Document:

Exhibit 10.2

** Certain information in this
exhibit has been omitted and has been filed separately with the Securities and
Exchange Commission pursuant to a confidential treatment request under Rule
24b-2 of the General Rules and Regulations under the Securities Act of 1934.

ASSET PURCHASE AGREEMENT

This Asset
Purchase Agreement (“Agreement”) is entered into as of the close of
business on March 31, 2007 (the “Effective Date”) by and among:

New Horizons
Computer Learning Center of Chicago, Inc., a Delaware corporation (“Seller”)
and New Horizons Worldwide, Inc. (“Parent”), on the one hand;

and NH
Chicago, LLC, a Michigan limited liability company (“Buyer”), and
M&J L.L.C., a Michigan limited liability company (“M&J”) that is
an Affiliate of Buyer, on the other hand.

Seller and
Buyer are hereinafter sometimes individually referred to as a “Party” or
collectively as the “Parties”.

WHEREAS,
Seller wishes to sell to Buyer, and Buyer wishes to purchase from Seller,
substantially all of Seller’s assets related to Seller’s computer training
business located in Chicago, Illinois (the “Business”); and

WHEREAS,
concurrent with the transactions described in this Agreement, Buyer desires to
become a franchisee of New Horizons Franchising Group, Inc. (“Franchisor”)
in Chicago, Illinois, it being understood that Franchisor is an Affiliate of
Seller.

NOW,
THEREFORE, in consideration of the covenants and agreements contained herein,
the Parties agree as follows:

Section 1          Certain Definitions

As used in
this Agreement the following terms shall have the following respective
meanings:

“Accounting
Employees” shall have the meaning set forth in Section 5.7.

“Accounts
Payable” shall mean all of Seller’s trade accounts payable (including all trade
accounts payable with respect to goods and services received by Seller but for
which invoices have not yet been received by Seller) that arise from the
conduct of the Business and relate to the period prior to the Closing.

“Accounts
Payable Aging” shall mean a report prepared by Seller showing the aging of the
Non-Current Accounts Payable of Seller as of the Effective Date.

“Action” shall
mean any action, suit, complaint, charge, hearing, arbitration, inquiry,
proceeding or investigation by or before any court of competent jurisdiction,
governmental or other regulatory or administrative agency or commission or
arbitral panel.

“Affiliate”
(and, with a correlative meaning, “Affiliated”) shall mean, with respect to any
Person, any other Person that directly, or indirectly through one or more
intermediaries, controls,

or is
controlled by, or is under common control with, such first Person.  As used in this definition, “control”
(including, with correlative meanings, “controlled by” and “under common
control with”) shall mean possession, directly or indirectly, of power to
direct or cause the direction of management or policies (whether through
ownership of securities or partnership or other ownership interests, by
contract or otherwise).

“Agreement”
shall have the meaning set forth in the preamble hereto.

“Ancillary
Agreements” shall mean, collectively, any agreements, certificates or other
documents delivered at or prior to the Closing in connection with the
transactions contemplated by this Agreement and shall include, without
limitation, the Assignment and Assumption Agreement, the Assignment of Lease,
the Bill of Sale, and the Franchisor Consent.

“Assigned
Contracts” shall have the meaning set forth in Section 2.1(F).

“Assignment
and Assumption Agreement” shall have the meaning set forth in Section 3.1(B).

“Assumed
Liabilities” shall have the meaning set forth in Section 3.4.

“Bill of Sale”
shall have the meaning set forth in Section 4.2(A)(3).

“Bryn Mawr
Lease” shall have the meaning set forth in Section 2.1(A).

“Business”
shall have the meaning set forth in the first recital hereof.

“Buyer” shall
have the meaning set forth in the preamble hereto.

“Buyer
Indemnified Party” shall have the meaning set forth in Section 8.2.

“Cap” shall
have the meaning set forth in Section 8.4.

“Cash” shall
mean all cash, time deposits, certificates of deposit, marketable securities,
short-term investments and other cash equivalents of Seller.

“Cash Payment”
shall have the meaning set forth in Section 3.1(A).

“Claim” means
(i) any right to payment, whether or not such right is reduced to
judgment, liquidated, fixed, contingent, unmatured, disputed, legal, equitable,
or secured and (ii) any right to an equitable remedy for breach of
performance if such breach gives rise to a right to payment, whether or not
such right to an equitable remedy is reduced to judgment, fixed, contingent,
matured, unmatured, disputed, undisputed, secured, or unsecured.

“Cleveland
Agreement” shall mean that certain Asset Purchase Agreement dated of even date
herewith between, inter alia, New Horizons Computer Learning Center of
Cleveland, Ltd., L.L.C. and Cleveland Buyer.

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“Cleveland
Buyer” shall mean NH Cleveland, LLC, a Michigan limited liability company.

“Cleveland
Seller” shall mean New Horizons Computer Learning Center of Cleveland, Ltd.,
L.L.C.

“Closing”
shall have the meaning set forth in Section 4.1.

“Closing
Balance Sheet” shall have the meaning set forth in Section 3.2(A).

“Closing
Financial Data” shall have the meaning set forth in Section 3.2(A).

“Closing
Working Capital” shall have the meaning set forth in Section 3.2(A).

“CMS” shall
have the meaning set forth in Section 5.7(B).

“Code” shall
mean the Internal Revenue Code of 1986, as amended, and any successor thereto.

“Contracts”
shall mean all existing instruments, contracts, agreements, arrangements,
understandings and commitments, whether written or oral, of Seller or its
Affiliates related to or arising from the conduct of the Business.

“Customer
Contracts” shall have the meaning set forth in Section 2.1(F).

“Current
Accounts Payable” shall have the meaning set forth in Section 3.4(A)(1).

“Deposits”
shall  have the meaning set forth in
Section 2.1(C).

“Dispute”
shall have the meaning set forth in Section 9.9(A).

“Effective
Date” shall have the meaning set forth in the preamble hereto.

“Employee
Benefit Plans” shall have the meaning set forth in Section 6.15(B).

“Environmental
Law” shall mean any currently applicable local, state or federal statute or any
rule, regulation, code, or ordinance issued or promulgated thereunder, that
relates to the operations of the Business and/or the use of the Leased
Premises, concerning protection of human health, safety, or the environment or
that regulates, restricts or governs the use, storage, disposition or release
of Hazardous Materials.

“Equipment”
shall have the meaning set forth in Section 2.1(B).

“ERISA” shall
mean the Employee Retirement Income Security Act of 1974, as amended.

“Expiration
Date” shall have the meaning set forth in Section 5.7(B).

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“Facilities
Lease” shall have the meaning set forth in Section 2.1(A).

“Final Closing
Working Capital” shall have the meaning set forth in Section 3.2(C).

“Final
Purchase Price” shall have the meaning set forth in Section 3.2(E).

“Financial
Statements” shall have the meaning set forth in Section 6.7(A).

“Franchise
Agreement” shall have the meaning set forth in Section 4.5(B).

“Franchisor
Consent” shall have the meaning set forth in Section 4.2(A)(7).

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

“Goodwill”
shall have the meaning set forth in Section 2.1(C).

“Governmental
Authority” means any United States federal, state or local or any foreign
government, governmental regulatory or administrative authority, agency,
commission, department, board, bureau, or instrumentality or any court,
tribunal or judicial or arbitral body.

“Governmental
Permits” shall have the meaning set forth in Section 2.1(C).

“Hazardous
Materials” shall mean any substance that is designated as a “hazardous
substance”, “hazardous waste”, “hazardous material”, “toxic substance”, “toxic
pollutant”, “contaminant”, “pollutant”, or words of similar import under any
Environmental Law.

“Indemnified
Party” shall have the meaning set forth in Section 8.3(A).

“Indemnifying
Party” shall have the meaning set forth in Section 8.3(A).

“Initial
Franchise Fee” shall have the meaning set forth in Section 4.3(A).

“Initial
Working Capital” shall mean the sum of $72,152, which the Parties agree was the
amount of Seller’s Working Capital as of February 28, 2007 (after the add back
of the March 2007 rent which was inadvertently posted to the February 2007
accounts payable).

“Intangible
Personal Property” shall have the meaning set forth in Section 2.1(C).

“Intellectual
Property” shall mean all patents, patent rights, trade names, trade marks,
trade mark registrations, service marks, service mark registrations,
copyrights, inventions, trade secrets, databases, data collections, know-how,
logos, marks (including brand names, product names, logos and slogans), methods,
network configurations and architectures, processes, software, software code
(in any form, including source code and executable or object code), web sites,
works of authorship, and other similar rights (including other unpatented
and/or unpatentable proprietary or confidential information systems or
procedures), applications for any of the foregoing, and licenses therefor, in
each case presently used or held for use by Seller in the Business.

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“Inventory”
shall have the meaning set forth in Section 2.l(B).

“IRS” shall
mean the United States Internal Revenue Service.

“ISBE” shall
have the meaning set forth in Section 4.5(c).

“Knowledge”
and words of similar import shall mean such facts or other matters of which the
referenced Person is aware or which such Person could be expected to discover
or otherwise become aware of after having made due inquiry and reasonable
investigation of the appropriate Persons having responsibility for such matters
or having access to the relevant information. 
A Person that is an entity shall be deemed to have Knowledge of a
particular fact or matter if any individual who is serving as a director,
officer, management level employee, manager, partner, executor or trustee of
such Person (or in any similar capacity) has, or at any time had, Knowledge of
such fact or other matter.

“LaSalle
Lease” shall have the meaning set forth in Section 5.7(C).

“Leased
Premises” shall have the meaning set forth in Section 2.1(A).

“Liability”
means any liability (whether known or unknown, whether asserted or unasserted,
whether absolute or contingent, whether accrued or unaccrued, whether
liquidated or unliquidated, and whether due or to become due and regardless of
when asserted), including, without limitation, any liability for Taxes.

“Liens” shall
have the meaning set forth in Section 4.2(A).

“Losses” shall
mean any loss, cost, Liability, lost profits, diminution of value, damage
(including consequential damages), penalty, fine, judgment, Claim or expense
(including reasonable attorneys’ fees).

“Most Recent
Financial Statements” shall have the meaning set forth in Section 6.7(A).

“Neutral
Auditors” shall have the meaning set forth in Section 3.2(C).

“Non-Current
Accounts Payable” shall have the meaning set forth in Section 3.4(A)(2).

“Order” means
any decree, order, injunction, rule, judgment, consent of or by any court or
Governmental Authority.

“Ordinary
Course” shall mean the ordinary course of Seller’s conduct of the Business
consistent with past practice.

“Permitted
Liens” shall have the meaning set forth in Section 4.2(A).

“Person” shall
mean any individual, firm, corporation, partnership, limited liability company,
joint venture, association, estate, trust, governmental agency or body or other
entity, and shall include any successor (by merger or otherwise) of such
Person.

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“Prepayments”
shall have the meaning set forth in Section 2.1(C).

“Purchased
Assets” shall have the meaning set forth in Section 2.1.

“Purchase
Price” shall have the meaning set forth in Section 3.1.

“Records”
shall have the meaning set forth in Section 2.1(G).

“Receivables”
shall have the meaning set forth in Section 2.1(E).

“Resolution
Period” shall have the meaning set forth in Section 3.2(B).

“Retained
Assets” shall have the meaning set forth in Section 2.2.

“Retained Liabilities”
shall have the meaning set forth in Section 3.4(B).

“Returns”
shall mean returns, reports, statements, notices, forms or other documents or
information required to be filed with any U.S. Taxing Authority or foreign
taxing authority in connection with the determination, assessment, collection
or payment of any Taxes or in connection with the administration,
implementation or enforcement of or compliance with any legal requirement
relating to any Tax.

“Royalty
Credit” shall have the meaning set forth in Section 4.5(B).

“Royalty
Payments” shall have the meaning set forth in Section 3.2(D).

“Seller” shall
have the meaning set forth in the preamble hereto.

“Seller
Indemnified Party” shall have the meaning set forth in Section 8.1(A).

“Software”
shall have the meaning set forth in Section 2.1(D).

“Tangible
Personal Property” shall have the meaning set forth in Section 2.1(B).

“Taxes” shall
mean all taxes, charges, fees, levies, impositions, or like other assessments
(whether U.S. federal, state, local or foreign) based upon or measured by
income and any other tax whatsoever, including, without limitation, single
business, gross receipts, profits, premium, sales, use, occupation, value
added, ad valorem, transfer, franchise, withholding, payroll, employment,
unemployment, excise, windfall profits, transfer, license, occupation or real
or personal property taxes, together with any interest, penalties or additions
to tax resulting from, attributable to, or incurred in connection with any such
taxes or any contest or dispute thereof.

“Third Party
Claim” shall have the meaning set forth in Section 8.3(B).

“Training
Obligations” shall have the meaning set forth in Section 3.4(A)(3).

“Vehicles”
shall have the meaning set forth in Section 2.1(B).

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“WARN Act”
shall have the meaning set forth in Section 3.4(B)(3).

“Working
Capital” shall mean (a) the book value of the following current assets of
Seller that comprise a part of the Purchased Assets: trade accounts receivable
(less A/R Control-Contra, A/R-Suspense, A/R-CES Suspense, A/R Co-Owned
Suspense, Reserve for Futures, Reserves for Subsequent CM, and Allowance for
Doubtful Accounts), A/R-ELS, A/R-COL to COL and total inventory (less
Inventory-Reserve), less (b) the book value of the following current liabilities
of Seller that comprise a part of the Assumed Liabilities: accounts payable
outstanding less than 31 days from the date of invoice, Customer Deposits,
Payable to Other Franchisees and Refund Reserve Liability, all as determined in
accordance with GAAP.  The calculation of
Working Capital shall be made in a manner consistent with the calculation shown
in Exhibit E attached hereto.

“Working
Capital Adjustment” shall have the meaning set forth in Section 3.2(D).

“Working
Capital Deficiency” shall have the meaning set forth in Section 3.2(D).

“Working Capital Surplus” shall have the meaning set forth in Section
3.2(D). 

Section 2               Purchase and Sale of
Assets; Excluded Assets

2.1           Purchased Assets. 
Pursuant to the terms and subject to the conditions set forth in this
Agreement, on the Effective Date, Seller hereby agrees to sell, grant,
transfer, convey, assign and deliver to Buyer, and Buyer agrees to purchase and
acquire from Seller, all of Seller’s right, title and interest in all of the
properties, assets and rights owned, used, acquired for use, or arising or
existing in connection with the Business wherever located, whether tangible or
intangible, and whether or not recorded on Seller’s books and records, except
for and excluding solely the Retained Assets provided for in Section 2.2 below
(all the foregoing being collectively referred to as the “Purchased Assets”).  The Purchased Assets shall include, but not
be limited to, the following:

(A)          All rights of Seller under its occupancy lease (the “Facilities Lease”)
covering the facilities (the “Leased Premises”) at 8550 Bryn Mawr, Suite 400,
Chicago, Illinois (the “Bryn Mawr Lease”), a true and complete copy of
the Facilities Lease, as amended to date, being included at Schedule 2.1(A) attached hereto;

(B)           All of Seller’s (x) vehicles used in connection with the conduct
of the Business (“Vehicles”), (y) furniture, furnishings,
fixtures, equipment, machinery, trade fixtures, leasehold improvements,
computers, computer discs, telephone systems and security systems (“Equipment”),
and (z) supplies, training and course materials, computer training kits
and manuals, catalogs, advertising copy and other properties of a similar type
used or held for use in the conduct of the Business (“Inventory” and,
together with the Vehicles and Equipment, whether owned or leased, the “Tangible
Personal Property”), a listing of all of which is included at Schedule 2.1(B) attached hereto (which
Schedule indicates whether the Vehicles and Equipment are owned or leased and,
if leased, includes a true and complete copy of the lease or other agreement(s)
governing the same, as amended to date);

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(C)           All of Seller’s (u) telephone and facsimile numbers, post office
boxes, e-mail addresses, websites, Internet domain names, trade names and
assumed names relating to the Business, (v) permits and other
governmental authorizations pertaining to the Business (“Governmental
Permits”), to the extent such authorizations may legally be assigned, (w)
goodwill with customers, vendors or prospective customers, and all customer
lists, relating to the conduct of the Business (“Goodwill”), (x)
security or similar deposits relating to the Business, but (i) such shall
exclude security deposits under any lease or agreement not comprising a part of
the Assigned Contracts and shall also exclude the certificate of deposit in
favor of ISBE for $198,000 which relates to Seller’s consumer business, and
(ii) shall exclude the security deposit 
made under the Facilities Lease, (y) prepaid advertising
(inclusive of yellow page advertising), prepaid expenses and other prepayments
relating to the conduct of the Business (“Prepayments”), and (z)
all other intangible assets relating to the Business or any of the Purchased
Assets (the foregoing being collectively called the “Intangible Personal
Property”), a listing of all of which is included at Schedule 2.1(C) attached hereto;

(D)          All of Seller’s software (including rights under Seller’s software
licenses), including SAGE accounting software, and other software used in the
conduct of the Business (“Software”), but excluding the CMS software
otherwise provided for in the Franchise Agreement (as defined in Section
4.5(B)), a listing of all of such Software being included at Schedule 2.1(D) attached hereto (and, as to
each, identifying whether such is owned by Seller or licensed for use by Seller
and, if licensed, includes a true and complete copy of the license agreement or
other agreement(s) governing the same, as amended to date, and all of Seller’s
rights in and to all other Intellectual Property used in connection with the
Business (except for such Intellectual Property as is licensed to Buyer
pursuant to the Franchise Agreement);

(E)           All of Seller’s accounts and notes receivable, and other rights to
receive payment, from customers, employees or others arising from the conduct
of the Business (“Receivables”), a listing of all of which (showing, as
to each, the name of the account debtor, the amount owed and an aging schedule
thereof) is included at Schedule 2.1(E)
attached hereto;

(F)           Except as provided in Section 2.2(E), all rights of Seller under any
Contracts which relate to or arise from the operation of the Business and are
accepted in writing by Buyer (“Assigned Contracts”), including any
thereof with customers or prospective customers which benefit the Business from
and after the Effective Date, including, but not limited to, computer training
center agreements and, further, including all rights to receive payment from
customers for services to be performed and invoiced after the Effective Date (“Customer
Contracts”), including without limitation the right to payment with regard
to coupon sales and redemptions, PC Club sales, corporate technical club sales
or applications, and future training classes, a listing of all of which Assigned
Contracts is included at Schedule 2.1(F)
attached hereto; and

(G)           Seller’s books and records, books of account, personnel files and
records for those employees of Seller who become employees of Buyer, files,
invoices, accounting records, and correspondence relating to any of the
Business, the Purchased Assets or the Assumed Liabilities (“Records”).

