate (A) the aggregate number of shares issued pursuant to all Index Warrant
exercises during such Determination Period, (B) the aggregate Total Exercised Warrant Values from
all exercises for such Determination Period and (C) the per
share weighted average amount of the Total Exercised Warrant Values for all Index Warrant
exercises during such Determination Period;

               (iii) third, multiply (A) the number of shares calculated in Section 2.06(d)(ii)(A) by (B)
$5.00;

               (iv) fourth, subtract (A) the number determined in Section 2.06(d)(iii) from (B) the aggregate
Total Exercised Warrant Values for such Determination Period;

               (v) if the amount determined in Section 2.06(d)(iv) above is greater than zero, Parent shall
issue to the Members shares of Parent Common Stock equal to the

14

 

quotient of (A) the amount
determined in Section 2.06(d)(iv) above divided by (B) the amount determined in Section
2.06(d)(ii)(C) (“Earnout Award Shares”).

          (e) Within fifteen (15) days of each Determination Date, Parent shall provide written notice
to the Members’ Representative as to the number of Earnout Award Shares, if any, (an “Earnout
Notice”). Such Earnout Notice shall also contain Parent’s calculation of such Earnout Award
Shares pursuant to Section 2.06(c).

          (f) Within 15 days after delivery of an Earnout Notice, the Members’ Representative will
deliver to Parent a written response in which the Members’ Representative will either:

               (i) agree in writing with the contents of the Earnout Notice, in which case such calculations
of the Earnout Award Shares (the “Earnout Award Calculation”), if any, will be final and
binding on the parties for purposes of Section 2.06; or

               (ii) dispute Parent’s determination of the Earnout Award Calculations, if any, as set forth in
a written notice (a “Earnout Dispute Notice”) setting forth in reasonable detail the basis
for each such disputed item and certifying that all such disputed items are being disputed in good
faith.

          (g) If the Members’ Representative fails to take either of the foregoing actions within 15
days after delivery of the Earnout Notice, then the Company and Members will be deemed to have
irrevocably accepted Parent’s determination of such Earnout Notice, in which case such
determination of the Earnout Award Calculation will be final and binding on the parties for
purposes of Section 2.06(j).

          (h) If the Members’ Representative delivers an Earnout Dispute Notice to Parent within 10 days
after delivery of the Earnout Notice, then Parent and the Members’ Representative will attempt in
good faith, for a period of 15 days, to agree on the calculations for purposes of Section 2.06.
Any resolution by Parent and the Members’ Representative during such 15-day period as to any
disputed items will be final and binding on the parties for purposes of Section 2.06. If Parent
and the Members’ Representative do not resolve all disputed items by the end of 15 days after the
date of delivery of the Earnout Dispute Notice, then Parent and the Members’ Representative will
submit the remaining items in dispute to the Independent
Accounting Firm and the procedures set forth in Section 2.03(d) shall be utilized to resolve
the disputed items. The determinations of the Independent Accounting Firm with respect to the
Earnout Award Calculation will be final and binding on the parties for purposes of Section 2.06.
Parent will revise all of the affected changes in the Earnout Award Calculation as appropriate to
reflect the resolution of the issues in dispute pursuant to this Section 2.06.

          (i) For purposes of complying with this Section 2.06, Parent and the Members’ Representative
will furnish to each other and to the Independent Accounting Firm such work papers and other documents and
information relating to the disputed issues as the Independent Firm may request and as are
available to that party (or its independent public accountants) and each party will be afforded the
opportunity to present to the Independent Accounting Firm any material related to the disputed items and to
discuss the items with the Independent Firm. Parent must

15

 

require that the Independent Firm enter
into a customary form of confidentiality agreement with respect to the work papers and other
documents and information regarding the matters, including financial information contained in the
Earnout Notice and Earnout Dispute Notice, provided to the Independent Accounting Firm pursuant to
this Section 2.06.

          (j) Once the Earnout Calculation is finalized, Parent shall issue such Earnout Award Shares to
the Members as determined by the Earnout Calculation pursuant to Section 2.06(k) and (j) herein.
Notwithstanding if the amount determined in Section 2.06(d)(iv) above is zero or less than zero,
Parent not shall issue any Earnout Award Shares to the Members. Parent shall promptly prepare and
file with AMEX a Notification Form for Listing Additional Shares with respect to any Earnout Award
Shares to be issued pursuant to Section 2.06 and shall use its
commercially reasonable efforts to obtain, prior
to such issuance of any Earnout Award Shares, approval for the listing of such Earnout Award
Shares, subject to official notice to AMEX of issuance.

          (k) In the event that the Members are issued Earnout Award Shares, all of such Earnout Award
Shares and the possession thereof shall be given to the Escrow Agent as soon as practicable. All
of the rights, duties and obligations with respect to said Earnout Award Shares shall be equivalent
to the rights, duties and obligations with respect to the Parent Shares, except as otherwise
specifically provided herein, including but not limited to the rights granted to the Members under
the Registration Rights Agreement.

          (l) Return of Parent Warrants and Redemption Warrants. In exchange for an Earnout
Award, each Member shall surrender a number of Parent Warrants and/or Redemption Warrants
exercisable for an amount of Parent Common Stock equal to such Earnout Award to Parent, together
with such other documents as may reasonably be required by Parent.

          (m) No Fractional Shares. Notwithstanding any other provision of this Agreement, no
fractional shares of Common Stock shall be issued pursuant to this Section 2.06, and no Member
shall be entitled to receive a fractional share of Common Stock pursuant to Section 2.06. In the
event that any Member would otherwise be entitled to receive a fractional share of Common Stock
pursuant to this Section 2.06, then such Member will receive an aggregate number of shares of
Common Stock rounded up or down to the nearest whole share (with amounts greater than 0.5 being
rounded up). If the Parent Warrant or Redemption Warrant shall have been exercised in part, Parent
shall, at the time of delivery of the certificate or
certificates representing Parent Warrants or Redemption Warrants, deliver to holder a new
Parent Warrant or new Redemption Warrant, as the case may be, evidencing the rights of holder to
acquire shares of Parent Common Stock called for by the Parent Warrant or the Redemption Warrant,
which new Parent Warrant or Redemption Warrant, as the case may be, shall in all other respects be
identical with the original Parent Warrant or the original Redemption Warrant.

     SECTION 2.07 Securities Laws Issues. Parent shall issue the Parent Shares and Parent
Warrants as provided in Section 2.01, the shares of Parent Common Stock as provided in Section 2.06
of this Agreement and the Redemption Liability Shares and Redemption Warrants pursuant to a
“private placement” exemption or exemptions from registration under Section 4(2) of the Securities
Act of 1933, as amended (the “Securities Act”) and/or Regulation D promulgated under the
Securities Act and an exemption from qualification under the laws of the State of Texas and other
applicable state securities laws notwithstanding that the Parent Shares,

16

 

Parent Warrants,
Redemption Liability Shares, Redemption Warrants, and Parent Common Stock issuable pursuant to an
Earnout Award shall be entitled to their respective rights specified in the Registration Rights
Agreement. Parent and the Company shall comply with all applicable provisions of, and rules under,
the Securities Act and applicable state securities laws in connection with the offering and
issuance of the shares of Parent Common Stock pursuant to this Agreement. Such Parent Shares,
Parent Warrants, Redemption Liability Shares, Redemption Warrants and Parent Common Stock issuable
pursuant to an Earnout Award will be “restricted securities” under the Federal and state securities
laws and cannot be offered or resold except pursuant to registration under the Securities Act or an
available exemption from registration.

     SECTION 2.08 Redemption Shares Issuance.

          (a) As used in this Agreement, the following terms have the following meanings (except as
noted in this Agreement):

               (i) “Exchange Value” means $5.40 per share of Parent Common Stock.

               (iii) “Redemption Calculations” has the meaning set forth in Section 2.08(c)(i).

               (iv) “Redemption Dispute Notice” has the meaning set forth in Section 2.08(c)(ii).

               (v) “Redemption Liability Adjustment Amount” means the Redemption Shares Number
multiplied by the Redemption Price Differential less the Redemption Shares Safe Harbor.

               (vi) “Redemption Liability Shares” means the number of shares of Parent Common Stock,
to be issued to the Members, if any, determined by dividing the Redemption Liability Adjustment
Amount by the Exchange Value.

               (vii) “Redemption Option” means the option that each holder of Parent Common Stock has
to require the Parent to redeem or convert his, her or its ownership of Parent Common Stock prior
to the Closing in accordance with the governing documents of Parent.

               (viii) “Redemption Notice” has the meaning set forth in Section 2.08(b).

               (ix) “Redemption Price” means the price per share of Parent Common Stock that Parent
is required to pay to any holder of Parent Common Stock exercising their Redemption Option.

17

 

               (x) “Redemption Price Differential” means the difference between the Redemption Price
and the Exchange Value.

               (xi) “Redemption Shares Number” means the aggregate number of shares of Parent Common
Stock which are required to be redeemed or converted by Parent from the holders of such Parent Common Stock
prior to the Closing in accordance with the governing documents of Parent based on those holders
who exercise their Redemption Option.

               (xii) “Redemption Shares Safe Harbor” means $3,000,000.

               (xiii) “Redemption Warrant” means the warrants issued by Parent pursuant to this
Section 2.08.

          (b) Parent and Merger Sub covenant and agree that they shall comply with all of the
requirements of their respective governing documents in connection with timely execution relating
to the holders of Parent Common Stock and their collectively held Redemption Option. Once the
expiration date for any holders of Parent Common Stock to exercise the Redemption Option has
occurred, Parent shall promptly provide written notice to the Members’ Representative as to the
amount of the Redemption Shares Number, if any, and the Redemption Price paid therefore (the
“Redemption Notice”). Such Redemption Notice shall also contain Parent’s calculation of
the amount of the Redemption Liability Adjustment Amount and the aggregate amount of Redemption
Liability Shares and Redemption Warrants.

          (c) Within 15 days after delivery of the Redemption Notice, the Members’ Representative will
deliver to Parent a written response in which the Members’ Representative will either:

               (i) agree in writing with the contents of the Redemption Notice, in which case such
calculations of the Redemption Shares Number, Redemption Price, Redemption Liability Adjustment
Amount and the aggregate amount of Redemption Liability
Shares and Redemption Warrants (collectively, the “Redemption Calculations”), if any,
will be final and binding on the parties for purposes of Section 2.08; or

               (ii) dispute Parent’s determination of the Redemption Calculations, if any, as set forth in a
written notice (a “Redemption Dispute Notice”) setting forth in reasonable detail the basis
for each such disputed item and certifying that all such disputed items are being disputed in good
faith.

          (d) If the Members’ Representative fails to take either of the foregoing actions within 15
days after delivery of the Redemption Notice, then the Company and Members will be deemed to have
irrevocably accepted Parent’s determination of the Redemption Notice, in which case such
determination of the Redemption Calculation will be final and binding on the parties for purposes
of Section 2.08(g).

          (e) If the Members’ Representative delivers a Redemption Dispute Notice to Parent within 15
days after delivery of the Redemption Notice, then Parent and the Members’ Representative will
attempt in good faith, for a period of 15 days, to agree on the calculations for purposes of
Section 2.08. Any resolution by Parent and the Members’

18

 

Representative during such 15-day period
as to any disputed items will be final and binding on the parties for purposes of Section 2.08. If
Parent and the Members’ Representative do not resolve all disputed items by the end of 15 days
after the date of delivery of the Redemption Dispute Notice, then Parent and the Members’
Representative will submit the remaining items in dispute to the Independent Accounting Firm and
the procedures set forth in Section 2.03(d) shall be utilized to resolve the disputed items. The
determinations of the Independent Accounting Firm with respect to the Redemption Calculations will
be final and binding on the parties for purposes of Section 2.08. Parent will revise all of the
affected changes in the Redemption Calculations as appropriate to reflect the resolution of the
issues in dispute pursuant to this Section 2.08.

          (f) For purposes of complying with this Section 2.08, Parent and the Members’ Representative
will furnish to each other and to the Independent Firm such work papers and other documents and
information relating to the disputed issues as the Independent Firm may request and as are
available to that party (or its independent public accountants) and each party will be afforded the
opportunity to present to the Independent Firm any material related to the disputed items and to
discuss the items with the Independent Firm. Parent must require that the Independent Firm enter
into a customary form of confidentiality agreement with respect to the work papers and other
documents and information regarding the matters, including financial information contained in the
Redemption Notice and Redemption Dispute Notice, provided to the Independent Accounting Firm
pursuant to this Section 2.08.

          (g) Once the Redemption Calculations are finalized, Parent shall issue the Redemption
Liability Shares and Redemption Warrants to the Members pro rata based in proportion to each
Member’s share (carried to five decimal point places) of the Company Interests. Notwithstanding
anything to the contrary contained herein, if the amount of Redemption Liability Shares is zero (0)
or negative, then the Members shall not be entitled to receive any additional shares of Parent
Common Stock under this Section 2.08. If there are any
Redemption Liability Shares to be issued to the Members, on or about the Closing pursuant to
this Section 2.08, such Redemption Liability Shares shall be issued to each of the Members together
with two Redemption Warrants, substantially in the identical form of the Parent Warrants, for each
Redemption Liability Share issued pursuant to this Section 2.08(g).

          (h) Distributions, dividends or other distributions declared or made after the Effective Time
with respect to Redemption Liability Shares with a record date after the Effective Time shall be
paid to the record owners of Redemption Liability Shares.

          (i) Notwithstanding any other provision of this Agreement, no fractional shares or Redemption
Liability Shares shall be issued. In the event that any Member would otherwise be entitled to
receive a fractional share of a Redemption Liability Share (after aggregating all shares and
fractional shares of Parent Common Stock issuable to such holder under this Section 2.08 and
otherwise under this Agreement), then such holder will receive an aggregate number of shares of
Parent Common Stock rounded up or down to the nearest whole share (with amounts equal to 0.5 and
greater being rounded up).

          (j) In the event that the Members are issued Redemption Liability Shares and Redemption
Warrants, all of such Redemption Liability Shares and
Redemption

19

 

Warrants and the possession
thereof shall be given to the Escrow Agent as soon as practicable. All of the rights, duties and
obligations with respect to said Redemption Liability Shares and Redemption Warrants shall be
equivalent to the rights, duties and obligations with respect to the Parent Shares and Parent
Warrants, except as otherwise specifically provided herein, including but not limited to the rights
granted to the Members under the Registration Rights Agreement and the rights specified in Section
2.06 pertaining to Earnout Awards.

                 (k) Any issuance of Redemption Liability Shares and Redemption Warrants pursuant to this
Section 2.08 will be treated by the parties as an adjustment to the Initial Merger Consideration
and the Initial Merger Consideration as so adjusted is referred to in this Agreement as the
“Merger Consideration”.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     The Company hereby represents and warrants to Parent and Merger Sub that the statements
contained in this Article III are true and correct except as set forth in the disclosure schedule
delivered by the Company to Parent and Merger Sub concurrently with the execution of this Agreement
(the “Company Disclosure Schedule”). The Company Disclosure Schedule shall be arranged and
cross-referenced to specific sections in this Article III and shall provide exceptions to, or
otherwise qualify in reasonable detail, only the specific corresponding section in this Article
III.

          SECTION 3.01 Organization and Qualification. The Company is a limited liability
company duly organized, validly existing and in good standing under the laws of the State of Texas
and has all requisite corporate power and
authority to own, lease and otherwise hold and operate its properties and other assets and to
carry on its business as it is now being conducted and as currently proposed to be conducted,
except where the failure to be so organized, existing or in good standing or to have such corporate
power and authority has not had, and could not reasonably be expected to have, individually or in
the aggregate, a Company Material Adverse Effect (as defined below). The Company is duly qualified
or licensed as a foreign corporation to do business, and is in good standing, in each jurisdiction
where the character of the properties owned, leased or operated by it or the nature of its business
makes such qualification or licensing necessary, except where the failure to be so qualified or
licensed and in good standing has not had, and could not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect. Section 3.01 of the Company
Disclosure Schedule sets forth each jurisdiction where the Company is qualified or licensed as a
foreign corporation and each other jurisdiction in which the Company owns, uses, licenses or leases
real property or has employees or engages independent contractors. The term “Company Material
Adverse Effect” means any event, change, violation, inaccuracy, circumstance or effect
(regardless of whether or not such events, changes, violations, inaccuracies, circumstances or
effects are inconsistent with the representations or warranties made by the Company in this
Agreement) that has, or could reasonably be expected to have, individually or in the aggregate, a
material adverse effect on the business, operations, condition (financial or otherwise), assets
(tangible or intangible), liabilities, employees, properties, prospects, capitalization or results
of operations of the Company, except for any such events, changes, violations, inaccuracies,

20

 

circumstances or effects resulting from or arising in connection with (i) any changes in general,
political, global or other national or worldwide events or changes in economic or business
conditions that do not disproportionately impact the Company as compared to other entities similar
in size and scope as that of the Company and that are within its industry or (ii) any changes or
events affecting the industry in which the Company operates that do not disproportionately impact
the Company as compared to other entities similar in size and scope as that of the Company and that
are within its industry.

          SECTION 3.02 Articles of Organization and Regulations. The Company has heretofore
made available to Parent a complete and correct copy of (a) the Articles of Organization and
Regulations of the Company (together, the “Company Charter Documents”) including all
amendments thereto, (b) the minute books containing all consents, actions and meetings of the
Members of the Company and the Company’s Board of Managers and any committees thereof, and (c) the
Member Interest transfer books of the Company setting forth all issuances or transfers of any
interests of the Company. Such Company Charter Documents are in full force and effect. The
Company is not in violation of any of the provisions of the Company Charter Documents. The minute
books, membership interests transfer books, stock registers and other records of the Company are
complete and accurate, and the signatures appearing on all documents contained therein are the true
or facsimile signatures of the persons purported to have signed the same.

          SECTION 3.03 No Subsidiaries.

               (a) The Company does not own, of record or beneficially, or control any direct or indirect
equity or other interest, or any right (contingent or otherwise) to acquire the
same, in any corporation, partnership, limited liability company, joint venture, association
or other entity. The Company is not a member of (nor is any part of the Company’s business
conducted through) any partnership, nor is the Company a participant in any joint venture or
similar arrangement. There are no contractual obligations of the Company to provide funds to, or
make any investment in (whether in the form of a loan, capital contribution or otherwise), any
other person.

               (b) The Company does not control, directly or indirectly, or have any direct or indirect
equity participation or similar interest in any corporation, partnership, limited liability
company, joint venture, trust or other business association which is not a Subsidiary. There are
no contractual obligations of the Company to provide funds to, or make any investment in (whether
in the form of a loan, capital contribution or otherwise), any other person.

          SECTION 3.04 Capitalization.

               (a) The Company Interests set forth in Section 3.04(a) of the Company Disclosure Schedule will
represent all of the outstanding member or other equity ownership interests of the Company on the
Closing Date. The Company has no securities or other instruments convertible into or exercisable
for membership or other equity ownership interests of the Company that have not already been
converted as of the Closing Date. All of the Company Interests have been duly authorized and
validly issued and are fully paid and non-assessable.

21

 

               (b) As of the Closing Date, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character, whether or not contingent, relating to the issued or
unissued capital stock of the Company or obligating the Company to issue or sell any share of
capital stock of, or other equity interest in, the Company. All shares of Company Interest so
subject to issuance, upon issuance in accordance with the terms and conditions specified in the
instruments pursuant to which they are issuable, will be duly authorized, validly issued, fully
paid and nonassessable.

               (c) The Company does not have outstanding any bonds, debentures, notes or other obligations
the holders of which have the right to vote (or which are convertible into or exercisable for
securities having the right to vote) with the Members of the Company on any matter (other than the
consent rights of the Company’s lender as disclosed in Section 3.06(a) of the Company Disclosure
Schedule).

               (d) All of the securities offered, sold or issued by the Company (i) have been offered, sold
or issued in compliance with the requirements of the Federal securities laws and any applicable
state securities or “blue sky” laws, and (ii) are not subject to any preemptive right, right of
first refusal, right of first offer or right of rescission.

               (e) Except as set forth in Section 3.04(e) of the Company Disclosure Schedule, the Company has
never repurchased, redeemed or otherwise reacquired any shares of capital stock or other securities
of the Company, other than unvested securities in the ordinary course upon termination of
employment or consultancy. There are no outstanding contractual obligations of the Company to
repurchase, redeem or otherwise acquire any share of capital stock of, or other equity interest in,
the Company. Other than as set forth in Section 3.04(e) of
the Company Disclosure Schedule, there are no member agreements, voting trusts or other
agreements or understandings to which the Company is a party, or of which the Company is aware,
that (i) relate to the voting, registration or disposition of any securities of the Company, (ii)
grant to any person or group of persons the right to elect, or designate or nominate for election,
a manager to the Board of Managers of the Company, or (iii) grant to any person or group of persons
information rights.

          SECTION 3.05 Authority Relative to This Agreement.

               (a) The Company has the legal power, capacity and authority to execute this Agreement and all
other agreements and documents contemplated hereby to which it is party. The execution and
delivery of this Agreement and such other agreements and documents by the Company, to the extent a
party thereto, and the consummation by the Company of the transactions contemplated hereby have
been validly authorized by the Company and the Members and no other action on the part of the
Company or the Members is necessary to validly authorize the transactions contemplated hereby
(other than the approval and adoption of this Agreement and the Merger by the Members as described
in Section 3.16 hereof and the filing and recordation of appropriate merger documents as required
by the DGCL and TLLCA). This Agreement has been duly and validly executed and delivered by the
Company and, assuming the due authorization, execution and delivery by Parent and Merger Sub,
constitutes a legal, valid and binding obligation of the Company, enforceable against the Company
in accordance with its terms, subject to the effect of any applicable bankruptcy, reorganization,

22

 

insolvency, moratorium or similar Laws affecting creditors’ rights generally and subject, as to
enforceability, to the effect of general principles of equity.

               (b) Without limiting the generality of the foregoing, the Board of Managers of the Company, at
a meeting duly called and held, has unanimously (i) determined that the Merger and the other
transactions contemplated hereby are fair to, and in the best interests of, the Company and
Members, (ii) approved and adopted the Merger, this Agreement and the other transactions
contemplated hereby in accordance with the provisions of the DGCL and TLCCA and the Company’s
charter documents, and (iii) directed that this Agreement and the Merger be submitted to the
Members for their approval and adoption and (iv) resolved to recommend that the Members vote in
favor of the approval and adoption of this Agreement.

          SECTION 3.06 No Conflict; Required Filings and Consents.

               (a) Except as set forth in Section 3.06(a) of the Company Disclosure Schedule, the execution
and delivery of this Agreement by the Company do not, and the performance of this Agreement by the
Company will not, (i) conflict with or violate the Company Charter Documents, (ii) assuming that
all consents, approvals, authorizations and other actions described in Section 3.06(b) have
been obtained and all filings and obligations described in Section 3.06(b) have been made
or complied with, conflict with or violate any foreign or domestic (Federal, state or local) law,
statute, ordinance, franchise, permit, concession, license, writ, rule, regulation, order,
injunction, judgment or decree (“Law”) applicable to the Company or by which any property
or asset of the Company is bound or affected, or (iii) conflict with, result in any breach of or
constitute a default (or an event which with notice or lapse of time or
both would become a default) under, require consent, approval or notice under, give to others
any right of termination, amendment, acceleration or cancellation of, require any payment under, or
result in the creation of a lien or other encumbrance on any property or asset of the Company
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Company is a party or by which any
property or asset of the Company is bound or affected.

               (b) Except as set forth in Section 3.06(b) of the Company Disclosure Schedule, the execution
and delivery of this Agreement by the Company do not, and the performance of this Agreement by the
Company will not, require any consent, approval, order, permit or authorization from, or
registration, notification or filing with, any domestic or foreign governmental, regulatory or
administrative authority, agency or commission, any court, tribunal or arbitral body, or any
quasi-governmental or private body exercising any regulatory, taxing, importing or other
governmental authority (a “Governmental Entity”), except (i) for the pre-merger
notification requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
and the rules and regulations promulgated thereunder (the “HSR Act”), if applicable, and
(ii) for the filing and recordation of appropriate merger documents as required by the DGCL or the
TLLCA, and (iii) for such other consents, approvals, orders, permits, authorizations,
registrations, notifications or filings, which if not obtained or made could not reasonably be
expected, individually or in the aggregate, to prevent or materially delay the consummation of the
transactions contemplated by this Agreement.

23

 

          SECTION 3.07 Permits; Compliance.

               (a) The Company is in possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exceptions, consents, certificates, approvals and orders of any Governmental
Entity necessary for the Company to own, lease and otherwise hold and operate its properties and
other assets and to carry on its business as it is now being conducted and as currently proposed to
be conducted (the “Company Permits”). All Company Permits are in full force and effect and
will remain so after the Closing and no suspension or cancellation of any Company Permit is pending
or, to the Knowledge of the Company, threatened. The Company has not received any notice or other
communication from any Governmental Entity regarding (i) any actual or possible violation of or
failure to comply with any term or requirement of any Company Permit, or (ii) any actual or
possible revocation, withdrawal, suspension, cancellation, termination or modification of any
Company Permit.

               (b) The Company is not in conflict with, or in default or violation of (i), to the Knowledge
of the Company, any Law applicable to the Company or by which any property or asset of the Company
is bound or affected, (ii) any material note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which the Company is a party
or by which the Company or any property or asset of the Company is bound or affected, or (iii), to
the Knowledge of the Company, any Company Permit.

          SECTION 3.08 Financial Statements.

               (a) True and complete copies of (i) the audited balance sheets of the Company as of December
31, 2004 and 2005, and the audited statements of operations, changes in members’ equity and changes
in cash flows for the year ended December 31, 2005, together with all related notes and schedules
thereto (collectively referred to herein as the “Audited Financial Statements”), (ii) the
unaudited statements of operations, changes in members’ equity and changes in cash flows for the
period commencing on the Company’s inception date and ending December 31, 2004 (collectively
referred to herein as the “Unaudited Financial Statements”) and (iii) the unaudited balance
sheet of the Company as of June 30, 2006 (the “Reference Balance Sheet”), and the related
statements of operations, changes in members’ equity and changes in cash flows for the six months
ended June 30, 2006 (and together with the Reference Balance Sheet, the “Interim Financial
Statements”), are attached as Section 3.08(a) of the Company Disclosure Schedule. The Audited
Financial Statements, the Unaudited Financial Statements and the Interim Financial Statements
(including, in each case, any notes thereto)(collectively, the “Company Financial
Statements”) were prepared in accordance with GAAP applied on a consistent basis throughout the
periods indicated (except as may be indicated in the notes thereto or, in the case of unaudited
statements, as permitted by GAAP) and each present fairly, in all material respects, the financial
position of the Company as at the respective dates thereof and for the respective periods indicated
therein, except as otherwise noted therein (subject, in the case of the Unaudited Financial
Statements, Interim Financial Statements, to normal and recurring year-end adjustments which were
not and are not expected, individually or in the aggregate, to be material).

               (b) To the Knowledge of the Company, except as set forth in Section 3.08(b) of the Company
Disclosure Schedule, the Company does not have any debts,

24

 

liabilities or obligations of any nature
(whether accrued or fixed, absolute or contingent, matured or unmatured, determined or
determinable, or as a guarantor or otherwise) (“Liabilities”), other than Liabilities (i)
recorded or reserved against on the Reference Balance Sheet or (ii) incurred in the ordinary course
of business, consistent with past practice, since June 30, 2006 plus up to an aggregate amount of
$100,000 incurred since June 30, 2006 not in the ordinary course of the business, consistent with
past practice. Except as set forth in Section 3.08(b) of the Company Disclosure Schedule, reserves
are reflected on the Reference Balance Sheet and on the books of account and other financial
records of the Company against all Liabilities of the Company in amounts that have been established
on a basis consistent with the past practice of the Company and in accordance with GAAP. To the
Knowledge of the Company and except as set forth in Section 3.08(b) of the Company Disclosure
Schedule, there are no outstanding warranty claims against the Company. To the extent any specific
representation or warranty in this Agreement is otherwise qualified as to the party’s knowledge or
as to materiality; the definition of “Liabilities” used in this Section 3.08(b) does not undermine
or modify any other representation contained herein, and the Company shall not be deemed in
violation of this Section 3.08(b) for any Liabilities governed by other specific representations
and warranties in this Agreement.

          SECTION 3.09 Absence of Certain Changes or Events. Since January 1, 2006, except as
contemplated by or as disclosed in this Agreement, the Company has conducted its business only in
the ordinary course and in a manner consistent with past practice and, since such date, (a) there
has not been any Company Material Adverse Effect
and (b) the Company has not taken or legally committed to take any of the actions specified in
Section 5.01(a) through (z).

          SECTION 3.10 Absence of Litigation. Except as set forth in Section 3.10 of the
Company Disclosure Schedule, there is no litigation, suit, claim, action, proceeding or
investigation (a “Legal Proceeding”) pending or, to the Knowledge of the Company,
threatened against the Company, or any property or asset owned or used by the Company or any person
whose liability the Company has or may have assumed, either contractually or by operation of Law,
before any arbitrator or Governmental Entity that could reasonably be expected, if resolved
adversely to the Company, to (i) impair the operations of the Company as currently conducted,
including, without limitation, any claim of infringement of any intellectual property right, (ii)
collectively result in losses to the Company in excess of $250,000, (iii) impair the ability of
the Company to perform its obligations under this Agreement or (iv) prevent, delay or make illegal
the consummation of the transactions contemplated by this Agreement. To the Company’s Knowledge,
no event has occurred, and no claim, dispute or other condition or circumstance exists, that could
reasonably be expected to give rise to or serve as a basis of the commencement of any Legal
Proceeding involving the Company (as set forth above). Neither the Company nor the officers or
managers thereof in their capacity as such, or any property or asset of the Company is subject to
any continuing order of, consent decree, settlement agreement or other similar written agreement
with, or, to the Knowledge of the Company, continuing investigation by, any Governmental Entity, or
any order, writ, judgment, injunction, decree, determination or award of any court, arbitrator or
Governmental Entity. Except as disclosed in Section 3.10 of the Company Disclosure Schedule, the
Company has no plans to initiate any Legal Proceeding against any third party.

25

 

          SECTION 3.11 Employee Benefit Plans; Labor Matters.

               (a) Section 3.11(a) of the Company Disclosure Schedule lists (i) all employee benefit plans
(as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”)) and all bonus, stock option, stock purchase, stock appreciation right,
restricted stock, phantom stock, incentive, deferred compensation, retiree medical, disability or
life insurance, cafeteria benefit, dependent care, disability, director or employee loan, fringe
benefit, sabbatical, supplemental retirement, severance or other benefit plans, programs or
arrangements, and all employment, termination, severance or other contracts or agreements (whether
legally enforceable or not, whether formal or informal and whether in writing or not) to which the
Company is a party, with respect to which the Company has any obligation or which are maintained,
contributed to or sponsored by the Company for the benefit of any current or former employee,
officer or manager of the Company, (ii) each employee benefit plan for which the Company could
incur liability under Section 4069 of ERISA in the event such plan has been or were to be
terminated, (iii) any plan in respect of which the Company could incur liability under Section
4212(c) of ERISA, and (iv) any employment agreements, offer letters or other contracts,
arrangements or understandings between the Company and any key employee of the Company (whether
legally enforceable or not, whether
formal or informal and whether in writing or not) including, without limitation, any
contracts, arrangements or understandings relating to a sale of the Company (each, a
“Plan,” and collectively, the “Plans”).

               (b) Each Plan is in writing and the Company has furnished Parent with a true and complete copy
of each Plan (or a written summary where the Plan is not in writing) and a true and complete copy
of each material document, if any, prepared in connection with each such Plan, including, without
limitation, (i) a copy of each trust or other funding arrangement, (ii) each summary plan
description and summary of material modifications, (iii) the two (2) most recent annual reports
(Form 5500 series and all schedules and financial statements attached thereto), if any, required
under ERISA or the Code in connection with each Plan, (iv) the most recently received Internal
Revenue Service determination letter for each Plan intended to qualify under ERISA or the Code, (v)
the most recently prepared actuarial report and financial statement in connection with each such
Plan, (vi) any correspondence with the Internal Revenue Service or the Department of Labor with
respect to each such Plan and (vii) each form of notice of grant and stock option agreement used to
document Company Options. Except as disclosed on Section 3.11(a) of the Company Disclosure
Schedule, there are no other employee benefit plans, programs, arrangements or agreements, whether
formal or informal, whether in writing or not, to which the Company is a party, with respect to
which the Company has any obligation or which are maintained, contributed to or sponsored by the
Company for the benefit of any current or former employee, officer or manager of the Company. The
Company has no express or implied commitment, whether legally enforceable or not, (x) to create,
incur liability with respect to, or cause to exist, any other employee benefit plan, program or
arrangement, (y) to enter into any contract or agreement to provide compensation or benefits to any
individual, or (z) to modify, change or terminate any Plan, other than with respect to a
modification, change or termination required by ERISA or the Code.

               (c) None of the Plans is a multi-employer plan (within the meaning of Section 3(37) or
4001(a)(3) of ERISA) (a “Multi-employer Plan”) or a single employer pension

26

 

plan (within
the meaning of Section 4001(a)(15) of ERISA) for which the Company could incur liability under
Section 4063 or 4064 of ERISA (a “Multiple Employer Plan”). Each Plan is subject only to
the Laws of the United States or a political subdivision thereof.

               (d) Except as set forth in Section 3.11(d) of the Company Disclosure Schedule, none of the
Plans provides for the payment of separation, severance, termination or similar benefits to any
person or obligates the Company to pay separation, severance, termination or similar-type benefits
solely or partially as a result of any transaction contemplated by this Agreement or as a result of
a “change in ownership or control,” within the meaning of such term under Section 280G of the Code.
Neither the execution and delivery of this Agreement nor the consummation of the transactions
contemplated hereby, either alone or together with another event, will (i) result in any payment
(including, without limitation, severance, unemployment compensation, golden parachute, forgiveness
of indebtedness or otherwise) becoming due under any Plan, whether or not such payment is
contingent, (ii) increase any benefits otherwise payable under any Plan or other arrangement, (iii)
result in the acceleration of the time of payment, vesting or funding of any benefits including,
but not limited to, the acceleration of the vesting and exercisability of any Company Option,
whether or
not contingent, or (iv) affect in any material respects any Plan’s current treatment under any
Laws including any Tax or social contribution Law. No Plan provides, or reflects or represents any
liability to provide, retiree health, disability, or life insurance benefits to any person for any
reason, except as may be required by the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended (“COBRA”), or other applicable statute, and the Company has never represented,
promised or contracted (whether in oral or written form) to any employee (either individually or to
employees as a group) or any other person that such employee or other person would be provided with
retiree health, disability, or life insurance benefits, except to the extent required by statute.

               (e) Each Plan is now and always has been operated in all material respects in accordance with
its terms and the requirements of all applicable Laws, regulations and rules promulgated thereunder
including, without limitation, ERISA and the Code. The Company has performed all obligations
required to be performed by it under, is not in any respect in default under or in violation of,
and to the Knowledge of the Company, there is not any default or violation by any party to, any
Plan. No action, claim or proceeding is pending or, to the Knowledge of the Company, threatened
with respect to any Plan (other than claims for benefits in the ordinary course) and no fact or
event exists that could give rise to any such action, claim or proceeding. Neither the Company nor
any person that is a member of the same controlled group as the Company or under common control
with the Company within the meaning of Section 414 of the Code (each, an “ERISA Affiliate”)
is subject to any penalty or Tax with respect to any Plan under Section 502(i) of ERISA or Sections
4975 through 4980 of the Code. Each Plan can be amended, terminated or otherwise discontinued at
any time without material liability to Parent, the Company or any of their ERISA Affiliates (other
than ordinary administration expenses). Neither the Company nor any affiliate has, prior to the
Effective Time and in any material respect, violated any of the health care continuation
requirements of COBRA, the requirements of the Family Medical Leave Act of 1993, the requirements
of the Health Insurance Portability and Accountability Act of 1996, the requirements of the Women’s
Health and Cancer Rights Act of 1998, the requirements of the Newborns’ and Mothers’ Health

27

 

Protection Act of 1996, or any amendment to each such act, or any similar provisions of state Law
applicable to its employees.

               (f) Each Plan intended to qualify under Section 401(a) or Section 401(k) of the Code and each
trust intended to qualify under Section 501(a) of the Code (i) has received a favorable
determination, opinion, notification or advisory letter from the Internal Revenue Service with
respect to each such Plan as to its qualified status under the Code, including all amendments to
the Code effected by the Tax Reform Act of 1986 and subsequent legislation, and no fact or event
has occurred since the date of such determination letter or letters from the Internal Revenue
Service to adversely affect the qualified status of any such Plan or the exempt status of any such
trust, or (ii) has remaining a period of time under applicable Treasury regulations or Internal
Revenue Service pronouncements in which to apply for such a letter and make any amendments
necessary to obtain a favorable determination as to the qualified status of each such Plan.

               (g) Neither the Company nor any ERISA Affiliate has incurred any liability under, arising out
of or by operation of Title IV of ERISA (other than liability for
premiums to the Pension Benefit Guaranty Corporation arising in the ordinary course),
including, without limitation, any liability in connection with (i) the termination or
reorganization of any employee benefit plan subject to Title IV of ERISA or (ii) the withdrawal
from any Multi-employer Plan or Multiple Employer Plan, and no fact or event exists which could
give rise to any such liability.

               (h) The Company has not, since its inception, terminated, suspended, discontinued
contributions to or withdrawn from any employee pension benefit plan, as defined in Section 3(2) of
ERISA, including, without limitation, any Multi-employer Plan. All contributions, premiums or
payments required to be made or accrued with respect to any Plan have been made on or before their
due dates. All such contributions have been fully deducted for income tax purposes and no such
deduction has been challenged or disallowed by any Governmental Entity and no fact or event exists
which could give rise to any disallowance.

               (i) Except as set forth in Section 3.11(i) of the Company Disclosure Schedule, (i) the Company
is not a party to any collective bargaining agreement or other labor union contract applicable to
persons employed by the Company or in the Company’s business, and currently, to the Knowledge of
the Company, there are no organizational campaigns, petitions or other unionization activities
seeking recognition of a collective bargaining unit that could affect the Company; (ii) there are
no controversies, strikes, slowdowns or work stoppages pending or, to the Knowledge of the Company,
threatened between the Company and any of its employees, and the Company has not experienced any
such controversy, strike, slowdown or work stoppage within the past three years; (iii) the Company
has not breached or otherwise failed to comply with the provisions of any collective bargaining or
union contract and there are no grievances outstanding against the Company under any such agreement
or contract; (iv) the Company has not engaged in any unfair labor practice, and there are no unfair
labor practice complaints pending against the Company before the National Labor Relations Board or
any other Governmental Entity or any current union representation questions involving employees of
the Company; (v) the Company is currently in compliance with all applicable Laws relating to the
employment of labor, including those related to wages, hours, worker classification (including

28

 

the
proper classification of independent contractors and consultants), collective bargaining, workers’
compensation and the payment and withholding of Taxes and other sums as required by the appropriate
Governmental Entity and has withheld and paid to the appropriate Governmental Entity or is holding
for payment not yet due to such Governmental Entity all amounts required to be withheld from
employees of the Company and is not liable for any arrears of wages, Taxes, penalties or other sums
for failure to comply with any of the foregoing; (vi) the Company has paid in full to all employees
or adequately accrued for in accordance with GAAP consistently applied all wages, salaries,
commissions, bonuses, benefits and other compensation due to or on behalf of such employees,
including accruals related to compensation pursuant to the Incentive Plans on the Closing Date
Balance Sheet, including with respect to the Transaction-Related Members’ Equity Charge; (vii)
there is no claim with respect to payment of wages, salary, overtime pay, workers compensation
benefits or disability benefits that has been asserted or threatened against the Company or that is
now pending before any Governmental Entity with respect to any person currently or formerly
employed by the Company; (viii) the Company is not a party to, or otherwise bound by, any consent
decree with, or citation by, any Governmental Entity relating to employees or employment practices;
(ix) the Company is in compliance with
all Laws and regulations relating to occupational safety and health Laws and regulations, and
there is no charge or proceeding with respect to a violation of any occupational safety or health
standards that has been asserted or is now pending or threatened with respect to the Company; (x)
the Company is in compliance with all Laws and regulations relating to discrimination in
employment, and there is no charge of discrimination in employment or employment practices for any
reason, including, without limitation, age, gender, race, religion or other legally protected
category, which has been asserted or, to the Knowledge of the Company, threatened against the
Company or that is now pending before the United States Equal Employment Opportunity Commission or
any other Governmental Entity; and (xi) each employee of the Company who is located in the United
States and is not a United States citizen has all approvals, authorizations and papers necessary to
work in the United States in accordance with applicable Law.

               (j) Section 3.11(j) of the Company Disclosure Schedule contains a true and complete list of
all individuals who serve as employees of or consultants to the Company as of the date hereof whose
annual compensation from the Company and positions with the Company have been previously detailed
to Parent, and whose annual compensation has not been modified in any manner other than as
permitted hereby, and for which a Company representation of such fact will be provided at Closing.

               (k) To the Company’s Knowledge, no employee of or consultant to the Company has been injured
in the workplace or in the course of his or her employment or consultancy, except for injuries
which are covered by insurance or for which a claim has been made under worker’s compensation or
similar Laws.

          SECTION 3.12 Contracts.

               (a) Section 3.12(a) of the Company Disclosure Schedule lists (under the appropriate
subsection) each of the following written contracts and agreements of the Company (such contracts
and agreements being the “Material Contracts”):

29

 

                    (i) each contract and agreement for the purchase or lease of personal property with any
supplier or for the furnishing of services to the Company with payments greater than $100,000 per
year;

                    (ii) all broker, exclusive dealing or exclusivity, distributor, dealer, manufacturer’s
representative, franchise, agency, sales promotion, market research, marketing, consulting and
advertising contracts and agreements to which the Company is a party or any other contract that
compensates any person based on any sales by the Company;

                    (iii) all leases and subleases of real property;

                    (iv) all contracts and agreements relating to Indebtedness other than trade indebtedness of
the Company, including any contracts and agreements in which the Company is a guarantor of
Indebtedness;

                    (v) all contracts and agreements with any Governmental Entity to which the Company is a party;

                    (vi) all contracts and agreements that limit or purport to limit the ability of the Company to
compete in any line of business or with any person or in any geographic area or during any period
of time;

                    (vii) all contracts containing confidentiality requirements (including all nondisclosure
agreements);

                    (viii) all contracts and agreements between or among the Company and any Member of the Company
or any affiliate of such person, other than contracts or agreements that will have no force and
effect after the Closing Date;

                    (ix) all contracts and agreements relating to the voting and any rights or obligations of a
Member of the Company, other than contracts or agreements that will have no force and effect after
the Closing Date;

                    (x) all contracts to manufacture for, supply to or distribute to any third party any products
or components;

                    (xi) all contracts regarding the acquisition, issuance or transfer of any securities and each
contract affecting or dealing with any securities of the Company, including, without limitation,
any restricted stock agreements or escrow agreement or any securities issuances pursuant to the
2004 Incentive Plan and the Special Bonus Plan (collectively, the “Incentive Plans”);

                    (xii) all contracts providing for indemnification of any officer, manager, employee or agent
of the Company;

                    (xiii) all contracts related to or regarding the performance of consulting, advisory or other
services or work of any type by any third party, other than contracts or agreements that will have
no force and effect after the Closing Date;

30

 

                    (xiv) all other contracts that have a term of more than 60 days and that may not be terminated
by the Company, without penalty, within 30 days after the delivery of a termination notice by the
Company;

                    (xv) any agreement of the Company that is terminable upon or prohibits assignment or a change
of ownership or control of the Company;

                    (xvi) all other contracts and agreements, excluding master service agreements or contracts for
services to be provided by the Company, whether or not made in the ordinary course of business,
that contemplate an exchange of consideration with an aggregate value greater than $100,000; and

                    (xvii) any agreement of guarantee, assumption or endorsement of, or any similar commitment
with respect to, the obligations, liabilities (whether accrued, absolute, contingent or otherwise)
or indebtedness of any person other than software licenses or professional services contracts
entered into in the ordinary course of business.

               (b) Each Material Contract and master service agreement or contract for services to be
provided by the Company (i) is valid and binding on the Company, as the case may be, and, to the
Knowledge of the Company, on the other parties thereto, and is in full force and effect, and (ii),
other than the Incentive Plans or other contracts which will have no force or effect after the
Closing Date upon consummation of the transactions contemplated by this Agreement, shall continue
in full force and effect without penalty or other adverse consequence. The Company is not in
breach or violation of, or default under, any Material Contract and, to the Knowledge of the
Company, no other party to any Material Contract is in breach or violation thereof or default
thereunder.

               (c) The Company has delivered or made available to Parent accurate and complete copies of all
Material Contracts identified in Section 3.12(a) of the Company Disclosure Schedule, including all
amendments thereto.

               (d) To the Company’s Knowledge, the Company does not have any oral contracts.

               (e) Except as set forth in Section 3.12(e) of the Company Disclosure Schedule, to the
Company’s Knowledge, no event has occurred, and no circumstance or condition exists, that (with or
without notice or lapse of time) will, or could reasonably be expected to, (i) result in a breach
or violation of, or default under, any Material Contract, (ii) give any entity the right to declare
a default, seek damages or exercise any other remedy under any Material Contract, (iii) give any
entity the right to accelerate the maturity or performance of any Material Contract or (iv) give
any entity the right to cancel, terminate or modify any Material Contract.

          SECTION 3.13 Environmental Matters. Except as disclosed on Section 3.13 of the
Company Disclosure Schedule:

               (a) The Company and, to the Knowledge of the Company, all third-party vendors of the Company
have obtained all Environmental Permits required by

31

 

Environmental Laws and necessary for the
conduct of its business. The Company and, to the Knowledge of the Company, all third-party vendors
of the Company are in compliance with such permits and, in connection with its Business, applicable
Environmental Laws, and there is no past material non-compliance which has not been resolved
(including the payment of any fines and penalties related thereto).

               (b) The Company as a direct result of it actions alone, in the conduct of its business, and
not as a result of the actions of others, has not incurred or become liable for or subject to any
Environmental Liabilities in connection with the Real Property or the Business.

               (c) The Company has not received any written notice from any Governmental Entity or other
third party of a violation of or liability under any Environmental Laws in connection with the Real
Property or the Business, which notice has not been resolved.

               (d) The Company has not received any written notice, claim, or request for information
alleging that the Company, to the extent related to the Business, or the Business are or may be
liable for damages, remediation or cost recovery as a result of a Release or threatened Release of
Hazardous Substances.

               (e) Neither the Company nor its respective predecessors or Affiliates has treated, stored,
disposed of, arranged for or permitted the disposal of, handled, or Released any Hazardous
Substances on, at, or from the Real Property or owned or operated any real property in a manner so
as to give rise to liabilities of such parties for Remedial Action pursuant to Environmental Laws.

               (f) The Company has furnished to Parent all final, non-privileged environmental audits and
reports prepared by or for the Company and all correspondence or orders from any Governmental
Entity alleging responsibility for Environmental Liabilities or violations of Environmental Laws
and relating to the current and former operations and facilities of the Company or any of its
Subsidiaries and their respective Affiliates with respect to the Business, which are in the
Company’s or any of its Subsidiaries’ possession, custody or control.

               (g) The Company has not received any written request for information, or been notified that it
is a potentially responsible party, under CERCLA or any similar Law of any state, locality or any
other jurisdiction. The Company has not entered into or agreed to any consent decree or order or
is subject to any judgment, decree or judicial order relating to compliance with Environmental
Laws, Environmental Permits or the investigation, sampling, monitoring, treatment, remediation,
removal or cleanup of Hazardous Substances and, no investigation, litigation or other proceeding is
pending or threatened in writing with respect thereto.

          For purposes of this Agreement:

          “Business” means the business of the Company as conducted on the date of this
Agreement, including, without limitation, providing directional drilling and surveying services
primarily to the oil and gas industry.

32

 

          “CERCLA” means the U.S. Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended as of the date hereof.

          “Environmental Laws” shall mean all Legal Requirements relating to pollution, the
protection of the environment or the use, handling, Release or management of Hazardous Substances,
including CERCLA, the Federal Solid Waste Disposal Act, as amended by the RCRA and Hazardous and
Solid Waste Amendments thereto, the Clean Air Act, the Clean Water Act, the Toxic Substances
Control Act, the Safe Drinking Water Act, and any similar or analogous Legal Requirements of any
Governmental Entity, as each of the foregoing is in effect on or prior to the date hereof.

          “Environmental Liabilities” shall mean any and all damages, claims or liabilities
(whether known or unknown, foreseen or unforeseen, contingent or otherwise), including, without
limitation, liability for response costs, personal injury to Persons, the Company with
respect to the Business, property damage, natural resource damage or any investigatory,
corrective or remedial obligation, which arise under or relate to any Environmental Laws in effect
at the time of such liability.

          “Environmental Permits” means any permit, approval, identification number, license and
other authorization required under any applicable Environmental Law.

          “Hazardous Substance” shall mean any hazardous substance as that term is defined in
CERCLA, including petroleum, crude oil or any fraction thereof, asbestos, and natural gas in its
various forms, and any hazardous waste as defined or regulated under RCRA.

          “Legal Requirement” means any requirement arising under any action, law, treaty, rule
or regulation, manual, guidance, advisory, alert, determination, order or direction of a
Governmental Entity and any binding arbitration award or order.

          “Real Property” means the real property described on Section 3.18 of the Company
Disclosure Schedule and the leased real property subject to the leases described in Section
3.12(a)(iii) of the Company Disclosure Schedule.

          “Release” shall have the meaning set forth in CERCLA.

          “Remedial Action” shall mean all actions to investigate, clean up, remove or treat a
Release(s) of Hazardous Substances (including required remedial investigations, feasibility
studies, corrective actions, closures and post-remedial or post-closure studies, operations and
maintenance and monitoring).

          “RCRA” means the Resource Conservation and Recovery Act.

          SECTION 3.14 Intellectual Property.

               (a) The Company owns or is licensed for, and in any event possess sufficient and legally
enforceable rights with respect to, all Company Intellectual Property (as defined below) relevant
to their respective businesses, as previously, presently or proposed to be conducted, or necessary
to conduct any such business without any conflict with or infringement

33

 

or misappropriation of any
rights or property of any person (“Infringement”). Such ownership, licenses and rights are
exclusive except with respect to standard, generally commercially available, “off-the-shelf” third
party products that are not part of any previous, current or proposed product, service or
Intellectual Property offering of the Company. “Intellectual Property” means (i)
inventions (whether or not patentable); trade names, trade and service marks, logos, domains, URLs,
websites, addresses and other designations (“Marks”); works of authorship; mask works;
data; technology, know-how, trade secrets, ideas and information; designs; formulas; algorithms;
processes; methods; schematics; computer software (in source code and/or object code form); and all
other intellectual property of any sort (“Inventions”) and (ii) patent rights; Mark rights;
copyrights; mask work rights; sui generis database rights; trade secret rights; moral rights; and
all other intellectual and industrial property rights of any sort throughout the world, and all
applications, registrations, issuances and the like with respect thereto (“IP Rights”).
“Company Intellectual Property” means all Intellectual Property that was
or is used, exercised, or exploited (“Used”) or proposed to be Used in any business of
the Company, or that may be necessary to conduct any such business as previously or presently
conducted or proposed to be conducted; this term will also include all other Intellectual Property
owned by or licensed to the Company now or in the past. All copyrightable matter within Company
Intellectual Property that is relevant to the Company has been created by persons who were
employees of the Company at the time of creation and no third party has or will have “moral rights”
or rights to terminate any assignment or license with respect thereto. With respect to patent
rights, moral rights and Mark rights, the representations and warranties of this Section 3.14(a)
are made only to the Company’s Knowledge.

               (b) To the extent included in Company Intellectual Property, Section 3.14(b) of the Company
Disclosure Schedule lists (by name, number, jurisdiction and owner) all patents and patent
applications; all registered and unregistered Marks; and all registered and material unregistered
copyrights and mask works; and all other issuances, registrations, applications and the like with
respect to those or any other IP Rights. All the foregoing (i) are valid, enforceable and
subsisting to the extent such concepts are applicable, and (ii) along with all related filings,
registrations and correspondence, have been provided to Parent. No cancellation, termination,
expiration or abandonment of any of the foregoing (except natural expiration or termination at the
end of the full possible term, including extensions and renewals) is anticipated by the Company.
Except as referenced in written documentation previously provided to Parent (including without
limitation file wrappers), the Company is not aware of any questions or challenges (or any
potential basis therefor) with respect to the patentability or validity of any claims of any of the
foregoing patents or patent applications or the validity (or any other aspect or status) of any
such IP Rights.

               (c) Section 3.14(c) of the Company Disclosure Schedule lists: (i) all licenses, sublicenses
and other agreements to which the Company is a party (or by which it or any Company Intellectual
Property is bound or subject) and pursuant to which any person has been or may be assigned,
authorized to Use, granted any lien or encumbrance regarding, or given access to any Company
Intellectual Property other than distribution of standard object code product pursuant to a
standard form end-user, object code, internal-use software license and support/maintenance
agreements entered into in the ordinary course of business; and (ii) all licenses, sublicenses and
other agreements pursuant to which the Company has been or may be assigned or authorized to Use, or
has incurred or may incur any obligation in connection with,

34

 

(A) any third party Intellectual
Property be incorporated or embodied in, or form all or any part of any previous, current or
proposed product, service or Intellectual Property offering of the Company or (B) any Company
Intellectual Property and (iii) each agreement pursuant to which the Company has deposited or is
required to deposit with an escrowholder or any other person, all or part of the source code (or
any algorithm or documentation contained in or relating to any source code) of any Company
Intellectual Property (“Source Materials”). The Company has not entered into any agreement
to indemnify, hold harmless or defend any other person with respect to any assertion of
Infringement or warranting the lack thereof. Any standard form referred to above in this section
has been clearly identified as such and provided to Parent.

               (d) No event or circumstance has occurred, exists or is contemplated (including, without
limitation, the authorization, execution or delivery of this Agreement or the
consummation of any of the transactions contemplated hereby) that (with or without notice or
the lapse of time) could result in (i) the breach or violation of any license, sublicense or other
agreement required to be listed in Section 3.14 of the Company Disclosure Schedule or (ii) the loss
or expiration of any right or option by the Company (or the gain thereof by any third party) under
any such license, sublicense or other agreement or (iii) the release, disclosure or delivery to any
third party of any part of the Source Materials. Further, the Company makes all the same
representations and warranties with respect to each license, sublicense and agreement listed on
Section 3.14 of the Company Disclosure Schedule as are made with respect to Material Contracts
elsewhere in this Agreement.

               (e) There is, to the Knowledge of the Company, no unauthorized Use, disclosure, or
Infringement of any Company Intellectual Property by any third party, including, without
limitation, any employee or former employee of the Company. The Company has not brought or
threatened any action, suit or proceeding against any third party for any Infringement of any
Company Intellectual Property or any breach of any license, sublicense or agreement involving
Company Intellectual Property.