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2.2           Retained Assets. 
Notwithstanding the provisions of Section 2.1, the Purchased Assets
shall not include any of the following (the “Retained Assets”):

(A)          Any Customer Contracts between Seller’s Affiliate and third party
customers for the delivery of training managed through the Enterprise Learning
Solutions department of Seller’s Affiliate, provided that Buyer shall be
entitled to deliver training in its capacity as a New Horizons franchisee and
shall be deemed the “selling center” which shall entitle Buyer to receive
customary revenue sharing offered by the Enterprise Learning Solutions
department of Seller’s Affiliate;

(B)           Seller’s Cash;

(C)           Seller’s rights under this Agreement;

(D)          Seller’s corporate minute books, stock records and tax returns or other
similar corporate books and records relating to the Business, to any of the
Retained Assets, to any Retained Liability, or to the negotiation and consummation
of the transactions provided for in this Agreement, and those Records, if any,
originals of which Seller is required to maintain under applicable law;

(E)           Seller’s rights arising under any Contracts which are not an Assigned
Contract;

(F)           Any rights of Seller relating to its conduct of the Business which
arise from or are related to services previously provided by the regional
office of Seller’s affiliate (such as accounting, payroll, legal or other
similar services, except as otherwise expressly provided herein); and.

(G)           Any assets owned by any of Seller’s Affiliates, none of which is
physically located at the Leased Premises nor used in the conduct of the
Business.

2.3           Non-Transferability
of Certain Contracts.  Nothing in
this Agreement shall be construed as an attempt to assign any Contract intended
to be an Assigned Contract included in the Purchased Assets that is by its
terms or law non-assignable without the consent of the other party or parties
thereto, unless such consent shall have been given or as to which all the
remedies for the enforcement thereof enjoyed by Seller would, as a matter of
law, pass to Buyer as an incident of the assignments provided for by this
Agreement.  Seller shall use commercially
reasonable efforts to obtain the consent of any third party to the assignment
to Buyer of any Assigned Contract for which such consent is required.  In the event (a) an Assigned Contract either
does not permit or expressly prohibits the assignment by Seller of its rights
and obligations thereunder, or (b) Seller has not obtained the necessary
consents to assignment from all parties to any Assigned Contract prior to the
Effective Date, or (c) direct assumption of any Assigned Contract is not
practical, Buyer shall fulfill such Assigned Contract and shall assume the
obligations and liabilities of such Assigned Contract accruing after the
Closing for and on behalf of Seller but for the account of Buyer and Seller
shall cooperate with Buyer in any reasonable arrangements designed to provide
for Buyer the benefits under such Assigned Contracts accruing after the Closing
including the enforcement for the benefit and at the expense of Buyer of any

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rights comparable to the rights
previously enjoyed by Seller in connection with such Assigned Contracts.

Section 3               Purchase Price

3.1           Closing Payment.  In
consideration for the transfer of the Purchased Assets, Buyer shall pay to
Seller the following amounts (the “Purchase Price”):

(A)          Cash Payment. 
Subject to the provisions of Section 3.2 below, on April 2, 2007, Buyer
shall pay to Seller the sum of Seven Hundred Fifty Thousand and 00/100 Dollars
($750,000.00) (the “Cash Payment”) in the form of a wire transfer to an
account of Seller designated in writing by Seller; provided, however, the Cash
Payment shall be reduced by the amount of the Non-Current Accounts Payable of
Seller assumed by Buyer pursuant to Section 3.4(A)(2); and

(B)           Assumption of Liabilities.  Upon
the Effective Date, Buyer shall execute and deliver an agreement (the “Assignment
and Assumption Agreement”) in form and content as provided for in Section
4.2(A)(1) obligating Buyer to assume Seller’s obligations with regard to the
Assumed Liabilities as defined in Section 3.4(A) below.

3.2           Purchase Price
Adjustment.

(A)          As soon as practicable,
but in no event later than thirty (30) days following the Closing, Seller shall
prepare a balance sheet of the Business as of the Closing (the “Closing
Balance Sheet”) and a calculation of the Working Capital of the Business as
of the Closing based on the Closing Balance Sheet (the “Closing Working Capital” and,
together with the Closing Balance Sheet, the “Closing Financial Data”). 
The Closing Balance Sheet shall be prepared in accordance with GAAP,
consistently applied with the manner in which Seller’s Most Recent Financial
Statements were prepared.

(B)           Seller shall deliver a
copy of the Closing Financial Data to Buyer promptly after it has been
prepared.  After receipt of the Closing
Financial Data, Buyer shall have fifteen (15) days to review the Closing Financial
Data.  Buyer and its authorized
representatives shall have reasonable access during normal business hours to
all relevant books and records of Seller to the extent required to complete
their review of the Closing Financial Data. 
Unless Buyer delivers written notice to Seller on or prior to the
thirtieth (30th) day after
Buyer’s receipt of the Closing Financial Data specifying in reasonable detail
the amount, nature and basis of all disputed items, Buyer shall be deemed to
have accepted and agreed to the calculation of the Closing Working
Capital.  If Buyer timely notifies Seller
of its objection to the calculation of the Closing Working Capital as described
above, Seller and Buyer shall, within thirty (30) days (or such longer period
as the Parties may agree in writing) following such notice (the “Resolution Period”), attempt to
resolve their differences and any resolution by them as to any disputed amounts
shall be final, binding and conclusive.

(C)           If, at the conclusion
of the Resolution Period, there are any amounts remaining in dispute, then such
amounts remaining in dispute shall be submitted to a firm of nationally
recognized independent certified public accountants (the “Neutral Auditors”) selected

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by Seller and Buyer within ten
(10) days after the expiration of the Resolution Period.  If Seller and Buyer are unable to agree on
the Neutral Auditors, then each of Seller and Buyer shall have the right to
request the office of the American Arbitration Association to appoint the
Neutral Auditors, which Neutral Auditors shall not have had a material
relationship with Seller, Buyer or any of their respective Affiliates within
the past two years.  Each of Seller and
Buyer agree to execute, if requested by the Neutral Auditors, a reasonable
engagement letter, including customary indemnities.  All fees and expenses relating to the work,
if any, to be performed by the Neutral Auditors shall be borne equally between
Seller and Buyer. The Neutral Auditors shall act as an arbitrator to determine,
based solely on the provisions of this Section 3.2 and the presentations by
Seller and Buyer only those issues still in dispute.  The Neutral Auditors’ determination shall be
made within thirty (30) days of their selection, shall be set forth in a
written statement delivered to Seller and Buyer and shall be deemed a final,
binding and conclusive arbitration award. 
A judgment of a court of competent jurisdiction may be entered upon the
Neutral Auditors’ determination.  The
term “Final
Closing Working Capital” shall mean the definitive Closing Working
Capital agreed to (or deemed to be agreed to) by Buyer and Seller in accordance
with Section 3.2(B) hereof or resulting from the determinations made by the
Neutral Auditors in accordance with this Section 3.2(C) (in addition to those
items theretofore agreed to by Seller and Buyer).

(D)          Seller, Parent and
Franchisor expressly agree that, subject to adjustment as provided in the last
sentence of this Section 3.2(D), Buyer and Cleveland Buyer shall be entitled to
a credit in the aggregate amount of $126,120 (the “Royalty Credit”)
against any royalty or other payments (“Royalty Payments”) coming due by
Buyer under the Franchise Agreement or Cleveland Buyer under its franchise
agreement.  The Royalty Credit shall be
applied against Royalty Payments of Buyer and Cleveland Buyer first coming due
after the Effective Date at the aggregate rate of $10,000 per month.

In addition to the
Royalty Credit, if the Final Closing Working Capital is less than the Initial
Working Capital by more than $7,500, then the amount of such deficiency (the
“Working Capital Deficiency”) shall be set off against the Royalty Payments as
follows:

(i)            If the sum (the “Working
Capital Adjustment”) of (a) the Working Capital Deficiency under this
Agreement, plus (b) the Working Capital Deficiency or less the Working Capital
Surplus under the Cleveland Agreement, as applicable, is greater than $53,880
(such that the total credit against the Royalty Payments, consisting of the
$126,120 Royalty Credit plus the $53,880 or greater Working Capital Adjustment,
is greater than $180,000), then the amount of the Working Capital Adjustment
shall be set off by Buyer and/or its Affiliates:

(1)           against the Royalty
Payments coming due over the six (6) month period immediately following the
first anniversary of the Effective Date at the rate of $10,000 per month, plus

(2)           with respect to the
amount of the Working Capital Adjustment in excess of $53,880, at the rate of
an additional $10,000 per month, commencing with the first month following the
date of determination of the Working Capital Adjustment, and continuing until
such excess amount of the Working Capital Adjustment is exhausted; and

 11
 

(ii)           If the Working Capital
Adjustment is less than or equal to $53,880, then such amount shall be set off
by Buyer and/or its Affiliates against the Royalty Payments coming due
immediately following the first anniversary of the Effective Date at the rate
of $10,000 per month.

If the Final Closing Working Capital is
greater than the Initial Working Capital by more than $7,500 (the “Working
Capital Surplus”), then the amount of such Working Capital Surplus shall reduce
the Royalty Credit.

(E)           The Cash Payment, as
adjusted pursuant to this Section 3.2, plus the amount of the Assumed Liabilities
assumed by Buyer pursuant to Section 3.4 is referred to herein as the “Final Purchase Price.”

3.3           Purchase Price
Allocation.  Buyer and Seller agree
to allocate the Final Purchase Price as follows: first, to the current assets
comprising a part of the Purchased Assets at their respective book values as
determined in the Final Closing Working Capital; second, to the fixed assets
comprising a part of the Purchased Assets at their respective book values as
determined in the Closing Balance Sheet; [******************************************************].  For purposes of all Taxes, the Parties agree
to report the transactions contemplated in this Agreement in a manner
consistent with this Section 3.3 and the allocation to be so agreed upon and
none of them will take any position inconsistent therewith in any Returns, in
any refund claim, in any litigation, or otherwise.  Each Party agrees to notify the other if any
taxing authority proposes to reallocate the Final Purchase Price.  Seller and Buyer shall cooperate in good
faith in the joint preparation of IRS Form 8594 on a basis consistent with the
allocation of the Final Purchase Price in accordance with this Section 3.3.

3.4           Assumed and Retained Liabilities.

(A)          Assumed Liabilities.  The
following shall constitute, and are herein together referred to as, the “Assumed
Liabilities”:

(1)           the Accounts Payable
that, as of the Effective Date, are outstanding [********************** ******************************],
all accrued expenses of Seller and all other current liabilities of Seller, in
each case solely to the extent included in the calculation of the Final Closing
Working Capital;

(2)           the Accounts Payable of Seller that, as of the Effective Date, are
outstanding [************** *************************************************]
but only to the extent included in the reduction to the Cash Purchase Price as
provided in Section 3.1 (A);[**********************************************************************
***********************************************************************************************************
**********************************************************************************************************
*****************************************];

(3)           Subject to the provisions set forth in Section 4.3(D), Seller’s
obligations to all individual and corporate customers to provide training which
has been

 12
 

purchased by such customers prior to the
Effective Date but not yet delivered as of the Effective Date (the “Training
Obligations”), which Training Obligations are listed in Schedule 3.4(A)(3) attached hereto;

(4)           Any obligation for cash
refunds to customers in respect to any prepaid training;

(5)           Any obligation to pay
for training provided by any other franchisee or Affiliate of the Franchisor in
respect to national training coupons sold by Seller, except to the extent such
constitutes a Retained Liability under Section 3.4(B)(5)(e); and

(6)           all liabilities and
obligations of Seller (other than liabilities or obligations arising out of any
breach or default by Seller prior to the Closing) under the Assigned Contracts
that are assigned to Buyer pursuant to Section 2.1 or under which the full
benefits are provided to Buyer by Seller pursuant to Section 2.3, and which
were incurred or otherwise first arise from and after the Closing; provided
that, notwithstanding anything to the contrary, Buyer does not assume, and
shall not be responsible for, any Liabilities which arise from (i) defaults
thereunder or breaches thereof on or prior to the Closing; or (ii) events
occurring on or prior to the Closing, which, after notice or lapse of time or
both, would constitute a default or breach, in each case whether or not a claim
for such default or breach is made prior to or following the Closing.

(B)           Retained Liabilities.  Buyer shall not be obligated to pay, perform
or abide by, and Seller shall retain exclusive responsibility for, any
Liabilities, debts, obligations, undertakings or commitments of Seller (the “Retained
Liabilities”), other than the Assumed Liabilities.  The Retained Liabilities shall include, but
not be limited to, the following:

(1)           Any Tax imposed by or payable to any Governmental Authority with
respect to any period ending on or prior to the Effective Date;

(2)           Any Liability or
obligation accruing, arising out of or relating to any fact or circumstance
which occurred on or prior to the Effective Date in respect to (a) Liabilities
and obligations to employees of Seller, including those for accident,
disability, health (including unfunded medical liabilities) and worker’s
compensation insurance or benefits, and all other Liabilities and obligations
to employees arising from facts or circumstances which occurred on or prior to
the Effective Date, (b) any Employee Benefit Plan or any other employee benefit
arrangement or commitment which is or has been maintained or contributed to by
Seller, (c) any portion of any bonuses earned or accrued upon the basis of any
events occurring on or prior to the Effective Date, (d) any accrued vacation
benefits, (e) any obligation to reimburse any employee for expenses incurred on
or prior to the Effective Date, or (f) any obligation to pay sales commissions
to employees on account of sales made on or prior to the Effective Date and
with respect to which sales Seller has received payment on or prior to the
Effective Date;

(3)           Liabilities and
obligations arising from or relating to claims or Liabilities for benefits or
pay under any severance arrangement of or binding upon Seller, including those
related to any alleged wrongful termination of employment solely as a result of

 13
 

the transactions contemplated
hereby including Workers Adjustment Retraining and Notification Act (the “WARN
Act”) liabilities and obligations;

(4)           Any Liability or obligation which, absent this provision, comprises a
part of the Assumed Liabilities but which is covered by any insurance policy
maintained by Seller or any of Seller’s Affiliates (but, then, only to the
extent of such insurance coverage and the amount of any deductible or
self-insured retention);

(5)           Any (a) inter-company
charges or amounts due to Parent or any Affiliate of Seller or Parent, (b)
claims relating to inter-franchise payment obligations which are based on the
non-payment of amounts owing any other franchisee of the Franchisor, except to
the extent that amounts therefor are included in the calculation of the Final
Closing Working Capital, (c) amounts due for borrowed money, (d) obligations
arising under any agreement, instrument or other contractual undertaking or
commitment that is not an Assigned Contract or which is not an Assumed
Liability, (e) inter-franchise obligations relating to payment for training
provided by franchisees of the Franchisor other than Buyer or its Affiliates
upon redemption of national training coupons sold by Seller on or prior to the
Effective Date in circumstances where the same are redeemed more than one (1)
year after the issuance of such coupons.