               (f) The Company has taken all reasonably necessary and appropriate steps to protect and
preserve the confidentiality of all Company Intellectual Property not otherwise disclosed in
published patents or patent applications or registered copyrights (“Company Confidential
Information”). All use by and disclosure to employees or others of Company Confidential
Information has been pursuant to the terms of valid and binding written confidentiality and
nonuse/restricted-use agreements or agreements that contain similar obligations. The Company has
not disclosed or delivered to any third party, or permitted the disclosure or delivery to any
escrow agent or other third party, any part of the Source Materials.

               (g) Each current employee of the Company and current independent contractor or consultant who
devotes substantially all of their business time to performing services for the Company as set
forth in Section 3.11(j) of the Company Disclosure Schedule has executed and delivered (and
to the Company’s Knowledge, is in compliance with) an agreement in substantially the form of the
Company’s standard Confidentiality Agreement, which is attached to Section 3.14(g) of the
Company Disclosure Schedule.

               (h) The Company has not received any communication alleging or suggesting that or questioning
whether the Company has been or may be (whether in its past,

35

 

current or proposed business or
otherwise) engaged in, liable for or contributing to any Infringement, nor does the Company have
any reason to expect that any such communication will be forthcoming.

               (i) The Company has no Knowledge that any of its employees or contractors is obligated under
any agreement, commitment, judgment, decree, order or otherwise (an “Employee Obligation”)
that could interfere with the use of his or her commercially reasonable best efforts to promote the
interests of the Company and its Subsidiaries or that could conflict with any of their businesses
as conducted or proposed to be conducted. Neither the execution nor delivery of this Agreement nor
the conduct of the Company’s business as conducted or proposed to be conducted, will conflict with
or result in a breach of the terms,
conditions or provisions of, or constitute a default under, any Employee Obligation. The
Company is not Using, and it will not be necessary to Use, (i) any Inventions of any of their past
or present employees or contractors (or people currently intended to be hired) made prior to or
outside the scope of their employment by the Company or such Subsidiary or (ii) any confidential
information or trade secret of any former employer of any such person.

               (j) To the Knowledge of the Company, all Software is free of all viruses, worms, trojan horses
and other infections or harmful routines and does not contain any bugs, errors, or problems that,
to the Company’s Knowledge, could disrupt its operation or have an adverse impact on the operation
of other software programs or operating systems. “Software” means software, programs,
databases and related documentation, in any form (including Internet sites, Internet content and
links) that is (i) material to the operation of the business of the Company, including, but not
limited to, that operated by the Company on its web sites or used by the Company in connection with
processing customer orders, storing customer information, or storing or archiving data, or (ii)
manufactured, distributed, sold, licensed or marketed by the Company.

               (k) The Company has obtained all approvals and agreements necessary or appropriate (including,
without limitation, assurances from customers regarding further export) for exporting any Company
Intellectual Property outside the United States and importing any Company Intellectual Property
into any country in which they are or have been disclosed, sold or licensed for Use, and all such
export and import approvals in the United States and throughout the world are valid, current,
outstanding and in full force and effect.

          SECTION 3.15 Taxes.

               (a) All Tax (as defined below) returns, statements, reports, declarations and other forms and
documents (including without limitation estimated Tax returns and reports and material information
returns and reports) required to be filed with any Tax Authority (as defined below) with respect to
any Taxable (as defined below) period ending on or before the Closing, by or on behalf of the
Company (collectively, “Tax Returns” and individually, a “Tax Return”), have been
or will be completed and filed when due (including any extensions of such due date) and all amounts
shown due on such Tax Returns on or before the Effective Time have been or will be paid on or
before such date. The Interim Financial Statements (i) fully accrue all actual and contingent
liabilities for Taxes (as defined below) with respect to all periods through June 30, 2006 and the
Company has not and will not incur any Tax

36

 

liability in excess of the amount reflected (excluding
any amount thereof that reflects timing differences between the recognition of income for purposes
of GAAP and for Tax purposes) on the Reference Balance Sheet included in the Interim Financial
Statements with respect to such periods, and (ii) properly accrues in accordance with GAAP all
material liabilities for Taxes payable after June 30, 2006, with respect to all transactions and
events occurring on or prior to such date. All information set forth in the notes to the Interim
Financial Statements relating to Tax matters is true, complete and accurate in all material
respects. The Company has not incurred any material Tax liability since June 30, 2006 other than
in the ordinary course of business and the Company has made adequate provisions for all Taxes since
that date in accordance with GAAP on at least a quarterly basis.

               (b) The Company has withheld and paid to the applicable financial institution or Tax Authority
all amounts required to be withheld. To the Knowledge of the Company, no Tax Returns filed with
respect to Taxable years through the Taxable year ended December 31, 2005 in the case of the United
States, have been examined and closed. The Company (or any member of any affiliated or combined
group of which the Company has been a member) has not granted any extension or waiver of the
limitation period applicable to any Tax Returns that is still in effect and there is no material
claim, audit, action, suit, proceeding, or (to the Knowledge of the Company) investigation now
pending or threatened against or with respect to the Company in respect of any Tax or assessment.
No notice of deficiency or similar document of any Tax Authority has been received by the Company,
and there are no liabilities for Taxes (including liabilities for interest, additions to Tax and
penalties thereon and related expenses) with respect to the issues that have been raised (and are
currently pending) by any Tax Authority that could, if determined adversely to the Company,
materially and adversely affect the liability of the Company for Taxes. There are no liens for
Taxes (other than for current Taxes not yet due and payable) upon the assets of the Company. The
Company has never been a member of an affiliated group of corporations, within the meaning of
Section 1504 of the Code. The Company is in full compliance with all the terms and conditions of
any Tax exemption or other Tax-sharing agreement or order of a foreign government, and the
consummation of the Merger will not have any adverse effect on the continued validity and
effectiveness of any such Tax exemption or other Tax-sharing agreement or order. Neither the
Company nor any person on behalf of the Company has entered into or will enter into any agreement
or consent pursuant to the collapsible corporation provisions of Section 341(f) of the Code (or any
corresponding provision of state, local or foreign income tax Law) or agreed to have Section
341(f)(2) of the Code (or any corresponding provision of state, local or foreign income tax Law)
apply to any disposition of any asset owned by the Company. None of the assets of the Company is
property that the Company is required to treat as being owned by any other person pursuant to the
so-called “safe harbor lease” provisions of former Section 168(f)(8) of the Code. None of the
assets of the Company directly or indirectly secures any debt the interest on which is tax exempt
under Section 103(a) of the Code. None of the assets of the Company is “tax-exempt use property”
within the meaning of Section 168(h) of the Code. The Company has not made and will not make a
deemed dividend election under Treas. Reg. §1.1502-32(f)(2) or a consent dividend election under
Section 565 of the Code. The Company has never been a party (either as a distributing corporation,
a distributed corporation or otherwise) to any transaction intended to qualify under Section 355 of
the Code or any corresponding provision of state Law. The Company has not participated in (and
will not participate in) an international boycott within the meaning of Section 999 of the Code. No
Member is other than a United States person within the

37

 

meaning of the Code. The Company does not
have and has not had a permanent establishment in any foreign country, as defined in any applicable
Tax treaty or convention between the United States of America and such foreign country and the
Company has not engaged in a trade or business within any foreign country. The Company has never
elected to be treated as an S-corporation under Section 1362 of the Code or any corresponding
provision of Federal or state Law. All material elections with respect to the Company’s Taxes made
during the fiscal years ending December 31, 2004 and 2005 are reflected on the Company’s Tax
Returns for such periods, copies of which have been provided to Parent. After the date of this
Agreement, no material election with respect to Taxes will be made without the prior written
consent of Parent, which consent will not be unreasonably withheld or delayed. The Company is not
party to any
joint venture, partnership, or other arrangement or contract that could be treated as a
partnership for Federal income tax purposes other than that the Company itself is taxed as a
partnership for Federal income tax purposes. The Company is not currently and never has been
subject to the reporting requirements of Section 6038A of the Code. There is no agreement,
contract or arrangement to which the Company is a party that could, individually or collectively,
result in the payment of any amount that would not be deductible by reason of Sections 280G (as
determined without regard to Section 280G(b)(4)), 162 (other than 162(a)) or 404 of the Code. The
Company is not a party to or bound by any Tax indemnity, Tax sharing or Tax allocation agreement
(whether written or unwritten or arising under operation of Federal Law as a result of being a
member of a group filing consolidated Tax Returns, under operation of certain state Laws as a
result of being a member of a unitary group, or under comparable Laws of other states or foreign
jurisdictions) that includes a party other than the Company nor does the Company owe any amount
under any such agreement. The Company has previously provided or made available to Parent true and
correct copies of all income, franchise, and sales Tax Returns, and, as reasonably requested by
Parent, prior to or following the date hereof, presently existing information statements and
reports. The Company is not, and has not been, a United States real property holding corporation
(as defined in Section 897(c)(2) of the Code) during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code. Other than by reason of the Merger, the Company has not been and
will not be required to include any material adjustment in Taxable income for any Tax period (or
portion thereof) pursuant to Section 481 or 263A of the Code or any comparable provision under
state or foreign Tax Laws as a result of transactions, events or accounting methods employed prior
to the Merger.

               (c) For purposes of this Agreement, the following terms have the following meanings:
“Tax” (and, with correlative meaning, “Taxes” and “Taxable”) means any and
all taxes including, without limitation, (i) any net income, alternative or add-on minimum tax,
gross income, gross receipts, sales, use, ad valorem, transfer (except transfer taxes that may or
may not be applicable to this Transaction, which if applicable will be accrued on the Estimated
Closing Date Balance Sheet), franchise, profits, value added, net worth, license, withholding,
payroll, employment, excise, severance, stamp, occupation, premium, property, environmental or
windfall profit tax, custom, duty or other tax, governmental fee or other like assessment or charge
of any kind whatsoever, together with any interest or any penalty, addition to tax or additional
amount imposed by any Governmental Entity responsible for the imposition of any such tax (domestic
or foreign) (a “Tax Authority”), (ii) any liability for the payment of any amounts of the
type described in (i) as a result of being a member of an affiliated, consolidated, combined or
unitary group for any taxable period or as the result of being a transferee or successor thereof
and (iii) any liability for the payment of any amounts of the type

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described in (i) or (ii) as a
result of any express or implied obligation to indemnify any other person. As used in this Section
3.15, the term “Company” means the Company and any entity included in, or required under GAAP to be
included in, any of the Audited Financial Statements or the Interim Financial Statements.

          SECTION 3.16 Vote Required. The only vote necessary to approve and adopt this
Agreement, the Merger and the other transactions contemplated by this Agreement is the affirmative
vote of the holders of at least 66-
2/3% of the Company Interests in favor of the approval and adoption of this Agreement and the
Merger.

          SECTION 3.17 Assets; Absence of Liens and Encumbrances. Except as set forth in
Section 3.17 of the Company Disclosure Schedule, the Company owns, leases or has the legal
right to use all of the assets, properties and rights of every kind, nature, character and
description, including, without limitation, real property and personal property (other than
Intellectual Property, which is covered by Section 3.14 hereof), used or intended to be used in the
conduct of the business of the Company or otherwise owned or leased by the Company and, with
respect to contract rights, is a party to and enjoys the right to the benefits of all contracts,
agreements and other arrangements used or intended to be used by the Company in or relating to the
conduct of the business of the Company (all such properties, assets and contract rights being the
“Assets”). The Company has good and indefeasible title to, or, in the case of leased or
subleased Assets, valid and subsisting leasehold interests in, all the Assets, free and clear of
all mortgages, liens, pledges, charges, claims, defects of title, restrictions, infringements,
security interests or encumbrances of any kind or character (“Liens”). The equipment of
the Company used in the operations of its business is, taken as a whole, in good operating
condition and repair, ordinary wear and tear excepted.

          SECTION 3.18 Real Property. Section 3.18 of the Company Disclosure Schedule lists
all real property that the Company owns or leases. With respect to each parcel of such Real
Property that is owned, the Company has good and clear record title to such parcel, free and clear
of any Lien, easement, covenant or other restriction, except for recorded easements, covenants or
other restrictions which do not impair the use, occupancy or value of such parcel. Except as
disclosed in Section 3.18 of the Company Disclosure Schedule, with respect to each parcel of Real
Property that is leased: (a) such lease is valid, legal, binding and enforceable by the lessee, and
in full force and effect; (b) such lease will continue to be legal, valid, binding, enforceable and
in full force and effect following the Closing Date; (c) the lessee is not in material breach or
default under any such lease, and to the Knowledge of the Company, no other party to such lease is
in material breach or default, and no event has occurred that, with notice or lapse of time, would
constitute a material breach or default by the lessee or, to the Knowledge of the Company, any
other party thereto, or permit termination, modification or acceleration by the lessor thereunder;
(d) the lessee has not repudiated and, to the Knowledge of the Company, no other party to any such
lease has repudiated any provision thereof; (e) the lessee has not received any information from
which a reasonable person would conclude that there are any disputes with respect to any such
lease; and (f) all Real Property subject to such lease has been operated and maintained in all
material respects in accordance with applicable laws.

          SECTION 3.19 Certain Interests.

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               (a) Except as set forth on Section 3.19(a) of the Company Disclosure Schedule, no holder of
greater than 1% of the voting power of the Company or its affiliates or any officer or manager of
the Company and, to the Knowledge of the Company, no immediate
relative or spouse (or immediate relative of such spouse) who resides with, or is a dependent
of, any such officer or manager:

                    (i) has any direct or indirect financial interest in any creditor, competitor, supplier,
manufacturer, agent, representative, distributor or customer of the Company; provided,
however, that the ownership of securities representing no more than 1% of the outstanding
voting power of any creditor, competitor, supplier, manufacturer, agent, representative,
distributor or customer, and which are listed on any national securities exchange or traded
actively in the national over-the-counter market, shall not be deemed to be a “financial interest”
as long as the person owning such securities has no other connection or relationship with such
creditor, competitor, supplier, manufacturer, agent, representative, distributor or customer;

                    (ii) owns, directly or indirectly, in whole or in part, or has any other interest in, any
tangible or intangible property that the Company uses in the conduct of its business (except for
any such ownership or interest resulting from the ownership of securities in a public company);

                    (iii) has any claim or cause of action against the Company ; or

                    (iv) has outstanding any indebtedness to the Company.

               (b) Except as set forth on Section 3.19(b) of the Company Disclosure Schedule and for the
payment of employee compensation or remuneration in the ordinary course of business, consistent
with past practice, the Company has no liability or any other obligation of any nature whatsoever
to any Member or any affiliate thereof or to any officer or manager of the Company or, to the
Knowledge of the Company, to any immediate relative or spouse (or immediate relative of such
spouse) of any such officer or manager.

          SECTION 3.20 Insurance Policies. Section 3.20 of the Company Disclosure Schedule
sets forth (i) a true and complete list of all insurance policies to which the Company is a party
or is a beneficiary or named insured and (ii) any claims made thereunder or made under any other
insurance policy since August 6, 2004. True and complete copies of all such policies have been
provided to Parent. All premiums due on such policies have been paid and the Company and each
Subsidiary is otherwise in compliance with the terms of such policies. The Company has not failed
to give any notice or present any claim under any such policy in a timely fashion. Such insurance
to the date hereof has been maintained in full force and effect and not been canceled or changed,
except to extend the maturity dates thereof. Except as set forth on Section 3.20 of the Company
Disclosure Schedule, since August 6, 2004, the Company has not received any notice or other
communication regarding any actual or possible (i) cancellation or threatened termination of any
insurance policy, (ii) refusal of any coverage or rejection of any claim under any insurance policy
or (iii) adjustment in the amount of the premiums payable with respect to any insurance policy.

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          SECTION 3.21 Restrictions on Business Activities. There is no agreement, commitment, judgment, injunction, order or decree binding upon the
Company or to which the Company is a party which has or could reasonably be expected to have the
effect of prohibiting or materially impairing any business practice material to the Company, any
acquisition of property by the Company or the conduct of business by the Company as currently
conducted or as proposed to be conducted.

          SECTION 3.22 Brokers. Except as set forth in Section 3.22 of the Company Disclosure
Schedule, no broker, finder or investment banker is entitled to any brokerage, finder’s or other
fee or commission in connection with the origination, negotiation or execution of this Agreement,
the Merger or the other transactions contemplated by this Agreement based upon arrangements made by
or on behalf of the Company. The Company has heretofore furnished to Parent a complete and correct
copy of all agreements between the Company and those entities set forth in Section 3.22 of the
Company Disclosure Schedule pursuant to which such advisor would be entitled to any payment in
relation to the Merger or the transactions contemplated by this Agreement. The Members are
responsible for any such fees paid or payable by the Company.

          SECTION 3.23 Intentionally Omitted.

          SECTION 3.24 Customers and Suppliers. Section 3.24 of the Company Disclosure
Schedule contains a complete list of all customers who individually accounted for more than 2% of
the Company’s gross revenues during the fiscal years ended December 31, 2004 and 2005 and the six
month period ended June 30, 2006. No customer listed on Section 3.24 of the Company Disclosure
Schedule has, within the past 12 months, cancelled or otherwise terminated, or, to the Knowledge of
the Company, made any threat to cancel or terminate, its relationship with the Company, or
decreased materially its usage of the Company’s services or products. Except as set forth in
Section 3.24 of the Company Disclosure Schedule, since August 6, 2004, no material supplier of the
Company has cancelled or otherwise terminated any contract with the Company prior to the expiration
of the contract term, or, to the Knowledge of the Company, made any threat to the Company to
cancel, reduce the supply or otherwise terminate its relationship with the Company. The Company
has not (i) breached (so as to provide a benefit to the Company that was not intended by the
parties) any agreement with or (ii) engaged in any fraudulent conduct with respect to, any customer
or supplier of the Company.

          SECTION 3.25 Inventory. All inventory of the Company, whether or not reflected on
the Reference Balance Sheet, consists of a quality and quantity usable and saleable in the ordinary
course of business, except for obsolete items and items of below-standard quality, all of which
have been written-off or written-down to net realizable value on the Reference Balance Sheet
pursuant to the Company’s policies and the best estimates of the Company’s management in accordance
with GAAP. All inventories not written-off have been priced at the lower of cost or market on a
first-in, first-out basis. The value of each type of inventory, whether raw materials,
work-in-process or finished goods, are not excessive in the present circumstances of the
Company in the best estimate of the Company’s management in accordance with GAAP.

          SECTION 3.26 Accounts Receivable; Bank Accounts. Except as set forth in Section 3.26
of the Company Disclosure Schedule, all accounts receivable of the Company reflected on the
Reference Balance Sheet are valid receivables properly reflected pursuant to the

41

 

Company’s policies
and practices and the best estimates of the Company’s management in accordance with GAAP, and
subject to no setoffs or counterclaims and are current and collectible (within 90 days after the
date on which they first became due and payable), net of the applicable reserve for bad debts on
the Reference Balance Sheet. Except as set forth in Section 3.26 of the Company Disclosure
Schedule, all accounts receivable reflected in the financial or accounting records of the Company
that have arisen since the date of Reference Balance Sheet are valid receivables subject to no
setoffs or counterclaims and are current and collectible (within 90 days after the date on which
they first became due and payable), net of a reserve for bad debts in an amount reasonably
proportionate to the reserve shown on the Reference Balance Sheet. Section 3.26 of the Company
Disclosure Schedule describes each account maintained by or for the benefit of the Company at any
bank or other financial institution.

          SECTION 3.27 Intentionally Omitted.

          SECTION 3.28 Offers. The Company has suspended or terminated, and has the legal
right to terminate or suspend, all negotiations and discussions of any acquisition, merger,
consolidation or sale of all or substantially all of the assets or member interests of the Company
with parties other than Parent.

          SECTION 3.29 Warranties. No product or service manufactured, sold, leased, licensed
or delivered by the Company is subject to any guaranty, warranty, right of return, right of credit
or other indemnity other than (i) the applicable standard terms and conditions of sale or lease of
the Company, which are set forth in Section 3.29 of the Company Disclosure Schedule and (ii)
manufacturers’ warranties for which the Company has no liability. Section 3.29 of the Company
Disclosure Schedule sets forth the aggregate expenses incurred by the Company in fulfilling its
obligations under its guaranty, warranty, right of return and indemnity provisions during each of
the Company’s fiscal years ended December 31, 2004 and 2005 covered by the Audited Financial
Statements and the interim period covered by the Interim Financial Statements and the Company does
not know of any reason why such expenses would reasonably be expected to increase as a percentage
of sales in the future.

          SECTION 3.30 Books and Records. The minute books and other similar records of the
Company contain complete and accurate records of all actions taken at any meetings of the Company’s
members, Board of
Managers or any committee thereof and of all written consents executed in lieu of the holding
of any such meeting. The books and records of the Company accurately reflect in all material
respects the assets, liabilities, business, financial condition and results of operations of the
Company and have been maintained in accordance with good business and bookkeeping practices
consistent with GAAP.

          SECTION 3.31 Intentionally Omitted.

          SECTION 3.32 Proxy Statement. The information to be supplied by the Company for
inclusion in Parent’s proxy statement (such proxy statement as amended or supplemented is referred
to herein as the “Proxy Statement”) shall not at the time the Proxy Statement is filed with
the SEC and at the time it becomes effective under the Securities Act, contain any untrue statement
of a material fact or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein not misleading. The

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information to be supplied by the Company
for inclusion in the proxy statement to be delivered to Parent’s stockholders in connection with
the meeting of Parent’s stockholders to consider the approval of this Agreement (the “Parent
Stockholders’ Meeting”) shall not, on the date the Proxy Statement is first mailed to Parent’s
stockholders, and at the time of the Parent Stockholders’ Meeting, contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which they are made, not
false or misleading; or omit to state any material fact necessary to correct any statement provided
by the Company in any earlier communication with respect to the solicitation of proxies for the
Parent Stockholders’ Meeting which has become false or misleading. If at any time prior to the
Effective Time, any event relating to the Company or any of its affiliates, officers or managers
should be discovered by the Company which should be set forth in a supplement to the Proxy
Statement, the Company shall promptly inform Parent.

          SECTION 3.33 No Misstatements. No representation or warranty made by the Company in
this Agreement, the Company Disclosure Schedule or any certificate delivered or deliverable
pursuant to the terms hereof contains or will contain any untrue statement of a material fact, or
omits, or will omit, when taken as a whole, to state a material fact, necessary in order to make
the statements made, in light of the circumstances under which they were made, not misleading;
provided, however, that any representations and warranties made by the Company herein that are
qualified by the Company’s “Knowledge” or materiality shall be incorporated into the representation
and warranty made by this sentence of this Section 3.33. To the Knowledge of the Company, the
Company has disclosed to Parent all material information relating to the business of the Company or
the transactions contemplated by this Agreement.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF MEMBERS

     Each Member hereby severally, and not jointly, represents and warrants to Parent and Merger
Sub only with respect to itself and not with respect to any other Member that the statements
contained in this Article IV are true and correct.

          SECTION 4.01 Ownership.

               (a) Except as provided in the MITA referenced in Section 3.04(e) of the Company Disclosure
Schedule, which will be terminated as of Closing, Member is the record and beneficial owner of, or
is the trustee of a trust that is the record holder of, and whose beneficiaries are the beneficial
owners of, and has good and indefeasible title to, the Company Interests as set forth in Sections
1.01 and 3.04(a) of the Company Disclosure Schedule, which as of the date hereof are, and at all
times prior to the Closing Date, such Company Interests shall be, free and clear of any liens,
claims, options, charges or other encumbrances other than to the extent such circumstances do not
impair Member’s ability to comply with its obligations hereunder. Except as provided in the MITA
referenced in Section 3.04(e) of the Company Disclosure Schedule, which will be terminated as of
Closing, Member has the sole right to vote the Company Interests with respect to the Merger, and
except as contemplated by this Agreement, none of the Company Interests is subject to any voting
trust or other agreement,

43

 

arrangement or restriction with respect to the voting of such Company
Interests with respect to the Merger.

          (b) As of the Closing Date, Member shall not own, either beneficially or of record, any equity
interests of the Company other than the Company Interests set forth in Sections 1.01 and 3.04(a) of
the Company Disclosure Schedule.

     SECTION 4.02 Power; Authorization; Enforceability. Member has all requisite power,
authority and legal capacity to execute this Agreement, to perform its obligations hereunder, and
to consummate the transactions contemplated hereby. Member has duly executed and delivered this
Agreement, and this Agreement constitutes a legal, valid and binding obligation of Member,
enforceable against Member in accordance with its terms, subject to the effect of any applicable
bankruptcy, reorganization, insolvency, moratorium or similar Laws affecting creditors’ rights
generally and subject, as to enforceability, to the effect of general principles of equity. Except
as provided in the MITA referenced in Section 3.04(e) of the Company Disclosure Schedule, which
will be terminated as of Closing, the execution and delivery by Member of this Agreement do not,
and the consummation of the transactions contemplated hereby and compliance with the terms hereof
will not, result in any material breach of or constitute a material default (or an event that with
notice or lapse of time or both would become a default) under, or give to others any right to
terminate, materially amend, accelerate or cancel any right or obligation under, or result in the
creation of any lien or encumbrance on any Membership Interests pursuant to, any material note,
bond, mortgage, indenture, contract, agreement, lease, license permit, franchise or other
instrument or obligation to which Member is a party or by which Member or the Company Interests are
or will be bound or affected. If Member is a natural person and is married and the Membership
Interests constitute community property of Member or otherwise need spousal or other approval for
this Agreement to be legal, valid and binding, this Agreement has been duly authorized, executed
and delivered by, and constitutes a valid and binding agreement of, Member’s spouse, enforceable
against such spouse in accordance with its terms.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

     Parent and Merger Sub hereby represent and warrant to the Company that the statements
contained in this Article V are true and correct except as set forth in the disclosure schedule
delivered by Parent to the Company concurrently with the execution of this Agreement (the
“Parent Disclosure Schedule”). The Parent Disclosure Schedule shall be arranged according
to specific sections in this Article V and shall provide exceptions to, or otherwise qualify in
reasonable detail, only the corresponding section in this Article V.

     SECTION 5.01 Organization and Qualification.

          (a) Parent is a corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate power and authority to own, lease and
otherwise hold and operate its properties and other assets and to carry on its business as it is
now being conducted, except where the failure to be so organized, existing

44

 

or in good standing or
to have such corporate power and authority have not had, and could not reasonably be expected to
have, individually or in the aggregate, a Parent Material Adverse Effect (as defined below).
Parent is duly qualified or licensed as a foreign corporation to do business, and is in good
standing, in each jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its business makes such qualification or licensing necessary, except where the
failure to be so qualified or licensed and in good standing has not had, and could not reasonably
be expected to have, individually or in the aggregate, a Parent Material Adverse Effect. The term
“Parent Material Adverse Effect” means any event, change or effect that is materially
adverse to the business, operations, condition (financial or otherwise), assets (tangible or
intangible), liabilities, prospects or results of operations of Parent and its subsidiaries taken
as a whole, except for any such events, changes or effects resulting from or arising in connection
with (i) any changes in general, political, global or other national or worldwide events or changes
in economic or business conditions that do not disproportionately impact Parent as compared to
other entities similar in size and scope as that of Parent and that are within its industry or (ii)
any changes or events affecting the industry in which Parent operates that do not
disproportionately impact Parent as compared to other entities similar in size and scope as that of
Parent and that are within its industry, (iii) any decline in the trading price of Parent Common
Stock, (iv) any adverse change in the United States securities market that does not
disproportionately impact Parent or (v) any failure by Parent to meet the revenue or earnings
predictions of equity analysts as reflected in the First Call consensus estimates, or any other
revenue or earnings estimate, or any other revenue or earnings prediction or expectation, for any
period ending (or for which earnings are released) on or after the date of this Agreement and prior
to the Closing Date.

          (b) Merger Sub is a corporation duly incorporated, validly existing and in good standing under
the laws of the State of Delaware.

     SECTION 5.02 Authority Relative to This Agreement. Each of Parent and Merger Sub has
all necessary corporate power and authority to execute and deliver this Agreement, and, subject to
obtaining the necessary approvals of the stockholders of Parent, to perform its obligations
hereunder and to consummate the Merger and the other transactions contemplated by this Agreement.
The execution and delivery of this Agreement by each of Parent and Merger Sub and the consummation
by each of Parent and Merger Sub of the Merger and the other transactions contemplated by this
Agreement have been duly and validly authorized by all necessary corporate action, and no other
corporate proceedings on the part of Parent or Merger Sub are necessary to authorize this Agreement
or to consummate the Merger and the other transactions contemplated by this Agreement (other than
with respect to the Merger, the filing and recordation of appropriate merger documents as required
by the DGCL and the TLLCA). This Agreement has been duly and validly executed and delivered by
each of Parent and Merger Sub and, assuming the due corporate authorization, execution and delivery
by the Company, constitutes a legal, valid and binding obligation of each of Parent and Merger Sub,
enforceable against each of Parent and Merger Sub in accordance with its terms, subject to the
effect of any applicable bankruptcy, reorganization, insolvency, moratorium or similar Laws
affecting creditors’ rights generally and subject, as to enforceability, to the effect of general
principles of equity.

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     SECTION 5.03 Capital Structure.

          (a) As of the date hereof, the authorized capital stock of Parent consists of (i) 50,000,000
shares of Parent Common Stock and (ii) 1,000,000 shares of preferred stock, par value $0.001 per
share, of Parent (“Parent Preferred Stock”). As of June 30, 2006, (i) 17,216,667 shares of
Parent Common Stock were issued and outstanding, all of which are duly authorized, validly issued,
fully paid and non-assessable, (ii) no shares of Parent Common Stock were reserved for future
issuance pursuant to outstanding, unexercised options to purchase Parent Common Stock and (iii)
28,516,668 shares of Parent Common Stock were reserved for issuance pursuant to outstanding,
unexercised warrants to purchase Parent Common Stock. As of the date hereof, no shares of Parent
Preferred Stock were issued and outstanding.

          (b) As of June 30, 2006, except for outstanding options and warrants referred to in clauses
(ii) and (iii) of the second sentence of Section 4.03(a) and otherwise as disclosed in the Parent
SEC Reports (as defined below), there are no outstanding options, warrants, or other agreements
relating to the issuance of capital stock of Parent or obligating Parent to issue or sell any
shares of its capital stock.

     SECTION 5.04 No Conflict; Required Filings and Consents.

          (a) The execution and delivery of this Agreement by each of Parent and Merger Sub do not, and
the performance of this Agreement by each of Parent and Merger Sub will not, (i) conflict with or
violate their respective organizational documents, (ii) assuming that all consents, approvals,
authorizations and other actions described in Section 5.04(b) have been obtained and all filings
and obligations described in Section 5.04(b) have been made or complied with, conflict with or
violate in any material respect any Law applicable to Parent or Merger Sub or by which any property
or asset of Parent or Merger Sub is bound or affected, or (iii) conflict with, result in any breach
of or constitute a default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any right of termination, amendment, acceleration or cancellation
of, or result in the creation of a lien or other encumbrance on any property or asset of Parent or
Merger Sub pursuant to, any material note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which Parent or Merger Sub is a
party, except, with respect to clauses (ii) and (iii), for any such conflicts, violations,
breaches, defaults, or other occurrences that could not reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect.

          (b) Except as set forth in Section 5.04(b) of the Parent Disclosure Schedule, the execution
and delivery of this Agreement by each of Parent and Merger Sub do not, and the performance of this
Agreement by each of Parent and Merger Sub will not, require any consent, approval, order,
authorization, registration or permit of, or filing with or notification to, any Governmental
Entity, except (i) for the pre-merger notification requirements of the HSR Act, if applicable, (ii)
for the filing and recordation of appropriate merger documents as required by the DGCL or the
TLLCA, (iii) for applicable requirements, if any, of the Exchange Act of 1934, as amended (the
“Exchange Act”), Federal and state securities laws and AMEX, and (iv) for such other
consents, approvals, orders authorizations, registrations or permits, filings or notifications that
if not obtained or made could not reasonably be expected, individually or in the

46

 

aggregate, to prevent or materially delay the consummation of the transactions contemplated by this Agreement.

     SECTION 5.05 SEC Filings; Financial Statements.

          (a) Parent has correctly and accurately in all material respects filed all forms, reports and
documents required to be filed by it with the Securities and Exchange Commission (the
“SEC”) since its inception date through the date of this Agreement (collectively, the
“Parent SEC Reports”). As of the respective dates they were filed (and if amended or
superceded by a filing prior to the date of this Agreement, then on the date of such filing), (i)
the Parent SEC Reports complied in all material respects with the requirements of the Securities
Act or the Exchange Act, as the case may be, and (ii) none of the Parent SEC Reports contained any
untrue statement of a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.

          (b) Each
of the Parent Audited Financial Statements (as defined in Section 5.11(a)) and Parent
Interim Financial Statements (as defined in Section 5.11(a)) (including, in each case, any notes
thereto) contained in the Parent SEC Reports was prepared in accordance with GAAP applied on a
consistent basis throughout the periods indicated (except as may be indicated in the notes thereto
or, in the case of unaudited statements, as permitted by Form 10-Q or 8-K promulgated by the SEC)
and each presented fairly, in all material respects, the consolidated financial position of Parent
and its consolidated subsidiaries as at the respective dates thereof and for the respective periods
indicated therein, except as otherwise noted therein (subject, in the case of unaudited statements,
to normal and recurring year-end adjustments which were not and are not expected, individually or
in the aggregate, to have a Parent Material Adverse Effect).

     SECTION 5.06 Interim Operations of Merger Sub. Merger Sub was formed by Parent solely
for the purpose of engaging in the transactions contemplated by this Agreement, has engaged in no
other business activities and has conducted its operations only as contemplated by this Agreement.
Merger Sub has no liabilities and, except for a subscription agreement pursuant to which all of its
authorized capital stock was issued to Parent, is not a party to any agreement other than this
Agreement and agreements with respect to the appointment of registered agents and similar matters.

     SECTION 5.07 Board Approval. Subject to certain conditions contained in Sections 8.01
and 8.02, including, but not limited to receiving a third party fairness opinion (the
“Opinion”), the Board of Directors of Parent (including any required committee or subgroup
of the Board of Directors of Parent) has, as of the date of this Agreement, unanimously (i)
declared the advisability of the Merger and approved this Agreement and the transactions
contemplated hereby, (ii) determined that the Merger is in the best interests of the stockholders
of Parent, and (iii) determined that the fair market value of the Company is equal to at least 80%
of Parent’s net assets

     SECTION 5.08 Valid Issuance of Parent Shares. The shares of Parent Common Stock to be
issued pursuant to this Agreement and pursuant to the Parent Warrants and

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Redemption Warrants will,
when issued, be duly authorized, validly issued, fully paid and non-assessable.

     SECTION 5.09 Brokers. Except as set forth on 5.09 of the Parent Disclosure Schedule,
no broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or
commission in connection with the Merger or the other transactions contemplated by this Agreement
based upon arrangements made by or on behalf of Parent or Merger Sub.

     SECTION 5.10 Intentionally Omitted.

     SECTION 5.11 Financial Statements.

          (a) True and complete copies of (i) the audited balance sheets of Parent as of December 31,
2005, and the related audited statements of operations, changes in stockholders’ equity and changes
in cash flows for the year then ended, together with all related notes and schedules thereto
(collectively referred to herein as the “Parent Audited Financial Statements”, and (ii) the
unaudited balance sheet of the Company as of June 30, 2006, (the “Parent Reference Balance
Sheet”), and the related statements of operations, changes in members’ equity and changes in
cash flows for the six months ended June 30, 2006, (together with Parent Reference Balance Sheet,
the “Parent Interim Financial Statements”), are attached as Section 5.11(a) of the Parent
Disclosure Schedule. The Parent Audited Financial Statements and the Parent Interim Financial
Statements (including, in each case, any notes thereto) were prepared in accordance with the GAAP
applied on a consistent basis throughout the periods indicated (except as may be indicated in the
notes thereto or, in the case of unaudited statements, as permitted by GAAP) and each present
fairly, in all material respects, the financial position of Parent as at the respective dates
thereof and for the respective periods indicated therein, except as otherwise noted therein
(subject, in the case of the Parent Interim Financial Statements, to normal and recurring year-end
adjustments which were not and are not expected, individually or in the aggregate, to be material).

          (b) To the Knowledge of Parent, except as set forth in Section 5.11(b) of the Parent
Disclosure Schedule, Parent does not have any Liabilities, other than Liabilities (i) recorded or
reserved against on the Parent Reference Balance Sheet and (ii) incurred in the ordinary course of
business, consistent with past practice, since June 30, 2006 plus up to an aggregate amount of
$100,000 incurred since June 30, 2006 not in the ordinary course of the business, consistent with
past practice. Except as set forth in Section 5.11(b) of the Parent Disclosure Schedule, reserves
are reflected on the Parent Reference Balance Sheet and on the books of account and other financial
records of Parent against all Liabilities of Parent in amounts that have been established on a
basis consistent with the past practice of Parent and in accordance with GAAP. To the Knowledge of
Parent, there are no outstanding warranty claims against Parent.

     SECTION 5.12 Absence of Certain Changes or Events. Since January 1, 2006, except as
contemplated by or as disclosed in this Agreement or as set forth in Section 5.12 of the Parent
Disclosure Schedule, Parent has conducted its business only in the ordinary course and in a manner
consistent with past practice and, since such date, (a) there has not been any Parent

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Material
Adverse Effect and (b) Parent has not taken or legally committed to take any of the actions
specified in Section 6.02(a) through (x).

     SECTION 5.13 Absence of Litigation. There is no Legal Proceeding pending or, to the
Knowledge of Parent, threatened against Parent or Merger Sub, or any property or asset owned or
used by Parent or any person whose liability Parent has or may have assumed, either contractually
or by operation of Law, before any arbitrator or Governmental Entity that could reasonably be
expected, if resolved adversely to Parent, to (i) impair the operations of Parent or Merger Sub as
currently conducted, including, without limitation, any claim of infringement of any intellectual
property right, (ii) collectively result in losses to Parent or Merger Sub in excess of $250,000,
(iii) impair the ability of Parent or Merger Sub to perform its obligations under this Agreement,
or (iv) prevent, delay or make illegal the consummation of the transactions contemplated by this
Agreement. To Parent’s Knowledge, no event has occurred, and no claim, dispute or other condition
or circumstance exists, that could reasonably be expected to give rise to or serve as a basis of
the commencement of any Legal Proceeding. Neither Parent nor Merger Sub nor the officers or
managers thereof in their capacity as such, or any property or asset of Parent or Merger Sub is
subject to any continuing order of, consent decree, settlement agreement or other similar written
agreement with, or, to the Knowledge of Parent, continuing investigation by, any Governmental
Entity, or any order, writ, judgment, injunction, decree, determination or award of any court,
arbitrator or Governmental Entity. Neither Parent nor Merger Sub has plans to initiate any Legal
Proceeding against any third party.

     SECTION 5.14 Taxes.

          (a) All Tax Returns have been or will be completed and filed when due (including any
extensions of such due date) and all amounts shown due on such Tax Returns on or before the
Effective Time have been or will be paid on or before such date. The Parent Interim Financial
Statements (i) fully accrue all actual and contingent liabilities for Taxes (as defined below) with
respect to all periods through June 30, 2006, and (ii) properly accrues in accordance with GAAP all
material liabilities for Taxes payable after June 30, 2006, with respect to all transactions and
events occurring on or prior to such date. All information set forth in the notes to the Parent
Interim Financial Statements relating to Tax matters is true, complete and accurate in all material
respects. Parent has not incurred any material Tax liability since June 30, 2006 other than in the
ordinary course of business and Parent has made adequate provisions for all Taxes since that date
in accordance with GAAP on at least a quarterly basis.

          (b) Parent has withheld and paid to the applicable financial institution or Tax Authority all
amounts required to be withheld. To the Knowledge of Parent, no Tax Returns filed with respect to
Taxable years through the Taxable year ended December 31, 2005 in the case of the United States,
have been examined and closed. Parent (or any member of any affiliated or combined group of which
Parent has been a member) has not granted any extension or waiver of the limitation period
applicable to any Tax Returns that is still in effect and there is no material claim, audit,
action, suit, proceeding, or (to the Knowledge of Parent) investigation now pending or threatened
against or with respect to Parent in respect of any Tax or assessment. No notice of deficiency or
similar document of any Tax Authority has been received by Parent, and there are no liabilities for
Taxes (including liabilities for interest, additions to Tax and penalties thereon and related
expenses) with respect to the issues that have been raised (and are

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currently pending) by any Tax
Authority that could, if determined adversely to Parent, materially and adversely affect the
liability of Parent for Taxes. There are no liens for Taxes (other than for current Taxes not yet
due and payable) upon the assets of Parent. Parent has never been a member of an affiliated group
of corporations, within the meaning of Section 1504 of the Code. Parent is in full compliance with
all the terms and conditions of any Tax exemption or other Tax-sharing agreement or order of a
foreign government, and the consummation of the Merger will not have any adverse effect on the
continued validity and effectiveness of any such Tax exemption or other Tax-sharing agreement or
order. Neither Parent nor any person on behalf of Parent has entered into or will enter into any
agreement or consent pursuant to the collapsible corporation provisions of Section 341(f) of the
Code (or any corresponding provision of state, local or foreign income tax Law) or agreed to have
Section 341(f)(2) of the Code (or any corresponding provision of state, local or foreign income tax
Law) apply to any disposition of any asset owned by Parent. None of the assets of Parent is
property that Parent is required to treat as being owned by any other person pursuant to the
so-called “safe harbor lease” provisions of former Section 168(f)(8) of the Code. None of the
assets of Parent directly or indirectly secures any debt the interest on which is tax exempt under
Section 103(a) of the Code. None of the assets of Parent is “tax-exempt use property” within the
meaning of Section 168(h) of the Code. Parent has not made and will not make a deemed dividend
election under Treas. Reg. §1.1502-32(f)(2) or a consent dividend election under Section 565 of the
Code. Parent has never been a party (either as a distributing corporation, a distributed
corporation or otherwise) to any transaction intended to qualify under Section 355 of the Code or
any corresponding provision of state Law. Parent has not participated in (and will not participate
in) an international boycott within the meaning of Section 999 of the Code. Parent does not have
and has not had a permanent establishment in any foreign country, as defined in any applicable Tax
treaty or convention between the United States of America and such foreign country and Parent has
not engaged in a trade or business within any foreign country. Parent has never elected to be
treated as an S-corporation under Section 1362 of the Code or any corresponding provision of
Federal or state Law. All material elections with respect to Parent’s Taxes made during the fiscal
year ending December 31, 2005 are reflected on Parent’s Tax Returns for such periods, copies of
which have been provided to the Company. After the date of this Agreement, no material election
with respect to Taxes will be made without the prior written consent of the Company, which consent
will not be unreasonably withheld or delayed. Parent is not party to any joint venture,
partnership, or other arrangement or contract that could be treated as a partnership for Federal
income tax purposes. Parent is not currently and never has been subject to the reporting
requirements of Section 6038A of the Code. There is no agreement, contract or arrangement to which
Parent is a party that could, individually or collectively, result in the payment of any amount
that would not be deductible by reason of Sections 280G (as determined without regard to Section
280G(b)(4)), 162 (other than 162(a)) or 404 of the Code. Parent is not a party to or bound by any
Tax indemnity, Tax sharing or Tax allocation agreement (whether written or unwritten or arising
under operation of Federal Law as a result of being a member of a group filing consolidated Tax
Returns, under operation of certain state Laws as a result of being a member
 of a unitary group, or
under comparable Laws of other states or foreign jurisdictions) that includes a party other than
Parent nor does Parent owe any amount under any such agreement. Parent has previously provided or
made available to the Company true and correct copies of all income, franchise, and sales Tax
Returns, and, as reasonably requested by the Company, prior to or following the date hereof,
presently existing information statements and

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reports. Parent is not, and has not been, a United
States real property holding corporation (as defined in Section 897(c)(2) of the Code) during the
applicable period specified in Section 897(c)(1)(A)(ii) of the Code. Other than by reason of the
Merger, Parent has not been and will not be required to include any material adjustment in Taxable
income for any Tax period (or portion thereof) pursuant to Section 481 or 263A of the Code or any
comparable provision under state or foreign Tax Laws as a result of transactions, events or
accounting methods employed prior to the Merger.

          (c) As used in this Section 5.14, the term “Parent” means Parent and any entity included in,
or required under GAAP to be included in, any of the Parent Interim Financial Statements.

     SECTION 5.15 Assets; Absence of Liens and Encumbrances. Parent owns, leases or has
the legal right to use all of the assets, properties and rights of every kind, nature, character
and description, including, without limitation, real property and personal property, used or
intended to be used in the conduct of the business of Parent or otherwise owned or leased by Parent
and, with respect to contract rights, is a party to and enjoys the right to benefits of all
contracts, agreements and other arrangements used or intended to be used by Parent in or relating
to the conduct of the business of Parent (all such properties, assets and contract rights being the
“Parent Assets”). Parent has good and indefeasible title to, or, in the case of leased or
subleased Parent Assets, valid and subsisting leasehold interests in, all Parent Assets, free and
clear of all mortgages, liens, pledges, charges, claims, defects of title, restrictions,
infringements, security interests or encumbrances of any kind or character (“Parent
Liens”).

     SECTION 5.16 Proxy Statement. The information to be supplied by Parent for inclusion
in the Proxy Statement shall not at the time the Proxy Statement is filed with SEC and at the time
it becomes effective under the Securities Act, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in order to make the
statements therein not misleading. The information to be supplied by Parent for inclusion in the
Proxy Statement to be delivered to Parent’s stockholders in connection with the Parent
Stockholders’ Meeting shall not, on the date the Proxy Statement is first mailed to Parent’s
stockholders, and at the time of the Parent Stockholders’ Meeting, contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which they are made, not
false or misleading; or omit to state any material fact necessary to correct any statement provided
by Parent in any earlier communication with respect to the solicitation of proxies for the Parent
Stockholders’ Meeting which has become false or misleading. If at any time prior to the Effective
Time, any event relating to Parent or any of its affiliates, officers or managers should be
discovered by Parent which should be set forth in a supplement to the Proxy Statements, Parent
shall promptly inform Company.

     SECTION 5.17 Registration Rights Agreement. The Registration Rights Agreement
contains substantially the same terms and conditions as the registration rights agreement entered
into among Parent, Founders and FBW, dated April 10, 2006 (the “Founders RR Agreement), and
such Founders RR Agreement has not been and shall not be amended without the prior written consent
of the Members’ Representative.

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     SECTION 5.18 Offers. The Company acknowledges that Parent is permitted to receive
general inquiries from third parties concerning potential transactions that would be in
substitution of or in addition to, the transaction contemplated by this Agreement (a “Back Up
Transaction”), and to conduct preliminary dialogue related thereto. However, Parent may not
negotiate, present, or propose related to any presentations or proposals concerning conditional
terms with any third party with respect to any Back Up Transaction until the earlier of (i) the
Closing or (ii) the Termination of this Agreement pursuant to the terms provided for in Article IX
hereto.

     SECTION 5.19 No Misstatements. No representation or warranty made by
Parent or Merger Sub in this Agreement, the Parent Disclosure Schedule or any certificate delivered
or deliverable pursuant to the terms hereof contains or will contain any untrue statement of a
material fact, or omits, or will omit, when taken as a whole, to state a material fact, necessary
in order to make the statements made, in light of the circumstances under which they were made, not
misleading; provided, however, that any representations and warranties made by Parent or Merger Sub
herein that are qualified by Parent’s or Merger Sub’s “Knowledge” or materiality shall be
incorporated into the representation and warranty made by this sentence of this Section 5.19. To
the Knowledge of Parent and Merger Sub, Parent and Merger Sub have disclosed to the Company all
material information relating to the business of Parent and Merger Sub or the transactions
contemplated by this Agreement.

ARTICLE VI

CONDUCT OF BUSINESSES PENDING THE MERGER

     SECTION 6.01 Conduct of Business by the Company Pending the Merger. During the period
from the date of this Agreement and continuing until the earlier of the termination of this
Agreement or the Effective Time, the Company agrees to carry on its business in the usual, regular
and ordinary course and in substantially the same manner as previously conducted, to pay its debts
and Taxes when due (subject to good faith disputes over such debts or Taxes), to pay or perform
other obligations when due and, to the extent consistent with such business, to use all reasonable
efforts consistent with past practices and policies to preserve intact its present business
organization, keep available the services of its present officers and key employees and consultants
and preserve its relationships with customers, suppliers, distributors, licensors, licensees, and
others having business dealings with it, to the end that its goodwill and ongoing businesses would
be substantially identical at the Effective Time. The Company shall promptly notify Parent of any
event or occurrence not in the ordinary course of business of the Company.

     By way of amplification and not limitation, except as specifically contemplated by this
Agreement or as specifically set forth in Section 6.01 of the Company Disclosure Schedule, the
Company shall not, between the date of this Agreement and the Effective Time, directly or
indirectly, do, or propose to do, any of the following without the prior written consent, which
consent shall not be unreasonably withheld, of Parent:

          (a) amend or otherwise change the Company Charter Documents or equivalent organizational
documents;

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          (b) issue, sell, pledge, dispose of, grant, encumber, authorize or propose the issuance, sale,
pledge, disposition, grant or encumbrance of any shares of its capital stock of any class, or any
options, warrants, convertible securities or other rights of any kind to acquire any shares of such
capital stock or any other ownership interest (including, without limitation, any phantom
interest), of the Company, except pursuant to the terms of options, warrants or preferred stock
outstanding on the date of this Agreement;

          (c) sell, lease, license, pledge, grant, encumber or otherwise dispose of any of its
properties or assets which are material, individually or in the aggregate, to its business;

          (d) split, combine, subdivide, redeem or reclassify any of its capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu of or in substitution for
shares of its capital stock, or purchase or otherwise acquire, directly or indirectly, any shares
of its equity interests except from former employees, managers, directors and consultants in
accordance with agreements providing for the repurchase of shares in connection with any
termination of service by such party;

          (e) acquire (including, without limitation, by merger, consolidation, or acquisition of stock
or assets) any interest or any assets in any corporation, partnership, other business organization
or any division thereof;

          (f) institute
or settle any Legal Proceeding for an amount greater than $100,000,
except as related to Legal Proceedings disclosed in Section 3.10
of the Company Disclosure Schedule;

          (g) incur any indebtedness for borrowed money or issue any debt securities or assume,
guarantee or endorse, or otherwise as an accommodation become responsible for, the obligations of
any person, or make any loans or advances other than such indebtedness described herein and as to
be included on the Estimated Closing Balance Sheet;

          (h) authorize any unbudgeted capital expenditure in excess of $100,000, individually or in the
aggregate;

          (i) enter into any lease or contract for the purchase or sale of any property, real or
personal, in an amount greater than $50,000 on an annual basis;

          (j) waive or release any material right or claim;

          (k) except as set forth on Schedule 6.01(k), increase, or agree to increase, the compensation
payable, or to become payable, to its (i) officers or (ii) employees (provided that any employee’s
annual compensation may be increased by an amount not to exceed 10% of such employee’s current
annual base salary), or grant any severance or termination pay to, or enter into any employment or
severance agreement with, any of its managers, officers or other employees, or establish, adopt,
enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation, stock
option, restricted stock, pension, retirement, deferred compensation, employment, termination,
severance or other Plan, agreement, trust, fund, policy or arrangement for the benefit of any
director, officer or employee; provided, however, that the foregoing provisions of
this subsection shall not apply to any

53

 

amendments to employee benefit plans described in Section
3(3) of ERISA that may be required by Law;

          (l) accelerate, amend or change the period of exercisability or the vesting schedule of
restricted stock or Company Options granted under any option plan, employee stock plan or other
agreement or authorize cash payments in exchange for any Company Options granted under any of such
plans, except as specifically required by the terms of such plans or any such agreement or any
related agreement in effect as of the date of this Agreement and disclosed in the Company
Disclosure Schedule;

          (m) extend any offers of employment to potential employees, consultants or independent
contractors or terminate any existing employment relationships for which the annual remuneration is
greater than $200,000;

          (n) enter into, amend or terminate any Material Contract;

          (o) enter into, amend or terminate any contract, agreement, commitment or arrangement that, if
fully performed, would not be permitted under this Section 6.01;

          (p) other than in the ordinary course of business consistent with past practice, enter into
any licensing, distribution, OEM agreements, sponsorship, advertising, merchant program or other
similar contracts, agreements or obligations that may not be cancelled without penalties by the
Company upon notice of 30 days or less;

          (q) take any action, other than reasonable and usual action in the ordinary course of
business, consistent with past practice, with respect to accounting policies, principles or
procedures;

          (r) make or change any Tax or accounting election, change any annual accounting period, adopt
or change any accounting method, file any amended Tax Return, enter into any closing agreement,
settle any Tax claim or assessment relating to the Company, surrender any right to claim refund of
Taxes, consent to any extension or waiver of the limitation period applicable to any Tax claim or
assessment relating to the Company, or take any other action or omit to take any action that would
have the effect of increasing the Tax liability of the Company or Parent;

          (s) (i) sell, assign, lease, terminate, abandon, transfer, permit to be encumbered or
otherwise dispose of or grant any security interest in and to any item of the Company Intellectual
Property, in whole or in part, (ii) grant any license with respect to any Company Intellectual
Property, other than a license of Software granted to customers of the Company to whom the Company
licenses such Software in the ordinary course of business, (iii) develop, create or invent any
Intellectual Property jointly with any third party, or (iv) disclose, or allow to be disclosed, any
confidential Company Intellectual Property, unless such Company Intellectual Property is subject to
a confidentiality or non-disclosure covenant protecting against disclosure thereof;

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          (t) make (or become obligated to make) any bonus payments to any of its officers or employees
except: (1) for those for which the Company is simultaneously fully reimbursed or (2) between the
execution date hereof and the Effective Time, bonus payments to certain employees not covered by
the Incentive Plan in an amount not to exceed an aggregate of $500,000;

          (u) revalue any of its assets, including writing down the value of inventory or writing off
notes or accounts receivable;

          (v) fail to maintain its equipment and other assets in good working condition and repair
according to the standards it has maintained up to the date of this Agreement, subject only to
ordinary wear and tear, unless it is more commercially reasonable to replace any such asset in the
ordinary course of Company’s business;

          (w) take any action or fail to take any reasonable action that would cause there to be a
Company Material Adverse Effect;

          (x) permit any insurance policy naming it as a beneficiary or a loss payable payee to be
cancelled or terminated and not replaced by a substantially similar replacement policy without
notice to Parent;

          (y) except in the ordinary course of its business, the Company will not write off as
uncollectible, or establish any extraordinary reserve with respect to, any account receivable or
other right of the Company to customer remittances for services in excess of $150,000 with respect
to a single matter, or in excess of $450,000 in the aggregate; or

          (z) take, or agree in writing or otherwise to take, any of the actions described in
subsections (a) through (y) above, or any action which is reasonably likely to make any of the
Company’s representations or warranties contained in this Agreement untrue or incorrect on the date
made (to the extent so limited) or as of the Effective Time.