(6)           Any Accounts Payable
not included in the calculation of the Final Closing Working Capital or not
included in the reduction to the Cash Purchase Price as provided in Section
3.1(A);

(7)           Any (a) Liability or
obligation to indemnify any director, officer, employee or agent of Seller,
except with regard to indemnification obligations owed to Seller from Buyer
arising under this Agreement, (b) with respect to periods ending on or prior to
the Effective Date, Liability arising out of or in connection with any
violation of a statute or governmental rule, regulation, directive or other
requirement, and any Liability or obligation of a conditional, contingent or
similar nature, or (c) Liability or obligation which arises from or is based on
a claim for injury to or death of persons, or damage to or destruction of
property, regardless of when asserted, but which arises from facts or
circumstances which occurred on or prior to the Effective Date;

(8)           Any Liability of Seller
or its Affiliates to the former owner(s) of the Business for royalty payments,
deferred purchase price or other obligation including, without limitation, all
liabilities under the agreement between Seller and the former owner of the
Business identified in Schedule 3.4(B)(8);

(9)           The obligations of
Seller, Parent or their Affiliate(s) on any guaranty of the Facilities Leases;

(10)         Any debts, Liabilities or
obligations incurred by Seller, or actions, claims or lawsuits asserted against
either Buyer or Seller which relate to the operation of the Business prior to
the Effective Date, except for (y) the Assumed Liabilities, and/or (z)
the Training Obligations;

 14
 

(11)         Any Liabilities or
obligations which arise from or relate to any Retained Asset;

(12)         Any Liabilities and
obligations relating to the operation prior to Closing of the Leased Premises
or the Business or any other real property, buildings, improvements or other
premises utilized by Seller or its Affiliates, including Liabilities arising
from any Environmental Laws;

(13)         Any Liabilities and
obligations of Seller to any of its Affiliates or to any of Seller’s or its
Affiliates’ past or present directors, officers or stockholders; and

(14)         Except for the Assumed
Liabilities, all other Liabilities and obligations of Seller or related to the
operation of the Business prior to Closing.

Section
4          Closing 

4.1           Closing.  The consummation of the
transactions provided for in this Agreement (the “Closing”) has been
held on, and shall be effective as of the close of business on,  the Effective Date.

4.2           Acts of Seller and Parent.  At
the Closing, Seller and Parent have taken such actions and executed and
delivered, or caused to be executed and delivered, to Buyer such certificates,
instruments and documents, as are required by this Agreement or as are required
to give full effect to the transactions provided for herein.  Such actions and materials include, but are
not limited to, the following:

(A)          Conveyance Documentation. 
Seller has executed and delivered to Buyer or shall execute and deliver
to Buyer (with such acknowledgments required by the circumstances) documents of
conveyance which are required to convey to Buyer the Purchased Assets free and
clear of all restrictions or conditions to sale, conveyance or transfer and
free and clear of all liens, mortgages, pledges, encumbrances, charges, claims,
security interests, Taxes, conditions or restrictions of any nature or
description whatsoever, whether secured or unsecured, choate or inchoate, fixed
or contingent, scheduled or unscheduled, noticed or unnoticed, recorded or
unrecorded, known or unknown (“Liens”) (other than those specifically
identified on Schedule 4.2(A)
hereto, the “Permitted Liens”) and consistent with the other
requirements of this Agreement.  Except
as otherwise expressly provided in this Agreement, the Purchased Assets are
being sold “as is, where is” without any express or implied warranties whatsoever.  Without limiting the generality of the
foregoing, the documents of conveyance shall include the following:

(1)           An assignment and
assumption agreement (“Assignment and Assumption Agreement”) in form and
content substantially as shown on Exhibit A
attached hereto pursuant to which, among other things, Seller conveys and
assigns to Buyer all right, title and interest of Seller arising under,
provided for in, or governed by any Assigned Contracts (other than the
Facilities Leases);

 15
 

(2)           An assignment and
assumption agreement (“Assignment of Lease”) in form and content
substantially as shown on Exhibit B
attached hereto pursuant to which, among other things, Seller conveys and
assigns to Buyer all right, title and interest of Seller arising under, provided
for in, or governed by the Bryn Mawr Lease (included herewith at Exhibit B-1); and, therewith, Seller shall
deliver a Consent to Assignment Agreement signed by the landlord named in the
Bryn Mawr Lease or other Person whose approval or consent is required in
connection therewith in such form as is mutually agreed by the Parties;

(3)           A bill of sale (“Bill of Sale”) in form and content
substantially as shown on Exhibit C
attached hereto and conveying to Buyer all of the Purchased Assets (other than
as provided for in the Assignment and Assumption Agreement, the Assignment of
Lease, or in any document of title provided for in Section 4.2(A)(4) below;

(4)           An endorsement and delivery of certificates of title required to
effectuate the transfer to Buyer of any Vehicles or other Equipment, and any
instruments the endorsement and delivery of which is required to effectuate
transfer to Buyer;

(5)           The written consent to assignment (in form and substance reasonably
satisfactory to Buyer) of third Persons whose approval of any conveyance
contemplated herein is required in order to comply with the requirements of any
agreement or legal requirement binding on Seller, Parent or their Affiliates.

(6)           The written consent of
Franchisor (the “Franchisor Consent”) to Buyer’s and its Affiliates’
right to setoff or recoup the amount of any of Seller’s and/or Parent’s
indemnification obligations under Section 8.2 hereof against any payments that
become due under their respective franchise agreements with Franchisor, dated
the Effective Date, in form and content substantially as shown on Exhibit D attached hereto.

(7)           Evidence reasonably
satisfactory to Buyer of the change of Seller’s name to a name dissimilar to
New Horizons Computer Learning Center of Chicago, Inc.

(8)           Consents to the
transactions contemplated by this Agreement and discharge(s) of all Liens on
any of the Purchased Assets by each of the senior lenders to Seller; and

(9)           Any other documents and
instruments required by this Agreement or reasonably requested by Buyer to
effect or evidence the transactions contemplated by this Agreement.

(B)           Delivery of
Possession.  Seller has delivered or
will deliver to Buyer, or cause to be delivered to Buyer, physical possession
of all Records, the originals of all Assigned Contracts, and other tangible
properties comprising any part of the Purchased Assets, and all keys,
combinations and other mechanisms for controlling access to the Leased Premises
and to any lock box or other repository to which Receivables or other
correspondence of Seller is routinely received.

 16
 

(C)           Receivables.  Seller maintains with Wells Fargo Bank (the “Custodial
Bank”) administrative arrangements regarding the collection of
Receivables.  Such arrangement provides
for a lock box arrangement with all items of payment delivered thereto.  At the Closing, Seller will deliver, or cause
to be delivered, to the Custodial Bank a writing which cancels the account/lock
box arrangement and irrevocably instructs the Custodial Bank to remit directly
to Buyer all correspondence, items of payment and other materials received by
it pursuant to any arrangements maintained with Seller.  To the extent that Seller shall, from and
after the Effective Date, receive any items of payment or be credited with any
items of payment in respect to any Receivables, Seller will hold such items in
trust for Buyer and promptly remit such items of payment to Buyer in the form
received and pay to Buyer any amounts so credited to Seller.

(D)          Closing Certificates.  Seller and Parent will cause the Franchisor
to execute and deliver to Buyer a certificate, dated as of the Effective Date,
and to the effect that the execution of the Franchise Agreement with Franchisor
shall comply with federal and state law regarding the sale of franchises in the
State of Illinois.

(E)           Secretary’s Certificate; Resolutions.  The
secretary or other executive officer of Seller and Parent shall deliver to
Buyer a certificate, dated as of the Effective Date, and to the effect (i) that
all action required to authorize and direct Seller’s and Parent’s execution and
performance of this Agreement and any other agreement or instrument of
conveyance provided for herein has been taken; and (ii) that all such action so
taken remains in effect without modification or revocation.  There shall be or is attached to such
certificate a true and complete copy of the resolutions adopted by Seller’s and
Parent’s governing bodies which are required in order to effectuate such
actions.

(F)           Seller’s Name. 
Seller agrees to and shall permit Buyer to use the name “New Horizons
Computer Learning Center of Chicago” as a fictitious business name for
so long as the Franchise Agreement remains in effect and, in that regard, shall
(i) from time to time at or after the Closing, execute such documents and take such
actions as are reasonably requested by Buyer to effectuate such result and (ii)
refrain from using or permitting others to use such name or any name similar
thereto in the active conduct of business.

(G)           Deliveries Regarding
Receivables.  From time to time at
the request of Buyer, Seller will provide Buyer with such assistance as Buyer
shall reasonably request in order to enable Buyer to enjoy the benefits
intended to be conveyed with regard to the Receivables (but no such request
shall require the expenditure of funds by Seller).

4.3           Acts of Buyer.  At
the Closing, Buyer will execute and deliver or cause to be executed and
delivered to Seller such certificates, instruments and documents as are
required by this Agreement or as are required to give full effect to the
transactions provided for herein.  Such
shall include, but not be limited to, the following:

(A)          Cash Payment. 
Buyer shall pay to Seller the Cash Payment, subject to adjustment as
provided for in Section 3.1(A), which shall also satisfy Buyer’s obligation to
pay an initial franchise fee (the “Initial Franchise Fee”) to Franchisor
in connection with the matters provided for in Section 4.5(B) below.

 17
 

(B)           Assumption.  Buyer will execute and
deliver, or has executed and delivered, to Seller (i) the Assignment and
Assumption Agreement pursuant to which Buyer assumes the Assumed Liabilities,
and (ii) the Assignment of Lease pursuant to which Buyer assumes the
obligations of Seller under the Bryn Mawr Lease to the extent such obligations
accrue from and after the Effective Date.

(C)           Secretary’s Certificate; Resolutions.  The
secretary or other officer of Buyer has delivered or shall deliver to Seller a
certificate, dated as of the Effective Date, and to the effect that all action
required to authorize and direct the execution and performance of this
Agreement and any other agreement or instrument of conveyance provided for
herein has been taken; and that all such action so taken remains in effect
without modification or revocation. 
There shall be attached to such certificate a true and complete copy of
the resolutions adopted by the members of Buyer authorizing such actions.

(D)          Acts Following Closing: Training Obligations.  Buyer
has determined that the procedures required to be followed by ISBE which are
necessary to be complied with in order for Buyer to enjoy the benefits of this
Agreement are such that Buyer’s application may not be submitted nor acted upon
until after the Closing hereunder.  Buyer
agrees (i) to make timely application to ISBE for such permits and licenses as
may be required for such purposes, (ii) upon Seller’s reasonable request to
notify Seller of any progress occurring with regard thereto, and (iii) to
obtain final approval of such permits and licenses from ISBE as soon as practicable
after the Effective Date.

4.4           Prorations at
Closing.  Except to the extent
included in the calculation of the Final Closing Working Capital, any and all
real property Taxes, personal property taxes, assessments, lease rentals, and
other charges applicable to the Leased Premises, the Purchased Assets or the
Assumed Liabilities will be prorated to the Effective Date, and such Taxes and
other charges shall be allocated between the Parties by adjustment at the
Closing, or as soon thereafter as the Parties may agree.  The Facilities Leases permit the landlords
therein named to charge the tenant for any incremental common area or other
expense items provided for in the Facilities Leases to the extent the annual
costs relating thereto exceed the amounts paid by the tenant during a calendar
year and, therefore, Seller will reimburse Buyer for its share of any such
incremental charges imposed at the end of the year 2007 which relate to the
period when Seller occupied the premises covered by the Facilities Leases.

4.5           Other Agreements.  In
addition to the matters provided for elsewhere in this Agreement, at or prior
to the Closing, the Parties shall additionally execute, or cause their
affiliates named therein to execute, the following separate agreements:

(A)          Employment Arrangements. 
Notwithstanding any restrictions to the contrary contained in this
Agreement or in any other agreement contemplated hereby, Seller shall permit
Buyer to offer employment to, and to employ, such Persons employed in
connection with the operation of the Business as may be designated by Buyer in
its sole discretion.  Buyer shall have no
obligation to offer to employ or to employ any employees of Seller and, with
respect to any employee of Seller to whom Buyer makes an offer of employment,
Buyer shall be free to determine in its sole discretion the terms of such
offer; provided, however, Buyer shall be

 18

responsible for and shall indemnify and
defend Seller and Parent in accordance with Section 8 hereof against Claims
brought by any employee of Seller alleging unlawful discrimination by Buyer as
the basis for Buyer’s decision not to hire such employee.

(B)           Franchise Agreement.  Buyer
and Franchisor (a wholly-owned direct or indirect subsidiary of Parent), shall
execute a franchise agreement with a term from the Effective Date through
[*****************] (the “Franchise Agreement”).  The Franchise Agreement shall be in
substantially the same form as the franchise agreement between the Franchisor
and M&J, Buyer’s Affiliate, for the Detroit, Michigan territory.  Seller further acknowledges and agrees that
Buyer shall have the right to setoff or recoup against amounts that may become
due to Buyer under this Agreement any amounts now or hereafter owing by Buyer
to Franchisor or its Affiliates under the Franchise Agreement as provided in
the Franchisor Consent.

(C)           Consents and Approvals.  All
consents, approvals or authorizations of any governmental agency (including the
Illinois State Board of Education which regulates Private Business and
Vocational Schools (“ISBE”)), the landlords named in the Facilities
Leases and any other person whose approval is required to assign and convey to
Buyer the Assigned Contracts and any other Purchased Assets shall have been
obtained on terms satisfactory to Buyer and shall be in full force and effect;
and, except as contemplated in Section 4.3(D), all Permits required to allow
Buyer to conduct the operations of the Business following the Effective Date
shall have been assigned to Buyer by Seller or otherwise obtained by
Buyer.  In connection herewith, Buyer
agrees, consistent with applicable law and circumstances, to use commercially
reasonable efforts to expeditiously obtain the approval of ISBE to the transfer
of Seller’s applicable licenses or, if such is not assignable, to initiate and
diligently undertake to obtain such ISBE approval as may be required.  Buyer agrees to provide all reasonably
required information to ISBE and to pay any reasonable and customary fees
associated with such approval.

Section
5          Additional Covenants
and Agreements

5.1           Indemnity of M&J Regarding Guarantee of
Facilities Leases.  Buyer is acquiring, by way of assignment, the
leasehold interest of Seller under the Facilities Lease.  Parent is or may be a guarantor or otherwise
obligated for the performance by the tenant or lessee named in the Facilities
Lease, which tenant or lessee will include Buyer or its Affiliates from and
after the Effective Date, and Parent may not be permitted to modify or cancel
its guaranty of the Facilities Lease in connection with the assignment of the
Facilities Lease.  Accordingly, Parent
may remain liable on the Facilities Lease in the event Buyer is unable to
perform thereunder as required in the Assignment of Lease.  In consideration of the transfers contemplated
in this Agreement and the assignment of the Facilities Lease, if and for so
long as Parent is a guarantor of the Facilities Lease, M&J agrees and does
hereby indemnify and agree to hold Parent harmless of and from any claims made
by the landlord named in the Facilities Lease based on a breach by Buyer of
such Facilities Lease; provided, however, the aggregate liability of
M&J hereunder in respect to the Facilities Lease shall be and is limited to
the sum of [****************************].

5.2           Non-Solicitation. 
Excluding persons employed by Seller in connection with the Business to
whom Buyer may make offers of employment as provided for in Section 4.5(A),

 19
 

except as otherwise agreed by Seller and
Buyer, Buyer and Seller, on behalf of themselves and their respective
Affiliates, agree not to solicit, recruit or hire any employees of the other Party,
or the other Party’s Affiliates, for so long as the Franchise Agreement remains
in effect or, if a shorter period of time, for six (6) months following the
termination of the applicable employee’s employment with such Party or such Party’s
Affiliates.