     SECTION 6.02 Conduct of Business by Parent Pending the Merger. During the period from
the date of this Agreement and continuing until the earlier of the termination of this Agreement or
the Effective Time, Parent agrees to carry on its business in the usual, regular and ordinary
course and in substantially the same manner as previously conducted, to pay its debts and Taxes
when due (subject to good faith disputes over such debts or Taxes), to pay or perform other
obligations when due and, to the extent consistent with such business, to use all reasonable
efforts consistent with past practices and policies to preserve intact its present business
organization, keep available the services of its present officers and key employees and consultants
and preserve its relationships with customers, suppliers, distributors, licensors, licensees, and
others having business dealings with it, to the end that its goodwill and ongoing businesses would
be substantially identical at the Effective Time. Parent shall promptly notify the Company of any
event or occurrence not in the ordinary course of business of Parent.

     By way of amplification and not limitation, except as specifically contemplated by this
Agreement or as specifically set forth in Section 6.02 of the Parent Disclosure Schedule, Parent
shall not, between the date of this Agreement and the Effective Time, directly or

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indirectly, do,
or propose to do, any of the following without the prior written consent, which consent shall not
be unreasonably withheld, of Company:

          (a) amend or otherwise change the Certificate of Incorporation and Bylaws or equivalent
organizational documents;

          (b) issue, sell, pledge, dispose of, grant, encumber, authorize or propose the issuance, sale,
pledge, disposition, grant or encumbrance of any shares of its capital stock of any class, or any
options, warrants, convertible securities or other rights of any kind to acquire any shares of such
capital stock or any other ownership interest (including, without limitation, any phantom
interest), of Parent, except pursuant to the terms of options, warrants or preferred stock
outstanding on the date of this Agreement;

          (c) sell, lease, license, pledge, grant, encumber or otherwise dispose of any of its
properties or assets which are material, individually or in the aggregate, to its business;

          (d) split, combine, subdivide, redeem or reclassify any of its capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu of or in substitution for
shares of its capital stock, or purchase or otherwise acquire, directly or indirectly, any shares
of its equity interests except from former employees, managers, directors and consultants in
accordance with agreements providing for the repurchase of shares in connection with any
termination of service by such party;

          (e) acquire (including, without limitation, by merger, consolidation, or acquisition of stock
or assets) any interest or any assets in any corporation, partnership, other business organization
or any division thereof;

          (f) institute or settle any Legal Proceeding for an amount greater than $100,000;

          (g) incur any indebtedness for borrowed money or issue any debt securities or assume,
guarantee or endorse, or otherwise as an accommodation become responsible for, the obligations of
any person, or make any loans or advances other than such indebtedness described herein;

          (h) authorize any unbudgeted capital expenditure in excess of $100,000, individually or in the
aggregate;

          (i) enter into any lease or contract for the purchase or sale of any property, real or
personal, in an amount greater than $50,000 on an annual basis;

          (j) waive or release any material right or claim;

          (k) increase, or agree to increase, the compensation payable, or to become payable, to its (i)
officers or (ii) employees (provided that any employee’s annual compensation may be increased by an
amount not to exceed 10% of such employee’s current annual base salary), or grant any severance or
termination pay to, or enter into any employment

56

 

or severance agreement with, any of its managers,
officers or other employees, or establish, adopt, enter into or amend any collective bargaining,
bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement,
deferred compensation, employment, termination, severance or other Plan, agreement, trust, fund,
policy or arrangement for the benefit of any director, officer or employee; provided,
however, that the foregoing provisions of this subsection shall not apply to any amendments
to employee benefit plans described in Section 3(3) of ERISA that may be required by Law;

          (l) accelerate, amend or change the period of exercisability or the vesting schedule of
restricted stock or stock options granted under any option plan, employee stock plan or other
agreement or authorize cash payments in exchange for any stock options granted under any of such
plans, except as specifically required by the terms of such plans or any such agreement or any
related agreement in effect as of the date of this Agreement and disclosed in the Parent Disclosure
Schedule;

          (m) extend any offers of employment to potential employees, consultants or independent
contractors or terminate any existing employment relationships for which the annual remuneration is
greater than $200,000;

          (n) enter into, amend or terminate any Material Contract to which it is a party;

          (o) enter into, amend or terminate any contract, agreement, commitment or arrangement that, if
fully performed, would not be permitted under this Section 6.02;

          (p) other than in the ordinary course of business consistent with past practice, enter into
any licensing, distribution, OEM agreements, sponsorship, advertising, merchant program or other
similar contracts, agreements or obligations that may not be cancelled without penalties by Parent
upon notice of 30 days or less;

          (q) take any action, other than reasonable and usual action in the ordinary course of
business, consistent with past practice, with respect to accounting policies, principles or
procedures;

          (r) make or change any Tax or accounting election, change any annual accounting period, adopt
or change any accounting method, file any amended Tax Return, enter into any closing agreement,
settle any Tax claim or assessment relating to Parent, surrender any right to claim refund of
Taxes, consent to any extension or waiver of the limitation period applicable to any Tax claim or
assessment relating to Parent, or take any other action or omit to take any action that would have
the effect of increasing the Tax liability of Parent or the Company;

          (s) make (or become obligated to make) any bonus payments to any of its officers or employees
except as set forth on Schedule 6.02(s);

          (t) revalue any of its assets, including writing down the value of inventory or writing off
notes or accounts receivable;

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          (u) fail to maintain its equipment and other assets in good working condition and repair
according to the standards it has maintained up to the date of this Agreement, subject only to
ordinary wear and tear, unless it is more commercially reasonable to replace any such asset in the
ordinary course of Parent’s business;

          (v) take any action or fail to take any reasonable action that would cause there to be a
Parent Material Adverse Effect;

          (w) permit any insurance policy naming it as a beneficiary or a loss payable payee to be
cancelled or terminated and not replaced by a substantially similar replacement policy without
notice to the Company; and

          (x) take, or agree in writing or otherwise to take, any of the actions described in
subsections (a) through (w) above, or any action which is reasonably likely to make any of Parent’s
or Merger Sub’s representations or warranties contained in this Agreement untrue or incorrect on
the date made (to the extent so limited) or as of the Effective Time

     SECTION 6.03 Litigation. The parties shall notify one another in writing promptly
after learning of any claim, action, suit, arbitration, mediation, proceeding or investigation by
or before any court, arbitrator or arbitration panel, board or other Governmental Entity initiated
by it or them or against it or them, or known by either party to be threatened against it or them
or any of its or their officers, directors, managers, employees or stockholders in their capacity
as such.

     SECTION 6.04 Notification of Certain Matters. Parent shall give prompt notice to the
Company, and the Company shall give prompt notice to Parent, of (i) the occurrence, or
non-occurrence, of any event the occurrence, or non-occurrence, of which would be likely to cause
(x) any representation or warranty contained in this Agreement to be untrue or inaccurate or (y)
any covenant, condition or agreement contained in this Agreement not to be complied with or
satisfied; and (ii) any failure or inability of Parent or the Company, as the case may be, to
comply with or satisfy, any covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to this
Section 6.04 shall not limit or otherwise affect the remedies available hereunder to the party
receiving such notice. The parties hereto acknowledge that reliance shall not be an element of any
claim or cause of action by any party hereto for misrepresentation or breach of a representation,
warranty or covenant under this Agreement.

     SECTION 6.05 Non-Back Up Transactions. Each party shall agree to invite the other
party to participate in bona-fide negotiations with any potential acquisition candidate it
identifies prior to the Closing; provided that such acquisitions would not be reasonably
considered a Back Up Transaction.

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ARTICLE VII

ADDITIONAL AGREEMENTS

     SECTION 7.01 Proxy Statement; Stockholder Approval. Proxy Statement; Parent Stockholders’
Meeting; Name Change.

          (a) As promptly as practicable after the execution of this Agreement, Parent will prepare and
file the Proxy Statement with the SEC. Parent will respond to any comments of the SEC and Parent
will use its commercially reasonable best efforts to mail the Proxy Statement to its stockholders
at the earliest practicable time. As promptly as practicable after the execution of this
Agreement, the Company and Parent will prepare and file any other filings required under the
Securities Exchange Act of 1934 (the “Exchange Act”), the Securities Act of 1933 (the
“Securities Act”) or any other Federal, foreign or Blue Sky laws relating to the Merger and
the transactions contemplated by this Agreement, (collectively, the “Other Filings”). Each
party will notify the other party promptly upon the receipt of any comments from the SEC or its
staff and of any request by the SEC or its staff or any other governmental officials for amendments
or supplements to the Proxy Statement or any Other Filing or for additional information and will
supply the other party with copies of all correspondence between such party or any of its
representatives, on the one hand, and the SEC, or its staff or other government officials, on the
other hand, with respect to the Proxy Statement, the Merger or any Other Filing. The Proxy
Statement and the Other Filings will comply in all material respects with all applicable
requirements of law and the rules and regulations promulgated thereunder. Whenever any event occurs
which is required to be set forth in an amendment or supplement to the Proxy Statement or any Other
Filing, the Company or Parent, as the case may be, will promptly inform the other party of such
occurrence and cooperate in filing with the SEC or its staff or any other government officials,
and/or mailing to stockholders or members, as the case may be, of the Company and Parent, such
amendment or supplement. The proxy materials will be sent to the stockholders of Parent for the
purpose of soliciting proxies from holders of Parent Common Stock to vote in favor of (i) the
adoption of this Agreement and the approval of the Merger (“Parent Stockholder Approval”),
(ii) the issuance and sale of shares of Common Stock to the extent that such issuance requires
shareholder approval under the rules of AMEX and (iii) the election of Messrs. Herrman, Nixon and
Neel to Parent’s Board of Directors at the Parent Stockholders’ Meeting. Such proxy materials
shall be in the form of a proxy statement to be used for the purpose of soliciting such proxies
from holders of Parent Common Stock.

          (b) As soon as practicable following its approval by the SEC, Parent shall distribute the
Proxy Statement to the holders of Parent Common Stock and, pursuant thereto, shall call the Parent
Stockholders’ Meeting in accordance with the DGCL and, subject to the other provisions of this
Agreement, solicit proxies from such holders to vote in favor of the adoption of this Agreement and
the approval of the Merger and the other matters presented to the stockholders of Parent for
approval or adoption at the Parent Stockholders’ Meeting, including, without limitation, the
matters described Section 7.01(a).

          (c) Parent shall comply with all applicable provisions of and rules under the Exchange Act,
the Securities Act and all applicable provisions of the DGCL in the preparation, filing and
distribution of the Proxy Statement, the solicitation of proxies thereunder,

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and the calling and
holding of the Parent Stockholders’ Meeting. Without limiting the foregoing, Parent shall ensure
that the Proxy Statement does not, as of the date on which it is distributed to the holders of
Parent Common Stock, and as of the date of the Parent Stockholders’ Meeting, contain any untrue
statement of a material fact or omit to state a material fact necessary in order to make the
statements made, in light of the circumstances under which they were made, not misleading (provided
that Parent shall not be responsible for the accuracy or completeness of any information provided
by the Company relating to the Company or any other information furnished by the Company for
inclusion in the Proxy Statement to the extent the Company information or its interpretation
thereof has not been altered by Parent or Parent’s representatives). The Company represents and
warrants that the information relating to the Company supplied by the Company for inclusion in the
Proxy Statement will not as of date of its distribution to the holders of Parent Common Stock (or
any amendment or supplement thereto) or at the time of the Parent Stockholders’ Meeting contain any
statement which, at such time and in light of the circumstances under which it is made, is false or
misleading with respect to any material fact, or omits to state any material fact required to be
stated therein or necessary in order to make the statement therein not false or misleading.

          (d) Prior to the Effective Time, Parent shall take such actions necessary to change its name
from “JK Acquisition Corp.” to “MS Energy Services, Inc.”

     SECTION 7.02 Members Approval; Exemption from Registration.

          (a) As promptly as practicable, and in any event within 30 days after the date hereof, and in
accordance with applicable Law and, the Company’s Charter Documents, the Company shall convene a
meeting of its Members or solicit written consents from its Members to obtain their approval and
adoption of this Agreement and the other transactions contemplated hereby. The Company shall
ensure that the Members’ meeting is called, noticed, convened and held, and that all proxies or
written consents are solicited and obtained from the Members, in compliance with applicable Law,
the Company’s Charter Documents, and all other applicable legal requirements. The Company agrees
to use its commercially reasonable best efforts to take all action necessary or advisable to secure
the necessary votes required by applicable Law and the Company’s Charter Documents to effect the
Merger. The Board of Managers of the Company shall unanimously recommend that the Members vote in
favor of and adopt and approve this Agreement and the other transactions contemplated hereby.
Neither the Board of Managers of the Company nor any committee thereof shall withdraw, amend or
modify, or propose or resolve to withdraw, amend or modify in a manner adverse to Parent, the
recommendation of the Board of Managers of the Company that the Members vote in favor of and adopt
and approve this Agreement and the other transactions contemplated hereby, except that the Board of
Managers shall not be obligated to approve or recommend to the Members for approval any proposed
amendment or modification of this Agreement unless the Board of Managers determines, in its sole
reasonable discretion, that such amendment or modification is in the best interest of the Company.

          (b) At every meeting of the Members of the Company called with respect to any of the
following, and at every adjournment thereof, and on every action or approval by written consent of
the Members of the Company with respect to the Merger so long as Parent and Merger Sub are not in
material violation of this Agreement, each Member shall

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vote or cause to be voted the Company
Interests and any New Company Interests (as defined below) in favor of (x) adoption of the Merger
Agreement and approval of the Merger, and (y) any matter that is required for the Company to ensure
the satisfaction of the conditions precedent to the consummation of the Merger. Each current
Member and any future Member agrees that any Company Interests that Member acquires record or
beneficial ownership (“New Membership Interests”) after the execution of this Agreement and
prior to the Closing Date (including through the exercise of any options, warrants or similar
instruments) shall be subject to the terms and conditions of this Agreement to the same extent as
if the New Membership Interests constituted Company Interests.

          (c) Each of the parties hereto acknowledge that the shares of Parent Common Stock issued to
the Members pursuant to this Agreement are intended to be issued pursuant to the “private
placement” exemption from registration under Section 4(2) of the Securities Act and/or Regulation D
promulgated under the Securities Act and agree to fully cooperate with Parent in its efforts to
ensure that the shares of Parent Common Stock may be issued pursuant to such private placement
exemption; provided, however, that neither Parent nor Merger Sub makes any
representation or warranty that such issuance in fact qualifies for such private placement
exemption. Such Parent Shares shall be subject to a Registration Rights Agreement substantially in
the form attached hereto as Exhibit C (the “Registration Rights Agreement”).

          (d) Notwithstanding the foregoing and anything to the contrary in Article VIII hereof, in the
event that Parent, based on advice of its counsel, has determined that the shares of Parent Common
Stock to be issued pursuant to this Agreement cannot be issued under the “private placement”
exemption from registration under Section 4(2) of the Securities Act and/or Regulation D
promulgated under the Securities Act, then at Parent’s sole and exclusive election the parties
hereto shall take all action necessary to prepare and file on or before December 1, 2006 a
registration statement on Form S-4 with the SEC which registers the issuance of the shares of
Parent Common Stock pursuant to this Agreement (the “Form S-4 Alternative”). Parent and
the Company shall use, and shall cause their officers, employees, agents, advisors or other
representatives to use, their respective commercially reasonable best efforts to effectuate the
foregoing (and fully cooperate with the other parties), including, without limitation, preparing
and filing all applications, documents and forms necessary to register the shares of Parent Common
Stock on an effective registration statement on Form S-4. In the event that shares of Parent
Common Stock are issued pursuant to the Form S-4 Alternative, no Shares of Parent Common Stock (or
certificates therefor) shall be issued in exchange for any Company Interest Certificates to any
person who, prior to the Effective Time, may be an “affiliate” (as that term is used in Rule 145
under the Securities Act) of the Company until such person has delivered to Parent and the Company
a duly executed Affiliate Agreement in the form provided by Parent.

     SECTION 7.03 Access to Information; Confidentiality.

          (a) From the date of this Agreement to the Effective Time, the parties hereto shall, subject
to each party’s compliance with the covenant set forth in Section 7.03(b) below: (i) provide to
each other (and each party’s officers, directors, employees, accountants, consultants, legal
counsel, advisors, agents and other representatives (collectively,

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“Representatives”))
access at reasonable times upon prior notice to the directors, officers, employees, agents,
properties, offices and other facilities of the other party and to the books and records thereof
and (ii) furnish promptly such information concerning the business, properties, contracts, assets,
liabilities, personnel and other aspects of the other party as the requesting party or its
Representatives may reasonably request.

          (b) The parties shall comply with, and shall cause their respective Representatives to comply
with, all of their respective obligations under the Non-Disclosure Agreement, dated May 25, 2006
(the “Non-Disclosure Agreement”), between the Company and Parent.

     SECTION 7.04 No Solicitation of Transactions.

          (a) The Company will not, directly or indirectly, and will instruct its Representatives not
to, directly or indirectly, solicit, initiate or encourage (including by way of furnishing
nonpublic information), or take any other action to facilitate, any inquiries or the making of any
proposal or offer (including, without limitation, any proposal or offer to its Members) that
constitutes, or may reasonably be expected to lead to, any Competing Transaction (as defined
below), or enter into or maintain or continue discussions or negotiate with any person in
furtherance of such inquiries or to obtain a Competing Transaction, or agree to or endorse any
Competing Transaction, or authorize or permit any of the officers, managers or employees of the
Company, or any investment banker, financial advisor, attorney, accountant or other representative
retained by the Company, to take any such action. The Company will notify Parent immediately after
receipt by the Company (or by any of its officers, directors, employees, agents, advisors or other
representatives) of any proposal for, or inquiry respecting, any Competing Transaction, or any
request for nonpublic information in connection with such proposal or inquiry or for access to the
properties, books or records of the Company by any person that informs or has informed the Company
that it is considering making or has made such a proposal or inquiry. Such notice to Parent shall
indicate in reasonable detail the identity of the person making such proposal or inquiry and the
terms and conditions of such proposal or inquiry. The Company immediately shall cease and cause to
be terminated all existing discussions or negotiations with any parties conducted heretofore with
respect to a Competing Transaction. The Company agrees not to release any third party from, or
waive any provision of, any confidentiality or standstill agreement to which it is a party.

          (b) A “Competing Transaction” means any of the following involving the Company (other
than the Merger and the other transactions contemplated by this Agreement): (i) a merger,
consolidation, share exchange, business combination or other similar transaction; (ii) any sale,
lease, exchange, transfer or other disposition of a material portion of the assets or debt or
equity securities of such party; (iii) a tender offer or exchange offer for 15% or more of the
outstanding voting securities of such party; or (iv) any solicitation in opposition to approval by
the Members of the Company of this Agreement and the Merger.

     SECTION 7.05 Employee Benefits Matters.

          (a) Subject to the requirements of third parties and laws associated with existing Company
employee benefit plans and further subject to determination of any and

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all obligations relating to
existing Company benefit plans on the Closing Date, all employees of the Company shall continue in
their existing benefit plans, except for the Company’s satisfaction of its obligations under the
2004 Incentive Plan and the Special Bonus Plan as noted in Section 3.11 of the Disclosure Schedule,
until such time as, in Parent’s sole discretion, an orderly transition can be accomplished to
employee benefit plans and programs maintained by Parent or Merger Sub for its and its affiliates’
employees in the United States. Parent and Merger Sub shall take such reasonable actions, to the
extent permitted by Parent’s and Merger Sub’s benefits programs, as are necessary to allow eligible
employees of the Company to participate in the health, welfare and other benefits programs of
Parent or Merger Sub or alternative benefits programs in the aggregate that are substantially
equivalent to those applicable to employees of the Company prior to Closing in similar functions
and positions on similar terms (it being understood that equity incentive plans are not considered
employee benefits). Pending such action, Parent shall maintain the effectiveness of and be solely
responsible for the Company’s benefit plans.

          (b) At Closing, Parent will enter into employment agreements (collectively, the
“Employment Agreements,” and, individually, an “Employment Agreement”) with the
individuals set forth on Schedule 7.05(b) hereto.

          (c) At Closing, Parent will enter into non-solicitation and non-competition agreements
(collectively, the “Non-Solicitation Agreements”, and, individually, a
“Non-Solicitation Agreement”) with the individuals set forth on Schedule 7.05(c) hereto.

          (d) Prior to the Effective Time, the Company shall take all necessary actions to obtain the
requisite Member approval under Section 280G(b)(5) of the Code of any payments or benefits that
could be considered “excess parachute payments” within the meaning of Section 280G of the Code and
shall require all “disqualified individuals” within the meaning of Section 280G of the Code to
subject their existing benefits and payments to the stockholder approval requirements of Section
280G(b)(5) of the Code, as contemplated in the Proposed Treasury Regulations promulgated
thereunder. The Company further agrees that whether or not its Members approve any such excess
parachute payments, neither Parent nor the Surviving Corporation shall have any responsibility or
liability with respect to any excise taxes owed by the recipients of any such payments.

          (e) The Company shall take all necessary corporate action to terminate its 2004 Incentive Plan
and its Special Bonus Plan (collectively, the “Incentive Plans”) effective as of the date
immediately prior to the Closing Date, but contingent on the Closing. Parent shall receive from
the Company evidence that the Company’s Board of Managers has adopted resolutions to terminate the
Incentive Plans (the form and substance of which resolutions shall be subject to review and
approval of Parent), effective as of the date immediately preceding the Closing Date.

          (f) The Company and, as applicable, its ERISA Affiliates each agree to terminate any and all
group severance, separation or salary continuation plans, programs or arrangements immediately
prior to Closing. Parent shall receive from the Company evidence that the plans, programs or
arrangements of the Company and, as applicable, each ERISA Affiliate have been terminated pursuant
to resolutions adopted by each such entity’s board of

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managers or directors (the form and substance
of which resolutions shall be subject to review and approval of Parent), effective as of the day
immediately preceding the Closing Date but contingent on the Closing.

          (g) With respect to all equity interest purchase, option and award agreements (including any
restricted units, unit purchase, option or award agreements under the Incentive Plans) between the
Company and any current or former employee, manager, consultant or founder effective as of the
Effective Time, any and all rights of repurchase under each such agreement shall be assigned to
Parent (or to such other entity as Parent shall designate) by virtue of the Merger and without any
further action on the part of the Company, such assignment to be effective as of the Effective
Time.

     SECTION 7.06 Further Action; Consents; Filings.

          (a) Upon the terms and subject to the conditions hereof, each of the parties hereto shall use
its reasonable best efforts to (i) take, or cause to be taken, all appropriate action and do, or
cause to be done, all things necessary, proper or advisable under applicable Law or otherwise to
consummate and make effective the Merger and the other transactions contemplated by this Agreement,
(ii) obtain from any Governmental Entity or any other person all consents, licenses, permits,
waivers, approvals, authorizations or orders required to be obtained or made by Parent or the
Company or any of their subsidiaries in connection with the authorization, execution and delivery
of this Agreement and the consummation of the Merger and the other transactions contemplated by
this Agreement, including those required under the HSR Act, and (iii) make all necessary filings,
and thereafter make any other required submission, with respect to this Agreement, the Merger and
the other transactions contemplated by this Agreement required under applicable Law. The parties
hereto shall cooperate with each other in connection with the making of all such filings, including
by providing copies of all such documents to the non-filing party and its advisors prior to filing
and, if requested, by accepting all reasonable additions, deletions or changes suggested in
connection therewith.

          (b) To the extent required, Parent and the Company shall file as soon as practicable after the
date hereof notifications under the HSR Act and each of Parent and the Company shall use
commercially reasonable efforts to respond as promptly as practicable to all reasonable inquiries
or requests and to resolve such objections, if any, as may be asserted by any Governmental Entity
with respect to the transactions contemplated by this
Agreement under the HSR Act, the Sherman Act,
as amended, the Clayton Act, as amended, the Federal Trade Commission Act, as amended, and any
other Federal, state or foreign statutes, rules, regulations, orders or decrees that are designed
to prohibit, restrict or regulate actions having the purpose or effect of monopolization or
restraint of trade (collectively, “Antitrust Laws”). Parent shall be solely responsible
for any fee payable in connection with filing the required notifications under the HSR Act, if
applicable. In connection therewith, if any administrative or judicial action or proceeding is
instituted (or threatened to be instituted) challenging any transaction contemplated by this
Agreement as violating any Antitrust Law, each of Parent and Company shall cooperate and use all
reasonable efforts to contest and resist vigorously any such action or proceeding and to have
vacated, lifted, reversed, or overturned any decree, judgment, injunction or other order, whether
temporary, preliminary or permanent, that is in effect and that prohibits, prevents, or restricts
consummation of the Merger or any such other transactions contemplated by this

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Agreement, unless by
mutual agreement Parent and Company decide that litigation is not in their respective best
interests. The parties hereto will consult and cooperate with one another, and consider in good
faith the views of one another, in connection with any analyses, appearances, presentations,
memoranda, briefs, arguments, opinions and proposals made or submitted by or on behalf of any party
hereto in connection with proceedings under or relating to any Antitrust Laws, if necessary.
Notwithstanding the provisions of the immediately preceding sentence, it is expressly understood
and agreed that Parent shall have no obligation to litigate or contest any administrative or
judicial action or proceeding or any Antitrust Order beyond December 31, 2006. Each of Parent and
Company shall use all reasonable efforts to take such actions as may be required to cause the
expiration of the waiting periods under the HSR Act or other Antitrust Laws with respect to such
transactions as promptly as possible after the execution of this Agreement; provided,
however, that nothing contained herein shall require either party to seek early termination
of any such waiting period under the Antitrust Laws.

          (c) Notwithstanding anything to the contrary in Section 7.06(a) or (b), (i) neither Parent nor
Merger Sub shall be required to divest (including, without limitation, through a licensing
arrangement) any of their respective businesses, product lines or assets, or to take or agree to
take any other action or agree to any limitation that could reasonably be expected to have a Parent
Material Adverse Effect and (ii) the Company shall not be required to divest (including, without
limitation, through a licensing arrangement) any of its respective businesses, product lines or
assets, or to take or agree to take any other action or agree to any limitation that could
reasonably be expected to have a Company Material Adverse Effect.

          (d) From the date of this Agreement until the earlier of the Effective Time or the termination
of this Agreement, each party shall promptly notify the other party in writing of any pending or,
to the knowledge of such party, threatened action, proceeding or investigation by any Governmental
Entity or any other person (i) challenging or seeking material damages in connection with this
Agreement or the transactions contemplated hereunder or (ii) seeking to restrain or prohibit the
consummation of the Merger or the transactions contemplated hereunder or otherwise limit the right
of Parent or its subsidiaries to own or operate all or any portion of the business, assets or
properties of the Company.

     SECTION 7.07 Intentionally Omitted.

     SECTION 7.08 No Public Announcement. The initial press release relating to this
Agreement shall be a joint press release the text of which has been substantially agreed to by each
of Parent and the Company. Thereafter, unless otherwise required by applicable Law, neither Parent
nor the Company shall issue any press release or otherwise make any public statements with respect
to this Agreement, the Merger or any of the other transactions contemplated by this Agreement
without the prior written consent of the other party.

     SECTION 7.09 Expenses. Except as provided in Article IX or Section
2.03, whether or not the Merger is consummated, all costs and expenses incurred in connection
with this Agreement, the Merger and other transactions contemplated by this Agreement (including,
without limitation, the fees and expenses of financial advisors, accountants and legal counsel) (i)
if incurred by Parent and Merger Sub, shall be paid by Parent and (ii) if incurred by the

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Company
or its Members (the “Member Expenses”), shall be paid by the Company, except the costs and
expense associated with Section 3.22 – Brokers shall be paid by the Members.

     SECTION 7.10 Affiliate Agreements. In the event that Parent elects to issue the
shares of Parent Common Stock pursuant to the Form S-4 Alternative, the Company shall cause each
person that could reasonably be deemed to be an “affiliate” of the Company for purposes of the
Securities Act to execute and deliver to Parent, as promptly as practicable after the execution of
this Agreement, an Affiliate Agreement in the form provided by Parent.

     SECTION 7.11 Services Agreement. Parent shall enter into an agreement (the
“Services Agreement”) with James P. Wilson pursuant to which Parent shall pay Mr. Wilson
$200,000 (on an annual basis) to serve as Chairman of the Board of Parent. The terms of the
Services Agreement shall be disclosed in the Proxy Statement.

     SECTION 7.12 AMEX Listing. Parent shall promptly prepare and file with AMEX a
Notification Form for Listing Additional Shares with respect to the Parent Shares and Redemption
Liability Shares to be issued at the Effective Time pursuant to this Agreement and shall use its
reasonable efforts to obtain, prior to the Effective Time, approval for the listing of such Parent
Shares and Redemption Liability Shares, subject to official notice to AMEX of issuance, and the
Company shall cooperate with Parent with respect to such filing.

     SECTION 7.13 Section 16 Relief. Provided that the Company delivers to Parent the
Section 16 Information (as defined below) in a timely fashion, the Board of Directors of Parent, or
a committee of two or more Non-Employee Directors thereof (as such term is defined for purposes of
Rule 16b-3 under the Exchange Act), shall adopt resolutions prior to the consummation of the Merger
providing that the receipt by the Company Insiders (as defined below) of the Parent Common Stock
upon conversion of the Company Interest pursuant to the transactions contemplated hereby and to the
extent such securities are listed in the Section 16 Information, are intended to be exempt from
liability pursuant to Section 16(b) under the Exchange Act. Such resolutions shall comply with the
approval conditions of Rule 16b-3 under the Exchange Act for purposes of such Section 16(b)
exemption, including, but not limited to, specifying the name of the Company Insiders, the number
of securities to be acquired or disposed of for each such person, the material terms of any
derivative securities, and that the approval is intended to make the receipt of such securities
exempt pursuant to Rule 13b-3(d). “Section 16 Information” shall mean information
regarding the Company Insiders, the number of shares of the Company Interest held by each such
Company Insider and expected to be exchanged for Parent Common Stock in connection with the Merger.
“Company Insiders” shall mean those officers and managers of the Company who will be
subject to the reporting requirement of Section 16(b) of the Exchange Act with respect to Parent
and who are listed in the Section 16 Information.

     SECTION 7.14 Key Employees. The Company shall notify Parent if, to the Company’s
Knowledge, any key employee or officer of the Company expects to or has expressed an intent to
resign from his or her position with the Company within twelve (12) months after the Closing Date.

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     SECTION 7.15 WARN Act. The Company agrees to use commercially reasonable efforts to
make available the existing Company employees to Parent that the Merger Sub desires to continue
employment of for the purpose of operating the Business. Parent and Merger Sub agree to continue
the opportunity to be employed to all or substantially all of the Company employees on the terms
and conditions that presently exist as of the Closing Date. Nothing between the parties shall
prohibit Parent or Merger Sub from terminating any of the existing employees subsequent to their
employment by Merger Sub. If it appears that a violation of the federal Worker Adjustment and
Retraining Notification Act (the “WARN Act”) is likely to occur, Parent or the Company may
elect to terminate this Agreement without further liability or, by mutual agreement, they may elect
to proceed with complying with said laws and close the transaction as soon after such compliance as
is reasonably practicable. The parties agree to consult with each other on the need for and timing
of notices pursuant to the WARN Act, if applicable, and utilize commercially reasonable efforts to
comply with same.

     SECTION
7.16 Conversion Schedule. Section 7.16 of the Company
Disclosure Schedule is a schedule prepared by the Company (the
“Preliminary Conversion Schedule”) showing the
aggregate number of Parent Shares to be issued to the holders of
Company Interests and each holder of rights to acquire membership
interests of the Company, as of the execution of this Agreement as of
the Effective Time. The Company and the Members’ Representative
shall prepare a final schedule as of the Effective Time (the
“Final Conversion Schedule”) showing the amount of
Cash Consideration and the number of Parent Shares, Parent Warrants,
Redemption Liability Shares and Redemption Warrants to be issued to
each holder of Company Interests and each holder of rights to acquire
membership interests of the Company, and an officer of the Company
shall certify the Final Conversion Schedule and deliver such schedule
to Parent at Closing.

     SECTION 7.17 Litigation Support. In the event and for so long as any Member actively
is contesting or defending against any action, suit, proceeding, hearing, investigation, charge,
complaint, claim or demand 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 parties will reasonably cooperate with him or it and his or its
counsel in the contest or defense, reasonably make available their personnel, and provide such
testimony and access to their books and records as shall be reasonably necessary in connection with
the contest or defense, all at the sole cost and expense of the contesting or defending Member
(unless the contesting or defending Member is entitled to indemnification therefore as described
below). Parent and Merger Sub acknowledge and agree that any Member that is individually brought
into any litigation in connection with the Company for facts, events or circumstances arising prior
to the Closing shall be indemnified to the maximum extent permitted to be indemnified under the
Company’s Charter Documents. Notwithstanding the foregoing, the Member(s) shall not be entitled to
indemnification to the extent of any of the following:

               (i) they are sued for any shareholder derivative action or suit by any Member; or

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               (ii) actions or inactions which constitute a breach of any Member representation, warranty,
covenant or agreement set forth herein; or

               (iii) actions or inactions by any Member which constitute a breach of any fiduciary duty; or

               (iv) to the extent such Member(s) are found to have engaged in gross negligence, intentional
misconduct, willful misconduct or fraud or other non-indemnifiable conduct set forth in the Company
Charter Documents.

     SECTION 7.18 Director and Officer Insurance. Parent shall provide to the Company a
commitment for a director and officer insurance policy with coverage limits not less than
$10,000,000 by October 31, 2006. Such policy shall be, without exception, effective as of the
Effective Time, and reasonably acceptable to the Company and all directors of Parent and Merger Sub
in accordance with the terms and provisions contained in the commitment. The bylaws, regulations
or other operative documents of the Surviving Corporation shall furthermore continue to provide
indemnification to all directors and executive officers to the maximum extent provided by Delaware
law.

     SECTION 7.19 Disclosure Schedules Bring Down.

          (a) The representations and warranties of the Company contained in this Agreement and all
information delivered in the Company Disclosure Schedule, or any attachment or exhibit hereto or in
any certificate delivered by the Company to Parent and/or Merger Sub shall be true and correct on
the Closing Date as though then made and as though the Closing Date was substituted for the date of
this Agreement throughout such representations and warranties; provided, however, that the
Company Disclosure Schedule delivered to Parent and Merger Sub as of the date of this Agreement
shall be permitted to be revised and amended as of the Closing Date.

          (b) The representations and warranties of Parent and Merger Sub contained in this Agreement
and all information delivered in the Parent Disclosure Schedule, or any attachment or exhibit
hereto or in any certificate delivered by Parent to the Company shall be true and correct on the
Closing Date as though then made and as though the Closing Date was substituted for the date of
this Agreement throughout such representations and warranties; provided, however, that the
Parent Disclosure Schedule delivered to the Company as of the date of this Agreement shall be
permitted to be revised and amended as of the Closing Date.

          (c) Both parties agree to use their commercially reasonable best efforts to provide the other
party with any revised and amended schedules pursuant to this Section 7.19 no later than five (5)
business days prior to the Closing Date mutually agreed upon by Parent and the Company. Based upon
its review of the schedules delivered pursuant to Section 7.19 by the other party, such party may,
in its sole reasonable discretion, terminate this Agreement and the Merger and the other
transactions contemplated by this Agreement may be abandoned at any time prior to the Effective
Time; provided, however, if (i) Parent terminates this Agreement pursuant to this Section 7.19(c)
or if Parent’s termination is not reasonable pertaining to the schedules delivered by the Company
to Parent, and Parent’s duties under Section 9.02(b) herein

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would otherwise have existed, then the terms of Section 9.02(b) shall apply to Parent, and (ii) the Company terminates this Agreement pursuant to this Section 7.19(c),
and Parent’s duties under Section 9.02(b) herein would otherwise have existed, then the terms of Section 9.02(b) shall apply to parent.

ARTICLE VIII

CONDITIONS TO THE MERGER

     SECTION 8.01 Conditions to the Obligations of Each Party. The respective obligations
of the Company, Parent and Merger Sub to consummate the Merger are subject to the satisfaction or
waiver (where permissible) of the following conditions:

          (a) Stockholder Approval. This Agreement shall have been approved and adopted by the
requisite affirmative vote of the stockholders of Parent in accordance with the DGCL and the
Parent’s Certificate of Incorporation and Bylaws, provided that Parent will proceed with the Merger
only if (i) a majority of the shares of Parent Common Stock voted by the Public Stockholders (as
defined herein below) are voted in favor of the Merger and (ii) Public Stockholders owning less
than 20% of the shares of Parent Common Stock sold in its initial public offering and the private
placement both vote against the Merger and exercise their Redemption Option pursuant to the
Parents’ Certificate of Incorporation. As used herein, the term “Public Stockholders”
shall mean any stockholder of Parent holding shares of Parent Common Stock issued in connection the
Parent’s IPO, excluding shares of Parent Common Stock held by the Founders. As used herein, the
term “Founders” shall mean James P. Wilson, Keith D. Spickelmier, Michael H. McConnell and
Herbert C. Williamson;

          (b) No Order. No Governmental Entity or court of competent jurisdiction located or
having jurisdiction in the United States shall have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, decree, judgment, injunction or other order, whether
temporary, preliminary or permanent (each an “Order”) which is then in effect and has the
effect of making the Merger illegal or otherwise prohibiting consummation of the Merger;

          (c) HSR Act. Any waiting period (and any extension thereof) applicable to the
consummation of the Merger under the HSR Act shall have expired or been terminated, if applicable;

          (d) Listing. Parent shall have filed with AMEX a Notification Form for Listing
Additional Shares with respect to Parent Shares and Redemption Liability Shares at the Effective
Time to be issued pursuant to this Agreement; and

          (e) Registration Rights Agreement. Parent, the Members and the Members’
Representative shall have entered into the Registration Rights Agreement.

     SECTION 8.02 Conditions to the Obligations of Parent and Merger Sub. The obligations
of Parent and Merger Sub to consummate the Merger are subject to the satisfaction or waiver (where
permissible) of the following additional conditions:

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          (a) Representations and Warranties. Each of the representations and warranties made
by the Company in this Agreement that are qualified as to Knowledge, materiality or Company
Material Adverse Effect, or any similar standard or qualification, shall
be true and correct in all respects, and each of the representations and warranties made by
the Company in this Agreement that are not qualified as to Knowledge, materiality or Company
Material Adverse Effect, or any similar standard or qualification, shall be true and correct in all
material respects, in each case as of the Effective Time with the same force and effect as if made
on and as of the Effective Time, except that those representations and warranties that address
matters only as of a particular date shall remain true and correct as of such date, and Parent
shall have received a certificate of the Chief Executive Officer of the Company to that effect;

          (b) Agreements and Covenants. The Company shall have performed or complied in all
material respects with all agreements and covenants required by this Agreement to be performed or
complied with by it on or prior to the Effective Time and Parent shall have received a certificate
of the Chief Executive Officer of the Company to that effect;

          (c) Approvals. Parent shall have received, each in form and substance reasonably
satisfactory to Parent, all authorizations, consents, orders and approvals (i) required by any
Governmental Entity or official, if any, (ii) set forth in Section 3.06 of the Company Disclosure
Schedule or (iii) the failure of which to obtain would have, or could reasonably be expected to
have, a Company Material Adverse Effect;

          (d) No Company Material Adverse Effect. No event or events shall have occurred, or
could be reasonably likely to occur, which, individually or in the aggregate, have, or could
reasonably be expected to have, a Company Material Adverse Effect;

          (e) Employment Agreements. Each individual set forth on Schedule 7.05(b) hereto shall
remain employed by the Company and the Employment Agreements shall have been entered into at
Closing on mutually acceptable terms to Parent and such individuals;

          (f) Non-Solicitation Agreements. Each individual set forth on Schedule 7.05(c) shall
have entered into a Non-Solicitation Agreement on mutually acceptable terms to Parent and such
individuals;

          (g) Affiliate Agreements. In the event that Parent elects to issue the shares of
Parent Common Stock pursuant to the Form S-4 Alternative, each of the affiliates of the Company
shall have executed and delivered to Parent an Affiliate Agreement and such agreement shall (i)
become effective at Closing or (ii) remain in full force and effect and shall not have been
anticipatorily breached or repudiated by any of such affiliates;

          (h) No Restraints. There shall not be pending or threatened any suit, action,
investigation or proceeding to which a Governmental Entity is a party (i) seeking to restrain or
prohibit the consummation of the Merger or any of the other transactions contemplated by this
Agreement or seeking to obtain from Parent or the Company any damages that are material or (ii)
seeking to prohibit or limit the ownership or operation by Parent or the Company of any material
portion of their respective businesses or assets;

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          (i) Issuance of Shares of Parent Common Stock. The issuance of the shares of Parent
Common Stock pursuant to this Agreement will be validly issued pursuant to the “private placement”
exemption from registration provided by Section 4(2) of the Securities Act
and/or Regulation D promulgated under the Securities Act. If Parent elects to utilize the
Form S-4 Alternative, the registration statement on Form S-4 shall have become effective under the
Securities Act and shall not be the subject of any stop order or proceeding seeking a stop order;

          (j) Escrow Agreement. Parent, the Members’ Representative and Escrow Agent shall have
entered into the Escrow Agreement and the Escrow Agreement shall be in full force and effect and
shall not have been anticipatorily breached or repudiated;

          (k) Termination of Incentive Plans. The Company shall have terminated the Incentive
Plans identified by Parent prior to Closing, and the Company shall have provided Parent with
evidence, reasonably satisfactory to Parent, as to the termination of the Incentive Plans;

          (l) Opinion of the Company’s Counsel. Parent shall have received the opinion of
Franklin, Cardwell & Jones, P.C., counsel to the Company, substantially in the form attached hereto
as Exhibit D;

          (m) Services Agreement. Parent and James P. Wilson shall have entered into the
Services Agreement;

          (n) Secretary’s Certificate. Parent shall have received (i) a certificate executed by
the Secretary of the Company attaching and certifying as to matters customary for a transaction of
this sort, including, without limitation, the true and correct copies of the Company’s Charter
Documents and copies of the resolutions of the Company’s Board of Managers and the Members
approving and adopting this Agreement and the transactions relating hereto, and (ii) such other
documents relating to the transactions contemplated by this Agreement as Parent may reasonably
request;

          (o) Estoppel Certificate. Parent shall have received an estoppel certificate, dated
as of a date not more than seven (7) days prior to the Closing Date and satisfactory in form and
content to Parent, executed by each of those landlords listed on Section 3.12(iii) of the Company
Disclosure Schedule whose consent is required in order that the parties might consummate the
transactions contemplated hereby;

          (p) FIRPTA Compliance. The Company shall, prior to the Closing Date, provide Parent
with a properly executed Foreign Investment in Real Property Tax Act of 1980 (“FIRPTA”)
Notification Letter, in form and substance satisfactory to Parent, which states that the membership
interests of the Company do not constitute “United States real property interests” under Section
897(c) of the Code, for purposes of satisfying Parent’s obligations under Treasury Regulation
Section 1.1445-2(c)(3). In addition, simultaneously with delivery of such Notification Letter, the
Company shall have provided to Parent, as agent for the Company, a form of notice to the Internal
Revenue Service in accordance with the requirements of Treasury Regulation Section 1.897-2(h)(2)
along with written authorization for Parent to deliver such

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notice form to the Internal Revenue
Service on behalf of the Company upon the consummation of the Merger;

          (q) Parachute Payments. Prior to the Effective Time, the Company shall have obtained
the requisite Members approval, if any, under Section 280G(b)(5) of the
Code of any payments or benefits that could be considered “excess parachute payments” within
the meaning of Section 280G of the Code, and any “disqualified individuals” as defined in Section
280G of the Code shall have agreed to forfeit any payments that would otherwise be non-deductible
if such Member approval, if required is not obtained;

          (r) Employees. Each of the individuals set forth on Schedule 8.02(r) shall be
employed in good standing by the Company;

          (s) Board and Officer Resignations. The Company shall have received written letters
of resignation from each of the current members of the Board of Managers and officers of the
Company, in each case effective at the Effective Time;

          (t) Termination of Employee Agreements. Parent shall have been furnished evidence
satisfactory to it that the Company has terminated all employment agreements with Messrs. Neel,
Culbreth and Cudd, and that any employment agreements existing prior to Closing between the Company
and each of those employees set forth on Schedule 8.02(t) shall be valid and enforceable;

          (u) Termination of the Company’s Agreements. Parent shall have been furnished
evidence satisfactory to it that all rights granted by the Company to its members and in effect
prior to the Closing, including, but not limited to, rights of co-sale, voting, registration, first
refusal, first offer, preemptive, board observation or information or operational covenants, shall
have terminated prior to the Closing Date;

          (v) Termination of Incentive Plans. Pursuant to Section 7.05(e), the Company shall
have terminated the Incentive Plans effective as of the date of the Closing;

          (w) Termination of Membership Interest Transfer Agreement. The Company shall have
terminated the Membership Interest Transfer Agreement effective as of the date of the Closing;

          (x) Fairness Opinion. The Opinion shall have been issued by a nationally recognized
firm that (i) the Merger is fair to, and in the best interest of, Parent, Merger Sub and their
respective stockholders and (ii) the fair market value of the Company is equal to at least 80% of
Parent’s net assets;

          (y) Due Diligence. Parent shall in good faith be satisfied with the results of its
legal, accounting, tax and business due diligence investigation of
the Company on or prior to October 1,
2006; and

          (z) Financial Due Diligence. The Parent shall in good faith be satisfied with the
“2007 Integrated Projection” from the Company which shall contain the good faith projections of the
Company with respect to its balance sheet and income statement and cash

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flow statement for the
calendar year 2007 which the Company shall deliver to Parent on or before September 15, 2006.

     SECTION 8.03 Conditions to the Obligations of the Company. The obligations of the Company to consummate the Merger are subject to the satisfaction or
waiver (where permissible) of the following additional conditions:

          (a) Representations and Warranties. Each of the representations and warranties of
Parent and Merger Sub contained in this Agreement that are qualified as to materiality or Parent
Material Adverse Effect, or any similar standard or qualification, shall be true and correct, and
each of the representations and warranties of Parent and Merger Sub contained in this Agreement
that are not qualified as to materiality or Parent Material Adverse Effect, or any similar standard
or qualification, shall be true and correct in all material respects, in each case as of the
Effective Time with the same force and effect as if made on and as of the Effective Time, except
that those representations and warranties which address matters only as of a particular date shall
remain true and correct as of such date, and the Company shall have received a certificate of a
duly authorized officer of Parent to that effect;

          (b) Approvals. The Company shall have received, each in form and substance reasonably
satisfactory to the Company, all authorizations, consents, orders and approvals (i) required by any
Governmental Entity or official, if any, (ii) set forth in Section 5.04(b) of the Parent Disclosure
Schedule or (iii) the failure of which to obtain would have, or could reasonably be expected to
have, a Parent Material Adverse Effect;

          (c) Employment Agreements. Each individual set forth on Schedule 7.05(b)
hereto shall remain employed by the Company and the Employment Agreements shall be entered into
with such individuals at Closing on mutually acceptable terms;

          (d) Non-Solicitation Agreements. Each individual set forth on Schedule
7.05(c) hereto shall enter into a Non-Solicitation Agreement at Closing on mutually acceptable
terms;

          (e) Affiliate Agreements. In the event that Parent elects to issue the shares of
Parent Common Stock pursuant to the Form S-4 Alternative, each of the affiliates of the Company
shall have executed and delivered to Parent an Affiliate Agreement and such agreement shall (i)
become effective at Closing, or (ii) remain in full force and effect and shall not have been
anticipatorily breached or repudiated by any of such affiliates;

          (f) No Restraints. There shall not be pending or threatened any suit, action,
investigation or proceeding to which a Governmental Entity is a party (i) seeking to restrain or
prohibit the consummation of the Merger or any of the other transactions contemplated by this
Agreement or seeking to obtain from Parent or the Company any damages that are material or (ii)
seeking to prohibit or limit the ownership or operation by Parent or the Company of any material
portion of their respective businesses or assets;

          (g) Issuance of Shares of Parent Common Stock. The issuance of the shares of Parent
Common Stock pursuant to this Agreement will be validly issued pursuant to the “private placement”
exemption from registration provided by Section 4(2) of the Securities Act

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and/or Regulation D
promulgated under the Securities Act. If Parent elects to utilize the Form S-4 Alternative, the
registration statement on Form S-4 shall have become effective under the Securities Act and shall
not be the subject of any stop order or proceeding seeking a stop order;

          (h) Escrow Agreement. Parent, the Members’ Representative and Escrow Agent shall have
entered into the Escrow Agreement and the Escrow Agreement shall be in full force and effect and
shall not have been anticipatorily breached or repudiated;

          (i) Secretary’s Certificate. The Company shall have received (i) a certificates
executed by the Secretary of each of Parent and Merger Sub attaching and certifying as to matters
customary for a transaction of this sort, including, without limitation, the true and correct
copies of Parent’s and Merger Sub’s organizational documents and copies of the resolutions of the
each of their Boards of Directors approving and adopting this Agreement and the transactions
relating hereto, and (ii) such other documents relating to the transactions contemplated by this
Agreement as the Company may reasonably request;

          (j) FIRPTA Compliance. Parent shall, prior to the Closing Date, provide the Company
with a properly executed FIRPTA Notification Letter, in form and substance satisfactory to the
Company, which states that the stock of Parent and Merger Sub do not constitute “United States real
property interests” under Section 897(c) of the Code, for purposes of satisfying Parent’s
obligations under Treasury Regulation Section 1.1445-2(c)(3). In addition, simultaneously with
delivery of such Notification Letter, Parent shall have provided to the Company, as agent for
Parent, a form of notice to the Internal Revenue Service in accordance with the requirements of
Treasury Regulation Section 1.897-2(h)(2) along with written authorization for Company to deliver
such notice form to the Internal Revenue Service on behalf of Parent upon the consummation of the
Merger;

          (k) Employees. Each of the individuals set forth on Schedule 8.02(r) shall be
employed in good standing by the Company;

          (l) Termination of the Company’s Agreements. All rights granted by the Company to its
Members and in effect prior to the Closing, including, but not limited to, rights of co-sale,
voting, registration, first refusal, first offer, preemptive, board observation or information or
operational covenants, shall have terminated prior to the Closing Date;

          (m) Termination of Incentive Plan. Pursuant to Section 7.05(e), the Company shall
have terminated the Incentive Plans effective as of the date of the Closing;

          (n) Termination of Membership Interest Transfer Agreement. The Company shall have
terminated the Membership Interest Transfer Agreement effective as of the date of the Closing;

          (o) Agreements and Covenants. Each of Parent and Merger Sub shall have performed or
complied in all material respects with all agreements and covenants required by this Agreement to
be performed or complied with by it on or prior to the Effective Time, and the Company shall have
received a certificate of a duly authorized officer of Parent to that effect;

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          (p) Opinion of Parent’s Counsel. The Company shall have received the opinion of
Patton Boggs, counsel to Parent, or another counsel reasonably satisfactory to the Company,
substantially in the form attached hereto as Exhibit E;

          (q) Resignations. Parent shall have received a written letter of resignation from
Michael H. McConnell as a director of Parent, and Keith D. Spickelmier as President of Parent, in
each case effective at the Effective Time.

          (r) No Parent Material Adverse Effect. No event or events shall have occurred, or be
reasonably likely to occur, which, individually or in the aggregate, have, or could have, a Parent
Material Adverse Effect;

          (s) Fairness Opinion. The Opinion shall have been issued by a nationally recognized
firm that (i) the Merger is fair to, and in the best interest of, Parent, Merger Sub and their
respective stockholders and (ii) the fair market value of the Company is equal to at least 80% of
Parent’s net assets; and

          (t) Due Diligence. The Company shall in good faith be satisfied with the results of
its legal, accounting, tax and business due diligence investigation of the Parent and Merger Sub
on or prior to October 1, 2006.

ARTICLE IX

TERMINATION, AMENDMENT AND WAIVER

     SECTION 9.01 Termination. This Agreement may be terminated and the Merger and the
other transactions contemplated by this Agreement may be abandoned at any time prior to the
Effective Time, notwithstanding any requisite approval and adoption of this Agreement and the
transactions contemplated by this Agreement, as follows:

          (a) by the Company in the event that Parent is unable to obtain the approval of its
stockholders pursuant to Section 8.01(a) prior to January 31, 2007;

          (b) by mutual written consent duly authorized by the Board of Directors of Parent and Merger
Sub and the Board of Managers of the Company prior to the Effective Time;

          (c) by either Parent or the Company if the Effective Time shall not have occurred on or before
January 31, 2007; provided, however, that the right to terminate this Agreement
under this Section 9.01(c) shall not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of, or resulted in, the failure of the Effective
Time to occur on or before January 31, 2007;

          (d) by either Parent or the Company upon the issuance of any Order which is final and
nonappealable which would (i) prevent the consummation of the Merger, (ii) prohibit Parent’s or the
Company’s ownership or operation of any portion of the business of the Company or (iii) compel
Parent or the Company to dispose of or hold separate, as a result of the Merger, any material
portion of the business or assets of the Company or Parent;

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          (e) by Parent upon a breach of any material representation, warranty, covenant or agreement on
the part of the Company set forth in this Agreement, or if any representation or warranty of the
Company shall have become untrue, in either case such that the conditions set forth in Sections
8.02(a) and 8.02(b) would not be satisfied (“Terminating Company Breach”);
provided, however, that, if such Terminating Company Breach is curable by the
Company through the exercise of its commercially reasonable best efforts and for so long as the
Company continues to exercise such commercially reasonable best efforts, Parent may not terminate
this Agreement under this Section 9.01(d) unless such breach is not cured within 30 days after
notice thereof is provided by Parent to the Company (but no cure period is required for a breach
which, by its nature, cannot be cured);

          (f) by the Company upon a breach of any material representation, warranty, covenant or
agreement on the part of Parent and Merger Sub set forth in this Agreement, or if any
representation or warranty of Parent and Merger Sub shall have become untrue, in either case such
that the conditions set forth in Sections 8.03(a) and 8.03(b) would not be satisfied
(“Terminating Parent Breach”); provided, however, that, if such Terminating
Parent Breach is curable by Parent and Merger Sub through the exercise of their respective
commercially reasonable best efforts and for so long as Parent and Merger Sub continue to exercise
such commercially reasonable best efforts, the Company may not terminate this Agreement under this
Section 9.01(e) unless such breach is not cured within 30 days after notice thereof is provided by
the Company to Parent (but no cure period is required for a breach which, by its nature, cannot be
cured);

          (g) by
Parent if the Company’s 2006 Annualized Adjusted EBITDA is (i) less than $17,625,000 and (ii)
more than $16,500,000 through the end of the most recently completed month prior to the month in
which the Effective Time occurs; or

          (h) by
Parent if the Company’s 2006 Annualized Adjusted EBITDA is less than $16,500,000 through the end
of the most recently completed month prior to the month in which the Effective Time occurs;

          (i) by Parent if it sends written notice to Company of its election to terminate if such
termination notice is sent within five (5) business days of its receipt of the 2007 Integrated
Projection of the Company and cites the Parent’s good faith reasons for such termination as such
reasons relate to material inconsistencies of such 2007 Integrated Projection relative to prior
information disclosed to and discussions with Parent by the Company prior to the date of this
Agreement regarding the 2007 Integrated Projection;

          (j) by Parent if it sends written notice to the Company of its election to terminate pursuant
to Section 8.02(y) if such termination notice is sent on or prior October 1, 2006 and cites
Parent’s good faith reasons for such termination; or

          (k) by the Company if it sends written notice to the Parent of its election to terminate
pursuant to Section 8.03(t) if such termination notice is sent on or prior to October 1, 2006 and
cites the Company’s good faith reasons for such termination.