5.3           Customer Records. The Parties will maintain the
confidentiality of all customer records and files in accordance with applicable
federal and state laws and regulations. 
On the Effective Date, Seller agrees to deliver to Buyer all original
customer records and files that relate to the purchase and delivery of computer
training for the Business, including the files which relate to the Training
Obligations.  Seller shall retain all
books and records relating to the Business that are not sold and delivered to
Buyer under this Agreement.  In the event
that Seller, Buyer or any of their respective Affiliates is audited by any
federal, state or local entity following the Effective Date, or if any of them
should otherwise need access to any of the books and records maintained by the
other for any legitimate business purpose (other than any litigation or
arbitration matter involving the Parties), then the Party in possession of the
books and records shall provide the other Party, its Affiliates and their
respective designees with reasonable access, during normal business hours, to
all such books and records; provided, however, if at any time the Party in
possession of the books and records determines to destroy or otherwise dispose
of any such books and records, it may do so provided such Party first gives the
other Party thirty (30) days advance notice and the other Party may, at its
expense, arrange to pick up such books and records from the Party in possession
thereof.

5.4           Further Assurances.  Each
of the Parties agrees to use its commercially reasonable efforts to timely
satisfy any conditions to Closing provided for herein and to assist each other
in doing such things and matters as are required to consummate the transactions
provided for herein.  Without limiting the
generality of the foregoing, Seller and Parent agree to assist the Buyer in
procuring the timely transfer of all Assigned Contracts (including licenses,
authorized training center agreements, vendor contracts and Software licenses).

5.5           Announcements; Confidentiality.  The Parties
(or certain of the Parties or their predecessors) have previously executed a
Confidentiality Agreement in connection with the transactions contemplated
herein.  As of the Effective Date, said
Confidentiality Agreement shall be of no further force or effect and, instead,
the Parties agree as follows:

(A)          Confidentiality Agreement.  Except
to the extent of the representations and warranties provided for in this
Agreement, no Party shall have any liability to the other based on any claim
that the information provided by such Party pursuant to the Confidentiality
Agreement was untrue, incomplete or misleading in any way.  Rather, the Parties shall be entitled to rely
only upon the representations and warranties set forth or provided for in this
Agreement and any agreements and instruments delivered pursuant to this
Agreement.

(B)           Public Announcements. 
Seller and Parent, on the one hand, and Buyer, on the other hand, will
consult with each other before issuing any press release or otherwise making
any public statement with respect to the transactions contemplated herein and
shall not issue any such press release or make any such public statement
without the approval of the others, unless

 20
 

counsel has advised such Party that such
release or other public statement must be issued immediately and the issuing
Party has not been able, despite its good faith efforts, to secure the prior
approval of the other Parties.

5.6           Financial Audit Cooperation.  Buyer shall provide reasonable assistance to
Seller and Parent regarding the 2006 and 2007 financial audits for Parent,
which assistance shall include gathering documentation, providing requested
account analysis and generally responding to inquires from Seller’s outside
auditors; provided, however, Seller shall reimburse Buyer for any out-of-pocket
expense incurred by Buyer in connection with the rendering of such assistance.

5.7           Transition Services.

(A)          Temporary Workspace
for Accounting Employees.  Buyer
agrees to allow [************************], each of whom are employees of
Seller and shall continue to be employees of Seller after the Effective Date
(collectively the “Accounting Employees”), to maintain workspaces in the
Leased Premises through September 30, 2007 at no charge to Seller for such
workspace in order to perform certain accounting services for Seller.  Seller agrees to be responsible for all
payroll, benefits and other employee-related expenses associated with the
Accounting Employees.

(B)           CMS Conversion.  Seller agrees that, effective as of the
Effective Date, and continuing until the later of September 30, 2007, or the
date that the Accounting Employees vacate the Leased Premises (the “Expiration
Date”), neither Buyer nor Cleveland Buyer shall be liable for any monthly
fees, under their franchise agreements or otherwise, for the use of Seller’s ASP
or Center Management System (“CMS”), provided that Buyer and Cleveland
Buyer shall have transitioned to a local model CMS by such Expiration Date.  Subsequent to the Expiration Date, Buyer and
Cleveland Buyer shall be liable for Seller’s standard local CMS fees.  Seller further agrees that Seller will
provide, or cause to be provided to Buyer and Cleveland Buyer, at Seller’s sole
expense, all user licenses, software and associated data necessary for Buyer
and Cleveland Buyer to transition from Seller’s ASP system and have CMS for their
Chicago and Cleveland territories installed at Buyer’s or its Affiliate’s
facility in Livonia, Michigan.

(C)           Seller agrees to rent
five (5) classrooms to Buyer at the facilities leased to Seller under its
occupancy lease covering the leased premises at 2 North LaSalle, Seventh Floor,
Chicago, Illinois (the “LaSalle Lease”) at a rate of $2,338 per week for a
period to be designated by Buyer of up to four (4) weeks.  If the landlord under the LaSalle Lease
elects to take back the leased premises prior to the expiration of the room
rental, the room rental contemplated hereby shall terminate.  The room rental shall terminate not later
than the date that Seller must surrender possession of the leased premises
under the LaSalle Lease to the landlord. 
Seller shall give the landlord written notice of its intention to assign
the LaSalle Lease to Buyer as soon as practicable following the Effective Date.  If the landlord consents to the assignment
within thirty (30) days following the Effective Date, Seller shall assign and
Buyer shall assume the LaSalle Lease on substantially the same terms and the
Parties assigned and assumed the Bryn Mawr Lease.

 21
 

(D)          Within one (1) year
following the Effective Date, Buyer shall assign to Seller its security deposit
under the Facilities Lease, and Buyer, concurrently therewith, shall pay to
Seller the value of the security deposit so assigned.

Section 6               Representations And Warranties
Of Seller And Parent.  Seller and Parent jointly and severally represent
and warrant to Buyer as follows:

6.1           Organization and Existence.  Seller
and Parent are Delaware corporations, duly organized, validly existing and in
good standing under the laws of the State of Delaware and each has all
necessary corporate power to own its assets (including the Purchased Assets) and
to operate its business (including the Business) as now owned and operated by them.  Seller is duly qualified and in good standing
under the laws of the State of Illinois and in any other jurisdiction wherein
the nature of the activities conducted or the character of the assets owned
require such qualification or licensing, and where a failure to be so qualified
or licensed would adversely affect (i) the value of the Purchased Assets, or
(ii) the amount of the Assumed Liabilities. 
Neither Seller nor Parent conducts any of the Business through any
subsidiary, joint venture, partnership, or other Affiliate; and Seller does not
maintain any offices, places of business, or personnel assigned to locations
outside of the State of Illinois.

6.2           Authority.  Seller and Parent have the full
legal right, power, capacity, and authority required to enter into and perform their
obligations under this Agreement and the Ancillary Agreements.  All approvals of Seller’s and Parent’s board
of directors or other governing body required to authorize the execution,
delivery and performance of this Agreement and the Ancillary Agreements by such
Parties has been obtained and, assuming due execution and delivery by Buyer and
M&J, this Agreement and the Ancillary Agreements represent the legal, valid
and binding obligations of Seller and Parent that are enforceable against them in
accordance with their respective terms, subject to (i) as to enforceability,
bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors rights generally, and (ii) general equitable
principles and to the discretion of the court before which any proceedings
seeking the remedy of specific performance and injunctive and other forms of
equitable relief may be brought.

6.3           Title.  Seller has good and marketable
title to, or a valid leasehold or licensed interest in, all of the Purchased Assets
and such Purchased Assets are free and clear of any Liens (including Liens for
Taxes) other than the Permitted Liens.

6.4           No Breach; Required
Approvals.  The execution and delivery by Seller and
Parent of this Agreement and the Ancillary Agreements, the consummation of the transactions
contemplated hereby and thereby, and the performance of Seller’s and Parent’s obligations
under this Agreement and the Ancillary Agreements:

(A)          will not violate (i) any
provision of Seller’s or Parent’s charter or bylaws, (ii) any statutes, laws, regulations,
rules, injunctions, orders, decrees, judgments or rulings of any judicial or
governmental body applicable to Seller or Parent , or (iii) except to the
extent that any third party consent or approval is required to convey same to
Buyer as disclosed on Schedule  6.4(B), any provision of any Facilities
Lease, Software license or Assigned Contract; and

 22
 

(B)           except as shown on Schedule
6.4(B) attached hereto, will not require Seller or Parent to obtain
any consents or approvals of, or make any filings with or give any notices to,
any governmental bodies or any other person and will not violate, result in the
breach of, or constitute (or with notice or lapse of time or both, constitute)
a default under any Contract, lease, license, permit or other agreement to
which Seller or Parent is a party or is bound.

6.5           Books and Records.  The
books of account and other Records of Seller, all of which have been made
available to Buyer, are complete and correct in all material respects and have
been maintained in accordance with sound business practices.

6.6           Tax Matters.  Except as disclosed on Schedule 6.6:

(A)          Seller has duly filed all Returns required to be filed by Seller in
connection with the Business.  All such
Returns are true, complete and correct, and all Taxes (whether or not shown on
any Return) due in connection with such Returns or otherwise due have been paid
in full or adequate provision for their payment has been made in the Most
Recent Financial Statements.

(B)           Claims and Assessments. 
There are no pending issues raised in an examination by any taxing
authority that might give rise to claims for Taxes or assessments upon, and
there are no Tax liens outstanding or, to the best of Seller’s or Parent’s Knowledge,
threatened against, the Purchased Assets. 
No issue has been raised in writing by any taxing authority in
connection with an audit or examination of any Return in connection with the
Business that, if raised with regard to any other Return not so audited or
examined, would reasonably be expected to result in a proposed deficiency with
respect to the period covered by such other Return.  No taxing authority in a jurisdiction where
Seller does not file Returns has made a claim, assertion or threat in writing that
Seller is or may be subject to taxation in such jurisdiction in connection with
the Business.

(C)           Withholding Taxes. 
Seller has withheld and paid, or caused to be paid to the proper taxing
authority, all Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor,
stockholder, or other third party.

(D)          Taxes Relating to Transaction.  The
transactions contemplated herein are not subject to Tax withholding under any
provisions of law.  The Party responsible
under applicable law shall be solely responsible for the payment of all sales,
use and similar Taxes which may be imposed by reason of any transfers provided
for in this Agreement.

6.7           Financial Matters

(A)          Financial Statements Delivered to Buyer.  At Schedule 6.7(A) are the following financial
statements of Seller (“Financial Statements”): (i) unaudited income statements
and balance sheets for the periods from January 1, 2004 through December 31,
2004, January 1, 2005 through December 31, 2005 and January 1, 2006 through December
31, 2006, and (ii) the unaudited income statement and balance sheet for the
period from January 1, 2007 through February 28, 2007 (the “Most Recent
Financial Statements”).  The
Financial Statements

 23
 

are complete and correct in all material
respects, were prepared in accordance with GAAP (except the Most Recent
Financial Statement are subject to changes resulting from normal year-end
adjustments and subject to the absence of footnotes) consistently applied
throughout the periods covered thereby, present fairly the financial condition,
results of operations and cash flows of Seller as of such dates and for the periods
covered thereby, and have been prepared
from and are in accordance with the books and Records of Seller.

(B)           Accounts Payable.  At Schedule 6.7(B) is a true and complete current
listing of all of the Accounts Payable of Seller, showing as to each the aging,
amount and name of the creditor.

(C)           Unredeemed Coupons.  At Schedule 6.7(C) is a true and complete current
listing of all of the unredeemed but prepaid coupons sold by Seller which
remain outstanding and in respect to which Seller is obligated to deliver
training.  Such listing reflects the
expiration date as to each.  To the
Knowledge of Seller and Parent, there exists no further or additional
obligations of Seller to deliver training for which payment has been received
or prepaid.

6.8           No Other Liabilities.  Except for the Assumed Liabilities and the
Liabilities specifically listed on Schedule 6.8,
there is no Liability, claim, deficiency, guarantee or obligation (absolute, accrued, contingent or otherwise), and
there is no basis for any such Liability or obligation, with regard to
the Business.  To the Knowledge of Seller
and Parent, no supplier, client or customer intends to make a reduction in its
present level of business conducted with the Business after the Effective Date,
either as a result of this Agreement and the transactions contemplated hereby
or for any other reason.

6.9           Purchased Assets.  The
only real property at which Seller conducts operations relating to its
Business, or which are otherwise leased or used by Seller or its Affiliates in
connection with the Business, are the Leased Premises.  Except for those items of Tangible Personal Property
identified on Schedule 6.9, all Tangible
Personal Property is (and will be as of the Effective Date) physically located at
the Leased Premises.  To the extent any
Tangible Personal Property included in the Purchased Assets is located at any
other location, Seller shall, at its sole cost and expense, promptly move same
to the Leased Premises or whichever thereof is designated by Buyer.  Each item of Tangible Personal Property is in
good operating condition, normal wear and tear excepted.  The Purchased Assets constitute all of the
assets, rights and properties necessary to conduct the Business as presently
conducted.

6.10         Legal Compliance; Permits

(A)          Compliance With Law. 
Except as set forth on Schedule 6.10(A),
the Business is in compliance in all material respects with all applicable laws
(including statutes, rules, regulations, codes, plans, injunctions, judgments,
orders, decrees, and rulings) of federal, state, local, and foreign governments
and all agencies thereof (including, but not limited to, laws respecting
employment, employment practices, employee classification, labor relations,
family and medical leaves, military leaves, leaves of absence generally, environment, safety and health, wages,
hours and terms and conditions of employment); and neither Seller nor Parent has any
Knowledge of circumstances which are likely to result in a violation of any of the
foregoing.  The foregoing includes, but is not limited
to, all laws relating to the protection of the

 24
 

environment, laws relating to discrimination
in the work place, laws relating to the use of proprietary computer software,
and laws governing the reporting, withholding or payment of payroll, income,
franchise or excise taxes.

(B)           Governmental Permits. 
Except as shown at Schedule 6.10(B),
the Governmental Permits to be conveyed to Buyer comprise all of the permits,
concessions, grants, franchises, licenses, filings, authorizations and
approvals required from any governmental division or agency which are necessary
for the conduct of the Business.  A
complete and correct list of the Governmental Permits is shown at Schedule 6.10(B) and, except as shown on
said Schedule: (i) Seller is in compliance with the respective terms and
conditions of all such Governmental Permits; and (ii) there are no proceedings
pending or, to the Knowledge of Seller or Parent, threatened which may result
in the revocation, cancellation, suspension or adverse modification of any Governmental
Permit; and (iii) the consummation of the transactions provided for in this
Agreement will not result in any revocation, cancellation, suspension or
adverse modification of any Governmental Permit.

6.11         Receivables. At Schedule 6.11
is a true and complete current listing of all of the outstanding Receivables,
showing as to each the aging, amount and name of the account debtor.  All Receivables reflected in the Financial
Statements and which will be reflected in the Closing Balance Sheet represent
or will represent valid obligations arising from bona fide sales actually made
or services actually performed by Seller in the Ordinary Course.  All Receivables of Seller as of the Closing
will be reflected in the Closing Balance Sheet. 
Subject to any reserves reflected in the Financial Statements or to be
reflected in the Closing Balance Sheet, Seller has not received written notice
of any contest, claim, defense or right of setoff with respect to the amount or
validity of any Receivable.  The reserves
in the Financial Statements and in the Closing Balance Sheet against the
Receivables for returns, allowances, chargebacks, and bad debts are
commercially reasonable and have been determined in accordance with GAAP,
consistently applied.

6.12         Intellectual Property.

(A)          Except as disclosed on
Schedule 6.12(A) and except for
Intellectual Property validly licensed to Buyer by Franchisor pursuant to the
Franchise Agreement, Seller owns or possesses or has the right to use pursuant
to a valid and enforceable, written license, sublicense, agreement, or
permission all Intellectual Property necessary for the operation of the
Business as presently conducted including, without limitation, all Intellectual
Property used in any service, product, technology or process (i) currently
being used, published or marketed by Seller or (ii) currently under development
for possible future publication, marketing or other use by Seller.  Each item of Intellectual Property owned or
used by Seller in connection with the Business immediately prior to the Closing
will be owned or available for use by Buyer on identical terms and conditions
immediately subsequent to the Closing (except that any Intellectual Property
licensed to Buyer pursuant to the Franchise Agreement shall be subject to the
terms of the Franchise Agreement). 
Seller has taken all necessary action to maintain and protect each item
of Intellectual Property that it owns or uses in connection with the Business.