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     SECTION 9.02 Effect of Termination.

          (a) In the event of termination of this Agreement pursuant to Section 9.01, this Agreement
shall forthwith become void, there shall be no liability under this Agreement on the part of
Parent, Merger Sub or the Company or any of their respective officers, managers or directors, and
all rights and obligations of each party hereto shall cease; provided, however,
that (i) Section 7.03(b), Section 7.09, Section 9.02 and Article XI shall remain in full force and
effect and survive any termination of this Agreement and (ii) nothing herein shall relieve any
party from liability for the breach of any of its representations or warranties or the breach of
any of its covenants or agreements set forth in this Agreement

          (b) In the event of termination of this Agreement pursuant to Sections 7.19(c), 9.01(a),
9.01(f) or 9.01(g), or termination by the Company if Parent has violated Section 9.01(c), Parent
shall reimburse the Company for all reasonable legal, accounting, financial advisory, consulting
and all other fees and expenses of third parties, except for Parks, Paton, Hoepfl & Brown, incurred
by the Company in connection with the negotiation and effectuation of the terms and conditions of
this Agreement and the transactions contemplated hereby;.

          (c) In the event of termination of this Agreement pursuant to Section 9.01 (other than
Sections 9.01(a), 9.01(f) or Section 9.01(g)), each party hereto shall be solely responsible for
all of its costs and expenses incurred in connection with this Merger as provided for in
Section 7.09 hereto.

     SECTION 9.03 Amendment. This Agreement may be amended by the parties hereto by
action taken by or on behalf of their respective Boards of Directors or Board of Managers at any
time prior to the Effective Time. This Agreement may not be amended except by an instrument in
writing signed by the parties hereto.

     SECTION 9.04 Waiver. At any time prior to the Effective Time, any party hereto may
(a) extend the time for the performance of any obligation or other act of any other party hereto,
(b) waive any inaccuracy in the representations and warranties contained herein or in any document
delivered pursuant hereto, and (c) waive compliance with any agreement or condition contained
herein. Any such extension or waiver shall be valid if set forth in an instrument in writing
signed by the party or parties to be bound thereby.

ARTICLE X

INDEMNIFICATION

     SECTION 10.01 Survival of Representations and Warranties.

          (a) The representations and warranties of the Company and the Members contained in this
Agreement and any other document or certificate relating hereto (collectively, the “Acquisition
Documents”) shall survive the Effective Time for a period of 18 months; provided,
however, that the representations and warranties set forth in Section 3.14 shall survive
the Effective Time for a period of 36 months; provided further that the
representations and warranties set forth in Sections 3.01, 3.02, 3.03, 3.04, 3.05, 3.06, 3.13, 3.15
and 3.16 (the “Company Basic Representations”) shall survive until the end of the
applicable statute of

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limitations pertinent thereto in each instance. Neither the period of
survival nor the liability of the Members with respect to the Company’s and such Members’
representations and warranties shall be affected by any investigation made at any time (whether
before or after the Effective Time) by or on behalf of Parent or by any actual, implied or
constructive knowledge or notice of any facts or circumstances that Parent may have as a result of
any such investigation or otherwise.

          (b) The representations and warranties of Parent and the Merger Sub contained in the
Acquisition Documents shall survive the Effective Time for a period of 18 months; provided,
however, that the representations and warranties set forth in Sections 5.01, 5.02, 5.03,
5.04, 5.05(a), 5.07, 5.08, 5.11, 5.14, 5.16, 5.17 and 5.19 (the “Parent Basic
Representations”) shall survive until the end of the applicable statute of limitations
pertinent thereto in each instance; provided, that, in the event any inaccuracy or
breach of the representations and warranties set forth in Section 5.16 by Parent or Merger Sub is
due to any inaccuracy or breach of the representations and warranties set forth in Section 3.32
(subject to its survival period pursuant to Section 10.01(a)) by the Company, the representations
and warranties of Parent and the Merger Sub contained in Section 5.16 shall only survive from the
Effective Time for a period of 18 months. Neither the period of survival nor the liability of
Parent and Merger Sub with respect to Parent’s and Merger Sub’s representations and warranties
shall be affected by any investigation made at any time (whether before or after the Effective
Time) by or on behalf of the Company or by any actual, implied or constructive knowledge or notice
of any facts or circumstances that the Company may have as a result of any such investigation or
otherwise.

          (c) The parties hereto agree that reliance shall not be an element of any claim for
misrepresentation or indemnification under this Agreement. The waiver by any party of any
condition based on the accuracy of any such representation or warranty, or based on the performance
of, or compliance with, any covenant or obligation, shall not affect the right to indemnification
or other remedy based on such representations, warranties, covenants or obligations. If written
notice of a claim has been given in good faith prior to the expiration of the applicable
representations and warranties by any party, then the relevant representations and warranties shall
survive as to such claim until such claim has been finally resolved.

     SECTION 10.02 Indemnification by the Members.

          (a) After the Effective Time, Parent and its affiliates (including, after the Effective Time,
the Surviving Corporation), officers, directors, employees, agents, successors and assigns
(collectively, the “Parent Indemnified Parties”) shall be indemnified and held harmless by
the Members, jointly and severally, for any and all liabilities, losses, damages of any kind,
diminution in value, claims, costs, expenses, fines, fees, deficiencies, interest, awards,
judgments, amounts paid in settlement and penalties (including, without limitation,
attorneys’, consultants’ and experts’ fees and expenses and other costs of defending, investigating
or settling claims) suffered, incurred, accrued (in accordance with GAAP) or paid by them
(including, without limitation, in connection with any action brought or otherwise initiated by any
of them) (collectively, “Losses”) arising out of or resulting from:

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               (i) any inaccuracy or breach of any representation or warranty (without giving effect to any
qualification as to materiality (or similar qualifications) contained therein) made by the Company
or any Member in the Acquisition Documents;

               (ii) the breach of any covenant or agreement made by the Company or any Member in the
Acquisition Documents;

               (iii) Losses from breach of contract or other claims made by any party that had a contractual
or other right to acquire the Company’s membership interests or assets;

               (iv) any cost, loss or other expense (including the value of any Tax deduction lost) as a
result of the application of Section 280G of the Code to any of the transactions contemplated by
this Agreement plus any necessary gross up amount; or

               (v) any Member Expenses paid by the Surviving Corporation following the Closing.

          (b) As used herein, “Losses” are not limited to matters asserted by third parties, but include
Losses incurred or sustained by the Parent Indemnified Parties in the absence of claims by third
parties.

          (c) Notwithstanding anything to the contrary contained in this Agreement, except with respect
to (A) claims for equitable remedies and (B) claims based on fraud or willful misrepresentation or
misconduct:

               (i) the maximum aggregate amount of indemnifiable Losses arising out of or resulting from the
causes enumerated in Sections 10.02(a) or 10.02(b) that may be recovered from the Members shall not
exceed $10,000,000; and

               (ii) no indemnification payment by the Members with respect to any indemnifiable Losses
otherwise payable under Section 10.02(a) and arising out of or resulting from the causes enumerated
in Section 10.02(a)(i) shall be payable until such time as all such indemnifiable Losses shall
aggregate to more than $500,000, after which time the Members shall be liable in full for all
indemnifiable Losses in excess of the first $500,000.

          (d) In
the event of a claim  relating to any Indemnification Claim any
Parent Indemnified Person may have under Article X, Parent shall seek
payment first out of the
Escrow Fund. Such Indemnification Amounts shall be payable (i) 75% in
cash from the Escrow
Amount and Proceeds and (ii) 25% in Escrow Shares; provided,
that, the Members’
Representative may elect to have an Indemnification Amount paid from
the Escrow Amount or
Proceeds in cash in lieu of Escrow Shares in a percentage greater
than 75% of such Adjustment
Amount. If the Escrow Fund has been reduced to zero, Parent shall
then be entitled to seek
payment for an unsatisfied Indemnification Amount directly from the
Members, subject to the
terms and conditions set forth in Article X.

     SECTION 10.03 Indemnification by Parent and Merger Sub.

          (a) After the Effective Time, the Members shall be indemnified and held harmless by Parent and
Merger Sub (collectively, the “Member Indemnified Parties”) for any Losses arising out of
or resulting from :

               (i) any inaccuracy or breach of any representation or warranty (without giving effect to any
qualification as to materiality (or similar qualifications) contained therein) made by Parent or
Merger Sub in the Acquisition Documents; or

               (ii) the breach of any covenant or agreement made by Parent or Merger Sub in the Acquisition
Documents.

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          (b) Notwithstanding anything to the contrary contained in this Agreement:

               (i) the maximum aggregate amount of indemnifiable Losses arising out of or resulting from the
causes enumerated in Section 10.03(a) that may be recovered from Parent shall
not exceed $12,658,000; and

               (ii) no indemnification payment by Parent with respect to any indemnifiable Losses otherwise
payable under Section 10.03(a) and arising out of or resulting from the causes enumerated in
Section 10.03(a) shall be payable until such time as all such indemnifiable Losses shall aggregate
to more than $500,000, after which time Parent shall be liable in full for all indemnifiable Losses
in excess of the first $500,000.

               (iii) any payments made pursuant to Section 10.03(b)(ii) shall be paid to the Members at the
rate of $1.21 for each $1.00 in indemnifiable Losses.

     SECTION 10.04 Indemnification Procedures.

          (a) For purposes of this Section 10.03, a party against which indemnification may be sought is
referred to as the “Indemnifying Party” and the party which may be entitled to
indemnification is referred to as the “Indemnified Party”.

          (b) The obligations and liabilities of Indemnifying Parties under this Article X with respect
to Losses arising from actual or threatened claims or demands by any third party which are subject
to the indemnification provided for in this Article X (“Third Party Claims”) shall be
governed by and contingent upon the following additional terms and conditions: if an Indemnified
Party shall receive notice of any Third Party Claim, the Indemnified Party shall give the
Indemnifying Party notice of such Third Party Claim within 15 days of the receipt by the
Indemnified Party of such notice; provided, however, that the failure to provide
such notice shall not release an Indemnifying Party from any of its obligations under this Article
X except to the extent that such Indemnifying Party is materially prejudiced by such failure. The
notice of claim shall describe in reasonable detail the facts known to the Indemnified Party giving
rise to such indemnification claim, and the amount or good faith estimate of the amount arising
therefrom.

          (c) If the Indemnifying Party acknowledges in writing its obligation to indemnify the
Indemnified Party hereunder against any Losses that may result from such Third Party Claim, then
the Indemnifying Party shall be entitled to assume and control the defense of such Third Party
Claim through counsel of its choice (such counsel to be reasonably acceptable to the Indemnified
Party) if it gives notice of its intention to do so to the Indemnified Party

80

 

within 15 days of the
receipt of such notice from the Indemnified Party; provided, however, that the
Indemnifying Party shall not have the right to assume the defense of the Third Party Claim if (i)
any such claim seeks, in addition to or in lieu of monetary losses, any injunctive or other
equitable relief, (ii) the Indemnifying Party fails to provide reasonable assurance to the
Indemnified Party of the adequacy of the Escrow Fund to provide indemnification in accordance with
the provisions of this Agreement and the Escrow Agreement with respect to such proceeding, (iii)
there is reasonably likely to exist a conflict of interest that would make it inappropriate (in the
judgment of the Indemnified Party in its reasonable discretion) for the same counsel to represent
both the Indemnified Party and the Indemnifying Party, or (iv) settlement of, or an adverse
judgment with respect to, the Third Party Claim may establish (in the good faith judgment of the
Indemnified Party) a precedential custom or practice adverse to the business interests of the
Indemnified Party or would increase the Tax liability of the Indemnified Party; provided
further, that if by reason of the Third Party Claim a Lien, attachment, garnishment,
execution or other encumbrance is placed upon any of the property or assets of such Indemnified
Party, the Indemnifying Party, if it desires to exercise its right to assume such defense of the
Third Party Claim, must agree to use a portion of the Escrow Fund to furnish a satisfactory
indemnity bond to obtain the prompt release of such Lien, attachment, garnishment, execution or
other encumbrance. If the Indemnifying Party assumes the defense of a Third Party Claim, it will
conduct the defense actively, diligently and at its own expense, and, subject to the limits of this
Agreement, it will hold all Indemnified Parties harmless from and against all Losses caused by or
arising out of any settlement thereof. The Indemnified Party shall cooperate with the Indemnifying
Party in such defense and make available to the Indemnifying Party, at the Indemnifying Party’s
expense, all witnesses, pertinent records, materials and information in the Indemnified Party’s
possession or under the Indemnified Party’s control relating thereto as is reasonably requested by
the Indemnifying Party. Except with the written consent of the Indemnified Party (not to be
unreasonably withheld), the Indemnifying Party will not, in the defense of a Third Party Claim,
consent to the entry of any judgment or enter into any settlement (i) which does not include as an
unconditional term thereof the giving to the Indemnified Party by the third party of a release from
all liability with respect to such suit, claim, action, or proceeding; (ii) unless there is no
finding or admission of (A) any violation of Law by the Indemnified Party (or any affiliate
thereof), (B) any liability on the part of the Indemnified Party (or any affiliate thereof) or (C)
any violation of the rights of any person and no effect on any other claims of a similar nature
that may be made by the same third party against the Indemnified Party (or any affiliate thereof);
or (iii) which exceeds the limits of indemnification set forth in this Agreement.

          (d) In the event that the Indemnifying Party fails or elects not to assume the defense of an
Indemnified Party against such Third Party Claim which the Indemnifying Party had the right to
assume pursuant to Section 10.03(c), the Indemnified Party shall have the right, at the expense of
the Indemnifying Party, to defend or prosecute such claim in any manner as it may reasonably deem
appropriate and may settle such claim after giving written notice thereof to the Indemnifying
Party, on such terms as such Indemnified Party may
deem appropriate, and the Indemnified Party may seek prompt reimbursement from the Escrow Fund
for any Losses incurred in connection with such settlement. If no settlement of such Third Party
Claim is made, the Indemnified Party may seek prompt reimbursement from the Escrow Fund for any
Losses arising out of any judgment rendered with respect to such claim. Any Losses for which an
Indemnified Party is entitled to indemnification hereunder shall be promptly

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paid as suffered,
incurred or accrued (in accordance with GAAP). If the Indemnifying Party does not elect to assume
the defense of a Third Party Claim which it has the right to assume hereunder, the Indemnified
Party shall have no obligation to do so.

          (e) In the event that the Indemnifying Party is not entitled to assume the defense of the
Indemnified Party against such Third Party Claim pursuant to Section 10.03(c), the Indemnified
Party shall have the right, at the expense of the Indemnifying Party, to defend or prosecute such
claim and consent to the entry of any judgment or enter into any settlement with respect to the
Third Party Claim in any manner it may reasonably deem appropriate after giving written notice
thereof to the Indemnifying Party, and the Indemnified Party may seek prompt reimbursement from the
Escrow Fund for any Losses incurred in connection with such judgment or settlement. In such case,
the Indemnified Party shall conduct the defense of the Third Party Claim actively and diligently,
and the Indemnifying Party shall cooperate with the Indemnified Party in such defense and make
available to the Indemnified Party, at the Indemnifying Party’s expense, all such witnesses,
records, materials and information in the Indemnifying Party’s possession or under the Indemnifying
Party’s control relating thereto as is reasonably requested by the Indemnified Party. If no
settlement of such Third Party Claim is made, the Indemnified Party may seek prompt reimbursement
from the Escrow Fund for any Losses arising out of any judgment rendered with respect to such
claim. Any Losses for which an Indemnified Party is entitled to indemnification hereunder shall be
promptly paid as suffered, incurred or accrued (in accordance with GAAP).

     SECTION 10.05 Members’ Representative.

          (a) Catalyst
/Hall Growth Capital Management Co., LLC (such person and any successor or successors being the
“Members’ Representative”) shall act as the representative of the Members, and shall be
authorized to act on behalf of the Members and to take any and all actions required or permitted to
be taken by the Members’ Representative under this Agreement with respect to any claims (including
the settlement thereof) made by a Parent Indemnified Party for indemnification pursuant to this
Article X and with respect to any actions to be taken by the Members’ Representative pursuant to
the terms of the Escrow Agreement (including, without limitation, the exercise of the power to (i)
authorize the delivery of Escrow Securities to a Parent Indemnified Party in satisfaction of claims
by a Parent Indemnified Party, (ii) agree to, negotiate, enter into settlements and compromises of,
and comply with orders of courts with respect to any claims for indemnification and (iii) take all
actions necessary in the judgment of the Members’ Representative for the accomplishment of the
foregoing). In all matters relating to this Article X, the Members’ Representative shall be the
only party entitled to assert the rights of the Members, and the Members’ Representative shall
perform all of the obligations of the Members hereunder. The Parent Indemnified Parties shall be
entitled to rely on all statements, representations and decisions of the Members’ Representative.

          (b) The Members shall be bound by all actions taken by the Members’ Representative in his, her
or its capacity thereof, except for any action that conflicts with the limitations set forth in
subsection (d) below. The Members’ Representative shall promptly, and in any event within five (5)
business days, provide written notice to the Members of any action taken on behalf of them by the
Members’ Representative pursuant to the authority delegated to the Members’ Representative under
this Section 10.05. The Members’ Representative shall at all

82

 

times act in his or her capacity as
Members’ Representative in a manner that the Members’ Representative believes to be in the best
interest of the Members. Neither the Members’ Representative nor any of its directors, officers,
agents or employees, if any, shall be liable to any person for any error of judgment, or any action
taken, suffered or omitted to be taken under this Agreement or the Escrow Agreement, except in the
case of its gross negligence, bad faith or willful misconduct. The Members’ Representative may
consult with legal counsel, independent public accountants and other experts selected by it. The
Members’ Representative shall not have any duty to ascertain or to inquire as to the performance or
observance of any of the terms, covenants or conditions of this Agreement or the Escrow Agreement.
As to any matters not expressly provided for in this Agreement or the Escrow Agreement, the
Members’ Representative shall not exercise any discretion or take any action.

          (c) Each Member shall indemnify and hold harmless and reimburse the Members’ Representative
from and against such Member’s ratable share of any and all liabilities, losses, damages, claims,
costs or expenses suffered or incurred by the Members’ Representative arising out of or resulting
from any action taken or omitted to be taken by the Members’ Representative under this Agreement or
the Escrow Agreement, other than such liabilities, losses, damages, claims, costs or expenses
arising out of or resulting from the Members’ Representative’s gross negligence, bad faith or
willful misconduct.

          (d) Notwithstanding anything to the contrary herein or in the Escrow Agreement, the Members’
Representative is not authorized to, and shall not, accept on behalf of any Member any merger
consideration to which such Member is entitled under this Agreement and the Members’ Representative
shall not in any manner exercise, or seek to exercise, any voting power whatsoever with respect to
shares of capital stock of the Company or Parent now or hereafter owned of record or beneficially
by any Member unless the Members’ Representative is expressly authorized to do so in a writing
signed by such Member.

     SECTION 10.06 Taxes. In addition to, and not by way of limitation on, the indemnities
set forth in Section 10.02(a), the Members agree to, and shall, indemnify a Parent Indemnified
Party and hold each of them harmless for Losses resulting from Taxes for all tax periods prior to
Closing (or otherwise related to a tax periods prior to Closing).

     SECTION 10.07 Reduction of Indemnified Amounts.

          (a) Notwithstanding any provision of this Article X to the contrary, Losses owed by the
Members to a Parent Indemnified Party shall be reduced by the amount of any mitigating recovery a
Parent Indemnified Party shall have received with respect thereto from any recovery by the Parent
Indemnified Party under any insurance policies, without regard to whether the Parent Indemnified
Party or another person paid the premiums therefor. If such a recovery is received by an a Parent
Indemnified Party after it receives payment or other credit
under this Agreement with respect to indemnified Losses, then a refund equal to the aggregate
amount of such recovery shall be made promptly to the Members.

          (b) Notwithstanding any provision of this Article X to the contrary, Losses owed by Parent to
a Member Indemnified Party shall be reduced by the amount of any mitigating recovery a Member
Indemnified Party shall have received with respect thereto from

83

 

any recovery by the Member
Indemnified Party under any insurance policies, without regard to whether the Member Indemnified
Party or another person paid the premiums therefor. If such a recovery is received by an a Member
Indemnified Party after it receives payment or other credit under this Agreement with respect to
indemnified Losses, then a refund equal to the aggregate amount of such recovery shall be made
promptly to Parent.

     SECTION 10.08 Exclusive Rights and Remedies. The provisions of this Article X shall
be the exclusive basis of the parties to this Agreement for (i) any breach of a representation or
warranty herein and (ii) any failure of a party to comply with any obligation, covenant, agreement
or condition herein.

ARTICLE XI

GENERAL PROVISIONS

     SECTION 11.01 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be deemed to have been
duly given upon receipt) by delivery in person, by cable, telecopy, facsimile, telegram or telex or
by registered or certified mail (postage prepaid, return receipt requested) to the respective
parties at the following addresses (or at such other address for a party as shall be specified in a
notice given in accordance with this Section 11.01):

(a)  if to Parent or Merger Sub:

JK Acquisition Corp.

5847 San Felipe, Suite 4350

Houston, Texas

Facsimile No.: (713)783-9750

Attention: James P. Wilson

with a copy to:

Patton Boggs LLP

2001 Ross Avenue, Suite 3000

Dallas, Texas 75201

Facsimile No.: (214) 758-1550

Attention: Fred S. Stovall, Esq.

(b)  if to the Company:

Multi-Shot LLC

2507 N. Frazier

Conroe, Texas 77303

Facsimile No.: (936) 441-6635

Attention: Allen Neel

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with a copy to:

Catalyst Hall

2 Riverway, Suite 1710

Houston, Texas 77056

Facsimile No.: (713) 623-0473

Attention: Ron Nixon and Rick Herrman

(c)  if to the Members’ Representative:

Ron Nixon and

Rick Herrman

Catalyst/Hall Growth Capital Management Co., LLC

2 Riverway, Suite 1710

Houston, Texas 77056

Facsimile No.: (713) 623-0473

and

Franklin, Cardwell & Jones

1001 McKinney, Suite 1800

Houston, Texas 77002

Facsimile No.: (713) 227-5657

Attention: Randolph Ewing, Esq.

     SECTION 11.02 Certain Definitions.

          (a) As used in this Agreement, the following terms shall have the following meanings:

               (i) “Adjusted EBITDA” means for any period, an amount equal to: the sum, without duplication,
of the amounts for such period of (a) Net Income, (b) interest expense, (c) provisions for taxes
based on income, (d) total depreciation expense, (e) total amortization expense, (f) non-cash
losses in connection with dispositions of equipment having a basis at the time of disposition, (g)
up to an aggregate of $702,500 (on an annualized basis) paid to or accrued for with respect to
“Second Tier Bonuses” or “Commission Bonuses” due to management personnel, and (h) any and all
management fees paid to or accrued for with respect to amounts due to affiliates of the Company
(which shall not exceed an aggregate of $120,000 on an annualized basis), all as determined in
accordance with GAAP.

               (ii) “affiliate” of a specified person means a person who directly or indirectly
through one or more intermediaries controls, is controlled by, or is under common control with such
specified person.

               (iii) “beneficial owner” with respect to any shares means a person who shall be deemed
to be the beneficial owner of such shares (i) which such person or any of its affiliates or
associates (as such term is defined in Rule 12b-2 promulgated under the Exchange Act) beneficially
owns, directly or indirectly, (ii) which such person or any of its affiliates or associates has,
directly or indirectly, (A) the right to acquire (whether such right is exercisable immediately or
subject only to the passage of time), pursuant to any agreement, arrangement or understanding or
upon the exercise of consideration rights, exchange rights, warrants or options, or otherwise, or (B) the right to vote pursuant to any agreement,
arrangement or understanding, or (iii) which are beneficially owned, directly or indirectly, by any
other persons with whom such person or any of its affiliates or associates or person with whom such
person or any of its affiliates or associates has any agreement, arrangement or understanding for
the purpose of acquiring, holding, voting or disposing of any shares.

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               (iv) “business day” means any day on which banks are not required or authorized to
close in New York, New York.

               (v) “Company’s
2006 Annualized Adjusted EBITDA” means (i), if the Effective Date is on or
after January 1, 2007, the Adjusted EBITDA of the Company for the complete calendar year ended 2006, or (ii)
if the Effective Time is prior to December 31, 2006, then the Adjusted EBITDA of the Company from January 1,
2006 through the end of the most recently completed month prior to the month in which the Effective
Time occurs on an annualized basis. For example, if the Effective Date is January 5, 2006, then
Company’s Annualized Adjusted EBITDA will be determined by the aggregate Adjusted EBITDA of the Company for the
period from January 1, 2006 through December 31, 2006. However, if the Effective Date is December
1, 2006, then the Company’s 2006 Annualized Adjusted EBITDA shall be the determined by multiplying (A) the
average monthly Adjusted EBITDA of the Company from January 1, 2006 through November 30, 2006 by (B) twelve.

               (vi) “control” (including the terms “controlled by” and “under common control with”)
means the possession, directly or indirectly or as trustee or executor, of the power to direct or
cause the direction of the management and policies of a person, whether through the ownership of
voting securities, as trustee or executor, by contract or credit arrangement or otherwise.

               (vii) “Escrow Agent” means First Zions National Bank, a national banking association.

               (viii) “Knowledge” means, with respect to any party hereto, actual or deemed knowledge
of: (i) in the case of the Company, the Company’s managers, as well as Allen Neel, Paul Culbreth,
David Cudd, and Scott Bork, and (ii) in the case of Parent, James P. Wilson, Keith D. Spickelmier,
Michael H. McConnell and Herbert C. Williamson, and such knowledge that would be imputed to such
persons upon reasonable inquiry or due investigation. An individual will be deemed to have
knowledge of a particular fact, circumstance, event or other matter if (i) such fact circumstance,
event or other matter is
reflected in one or more documents, written or electronic, that are or have been in such
individual’s possession or that would reasonably be expected to be reviewed by an individual who
has the duties and responsibilities of such individual in the customary performance of such duties
and responsibilities, or (ii) such knowledge could be obtained from reasonable inquiry of those
persons employed by the Company (as the case may be) charged with administrative or

86

 

operational
responsibility for such matter for such party by the person in the discharge of his duties and
responsibilities with regards to those persons.

          (ix) “MITA” means that certain Membership Interest Transfer Agreement, dated April 21,
2004, by and among the Company, Allen Neel, Paul Culbreth, David Cudd and certain other Members.

          (x) “Net Income” means, for any period, the net income (or loss) of the Company for
such period taken as a single accounting period determined in conformity with GAAP.

          (xi) “person” means an individual, corporation, partnership, limited partnership,
syndicate, person (including, without limitation, a “person” as defined in Section 13(d)(3) of the
Exchange Act), trust, association or entity or government, political subdivision, agency or
instrumentality of a government.