 25
 

(B)           Seller has not
interfered with, infringed upon, misappropriated, or otherwise come into
conflict with any Intellectual Property rights of third parties, and there has
been no charge, complaint, claim, demand, or notice alleging any such
interference, infringement, misappropriation, or violation (including any claim
that Seller must license or refrain from using any Intellectual Property rights
of any third party). To Seller’s or Parent’s Knowledge, no third party has
interfered with, infringed upon, misappropriated, or otherwise come into
conflict with any Intellectual Property rights of Seller.

(C)           Seller has delivered to
Buyer true and complete copies of all licenses, sublicenses, agreements, and
permissions (as amended to date) for each item of Intellectual Property that
any third party owns and that Seller uses in connection with the Business.

(D)          Except as set forth on Schedule 6.12(D), the Software used by
Seller and comprising a part of the Purchased Assets is all thereof which is
necessary to be assigned hereunder in order to enable Buyer to conduct the
Business on and after the Effective Date in a manner consistent with the manner
in which the Business is presently conducted and has been conducted during the
year prior to the Effective Date, and without infringing upon or conflicting
with the rights of any other Person.  Neither
Seller nor Parent has any Knowledge of any infringement or improper use by any
third Person of the Software of Seller.

6.13         Assigned Contracts.  At Schedule 6.13 is a list of all the Assigned
Contracts.  Except as reflected on Schedule 6.13:

(A)          The Assigned Contracts are, and on the Effective Date will be, in full
force and effect and there does not exist, and will not exist, any default or
event or condition which, after notice or lapse of time or both, would
constitute a default thereunder by Seller or, to the best of Seller’s and
Parent’s  Knowledge, by any other Person.

(B)           Neither Seller nor Parent has received notice that any Person who is a
party to any of the Assigned Contracts intends to cancel or terminate such
agreements, or to discontinue or materially decrease the amount of business it
does with Seller; and no party has repudiated any provision of any Assigned
Contract.

(C)           At Schedule 6.13 are true
and complete copies of each written agreement (as amended to date) listed on Schedule 6.13 and a written summary setting
forth the terms and conditions of each oral agreement referred to on Schedule 6.13.

6.14         Litigation.  Except as set forth on Schedule 6.14, (A) there are no pending or,
to the Knowledge of Seller or Parent, threatened claims or Actions, whether
initiated by Seller or other Persons, before any court, arbitrator or Governmental
Authority, administrative or regulatory agency which involve Seller, the
Business or any of the Purchased
Assets or Assumed Liabilities; and (B) there is no outstanding or unsatisfied
writ, order, judgment, stipulation, injunction, decree, determination, award or
other order of any court, arbitrator or governmental agency or instrumentality,
domestic or foreign, against Seller or Parent that adversely affects or
involves any of the Purchased Assets, the Assumed Liabilities or the Business.

 26
 

6.15         Employees and
Compensation.

(A)          Shown on Schedule 6.15(A) is a list of the name of
each employee, sales agent or other Person, separately identified as to
part-time or full-time, who is currently employed in the Business by Seller,
together with each Person’s job classification, date of hire, and current rate
of compensation (or method for computing same). 
All employees of Seller are “at will” employees whose employment may be
terminated by Seller at any time, with or without notice or cause.

(B)           Schedule 6.15(B) hereto lists all compensation
and benefit plans, contracts and arrangements maintained, sponsored or
participated in by Seller or any of its Affiliates in connection with the
Business and in effect as of the date hereof including, without limitation, all
pension (including all such employee pension benefit plans as defined in
Section 3(2) of ERISA), profit-sharing, savings and thrift, fringe benefit,
bonus, incentive or deferred compensation, severance pay and medical and life
insurance plans and employee welfare plans as defined in Section 3(1) of ERISA
that are sponsored by Seller or any of its Affiliates and in which any
employees of Seller participate (collectively, “Employee Benefit Plans”).

(C)           As to Employee Benefit
Plans sponsored by Seller or its Affiliates that are “employee pension benefit
plans” as defined in Section 3(2) of ERISA, such plans sponsored by Seller or
its Affiliates are tax qualified under Section 401(a) of the Code, are not
currently under examination by, nor are any matters pending before, the
Internal Revenue Service, the Employee Benefits Security Administration or any
quasi-government agency, are not subject to any claim, suit or arbitration
(other than routine claims for benefits), are not subject to the minimum
funding standards of Code Section 412, are in compliance with and have been
administered in accordance with their terms and in compliance with all
applicable requirements of law, including, but not limited to, the Code and
ERISA, and there have been no prohibited transactions as defined in Code
Section 4975 or ERISA Section 406 with respect to such plans that could subject
Seller or its Affiliates to a tax or penalty under Code Section 4975 or ERISA
Section 502(i).

(D)          Neither Seller nor any
of its Affiliates has incurred any Liability under Title IV of ERISA that has
or could, after the Effective Date, become a Lien upon any of the Purchased
Assets pursuant to ERISA Section 4068.

(E)           Neither Seller nor any
of its Affiliates is or has ever been required to contribute to any “multiemployer
plan,” as such term is defined in Section 4001(a)(3) of ERISA, in which any
employees of Seller in connection with the Business participate.

(F)           Except as set forth in Schedule 6.15(F), no Employee Benefit Plan
provides medical, surgical, hospitalization, death or similar benefits (whether
or not insured) for employees for period extending beyond their retirement or
other termination of service, other than (i) coverage mandated by applicable
law, or (ii) death benefits under any pension plan.

(G)           For the purposes of
this Section 6.15, Seller shall include all trades or business under common
control with Seller as provided in the regulations under Code Section 414(c).

 27
 

6.16         Environmental Matters.  Seller at all times has complied with and
currently is in compliance with all Environmental Laws.  The Business has been conducted by Seller and
the condition of the Purchased Assets and the Leased Premises is and at all
times has been in compliance with all requirements of all Environmental Laws.

6.17         Brokers’ Fees.  Seller
does not have, and shall not have, any liability to pay any fees or commissions
to any broker, finder, or agent with respect to the transactions contemplated
by this Agreement.

Section 7               Representations of
Buyer And M&J.

7.1           Buyer.  Buyer represents and warrants to Seller as
follows:

(A)          Organization and
Existence.  Buyer is a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of Michigan.

(B)           Authority and
Binding Effect.  Subject to receipt
of any approvals required to be obtained from ISBE for which provision is made
in Section 4.3(D) hereof, Buyer has the full legal right, power, capacity, and
authority required to enter into and perform its obligations under this
Agreement and the Ancillary Agreements and the execution of this Agreement and
the Ancillary Agreements have been duly authorized.  Assuming due execution and delivery by Seller
and Parent, this Agreement and the Ancillary Agreements represent legal, valid
and binding obligations of Buyer that are enforceable against it in accordance
with their respective terms, subject to (i) as to enforceability, bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement of
creditors rights generally, and (ii) general equitable principles and to the
discretion of the court before which any proceedings seeking the remedy of
specific performance and injunctive and other forms of equitable relief may be
brought.

(C)           Noncontravention;
Consents Required.  Neither the
execution and the delivery of this Agreement or of any other agreements and
documents to be executed pursuant hereto, nor the consummation of the
transactions contemplated hereby, will conflict with or violate any provision
of (i) any statute, law, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government, governmental agency, or
court to which Buyer or any of its assets is subject, or (ii) any provision of
the organizational documents governing the affairs of Buyer, or (iii) conflict
with or constitute a default (or, with notice or lapse of time or both, would
become a default) under any promissory note, mortgage, bond, instrument,
indenture, agreement, contract, lease, license, permit, instrument, or other
arrangement to which Buyer is a party or by which it is bound, or (iv) except
as contemplated in Section 4.3(D), require the giving of any notice to, any
filing with, or obtaining any comment or approval from any Person.

(D)          Brokers’ Fees.  Buyer does not have, and shall not have, any
liability to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement.

 28
 

7.2           M&J.  M&J represents and warrants to Seller as
follows:

(A)          Ownership of Buyer.  New Horizons of Michigan Holding Corporation,
a Michigan corporation, owns 100% of the issued and outstanding capital stock
of Buyer.

(B)           Binding Effect.  Assuming due execution and delivery by Seller
and Parent, this Agreement represents a legal, valid and binding obligation of
M&J (with respect only to those provisions hereof that are specifically
applicable to M&J) that is enforceable against M&J in accordance with
its terms, subject to (i) as to enforceability, bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of creditors
rights generally, (ii) the obtaining of any approvals or consents required in
connection herewith and as provided for therein, and (iii) general equitable
principles and to the discretion of the court before which any proceedings
seeking the remedy of specific performance and injunctive and other forms of
equitable relief may be brought.

(C)           Brokers’ Fees.  M&J does not have, and shall not have,
any liability to pay any fees or commissions to any broker, finder, or agent
with respect to the transactions contemplated by this Agreement for which
Seller could become liable or obligated.

Section 8               Indemnification

8.1           Indemnity by Buyer and M&J.

(A)          Buyer shall indemnify, hold harmless and defend Seller and its Affiliates,
and their respective shareholders, members, managers, directors, officers,
agents and employees (each, a “Seller Indemnified Party”), from and
against any cause of action, claim, Loss or Liability arising out of or
resulting in any way from any breach or violation of the representations and
warranties set forth in Section 7.

(B)           Buyer shall indemnify, hold harmless and defend each Seller Indemnified
Party from and against any cause of action, claim, Loss or Liability arising
out of or resulting in any way from: (i) any breach of any covenant of Buyer
set forth in this Agreement; (ii) any Liability which relates to and is based
upon the operation of the Business or the Purchased Assets after the Effective
Date, except for any Liability as shall arise from a breach of Seller’s
representations, warranties or covenants set forth in this Agreement; (iii) a
claim of unlawful discrimination by Buyer asserted by a former employee of
Seller as set forth in Section 4.5(a); and (iv) the failure of Buyer to fully
and adequately pay, perform or observe the requirements of the Assumed
Liabilities, including the Training Obligations.

(C)           M&J shall indemnify, hold harmless and defend each Seller
Indemnified Party from and against any cause of action, claim, Loss or Liability
arising out of or resulting in any way from any breach or violation of the
representations and warranties set forth in Section 7.2.

8.2           Indemnity by Seller and Parent.  Subject
to the limitations set forth in Section 8.4, Seller and Parent jointly and
severally shall indemnify, hold harmless and defend Buyer and its Affiliates, and
their respective shareholders, members, managers, directors, officers, agents
and employees (each, a “Buyer Indemnified Party”) from and against any
cause of action, claim, Loss or Liability arising out of or resulting in any
way from: (i) any breach or violation of the

 29
 

representations and warranties set forth in Section
6; (ii) any breach of any covenant of Seller or Parent set forth in this
Agreement; (iii) any debts, claims, liabilities or lawsuits which relate to the
use or operation of the Business or the Purchased Assets prior to the Effective
Date, including the Retained Liabilities; and (iv) the matter disclosed in Schedule 6.14.

8.3           Indemnification Procedure.

(A)          Notification of Claim.  Any person seeking indemnification under
Section 8.1 or Section 8.2 (the “Indemnified Party”) shall promptly notify the
other party or parties from whom indemnification is being sought (the
“Indemnifying Party”) in writing of any claim or demand for which the
Indemnified Party is asserting an indemnification claim.  Such notice shall be accompanied by a
reasonably full description of the basis for such claim or demand, a reference
to the provisions of this Agreement under which liability is asserted and a
statement as to the known amount of the loss or damage (or, if not known, an
estimate thereof if a reasonable basis exists for estimating the same); provided,
however, that no delay on the part of the Indemnified Party in notifying any Indemnifying
Party shall relieve the Indemnifying Party for any liability or obligation
hereunder unless (and then solely to the extent) the Indemnifying Party is
prejudiced by the delay.

(B)           Defense of Legal Actions.  If the claim which is the subject of any
notification given pursuant to Section 8.3(A) is based on a legal action filed
by any third person (a “Third Party Claim”), the Indemnifying Party
shall be entitled to participate in the defense of such Third Party Claim and,
provided that within fifteen (15) days after receipt of such written `notice
the Indemnifying Party confirms in writing its responsibility therefor and
demonstrates to the reasonable satisfaction of the Indemnified Party its
financial capability to undertake the defense and provide indemnification with
respect to such Third-Party Claim, to have the right to take over the defense thereof
with counsel reasonably satisfactory to the Indemnified Party

(1)           If the Indemnifying Party
elects to take over the defense of such Third Party Claim, then: (aa) it shall
keep the Indemnified Party informed as to the status thereof and promptly provide
copies of pleadings and other filings in the case; (bb) the Indemnifying Party
shall have the sole right to contest, settle or otherwise dispose of such Third
Party Claim on such terms as the Indemnified Party, in its sole discretion,
shall deem appropriate, provided that the consent of the Indemnified Party to
any settlement or disposition shall be required if (x) it results in any
liability to or equitable relief against the Indemnified Party not fully
satisfied by the Indemnifying Party, (y) the result would in any way restrict
the future activity of the Indemnified Party or any of its Affiliates or (z) it
would result in the admission or finding of a violation of law or violation of
the rights of any Person by the Indemnified Party or any of its Affiliates; and
(cc) the Indemnified Party shall have the right to participate jointly in the
defense of such Third Party Claim, but shall do so at its own cost; provided,
however, that the Indemnifying Party shall be liable for the Indemnified Party’s
legal expenses if the Indemnified Party determines in good faith that the
incurrence of the same is appropriate in light of defenses not available to the
Indemnifying Party, conflicts of interest or other similar circumstances.

(2)           If the Indemnifying Party
does not elect to take over the defense of such Third Party Claim, then:  (aa) the Indemnified Party shall keep the
Indemnifying Party

 30
 

informed as to the status thereof
and promptly provide copies of all pleadings and other filings in the case;
(bb) the Indemnified Party shall have the sole right to contest, settle or
otherwise dispose of such Third Party Claim on such terms as the Indemnified
Party, in its sole discretion, shall deem appropriate; (cc) the Indemnifying
Party shall have the right to participate jointly in the defense of such Third
Party Claim, but shall do so at its own cost; and (dd) the Indemnified Party may
preserve its rights to indemnification for the recovery of any Losses arising
from such Third Party Claim or the costs of defending the same, including,
without limitation, reasonable attorney’s fees. 
The reimbursement of fees, costs and expenses required by this Section 8
shall be  made by periodic payments
during the course of the investigations or defense, as and when bills are
received or expenses incurred.

(3)           The Indemnified Party and
the Indemnifying Party shall cooperate with each other in the defense of any
Third Party Claim.

8.4           Limitation on Seller and Parent’s Indemnity Liability. 
Notwithstanding the provisions of Section 8.2, the right of the Buyer
Indemnified Parties under this Agreement and the Buyer Indemnified Parties
under the Cleveland Agreement to recover damages from Seller, Cleveland Seller
or Parent on account of the obligation of Seller, Cleveland Seller and Parent to
indemnify or hold harmless the Buyer Indemnified Parties under this Agreement
and the Buyer Indemnified Parties under the Cleveland Agreement with respect to
a breach or violation of the
representations and warranties set forth in Section 6 of this Agreement or the
Cleveland Agreement, respectively, (as set forth in Clause (i) of Section 8.2) shall be limited to the aggregate amount of [**********]
(the “Cap”); provided that the Cap shall not apply in the event
of a breach or violation of the warranties and representations set forth in
Sections 6.1, 6.2, 6.3 or 6.4(A) of this Agreement or the Cleveland Agreement; provided
further, that, subject to the Cap, the Buyer Indemnified Parties under
this Agreement and the Buyer Indemnified Parties under the Cleveland Agreement may
enforce their right to indemnification directly against Seller, Cleveland
Seller or Parent or, at their option, exercise the right to setoff or recoup from any Royalty Payments due by any
of them or their Affiliates to Franchisor or its Affiliates, from time to time,
pursuant to the Franchisor Consent.

8.5           Exclusivity of Remedies.  The
Parties hereby acknowledge and agree that their sole and exclusive remedy with
respect to any and all claims relating to the subject matter of this Agreement
(other than a claim for fraud or for specific performance of the terms of this
Agreement) shall be pursuant to, and limited by, the indemnification provisions
set forth in this Section 8.

Section 9               Miscellaneous

9.1           Notices.  All notices with respect to
this Agreement will be in writing and sent by hand delivery, overnight delivery
via a national courier service, certified mail or facsimile to the Parties at
their addresses or facsimile numbers as follows:

 31
 

If to Seller or Parent:

New Horizons Computer Learning Center of Chicago, Inc.