          (xii) “subsidiary” or “subsidiaries” of any person means any corporation,
partnership, joint venture or other legal entity of which such person (either alone or through or
together with any other subsidiary) owns, directly or indirectly, more than 50% of the stock or
other equity interests, the holders of which are generally entitled to vote for the election of the
board of directors or other governing body of such corporation or other legal entity.

     (b) The following terms shall have the meanings defined for such terms in the Sections of this
Agreement set forth below:

	 	 	 
	Term	 	Section
	Acquisition Documents 
	 	10.01
	Adjusted
EBITDA  
	 	11.02(d)
	Adjustment Notice 
	 	2.03(d)
	Affiliate 
	 	11.02(a)
	Aggregate Merger Consideration 
	 	2.01(b)
	Agreement 
	 	Preamble
	AMEX 
	 	2.03(i)
	Antitrust Laws 
	 	7.05(b)
	Assets 
	 	3.17
	Audited Financial Statements 
	 	3.08(a)
	Back Up Transaction
	 	5.18
	Beneficial Owner 
	 	11.02(a)
	Business Day 
	 	11.02(a)
	CERCLA 
	 	3.13
	Certificate of Merger 
	 	1.02
	Closing 
	 	1.02
	Closing Date 
	 	1.02
	COBRA 
	 	3.11(d)
	Code 
	 	2.04(g)
	Common Control 
	 	3.06(c)
	Company’s 2006 Annualized EBITDA 
	 	11.02(a)
	Company Interest Exchange Ratio 
	 	2.01(b)

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	Term	 	Section
	Company Interest Exchange Cash Ratio 
	 	2.01(b)
	Company 
	 	Preamble
	Company Basic Representations 
	 	10.01
	Company Confidential Information 
	 	3.14(f)
	Company Disclosure Schedule 
	 	Article III
	Company Financial Statements 
	 	3.08(a)
	Company Insiders 
	 	7.12
	Company Intellectual Property 
	 	3.14(a)
	Company Material Adverse Effect 
	 	3.01
	Company Permits
	 	3.07(a)
	Company Interest Certificates 
	 	2.02(a)
	Company Interest 
	 	Recitals
	Company Warrant 
	 	2.04(b)
	Competing Transaction 
	 	7.03(b)
	Control 
	 	11.02(a)
	Current Assets 
	 	2.02(a)(ii)
	Current Liabilities 
	 	2.02(a)(ii)
	DGCL 
	 	Recitals
	Dispute Notice 
	 	2.03(b)
	Earnout Award Calculation 
	 	2.06(f)
	Earnout Award Shares 
	 	2.06(d)
	Earnout Dispute Notice 
	 	2.06(f)
	Earnout Notice 
	 	2.06(e)
	Earnout Per Share Market Value 
	 	2.06(b)
	Effective Time 
	 	1.02
	Employee Obligation 
	 	3.14(i)
	Employment Agreement(s) 
	 	7.04(b)
	Environmental Laws 
	 	3.13
	Environmental Permits 
	 	3.13
	ERISA 
	 	3.11(a)
	ERISA Affiliate 
	 	3.11(e)
	Escrow Account 
	 	2.04(b)
	Escrow Agent 
	 	2.04(b)
	Escrow Agreement 
	 	2.04(b)
	Escrow Amount 
	 	2.01(b)
	Escrow Fund 
	 	2.04(b)
	Escrow Per Share Market Value 
	 	2.03(i)
	Escrow Securities 
	 	2.04(a)
	Escrow Shares 
	 	2.01(b)
	Escrow Warrants 
	 	2.04(a)
	Estimated Closing Working Capital 
	 	2.02(b)
	Estimated Net Enterprise Value 
	 	2.01(b)
	Estimated Third Party Indebtedness 
	 	2.01(b)
	Exchange Act 
	 	5.04(a)
	Exchange Agent 
	 	2.02(a)

88

 

	 	 	 
	Term	 	Section
	Exchange Value 
	 	2.08(a)
	Final Conversion Schedule 
	 	7.15
	FIRPTA 
	 	8.02(q)
	Form S-4 Alternative 
	 	7.01(c)
	Founders 
	 	8.01(a)
	Fully Diluted Unit Amount 
	 	2.01(b)
	GAAP 
	 	2.02(a)(ii)
	Governmental Entity 
	 	3.06(b)
	Gross Enterprise Value 
	 	2.01(b)
	Hazardous Substances 
	 	3.13
	HSR Act 
	 	3.06(b)
	Indemnification Claim 
	 	2.04(b)(ii)
	Indemnified Party 
	 	10.04(a)
	Indemnifying Party 
	 	10.04(a)
	Independent Accounting Firm 
	 	2.03(d)
	Index Warrant 
	 	2.02(b)
	Infringement 
	 	3.14(a)
	Initial Merger Consideration 
	 	2.01(e)
	Intellectual Property 
	 	3.14(a)
	Interim Financial Statements 
	 	3.08(a)
	Inventions 
	 	3.14(a)
	IP Rights 
	 	3.14(a)
	Knowledge 
	 	11.02(a)
	Law 
	 	3.06(a)
	Legal Proceeding 
	 	3.10
	Letter of Transmittal 
	 	2.02(a)
	Liabilities 
	 	3.08(b)
	Liens 
	 	3.17
	Losses 
	 	10.02(a)
	Marks 
	 	3.14(a)
	Material Contracts 
	 	3.12(a)
	Measurement Date 
	 	2.06(b)
	Members 
	 	Recitals
	Members Expenses 
	 	7.05
	Members’ Representative 
	 	10.05(a)
	Merger 
	 	Recitals
	Merger Consideration 
	 	2.08(k)
	Merger Sub 
	 	Preamble
	MITA 
	 	11.02(a)
	Multi-employer Plan 
	 	3.11(c)
	Multiple Employer Plan 
	 	3.11(c)
	Net Income 
	 	11.02(a)
	New Membership Interests
	 	7.02(b)
	Non-Disclosure Agreement 
	 	7.03(b)
	Non-Solicitation Agreement 
	 	7.05(c)

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	Term	 	Section
	Order 
	 	8.01(b)
	Parent 
	 	Preamble
	Parent Audited Financial Statements 
	 	5.11(a)
	Parent Basic Representations 
	 	10.02(b)
	Parent Common Stock 
	 	Recitals
	Parent Disclosure Schedule 
	 	Article V
	Parent Indemnified Parties 
	 	10.02(a)
	Parent Interim Financial Statements 
	 	5.11(a)
	Parent Material Adverse Effect 
	 	5.01(a)
	Parent Preferred Stock 
	 	5.03
	Parent Reference Balance Sheet
	 	5.11(a)
	Parent SEC Reports 
	 	5.05(a)
	Parent Shares 
	 	2.01(b)
	Parent Warrant 
	 	2.01(b)
	Per Company Interest Cash Consideration 
	 	2.01(a)
	Patton Boggs 
	 	1.02
	Person 
	 	11.02(a)
	Plans 
	 	3.11(a)
	Preliminary Conversion Schedule 
	 	7.15
	Proceeds 
	 	2.03(d)
	Redemption Calculations 
	 	2.08(c)
	Redemption Dispute Notice 
	 	2.08(c)
	Redemption Liability Adjustment Amount 
	 	2.08(a)
	Redemption Liability Shares 
	 	2.08(a)
	Redemption Option 
	 	2.08(a)
	Redemption Notice 
	 	2.08(b)
	Redemption Price 
	 	2.08(a)
	Redemption Price Differential 
	 	2.08(a)
	Redemption Shares Number 
	 	2.08(a)
	Redemption Shares Safe Number 
	 	2.08(a)
	Redemption Warrant 
	 	2.08(a)
	Reference Balance Sheet 
	 	3.08(a)
	Representatives 
	 	7.02(a)
	SEC 
	 	5.05(a)
	Section 16 Information 
	 	7.12
	Securities Act 
	 	2.06
	Services Agreement 
	 	7.11
	Software 
	 	3.14(j)
	Source Materials 
	 	3.14(c)
	Stockholder Certificate 
	 	Recitals
	Stockholder Expenses 
	 	7.08
	Subsidiaries 
	 	11.02(a)
	Subsidiary 
	 	11.02(a)
	Surviving Corporation 
	 	1.01
	Target Working Capital 
	 	2.02(c)
	Tax 
	 	3.15(c)

90

 

	 	 	 
	Term	 	Section
	Taxable 
	 	3.15(c)
	Tax Authority 
	 	3.15(c)
	Taxes 
	 	3.15(c)
	Tax Return 
	 	3.15(a)
	Terminating Company Breach 
	 	9.01(d)
	Terminating Parent Breach 
	 	9.01(e)
	Third Party Claims 
	 	10.04(b)
	Trading Price 
	 	2.06(b)
	Transaction Related Members’ Equity Charge 
	 	2.01(c)
	Used 
	 	3.14(a)
	Voting Agreement 
	 	Recitals
	WARN Act 
	 	7.04
	Working Capital 
	 	2.02(a)(ii)

     SECTION 11.03 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of Law or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full force and effect so
long as the economic or legal substance of the transactions contemplated by this Agreement is not
affected in any manner materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original intent of the parties
as closely as possible in a mutually acceptable manner in order that the transactions contemplated
by this Agreement be consummated as originally contemplated to the fullest extent possible.

     SECTION 11.04 Assignment; Binding Effect; Benefit. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by any of the parties hereto
(whether by operation of Law or otherwise) without the prior written consent of the other parties.
Subject to the preceding sentence, this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns. Notwithstanding
anything contained in this Agreement to the contrary, nothing in this Agreement, expressed or
implied, is intended to confer on any person other than the parties hereto or their respective
successors and assigns any rights, remedies, obligations or liabilities under or by reason of this
Agreement.

     SECTION 11.05 Incorporation of Exhibits. The Company Disclosure Schedule, the Parent
Disclosure Schedule, the Schedules and all Exhibits attached hereto and referred to herein are
hereby incorporated herein and made a part hereof for all purposes as if fully set forth herein.

     SECTION 11.06 Specific Performance. Each party acknowledges and agrees that the
other party would be damaged irreparably in the event any of the provisions of this Agreement is
not performed in accordance with its specific terms or is otherwise breached. Accordingly, each
party agrees that the other party shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this Agreement and the
terms and provisions hereof in any action instituted in any court in the

91

 

United States or in any
state having jurisdiction over the parties and the matter in addition to any other remedy to which
they may be entitled pursuant hereto.

     SECTION 11.07 Governing Law; Forum. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware applicable to contracts executed in
and to be performed in that state and without regard to any applicable conflicts of law. In any
action between the parties hereto arising out of or relating to this Agreement or any of the
transactions contemplated by this Agreement: (i) each of the parties irrevocably and
unconditionally consents and submits to the exclusive jurisdiction and venue of either the state
courts located in Harris County, Texas or the United States District Court for the Southern
District of Texas and (ii) each of the parties irrevocably consents to service of process by first
class certified mail, return receipt requested, postage prepaid.

     SECTION 11.08 Time of the Essence. For purposes of this Agreement and the
transactions contemplated by this Agreement, time is of the essence.

     SECTION 11.09 Waiver of Jury Trial. Each of the parties hereto hereby irrevocably
waives any and all right to trial by jury in any legal proceeding arising out of or relating to
this Agreement or the transactions contemplated hereby.

     SECTION 11.10 Construction and Interpretation.

          (a) For purposes of this Agreement, whenever the context requires, the singular number shall
include the plural, and vice versa; the masculine gender shall include the feminine and neuter
genders; the feminine gender shall include the masculine and neuter genders; and the neuter gender
shall include the masculine and feminine genders.

          (b) Neither this Agreement nor any uncertainty or ambiguity herein shall be construed or
resolved against any party, whether under any rule of construction or otherwise. No party to this
Agreement shall be considered the draftsman. The parties acknowledge and agree that this Agreement
has been reviewed, negotiated, and accepted by all parties and their attorneys and shall be
construed and interpreted according to the ordinary meaning of the words used so as fairly to
accomplish the purposes and intentions of all parties hereto.

          (c) As used in this Agreement, the words “include” and “including,” and variations thereof,
shall not be deemed to be terms of limitation, but rather shall be deemed to be followed by the
words “without limitation.”

          (d) Except as otherwise indicated, all references in this Agreement to “Articles,” “Sections,”
“Schedules” and “Exhibits” are intended to refer to an Article or Section of, or Schedule or
Exhibit to, this Agreement.

          (e) Except as otherwise indicated, all references (i) to any agreement (including this
Agreement), contract or Law are to such agreement, contract or Law as amended, modified,
supplemented or replaced from time to time, and (ii) to any Governmental Entity include any
successor to that Governmental Entity.

92

 

     SECTION 11.11 Further Assurances. Each party hereto shall execute and cause to be
delivered to each other party hereto such instruments and other documents, and shall take such
other actions, as such other party may reasonably request (prior to, at or after the Closing) for
the purpose of carrying out or evidencing any of the transactions contemplated by this Agreement.

     SECTION 11.12 Headings. The descriptive headings contained in this Agreement are
included for convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.

     SECTION 11.13 Counterparts. This Agreement may be executed and delivered (including
by facsimile transmission) in two or more counterparts, each of which when executed and delivered
shall be deemed to be an original but all of which taken together shall constitute one and the same
agreement.

     SECTION 11.14 Entire Agreement. This Agreement (including the Exhibits, the
Schedules, the Company Disclosure Schedule and the Parent Disclosure Schedule) and the
Non-Disclosure Agreement constitute the entire agreement among the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings among the parties with
respect thereto. No addition to or modification of any provision of this Agreement shall be
binding upon any party hereto unless made in writing and signed by all parties hereto.

[Remainder of this page intentionally left blank; signature page follows.]

93

 

     IN WITNESS WHEREOF, each of Parent, Merger Sub, the Company and the Members’ Representative
has executed or has caused this Agreement to be executed by its duly authorized officer as of the
date first written above.

	 	 	 	 	 	 	 	 	 
	 	 	JK ACQUISITION CORP.	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ James P. Wilson	 	 	 	 
	 	 	 	 	 	 	 
	 	 	Name: James P. Wilson	 	 
	 	 	Title: Chief Executive Officer	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	MULTI-SHOT, INC.	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ James P. Wilson	 	 	 	 
	 	 	 	 	 	 	 
	 	 	Name: James P. Wilson	 	 	 	 
	 	 	Title: President	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	MULTI-SHOT, LLC	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ Allen Neel	 	 	 	 
	 	 	 	 	 	 	 
	 	 	Name: Allen Neel	 	 
	 	 	Title: President	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	CATALYST/HALL GROWTH CAPITAL, LP	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	Catalyst/Hall
Growth Capital Management Co., LLC	 	 
	 	 	 	 	Its sole general partner	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:  /s/ Rick Herrman	 	 	 	 
	 

	 	 	 	 
	 	 
	 	 	 	 	Name: Rick Herrman	 	 
	 	 	 	 	Title: President	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	CATALYST/HALL PRIVATE EQUITY, LP	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	Catalyst/Hall Private Equity Management

Company, LLC	 	 
	 	 	 	 	Its sole general partner	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:  /s/ Rick Herrman	 	 	 	 
	 

	 	 	 	 
	 	 
	 	 	 	 	Name: Rick Herrman	 	 
	 	 	 	 	Title: President	 	 

Merger Agreement – Signature Pages

 

 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	CATALYST CAPITAL PARTNERS I, LTD.	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	The Catalyst Group, Inc.	 	 	 	 
	 	 	 	 	Its sole general partner	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	/s/ Rick Herrman	 	 	 	 
	 

	 	 	 	 	 	 	 
	 	 	 	 	Name: Rick Herrman	 	 	 	 
	 	 	 	 	Title: Vice President	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	CATALYST CAPITAL PARTNERS II, LTD.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	The Catalyst Group II, Inc.	 	 	 	 
	 	 	 	 	Its sole general partner	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	/s/ Rick Herrman	 	 	 	 
	 

	 	 	 	 	 	 	 
	 	 	 	 	Name: Rick Herrman	 	 	 	 
	 	 	 	 	Title: Vice President	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	CRF AIR, LLC	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ Jay C. Jimerson 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	Name: Jay C. Jimerson	 	 	 	 
	 	 	Title: Manager	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 	/s/ Robert P. Vilyus	 	 	 	 
	 	 	 	 	 
	 	 	ROBERT P. VILYUS	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 	/s/ Allen Neel	 	 	 	 
	 	 	 	 	 
	 	 	ALLEN NEEL	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 	/s/ David Cudd	 	 	 	 
	 	 	 	 	 
	 	 	DAVID CUDD	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 	/s/ Paul Culbreth	 	 	 	 
	 	 	 	 	 
	 	 	PAUL CULBRETH	 	 

Merger Agreement – Signature Pages

 

 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	CATALYST/HALL GROWTH
CAPITAL MANAGEMENT CO., LLC 
(in such capacity as
Members’ Representative)
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ Rick Herrman 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	Name: Rick Herrman	 	 	 	 	 	 
	 	 	Title: President	 	 	 	 	 	 

Merger Agreement – Signature Pagesexv10w2

 

EXHIBIT 10.2

EXHIBIT A

          THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE PLEDGED,
SOLD, OFFERED FOR SALE, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF REGISTRATION UNDER
OR EXEMPTION FROM SUCH ACT AND ALL APPLICABLE STATE SECURITIES LAWS.

          THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF ARE SUBJECT TO THE TERMS AND
PROVISIONS OF THE AGREEMENT AND PLAN OF MERGER, DATED AS OF SEPTEMBER
6, 2006, AMONG JK
ACQUISITION CORP. (THE “COMPANY”), MULTI-SHOT, INC., MULTI-SHOT, LLC, CATALYST HALL GROWTH
CAPITAL MANAGEMENT CO., LLC, AS MEMBERS’ RESPRESENTATIVE, AND THE MEMBERS OF MULTI-SHOT, LLC (AS SUCH
AGREEMENT MAY BE SUPPLEMENTED, MODIFIED, AMENDED, OR RESTATED FROM TIME TO TIME, THE
“AGREEMENT”). A COPY OF THE AGREEMENT IS AVAILABLE AT THE EXECUTIVE OFFICES OF THE COMPANY.

	 	 	 
	[                    ] Shares

	 	Warrant No. [___]

WARRANT TO ACQUIRE SHARES OF COMMON STOCK OF

JK ACQUISITION CORP.

          This is to certify that, in consideration of valuable consideration, which is hereby
acknowledged as received, [                    ], its successors and registered assigns, is entitled
at any time after the Closing Date (as defined in the Agreement) to exercise this Warrant to
acquire as an Earnout Award pursuant to Section 2.06 of the Agreement, [                    ] (___)
shares of common stock, par value $0.0001 per share of JK ACQUISITION CORP., a Delaware corporation
(which shall be renamed MS Energy Services, Inc. at the Effective Time)(the “Company”), and
to exercise the other rights, powers, and privileges hereinafter provided, all on the terms and
subject to the conditions specified in this Warrant and in the Agreement. All capitalized terms
used herein but not otherwise defined shall have the meaning set forth in the Agreement.

	 	1.	 	Duration of Warrants. A Warrant may be exercised only during the period
(“Exercise Period”) commencing on the Effective Time and terminating at 5:00 p.m.,
New York City local time on [                    ] [___], 2010 (“Expiration Date”). Each Warrant
not exercised on or before the Expiration Date shall become void, and all rights thereunder
and all rights in respect thereof under this Agreement shall cease at the close of business
on the Expiration Date. The Company in its sole discretion may extend the duration of the
Warrants by delaying the Expiration Date; provided, however, that any extension of the
duration of the Warrants must apply equally to all of the Warrants.
	 
	 	2.	 	Exercise of Warrants.

          (a) Payment. A Warrant may be exercised by the registered holder thereof by
surrendering it, at the office of the Company, for the number of shares of Common Stock
which the registered holder is entitled to receive as an Earnout Award pursuant to Section
2.06 of the Agreement, as well as any and all applicable taxes due in connection with the
exercise of the Warrant, the exchange of the Warrant for shares of Common Stock, and the
issuance of the Common Stock. The registered holder shall not be required to provide any
additional consideration upon the exercise of the Warrant or the issuance of Common Stock
upon exercise of a Warrant.

1

 

          (b) As soon as practicable after the exercise of any Warrant, the Company shall issue
to the registered holder of such Warrant a certificate or certificates for the number of
full shares of Common Stock to which he is entitled pursuant to the exercise of the Warrant,
registered in such name or names as may be directed by him, her or it, and additionally if
such Warrant shall not have been exercised in full, a new countersigned Warrant for the
number of shares as to which such Warrant shall not have been exercised. Notwithstanding
the foregoing, the Company shall not be obligated to deliver any securities pursuant to the
exercise of a Warrant unless a registration statement under the Act and all applicable state
securities laws with respect to the Common Stock is effective or an exemption under the Act
and all applicable state securities laws is available for the issuance.

          (c) All shares of Common Stock issued upon the proper exercise of a Warrant in
conformity with this Agreement shall be validly issued, fully paid and nonassessable.

          (d) Each person in whose name any such certificate for shares of Common Stock is issued
shall for all purposes be deemed to have become the holder of record of such shares on the
date on which the Warrant was surrendered, irrespective of the date of delivery of such
certificate, except that, if the date of such surrender and payment is a date when the stock
transfer books of the Company are closed, such person shall be deemed to have become the
holder of such shares at the close of business on the next succeeding date on which the
stock transfer books are re-opened, which shall be the earliest practical date available to
the Company.

	 	3.	 	No Fractional Shares. Notwithstanding any other provision of this Warrant or
the Agreement, no fractional shares of Common Stock shall be issued pursuant to the terms
of this Warrant, and no Member shall be entitled to receive a fractional share of Common
Stock pursuant to the terms of this Warrant.

	 	4.	 	Transfer and Exchange of Warrants.

          (a) Registration of Transfer. The Company shall register the transfer, from
time to time, of any outstanding Warrant in the Warrant register, upon the surrender of such
Warrant for transfer, properly endorsed with signatures properly guaranteed and accompanied
by appropriate instructions for transfer. Upon any such transfer, a new Warrant
representing an equal aggregate number of Warrants shall be issued and the old Warrant shall
be cancelled by the Company.

          (b) Procedure for Surrender of Warrants. Warrants may be surrendered to the
Company, together with a written request for exchange or transfer, and thereupon the Company
shall issue in exchange therefor one or more new Warrants as requested by the registered
holder of the Warrants so surrendered, representing an equal aggregate number of Warrants.

          (c) Partial Exercise. If the Warrant shall have been exercised in part, the
Company shall, at the time of delivery of the certificate or certificates representing
shares of Parent Common Stock, deliver to holder a new Warrant evidencing the unexercised
rights of holder to acquire shares of Parent Common Stock called for by the Warrant, which
new Warrant shall in all other respects be identical with the original Warrant.

          (d) Service Charges. No service charge shall be made for any exchange of
Warrants.

	 	5.	 	Other Provisions Relating to Rights of Holders of Warrants.

2

 

          (a) No Rights as Stockholder. A Warrant does not entitle the registered holder
thereof to any of the rights of a stockholder of the Company, including, without limitation,
the right to receive dividends, or other distributions, exercise any preemptive rights to
vote or to consent or to receive notice as stockholders in respect of the meetings of
stockholders or the election of directors of the Company or any other matter. The holder
shall be entitled to all rights of a stockholder of the Company with respect to shares of
Common Stock issuable upon exercise of this Warrant immediately upon such exercise
notwithstanding that a certificate representing such shares Common Stock has not been
issued.

          (b) Lost, Stolen, Mutilated, or Destroyed Warrants. If any Warrant is lost,
stolen, mutilated, or destroyed, the Company may on such terms as to indemnity or otherwise
as they may in their discretion impose (which shall, in the case of a mutilated Warrant,
include the surrender thereof), issue a new Warrant of like denomination, tenor, and date as
the Warrant so lost, stolen, mutilated, or destroyed. Any such new Warrant shall constitute
a substitute contractual obligation of the Company, whether or not the allegedly lost,
stolen, mutilated, or destroyed Warrant shall be at any time enforceable by anyone.

          (c) Reservation of Common Stock. The Company shall at all times that any
Warrant is outstanding reserve and keep available a number of its authorized but unissued
            shares of Common Stock that will be sufficient to permit the exercise in full of all
outstanding Warrants.

          (d) Registration of Common Stock. The registration of the Common Stock
issuable pursuant to the terms of this Warrant shall be subject to that certain Registration
Rights Agreement, dated [                     ___], 2006 by and between the Company, the Members’
Representative and the members of Multi-Shot, LLC.

	 	6.	 	Miscellaneous Provisions.

          (a) Successors. All the covenants and provisions of this Warrant by or for the
benefit of the Company shall bind and inure to the benefit of their respective successors
and assigns.

          (b) Notices. All notices, requests, claims, demands and other communications
hereunder shall be in writing and shall be given (and shall be deemed to have been duly
given upon receipt) by delivery in person, by cable, telecopy, facsimile, telegram or telex
or by registered or certified mail (postage prepaid, return receipt requested) to the
respective parties at the following addresses (or at such other address for a party as shall
be specified in a notice given in accordance with this Section 6(b)):

if to the Company:

JK Acquisition Corp.

5847 San Felipe, Suite 4350

Houston, Texas

Facsimile No.: (713) 783-9750

Attention: James P. Wilson

3

 

with a copy to:

Patton Boggs LLP

2001 Ross Avenue, Suite 3000

Dallas, Texas 75201

Facsimile No.: (214) 758-1550

Attention: Fred S. Stovall, Esq.

if to Holder, to the address reflected on the register of Warrants kept by the Company, with a copy to the Members’ Representative at:

Catalyst
Hall Growth Capital Management Co., LLC

2 Riverway, Suite 1710

Houston, Texas 77056

Facsimile No.: (713) 623-0473

Attention: Ron Nixon and Rick Herrman

          (c) Applicable law. The validity, interpretation, and performance of the
Warrants shall be governed in all respects by the laws of the State of Delaware, applicable
to contracts executed in and to be performed in that state and without regard to any
applicable conflicts of law. In any action between the parties hereto arising out of or
relating to the Warrants: (i) each of the parties irrevocably and unconditionally consents
and submits to the exclusive jurisdiction and venue of either the state courts located in
Harris County, Texas or the United States District Court for the Southern District of Texas
and (ii) each of the parties irrevocably consents to service of process by first class
certified mail, return receipt requested, postage prepaid.

          (d) Persons Having Rights under this Agreement. Nothing in this Agreement
expressed and nothing that may be implied from any of the provisions hereof is intended, or
shall be construed, to confer upon, or give to, any person or corporation other than the
parties hereto and the registered holders of the Warrants. All covenants, conditions,
stipulations, promises, and agreements contained herein shall be for the sole and exclusive
benefit of the parties hereto and their successors and assigns and of the registered holders
of the Warrants.

          (e) Counterparts. This Agreement may be executed in any number of counterparts
and each of such counterparts shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute but one and the same instrument.

          (f) Effect of Headings. The Section headings herein are for convenience only
and are not part of this Warrant Agreement and shall not affect the interpretation thereof.

          (g) Other. This Warrant is issued under, and the rights represented hereby are
subject to the terms and provisions contained in the Agreement, to all terms and provisions
of which the registered holder of this Warrant, by acceptance of this Warrant, assents.
Reference is hereby made to the Agreement for a more complete statement of the rights and
limitations of rights of the registered holder of this Warrant and the rights and duties of
the Company under this Warrant. A copy of the Agreement is on file at the office of the
Company.

[Remainder of this page intentionally left blank; signature page follows.]

4

 

     IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed on this [___] day
of [                    ], 2006.

	 	 	 	 	 	 	 
	 	 	JK ACQUISITION CORP.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 

Form of Warrant – Signature Page

5

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