Attention:  Office of General
Counsel

1900 S. State College Blvd., Suite 650

Anaheim, CA  92806

Tel:  (714) 940-8000

Fax: 
(714) 938-6007

If to Buyer or M&J:

NH Chicago,
LLC

14115 Farmington Road

Livonia, MI  48154

Tel:  (734) 525-1501

Fax:  (734) 525-1401

The date of giving
of any such notice shall be (i) the date of delivery if hand delivered, (ii)
the date of receipt for certified mail, (iii) the day after delivery to the
overnight courier service if sent thereby, and (iv) the date of telephone
facsimile transmission on production of a transmission report by the machine
from which the facsimile was sent that indicates that the facsimile was sent in
its entirety to the facsimile number of the recipient.

9.2           Entire Agreement; Assignment.  This
Agreement, together with the Exhibits and Schedules provided for herein and attached
hereto, represents the entire agreement and understanding between the Parties
and supersedes all prior or contemporaneous agreements, promises or
understandings, verbal or written, including, without limitation, that certain
non-binding letter of intent dated as of January 24, 2007 between Parent and an
Affiliate of Buyer.  This Agreement is
and shall be binding on each Party and its or his respective successors, heirs
and permitted assigns.  Except for any
assignment by Buyer to any Affiliates of Buyer or to any Person that acquires
the business of Buyer (whether through merger, share exchange, stock purchase,
acquisition of substantially all of the assets or other similar transaction),
this Agreement may not be assigned without the written consent of the other Party,
and may only be amended by a written agreement signed by authorized
representatives of all Parties.

9.3           Waiver.  The failure of either party to enforce any
right, remedy or condition of this Agreement shall not be deemed a waiver
thereof nor shall it void or otherwise affect its right to enforce the same
right, remedy or condition at any subsequent time.

9.4           Survival of Representations and Warranties.  All of the representations, warranties,
covenants and agreements set forth in this Agreement and in any certificate or
document delivered pursuant to this Agreement shall survive the Closing and
continue until the expiration of the applicable statute of limitations and
shall be deemed to have been relied upon and shall not be affected in any
respect by the Closing, any investigation conducted by any Party hereto or by
any information that any Party may receive.

9.5           Counterparts.  This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original, and all of which together shall constitute but one and the
same instrument.

 32
 

9.6           Facsimile Signatures.  For
purposes of execution of this Agreement, faxed signature pages shall be deemed
the same as original signature pages.

9.7           Governing Law.  This Agreement will be governed by
and construed in accordance with the laws of the State of Michigan applicable to agreements made and to be
performed entirely within the State of Michigan without giving effect to
conflicts of laws principles.

9.8           Headings;
Definitions.  Captions, titles and
headings to sections or paragraphs of this Agreement are inserted for
convenience of reference only and shall not affect the construction or
interpretation of this Agreement.  All
references in this Agreement to “Section” or “Paragraph” refer to the
corresponding sections or paragraphs of this Agreement unless otherwise stated
and, unless the context otherwise specifically requires, refer to all
subsections or subparagraphs thereof. 
All defined terms and phrases used in this Agreement are equally
applicable to both the singular and plural forms of such terms.  Nouns and pronouns will be deemed to refer to
the masculine, feminine or neuter, singular and plural, as the identity of the
person or persons may in the context require.

9.9           Dispute Resolution.

(A)          Negotiation.  In the event of any dispute or disagreement
between any of the Parties hereto as to the interpretation of any provision of
this Agreement or any agreement incorporated herein, the performance of
obligations hereunder or thereunder, or any other disputed matter relating
hereto or thereto (“Dispute”), such Dispute, upon the written request of
any Party hereto, shall be referred to the chief executive officers of each
Party.  The chief executive officers
shall promptly meet in good faith to resolve the Dispute.  If the chief executive officers do not agree
upon a decision within thirty (30) calendar days after the reference of the
matter to them, any party hereto shall be free to exercise the remedies
available to it under Section 9.9(B).

(B)           Arbitration.  The parties hereto agree that if a Dispute
arises between them that is not resolved by good faith negotiation as provided
in Section 9.9(A), then such Dispute, upon ten (10) days’ prior written notice
from one party to the other of its intent to arbitrate (an “Arbitration
Notice”), shall be submitted to and settled exclusively by final and
binding arbitration in lieu of any judicial proceeding; provided, however, that
nothing contained in this Section 9.9 shall preclude any party hereto from at
any time seeking or obtaining from a court of competent jurisdiction (a)
injunctive relief, or (b) equitable or other judicial relief to specifically
enforce the provisions hereof or to preserve the status quo ante pending
resolution of Disputes hereunder. Subject only to the foregoing, no such Dispute
shall be made the subject of an action in a court of law or equity by any party
hereto but shall be submitted to arbitration and finally determined in
accordance with the provisions of this Section 9.9(B). Such arbitration shall
be conducted by the American Arbitration Association in Chicago, Illinois
before three (3) arbitrators in accordance with the Commercial Arbitration
Rules of the American Arbitration Association existing at the date of
submission of the Dispute to arbitration; provided, however, the parties shall
be entitled to discovery as provided in the Federal Rules of Civil Procedure.
If an arbitrator so selected becomes unable to serve, his or her successor
shall be similarly selected

 33
 

or appointed.  All arbitration hearings shall be conducted on
an expedited schedule commencing not later than one hundred twenty (120) days
following selection of the arbitrators, and all proceedings shall be
confidential. Any party may at its expense make a stenographic record thereof.  Each party shall pay its own expenses and
each party shall pay one-half of the costs and expenses of the arbitrators and
the American Arbitration Association. Any arbitration award shall be binding
and enforceable against the parties hereto and judgment may be entered thereon
in any court of competent jurisdiction.

9.10         Time of the Essence.  With regard to all dates and time periods set
forth or referred to in this Agreement, time is of the essence.

9.11         Third Parties.  Nothing in this Agreement, express or
implied, is intended to or shall be construed to confer upon or give any person
other than the Parties and their respective successors and permitted assigns,
any legal or equitable right, remedy or claim under or with respect to this
Agreement.

9.12         Severability.  In the event that a court or arbitral body of
competent jurisdiction holds any provision of this Agreement invalid, illegal
or unenforceable, such decision shall not affect the validity or enforceability
of any of the other provisions of this Agreement, which other provisions shall
remain in full force and effect, and the application of such invalid, illegal
or unenforceable provision to persons or circumstances other than those as to
which it is held invalid, illegal or unenforceable shall be valid and be
enforced to the fullest extent permitted by law.  To the extent permitted by applicable law,
each party waives any provision of law that renders any provision of this
Agreement invalid, illegal or unenforceable in any respect.

[SIGNATURE
PAGE FOLLOWS]

 34
 

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

	
  SELLER:

  
	
   

  
	
  NEW HORIZONS
  COMPUTER LEARNING

  
	
  CENTER OF
  CHICAGO, INC.

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  	 

	
  Mark A. Miller

  
	
  Chief Executive Officer

  
	
   

  
	
  PARENT:

  
	
   

  
	
  NEW HORIZONS
  WORLDWIDE, INC.

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Mark A. Miller

  
	
  Chief Executive Officer

  
	
   

  
	
  BUYER:

  
	
   

  
	
  NH CHICAGO, LLC

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Mark McManus, Jr.

  
	
  Chief Executive Officer

  
	
  M&J:

  
	
   

  
	
  M&J L.L.C.

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Mark McManus, Jr.

  
	
  Chief Executive Officer

  

 

 35
 

EXHIBIT A

ASSIGNMENT AND
ASSUMPTION AGREEMENT

This Assignment and Assumption Agreement (the “Assignment”) is made for
the consideration provided for in, and pursuant to the requirements of, a
certain Asset Purchase Agreement (“Agreement”) of even date herewith by and
between NEW HORIZONS COMPUTER LEARNING CENTER OF CHICAGO, INC., a Delaware
corporation (“Assignor”), and NH CHICAGO, LLC, a Michigan limited liability
company (“Assignee”).

WITNESSETH:

WHEREAS, pursuant to the Agreement, Assignee desires to purchase and
acquire from Assignor all of the Assignor’s right, title and interest in, or
arising under or pursuant to, those certain agreements defined in the Agreement
as the “Assigned Contracts”, being those (excluding, for these purposes, the
Facilities Leases) identified on the Attachment hereto, as a consequence of
which the Assignee is willing to assume Assignor’s obligations,
responsibilities and liabilities under the said Assigned Contracts which accrue
from and after the date hereof in accordance with the terms hereof and the
Agreement;

NOW, THEREFORE:

1.             Assignor
hereby assigns, transfers and conveys to Assignee, all of Assignor’s right,
title and interest in, to and under the Assigned Contracts as defined in the
Agreement and identified on the Attachment hereto effective as of the date
hereof.

2.             Assignee does hereby
accept the foregoing assignment and does hereby assume, and agree to perform
and be bound by, all of the covenants, conditions, obligations and liabilities
of Assignor under the said Assigned Contracts which accrue after the date
hereof; provided that, notwithstanding anything to the contrary, Assignee does
not assume, and shall not be responsible for, any of Assignor’s obligations,
responsibilities or liabilities which arise from (i) defaults under any of the
Assigned Contracts or breaches thereof on or prior to the date hereof; or (ii)
events occurring on or prior to the date hereof, which, after notice or lapse
of time or both, would constitute a default or breach, in each case whether or
not a claim for such default or breach is made prior to or following the date
hereof.

(Signatures on Next Page)

 36
 

IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be duly executed and delivered as of the Effective Date provided for in the
Agreement.

	
  ASSIGNOR:

  	
   

  	
  ASSIGNEE:

  
	
   

  	
   

  	
   

  
	
  NEW HORIZONS
  COMPUTER LEARNING

  	
   

  	
  NH CHICAGO, LLC

  
	
  CENTER OF
  CHICAGO, INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Mark A. Miller

  	
   

  	
  Mark McManus,
  Jr.

  
	
  Chief Executive Officer

  	
   

  	
  Chief Executive
  Officer

  
							

 

 37

ATTACHMENT

TO

ASSIGNMENT AND ASSUMPTION
AGREEMENT

The following is a listing of
the Assigned Contracts, including the Customer Contracts but excluding the
Facilities Leases, to be and herewith assigned to the Assignee.  To the extent in writing, there is attached
hereto a true and complete copy of each of the Assigned Contracts.

EXHIBIT B-1

ASSIGNMENT OF LEASE

	
  STATE OF ILLINOIS

  	
  )

  	
   

  
	
   

  	
  )

  	
  ASSIGNMENT OF LEASE

  
	
  COUNTY OF COOK

  	
  )

  	
   

  

 

FOR VALUABLE
CONSIDERATION, and in consideration of the agreements of the parties set forth
in a certain Asset Purchase Agreement (“Agreement”) of even date herewith by
and between NEW HORIZONS COMPUTER LEARNING CENTER OF CHICAGO, INC., a Delaware
corporation (herein called “ASSIGNOR”), and NH CHICAGO, LLC, a Michigan limited
liability company (herein called “ASSIGNEE”), the undersigned ASSIGNOR does
hereby set over, transfer, sell and assign unto ASSIGNEE all of ASSIGNOR’S
right, title and interest in and to the following described Office Lease Agreement
(the “Facilities Lease”) entered into by and between ASSIGNOR, as tenant, and
the landlord named below:

	
  Name of Landlord:

  	
  8550 Bryn Mawr, L.L.C.

  
	
   

  	
   

  
	
  Address of
  Premises:

  	
  8550 West Bryn Mawr, Chicago, IL

  
	
   

  	
   

  
	
  Date of Lease:

  	
  May 21, 1999

  
	
   

  	
   

  
	
  Amendments:

  	
  First Amendment to Office Lease dated November 4,
  2005

  

 

ASSIGNOR
warrants that it has full title to the foregoing leasehold estate, the
Facilities Lease is in full force and effect, no condition or state of facts
exists which (with or without the giving of notice and/or the lapse of time)
would constitute a default by ASSIGNOR or, to the Knowledge (as defined in the
Agreement) of ASSIGNOR, by any other party to the Facilities Lease, and
ASSIGNOR has the power and right to assign its rights as herein provided
(subject to the approval of the landlord above named).

By its
execution below, ASSIGNEE agrees to assume, and to pay, perform and abide by,
all of the obligations, indebtedness, terms, provisions and conditions undertaken
to be paid, performed or complied with by ASSIGNOR under or pursuant to the
Facilities Lease at any time after the date hereof; provided that,
notwithstanding anything to the contrary, Assignee does not assume, and shall
not be responsible for, any obligations, indebtedness or liabilities which
arise from (i) defaults under the Facilities Lease or breaches thereof on or
prior to the date hereof; or (ii) events occurring on or prior to the date
hereof, which, after notice or lapse of time or both, would constitute a
default or breach, in each case whether or not a claim for such default or
breach is made prior to or following the date hereof.

(Signatures on Next Page)

IN WITNESS
WHEREOF, the undersigned parties have executed this Assignment of Lease effective
as of the 31st day of March, 2007.

ASSIGNOR:

	
  NEW HORIZONS COMPUTER LEARNING CENTER OF
  CHICAGO, INC.

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Mark A. Miller

  
	
  Chief Executive
  Officer

  
	
   

  
	
  ASSIGNEE:

  
	
   

  
	
  NH CHICAGO, LLC

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Mark McManus,
  Jr.

  
	
  Chief Executive
  Officer

  

 

EXHIBIT
C

BILL OF SALE

FOR GOOD
AND VALUABLE CONSIDERATION, the receipt of which is
hereby acknowledged, the undersigned, New Horizons Computer Learning Center of Chicago,
Inc., a Delaware corporation (“Seller”), hereby sells, conveys, transfers,
assigns and delivers to NH Chicago, LLC, a Michigan limited liability company (“Buyer”),
all of Seller’s right, title and interest in and to the Purchased Assets as
such term is defined in that certain Asset Purchase Agreement (“Agreement”) dated
as of March 31, 2007 by and among, inter alia,
Buyer and Seller.

TO HAVE
AND TO HOLD the same unto Buyer, its successors and
assigns forever, free and clear of all Liens other than any Permitted Liens
(each of which terms being as defined in the Agreement).

This Bill of
Sale is delivered pursuant to and is subject to and governed by the terms and
conditions of the Agreement. The representations, warranties and covenants as
set forth in the Agreement shall survive delivery of this Bill of Sale as set
forth in the Agreement.

This Bill of
Sale is ancillary to the Agreement, and in the event of a conflict between the
terms of this Bill of Sale and the terms of the Agreement, the terms of the
Agreement shall govern.

IN WITNESS
WHEREOF, the undersigned has caused this instrument to
be duly executed as of the 31st day of March 2007.

	
  NEW HORIZONS COMPUTER LEARNING CENTER OF
  CHICAGO, INC.

  
	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Mark A. Miller

  
	
  Chief Executive
  OfficerExhibit 4.1

GEOKINETICS INC.

2007 STOCK AWARDS PLAN

Purpose.   The purpose of the GEOKINETICS INC. 2007
STOCK AWARDS PLAN (the “Plan”) is to provide a means through which
GEOKINETICS INC., a Delaware corporation (the “Company”), and its
subsidiaries, may attract, retain and motivate employees, directors and persons
affiliated with the Company and to provide a means whereby such persons can
acquire and maintain stock ownership, thereby strengthening their concern for
the welfare of the Company. A further purpose of the Plan is to provide such
participants with additional incentive and reward opportunities designed to
enhance the profitable growth and increase stockholder value of the Company.
Accordingly, the Plan provides for granting Incentive Stock Options, options
that do not constitute Incentive Stock Options, Stock Appreciation Rights,
Restricted Stock Awards, Phantom Stock Awards, or any combination of the
foregoing, as is best suited to the particular circumstances as provided
herein.

Definitions.   The following definitions shall be applicable
throughout the Plan unless specifically modified by any paragraph:

(a)   “Affiliates”
means any entity which directly or indirectly through one or more
intermediaries is controlled by the Company.

(b)   “Award” means,
individually or collectively, any Option, Restricted Stock Award, Phantom Stock
Award or Stock Appreciation Right.

(c)   “Board”
means the Board of Directors of the Company.

(d)   “Change of Control”
means the occurrence of any of the following events: (i) the Company shall not
be the surviving entity in any merger, consolidation or other reorganization
(or survives only as a subsidiary of an entity other than a previously
wholly-owned subsidiary of the Company), (ii) the Company sells, leases or exchanges
all or substantially all of its assets to any other person or entity (other
than a wholly-owned subsidiary of the Company), (iii) the Company is to be
dissolved and liquidated, (iv) any person or entity, including a “group” as
contemplated by Section 13(d)(3) of the 1934 Act, acquires or gains ownership
or control (including, without limitation, power to vote) of more than 50% of
the outstanding shares of the Company’s voting stock (based upon voting power),
or (v) as a result of or in connection with a contested election of directors,
the persons who were directors of the Company before such election shall cease
to constitute a majority of the Board.  Notwithstanding the foregoing, a “Change
of Control” shall not include any transaction or series of related transactions
in which a stockholder or any “group” (as contemplated by Section 13(d)(3) of
the 1934 Act) of which such stockholder is a member that, as of the date of
approval of the Plan by the Board, owns more than 25% of the outstanding shares
of the Company’s voting stock (based upon the voting power of all shares of the
Company’s capital stock, the holders of which are entitled to vote for the
election of members of the Board) acquires, directly or indirectly, more than
50% of the outstanding shares of the Company’s voting stock, but less than 75%
of the outstanding shares of the Company’s voting stock (based, in either such
case, upon the voting power of all shares of the Company’s capital stock, the
holders of which are entitled to vote for the election of members of the
Board).

(e)   “Change of Control
Value” means (i) the per share price offered to stockholders of
the Company in any merger, consolidation, reorganization, sale of assets or
dissolution transaction, (ii) the price per share offered to stockholders
of the Company in any tender offer or exchange offer whereby a Change of
Control takes place, or (iii) if a Change of Control occurs other than
pursuant (i) or (ii) above, the Fair Market Value per share of the
shares into which Awards are exercisable, as determined by the Committee,
whichever is applicable. In the event that the consideration offered to
stockholders of the Company consists of anything other than cash, the Committee
shall determine the fair cash equivalent of the portion of the consideration
offered which is other than cash.

 1
 

(f)   “Code”
means the Internal Revenue Code of 1986, as amended. Reference in the Plan to
any section of the Code shall be deemed to include any amendments or successor
provisions to any section and any regulations under such section.

(g)   “Committee”
means the Board or any Compensation Committee of the Board which shall be
constituted as required by applicable law including in the case of a Committee
administering the Plan in accordance with the requirements of Rules 163b-3
or Section 162(m) of the Code, (i) as to permit the Plan to
comply with Rule 16b-3, and (ii) solely of “outside directors,”
within the meaning of Section 162(m) of the Code and applicable
interpretive authority thereunder.

(h)   “Company”
means Geokinetics Inc.

(i)   “Director”
means an individual elected to the Board by the stockholders of the Company or
by the Board under applicable corporate law who is serving on the Board on the
date the Plan is adopted by the Board or is elected to the Board after such
date.

(j)   An “employee”
means any person (including an officer or a Director) in an employment
relationship with the Company or any Parent or Subsidiary.

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

(l)   “Fair Market Value”
means, as of any specified date, the mean of the high and low sales prices of
the Stock (i) reported by any interdealer quotation system on which the
Stock is quoted on that date or (ii) if the Stock is listed on a national
stock exchange, reported on the stock exchange composite tape on that date; or,
in either case, if no prices are reported on that date, on the last preceding
date on which such prices of the Stock are so reported. If the Stock is traded
over the counter at the time a determination of its Fair Market Value is
required to be made hereunder, its fair market value shall be deemed to be
equal to the average between the reported high and low or closing bid and asked
prices of Stock on the most recent date on which Stock was publicly traded. In
the event Stock is not publicly traded at the time a determination of its value
is required to be made hereunder, the determination of its fair market value
shall be made by the Committee in such manner as it deems appropriate.

(m)   “Holder”
means a Participant who has been granted an Award.

(n)   “Incentive Stock
Option” means an incentive stock option within the meaning of
Section 422(b) of the Code.

(o)   “Nonqualified Stock
Option” means an option granted under Section 7 of the Plan to
purchase Stock that does not constitute an Incentive Stock Option.

(p)   “Option”
means an Award granted under Section 7 of the Plan and includes both
Incentive Stock Options to purchase Stock and Nonqualified Stock Options to
purchase Stock.

(q)   “Option Agreement”
means a written agreement between the Company and a Holder with respect to an
Option.

(r)   “Parent”
means any corporation (other than the Company) in an unbroken chain of
corporations ending with the Company if, at the time of grant of the Award,
each of the corporations other than the Company owns stock possessing 50% or
more of the total combined voting power of all classes of stock in one of the
other corporations in such chain. A corporation that attains the status of a
Parent on a date after the adoption of the Plan shall be considered a Parent
commencing as of such date.

(s)   “Participant”
means individually or collectively, an employee, member of the Board or person
affiliated with the Company, any Parent or Subsidiary or any of its Affiliates,
who participates in the Plan.

(t)   “Phantom Stock Award”
means an Award granted under Section 10 of the Plan.

(u)   “Phantom Stock Award
Agreement” means a written agreement between the Company and a
Holder with respect to a Phantom Stock Award.

 2
 

(v)   “Restricted Stock
Agreement” means a written agreement between the Company and a
Holder with respect to a Restricted Stock Award.

(w)   “Restricted Stock
Award” means an Award granted under Section 9 of the Plan.

(x)   “Rule 16b-3”
means Rule 16b-3 promulgated by the Securities and Exchange Commission
under the 1934 Act, as such may be amended from time to time, and any successor
rule, regulation or statute fulfilling the same or a similar function.

(y)   “Spread”
means, in the case of a Stock Appreciation Right, an amount equal to the
excess, if any, of the Fair Market Value of a share of Stock on the date such
right is exercised over the price designated in such Stock Appreciation Right.

(z)   “Stock”
means the Common Stock par value, $.01 per share, of the Company.

(aa)   “Stock Appreciation
Right” means an Award granted under Section 8 of the Plan.

(bb)   “Stock Appreciation
Rights Agreement” means a written agreement between the Company and
a Holder with respect to an Award of Stock Appreciation Rights.

(cc)   “Subsidiary”
means any corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company if, at the time of grant of the Award,
each of the corporations other than the last corporation in the unbroken chain
owns stock possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain. A corporation
that attains the status of a Subsidiary on a date after the adoption of the
Plan shall be considered a Subsidiary commencing as of such date.

3.   Effective Date and
Term.   The Plan shall be effective upon its adoption by
the Board, provided that the Plan has been or is approved by the stockholders
of the Company within twelve months of its adoption by the Board. No further
Awards may be granted under the Plan on or after the date which is ten years
following the effective date. The Plan shall remain in effect until all Awards
granted under the Plan have been satisfied or expired.

4.   Administration.  
The Plan shall be administered by the Board or by the Committee as
authorized by the Board (hereinafter where the term “Committee” is used “Board”
shall be substituted, if no Committee has been established). Subject to the
provisions of the Plan, the Committee shall have sole authority, in its
discretion, to determine which Participant shall receive an Award, the time or
times when such Award shall be made, whether an Incentive Stock Option,
Nonqualified Stock Option or Stock Appreciation Right, Restricted Stock Award
or Phantom Stock Award shall be granted, the number of shares of Stock which
may be issued under each Option, Stock Appreciation Right or Restricted Stock
Award, and the value of each Phantom Stock Award. In making such determinations
the Committee may take into account the nature of the services rendered by the
respective Participants, their present and potential contributions to the
Company’s success and such other factors as the Committee in its discretion
shall deem relevant. The Committee shall have such additional powers as are
delegated to it by the other provisions of the Plan. Subject to the express
provisions of the Plan, the Committee is authorized to construe the Plan and
the respective agreements executed thereunder, to prescribe such rules and
regulations relating to the Plan as it may deem advisable to carry out the
Plan, and to determine the terms, restrictions and provisions of each Award,
including such terms, restrictions and provisions as shall be requisite in the
judgment of the Committee to cause designated Options to qualify as Incentive
Stock Options, and to make all other determinations necessary or advisable for
administering the Plan.  The Committee
may correct any defect or supply any omission or reconcile any inconsistency in
any agreement relating to an Award in the manner and to the extent it shall
deem expedient to carry it into effect. The determinations of the Committee on
the matters referred to in this Section 4 shall be conclusive.

5.   Shares Subject to the
Plan.   Subject to Section 11, the aggregate number
of shares of Stock that may be issued under the Plan shall be 750,000 shares of
which up to 50% or 375,000 shares may be issued under the Plan as Restricted
Stock Awards. The Stock to be offered pursuant to the grant of an Award may be
authorized but unissued Stock or Stock previously issued and outstanding and
reacquired by the Company. Shares of Stock shall be deemed to have been issued
under the Plan only to the extent actually issued and 

 3
 

delivered
pursuant to an Award. To the extent that an Award lapses or the rights of its
Holder terminate or the Award is paid in cash, any shares of Stock subject to
such Award shall again be available for the grant of an Award. Separate stock
certificates shall be issued by the Company for those shares acquired pursuant
to the exercise of an Incentive Stock Option and for those shares acquired
pursuant to the exercise of a Nonqualified Stock Option.

6.   Eligibility.  
Awards may be granted only to persons who, at the time of grant, are
employees, members of the Board or persons affiliated with the Company or any
of its Affiliates. An Award may be granted on more than one occasion to the
same person, and, subject to the limitations set forth in the Plan, such Award may
include an Incentive Stock Option or a Nonqualified Stock Option, a Stock
Appreciation Right, a Restricted Stock Award, a Phantom Stock Award or any
combination thereof.

7.   Stock Options.

(a)   Option
Period.   The term of each Option shall be as specified by
the Committee at the date of grant, but in no event shall exceed ten years.

(b)   Limitations on
Exercise of Option.   An Option shall be exercisable in
whole or in such installments and at such times as determined by the Committee.

(c)   Special Limitations
on Incentive Stock Options.   Incentive Stock Options may
only be granted to employees of the Company or any Parent or Subsidiary. To the
extent that the aggregate Fair Market Value (determined at the time the
respective Incentive Stock Option is granted) of Stock with respect to which
Incentive Stock Options are exercisable for the first time by an individual
during any calendar year (under all “incentive stock option” plans of the
Company and any Parent or Subsidiary) exceeds $100,000, the Incentive Stock
Options covering shares of Stock in excess of $100,000 (but not Incentive Stock
Options covering Stock up to $100,000) shall be treated as Nonqualified Stock
Options as determined by the Committee. The Committee shall determine, in
accordance with applicable provisions of the Code, Treasury Regulations and
other administrative pronouncements, which of an optionee’s Incentive Stock
Options will not constitute Incentive Stock Options because of such limitation
and shall notify the optionee of such determination as soon as practicable
after such determination. No Incentive Stock Option shall be granted to an
individual if, at the time the Option is granted, such individual owns stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company or of its Parent or Subsidiary, within the meaning of
Section 422(b)(6) of the Code, unless (i) at the time such
Option is granted the option price is at least 110% of the Fair Market Value of
the Stock subject to the Option and (ii) such Option by its terms is not
exercisable after the expiration of five years from the date of grant.

(d)   Option
Agreement.   Each Option shall be evidenced by an Option
Agreement in such form and containing such provisions not inconsistent with the
provisions of the Plan as the Committee from time to time shall approve,
including, without limitation, provisions to qualify an Incentive Stock Option
under Section 422 of the Code. An Option Agreement may provide for the
payment of the option price, in whole or in part, by the delivery of a number
of shares of Stock (plus cash if necessary) having a Fair Market Value equal to
such option price. Payment in full or in part may also be made by reduction in
the number of shares of Stock issuable upon the exercise of an Option, based on
the Fair Market Value of the shares of 
Stock on the date the Option is exercised. Each Option Agreement shall
provide that the Option may not be exercised earlier than 30 days from the
date of grant and shall specify the effect of termination of employment or
service on the exercisability of the Option. Moreover, an Option Agreement may
provide for a “cashless exercise” of the Option by establishing procedures
whereby the Holder, by a properly-executed written notice, directs (i) an
immediate market sale or margin loan respecting all or a part of the shares of
Stock to which he is entitled upon exercise pursuant to an extension of credit
by the Company to the Holder of the option price, (ii) the delivery of the
shares of Stock from the Company directly to a brokerage firm and
(iii) the delivery of the option price from the sale or margin loan
proceeds from the brokerage firm directly to the Company. Such Option Agreement
may also include, without limitation, provisions relating to (i) vesting
of Options, subject to the provisions hereof accelerating such vesting on a
Change of Control, (ii) tax matters (including provisions
(y) permitting the delivery of additional shares of Stock or the
withholding of shares of Stock from those acquired upon exercise to satisfy
federal, state or local income tax withholding requirements and
(z) dealing 

 4
 

with
any other applicable employee wage withholding requirements), and
(iii) any other matters not inconsistent with the terms and provisions of
this Plan that the Committee shall in its sole discretion determine. The terms
and conditions of the respective Option Agreements need not be identical.

(e)   Option Price and
Payment.   The price at which a share of Stock may be
purchased upon exercise of an Option shall be determined by the Committee, but
such purchase price shall not be less than, the Fair Market Value of Stock
subject to an Option on the date the Option is granted and (ii) such
purchase price shall be subject to adjustment as provided in Section 11.
The Option or portion thereof may be exercised by delivery of an irrevocable
notice of exercise to the Company. The purchase price of the Option or portion
thereof shall be paid in full in the manner prescribed by the Committee.

(f)   Stockholder Rights
and Privileges.   The Holder shall be entitled to all the
privileges and rights of the stockholder only with respect to such shares of
Stock as have been purchased under the Option and for which certificates of
stock have been registered in the Holder’s name.

(g)   Options and Rights
in Substitution for Stock Options Granted by Other Corporations.   Options
and Stock Appreciation Rights may be granted under the Plan from time to time
in substitution for stock options held by individuals employed by corporations
who become employees as a result of a merger or consolidation of the employing
corporation with the Company or any Subsidiary, or the acquisition by the
Company or Subsidiary of the assets of the employing corporation, or the acquisition
by the Company or Subsidiary of stock of the employing corporation with the
result that such employing corporation becomes a Subsidiary.

8.   Stock Appreciation Rights.

(a)   Stock Appreciation
Rights.   A Stock Appreciation Right is the right to receive
an amount equal to the Spread with respect to a share of Stock upon the
exercise of such Stock Appreciation Right. Stock Appreciation Rights may be
granted in connection with the grant of an Option, in which case the Option
Agreement will provide that the Stock Appreciation Right shall be cancelled
when and to the extent the related Option is exercised and that exercise of
Stock Appreciation Rights will result in the surrender of the right to purchase
the shares under the Option as to which the Stock Appreciation Rights were
exercised. Alternatively, Stock Appreciation Rights may be granted
independently of Options in which case each Award of Stock Appreciation Rights
shall be evidenced by a Stock Appreciation Rights Agreement which shall contain
such terms and conditions as may be approved by the Committee. The Spread with
respect to a Stock Appreciation Right shall be payable in cash, shares of Stock
with a Fair Market Value equal to the Spread or in a combination of cash and
shares of Stock, as determined by the Committee at the time of grant. Each
Stock Appreciation Rights Agreement shall provide that the Stock Appreciation
Rights may not be exercised earlier than 30 days from the date of grant
and shall specify the effect of termination of employment or service on the
exercisability of the Stock Appreciation Rights.

(b)   Other Terms and
Conditions.   At the time of such Award, the Committee,
may in its sole discretion, prescribe additional terms, conditions or
restrictions relating to Stock Appreciation Rights, including but not limited
to rules pertaining to termination of employment or service (by
retirement, disability, death or otherwise) of a Holder prior to the expiration
of such Stock Appreciation Rights. Such additional terms, conditions or restrictions
shall be set forth in the Stock Appreciation Rights Agreement made in
conjunction with the Award. Such Stock Appreciation Rights Agreements may also
include, without limitation, provisions relating to (i) vesting of Awards,
subject to the provisions hereof accelerating vesting on a Change of Control,
(ii) tax matters (including provisions covering applicable wage
withholding requirements), and (iii) any other matters not inconsistent
with the terms and provisions of this Plan, that the Committee shall in its
sole discretion determine. The terms and conditions of the respective Stock
Appreciation Rights Agreements need not be identical.

(c)   Award
Price.   The award price of each Stock Appreciation Right
shall be determined by the Committee, but such award price (i) shall not
be less than the Fair Market Value of a share of Stock on the date the Stock
Appreciation Right is granted (or such greater exercise price as may be
required if such Stock Appreciation Right is granted in connection with an Incentive
Stock Option that must have an exercise price equal to 110% of the Fair Market
Value of the Stock on the date of grant pursuant to Section 7(c), and
(ii) shall be subject to adjustment as provided in Section 11.

 5
 

(d)   Exercise
Period.   The term of each Stock Appreciation Right shall
be as specified by the Committee at the date of grant, but in no event shall
exceed ten years.

(e)   Limitations on
Exercise of Stock Appreciation Right.   A Stock
Appreciation Right shall be exercisable in whole or in such installments and at
such times as determined by the Committee.

9.   Restricted Stock Awards.

(a)   Forfeiture
Restrictions to be Established by the Committee.   Shares
of Stock that are the subject of a Restricted Stock Award shall be subject to
restrictions on disposition by the Holder and an obligation of the Holder to
forfeit and surrender the shares to the Company under certain circumstances
(the “Forfeiture Restrictions”). The Forfeiture Restrictions shall be
determined by the Committee in its sole discretion, and the Committee may
provide that the Forfeiture Restrictions shall lapse upon (i) the
attainment of business objectives established by the Committee that are based
on (1) the price of a share of Stock, (2) the Company’s earnings per
share, (3) the Company’s revenue, (4) the revenue of a business unit
of the Company designated by the Committee, (5) the return on stockholders’
equity achieved by the Company, (6) the Company’s pre-tax cash flow from
operations, or (7) similar criteria established by the Committee,
(ii) the Holder’s continued employment or service with the Company,
Parent, Subsidiary or Affiliate for a specified period of time, or
(iii) other measurements of individual, business unit or Company
performance, including subjective goals. Each Restricted Stock Award may have
different Forfeiture Restrictions, in the discretion of the Committee. The
Forfeiture Restrictions applicable to a particular Restricted Stock Award shall
not be changed except as permitted by Section 9(b) or Section 11.

(b)   Other Terms and
Conditions.   Stock awarded pursuant to a Restricted Stock
Award shall be represented by a stock certificate registered in the name of the
Holder of such Restricted Stock Award. The Holder shall have the right to
receive dividends with respect to Stock subject to a Restricted Stock Award, to
vote Stock subject thereto and to enjoy all other stockholder rights, except
that (i) the Holder shall not be entitled to delivery of the stock
certificate until the Forfeiture Restrictions shall have expired, (ii) the
Company shall retain custody of the Stock until the Forfeiture Restrictions
shall have expired, (iii) the Holder may not sell, transfer, pledge,
exchange, hypothecate or otherwise dispose of the Stock until the Forfeiture Restrictions
shall have expired, and (iv) a breach of the terms and conditions
established by the Committee pursuant to the Restricted Stock Agreement, shall
cause a forfeiture of the Restricted Stock Award. At the time of such Award,
the Committee may, in its sole discretion, prescribe additional terms,
conditions or restrictions relating to Restricted Stock Awards, including, but
not limited to, rules pertaining to the termination of employment or
service (by retirement, disability, death or otherwise) of a Holder prior to
expiration of the Forfeiture Restrictions. Such additional terms, conditions or
restrictions shall be set forth in a Restricted Stock Agreement made in
conjunction with the Award. Such Restricted Stock Agreement may also include,
without limitation, provisions relating to (i) subject to the provisions
hereof accelerating vesting on a Change of Control, vesting of Awards,
(ii) tax matters (including provisions (y) covering any applicable
employee wage withholding requirements and (z) prohibiting an election by
the Holder under Section 83(b) of the Code), and (iii) any other
matters not inconsistent with the terms and provisions of this Plan that the
Committee shall in its sole discretion determine. The terms and conditions of
the respective Restricted Stock Agreements need not be identical.

(c)   Payment for
Restricted Stock.   The Committee shall determine the
amount and form of any payment for Stock received pursuant to a Restricted
Stock Award, provided that in the absence of such a determination, a Holder
shall not be required to make any payment for Stock received pursuant to a
Restricted Stock Award, except to the extent otherwise required by law.

(d)   Agreements.  
At the time any Award is made under this Section 9, the Company
and the Holder shall enter into a Restricted Stock Agreement setting forth each
of the matters as the Committee may determine to be appropriate. The terms and
provisions of the respective Restricted Stock Agreements need not be identical.

 6
 

10.   Phantom Stock Awards.

(a)   Phantom Stock
Awards.   Phantom Stock Awards are rights to receive an
amount equal to the Fair Market Value of Stock over a specified period of time,
which vest over a period of time or upon the occurrence of an event (including
without limitation a Change of Control) as established by the Committee,
without payment of any amounts by the Holder thereof (except to the extent
otherwise required by law). Each Phantom Stock Award may have a maximum value
established by the Committee at the time of such Award.

(b)   Award
Period.   The Committee shall establish, with respect to
and at the time of each Phantom Stock Award, a period (which in no event shall
be longer than ten years) over which or the event upon which the Award shall
vest with respect to the Holder.

(c)   Awards
Criteria.   In determining the value of Phantom Stock
Awards, the Committee shall take into account a Participant’s responsibility
level, performance, potential, other Awards and such other considerations as it
deems appropriate.

(d)   Payment.  
Following the end of the vesting period for a Phantom Stock Award,
the Holder of a Phantom Stock Award shall be entitled to receive payment of an
amount, not exceeding the maximum value of the Phantom Stock Award, based on
the then vested value of the Award. Payment of a Phantom Stock Award may be
made in cash, Stock or a combination thereof as determined by the Committee.
Payment shall be made in a lump sum or in installments as prescribed by the
Committee in its sole discretion. Any payment to be made in Stock shall be
based on the Fair Market Value of the Stock on the payment date. Cash dividend
equivalents may be paid during or after the vesting period with respect to a
Phantom Stock Award, as determined by the Committee and as provided in the
Phantom Stock Award Agreement. If a payment of cash is to be made on a deferred
basis, the Committee shall establish whether interest shall be credited, the
rate thereof and any other terms and conditions applicable thereto.

(e)   Termination of Employment
or Service.   A Phantom Stock Award shall terminate if the
Holder does not remain continuously in the employ or in the service of the
Company or any Affiliate, as applicable at all times during the applicable
vesting period, except as may be otherwise determined by the Committee or as
set forth in the Award at the time of grant.

 (f)   Agreements.   At the time any
Award is made under this Section 10, the Company and the Holder shall
enter into a Phantom Stock Award Agreement setting forth each of the matters
contemplated hereby and such matters described in this Section 10 as the
Committee may determine to be appropriate. The terms and provisions of the
respective agreements need not be identical.

11.   Recapitalization and Reorganization.

(a)   The shares with respect to which Awards may be granted
are shares of Stock as presently constituted, but if, and whenever, prior to
the expiration of an Award theretofore granted, the Company shall effect a
subdivision or consolidation by the Company of the shares of Stock, then the
number of shares of Stock with respect to which such Award may thereafter be
exercised or satisfied, as applicable, (i) in the event of an increase in
the number of outstanding shares, shall be proportionately increased, and the
purchase price per share (and any applicable repurchase price) shall be
proportionately reduced, and (ii) in the event of a reduction in the
number of outstanding shares, shall be proportionately reduced, and the
purchase price per share (and any applicable repurchase price) shall be
proportionately increased.

(b)   If the Company recapitalizes or otherwise changes its
capital structure, thereafter upon any exercise or satisfaction, as applicable,
of an Award theretofore granted, the Holder shall be entitled to (or entitled
to purchase, if applicable) under such Award, in lieu of the number of shares
of Stock then covered by such Award, the number and class of shares of stock
and securities to which the Holder would have been entitled pursuant to the
terms of the recapitalization if, immediately prior to such recapitalization,
the Holder had been the holder of record of the number of shares of Stock then
covered by such Award and the purchase price per share (and any applicable
repurchase price) shall be proportionately adjusted.

(c)   In the event of a Change of Control, outstanding Awards
shall immediately vest and become exercisable or satisfiable, as provided in
the agreements evidencing such Awards.  In the event of a Change of
Control, the Committee, in its discretion shall act to effect one or more of
the following alternatives with respect to outstanding Awards other than
Restricted Stock Awards, which may vary among individual Holders 

 7
 

and
which may vary among Awards held by any individual Holder: (1) determine a
limited period of time on or before a specified date (before or with the
consent of successor corporation after such Change of Control) after which
specified date all unexercised Options and all rights of Holders thereunder
shall terminate, (2) require the mandatory surrender to the Company by selected
Holders of some or all of the outstanding Awards held by such Holders
(irrespective of whether such Awards are then exercisable under the provisions
of the Plan) as of a date, before or after such Change of Control, specified by
the Committee, in which event the Committee shall thereupon cancel such Awards
and the Company shall pay to each Holder an amount of cash per share equal to
the excess, if any, of the Change of Control Value of the shares subject to
such Awards over the exercise price(s) under such Awards for such shares, (3)
make such adjustments to Awards then outstanding as the Committee deems
appropriate to reflect such Change of Control (provided, however, that the
Committee may determine in its sole discretion that no adjustment is necessary
to Awards then outstanding) or (4) provide that thereafter upon any exercise of
an Award theretofore granted; the Holder shall be entitled to purchase or
receive under such Awards, in lieu of the number of shares of Stock then
covered by such Awards, the number and class of shares of stock or other
securities or property (including, without limitation, cash) to which the
Holder would have been entitled pursuant to the terms of the agreement of
merger, consolidation or sale of assets and dissolution if, immediately prior
to such merger, consolidation or sale of assets and dissolution the Holder has
been the holder of record of the number of shares of Stock then covered by such
Awards, provided that if such consideration is not solely common stock of the
successor corporation, the Committee may, with the consent of the successor
corporation, provide for the consideration to be received to be solely common
stock of the successor corporation equal to the Fair Market Value of the per
share consideration received by the holders of the Stock in the transaction.
The provisions contained in this paragraph shall not terminate any rights of
the Holder to further payments pursuant to any other agreement with the Company
following a Change of Control.

(d)   In the event that the Committee determines that any
recapitalization, reorganization, merger, consolidation, combination, exchange
or other relevant change in capitalization or any stock split, reverse stock
split, stock dividend, or dividend payable in other than shares of Stock or
other similar corporate transaction or event affects the Common Stock such that
an adjustment is determined by the Committee to be appropriate to prevent the
dilution or enlargement of the benefits or potential benefits intended to be
made available under the Plan, then the Committee shall, in such a manner, as
it deems equitable, adjust any or all of (i) the number of shares and type of
Stock with respect to which Awards may be granted, (ii) the number of
share and type of Stock subject to outstanding awards, and (iii) the grant or
exercise price with respect to any Award.

(e)   The existence of the Plan and the Awards granted
hereunder shall not affect in any way the right or power of the Board or the
stockholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company’s capital
structure or its business, any merger or consolidation of the Company, any
issue of debt or equity securities ahead of or affecting Stock or the rights
thereof, the dissolution or liquidation of the Company or any sale, lease,
exchange or other disposition of all or any part of its assets or business or
any other corporate act or proceeding.

(f)   Any adjustment provided for in Subparagraphs (a), (b),
(c) or (d) above shall be subject to any required stockholder action.

(g)   Except as hereinbefore expressly provided, the issuance
by the Company of shares of stock of any class or securities convertible into shares
of stock of any class, for cash, property, labor or services, upon direct sale,
upon the exercise of rights or warrants to subscribe therefore or the granting
of any later Awards under the Plan or any other stock plan, or upon conversion
of shares of obligations of the Company convertible into such shares or other
securities, and in any case whether or not for fair value, shall not affect,
and no adjustment by reason thereof shall be made with respect to, the number
of shares of Stock subject to Awards theretofore granted or the purchase price
per share, if applicable.

12.   Amendment and
Termination.   The Board in its discretion may terminate
the Plan at any time with respect to any shares for which Awards have not
theretofore been granted. The Board shall have the right to alter or amend the
Plan or any part thereof from time to time; provided that no change in any
Award theretofore granted may be made (i) which would impair the rights of the
Holder without the consent of the Holder (unless such change is required to
comply with applicable law or in order to cause the benefits under 

 8
 

the
Plan to qualify as performance-based compensation within the meaning of
Section 162(m) of the Code and applicable interpretive authority
thereunder) or (ii) which would reduce the option price under any outstanding
Option, reduce the award price under any outstanding Stock Appreciation Right,
or reduce the amount of any payment for Stock to be received by the Company
pursuant to a Restricted Stock Award without stockholder approval of any such
change.

13.   Miscellaneous.

(a)   No Right to An
Award.   Neither the adoption of the Plan by the Company
nor any action of the Board or the Committee shall be deemed to give a
Participant any right to be granted an Award to purchase Stock, a right to a
Stock Appreciation Right, a Restricted Stock Award or a Phantom Stock Award or
any of the rights hereunder except as may be evidenced by an Award or by an
Option Agreement, Stock Appreciation Rights Agreement, Restricted Stock Agreement
or Phantom Stock Award Agreement on behalf of the Company, and then only to the
extent and on the terms and conditions expressly set forth therein. The Plan
shall be unfunded. The Company shall not be required to establish any special
or separate fund or to make any other segregation of funds or assets to assure
the payment of any Award.

 (b)   No Employment Rights Conferred.   Nothing
contained in the Plan shall (i) confer upon any Participant any right to
continue as an employee or person affiliated with the Company any Parent or
Subsidiary or any of its Affiliates (ii) interfere in any way with the
right of the Company’s or any Parent’s Subsidiary or Affiliate’s right to
terminate a Participant’s employment or consulting arrangement at any time.

(c)   Other Laws;
Withholding.   The Company shall not be obligated to issue
any Stock pursuant to any Award granted under the Plan at any time when the
shares covered by such Award have not been registered under the Securities Act
of 1933 and such other state and federal laws, rules or regulations as the
Company or the Committee deems applicable and, in the opinion of legal counsel
for the Company, there is no exemption from the registration requirements of
such laws, rules or regulations available for the issuance and sale of
such shares. No fractional shares of Stock shall be delivered, nor shall any
cash in lieu of fractional shares be paid. The Company shall have the right to
deduct in connection with all Awards any taxes required by law to be withheld and
to require any payments required to enable it to satisfy its withholding
obligations.

(d)   No Restriction on
Corporate Action.   Nothing contained in the Plan shall be
construed to prevent the Company or any Parent, Subsidiary or Affiliate from
taking any corporate action which is deemed by the Company or such Parent,
Subsidiary or Affiliate to be appropriate or in its best interest, whether or
not such action would have an adverse effect on the Plan or any Award made
under the Plan. No Participant, beneficiary or other person shall have any
claim against the Company or any Parent, Subsidiary or Affiliate as a result of
any such action.

(e)   Restrictions on
Transfer.   Except as otherwise determined by the
Committee in cases other than in connection with Incentive Stock Options, an
Award shall not be transferable otherwise than by will or the laws of descent
and distribution or pursuant to a “qualified domestic relations order” as
defined by the Code or Title I of the Employee Retirement Income Security Act
of 1974, as amended, or the rules thereunder, and shall be exercisable
during the Holder’s lifetime only by such Holder or the Holder’s guardian or
legal representative.

(f)   Rule 16b-3.  
It is intended that the Plan and any grant of an Award made to a person subject
to Section 16 of the 1934 Act meet all of the requirements of
Rule 16b-3. If any provision of the Plan or any such Award would
disqualify the Plan or such Award under, or would otherwise not comply with,
Rule 16b-3, such provision or Award shall be construed or deemed amended
to conform to Rule 16b-3.

(g)   Section 162(m).  
If the Plan is subject to Section 162(m) of the Code, it is intended
that the Plan comply fully with and meet all the requirements of
Section 162(m) of the Code so that Options and Stock Appreciation
Rights granted hereunder and, if determined by the Committee, Restricted Stock
Awards, shall constitute “performance-based” compensation within the meaning of
such section. If any provision of the Plan would disqualify the Plan or would
not otherwise permit the Plan to comply with Section 162(m) as so
intended, such provision shall be construed or deemed amended to conform to the
requirements or provisions of Section 162(m); provided that no such
construction or amendment shall have an adverse effect on the economic value to
a Holder of any Award previously granted hereunder.

(h)   Code
Section 409A Compliance.   Notwithstanding any
provision of the Plan, to the extent that any Award would be subject to
Section 409A of the Code, no such Award may be granted if it would fail to

 9
 

comply
with the requirements set forth in Section 409A of the Code. To the extent
that the Committee determines that the Plan or any Award is subject to
Section 409A of the Code and fails to comply with the requirements of
Section 409A of the Code, notwithstanding anything to the contrary
contained in the Plan or in any Award agreement, the Committee reserves the
right to amend or terminate the Plan and/or amend, restructure, terminate or
replace the Award in order to cause the Award to either not be subject to
Section 409A of the Code or to comply with the applicable provisions of
such section.

(i)   Governing
Law.   This Plan shall be construed in accordance with the
laws of the State of Delaware.

 10

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